/raid1/www/Hosts/bankrupt/TCR_Public/210305.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, March 5, 2021, Vol. 25, No. 63
Headlines
1 BIG RED: Wants Authority to Use Cash Collateral
2018 BLUE ISLAND: $15.1M Sale of All Assets to Kinzie Approved
315 PARK STREET: Voluntary Chapter 11 Case Summary
595 BROADWAY: Voluntary Chapter 11 Case Summary
60 91ST STREET: Trustee's Liquidating Plan Confirmed by Judge
ACCO BRANDS: Fitch Assigns BB Rating on New $650MM Unsec. Notes
ACER THERAPEUTICS: Incurs $22.9 Million Net Loss in 2020
AE HOTEL: Seeks Access to CBB's Cash Collateral
AGILE THERAPEUTICS: Widens Net Loss to $51.8 Million in 2020
AIRPORT VAN RENTAL: Gets Cash Collateral Access Thru March 19
ALAMO DRAFTHOUSE: Case Summary & 30 Largest Unsecured Creditors
ALAMO DRAFTHOUSE: Files Chapter 11 to Sell to Altamont & Fortress
ANTARA SYSTEMS: Can Use Cash Collateral on Interim Basis
ANTARA SYSTEMS: Seeks to Hire Gantry Business as Financial Advisor
ANTARA SYSTEMS: Seeks to Hire Keller & Almassian as Legal Counsel
ARCHES BUYER: S&P Rates $1.6BB Senior Secured Term Loan 'B'
ATI HOLDINGS: S&P Places 'B-' Issuer Credit Rating on Watch Pos.
AVANTOR FUNDING: Fitch Raises LT IDR to 'BB', Outlook Positive
BC HOSPITALITY: Chloe Says Plan Not Filed in Good Faith
BCR PARTNERS: Seeks to Hire Berman DeLeve as Legal Counsel
BEN F. BLANTON: Unsecureds Owed Less Than $2,500 to be Paid in Full
BERLIN PACKAGING: Moody's Rates New $500MM First Lien Loans 'B3'
BERRY GLOBAL: Incremental Issuance No Impact on Moody's Ba3 CFR
BOY SCOUTS OF AMERICA: Needs $300M From Councils for Ch.11 Exit
BRAND INDUSTRIAL: S&P Affirms 'B-' ICR, Outlook Negative
BRAZOS ELECTRIC: Fitch Cuts IDR to 'D' on Bankr. Filing
BRAZOS ELECTRIC: Has $240M Cash, Searches for Bankruptcy Loan
BRAZOS ELECTRIC: Seeks Authority to Use Cash Collateral
BRAZOS ELECTRIC: Seeks Legislative Fix in Filing Chapter 11
BRITT TRUCKING: Voluntary Chapter 11 Case Summary
CARBON AND CLAY: Case Summary & 20 Largest Unsecured Creditors
CASA DE LAS INVESTMENTS: Seeks to Hire Keller Williams as Broker
CICI'S HOLDINGS: Poised for Bankruptcy Exit Under New Owner
CLOUD TEN: Seeks to Hire Horn & Associates as Counsel
CMC II LLC: Court Permits Consulate Affiliates to Get $5M Loan
CONNEAUT LAKE PARK: $1.2M Cash Sale of All Assets to Keldon Okayed
CONSTANT CONTACT: Fitch Assigns First-Time 'B' LongTerm IDR
CONTINENTAL COUNTRY: U.S. Trustee Unable to Appoint Committee
DANA INC: S&P Affirms 'BB' ICR, Alters Outlook to Stable
DAVID CROWE: Turbine Powered Technology Gets Automatic Stay Relief
DAWN ACQUISITIONS: S&P Downgrades ICR to 'CCC', Outlook Negative
DEARBORN REAL: Case Summary & 10 Unsecured Creditors
DESERT OASIS: Desert Land Trustee Objects to Plan Disclosures
DESERT OASIS: Northern Trust Says Trustee's Plan Unconfirmable
DESTILERIA NACIONAL: Court Denies Objection to CRIM's Claim Two
DETROIT WORLD: Court Allows Cash Collateral Use Until May 3
DON & SON EXCAVATING: Seeks to Hire Susan M. Gray as Legal Counsel
EAGLE RANCH: Seeks to Hire United Country American as Broker
ENFRAGEN LLC: Moody's Completes Review, Retains Ba3 Rating
ENTERPRISE DEVELOPMENT: Fitch Assigns Final 'B+' LongTerm IDR
ENTRUST ENERGY: 2nd Power Provider to Default After Texas Crisis
ESTHER CORONA: Seeks Court Approval to Use Cash Collateral
EVERGREEN DEVELOPMENT: Seeks Cash Collateral Use Until March 31
F&O SCARSDALE: Non-Insider Unsecureds Will Get 8% of Claims
FERRELLGAS PARTNERS: Seeks to Hire 'Ordinary Course' Professionals
FIELDWOOD ENERGY: Committee Hires Pachulski Stang as Counsel
FLEURDELIS HOSPITALITY: Wants Authority to Use Cash Collateral
FORUM ENERGY: Incurs Net Loss of $96.9 Million in 2020
FORUM ENERGY: Reports $33 Million Net Loss for Fourth Quarter
FRANCIS FARMS: Voluntary Chapter 11 Case Summary
FREEMAN MOBILE: May Use Bank of America's Cash Collateral
GARRISON SHORTSTOP: Seeks Cash Collateral Access Thru June 18
GATA III: Seeks to Hire Larson & Zirzow as Legal Counsel
GENESIS INVESTMENT: Hires RJ Friedman as Bankruptcy Attorney
GRACE DENTAL: Seeks Cash Collateral Access
GRASAN EQUIPMENT: Seeks to Hire Leech Tishman as Counsel
GRATITUDE TRAINING: Has Final OK on Cash Collateral Use
GREENTEC-USA INC: Auction/Sale Hearing for All Assets on April 16
GREGORY GILBERT: $1M Cash Sale of Reno Home to Averys Approved
GULF STATES TRANSPORTATION: Seeks to Hire D & R as Appraiser
HEO INC: Seeks Use of Cash Collateral
HERTZ CORP: Donlen Entities' $825M All Assets Sale to Freedom OK'd
IAA INC: Moody's Affirms Ba3 CFR & Alters Outlook to Stable
IGNITIONONE INC: Public Auction Slated for March 10
IMERYS TALC: Johnson & Johnson Blasts 'Tainted Process'
INFINERA CORP: Delays Filing of Fiscal 2020 Annual Report
INSCOPE INTERNATIONAL: April 9 Plan Confirmation Hearing Set
INTERMEDIA CLOUD: IPO Registration No Impact on Moody's B3 Rating
JADEX INC: Moody's Assigns B2 Rating to New $60MM Revolver Loan
KAISER AND ASSOCIATES: Gets Cash Collateral Access on Interim Basis
KNOTEL INC: Committee Hires Potter Anderson as Delaware Counsel
KNOTEL INC: Committee Seeks to Hire Lowenstein Sandler as Counsel
KNOTEL INC: Committee Taps FTI Consulting as Financial Advisor
KNOTEL INC: DIP Loan, Cash Collateral Access OK'd on Final Basis
KNOTEL INC: Seeks to Hire Hilco as Real Estate Consultant
LAROSE HOSPITALITY: Seeks Cash Collateral Use
LESLIE'S POOLMART: Moody's Assigns B1 Rating to New Secured Loan
LIQUID TECH: S&P Assigns 'B-' Issuer Credit Rating on Refinancing
LONGHORN JUNCTION: Plan to Pay Unsecureds in Full With 5% Interest
MACY RETAIL: Fitch Rates New 8-Yr. $500MM Unsec. Notes 'BB'
MAIN STREET INVESTMENTS II: Seeks to Hire Corey B. Beck as Counsel
MALLINCKRODT PLC: Court Holds Motion to Sever in Abeyance
MALLINCKRODT PLC: Paul Weiss, LRC Update List of Noteholders
MAPLE MANAGEMENT: Granted Use of Cash Collateral Thru March 31
MAPLE MANAGEMENT: Seeks to Hire Weissberg and Associates as Counsel
MARSHALL SPIEGEL: U.S. Trustee Appoints Creditors' Committee
MERCY HOSPITAL: Trinity Agrees to Sell Chicago Hospital to Insight
MERCY HOSPITAL: U.S. Trustee Appoints Creditors' Committee
MICROVISION INC: Seval Oz Joins Board of Directors
ML COUNTRY CLUB: Case Summary & 7 Unsecured Creditors
MOTELS OF SUGAR: U.S. Trustee Unable to Appoint Committee
MOUNT ETNA PARTNERS: Seeks to Hire Collins Webster as Counsel
MURPHY OIL: Fitch Assigns BB+ Rating on 7-Yr. Sr. Unsecured Notes
NEPHROS INC: Incurs $4.5 Million Net Loss in 2020
NORTHWEST CAPITAL: Allowed to Use Cash Collateral on Interim Basis
OCEANVIEW MOTEL: Allowed to Use Cash Collateral Through June 30
OLYMPUS DEVELOPMENT: March 23 Hearing on Sale of Nashville Property
OMEROS CORP: Widens Net Loss to $138.1 Million in 2020
OWENS & MINOR: Fitch Raises LongTerm IDRs to 'BB-'
PADCO ENERGY: Owner Ray Carr Indicted for Bankruptcy Fraud
PAPER SOURCE: Wants DIP Financing, Cash Collateral Use
PARK RIVER: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
PBS BRAND: Hires B. Riley, Appoints Mark Shapiro as Co-CRO
PEELED INC: Case Summary & 20 Largest Unsecured Creditors
PERFORMANCE AIRCRAFT: Hires Chuhak & Tecson as Special Counsel
PG&E CORP: Securities Plaintiffs Have Until Mar. 9 to File Brief
PRA HEALTH: S&P Places 'BB' ICR On Watch Developing
PROFESSIONAL FINANCIAL: Affiliate Gets OK to Hire Real Estate Agent
QUALITY PERFORATING: Seeks to Hire Joseph M. Alu as Accountant
R. INVESTMENTS: Voluntary Chapter 11 Case Summary
ROOSEVELT UNIVERSITY: Moody's Affirms B1 on $35MM Series 2007 Bonds
SANCHEZ TRUCKING: Seeks Cash Collateral Access
SANTA CLARITA: Plans to Sell Whittaker-Bermite Site to Prologis
SCIENTIFIC GAMES: Widens Net Loss to $548 Million in 2020
SILVERLIGHT BUSINESS: Files Emergency Bid to Use Cash Collateral
SILVERLIGHT BUSINESS: Seeks to Hire Benjamin Martin as Counsel
SLIM DOLLAR: Asks to Extend Plan & Disclosures Deadline by 1 Month
SPHERATURE INVESTMENTS: Committee Seeks to Hire Financial Advisor
SPHERATURE INVESTMENTS: Committee Taps Pachulski Stang as Counsel
STA TRAVEL: Case Summary & 20 Largest Unsecured Creditors
SUNDIVE COMMODITY: Seeks to Hire Claro Group as Financial Advisor
T&R SERVICE: Seeks to Hire McGinnis & Company as Accountant
TK SKOKIE: Asks Court for Add'l 120-Day Extension of Plan Deadline
TOLL BROTHERS: Moody's Alters Outlook on Ba1 CFR to Positive
TOWER HEALTH: Fitch Lowers LongTerm IDR to 'B+'
TOWN SPORTS: NY Attorney General Resolves Covid Gym Fees Suit
TRANQUILITY GROUP: Seeks to Hire Berman DeLeve as Legal Counsel
TRANSOCEAN LTD: Incurs $568 Million Net Loss in 2020
TRIDENT BRANDS: Delays Filing of 2020 Annual Report
UNITI GROUP: Delays Filing of 2020 Annual Report
UNIVERSITY OF THE ARTS: Fitch Lowers Issuer Default Rating to BB
US GLOVE: Seeks to Hire Emory & Co as Valuation Consultant
USIC HOLDINGS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
VALARIS PLC: Court Approves $7-Billion Debt-for-Equity Plan
VBI VACCINES: Incurs $46.2 Million Net Loss in 2020
VISTRA CORP: S&P Places 'BB+' ICR on CreditWatch Negative
VIZIV TECHNOLOGIES: Seeks to Hire Stout Risius as Investment Banker
WC 4TH AND COLORADO: March 31 Plan Confirmation Hearing Set
WC 8120 RESEARCH: Unsecured Creditors Owed $74,967 to Recover 100%
WILLCO X DEVELOPMENT: Disclosures Deadline Extended to March 29
X-BUILT LLC: Seeks to Hire Century 21 as Realtor
YOUFIT HEALTH: Wins May 8 Plan Exclusivity Extension
YUM! BRANDS: Moody's Affirms Ba2 CFR & Alters Outlook to Stable
ZENITH ENERGY: Fitch Withdraws B- LongTerm Issuer Default Rating
[*] One-Year Extension of Subchapter V's $7.5M Debt Ceiling Pushed
*********
1 BIG RED: Wants Authority to Use Cash Collateral
-------------------------------------------------
1 Big Red, LLC asks the U.S. Bankruptcy Court for the District of
Kansas for authorization to use cash collateral.
The Debtor buys and sells real estate and has a principal location
at 440 E. 63rd Street, Kansas City, Missouri. At the time of the
filing, the Debtor had real estate valued at approximately
$3,500,000.
The Debtor is indebted to the U.S. Small Business Association,
which is secured by assets of the Debtor.
The Debtor is also indebted to these entities for mortgages on the
specified properties:
Anchor Loans - 2994 W. 118th Terr., Leawood, Kansas
Cherokee Investments - 3901-3923 Linwood Blvd, Kansas City,
Missouri
Lima One Capital - 4812 W. 69th Terr., Prairie Village,
Kansas
Peerstreet - 7410 Sni A Bar Road, Kansas City, Missouri
Peerstreet - 411 W. 46th Terr, Unit 104, Kansas City,
Missouri
Taylor Strategic - 3901 – 3923 Linwood Blvd., Kansas City,
Missouri
Taylor Strategic also has a second mortgage on 3901 – 3923
Linwood Blvd., Kansas City, Missouri.
The Debtor relates that while it has not fully analyzed the SBA's
and the Mortgagors' loan documents, the Debtor believes that the
SBA and Mortgagors may hold a lien in the Debtor’s assets.
The Debtor proposes providing the SBA and Mortgagors with
replacement liens in post-petition accounts receivable in an amount
equal to but not to exceed the cash collateral used and to the
extent that use of cash collateral results in any decrease in the
aggregate value of the SBA’s and Mortgagors liens on Debtor’s
property on the Petition Date. The Debtor asserts that this
post-petition grant of a security interest in accounts receivable
will provide adequate protection to SBA and Mortgagors.
"Debtor is proposing to use the cash collateral to pay the
insurance premiums and utilities and maintenance on the real
properties. Given that the current cash flow is only $1,000.00,
the Debtor should be allowed to use all of the current cash
collateral up to $5,000.00 a month," the Debtor tells the Court.
A full-text copy of the Motion, dated March 2, 2021, is available
for free at https://tinyurl.com/43r8vf6a from PacerMonitor.com.
About 1 Big Red
1 Big Red, LLC, a Kansas City, Missouri-based company primarily
engaged in activities related to real estate, sought Chapter 11
protection (Bankr. D. Kan. Case No. 21-20044) on Jan. 15, 2021.
Sean Tarpenning, chief executive officer, signed the petition. The
Debtor was estimated to have assets of $3,500,000 and liabilities
of $3,094,099 as of the bankruptcy filing. Judge Robert D. Berger
oversees the case. Evans & Mullinix, PA serves as the Debtor's
legal counsel.
2018 BLUE ISLAND: $15.1M Sale of All Assets to Kinzie Approved
--------------------------------------------------------------
Judge Jack B. Schmetterer of the U.S. Bankruptcy Court for the
Northern District of Illinois authorized 2018 Blue Island, LLC's
sale of substantially all assets to Kinzie Assets, LLC for $15.088
million.
The sale is free and clear of all Liabilities and Encumbrances.
Notwithstanding the foregoing, the Property will be sold subject
only to the Permitted Exceptions, and the Debtor will pay all
outstanding or sold real property taxes at closing. Except for
the Carve-Out, all liens, claims, encumbrances, and interests on
the Property, including, without limitation, the asserted liens,
claims, and encumbrances of the Trustee, will attach to the
proceeds from the Sale.
Upon the Closing Date, the sale proceeds, including the Earnest
Money, less all customary closing costs, credits, and amounts to be
paid to M&M, will be deposited in the Debtor's DIP bank accounts.
The Debtor will cooperate in all aspects to ensure a timely closing
of the Sale and promptly turn over possession, custody, and control
of the Property to Purchaser on the Closing Date, including,
without limitation, all documents, books and records, and leases
related to the Property.
At Closing, pursuant to 11 U.S.C. Section 328, and in accordance
with the terms of the M&M Order, M&M will be paid fees in the
amount of $490,360 and reimbursement of costs in the amount of
$4,205.76. The M&M Commission will be free and clear of all liens,
claims amend paid, at Closing, without further order of the Court.
Upon the Closing Date, the sale proceeds, including the Earnest
Money, less all customary closing costs and credits, will be
deposited in the Debtor's DIP bank account. No proceeds of the
Sale will be distributed until an order of the Court. The U.S.
Trustee Quarterly Fees may be paid without further order of the
Court.
The Debtor will promptly turnover possession, custody, and control
of the Property to Purchaser on the Closing Date, including,
without limitation, all documents, books and records, and leases
related to the Property.
The automatic stay of section 362(a) of the Bankruptcy Code will
not apply to and otherwise will not prevent the exercise or
performance by any party of its rights or obligations under the
Agreement, including, without limitation, with respect to any cash
held in escrow pursuant to the provisions thereof.
The Order will take effect immediately, be immediately enforceable
and its provisions will be self-executing. This Order will not be
stayed pursuant to Bankruptcy Rules 6004(g), 6006(d), 7062, or
otherwise. The Debtor is authorized to close the Sale of the
Property to the Purchaser immediately upon the entry of the Order
pursuant to the terms of the Agreement.
A copy of the Agreement is available at
https://tinyurl.com/2k8rbx7r from PacerMonitor.com free of charge.
About 2018 Blue Island LLC
2018 Blue Island, LLC sought Chapter 11 protection (Bankr. N.D.
Ill. Case No. 20-21563) on Dec. 15, 2020. The case is assigned to
Judge Jacqueline P. Cox.
The Debtor estimated assets and liabilities in the range of $10
million to $50 million.
The Debtor tapped
Kevin H. Morse, Esq., at Clark Hill PLC as counsel.
The petition was signed by Andrew Belew, president, Better Housing
Foundation, Inc., as manager.
315 PARK STREET: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: 315 Park Street, LLC
3780 Mystic Valley Park, Unit 311
Medford, MA 02155
Business Description: 315 Park Street, LLC is a Single Asset Real
Estate debtor (as defined in 11 U.S.C.
Section 101(51B)).
Chapter 11 Petition Date: March 4, 2021
Court: United States Bankruptcy Court
District of Massachusetts
Case No.: 21-10279
Debtor's Counsel: Alex R. Hess, Esq.
ALEX R. HESS LAW GROUP
245 First Street, 18th Floor
Riverview II
Cambridge, MA 02142
Tel: 610-730-9472
E-mail: Ahess@arhlawgroup.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Gina Strauss, manager, agent.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/FD6A6NA/315_PARK_STREET_LLC__mabke-21-10279__0001.0.pdf?mcid=tGE4TAMA
595 BROADWAY: Voluntary Chapter 11 Case Summary
-----------------------------------------------
Debtor: 595 Broadway LLC
20 Wheeler Street, Apt 2
Somerville, MA 02145
Business Description: 595 Broadway LLC is a Single Asset Real
Estate debtor (as defined in 11 U.S.C.
Section 101(51B)).
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
District of Massachusets
Case No.: 21-10272
Debtor's Counsel: Jordan Shapiro, Esq.
SHAPIRO & HENDER
105 Salem Street
Malden, MA 02148
Tel: 781-324-5200
Fax: 781-322-4791
E-mail: jslawma@aol.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by David Reis, manager.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/DUISFQY/595_Broadway_LLC__mabke-21-10272__0001.0.pdf?mcid=tGE4TAMA
60 91ST STREET: Trustee's Liquidating Plan Confirmed by Judge
-------------------------------------------------------------
Judge Shelley C. Chapman has entered findings of fact, conclusions
of law, and order confirming the Chapter 11 Trustee's First Amended
Chapter 11 Plan for Liquidation of debtor 60 91st Street Corp.
The Plan was the product of extensive negotiations conducted at
arm's length among the Chapter 11 Trustee, on behalf of the Debtor,
the Lender, and the US Trustee. Accordingly, the requirements of
Section 1129(a)(3) of the Bankruptcy Code are satisfied.
The Chapter 11 Trustee has advanced sound business justifications
for seeking to sell the Assets under the Sale Terms as demonstrated
at the Sale Hearing, and the Sale under those Sale Terms is a
reasonable exercise of the Chapter 11 Trustee's business judgment.
The Purchase Agreement was negotiated, proposed and entered into by
the Chapter 11 Trustee and the Purchaser without collusion, in good
faith, and from arm's-length bargaining positions. Neither the
Chapter 11 Trustee nor the Purchaser has engaged in any conduct
that would cause or permit the Purchaser Agreement to be voided
under Section 363(n) of the Bankruptcy Code.
The Chapter 11 Trustee has proposed the Plan, and all other
documents necessary or appropriate to effectuate the Plan, in good
faith with the legitimate and honest purpose of maximizing the
value of the Debtor's Estate, and not by any means forbidden by
law. In determining that the Plan has been proposed in good faith,
the Court has examined the totality of the circumstances
surrounding the filing the chapter 11 case and the formulation of
the Plan.
A full-text copy of the Plan Confirmation Order dated Feb. 25,
2021, is available at https://bit.ly/3qhj1Oo from PacerMonitor.com
at no charge.
Counsel for Heidi J. Sorvino, as the Chapter 1 Trustee:
James C. Vandermark
WHITE AND WILLIAMS LLP
7 Times Square, Suite 2900
New York, NY 10036
Tel: (212) 244-9500
E-mail: vandermarkj@whiteandwilliams.com
- and -
Amy E. Vulpio
WHITE AND WILLIAMS LLP
1650 Market Street, Suite 1800
Philadelphia, PA 19103
Tel: (215) 864-7000
E-mail: vulpioa@whiteandwilliams.com
About 60 91st Street Corp.
60 91st Street Corp. owned the property at 60 West 91st St., New
York, New York, 10024.
To stop foreclosure, 60 91st Street Corp. sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No.
20-10338) on Feb. 4, 2020, listing under $1 million in both assets
and liabilities. The Debtor has tapped Tenille Lewis, Esq., as its
bankruptcy attorney.
Heidi Sorvino is Debtor's Chapter 11 trustee. The Trustee is
represented by White and Williams LLP.
ACCO BRANDS: Fitch Assigns BB Rating on New $650MM Unsec. Notes
---------------------------------------------------------------
Fitch Ratings has assigned a 'BB'/'RR4' rating to ACCO Brands
Corporation's proposed $650 million of senior unsecured notes. The
notes will be issued by ACCO Brands Corporation and will rank pari
passu with all existing and future senior indebtedness of the
company. Proceeds of the issuance will be used to refinance the
company's existing $375 million of 5.25% unsecured notes due 2024
and repay a portion of the drawings under the company's revolving
credit facility as well as pay related fees and expenses.
At Dec. 31, 2020, the company had $332.6 million drawn on its
revolver following its purchase of PowerA for upfront consideration
of $340 million plus transaction expenses or around 7x projected
EBITDA. Fitch estimates gross leverage (gross debt/EBITDA), pro
forma for the transaction, of approximately 4.6x, modestly above
Fitch's downgrade sensitivity of 4.0x. However, assuming a partial
rebound in the base business in 2021 and FCF deployment toward debt
reduction, gross leverage could trend toward the mid-3x in 2021.
ACCO's 'BB'/Stable ratings reflect the company's historically
consistent FCF and reasonable gross leverage, which trended around
3x prior to operating challenges in 2020 related to the coronavirus
pandemic. The ratings are constrained by secular challenges in the
office products industry and channel shifts within the company's
customer mix, as well as the risk of further debt-financed
acquisitions into faster-growing geographies and product
categories. The company has taken actions over the last few years
to manage costs given pressures on U.S. organic growth and has
executed well on diversifying its customer base toward
higher-growth channels, as well as international markets. The
acquisition of PowerA, which sells accessories for the fast-growing
video gaming market, is an example of ACCO's good diversification
strategy.
The impact of the pandemic, including more remote work and remote
education activity as well as reduced corporate spending on ACCO's
product assortment, drove 2020 EBITDA to around $200 million from
$290 million in 2019. Fitch expects a modest rebound toward around
$230 million in 2021, with total EBITDA projected around $280
million including a $50 million contribution from the PowerA
acquisition. Despite near-term pressures, Fitch expects FCF after
dividends of at least $100 million annually, with FCF expected to
be deployed toward debt reduction.
KEY RATING DRIVERS
PowerA Acquisition: In December 2020, ACCO closed on the
acquisition of PowerA, a manufacturer of video game accessories,
including controllers, audio peripherals and storage accessories,
from Bensussen, Deutsche & Associates. The company has licensee
arrangements with well-known gaming brands like Nintendo, Xbox and
Playstation. The approximately $340 million purchase price plus
transaction expenses and working capital investments represents a
7x multiple on estimated 2020 EBITDA of $50 million; revenue in
2020 is estimated in the $200 million range. Assuming some recovery
in ACCO's existing business in 2021, PowerA would represent around
10% and close to 20% of pro forma revenue and EBITDA, respectively.
ACCO has not projected operating synergies as PowerA is expected to
operate mostly independently from the incumbent business.
Fitch views the acquisition positively as it provides ACCO some
business diversification into a category that is expected to
provide good growth. Per ACCO, PowerA's revenue has grown at a 40%
CAGR since 2015 and is estimated to have grown around 23% in 2020.
Assuming around 10% growth annually, PowerA could support ACCO's
top-line expansion by approximately 1% annually. Around 75% of
PowerA's revenue is generated in the U.S., compared with around 43%
for ACCO's existing business in North America, and could therefore
modestly increase ACCO's North America presence. The multiple of 7x
projected 2020 EBITDA appears reasonable given the company's
historical growth trajectory.
ACCO financed the PowerA acquisition largely through a draw on its
revolver, which it plans to partly pay down with the proceeds of
the current bond offering. Fitch estimates pro forma gross leverage
at the end of 2020 at approximately 4.6x, assuming approximately
$200 million of EBITDA in the base business and an estimated $50
million EBITDA contribution from PowerA. In 2021, leverage could
improve toward the mid-3x range as base business EBITDA recovers
from pandemic-related challenges and FCF is deployed toward debt
reduction. ACCO has suspended share buybacks and Fitch believes the
company could generate around $120 million in annual FCF beginning
2021, after dividends of approximately $25 million or $0.26 per
share.
Coronavirus Pandemic: ACCO has seen a significant decline in demand
for its products in 2020 due to remote work and education
arrangements and potential corporate spending pullbacks as
companies reduce operating expenses. Revenue in 2020 declined
approximately 15% to $1.66 billion from $1.96 billion in 2019. The
company has shown good cost control, with operating expenses
projected down approximately 12% in 2020. However, gross margins
declined over 260bps for the full year on unfavorable product mix,
yielding a 30% EBITDA decline to $198 million from $291 million in
2019. FCF in 2020 was around $100 million, down from nearly $150
million in 2019 due to EBITDA declines, somewhat mitigated by lower
cash taxes and capex.
Fitch expects ACCO's base business to rebound somewhat in 2021, as
remote work and education arrangements subside. However, ongoing
economic challenges could still cause ACCO's commercial customers
to limit spending on categories like office and business products.
In addition, acceptance of remote work arrangements longer term
could limit ACCO's ability to fully rebound to pre-2020 revenue
levels. Fitch projects ACCO's standalone sales could improve around
6% to $1.74 billion, with EBITDA rebounding toward $230 million.
Revenue and EBITDA growth could be flattish to modestly positive in
2022. FCF could remain around $120 million annually as EBITDA
growth is mitigated by higher taxes and capex.
Early in 2020 the company suspended share buybacks and indicated
its intent to use FCF toward debt reduction. On a standalone basis,
Fitch estimates ACCO's leverage to be around 4.0x in 2020 relative
to the 3x average over the past four years given EBITDA declines.
Limited Organic Industry Growth: The office products industry is
experiencing a slow secular decline in mature markets due to a
shift toward digital technologies, partially offset by growth in
emerging markets. ACCO is also managing a continued shift in
channel revenue away from traditional office product superstores
such as Staples and Office Depot, and traditional office supply
wholesalers towards discounters, e-commerce retailers and the
independent channel. These customers have also increased their
direct sourcing efforts to grow private label penetration, creating
more competition for ACCO's largely branded product portfolio.
While ACCO benefits from its market-leading position, the company
has been affected by industry pressures. ACCO's U.S. revenue (43.0%
of net revenue in 2019) declined 1.5% on a four-year CAGR basis in
2015-2019; operating income declines were modestly higher at 3.6%.
Fitch expects flattish to modestly negative growth will continue
over the medium term, after the near-term impacts of the
coronavirus pandemic.
ACCO's international revenue penetration increased to 57% in 2019
compared with 40% in 2015, largely due to acquisitions. Fitch
expects modest organic growth in ACCO's international portfolio,
given a more favorable secular backdrop coupled with ACCO's ability
to expand its geographic and product reach from its current revenue
base.
ACCO's customer concentration has somewhat eased in recent years,
with ACCO's top 10 customers accounting for 42% of revenue in 2019
compared with 56% in 2016. The decline is due to both retail market
share shifts and ACCO's proactive efforts to diversify its
portfolio through M&A activity. Fitch expects ACCO to continue to
seek opportunities to reduce its reliance on traditional office
products markets and channels. The proposed PowerA acquisition is
an example of these efforts.
Acquisitions Drive Growth and Diversification: Given secular
challenges in some of ACCO's primary categories and markets, the
company has acquired several businesses over the last few years to
capitalize on growth in new markets and faster-growing adjacent
categories. The acquisitions have contributed to ACCO's revenue
growth, margin expansion due to greater scale and improved
geographic and customer diversity. The purchase of PowerA is an
example of ACCO adding a higher-growth category -- video gaming --
to its business portfolio.
In August 2019, ACCO acquired Foroni, a Brazilian manufacturer and
marketer of notebooks and other paper products for schools and
offices, for $50 million including the assumption of debt. In July
2018, ACCO purchased GOBA, a producer of school and craft products
sold under the Barrilito brand in Mexico, for $37 million. These
transactions were financed with cash on hand. In February 2017,
ACCO acquired Esselte, a predominantly European-focused seller of
office machines and organizational products, for $333 million.
Annual cost savings from this acquisition exceeded $30 million and
this business line contributed $50 million of incremental FCF (of
the consolidated total of $147 million) in 2019. In May 2016, ACCO
closed the acquisition of the remaining 50% of Pelikan Artline Pty
Limited, its joint venture company serving the Australian and New
Zealand markets, as well as a buyout of a minority interest in a
subsidiary of the joint venture.
Strong Expense and Balance Sheet Management: ACCO maintains a tight
focus on its cost structure, which has enabled the company to
improve profitability in a difficult operating environment. In the
U.S., the company continues to reallocate sales efforts to
higher-margin independent retailers (who tend to sell
higher-price-point, higher-margin products but have a higher cost
to serve as well) and away from the declining, lower-margin office
superstore channel. Meanwhile, the company's selling, general &
administrative expense margin has remained relatively steady in the
low-19% range in recent years despite sluggish organic growth and
fixed cost inflation. The company's ongoing focus on cost
reductions has protected EBITDA in the face of its top-line
challenges.
ACCO's good balance sheet management is a positive factor in its
credit profile. While the company occasionally makes debt-financed
acquisitions to optimize its portfolio, the company has
demonstrated a willingness to manage its leverage through debt
reduction following a transaction, in line with its public
commitment to maintain net debt to EBITDA around 2.5x (similar on a
gross leverage basis given minimal cash balances). Over the four
years prior to 2020, gross leverage has trended at 3x, with
approximately $100 million of debt reduction in 2018/2019 following
the debt-financed Esselte acquisition in 2017.
DERIVATION SUMMARY
ACCO's 'BB'/Stable rating reflects the company's good position in
the global office and business products industry. The ratings are
constrained by secular challenges in the office products industry
in North America, Europe and Australia. The company has taken steps
over the last few years to manage costs given pressures on U.S.
organic growth and has executed well on diversifying its customer
base toward higher-growth, higher-margin channels in North America
as well as acquisitions in better-performing categories and
international markets. The rating also reflects ACCO's good balance
sheet management, which has led to gross leverage trending around
3.0x over time. Including a full year contribution from the PowerA
acquisition, Fitch projects 2021 gross leverage could trend in the
mid-3x, below Fitch's downgrade sensitivity of 4.0x.
ACCO is similarly rated to Spectrum Brands, Inc. (BB/Stable),
Central Garden and Pet Company (BB/Stable), Tempur Sealy
International, Inc. (BB/Stable), and Levi Strauss & Co.
(BB/Negative).
Spectrum Brands, Inc.'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) at or below 3.5x, which equates to a similar gross
debt/EBITDA target assuming around $150 million in cash. The rating
also reflects expectations for modest organic revenue growth over
the long term, reasonable profitability with an EBITDA margin near
15% and positive FCF.
These positive factors are offset by recent profit margin pressures
across segments and the company's acquisitive posture, which could
cause temporary leverage spikes following a transaction. Finally,
the rating considers expected near-term business challenges
relating to the impact of the coronavirus on Spectrum's
manufacturing capabilities, and the impact of a consumer recession
on Spectrum's operating segments like hardware and home
improvement.
Central Garden & Pet Company's 'BB'/Stable 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. Gross leverage (total debt/EBITDA) is expected to
trend in the 3.0x to 3.5x range, up from 2.6x in fiscal 2020 (ended
September) as the company manages leverage in this range over
time.
Tempur Sealy International, Inc's 'BB'/Stable ratings reflects its
leading market position as a vertically integrated global bedding
company with well-known, established brands across a wide variety
of price points offered through broad distribution channels. The
ratings are tempered by the single product focus in a highly
competitive, fragmented market that is exposed to potential
pullbacks in discretionary consumer spending during periods of
macroeconomic weakness. In addition, the mattress industry has been
susceptible to periods of irrational pricing, secular shifts in
consumer preferences and bankruptcies in both the supplier and
distribution side. Over time, Fitch expects the company to manage
gross leverage within its targeted range of less than 3x, diverting
FCF toward shareholder returns and opportunistic acquisitions.
Levi's 'BB' IDR reflects the significant business interruption
resulting from the coronavirus pandemic and changes in consumer
behavior, which have materially reduced sales of apparel, while the
Negative Outlook reflects uncertainty regarding the timing and
magnitude of a recovery in operating momentum. Adjusted leverage
increased to approximately 6.0x in fiscal 2020 (ended November
2020) from 3.1x in fiscal 2019 as EBITDA declined to approximately
$360 million from approximately $750 million in fiscal 2019 on a
nearly 23% sales decline to $4.45 billion. Adjusted leverage is
expected to be in the high-3.0x in fiscal 2021, assuming sales and
EBITDA declines of around 12% from fiscal 2019 levels. Increased
confidence in Levi's ability to achieve Fitch's projections and
bring adjusted leverage to under 4x would lead to a stabilization
in Fitch's Ratings Outlook.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Following a decline of around 15% in 2020, organic revenue
could expand around 6% to $1.74 billion in 2021 as remote work
and education arrangements ease. Including the contribution
from the PowerA acquisition, total 2021 revenue could be
around $2 billion. Organic revenue growth could be in the low
single digits in 2022 as ACCO is expected to continue to
benefit from improving macroeconomic conditions;
-- EBITDA margins, which declined from approximately 15% in 2019
to 12% in 2020, could rebound to the low-to-mid 14% range on
the rebound in sales and the margin accretive impact of the
PowerA acquisition. In 2021, legacy ACCO EBITDA could expand
to around $230 million as sales rebound, with PowerA adding
approximately $50 million in EBITDA. EBITDA in 2022 could grow
modestly alongside top-line expansion;
-- FCF after dividends, which was $147 million in 2019, declined
to around $100 million in 2020 as the drop in EBITDA was only
partially mitigated by lower cash taxes and capex. FCF is
projected to be in the $120 million range beginning 2021, as
EBITDA growth is mitigated by higher taxes and capex;
-- The acquisition of PowerA is expected to have a modestly
positive impact on ACCO's FCF in 2021 and 2022, in the range
of $10 million to $15 million annually. Fitch expects ACCO
will deploy FCF toward debt reduction but could resume its
share buyback program at some point in 2021. Dividends are
projected at around $25 million, or approximately $0.26 per
share, in line with ACCO's history;
-- Gross debt/EBITDA, which averaged around 3x over the past four
years, increased to the 4x area in 2020 excluding the revolver
draw at year end to fund the PowerA acquisition. Pro forma for
the acquisition, leverage is approximately 4.6x, assuming a
$50 million EBITDA contribution. Gross leverage could return
to the mid-3x by 2021 assuming an EBITDA rebound at the legacy
business and some FCF deployment toward debt reduction.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade beyond 'BB' is possible if the company makes
favorable acquisitions that change its business mix toward
less cyclical or higher growth prospects while maintaining
total debt/EBITDA below 3x. However, an upgrade is not
anticipated in the near term given existing business model and
industry issues.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Sustained gross leverage at or above 4x, generating annual FCF
of less than $25 million, or a large debt-financed acquisition
without a concrete plan to reduce gross leverage to 4x in a
24-month time frame could lead to a negative rating action;
-- A sustained acceleration of revenue declines in North America
relative to the modestly negative trend prior to 2020.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Liquidity is ample, and is supported by the
company's consistent FCF generation, albeit seasonally skewed to
the second half of the year. As of Dec. 31, 2020, ACCO had $36.6
million of cash on hand and $257 million of revolver availability,
net of $10.6 million outstanding LCs and $333 million of borrowings
under its $600 million revolver. Assuming the bond deal is executed
as proposed, Fitch expects the proforma revolver draw to decline to
$78 million resulting in availability of $512 million.
ACCO had $1,137 million of debt outstanding as of Dec. 31, 2020,
consisting primarily of a $287 million euro senior secured term
loan A, $93 million outstanding on the U.S. dollar senior secured
term loan A, $43 million under the Australian dollar senior secured
term loan A and $333 million of revolver borrowings (all of which
mature in May 2024), and $375.0 million of unsecured notes due
December 2024. Annual amortization across ACCO's capital structure
is approximately $30 million annually through 2023. Assuming the
bond deal is executed as proposed, Fitch expects the $375 million
of notes due December 2024 to be fully retired with the $650
million of new bonds expected to mature in 2029.
Financial covenants include maintenance of funded indebtedness (net
of cash) to EBITDA less than 3.75x (increasing to 4.25x for up to
three quarters following an acquisition) and interest coverage
(EBITDA divided by interest expense) greater than 3.0x.
In conjunction with the PowerA acquisition, ACCO amended its credit
facility to increase permitted acquisition pro forma leverage to
4.5x from 3.5x; the company also increased its maximum net leverage
covenant by 0.5x through the second quarter of 2022. Consequently,
maximum net leverage would be 4.75x at the end of 2020, 5.25x at
the end of the first and second quarters of 2021, 4.75x at the end
of the third quarter of 2021 and 4.25 at the end of 2021. The
maximum net leverage would step down to 3.75x at the end of the
third quarter of 2022.
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 rates ACCO's
first-lien secured debt one notch above the IDR, reflecting
outstanding recovery prospects (91%-100%) given default (RR1).
Unsecured debt will typically achieve average recovery, and thus
was assigned an 'RR4', or 31%-50% recovery.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical financials have been adjusted for stock-based
compensation, transaction expenses and integration expenses.
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.
ACER THERAPEUTICS: Incurs $22.9 Million Net Loss in 2020
--------------------------------------------------------
Acer Therapeutics Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$22.88 million for the year ended Dec. 31, 2020, compared to a net
loss of $29.42 million for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $14.61 million in total
assets, $6.39 million in total liabilities, and $8.22 million in
total stockholders' equity.
Cash and cash equivalents were $5.8 million as of Dec. 31, 2020,
compared to $12.1 million as of Dec. 31, 2019. Acer believes its
cash and cash equivalents available as of Dec. 31, 2020, combined
with an additional $3.2 million of net proceeds subsequently
received from the sales of common stock under its ATM facility and
through its equity line purchase agreement with Lincoln Park
Capital, along with the $1.0 million nonrefundable payment and $4.0
million secured loan received from Relief Therapeutics following
the signing of the ACER-001 Option Agreement, will be sufficient to
fund its operations into the third quarter of 2021.
Net loss for the three months ended Dec. 31, 2020 was $6.2 million,
or $0.50 net loss per share (basic and diluted), compared to a net
loss of $5.2 million, or $0.51 net loss per share (basic and
diluted), for the three months ended Dec. 31, 2019.
"In spite of the challenges presented by a global pandemic in 2020,
we continued to advance our existing programs while expanding our
pipeline," Chris Schelling, chief executive officer and founder of
Acer, said. "As a result, we anticipate a number of key milestones
next quarter, including a proposed ACER-001 pre-NDA meeting with
FDA, continuing to work toward a potential ACER-001 collaboration
and license agreement with Relief Therapeutics pursuant to the
existing option agreement between the companies, and a Type B
meeting with the FDA to discuss a possible path forward for EDSIVO.
We are also working toward initiation of a Phase 2 clinical trial
of osanetant in BRCA-positive patients with induced vasomotor
symptoms in the fourth quarter of 2021, subject to successful IND
filing and additional capital, and continuing to seek non-dilutive
capital to advance emetine development."
BDO USA, LLP, based in Boston, Massachusetts, issued a "going
concern" qualification in its report dated March 1, 2021, citing
that the Company has recurring losses and negative cash flows from
operations that raise substantial doubt about the Company's ability
to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1069308/000156459021009909/acer-10k_20201231.htm
Acer Therapeutics
Acer -- http://www.acertx.com-- is a pharmaceutical company
focused on the acquisition, development and commercialization of
therapies for serious rare and life-threatening diseases with
significant unmet medical needs. Acer's pipeline includes four
clinical-stage candidates: emetine hydrochloride for the treatment
of patients with COVID-19; EDSIVO (celiprolol) for the treatment of
vascular Ehlers-Danlos syndrome (vEDS) in patients with a confirmed
type III collagen (COL3A1) mutation; ACER-001 (a taste-masked,
immediate release formulation of sodium phenylbutyrate) for the
treatment of various inborn errors of metabolism, including urea
cycle disorders (UCDs) and Maple Syrup Urine Disease (MSUD); and
osanetant for the treatment of induced Vasomotor Symptoms (iVMS)
where Hormone Replacement Therapy (HRT) is likely contraindicated.
Each of Acer's product candidates is believed to present a
comparatively de-risked profile, having one or more of a favorable
safety profile, clinical proof-of-concept data, mechanistic
differentiation and/or accelerated paths for development through
specific programs and procedures established by the FDA.
AE HOTEL: Seeks Access to CBB's Cash Collateral
-----------------------------------------------
AE Hotel, LLC asks the U.S. Bankruptcy Court for the Western
District of Texas, Midland Division, for authority to use cash
collateral on an interim basis.
The Debtor is in immediate need to use the cash collateral of
Commonwealth Business Bank to maintain operations of the business.
The Debtors business consists of the ownership and operation of a
71 room hotel in Andrews Texas. As a result of a slow down in
business, and some mismanagement from a former operator of the
hotel the Debtor sought bankruptcy protection.
CBB currently asserts a first lien position, on among other things
the accounts receivable and inventory of Debtor. The amount owed
to CBB is approximately $4.5 million.
The Debtor is willing to provide CBB with replacement liens
pursuant to 11 U.S.C. section 552.
A copy of the motion and the Debtor's monthly operational expenses
is available for free at https://bit.ly/3c4Bf0y from
PacerMonitor.com.
About AE Hotel, LLC
AE Hotel, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Tex. Case No. 21-70025) on March 2,
2021. In the petition signed by Wasim Beshay, authorized
representative, the Debtor disclosed up to $50,000 in assets and up
to $10 million in liabilities.
Eric A. Liepins, Esq. is the Debtor's counsel.
AGILE THERAPEUTICS: Widens Net Loss to $51.8 Million in 2020
------------------------------------------------------------
Agile Therapeutics, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$51.85 million on $749,000 of net revenues for the year ended Dec.
31, 2020, compared to a net loss of $18.61 million on zero revenue
for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $73.06 million in total
assets, $23.73 million in total liabilities, and $49.33 million in
total stockholders' equity.
Iselin, New Jersey-based Ernst & Young LLP issued a "going concern"
qualification in its report dated March 1, 2021, on the
consolidated financial statements for the year ended Dec. 31, 2020,
citing that
the Company has generated losses since inception, used substantial
cash in operations, anticipates it will continue to incur net
losses for the foreseeable future and requires additional capital
to fund its operating needs beyond 2021.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1261249/000155837021002163/agrx-20201231x10k.htm
About Agile
Agile Therapeutics, Inc. is a women's healthcare company dedicated
to fulfilling the unmet health needs of today's women. The Company
has remained steadfast in its commitment to innovate in women's
healthcare where there continues to be unmet needs – not only in
contraception – but also in other meaningful women's health
therapeutic areas.
AIRPORT VAN RENTAL: Gets Cash Collateral Access Thru March 19
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Central District of California,
Los Angeles Division, has authorized Airport Van Rental, Inc. to
use cash collateral on an interim basis through the close of
business on March 19, 2021.
The Debtor's use of cash collateral will be on the same terms and
conditions, and with the provision of the same adequate protection,
and with the same reservations of rights, as authorized and
approved by the Court's prior order entered January 29, 2021.
The final hearing on the matter is scheduled for March 17, 2021 at
11 a.m. Objections are due March 3, 2021.
A copy of the order is available at https://bit.ly/30aNseJ from
PacerMonitor.com.
About Airport Van Rental, Inc.
Airport Van Rental -- https://www.airportvanrental.com/ -- is a van
rental company offering short and long-term rentals for road trips,
weekend journeys, moving, and any other group outings.
Airport Van Rental and its affiliates filed their voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
C.D. Cal. Lead Case No. 20-20876) on Dec. 11, 2020. Yazdan Irani,
its president and chief executive officer, signed the petitions.
At the time of filing, Airport Van Rental disclosed between $10
million and $50 million in both assets and liabilities.
Judge Sheri Bluebond oversees the case.
The Debtors tapped Danning, Gill, Israel & Krasnoff, LLP as their
bankruptcy counsel, CSA Partners LLC as financial consultant, and
Joel Glaser, APC as litigation counsel. Kevin S. Tierney is the
Debtors' chief reorganization officer.
ALAMO DRAFTHOUSE: Case Summary & 30 Largest Unsecured Creditors
---------------------------------------------------------------
Lead Debtor: Alamo Drafthouse Cinemas Holdings, LLC
3908 Avenue B
Austin, TX 78751
Business Description: Founded in 1997, Alamo Drafthouse
Cinemas Holdings, LLC --
https://drafthouse.com --
operates and franchises movie theaters
that provide patrons a unique movie-
going experience that includes luxury
seating, food, craft beer,
wine and cocktails, seat-side food and
beverage services, collectible consumer
products, and a diverse selection of
mainstream, independent, and classic
movies. In addition to its movie
theaters, the Company operates "Mondo,"
an online and print editorial business
and a merchandising business. The
Company also hosts "Fantastic
Fest," an annual film festival held in
Austin, Texas.
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
District of Delaware
Thirty-four affiliates that concurrently filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
Alamo Drafthouse Cinemas Holdings, LLC (Lead Case) 21-10474
Alamo Aspen Grove, LLC 21-10505
Alamo Avenue B, LLC 21-10498
Alamo Cinema Group I, LP 21-10502
Alamo Cinema Group I GP, LLC 21-10501
Alamo City Foundry, LLC 21-10488
Alamo City Point, LLC 21-10490
Alamo DH Anderson Lane, LLC 21-10482
Alamo Drafthouse Cinemas, LLC 21-10475
Alamo Drafthouse Raleigh, LLC 21-10481
Alamo Lakeline, LLC 21-10506
Alamo League Investments, LTD. 21-10478
Alamo League Investments GP, LLC 21-10477
Alamo Liberty, LLC 21-10491
Alamo Mainstreet, LLC 21-10489
Alamo Marketplace, LLC 21-10493
Alamo Mission, LLC 21-10484
Alamo Mueller, LLC 21-10486
Alamo North SA, LLC 21-10497
Alamo Park North, LLC 21-10496
Alamo Ritz, LLC 21-10485
Alamo Satown, LLC 21-10492
Alamo Slaughter Lane, LTD. 21-10500
Alamo Slaughter Lane GP, LLC 21-10499
Alamo Sloans, LLC 21-10507
Alamo South Lamar, LP 21-10480
Alamo South Lamar GP, LLC 21-10479
Alamo Staten Island, LLC 21-10504
Alamo Stone Oak, LLC 21-10494
Alamo Vineland, LLC 21-10476
Alamo Westlakes, LLC 21-10495
Alamo Westminster, LLC 21-10503
Alamo Yonkers, LLC 21-10483
Mondo Tees, LLC 21-10487
Judge: Hon. Mary F. Walrath
Debtors'
Bankruptcy
Counsel: M. Blake Cleary, Esq.
Matthew B. Lunn, Esq.
Kenneth J. Enos, Esq.
Betsy L. Feldman, Esq.
Jared W. Kochenash, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
1000 N. King Street
Wilmington, Delaware 19801
Tel: (302) 571-6600
Fax: (302) 571-1253
Email: mbcleary@ycst.com
mlunn@ycst.com
kenos@ycst.com
bfeldman@ycst.com
jkochenash@ycst.com
Debtors'
Financial
Advisor: PORTAGE POINT PARTNERS
Debtors'
Investment
Banker: HOULIHAN LOKEY CAPITAL, INC.
Debtors'
Notice,
Claims,
Solicitation
& Balloting
Agent: EPIQ CORPORATE RESTRUCTURING, LLC
https://dm.epiq11.com/case/alamodrafthouse/dockets
Estimated Assets
(on a consolidated basis): $100 million to $500 million
Estimated Liabilities
(on a consolidated basis): $100 million to $500 million
The petitions were signed by Matthew Vonderahe, chief financial
officer.
A copy of Alamo Drafthouse's petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/P3Y2JOA/Alamo_Drafthouse_Cinemas_Holdings__debke-21-10474__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Summit Glory Property LLC Landlord $2,157,254
c/o Fosun Property Holdings
28 Liberty St
New York, NY 10005
Contact: Tom Costanzo
and Arsenia Carrasco
Tel: 646-779-3011
Email: tconstanzo@fosun.com
arsenia.carrasco@cbre.com
2. 30 West Pershing, LLC Landlord $1,996,625
EPR Properties
909 Walnut St
Suite 200
Kansas City, MO 64106
Contact: Johnna David
Tel: 816-472-1700
Email: johnnad@eprkc.com
3. Albee Development LLC Landlord $1,511,912
411 Theodore Fremd Ave
Suite 300
Rye, NY 10580
Contact: Chris Conlon
Tel: 914-288-8181
Email: cconlon@acadiarealy.com
4. Neon Trade Debt $1,052,084
1685 38th St
Suite 100
Boulder, CO 80301
Contact: Jessica Nickelsberg
Tel: 720-746-4844
Fax: 720-746-4870
Email: jessica@neonrated.com
5. Sloans Lake Landlord $989,144
c/o FCA Partners, LLC
300 South Tryon St
Charlotte, NC 28202
Contact: Win Kelly
Tel: 704-492-1188
Email: win.kelly@fcapartners.com
6. FHF I Lamar Union LLC Landlord $964,905
211 E 7th St
Suite 620
Austin, TX 78701
Contact: Bryan Dabbs
Tel: 512-423-6564
Email: bdabbs@bkdrealty.com
7. Gerrity Retail Management LLC Landlord $880,680
c/o Gerrity Group LLC
973 Lomas Santa Fe Dr
Solana Beach, CA 92075-2137
Contact: Rene Daniels
Tel: 858-369-7000
Email: rdaniels@gerritygroup.com
8. DDR DB Stone Oak LP Landlord $795,545
330 Enterprise Pkwy
Cleveland, OH 44122
Contact: Kevin Cohen
Tel: 404-504-6738
Email: lball@sitecenters.com
9. Mueller Aldrich Street, LLC Landlord $777,783
Mueller Central
4550 Mueller Blvd
Austin, TX 78723
Contact: Reily Gregson
Tel: 512-703-9202
512-482-0094
Email: rgregson@weitzmangroup.com
10. Westlakes 410 Investments LLC Landlord $711,448
Attn: Property Management
6907 Capital of Texas Highway North
Suite 370
Austin, TX 78731
Contact: Scott Booth
Tel: 512-637-3649
Email: sbooth@servicegroupholdings.com
11. Whitestone REIT Landlord $627,197
2600 S Gessner Rd
Suite 500
Houston, TX 77063
Contact: Matt Okmin
Tel: 512-808-7212
Fax: 713-465-8847
Email: mokmin@whitestonereit.com
12. MEP Mainstreet Operations LLC Landlord $625,188
601 E Pratt Street
6th Floor
Baltimore, MD 21202
Contact: Diane Wheeler and
Nick Benjamin
Tel: 410-752-5444
443-927-6592
Email: nbenjamin@cordish.com
13. UE Yonkers II LLC Landlord $617,246
28 Liberty St
New York, NY 10005
Contact: Scott Auster
Tel: 212-956-2556
Email: sauster@uedge.com
14. Sony Electronics Inc. Trade Debt $608,421
1 Sony Dr
Park Ridge, NJ 07656
Contact: Chris Appleton
Tel: 205-837-0226
Email: chris.appleton@sony.com
15. SVAP II Park North, LLC Landlord $488,467
302 Datura St
Suite 100
West Palm Beach, FL 33401-5481
Contact: Yolanda Mason
Tel: 210-504-2700
Email: ymason@sterlingorganization.com
16. US Foods Inc. Trade Debt $434,564
11955 E Peakview Ave
Englewooed, CO 80111-6830
Contact: Beth Gonzalez
Tel: 512-228-6226
Email: beth.gonzalez@usfoods.com
17. New Braunfels Marketplace LP Landlord $402,309
177 W Mill St
New Braunfels, TX 78130-5055
Contact: Isabel Wiggins
Tel: 830-620-7475
Email: isabel@wigginscommercial.com
18. A to Z Media, Inc. Trade Debt $402,106
243 W 30th St
6th Floor
New York, NY 10001
Contact: Lucas Jones
Tel: 212-260-0237
503-736-3261
Fax: 212-260-0631
Email: lucas@atozmedia.com
19. Hobby Properties Landlord $385,979
Kerbby LLC
515 N Blount St
Raleigh, NC 27604
Contact: John Holmes
Tel: 919-783-6141
Fax: 919-782-3321
Email: info@hobbyproperties.com
20. Workday Inc. Trade Debt $335,312
3350 Peachtre Rd NE
Suite 1000
Atlanta, GA 30326
Contact: David Bauguess
Tel: 877-967-5329
Email: david.baugess@workday.com
21. Stafford-Smith, Inc. Trade Debt $313,629
3414 S Burdick St
Kalamazoo, MI 49001
Contact: Amber Richards
Tel: 800-968-2442
512-271-6691
Email: arichards@staffordsmith.com
22. CF Austin Retail, LLC Landlord $303,057
100 Waugh Dr
Suite 600
Houston, TX 77007-6340
Contact: Graham Moore
Tel: 512-684-3800
Email: moore@aquilacommercial.com
23. City and County of Denver Tax Debt $302,212
Treasury Division
201 W Colfax Ave
Unit 1109
Denver, CO 80203
Contact: Brendan Hanlon
Tel: 720-913-9400
Email: treasinfo@denvergov.org
brendan.hanlon@denvergov.org
24. Vista Entertainment Trade Debt $273,811
Solutions USA Inc.
6300 Wilshire Blvd
Suite 940
Los Angeles, CA 90048
Contact: Craig Fisher
Tel: 215-805-7600
Email: craig.fisher@vista.co
25. WEA-WSM Trade Debt $237,553
32253 Collection Center Dr
Chicago, IL 60693-0322
Contact: Rickey Olsen
Tel: 629-203-5451
Email: richard.olsen@wmg.com
26. Camatic Seating, Inc. Trade Debt $221,552
12801 N Stemmons Fwy
Suite 903
Farmers Branch, TX 75234
Contact: Diana Frankowski
Tel: 682-503-5317
Email: diana.frankowski@camatic.com
27. Ironedge Group Trade Debt $209,503
3000 Wilcrest Dr
Suite 300
Houston, TX 77042
Contact: Ryan Lakin
Tel: 210-757-4222 x101
Email: rlakin@ironedgegroup.com
28. Ellerson Development Landlord $191,793
Corporation
1660 Huguenot Rd
Midlothian, VA 23113
Contact: Nicole Brown
Tel: 804-897-0900
Fax: 804-897-0901
Email: nbrown@edcweb.com
29. Acadia Realty Landlord $171,900
411 Theodore Fremd Ave
Suite 300
Rye, NY 10580
Contact: Jason Blacksberg
Tel: 914-288-8100
914-288-8138
Fax: 914-428-2760
914-288-2138
Email: jblackberg@acadiarealty.com
30. Moroch Partners, Inc. Trade Debt $171,137
3625 N. hall Street
Suite 1100
Dallas, TX 75219
Contact: Matt Powell
Tel: 214-520-9700
Email: mpowell@moroch.com
ALAMO DRAFTHOUSE: Files Chapter 11 to Sell to Altamont & Fortress
-----------------------------------------------------------------
Alamo Drafthouse Cinema, the Texas-based theater chain, has filed
for Chapter 11 protection with $123 million in debt.
Alamo, the largest privately-owned theater chain in the U.S., said
in its bankruptcy filings that it has a plan support agreement for
a sale of its business to Altamont Capital Partners, a previous
investor in the company, as well as affiliates of Fortress
Investment Group, a new backer.
The company is asking the bankruptcy court to approve a 75-day
timeline for the transaction process and the $20 million
debtor-in-possession credit facility led by Altamont and Fortress.
Austin, Texas-based Alamo was founded in 1997 and currently
operates 18 company-owned theaters and 23 franchise locations
nationwide. As part of the bankruptcy, Alamo Drafthouse will close
down a few underperforming locations and restructure its lease
obligations.
The company says that operations will continue as normal and the
Chapter 11 process and sale will give it the capital it needs to
continue operating as it emerges from a public health crisis that
left many of its locations closed for months.
Founder Tim League will remain involved with the company and is
among the lender group buying the assets. Mr. League was named the
company's executive chairman in April, with Shelli Taylor, a former
Starbucks executive, assuming the role of CEO.
"Because of the increase in vaccination availability, a very
exciting slate of new releases, and pent-up audience demand, we're
extremely confident that by the end of 2021, the cinema industry
— and our theaters specifically — will be thriving," founder
Tim League said in the release.
Variety notes that the coronavirus pandemic has decimated the
exhibition business, with major studios postponing blockbusters and
theaters remaining shuttered for months. However, there are signs
it is rebounding. Cinemas can open in New York City starting on
March 5 and exhibitors expect that Los Angeles will soon welcome
back moviegoers, potentially setting the stage for a revival this
summer as vaccinations increase.
"Alamo Drafthouse had one of its most successful years in the
company's history in 2019 with the launch of its first Los Angeles
theater and box office revenue that outperformed the rest of the
industry," Taylor said in a statement. "We're excited to work with
our partners at Altamont Capital Partners and Fortress Investment
Group to continue on that path of growth on the other side of the
pandemic, and we want to ensure the public that we expect no
disruption to our business and no impact on franchise operations,
employees and customers in our locations that are currently
operating."
"The Chapter 11 filing will allow the company to finalize the
transaction through a court-supervised process while also enabling
the company to strengthen its balance sheet and complete its
financial restructuring this spring," the company added.
As of the filing date, the company disclosed $123 million in debt.
The Company owes $78.1 million on a term loan, $29.6 million on a
development loan and $5 million on a revolving line of credit,
according to its filings. The company also said it has taken out a
$10 million Paycheck Protection Program loan for which it is
seeking partial forgiveness.
About Alamo Drafthouse
The Alamo Drafthouse Cinema -- https://drafthouse.com -- is an
American cinema chain founded in 1997 in Austin, Texas that is
famous for its strict policy of requiring its audiences to maintain
proper cinemagoing etiquette. Known for offering full meal and
alcohol service at its theaters, the company also operates a movie
merchandise store and an annual genre film festival, Fantastic
Fest. Alamo Drafthouse had 41 locations as of March 31, 2021, with
23 of those locations ran by franchisees.
On March 3, 2021, Alamo Drafthouse Cinemas Holdings, LLC and 33
affiliated companies filed Chapter 11 petitions (Bankr. D. Del.
Lead Case No. 21-10474).
Alamo Drafthouse was estimated to have $100 million to $500 million
in assets and liabilities as of the bankruptcy filing.
The Hon. Mary F. Walrath is the case judge.
The Company tapped Young Conaway Stargatt & Taylor LLP as
bankruptcy counsel, Portage Point Partners as its financial
adviser, and Houlihan Lokey Capital as its investment banker. Epiq
Corporate Restructuring, LLC, is the claims agent.
ANTARA SYSTEMS: Can Use Cash Collateral on Interim Basis
--------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Michigan has
authorized Antara Systems, LLC d/b/a Jimdi Plastics to use cash
collateral on an interim basis.
A final hearing on the matter is scheduled for March 18, 2021 at 11
a.m.
The Court acknowledges that an immediate need exists for Debtor to
obtain the funding in order to preserve the estate and continue the
Debtor's business.
The Debtor is authorized use all cash collateral, income, deposit
accounts, inventory, accounts, general intangibles, chattel paper,
documents, instruments, equipment and all other property and assets
of the estate, and the proceeds and products therefrom, to fund the
payment of post-petition operating expenses that arise in the
ordinary course of its business in accordance with the terms of the
Motion.
As adequate protection for the use of cash collateral, and subject
to any rights of parties other than the Debtor to object to the
liens and security interests of the secured parties, TCF National
Bank and any other secured parties will retain their security
interests and liens on all assets in their current rank, order and
priority. In order to provide adequate protection to TCF, because
the use of cash collateral and/or the sale or consumption of
inventory by the DIP may result in a decrease in the value of TCF's
property secured by liens and security interests and otherwise
damage TCF, TCF is granted a perfected lien and security interest
in and upon all of the following created through the terms of the
Motion incorporated into the Order or any extension thereof to the
extent of any diminution in TCF's position because of the use of
the cash collateral:
(1) Debtor's post filing cash, accounts, instruments, chattel
paper, general intangibles;
(2) Debtor's post filing inventory;
(3) Debtor's equipment, including vehicles, acquired
post-petition.
The liens and security interests will be prior to all other liens,
encumbrances and security interests of any kind or nature in the
post-filing collateral.
As further adequate protection, the Debtor will make interest only
payments on Loan 1 of approximately $7,500, and on Loan 2 of
approximately $1,212, to TCF commencing March 15 and continuing
thereafter on the 15th day of each month. However, a monthly
payment is anticipated to be paid to TCF on or before the due date
of March 15 by the SBA on Loan 1. If the SBA makes the payment on
Loan 1, the Debtor's required interest only payment on Loan 1 due
March 15 will be satisfied by virtue of the SBA payment. If the
SBA does not make this payment on Loan 1, the Debtor will make
interest only payment for the month of March directly to TCF on
Loan 1 on or before March 25.
A copy of the order is available at https://bit.ly/3rhILvo from
PacerMonitor.com.
About Antara Systems, LLC d/b/a Jimdi Plastics
Founded in 1997, Antara Systems, LLC dba Jimdi Plastics, produces
injection molded components and assemblies for the agriculture,
automotive, consumer product, office furniture and recreation
markets. It sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mich. Case No. 21-00427) on February
21, 2021. In the petition signed by Reed E. Lawrie, managing
member, the Debtor disclosed $2,112,129 in assets and $4,392,696 in
liabilities.
Judge Scott W. Dales oversees the case.
A. Todd Almassian, Esq. at Keller & Almassian, PLC is the Debtor's
counsel.
Gantry Business Solutions LLC's Dave Distel and Tim Emmitt serve as
financial advisors.
ANTARA SYSTEMS: Seeks to Hire Gantry Business as Financial Advisor
------------------------------------------------------------------
Antara Systems, LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Michigan to hire Gantry Business
Solutions, LLC as its financial advisor.
The firm's services include:
a. compiling data and analyzing information necessary to meet
the reporting requirements mandated by the bankruptcy process, and
to meet the requests of various parties related to the Debtor's
restructuring and reorganization;
b. compiling and preparing operational and financial data and
analysis for the Debtor and its counsel to assist in developing a
plan of reorganization and related documents; and
c. other financial advisory services.
The firm will be paid $250 per hour for its services.
David Distel, a partner at Gantry, disclosed in a court filing that
the firm is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code.
The firm can be reached through:
David J. Distel
Gantry Business Solutions LLC
Email: info@gantrybs.com
About Antara Systems
Founded in 1997, Antara Systems, LLC produces injection molded
components and assemblies for the agriculture, automotive, consumer
product, office furniture and recreation markets. It conducts
business under the name Jimdi Plastics.
Antara Systems sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mich. Case No. 21-00427) on Feb. 21,
2021. In the petition signed by Reed E. Lawrie, managing member,
the Debtor disclosed $2,112,129 in assets and $4,392,696 in
liabilities.
Judge Scott W. Dales oversees the case.
Keller & Almassian, PLC and Gantry Business Solutions, LLC serve as
the Debtor's legal counsel and financial advisor, respectively.
ANTARA SYSTEMS: Seeks to Hire Keller & Almassian as Legal Counsel
-----------------------------------------------------------------
Antara Systems, LLC seeks approval from the U.S. Bankruptcy Court
for the Western District of Michigan to hire Keller & Almassian,
PLC as its legal counsel.
The firm's services include:
a. advising the Debtor with respect to its rights, powers and
duties in the continued management and operation of its financial
affairs and property;
b. attending meetings and negotiating with representatives of
creditors and other parties-in-interest;
c. advising and consulting the Debtor regarding the conduct of
its Chapter 11 case, including all of the legal and administrative
requirements of operating in Chapter 11;
d. advising the Debtor on matters relating to the assumption,
rejection or assignment of unexpired leases and executory
contracts;
e. taking all necessary actions to protect and preserve the
Debtor's estate, including the prosecution of actions on its
behalf, the defense of any actions commenced against the estate,
negotiations concerning all litigation in which the Debtor may be
involved and objections to claims filed against the estate;
f. assisting in formulating and prosecuting a plan of
reorganization, disclosure statement and related documents, and
taking any necessary action to obtain confirmation of the plan;
g. appearing before the bankruptcy court and the Office of the
United States Trustee; and
h. other necessary legal services.
The firm will be paid at these rates:
A. Todd Almassian $400 per hour
James M. Keller $350 per hour
Greg J. Ekdahl $350 per hour
Associate Attorney $300 per hour
Paralegals $175 per hour
A. Todd Almassian, Esq., a partner at Keller & Almassian, is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
A. Todd Almassian, Esq.
Greg J. Ekdahl, Esq.
Keller & Almassian, PLC
230 East Fulton Street
Grand Rapids, MI 49503
Phone: (616) 364-2100
Email: talmassian@kalawgr.com
gekdahl@kalawgr.com
About Antara Systems
Founded in 1997, Antara Systems, LLC produces injection molded
components and assemblies for the agriculture, automotive, consumer
product, office furniture and recreation markets. It conducts
business under the name Jimdi Plastics.
Antara Systems sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Mich. Case No. 21-00427) on Feb. 21,
2021. In the petition signed by Reed E. Lawrie, managing member,
the Debtor disclosed $2,112,129 in assets and $4,392,696 in
liabilities.
Judge Scott W. Dales oversees the case.
Keller & Almassian, PLC and Gantry Business Solutions, LLC serve as
the Debtor's legal counsel and financial advisor, respectively.
ARCHES BUYER: S&P Rates $1.6BB Senior Secured Term Loan 'B'
-----------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level rating and '3'
recovery rating to Arches Buyer Inc.'s $1.6 billion senior secured
term loan. The '3' recovery rating indicates its expectation for
meaningful (50%-70%; rounded estimate: 65%) recovery of principal
in the event of a payment default.
Arches Buyer plans to use the proceeds from this loan to refinance
its existing senior secured credit facility. S&P views the
transaction as leverage neutral and expect the company to save
about $15 million on its annual interest cost.
S&P said, "Our 'B' issuer credit rating and stable outlook on
Arches remain unchanged, which reflects our forecast that
Ancestry's leverage will decline below 7.5x and it will report free
operating cash flow (FOCF) to debt of between 5% and 6% over the
next 12 months as a mid-single-digit percent increase in its
subscription revenue offsets a decline in its DNA origins kit
sales. It also reflects our expectation that management's
cost-cutting efforts and the shift in its revenue mix toward the
higher-margin subscription business will lead to a roughly 300
basis point (bps) increase in its EBITDA margin in 2021.
"We could lower our rating on Arches over the next year if we
expect its FOCF to debt to decline below 5% and its leverage to
remain above 7.5x for a prolonged period. This could occur if the
rise in the company's subscription revenue stalls, its cost-cutting
efforts are insufficient for it to maintain an EBITDA margin of
more than 30%, or reductions in the marketing spending in its DNA
segment lead to accelerated declines in its DNA kit sales and
subscriber additions from DNA cross-sells.
"Although unlikely, we could upgrade Arches if it broadens the
diversity of its operations and commits to a less-aggressive
financial policy such that it maintains consistent FOCF to debt of
over 10% and sustains leverage of less than 6x despite any future
re-leveraging activity."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a default
occurring in 2023 stemming from a combination of factors, including
an economic downturn, customer losses, and pricing pressures as new
entrants emerge or existing competitors expand their product
offerings and features, which lead to a decline in its existing
customer renewal rates or higher member-acquisition costs.
-- S&P believes the company's lenders would look to maximize their
recovery in a default scenario and pursue a reorganization rather
than a liquidation given Arches' good brand name and market
leadership position.
Arches Buyer, a wholly-owned subsidiary of Arches Intermediate
Inc., is the borrower of the senior secured first-lien credit
facility.
The credit facility and senior secured notes rank pari passu and
are secured by a first-priority security interest in substantially
all of the borrower's and the guarantor's tangible and intangible
assets and are guaranteed by all current and future domestic
material subsidiaries of the company.
The senior unsecured notes are subordinated to the secured debt to
the extent of the value of the collateral.
Other default assumptions include an 85% draw on the revolving
credit facility, LIBOR is 2.5%, and all debt amounts include six
months of prepetition interest.
Simulated default assumptions
-- Simulated year of default: 2023
-- EBITDA at emergence: About $276 million
-- EBITDA multiple: 6.5x
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): About
$1.65 billion
-- Senior secured debt claims: About $2.3 billion
--Recovery expectations: 50%-70% (rounded estimate: 65%)
-- Estimated unsecured claims: $572 million
--Recovery expectations: 0%-10% (rounded estimate: 0%)
ATI HOLDINGS: S&P Places 'B-' Issuer Credit Rating on Watch Pos.
----------------------------------------------------------------
S&P Global Ratings placed all its ratings on ATI Holdings
Acquisition Inc., including the 'B-' issuer credit rating and its
issue-level ratings on its debt, on CreditWatch with positive
implications.
The CreditWatch reflects the potential for an upgrade, likely
limited to one notch, if the transaction closes and the projected
debt reduction materializes, which S&P expects in the second
quarter.
The rating action is in response to the announcement that ATI
entered into a merger agreement with FVAC II, a special purpose
acquisition company formed as a blank check company via IPO in
August 2020. S&P expects the deal to close in the second quarter.
ATI shareholders approved the deal, and shareholder approval from
FVAC II is pending. Upon close of the merger, S&P expects the
combined company will use proceeds to repay over $500 million of
debt.
S&P will monitor developments related to the transaction, including
necessary shareholder approvals, regulatory clearances, and
customary closing conditions. S&P believes the transaction will be
positive for ATI given the meaningful expected debt reduction and
corresponding improvement in credit measures.
AVANTOR FUNDING: Fitch Raises LT IDR to 'BB', Outlook Positive
--------------------------------------------------------------
Fitch Ratings has upgraded Avantor Funding, Inc.'s Long-Term (LT)
Issuer Default Rating (IDR) to 'BB'/Positive Outlook from
'BB-'/Stable Outlook. Fitch has also assigned a LT IDR of
'BB'/Positive Outlook to Avantor, Inc. The senior secured debt and
unsecured debt has been affirmed at 'BB+'/'RR1' and 'BB'/'RR2',
respectively.
The Upgrade is supported by continued strong operating performance,
a strong FCF and liquidity profile, and continued deleveraging to
below 4.5x gross debt/EBITDA. The Positive Outlook reflects Fitch's
expectation that the company will continue to reduce leverage to
below 4.0x over the next 12-18 months, primarily through EBITDA
growth. Fitch views the company to have sufficient flexibility to
invest, both internally and externally, while maintaining financial
flexibility consistent with a mid- to high-'BB' rating. The ratings
apply to roughly $4.9 billion of debt outstanding at Dec. 31,
2020.
KEY RATING DRIVERS
Manageable Coronavirus Effects: Avantor's business profile is
relatively resilient because of good end market diversification and
non-cyclical demand for healthcare products. Avantor's biopharma
end markets have held up well and have benefited from
COVID-19-related testing demand and vaccine-related production,
which is expected to continue into 2021. The industrials end
markets have seen more significant business disruption effects from
the pandemic, but because of the diversity of the customers served
in the advanced technologies and applied materials businesses,
demand for the company's products has remained relatively stable.
EBITDA sustainably grew in 2020 due to positive operating leverage
effects with higher sales volumes and mix shift to higher margin
proprietary products.
Ample Liquidity: Fitch expects Avantor to maintain a comfortable
liquidity cushion going forward. Fitch expects cash on hand,
ongoing cash generation and committed lines of revolving credit
will ensure the company has adequate liquidity to support
operations, capital spending needs, preferred dividends and
required term loan amortization during 2021. A highly recurring
revenue model, with a shift to higher margin proprietary products,
and Avantor's ability to refinance outstanding debt at lower coupon
rates during 2020 supports FCF generation exceeding $600 million
annually and the 'BB' IDR.
Leverage Continues to Decline: Avantor's gross debt/EBITDA was 4.2x
at Dec. 31, 2020, and Fitch forecasts leverage of 4.0x at the end
of 2021, assuming some EBITDA growth and a small amount of debt
reduction. The agency views leverage of 4.0x-4.5x in line with the
'BB' IDR. The Positive Outlook reflects Fitch's expectation that
continued deleveraging below 4.0x is likely, given management's
long-term public goal to continue to reduce net leverage to 2x-4x
and Fitch's view that the company has the financial flexibility
necessary to achieve this goal. The company has successfully
reduced debt since the merger with VWR, from a Fitch-calculated,
nearly 10x following the close of the transaction. This was the
result of the combined effects of EBITDA growth and debt reduction,
which was partly funded through the proceeds of an initial public
offering.
Strong Competitive Position and Good Diversification: Avantor is
well diversified through end markets and product categories, with
biopharma representing about 50% of total sales. Advanced
technologies and applied materials end markets represent roughly
25% of sales and includes a mix of more cyclical end markets that
benefit from highly recurring consumable sales. Consistent cash
generation is supported through highly diversified consumables- and
service-focused revenues representing roughly 85% of sales, and
more limited exposure to equipment and instrumentation (15% of
sales) versus peers. Strength and diversification in high-growth
end markets should offset slower growth and cyclical end markets,
resulting in single-digit revenue growth above the average life
sciences industry.
DERIVATION SUMMARY
Avantor's strongest competitors are significantly larger, with
leading positions in the broader life sciences industry and greater
financial flexibility. Thermo Fisher (BBB+/Stable) is Avantor's
closest peer within the lab products industry. Thermo Fisher, a
direct distribution competitor, is materially larger than Avantor,
has an industry-leading manufacturing business and is much more
conservatively capitalized. Other low- to mid-'BB' rated healthcare
companies operating in different industry subsectors typically have
leverage sensitivities in the 4.0x-5.0x range.
KEY ASSUMPTIONS
Fitch's key assumptions within the agency's rating case for the
issuer include:
-- Coronavirus-related tailwinds help to support biopharma end
market growth;
-- Organic revenue growth in the low- to mid-single-digits;
-- EBITDA margins relatively flat, but upside could come from a
continued shift to proprietary products;
-- Capex is forecasted to be around 1.0% of revenues;
-- Capital deployment balanced between tuck-in acquisitions and
share repurchases;
-- FCF exceeding $600 million annually, aided by reduced cost of
capital after 2020 refinancing activity;
-- Gross debt/EBITDA is maintained around 4.0x in 2021, and
likely to trend below 4.0x later in the forecast period,
supporting the Positive Outlook.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Operating with gross debt/EBITDA sustained below 4.0x;
-- Continued operational strength that results in (cash flow from
operations - capex)/total debt around or above 9%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Operating with gross debt/EBITDA sustained above 4.5x;
-- Pressures to profitability or increased expenses that result
in (cash flow from operations - capex)/total debt sustained
below 7.5%.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Liquidity was supported by cash on hand of
$287 million and availability of $513 million under a $515 million
first-lien, secured revolver due 2025 as of Dec. 31, 2020. The
revolver was upsized to $515 million in July 2020. Avantor's senior
secured credit facility does not include financial maintenance
covenants aside from a springing first-lien, net leverage covenant
of 7.35x if 35% of the revolver is drawn. Additionally, working
capital needs are supported by a $300 million accounts receivable
securitization facility, of which $287 million was unused at Dec.
31, 2020.
Debt Maturities Manageable: The company's debt maturities and
amortization requirements are manageable. The 2020 refinancing
transactions pushed out maturities, leaving the nearest maturity
the receivables facility maturing in March 2023 and a portion of
the term loans due in October 2024. Fitch does not anticipate
continued significant debt reduction and expects the company will
refinance most maturities.
Notching on Debt Instruments: Fitch rates the senior secured credit
facility and notes 'BB+'/'RR1', one notch above the IDR of 'BB'.
The senior unsecured notes are rated 'BB'/'RR2', in line with the
'BB' IDR. While the debt structure is weighted toward secured debt
at roughly 60% of total, Fitch estimates superior recovery for both
the secured and unsecured debt because of favorable characteristics
of Avantor's business model, including largely noncyclical end
market demand and highly sustainable CF generation.
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.
BC HOSPITALITY: Chloe Says Plan Not Filed in Good Faith
-------------------------------------------------------
Creditors Chloe Coscarelli, Chef Chloe LLC, CC Hospitality Holdings
LLC and CKC Sales, LLC (collectively, "Chloe") object to
confirmation of the Joint Chapter 11 Plan of BC Hospitality Group,
Inc. and Its Debtor Affiliates.
Chloe objects to the Plan because BCHG seeks to use or transfer the
By Chloe trademark pursuant to the Plan. Through its breach of
unambiguous terms and conditions, BCHG lost its ownership rights in
the By Chloe Mark.
Chloe also objects to the Plan because BCHG seeks to impermissibly
use or transfer all other Chloe trademarks and domain names, assets
in which BCHG likewise has no rights. As the NFL Agreement makes
clear, Chloe is the sole owner of her name, image, and likeness
("NFL Rights").
Preliminarily, Chloe submits that BCHG lacks a good faith basis to
dispute the arbitration decision issued by Judge Hochberg declared
BCHG's purported repurchase of Chef Chloe's membership interests
null and void along with any attempts to amend the Operating
Agreement without her consent.
Chloe contends to the Plan's exculpation provision contained in
Article X.E. because it is not limited to those creditors who have
accepted the Plan and purports to bind, without their consent,
general unsecured creditors, including Chloe, who stand to receive
nothing under the Plan.
Chloe asserts that the Plan's injunction provision operates as a
permanent injunction barring creditors and other entities from
pursuing non-debtor third parties. Chloe objects to the injunction
provision, and there is no evidence that any value has been given
to Chloe in exchange for the injunction.
Chloe further asserts that the release, exculpation, and injunction
provisions contained in Article X of the Plan render the Plan
unconfirmable, and the Court should so find. Chloe objects to the
Investor Group, and each of them, ESquared Hospitality, Haber, and
Wasser, being covered by any such release, exculpation, or
injunction provision in any way related to Chloe and/or her
affiliates.
Counsel for Chloe:
Mette H. Kurth
CULHANE MEADOWS, PLLC
4023 Kennett Pike #165
Wilmington, Delaware 19807
Telephone:(302) 660-8331
E-mail: mkurth@cm.law
Ronald J. Schutz
Patrick M. Arenz
- and -
ROBINS KAPLAN LLP
800 LaSalle Avenue, Suite 2800
Minneapolis, MN 55402
Telephone: (612) 349-8591
E-mail: rschutz@robinskaplan.com
parenz@robinskaplan.com
James P. Menton, Jr.
2049 Century Park East, Suite 3400
Los Angeles, California 900
Asset Sale or Equitization Plan
The Debtors and their advisors are engaged in a marketing process
for potential purchasers and/or plan sponsors to facilitate the
Debtors' emergence from the Chapter 11 Cases. To that end, on Dec.
15, 2020, the Debtors filed a motion for approval of bidding
procedures, which was approved by the Bankruptcy Court on Jan. 7,
2021. Pursuant to the Bidding Procedures Order, the Court
approved the Debtors' marketing process associated with the Plan,
which includes a toggle feature, resulting in either: (a) an Asset
Sale Restructuring, which allows the Debtors to enter into a sale
transaction for the sale or disposition the Debtors' assets; or (b)
an Equitization Restructuring, which provides for the
implementation of the terms of an acceptable plan sponsor
investment in the form of an equity investment. The Plan toggle
provides the Debtors with the latitude necessary to negotiate the
precise terms of their ultimate emergence from chapter 11 and,
consequently, the terms of the Plan may be revised, as necessary.
Consistent with this process, the Debtors are marketing for equity
investors or a sale of the Debtors’ business. The net proceeds
received by the Debtors upon either an Asset Sale Restructuring or
an Equitization Restructuring are to be used to make payments, to
the extent of available Cash, to holders of Allowed Claims in the
order of priority under Section 507 of the Bankruptcy Code,
including DIP Claims, Allowed Administrative Claims (including
Professional Fee Claims), Allowed Priority Tax Claims and Allowed
Claims in Class 1, Class 2, and Pro Rata Distributions to holders
of Allowed General Unsecured Claims in Class 3.
Under the Plan, Each Holder of an Allowed General Unsecured Claims
in Class 3 shall receive its Pro Rata share of the GUC Distribution
Amount. Class 3 is owed an estimated $2.85 million. The estimated
percentage recovery for the class is unknown at this time.
A copy of the Plan filed Jan. 21, 2021, is available at
https://bit.ly/3qkIab4
About By Chloe
By Chloe is a fast-casual vegan restaurant chain based in New York
City.
BC Hospitality Group Inc. and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 20-13103) on Dec. 14,
2020. BC Hospitality was estimated to have assets of $10 million
to $50 million and liabilities of $1 million to $10 million.
YOUNG CONAWAY STARGATT & TAYLOR, LLP, is the Debtors' counsel.
ANKURA CONSULTING GROUP, LLC, is the financial advisor.
BCR PARTNERS: Seeks to Hire Berman DeLeve as Legal Counsel
----------------------------------------------------------
BCR Partners, LLC seeks approval from the U.S. Bankruptcy Court for
the Western District of Missouri to employ Berman, DeLeve, Kuchan &
Chapman, LLC as its legal counsel.
The firm's services include:
(a) advising the Debtor regarding its rights and obligations
and compliance with the Bankruptcy Code;
(b) preparing and filing of any and all petitions, schedules,
statement of affairs, motions, applications, plan of reorganization
and any and all other pleadings and documents which may be required
in this proceeding;
(c) representing the Debtor at the meeting of creditors,
confirmation, and related hearings and any continued or adjourned
hearings thereof;
(d) soliciting consents to the Debtor's proposed plan of
reorganization; disclosures and communications with creditors
relating thereto; and securing confirmation of said plan;
(e) representing the Debtor with respect to any matters that
may arise in connection with the Debtor's reorganization proceeding
and the conduct and operation of the Debtor's business; and
(f) examining claims of creditors.
The hourly rate currently charged by Ronald S. Weiss, Esq., and
Joel Pelofsky, Esq., is $325 per hour. Paralegals and document
maintenance personnel charge $120 per hour and $75 per hour,
respectively.
Mr. Weiss disclosed in a court filing that he and his firm are
"disinterested persons" as defined in Section 101(14) of the
Bankruptcy Code.
Berman can be reached through:
Ronald S. Weiss, Esq.
Joel Pelofsky, Esq.
Berman, DeLeve, Kuchan & Chapman, LLC
1100 Main, Suite 2850
Kansas City, MO 64105
Phone: (816) 471-5900
Fax: (816) 842-9955
Email: rweiss@bdkc.com
Email: jpelofsky@bdkc.com
About BCR Partners
BCR Partners -- https://bransoncedarsresort.com -- is a vacation
destination offering tree houses, log cabins, and bungalows.
BCR Partners, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Case No. 21-60121)
on Feb. 26, 2021. The petition was signed by Michael Hyams, chief
operating officer and partner. At the time of filing, the Debtor
estimated $1 million to $10 million in both assets and liabilities.
Berman, DeLeve, Kuchan & Chapman, LLC represents the Debtor as
counsel.
BEN F. BLANTON: Unsecureds Owed Less Than $2,500 to be Paid in Full
-------------------------------------------------------------------
Ben F. Blanton Construction, Inc., submitted an Amended Subchapter
V Small Business Plan of Reorganization on Feb. 25, 2021.
The Debtor will emerge from bankruptcy and continue to operate its
business if the Plan is confirmed by the Bankruptcy Court.
Creditors of the Debtor will be paid from the VUE Insurance
Proceeds, the Travelers Proceeds and, either the Creditors Fund if
the plan is confirmed under 11 U.S.C. Sec. 1191(a) of the Future
Income of the Debtor to the extent the Plan is confirmed under 11
U.S.C. Sec. 1191(b).
Under the Plan, the Allowed Claims of secured creditors in Classes
1 through 3 will be paid in full pursuant to the terms of the
applicable loan documents. The Debtor and Rosch Company are parties
to a pending arbitration action. The Allowed Class 4 Claim of
Rosch Company, if any, will be paid solely from Travelers Proceeds
recovered through the Travelers Litigation pending in the United
States District Court for the Eastern District of Missouri.
Class 5 consists of the unsecured claims of Insiders and
Affiliates. Class 5 claim holders will receive no distribution
under the Plan. Class 6 General Unsecured Ordinary Course Claims
consist of the Allowed claims of subcontractors on projects that
are the subject of the construction contracts, ordinary course
vendors and service providers, and utility providers. Class 6
Claims will be paid in full in the ordinary course, consistent with
the terms of their agreements with the Debtor.
Class 7 General Unsecured VUE Project Claims consist of any Allowed
claims of BCC Partners, LLC and the subcontractors on the VUE
Project, understanding that to the extent such Class 7 claims are
paid by the Bonding Company, the Bonding Company will be subrogated
to the rights of BCC Partners and the subcontractors on the VUE
Project and such subrogated claims shall be paid as Class 8
claims.
Class 8 Bonding Company Claims consist of Allowed Claims to the
extent the Bonding Company has paid claims under the Bond or Other
Bonds. Class 8 will receive Travelers' Proceeds to the extent and
amount Bonding Company pays any claim on the Bond to Rosch Company,
LLC; Insurance Proceeds to the extent and amount Bonding Company
has paid Claims on the Vue Project and pro rata distributions from
the Creditor Fund.
Class 9 Rejection Claims consists of Allowed claims arising out of
the Rejected Contracts and other Unsecured Creditor Claims which
are neither Class 7, Class 8 or Class 10 claims. Allowed Class 9
Claims, if any, will receive distributions under the Plan as either
a Class 7 Claim or if elected, a Class 10 claim.
Class 10 consists of Allowed Convenience Class Claims, which are
claims of $2,500 or less, or claims voluntarily reduced to an
Allowed amount of $2,500 by the claim holder. On the effective
date, Allowed Convenience Class Claims will be paid in full. Class
10 is impaired under the Plan.
Class 11 consists of the claims of all equity interest holders in
the Debtor. On the effective date of the Plan, all Class 11
interests in the Debtor shall be retained by the existing interest
holders subject to the terms of the Plan, and shall retain all
existing rights and privileges. While interest holders will retain
their equity interests, the equity holders have agreed to waive
significant claims held against the Debtor and unsecured creditors
are receiving value through this Plan in excess of the liquidating
value of all the Debtor's property.
A full-text copy of the Amended Subchapter V Plan dated Feb. 25,
2021, is available at https://bit.ly/3qiaMSe from PacerMonitor.com
at no charge.
Attorneys for the Debtor:
Wendi Alper-Pressman, Esq.
LATHROP GPM LLP
7701 Forsyth, Suite 400
Clayton, MO 63105
Tel: 314-613-2800
Email: wendl.alper-pressman@lathropgpm.com
About Ben F. Blanton
Ben F. Blanton Construction, Inc. --
https://www.blantonconstruction.com/ -- is a construction
management, design/build, and general contracting company with
headquarters in the greater metropolitan St. Louis, Missouri area.
Ben F. Blanton Construction, Inc. filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mo.
Case No. 20-43555) on July 16, 2020. The petition was signed by
Jeffrey M. Blanton, president. At the time of filing, the Debtor
estimated $10 million to $50 million in both assets and
liabilities. Wendi Alper-Pressman, Esq., at LATHROP GPM LLP,
represents the Debtor.
BERLIN PACKAGING: Moody's Rates New $500MM First Lien Loans 'B3'
----------------------------------------------------------------
Moody's Investors Service assigned B3 ratings to Berlin Packaging
LLC's proposed $400 million senior secured first lien term loan due
2028 and $100 million delayed draw senior secured first lien term
loan due 2028. Moody's also affirmed the B3 rating on the company's
upsized $125 million senior secured revolving credit facility
expiring 2024 (including a $50 million increase), B3 Corporate
Family Rating and B3-PD Probability of Default Rating. The B3
rating on the company's Euro 140 million senior secured first lien
term loan due 2025 is unchanged and will be withdrawn at the close
of the transaction. The outlook remains stable. The terms and
conditions of the new term loan are expected to be similar to the
existing term loans. The proceeds from the new term loan will be
used to pay down the Euro term loan due 2025 and $155 million of
the $355 million senior secured second lien term loans due 2026
(not rated by Moody's), fund pending acquisitions, and pay fees and
expenses.
The affirmation of the CFR despite the increase in debt reflects
Moody's expectation of a significant improvement in pro forma
credit metrics over the next 12 months as the company benefits from
new business, completed cost cutting initiatives and the
elimination of one-time charges for various initiatives. Moody's
expects pro forma debt to LTM EBITDA of 7.1x at September 30, 2020
to improve to 6.5x by the end of 2021 (pro forma for the recently
completed and pending acquisitions and the proposed debt financing
but excluding the unfunded delayed draw). Pro forma free cash flow
to debt of 2.5% at September 30, 2020 is also expected to improve
to 3.0% by the end of 2021. The recently completed and pending
acquisitions all have a high exposure to stable end markets.
Additionally, the acquisitions increase the company's exposure to
Europe which is expected to improve margins in the region through
greater scale and provide further cross selling opportunities as
the smaller targets gain access to Berlin's much larger network.
Berlin is expected to have $68 million in cash available at the
close of the transaction and full availability under the upsized
$125 million revolver.
The stable outlook reflects Moody's expectation that Berlin will
soundly integrate the recently completed and pending acquisitions
and benefit from the greater scale and cross selling opportunities
in Europe they add.
The proposed new senior secured term loan is expected to contain
covenant flexibility for transactions that can adversely affect
creditors. This includes an ability to incur incremental
indebtedness up to either $165m prior to a Permitted Change of
Control, or 100% of EBITDA thereafter (less any amounts previously
incurred under the 1st lien or 2nd lien incremental starter
baskets), plus for pari passu 1st lien secured debt in additional
amounts so long as pro forma 1st lien net leverage does not exceed
5.50x; and for junior secured debt additional amounts up to: (i)
7.25x secured net leverage ratio (prior to a Permitted Change of
Control); or (ii) the lesser of 7.75x and the pro forma secured net
leverage at the time the Permitted Change of Control is
consummated. The credit facility allows incremental term loan
indebtedness up to $100.0 million to be incurred with an earlier
maturity date than the initial term loans.
Designations of unrestricted subsidiaries and transfer of assets to
unrestricted subsidiaries are permitted, subject to carve-outs.
Certain provisions limit designation of unrestricted subsidiaries,
but there are no "blocker" provisions preventing the transfer of
assets to such subsidiaries once designated. Only wholly-owned
subsidiaries are required to be subsidiary guarantors; partial
dividends of ownership interest could jeopardize guarantees,
subject to limitations on the release of the guarantee of a
guarantor that ceases to be wholly-owned, unless no event of
default exists and the borrower is deemed to have made an
investment in such subsidiary and such investment is otherwise
permitted under the investment covenant. There are no step-downs to
the asset sale prepayment requirement, subject to reinvestment
rights.
The ratings are subject to the receipt and review of the final
documentation.
Assignments:
Issuer: Berlin Packaging LLC
Senior Secured 1st Lien Term Loan, Assigned B3 (LGD3)
Senior Secured 1st Lien Delayed Draw Term Loan, Assigned B3
(LGD3)
Affirmations:
Issuer: Berlin Packaging LLC
Probability of Default Rating, Affirmed B3-PD
Corporate Family Rating, Affirmed B3
Senior Secured 1st Lien Bank Credit Facility, Affirmed B3 (LGD3)
Outlook Actions:
Issuer: Berlin Packaging LLC
Outlook, Remains Stable
RATINGS RATIONALE
Berlin's credit profile is constrained by its high leverage and
aggressive financial policies, including debt financed acquisitions
and dividends. Berlin also has a high percentage of business which
lacks long-term contracts thereby lowering switching costs for
customers.
Strengths in the company's credit profile include its high exposure
to more stable end markets including food, beverage and health
care. The top ten customers generate approximately 8% of sales and
no customer generates more than 2%. As a distributor and service
provider, the company does not require high capital expenditures
which provides support for free cash flow.
Berlin's adequate liquidity is characterized by our expectation of
adequate free cash generation and full availability under its $125
million revolver, which expires in November 2024. Moody's consider
the revolver small relative to Berlin's annual interest expense and
capex or its revenue. The only financial covenant on the revolver
is a springing first lien net leverage ratio of 8.5x if borrowings
exceed 35.0% of the total revolver amount. Cushion under the
financial covenant is expected to be adequate over the next 12
months. There are no financial maintenance covenants on the term
loans. Term loan amortization is approximately 1.0% annually. The
company has no significant seasonality. The next debt maturity is
the revolver in November 2024. The foreign assets are not pledged
as security for the credit facilities leaving some alternative
sources of liquidity.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be downgraded if there is any deterioration in
credit metrics, liquidity or the competitive environment.
Additionally, significant debt financed acquisitions or shareholder
distributions may also prompt a downgrade. Specifically, the
ratings could be downgraded if:
- Adjusted debt to LTM EBITDA is above 6.5x
- EBITDA to interest expense is below 2.0x
- Free cash flow to debt is below 1.0%
The rating could be upgraded if Berlin sustainably improves credit
metrics within the context of stability in the competitive
environment. The company will also need to maintain adequate
liquidity and adopt more conservative financial policies.
Specifically, the ratings could be upgraded if:
- Debt to LTM EBITDA is below 5.5x
- EBITDA to interest expense is over 3.0x
- Free cash flow to debt is over 4.5%
Based in Chicago, Illinois, Berlin Packaging LLC is a distributor
of rigid packaging primarily for food, beverage, household,
personal care, and health care end markets. The company also
provides various services to the industry including sourcing,
design, consulting, warehousing, and financing. For the twelve
months ended September 30, 2020, sales totaled approximately $2.2
billion pro forma for recent and pending acquisitions. Berlin is
majority owned by Oak Hill Capital Partners with a minority
interest by the Canada Pension Plan Investment Board (CPPIB) and
does not publicly disclose financial information.
The principal methodology used in these ratings was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
BERRY GLOBAL: Incremental Issuance No Impact on Moody's Ba3 CFR
---------------------------------------------------------------
Moody's Investors Service announced that the Ba2 rating on Berry
Global Inc.'s (a wholly owned subsidiary of Berry Global Group Inc.
("Berry")) $775 million first lien senior secured notes due 2026 is
unchanged following the company's announcement of an incremental
issuance. Berry Global Group Inc.'s existing ratings, including the
Ba3 Corporate Family Rating and Ba3-PD Probability of Default
Rating are unchanged. The outlook remains stable. Berry Global
Group Inc.'s SGL-2 Speculative Grade Liquidity Rating is also
unchanged.
On February 26, 2021, Berry announced that it was offering an
additional issuance of the 1.57% first lien senior secured notes
due 2026 which would be consolidated with and form a single series
with the existing notes. The proceeds from the new notes will be
used to repay a portion of the existing senior secured term loans
and pay fees and expenses. Moody's considers the transaction credit
neutral. The rating on the existing term loan will be withdrawn at
the close of the transaction.
The Ba2 ratings on the first lien senior secured term loans and
notes, one notch above the Ba3 CFR, reflect the instruments'
subordination to the asset based revolver for the most liquid
assets (accounts receivable and inventory) and the benefit of the
loss absorption provided by a considerable amount of second lien
debt. The Ba3 CFR reflects an expectation of continued high
leverage through 2021 resulting from the debt financed acquisition
of RPC Group PLC (RPC) in July 2019.
RATINGS RATIONALE
Moody's expects Berry to improve leverage to 4.7 times by year-end
2021 driven primarily by debt reduction as the company continues to
use free cash flow to pay down debt. Strengths in Berry's credit
profile include its considerable scale (revenue), a concentration
of sales in relatively stable end markets (food and healthcare),
and strong free cash generation. Berry is the largest rated
packaging manufacturer by revenue and has 75% of its customer
business under long-term contracts with cost pass-through
provisions (raises customer switching costs and protects against
increases in volatile raw material costs). Governance risks are low
given that Berry is a public company and nine of its ten board
members are independent.
Weaknesses in Berry's credit profile include high leverage, some
exposure to more cyclical end markets and lengthy lags in
contractual cost pass-through mechanisms with customers (leaving
the company exposed to changes in volumes before increases in raw
material prices can be passed through). Berry operates in the
fragmented and competitive packaging industry which has many
private, unrated competitors and strong price competition.
The stable outlook reflects management's pledge to direct all free
cash flow to debt reduction until metrics improve to pre RPC
acquisition levels.
The rating could be upgraded if the company sustainably improves
credit metrics within the context of a stable competitive
environment while maintaining good liquidity. Specifically, the
ratings could be upgraded if funds from operations to debt is above
15.5%, debt to EBITDA is below 4.25 times, and EBITDA to interest
expense is above 5.25 times.
The rating could be downgraded if Berry fails to improve credit
metrics or there is any deterioration in liquidity or the
competitive environment. Additional debt financed acquisitions or
excessive acquisitions (regardless of financing) could also prompt
a downgrade. Specifically, the ratings could be downgraded if funds
from operations to debt is below 13%, debt to EBITDA is above 4.8
times, or EBITDA to interest expense is below 4.25 times.
Based in Evansville, Indiana, Berry Global Group Inc. is a
manufacturer of both rigid and flexible plastic packaging for food,
beverage, health care, personal care, and industrial end markets.
Berry generates approximately 51% of sales in North American, 40%
in EMEA, 5% in Asia Pacific, and 4% in the rest of the world. Net
sales for the twelve months ended September 30, 2020 totaled
approximately $11.7 billion.
BOY SCOUTS OF AMERICA: Needs $300M From Councils for Ch.11 Exit
---------------------------------------------------------------
Mark Hrywna of The Non Profit Times reports that Boy Scouts of
America (BSA) is hopeful that it will emerge from Chapter 11
bankruptcy restructuring this fall, with $300 million from Local
Councils to be contributed toward sexual abuse settlements,
according to its latest court filings.
BSA will request voluntary commitments of its Local Councils to
make contributions, which would be set forth in commitment
agreements executed by each of the 253 councils. BSA would be
required to file a report with the Bankruptcy Court by June 1 about
the status of its efforts to obtain contribution commitments from
Local Councils, according to a trove of documents filed on Monday
that included an amended reorganization plan.
The amended Chapter 11 reorganization plan for Boy Scouts of
America and Delaware BSA, LLC was filed in the U.S. Bankruptcy
Court for the District of Delaware. Of the 379 pages in the amended
plan, 259 pages are schedules and exhibits that identify artwork,
national and local council insurance policies, and oil and gas
interests that could fund the settlements.
The Irving, Texas-based BSA filed for Chapter 11 bankruptcy in
February 2020 to restructure the national organization. Local
councils are separate 501(c)(3) tax-exempt organizations and did
not file for bankruptcy. The 111-year-old organization faces
thousands of potential lawsuits over alleged sexual abuse of
members over the years.
In a statement, Boy Scouts of America said it filed for Chapter 11
bankruptcy to "achieve two key imperatives: equitably compensate
survivors who were harmed during their time in Scouting and
continue to carry out Scouting's mission for years to come."
The amended reorganization plan is "a critical step in our
emergence from bankruptcy," the statement continued. "The plan
demonstrates that considerable progress has been made as we
continue to work with all parties toward achieving our strategy to
provide equitable compensation for victims and address our other
financial obligations so that we can continue to serve youth for
years to come."
"There are still many aspects of the plan that we are refining
through ongoing mediation, but the amended plan is an important
step in demonstrating progress that we believe will ultimately lead
to a final plan that the Bankruptcy Court will confirm."
The statement also indicated that supplements to the plan will
include more detailed breakdown of the process to compensate
survivors and more details about how local councils will support
that effort.
Survivors of sexual abuse in connection with activities associated
with Boy Scouts of America had until Nov. 16, 2020 to file a claim.
Survivors whose claims are approved may receive compensation from
the bankruptcy. If the plan to reorganize BSA is approved, it could
release claims that survivors hold against certain third parties,
including Local Councils and organizations that sponsored their
troop or pack.
In its latest tax filing in November 2020, for the tax year 2019,
the national headquarters reported total revenue of $408.6 million,
up considerably from $285 million in 2018 on the strength of
investment income of $145 million, up from $32 million, and program
revenue of $116 million, up from $82 million. Contributions were
$114 million, down from $143 million in 2018. Expenses were $430
million last year, outpacing revenue by almost $22 million though
still smaller than the operating deficit of $58 million reported in
2018. Net assets were $408 million, down from $532 million in
2018.
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 and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their 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.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BRAND INDUSTRIAL: S&P Affirms 'B-' ICR, Outlook Negative
--------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit rating on Brand
Industrial Services Inc.
The negative outlook reflects the company's elevated debt leverage
due, in part, to the effects of the COVID-19 pandemic on its
operating performance. Although much of Brand's project work has
been able to continue amid this environment, some of its customers'
projects have been delayed. S&P assumes the company's debt leverage
will improve but remain elevated in 2021.
S&P said, "The delays of its customers' construction projects amid
the coronavirus-related shutdowns and a reduction in the level of
new project activity has caused the company's earnings to be weaker
than we previously expected and increased its debt leverage, which
we assume will remain elevated in 2021. The pandemic has pressured
the margins of Brand's customers and led to delays in their
maintenance and capital spending work. While we believe Brand's
industrial customers' spending on capital projects may remain
depressed for some time, we anticipate the company's 2021 revenue
will benefit somewhat from maintenance and turnaround work that was
deferred in 2020, particularly in the petrochemical and power
markets." Over the longer term, the increasingly stringent
regulation across its end markets will likely continue to support
recurring demand for Brand's services. Many of the company's
customers face annual maintenance requirements, mandatory
refurbishment and repair activity, regularly scheduled turnarounds
and outages, and capital projects.
The negative outlook on Brand reflects its elevated debt leverage
due, in part, to the effects of COVID-19 on its operating
performance. Although the company has been able to continue much of
its project work amid this environment, some of its projects have
been delayed.
S&P said, "We could lower our rating on Brand in the next 12 months
if its liquidity becomes strained. This could occur due to a
weaker-than-expected operating performance stemming from additional
unexpected delays or project costs. Additionally, we could lower
our rating if the company's debt leverage increases because of
acquisition spending. Overall, we could lower our rating if we
believe that Brand depends on favorable business, financial, and
economic conditions to meet its financial commitments or come to
view its financial commitments as unsustainable over the long
term.
"We could revise our outlook on Brand to stable over the next 12
months if its liquidity remains solid and we believe it is on track
to reduce its leverage toward 6.5x and maintain it at that level.
This could occur if the company's operating environment stabilizes
and it maintains EBITDA margins in the low-double-digit percent
area while generating positive free cash flow with free operating
cash flow (FOCF) to adjusted debt in the low- to mid-single-digit
percent area."
BRAZOS ELECTRIC: Fitch Cuts IDR to 'D' on Bankr. Filing
-------------------------------------------------------
Fitch Ratings has downgraded the Issuer Default Rating (IDR) on
Brazos Electric Power Cooperative Inc. TX (Brazos Electric) to 'D'
from 'A+'. The Rating Watch Negative is removed.
The 'D' rating reflects the announcement that the electric
cooperative has filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code.
The filing follows unprecedented winter weather experienced
throughout Texas during the week of Feb. 14, including multiple
snow and ice storms and historic low temperatures, resulting in
severe market price volatility and dislocation. Brazos Electric
indicated in its announcement that the catastrophic failures due to
the storm resulted in the receipt of a $1.8 billion invoice from
the Electric Reliability Council of Texas (ERCOT). This amount for
collateral and the cost of electric service during the storm, in
addition to other related costs, are so high that Brazos Electric
stated in its press release that it could not and would not pass
the costs of such a catastrophic financial event on its 16-member
cooperative and the more than 1.5 million Texans served by those
members. As a point of reference, Brazos Electric's annual revenues
are approximately $1.0 billion.
The market price dislocation and uncertainty regarding the extent
of liquidity concerns in the near term triggered Fitch's decision
to place Brazos Electric's rating, and all other cooperative and
municipal utilities operating within the ERCOT regional power
market, on Rating Watch Negative on Feb. 24.
SECURITY
Brazos Electric's IDR reflects Fitch's assessment of the
cooperative's vulnerability to default on its financial
obligations.
KEY RATING DRIVERS
Bankruptcy Petition: Brazos Electric files a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code on March 1,
2021.
Supply Collapse Leads to Exponential Costs: The regionalized energy
market operated by ERCOT requires utilities to purchase all energy
from the market and sell all energy produced to the market. As many
of the state's generation plants were not prepared for the
persistence of multiple days of freezing temperatures that occurred
in February, generation and natural-gas wells and pipelines
shut-down production across the state. The shortage of energy
supply from both owned and contracted generation plants drove
Brazos Electric to purchase energy from ERCOT without a
corresponding sale of energy from its own generation resources
during certain periods to offset market prices, resulting in
significantly higher than budgeted net energy costs.
Natural Gas Price Spikes: Natural gas shortages due to high demand
for home heating and well shut-downs significantly hampered energy
production, although other fuel types (coal, wind and nuclear)
struggled to produce power as well. Natural gas prices in Texas
last week exhibited a similar trend to ERCOT real-time market
energy prices and reached exponential peaks above typical gas
commodity prices.
Magnitude Outstripped Existing Liquidity: Brazos Electric, prior to
the storm, was considered to have adequate liquidity. At the end of
2019, unrestricted days cash provided an adequate 64 days cash on
hand. Additional liquidity provided through a $500 million line of
credit with Bank of America provided additional liquidity, totaling
293 days liquidity. While this robust liquidity positions Brazos
Electric to absorb above-budget costs, the magnitude of last week's
expenditures quickly exceeded the liquidity available.
Legislative and Regulatory Risk: The extreme winter weather event
prompted ERCOT to order utilities to curtail load to avoid grid
failure, leaving approximately four million Texans without power at
the peak of the outages. Conversations are fluid at the moment
regarding how to address the issues that occurred last week and
prevent their reoccurrence. The Texas legislature is in session and
the governor has indicated his intent to work with the legislature
to address the shortfalls of the electric sector. Hearings began
last week. It is too early to know what legislation may ultimately
be signed into law.
ESG-Environment: Brazos Electric has an ESG Relevance Score of '5',
revised from '4' for Exposure to Environmental Impacts due to the
effects of recent severe winter weather, which has had an acute,
negative impact on Brazos Electric's credit profile, and is highly
relevant to the filing for bankruptcy protection.
RATING SENSITIVITIES
Rating sensitivities are not applicable, as the company has filed
for bankruptcy.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
BEPC is a large generation and transmission (G&T) power cooperative
serving 16 Texas distribution cooperative members and one
municipality pursuant to long-term, all-requirements power sales
contracts through 2045. The members serve a growing customer base
of approximately 684,296 retail meters in 68 counties located
principally to the west of the Dallas/Fort Worth metropolitan area
and northwest of Houston. Residential member sales account for
approximately 58% of the total and add stability to the
cooperative's overall revenue base.
ESG CONSIDERATIONS
Brazos Electric has an ESG Relevance Score of '5', revised from
'4', for Exposure to Environmental Impacts due to the effects of
recent severe winter weather, which has had an acute, negative
impact on Brazos Electric's credit profile, and is highly relevant
to the filing for bankruptcy protection. For all other ESG
concerns, 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, either due to their nature or the way in
which they are being managed by Brazos Electric.
BRAZOS ELECTRIC: Has $240M Cash, Searches for Bankruptcy Loan
-------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that Brazos Electric Power
Cooperative has received 32 expressions of interest regarding a
debtor-in-possession loan to fund its bankruptcy, Louis Strubeck of
law firm Norton Rose Fulbright said in a hearing Wednesday.
The electricity provider filed for bankruptcy without a DIP in
place because it has more than $240 million of cash on hand, Mr.
Strubeck said, but added that it may need financing in the future.
Its financial adviser, Berkeley Research Group, is leading
discussions about a potential DIP, he said.
MBrazos Electric Power Cooperative is a 3,994-megawatt transmission
and generation cooperative which members' service territory covers
68 counties from the Texas Panhandle to Houston. It was organized
in 1941 and the first cooperative formed in the Lone Star state
with the primary intent of generating and supplying electrical
power. At present, it is the largest generation and transmission
cooperative in the state and is the wholesale power supplier for
its 16 member-owner distribution cooperatives and one municipal
system.
Brazos Electric Power Cooperative filed a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.
Tex. Case No. 21-30725) on March 1, 2021.
Brazos listed at $1 billion to $10 billion in assets and
liabilities as of the filing.
Norton Rose Fulbright US LLP, led by Dallas partner Louis Strubeck,
is the bankruptcy counsel to Brazos. Berkeley Research Group, LLC,
is the financial advisor. Stretto is the claims agent, maintaining
the page https://cases.stretto.com/brazos/court-docket/
BRAZOS ELECTRIC: Seeks Authority to Use Cash Collateral
-------------------------------------------------------
Brazos Electric Power Cooperative, Inc. asks the U.S. Bankruptcy
Court for the Southern District of Texas, Houston Division, for
authorization to use cash collateral.
Before the Petition Date, the Debtor was party to various financing
arrangements through which it funded, among other things,
working-capital needs and capital projects pending longer-term
financing. The Debtor's outstanding secured debt consists of
Federal Financing Bank (FFB) Secured Notes, with a total principal
amount of $1,564,609,000. The Debtor's outstanding unsecured
financed debt consists of an Unsecured Revolving Credit Agreement
with a total principal amount of $479,975,000.
The Debtor uses a centralized cash-management system, which
concentrates substantially all of the Debtor's cash resources in
various accounts maintained by the Debtor. The Debtor is party to
an Indenture of Deed of Trust, Security Agreement, and Financing
Statement dated as of June 1, 2010 by and between the Debtor, as
grantor, and Regions Bank, as Trustee securing certain notes issued
by the Federal Financing Bank. The Secured Notes are guaranteed by
the Rural Utilities Service pursuant to, among other agreements,
the Fifth Amended and Restated Loan Contract, dated as of December
15, 2020 between the Debtor and the United States of America,
acting through the Administrator of RUS. The Debtor's obligations
under the Secured Notes are secured by certain liens under the
Trust Indenture in the Debtor's property.
The Debtor also maintains a long-term unsecured line of credit
under the Second Amended and Restated Credit Agreement, dated as of
September 28, 2018 by and among Bank of America N.A., as
Administrative Agent, Swing Line Lender, and L/C Issuer, and
certain lenders party thereto, including CFC. The Revolving Credit
Agreement provides the Debtor with a $500 million revolving line of
credit. Just before the Petition Date, the Debtor drew down the
Revolving Facility in full in order to access additional liquidity
needed as a result of the Black Swan Winter Event occurring between
February 14, 2021 and February 28, 2021. Most of the Debtor's cash
on hand, including Line of Credit Proceeds, are currently on
deposit in the CFC Investment Account maintained with National
Rural Utilities Cooperative Finance Corporation ("CFC").
"As of the Petition Date, the Debtor currently has $241.1 million
of cash on hand. Of that amount, up to approximately $221 million
could constitute Line of Credit Proceeds drawn by the Debtor
shortly before the Petition Date and are not proceeds of the RUS
Prepetition Collateral. The Debtor has not entered into an account
control agreement or similar arrangement in respect of that
account; however, CFC may assert set-off and other rights, and Bank
of America may asserts rights, against that account. Further, the
RUS Parties claim a security interest in cash held by the Debtor
pursuant to the RUS Credit Documents. Nevertheless, the Debtor
believes that its current cash balance, including the Line of
Credit Proceeds, is unencumbered and does not constitute cash
collateral as such term is defined in section 363(a) of the
Bankruptcy Code... However, out of an abundance of caution, the
Debtor is negotiating the terms of what it hopes will be a
consensual order with the Reserving Lender Parties to avoid any
unnecessary litigation at this stage of this chapter 11 case," the
Debtor tells the Court.
"Although the Debtor still has approximately $241.1 million of cash
on hand (including Line of Credit Proceeds), under the
circumstances, the Debtor will need additional financing not only
to fund ongoing operations but to pay the administrative cost of
this chapter 11 case. Over the past week, the Debtor has been in
regular contact with several of its largest financial stakeholders
(including RUS, CFC, and Bank of America) and other counterparties
concerning, among other things, potential financing solutions,
including the existence and temporary use of Cash Collateral. The
Debtor was not able to fully explore longer-term financing options
before the Petition Date and there is no immediate need for
additional debtor in possession financing at this time. The
Debtor’s discussions with various banks and financial
institutions regarding postpetition financing are extensive and
ongoing, but in order to minimize further disruption to the
Debtor’s operations and facilitate its transition into chapter
11, the Debtor needs immediate access to its existing cash
resources, including the Line of Credit Proceeds. Based on current
projections as set forth in the Budget, the Debtor believes that it
can survive using only its cash on hand to satisfy ongoing
operations and the initial administrative costs of this case
through at least April 30, 2021," the Debtor further tells the
Court.
A full-text copy of the Debtor's Emergency Motion is available for
free at https://tinyurl.com/3rukpftv from PacerMonitor.com.
About Brazos Electric Power Cooperative
Brazos Electric Power Cooperative is a 3,994-megawatt transmission
and generation cooperative which members' service territory covers
68 counties from the Texas Panhandle to Houston. It was organized
in 1941 and the first cooperative formed in the Lone Star state
with the primary intent of generating and supplying electrical
power. At present, it is the largest generation and transmission
cooperative in the state and is the wholesale power supplier for
its 16 member-owner distribution cooperatives and one municipal
system.
Brazos Electric Power Cooperative filed a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.
Tex. Case No. 21-30725) on March 1, 2021.
Brazos listed $1 billion to $10 billion in both assets and
liabilities as of the filing.
Brazos Electric has hired Norton Rose Fulbright and Dallas partner
Louis Strubeck, to lead its restructuring effort. Lawyers say that
Foley & Lardner LLP bankruptcy partner Holland O'Neil is also
advising Brazos Electric.
BRAZOS ELECTRIC: Seeks Legislative Fix in Filing Chapter 11
-----------------------------------------------------------
Law360 reports that Texas power cooperative Brazos Electric told a
bankruptcy judge Wednesday, March 3, 2021, that it has retained one
of the state's top lobbyists to pursue a legislative resolution to
the billions of dollars in liabilities owed by Texas power
companies in the aftermath of February's devastating winter storm.
During the company's initial court appearance in its Chapter 11
case, Brazos attorney Louis R. Strubeck Jr. of Norton Rose
Fulbright said the debtor is not the only electricity generator in
Texas that is dealing with sky-high fees resulting from the "black
swan" winter weather event.
.
About Brazos Electric
Brazos Electric Power Cooperative is a 3,994-megawatt transmission
and generation cooperative which members' service territory covers
68 counties from the Texas Panhandle to Houston. It was organized
in 1941 and the first cooperative formed in the Lone Star state
with the primary intent of generating and supplying electrical
power. At present, it is the largest generation and transmission
cooperative in the state and is the wholesale power supplier for
its 16 member-owner distribution cooperatives and one municipal
system.
Brazos Electric Power Cooperative filed a voluntary petition for
relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.
Tex. Case No. 21-30725) on March 1, 2021.
Brazos listed at $1 billion to $10 billion in assets and
liabilities as of the filing.
Norton Rose Fulbright US LLP, led by Dallas partner Louis Strubeck,
is the bankruptcy counsel to Brazos. Berkeley Research Group, LLC,
is the financial advisor. Stretto is the claims agent, maintaining
the page https://cases.stretto.com/brazos/court-docket/
BRITT TRUCKING: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Britt Trucking Company
DBA Britt Truckng Co., Inc.
DBA Britt Trucking Company, Inc.
DBA Britt Trucking
1900 Seminole Rd
Lamesa, TX 79331
Business Description: Britt Trucking Company operates in the
general freight trucking industry.
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
Northern District of Texas
Case No.: 21-50031
Judge: Hon. Robert L. Jones
Debtor's Counsel: R. Byrn Bass, Jr., Esq.
R. BYRN BASS, JR.
Wells Fargo Center
1500 Broadway, Suite 505
Lubbock, TX 79401
Tel: (806) 785-1250
E-mail: bbass@bbasslaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Larry Price, president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/FXGX6RY/Britt_Trucking_Company__txnbke-21-50031__0001.0.pdf?mcid=tGE4TAMA
CARBON AND CLAY: Case Summary & 20 Largest Unsecured Creditors
--------------------------------------------------------------
Debtor: Carbon and Clay Company
dba My Magic Mud
1965 Post Road, Suite 600
New Braunfels, TX 78130
Business Description: Carbon and Clay Company manufactures beauty
and oral care products.
Chapter 11 Petition Date: March 4, 2021
Court: United States Bankruptcy Court
Western District of Texas
Case No.: 21-50242
Judge: Hon. Craig A. Gargotta
Debtor's Counsel: William R. Davis, Jr., Esq.
LANGLEY & BANACK, INC.
745 E Mulberry Ave.
Suite 700
San Antonio, TX 78212
Tel: (210) 736-6600
Fax: (210) 735-6889
E-mail: wrdavis@langleybanack.com
Total Assets: $2,850,486
Total Liabilities: $1,434,965
The petition was signed by Jessica Arman, 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/LE3ETPQ/Carbon_and_Clay_Company__txwbke-21-50242__0001.0.pdf?mcid=tGE4TAMA
CASA DE LAS INVESTMENTS: Seeks to Hire Keller Williams as Broker
----------------------------------------------------------------
Casa de Las Investments, LLC seeks approval from the U.S.
Bankruptcy Court for the Central District of California to employ
Keller Williams Los Angeles as its broker.
The firm will list the Debtor's real property located at 10107
England Ave., Inglewood, Calif.
The firm will receive a commission equal to 4.5 percent from the
proceeds of the sale.
Keller Williams 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:
Anthony Wright, Jr.
Keller Williams Los Angeles
700 S Flower St, Suite 2900
Los Angeles, CA 90017, US
Phone: (424) 333-5940
Email: anthonywright@kw.com
About Casa de Las Investments
Casa De Las Investments, LLC sought protection under Chapter 11 of
the Bankruptcy Code (Bankr. C.D. Calif. Case No. 21-10796) on Feb.
1, 2021. In its petition, the Debtor estimated assets of between
$500,000 and $1 million and liabilities of between $1 million and
$10 million. Lille B. Whitehead, managing member, signed the
petition.
Judge Ernest M. Robles oversees the case. The Hinds Law Group, APC
is the Debtor's legal counsel.
CICI'S HOLDINGS: Poised for Bankruptcy Exit Under New Owner
-----------------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that Cici's Holdings Inc.
is poised to exit bankruptcy under new ownership following court
approval of its Chapter 11 reorganization plan 37 days after
filing.
The plan approved Wednesday, March 3, 2021, will cut the company's
debt by as much as $81.6 million and preserve the going-concern
value of the business, Teri Stratton of TRS Advisors, Cici's
financial adviser and investment banker, said in a declaration.
The pizza chain's largest creditor and secured lender, D&G
Investors LLC, will take over the business and assume all franchise
agreements. D&G is an entity controlled by private investment firm
Gala Capital Partners LLC and SSCP Management Inc.
About CiCi's Holdings
CiCi's Holdings Inc. is the owner, operator and franchisor of
family-oriented unlimited pizza restaurants. With approximately
318 locations across 26 states, including 11 owned restaurants and
307 franchise locations owned and operated by 128 franchisees, the
CiCi's brand is known as a "go-to" destination for family and other
group outings through its wide variety of pizza, pasta, and salad
bar items and cost-effective price point.
CiCi's Holdings and its affiliates sought Chapter 11 protection
(Bankr. N.D. Tex. Lead Case No. 21-30146) on Jan. 25, 2021, with a
restructuring support agreement for a plan that would have lender
D&G Investors LLC take over ownership. D&G is an affiliate of
private investment firm Gala Capital.
Cici's Holdings was estimated to have $10 million to $50 million in
assets and $50 million to $100 million in liabilities as of the
bankruptcy filing.
The Hon. Stacey G. Jernigan is the case judge.
The Debtors tapped Gray Reed & McGRAW LLP as bankruptcy counsel and
Piper Sandler & Co. as investment banker. Stretto is the claims
agent.
CLOUD TEN: Seeks to Hire Horn & Associates as Counsel
-----------------------------------------------------
Cloud Ten Marketing Group LLC seeks approval from the U.S.
Bankruptcy Court for the Middle District of Florida to hire Horn &
Associates as its bankruptcy counsel.
The firm's services will include:
a. advising the Debtor with respect to its powers, rights and
duties and the continued management of hits business operations and
other financial affairs;
b. assisting the Debtor in the preparation of its schedules
and statements of financial affairs;
c. advising the Debtor with respect to its responsibilities in
complying with the U.S. trustee's operating guidelines and
reporting requirements and with the rules of the court;
d. assisting the Debtor in the administration of its Chapter
11 case;
e. reviewing and analyzing the claims of creditors and
negotiating with such creditors;
f. preparing and prosecuting litigation;
g. reviewing any other legal documents necessary for the
administration of the case;
h. advising the Debtor and negotiating with respect to the
sale of assets of the estate;
i. representing the Debtor in negotiation with its creditors
in the preparation and proposal of a plan of reorganization;
j. preparing legal papers;
k. other legal services.
Ian Horn, Esq., the firm's who will be handling the case, charges
$400 per hour. The rates charged by paraprofessionals and legal
assistants in his office range from $100 to $200 per hour.
Mr. Horn declared in a court filing that he and his law firm are
"disinterested persons" as required by Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
Ian Horn, Esq.
Horn & Associates
P.O. Box 691
Brandon, FL 33509
Tel: (813) 545-1067
Fax: 813-689-5794
Email: IanHornLaw@gmail.com
About Cloud Ten Marketing Group
Cloud Ten Marketing Group, LLC is a single asset real estate (as
defined in 11 U.S.C. Section 101(51B)).
Cloud Ten Marketing Group filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
21-00303) on Jan 26, 2021. Richard Smith, managing member, signed
the petition. In the petition, the Debtor disclosed assets of
between $1 million and $10 million and liabilities of the same
range.
Judge Michael G. Williamson oversees the case.
Horn & Associates serves as the Debtor's legal counsel.
CMC II LLC: Court Permits Consulate Affiliates to Get $5M Loan
--------------------------------------------------------------
Law360 reports that affiliates of nursing home business Consulate
Health Care were cleared on Wednesday, March 3, 2021, to tap into a
$5 million post-petition loan as they move forward with plans to
sell assets after being plunged into Chapter 11 in Delaware by a
roughly $258 million False Claims Act judgment.
During a virtual hearing, U.S. Bankruptcy Judge John T. Dorsey gave
the go-ahead for debtor CMC II LLC and affiliates to access $1
million of a $5 million in debtor-in-possession loan from CPSTN
Operations LLC, pending a final hearing on the total post-petition
financing package.
About CMC II, et al.
CMC II, LLC, 207 Marshall Drive Operations LLC, 803 Oak Street
Operations LLC and three inactive affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-10461) on March 1,
2021.
CMC II, LLC, et al., are part of a group of Consulate Health care
corporate affiliates that manage and operate 140 skilled nursing
facilities. CMC II provides management and support services to
approximately 140 SNFs, each of which is operated by an affiliate
of the Debtors under the common ownership of non-Debtor LaVie Care
Centers, LLC, doing business as Consulate Health Care. 207
Marshall Drive Operations LLC operates Marshall Health and
Rehabilitation Center, a 120-bed SNF located in Perry, Florida.
803 Oak Street Operations LLC operates Governor's Creek Health and
Rehabilitation, a 120-bed SNF located in Green Cove Springs,
Florida.
CMC II estimated assets and debt of $100 million to $500 million as
of the bankruptcy filing.
The Hon. John T. Dorsey is the case judge.
The Debtors tapped Chipman Brown Cicero & Cole, LLP, as counsel;
and Alvarez & Marsal North America, LLC as restructuring advisor.
Evans Senior Investments is the Debtors' broker. Stretto is the
claims agent.
CONNEAUT LAKE PARK: $1.2M Cash Sale of All Assets to Keldon Okayed
------------------------------------------------------------------
Judge Jeffery A. Deller of the U.S. Bankruptcy Court for the
Western District of Pennsylvania authorized the Trustees of
Conneaut Lake Park, Inc.'s sale of substantially all assets to
Keldon Holdings, LLC, for $1.2 million, cash.
A hearing on the Motion was held on March 2, 2021, at 10:00 a.m.
via Zoom. The Objection Deadline was Feb. 17, 2020.
The Sale includes, among other things, transfer of title to the
Water Supply to the Successful Bidder. Upon closing of the Sale,
the Debtor and the Successful Bidder will submit a complete
application to transfer the Water Supply Permits issued by the
Pennsylvania Department of Environmental Protection identified as
Permit Nos. 2009505, 2009505-MA1 and 2084504-T2-MA2.
Upon closing of the Sale, the Successful Bidder assumes the
continued operational aspects of the Water Supply, including the
employment of Certified Personnel and the responsibility to ensure
the collection, analysis and reporting of compliance samples from
the Water Supply.
The Sale of the Debtor's Assets to the Successful Bidder is on an
"as is where is" basis consistent with the terms of the PSA.
The Sale is free and clear of any and all Liens and Claims, with
all such Liens and Claims upon the Debtor's Assets to be
unconditionally released, discharged, and terminated as against
either the Debtor's Assets or the Successful Bidder. Any such
Liens and Claims will attach to the proceeds of the sale of the
Debtor's Assets.
The Successful Bidder's offer for the Debtor's Assets, as embodied
in the PSA, is the highest and best offer for the Debtor's Assets
and is approved. The PSA is also approved. Pursuant to sections
105(a) and 363(b) of the Bankruptcy Code, the Sale by the Debtor to
the Successful Bidder for the Debtor's Assets and transactions
related thereto, upon the closing under the PSA, are authorized and
approved in all respects.
Pursuant to the PSA and section 365(k) of the Bankruptcy Code, the
Debtor will have no liabilities for any claims arising or relating
to or accruing post-Closing under any of the Assigned Contracts.
Except as provided in the PSA and the Order, the Debtor will be
responsible for all obligations that arise prior to the Closing
Date relating to all Assigned Contracts unless otherwise agreed to
by and between the Debtor, Successful Bidder and the counterparty
to the
Assigned Contract.
Notwithstanding the provisions of Rules 6004(h) and 6006(d) of the
Bankruptcy Rules, the Order will not he stayed for 14 days after
entry and will be effective immediately upon entry, and the Debtor
and the Successful Bidder are authorized to close the Sale
immediately upon entry of the Order.
The Sale is made pursuant to the Debtor's Chapter 11 Plan of
Reorganization confirmed by the Court by Order entered Sept. 6,
2016. Therefore, in accordance with 11 U.S.C. Section 1146(a), the
Sale is exempt from taxation under any laws imposing a stamp tax,
state or local transfer tax, or similar tax. If a timely objection
is filed, then the Court will hold a hearing and decide the Section
1 146(a) stamp tax issue de novo. If no such objection is timely
filed, then the exemption provided for in this paragraph will be
allowed and final.
A copy of the PSA is available at https://tinyurl.com/585avvwy from
PacerMonitor.com free of charge.
About Conneaut Lake Park
Trustees of Conneaut Lake Park, Inc. is a Pennsylvania non-profit
corporation organized in 1997 and having the corporate purpose,
among other things, to preserve and maintain Conneaut Lake Park, a
vintage amusement park located in Conneaut Lake, Pennsylvania, for
historical, cultural, social and recreational, and civic purposes
for the benefit of the community and the general public. It
presently holds in trust for the use of the general public
approximately 207 acres of land and the improvements thereon
located in Crawford County, Pennsylvania.
Trustees of Conneaut Lake Park, Inc., filed a Chapter 11
bankruptcy
petition (Bankr. W.D. Pa. Case No. 14-11277) in Erie,
Pennsylvania,
on Dec. 4, 2014. The case is assigned to Judge Thomas P. Agresti.
The Debtor estimated assets and debt of $1 million to $10 million.
Trustees of Conneaut Lake Park filed for bankruptcy protection
less
than 20 hours before the Crawford County amusement park was
scheduled to go to sheriff's sale for almost $930,000 in back
taxes
and related fees.
The Debtor tapped George T. Snyder, Esq., at Stonecipher Law Firm,
in Pittsburgh, as counsel.
Passport Realty, LLC was appointed by the Court as Broker on July
31, 2015.
On Sept. 6, 2016, the Court entered a final order approving the
Disclosure Statement and confirming the Reorganized Debtor's Joint
Amended Plan of Reorganization.
CONSTANT CONTACT: Fitch Assigns First-Time 'B' LongTerm IDR
-----------------------------------------------------------
Fitch Ratings has assigned first-time Long-Term Issuer Default
Ratings (IDRs) of 'B' to Constant Contact, Inc. The Rating Outlook
is Stable. Fitch has also assigned a 'BB-'/'RR2' to Constant
Contact's $125 million secured revolving credit facility (RCF),
$670 million first-lien secured term loan, and $180 million
first-lien delayed-draw term loan (DDTL). Fitch has also assigned a
'CCC+'/'RR6' to the second-lien secured term loan. The proceeds
along with sponsor equity from Clearlake Capital Group, L.P. and
Siris Capital Group, LLC will be used for the acquisition of
Constant Contact, Inc. from Endurance International Group Holdings,
Inc.
Constant Contact, Inc.'s Long-Term IDR of 'B' is supported by its
stable recurring sales and strong cash generative qualities. The
IDR also reflects the fragmented email marketing industry with
several competing brands and products, and substantial exposure to
the SMB market with greater volatility. In addition, as a private
equity owned entity, financial leverage is likely to remain at
moderate levels as shareholders prioritize ROE maximization
limiting debt reduction.
KEY RATING DRIVERS
Recurring Revenue and Strong Profitability: Substantially all of
Constant Contact's revenues are recurring providing visibility into
future revenue streams. Recurring revenues are primarily supported
by subscriptions for various tiers of products. Net revenue
retention for Constant Contact is in the mid-80s. The company has
maintained stable subscribers while growing average revenue per
subscriber (ARPS) from its installed base despite the relatively
high churn in the small to medium-sized business (SMB) segment.
Constant Contact has consistently demonstrated strong FCF
characteristics with strong EBITDA and FCF margins.
SMB Exposure: Constant Contact, Inc. offers products addressing the
email marketing needs of SMB customers that have limited technical
or marketing resources dedicated to launching, managing, and
monitoring their online marketing campaigns. The SMB segment
generally has high failure rates resulting in high subscriber
churn. This results in the need for Constant Contact to maintain
sales by replacing churned customers with new ones and growing
ARPS. Exposure to SMB customers also results in exposure to the
cyclical impact of economic cycles, which could potentially lead to
cash flow volatility during periods of economic stress.
Fragmented Industry: The SMB email marketing industry is
fragmented, with over 200 market participants. Barriers to entry
are low and incumbent market share is not protected. Switching
costs are low, as it is not costly or complicated to switch
marketing software vendors. Constant Contact is the No. 2 player in
the market serving over 470,000 subscribers, with the market leader
(Mailchimp) estimated to have over one-third of market share among
SMB email marketing companies. Beyond the top two competitors, no
other peers command over 10% market share. Several companies offer
a broad spectrum of solutions to customers with various needs, as
well as competitors offering narrower point solutions to SMBs with
limited scope.
Market Position Facilitates Customer Acquisition: Over 50% of
Constant Contact's customer acquisitions are direct-to-site and
considered organic acquisitions. The company attributes the strong
organic customer acquisition to its strong brand awareness and
market position within the SMB segment. Fitch views the high
organic customer acquisition as an important factor for profitable
subscriber growth in the SMB segment and fragmented industry.
Elevated Leverage: Following the spin-off transaction, Fitch
estimates Constant Contact's gross leverage to be elevated
initially at over 6x in 2021. Despite deleveraging capacity
projected beyond 2021 supported by the company's FCF generation,
Fitch expects limited deleveraging as Constant Contact's private
equity ownership would likely prioritize ROE maximization through
M&As and dividend payments.
DERIVATION SUMMARY
Constant Contact's 'B' Long-term IDR reflects its strong market
position as a software vendor in the fragmented SMB email marketing
industry. The company provides SMBs the means to launch, analyze
and manage their own email marketing campaigns. Demand for email
marketing is expected to grow as SMBs seek to maximize their reach
to customers and email campaigns continue to offer better ROI than
other marketing channels. Constant Contact's operating profile is
also strengthened by the high recurring nature of its revenues
supported by the subscription model. Limitations to Constant
Contact's rating include its SMB exposure that could result in
revenue volatility during extended economic weakness.
Fitch expects Constant Contact to maintain some level of financial
leverage as a private equity owned company as equity owners
optimize capital structure to maximize ROE. Constant Contact
operated as the core of Endurance International's Digital Marketing
segment. Following the spin-off transaction, Constant Contact will
operate as a standalone company. Constant Contact's market
position, revenue scale, SMB exposure and leverage profile are
consistent with the 'B' rating category.
KEY ASSUMPTIONS
-- Low-single digit organic revenue growth, driven by modest net
subscriber adds and higher ARPS.
-- EBITDA margins in the high 30's in 2021 and expanding to near
40% by 2023 as company optimizes its operations as an
independent entity;
-- $250 million in aggregate acquisitions through 2023 largely
funded with incremental debt; and
-- Mid single-digit capital intensity.
KEY RECOVERY RATING ASSUMPTIONS
-- The Recovery analysis assumes that Constant Contact, Inc.
would be reorganized as a going concern in bankruptcy rather
than liquidated.
-- A 10% administrative claim is assumed.
Going-Concern (GC) Approach
-- In the event of a bankruptcy reorganization, Fitch assumes
that Constant Contact would continue to execute on its cost
reduction plan as part of the reorganization plan. In such a
scenario, the recovery analysis assumes sales pressure in the
form of declining net subscriber retention from not adding new
customers and slowing ARPS growth.
-- Constant Contact's GC EBITDA is assumed to be approximately
20% below PF fiscal 2020 EBITDA of $168 million as the company
would have achieved most of the $21 million cost reduction
plan during 2021.
-- An EV multiple of 6x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice
of this multiple considered the following factors:
-- The historical bankruptcy case study exit multiples for
technology peer companies ranged between 2.6x and 10.8x.
-- Of these companies, only three were in the Software sector:
Allen Systems Group, Inc.; Avaya, Inc. and Aspect Software
Parent, Inc., which received recovery multiples of 8.4x, 8.1x
and 5.5x, respectively.
-- Constant Contact's stable sales profile, brand recognition and
position as the No. 2 player in the fragmented SMB email
marketing industry.
-- Fitch arrives at an EV of $806 million. After applying the 10%
administrative claim, adjusted EV of $726 million is available
for claims by creditors.
-- Fitch assumes a full draw on Constant Contact's $125 million
revolver as well as the $180 million DDTL.
Fitch estimates strong recovery prospects for the first lien term
loans and revolver and rates them 'BB-'/'RR2', or two notches above
Constant Contact's 'B' IDR.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch's expectation of total debt with equity credit/operating
EBITDA sustaining below 5.0x; and
-- (Cash from operations-capex)/total debt with equity credit
above 7.5%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch's expectation of total debt with equity credit/operating
EBITDA sustaining above 6.5x;
-- (Cash from operations-capex)/total debt with equity credit
below 5.0%;
-- FFO interest coverage below 2.0x; and
-- Deterioration in key operating metrics, including subscriber
growth, churn and profitability.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Strong Liquidity: Following the close of the transaction, Constant
Contact, Inc. will have $10 million cash on balance sheet and full
availability of its $125 million revolver. Internal cash generation
with strong margins also supports the liquidity profile, as Fitch
expects Constant Contact to consistently generate FCF margins in
the low to mid-teens.
Debt Structure: The company has a favorable maturity schedule, with
no debt maturity before 2028 and term loan amortization is
manageable at $6.7 million annually.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3' - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
CONTINENTAL COUNTRY: U.S. Trustee Unable to Appoint Committee
-------------------------------------------------------------
The U.S. Trustee for Region 14 on March 3 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Continental Country Club, Inc.
About Continental Country Club
Continental Country Club filed a Chapter 11 bankruptcy petition
(Bankr. D. Ariz. Case No. 21-00956) on Feb. 9, 2021. At the time
of the filing, the Debtor disclosed assets of between $1 million
and $10 million and liabilities of the same range.
Judge Edward P. Ballinger Jr. oversees the case.
The Debtor tapped Engelman Berger, P.C. as its bankruptcy counsel
and Krupnik & Speas, PLLC and Warner Angle Hallam Jackson &
Formanek PLC as its special counsel.
DANA INC: S&P Affirms 'BB' ICR, Alters Outlook to Stable
--------------------------------------------------------
S&P Global Ratings revised the outlook on Dana Inc. to stable from
negative and affirmed the 'BB' issuer credit rating.
S&P said, "At the same time, we raised our issue-level rating on
the company's senior unsecured notes to 'BB' from 'BB-' and revised
our recovery rating to '4' from '5'. The '5' recovery rating
indicates our expectation for average (30%-50%; rounded estimate:
30%) recovery in the event of a payment default.
"Dana's volumes and margins continue to recover, and increasing
demand in the majority of Dana's end markets should improve the
company's credit metrics in 2021 and 2022. We expect a strong
recovery in demand for class 8 trucks in North America, medium duty
trucks internationally, and off-highway vehicles because of a ramp
up in construction and mining. These higher volumes should lift
Dana's margins in 2021 and 2022 higher than our previous
expectation. While margins remain weaker than before the pandemic,
this is partly because of strategic spending on electrification
initiatives, which should benefit the company longer term. Overall,
we now expect debt to EBITDA to fall below 3x and free operating
cash flow (FOCF) to debt to move above 10% in 2021. The main risk
to our forecast would be significantly lower volumes in its end
markets. For example, if the global semiconductor shortage in the
auto industry worsens or takes longer to resolve, this could limit
the improvement in Dana's revenues and profits.
"The stable outlook incorporates our expectation that Dana's EBITDA
margins will increase to around 11% this year and its end markets
continue to recover. It also incorporates our expectation the
company will maintain debt to EBITDA well below 4x and free
operating cash flow (FOCF) will move sustainably above 10% this
year.
"We would likely lower our rating on Dana if we expect its debt to
EBITDA to remain higher than 4x or its FOCF to debt remains well
below 10%. This could occur if demand falls because of unexpected
economic weakness or operational issues at Dana.
"We could raise our ratings on Dana if we come to believe that it
will maintain a debt-to-EBITDA metric approaching 2x and a
FOCF-to-debt ratio of more than 15%. As a tier-1 auto supplier,
this would provide adequate cushion for underperformance over the
next downturn and lead to an improved cash flow adequacy
assessment. We would also need to be confident that the company is
committed to a financial policy of maintaining these metrics."
DAVID CROWE: Turbine Powered Technology Gets Automatic Stay Relief
------------------------------------------------------------------
Judge Brenda Moody Whinery of the United States Bankruptcy Court
for the District of Arizona granted Turbine Powered Technology,
LLC's Motion for Relief from Automatic Stay.
In 2016, TPT commenced an action in the 16th Judicial District
Court for the Parish of St. Mary in Louisiana against Debtor David
K. Crowe and eight others. The complaint in the Louisiana Action
contains counts against some and/or all of the named defendants for
declaratory relief, breach of contract, bad faith breach of
contract, intentional and/or negligent misrepresentation,
detrimental reliance, fraud and fraud in the inducement, violation
of the Louisiana Unfair Trade Practices Act and Consumer Protection
Law, violation of the Louisiana Uniform Trade Secrets Act, tortious
interference with business relationships, unjust enrichment, and
breach of fiduciary duty. The complaint also sought injunctive
relief against Mr. Crowe and others in the form of a temporary
restraining order, a preliminary injunction, and ultimately, a
permanent injunction. Mr. Crowe and his wife, Colleen, asserted
counterclaims and third-party claims in the Louisiana Action,
alleging damages of not less than $100 million.
Pre-petition, the Crowes were represented by Meade Young, LLC in
the Louisiana Action. On May 9, 2019, the Crowes filed an
Application for Approval of Employment of Meade Young, LLC as
Special Counsel for Debtors in Possession, in which application the
Crowes asked the Court to authorize the employment of Meade Young
to continue to represent them in the Louisiana Action on a
contingency fee basis. The Court granted the Special Counsel
Application, with approval of fees and costs to be subject to
further Court order. The Special Counsel Application did not seek
to limit the scope of Meade Young's employment, and the order
approving the Special Counsel Application did not otherwise impose
any limitations on the scope of Meade Young's employment to
prosecute the claims asserted by the Crowes or defend against the
claims asserted against Crowe in the Louisiana Action. The
retention agreement between Meade Young and the Crowes was not
disclosed to, or approved by, the Court. Meade Young currently
remains special counsel for the Crowes in the Louisiana Action.
On April 12, 2019, the Crowes filed a voluntary petition for relief
under chapter 11 of the Bankruptcy Code, staying the Louisiana
Action as to Mr. Crowe.
On July 16, 2019, TPT filed a proof of claim in an amount not less
than $30,014,536.82. The proof of claim stated that the basis for
the TPT Claim is the claims asserted by TPT against Mr. Crowe in
the Louisiana Action, other amounts awarded to TPT in the Louisiana
Action, and potentially other litigation claims. The Crowes
objected to TPT's proof of claim.
On July 22, 2019, TPT commenced an adversary proceeding against the
Crowes, in which proceeding TPT sought liquidation of the TPT Claim
in an amount not less than $30,014,536.82, plus interest,
attorneys' fees and other relief, and seeks a determination that
the TPT Claim is nondischargeable pursuant to Sections
523(a)(2)(A), 523(a)(4), 523(a)(6), and 727(a)(4)2. In the
Adversary complaint, TPT consented to the jurisdiction of the Court
for purposes of the Adversary. The Crowes generally deny the
allegations set forth in the Adversary complaint.
On August 14, 2019, the Crowes filed their Amended Disclosure
Statement in Support of Amended Chapter 11 Plan of Reorganization
Dated August 14, 2019 Proposed by David K. Crowe and Colleen M.
Crowe. The Disclosure Statement and the Amended Chapter 11 Plan of
Reorganization Dated August 2, 2019 Proposed by David K. Crowe and
Colleen M. Crowe was approved by the Court. The Crowes represented
in the Disclosure Statement that they intend to pursue their claims
in the Louisiana Action and related litigation post-confirmation
and/or upon the granting of stay relief, although the Crowes have
since indicated that they may choose not to "return to the fray" if
stay relief is granted.
On September 3, 2019, TPT filed the Motion for Stay Relief, in
which TPT moves the Court to grant stay relief to allow it to
complete the litigation in the Louisiana Action. On September 17,
2019, the Debtors respondend, asking the Court to deny TPT's
request for stay relief on the basis that the Louisiana Action
overlaps with the Adversary, over which the Court has core
jurisdiction, and on the basis that it is in the best interests of
the estate and creditors to have the issues decided by the Court.
The Crowes initially took the position that stay relief would put
the bankruptcy case on hold indefinitely pending liquidation of the
TPT Claim given the impact that liquidation of the TPT Claim would
have on the administration of the bankruptcy case. It was the
Crowes' position that liquidation or estimation of the TPT Claim
would be required in order for them to pursue confirmation of their
Plan.
TPT then filed a Motion to: (1) Abstain or Alternatively, Stay
Adversary Proceeding; and (2) to Continue Deadlines, on October 18,
2019. In its motion, TPT asked the Court to permissively abstain
from or stay the adjudication of the Adversary pending the
adjudication of TPT's claims against Crowe in the Louisiana Action.
The Crowes opposed the Motion to Abstain for many of the same
reasons that the Crowes initially opposed the Motion for Stay
Relief. The Court denied TPT's Motion to Abstain based upon the
status of the proceedings, particularly given the pending Motion
for Partial Summary Judgement (Counts I - III) which was filed by
the Crowes on November 13, 2019, without prejudice to the Court
determining whether the stay should be terminated or modified in
the future. The Court denied the Crowes' MPSJ on July 31, 2020, on
the basis that TPT had described what it asserts are the trade
secrets at issue in the Adversary, which are the same trade secrets
at issue in the Louisiana Action, with sufficient particularity to
overcome the MPSJ.
On November 12, 2020 and December 9, 2020, the Court held continued
hearings on the Motion for Stay Relief. On January 14, 2021, the
Court heard oral argument, where counsel for TPT clarified that at
the time, TPT was requesting relief from the stay solely for the
purpose of liquidating the TPT Claim.
The entirety of the TPT Claim remains disputed, unliquidated, and
contingent. Counsel for the Crowes has represented that given the
Court's MPSJ ruling, specifically the portion of the ruling
regarding the scope of the trade secret claims, neither liquidation
nor estimation of the TPT Claim is necessary for purposes of the
pending confirmation hearing on the Plan.
Judge Whinery said that Courts generally consider these
non-exclusive Curtis factors when determining whether there is
cause to grant stay relief to allow pre-petition litigation to
continue in another forum:
(1) Whether the relief will result in a partial or complete
resolution of the issues.
(2) The lack of any connection with or interference with the
bankruptcy case.
(3) Whether the foreign proceeding involves the debtor as a
fiduciary.
(4) Whether a specialized tribunal has been established to
hear the particular cause of action and that tribunal has the
expertise to hear such cases.
(5) Whether the debtor's insurance carrier has assumed full
financial responsibility for defending the litigation.
(6) Whether the action essentially involves third parties, and
the debtor functions only as a bailee or conduit for the goods or
proceeds in question.
(7) Whether litigation in another forum would prejudice the
interests of other creditors, the creditors' committee and other
interested parties.
(8) Whether the judgment claim arising from the foreign action
is subject to equitable subordination under Section 510(c).
(9) Whether movant's success in the foreign proceeding would
result in a judicial lien avoidable by the debtor under Section
522(f).
(10) The interest of judicial economy and the expeditious and
economical determination of litigation for the parties.
(11) Whether the foreign proceedings have progressed to the
point where the parties are prepared for trial.
(12) The impact of the stay on the parties and the balance of
hurt.
Applying the Curtis factors to the record before the Court, Judge
Whinery held:
(a) Whether the relief will result in a partial or complete
resolution of the issues: Allowing the Louisiana Action to proceed
will allow all, or nearly all, parties to the Louisiana Action to
obtain complete determinations of all pending claims for monetary
damages. This will allow liquidation of claims without the risk of
inconsistent rulings as between the parties to the Louisiana
Action. Whether or not TPT ultimately has any allowed claims, and
the extent to which any such claims are dischargeable in this
bankruptcy case are separate issues, reserved to the jurisdiction
of this Court. This factor weighs in favor of stay relief.
(b) The lack of any connection with or interference with the
bankruptcy case: The granting of stay relief for the purpose of
allowing the Louisiana Action to continue solely to liquidate the
monetary damages claims against Crowe will not materially interfere
with this bankruptcy case. The Debtors have acknowledged that the
TPT Claim does not need to be liquidated or estimated prior to or
as part of the confirmation proceedings. Further, to the extent
TPT were to attempt a collateral attack on a confirmation order in
the case, this Court could deal with such matter in due course.
The issues of allowability and nondischargeability of TPT's Claim,
if any, can be determined after liquidation of such claim. This
factor weighs in favor of stay relief.
(c) Whether the foreign proceeding involves the debtor as a
fiduciary: The complaint in the Louisiana Action asserts claims
against Crowe "in his individual capacity and/or as an officer,
owner, manager and/or partner" of various entities. Further, to
the extent there are state law fiduciary claims against Crowe at
issue in the Louisiana Action, any Section 523(a)(4)
dischargeability analysis, which analysis requires application of
federal law, would have to be done by this Court. This factor is
neutral.
(d) Whether a specialized tribunal has been established to
hear the particular cause of action and that tribunal has the
expertise to hear such cases: Ultimately, all of the causes of
action TPT has asserted in the Louisiana Action are state law
claims involving issues of Louisiana state law. The Louisiana
court in which the case proceeds, whether that be a Louisiana state
court or a Louisiana federal district court, is not a specialized
tribunal, but will likely be familiar with the applicable law.
Further, there is no need for this bankruptcy court, which is a
specialized tribunal, to determine the issues of state law
underlying the TPT Claim. This Court would retain jurisdiction
over claim allowance and nondischargeability proceedings. This
factor is neutral, at best.
(e) Whether the debtor's insurance carrier has assumed full
financial responsibility for defending the litigation: Even if the
Crowes do not have insurance that will bear the costs of the
Louisiana Action, this Court has approved the employment of special
counsel, and pursuant to this Court's order, special counsel is
engaged on a contingency fee basis, with fees to be calculated and
earned, subject to this Court's approval, as a percentage of
recovery from the claims brought by the Crowes. The Crowes have
indicated that their current special counsel is unwilling to defend
them in the Louisiana Action on a contingency basis. Thus, they
argue that stay relief would force them to decide whether to
"return to the fray" and proceed with litigation of their claims,
presumably under the continued representation of current special
counsel, or whether to locate new special counsel. It is
ultimately the Crowes' decision as to whether to pursue the claims
against TPT and others. Further, the TPT Claim must be liquidated
in some forum. Regardless of whether the TPT Claim is liquidated
in the Louisiana court or this Court, the Crowes will necessarily
incur fees and costs. This factor is neutral.
(f) Whether the action essentially involves third parties, and
the debtor functions only as a bailee or conduit for the goods or
proceeds in question: None of the claims at issue appear to involve
Crowe acting solely as a bailee or conduit. This factor weighs
against stay relief.
(g) Whether litigation in another forum would prejudice the
interests of other creditors, the creditors' committee and other
interested parties: No creditors or other parties in interest have
objected to the Motion for Stay Relief. Further, given the
circumstances of this case and current status of the proceedings,
it is the determination of this Court that allowing the Louisiana
court to liquidate the TPT Claim would not prejudice creditors or
interested parties in any material way. The TPT Claim will have to
be liquidated at some juncture, in some forum, and the Court would
require the parties to come back to this Court for any claim
allowance, enforcement and/or dischargeability determinations.
This factor weighs in favor of stay relief.
(h) Whether the judgment claim arising from the foreign action
is subject to equitable subordination under Section 510(c): Both
parties agree this factor is inapplicable.
(i) Whether movant's success in the foreign proceeding would
result in a judicial lien avoidable by the debtor under Section
522(f): Both parties agree this factor is inapplicable.
(j) The interest of judicial economy and the expeditious and
economical determination of litigation for the parties: To the
Court's knowledge, the Louisiana Action involves one additional
debtor-defendant and seven additional non-debtor defendants. As
such, the Louisiana court alone is in a position to comprehensively
resolve the disputes between most, if not all, of the parties. The
Court's granting of stay relief would significantly curb
duplicative litigation and further bifurcation of the issues.
Further, at this juncture, the Crowes have special counsel who is
employed to represent them on a contingency fee basis in the
Louisiana Action. The Crowes have indicated that they may need new
special counsel or need to seek approval of a non-contingent fee
agreement for their current special counsel if they chose not to
pursue their claims in the Louisiana Action. Even so, the Crowes'
bankruptcy counsel in this case is employed on an hourly basis such
that if liquidation of the TPT Claim were to be adjudicated by this
Court, the Crowes would necessarily incur attorneys' fees. This
factor favors stay relief.
(k) Whether the foreign proceedings have progressed to the
point where the parties are prepared for trial: Based upon
pleadings that have been filed on this Court's docket, the
Louisiana record is voluminous. Although it has been represented
to the Court that a new judge will be assigned to the case in
Louisiana, the Louisiana Action has been pending for more than four
years and is approaching the trial stage. This factor weighs in
favor of stay relief.
(l) The impact of the stay on the parties and the "balance of
hurt": The stay is intended in part to provide debtors with
breathing room. In this case, the Crowes have had the benefit of
the stay for more than 22 months. Confirmation of the Crowe's Plan
is set for an evidentiary hearing, and, importantly, counsel for
the Crowes has confirmed that liquidation of the TPT Claim is not
essential for plan confirmation. Ultimately, the stay is merely
pausing litigation that will necessarily have to be resolved in
some forum. Based upon the foregoing, this factor weighs in favor
of stay relief.
"Based upon the Court's consideration of the Curtis factors and the
totality of the circumstances in this case, it is the determination
of this Court that TPT has established cause for relief from the
automatic stay pursuant to Section 362(d)(1) to allow the Louisiana
Action to proceed against Crowe, solely for the purpose of
liquidating the pre-petition TPT Claim. The stay will remain in
effect as to any injunctive relief sought in the Louisiana Action,"
Judge Whinery concluded.
The case is In re: DAVID K. CROWE and COLLEEN M. CROWE, Chapter 11,
Debtor(s), Case No. Case No. 4:19-bk-04406-BMW (Bankr. D. Ariz.).
A full-text copy of the Ruling and Order Regarding Motion for
Relief from Automatic Stay, dated February 25, 2021, is available
at https://tinyurl.com/42t94fbm from Leagle.com.
About David K. Crowe and Colleen M. Crowe
David K. Crowe and Colleen M. Crowe sought protection under Chapter
11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 19-04406) on
April 12, 2019. Mesch, Clark & Rothschild, P.C. is the Debtors'
bankruptcy counsel.
DAWN ACQUISITIONS: S&P Downgrades ICR to 'CCC', Outlook Negative
----------------------------------------------------------------
S&P Global Ratings lowered the issuer-credit rating on data center
operator Dawn Acquisitions LLC to 'CCC' from 'B-' given its view
that the company's capital structure is unsustainable with S&P
adjusted debt-to-EBITDA projected to remain above 10x through 2022
and potential that it could exhaust its liquidity within the next
12 months, absent an external cash infusion.
S&P is also lowering the issue-level ratings on the company's
secured debt to 'B-' from 'B+', which reflects its expectation of
very high (rounded estimate: 90%) recovery in the event of a
payment default.
S&P said, "The negative rating outlook reflects our belief that,
notwithstanding the potential for an asset sale or reduction in
capital spending, absent a sizeable equity infusion, we believe the
capital structure is unsustainable and the company could engage in
a distressed restructuring over the next year.
"The downgrade reflects our belief that Dawn's liquidity will be
pressured over the next 12 months. As of Sept. 30, 2020, the
company had approximately $20 million of cash on hand in addition
to its undrawn $50 million revolving credit facility. Based on our
forecast of negative free operating cash flow (FOCF) of around $55
million-$65 million over the next 12 months, we believe the company
will likely deplete cash balances and need to draw on the revolver.
However, the revolver contains a springing maximum net first-lien
leverage covenant of 8.0x (on a bank basis) when the outstanding
balance reaches 35% utilization. Based on our estimates of S&P
Global Ratings-adjusted leverage in the 11x-12x range over the next
year, we believe the company's ability to draw more the full amount
on the revolver could be limited before breaching the springing
covenant. Consequently, absent external support from owner
Brookfield Infrastructure Partners L.P., we believe there is a high
likelihood the company will exhaust its internal liquidity sources
over the course of the next year.
"We believe Dawn's capital structure has become unsustainable due
to currently high leverage. We expect that already weak credit
metrics will deteriorate further in 2021 given our forecast for
EBITDA declines of 15%-25% this year and significantly negative
FOCF. We expect customer churn to remain elevated as contracts come
up for renewal and are priced to market rates." While utilization
rates are low, it could prove challenging for the company to sell
commodity-like space and power profitably, resulting in revenue and
EBITDA declines that keep leverage above 10x through 2022.
Since being spun out from AT&T, Dawn has not invested significantly
in data center expansion because it focused on improving low
utilization rates at existing facilities, with limited success. S&P
said, "However, we now expect expansion capital spending to
accelerate moderately in select markets. While capital intensity is
still fairly low compared to peers, this will create a greater
external funding requirement, which could come from owner
Brookfield Infrastructure. It is possible that Dawn could pull back
on some of its planned capital spending to slow the pace of the
cash burn, but it will not be sufficient to improve FOCF
substantially, as we expect cash from operations of negative $5
million-$10 million in 2021 before maintenance capital expenditures
(capex) of $30 million."
Dawn's lack of an interconnected ecosystem limits the company's
ability to attract new customers. S&P said, "We believe the company
operates at a competitive disadvantage relative to some peers
because of its lack of significant interconnection and carrier
diversity as well as a lack of differentiated managed services.
Despite the company's initiative to construct "Meet-Me Rooms"
(MMRs) to facilitate interconnection in most of its facilities, we
believe this strategy will prove difficult to execute given that
most carrier-neutral exchange points have already been established
in their markets. Consequently, we expect churn to remain elevated
in 2021, which will keep utilization rates in the low-to-mid-60%
area, compared to the broader industry average of around 80%.
Additionally, we believe many potential enterprise customers may be
less likely to alter or expand their network infrastructure in the
currently weak macroeconomic environment, which will result in
lower new sales in 2021. Therefore, we project revenue declines of
5%-15% this year. Many other third-party data center providers have
opted to layer in managed services to attract enterprise customers
and supplement colocation offerings as hybrid and multi-cloud
architecture becomes more prevalent. We believe that Dawn could
remain challenged to attract new customers without this type of
differentiation."
Dawn leases the majority of its assets, exposing it to unprofitable
contracts given the low utilization rates and large upfront costs.
S&P said, "We believe Dawn is exposed to rising lease rates, which
could make it challenging for the company to operate certain
facilities profitably. Consequently, we expect profitability will
be pressured given the company's high operating leverage, resulting
in EBITDA declines of around 15%-25% for 2021."
S&P said, "The negative outlook reflects our view that Dawn's
liquidity position is weak and a restructuring or payment default
is possible over the next year, absent a significant equity
infusion.
"We could lower the rating if Dawn's liquidity continues to
deteriorate such that a default or restructuring appears to be
inevitable within six months or if the company breaches its
financial covenants and is unable to cure them.
"We could consider an upgrade to 'CCC+' if Dawn is able to
substantially improve its liquidity position and we believed that a
default was less likely over the next 12 months, which would likely
involve external support from Brookfield."
DEARBORN REAL: Case Summary & 10 Unsecured Creditors
----------------------------------------------------
Debtor: Dearborn Real Estate Associates, L.L.C.
8560 Silvery Lane
Dearborn Heights, MI 48127
Business Description: Dearborn Real Estate Associates, L.L.C. is
primarily engaged in renting and leasing
real estate properties.
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
Eastern District of Michigan
Case No.: 21-41804
Judge: Hon. Maria L. Oxholm
Debtor's Counsel: Edward J. Gudeman, Esq.
GUDEMAN & ASSOCIATES, PC
1026 W. Eleven Mile Road
Royal Oak, MI 48067
Tel: 248-546-2800
Email: ecf@gudemanlaw.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by David P. Jankowski, member.
A copy of the Debtor's list of 10 unsecured creditors is available
for free at:
https://www.pacermonitor.com/view/UDP5KPQ/Dearborn_Real_Estate_Associates__miebke-21-41804__0003.0.pdf?mcid=tGE4TAMA
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/XZLC6EY/Dearborn_Real_Estate_Associates__miebke-21-41804__0001.0.pdf?mcid=tGE4TAMA
DESERT OASIS: Desert Land Trustee Objects to Plan Disclosures
-------------------------------------------------------------
Jeffrey I. Golden, solely in his capacity as the duly appointed and
serving chapter 11 trustee for the bankruptcy estate of Desert
Land, LLC, whose case is pending in the Court as Case No.
BK-S-18-12454-GS, objects to the Disclosure Statement for Chapter
11 Trustee Kavita Gupta's Joint Plan of Liquidation of Debtor
Desert Oasis Apartments, LLC.
The Objection is premised upon Desert Land's general unsecured
claim against the Debtor's estate in the amount of $4.5 million
which is deemed and should be allowed in the Debtor's case pursuant
to Section 502 of the Bankruptcy Code.
Trustee Golden points out that the Disclosure Statement does not
explain how the Gonzales Claim was treated under the Debtor's 2011
Plan, including how or why the Gonzales Claim obtained any priority
rights thereunder relative to the DL Claim.
Trustee Golden claims that the Disclosure Statement contains no
discussion of how long the Gonzales-Norther Litigation may remain
pending. Nor does it provide any indication of what would happen in
the event the District Court declines to determine the merits of
Gonzales' claim to priority presented in the Gonzales-Northern
Litigation.
Trustee Golden asserts that the Disclosure Statement does not
provide any indication of what would happen in the event that
amount proves insufficient to fund Northern Trust's reasonable fees
and costs for continuing to respond to this litigation.
Trustee Golden further asserts that the Disclosure Statement should
include a description of any tax refund to which the Debtor's
estate may be entitled, and if there are none, or if the proponent
of the Proposed Plan has not conducted any analysis or has no such
information, then that should be stated.
Trustee Golden states that the Disclosure Statement provides no
information about any such rights or causes of action while section
6.8 of the Proposed Plan preserves a litany of rights and causes of
action, including, without limitation, to pursue claims against
creditors such as Desert Land.
Trustee Golden says that the exculpation provision of the Proposed
Plan insulates Trustee Gupta and her professionals from claims
arising from the Desert Land Case for no consideration to the
Desert Land Estate without any explanation in the Disclosure
Statement for its breadth.
A full-text copy of Desert Land's objection dated Feb. 25, 2021, is
available at https://bit.ly/3sRCozD from PacerMonitor.com at no
charge.
Attorneys for Desert Land:
Steven T. Gubner
Jerrold L. Bregman
Susan K. Seflin
BRUTZKUS GUBNER
300 S. 4th Street, Suite 1550
Las Vegas, NV 89101
Telephone: (702) 835-0800
Facsimile: (866) 995-0215
E-mail: sgubner@bg.law
jbregman@bg.law
sseflin@bg.law
About Desert Oasis Apartments
Desert Oasis Apartments LLC owns a garden-style apartment complex
situated across the boulevard from the Mandalay Bay Resort. The
apartment complex has a value of at least $6,500,000.
Secured creditor Wells Fargo set a trustee's sale on the apartment
complex for May 11, 2011, but Desert Oasis sought bankruptcy
protection (Bankr. D. Nev. Case No. 11-17208) the day before the
sale. The Company disclosed $18,067,242 in assets and $20,291,316
in liabilities as of the Chapter 11 filing. Lenard E. Schwartzer,
Esq., at Schwartzer & McPherson Law Firm, serves as the Debtor's
bankruptcy counsel.
DESERT OASIS: Northern Trust Says Trustee's Plan Unconfirmable
--------------------------------------------------------------
The Northern Trust Company, the secured lender of Debtor Desert
Oasis Apartments LLC, objects to the Disclosure Statement for
Chapter 11 Trustee Kavita Gupta's Joint Plan of Liquidation.
Northern Trust claims that impairment is broad and despite the
Trustee's attempts to avoid the issue, the Plan impairs Northern
Trust's rights. Accordingly, Northern Trust is entitled to vote on
the Plan and the Trustee's attempts to disenfranchise Northern
Trust to prevent a potentially negative vote renders the Plan
unconfirmable.
Northern Trust points out that the Plan interjects itself into the
middle of the issues between Northern Trust and the Gonzales Trust.
The process by which the Trustee intends to address these issues is
flawed and inappropriate and there is no treatment proposed for
Northern Trust's resulting claim if there is a Reversal Event.
Northern Trust asserts that there is no requirement that the
Trustee, who is not a party to the Adversary, become entangled in
the adjudication of payments received by Northern Trust. The
Trustee simply lacks any basis to dictate what Northern Trust and
the Gonzales Trust do in the Adversary.
Northern Trust further asserts that the Trustee improperly shifts
the burden to pay Gonzales Trust's claim to Northern Trust by
ignoring the interest. By forcing such a burden on Northern Trust
the Plan cannot be deemed fair and equitable and cannot be
confirmed.
Northern Trust states that the Plan pays over all remaining funds
the Estate holds to the Gonzales Trust after payment in full of the
Disbursing Agent's fees, any fees of professionals hired by the
Disbursing Agent, and Administration Claims and leaves Northern
Trust with little to no recovery.
Northern Trust says that the Plan requires the Gonzales Trust
approve repayment to Northern Trust before a payment will be made.
If Gonzales Trust does not approve a payment then Northern Trust is
forced to incur time and expense of seeking this Court's approval.
A full-text copy of Northern Trust's objection dated Feb. 25, 2021,
is available at https://bit.ly/3bVk0il from PacerMonitor.com at no
charge.
Attorneys for The Northern Trust:
FENNEMORE CRAIG, P.C.
Cathy L. Reece
Anthony W. Austin
2394 E. Camelback Rd., Ste. 600
Phoenix, AZ 85016-3429
Telephone: (602) 916-5343
Facsimile: (602) 916-5543
Email: creece@fclaw.com
aaustin@fclaw.com
About Desert Oasis Apartments
Desert Oasis Apartments LLC owns a garden-style apartment complex
situated across the boulevard from the Mandalay Bay Resort. The
apartment complex is valued at least $6,500,000.
Secured creditor Wells Fargo set a trustee's sale on the apartment
complex for May 11, 2011, but Desert Oasis sought bankruptcy
protection (Bankr. D. Nev. Case No. 11-17208) the day before the
sale. The Company disclosed $18,067,242 in assets and $20,291,316
in liabilities as of the Chapter 11 filing. Lenard E. Schwartzer,
Esq., at Schwartzer & McPherson Law Firm, serves as the Debtor's
bankruptcy counsel.
DESTILERIA NACIONAL: Court Denies Objection to CRIM's Claim Two
---------------------------------------------------------------
Judge Enrique S. Lamoutte of the United States Bankruptcy Court for
the District of Puerto Rico denied Destileria Nacional Inc.'s
Objection to Amended Claim Two filed by the Municipal Revenue
Collection Center and for Allowance of Such as Administrative
Expense.
The Debtor filed its Objection to Amended Claim Two filed by the
Municipal Revenue Collection Center and for Allowance of Such as
Administrative Expense on February 5, 2021. The Debtor alleged
that CRIM amended its claim to include the amount of $29,960.78, of
which $22,371.82 was claimed as a priority under 11 U.S.C. Section
507(a)(8), and $7,588.96 was claimed as general unsecured for
penalties and surcharges. The Debtor argued that pursuant to the
Account Statement filed in support of the Amended Claim No. 2,
"such claim is for a tax due post-petition, on August 7, 2020."
The Debtor alleged that the taxes claimed by CRIM were incurred by
the debtor-in-possession and are an administrative expense of the
Debtor. The Debtor argued further that such claim was not a right
of payment against the Debtor that arose before the order for
relief, and thus, is not a claim as defined by Section 101(5) and
CRIM is not a "creditor" as defined by section 101(10).
CRIM argued that the taxes included in Amended Claim 2 are personal
property taxes pursuant to a tax return filed by the Debtor on
December 2020, for the taxes corresponding to year 2019. CRIM said
that although it might seem that claim 2-2 is administrative due to
the Debtor's late filing of its personal property tax returns, it
is not, considering that personal property taxes accumulate during
the calendar year. CRIM added that the claim is split in two
portions: $22,371.82 classified as priority under 11 U.S.C. Section
507(8)(B) and $7,588.96 classified as general unsecured.
The Debtor conceded that the "$29,960.78 portion of Claim No. 2-2
is a priority pursuant to 11.U.S.C. Section 507(a)(8)(B), 502(d)
and 502(i)." The Court noted that the priority portion is in the
amount of $22,371.82 and not $29,960.78, which is the total amount
owed. The Court agreed that a property tax liability is generally
"incurred on the date it accrues, not on the date of the assessment
or the date on which it is payable." The Court held that "taxes
incurred prepetition but assessed postpetition are a priority but
not an administrative expense... Only liabilities incurred
postpetition may be allowed as an administrative expense."
The Debtor argued that the amount of $7,588.96 claimed for
penalties and surcharges is not general unsecured, but an
administrative expense pursuant to 11 U.S.C. Section
503(b)(1)(B)(ii) and (C). The Debtor said that, as clarified by
CRIM, by August 2020 the Debtor had to file the tax form for the
pre-petition tax year 2019. The Debtor said further that failure
to do so triggered surcharges and penalties. The Debtor contended
that all surcharges and penalties are within the scope of Section
503(b)(1)(B).
The Court noted that Section 503(b)(1)(B)(ii) is inapplicable as
the taxes included by CRIM in Amended Claim 2-2 are not related to
"an excessive allowance of a tentative carryback adjustment". The
Court added that the penalties referred to in section 503(b)(1)(C)
are those associated to taxes specified in subparagraph (B), which
the Debtor conceded was inapplicable. The Court explained that
Section 507(a)(8) is also relevant to the dischargeability
provisions of section 523 but not to the determination of an
administrative expense under section 503.
"For the reasons stated herein, the court finds that the Debtor has
failed to provide any legal support to its allegation that a
portion of the CRIM's claim is administrative and, therefore,
denies its objection to Amended Claim 2-2. Although the Debtor
appears to argue that CRIM's claim should be awarded a higher
priority of payment status as an administrative expense, the
underlying reason for such action is to remove its classification
as a partial unsecured creditor, and adversely affect the
acceptance of the competing plan submitted by Miramar Brewing LLC,"
held Judge Lamoutte.
The case is IN RE: DESTILERIA NACIONAL INC., Chapter 11, Debtor,
Case No. 20-01247 (ESL) (Bankr. D.P.R.). A full-text copy of the
Opinion and Order, dated February 25, 2021, is available at
https://tinyurl.com/7updksru from Leagle.com.
About Destileria Nacional
Destileria Nacional, Inc., a beer manufacturer headquartered in
Guaynabo, P.R., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.P.R. Case No. 20-01247) on March 6,
2020.
At the time of the filing, the Debtor estimated assets of between
$100,001 and $500,000 and liabilities of between $500,001 and $1
million. Judge Enrique S. Lamoutte Inclan oversees the case. The
Debtor hired Isabel Fullana-Fraticelli & Asoc. PSC as its legal
counsel.
DETROIT WORLD: Court Allows Cash Collateral Use Until May 3
-----------------------------------------------------------
Judge Mark A. Randon of the U.S. Bankruptcy Court for the Eastern
District of Michigan, Southern Division, authorized Detroit World
Outreach Church to use cash collateral on an interim basis until
May 3, 2021.
The Court approved the stipulation between lender Comerica Bank,
the Debtor, the Subchapter V Trustee, and the United States
Trustee, regarding the Debtor's interim use of cash collateral.
As of the Petition Date, the Debtor had outstanding secured debt
owed to the Lender pursuant to a Fixed Rate Installment Note, dated
September 28, 2006, in the original stated principal amount of
$6,425,000.
Prior to the Petition Date, the Debtor granted to the Lender:
(1) a first priority Continuing Collateral Mortgage dated
September 28, 2006 and recorded on October 4, 2006, with the Wayne
County Register of Deeds ("Church Mortgage");
(2) a first priority Continuing Collateral Mortgage dated
January 10, 2019 and recorded on February 13, 2019, with the Wayne
County Register of Deeds ("Woodbine Mortgage"); and
(3) a first priority Continuing Collateral Mortgage dated
January 10, 2019 and recorded on February 13, 2019, with the Wayne
County Register of Deeds ("Auburn Mortgage").
In addition, Isaiah 61 Development Corporation, a Michigan
nonprofit corporation, granted the Lender a first priority
Continuing Collateral Mortgage dated January 10, 2019, and recorded
on February 13, 2019, with the Wayne County Register of Deeds
("Isaiah Mortgage"). The Debtor granted first-priority security
interest in and liens on the Collateral including, all rights to
Accounts Receivable, payments, rents, and funds deposited into
accounts held at the Lender, and substantially all other personal
property of the Debtor to the Lender to secure payment of the
Prepetition Obligations. Prepetition Collateral does not include
offerings or tithes.
As of February 1, 2021, the aggregate amount owed by the Debtor
under the Prepetition Credit Documents was not less than
$2,677,764.09. The Prepetition Obligations do not include amounts
owed by the Debtor, under an SBA Note dated May 4, 2020 made in the
original principal amount of $74,200.
"The Debtor's need to use Cash Collateral is immediate and critical
to enable the Debtor to continue operations and to administer and
preserve the value of its estate. The ability of the Debtor to
finance its operations, maintain business relationships, pay its
employees, protect the value of its assets, and otherwise finance
its operations requires the availability of working capital from
the use of Cash Collateral, the absence of which would immediately
and irreparably harm the Debtor (although the Debtor represents and
warrants that it is currently unaware of any condition in, or on,
the Prepetition Collateral or the Post-Petition Collateral that is
reasonably likely to imperil life or property), its estate, its
creditors, and its equity holders. The Debtor does not have
sufficient available sources of working capital and financing to
operate its businesses or to maintain its properties in the
ordinary course of business without the authorized use of Cash
Collateral," found Judge Randon.
The Debtor was authorized to use Cash Collateral, on an interim
basis, until the earlier of May 3, 2021, or the expiration of the
Remedies Notice Period. The Court mandated that in no event shall
the Debtor's (a) actual expenses and expenditures exceed 105% of
the projected amount for any line item of the Budget or (b)
performance with respect to any line item in the Budget under
"projected monthly income" fail to be equal to or greater than 90%
of such line item tested on an aggregate basis, without the written
consent of the Lender.
The Lender will receive adequate protection in the form of monthly
payments in the amount of $12,500, which will be paid to the Lender
on the 10th of each month. The Lender is permitted to apply
Adequate Protection Payments in accordance with the Prepetition
Credit Documents without further approval or order of the court.
As additional adequate protection, the Lender was granted valid and
automatically perfected:
(a) replacement liens to the same extent, validity and
priority as the Lender held under the Prepetition Liens; and
(b) an additional security interest solely to the extent of
any Diminution in Value in any and all presently owned and
hereafter acquired assets and real and personal property of the
Debtor.
The Adequate Protection Liens do not include Tithes Income, causes
of action under Chapter 5 of the Bankruptcy Code or the proceeds
thereof. The Adequate Protection Liens are valid, binding,
enforceable and fully perfected as of the date hereof.
The final hearing to consider entry of the Final Order is scheduled
for March 22, 2021 at 11:00 a.m.
A full-text copy of the Agreed Interim Order, dated March 2, 2021,
is available for free at https://tinyurl.com/vz3cx8ru from
PacerMonitor.com.
About Detroit World Outreach Church
Detroit World Outreach Church is a religious organization that
operates a Christian church. It sought protection under Chapter 11
of the U.S. Bankruptcy Code (Bankr. E.D. Mich. Case No. 21-40850)
on January 31, 2021. In the petition signed by Bishop CJ Andre,
president, the Debtor disclosed up to $10 million in both assets
and liabilities.
Judge Mark A. Randon oversees the case.
Kimberly Redd, Esq. at GREAT LAKES LEGAL GROUP PLLC is the Debtor's
legal counsel.
DON & SON EXCAVATING: Seeks to Hire Susan M. Gray as Legal Counsel
------------------------------------------------------------------
Don & Son Excavating, Inc. seeks approval from the U.S. Bankruptcy
Court for the Northern District of Ohio to employ Susan M. Gray Law
Offices, Inc. as its legal counsel.
The firm will render these services:
a. advise the Debtor as to its rights, duties and powers under
the Bankruptcy Code;
b. file statements, schedules, Chapter 11 plan and other
documents;
c. represent the Debtor at court hearings, meetings of
creditors, conferences, trials and other proceedings;
d. perform other legal services.
The firm will be paid as follows:
Attorneys $300 per hour
Legal Assistants $100 per hour
Susan Gray, Esq., disclosed in a court filing that she and her firm
do not hold or represent any interest adverse to the Debtor's
estate.
The firm can be reached through:
Susan M. Gray, Esq.
Ohio Savings Bank Building
22255 Center Ridge Road, Suite 210
Rocky River, OH 44116
Phone: (440) 331-3949
Fax: (440) 331-8160
Email: smgray@smgraylaw.com
About Don & Son Excavating
Don & Son Excavating, Inc. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ohio Case No.
21-10548) on Feb. 18, 2021. At the time of the filing, the Debtor
disclosed assets of between $100,001 and $500,000 and liabilities
of the same range. Judge Arthur Harris oversees the case. Susan
M. Gray Law Offices, Inc. serves as the Debtor's legal counsel.
EAGLE RANCH: Seeks to Hire United Country American as Broker
------------------------------------------------------------
Eagle Ranch Resort, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Missouri to hire United Country
American Heartland Real Estate as its real estate broker.
The firm will be listing 520 acres of real property owned by the
Debtor, and any related work for the Debtor during the Chapter 11
proceedings.
Ryan Hubbard, a broker at Heartland, disclosed in a court filing
that the firm is a "disinterested person" under Chapter 11 of the
Bankruptcy Code.
The firm can be reached through:
Ryan Hubbard
United Country American Heartland Real Estate
504 US-54
El Dorado Springs, MO 64744
Phone: +1 417-876-2699
About Eagle Ranch
Eagle Ranch Resort, LLC filed for Chapter 11 bankruptcy protection
(Bankr. W.D. Mo. Case No. 20-42109) on Dec. 11, 2020. Jerry
Hennings, a member, signed the petition. In the petition, the
Debtor disclosed $1,637,309 in assets and $973,597 in liabilities.
Judge Dennis R. Dow oversees the case.
Krukow Law Offices, LLC serves as the Debtor's legal counsel.
ENFRAGEN LLC: Moody's Completes Review, Retains Ba3 Rating
----------------------------------------------------------
Moody's Investors Service has completed a periodic review of the
ratings of EnfraGen LLC and other ratings that are associated with
the same analytical unit. The review was conducted through a
portfolio review discussion held on February 22, 2021 in which
Moody's reassessed the appropriateness of the ratings in the
context of the relevant principal methodology(ies), recent
developments, and a comparison of the financial and operating
profile to similarly rated peers. The review did not involve a
rating committee. Since January 1, 2019, Moody's practice has been
to issue a press release following each periodic review to announce
its completion.
This publication does not announce a credit rating action and is
not an indication of whether or not a credit rating action is
likely in the near future. Credit ratings and outlook/review status
cannot be changed in a portfolio review and hence are not impacted
by this announcement.
Key rating considerations
EnfraGen's Ba3 rating reflects the company's diversified asset
base, good cash flow predictability, adequate counterparty risk and
structural protections. As a counterbalance, the rating is tempered
by an aggressive financing structure, limited track record under a
recently formed organization and evolving markets dynamics that
could pose challenges to the fuel concentration and asset
positioning from the company.
While Moody's expect EnfraGen to maintain sound operational
performance across its portfolio and stable cash flow, stemming
primarily from regulated reliability and capacity charges, Moody's
also acknowledge that the financing exposes bondholders to material
refinancing risk due to an aggressive amortization profile with
high leverage throughout the life of the notes.
The principal methodology used for this review was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
ENTERPRISE DEVELOPMENT: Fitch Assigns Final 'B+' LongTerm IDR
-------------------------------------------------------------
Fitch Ratings has assigned a final Long-Term Issuer Default Rating
(IDR) of 'B+' to the Enterprise Development Authority (EDA)
following the closing of its new senior secured credit facility and
refinancing of its secured notes. Fitch also assigned a 'BB'/'RR2'
to EDA's super priority revolving credit facility and secured term
loan B. The Rating Outlook is Negative.
The 'B+' IDR reflects the EDA's conservative leverage position and
solid initial performance of Hard Rock Hotel & Casino -- Sacramento
at Fire Mountain (Hard Rock Sacramento), notwithstanding
pandemic-related pressures in mid-2020, offset by its lack of
geographic diversification as a single-site casino. The ratings
also consider the completed refinancing of EDA's existing capital
structure with new prepayable debt and cash on hand. The
refinancing will support further deleveraging through 5% annual
amortization of the term loan, while increasing FCF from the lower
annual interest expense (over $40 million in annual savings).
Fitch expects gross leverage (total debt/EBITDA) to sustain in the
mid 3x range through 2023, which looks through U.S. regional
gaming's recovery from the pandemic. Positively, EDA is using a
meaningful amount of excess cash to paydown debt as part of the
refinancing transaction. EDA is also subject to potential
cannibalization of demand through the opening of the Wilton
Rancheria casino in late 2022 or early 2023, though Fitch expects
the potential impact to leverage to be manageable.
The Negative Rating Outlook reflects the risks and uncertainty the
U.S. gaming industry is facing from the pandemic. Fitch could
revise the Rating Outlook to Stable when there is a greater degree
of confidence in the gaming industry's recovery trajectory. EDA
will have an adequate liquidity position between cash on hand and
revolver availability, as well as strong forecasted FCF that will
be sufficient to cover a manageable amount of debt service and
limited tribal distributions that are in-line with the credit
agreement's restrictive covenants.
KEY RATING DRIVERS
Conservative Balance Sheet: Fitch expects EDA to operate at gross
debt/EBITDA in the mid-3.0x range through 2023, which looks through
regional gaming's recovery from the pandemic. The refinancing and
continued ramp up of operations will support the deleveraging path.
Deleveraging will also be supported by healthy amortization of the
term loan (5% per year). Fitch's leverage forecast takes into
account some cannibalization from the proposed Wilton Rancheria
casino, which will also draw from the greater Sacramento feeder
market.
Limited Geographic Diversification: EDA's conservative credit
metrics are offset by its limited geographic diversification,
operating a single-site casino in a competitive market. Fitch views
the reliance on a single property and single market as a constraint
on the credit profile, with higher-rated tribal peers typically
having either greater diversification or operating monopolistic
positions in deeper gaming markets. Notably, Hard Rock Sacramento
has performed well since opening in late 2019, with a solid brand
and strong manager in Seminole Hard Rock International (BBB-).
Competition Increasing: The Wilton Rancheria Tribe is developing a
tribal casino with Boyd Gaming Corp. that will also draw from the
greater Sacramento area, which is reportedly opening in late 2022
or early 2023. The $500 million project will be roughly 50 miles
from Hard Rock Sacramento and will cannibalize from the broader
Sacramento area casinos, including Hard Rock. Fitch expects the
overall impact to be manageable given the strength of the Hard Rock
brand, solid initial operating performance, and Hard Rock having a
more established player database by the time Wilton opens. Fitch
assumes a 10% impact to Hard Rock's gross gaming revenue from the
competitive opening of Wilton Rancheria, which is manageable in the
context of its credit profile.
Regional Gaming Demand: Gaming performance at Hard Rock Sacramento
has been strong since re-opening in May 2020 after the March
pandemic-driven closure. The closure was at the tribe's discretion
as the state's broader coronavirus operating restrictions are not
applicable on tribal land. U.S. regional gaming has experienced
more resilient demand relative to other severely impacted leisure
and entertainment sectors, helped in part by limited alternative
entertainment options and government stimulus backing discretionary
spend levels. In addition, most regional gaming markets do not rely
on fly-in or tourist demand, which has helped soften the pandemic's
impact on gaming revenues. Similar to other regional gaming
operators, operating metrics have been exceptionally strong since
reopening. However, Fitch expects performance to return to more
normalized levels by the second half of 2021. For U.S. regional
gaming revenues in 2021, Fitch is forecasting 20% revenue declines
from 2019 levels, and for a full recovery by 2023.
Stable Tribal Governance: The Estom Yumeka Maidu Tribe has a stable
tribal council and tribal governance policies, which Fitch views
favorably. The Tribal Chairwoman has served in her current role for
over 18 years and the remaining members of tribal council have an
average tenure of 10 years. Fitch expects the tribe to continue to
adhere to conservative financial policies, evidenced by the
decision to use excess cash at the Enterprise to de-lever during
the refinancing.
DERIVATION SUMMARY
EDA's 'B+' rating reflects its limited geographic diversification,
conservative leverage profile and expected healthy operating
performance through the forecast period. The rating is in-line with
other single-site casino operators with similar leverage profiles,
both tribal and commercial. Single-site profiles are common in
tribal gaming but higher rated tribal peers typically have more
conservative financial profiles with lower leverage; monopolistic
positions; geographic diversification and/or stronger performing
properties in deeper gaming markets.
KEY ASSUMPTIONS
-- Slot and table win per day metrics decline from the peaks seen
in mid-to-late 2020, but remain above pre-pandemic levels in
2021 and 2022 backed by healthy operating trends and strong
performance since reopening. The property experiences
manageable cannibalization of demand from the Wilton Rancheria
tribal opening starting in 2023.
-- EBITDA margins gradually decline from 2020 levels as cost
structure normalizes and remain relatively stable from 2021
2024;
-- EDA distributes a manageable amount of priority and
discretionary tribal distributions that are in-line with
restrictive covenants;
-- Manageable levels of maintenance capex with some minor growth
capex related to the entertainment center and gas station that
are funded through cash flow;
-- The refinancing is completed in first-quarter 2021.
RECOVERY ASSUMPTIONS
The recovery analysis assumes that EDA would be considered a going
concern in a distressed scenario, as traditional Chapter 11
bankruptcy for tribal entities is not an option. Fitch has assumed
a 10% administrative claim and for the new revolver to be fully
drawn at the time of restructuring.
Fitch's going-concern EBITDA assumption reflects a minimum level of
win-per-day metrics for the casino's operations, with a small
degree of non-gaming revenues, in a scenario that considers
greater-than-anticipated competitive pressures and a decline in
broader U.S. regional gaming revenues.
An EV/EBITDA multiple of 4.5x is used to calculate a
post-reorganization sustainable leverage level for EDA. Since
creditors cannot force a federally recognized tribe into a
bankruptcy scenario or claim equity in gaming operations, recovery
typically takes form of a debt-for-debt exchange. The 4.5x EBITDA
multiple is Fitch's assumption for a sustainable post-restructuring
leverage after a debt exchange occurs.
Fitch caps the recovery rating on the revolver at 'RR2' due to
Fitch having a 'RR2' cap on Native American debt instruments'
recovery ratings. The cap is based primarily on the limited legal
precedent and framework of tribal restructurings and other unique
considerations that would differ from traditional commercial
restructurings.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Total debt to EBITDA sustaining below 2.5x;
-- Fitch having a greater degree of confidence on EDA's ability
to weather the Wilton Rancheria casino opening;
-- Continued evidence of stabilization in demand and signs of
significant rebound in U.S. regional gaming.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Total debt to EBITDA sustaining above 4.0x either due to
greater than expected impacts from the Wilton Rancheria casino
opening or EDA pursuing a debt-funded expansion;
-- Evidence of tribal council straying from its current
conservative financial policies;
-- FCF margins (before voluntary distributions) falling to the
single-digit percent range;
A stabilization of the Negative Rating Outlook would result from
Fitch having more confidence in the rebound within regional gaming
in the U.S. and having better clarity on EDA's ability to weather
the Wilton Rancheria proposed opening.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Currently, the EDA has a sufficient amount of
cash on hand to cover debt service, required distributions and
scheduled capex. The issuer will also have some availability on its
revolving credit facility upon closing. Liquidity is adequate in
the context of the rating and relative to tribal peers. EDA will be
able to distribute a meaningful amount of cash flow to the tribe
beyond mandatory priority distributions, which are manageable in
the context of EDA's operating cash flow. Hard Rock Sacramento
opened in late 2019 and remaining growth capex will be funded with
cash flows.
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.
ENTRUST ENERGY: 2nd Power Provider to Default After Texas Crisis
----------------------------------------------------------------
Mark Chediak of Bloomberg News reports that power retailer Entrust
Energy Inc. became the second electricity seller to be barred from
Texas's power market for failing to make payments after last
month's energy crisis.
The Electric Reliability Council of Texas said it was revoking
Entrust's right to participate in the market and was moving its
customers to rival retailers. The retailer was short more than $234
million in payments to generators and others, according to a
separate Ercot filing Wednesday, March 3, 2021.
Griddy Energy LLC, the retail electricity provider that came under
fire after its customers received exorbitant power bills during the
grid emergency, was found in default by Ercot last week.
The notices come as power retailers and other companies have asked
Texas regulators to suspend collection of invoices and roll back
wholesale electricity prices that soared to $9,000 a megawatt-hour
during the Arctic blast that crippled the grid and left millions
without power for days.
About Entrust Energy Inc.
Entrust Energy, Inc. provides electricity and natural gas to
residential customers in Texas, Illinois, Maryland, New York, Ohio,
and Pennsylvania.
ESTHER CORONA: Seeks Court Approval to Use Cash Collateral
----------------------------------------------------------
Esther Corona, Inc. asks the U.S. Bankruptcy Court for the Northern
District of California, San Jose Division, for authorization to use
cash collateral.
The Debtor operates a day care business. At the time of the filing
of the petition, the Debtor's assets consisted of cash deposits in
the amount of $7,984.04, furniture and fixtures, and tools and
equipment valued at $62,275.
First Home Bank has a UCC lien encumbering the Debtor's assets with
an approximate balance of $234,608.69.
The Court has previously granted the Debtor authority for interim
use of cash collateral on February 2, 2021. The interim use of
cash collateral was subject to granting First Home Bank a
replacement lien for the use of cash collateral on post-petition
revenue and paying First Home Bank monthly adequate protection
payments equal to interest only payments at four percent per
annum.
The Debtor tells the Court that in order to continue operations, it
needs to use the available cash and use available supplies.
"Debtor now requests continuing authority to use First Home Bank's
cash collateral, but agrees that as a condition for such use,
Debtor will make the regular contractual payments commencing on May
15, 2021 and continuing monthly thereafter until the earlier of
confirmation, dismissal or conversion of the case," the Debtor
further tells the Court.
The Debtor proposes to provide First Home Bank with a replacement
lien for the use of all pre-petition cash collateral that is used
by granting First Home Bank a lien in post-petition revenue. The
Debtor says that in the event of additional lien claimants, First
Home Bank shall have the same priority in such replacement lien as
First Home Bank had pre-petition.
A full-text copy of the Motion, dated March 2, 2021, is available
for free at https://tinyurl.com/3vnrk7un from PacerMonitor.com.
About Esther Corona
Esther Corona, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Calif. Case No. 21-50088) on Jan. 25,
2021. At the time of the filing, the Debtor had between $50,001
and $100,000 in assets and between $500,001 and $1 million in
liabilities. Judge M. Elaine Hammond oversees the Debtor's Chapter
11 case. The Debtor is represented by The Fuller Law Firm, PC in
its case.
EVERGREEN DEVELOPMENT: Seeks Cash Collateral Use Until March 31
---------------------------------------------------------------
Evergreen Development Group asks the U.S. Bankruptcy Court for the
District of Minnesota for authority to use cash collateral and
grant adequate protection through March 31, 2021 to pay operating
expenses in an amount not to exceed $30,000.
The Debtor requires the use of cash collateral to operate its
business in as normal a fashion as possible in order to preserve
the value of its business enterprise pending the confirmation of a
Plan of Reorganization or consummation of a sale of the Debtor's
business operations.
The Debtor's operations have suffered in recent years due to
several factors the downturn in the real estate markets over the
last year. However, over the last several months the business has
operated on a positive cash flow basis.
In response to the Debtor's financial difficulties, the Debtor's
management spent a substantial period of time evaluating
alternatives for maximizing value for all of the Debtor's
constituencies. After careful consideration and the exercise of
sound business judgment, the Debtor concluded that a Chapter 11
filing was the only viable option.
Minnesota Bank and Trust holds a combination mortgage, security
agreement and fixture financing statement executed by Borrowers, in
favor of Lender, dated November 30, 2005, and recorded on January
13, 2006, as Document No. 1182373, in the Office of the County
Recorder in and for Stearns County, Minnesota. The Debtor is
indebted to Lender in the approximate amount of $3,840,000 as of
the Petition Date. The Lender claims a secured first-priority lien
in substantially all of the Debtor's assets real property and
rental proceeds of the Debtor's operations.
The Debtor asserts there is no value in the Property in excess of
the amounts owed to Lender.
Keith A. Franklin, d/b/a Franklin Outdoor Advertising Co., has an
interest in the Property pursuant to that certain Franklin Outdoor
Advertising Lease Agreement dated August 29, 2004, and recorded on
April 24, 2007, as Document No. 1225358, in the Office of the
County Recorder in and for Stearns County, Minnesota.
The John Duke Trust, Lisa J. Hadley, and Edward H. Fish also claim
an interest in the Property.
On the Petition Date, the Debtor's cash collateral has an estimated
value of $3,865,737.36.
As of June 30, 2021, Debtor estimates that the Collateral's value,
will be $3,906,145.24.
The Debtor proposes to grant Lender replacement liens in any new
post-petition assets generated by Debtor having the same dignity,
priority and extent as existed on the Petition Date.
A preliminary hearing on the motion is scheduled for March 5, 2021
at 9:30 a.m.
A copy of the Motion and the Debtor's budget through the week of
June 30 is available at https://bit.ly/3sITvTZ from PacerMonitor.
About Evergreen Development Group
Evergreen Development Group is a single asset real estate company
which owns and leases commercial real estate in Waite Park,
Minnesota. Its principal place of business and corporate offices
are located at 95 10th Ave. South, Waite Park, Minnesota, 56387.
The Debtor merged with The Evergreens of Apple Valley, L.L.P. in
2015.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Court (Bankr. D. Minn. Case No. 21-60066) on February
26, 2021. In the petition signed by Robert A. Hopman, general
partner, the Debtor disclosed up to $10 million in assets and up to
$50,000 in liabilities.
FOLEY & MANSFIELD, P.L.L.P represents the Debtor as counsel
F&O SCARSDALE: Non-Insider Unsecureds Will Get 8% of Claims
-----------------------------------------------------------
F&O Scarsdale, LLC, and its Debtor Affiliates submitted a Joint
Chapter 11 Plan of Reorganization and a Disclosure Statement on
Feb. 25, 2021.
Due to COVID-19 governmental restrictions, all of the restaurants
were initially closed, with certain of the restaurants being
permitted to partially re-open. However, the Debtors were not able
to feasibly re-open their restaurants at Scarsdale, Lexington and
Melrose Place. The Debtors' cash reserves were depleted, despite
significant pre-petition loans made by Mr. Guillaume Fonkenell
totaling approximately $7 million.
The Debtors determined to utilize the Bankruptcy process under
Chapter 11 to raise additional capital, restructure its
obligations, determine what lease locations are viable and
potentially profitable, and liquidate disputed litigation claims in
an efficient and cost-effective manner so that the Debtors may
emerge as a reorganized and continuing business to the benefit of
their creditors, equity and customers alike.
The Plan will be funded with a combination of the Debtor's cash on
hand on the Confirmation Date, derived from both the DIP Loans and
additional, post-Effective Date loans to be made by Guillaume
Fonkenell. These funds are expected to be sufficient to pay all
Allowed Administrative and Priority Claims in full, as well as to
fund an 8% distribution to the holders of Allowed Non-Insider
Unsecured Claims within 30 days after the Effective Date, and the
Reorganized Debtors shall effectuate all payments due under the
Plan.
Class 2 consists of the holders of Allowed Non-Insider Unsecured
Claims including any Allowed Claims of landlords arising out of the
rejection of unexpired leases or executor contracts. Allowed Class
2 Claims total approximately $7,187,500. Holders of Allowed
Unsecured Claims shall each receive a total Cash distribution equal
to 8% of such Allowed Unsecured Claims within 30 days after the
Effective Date. Allowed Class 2 Claims are impaired under this
Plan and holders of such Claims shall be entitled to vote on this
Plan.
Class 3 consists of the Allowed Insider Unsecured Claim of
Guillaume Fonkenell in the approximate Allowed amount of
$7,000,000. The holder of the Allowed Insider Unsecured Claim
shall be deemed to waive its right to distribution subject to
confirmation of the Plan. Allowed Class 3 Claims are Impaired
under this Plan but any accepting vote by the Class 3 claimholder
may not be considered for purposes of confirming the Plan.
Class 4 consists of the Allowed Interests in the Debtors. Other
than LDG, Scarsdale, Thirteenth and Fifth Avenue, who have various
individual members, the sole member of the other Debtors is LDG.
Subject to acceptance of the Plan by Class 2 and 3, the Interests,
other than the Interests in Thirteen and Fifth, shall remain
unaffected by this Plan and shall remain in full force in effect as
to the Reorganized Debtors. The Class 4 Interests in Thirteen and
Fifth shall be redistributed 100% to USA in consideration of (a)
Mr. Fonkenell's funding commitment under this Plan (b) Mr.
Fonkenell's waiver of right to distribution on account of his Class
3 Claim.
The holders of Class 4 Interests, other than the holders of
Interests in Fifth and Thirteenth, are unimpaired under and deemed
to accept the Plan. Wine & Cheese LLC, Yoram Shemesh and Ed
Somekh, the minority Interest holders in Thirteen and Fifth, are
deemed to reject the Plan.
A full-text copy of the Disclosure Statement dated Feb. 25, 2021,
is available at https://bit.ly/3bg0f64 from PacerMonitor.com at no
charge.
Attorneys for the Debtors:
DAVIDOFF HUTCHER & CITRON LLP
605 Third Avenue
New York, New York 10158
Tel: (212) 557-7200
Robert L. Rattet, Esq.
Jonathan S. Pasternak, Esq.
About F&O Scarsdale
F&O Scarsdale LLC and its affiliates own and operate 10 restaurants
under the tradename Fig & Olive located throughout the New York
City, DC, Chicago, Houston, and Los Angeles areas.
On July 3, 2020, F&O Scarsdale and its affiliates filed voluntary
petitions under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y.
Lead Case No. 20-22808). Judge Sean H. Lane oversees the case.
The Debtors have tapped Davidoff Hutcher & Citron, LLP, as their
legal counsel and CohnReznick, LLP as their financial advisor and
accountant.
FERRELLGAS PARTNERS: Seeks to Hire 'Ordinary Course' Professionals
------------------------------------------------------------------
Ferrellgas Partners LP and Ferrellgas Partners Finance Corp. filed
a motion seeking approval from the U.S. Bankruptcy Court for the
District of Delaware to employ professionals used in the ordinary
course of business.
The motion, if granted, would allow the Debtors to hire "ordinary
course professionals" without the requirement of filing fee
applications.
The Debtors believe that the employment of OCPs, many of which are
already familiar with their businesses and affairs, is necessary to
avoid disruption of their businesses.
The OCP's are:
PricewaterhouseCoopers LLP
Tax Services
Monthly fee cap: $175,000
KPMG International
Tax/Auditing Services
Monthly fee cap: $4,000
About Ferrellgas Partners
Ferrellgas Partners, LP is a publicly traded Delaware limited
partnership formed in 1994 that has two direct subsidiaries,
Ferrellgas Partners Finance Corp. and non-debtor Ferrellgas, LP.
Ferrellgas Partners Finance is a Delaware corporation formed in
1996 and has nominal assets, no employees and does not conduct any
operations, but solely serves as co-issuer and co-obligor for the
2020 Notes. Ferrellgas, primarily through non-debtor OpCo, is a
distributor of propane and related equipment and supplies to
customers in the United States. Ferrellgas' market areas for
residential and agricultural customers are generally rural while
the market areas for industrial and commercial and portable tank
exchange customers are generally urban.
Ferrellgas Partners LP and Ferrellgas Partners Finance filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Case Nos. 21-10021 and 21-10020) on Jan. 11,
2021. James E. Ferrell, chief executive officer and president,
signed the petitions.
At the time of the filing, Ferrellgas Partners, LP was estimated to
have $100 million to $500 million in both assets and liabilities
while Ferrellgas Partners Finance was estimated to have less than
$50,000 in assets and $100 million to $500 million in liabilities.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Squire Patton Boggs (US) LLP as primary
bankruptcy and restructuring counsel; Chipman, Brown, Cicero &
Cole, LLP as local bankruptcy counsel; Moelis & Company LLC as
investment banker; and Ryniker Consultants as financial advisor.
Prime Clerk LLC is the claims, noticing & solicitation agent.
FIELDWOOD ENERGY: Committee Hires Pachulski Stang as Counsel
------------------------------------------------------------
The official committee of unsecured creditors of Fieldwood Energy
LLC and its affiliates received approval from the U.S. Bankruptcy
Court for the Southern District of Texas to retain Pachulski Stang
Ziehl & Jones, LLP as its legal counsel.
The firm's services include:
a. advising the committee with respect to its rights, duties,
and powers in the Debtors' Chapter 11 cases;
b. assisting the committee in its consultations with the
Debtors;
c. assisting the committee in analyzing the claims of
creditors and the Debtors' capital structure, and in negotiating
with holders of claims;
d. assisting the committee in its investigation of the acts,
conduct, assets, liabilities and financial condition of the Debtors
and of the operation of the Debtors' business;
e. assisting the committee in its investigation of the liens
and claims of the Debtors' lenders and the prosecution of any
claims or causes of action revealed by such investigation;
f. assisting 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 leases of nonresidential real property and executory contracts,
asset dispositions, financing or other transactions, and the terms
of a plan of reorganization for the Debtors;
g. assisting the committee in communicating with unsecured
creditors;
h. representing the committee at hearings and other court
proceedings;
i. preparing and reviewing legal papers;
j. handling matters that are not appropriately handled by
Stroock & Stroock & Lavan, LLP, the other law firm tapped by the
committee, because of actual and potential conflict of interest;
and
m. other legal services.
The hourly rates charged by the firm's attorneys and paralegals
are:
Michael D. Warner, Member $900 per hour
Ayala A. Hassell, Of Counsel $725 per hour
Benjamin L. Wallen, Associate $750 per hour
Kerri L. LaBrada, Paralegal $460 per hour
Partners $845 to $1,695 per hour
Of Counsel $695 to $1,275 per hour
Associates $695 to $725 per hour
Paraprofessionals $425 to $460 per hour
Michael Warner, Esq., a partner at Pachulski, disclosed in court
filings that the firm is "disinterested" within the meaning of
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.
Warner disclosed that:
-- Pachulski has not agreed to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the equity committee in the 12
months prior to the Debtors' Chapter 11 filing; and
-- the committee and its professionals reserve all rights to
seek approval of the professional fees.
The firm can be reached through:
Michael Warner, Esq.
Robert J. Feinstein, Esq.
Ayala Hassell, Esq.
Steven W. Golden, Esq.
Benjamin L. Wallen, Esq.
Pachulski Stang Ziehl & Jones, LLP
440 Louisiana Street, Suite 900
Houston, TX 77002
Tel: (713) 691-9385
Email: mwarner@pszjlaw.com
rfeinstein@pszjlaw.com
ahassell@pszjlaw.com
sgolden@pszjlaw.com
bwallen@pszjlaw.com
About Fieldwood Energy
Fieldwood Energy is a portfolio company of Riverstone Holdings
focused on acquiring and developing conventional assets, primarily
in the Gulf of Mexico region. It is the largest operator in the
Gulf of Mexico owning an interest in approximately 500 leases
covering over two million gross acres with 1,000 wells and 750
employees. Visit https://www.fieldwoodenergy.com for more
information.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on Feb. 15,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded by $1.626 billion.
On Aug. 3, 2020, Fieldwood Energy and its 13 affiliates again filed
voluntary Chapter 11 petitions (Bankr. S.D. Tex. Lead Case No.
20-33948). Mike Dane, senior vice president and chief financial
officer, signed the petitions.
At the time of the filing, Debtors disclosed $1 billion to $10
billion in both assets and liabilities.
Judge David R. Jones oversees the cases.
The Debtors tapped Weil, Gotshal & Manges LLP as their legal
counsel, Houlihan Lokey Capital, Inc. as investment banker, and
AlixPartners, LLP as financial advisor. Prime Clerk LLC is the
claims, noticing and solicitation agent.
The first lien group employed O'Melveny & Myers LLP as its legal
counsel and Houlihan Lokey Capital, Inc. as its financial advisor.
The RBL lenders employed Willkie Farr & Gallagher LLP as their
legal counsel and RPA Advisors, LLC as their financial advisor.
Meanwhile, the cross-holder group tapped Davis Polk & Wardwell LLP
and PJT Partners LP as its legal counsel and financial advisor,
respectively.
On Aug. 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan, LLP
and Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FLEURDELIS HOSPITALITY: Wants Authority to Use Cash Collateral
--------------------------------------------------------------
Fleurdelis Hospitality, Inc. asks the U.S. Bankruptcy Court for the
Eastern District of Texas for authorization to use cash
collateral.
The Debtor says it has an immediate need to use the cash collateral
of its secured creditor, Red Oak Capital Holdings, LLC, which
claims liens on Debtor's personal property including accounts. The
Debtor says it can adequately protect the interests of the Secured
Lender by providing the latter with post-petition liens, a priority
claim in the Chapter 11 bankruptcy case, and cash flow payments.
The Debtor contends that the cash collateral will be used to
continue the Debtor's ongoing operations of the Hampton Inn
Livingston located in Livingston, Texas. The Debtor intends to
rearrange its affairs and needs to continue to operate in order to
pay its ongoing expenses, generate additional income and to propose
a plan in this case.
"This is an emergency matter since the Debtor has no outside
sources of funding available to it and must rely on the use of cash
collateral to continue its operations," Fleurdelis tells the
Court.
A full-text copy of the Emergency Motion, dated March 2, 2021, is
available for free at https://tinyurl.com/4zrbhh4v from
PacerMonitor.com.
About Fleurdelis Hospitaltiy
Fleurdelis Hospitality, Inc. dba Hampton Inn Livingston filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code (Bankr. E.D. Tex. Case No. 21-90035) on February 24, 2021.
The petition was signed by its president, Akbar Ahmed. At the time
of the filing, the Debtor estimated its assets and liabilities at
$1 million to $10 million.
The Debtor is represented by Joyce Lindauer, Esq., at Joyce W.
Lindauer Attorney, PLLC. The case is overseen by Judge Bill
Parker.
FORUM ENERGY: Incurs Net Loss of $96.9 Million in 2020
------------------------------------------------------
Forum Energy Technologies, Inc. filed with the Securities and
Exchange Commission its Annual Report on Form 10-K disclosing a net
loss of $96.89 million on $512.47 million of revenues for the year
ended Dec. 31, 2020, compared to a net loss of $567.06 million on
$956.53 million of revenues for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $889.93 million in total
assets, $483.69 million in total liabilities, and $406.24 million
in total equity.
Net cash provided by operating activities was $3.9 million for the
year ended Dec. 31, 2020 compared to $104.1 million for the year
ended Dec. 31, 2019. The decrease is primarily attributable to the
decline in operating results. Net income adjusted for non-cash
items used $53.5 million of cash for the year ended Dec. 31, 2020
compared to providing $40.7 million of cash for the year ended Dec.
31, 2019. The remaining decline is due to changes in working
capital which provided cash of $57.3 million for the year ended
Dec. 31, 2020 compared to $63.5 million for the year ended Dec. 31,
2019.
Net cash provided by investing activities was $108.3 million for
the year ended Dec. 31, 2020 including $104.6 million from the sale
of certain assets of its ABZ and Quadrant brands of valve products
and $5.3 million of proceeds from the sale of property and
equipment, partially offset by $2.2 million of capital
expenditures. Net cash provided by investing activities was $28.1
million for the year ended Dec. 31, 2019 including $39.3 million in
cash proceeds from the sale of its aggregate 40% interest in
Ashtead technology and $3.4 million in cash proceeds from the sale
of certain assets of its Cooper Alloy brand of valve products,
partially offset by $15.1 million of capital expenditures for
property and equipment.
Net cash used in financing activities was $41.8 million for the
year ended Dec. 31, 2020 compared to $122.2 million used in
financing activities for the year ended Dec. 31, 2019. Net cash
used in financing activities for the year ended Dec. 31, 2020
includes $40.3 million of cash used to repurchase 2021 Notes, $9.7
million paid for deferred financing costs and a $3.5 million early
participation payment for the bond exchange. These cash outflows
were partially offset by $13.1 million of net borrowings on its
Credit Facility in 2020. Net cash used in financing activities for
the year ended Dec. 31, 2019 primarily includes $119.9 million of
net repayments of debt.
As of Dec. 31, 2020, the Company had cash and cash equivalents of
$128.6 million and $110.5 million of availability under its Credit
Facility. In the fourth quarter of 2020, the Company sold certain
assets of its ABZ and Quadrant brands of valve products for cash
consideration of $104.6 million. In the third quarter of 2020, the
Company received a $14.1 million cash refund for income taxes from
filing a carryback claim for U.S. federal tax losses based on
provisions in the CARES Act.
"We anticipate that our future working capital requirements for our
operations will fluctuate directionally with revenues.
Furthermore, availability under our Credit Facility will fluctuate
directionally based on the level of our eligible accounts
receivable and inventory. In addition, we expect total 2021
capital expenditures to be less than $10.0 million, consisting of,
among other items, replacing end of life machinery and equipment,"
Forum Energy said.
"We expect our available cash on-hand, cash generated by
operations, and estimated availability under our Credit Facility to
be adequate to fund current operations and debt maturities during
the next 12 months. In addition, based on existing market
conditions and our expected liquidity needs, among other factors,
we may use a portion of our cash flows from operations, proceeds
from divestitures, securities offerings or other eligible capital
to reduce the principal amount of our 2025 Notes or other debt
outstanding. In 2020, we completed one disposition for total
consideration of $104.6 million and in 2019, we completed two
dispositions for total consideration of $51.7 million," Forum
Energy said.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1401257/000140125721000031/fet-20201231.htm
About Forum Energy
Forum Energy Technologies is a global oilfield products company,
serving the drilling, downhole, subsea, completions and production
sectors of the oil and natural gas industry. The Company's
products include highly engineered capital equipment as well as
products that are consumed in the drilling, well construction,
production and transportation of oil and natural gas. Forum is
headquartered in Houston, TX with manufacturing and distribution
facilities strategically located around the globe. For more
information, please visit www.f-e-t.com
* * *
As reported by the TCR on Aug. 21, 2020, S&P Global Ratings raised
its issuer credit rating on Houston-based oilfield products and
services provider, Forum Energy Technologies Inc., to 'CCC+' from
'SD' (selective default) after the company completed its debt
exchange for the majority of its 6.25% senior unsecured notes due
2021.
Also in August 2020, Moody's Investors Service upgraded Forum
Energy Technologies, Inc.'s Corporate Family Rating to Caa2 from
Ca. "The upgrade of Forum's ratings reflects the extended debt
maturity profile and resulting improvement in liquidity," Jonathan
Teitel, a Moody's analyst, said.
FORUM ENERGY: Reports $33 Million Net Loss for Fourth Quarter
-------------------------------------------------------------
Forum Energy Technologies, Inc. reported fourth quarter 2020
revenue of $113 million, an increase of $9 million from the third
quarter 2020. Orders received in the quarter increased by $32
million to $124 million. Net loss for the quarter was $33 million,
or $5.85 per diluted share, compared to a net loss of $22 million,
or $3.86 per diluted share, for the third quarter 2020. Excluding
$6 million, or $1.05 per share of special items, adjusted net loss
was $4.80 per diluted share in the fourth quarter 2020, compared to
an adjusted net loss of $6.00 per diluted share in the third
quarter 2020. Adjusted EBITDA improved by $7 million sequentially
to negative $2.6 million.
Special items in the fourth quarter 2020, on a pre-tax basis,
included an $88 million gain from the ABZ and Quadrant valve brand
asset sale. The gain was offset by $86 million of asset
impairments and restructuring costs as well as $7 million in
foreign exchange losses and $2 million of transaction expenses.
Cris Gaut, chairman and chief executive officer, remarked, "In the
fourth quarter, drilling and completion activity accelerated as oil
and natural gas prices improved. We took advantage of this
activity increase as our bookings were up by 34% and revenue
increased 9%, resulting in a book-to-bill ratio of 110%.
"In order to improve our returns as the market recovers, we
restructured our portfolio, exiting lower margin products that
would dilute our results. These changes focus our resources on
higher margin, differentiated products with better leverage to
improving activity levels.
"During the fourth quarter, we closed the sale of our ABZ and
Quadrant valve brands for $105 million in cash, reducing our net
debt by roughly one-third. Compared to the prior year end, net
debt was down $141 million to $201 million at December 31, 2020.
We ended the fourth quarter with $129 million in cash on-hand and
only $13 million drawn on our credit facility, resulting in
liquidity of $240 million.
"The steps taken by Forum in the fourth quarter position us to
perform well and take advantage of market opportunities afforded to
us in the rising-market environment."
Segment Results
Drilling & Downhole segment revenue was $50 million and orders were
$58 million, an increase of 16% and 49%, respectively, from the
third quarter 2020. The revenue increase was driven by higher
demand for the Company's premium drilling handling tools for
international markets. The Company's subsea product line received
a significant non-oil and gas order in the fourth quarter. Segment
adjusted EBITDA was $1 million, up $5 million from the third
quarter, resulting primarily from higher revenues and further cost
reductions. Drilling & Downhole operations focus primarily on
capital equipment and consumable products for global well
construction, artificial lift and subsea markets.
Completions segment revenue was $31 million, a sequential increase
of $11 million, or 56%, due to the strong increase in well
completions activity in the fourth quarter. Orders in the fourth
quarter were $30 million, an increase of $12 million, or 65%, from
the third quarter 2020. Segment adjusted EBITDA was $1 million, up
$5 million from the third quarter primarily due increased operating
leverage on the higher sales volumes. The Completions segment
designs and manufactures products for the coiled tubing, wireline
and stimulation markets.
Production segment revenue was $33 million, a decrease of $8
million, or 20% from the third quarter 2020, due to continued
customer de-stocking of both valves and surface production
equipment. Orders in the fourth quarter were $36 million, a 3%
increase sequentially. Segment adjusted EBITDA decreased by $3
million sequentially to break-even as a result of the decline in
revenue. The Production segment manufactures land well site
production equipment, desalination process equipment, and a wide
range of valves for upstream, midstream and process industry
customers.
About Forum Energy
Forum Energy Technologies is a global oilfield products company,
serving the drilling, downhole, subsea, completions and production
sectors of the oil and natural gas industry. The Company's
products include highly engineered capital equipment as well as
products that are consumed in the drilling, well construction,
production and transportation of oil and natural gas. Forum is
headquartered in Houston, TX with manufacturing and distribution
facilities strategically located around the globe. For more
information, please visit www.f-e-t.com/
Forum Energy reported a net loss of $567.06 million for the year
ended Dec. 31, 2019, compared to a net loss of $374.08 million for
the year ended Dec. 31, 2018. As of June 30, 2020, the Company had
$1.06 billion in total assets, $625.88 million in total
liabilities, and $440.98 million in total equity.
* * *
As reported by the TCR on Aug. 21, 2020, S&P Global Ratings raised
its issuer credit rating on Houston-based oilfield products and
services provider, Forum Energy Technologies Inc., to 'CCC+' from
'SD' (selective default) after the company completed its debt
exchange for the majority of its 6.25% senior unsecured notes due
2021.
Also in August 2020, Moody's Investors Service upgraded Forum
Energy Technologies, Inc.'s Corporate Family Rating to Caa2 from
Ca. "The upgrade of Forum's ratings reflects the extended debt
maturity profile and resulting improvement in liquidity," said
Jonathan Teitel, a Moody's analyst.
FRANCIS FARMS: Voluntary Chapter 11 Case Summary
------------------------------------------------
Debtor: Francis Farms Holdings, LLC
151 R County Street
Rehoboth, MA 02769
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
District of Massachusetts
Case No.: 21-10273
Judge: Hon. Janet E. Bostwick
Debtor's Counsel: Gary W. Cruickshank, Esq.
GARY W. CRUICKSHANK
21 Custom House Street
Suite 920
Boston, MA 02110
Tel: 617-330-1960
Email: gwc@cruickshank-law.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by David Cascioli, manager.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/3W2225I/Francis_Farms_Holdings_LLC__mabke-21-10273__0001.0.pdf?mcid=tGE4TAMA
FREEMAN MOBILE: May Use Bank of America's Cash Collateral
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, has authorized Freeman Mobile
Orthodontics PLLC to use the cash collateral of Bank of America on
a final basis, with a 10% variance.
As adequate protection for the use of Cash Collateral and for any
diminution in value of the Lender's prepetition collateral, the
Lender is granted a valid, perfected lien upon, and security
interest in, all property of the Debtor generated post-petition to
the same extent and in the same order of priority of any valid
pre-petition lien.
The post-petition liens and security interests granted to the
Lender, if any, will be valid and perfected post-petition, to the
same extent and priority of the prepetition liens, without the need
for execution or filing of any further documents or instruments
otherwise required to be filed or be executed or filed under
non-bankruptcy law.
The Court's Order enumerated these Events of Default:
(a) If the Debtor breaches any term or condition of the Order
or any of the Lender's loan documents, other than defaults existing
as of the Petition Date;
(b) If the Case is converted to a case under Chapter 7 of the
Bankruptcy Code;
(c) If the case is dismissed; or
(d) If any violation or breach of any provision of the Order
occurs.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/2ZWfNp7 from PacerMonitor.com.
About Freeman Mobile Orthodontics PLLC
Freeman Orthodontics is a Fort Lauderdale, Florida-based
orthodontics specialist that provides cutting-edge, high quality
and friendly orthodontic care to patients in different communities
in Florida. It takes price in providing patients with specialized
and personalized service because it recognizes the different needs
of patients. It features the newest technological advances in
dental industry like brackets, braces, clear aligners, accelerated
orthodontics, and many more.
Freeman Mobile Orthodontics PLLC and affiliate Freeman
Orthodontics, P.A., sought Chapter 11 protection (Bankr. S.D. Fla.
Lead Case No. 20-15408) on May 17, 2020. Affiliates Interstellar
Disruption LLC, Freeman Holdings LLC, Freeman Holdings II LLC and
FWP Realty Holdings also sought bankruptcy protection.
On May 17, 2020, Christoper Scott Freeman, the lead orthodontics at
the practice, also filed a personal Chapter 11 case. He disclosed
$13 million in liabilities, including four bank loans worth $12.6
million.
The Hon. Scott M. Grossman is the case judge.
The Debtors hired Wernick Law, PLLC, as counsel.
GARRISON SHORTSTOP: Seeks Cash Collateral Access Thru June 18
-------------------------------------------------------------
Garrison Shortstop, LLC asks the U.S. Bankruptcy Court for the
Eastern District of Kentucky, Ashland Division, for entry of an
order extending the term of its authorization to use cash
collateral through June 18, 2021.
On December 3, 2020, the Court entered an Order approving the
Debtor's use of cash collateral on an interim basis.
On January 13, 2021, the Court entered an Order extending the terms
of the Cash Collateral Order through March 24, 2021.
The Debtor seeks authorization to extend the term of the Cash
Collateral Order under the same terms and conditions set forth in
the original Cash Collateral Order.
The Debtor asserts that no material changes have occurred since the
granting of interim relief of the original Cash Collateral Order
which would deem any party in interest no longer adequately
protected.
A copy of the Motion is available at https://bit.ly/3bcyF9P from
PacerMonitor.com.
About Garrison Shortstop, LLC
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Ky. Case No. 20-10262 on December 1,
2020. In the petition signed by Lucinda Applegate, member, the
Debtor disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge Tracey N. Wise oversees the case.
Michael B. Baker, Esq. at The Baker Firm, PLLC is the Debtor's
counsel.
GATA III: Seeks to Hire Larson & Zirzow as Legal Counsel
--------------------------------------------------------
GATA III, LLC seeks approval from the U.S. Bankruptcy Court for the
District of Nevada to hire Larson & Zirzow, LLC as its legal
counsel.
The firm will render these services:
(a) prepare legal papers in connection with the administration
of the Debtor's bankruptcy estate;
(b) take all necessary actions in connection with a sale or
preparation of a plan of reorganizatio;
(c) take all necessary actions to protect and preserve the
Debtor's estate including the prosecution of actions on the
Debtor's behalf, the defense of any actions commenced against the
Debtor, the negotiation of disputes in which the Debtor is
involved, and the preparation of objections to claims filed against
the estate; and
(d) perform all other necessary legal services in connection
with the prosecution of the Debtor's Chapter 11 case.
The firm received a retainer in the amount of $35,000.
Larson & Zirzow will be paid at these rates:
Partners $550 per hour
Paraprofessionals $220 per hour
Larson & Zirzow is a "disinterested person" as defined in Section
101(14) of the Bankruptcy Code, according to court papers filed by
the firm.
The firm can be reached through:
Zachariah Larson, Esq.
Larson & Zirzow, LLC
850 E. Bonneville Ave.
Las Vegas, NV 89101
Tel: 702-382-1170
Email: mzirzow@lzlawnv.com
About GATA III
GATA III, LLC is a Las Vegas-based company primarily engaged in
renting and leasing real estate properties.
GATA III filed its voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. D. Nev. Case No. 21-10690) on Feb.
15, 2021. Paul Thomas, sole manager, signed the petition. At the
time of the filing, the Debtor disclosed assets of between $1
million and $10 million and liabilities of the same range.
Judge Natalie M Cox oversees the case.
Larson & Zirzow, LLC is the Debtor's legal counsel.
GENESIS INVESTMENT: Hires RJ Friedman as Bankruptcy Attorney
------------------------------------------------------------
Genesis Investment, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of New York to hire RJ Friedman
Attorneys, as its legal counsel.
The firm will render these services:
a. advise the Debtor regarding matters of bankruptcy law and
concerning the requirements of the Bankruptcy Code;
b. represent the Debtor in proceeding and hearings in the
court involving matters of bankruptcy law;
c. assist in compliance with the requirements of the Office of
the United States Trustee;
d. provide legal advice and assistance with respect to the
Debtor's powers and duties in the continued operation of the
business and management of the estate;
e. assist in the administration of the estate's assets and
liabilities;
f. prepare necessary applications, answers, motions, orders,
reports and/or other legal documents;
g. assist in the collection of all accounts receivable and
other claims;
h. provide advice concerning the claims secured and unsecured
creditors, prosecution and/or defense of all actions;
i. prepare,, negotiate, prosecute and attain confirmation of
a plan of reorganization.
The firm will charge $275 per hour for its services.
Richard J. Friedman, Jr., Esq., at RJ Friedman, disclosed in a
court filing that he and his firm are "disinterested persons" as
defined in section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Richard J. Friedman, Jr.
RJ Friedman Attorneys
202 Main Street
Hamburg, NY 14075
Phone: 716-648-8000
Fax: 716-649-7672
About Genesis Investment
Genesis Investment, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D.N.Y. Case No. 18-11907) on Sept. 25,
2018. At the time of the filing, the Debtor estimated assets of
less than $500,000 and liabilities of less than $1 million. Judge
Michael J. Kaplan presides oversees the case. RJ Friedman
Attorneys represents the Debtor as bankruptcy attorney.
GRACE DENTAL: Seeks Cash Collateral Access
------------------------------------------
Grace Dental, P.A. asks the U.S. Bankruptcy Court for the Middle
District of Florida, Orlando, Division to use cash collateral and
to provide adequate protection to East West Bank and United
Community Bank.
The Debtor requires the use of cash collateral to avoid halting
operations, which would result in the loss of the going concern
value of the business and a reduction in the value of the estate's
assets.
As of the Petition Date, Debtor listed in its Schedules a total of
approximately $125,490 of aggregate value of personal property.
Debtor listed approximately $65,450 in cash and cash equivalents,
which sum includes approximately $39,045 that the Debtor has
received from the federal government's Paycheck Protection Program,
plus approximately $13,624 that the Debtor has received from the
federal government's CARES Provider Relief Fund for certain
authorized designated purposes, for a total of approximately
$52,670, which funds have been earmarked to pay certain authorized
designated purposes, and therefore such funds are not subject to
any lien(s) of BoA.
Debtor's other personal property (consisting of other cash,
accounts receivable, inventory, furniture, and equipment, not
including the Earmarked Funds) is valued at approximately $72,820,
of which there is approximately $12,780 in cash and cash
equivalents.
Debtor's earnings going forward may be subject to Creditors'
alleged liens, and to the extent that such future earnings may be
deemed to be cash collateral, the Debtor seeks authority to use
same.
EWB is the only creditor that has filed a UCC Statement.
As of the Petition Date, the Debtor is obligated to EWB in the
approximate amount of $219,306. The Creditor may assert a
first-priority lien against the Debtor's accounts, inventory,
equipment, and other personal property based on a UCC Statement
filed on October 31, 2016. The value of all of the personal
property Collateral securing EWB's claim is approximately $118,648.
Accordingly, there is insufficient value in the Collateral to
fully secure ESB's claim, and therefore EWB is only partially
secured pursuant to 11 U.S.C. section 506.
As of the Petition Date, the Debtor is obligated to UCB in the
approximate amount of $415,796. UCB may claim a lien on the
Debtor's personal property based on a final summary judgment for a
corporate guarantee. However, UCB is wholly unsecured pursuant to
11 U.S.C. section 506, based on the superior EWB lien, and the
insufficient value in the Collateral to secure UCB's claim.
As adequate protection for the use of Creditors' cash collateral,
the Debtor proposes to grant Creditors replacement liens with the
same validity, extent, and priority as their respective prepetition
liens.
The Debtor estimates it will require a monthly operating reserve of
$50,000 to continue to maintain monthly operations, and depending
on the month, a greater or lesser amount will be required each
comparable period thereafter.
A copy of the motion is available at https://bit.ly/38756Eq from
PacerMonitor.com.
About Grace Dental, P.A.
Grace Dental, P.A. operates a general dentistry practice that
specializes in oral health, prevention, diagnosis, and treatment
with issues of teeth, gums, and mouth. The Debtor encompasses all
areas of oral surgery, cosmetic, pediatric, periodontal,
orthodontics, endodontics, TMJ/TMD, geriatrics.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 6:21-bk-00895) on March
1, 2021. In the petition signed by Gabriel Sangalang, director, the
Debtor disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Jeffrey S. Ainsworth, Esq. at BransonLaw, PLLC and L. Todd Budgen,
Esq. at Budgen Law represents the Debtor as counsel.
GRASAN EQUIPMENT: Seeks to Hire Leech Tishman as Counsel
--------------------------------------------------------
Grasan Equipment Company, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Ohio to hire Leech
Tishman Fuscaldo & Lampl, LLC as its legal counsel.
The firm's services include:
a. advising the Debtor with respect to its powers and duties
in the continued management and operation of its businesses;
b. preparing pleadings and attending court hearings;
d. pursuing any causes of action on behalf of Debtor or which
may be filed against the Debtor; and
e. other legal services necessary to administer the Debtor's
Chapter 11 case.
The firm will be paid as follows:
Partner $275 to $690 per hour
Associate $205 to $300 per hour
Counsel/Of Counsel $325 to $690 per hour
Paralegals $95 to $230 per hour
Leech Tishman is a "disinterested" person as that term is defined
in Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Patrick W. Carothers, Esq.
Leech Tishman Fuscaldo & Lampl, LLC
525 William Penn Place, 28th Floor
Pittsburgh, PA 15219
Tel: 412-261-1600
Fax: 412-227-5551
Email: pcarothers@leechtishman.com
About Grasan Equipment Co.
Grasan Equipment Co., Inc. is a Mansfield, Ohio-based company that
provides remediation and other waste management services.
Grasan Equipment sought Chapter 11 protection (Bankr. N.D. Ohio
Case No. 21-60199) on Feb. 19, 2021. Marian Eilenfeld, authorized
representative, signed the petition. In the petition, the Debtor
disclosed total assets of $200,000 and total debt of $4,882,416.
Judge Russ Kendig oversees the case.
The Debtor tapped Patrick W. Carothers, Esq., at Leech Tishman
Fuscaldo & Lampl, LLC, as its legal counsel.
GRATITUDE TRAINING: Has Final OK on Cash Collateral Use
-------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, has authorized Gratitude Training, LLC to
use cash collateral on a final basis with monthly adequate
protection payments to Newtek Small Business Finance, LLC in the
amount of $500.
The adequate protection payments will be made payable to Newtek
Small Business Finance, LLC, and mailed to, 1200 Weston Road, PH,
Weston, Florida 33326.
Debtor is authorized to use the cash collateral with no provision
for adequate protection payments to the United States Small
Business Administration, as there is no valid security interest in
the assets of Debtor, although an UCC-1 financial statement was
filed and recorded.
Notwithstanding any provision of the Final Order to the contrary or
failure to include a specific line item in any Budget; any liens in
favor of the Banks including, without limitation, the Replacement
Liens, will be subject to carve-out for all fees due to the U.S.
Trustee and/or Clerk of Court; and the Debtor is authorized to pay
the U.S. Trustee fees without further order of the Court.
A copy of the order and the Debtor's budget through May 2021 is
available at https://bit.ly/3rfSKlc from PacerMonitor.com.
About Gratitude Training, LLC
Gratitude Training, LLC, a coaching company that offers
transformational trainings, filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No.
21-10143) on Jan. 8, 2021. Gratitude Training President Josephine
Englesson signed the petition.
At the time of filing, the Debtor disclosed $40,811 in assets and
$1,788,435 in liabilities.
Judge Peter D. Russin presides over the case.
The Debtor tapped Van Horn Law Group, P.A. as its legal counsel and
Varshawsky Huber, LLP as its accountant.
GREENTEC-USA INC: Auction/Sale Hearing for All Assets on April 16
-----------------------------------------------------------------
Judge Brian F. Kenney of the U.S. Bankruptcy Court for the Eastern
District of Virginia authorized GreenTec-USA, Inc.'s bidding
procedures relating to the sale of substantially all assets to
IntelGard, Inc. for $4.25 million, subject to overbid.
A hearing on the Motion was held on Feb. 23, 2021, at 11:00 a.m.
The Limited Objection filed by creditors Vic Topper et al.
("GreenTec Plaintiffs") is overruled except that (i) the required
Earnest Money Deposit will be increased to $50,000 for all
Qualified Bidders, including the Purchaser, and (ii) the
opportunity for due diligence provided for by the Bid Procedures
will include the requirement of access to the Assets for the
purpose of conducting appropriate testing, subject to the execution
of non-disclosure agreements; and that the specific requests in the
Objection that (i) the GreenTec Plaintiffs be permitted to credit
bid for the Assets, and (ii) that the Assets be transferred to the
GreenTec Plaintiffs if the Debtor fails to sell them, are all
expressly denied.
The Break-Up Fee is approved; and that, if earned by the Purchaser
pursuant to the terms of the APA, the Debtor is authorized to pay
the Break-Up Fee to the Purchaser without further order of the
Court.
The proposed sale of the Assets and the Auction will be conducted
in accordance with the provisions of the Bid Procedures Order and
the Bid Procedures; that the Sale and Bid Procedures Notice is
approved in all respects; that the Debtor will serve the Sale and
Bid Procedures Notice within three business days of entry of the
Order on the Notice Parties.
The principal terms of the Bidding Procedures are:
a. Bid Deadline: March 31, 2021, at 5:00 p.m. (ET)
b. Initial Bid: $4,512,500, which is equal to Cash
Consideration of the bid submitted by the Stalking Horse of $4.25
million, plus (i) the break-up fee in the amount of $212,500
c. Deposit: $50,000
d. Auction: If there are one or more Qualified Bids timely
submitted to the Debtor by one or more Qualified Bidders by the
Opening Bid Deadline in accordance with the Bid Procedures, the
Auction/Sale Hearing will be held on April 16, 2021, at 1:30 p.m.,
for the purpose of conducting an auction sale, determining the
highest and best bidder, approving a sale of the Assets to the
highest and best bidder, and resolving any disputes related
thereto, all in accordance with the Bid Procedures.
e. Bid Increments: $20,000
f. Break-Up Fee: $212,500 (equal to 5% of the Purchase Price)
On April 2, 2021, the Debtor will file and serve a Certification
certifying whether and to what extent it has timely received one or
more Qualified Bids from one or more Qualified Bidders; that any
party in interest who disputes whether the Debtor has timely
received a Qualified Bid from a Qualified Bidder shall, not later
than April 9, 2021, file and serve written objection with respect
the Debtor's Certification; and that any disputes relating to the
Certification will be heard at the Auction/Sale Hearing.
Notwithstanding the possible applicability of Bankruptcy Rule
6004(h) or otherwise, the terms and conditions of this Bid
Procedures Order will be immediately effective and enforceable upon
entry, and no automatic stay of execution will apply to the Bid
Procedures Order
A copy of the Bid Procedures is available at
https://tinyurl.com/dx3v7e8 from PacerMonitor.com free of charge.
About GreenTec-USA Inc.
GreenTec-USA, Inc. -- https://greentec-usa.com/ -- offers
cyber-defense, secure data, secure systems, and secure document
storage, video compression, data center modularization and
optimization services.
Based in Sterling, Va., GreenTec-USA filed a voluntary Chapter 11
petition (Bankr. E.D. Va. Case No. 19-14034) on Dec. 10, 2019. In
the petition signed by Stephen Petruzzo, president and chief
executive officer, Debtor estimated $1 million to $10 million in
both assets and liabilities. Robert M. Marino, Esq., at Redmon
Peyton & Braswell, LLP, is Debtor's legal counsel.
GREGORY GILBERT: $1M Cash Sale of Reno Home to Averys Approved
--------------------------------------------------------------
Judge Bruce T. Beesley of the U.S. Bankruptcy Court for the
District of Nevada issued an amended order authorizing Rebekah E.
Gilbert's sale of the real property located at 2670 Thomas
Jefferson Drive, in Reno, Nevada, to Robert Clayton Avery, Kelly
Stitt Avery and Marsden Ronald Avery Jr. for $1.01 million, cash.
A hearing on the Motion was held on Jan. 19, 2021, at 2:00 p.m.
The Motion, the underlying purchase agreements and the transactions
contemplated thereby are approved pursuant to Section 363(b) and
(f) as modified by the Order, and Debtors are authorized and
empowered to perform their obligations under the Purchase Agreement
and to act as necessary to effectuate the sale without further
corporate authorization or Order of the Court.
The sale is free and clear of all claims, liens and encumbrances.
The loan secured by a first lien on the Thomas Jefferson Property
will be paid in full directly from escrow as of the date of the
closing of the sale, that will be within 90 days from the date of
the entered order on the Motion To Sell, and the sale will be
conducted through an escrow and based on a non-expired contractual
payoff statement received directly from U.S. Bank Trust National
Association, as Trustee of the Bungalow Series IV Trust.
The loan secured by a second lien on the Thomas Jefferson Property
will be paid in full directly from escrow as of the date of the
closing of the sale, that will be within 90 days from the date of
the entered order on the Motion To Sell, and the sale will be
conducted through an escrow and based on a non-expired contractual
payoff statement received directly from Wells Fargo Bank - Home
Equity Group, servicing agent for, Wells Fargo Bank, N.A.
All of the Debtors' costs of sale, including real estate agent
commissions and title/escrow fees and the remaining net proceeds,
will be paid directly from escrow. All remaining net proceeds,
after payment of the secured lien claims identified, and the
Debtor's costs of sale, will be disbursed directly from escrow to
Rebekah E. Gilbert.
Any and all secured creditor, including those identified, will
retain the right to submit an updated payoff demand prior to any
close of escrow to ensure their claims is paid in full.
As provided by Fed. R. Bankr. P. 6004(h), 6006(d) and 7062, the
Order will be effective and enforceable immediately upon entry.
Notwithstanding Bankruptcy Rules 6004(h), the Court expressly finds
that there is no just reason for delay in the implementation of the
Order and expressly directs entry of judgment as set forth therein.
Gregory L. Gilbert and Rebekah E. Gilbert sought Chapter 11
protection (Bankr. D. Nev. Case No. 18-50772) on July 17, 2018.
The Debtor tapped Kevin A. Darby, Esq., at Darby Law Practice,
Ltd.
as counsel.
Counsel for Debtor:
Kevin A. Darby, Esq.
DARBY LAW PRACTICE, LTD.
E-mail: kad@darbylawpractice.com
GULF STATES TRANSPORTATION: Seeks to Hire D & R as Appraiser
------------------------------------------------------------
Gulf States Transportation, LLC seeks authority from the U.S.
Bankruptcy Court for the Eastern District of Louisiana Eastern to
employ Darrel Richoux of D & R Appraisal Services, LLC to conduct
an appraisal of its vehicles.
Mr. Richoux will charge $150 per vehicle for his appraisal services
and up to $500 for testifying at court hearings.
As disclosed in court filings, D & R Appraisal does not have
interest materially adverse to the interest of the Debtor's estate,
creditors and equity security holders.
The firm can be reached through:
Darrel Richoux
D & R Appraisal Services, LLC
507 Roseland Pkwy
Harahan, LA 70123
Phone: (504) 481-1057
About Gulf States Transportation
Gulf States Transportation, LLC filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La.
Case No. 19-13283) on Dec. 9, 2019. At the time of the filing, the
Debtor disclosed assets of between $100,001 and $500,000 and
liabilities of the same range.
Judge Meredith S. Grabill oversees the case.
Darryl T. Landwehr, Esq., at Landwehr Law Firm, represents the
Debtor as counsel.
HEO INC: Seeks Use of Cash Collateral
-------------------------------------
Heo, Inc. asks the U.S. Bankruptcy Court for the Northern District
of Georgia, Gainesville Division, for authority to use cash
collateral on an emergency basis for general operational and
administrative expenses in accordance with its budget.
The Debtor owns and operates a commercial building located at 1356
Union Avenue Memphis, Tennessee. The Debtor is wholly owned and
operated by Hyo S. Heo.
Prior to 2018, Ms. Heo owned and operated a dry-cleaning business,
Union Dryve, Inc., at the Property as the tenant of the Debtor. In
2018, Ms. Heo sold Union Dryve to a third-party couple. The
Tenants began operating Union Dryve at the Property pursuant to the
sale and lease agreements. The Tenants have not been financially
successful in operating Union Dryve and have ceased making full
rent payments to the Debtor. Without receiving the full amount of
rental income owed, the Debtor began falling behind on its own
financial obligations.
In connection with their financial struggles, the Tenants brought a
lawsuit against the Debtor, Ms. Heo, Union Dryve, Inc., and John
Byeong II Choi and Maria Myunghee Choi in state court in Tennessee.
The Tenants allege that the Defendants failed to disclose certain
debt obligations of Union Dryve in connection with its purchase.
Specifically, the Tenants allege they were unaware of a certain
U.S. Small Business Administration loan, despite agreeing to a
unique ownership arrangement devised and executed in response to
the presence of the loan. The Tenants do not seek to rescind the
purchase of Union Dryve and continue to occupy the Property. The
Debtor has not received full rent payments from the Tenants since
March 2020.
Between the state court lawsuit with the Tenants and the cessation
of its primary income stream, the Debtor’s arrearage on its
ongoing financial obligations continued to accrue. The Debtor
depleted nearly all its cash reserves in litigating the lawsuit.
Faced with no other viable alternative, the Debtor was forced to
file for chapter 11 bankruptcy protection.
The Debtor is a borrower on loans evidenced by notes with the Bank
of Hope and the U.S. Small Business Administration, which assert
security interests in the Debtor's property. As of the Petition
Date, the Debtor believes the amount owed to the Lenders is
approximately $926,478.80 in the aggregate.
To the extent that any interest that the Lenders may have in the
Cash Collateral is diminished, the Debtor proposes to grant the
Lenders a replacement lien in post-petition collateral of the same
kind, extent, and priority as the liens existing pre-petition,
except that the Adequate Protection Liens will not extend to the
proceeds of any avoidance actions received by the Debtor or the
estate pursuant to chapter 5 of the Bankruptcy Code. Hence, the
Lenders' interests in the Debtor's Cash Collateral, to the extent
they have any, are adequately protected.
A copy of the motion and the Debtor's 13-week budget through the
week of May 24 is available for free at https://bit.ly/3rhA4l1 from
PacerMonitor.com.
About Heo, Inc.
Heo, Inc. owns and operates a commercial building located at 1356
Union Avenue Memphis, Tennessee. The Debtor is wholly owned and
operated by Hyo S. Heo.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N. D. Ga. Case No. 21-20173) on February
18, 2021. In the petition signed by Hyo Sook Heo, authorized
representative, the debtor disclosed up to $100,000 in assets and
up to $10 million in liabilities.
ROUNTREE LEITMAN & KLEIN, LLC represents the Debtor as counsel.
HERTZ CORP: Donlen Entities' $825M All Assets Sale to Freedom OK'd
------------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware authorized Hertz Corp. and its affiliate to sell
substantially all of the assets of Donlen Corp. and its Debtor
subsidiaries to Freedom Acquirer, LLC, for $825 million, plus
closing adjustments based on a working capital, fleet equity and
assumed indebtedness.
The Sale Hearing was held on March 1, 2021.
The Asset Purchase Agreement, including any amendments, supplements
and modifications thereto, all other Transaction Documents, and all
of the terms and conditions therein, are approved in all respects.
The sale of the Donlen Assets to the Purchaser is free and clear of
all Interests. Any and all valid and perfected liens or interests
in the Donlen Assets will attach to any proceeds of the Sale
Transaction.
Pursuant to 11 U.S.C. Sections 105(a), 363 and 365, and subject to
and conditioned upon the Closing Date, the Debtors' assumption and
assignment to the Purchaser, and the Purchaser's assumption on the
terms set forth in the Asset Purchase Agreement, of the Assigned
Contracts is approved, and the requirements of 11 U.S.C. Section
365(b)(1) with respect thereto are deemed satisfied.
The Debtors are authorized and directed to (a) assume and assign to
the Purchaser, effective upon the Closing Date of the Sale
Transaction, the Assigned Contracts free and clear of all Interests
of any kind or nature whatsoever and (b) execute and deliver to the
Purchaser such documents or other instruments as may be necessary
to assign and transfer the Assigned Contracts to the Purchaser.
Without limiting the foregoing, following closing of the Sale
Transaction, the Purchaser (or its designee) will assume all rights
and obligations of Donlen Corp. or Donlen Fleet Leasing Ltd., as
applicable, as servicer under the Securitization Documents, and The
Hertz Corp. will not guarantee the performance or obligation of
Purchaser (or its designee) as servicer. Except as expressly set
forth in the Order, the Order and the Asset Purchase Agreement are
not intended to modify or impair the Existing Syndication Business
or the contractual relationship between the non-debtor Acquired
Subsidiaries and the owners of any special units of beneficial
interests issued pursuant to the Existing Syndication Business.
Donlen Corp. is authorized and, to the fullest extent possible,
directed to use proceeds from the Sale to repay the postpetition
loans made by The Hertz Corporation to Donlen Corp. Nothing in the
Order will govern the use of proceeds, which, to the extent
applicable, shall be governed by paragraph 15 in the DIP Order, and
nothing herein will prejudice any party's rights regarding the use
of such proceeds.
In the event that the Purchaser fails to consummate the Sale
Transaction, the Backup Bidder will be deemed to have the new
prevailing bid, and the Debtors will be authorized, without further
order of the Court, to consummate the Sale Transaction with the
Backup Bidder as the Purchaser (as such term is used throughout the
Order).
In accordance with the Asset Purchase Agreement, the Donlen Debtors
are authorized to change the names of each Donlen Debtor following
the closing of the Sale.
Without limiting any other provision of the Order, the Debtors are
authorized and directed to, and will from the date thereof until
the date that is six months from the date thereof, use its
commercially reasonable efforts to take any and all actions
reasonably requested by the Purchaser that are necessary or
appropriate to transfer the bank and deposit accounts of the
Selling Entities listed on Schedule 1 to the Purchaser or its
designee, as contemplated by Section 2.1(m) of the Asset Purchase
Agreement, without further notice to or order of the Court.
The Debtors are authorized to take all actions necessary to
effectuate the relief granted pursuant to the Order in accordance
with the Motion.
A copy of the Schedule 1 and the Agreement is available at
https://tinyurl.com/fjmh99hc from PacerMonitor.com free of charge.
About Hertz Corp.
Hertz Corp. and its subsidiaries -- http://www.hertz.com--
operate
a worldwide vehicle rental business under the Hertz, Dollar, and
Thrifty brands, with car rental locations in North America,
Europe,
Latin America, Africa, Asia, Australia, the Caribbean, the Middle
East, and New Zealand. They also operate a vehicle leasing and
fleet management solutions business.
On May 22, 2020, The Hertz Corporation and certain of its U.S. and
Canadian subsidiaries and affiliates filed voluntary petitions for
reorganization under Chapter 11 in the U.S. Bankruptcy Court for
the District of Delaware (Bankr. D. Del. Case No. 20-11218).
Judge Mary F. Walrath oversees the cases. The Debtors have tapped
White & Case LLP as their bankruptcy counsel, Richards, Layton &
Finger, P.A. as local counsel, Moelis & Co. as investment banker,
and FTI Consulting as financial advisor. The Debtors also retained
the services of Boston Consulting Group to assist the Debtors in
the development of their business plan. Prime Clerk LLC is the
claims agent.
The U.S. Trustee for Regions 3 and 9 appointed a Committee to
represent unsecured creditors in Debtors' Chapter 11 cases. The
Committee has tapped Kramer Levin Naftalis & Frankel LLP as its
bankruptcy counsel, Benesch Friedlander Coplan & Aronoff LLP as
Delaware counsel, UBS Securities LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Ernst & Young
LLP provides audit and tax services to the Committee.
IAA INC: Moody's Affirms Ba3 CFR & Alters Outlook to Stable
-----------------------------------------------------------
Moody's Investors Service changed the outlook for IAA, Inc. to
stable from negative on improved credit metric expectations as the
US economy recovers from the 2020 recession. Moody's affirmed IAA's
Ba3 corporate family rating and Ba3-PD probability of default
rating. Moody's also affirmed the Ba2 (LGD2) and B2 (LGD5) ratings
on IAA's senior secured credit facilities and senior unsecured
notes, respectively. Moody's revised the speculative grade
liquidity rating ("SGL") to SGL-1 from SGL-2.
Affirmations:
Issuer: IAA, Inc.
Corporate Family Rating, Affirmed Ba3
Probability of Default Rating, Affirmed Ba3-PD
Senior Secured Bank Credit Facility, Affirmed Ba2 (LGD2)
Senior Unsecured Regular Bond/Debenture, Affirmed B2 (LGD5)
Upgrades:
Issuer: IAA, Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: IAA, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The stabilization of the outlook reflects IAA's improving trends
after the drastic reduction in assignment volumes caused by the
recession. Increasing miles driven since the 2Q20 trough, combined
with better than expected revenue per unit dynamics, have mitigated
the volume reduction and will continue to fuel the recovery. IAA's
credit profile is supported by its co-leader position (along with
Copart) with roughly 40% of the salvage auction market in North
America. A sizeable real estate portfolio and long-standing
relationships with insurance carriers create barriers to entry.
Profitability is very strong for the services sector, with EBITDA
margins increasing towards 40% (Moody's adjusted), supported by the
accelerated transition to an online-only auction format in 2020.
Over the last 10 years, several trends have created tailwinds
supporting IAA's growth. Technological advances result in more
expensive auto repairs, leading to higher total loss volumes. In
addition, the increasing cost of components drives higher demand
for salvage parts, benefitting IAA's revenue per unit. Most
recently, an increasing international buyer client base, combined
with a supply and demand imbalance caused by the coronavirus
pandemic have contributed to price increases.
The ratings are constrained by IAA's limited scale and narrow
scope, as well as the company's high customer concentration with
roughly 40% of revenue generated from the three largest insurance
customers. Assignment volumes are highly dependent on miles driven,
which creates exposure to cyclical swings. Moody's expect the
ongoing economic recovery to continue in 2021, but the long-term
impact of COVID-19 remains uncertain. The pandemic has accelerated
usage of technology tools that replace travel needs in certain
sectors of the economy, which could disrupt the steady growth in
miles driven experienced in recent years. High financial leverage
also constrains the credit, with Moody's adjusted debt/EBITDA at
4.1x (as of December 2020) and the potential for debt-funded
leveraging transactions.
The stable outlook reflects the expectation that IAA's credit
metrics will continue to improve after the 2Q20 recessionary
trough. The coronavirus pandemic disrupted assignment volumes,
hitting the lowest level in 2Q20, but positive pricing trends have
partially mitigated volume reductions and diminished revenue
declines. Moody's anticipate strong double-digit revenue growth
over the next 12 months, as volume stabilization with favorable
pricing trends support the recovery. Longer term revenue is
expected to resume steady growth in the mid single-digit range.
Margins are expected to slowly expand towards 40% (Moody's
adjusted) over the next 12 months, driven by the 2020 transition to
an online-only model, but partially offset by temporary
pandemic-related cost cuts rolling off. Leverage is expected to
trend lower towards 3.5x (Moody's adjusted), driven by revenue
growth and margin expansion. Free cash flow to debt is anticipated
in the 8%-10% range (all metrics Moody's adjusted).
The debt instrument ratings reflect IAA's Ba3-PD Probability of
Default Rating and expected loss for individual instruments. The
$800 million senior secured term loan due 2026 (reduced to $774
million as of December 2020 due to mandatory and voluntary
repayments), and $361 million revolver due 2024 are rated Ba2 with
a loss given default assessment of LGD2, one notch above IAA's Ba3
Corporate Family Rating. The senior secured rating incorporates the
seniority to the $500 million senior unsecured notes due 2027,
which are rated B2 with a loss given default assessment of LGD5,
and other non-debt liabilities.
Borrowings under the $774 million term loan and $361 million
revolver are secured by a first priority security interest in all
tangible and intangible assets, as well as a perfected first
priority equity pledge in domestic subsidiaries and 65% of first
tier foreign subsidiaries. The senior secured credit facilities are
guaranteed by all wholly-owned domestic subsidiaries. The term loan
amortizes 1% annually. The revolver includes a 3.5x senior secured
net leverage financial covenant to be tested at first dollar drawn.
The $10 million Canadian revolver (unrated) is secured by certain
Canadian assets and is subject to covenants including a working
capital ratio of at least 1.0x and a minimum fixed charge coverage
ratio of at least 1.25x (as defined in the credit agreement).
The SGL-1 speculative grade liquidity reflects IAA's very good
liquidity, including a $233 million cash and equivalents balance as
of December 2020, an undrawn $361 million revolving credit facility
and our expectation that IAA will continue to generate healthy cash
flow with FCF/Debt metrics in the 8%-10% range over the next 12
months. In 2020, IAA's Canadian subsidiary also entered into a $10
million revolving facility agreement that provides working capital
liquidity to IAA's Canadian operations. Moody's expect capex above
2020 levels as the recession wanes and IAA resumes real estate and
other investments. Moody's anticipate available cash, committed
revolver capacity and free cash flow generation will cover
liquidity needs over the next 12 months. Sizeable shareholder
distributions or other changes to the current use of cash policies
could weaken liquidity and could change Moody's view.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The rating could be upgraded if we expect favorable tailwinds in
the salvage industry will continue to support sustained mid to high
single-digit organic revenue growth, strong EBITDA margins and
increasing free cash flow to debt above 10%. Debt/EBITDA leverage
sustained below 3.5x and a history of balanced financial policies
that keep leverage within the anticipated range are also key
upgrade considerations (all metrics Moody's adjusted).
The ratings could be downgraded if IAA's long-term revenue growth
(excluding the temporary impact from the COVID-19 recession) slows
down to low single-digits or margins are pressured due to increased
competition, changes in the frequency of total losses, lower miles
driven, or other changes to IAA's operating conditions. The rating
could be lowered (all metrics Moody's adjusted) if Moody's expect
debt to EBITDA will be sustained above 4.5x, free cash flow to debt
will remain below 6.0%, liquidity deteriorates, or IAA pursues
aggressive financial policies favoring shareholders over
creditors.
IAA, Inc. ("IAA") is a US-based leading provider of auction
services for total loss, damaged and low-value vehicles. IAA
operates online marketplaces for buyers and sellers of salvage
vehicle and related services, such as transportation, inspection,
valuation, titling, and other. Sellers of salvage vehicles include
insurance companies, charities, dealers and financial institutions.
Buyers include dismantlers, resellers, recyclers and international
buyers. The company is one of the two largest providers in North
America with roughly 200 sites globally, including UK operations
after the 2015 acquisition of HBC Vehicle Services. Revenue as of
December 2020 was $1.4 billion.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
IGNITIONONE INC: Public Auction Slated for March 10
---------------------------------------------------
Horizon Technology Finance Corporation and Horizon Credit II LLC
("secured party") will sell by either public or private disposition
all of rights of IgnitionOne Inc. and NetMining LLC ("Debtors"),
and Asset Recovery Associates LLC, as assignee for the benefit of
creditors of the Debtors, in and to these personal property held by
the Debtors:
a) 1,515,337 shares of Series A Common Stock of Zeta Global
Holdings Corp. ("Common Stock"), and
b) 766,872 shares of Series F-4 Preferred Stock of Zeta Global
("Preferred Stock").
The sale, via zoom, will take place on March 10, 2021, at 11:00
a.m. (ET).
For more information regarding entry into the data room, the
signing of an NDA, bidding procedures and wire information, please
contact the auctioneer:
Paul E. Saperstein Co., Inc.
144 Centre St.
Holbrook, MA 02343
Tel: 617-227-6553
E-mail: msaperstein@pesco.com
The Debtors can be reached at:
IgnitionOne, Inc.
NetMining LLC
Asset Recovery Associates, LLC
3155 Roswell Road NE, Suite 120
Atlanta, GA 30305
Attn: Katie Goodman
E-mail: kgoodman@gggmgt.com
Counsel to the Debtors:
Monzack Mersky McLaughlin & Browder PC
1201 N. Orange Street, Suite 400
Wilmington, DE 19801
Attn: Rachel Mersky
E-mail: rmersky@monlaw.com
Information regarding Zeta Global Holdings Corp. is available at
http://www.zetaglobal.com/
IgnitionOne, Inc., operates as a software company. The Company
designs and develops platform for marketers with the tools to
leverage their customer data to power omnichannel marketing
decisions.
IMERYS TALC: Johnson & Johnson Blasts 'Tainted Process'
-------------------------------------------------------
Law360 reports that Johnson & Johnson has told a Delaware
bankruptcy court that talc supplier Imerys Talc America is engaging
in unfair Chapter 11 maneuvers aimed at shielding its parent
company from liability for talcum powder cancer claims and saddling
the pharmaceutical giant with the bill.
In challenging what it called "a tainted process marked by a
glaring moral hazard," J&J told the court Tuesday, March 2, 2021,
that Imerys shouldn't benefit from indemnity agreements between the
companies after having ceded control over settlement procedures and
values to cancer victims' representatives in exchange for
protecting parent Imerys Talc SA.
About Imerys Talc America
Imerys Talc America, Inc. and its subsidiaries --
https://www.imerys-performance-additives.com/ -- are in the
business of mining, processing, selling and distributing talc. Its
talc operations include talc mines, plants and distribution
facilities located in Montana (Yellowstone, Sappington, and Three
Forks); Vermont (Argonaut and Ludlow); Texas (Houston); and
Ontario, Canada (Timmins, Penhorwood, and Foleyet). It also
utilizes offices located in San Jose, Calif., and Roswell, Ga.
Imerys Talc America and its subsidiaries, Imerys Talc Vermont, Inc.
and Imerys Talc Canada Inc., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 19-10289) on Feb. 13, 2019. The Debtors were
estimated to have $100 million to $500 million in assets and $50
million to $100 million in liabilities as of the bankruptcy
filing.
Judge Laurie Selber Silverstein oversees the cases.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as their legal counsel, Alvarez & Marsal North America,
LLC as financial advisor, and CohnReznick LLP as restructuring
advisor. Prime Clerk, LLC is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
tort claimants in the Debtors' Chapter 11 cases. The tort
claimants' committee is represented by Robinson & Cole, LLP.
INFINERA CORP: Delays Filing of Fiscal 2020 Annual Report
---------------------------------------------------------
Infinera Corporation will not be able to file its Annual Report on
Form 10-K for its fiscal year ended Dec. 26, 2020 before the
deadline due to delays in compiling and reviewing certain
information included in the Form 10-K.
The Company expects to file the Form 10-K within the extension
period of 15 calendar days, as provided under Rule 12b-25 under the
Securities Exchange Act of 1934, as amended.
About About Infinera
Headquartered in Sunnyvale, Calif., Infinera -- www.infinera.com --
is a global supplier of innovative networking solutions that enable
carriers, cloud operators, governments, and enterprises to scale
network bandwidth, accelerate service innovation, and automate
network operations. The Infinera end-to-end packet-optical
portfolio delivers industry-leading economics and performance in
long-haul, submarine, data center interconnect, and metro transport
applications.
Infinera reported a net loss of $386.62 million for the year ended
Dec. 28, 2019, a net loss of $214.29 million for the year ended
Dec. 29, 2018, and a net loss of $194.51 million for the year ended
Dec. 30, 2017.
INSCOPE INTERNATIONAL: April 9 Plan Confirmation Hearing Set
------------------------------------------------------------
InScope International, Inc., filed with the U.S. Bankruptcy Court
for the Eastern District of Virginia, Alexandria Division, a motion
seeking entry of an order approving the proposed Disclosure
Statement.
On Feb. 25, 2021, Judge Klinette H Kindred approved the Disclosure
Statement and ordered that:
* April 9, 20121, at 11:00 a.m. in Courtroom III of the United
States Bankruptcy Court, 200 S. Washington Street, Alexandria,
Virginia 22314 is the hearing to consider confirmation of the
Plan.
* April 2, 2021 is fixed as the last day to file objections to
confirmation of the Plan.
* The form of Class 3 Ballot is approved.
* April 2, 2021 at 5:00 p.m. is fixed as the last day to
submit ballots accepting or rejecting the Plan.
A full-text copy of the order dated Feb. 25, 2021, is available at
https://bit.ly/385nOwn from PacerMonitor.com at no charge.
Counsel to InScope International:
Kristen E. Burgers, Esq.
Hirschler Fleischer
Greensboro Drive, Suite 700
Tysons, VA 22102
Tel: (703) 584-8900
Fax: (703) 584-8901
E-mail: kburgers@hirschlerlaw.com
About InScope International
InScope International, Inc. --
https://www.inscopeinternational.com/ -- provided management,
scientific, and technical consulting services.
InScope International sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Va. Case No. 19-10230) on Jan. 23,
2019. At the time of the filing, the Debtor estimated assets of
less than $1 million and liabilities of $1 million to $10 million.
The case has been assigned to Judge Klinette H. Kindred.
Hirschler Fleischer PC is the Debtor's legal counsel.
The Office of the U.S. Trustee appointed an official committee of
unsecured creditors in the Debtor's case on March 1, 2019. The
committee tapped Kevin M. O'Donnell, Esq., at Henry & O'Donnell,
P.C., as its legal counsel.
INTERMEDIA CLOUD: IPO Registration No Impact on Moody's B3 Rating
-----------------------------------------------------------------
Moody's Investors Service says the filing of a Form S-1
registration statement for an initial public offering on February
26 by Intermedia Cloud Communications, Inc., the indirect parent
company of Intermedia Holdings, Inc. (Intermedia, B3 stable) is
credit positive but ratings are not immediately affected because
the success of the IPO is market dependent, and limited information
regarding the long term capital structure and financial policies
post IPO has been made available to date.
If successful, the IPO will be credit positive for Intermedia
because the stated purpose of the IPO will be to enhance
Intermedia's capital structure and increase financial flexibility.
In its S-1, Intermedia indicated its intention to use some of the
net proceeds for debt reduction. The company also disclosed that
other than the repayment of outstanding borrowings under the term
loan facility, it has not specifically identified a large single
use for the net proceeds. Intermedia indicated a $100M proposed
offering amount but the total amount of debt repayment is unknown.
After completion of the proposed offering, Intermedia's current
equity sponsor Madison Dearborn Partners, LLC (MDP) will remain a
controlling owner of the company. According to the S-1 filing, MDP
will have the right to designate all nominees to Intermedia's board
of directors so long as MDP owns 40% or more of the company's
stock.
Based in Sunnyvale, CA, Intermedia is a provider of cloud-based
communications, collaboration, security and productivity software
solutions for businesses. Products include cloud voice, Contact
Center as a Service (" CCaaS "), web/video/ content sharing and
conferencing, file backup, sync and share, business e-mail,
archiving and security. The company is also one of the largest
independent providers of Microsoft's cloud-based Exchange e-mail.
Intermedia was acquired in February 2017 by Madison Dearborn
Partners. The company generated revenue of $252 million in FY2020.
JADEX INC: Moody's Assigns B2 Rating to New $60MM Revolver Loan
---------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to Jadex Inc.'s new
$60 million senior secured revolving credit facility expiring 2026.
The B2 Corporate Family Rating, B2-PD Probability of Default Rating
and the B2 rating on the senior secured first lien term loan due
February 2028 are unchanged. Moody's will withdraw the B2 rating on
the existing $50 million senior secured revolving credit facility
expiring in 2024 at the close of the transaction. The outlook is
stable. The terms and conditions of the new revolver are the same
as the old revolver and the facility was undrawn at the close of
the transaction. While the increase in the revolver is a positive
for the company's liquidity, Moody's considers the transaction
credit neutral given the size of the increase and an expectation of
weak free cash flow over the next 12 months.
Assignments:
Issuer: Jadex Inc.
US$60 million Gtd. Senior Secured 1st Lien Revolving Credit
Facility, Assigned B2 (LGD3)
Ratings to be Withdrawn:
Issuer: Jadex Inc.
US$50 million Gtd. Senior Secured 1st Lien Revolving Credit
Facility, Withdraw at closing, B2 (LGD3)
RATINGS RATIONALE
Moody's expects Jadex's debt to LTM EBITDA to improve by the end of
2021 as credit metrics benefit from improved operating results
driven by new business, completed and ongoing productivity
initiatives, and management's pledge to dedicate free cash flow to
debt reduction over the next 12 to 18 months. While free cash flow
is also expected to improve as one-time charges abate, Moody's
expects it to remain constrained by continued capex spending to
fund new business and productivity initiatives. Moody's projects
debt to LTM EBITDA will improve to 4.9x and free cash flow to debt
to be over 1.0% by the end of 2021 versus 6.3x and -24.3% at
September 30, 2020, respectively, pro forma for the refinancing and
debt financed dividend in February 2020. Jadex was carved out from
Newell Brands Inc. (Ba1 negative) in May 2019.
Weaknesses in Jadex's credit profile include a high customer and
product concentration of sales, lack of scale (revenue) and low
EBITDA margin. Moreover, the company competes in the competitive
and fragmented packaging industry, which makes growth and margin
expansion difficult. The company generates 11% of sales from
cyclical industrial end markets including automotive. Jadex has a
high percentage of customers without long-term contracts, which
lowers switching costs. Governance risks are heightened given
Jadex's private equity ownership, which carries the risk of an
aggressive financial policy, which could include debt funded
acquisitions or dividends. All the members of the board of
directors are affiliated with One Rock Capital Partners, LLC.
Strengths in Jadex's credit profile include its high exposure to
stable end markets and long-term relationships with blue-chip
customers. The company generates approximately 65% of sales from
medical, food and consumer end markets. Jadex has an average
relationship of over 20 years with its top customers which include
many blue-chip names. The company is the sole supplier and has
exclusivity clauses on a significant percentage of business.
Jadex's adequate liquidity encompasses Moody's expectation of weak
free cash flow over the next 12 months offset by adequate back up
liquidity from the $60 million revolver, which expires 2026. The
only financial covenant for the revolver is a springing first lien
leverage ratio of 6.5x which is triggered at 35% utilization. The
company is expected to maintain good cushion under this covenant
over the next 12 months. Jadex has some seasonality in 2Q and 3Q.
Term loan amortization is 1.0% annually ($4.5 million) paid
quarterly. Certain assets are not secured by the credit agreement
leaving some alternate liquidity.
The stable outlook reflects Moody's expectation that Jadex will
effectively commercialize its new business, benefit from
productivity initiatives and dedicate free cash flow to debt
reduction.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The ratings could be downgraded if there is deterioration in the
credit metrics, liquidity or competitive environment. Specifically,
the ratings could be downgraded if:
Debt to EBITDA is above 6.0 times
EBITDA to interest expense is below 2.5 times
Free cash flow to debt is below 1.0%
An upgrade would require a sustainable improvement in credit
metrics within the context a stable competitive environment. Jadex
would also need to increase its scale (revenue) and diversity and
improve its liquidity, including an improvement in free cash flow.
Specifically, the ratings could be upgraded if:
Debt to EBITDA is below 5.0 times
EBITDA to interest expense is above 3.5 times
Free cash flow to debt to debt is above 4.0%
Headquartered in Greenville, SC, Jadex Inc. is a manufacturer of
rigid and flexible plastic packaging and zinc and steel-based
products. Jadex serves the food, medical, consumer, industrial,
infrastructure, coinage, and automotive end markets. 84% of sales
are generated in the US with the balance generated in the
Philippines, Canada, Mexico, United Kingdom, China, Germany, and
Italy. Jadex has been a portfolio company of One Rock Capital
Partners, LLC since May 2019. LTM sales as of September 30, 2020
were approximately $651 million.
The principal methodology used in this rating was Packaging
Manufacturers: Metal, Glass and Plastic Containers Methodology
published in September 2020.
KAISER AND ASSOCIATES: Gets Cash Collateral Access on Interim Basis
-------------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of North
Carolina, Raleigh Division, has authorized Kaiser and Associates,
DDS, P.A. to use cash collateral on an interim basis in accordance
with the March 2021 budget.
The Court acknowledges that the Debtor requires access to the cash
collateral generated by its operations in order to allow it to
remain in business.
On or about June 13, 2016, the Debtor and BB&T were parties to a
Promissory Note and Security Agreement in the amount of $800,000.
The Promissory Note appears to be secured by the Debtor's personal
property, as set forth in the Security Agreement and UCC-1 filed on
behalf of BB&T on June 13, 2016 bearing file number 201690059975F.
Further, On January 3, 2019, BB&T filed a UCC-1 against the Debtor
bearing file number 20190000885E. Finally, on March 1, 2019, BB&T
filed a UCC-1 against the Debtor bearing file number 20190020836B.
BB&T subsequently assigned its interest in the Promissory Note,
including the one on the Debtor's real property, and the secured
creditor is now Yellow Breeches Capital, LLC.
The Debtor granted to Creditor a security interest in all of
Debtor's present and future accounts, chattel paper, deposit
accounts, personal property, assets and fixtures, general
intangibles, instruments, equipment, inventory wherever located,
and proceeds now or hereafter owned or acquired by the Debtor.
The Debtor acknowledges and does not dispute validity, priority,
and enforceability of the liens asserted by Creditor or the amounts
due to Creditor under promissory notes and agreements. The
Debtor's accounts generated from operations constitute cash
collateral of Creditor within the meaning of section 363 of the
Bankruptcy Code.
The Debtor is authorized to use cash collateral for its
post-petition, necessary operating expenses. The Debtor must
receive written authorization from the Creditor for expenditures in
excess of the budgeted amounts, except that the Debtor is
authorized to exceed an individual line item by a maximum of 10%
without prior approval. The budget contains a $2,000 payment for
Chapter 11 Administrative Fees.
As adequate protection, the Creditor is granted a continuing
post-petition lien and security interest in all property and
categories of property of the Debtor in which and of the same
priority as said creditor held a similar, unavoidable lien as of
the Petition Date, and the proceeds thereof, whether acquired
pre-petition or post-petition, equivalent to a lien granted under
sections 364(c)(2) and (3) of the Bankruptcy Code.
The post-petition liens granted will survive the term of the Order
to the extent the pre-petition liens were valid, perfected,
enforceable, and non-avoidable as of the Petition Date.
As further adequate protection, the Debtor will commence monthly
adequate protection payments to the Creditor in the amount of
$2,500, to be paid no later than the 15th day of each subsequent
month, so long as the Order is in effect.
The Debtor is also directed to deposit all cash, checks, and other
cash items received from the operation of the business encumbered
by liens in favor of Creditor into its Debtor-in-Possession
Operating bank account and provide Creditor with reasonable access
to the Debtor's financial records and statements as it may
reasonably request from time-to-time.
The court enumerated these events of default:
a. the Debtor will fail to comply with any of the terms or
conditions of the Order;
b. the Debtor will fail to maintain insurance;
c. the Debtor will use cash collateral other than as agreed in
the Order; or
d. appointment of a trustee or examiner in the proceeding, or
the conversion of the case to a proceeding under Chapter 7 of the
Bankruptcy Code.
The Debtor is prohibited from disposing any asset out of the
ordinary course of its business without approval of the Court and
the advance written consent of Creditors.
In the event that the interests of Creditor in its cash collateral
are not adequately protected by the terms of the Order, Creditor is
entitled to, among seeking any other relief, an administrative
expense claim pursuant to 11 U.S.C. section 507(b) in the case and
any ensuing Chapter 7 case, which will be superior to any and all
other costs and expenses of the kind specified in and pursuant to
sections 507(a)(1), 506(c), and 726(b) of the Bankruptcy Code.
Unless further agreement as to the use of cash collateral is
reached, a hearing on the matter is scheduled for March 29, 2021 at
12:30 p.m.
A copy of the order and the Debtor's budget for March 2021 is
available for free at https://bit.ly/3bWSyAU from
PacerMonitor.com.
About Kaiser and Associates
Kaiser and Associates, DDS, P.A. sought protection for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No.
21-00072) on Dec. 16, 2020, listing under $1 million in both assets
and liabilities.
Judge David M. Warren oversees the case.
William H. Kroll, Esq. at Everett Gaskins Hancock LLP, is the
Debtor's legal counsel.
John G. Rhyne is the Chapter 11 trustee appointed in the Debtor's
case. The trustee is assisted by his own firm, John G. Rhyne,
Attorney at Law.
Yellow Breeches Capital, LLC, as creditor, is represented by:
Louis Spencer, Esq.
ALEXANDER RICKS PLLC
1420 E. 7th Street, Suite 100
Charlotte, NC 28204
Tel No: (980) 335-0711
E-mail: louis@alexanderricks.com
KNOTEL INC: Committee Hires Potter Anderson as Delaware Counsel
---------------------------------------------------------------
The official committee of unsecured creditors of Knotel, Inc. and
its affiliates seeks approval from the U.S. Bankruptcy Court for
the District of Delaware to retain Potter Anderson & Corroon, LLP
as its Delaware counsel.
The committee needs the firm's legal advice on local rules,
practices and procedures, and strategic advice on how to accomplish
its goals in connection with the Debtors' Chapter 11 cases.
The firm can be reached through:
Christopher M. Samis, Esq.
Aaron H. Stulman, Esq.
Potter Anderson & Corroon, LLP
1313 N. Market Street, 6th Floor
Wilmington, DE 19801
Tel: (302) 984-6000
Fax: (302) 658-1192
Email: csamis@potteranderson.com
astulman@potteranderson.com
About Knotel Inc.
Knotel -- http://www.Knotel.com/-- is a flexible workspace
platform that matches, tailors, and manages space for customers.
New York-based Knotel offers workspace properties such as desks,
open, and private spaces on rent for companies in 20 global
markets. In the U.S., Knotel primarily serves in the New York City
and San Francisco areas.
Knotel, founded in 2015, raised hundreds of millions of dollars
from investors. It expanded rapidly for years and was one of the
more aggressive competitors in the co-working and flexible office
space sector, becoming one of WeWork's fiercest rival.
As the COVID-19 pandemic upended the co-working industry, Knotel,
Inc., and its U.S. subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Case No. 21-10146) on Jan. 30, 2021, to pursue a
sale of the assets to Newmark Group.
Knotel estimated $1 billion to $10 billion in assets and
liabilities as of the bankruptcy filing.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Milbank LLP as their bankruptcy counsel, Morris
Nichols Arsht & Tunnell LLP as Delaware bankruptcy co-counsel,
Fenwick & West LLP as corporate counsel, and Moelis & Company LLC
as investment banker and financial advisor. The Debtors also hired
Ernst & Young LLP to provide tax services. Omni Agent Solutions is
the claims agent and administrative agent.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee tapped Potter Anderson & Corroon, LLP and Lowenstein
Sandler, LLP as its legal counsel and FTI Consulting, Inc. as its
financial advisor.
KNOTEL INC: Committee Seeks to Hire Lowenstein Sandler as Counsel
-----------------------------------------------------------------
The official committee of unsecured creditors of Knotel, Inc. and
its affiliates seeks approval from the U.S. Bankruptcy Court for
the District of Delaware to retain Lowenstein Sandler, LLP as its
legal counsel.
The firm will provide necessary legal services to the committee in
connection with the prosecution of the Debtors' Chapter 11 cases.
Lowenstein Sandler can be reached at:
Robert M. Hirsch, Esq.
John P. Schneider, Esq.
Lowenstein Sandler, LLP
1251 Avenue of the Americas
New York, NY 10020
Tel: (212) 262-6700
Fax: (212) 262-7402
Email: rhirsh@lowenstein.com
jschneider@lowenstein.com
About Knotel Inc.
Knotel -- http://www.Knotel.com/-- is a flexible workspace
platform that matches, tailors, and manages space for customers.
New York-based Knotel offers workspace properties such as desks,
open, and private spaces on rent for companies in 20 global
markets. In the U.S., Knotel primarily serves in the New York City
and San Francisco areas.
Knotel, founded in 2015, raised hundreds of millions of dollars
from investors. It expanded rapidly for years and was one of the
more aggressive competitors in the co-working and flexible office
space sector, becoming one of WeWork's fiercest rival.
As the COVID-19 pandemic upended the co-working industry, Knotel,
Inc., and its U.S. subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Case No. 21-10146) on Jan. 30, 2021, to pursue a
sale of the assets to Newmark Group.
Knotel estimated $1 billion to $10 billion in assets and
liabilities as of the bankruptcy filing.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Milbank LLP as their bankruptcy counsel, Morris
Nichols Arsht & Tunnell LLP as Delaware bankruptcy co-counsel,
Fenwick & West LLP as corporate counsel, and Moelis & Company LLC
as investment banker and financial advisor. The Debtors also hired
Ernst & Young LLP to provide tax services. Omni Agent Solutions is
the claims agent and administrative agent.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee tapped Potter Anderson & Corroon, LLP and Lowenstein
Sandler, LLP as its legal counsel and FTI Consulting, Inc. as its
financial advisor.
KNOTEL INC: Committee Taps FTI Consulting as Financial Advisor
--------------------------------------------------------------
The official committee of unsecured creditors of Knotel, Inc. and
its affiliates seeks approval from the U.S. Bankruptcy Court for
the District of Delaware to retain FTI Consulting, Inc. .
The firm will provide financial advisory services to the committee
in connection with the Debtors' Chapter 11 cases.
FTI Consulting can be reached at:
David R. Alfaro
FTI Consulting, Inc.
50 California Street, Suite 1900
San Francisco, CA 94111
Tel: +1 415 283 4200
Fax: +1 415 293 4496
Email: david.alfaro@fticonsulting.com
About Knotel Inc.
Knotel -- http://www.Knotel.com/-- is a flexible workspace
platform that matches, tailors, and manages space for customers.
New York-based Knotel offers workspace properties such as desks,
open, and private spaces on rent for companies in 20 global
markets. In the U.S., Knotel primarily serves in the New York City
and San Francisco areas.
Knotel, founded in 2015, raised hundreds of millions of dollars
from investors. It expanded rapidly for years and was one of the
more aggressive competitors in the co-working and flexible office
space sector, becoming one of WeWork's fiercest rival.
As the COVID-19 pandemic upended the co-working industry, Knotel,
Inc., and its U.S. subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Case No. 21-10146) on Jan. 30, 2021, to pursue a
sale of the assets to Newmark Group.
Knotel estimated $1 billion to $10 billion in assets and
liabilities as of the bankruptcy filing.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Milbank LLP as their bankruptcy counsel, Morris
Nichols Arsht & Tunnell LLP as Delaware bankruptcy co-counsel,
Fenwick & West LLP as corporate counsel, and Moelis & Company LLC
as investment banker and financial advisor. The Debtors also hired
Ernst & Young LLP to provide tax services. Omni Agent Solutions is
the claims agent and administrative agent.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee tapped Potter Anderson & Corroon, LLP and Lowenstein
Sandler, LLP as its legal counsel and FTI Consulting, Inc. as its
financial advisor.
KNOTEL INC: DIP Loan, Cash Collateral Access OK'd on Final Basis
-----------------------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware authorized Knotel, Inc. and its affiliated Debtors to
obtain post-petition financing and use cash collateral on a final
basis.
Digiatech, LLC, is the successor in interest to Western Alliance
Bank under the Prepetition First Lien facility. Digiatech, LLC, is
also the successor in interest to and assignee of TriplePoint
Venture Growth BDC Corp., in its capacity as lender and collateral
agent and TriplePoint Capital LLC under the Prepetition Second Lien
facility.
As of the Petition Date, the Debtors were jointly and severally
indebted and liable to Digiatech under:
(a) the Prepetition First Lien Loan Agreement in the aggregate
amount of not less than $18.55 million of outstanding principal,
accrued and unpaid interest, and fees thereon as of the Petition
Date; and
(b) the Prepetition Second Lien Loan Agreement in the
aggregate amount of not less than $51,169,161, which consists of
(x) $50.0 million of outstanding principal advanced under the
Prepetition Second Lien Credit Documents, plus (y) not less than
$1,169,161 on account of accrued and unpaid interest and fees
thereon as of the Petition Date.
The Prepetition Secured Debt Obligations are secured by valid,
binding, perfected and enforceable first priority liens on and
security interests in the "Collateral," as defined in the
Prepetition Secured Credit Documents.
The Cash Collateral consists of any and all of the Debtors' cash,
including cash and other amounts on deposit or maintained in any
account or accounts by the Debtors, and any amounts generated by
the collection of accounts receivable or other disposition of the
Prepetition Collateral existing as of the Petition Date or from
time to time, and the proceeds of any of the foregoing.
Judge Walrath found that the Debtors have an immediate need to
obtain the New Money DIP Loans under the DIP Facility and to use
the Cash Collateral, in order to, among other things:
(a) permit the orderly continuation of their respective
businesses;
(b) maintain business relationships with their vendors,
suppliers, customers, and other parties;
(c) make payroll;
(d) make capital expenditures;
(e) make adequate protection payments; and
(f) pay the costs of the administration of the chapter 11
cases and satisfy other working capital and general corporate
purposes of the Debtors.
Judge Walrath found further that the Debtors require immediate
access to sufficient working capital and liquidity through the
incurrence of the new indebtedness for borrowed money and other
financial accommodations to avoid irreparable harm by, among other
things, preserving and maintaining the going concern value of the
Debtors' business. She added that the Debtors will not have
sufficient sources of working capital and financing to operate
their business or maintain their properties in the ordinary course
of business throughout these chapter 11 cases without the New Money
DIP Loans and authorized use of Cash Collateral.
The Debtors had sought authority from the Court to obtain
postpetition debtor-in-possession financing, comprising a
superpriority senior secured multiple-draw term loan facility in an
aggregate principal amount of up to $40.8 million, which consists
of:
(1) a new money multi-draw term loan facility in an aggregate
principal amount of $20.4 million, funded by Digiatech, LLC; and
(2) a term loan facility in an aggregate principal amount of
$20.4 million, which, shall (A) roll-up $20.4 million of the
Prepetition Secured Debt on a dollar-for-dollar basis held by the
DIP Lender into the DIP Facility, (B) be issued under the DIP
Facility on a pari passu basis with the New Money DIP Loans, and
(C) be approved in its entirety upon entry of and pursuant to the
Court's Final Order, subject to the Challenge Period with respect
to the Roll-Up Loans and any such investigation with respect to the
Roll-Up Loans by the Creditors’ Committee.
Judge Walrath authorized the Debtors to borrow up to the full
amount of the New Money DIP Loans and the full amount of the
Roll-Up Loans subject to the Challenge Period with respect to the
Roll-Up Loans, subject to and in accordance with the Court's Final
Order and the DIP Documents.
Judge Walrath held that pursuant to section 364(c)(1) of the
Bankruptcy Code, and subject to the Challenge Period solely with
respect to the Roll-Up Loans, all of the DIP Obligations will
constitute allowed senior administrative expense claims of the DIP
Lender, against each of the Debtors’ estates.
The DIP Lender was granted:
(a) a valid, binding, continuing, enforceable, perfected first
priority senior security interest in and lien upon all prepetition
and postpetition property of the Debtors, including the Prepetition
Collateral, whether existing on the Petition Date or thereafter
acquired, that, on or as of the Petition Date is not subject to
valid, perfected and non-avoidable liens;
(b) a valid, binding, continuing, enforceable, perfected first
priority senior priming security interest in and lien upon all
prepetition and postpetition property of the Debtors; and
(c) a valid, binding, continuing, enforceable, fully-perfected
security interest in and lien upon all prepetition and
post-petition property of the Debtors.
The Carve-Out consists of:
(1) all fees required to be paid to the Clerk of the Court and
to the Office of the U.S. Trustee under section 1930(a) of title 28
of the United States Code plus interest at the statutory rate;
(2) all reasonable fees and expenses up to $25,000 incurred by
a trustee under section 726(b) of the Bankruptcy Code;
(3) to the extent allowed at any time, whether by interim or
final order, procedural order, or otherwise, (x) all administrative
expenses pursuant to section 503 of the Bankruptcy Code and
including (y) all unpaid fees and expenses incurred by persons or
firms retained by the Debtors pursuant to section 156, 327, 328, or
363 of the Bankruptcy Code and an official committee of unsecured
creditors pursuant to section 328 or 1103 of the Bankruptcy Code at
any time before or on the first business day following delivery by
the DIP Lender of a Carve Out Trigger Notice, whether allowed by
the Court prior to or after delivery of a Carve Out Trigger Notice;
and
(4) allowed administrative expenses including, but not limited
to, Allowed Professional Fees of Professional Persons in an
aggregate amount not to exceed $75,000 incurred after the first
business day following the date of delivery by the DIP Lender of
the Carve Out Trigger Notice, to the extent allowed, whether by
interim or final order, procedural order, or otherwise.
The Prepetition Secured Lender was granted these adequate
protections:
(1) as security for and solely to the extent of any Diminution
in Value, additional and replacement valid, binding, enforceable
non-avoidable, and effective and automatically perfected
postpetition security interests in, and liens on, as of the date of
the Final Order, without the necessity of the execution by the
Debtors of security agreements, control agreements, pledge
agreements, financing statements, mortgages, or other similar
documents, all DIP Collateral;
(2) an allowed administrative expense claim in the chapter 11
cases to the extent of any postpetition Diminution in Value ahead
of and senior to any and all other administrative expense claims in
such Cases, except the Carve Out and the DIP Superpriority Claims;
(3) the Debtors are authorized and directed to pay, without
further Court order, reasonable and documented fees and expenses,
whether incurred before or after the Petition Date, of the
Prepetition Secured Lender, including, without limitation, the
reasonable and documented fees and expenses of (a) Sullivan &
Worcester LLP, counsel to the Prepetition Secured Lender, and (b)
any other professional retained by the Prepetition Secured Lender
for services rendered regarding the Prepetition Secured Debt; and
(4) the Prepetition Secured Lender, shall receive, upon entry
of this Final Order, monthly adequate protection payments payable
in kind on the thirtieth day of each month equal to the interest at
the then applicable interest rate under the Prepetition Secured
Credit Documents that would otherwise be owed to the Prepetition
Secured Lender under the Prepetition Secured Credit Documents,
during such monthly period in respect of the Prepetition Secured
Obligations that are not Roll-Up Loans, until such time as the full
Prepetition Secured Debt is paid in full, in cash.
A full-text copy of the Final Order, dated March 2, 2021, is
available for free at https://tinyurl.com/27uc9jra from
omniagentsolutions.com.
About Knotel Inc.
Knotel -- http://www.Knotel.com/-- is a flexible workspace
platform that matches, tailors, and manages space for customers.
New York-based Knotel offers workspace properties such as desks,
open, and private spaces on rent for companies in 20 global
markets. In the U.S., Knotel primarily serves in the New York City
and San Francisco areas.
Knotel, founded in 2015, raised hundreds of millions of dollars
from investors. It expanded rapidly for years and was one of the
more aggressive competitors in the co-working and flexible office
space sector, becoming one of WeWork's fiercest rival.
As the COVID-19 pandemic upended the co-working industry, Knotel,
Inc., and its U.S. subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Case No. 21-10146) on Jan. 30, 2021, to pursue a
sale of the assets to Newmark Group.
Knotel estimated $1 billion to $10 billion in assets and
liabilities as of the bankruptcy filing.
Morris, Nichols, Arsht & Tunnell LLP is serving as the Company's
counsel. Moelis & Company is the investment banker. Omni Agent
Solutions is the claims agent.
KNOTEL INC: Seeks to Hire Hilco as Real Estate Consultant
---------------------------------------------------------
Knotel, Inc. and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire Hilco Real
Estate, LLC as their real estate consultant.
The firm will assist the Debtors in negotiating the terms of the
sale of their properties.
Hilco can be reached through:
Sarah Baker
Hilco Real Estate, LLC
5 Revere Drive, Suite 206
Northbrook, IL 60062
Tel: (847) 504-2462
Fax: (847) 897-0874
Email: sbaker@hilcoglobal.com
About Knotel Inc.
Knotel -- http://www.Knotel.com/-- is a flexible workspace
platform that matches, tailors, and manages space for customers.
New York-based Knotel offers workspace properties such as desks,
open, and private spaces on rent for companies in 20 global
markets. In the U.S., Knotel primarily serves in the New York City
and San Francisco areas.
Knotel, founded in 2015, raised hundreds of millions of dollars
from investors. It expanded rapidly for years and was one of the
more aggressive competitors in the co-working and flexible office
space sector, becoming one of WeWork's fiercest rival.
As the COVID-19 pandemic upended the co-working industry, Knotel,
Inc., and its U.S. subsidiaries sought Chapter 11 protection
(Bankr. D. Del. Case No. 21-10146) on Jan. 30, 2021, to pursue a
sale of the assets to Newmark Group.
Knotel estimated $1 billion to $10 billion in assets and
liabilities as of the bankruptcy filing.
Judge Mary F. Walrath oversees the cases.
The Debtors tapped Milbank LLP as their bankruptcy counsel, Morris
Nichols Arsht & Tunnell LLP as Delaware bankruptcy co-counsel,
Fenwick & West LLP as corporate counsel, and Moelis & Company LLC
as investment banker and financial advisor. The Debtors also hired
Ernst & Young LLP to provide tax services. Omni Agent Solutions is
the claims agent and administrative agent.
The U.S. Trustee for Region 3 appointed an official committee to
represent unsecured creditors in the Debtors' Chapter 11 cases.
The committee is represented by Potter Anderson & Corroon, LLP and
Lowenstein Sandler, LLP.
LAROSE HOSPITALITY: Seeks Cash Collateral Use
---------------------------------------------
Larose Hospitality, LLC asks the U.S. Bankruptcy Court for the
Eastern District of Texas for authorization to use cash
collateral.
The Debtor tells the Court that it has an immediate need to use the
cash collateral of Secured Lender Red Oak Capital Holdings, LLC,
which claims liens on the Debtor's personal property including
accounts. The Debtor further tells the Court that it can
adequately protect the interests of the Secured Lender by providing
the latter with post-petition liens, a priority claim in the
Chapter 11 bankruptcy case, and cash flow payments.
The Debtor relates that the cash collateral will be used to
continue the Debtor's ongoing operations while it is in Chapter 11.
The Debtor operates a Holiday Inn Express & Suites located in
Livingston, Texas. The Debtor intends to rearrange its affairs and
needs to continue to operate in order to pay its ongoing expenses,
generate additional income and to propose a plan in the case.
"This is an emergency matter since the Debtor has no outside
sources of funding available to it and must rely on the use of cash
collateral to continue its operations," the Debtor contends.
A full-text copy of the Emergency Motion, dated March 2, 2021, is
available for free at https://tinyurl.com/by9x87pd from
PacerMonitor.com.
About Larose Hospitality
Larose Hospitality, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No.
21-90034) on February 24, 2021. It operates a Holiday Inn Express &
Suites located in Livingston, Texas. Henry Thomas Moran has been
appointed the Subchapter V Trustee.
Larose Hospitality, LLC is represented by:
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
Email: Joyce@joycelindauer.com
guy@joycelindauer.com
LESLIE'S POOLMART: Moody's Assigns B1 Rating to New Secured Loan
----------------------------------------------------------------
Moody's Investors Service assigns a B1 to Leslie's Poolmart, Inc.'s
new senior secured term loan. The net proceeds from the new term
loan are expected to be used to repay Leslie's Poolmart, Inc. (Old)
senior secured term loan. The rating on the Leslie's Poolmart, Inc.
(Old) will be withdrawn upon the closing of the refinancing and its
repayment in full. Leslie's B1 corporate family rating and SGL-2
speculative grade liquidity rating remains unchanged. The ratings
outlook for Leslie's is stable.
Assignments:
Issuer: Leslie's Poolmart, Inc.
Senior Secured Bank Credit Facility, Assigned B1 (LGD4)
RATINGS RATIONALE
Leslie's Poolmart, Inc.'s B1 corporate family rating reflects its
moderately high leverage with debt/EBITDA of 4.1x and that it
remains 49% owned by private equity following its public stock
offerings. The company benefits from relatively stable demand of
pool and spa maintenance products from a large installed base that
diminishes its economic sensitivity, despite its weather
dependence. Leslie's has also experienced significant tail winds
from the pandemic as consumers remain focused on their homes and
sanitation increases in importance. The increase in pool
installations will help support demand for its products in future
years. The rating is supported by Leslie's leading market share
within the US pool and spa care market which serves residential,
professional, and commercial consumers. Despite its strength in the
category, its limited absolute scale and geographic concentration
constrains its rating.
The stable outlook reflects Moody's expectations for good
liquidity, a conservative financial strategy, and stable to
increasing revenue and earnings on a weather-adjusted basis as the
business normalizes from the tailwinds of the pandemic.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require a significant increase in scale while
maintaining sustained earnings growth, a meaningful reduction in
private equity ownership, and good liquidity. Quantitatively,
ratings could be upgraded should debt/EBITDA be sustained below
4.0x and EBIT/interest expense be sustained above 3.0x.
The ratings could be downgraded if operating performance
deteriorates or liquidity weakens. Quantitatively, the ratings
could be downgraded if debt/EBITDA is sustained above 5.0x or
EBIT/interest expense approaches 2.0x.
The principal methodology used in this rating was Retail Industry
published in May 2018.
Leslie's Poolmart, Inc., a subsidiary of Leslie's Inc., is a
direct-to-consumer brand in the U.S. pool and spa care industry,
serving residential, professional, and commercial consumers through
936 physical locations stores and multiple digital platforms as of
January 2, 2021. Leslie's Inc. is a public company and trades on
the NASDAQ under the symbol "LESL" and is approximately 49% owned
by investment funds affiliated with L Catterton and GIC as a result
of a leveraged buyout in February 2017. Net sales for the LTM
period ended January 2, 2021 were approximately $1.1 billion.
LIQUID TECH: S&P Assigns 'B-' Issuer Credit Rating on Refinancing
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to Liquid
Tech Solutions Holdings LLC, a Stoughton, Mass.-based provider of
on-site truck-to-truck (T2T) refueling and fuel delivery services,
the borrower of the proposed debt, and a 'B-' issue-level and '3'
recovery ratings to the company's first-lien credit facility. The
'3' recovery rating reflects its expectation for meaningful
(50%-70%; rounded estimate: 50%) recovery in the event of a payment
default.
S&P said, "The stable outlook reflects our expectation that LTS
will benefit from good operating performance with support from low-
to mid-single-digit growth in gallons sold, stable dollars per
gallon charged, and higher market share. We expect LTS' adjusted
leverage in the mid-6x area over the next 12 months with adjusted
EBITDA margins (as a percentage of net revenue; for example, gross
revenue less the pass-through cost of fuel or the cost of
lubricants) around 30%."
S&P's rating reflects the following key risks and strengths:
Key Risks:
-- High starting leverage (forecast at the mid-6x area for the
next 12 months) pro forma for the transaction along with financial
sponsor ownership and ongoing debt-funded acquisitions which could
preclude sustained deleveraging.
-- Cyclical demand for diesel and lubricants in end markets such
as logistics, infrastructure, and shipping.
-- Limited free operating cash flow (FOCF) generation over the
next 12 months as the company supports its capital investment needs
and earnout payments.
-- Relatively small revenue and EBITDA scale in a highly
fragmented and narrow T2T industry with a large number of regional
and local competitors that often compete as a low-price commodity
supplier.
-- Wage pressure for drivers, high supplier concentration,
unpredictable clean-up costs of spills and leaks, and uncertain
impact of the adoption of diesel fuel alternatives could pressure
profit margins over time.
Key Strengths:
-- Leading national market position within its industry segment
with limited customer and end-market concentration.
-- Focus on improving driver productivity and limiting the total
cost of refueling (compared with traditional day-time gas station
or unmanned fuel station utilization), strong revenue growth, and
tenured customer relationships.
-- Expert use of information technology, data, and analytics to
improve LTS' operating efficiency and customer experience and
retention has supported solid profit margins.
-- High inventory turns and pass-through fuel costs limit fuel
price commodity exposure.
-- Increased adoption of renewable diesel and the company's
sustainability solutions (additives to increase fuel quality and
reduce carbon footprint) should benefit volumes over time.
S&P said, "We expect adjusted leverage will remain elevated (more
than 6x) over the next 12 months. We expect the company will
experience modest deleveraging over the course of 2021 as they
integrate recent acquisitions, one-time costs conclude, and as
business activity and gallon volumes normalize following the
pandemic-related shutdowns. We also expect the company will
continue to pursue an acquisitive growth strategy given the
compelling post-synergy economic benefits (route density and
optimization, back-office leverage, customer acquisition, potential
customer-level price or service level improvement), the company's
acquisition growth track record (13 acquisitions over the past four
years), and the financial sponsor Lindsay Goldberg LLC's ownership
(acquired a majority stake in August 2020). In October 2020, LTS
made an acquisition in the Southwest, providing access to higher
margin, smaller gallon delivery routes, which we expect will
support volumes and average dollar per gallon spreads in 2021."
Limited profit scale and the narrow business focus in the price
competitive and highly fragmented T2T refueling market constrain
our assessment of the business. Despite being one of the leading
service providers in the T2T refueling market, the company has a
relatively small scale of operations with a market share of around
10% (in a 28 billion gallon addressable market) and competes
against smaller and regional service providers. The company
generates most of its revenues (around 90%) from the delivery of
diesel. Diesel is a commoditized product for which cyclical
macroeconomic factors influence demand, including GDP growth,
industrial activity, and construction spending, and seasonal
factors such as weather. Competitors often compete on price and
volumes. S&P said, "We view revenues as largely transactional in
nature, which limits longer-term revenue visibility. Capital
investment needs and the labor-intensive nature of the company's
services constrain margins in the industry. The availability of
experienced drivers, an aging labor pool, and exposure to periods
of rising wages are other factors, though this also serves as a
benefit for LTS' business model as customers seek to save on labor
costs."
LTS has differentiated its value proposition by focusing on
building its national service footprint and the use of analytics,
automated billing, and diagnostic tools to reduce the total cost of
refueling (reduced driver time spent refueling, lower fuel use and
theft, better regulatory compliance, environment costs, and risk
mitigation, and lower capital investments). These efforts have led
to long-tenured relationships and good growth and profit margins.
The company has also made good progress transitioning its clients
to renewable and biodiesel offerings, which could insulate it from
threats of alternative power sources over the longer term.
Nevertheless, supplier concentration to a leading supplier of
renewable diesel is a notable risk that exposes LTS to higher costs
or sudden price pressures.
S&P said, "We expect low-single-digit organic net revenue growth in
2021 and stable operating performance as demand normalizes and unit
spread economics improve. In 2020, the company experienced a modest
decline in gallons supplied largely because of lower demand from
the energy, food service, and infrastructure end markets, before
recovering modestly in the second half of the year. A
slower-than-expected economic recovery in 2021, or further
extensive business closures because of COVID-19, could lead to
revenue and earnings volatility. Nevertheless, we believe the
company will continue to experience strong performance from
shipping and logistics customers, home goods, and waste management,
leading to low-single-digit growth in gallons supplied for 2021. We
expect revenue mix shift will also improve, as LTS continues to
expand into the smaller gallon delivery class and service less
travelled routes, which have higher margins. We anticipate the
recent Southwest acquisition will result in stable unit spread
levels over the next 12 months."
The company is exposed to commodity prices, but a vast majority of
these price fluctuations are passed on to customers. The company
buys fuel at a rate that closely tracks the oil price information
services (OPIS) wholesale price index and fuel is then sold to
customers quickly, minimizing inventory on hand and carrying costs.
The company's information technology and data-driven approach to
pricing, route optimization, and fleet management should continue
to support efficiency in the cost structure. S&P expects S&P Global
Ratings' adjusted EBITDA margins around 30% for 2021, attributed to
modest diesel spread expansion and the wind-down of CEO-funded
one-time bonus payments, partially offset by some wage pressure for
drivers and a lagging recovery from the COVID-19 pandemic in
certain end markets.
Good liquidity balances offset modest to break-even free operating
cash flow (FOCF) generation over the next 12 to 24 months. The
company has generated only modest free cash flow over the last
several years, as they support investments in their trucking fleet
and growth into new territories, as well as working capital needs
and professional fees related to acquisitions. S&P forecasts modest
to break-even FOCF generation in 2021, as non-recurring expenses
wind down, the company has roughly $10 million in capital
expenditure (capex) needs, and about $10 million in earnout
payments related to recent acquisitions. The company has
experienced some working capital swings related to inventory
management, and we expect higher commodity prices would result in
intra quarter cash needs for the business.
S&P said, "The stable outlook reflects our expectation that LTS
will benefit from good operating performance supported by low- to
mid-single-digit growth in gallons sold, stable dollars per gallon
charged, and increased market share. We expect LTS' adjusted
leverage will be in the mid-6x area over the next 12 months with
adjusted EBITDA margins (as a percentage of net revenue; for
example, gross revenue less the pass-through cost of fuel or the
cost of lubricants) around 30%.
"We could lower our rating if operating performance unexpectantly
deteriorates such that we forecast liquidity will fall below $25
million, expect large FOCF deficits, or conclude the capital
structure is unsustainable."
In this scenario S&P would anticipate:
-- Rapid decline in demand from end markets or increasing
price-based competition leads to volume declines;
-- Difficulty integrating acquisitions; or
-- A sudden increase in working capital outflows, labor, and other
costs.
S&P could raise its ratings if the company lowers and keeps
adjusted leverage below 5x along with FOCF to debt in the
high-single-digit percent area. An upgrade would also be contingent
on strong operating performance and a restrained sponsor financial
policy, allowing the company to maintain leverage at these levels.
LONGHORN JUNCTION: Plan to Pay Unsecureds in Full With 5% Interest
------------------------------------------------------------------
Longhorn Junction Land and Cattle Company, LLC and SC Williams,
LLC, both Texas limited liability companies, submitted a Chapter 11
Plan and a Joint Disclosure Statement on Feb. 25, 2021.
This Joint Disclosure Statement contains one or more allegations
representing the Debtors' position regarding its debtor-creditor
relationship with Romspen Mortgage Limited Partnership ("Romspen"
and/or "Lender"). The Debtors' allegations contained in this Joint
Disclosure Statement regarding Romspen are not deemed to be
established facts or evidence in the record of these Bankruptcy
Cases. Romspen is not deemed to admit any of the Debtors'
allegations or statements contained in this Joint Disclosure
Statement. Romspen expressly reserves all rights to dispute the
accuracy of any of the Debtors' statements contained in this Joint
Disclosure Statement. Romspen further expressly reserves all
rights to contest the substantive treatment of Romspen's claims and
liens against the Debtors' and their assets, as disclosed in this
Joint Disclosure Statement.
Under the Plan, Longhorn Junction will continue to pursue its sales
strategy to sell its tracts of property, led by Hilco. Due to the
efforts of Hilco, as of the filing of this Disclosure Statement,
the Debtors have signed two contracts in addition to the sale
pending court approval. Those contracts to sell Tract #5 to
Provident Realty Advisors for over $16 million and to sell Tract #6
to Molto Development, LLC for approximately $10.5 million will make
significant payments towards the outstanding secured debt owed to
Romspen. Debtors' plan proposes to pay Romspen over $20 million by
the end of the calendar year and pay off the remaining debt by the
end of the 2nd quarter in 2022.
Hilco has and will continue to widely market the LJ Real Property.
The LJ Property, which consists of various tracts attractive to
different prospective purchasers will be sold in tracts through
multiple sales. Romspen will retain its liens on all collateral to
secure its Allowed Claim. The Plan will include release prices on
each tract calculated by dividing the amount of the outstanding
indebtedness to Romspen by the square footage of the tracts to be
sold plus a premium so that Romspen's loan to equity ratio will
improve with each sale. This will increase the likelihood that
Debtors can refinance Romspen's indebtedness prior to the
conclusion of the sales process. Debtors also reserve the right
refinance if the opportunity arises.
Tax liens will be paid out of the proceeds of sale from each parcel
of land. Debtors project that Romspen's indebtedness will be
substantially paid in full after the sale of Tracts # 3, 5, & 6.
After the indebtedness to Romspen is paid in full, priority and
unsecured creditors will be paid, with interest, out of the
proceeds of sales of the remaining Property. In any event, all
creditors will be paid in full, with interest within two years of
the Effective Date of the Plan.
Class 6 Claims consists of Allowed Unsecured Claims against
Longhorn Junction. The deadline for filing Proofs of Claim has not
yet occurred but, the best of Debtor's knowledge, the amount of
unsecured claims against Longhorn Junction exceeds $46,000. Each
of holder of an Allowed Claim in Class 6 Claims will be paid in
full with 5% interest accruing from sales of the Longhorn Junction
Property after Romspen has been paid in full and from sales of Sun
City Property after the holder of Allowed Claims against SC
Williams have been paid but, in no event, in more than 24 months
from the Effective Date of the Plan.
Class 7 Claims consists of Allowed Unsecured Claims against SC
Williams. The deadline for filing Proofs of Claim has not yet
occurred but, the best of Debtor's knowledge, the following parties
have unsecured claims against SC Williams in excess of $336,000.
Each of holder of an Allowed Claim in Class 7 Claims will be paid
in full with 5% interest accruing from sales of the Sun City
Property after Romspen has been paid in full and from sales of
Longhorn Junction Property after the holder of Allowed Claims
against Longhorn Junction have been paid but, in no event, in more
than 24 months from the Effective Date of the Plan.
The equity interest holder in both Debtors, Gregory Hall, will
retain his Interest.
The Debtors' ability to pay Romspen depends on the ability of the
Debtors to sell Tracts at prices sufficient to make the payments to
Romspen. Based upon the current contracts, the fair market
valuations of the property, and Debtor's substantial equity in the
Property, Debtors are confident that the marketing and sales
process will continue to attract bids sufficient for Debtors to
timely make the payments to Romspen and their remaining creditors.
A full-text copy of the Joint Disclosure Statement dated Feb. 25,
2021, is available at https://bit.ly/2NRwTCa from PacerMonitor.com
at no charge.
Attorneys for the Debtors:
Todd Headden
Ron Satija
HAYWARD PLLC
901 Mopac Expressway South
Building 1, Suite 300
Austin, Texas 78746
737.881.7100 (phone/fax)
Email: theadden@haywardfirm.com
About Longhorn Junction Land
Longhorn Junction Land and Cattle Company, LLC and SC Williams, LLC
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
W.D. Texas Lead Case No. 21-10003) on Jan. 4, 2021.
At the time of the filing, Longhorn Junction disclosed assets of
between $10 million and $50 million and liabilities of the same
range. SC Williams had estimated assets of between $1 million and
$10 million and liabilities of between $10 million and $50
million.
Judge Tony M. Davis oversees the cases.
The Debtors tapped Hayward PLLC and Hilco Real Estate Auctions, LLC
as their legal counsel and real estate advisor, respectively.
MACY RETAIL: Fitch Rates New 8-Yr. $500MM Unsec. Notes 'BB'
-----------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Ratings
(IDR) for Macy's Inc., Macy's Retail Holdings, LLC. (MRH) and
Macy's Inventory Funding LLC at 'BB'. Fitch has also affirmed the
ratings of the existing debt under Macy's Inc., MRH, and Macy's
Inventory Funding LLC. The Rating Outlook is Negative. Fitch is
assigning a rating of 'BB'/'RR4' to Macy's Retail Holdings'
proposed eight-year $500 million senior unsecured notes. Proceeds
from the new notes will be used to tender an equivalent amount of
existing senior unsecured notes due 2022 to 2025, thereby extending
the company's debt maturity profile and reducing near-term
maturities.
Macy's ratings reflect the significant business interruption
resulting from the coronavirus pandemic and changes in consumer
behavior, which have materially reduced sales of apparel and
accessories, while the Negative Outlook reflects uncertainty
regarding the timing and magnitude of a recovery in operating
momentum.
Fitch calculated EBITDA declined to $35 million in 2020 from
approximately $2.2 billion in 2019 on a nearly 30% retail sales
decline to $17.3 billion. Macy's ability to sustain its 'BB' rating
would depend on the operating rebound potential through 2022.
Adjusted leverage is expected to be in the mid-4x range in 2021,
assuming revenue of $19.7 billion, a 20% decline from 2019 levels,
and EBITDA of approximately $1.3 billion. Leverage could return to
the low 4x in 2022 assuming a sustained topline recovery, EBITDA
close to $1.5 billion and further debt paydown, with $450 million
of debt maturing in January 2022. Increased confidence in Macy's
ability to achieve Fitch's projections and bring adjusted leverage
to the low 4x would lead to a stabilization in Fitch's Rating
Outlook. A weaker than expected recovery due to ongoing secular
headwinds which leads to leverage being sustained above 4.5x could
lead to negative rating actions.
Macy's ended 2020 (year ending Jan. 30, 2021) with a cash balance
of $1.7 billion and no borrowings under its $2.941 billion secured
ABL facility (with availability subject to a borrowing base net of
letters of credit). The company paid down approximately $530
million of debt that matured in January 2021 with cash on hand. The
company has $450 million in senior unsecured notes maturing in
January 2022, followed by $850 million in senior unsecured notes
maturing in 2023 and $540 million maturing in 2024, a portion of
which will be refinanced with the $500 million proposed note
offering. Fitch expects Macy's to repay the remaining balance of
the unsecured notes due January 2022 post the proposed bond
transaction with cash on hand.
KEY RATING DRIVERS
Sales Disruption from the Coronavirus Pandemic: The pandemic has
severely affected revenue trajectories in categories like apparel,
which have suffered from mandated or proactive store closures, weak
traffic at retailers of apparel and accessories, and reduced
wardrobe replenishment needs from declines in social gatherings and
increased incidence of remote work arrangements. Numerous unknowns
remain, including the pace of vaccine deployment, economic
conditions exiting the pandemic including lingering unemployment
and household income trends, the impact of potential additional
government spending support, and the lasting effects the crisis
will on have on long-term consumer behavior.
Macy's exposure to the weak apparel and accessories category has
been partially mitigated by good performance in its home
categories, which have benefitted from increased shelter-in-place
activity. Beauty trends have been somewhat mixed, with weak trends
in cosmetics offsetting better trends in other segments.
Relative to other U.S.-based sellers of apparel, Macy's significant
exposure to mall locations, tourist markets and densely populated
areas has resulted in more pronounced sales declines. Macy's sales
declined 45% in the first quarter of 2020, improving to declines of
35%, 23% and 19% in its second, third and fourth quarters,
respectively, as a prolonged holiday gifting season, sharpened
digital and assortment focus, and stimulus support moderated
declines seen in the first half. Macy's 2020 net sales declined 30%
to $17.3 billion, with minimal EBITDA generation as sales
deleveraging, significant inventory markdowns in 1H20, and
increased delivery expenses from the shift to digital weighed
heavily on margins.
Fitch expects significant growth in 2021 against a weak 2020, with
net sales and EBITDA projected around $19.7 billion and $1.3
billion, respectively. Despite the projected expansion, these sales
and EBITDA estimates would still represent around 20% and 40%
declines from Macy's pre-pandemic 2019 figures, given lingering
challenges in the apparel sector.
Sales growth in 2022 could trend in the low-single digit range,
with EBITDA approaching $1.5 billion. Achievement of these results
along with debt paydown of the January 2022 maturity would result
in adjusted leverage trending toward the low 4x range. Increased
confidence in Macy's ability to achieve Fitch's projections as 2021
unfolds would lead to a stabilization in the Rating Outlook.
Actions Taken by Macy's: Macy's suspended its dividend ($1.51 per
share or approximately $470 million annually) beginning the second
quarter of 2020. The company announced an incremental $630 million
of annual savings from restructuring and cost cutting, on top of
the $1.5 billion announced as part of its restructuring plan in
February 2020, reduced inventory receipts, and significantly pulled
back on capex to $450 million in 2020 from its initially targeted
$1 billion.
In June 2020, the company put in place a $2.941 billion secured ABL
facility maturing May 9, 2024 and a $300 million short-term bridge
revolving credit facility that matured in December 2020 secured by
inventory, which replaced its existing $1.5 billion unsecured
credit facility. The company also issued $1.3 billion of senior
secured notes collateralized by certain real estate assets.
Fitch's base case projections assume Macy's capex increases to the
$650 million range beginning 2021 and that the company does not
restart dividend payments over the next two to three years. Fitch
expects Macy's to deploy excess cash toward debt paydown, largely
its upcoming unsecured notes maturities.
Business Model Evolution: While most U.S. brick-and-mortar
retailers are battling competitive incursion from online and
value-oriented players, sales weakness has been most pronounced for
mid-tier apparel and accessories retailers. While leading players
such as Macy's, Kohl's and Nordstrom have been able to largely
offset decline in in-store sales through the growth in their
e-commerce businesses pre pandemic, retailers had to invest heavily
in omnichannel platforms, which have driven down EBITDA margins and
reduced cash flow.
Successful retailers in the space are investing in the omnichannel
model, rightsizing their store footprint, and have a differentiated
product and service offering, including a well-developed value
message, to draw customers in. Financially and operationally
stronger department stores should be able to at least maintain
their share of the apparel and accessories space over the longer
term. These companies are expected to benefit from store closings
and restructuring activity from cash-constrained specialty apparel
players and department stores which accelerated in 2020.
Macy's has proactively rationalized its store footprint and reduced
its cost structure, using the expense savings and proceeds from
real estate monetization to invest in its digital business,
store-related growth strategies, its relaunched loyalty program,
and expansion of Bluemercury and Macy's Backstage. The company also
benefits from relationships with key national brand vendors,
especially given more acute challenges elsewhere in the department
store sector. Longer term, Macy's ability to stabilize its share of
the mid-tier apparel, accessories and home space will depend on
execution against its omnichannel and other growth initiatives.
Intensified Strategy Highlights Secular Challenges: In light of
ongoing issues and lackluster 2019 performance, management
announced a three-year plan in February 2020, which accelerates its
strategy of real estate rationalization, cost structure
optimization and targeted business re-investment. Major elements of
the plan include the closure of 125 (or around 20%) of Macy's
lower-volume stores, primarily in secondary or tertiary markets, to
focus management attention on its best performing assets. Post
closures, Macy's full line stores will decline to about 450 units
from about 580 stores at the end of 3Q19 and will account for 93%
of store revenue and 88% of stores going forward, with close to 85%
of the locations located in A and B rated malls. Overall, Macy's
branded stores account for 88% of total company revenue with the
remaining 12% coming from Bloomingdales and Bluemercury.
These stores slated for closure produced approximately $1.3 billion
of revenue in 2019 (less than 10% of 2019 total), and Fitch assumes
minimal EBITDA. While Macy's had originally targeted $700 million
in asset sale proceeds from these store closures, dislocation in
discretionary retail sales could adversely affect realized
proceeds.
Fitch expects the 125 store closures and accelerated closures by
other anchor tenants such as J.C. Penney, which filed for Chapter
11 bankruptcy protection on May 15, 2020 (and emerged in December
2020 with plans to reduce its footprint to just over 600 stores
from 846 stores at the end of 2019), and store closings at
retailers such as Nordstrom (which announced 16 full line store
closings) could have major repercussions for the affected malls,
particularly if reduced traffic and co-tenancy clauses combine to
trigger further tenant departures. This would lead to the
accelerated reshaping of the mall landscape, which Fitch has
anticipated given the ongoing channel shifts to online and off-mall
discount formats. Over time, industry leaders, both in the mall and
off-mall channel, that continue to invest in omnichannel
capabilities could benefit, as unproductive apparel and accessories
stores and malls in the U.S. are rightsized. Benefits of reduced
square footage include both protection of market share and gross
margins, given the need to execute unplanned promotions in apparel
and accessories environments with excess inventory.
Macy's has experimented with new and off-mall formats. The company
had planned to expand its portfolio of standalone off-price
Backstage stores and test a new department store concept called
Market by Macy's, both in off-mall locations in 2020. Some of these
plans were put on hold in 2020 given the liquidity and operational
focus on managing through the coronavirus pandemic and a reduction
in consumer discretionary spending. The company expects to test
some of the off-mall concepts including adding additional off-price
locations in three markets, Dallas, Atlanta and Washington, D.C. in
2021.
As part of its February 2020 analyst day, Macy's shared its target
of $1.5 billion in reductions to its cost structure. The company
has also targeted major savings in areas like supply chain
optimization, store expense reduction and marketing expense
efficiency. Gross margin opportunities totaled $600 million, while
SG&A opportunities provided the remaining $900 million. Macy's
commented that it had exited 2020 achieving the targeted SG&A
reductions with some gross margin benefits from efforts to improve
merchandise mix.
The $1.5 billion in cost reductions is designed to provide Macy's
with reinvestment opportunity that have been additional sources of
liquidity in the near term. Major areas of focus include Macy's
digital business, strengthening customer relationships, in-store
enhancements, and private label expansion. The company is targeting
site upgrades, improving its mobile app, expanding omnichannel
attributes such as in-store or curbside pickup of online orders,
and potential new features like recommerce and customizable
fashion.
Macy's e-commerce business was around $6 billion or 25% of sales in
2019, and grew to $7.7 billion in 2020 or nearly 45% of sales given
the significant shift to online as a result of temporary store
closures and a reduction in traffic due to the pandemic. Macy's
currently expects digital sales to be $7 billion or 35% of 2021
forecasted sales but expects the business to grow to $10 billion by
2023 and account for over 40% of its total business.
While Fitch acknowledges Macy's proactive approach to real estate
portfolio rationalization and efforts to invest in defending share,
the heightened retrenchment of the store base and cost cutting
required to stabilize operations is evidence of the dislocation in
the business and ongoing secular pressure.
EBITDA Declines Pre-Pandemic: EBITDA in 2019 declined 13% to $2.2
billion given a 0.8% comparable store sales decline and margin
declining to 8.6% from 9.8% in 2018. Prior to the recent
disruption, Fitch had expected merchandise revenue to decline below
$23 billion by 2022 from a 2019 base of $24.5 billion on modest
comp declines and store closures, and for EBITDA to decline under
$2.0 billion despite cost reduction efforts. Fitch now expects
revenue to be $21 billion to $22 billion in 2022/2023 with EBITDA
trending toward the mid-$1 billion range on EBITDA margins in the
7%-8% range given a gradual recovery in apparel and accessories
sales entering 2022. The company is targeting low single digit comp
growth, with double digit growth in digital sales offset by low to
mid digit declines in store level sales and EBITDA margin moving
into the high single digits (compared with 10% in 2018).
Macy's financial discipline and adherence to its publicly stated
financial policy (leverage of 2.5x to 2.8x, or 2.4x to 2.7x on a
Fitch-calculated basis) has supported the company's credit profile
over the past few years. The company is targeting leverage to
return under 3x, but Fitch expects it could be well outside of this
range over the next couple of years given an anticipated slow
recovery in apparel and accessories sales.
DERIVATION SUMMARY
Macy's (BB/Negative): Macy's ratings reflect the significant
business interruption resulting from the coronavirus pandemic and
changes in consumer behavior, which have materially reduced sales
of apparel and accessories, while the Negative Outlook reflects
uncertainty regarding the timing and magnitude of a recovery in
operating momentum. Adjusted leverage is expected to be in the
mid-4x range in 2021, assuming revenue of $19.7 billion a, 20%
decline from 2019 levels, and EBITDA of approximately $1.3 billion.
Leverage could return to the low 4x in 2022 assuming a sustained
topline recovery and EBITDA close to $1.5 billion and further debt
paydown, with $450 million of debt maturing in January 2022.
Increased confidence in Macy's ability to achieve Fitch's
projections would lead to a stabilization in the Rating Outlook.
Macy's ratings continue to reflect its position as the largest
department store chain in the U.S. and Fitch's view of a prolonged
timeframe for the company's operating trajectory to stabilize on a
lower EBITDA base, given weak mall traffic and heightened
competition from alternate channels that include online and
off-price. This follows sustained low single digit comparable store
sales declines, recent EBITDA margin contraction with increased
management urgency to address secular challenges, as evidenced by
the announcement of 125 store closures and $1.5 billion in cost
reductions to support business reinvestment, prior to the recent
downturn.
Kohl's (BBB-/Negative): Kohl's ratings reflect its position as the
second largest department store in the U.S. and Fitch's expectation
that the company should be able to able to accelerate market share
gains post the pandemic related downturn. Kohl's off-mall real
estate footprint provides some insulation from mall traffic
challenges. Adjusted leverage is expected to be high-3x in 2021,
assuming revenue of $17.5 billion (15% lower than 2019 levels) and
EBITDA of around $1.3 billion (30% lower than 2019 levels).
Leverage could decline to under 3.5x in 2022 assuming a sustained
topline and EBITDA recovery.
Dillard's (BB/Negative): Dillard's ratings reflect the company's
below-industry-average sales productivity (as measured by sales
psf), operating profitability and geographical concentration
relative to its larger department store peers, such as Kohl's and
Macy's. The ratings consider Dillard's strong liquidity and minimal
debt maturities, with adjusted debt/EBITDAR expected to return to
the 2x range in 2021, assuming revenue of $5.4 billion or 15% below
2019 levels and EBITDA of approximately $300 million versus
approximately $400 million in 2019.
KEY ASSUMPTIONS
-- Fitch projects Macy's 2021 net sales could increase 14% to
$19.7 billion from depressed 2020 levels, although remain
below the $24.5 billion levels (or $23.2 billion proforma for
the 125 store closings through 2022) seen in 2019 due to the
lingering softness in apparel and a slow recovery in customer
traffic. Sales growth could increase 3% in 2022 as demand
continues to rebound, partially offset by sales loss from
ongoing store closures;
-- EBITDA, which declined to minimal amounts in 2020 from
approximately USD2.2 billion in 2019, could improve toward
USD1.3 billion in 2021 on sales recovery and gross margin
benefit from the mix shift back to higher-margin categories
such as apparel. EBITDA margins could rebound to around 6% in
2021, still below 2019 levels of 9%. EBITDA is expected to
trend toward $1.5 billion beginning in 2022, with margins in
the 7%-8% range;
-- FCF is expected to be negative $600 million to negative $700
million in 2021, largely due the reversal of the significant
working capital benefit in 2020 as inventory levels rebound
from significantly reduced levels in 2020 and increased capex
of $650 million as the company resumes a number of growth
initiatives. FCF could be $200 million to $300 million in 2022
as EBITDA improves;
-- Adjusted debt/EBITDAR could be in the mid 4x in 2021 and the
low 4x in 2022 on EBITDA recovery. This compares with 2.9x in
2019. Fitch assumes the company repays the remaining balance
(post the proposed refinancing transaction) of the $450
million of debt maturing in January 2022.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A stabilization case would require Macy's to meet Fitch's
revised projections that include EBITDA increasing to $1.3
billion in 2021 and $1.5 billion in 2022, and adjusted
debt/EBITDAR (capitalizing leases at 8x) declining to the mid
4x in 2021 and the low 4x in 2022;
-- An upgrade could occur from sustained low single digit
positive comps, EBITDA growth in the low to mid-single digits
with EBITDA margins in the high single digits beginning 2022,
combined with adjusted debt/EBITDAR sustained below 4x.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A negative rating action could result from a weaker than
expected recovery due to ongoing secular headwinds and reduced
confidence In Macy's ability to return to top line and
profitability growth in 2022, such that adjusted debt/EBITDAR
is sustained above 4.5x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Macy's ended 2020 with a cash balance of $1.7 billion and no
borrowings under its $2.941 billion secured ABL facility (with
availability subject to a borrowing base net of letters of credit).
The company put in place a $2.941 billion ABL facility and a $300
million short-term bridge revolving facility (matured in December
2020) in June 2020, that replaced the existing $1.5 billion
unsecured credit facility with the same maturity of May 9, 2024.
Macy's also issued $1.3 billion of senior secured notes in June
2020 collateralized by certain real estate assets. Of the total
real estate and inventory assets Macy's previously held at MRH and
subsidiaries, Macy's transferred some to new SPVs to be the
security for the ABL and the new secured notes. The company's liens
are limited to 15% of consolidated net tangible assets, which caps
the liens to $1 billion to $1.3 billion, based on Fitch's
calculation. The ABL and notes are issued outside of MRH, so the
limitation on liens does not apply to this transaction. The CNTA
basket could be applied to any future secured debt based on the
assets remaining at MRH and its subsidiaries.
The $2.941 billion ABL facility at the newly created SPV, Macy's
Inventory Funding LLC, has a first lien priority on inventory.
Borrowings under the ABL facility are subject to a borrowing base
based on 90% of NOLV of inventory minus customary reserves. Prior
to April 30, 2021, Macy's must maintain excess availability of 10%
and after April 30, 2021, borrowings are subject to a minimum
springing fixed charge coverage of 1x if availability is less than
10%.
The $1.3 billion senior secured notes issued by Macy's Inc. are
secured on a first-priority basis by a pledge from PropCo (as
defined below) and a first mortgage/deed of trust in all real
property owned or to be owned by PropCo. The notes are also
guaranteed on an unsecured basis by MRH. The notes have first lien
priority on select real estate assets, based on a 2:1 loan value on
a valuation (based on lit value) conducted by Eastdil.
The real estate collateral for the secured notes were transferred
to a newly created Propco. It includes three flagship stores (Union
Square, San Francisco; Brooklyn, New York; and State Street,
Chicago), 35 full-line mall locations (33 Macy's and two
Bloomingdales) in 'A' rated malls, and 10 distribution centers. The
$365 million in new notes issued by MRH in July 2020 are secured by
a second-priority lien on the same collateral securing the $1.3
billion senior secured notes.
Macy's owns a considerable amount of real estate, including 389
(298 owned and 91 ground leased) of its 508 Macy's full line stores
and 21 (14 owned and seven ground leased) of its 35 Bloomingdales
full line stores. Macy's still has 375 unencumbered full line
stores (owned and ground leased) and five distribution centers,
which are at MRH and its subsidiaries.
Proposed Refinancing Transaction: Macy's has proposed a refinancing
in which $500 million of new unsecured notes due 2029 would be used
to tender up to $500 million of debt maturing between 2022 and
2025. The company has $450 million of debt maturing in 2022, $850
million in 2023 and $540 million in 2024, with a small $24 million
maturity in 2025. Fitch expects the remaining balances on the
January 2022 maturity post the proposed bond transaction to be paid
down with cash on hand.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative-grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes. The
$2.941 billion secured ABL facility is rated 'BBB-'/'RR1' and the
$1.3 billion senior secured notes are rated 'BB+'/'RR1', indicating
outstanding recovery prospects (91%-100%). The $360 million second
lien secured notes due 2024 to 2034 are rated 'BB'/'RR3',
indicating above average (51%-70%) recovery prospects and the
unsecured notes are rated 'BB'/'RR4', indicating average (31%-50%)
recovery prospects.
SUMMARY OF FINANCIAL ADJUSTMENTS
-- EBITDA adjusted for stock-based compensation;
-- Operating lease expense capitalized by 8x for historical and
projected adjusted debt.
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.
MAIN STREET INVESTMENTS II: Seeks to Hire Corey B. Beck as Counsel
------------------------------------------------------------------
Main Street Investments II, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Nevada to employ The Law
Office of Corey B. Beck, P.C. as its legal counsel.
The firm will render these services:
a. prosecute or defend any lawsuits, adversary proceedings and
contested matters arising out of the Debtor's Chapter 11 case in
which the Debtor may be a party;
b. assist in obtaining court approval for recovery and
liquidation of estate assets;
c. assist in determining the priorities and status of claims
and in filing objections thereto if necessary;
d. if applicable, assist in the preparation of a disclosure
statement and Chapter 11 plan;
e. perform all other legal services necessary to administer
the case.
Corey B. Beck will be paid at these rates:
Attorney $375 per hour
Paralegal $125 per hour
Staffs $35 per hour
The firm will also be reimbursed for out-of-pocket expenses
incurred.
Corey Beck, Esq., a partner at the Law Office of Corey B. Beck,
disclosed in a court filing that the firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Corey B. Beck, Esq.
The Law Office of Corey B. Beck, P.C.
425 South Sixth Street
Las Vegas, NV 89101
Tel: (702) 678-1999
Fax: (702) 678-6788
Email: becksbk@yahoo.com
About Main Street Investments II
Main Street Investments II, LLC filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case
No. 21-10361) on Jan. 27, 2021. At the time of the filing, the
Debtor disclosed assets of between $1 million and $10 million and
liabilities of the same range. Judge Natalie M. Cox oversees the
case. The Law Office of Corey B. Beck, P.C. serves as the Debtor's
legal counsel.
MALLINCKRODT PLC: Court Holds Motion to Sever in Abeyance
---------------------------------------------------------
Judge Audrey G. Fleissig of the United States District Court for
the Eastern District of Missouri, Eastern Division, held Plaintiffs
Pamela Butler and others' motion to sever in abeyance for a period
of 120 days to permit Defendant Cotter Corporation an opportunity
to seek relief from the automatic stay in the bankruptcy court in
which Defendant Mallinckrodt LLC's bankrupty petition is pending.
The four cases at issue before the Court were filed on October 5,
2018. They each assert public liability actions under the
Price-Anderson Act ("PAA") as amended, 42 U.S.C. Sections 2014,
2210, for bodily injury allegedly resulting from exposure to
radioactive waste materials owned by the United States and handled
by Defendant Mallinckrodt LLC between 1942 and 1957, and by
Defendant Cotter Corporation between 1969 and 1973.
On October 12, 2020, Mallinckrodt filed a Notice of Bankruptcy,
stating that it had filed a voluntary petition for relief under
Chapter 11 of Title 11 of the Bankruptcy Code. Plaintiffs' claims
against Mallinckrodt were therefore automatically stayed pursuant
to 11 U.S.C. Section 362.
Plaintiffs now sought to sever their claims against Mallinckrodt,
so that Plaintiffs may proceed against Cotter notwithstanding the
bankruptcy stay as to Mallinckrodt. Cotter opposed the motion and
sought a stay of the litigation pending Mallinckrodt's bankruptcy
proceedings.
During oral argument on February 23, 2021, counsel for Cotter
informed the Court of its intent to promptly seek relief from the
automatic stay in the bankruptcy court. Counsel for both sides
acknowledged that it would serve the interests of judicial economy
for the Court to refrain ruling on Plaintiffs' motion for a limited
amount of time, to permit the bankruptcy court to rule on Cotter's
forthcoming motion.
The Plaintiffs and Cotter Corporation were directed to file a joint
notice advising the Court of the status of Cotter's efforts to seek
relief from the automatic stay in the bankruptcy court.
The case is PAMELA BUTLER, Plaintiffs, v. MALLINCKRODT LLC, et al.,
Defendants, Case No. Case No. 4:18-cv-01701-AGF (E.D. Mo.). A
full-text copy of the Memorandum and Order, dated February 23,
2021, is available at https://tinyurl.com/te3x6ujx from
Leagle.com.
About Mallinckrodt PLC
Mallinckrodt is a global business consisting of multiple
wholly-owned subsidiaries that develop, manufacture, market and
distribute specialty pharmaceutical products and therapies. The
company's Specialty Brands reportable segment's areas of focus
include autoimmune and rare diseases in specialty areas like
neurology, rheumatology, nephrology, pulmonology and ophthalmology;
immunotherapy and neonatal respiratory critical care therapies;
analgesics; and gastrointestinal products. Its Specialty Generics
reportable segment includes specialty generic drugs and active
pharmaceutical ingredients. On the Web:
http://www.mallinckrodt.com/
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against them.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell,
Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray
LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim
Securities LLC as investment banker; and AlixPartners LLP as
restructuring advisor. Prime Clerk, LLC is the claims agent.
The official committee of unsecured creditors retained Cooley LLP
as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon
Advisers LLC as its financial advisor.
On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an
official committee of opioid related claimants. The OCC tapped
Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz
as Delaware co-counsel, Province Inc. as financial advisor, and
Jefferies LLC as investment banker.
MALLINCKRODT PLC: Paul Weiss, LRC Update List of Noteholders
------------------------------------------------------------
In the Chapter 11 cases of Mallinckrodt PLC, et al., the law firms
of Paul, Weiss, Rifkind, Wharton & Garrison LLP and Landis Rath &
Cobb LLP submitted an amended verified statement under Rule 2019 of
the Federal Rules of Bankruptcy Procedure, to disclose an updated
list of Unsecured Notes Ad Hoc Group that they are representing.
The Unsecured Notes Ad Hoc Group formed by certain unaffiliated
holders of the Debtors' (i) 5.75% senior notes due 2022 issued
under that certain Indenture, dated as of August 13, 2014, the
guarantors party thereto from time to time and Deutsche Bank Trust
Company Americas, as trustee, (ii) 5.500% senior notes due 2025
issued under that certain Indenture, dated as of April 15, 2015 by
and among the Issuers, the guarantors party thereto from time to
time and the Trustee and (iii) 5.625% senior notes due 2023 issued
under that certain Indenture, dated as of September 24, 2015.
In or around June 2020, certain Members of the Unsecured Notes Ad
Hoc Group engaged Paul, Weiss to represent the Unsecured Notes Ad
Hoc Group in connection with the Members' holdings of the
Guaranteed Unsecured Notes. In September 2020, the Unsecured Notes
Ad Hoc Group also engaged LRC to represent it in connection with
the Unsecured Notes Ad Hoc Group's holdings of the Guaranteed
Unsecured Notes.
On October 21, 2020, Counsel filed the Verified Statement of Paul,
Weiss, Rifkind, Wharton & Garrison LLP and Landis Rath & Cobb LLP
Pursuant to Federal Rule of Bankruptcy Procedure 2019 [ECF No.
272]. Since then, the Members of the Unsecured Notes Ad Hoc Group
and the disclosable economic interests in relation to the Debtors
that such Members hold or manage have changed. Accordingly,
pursuant to Bankruptcy Rule 2019, Counsel submits this Amended
Statement.
As of Feb. 19, 2021, members of the Unsecured Notes Ad Hoc Group
and their disclosable economic interests are:
Aurelius Capital Management, LP
535 Madison Avenue, 31st Floor
New York, NY 10022
* 2024 Term Loan Obligations: $73,295,848.12
* 2025 Term Loan Obligations: $23,532,154.41
* First Lien Notes Obligations: $49,629,000
* Second Lien Notes Obligations: $26,673,000
* 5.625% Senior Notes Obligations: $38,200,000
* 5.750% Senior Notes Obligations: $44,284,000
* 4.75% Unsecured Notes Obligations: $28,414,000
Capital Research and Management Company
333 South Hope Street, 50th Floor
Los Angeles, CA 90071
* First Lien Notes Obligations: $143,460,000
* 5.500% Senior Notes Obligations: $17,118,000
* 5.625% Senior Notes Obligations: $6,096,000
* 5.750% Senior Notes Obligations: $12,025,000
Catalur Capital Management, LP
One Grand Central Place
60 East 42nd Street, Suite 2107
New York, NY 10165
* 2024 Term Loan Obligations: $2,490,956
* 5.500% Senior Notes Obligations: $2,000,000
* 5.625% Senior Notes Obligations: $3,000,000
Cedarview Capital Management, LP
One Penn Plaza, 45th Floor
New York, NY 10119
* First Lien Notes Obligations: $1,500,000
* 5.750% Senior Notes Obligations: $375,000
Cetus Capital LLC
8 Sound Shore Dr., #303
Greenwich, CT 06830
* 2024 Term Loan Obligations: $11,937,984.49
* First Lien Notes Obligations: $2,000,000
* 5.500% Senior Notes Obligations: $2,000,000
* 5.625% Senior Notes Obligations: $3,000,000
* 5.750% Senior Notes Obligations: $3,000,000
* Other Disclosable Economic Interests: 328,788 Shares
Citadel LLC
601 Lexington Avenue
New York, NY 10022
* Second Lien Notes Obligations: $2,000,000
* 5.750% Senior Notes Obligations: $7,000,000
Credit Suisse Securities (USA) LLC
11 Madison Avenue, 4th Floor
New York, NY 10010
* 2024 Term Loan Obligations: $1,772,563.56
* 9.50% Debenture Obligations: $200,000
Diameter Capital Partners LP
24 W. 40th Street, 5th Floor
New York, NY 10018
* Revolving Credit Facility Obligations: $39,500,000
* 5.625% Senior Notes Obligations: $2,500,000
* 5.750% Senior Notes Obligations: $16,500,000
Deutsche Bank Securities Inc.
60 Wall Street
New York, NY 10005
* Revolving Credit Facility Obligations: $10,000,000
* 2024 Term Loan Obligations: $3,950,995.86
* 2025 Term Loan Obligations: $4,035,557.64
* First Lien Notes Obligations: $1,000,000
* Second Lien Notes Obligations: $4,799,000
* 5.500% Senior Notes Obligations: $1,435,000
* 5.625% Senior Notes Obligations: $34,543,000
* 5.750% Senior Notes Obligations: $77,430,000
Farmstead Capital Management, LLC
7 North Broad Street, 3rd Floor
Ridgewood, NJ 07450
* 5.500% Senior Notes Obligations: $21,900,000
* 5.625% Senior Notes Obligations: $8,000,000
* 5.750% Senior Notes Obligations: $34,131,000
Federated Investment Management Company
1001 Liberty Avenue
Pittsburgh, PA 15222
* 2024 Term Loan Obligations: $4,952,844
* 2025 Term Loan Obligations: $4,268,136
* 5.500% Senior Notes Obligations: $66,375,000
* 5.625% Senior Notes Obligations: $45,775,000
* 5.750% Senior Notes Obligations: $2,000,000
* Other Disclosable Economic Interests: 23,705 Shares
FFI Fund, Ltd., FYI Ltd. and
Olifant Fund, Ltd.
888 Boylston Street, 15th Floor
Boston, MA 02199
* 5.500% Senior Notes Obligations: $39,800,000
* 5.625% Senior Notes Obligations: $83,000,000
* 5.750% Senior Notes Obligations: $62,500,000
Hain Capital Group, LLC
301 Route 17, 7th Floor
Rutherford, NJ 07070
* 5.625% Senior Notes Obligations: $16,500,000
* 5.750% Senior Notes Obligations: $5,000,000
JPMorgan Investment Management Inc. and
JPMorgan Chase Bank, N.A.
JPMorgan Investment Management Inc.
1 E. Ohio Street, IN1-0143 - Floor 6,
Indianapolis, IN 46204-1912
* 5.500% Senior Notes Obligations: $63,320,000
* 5.625% Senior Notes Obligations: $51,392,000
* 5.750% Senior Notes Obligations: $8,535,000
Livello Capital Management LP
One World Trade Center, 85th Floor
New York, NY 10007
* 2024 Term Loan Obligations: $1,998,738.37
* First Lien Notes Obligations: $3,750,000
* Second Lien Notes Obligations: $1,000,000
* 5.500% Senior Notes Obligations: $1,750,000
* 5.750% Senior Notes Obligations: $6,500,000
Luxor Capital Group, LP
1114 Avenue of the Americas, 28th Floor
New York, NY 10036
* 5.625% Senior Notes Obligations: $3,000,000
* 5.750% Senior Notes Obligations: $9,000,000
Moore Capital Management, LP
11 Times Square
New York, NY 10036
* First Lien Notes Obligations: $20,250,000
* Second Lien Notes Obligations: $246,000
* 5.750% Senior Notes Obligations: $8,000,000
New Generation Advisors, LLC
13 Elm Street, Suite 2
Manchester, MA 01944
* 5.625% Senior Notes Obligations: $11,570,000
* 5.750% Senior Notes Obligations: $16,530,000
Nomura Corporate Research and Asset Management Inc.
309 W 49th Street
New York, NY 10019
* First Lien Notes Obligations: $15,000,000
* 5.625% Senior Notes Obligations: $14,252,000
* 5.750% Senior Notes Obligations: $29,092,000
North America Credit Trading Group of
J.P. Morgan Securities LLC
* 2025 Term Loan Obligations: $1,000
* 5.500% Senior Notes Obligations: $6,715,000
* 5.625% Senior Notes Obligations: $16,921,000
* 5.750% Senior Notes Obligations: $5,071,000
Oaktree Capital Management, L.P.
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
* Revolving Credit Facility Obligations: $68,000,000
* 5.500% Senior Notes Obligations: $6,000,000
* 5.625% Senior Notes Obligations: $50,268,000
* 5.750% Senior Notes Obligations: $81,715,000
Pacific Investment Management Company LLC
650 Newport Center Drive
Newport Beach, CA 92660
* 2025 Term Loan Obligations: $1,132,427.83
* 5.500% Senior Notes Obligations: $5,100,000
Scoggin International Fund Ltd
660 Madison Avenue
New York, NY 10065
* 5.500% Senior Notes Obligations: $1,000,000
* 5.625% Senior Notes Obligations: $8,600,000
* 5.750% Senior Notes Obligations: $7,400,000
Scoggin Worldwide Fund Ltd
660 Madison Avenue
New York, NY 10065
* 5.500% Senior Notes Obligations: $818,000
* 5.625% Senior Notes Obligations: $590,000
* 5.750% Senior Notes Obligations: $600,000
Serengeti Lycaon MM LP
632 Broadway, 12th Floor
New York, NY 10012
* First Lien Notes Obligations: $3,000,000
* 5.500% Senior Notes Obligations: $1,000,000
* 5.625% Senior Notes Obligations: $7,000,000
Third Point LLC
55 Hudson Yards, 51st Floor
New York, NY 10001
* 2024 Term Loan Obligations: $10,000,000
* First Lien Notes Obligations: $29,000,000
* 5.500% Senior Notes Obligations: $32,280,000
* 5.625% Senior Notes Obligations: $40,500,000
* 5.750% Senior Notes Obligations: $31,872,000
Wells Fargo Securities LLC
550 S. Tyron Street, 4th Floor
Charlotte, NC 28202
* First Lien Notes Obligations: $1,000,000
* 5.625% Senior Notes Obligations: $3,300,000
* 5.750% Senior Notes Obligations: $8,540,000
* Other Disclosable Economic Interests: 159,752 Shares
Whitebox Advisors LLC
3033 Excelsior Blvd., Suite 500
Minneapolis, MN 55416
* 5.500% Senior Notes Obligations: $9,046,000
* 5.625% Senior Notes Obligations: $2,869,000
Counsel to the Unsecured Notes Ad Hoc Group can be reached at:
LANDIS RATH & COBB LLP
Richard S. Cobb, Esq.
919 Market Street, Suite 1800
Wilmington, DE 19801
Telephone: (302) 467-4400
Facsimile: (302) 467-4450
E-mail: cobb@lrclaw.com
- and -
PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP
Andrew N. Rosenberg, Esq.
Alice Belisle Eaton, Esq.
Claudia R. Tobler, Esq.
Neal Paul Donnelly, Esq.
1285 Avenue of the Americas
New York, NY 10019
Telephone: (212) 373-3000
Facsimile: (212) 757-3990
E-mail: arosenberg@paulweiss.com
aeaton@paulweiss.com
ctobler@paulweiss.com
ndonnelly@paulweiss.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/2OoUsBT and https://bit.ly/3e74XEU
About Mallinckrodt PLC
Mallinckrodt is a global business consisting of multiple
wholly-owned subsidiaries that develop, manufacture, market and
distribute specialty pharmaceutical products and therapies. The
company's Specialty Brands reportable segment's areas of focus
include autoimmune and rare diseases in specialty areas like
neurology, rheumatology, nephrology, pulmonology and ophthalmology;
immunotherapy and neonatal respiratory critical care therapies;
analgesics; and gastrointestinal products. Its Specialty Generics
reportable segment includes specialty generic drugs and active
pharmaceutical ingredients. On the Web:
http://www.mallinckrodt.com/
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against them.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell,
Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray
LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim
Securities LLC as investment banker; and AlixPartners LLP as
restructuring advisor. Prime Clerk, LLC is the claims agent.
The official committee of unsecured creditors retained Cooley LLP
as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon
Advisers LLC as its financial advisor.
On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an
official committee of opioid related claimants. The OCC tapped
Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz
as Delaware co-counsel, Province Inc. as financial advisor, and
Jefferies LLC as investment banker.
MAPLE MANAGEMENT: Granted Use of Cash Collateral Thru March 31
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division, has authorized Maple Management, LLC to use cash
collateral on an interim basis through March 31, 2021 in accordance
with the approved budget, and with a 10% variance.
As adequate protection, Greenwich Capital Management LP is granted
valid, binding, continuing, unavoidable, enforceable and perfected
post-petition liens and security interests in the Personal Property
and all proceeds generated from the Personal Property, wherever
located, to the same extent, validity and priority held by the
Funder prior to the Petition Date and to the extent of the
diminution in the amount of Cash Collateral used by the Debtor
after the Petition Date. The Replacement Liens granted to Funder
will be in addition to, and not in substitution of, any and all
security interests, liens, encumbrances, rights of set-off or other
rights of the Funder currently existing or hereafter arising.
Any expense that is budgeted for payment in one month but is not
paid in such month will be carried over for payment by the Debtor
in subsequent months, expect for the monthly adequate protection
payment to the Funder in an amount of $1,500 per week or such sum
as may be further determined by the Court.
The Debtor is also directed to maintain insurance coverage on the
Personal Property and remain current on all post-petition rent
obligations, sums due to the Trustees and any sums due to any
taxing authorities.
A status hearing on the Debtor's right to use cash collateral and
the Objection is scheduled for March 31, 2021 at 1:30 p.m.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/3bVvAdg from PacerMonitor.com.
About Maple Management, LLC
Maple Management, LLC is engaged in the business of owning and
operating a construction-related business that installs elevators,
ramps and lifts for the disabled, elderly and infirm at their
primary residences. Maple Management operates from the real
property commonly known as 245 W Roosevelt Rd Ste 77, West Chicago,
IL 60185-4838. Maple rents this premises. Its principal is James
Mecha.
Maple sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. N.D. Ill. Case No. 21-02059) on February 17, 2021. In
the petition signed by Mecha, the Debtor disclosed up to $50,000 in
assets and up to $1 million in liabilities.
Judge Janet S. Baer oversees the case.
Ariel Weissberg at Weissberg and Associates, Ltd. is the Debtor's
counsel.
MAPLE MANAGEMENT: Seeks to Hire Weissberg and Associates as Counsel
-------------------------------------------------------------------
Maple Management, LLC seeks approval from the U.S. Bankruptcy Court
for the Northern District of Illinois to employ Weissberg and
Associates, Ltd. as its legal counsel.
The firm will render these services:
a. advice the Debtor regarding its powers and duties under the
Bankruptcy Code;
b. assist the Debtor in the negotiation, formulation and
drafting of a plan of reorganization and disclosure statement, and
represent the Debtor in the confirmation process;
c. examine claims asserted against the Debtor;
d. take the necessary actions in connection with claims that
may be asserted against the Debtor, and prepare legal papers;
e. represent the Debtor in all adversary proceedings and
contested matters, including motions to use cash collateral, sell
the Debtor's properties, modify the automatic stay, appoint
professionals and get debtor-in-possession financing;
f. represent the Debtor in its dealings with the Office of the
U.S. Trustee and with the creditors of the estate;
g. represent the Debtor in litigation.
Weissberg and Associates will charge $450 per hour for its
services. The firm received a retainer in the amount of $15,000
and $1,738 for the Chapter 11 filing fee.
Weissberg and Associates is a "disinterested person" as defined in
Section 101(14) of the Bankruptcy Code, according to court
filings.
The firm can be reached through:
Ariel Weissberg, Esq.
Weissberg and Associates, Ltd.
564 W. Randolph St., 2nd Floor
Chicago, IL 60661
Tel. 312-663-0004
Fax. 312-663-1514
Email: ariel@weissberglaw.com
About Maple Management
Maple Management, LLC is a West Chicago, Ill.-based company engaged
in construction-related business that installs elevators, ramps and
lifts for the disabled, elderly and infirm at their primary
residences. Its principal is James Mecha.
Maple sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. N.D. Ill. Case No. 21-02059) on Feb. 17, 2021. At the
time of the filing, the Debtor had estimated assets of less than
$50,000 and liabilities of between $500,001 and $1 million.
Judge Janet S. Baer oversees the case.
Ariel Weissberg at Weissberg and Associates, Ltd. is the Debtor's
legal counsel.
MARSHALL SPIEGEL: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------------
The U.S. Trustee for Region 11 on March 3 appointed an official
committee to represent unsecured creditors in the Chapter 11 case
of Marshall Spiegel.
The committee members are:
1. William (Bill) M. Fausone, Treasurer
c/o Prairie Shores Property Mgmt.
700 N. Sacramento Blvd.
Chicago, IL 60612-1046
Representative: 1618 Sheridan Road Condo Association
2. James Waite
Marie Francoise Waite
c/o Murphy Law Group
161 North Clark Street, Suite 2550
Chicago, IL 60601
Representative: James Waite
3. William Hall
Valerie Hall
c/o John T. Schriver
Duane Morris LLP
190 S. LaSalle Street, Suite 3700
Chicago, IL 60603
Representative: William Hall
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Marshall Spiegel
Marshall Spiegel sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-21625) on Dec. 16,
2020. The Debtor is represented by David Lloyd, Esq.
MERCY HOSPITAL: Trinity Agrees to Sell Chicago Hospital to Insight
------------------------------------------------------------------
Shruti Date Singh and Lauren Coleman-Lochner of Bloomberg News
reports that Trinity Health Corp. has agreed to sell Chicago's
Mercy Hospital and Medical Center to a Flint, Michigan-based
biomedical company that will keep the facility running.
Insight, the potential buyer that intends to operate the facility
as a full-service acute care hospital, is filing paperwork for the
change of ownership with the Illinois Health Facilities and
Services Review Board, according to a statement from the company.
The agreement is non-binding and final terms will be negotiated in
the coming weeks, according to a statement from Mercy.
"If the acquisition meets state regulatory approval, Insight plans
to operate a community-based hospital."
About Mercy Hospital
Mercy Hospital operates the general acute care hospital known as
Mercy Hospital & Medical Center located at 2525 South Michigan
Ave., Chicago. The hospital offers inpatient and outpatient
services. Mercy Health System of Chicago, an Illinois
not-for-profit corporation, is the sole member of Mercy Hospital.
The health care facilities are part of Trinity Health's network of
health care providers. On the Web: http://www.mercy-chicago.org/
Mercy Hospital and Medical Center and Mercy Health System of
Chicago sought Chapter 11 protection (Bankr. N.D. Ill. Case Nos.
21-01805 and 21-01806) on Feb. 10, 2021. Mercy Hospital estimated
$100 million to $500 million in assets and liabilities as of the
bankruptcy filing.
Judge Timothy A. Barnes oversees the case.
Foley Lardner LLP, led by Matthew J. Stockl, is the Debtors' legal
counsel. Epiq Corporate Restructuring, LLC is the claims, noticing,
solicitation and administrative agent.
MERCY HOSPITAL: U.S. Trustee Appoints Creditors' Committee
----------------------------------------------------------
The U.S. Trustee for Region 11 on March 3 appointed an official
committee to represent unsecured creditors in the Chapter 11 cases
of Mercy Hospital and Medical Center and Mercy Health System of
Chicago.
The committee members are:
1. Boston Scientific
300 Boston Scientific Way
Marlborough, MA 01752-1291
Representative: Janine Karwacki
2. Kimberly Houston
c/o Goldberg & Goldberg
33 N. Dearborn Street, Suite 1930
Chicago, IL 60602
Representative: Kimberly Houston
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Mercy Hospital
Mercy Hospital and Medical Center -- http://www.mercy-chicago.org/
-- operates a general acute care hospital located at 2525 South
Michigan Ave., Chicago. The hospital offers inpatient and
outpatient services. Mercy Health System of Chicago, an Illinois
not-for-profit corporation, is the sole member of Mercy Hospital.
The health care facilities are part of Trinity Health's network of
health care providers.
Mercy Hospital and Mercy Health System of Chicago sought Chapter 11
protection (Bankr. N.D. Ill. Lead Case No. 21-01805) on Feb. 10,
2021. Mercy Hospital estimated $100 million to $500 million in
assets and liabilities as of the bankruptcy filing.
Judge Timothy A. Barnes oversees the cases.
Foley Lardner LLP, led by Matthew J. Stockl, is the Debtors' legal
counsel. Epiq Corporate Restructuring, LLC is the claims,
noticing, solicitation and administrative agent.
MICROVISION INC: Seval Oz Joins Board of Directors
--------------------------------------------------
Seval Oz has been appointed to MicroVision, Inc.'s board of
directors. Concurrently, Bernee D. L. Strom has stepped down as a
director.
Ms. Oz is a recognized global business and marketing leader in
mobility, autonomous vehicle technology and intelligent
transportation systems. Ms. Oz was a founder and CEO of Aurima,
Inc., a multi-sensor awareness platform powered by AI deep learning
for autonomous vehicles. She was previously CEO of Continental
Intelligent Transportation Systems, a division of Continental AG
Interiors Division. She has served as Head of Global Strategic
Partnerships for Google[x]'s Self Driving Cars Program (Waymo)
where she supported global business and marketing efforts for
Google's self-driving technology commercial launch. In addition,
she is an executive board advisor to automotive industry leaders
and an investment advisor to several investment funds and holds 10
patents in vehicular technology software. Ms. Oz was the recipient
of the Women in Technology Award for Courage and serves as an
advisor to several boards including Pioneer Electronics, Moove.ai,
HealthCorps, a national health education program for high schools
and Endeavor.Org, a global high-impact entrepreneurship
organization based in NYC. Ms. Oz is a frequent speaker on women's
leadership in technology and serves in an advisory capacity to
multiple automotive industry leaders. Ms. Oz received her MBA from
Wharton Business School and her BA from Wellesley/M.I.T. in
economics and political science.
"We are fortunate to add Seval Oz to our board of directors and
look forward to benefiting from her significant experience working
with public companies and technology companies as well as having
her management expertise gained from a long career in leadership
roles," Sumit Sharma, chief executive officer of MicroVision,
said.
"I am thrilled to join the MicroVision board of directors at this
opportune time. I am excited to bring my expertise and experience
in autonomous vehicle technology and mobility to the Company as it
develops its automotive lidar technology and explores strategic
alternatives," Seval Oz, newly appointed independent director of
MicroVision, said. "I look forward to working with Brian, Sumit,
board members and the management team to help the Company maximize
the value of its solid state automotive lidar and micro-display
technology."
"I have enjoyed my work with the board and management and feel I
can confidently step down to continue work with my other boards and
philanthropic activities," Bernee Strom said. "The Company is well
positioned with two new board members with experience in automotive
lidar, mobility and automotive OEM markets. I believe the Company
is on strong footing and I am excited for MicroVision's future."
"Bernee has been a valuable member of our board and has been a
significant contributor to the vision and strategy of the Company,"
Brian Turner, chairman and independent director at MicroVision,
stated. "We want to thank Bernee for her hard work on the board;
she will be missed."
About MicroVision
MicroVision -- http://www.microvision.com-- is the creator of
PicoP scanning technology, an ultra-miniature sensing and
projection solution based on the laser beam scanning methodology
pioneered by the company. MicroVision's platform approach for this
sensing and display solution means that its technology can be
adapted to a wide array of applications and form factors. The
Company combines its hardware, software, and algorithms to unlock
value for its customers by providing them a differentiated advanced
solution for a rapidly evolving, always-on world.
MicroVision reported a net loss of $26.48 million for the year
ended Dec. 31, 2019, compared to a net loss of $27.25 million for
the year ended Dec. 31, 2018. As of Dec. 31, 2019, the Company had
$11.84 million in total assets, $15.81 million in total
liabilities, and a total shareholders' deficit of $3.98 million.
Moss Adams LLP, in Seattle, Washington, the Company's auditor since
2012, issued a "going concern" qualification in its report dated
March 11, 2020, citing that the Company has suffered recurring
losses from operations and has an accumulated deficit that raise
substantial doubt about its ability to continue as a going concern.
ML COUNTRY CLUB: Case Summary & 7 Unsecured Creditors
-----------------------------------------------------
Debtor: ML Country Club, LLC
DBA Mays Landing Country Club
1855 Cates Road
Mays Landing, NJ 08330
Business Description: ML Country Club, LLC --
https://www.mayslandinggolf.com --
operates a private golf club in Hamilton,
New Jersey.
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
District of New Jersey
Case No.: 21-11745
Debtor's Counsel: Robert N. Braverman, Esq.
MCDOWELL LAW, PC
46 West Main St.
Maple Shade, NJ 08052
Tel: 856-482-5544
Fax: 856-482-5511
E-mail: rbraverman@mcdowelllegal.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Louis Sacco, managing member.
A copy of the petition containing, among other items, a list of the
Debtor's seven unsecured creditors is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/TOZ7I2Q/ML_COUNTRY_CLUB_LLC__njbke-21-11745__0001.0.pdf?mcid=tGE4TAMA
MOTELS OF SUGAR: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------
The U.S. Trustee for Region 10 on March 3 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Motels of Sugar Land, LLP.
About Motels of Sugar Land
Motels of Sugar Land, LLP owns the 94-suite Springhill Suites and
Hotel by Marriott in Sugarland, Texas, that employs 14 people.
Motels of Sugar Land sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Ind. Case No. 21-00371) on Jan. 29,
2021. Motels of Sugar Land President Sanjay Patel signed the
petition. In the petition, the Debtor disclosed $6,396,935 in
assets and $6,455,893 in liabilities.
Judge Robyn L. Moberly oversees the case. KC Cohen, Lawyer, PC is
the Debtor's legal counsel.
MOUNT ETNA PARTNERS: Seeks to Hire Collins Webster as Counsel
-------------------------------------------------------------
Mount Etna Partners, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Missouri to hire Collins, Webster
& Rouse P.C. as its legal counsel.
The firm's services include:
(a) examining the affairs of the Debtor and other parties as
to its acts, conduct and property;
(b) preparing records and reports as required by U.S.
bankruptcy laws;
(c) preparing applications and proposed orders;
(d) identifying and prosecuting claims and causes of action
assertable by the Debtor;
(e) examining proofs of claim previously filed and to be filed
and the possible prosecution of objections to such claims;
(f) advising the Debtor and preparing documents in connection
with the operation of its business;
(g) advising the Debtor and preparing documents in connection
with the liquidation and reorganization of the assets of the
estate; and
(h) other legal services necessary to administer the Debtor's
Chapter 11 case.
The firm will be paid at these rates:
Norman Rouse $295 per hour
Mark E. Peron $200 per hour
Paralegal $85 per hour
The source of the funds for the pre-bankruptcy retainer of $10,000
was paid by 37 Inc. as a capital investment.
Norman Rouse, Esq., a partner at Collins, disclosed in a court
filing that the firm neither holds nor represents an interest
adverse to the Debtor and its estate.
The firm can be reached through:
Norman E. Rouse, Esq.
Collins, Webster & Rouse P.C.
5957 East 20th Street
Joplin, MO 64801-8765
Tel: 417-782-2222
Fax: 417-782-1003
Email: twelch@cwrcave.com
About Mount Etna Partners
Mount Etna Partners, LLC -- http://www.americanfibrex.com/-- is a
manufacturer of high temperature industrial insulation products.
It conducts business under the name American Fibrex.
Mount Etna Partners filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No.
21-30025) on Feb. 23, 2021. Garrett Reincke, president and chief
executive officer, signed the petition. In the petition, the
Debtor estimated $500,000 to $1 million in assets and $1 million to
$10 million in liabilities.
Collins, Webster & Rouse P.C. serves as the Debtor's legal counsel.
MURPHY OIL: Fitch Assigns BB+ Rating on 7-Yr. Sr. Unsecured Notes
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB+'/'RR4' rating to Murphy Oil
Corporation's seven-year senior unsecured notes. Proceeds, along
with cash on hand, are intended to fund the redemption of two
series of 2022 senior unsecured notes. The Rating Outlook is
Negative.
The ratings reflect the extension of maturity runway to 2024 from
the proposed transaction, approximately $1.7 billion of liquidity,
the expectation that FCF should be neutral at the current price
deck, and expected growth in Gulf of Mexico (GoM) production in
late 2022 following the completion of three offshore projects. This
is offset by elevated credit metrics resulting from lower commodity
prices in 2020 as a result of the pandemic, reduced production
expectations due to lower capex, and risk of potential changes in
federal regulations from the Biden administration regarding
offshore drilling.
The Negative Rating Outlook reflects the elevated credit metrics
from lower commodity prices that could potentially last for an
extended period of time and the uncertainty of potential regulatory
changes. Fitch expects credit metrics to improve over the
forecasted period base on the current price deck.
KEY RATING DRIVERS
Improved Liquidity Position: Murphy has relatively strong liquidity
of $1.7 billion, including approximately $311 million of cash as of
Dec. 31, 2020 and $1.4 billion available on its unsecured revolving
credit facility. Due to the pandemic's effect on commodity prices,
the company reduced its dividend by 50% (estimated $77 million in
annual savings), materially reduced capex, and cut operating and
corporate costs. The proposed transaction eliminated note
maturities until 2024, and the company is expected to be FCF
neutral at Fitch's price-deck assumptions.
Flattening Production Profile: Fitch expects Murphy's production
profile to remain relatively flat over the next two years in order
to maximize FCF and reduce debt. With capex primarily focused in
the GoM, production in the Eagle Ford remains at maintenance
levels. Production is expected to materially increase in 2023
following the completion of three projects in GoM, and Fitch
believes the company may address increasing production at its Eagle
Ford and Montney assets.
GoM Projects Drive Production: Murphy will spend approximately $200
million-$250 million per year in 2021 and 2022 on several projects
that are expected to materially increase production. The Khaleesi,
Mormont, and Samurai projects are progressing with drilling
expected in 2Q21 and first oil on track for 1H22. These projects
are expected to have a breakeven oil price of less than $30/bbl.
The St. Malo waterflood (non-operated) is in the midst of
completing its first producer well and is preparing to drill a
second injector well. Construction on the King's Quay floating
production system is 90% complete and Murphy hopes to complete the
sale of the asset during 1Q21. Fitch expects FCF should materially
increase from the enhanced production, as well as a reduction in
capex when these projects are completed in 2022.
Potential Regulatory Considerations: In January 2021, the Biden
administration announced a 60-day moratorium on the leasing of new
oil and natural gas on federal land and waters. This did not affect
work and permitting on existing leases, and Murphy claims that it
has been able to obtain approvals on work permits for its GoM
leases. It is unclear whether President Biden will take further
actions that could affect Murphy's operations in the GoM or other
properties in the U.S. Murphy's GoM assets produced 63,000 barrels
of oil equivalent per day in 4Q21, and the company's interest
includes 126 blocks over more than 725,000 acres.
Increase in Hedging Activity: Murphy has increased its hedging
activity going into 2021. Fitch estimates that slightly more than
half of Murphy's expected is oil production is hedged at $42.77/bbl
and slightly over 53% of its natural gas production is hedged. This
is a significant increase from the 36% of oil production and 18% of
natural gas production hedged going into 2020.
DERIVATION SUMMARY
Murphy's production of 149,000 barrels of oil equivalent per day
(mboe/d) as of Dec. 31, 2020 (excluding non-controlling interest)
is at the low end of the range of most investment-grade issuers and
high 'BB' issuers, such as Apache Corporation (BB+/Stable; 445
mboe/d), Ovintiv Inc. (BB+/Negative; 510 mboe/d), Occidental
Petroleum (BB/Stable; 1,228 mboe/d) and Continental Resources Inc.
(BBB-/Negative; 297 mboe/d) all reported as of Sept. 30, 2020.
Murphy's netbacks are more in line with investment-grade peers due
to its high realized price, which is somewhat offset by higher
production expenses due to its GoM exposure. Murphy's netback of
$12.36/bbl is in line with Continental ($12.50/bbl) and Apache
($13.13/bbl) and ahead of Ovintiv ($5.48/bbl), Occidental
($10.59/bbl), Hess ($7.97/bbl), and Marathon Oil Corporation
(BBB-/Stable; $8.19/bbl). The netback margin is also at the high
end of the company's peers.
Similar to most E&P issuers, Murphy's leverage metrics deteriorated
in 2020 with debt/EBITDA increasing to 3.0x from 1.8x in 2019.
Other metrics, such as debt/flowing production of $18,346 is in
line with its peers such as Apache ($18,891), Continental
($18,941), and Hess ($20,298). Murphy's approximately $850 million
of asset retirement obligations offsets the positive leverage
metrics. The obligations are lower than Hess ($932 million) and
Apache ($1,859 million), but significantly higher than onshore
peers, such as Ovintiv ($446 million), Marathon ($236 million), and
Continental ($174 million).
KEY ASSUMPTIONS
-- WTI oil prices of $42.00/bbl in 2021, $47 in 2022 and $50 in
2023 and the long term.
-- Henry Hub natural gas prices of $2.45/mcf in 2021 and
thereafter.
-- Relatively flat production through 2022.
-- Capex of $700 million in 2021, increasing to $850 million in
2022, and declining to $500 million in 2023.
-- Approximately $77 million of dividends throughout the
forecasted period, no share buybacks, acquisitions, or
divestitures.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Increased operational focus on core basins and the Eagle Ford
and GOM in terms of growing production;
-- Clear and conservative capital-allocation and financial policy
that demonstrates capex, shareholder return and M&A
discipline;
-- Adhering to management's stated policy of no more than 10% of
the capital budget in exploratory projects;
-- Increasing production above 200,000 barrels of oil equivalent
per day;
-- Lease-adjusted FFO-gross leverage below 2.0x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Midcycle debt greater than 2.5x;
-- A change in financial policy that results in capital allocated
away from core assets;
-- Midcycle debt/flowing barrel above $20,000 per barrel of oil
equivalent (boe) or debt/PD reserves of more than $6.00/boe on
a sustained basis;
-- Lease adjusted FFO-gross leverage above 2.5x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Ample Liquidity: Murphy has $1.4 billion available under its
revolver as of Dec. 31, 2020 ($200 million drawn) and $311 million
of cash on hand. Pro forma for the proposed transaction, the next
bond maturity is not until 2024.
The revolver is a senior unsecured guaranteed facility that matures
in November 2023 and has priority over the senior unsecured notes.
Fitch believes the revolver is likely to be extended given the low
leverage and strong asset coverage.
ESG CONSIDERATIONS
Murphy Oil Corporation: Waste & Hazardous Materials Management;
Ecological Impacts: '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.
Murphy Oil has an ESG Relevance Score of '4' for waste and
hazardous materials management/ecological impacts, due to the
enterprise-wide solvency risks that an offshore oil spill poses for
an E&P company. This factor has a negative impact on the credit
profile, and is relevant to the rating in conjunction with other
factors.
NEPHROS INC: Incurs $4.5 Million Net Loss in 2020
-------------------------------------------------
Nephros, Inc. filed with the Securities and Exchange Commission its
Annual Report on Form 10-K disclosing a net loss of $4.53 million
on $8.56 million of total net revenues for the year ended Dec. 31,
2020, compared to a net loss of $3.18 million on $10.33 million of
total net revenues for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $18.51 million in total
assets, $2.94 million in total liabilities, and $15.57 million in
total stockholders' equity.
Cost of goods sold for the year ended Dec. 31, 2020 was $3.6
million, compared with $4.3 million in 2019, a decrease of 14%.
Cost of goods sold for the fourth quarter of 2020 was $1.0 million,
compared with $1.3 million in the fourth quarter of 2019, a
decrease of 18%.
Gross margins for the year ended Dec. 31, 2020 were 57%, compared
with 59% in 2019. Gross margins for the fourth quarter of 2020
were 56%, compared with 60% in the fourth quarter of 2019.
Research and development expenses for the year ended Dec. 31, 2020
were $2.8 million, compared with $3.1 million in 2019, a decrease
of 11%. Research and development expenses for the fourth quarter
of 2020 were $0.6 million, compared with $0.8 million in the fourth
quarter of 2019, a decrease of 20%.
Depreciation and amortization expenses for the year ended Dec. 31,
2020 were approximately $192,000, compared with approximately
$186,000 in 2019, an increase of 3%. Depreciation and amortization
expenses for the fourth quarter of 2020 were approximately $50,000,
compared with approximately $44,000 in the fourth quarter of 2019,
an increase of 14%.
Selling, general and administrative expenses for the year ended
Dec. 31, 2020 were $6.5 million, compared with $6.1 million in
2019, an increase of 6%. Selling, general and administrative
expenses in each of the fourth quarters of 2020 and 2019 were $1.4
million.
Net loss for the fourth quarter of 2020 was approximately
($759,000), compared with a net loss of approximately ($144,000) in
the fourth quarter of 2019, a 427% increase in loss.
Adjusted EBITDA for the year ended Dec. 31, 2020 was ($3.6
million), compared with ($1.2 million) in 2019, a 193% increase in
loss. Adjusted EBITDA for the fourth quarter of 2020 was
approximately ($466,000), compared with approximately $374,000 in
the fourth quarter of 2019.
As of Dec. 31, 2020, Nephros had cash and cash equivalents of
approximately $8.2 million.
"While 2020 was a challenging year overall, we were pleased to
deliver consecutive quarter over quarter growth in the second
half," said Andy Astor, chief executive officer of Nephros. "The
two hardest hit segments of our business were new customer
acquisitions and emergency response, offset by stable recurring
revenue from our existing customer base, limiting our overall
downturn for the year to 17%. As COVID-19 immunity increases over
the coming weeks and months, we are optimistic that our business
will return to pre-pandemic growth levels in the latter half of
this year."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1196298/000149315221005090/form10-k.htm
About Nephros
South Orange, New Jersey-based Nephros -- www.nephros.com -- is a
water technology company in medical and commercial water
purification and pathogen detection.
NORTHWEST CAPITAL: Allowed to Use Cash Collateral on Interim Basis
------------------------------------------------------------------
Judge Jack B. Schmetterer of the U.S. Bankruptcy Court for the
Northern District of Illinois, Eastern Division, authorized
Northwest Capital Holdings, LLC to use cash collateral on an
interim basis.
The Debtor was authorized to use cash collateral to pay the items
set forth in the approved Budget. The approved Budget provided for
these total operating expenses:
For the week ending March 13, 2021: $24,600
For the week ending March 20, 2021: $15,500
For the week ending March 27, 2021: $27,699
For the week ending April 3, 2021: $41,699
The Debtor was directed to provide Midland States Bank with
receipts, within three days from purchase, for its purchase of
appliances. The Debtor was also directed to provide Midland with
copies of signed leases. The Debtor was permitted to pay the real
estate taxes on the Budget and Midland was authorized to pay the
2019 second installment taxes out of escrow.
Midland was granted a post-petition security interest and lien upon
the same type or form of collateral that secured the Midland
Prepetition Claim as of the Petition Date, which will have the same
type of priority, validity and enforceability that existed as of
the Petition Date, to the extent the Debtor's use of cash
collateral results in a diminution in the value of Midland's
interest in cash collateral as of the Petition Date.
The Debtor was required to deposit all rents in the Debtor's
account at Midland, until further order of the Court.
Further hearing on the Debtor's use of cash collateral is scheduled
for March 30, 2021 at 10:30 a.m.
A full-text copy of the Agreed Sixteenth Order, dated March 2,
2021, is available at https://tinyurl.com/ax3nn2u4 from
PacerMonitor.com.
About Northwest Capital
Northwest Capital Holdings, LLC is a single asset real estate
debtor (as defined in 11 U.S.C. Section 101(51B)). Northwest
Capital filed a Chapter 11 petition (Bankr. N.D. Ill. Case No.
20-05334) on Feb. 27, 2020. At the time of the filing, the Debtor
was estimated to have $10 million to $50 million in assets and $1
million to $10 million in liabilities. Judge Jack B. Schmetterer
oversees the case. The Debtor's legal counsel is William J.
Factor, Esq.
OCEANVIEW MOTEL: Allowed to Use Cash Collateral Through June 30
---------------------------------------------------------------
Judge Andrew B. Altenburg, Jr. of the U.S. Bankruptcy Court for the
District of New Jersey authorized Oceanview Motel, LLC to use cash
collateral on an interim basis through June 30, 2021.
The cash collateral consists of post-petition proceeds, products,
offspring, rents, or profits of property and the fees, charges,
accounts or other payments for the use or occupancy of rooms and
other public facilities in hotels, motels, or other lodging
properties subject to a security interest.
"The Debtor does not have sufficient unencumbered cash or other
assets with which to continue to operate its business in Chapter
11. The Debtor requires immediate authority to use cash collateral
as defined herein in order to continue its business operations
without interruption toward the objective of formulating an
effective plan of reorganization," Judge Altenburg found.
As adequate protection for use of cash collateral, the Debtor's
lender will be granted a replacement perfected security interest
under Section 361(2) of the Bankruptcy Code to the extent the
Lender’s cash collateral is used by the Debtor, to the extent and
validity and with the same priority in the Debtor’s post-petition
collateral, and proceeds thereof, that the Lender held in the
Debtor’s pre-petition collateral, subject to payments due under
28 U.S.C. Section 1930(a)(6). To the extent any other creditor
holds or asserts a lien position in cash collateral, such creditor
shall receive a replacement lien to the same extent, priority and
validity as it existed pre-petition.
To the extent the adequate protection proves insufficient to
protect the Lender’s interests in and to the cash collateral, the
Lender will have a super-priority administrative expense claim,
pursuant to Section 507(b) of the Bankruptcy Code, senior to any
and all claims against the Debtor under Section 507(a) of the
Bankruptcy Code, whether in the proceeding or in any superseding
proceeding, subject to payments due under 28 U.S.C. Section
1930(a)(6).
Further hearing on the Debtor's use of cash collateral is scheduled
for June 1, 2021 at 10:00 a.m. The deadline of filing objections
to the Debtor's use of cash collateral is May 25, 2021 at 4:00
p.m.
A full-text copy of the Interim Order, dated March 2, 2021, is
available for free at https://tinyurl.com/a8vhju4v from
PacerMonitor.com.
About Oceanview Motel
Oceaview Motel sought protection under Chapter 11 of the Bankruptcy
Code on September 30, 2020 (Bankr. D.N.J. Case No. 20-21165).
OLYMPUS DEVELOPMENT: March 23 Hearing on Sale of Nashville Property
-------------------------------------------------------------------
Judge Randal S. Mashburn of the U.S. Bankruptcy Court for the
Middle District of Tennessee will convene a telephonic hearing on
March 23, 2021, at 9:30 a.m., to consider Olympus Development
Group, LLC's sale of the real property located at 5731 Knob Road,
in Nashville, Tennessee, free and clear of liens, claims, and
encumbrances.
The call-in information is as follows: Call-In Number:
888-363-4749; Access Code: 8979228#.
Unless the Court orders otherwise, the hearing will be telephonic:
AT&T conference line number 1-888-363-4749, access code 8979228#.
The Debtor will serve a copy of the Order as set forth in Paragraph
3 of the Motion.
About Olympus Development Group, LLC
Olympus Development Group, LLC is the fee simple owner of three
residential properties in Nashville, Tennessee having a total
current value of $1.61 million.
Olympus Development Group, LLC sought Chapter 11 protection (Bankr.
M.D. Tenn. Case No. 21-00459) on Feb. 17, 2021. The case is
assigned to Randal S. Mashburn.
The Debtor's total assets are valued at $1,665,967 and $1,685,896
in total debt.
The Debtor tapped Griffin S. Dunham, Esq., at Dunham Hildebrand,
PLLC as counsel.
The petition was signed by Josephine Saffert, manager.
OMEROS CORP: Widens Net Loss to $138.1 Million in 2020
------------------------------------------------------
Omeros Corporation filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$138.06 million on $73.81 million of net product sales for the year
ended Dec. 31, 2020, compared to a net loss of $84.48 million on
$111.80 million of net product sales for the year ended Dec. 31,
2019.
As of Dec. 31, 2020, the Company had $181.04 million in total
assets, $36.74 million in total current liabilities, $28.77 million
in non-current lease liabilities, $236.29 million in unsecured
convertible senior notes, and a total shareholders' deficit of
$120.75 million.
"2020 was a challenging year for everyone, but our team's list of
accomplishments is impressive - submission of the BLA for
transplant-associated TMA and life-saving treatment of critically
ill COVID-19 patients with narsoplimab, reinstatement of separate
payment for our ophthalmic product OMIDRIA, entry into the clinic
for our MASP-3 inhibitor OMS906, and the addition of substantial
working capital to our balance sheet," said Gregory A. Demopulos,
M.D., Omeros' chairman and chief executive officer. "As we entered
the new year, the team maintained its momentum, continuing to build
on these achievements. The BLA was granted priority review and our
commercial launch plan is on track to bring narsoplimab to patients
as soon as we receive approval. The only complement inhibitor in
the I-SPY COVID-19 trial, narsoplimab is the focus of growing
attention from international government agencies and global
organizations in the fight against COVID, and we are advancing the
drug across IgA nephropathy, aHUS and an expanding set of
indications. Once again secured, OMIDRIA revenues are increasing
and will continue to provide working capital to fund our pipeline,
including OMS906, which remains on schedule to read out initial
data next quarter, and the rest of our programs. 2021 has started
strong, and we expect that it will finish even stronger."
Fourth Quarter 2020
For the fourth quarter of 2020, OMIDRIA revenues were $10.6
million. This compares to OMIDRIA revenues of $26.1 million for the
third quarter of 2020. The decrease was primarily due to the
expiration of pass-through reimbursement for OMIDRIA on Oct. 1,
2020 and the uncertainty around separate payment for OMIDRIA until
CMS confirmed in December that OMIDRIA qualifies for separate
payment when used in the ASC setting under CMS' policy for
non-opioid pain management surgical drugs.
Total costs and expenses for the fourth quarter of 2020 were $44.4
million, compared to $51.5 million in the preceding quarter. The
decrease was primarily due to a technology license payment related
to the OMS906 program in that earlier quarter.
For the three months ended Dec. 31, 2020, Omeros reported a net
loss of $37.3 million, or $0.60 per share, which included non-cash
expenses of $3.5 million, or $0.06 per share. This compares to the
prior year fourth quarter, when Omeros reported a net loss of $29.2
million or $0.58 per share, which included non-cash expenses of
$6.3 million, or $0.12 per share.
As of Dec. 31, 2020, Omeros had $135.0 million of cash, cash
equivalents and short-term investments available for operations.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1285819/000155837021002177/omer-20201231x10k.htm
About Omeros Corporation
Seattle, Washington-based Omeros -- www.omeros.com -- is a
commercial-stage biopharmaceutical company committed to
discovering, developing and commercializing small-molecule and
protein therapeutics for large-market and orphan indications
targeting inflammation, complement-mediated diseases, disorders of
the central nervous system and immune-related diseases, including
cancers.
OWENS & MINOR: Fitch Raises LongTerm IDRs to 'BB-'
--------------------------------------------------
Fitch Ratings has upgraded Owens & Minor, Inc.'s (OMI) and its
subsidiaries' Long-Term Issuer Default Ratings (IDRs) to 'BB-' from
'B' and the companies' senior secured debt to 'BB'/'RR1' from
'BB-/RR2'. The Rating Outlook is Stable. The rating action applies
to approximately pro forma $1.0 billion of long-term debt as of
Dec. 31, 2020.
In addition, Fitch has assigned a 'BB'/'RR1' secured debt rating to
OMI and its subsidiaries new $300 million revolving credit facility
due 2026 and a 'BB-' IDR to Byram Healthcare Centers, Inc. Fitch
also assigned a 'BB-'/'RR4' senior unsecured debt rating to OMI's
proposed issuance of $500 million of senior unsecured notes due
2029.
The proceeds of the new senior unsecured notes are expected to be
used to pay the outstanding balance on the company's term loan B.
Upon the closing of the new credit facility and new senior
unsecured notes, Fitch will withdraw the existing ratings on OMI's
current revolving credit facilty and term loan B.
In connection with the refinancing and creation of a new credit
facility, OMI is expected to increase the borrowing limit of its
Accounts Receivable Securitization program from $325 million to
$450 million. That facility is expected to become the company's
principal source of short-term liquidity in addition to CFO.
The upgrade reflects the material reduction in OMI's debt achieved
through the combination of growth in FCF, asset sales and proceeds
from the sale of common stock. In addition, the upgrade and Stable
Outlook incorporate Fitch's expectation that operating performance
and cash flow generation will improve beyond 2021 because of
improved productivity, sustained demand for personal protective
equipment, and steady resumption of elective procedures to
pre-pandemic levels.
KEY RATING DRIVERS
Improved Capital Structure: OMI has reduced its debt by
approximately $500 million or one third between year-end 2019 and
2020 through a combination of the sale of assets, common stock and
stronger FCF. The reduced debt will enhance FCF over the near term
by as much as $35 million-$40 million compared with the past couple
years. That, in turn is expected to enhance the company's financial
flexibility to meet growth opportunities and to continue to improve
its service and product offerings.
Operating Performance COVID-19 Tailwinds: Fitch anticipates the
increased demand for personal protective equipment (PPE) driven by
the coronavirus pandemic will benefit OMI over the near to medium
term. In addition, stronger operational execution is expected to
enhance output and operating efficiencies. Fitch anticipates that
the level of healthcare elective procedures will continue to rise
over 2021, which will also enhance product demand. Fitch expects
OMI's supply chain to remain stable.
Ample Liquidity: OMI's proposed refinancing of its term loan B with
proceeds from the sale of new notes, the establishment of a new
revolving credit facility and the increase in its accounts
receivable securitization facility will provide good liquidity over
the near term. As a result of these changes to the capital
structure, OMI is expected to have no maturities to meet until
2024. Fitch believes that CFO and external sources of funding will
be sufficient to meet working capital and capital expenditure needs
over the near term.
Favorable Outlook for Home Healthcare: The outlook for increased
demand of products and services in the home healthcare market
represents an area for continued growth. The combination of an
aging population in the U.S., rising levels of chronic conditions
and an increasing preference for home care bode well for growth of
Byram Healthcare.
Competitive Environment: The med-surg supply distribution industry
in the U.S. is highly competitive and characterized by pricing
pressure. Fitch expects margin pressure to continue over the coming
years. OMI competes with other national distributors (e.g. Cardinal
Health, and Medline, Inc.) and a number of regional and local
distributors, as well as customer self-distribution models and, to
a lesser extent, certain third-party logistics companies. OMI's
success depends on its ability to compete on price, product
availability, delivery times and ease of doing business, while
managing internal costs and expenses. OMI's improved service levels
have helped it to improve its customer service and retention
levels, which are critical to its ongoing competitive position.
Customer Concentration: OMI's 2020 10-K stated that its top- 10
customers in the U.S. represented approximately 21% of its
consolidated net revenue. Additionally, in 2020, approximately 72%
of its consolidated net revenue was from sales to member hospitals
under contract with its largest Group Purchasing Organizations
(GPOs): Vizient, Premier and HPG. As a result of this
concentration, OMI could lose a significant amount of revenue due
to the termination of a key customer or GPO relationship. The
termination of a relationship with a given GPO would not
necessarily result in the loss of all of the member hospitals as
customers, but the termination of a GPO relationship, or a
significant individual healthcare provider customer relationship
could adversely affect OMI's debt-servicing capabilities.
DERIVATION SUMMARY
OMI's 'BB-' Long-Term IDR considers its competitive position, gross
debt/EBITDA, which is generally expected to remain between 3x and
4x over the near term. The ratings also consider improved funds
from operations (FFO) resulting from improved efficiency and
enhanced FCF as a result of lower interest expense. The material
reduction in debt leverage, improving cash generation and liquidity
profile afford OMI much better flexibility compared to its recent
past.
OMI's smaller scale in an industry with high fixed costs, where
scale influences leverage with suppliers and customers, and
significantly higher leverage all lead Fitch to rate the company
below AmerisourceBergen Corp. (A-/ Stable), Cardinal Health, Inc.
(BBB/Stable) and McKesson Corp (BBB+/Stable). OMI competes with
other regional and local distributors, as well as customer
self-distribution models and, to a lesser extent, certain
third-party logistics companies. In contrast to other larger
distributors, Fitch considers OMI less diversified in terms of
customers, revenues and suppliers.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Total revenues increase at a 3% CAGR over the forecast period
through 2024 driven by solid demand for PPE products among
healthcare systems and home health; no significant
contributions for distribution business expected, but no
contract losses either.
-- Operating EBITDA margins are expected to decline somewhat
compared to FY 2020, but remain comparable in terms of
absolute earnings. Margins greater than 3.0% are expected to
be attainable as as a result of continued benefits from higher
product demand, better absorption of overhead and customer
stability, as well as a growth in revenues.
-- Debt balances remain relatively stable; FCF is assumed to be
adequate to fund internal growth and some modest external
growth (acquisitions).
-- Working capital investment creates a demand on cash in order
to meet increased product demand, but is manageable without a
sustained increase in borrowing.
-- Fitch's estimates sustainable FCF/Debt will fluctuate between
7%-10%; common stock dividends are not assumed to increase and
there is no assumption for share repurchases.
-- Fitch assumes OMI increases its capital expenditures to
approximately $80 million per year through the forecast
period.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Continued reduced dependence on short-term borrowing for
working capital needs;
-- Top line growth sustained at 4% or higher balanced across
segments and geographies, supported by consistent service
levels and customer persistency;
-- Debt/EBITDA sustained below 3.0x and FCF/Debt above 12.5%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Substantial dependence on revolving credit facility or
accounts receivable securitization for working capital needs;
-- Increased level of debt for shareholder returns (dividend or
share repurchases) or highly leveraged acquisitions that are
expected to raise business and financial risks without
sufficient returns;
-- Loss of healthcare provider customers or Group Purchasing
Organizations that cause a material loss of revenues and
EBITDA;
-- Debt/EBITDA sustained above 4.0x and FCF/Debt sustained below
5%.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Good Liquidity: OMI has good sources of liquidity that are derived
from cash flow from operations, an accounts receivable
securitization program (up to $450 million) and a revolving credit
facility (up to $300 million). Fitch anticipates that CFO and FCF
from operations will trend between $150-$175 million and $70-$90
million, respectively over the next four years enhanced by modest
growth and reduced interest expense. Such estimates are subject to
potential changes in working capital, which can vary significantly
depending on the last day of the fiscal year. Fitch estimates that
the peak of the A/R securitization draw will be $250 million with
the average closer to approximately $200 million.
Favorable Maturity Profile: Following the company's proposed
offering of $500 million of new senior unsecured notes, OMI will
have no debt amortization requirements over Fitch's forecast period
through 2024.
SUMMARY OF FINANCIAL ADJUSTMENTS
Historical and projected EBITDA is adjusted principally for
nonrecurring expenses, including acquisition related and exit and
realignment costs.
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.
PADCO ENERGY: Owner Ray Carr Indicted for Bankruptcy Fraud
----------------------------------------------------------
On March 3, 2021, acting United States Attorney Alexander C. Van
Hook announced that a federal grand jury has returned an indictment
charging a Shreveport businessman, Michael Ray Carr, Jr., 39, with
concealment of bankruptcy estate assets.
According to the indictment, Carr was the sole and principal owner
of PADCO Energy Services, LLC ("Energy"), and sixty percent owner
PADCO Pressure Control, LLC ("Pressure"), with both businesses
consisting of mainly oilfield services. On October 4, 2016, Energy
and Pressure filed for Chapter 11 bankruptcy. The bankruptcy
documents were signed by Carr and certified under penalty of
perjury that the information contained in them was true and
correct.
The indictment alleges that a bankruptcy court hearing was held on
September 12, 2017, wherein Pressure and Carr agreed to turn over
property of the estate, oilfield equipment, to the bankruptcy
trustee. However, on October 5, 2017, the Chapter 11 trustee for
Pressure filed a motion in the bankruptcy proceeding claiming that
Pressure and Carr had failed to turn over the property of the
estate. On December 1, 2017, an agreement between Pressure, Energy,
Carr, and the creditors was reached and a consent order was
approved by the bankruptcy court stating that the Chapter 11
trustee could secure all equipment referenced in the order.
It is further alleged in the indictment that Carr knowingly and
fraudulently concealed property for Pressure and Energy which
belonged to the bankruptcy estate, from the Chapter 11 trustee
charged with control of the debtor’s property, from the
creditors, and the United States Trustee.
An indictment is merely an accusation and a defendant is presumed
innocent unless and until proven guilty beyond a reasonable doubt.
The FBI is conducting the investigation and Assistant U.S. Attorney
Tennille M. Gilreath is prosecuting the case.
About Padco Energy Services
PADCO Pressure Control, L.L.C., based in Lafayette, LA, filed a
Chapter 11 petition (Bankr. W.D. La. Case No. 16-51381) on October
4, 2016. The Hon. Robert Summerhays presides over the case. Thomas
E. St. Germain, member of Weinsten & St. Germain, LLC, as
bankruptcy counsel.
In its petition, the Debtor estimated $0 to $50,000 in assets and
$1 million to $10 million in liabilities. The petition was signed
by Michael Carr, chief executive officer.
No official committee of unsecured creditors has been appointed in
the case.
PAPER SOURCE: Wants DIP Financing, Cash Collateral Use
------------------------------------------------------
Paper Source, Inc. and its affiliated Debtors ask the U.S.
Bankruptcy Court for the Eastern District of Virginia, Richmond
Division, for authorization to obtain postpetition financing and
use cash collateral.
"The Debtors require immediate access to incremental liquidity in
the form of postpetition financing and access to Cash Collateral.
Such relief is critical to preserving and maximizing the value of
the Debtors' estates. The Debtors have commenced these chapter 11
cases to implement a comprehensive restructuring that will allow
the Debtors to achieve certain objectives that are critical to
their survival: (a) continue a marketing process whereby the
Debtors will seek to sell all or substantially all of their assets
to MidCap Funding Investment XI LLC, an affiliate of the DIP Agent
and Prepetition First Lien Agent, or another buyer; (b) evaluate
and rationalize the Debtors' real estate portfolio, including
renegotiating lease terms to align the Debtors' rent expenditures
with prevailing market rates; and (c) continue operations without
interruption, including minimizing any potential adverse effects to
the Debtors' businesses, customers, employees, trade partners and
other key stakeholders. The Debtors will not be able to achieve
any of these goals, and will instead suffer immediate and
irreparable harm absent access to additional liquidity. Indeed, at
the time of the commencement of these chapter 11 cases, the Debtors
have an amount insufficient to operate the Debtors' businesses or
continue in the ordinary course," the Debtors tell the Court.
The proposed DIP Facility has, among others, these material terms:
(a) Borrower: Paper Source, Inc.
(b) Guarantor: Pine Holdings, Inc.
(c) Lenders:
DIP Lender DIP
Commitment
----------
--------------
MidCap Financial Trust
$10,816,203.24
Apollo Investment Corporation
$3,287,671.24
Apollo Helius Multi-Credit Fund I Apollo
$1,896,125.52
Funds ICAV
(d) Entities with Interests in Cash Collateral: Prepetition
Secured Parties under the Prepetition First Lien Credit Documents
and Prepetition Second Lien Credit Documents, respectively.
(e) Term: The DIP Loans (together with all other DIP
Obligations) shall mature and be due and payable on the earliest to
occur of the following:
(1) June 30, 2021;
(2) the consummation of a sale of all or substantially
all of the assets of the Debtors;
(3) the termination of the Stalking Horse Agreement for
any reason without the prior written consent of the DIP Lenders and
the Stalking Horse Purchaser other than a termination of the
Stalking Horse Agreement to pursue approval of an Alternative
Transaction (as defined in the Stalking Horse Agreement) that
results in the indefeasible payment in full in cash of the
Prepetition First Lien Obligations as of the closing of such
Alternative Transaction;
(4) the substantial consummation (as defined in section
1101 of the Bankruptcy Code and which for purposes hereof shall be
no later than the “effective date” thereof) of a plan of
reorganization filed in the Chapter 11 Cases that is confirmed
pursuant to an order entered by the Bankruptcy Court;
(5) entry of an order by the Bankruptcy Court approving
(A) a motion seeking conversion or dismissal of any or all of the
Chapter 11 Cases or (B) a motion seeking the appointment or
election of a trustee, a responsible officer or examiner with
enlarged powers relating to the operation of the Debtors' business;
and
(6) the date of acceleration of all or any portion of the
DIP Loans and the termination of the commitments in respect thereof
upon the occurrence of an Event of Default.
(f) Adequate Protection for Prepetition First Lien Secured
Parties: As adequate protection for any diminution of the
Prepetition First Lien Secured Parties' interest in the Prepetition
Collateral resulting from the subordination of the Prepetition
First Liens to the DIP Liens and the Carve-Out, the Prepetition
First Lien Agent shall receive, for the benefit of the Prepetition
First Lien Secured Parties:
(1) continuing valid, binding, enforceable and perfected
postpetition replacement liens pursuant to sections 361, 363(e),
and 364(d)(l) of the Bankruptcy Code on the DIP Collateral, which
shall be subject and subordinated only to the Carve-Out, the DIP
Liens and Permitted Liens and which (x) shall otherwise be senior
to all other security interests in, liens on, or claims against the
DIP Collateral, and (y) shall not be made subject to or pari passu
with any lien or security interest heretofore or hereinafter
granted in the Chapter 11 Cases or any Successor Cases and shall be
valid and enforceable against any trustee appointed in any of the
Chapter 11 Cases or any Successor Cases, and shall not be subject
to sections 510, 549 or 550 of the Bankruptcy Code;
(2) administrative superpriority expense claims in each
of the Chapter 11 Cases, junior and subordinate only to the
Carve-Out and the DIP Obligations (including the DIP Superpriority
Claims), pursuant to section 507(b) with priority over any and all
other administrative expenses, administrative expense claims and
unsecured claims against the Debtors or their Estates, now existing
or hereafter arising, of any kind or nature whatsoever as to and to
the extent provided by sections 503(b) and 507(b) of the Bankruptcy
Code; and
(3) (x) monthly reimbursement payments of the Prepetition
First Lien Secured Parties' respective reasonable fees and expenses
including the professional fees of Proskauer Rose LLP, Tavenner &
Beran PLC, and Carl Marks & Co., Inc., and (y) payment in kind of
monthly interest, calculated at the non-default rate under the
Prepetition First Lien Credit Agreement and added to the principal
amounts of the Prepetition First Lien Secured Parties' allowed
secured claims.
(g) Adequate Protection for Prepetition Second Lien Secured
Parties: As adequate protection for any Diminution of the
Prepetition Second Lien Secured Parties' interest in the
Prepetition Collateral resulting from the subordination of the
Prepetition Second Liens to the DIP Liens, the Carve-Out, and the
First Lien Replacement Liens, the Prepetition Second Lien Agent
shall receive, for the benefit of the Prepetition Second Lien
Secured Parties:
(1) continuing valid, binding, enforceable and perfected
postpetition replacement liens pursuant to sections 361, 363(e),
and 364(d)(l) of the Bankruptcy Code on the DIP Collateral, which
shall be subject and subordinated only to the Carve-Out, the
Permitted Liens, the DIP Liens, the First Lien Replacement Liens,
and the Prepetition First Liens and which shall otherwise be senior
to all other security interests in, liens on, or claims against the
DIP Collateral and shall be valid and enforceable against any
trustee appointed in any of the Chapter 11 Cases or any Successor
Cases, and shall not be subject to sections 510, 549 or 550 of the
Bankruptcy Code; and
(2) dministrative superpriority expense claims in each of
the Chapter 11 Cases, junior and subordinate to the Carve-Out, the
DIP Obligations (including the DIP Superpriority Claims), the First
Lien Adequate Protection Superpriority Claims, and the Prepetition
First Lien Obligations, and pursuant to section 507(b) with
priority over any and all other administrative expenses,
administrative expense claims and unsecured claims against the
Debtors or their Estates, now existing or hereafter arising, of any
kind or nature whatsoever as to and to the extent provided by
sections 503(b) and 507(b) of the Bankruptcy Code.
(h) Carve Out: “Carve-Out” means the following expenses:
(1) all fees required to be paid to the Clerk of the
Bankruptcy Court and to the Office of the United States Trustee
pursuant to 28 U.S.C. Section 1930(a);
(2) all reasonable fees and expenses incurred by a
Trustee under section 726(b) of the Bankruptcy Code in an amount
not exceeding $50,000;
(3) subject to the Approved Budget to the extent allowed
at any time, whether by interim order, procedural order, or
otherwise, all unpaid fees and expenses (including any
restructuring, sale, success, or other transaction fee of any
investment bankers or financial advisors of the Debtors) incurred
by persons or firms retained by the Debtors pursuant to section
327, 328, or 363 of the Bankruptcy Code and unpaid fees and
expenses incurred by persons or firms retained by any statutory
committees appointed in the Chapter 11 Cases pursuant to section
328 or 1103 of the Bankruptcy Code at any time before or on the
first business day following delivery by the DIP Agent of a Carve
Out Trigger Notice, whether allowed by the Bankruptcy Court prior
to or after delivery of a Carve Out Trigger Notice; and
(4) Allowed Professional Fees not to exceed $500,000,
incurred after the first business day following delivery by the DIP
Agent of the Carve Out Trigger Notice, to the extent allowed at any
time, whether by interim order, procedural order, or otherwise.
(i) Interest Rates: Interest will be payable on the unpaid
principal amount of all DIP Loans and all overdue interest thereon
at a rate per annum equal to the LIBOR Rate (as defined in the
Prepetition First Lien Credit Agreement) for an Interest Period (as
defined in the Prepetition First Lien Credit Agreement) of one
month plus 10.00%, payable monthly on the first business day of
each month in arrears. All accrued interest which for any reason
has not theretofore been paid shall be paid in full on the date on
which the final principal amount of the DIP Loans is paid.
(j) Milestones: Unless waived by the Required DIP Lenders in
their sole discretion, the failure of the Debtors to meet the
following milestones by the applicable specified deadlines set
forth therefor shall constitute an Event of Default:
(1) no later than three business days after the Petition
Date, entry by the Bankruptcy Court of the Interim Order;
(2) no later than 30 calendar days after the entry of the
Interim Order, entry by the Bankruptcy Court of the Final Order;
(3) no later than 30 calendar days after the Petition
Date, entry by the Bankruptcy Court of an order approving a motion
establishing bidding procedures in respect of the Sale, which order
shall be reasonably acceptable to the Required DIP Lenders;
(4) no later than 45 calendar days after the Petition
Date, submission of qualified bids in respect of the Sale;
(5) no later than 60 calendar days after the Petition
Date, the conduct of a sale hearing;
(6) no later than 65 calendar days after the Petition
Date, entry by the Bankruptcy Court of a sale order, which order
shall be reasonably acceptable to the Required DIP Lenders; and
(7) no later than 85 calendar days after the Petition
Date, consummation a Sale approved by the Bankruptcy Court.
(k) Events of Default: Each of following shall constitute an
"Event of Default":
(1) the entry of an Interim Order or Final Order in form
or substance that is not acceptable to the DIP Agent in its sole
discretion;
(2) failure by any Debtor to be in compliance in all
respects with provisions of this Term Sheet, the DIP Orders and/or
the Final Order (as applicable);
(3) any request made by the Debtors for, or the reversal,
modification, amendment, stay, reconsideration or vacatur of a DIP
Order, as entered by the Bankruptcy Court, without the prior
written consent of the DIP Agent and each DIP Lender;
(4) failure of any of the Case Milestones to be satisfied
by the Specified Deadline (as such Specified Deadlines may be
modified to accommodate the calendar of the Bankruptcy Court);
(5) failure of any representation or warranty to be true
and correct in all material respects (or, to the extent qualified
by materiality or Material Adverse Change, in all respects) when
made;
(6) the filing of any application by the Debtors (other
than the application for financing provided by a third party which
seeks authority to pay all of the DIP Obligations in full upon
entry of the order approving such financing) for the approval of
(or an order is entered by the Court approving) any claim arising
under Section 507(b) of the Bankruptcy Code or any other provision
of the Bankruptcy Code or any security, mortgage, collateral
interest or other lien in any of the Chapter 11 Cases which is pari
passu with or senior to the DIP Liens, excluding liens arising
under the DIP Orders, or pursuant to any other financing agreement
made with the prior written consent of the DIP Agent and each DIP
Lender;
(7) the commencement of any action by the Debtors or
other authorized person (other than an action permitted by the DIP
Orders) against any of the DIP Agent or any DIP Lender or any of
their agents and employees, to subordinate or avoid any liens made
in connection with the DIP Orders;
(8) (i) any Debtor files a pleading in any court seeking
or supporting an order to revoke, reverse, stay, vacate, amend,
supplement or otherwise modify any DIP Order or the Term Sheet, or
the disallow the DIP Obligations, in whole or in part, or (ii) any
material provision of the DIP Orders or Term Sheet, or any other
order of the Bankruptcy Court approving the Debtors' use of Cash
Collateral (as defined in the DIP Orders), shall for any reason
cease to be valid and binding (without the prior written consent of
the DIP Agent and each DIP Lender);
(9) the filing with the Bankruptcy Court of a motion
seeking approval of a sale under Section 363 (other than approval
of a sale pursuant to the terms of the Stalking Horse Agreement) or
a plan of reorganization or liquidation in any of the Chapter 11
Cases that, in either case, does not provide for indefeasible
payment in full in cash to the DIP Agent and the DIP Lenders of DIP
Loans and all other amounts outstanding under this Term Sheet, the
DIP Orders on closing of such sale or the effective date of such
plan;
(10) the appointment in any of the Chapter 11 Cases of a
trustee, receiver, examiner, or responsible officer with enlarged
powers relating to the operation of the business of any Debtor
(powers beyond those set forth in sections 1106(a)(3) and (a)(4) of
the Bankruptcy Code);
(11) the granting of relief from the automatic stay by
the Bankruptcy Court to any other creditor or party in interest in
the Chapter 11 Cases with respect to any portion of the DIP
Collateral exceeding $150,000 in value in the aggregate;
(12) since the Petition Date, the occurrence of any
Material Adverse Change; and
(13) failure to pay principal, interest or other DIP
Obligations in full when due, including without limitation, on the
Maturity Date.
As of the Petition Date, the Debtors have approximately
$103,188,208.08 in aggregate principal amount outstanding of funded
debt obligations.
Paper Source, Inc., as borrower, Pine Holdings, Inc. as guarantor,
MidCap Financial Trust, as administrative agent, the term loan
lenders party thereto from time to time, are party to a Credit and
Guaranty Agreement, dated as of May 22, 2019, which provides for a
first lien secured credit facility consisting of (a) a term loan A
commitment, which is scheduled to mature on May 22, 2024, (b) a
delayed draw term loan commitments, which matured on February 26,
2021, and (c) a revolving credit commitment, which is scheduled to
mature on May 22, 2024. The obligations under the First Lien
Credit Agreement are secured, subject to certain exceptions, by a
first priority lien on the Debtors' assets. As of the Petition
Date, approximately $55.1 million in Prepetition First Lien Term
Loan borrowings, $2.7 million in Fourth Amendment Delayed Draw Term
Loan borrowings, and $15.0 million in Prepetition First Lien
Revolving Credit Facility borrowings are outstanding under the
First Lien Credit Agreement.
Paper Source, Inc., as borrower, Pine Holdings, Inc. as guarantor,
Victory Park Management, LLC, as administrative agent, and certain
financial institutions as lenders, are party to a Credit and
Guaranty Agreement, dated as of May 22, 2019, which provides for a
second lien secured term credit facility consisting of a term
commitment of $25.0 million, which is scheduled to mature on
November 22, 2024. The obligations under the Prepetition Second
Lien Term Loan Agreement are secured, subject to certain
exceptions, by a second priority lien on the Debtors' assets. As
of the Petition Date, as a result of paid-in-kind interest that has
accrued and capitalized since the closing of the Prepetition Second
Lien Term Loan Agreement, and approximately $30,382,208.08 million
aggregate principal amount is outstanding under the Prepetition
Second Lien Term Loan Agreement.
Funds affiliated with, or managed by, Investcorp International Inc.
constitute the majority owners of the Debtors through their equity
holdings of debtor Pine Holdings, Inc. Debtor Pine Holdings, Inc.
has three classes of equity—Series A Common, Series D Common, and
Series A Convertible Preferred. MidCap Financial Trust and certain
affiliated funds own both nonvoting preferred equity and nonvoting
common equity in Pine Holdings, Inc. as a result of a capital
infusion transaction. Current and former management of the Debtors
own options to purchase common equity in Pine Holdings, Inc.
Moreover, the largest of the Debtors' Prepetition Second Lien
Lenders, VPC Special Opportunities Fund III Onshore, L.P. ("Victory
Park"), owns unexercised warrants, which, if exercised, would give
Victory Park the right to purchase common equity in Pine Holdings,
Inc.
"Immediate access to the DIP Facility and Cash Collateral
isessential to not only meet working capital and business operating
needs, but also to fund the administration of these chapter 11
cases, enabling the Debtors and their stakeholders to develop a
value-maximizing transaction... Moreover, the Debtors believe that
access to post-petition financing will help the Debtors stabilize
their operations, and restore the confidence of the Debtors'
landlords, the, customers, employees and other stakeholders at this
critical stage," the Debtors contend.
A full-text copy of the Debtor's Motion is available for free at
https://tinyurl.com/cawy7jsw from Epiq.
About Paper Source
Paper Source, Inc., operates as lifestyle brand and retailer of
premium paper products, crafting supplies and related gifts,
including custom invitations, greeting cards and personalized
stationery and stamps. It sells fine and artisanal papers, wedding
paper goods, books and gift wrap through its 158 domestic stores
and its e-commerce website. The Company's administrative
headquarters is in Chicago.
Paper Source, Inc., and Pine Holdings, Inc., sought Chapter 11
protection (Bankr. E.D. Va. Case No. 21-30660) on March 2, 2021.
Paper Source estimated assets and debt of $100 million to $500
million as of the bankruptcy filing.
The Hon. Keith L. Phillips is the case judge.
The Debtors tapped WILLKIE FARR & GALLAGHER LLP as bankruptcy
counsel; WHITEFORD TAYLOR & PRESTON LLP as bankruptcy co-counsel;
M-III ADVISORY, LP as restructuring advisor; and SSG CAPITAL
ADVISORS, LLC, as investment banker. A&G REAL ESTATE PARTNERS is
the real estate advisor. EPIQ CORPORATE RESTRUCTURING, LLC, is the
claims agent.
PARK RIVER: Fitch Affirms 'B' LongTerm IDR, Outlook Stable
----------------------------------------------------------
Fitch Ratings has affirmed the ratings of Park River Holdings,
Inc., including its Long-Term Issuer Default Rating (IDR) at 'B'
and ABL at 'BB'/'RR1' following the completion of the financing
transactions in conjunction with the acquisition of PrimeSource
Building Products, Inc. by Clearlake Capital Partners, LP and
merger of the company with TKE Holdings (Dimora Brands). In
addition, Fitch has assigned final 'B+'/'RR3' ratings to Park
River's senior secured term loan, and 'CCC+'/'RR6' ratings to the
senior unsecured notes. The Rating Outlook is Stable.
Park River's IDR reflects the elevated leverage level following the
acquisition of PrimeSource by Clearlake Capital Partners, L.P. and
the subsequent combination of PrimeSource with Dimora Brands. The
IDR also reflects the company's competitive position within the
fragmented building products distribution market, its exposure to
the cyclical residential construction end-market, and modest
profitability and FCF metrics.
Fitch's expectation for residential housing growth and a
stabilizing commodity environment in 2021 supports modest
deleveraging in the intermediate term through EBITDA growth and FCF
allocated to debt reduction. The company's large scale, breadth of
product offerings, extended debt maturity schedule and adequate
liquidity positions are also factored into the ratings.
The Stable Outlook reflects the expectation that the company will
lower Fitch-calculated total debt to operating EBITDA to below 6.5x
by the end of 2021 from a combination of EBITDA growth and debt
reduction. Fitch's rating case assumes a stable economic
environment in 2021. Negative rating actions may occur if Fitch
expects leverage to sustain above 6.5x beyond YE 2022.
KEY RATING DRIVERS
Impact of Final Financing: Fitch believes the final financing terms
of the transaction will have a neutral impact on Park River's
overall credit profile. While the incremental unsecured debt
(unsecured notes increased to $400 million from $345 million)
increases Fitch-calculated total debt to operating EBITDA by about
0.25x, the upsized and undrawn ABL provides the company with some
additional liquidity. However, the company's relatively higher
leverage level will make deleveraging slightly more difficult
(particularly if the economic environment is softer than
anticipated), and could result in negative rating action if Fitch's
expectations are for leverage to remain above 6.5x beyond 2022.
Combination of PrimeSource and Dimora Brands: In December 2020,
Clearlake Capital Partners, L.P. completed the acquisition of
PrimeSource, a leading distributor and provider of specialty
building materials serving residential, commercial and industrial
new construction and remodeling markets. Clearlake subsequently
merged PrimeSource with Dimora Brands, a designer, manufacturer and
seller of hardware and home accessories. The combined company, Park
River Holdings, Inc., has an extensive distribution network and
broad product offering of more than 52,000 SKUs, and pro forma
revenues of about $1.68 billion.
Elevated Leverage Levels: Following the close of the acquisitions
and related refinancing, Park River's pro forma Fitch-calculated
total debt to operating EBITDA is expected to be around 7.1x. Fitch
expects the company to delever through EBITDA growth and by
allocating FCF towards debt repayment. The strong residential
housing backdrop through at least the first half of 2021 supports
modest, albeit slow, deleveraging. Fitch's rating case projects
total debt to operating EBITDA to be around 6.4x at the end of 2021
and 5.7x at YE 2022.
Modest Overall Competitive Position: The company's competitive
position is relatively weak compared to more highly-rated building
products manufacturers in Fitch's coverage, due to its position as
a distributor and provider in the supply chain, the highly
fragmented nature of the industry, and some commoditized product
offerings. Fitch believes the company's scale, broad product
offering, and brand equity associated with its proprietary brands
such as Grip-Rite and Pro-Twist provide competitive advantages
relative to other building products distributors, as demonstrated
by its higher pro forma profitability margins.
Management believes the company has the #1 position within the
construction fastener distribution market, with around 21% share.
The combination with Dimora Brands provides Park River with a broad
product offering, manufacturing operations, and an extensive
distribution network.
Balanced End-Market Exposure: While about 40% of sales are directed
to the highly-cyclical residential construction end-market,
management estimates that the remaining 60% are directed to
relatively-stable repair and replacement activity. Park River's
substantial exposure to repair and replacement reflects positively
on the credit profile when compared with other building products
distributors with more exposure to the cyclical new construction
end-markets. Through the construction cycle, Park River's credit
metrics and profitability are expected to be slightly more stable
than peers with less exposure to repair and replacement driven
demand.
Modest Profitability: Park River's profitability metrics are
commensurate with building products issuers in the 'B' category and
are modestly higher than its large distributor peers.
Fitch-adjusted EBITDA margins have historically been in the 7%-9%
range for PrimeSource, while FCF margins have been in the
low-single-digit range. Pro forma for the merger, Fitch expects
EBITDA margins to situate in the 12%-13% range during the forecast
period, driven by Dimora's relatively higher margins and some
fixed-cost synergies.
The company's variable cost structure and ability to wind down
working capital should help preserve positive FCF and support
liquidity through a modest construction downturn, but material
declines in EBITDA margins could lead to unsustainably-high
leverage levels.
Broad Product Offering: The combined company provides a broad
product offering of more than 52,000 SKUs, including a
well-recognized portfolio of proprietary branded products (which
carry higher gross margins) that represent more than 60% of pro
forma sales. Park River's breadth of offerings and the 'one-stop
shop' nature of the business provide modest competitive advantages
relative to smaller distributors with only a local presence and
limited product offerings. This product breadth enhances customer
relationships, provides some competitive advantage over smaller
distributors and diversifies the company's supplier base.
DERIVATION SUMMARY
Park River Holdings, Inc. has weaker credit and profitability
metrics than Fitch-rated public building products manufacturers,
which are concentrated in low-investment grade rating categories.
These peers typically have total debt to operating EBITDA of less
than or equal to 3.0x, global operating profiles, and market
positions compared with Park River.
The company is smaller in scale but has similar profitability
metrics, product offerings, and credit metrics as its closest
publicly-traded peer, Beacon Roofing Supply, Inc. (BECN). Park
River and BECN also have similar end-market exposure, though BECN
has a bit more exposure to the less-cyclical repair and replacement
sector. Park River has similar leverage metrics as LBM Acquisition,
LLC (B/Stable). LBM is meaningfully larger but has lower EBITDA
margins and higher exposure to the new construction market compared
with Park River.
KEY ASSUMPTIONS
-- Fitch estimates pro forma total debt to operating EBITDA to be
about 7.1x at the close of the acquisitions and remarketing
transactions;
-- Low-single-digit organic revenue growth in 2021 supported by
residential housing strength, partially offset by weakness in
repair and replacement;
-- Fitch-adjusted EBITDA margins sustain in the 12%-13% range;
-- FCF margins consistently in the low- to mid-single digits;
-- Total pro forma debt to operating EBITDA of 6.4x at YE 2021
and 5.7x at YE 2022 and EBITDA/interest paid around 2.5x-3.0x.
Recovery Analysis Assumptions
The recovery analysis assumes that Park River would be considered a
going-concern (GC) in bankruptcy and that the company would be
reorganized rather than liquidated. Fitch has assumed a 10%
administrative claim.
Fitch's GC EBITDA estimate of $173 million estimates a
post-restructuring sustainable level of EBITDA. This is about 17%
below Fitch calculated pro-forma EBITDA for the LTM ending Sept.
30, 2020.
The GC EBITDA is based on Fitch's assumption that distress would
arise from weakening in the housing market, combined with losses of
certain customers. Fitch estimates annual revenues that are about
10% below Fitch-forecasted 2020 pro forma levels, and
Fitch-adjusted EBITDA margins of about 11% (roughly 100 bps below
Sept. 30, 2020 pro forma EBITDA margins) would capture the lower
revenue base of the company after emerging from a housing downturn,
plus a sustainable margin profile after right sizing, which leads
to Fitch's $173 million GC EBITDA assumption.
Fitch assumed a 5.5x EV multiple to calculate the going-concern EV
in a recovery scenario. The 5.5x multiple is below the 9.1x
purchase multiple when Bain Capital acquired LBM Acquisition, LLC
in December 2020. This is also below the 8.4x EBITDA multiple when
BLDR acquired ProBuild for $1.6 billion in 2015. Additionally,
Beacon Roofing Supply acquired distributor Allied Building Products
for $2.6 billion in 2017 at an 8.7x multiple. Fitch does not have
recent data on recovery multiples for building products
distributors.
The ABL revolver is assumed to be 70% drawn at default, which
accounts for potential shrinkage in the available borrowing base
during a contraction in revenues that provokes a default, and is
assumed to have priority-ranking claims to the term loan in the
recovery analysis. The analysis results in a recovery corresponding
to an 'RR1' for the $405 million ABL facility, a recovery
corresponding to an 'RR3' for the $1.095 billion secured term loan
and a recovery corresponding to an 'RR6' for the $400 million
senior unsecured notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch's expectation that total debt-to-operating EBITDA will
be sustained below 5.0x;
-- The company lowers its end-market exposure to the new home
construction market in order to reduce earnings cyclicality
and credit metric volatility through the housing cycle;
-- The company maintains a strong liquidity position with no
material short-term debt obligations.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch's expectation that total debt-to-operating EBITDA will
be sustained above 6.5x;
-- Operating EBITDA/Interest paid falls below 2.0x;
-- Fitch's expectation that FCF generation will approach neutral
or fall to negative.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: Park River has an adequate liquidity position
given the ABL capacity of $405 million, which was undrawn upon the
close of the transactions. Fitch expects FCF generation and its ABL
will provide the company with ample liquidity to fund its
operations. Fitch's rating case forecasts operating EBITDA to
interest paid to sustain in the 2.5x-3.0x range over the forecast
period
Long-dated Maturity Schedule: The company has no meaningful debt
maturities until December 2025, when its ABL comes due. The term
loan does not mature until December 2027, while the senior
unsecured notes come due in February 2029. The term loan amortizes
at 1% annually and is subject to an ECF sweep.
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.
PBS BRAND: Hires B. Riley, Appoints Mark Shapiro as Co-CRO
----------------------------------------------------------
PBS Brand Co LLC and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to hire B. Riley
Advisory Services and appoint Mark Shapiro to serve as chief
restructuring officer.
B. Riley has agreed to assist the Debtors in evaluating and
implementing strategic and tactical options. In addition, the firm
has agreed to provide additional personnel to assist the CRO and
perform financial advisory services for the Debtor.
The work to be performed by Mr. Shapiro and his firm will not
duplicate the work being performed by Edward Gavin, Gavin/Solmonese
LLC's managing director, who also serves as CRO for the Debtors.
B. Riley will bill a fixed rate of $80,000 for its services through
April 30, plus out-of-pocket expenses. If the matter extends
beyond April 30, its fee will be billed at a fixed rate of $7,500
per week, plus out-of-pocket expenses.
Mr. Shapiro disclosed in a court filing that his firm neither holds
nor represents any interest adverse to the Debtors' estates.
B. Riley can be reached through:
Mark Shapiro
B. Riley Advisory Services
3500 Maple Avenue, Suite 420
Dallas, TX 75219
Tel: (972) 794-1050
Email: www.brileyfin.com
About PBS Brand Co.
Denver-based PBS Brand Co. LLC and its affiliates own and operate
"Punch Bowl" restaurants and bars across the United States.
PBS Brand Co. and its affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 20-13157) on Dec. 21, 2020. Stacy
Johnson Galligan, authorized representative, signed the petitions.
At the time of the filing, PBS Brand disclosed assets of between
$10 million and $50 million and liabilities of the same range.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Morris James LLP as their legal counsel; SSG
Advisors, LLC as investment banker; Omni Agent Solutions as the
claims, noticing and balloting agent; and Gavin/Solmonese LLC and
B. Riley Advisory Services as restructuring advisors. Edward Gavin
of Gavin/Solmonese and Mark Shapiro of B. Riley both serve as chief
restructuring officers.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors on Jan. 6, 2021. Porzio, Bromberg & Newman,
P.C., and Province, LLC serve as the committee's legal counsel and
financial advisor, respectively.
PEELED INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: Peeled Inc.
DBA Peeled Snacks
750 Old Hickory Blvd Building 2
Suite 150
Brentwood, TN 37027
Business Description: Peeled Inc. -- https://peeledsnacks.com --
is a manufacturer of "healthy" snacks
offering organic, gluten-free, vegan,
kosher options.
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
District of Delaware
Case No.: 21-10513
Debtor's
Legal Counsel: SUGAR FELSENTHAL GRAIS & HELSINGER LLP
Debtor's
Co-Counsel: David W. Carickhoff, Esq.
ARCHER & GREINER, P.C.
300 Delaware Avenue, Suite 1100
Wilmington, DE 19801
Tel: 302-777-4350
Email: dcarickhoff@archerlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Kenneth R. Yager, chief restructuring
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/R7BYPPA/Peeled_Inc__debke-21-10513__0001.0.pdf?mcid=tGE4TAMA
PERFORMANCE AIRCRAFT: Hires Chuhak & Tecson as Special Counsel
--------------------------------------------------------------
Performance Aircraft Leasing, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Illinois to hire
Chuhak & Tecson, P.C. as its special counsel.
The Debtor needs the firm's legal assistance in a case filed by XL
Specialty Insurance Company against it in the Circuit Court of Cook
County and in a third party complaint the Debtor filed against LL
Johns & Associates Inc.
Chuhak & Tecson does not have any interest adverse to the Debtor's
creditors and equity security holders, according to court filings.
The firm can be reached through:
Stephen A. Wood, Esq.
Carri A. Conlon, Esq.
Chuhak & Tecson, P.C.
30 S Wacker Dr Ste 2600
Chicago, IL 60606
Phone: +1 312-444-9300
About Performance Aircraft Leasing
Performance Aircraft Leasing, Inc., a corporation that leases
aircraft, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. N.D. Ill. Case No. 21-02211) on Feb. 19, 2021. In the
petition signed by Edward H. Wachs, president, the Debtor disclosed
$327,921 in assets and $3,684,754 in liabilities.
Judge Donald R. Cassling oversees the case.
Golan Christie Taglia, LLP and Chuhak & Tecson, PC serve as the
Debtor's bankruptcy counsel and special counsel, respectively.
PG&E CORP: Securities Plaintiffs Have Until Mar. 9 to File Brief
----------------------------------------------------------------
Judge Haywood S. Gilliam, Jr. of the United States District Court
for the Northern District of California, Oakland Division, approved
the Stipulation between the Securities Plaintiffs Public Employees
Retirement Association of New Mexico, York County on behalf of the
County of York Retirement Fund, City of Warren Police and Fire
Retirement System, and Mid-Jersey Trucking Industry & Local No. 701
Pesion Fund, and Appellee Official Committee of Tort Claimants.
The Securities Plaintiffs commenced the bankruptcy appeal on July
2, 2020. On September 3, 2020, Securities Plaintiffs filed a
principal brief together with a multi-volume appendix. On October
5, 2020, Reorganized Debtors-Appellees PG&E Corporation and Pacific
Gas and Electric Company filed a brief and an appendix. On the
same day, Appellee Official Committee of Tort Claimants filed a
brief and an appendix. On October 26, 2020, Securities Plaintiffs
filed a reply brief in further support of their appeal. On
February 16, 2021, Appellee TCC filed a motion to dismiss the
appeal.
Pursuant to Bankruptcy Rule 8013(a)(3)(A), Securities Plaintiffs
currently have until February 23, 2021 to file a brief in
opposition to the TCC's Motion to Dismiss. The TCC's Motion to
Dismiss is noticed to be heard on May 13, 2021, at 2:00 p.m;
Securities Plaintiffs said that the requested enlargement of time
will have a negligible, if any, impact on the timeframe for the
resolution of this appeal in light of the TCC's Motion to Dismiss
hearing date being just under three months away.
The Stipulation contains these relevant terms:
1. Securities Plaintiffs-Appellants shall have an additional
14 days, through and including March 9, 2021, to file their brief
in opposition to the TCC's motion to dismiss.
2. Appellee TCC shall have seven days, through and including
March 16, 2021, to file their reply brief.
The case is In re: PG&E CORPORATION and PACIFIC GAS AND ELECTRIC
COMPANY, Debtors, Case No. No. 20-CV-04567 HSG (N.D. Cal.). A
full-text copy of the Stipulation and Order Enlarging Time to File
Securities Plaintiffs-Appellants' Brief in Opposition to the TCC's
Motion to Dismiss, dated February 23, 2021, is available at
https://tinyurl.com/va5ht5c from Leagle.com.
Securities Lead Plaintiff-Appellant Public Employees Retirement
Association of New Mexico and the Class are represented by:
Thomas A. Dubbs, Esq.
Carol C. Villegas, Esq.
Jeffrey A. Dubbin, Esq.
LABATON SUCHAROW LLP
140 Broadway
New York, NY 10005
Telephone: 212-907-0700
Email: tdubbs@labaton.com
cvillegas@labaton.com
jdubbin@labaton.com
- and -
Michael S. Etkin, Esq.
Andrew Behlmann, Esq.
LOWENSTEIN SANDLER LLP
One Lowenstein Drive
Roseland, NJ 07068
Telephone: 973-597-2500
Email: metkin@lowenstein.com
abehlmann@lowenstein.com
- and -
Randy Michelson, Esq.
MICHELSON LAW GROUP
220 Montgomery St, Suite 2100
San Francisco, CA 94104
Telephone: 415-512-8600
Email: randy.michelson@michelsonlawgroup.com
About PG&E Corp.
PG&E Corporation (NYSE: PCG) -- http://www.pgecorp.com/-- is a
Fortune 200 energy-based holding company, headquartered in San
Francisco. It is the parent company of Pacific Gas and Electric
Company, an energy company that serves 16 million Californians
across a 70,000-square-mile service area in Northern and Central
California.
As of Sept. 30, 2018, the Debtors, on a consolidated basis, had
reported $71.4 billion in assets on a book value basis and $51.7
billion in liabilities on a book value basis.
PG&E Corp. and Pacific Gas employ approximately 24,000 regular
employees, approximately 20 of whom are employed by PG&E Corp. Of
Pacific Gas' regular employees, approximately 15,000 are covered by
collective bargaining agreements with local chapters of three labor
unions: (i) the International Brotherhood of Electrical Workers;
(ii) the Engineers and Scientists of California; and (iii) the
Service Employees International Union.
On Jan. 29, 2019, PG&E Corp. and its primary operating subsidiary,
Pacific Gas and Electric Company, filed voluntary Chapter 11
petitions (Bankr. N.D. Cal. Lead Case No. 19-30088).
PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company, said they are facing extraordinary challenges
relating to a series of catastrophic wildfires that occurred in
Northern California in 2017 and 2018. The utility said it faces an
estimated $30 billion in potential liability damages from
California's deadliest wildfires of 2017 and 2018.
Weil, Gotshal & Manges LLP and Cravath, Swaine & Moore LLP are
serving as PG&E's legal counsel, Lazard is serving as its
investment banker and AlixPartners, LLP is serving as the
restructuring advisor to PG&E. Prime Clerk LLC is the claims and
noticing agent.
In order to help support the Company through the reorganization
process, PG&E has appointed James A. Mesterharm, a managing
director at AlixPartners, LLP, and an authorized representative of
AP Services, LLC, to serve as Chief Restructuring Officer. In
addition, PG&E appointed John Boken also a Managing Director at
AlixPartners and an authorized representative of APS, to serve as
Deputy Chief Restructuring Officer. Mr. Mesterharm, Mr. Boken and
their colleagues at AlixPartners will continue to assist PG&E with
the reorganization process and related activities. Morrison &
Foerster LLP, as special regulatory counsel. Munger Tolles & Olson
LLP is special counsel.
The Office of the U.S. Trustee appointed an official committee of
creditors on Feb. 12, 2019. The Committee retained Milbank LLP as
counsel; FTI Consulting, Inc., as financial advisor; Centerview
Partners LLC as investment banker; and Epiq Corporate
Restructuring, LLC as claims and noticing agent.
On Feb. 15, 2019, the U.S. trustee appointed an official committee
of tort claimants. The tort claimants' committee is represented by
Baker & Hostetler LLP.
PG&E Corporation and Pacific Gas and Electric Company announced
July 1, 2020, that PG&E has emerged from Chapter 11, successfully
completing its restructuring process and implementing PG&E's Plan
of Reorganization that was confirmed by the Bankruptcy Court on
June 20, 2020.
PRA HEALTH: S&P Places 'BB' ICR On Watch Developing
---------------------------------------------------
S&P Global Ratings placed its 'BB' issuer credit rating on PRA
Health Sciences Inc. (PRAH) on CreditWatch with developing
implications.
The CreditWatch placement follows the company's announcement that
it is being acquired by ICON PLC. S&P said, "We placed our 'BBB-'
issuer credit rating on ICON on CreditWatch with negative
implications to reflect that we may lower our rating on the company
by one or more notches depending on the final amount of incremental
debt raised."
PROFESSIONAL FINANCIAL: Affiliate Gets OK to Hire Real Estate Agent
-------------------------------------------------------------------
Professional Investors Security Fund, Inc., an affiliate of
Professional Financial Investors, Inc., received approval from the
U.S. Bankruptcy Court for the Northern District of California to
employ Sally Forster-Jones of Compass Concierge Services, LLC as
its real estate agent.
The Debtor requires the services of a real estate agent to sell two
residential real properties located at 19236 Pacific Highway,
Malibu, Calif., and 3830 Hayvenhurst Drive, Encino, Calif.
Compass Concierge, an affiliate of Compass California, Inc., is
authorized to advance all or a portion of the costs for its
services in the total amount of $40,000 for the Malibu property and
$20,000 for the Encino property.
The firm can be reached through:
Sally Forster-Jones
Compass California, Inc.
3717 S. La Brea Avenue, Suite 102
Los Angeles CA 90016
Phone: 310-652-6285
About Professional Financial Investors
Professional Financial Investors, Inc. and Professional Investors
Security Fund, Inc. are both engaged in activities related to real
estate.
On July 16, 2020, a group of creditors filed an involuntary Chapter
11 petition (Bankr. N.D. Calif. Case No. 20-30579) against
Professional Investors Security Fund. On July 26, 2020,
Professional Financial Investors sought Chapter 11 protection
(Bankr. N.D. Calif. Case No. 20-30604). On Nov. 20, 2020,
Professional Financial Investors filed involuntary Chapter 11
petitions against Professional Investors Security Fund I, A
California Limited Partnership and 28 other affiliates. The cases
are jointly administered under Case No. 20-30604.
At the time of the filing, Professional Financial Investors
disclosed assets of between $100 million and $500 million and
liabilities of the same range.
Judge Dennis Montali oversees the cases.
The Debtors tapped Sheppard, Mullin, Richter & Hampton, LLP, as
their legal counsel; Trodella & Lapping LLP as conflicts counsel;
Ragghianti Freitas LLP, Weinstein & Numbers LLP, Wilson Elser
Moskowitz Edelman & Dicker LLP, Nardell Chitsaz & Associates, and
Kimball Tirey & St. John, LLP as special counsel; and Armanino LLP
as tax accountants and financial advisors. Donlin, Recano &
Company, Inc. is the claims, noticing, and solicitation agent and
administrative advisor.
FTI Consulting Inc. serves as the Debtors' financial advisor.
Andrew Hinkelman, senior managing director at FTI, is the chief
restructuring officer.
On Aug. 19, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. The committee is represented by
Pachulski Stang Ziehl & Jones, LLP.
QUALITY PERFORATING: Seeks to Hire Joseph M. Alu as Accountant
--------------------------------------------------------------
Quality Perforating, Inc. seeks authority from the U.S. Bankruptcy
Court for the Middle District of Pennsylvania to hire Joseph M. Alu
& Associates, P.C. as its accountant.
The firm's services include:
(a) prepare final federal and state tax returns for year-end
Dec. 31, 2020;
(b) prepare financial statements for year-end Dec. 31, 2021;
(c) assist the Debtor in preparing financial statements as
required;
(d) assist the Debtor in preparing internal and external
reports as necessary in connection with bidding and maintaining
contracts; and
(e) handle any and all other accounting and tax related
problems, which may arise during the course of the administration
of the estate.
The firm will be paid a flat fee of $2,500.
Joseph M. Alu & Associates does not represent interests adverse to
the Debtor's estate in matters upon which it is to be engaged,
according to court filings.
The firm can be reached through:
Joseph M. Alu, CPA
Joseph M. Alu & Associates, P.C.
321 Spruce Street, Suite 1000
Scranton, PA 18503
Phone: 570-342-0405
About Quality Perforating
Quality Perforating, Inc., a manufacturer of perforated sheets,
coils and component parts, sought Chapter 11 protection (Bankr.
M.D. Pa. Case No. 20-03561) on Dec. 16, 2020. Quality Perforating
President Robert W. Farber signed the petition. In the petition,
the Debtor disclosed total assets of $3,608,042 and total
liabilities of $9,820,041.
Judge Robert N. Opel II oversees the case.
The Debtor tapped the Law Offices of Mark J. Conway, P.C. as its
legal counsel and Joseph M. Alu & Associates, P.C. as its
accountant.
R. INVESTMENTS: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: R. Investments, RLLP
1624 Market Street, Suite 226 #24937
Denver, CO 80202
Business Description: R. Investments is engaged in activities
related to real estate.
Chapter 11 Petition Date: March 4, 2021
Court: United States Bankruptcy Court
District of Colorado
Case No.: 21-11011
Debtor's Counsel: Patrick R. Akers, Esq.
MOYE WHITE LLP
1400 16th Street, 6th Floor
Denver, CO 80202-1486
Tel: (303) 292-2900
Email: patrick.akers@moyewhite.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $10 million to $50 million
The petition was signed by William Travis Steffens, CEO.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A copy of the petition is available for free at PacerMonitor.com
at:
https://www.pacermonitor.com/view/QKEMB6I/R_Investments_RLLP__cobke-21-11011__0001.0.pdf?mcid=tGE4TAMA
ROOSEVELT UNIVERSITY: Moody's Affirms B1 on $35MM Series 2007 Bonds
-------------------------------------------------------------------
Moody's Investors Service has revised Roosevelt University's (IL)
outlook to stable from negative and affirmed the B1 on
approximately $35 million of Series 2007 revenue bonds. The bonds
were issued through the Illinois Finance Authority.
RATINGS RATIONALE
The revision of the outlook to stable reflects the low likelihood
of deterioration of Roosevelt's wealth and liquidity over the next
year as operating deficits are holding steady despite the impact of
the coronavirus pandemic and federal relief funding provides near
term support. The acquisition of certain assets and liabilities of
Robert Morris University Illinois (RMUI) is complete and hasn't
consumed a material amount of Roosevelt's financial resources.
The affirmation of the B1 reflects Roosevelt's very high financial
leverage and associated fixed costs that continue to remain
unaffordable at its current scale, resulting in fundamental
financial imbalance and an unsustainable operating model absent
material changes. Management continues to seek revenue growth
through acquisition opportunities and expanded offerings. At the
same time, expenses are being rationalized through structural
changes to the faculty and staff ranks, a recent debt restructuring
and other budget relieving measures. The recent integration with
RMUI impacted a portion of fiscal 2020 results and enables
Roosevelt to offer additional programs and other opportunities to
its students, but does not eliminate longer term fundamental
challenges in student recruitment.
Roosevelt retains highly valuable and marketable real estate that
secures the Series 2018A, 2018B, 2019A, 2020A and 2020B bonds,
while the rated Series 2007 bonds do not have the same secured
interest in collateral.
RATING OUTLOOK
The stable outlook reflects Moody's expectations that wealth and
liquidity will remain relatively flat over the next year and that
operating performance in fiscal 2021 will not deviate significantly
from the deficit generated in fiscal 2020. It also acknowledges
that management will continue to work on expense management while
pursuing topline revenue growth opportunities.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
- Substantial and sustained improvement in operating performance
that provides over 1.0x debt service coverage
- Significant strengthening of student market evidenced by
sustained growth of net tuition revenue and enrollment stability
- Material growth of cash and investments and liquidity relative
to debt and operations
- Substantial deleveraging so that fixed costs become more
affordable
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
- Decline of unrestricted liquidity
- Inability to show improvement in operating performance by fiscal
2022 or deeper than expected deficit in fiscal 2021
- Failure to stabilize enrollment and grow net tuition revenue
LEGAL SECURITY
All bonds are a general obligation, secured by the university's
gross revenues. The unrated Series 2018A, 2018B, 2019A, 2020A and
2020B bonds have a cash-funded debt service reserve fund (DSRF) and
a mortgage pledge on the university's Schaumburg campus and most of
the university's Chicago campus. There is an additional bonds test.
The Series 2007 bonds do not have a DSRF or a mortgage pledge.
The Series 2018A, 2018B, 2019A, 2020A and 2020B bonds contain an
unrestricted cash and investments to MADS covenant that is tested
twice annually. Roosevelt must maintain coverage of no less than
150% through fiscal 2022, no less than 175% in fiscal years 2023
and 2024, and no less than 200% in fiscal 2025 and beyond. Failure
to do so would require consultative review with a cure period that
extends several years. As of the last reporting date, Roosevelt
reported over 2.0x coverage.
PROFILE
Founded in 1945, Roosevelt University is a moderate sized private
university offering undergraduate, graduate, and professional
degree programs at its campuses in downtown Chicago and in
Schaumburg, a northwest suburb of Chicago, and online. The
university enrolled 4,306 full-time equivalent students in Fall
2020, and increase of 20% and reflecting the integration with
Robert Morris University Illinois.
METHODOLOGY
The principal methodology used in this rating was Higher Education
published in May 2019.
SANCHEZ TRUCKING: Seeks Cash Collateral Access
----------------------------------------------
Sanchez Trucking Transport, LLC asks the U.S. Bankruptcy Court for
the Northern District of Texas, Lubbock Division, for authority to
use cash collateral and provide adequate protection.
The Debtor has $2,174.32 held in a checking account at Lubbock
National Bank of Lubbock, Texas. The deposit account may be
subject to the lien of the Internal Revenue Service.
The counsel of the Debtor has not had the opportunity to analyze
the security position of the $273.45 held on deposit at First State
Bank Shallowater and can reach no conclusion as to its validity or
perfection against such account at this time.
The continued use of the funds in the Lubbock National Bank
checking account is essential for payment of current operating
expenses and continuation of the estate's business.
Emitero Sanchez, owner of Sanchez Trucking, is prepared to testify
at a cash collateral hearing, if one is held, that the amount of
the collateral held in the checking account will be enhanced in
value by the estate's continued operation.
As adequate protection for the use of cash collateral, the estate
proposes to grant a lien on post-petition assets of the same class
as those in which there exists a properly perfected prepetition
security interest, which would secure the allowed secured claims of
the IRS.
The Debtor believes that its business operations are subject to
reorganization. The cash flow projection indicates that the Debtor
will have sufficient funds to make the cash collateral payment.
A copy of the motion is available at https://bit.ly/2OmW8fe from
PacerMonitor.com.
About Sanchez Trucking Transport, LLC
Sanchez Trucking Transport, LLC is a locally owned company based
out of Petersburg, Texas. The company started business in 1995. The
Debtor hauls agriculture commodities fromPetersburg Coop Gin. In
addition, it also hauls manure from South Plains Compost. The
Debttor mainly work locally, but in the past it has hauled products
state wide.
The Debtor filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 21-50007) on Jan.
23, 2021.
Judge Robert L. Jones oversees the case.
Tarbox Law, PC, led by Max R. Tarbox, Esq., serves as the Debtor's
counsel.
SANTA CLARITA: Plans to Sell Whittaker-Bermite Site to Prologis
---------------------------------------------------------------
Tammy Murga of The Signal reports that Santa Clarita LLC, which
owns the undeveloped 900-plus-acre Whittaker-Bermite site, recently
filed for voluntary bankruptcy, and is working to sell it to a
global industrial real estate company for possible commercial and
residential development, officials said Wednesday, March 3, 2021.
In November 2020, Santa Clarita LLC filed for Chapter 11
bankruptcy, listing assets of up to $1 billion and debts ranging
from $100 million to $500 million, a move that was designed to sell
the property to Prologis Inc. and help Santa Clarita LLC pay its
creditors, according to Christopher Bayley, an attorney
representing the company.
"What would end up happening is that ... when the (offer) closes,
the money would then, from the sale, go to Santa Clarita LLC and it
would be able to pay all of its creditors in full and pay everybody
off that has allowed claims under the bankruptcy code," said
Bayley.
The Whittaker-Bermite site is located in the center of the city,
surrounded on each direction by Soledad Canyon Road, Golden Valley
Road, Railroad Avenue and Circle J Ranch. Starting in the 1930s,
the area served as the production site of dynamite, fireworks and
oil field explosives. Years of manufacturing left behind chemicals
and waste byproducts in the soil and groundwater even after
operations fully ceased in 1987.
In 1995, Santa Clarita City Council members approved a development
plan, dubbed the Porta Bella specific plan, that consisted of 1,200
single-family residential units and 1,600 multi-family homes, 96
acres for commercial and business use, as well as 400 acres of open
space. The agreement was to also build millions of dollars of
public infrastructure and have the site remediated before
development, according to the city's Whittaker-Bermite website.
Last year, the cleanup of the site was declared completed after two
decades, although complete water cleanup efforts continue.
Santa Clarita LLC bought the site from Whittaker Corp. in 1999 and,
in 2019, Arizona-based Remediation Financial Inc. bought Santa
Clarita LLC, according to RFI CEO David Lunn. On Feb. 9, the
California Department of Toxic Substances Control released its hold
on the property for $1.4 million as soil and groundwater cleanup
took place, according to Jose Diaz, senior project manager for the
state department.
Liens are placed against property so that creditors, such as banks
and credit unions, can collect what is owed to them. Owners are
then given full and clear title to the property once liens are
removed.
Prologis officials did not return requests for comment Wednesday
but Lunn said Wednesday the global real estate company is looking
to team up with a Santa Clarita Valley home builder to bring the
Porta Bella specific plan to fruition.
The city and Santa Clarita LLC continue discussions over whether
the development agreements are still in place.
"We're trying to work with the city for them to agree that the
development agreements are still in place," said Lunn, adding that
the company is also working with Prologis to access federal grants
for infrastructure laid out on the Porta Bella plan.
Due to a pending claim, the city cannot comment on the matter, said
City Communications Manager Carrie Lujan.
Meanwhile, Santa Clarita LLC filed a complaint Tuesday, March 2,
2021, against Blue Ox Holdings LLC, challenging claims that have
been filed by claimants or creditors in the bankruptcy that are
"seeking to be paid large sums of money in which the debtor (Santa
Clarita LLC) doesn't agree with," said Bayley.
The attorney added there could be more complaints filed.
About Santa Clarita LLC
Santa Clarita, LLC, was formed in 1998 by Remediation Financial,
Inc. ("RFI") for the sole purpose of acquiring a real property
consisting of approximately 972 acres of undeveloped land generally
located at 22116 Soledad Canyon Road, Santa Clarita, California
(the "Property"). The Debtor purchased the Property from Whittaker
Corporation. Whittaker used the Property to manufacture munitions
and related items for the U.S. Department of Defense (the "DOD").
The soil and groundwater on the Property suffered environmental
contamination thus the property required remediation before the
Property could be developed.
On or about January 2019, the controlling interest in RFI was
acquired by Glask Development, LLC. Glask Development, LLC has two
members, K&D Real Estate Consulting, LLC and Gracie Gold
Development, LLC. The Debtor's sole member and manager is RFI.
Santa Clarita filed a voluntary petition for relief under Chapter
11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 20-12402) on
Nov. 12, 2020. The petition was signed by David W. Lunn, chief
executive officer of Remediation Financial, Inc., manager of the
Debtor. At the time of filing, the Debtor estimated $100 million
to $500 million in assets and $500 million to $1 billion in
liabilities. Judge Madeleine C. Wanslee oversees the case. Thomas
H. Allen, Esq., at Allen Barnes & Jones, PLC, is Debtor's legal
counsel.
SCIENTIFIC GAMES: Widens Net Loss to $548 Million in 2020
---------------------------------------------------------
Scientific Games Corporation filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$548 million on $2.72 billion of total revenue for the year ended
Dec. 31, 2020, compared to a net loss of $118 million on $3.40
billion of total revenue for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $7.98 billion in total assets,
$10.51 billion in total liabilities, and a total stockholders'
deficit of $2.52 billion.
"While 2020 certainly had unforeseen challenges, I couldn't be more
proud of our team for successfully navigating through them. The
strong execution coupled with the diversity of our business enabled
positive cash flow. As we start off the year, I am truly excited
about the team, products, and game franchises that should enable
share gains, deal wins, and opportunities to enter new genres. The
executive team and our Board are working purposefully to transform
our Company, capitalize on the evolving industry trends and deliver
outsized returns to our Shareholders," Barry Cottle, chief
executive officer and president of Scientific Games, said.
Michael Eklund, chief financial officer of Scientific Games, added,
"We continued to execute, having driven cash flow improvements in
the fourth quarter despite a number of COVID-19 related
restrictions to our land-based business. The focus remains on
disciplined cost and balance sheet management. I'm confident in
the opportunities for operational and business process improvements
that will drive increased cash flow conversion and deleveraging,
leading to increased stakeholder value."
Fourth quarter 2020 Financial Highlights
Fourth quarter consolidated revenue was $762 million compared to
$863 million in the prior year period. Total Company revenues
improved sequentially benefiting from improvements in Gaming.
Year-over year results declined as the Company's Gaming business
was impacted by COVID-19 restrictions for casinos globally while
its Lottery, SciPlay and Digital businesses delivered growth.
Net loss was $84 million compared to a net loss of $37 million in
the prior year period due to lower revenue partially offset by
lower interest expense reflecting the favorable impact of 2019
refinancing activities.
Consolidated Adjusted EBITDA was $244 million which improved
sequentially, principally driven by Gaming improvements. The
results compared to $328 million in the prior year, with the
decline due to lower Gaming revenue as a result of COVID-19
disruptions. In addition, the results were impacted by a $15
million Gaming segment charge related to receivables credit
allowances.
Net cash provided by operating activities increased by $16 million
from the prior year period to $159 million primarily due to
improvements in working capital activities.
Free cash flow, a non-GAAP financial measure, increased $20 million
to $72 million from the prior year period, benefiting from
improvements in working capital and lower capex partially offset by
lower revenue.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/750004/000075000421000008/sgms-20201231.htm
About Scientific Games
Based in Las Vegas, Nevada, Scientific Games Corporation
(NASDAQ:SGMS) -- http://www.scientificgames.com-- is a developer
of technology-based products and services and associated content
for the worldwide gaming, lottery, social and digital gaming
industries. Its portfolio of revenue-generating activities
primarily includes supplying gaming machines and game content,
casino-management systems and table game products and services to
licensed gaming entities; providing instant and draw-based lottery
products, lottery systems and lottery content and services to
lottery operators; providing social casino solutions to retail
consumers and regulated gaming entities, as applicable; and
providing a comprehensive suite of digital RMG and sports wagering
solutions, distribution platforms, content, products and services.
SILVERLIGHT BUSINESS: Files Emergency Bid to Use Cash Collateral
----------------------------------------------------------------
Silverlight Business and Risk Management, Inc. asks the U.S.
Bankruptcy Court for the Middle District of Florida, Tampa
Division, for entry of an order determining the extent of cash
collateral, authorizing the Debtor to use cash collateral,
determining adequate protection for Crestmark Bank and SAN of FL,
and granting other related relief.
The debtor says it requires use of cash collateral to fund the
operating expenses necessary to continue the operation of its
business, to maintain the estate, and to otherwise avoid
irreparable harm and injury to its business and the estate.
Prior to the Petition Date, the debtor borrowed funds from
Crestmark Bank and SAN of FL under promissory notes and security
agreements. On the Petition Date, Crestmark Bank was owed
approximately $225,000 on account of its note and security
agreement, and SAN of FL was owed approximately $90,000 on account
of its note and security agreement.
Pursuant to their notes and security agreements, Crestmark Bank and
SAN of FL may assert that Debtor granted to Crestmark Bank and SAN
of FL a lien on and a security interest in the debtor's renewal
commissions, and the proceeds generated from the lien.
Crestmark Bank and SAN of FL may assert that the renewal
commissions are proceeds generated from the debtor's customer
accounts and that such proceeds constitute cash collateral in which
each has a security interest. However, the debtor asserts that
neither Crestmark Bank or SAN of FL has a perfected security
interest in such renewal commissions. The Debtor seeks the entry
of an order determining that the renewal commissions are not
"proceeds" under 11 U.S.C 552. In the event the court determines
that the renewal commissions do constitute cash collateral, the
debtor seeks entry of an order in the form, consistent with the
proposed budget, authorizing the use of such cash collateral.
The Debtor proposes to use any cash collateral for these purposes:
(a) Care, maintenance and preservation of the Debtor's
assets;
(b) Payment of business expenses; and
(c) Continued business operations, including compensation for
Debtor's officers for continuing to manage the business.
If the renewal commissions constitute "cash collateral", the Debtor
proposes to allow Crestmark Bank and SAN of FL a floating lien on
any post-petition renewal commissions in the same amount and level
as Crestmark Bank and SAN of FL held pre-petition. The Debtor
contends that because of uncertainties regarding the timing of
expenses and purchases, and the impact of Chapter 11 on these
items, it is impossible to predict with accuracy the precise amount
of such cash collateral necessary for the Debtor to operate the
business. The proposed utilization of such cash collateral will
not, in any event, impair Crestmark Bank and SAN of FL's position
in the Collateral.
The Debtor asserts there is insufficient time for a full hearing
pursuant to Bankruptcy Rule 4001(b)(2) to be held before the debtor
must use cash collateral. The Debtor further asserts that if the
Motion is not considered on an expedited basis and if the debtor is
denied the ability to immediately use any cash collateral, there
will be a direct and immediate material and adverse impact on the
continuing operation of Debtor's business activities.
The Debtor proposes a replacement lien on renewal commissions
acquired after the Petition Date equal in extent, validity, and
priority to any security interest in such renewal commissions that
Crestmark and SAN of FL each held as of the Petition Date. In
other words, the Debtor proposes that Crestmak Bank and SAN of FL
have "floating" liens on such assets which continue to "float",
notwithstanding section 552 of the Bankruptcy Code, to the same
extent and level of priority as any pre-petition lien on the
Collateral.
Under the terms of the proposed interim order, the interests of
Crestmark Bank and SAN of FL will be adequately protected. The
debtor further alleges that all conditions precedent to the use of
cash collateral have been performed or have occurred.
A copy of the motion is available at https://bit.ly/2PiB1ez from
PacerMonitor.com.
About Silverlight Business and Risk Management, Inc.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 8:21-bk-00770) on
February 18, 2021. In the petition signed by Dennis G. Fuller, Sr,
president, the Debtor disclosed up to $500,000 in assets and up to
$1 million in liabilities.
Benjamin G. Martin is the Debtor's counsel.
SILVERLIGHT BUSINESS: Seeks to Hire Benjamin Martin as Counsel
--------------------------------------------------------------
Silverlight Business and Risk Management, Inc. seeks approval from
the U.S. Bankruptcy Court for the Middle District of Florida to
hire the Law Offices of Benjamin Martin as its legal counsel.
The firm's services include:
a. preparation and filing of schedules, statement of financial
affairs and statement of executory contracts or amendments
thereto;
b. representation of the Debtor at all meetings of creditors,
hearings, pretrial conferences, and trials in the Debtor's Chapter
11 case or any litigation arising in connection with the case;
c. preparation, filing and presentation to the court of any
pleading requesting relief;
d. preparation, filing and presentation to the court of any
disclosure statement and Chapter 11 plan of reorganization;
e. review of claims made by creditors and interested parties,
including the preparation and prosecution of any objections to
claims as appropriate;
f. preparation and presentation of a final accounting and
motion for final decree closing the case; and
g. performance of all other legal services.
The Law Offices of Benjamin Martin will charge $300 per hour for
attorney's time and $100 per hour for travel time by attorney.
The firm received a retainer in the amount of $6,000.
The Law Offices of Benjamin Martin neither represents nor holds any
interest adverse to the Debtor and its bankruptcy estate, according
to court papers filed by the firm.
The firm can be reached through:
Benjamin G. Martin, Esq.
Law Offices of Benjamin Martin
1620 Main Street, Suite 1
Sarasota, FL 34236
Phone: (941) 951-6166
Email: skipmartin@verizon.net
About Silverlight Business and Risk Management
Silverlight Business and Risk Management, Inc. sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No.
21-00770) on Feb. 18, 2021. At the time of the filing, the Debtor
had estimated assets of between $100,001 and $500,000 and
liabilities of between $500,001 and $1 million.
The Law Offices of Benjamin Martin represents the Debtor as
counsel.
SLIM DOLLAR: Asks to Extend Plan & Disclosures Deadline by 1 Month
------------------------------------------------------------------
Slim Dollar Realty Associates, LLC, on an ex parte basis, asked the
Bankruptcy Court to grant an extension of the pending deadlines and
continue the hearing on the adequacy of the Debtor's Amended
Disclosure Statement.
The Debtor has been in contact with the Tax Collector for the Town
of Bow to finalize an agreement for a payment plan for the
outstanding real estate taxes on the Debtor's real estate. The
Debtor will not have a finalized agreement in place by March 1,
2021, the deadline to file its Amended Disclosure Statement and
Plan.
The Debtor, accordingly, asked the Court to extend the deadline to
file its Amended Disclosure Statement and Plan to April 1, 2021 and
the deadline for filing objections to the Debtor's Amended
Disclosure Statement to April 8, 2021.
The Debtor also requested that the Court continue the hearing on
the Adequacy of the Debtor's Amended Disclosure Statement from
March 10, 2021 at 1:30 p.m. to April 21, 2021 at 2:00 p.m.
This additional time will allow the Debtor to finalize its payment
plan with the Town of Bow and amend its disclosure statement
accordingly.
About Slim Dollar Realty Associates
Slim Dollar Realty Associates, LLC is a single asset real estate
(as defined in 11 U.S.C. Section 101(51B)). Its principal assets
are located at 19 Woodhill Hooksett Road Bow, N.H.
Slim Dollar Realty Associates filed a voluntary petition under
Chapter 11 of the Bankruptcy Code (Bankr. D.N.H. Case No. 20 10761)
on Aug. 24, 2020. Charles R. Sargent, Jr., manager, signed the
petition. At the time of filing, the Debtor estimated $500,000 to
$1 million in assets and $1 million to $10 million in liabilities.
Judge Bruce A. Harwood oversees the case. Victor W. Dahar, P.A.
serves as Debtor's legal counsel.
SPHERATURE INVESTMENTS: Committee Seeks to Hire Financial Advisor
-----------------------------------------------------------------
The official committee of unsecured creditors of Spherature
Investments LLC and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Texas to employ
GlassRatner Advisory & Capital Group LLC as its financial advisor.
The firm's services include:
a. analyzing the financial operations of the Debtors before
and after they filed for Chapter 11 protection;
b. performing forensic investigation of the Debtors'
pre-bankruptcy activities to identify potential causes of action;
c. performing claims analysis;
d. verifying the physical inventory of supplies, equipment and
other material assets and liabilities;
e. assisting the committee in its analysis and review of the
Debtors' monthly statements of operations;
f. analyzing the Debtors' budgets, cash flow projections, cash
disbursements, restructuring programs, selling and general
administrative expense structure and other reports or analyses
prepared by the Debtors;
g. analyzing transactions with insiders and related or
affiliated companies;
h. preparing and submitting reports to the committee;
i. assisting the committee in its review of the financial
aspects of a plan of reorganization or liquidation, if any, to be
submitted by the Debtors;
j. attending court hearings, meetings of creditors and
conferences;
k. preparing hypothetical orderly liquidation analyses;
l. monitoring, participating in and consulting with the
committee regarding the marketing and sale of the Debtors' assets;
m. analyzing the financial ramifications of any proposed
transactions for which the Debtors seek bankruptcy court approval
including, but not limited to, post-petition sale of the Debtors'
assets, management compensation, and retention and severance
plans;
n. providing expert testimony and analysis in support of
potential litigation that may be investigated or prosecuted by the
committee; and
o. other financial advisory services.
The firm will be paid at these rates:
Wayne P. Weitz (Senior Managing Director) $675 per hour
David Greenblatt (Director) $480 per hour
Daniel Uitti (Senior Associate) $325 per hour
Senior Managing Directors $450 - $675 per hour
Managing Directors/Directors $350 - $525 per hour
Other Professionals $175 - $350 per hour
Wayne Weitz, senior managing director at GlassRatner, disclosed in
a court filing that his firm is a "disinterested person" within the
meaning of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Wayne P. Weitz
GlassRatner Advisory & Capital Group LLC
d/b/a B. Riley Advisory Services
299 Park Avenue, 21st Floor
New York, NY 10171
Phone: (212) 457-3308
About Spherature Investments
Spherature Investments LLC and its affiliates sought Chapter 11
protection (Bankr. E.D. Texas Lead Case No. 20-42492) on Dec. 21,
2020. Its affiliates include WorldVentures Marketing, LLC, a
company that sells travel and lifestyle community memberships
providing a diverse set of products and experiences.
Spherature Investments estimated $50 million to $100 million in
assets and liabilities at the time of the filing.
The Hon. Brenda T. Rhoades is the case judge.
The Debtors tapped Foley & Lardner, LLP as their legal counsel and
Larx Advisors, Inc. as their restructuring advisor. Stretto is the
claims agent.
The U.S. Trustee for Region 6 appointed an official unsecured
creditors' committee on Jan. 22, 2021. The committee tapped
Pachulski Stang Ziehl & Jones, LLP as its legal counsel and
GlassRatner Advisory & Capital Group LLC as its financial advisor.
SPHERATURE INVESTMENTS: Committee Taps Pachulski Stang as Counsel
-----------------------------------------------------------------
The official committee of unsecured creditors of Spherature
Investments LLC and its affiliates seeks approval from the U.S.
Bankruptcy Court for the Eastern District of Texas to employ
Pachulski Stang Ziehl & Jones, LLP as its legal counsel.
The firm's services include:
a. assisting the committee in its consultations with the
Debtors regarding the administration of their Chapter 11 cases;
b. advising the committee with respect to the Debtors'
retention of professionals and advisors;
c. assisting 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;
d. assisting the committee in any manner relevant to
reviewing and determining the Debtors' rights and obligations under
their leases and executory contracts;
e. assisting the committee in investigating the acts,
conduct, assets, liabilities and financial condition of the
Debtors, the Debtors' operations and any other matters relevant to
the cases or to the formulation of a Chapter 11 plan;
f. assisting the committee in connection with any sale of the
Debtors' assets;
g. assisting the committee in the negotiation, formulation or
filing of objections to any plan of liquidation or reorganization;
h. assisting the committee in understanding its powers and
duties under the Bankruptcy Code and Bankruptcy Rules;
i. assisting the committee in the evaluation of claims and
representing the committee in litigation matters, including
avoidance actions; and
j. other legal services.
The firm's attorneys and paralegals will be paid at these rates:
Partners $845 to $1,695 per hour
Of Counsel $695 to $1,275 per hour
Associates $695 to $725 per hour
Paraprofessionals $425 to $460 per hour
Robert J. Feinstein Partner $1,395 per hour
Michael D. Warner Partner $1,225 per hour
Ayala A. Hassell Of Counsel $725 per hour
Steven W. Golden Associate $725 per hour
Kerri LaBrada Paralegal $460 per hour
Michael Warner, Esq., a partner at Pachulski, disclosed in court
filings that his firm is "disinterested" within the meaning of
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.
Warner disclosed that:
-- Pachulski has not agreed to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement;
-- none of the professionals included in the engagement vary
their rate based on the geographic location of the bankruptcy
case;
-- the firm has not represented the equity committee in the 12
months prior to the Debtors' Chapter 11 filing; and
-- As committee counsel, Pachulski anticipates that its budget
will be governed by any cash collateral or debtor-in-possession
financing order approved by the court, subject to any rights that
the committee may have to object if an agreement on a budget cannot
be reached.
The firm can be reached through:
Michael Warner, Esq.
Robert J. Feinstein, Esq.
Ayala Hassell, Esq.
Steven W. Golden, Esq.
Benjamin L. Wallen, Esq.
Pachulski Stang Ziehl & Jones, LLP
440 Louisiana Street, Suite 900
Houston, TX 77002
Tel: (713) 691-9385
Email: mwarner@pszjlaw.com
rfeinstein@pszjlaw.com
ahassell@pszjlaw.com
sgolden@pszjlaw.com
bwallen@pszjlaw.com
About Spherature Investments
Spherature Investments LLC and its affiliates sought Chapter 11
protection (Bankr. E.D. Texas Lead Case No. 20-42492) on Dec. 21,
2020. Its affiliates include WorldVentures Marketing, LLC, a
company that sells travel and lifestyle community memberships
providing a diverse set of products and experiences.
Spherature Investments estimated $50 million to $100 million in
assets and liabilities at the time of the filing.
The Hon. Brenda T. Rhoades is the case judge.
The Debtors tapped Foley & Lardner, LLP as their legal counsel and
Larx Advisors, Inc. as their restructuring advisor. Stretto is the
claims agent.
The U.S. Trustee for Region 6 appointed an official unsecured
creditors' committee on Jan. 22, 2021. The committee tapped
Pachulski Stang Ziehl & Jones, LLP as its legal counsel and
GlassRatner Advisory & Capital Group LLC as its financial advisor.
STA TRAVEL: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------
Debtor: STA Travel Inc.
DBA STA Travel
6501 E. Greenway Pkwy
#103-429
Scottsdale, AZ 85254
Business Description: STA Travel Inc., an affiliate of STA Travel
Holding AG, operates as a travel company.
The Debtor also operated a storefront
location at 722 Broadway, New York, NY.
Chapter 11 Petition Date: March 3, 2021
Court: United States Bankruptcy Court
District of Delaware
Case No.: 21-10511
Debtor's Counsel: Thomas M. Horan, Esq.
COZEN O'CONNOR
1201 N. Market Street
Suite 1001
Wilmington, DE 19801
Tel: 302-295-2000
Fax: 302-295-2013
Email: thoran@cozen.com
Debtor's
Real Estate
Advisor: CBRE, INC.
Debtor's
Claims &
Noticing
Agent: OMNI AGENT SOLUTIONS
https://cases.omniagentsolutions.com/?clientId=CsgAAncz%2B6boKQgPPeGmJJmlkiQkDEHAg4WUItYYOmGArx4eXSTnoFfil1hch8s3ZTrH3uf07qI%3D
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Anthony Mercer, treasurer.
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/AAZ6E4I/STA_Travel_Inc__debke-21-10511__0001.0.pdf?mcid=tGE4TAMA
SUNDIVE COMMODITY: Seeks to Hire Claro Group as Financial Advisor
-----------------------------------------------------------------
Sundive Commodity Group, LLC seeks approval from the U.S.
Bankruptcy Court for the Southern District of Texas to employ The
Claro Group, LLC as its financial advisor.
The firm will render these services:
a. assist in the review of reports or filings required by the
bankruptcy court or the Office of the U.S. Trustee, including, but
not limited to, schedules of assets and liabilities, statement of
financial affairs and monthly operating reports;
b. review the Debtor's financial information, including, but
not limited to, analyses of cash receipts and disbursements,
financial statement items and proposed transactions for which
bankruptcy court approval is sought;
c. review and analyse reports regarding cash collateral and
any debtor-in-possession financing arrangements and budgets;
d. assist with the marketing process for the potential sale
of the Debtor's assets or for a potential recapitalization,
refinancing or such other transactions for the Debtor;
e. review any potential cost containment opportunities
proposed by the Debtor;
f. review any potential asset redeployment opportunities
proposed by the Debtor;
g. review and analyse issues related to the assumption and
rejection of executory contracts and leases;
h. review and analyse the Debtor's proposed business plans
and the business and financial condition of the Debtor generally;
i. assist in evaluating reorganization strategy and
alternatives available, including any asset sale transactions;
j. review and analyze the Debtor's financial projections and
assumptions;
k. review and analyze enterprise, asset and liquidation
valuations;
l. assist in preparing documents necessary for confirmation
of any Chapter 11 plan, proposed asset sales and proposed use of
cash or financing;
m. assist the Debtor in negotiations and meetings with
creditors and other parties-in-interest;
n. review and provide analysis on potential tax consequences
to the bankruptcy estate of any reorganization or proposed
transactions;
o. assist with the claims resolution procedures including,
but not limited to, analyses of creditors' claims by type and
entity;
p. provide forensic accounting and litigation consulting
services and expert witness testimony regarding plan confirmation,
transactional issues, avoidance actions and other matters; and
q. other such functions as requested by the Debtor.
The firm will be paid at these rates:
Managing Directors $495-$570 per hour
Directors/ Senior Advisors $395-$490 per hour
Managers / Senior Managers $300-$385 per hour
Analysts/ Consultants/ Sr. Consultants $200-$295 per hour
Administrative Personnel $125-$175 per hour
Douglas Brickley, managing director at Claro Group, disclosed in a
court filing that his firm is a "disinterested person" as that term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Douglas J. Brickley
The Claro Group, LLC
711 Louisiana Street, Suite 2100
Houston , TX 77002
Tel: 713-454-7730 / 713-955-8406
Mobile: 713-398-5088
Fax: 713-236-0033
Email: dbrickley@theclarogroup.com
About Sundive Commodity Group
Sundive Commodity Group, a Cypress, Texas-based merchant wholesaler
of petroleum and petroleum products, filed a Chapter 11 petition
(Bankr. S.D. Texas Case No. 21-30163) on Jan. 20, 2021.
In its petition, the Debtor estimated $1 million to $10 million in
assets and $10 million to $50 million in liabilities. Sundive
President Christopher Barton signed the petition.
Judge Eduardo V. Rodriguez presides over the case.
Hoffman & Saweris, P.C. and The Claro Group, LLC serve as the
Debtor's bankruptcy counsel and financial advisor, respectively.
T&R SERVICE: Seeks to Hire McGinnis & Company as Accountant
-----------------------------------------------------------
T&R Service Company seeks approval from the U.S. Bankruptcy Court
for the District of South Dakota to hire McGinnis & Company, PC, as
its accountant.
The firm will assist the Debtor in tax preparations, payroll, other
necessary accounting procedures and assist in preparing the
required monthly reports, and render other duties as may be
necessary to achieve successful reorganization under Chapter 11.
The firm will be paid at these rates:
Rodney J. McGinnis, CPA $200 per hour
Sharla S. Reisch, CPA $115 per hour
Rodney J. McGinnis, CPA, a partner at McGinnis & Company, assured
the court that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Rodney J. McGinnis, CPA
McGinnis & Company, PC
301 E. 14th Street, Suite 100
Sioux Falls, SD 57104
Phone: (605) 338-1938
About T&R Service Company
T&R Service Company filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D.S.D. Case No. 21-40007)
on Jan. 13, 2021. At the time of filing, the Debtor estimated
$1,000,001 to $10 million in bot assets and liabilities. Clair R.
Gerry, Esq. at Gerry & Kulm Ask, Prof. LLC represents the Debtor as
counsel.
TK SKOKIE: Asks Court for Add'l 120-Day Extension of Plan Deadline
------------------------------------------------------------------
TK Skokie, LLC, moves the Court to issue an order extending the
date by which it must file its Plan of Reorganization and
Disclosure Statement, pursuant to 11 U.S.C. Sec. 1121(e)(3).
A hearing on the Motion is scheduled for March 11, 2021, at 11:00
a.m.
Because of the closing of the Debtor's business operations due to
the COVID-19pandemic, the Debtor previously asked for an extension
of time to file its Plan. The current date set by the Court for
the filing of the Debtor's Plan is March 22, 2021.
The Debtor does not expect to be able to meet the deadline because
of the subsequent second total shut-down of its operations due to
COVID-19.
Once again, limited operations have been restored, and the Debtor
is reporting increased income, but revenues still remain less than
optimal.
Having shed itself of the significant cost and stigma of the Titled
Kilt FranchiseAgreement, Debtor's management believes that
revenues will in fact increase beyond its pre-petition numbers as
prior to the filing of this case the Debtor's business was the only
restaurant operation out of 17 in the Village Crossing Shopping
Center that was not profitable. The Debtor's re-branded operation
is now at a par with the other restaurants in the Shopping Center
and the Debtor accordingly believes that it will be able to attain
profitability sufficient to allow it to file a confirmable Plan.
The Tilted Kilt Franchise fees averaged $8,500 per month. That
savings coupled with an additional $4,000 per month all dedicated
to Plan payments over five years will allow the Debtor to pay all
governmental claims in full with a 30% dividend to general
unsecured creditors. These figures are based upon claims that have
been filed to date. The Debtor's management believes that it is
likely that given time to continue to build-up its operations a
confirmable and feasible Plan can and will be proposed.
The Debtor is asking for a 120-day extension to allow for the
continued build-up of business revenues, and hopefully the further
relaxing of Coronavirus regulations. The Debtor, TK Skokie, LLC,
prays that the Court issues an order extending the date by which it
must file its Plan and Disclosure Statement to July 20, 2021.
Attorney for the Debtor:
Timothy C. Culbertson
ARDC No. 6229083
P.O. Box 56020
Harwood Heights, Illinois 60656
Tel: (847) 913-5945
E-mail: tcculb@gmail.com
TK Skokie, LLC, sought Chapter 11 protection (Bankr. N.D. Ill. Case
No. 19-33898) on Nov. 29, 2019, listing assets and liabilities of
less than $1 million. Timothy C. Culbertson, Esq., at the LAW
OFFICES OF TIMOTHY C. CULBERTSON, is the Debtor's counsel.
TOLL BROTHERS: Moody's Alters Outlook on Ba1 CFR to Positive
------------------------------------------------------------
Moody's Investors Service changed the outlook for Toll Brothers,
Inc. positive from stable. At the same time, Moody's affirmed
Toll's Ba1 Corporate Family Rating and Ba1-PD Probability of
Default Rating, and the Ba1 rating on the senior unsecured notes of
Toll Brothers Finance Corp. The company's Speculative Grade
Liquidity Rating was maintained at SGL-1.
The positive outlook reflects Moody's expectation of Toll Brothers'
strong performance in 2021, including significant revenue expansion
and growth in gross margin, accompanied by improvements in debt
leverage and interest coverage credit statistics through debt
repayment and earnings retention. In the next 12 months Moody's
expects Toll Brothers' total debt to capitalization to decline to
approximately 37%, interest coverage to trend toward 7.0x and gross
margin to exceed 21%, strengthening the company's credit profile.
The company's recent voluntary repayment of $150 million of its
senior unsecured term loan due 2025, and the anticipated early
redemption of its 5.625% $250 million senior unsecured notes due
2024 in March 2021 demonstrate Toll's strategic goal to reduce
leverage. Over the next 12 to 18 months Moody's expects Toll to
continue to operate conservatively, make strides to reduce debt,
and maintain a disciplined approach to shareholder friendly
actions. Moody's also expects Toll's focus on land purchasing
efficiencies to contribute to its strong cash flow during this
growth stage, supporting the company's excellent liquidity.
"Moody's projects Toll's revenue to exceed $8 billion in FY 2021,
setting another all-time high company record, driven by strong
demand across its product categories and geographies" says Natalia
Gluschuk, Moody's Vice President -- Senior Analyst.
The following rating actions were taken:
Affirmations:
Issuer: Toll Brothers, Inc.
Corporate Family Rating, Affirmed Ba1
Probability of Default Rating, Affirmed Ba1-PD
Issuer: Toll Brothers Finance Corp.
Senior Unsecured Regular Bond/Debenture, Affirmed Ba1 (LGD4)
Outlook Actions:
Issuer: Toll Brothers Finance Corp.
Outlook, Changed To Positive From Stable
Issuer: Toll Brothers, Inc.
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Toll Brothers, Inc.'s Ba1 Corporate Family Rating is supported by:
1) the company's position as the sole national homebuilder with a
meaningful focus on the upper-end homebuilding segment and a widely
recognized brand name; 2) management's ability to stay ahead of
evolving demographics and adapt to changing markets resulting in a
diversity of offered product categories, including an expansion
into the affordable luxury segment; 3) a broad geographic reach
nationwide with operations in 24 states and 50 markets; 4) a
largely build-to-order operating strategy, and the resulting
revenue visibility, as well as the lowest cancellation rates in the
industry; and 5) governance considerations, including a
conservative financial profile and financial strategy that allows
for significant financial flexibility and incorporates very good
liquidity.
However, the rating is also constrained by: 1) the company's track
record of shareholder-friendly actions including share repurchases
and dividends that have limited deleveraging; 2) cost pressures
facing the industry with respect to land, labor and building
materials; 3) an owned land supply of about four years based on the
LTM deliveries, which could be subject to impairment risk during a
market weakening; 4) capital requirements associated with its joint
venture operations; and 5) exposure to protracted declines in
revenues and weakening in credit metrics given the cyclicality
inherent to the homebuilding sector.
The SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that Toll will maintain very good liquidity over the
next 12 to 15 months given its strong cash flow, significant
availability under its $1.9 billion revolving credit facility
expiring in 2025, substantial covenant compliance headroom, and
ample land supply. As of January 31, 2021, Toll had $2.7 billion in
liquidity, consisting of $950 million of cash and $1.8 billion in
revolver availability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include:
Achievement and maintenance of adjusted homebuilding debt to book
capitalization below 40% together with homebuilding EBIT coverage
of interest sustained in the high single digits
Maintenance of a very good liquidity position, including strong
free cash flow
Demonstration of a commitment to attaining and maintaining an
investment grade rating, both to Moody's and to the debt capital
markets
An ability to withstand a serious financial shock without having
its key credit metrics sinking to low speculative grade levels
Factors that could lead to a downgrade include:
Debt leverage approaching 50%
Cash flow from operations becoming increasingly negative and
liquidity weakening
An economic downturn in which revenues and net income decline
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
Toll Brothers, Inc. is a national builder of luxury homes. Toll
serves move-up, empty-nester, active-adult, and second-home buyers
and operates in 50 markets across 24 states. The company builds an
array of luxury residential single-family detached, attached home,
master planned resort-style golf, and urban low-, mid-, and
high-rise communities, principally on land it develops and
improves. Toll also operates its own architectural, engineering,
mortgage, title, land development and land sale, golf course
development and management, home security, and landscape
subsidiaries. The company also operates its own lumber
distribution, house component assembly, and manufacturing
operations. The company develops commercial and apartment
properties through Toll Brothers Apartment Living, Toll Brothers
Campus Living, and develops urban low-, mid-, and high-rise
for-sale condominiums through Toll Brothers City Living. Revenue
and net income in the LTM period ended January 31, 2021 were $7.3
billion and $486 million, respectively.
TOWER HEALTH: Fitch Lowers LongTerm IDR to 'B+'
-----------------------------------------------
Fitch Ratings has downgraded Tower Health System, PA's (Tower)
Long-Term Issuer Default Rating (IDR) to 'B+' from 'BB+'. Fitch has
also downgraded the following bonds issued by Tower to 'B+' from
'BB+':
-- $160,065,000 The Berks County Municipal Authority (Reading
Hospital & Medical Center Project) series 2012A;
-- $590,500,000 The Berks County Industrial Development Authority
revenue bonds series 2017;
-- $44,660,000 The Berks County Municipal Authority fixed rate
revenue bonds series 2020A;
-- $64,565,000 The Berks County Municipal Authority fixed rate
revenue put bonds series 2020B-1;
-- $82,450,000 The Berks County Municipal Authority fixed rate
revenue put bonds series 2020B-2;
-- $72,920,000 The Berks County Municipal Authority fixed rate
revenue put bonds series 2020B-3;
-- $190,720,000 Tower Health taxable fixed rate revenue bonds
series 2020.
The Rating Outlook remains Negative.
SECURITY
The bonds are secured by a pledge of gross revenues of the
obligated group (OG). The OG consists of Tower Health, Reading
Hospital and the five acquired CHS hospitals. The OG does not
include St. Christopher's Hospital for Children or the Tower Health
Medical Group. All Tower debt is fixed rate.
ANALYTICAL CONCLUSION
The long-term 'B+' rating and Negative Outlook reflect significant
ongoing financial losses from the coronavirus pandemic. Losses also
resulted from operational/integration challenges following the 2017
acquisition of five acute care hospitals in Chester, Montgomery,
and Philadelphia (together, the CMP hospitals). Tower had combined
operating losses of over $415 million in fiscal 2020 (audited full
year results through June 30, 2020) inclusive of prior CARES
funding. The system expects an operating loss of approximately $160
million in fiscal 2021, as evidenced by preliminary second quarter
fiscal 2021 (unaudited six-month results through Dec. 31, 2020)
losses of just over $108 million.
Tower has significant size and scale, a strong regional presence,
and a successful track record as a standalone provider at Reading
Hospital. The system has made some balance sheet gains made through
monetization of certain assets and an abundance of operational
improvements. However, operational challenges and a lack of
sufficiently rigorous expense cuts have put Tower's balance sheet
on an inevitably downward path.
Tower employed extensive mitigation strategies during the
coronavirus surge and continues to do so with the assistance of
Guidehouse. Fitch previously anticipated that Tower would return to
a stable operational position and gradually improve its balance
sheet, but recent average monthly losses of $14 million suggest
that additional cost cutting and/or revenue enhancement is needed.
The Negative Outlook reflects Tower's significant short-term
financial strain and uncertainty about longer-term operational
performance. Further multi-notch downgrades are possible if Tower
is unable to execute on or adjust their current strategy and
financial trajectory.
KEY RATING DRIVERS
Revenue Defensibility: 'bbb'
Leading Inpatient Market Share
Tower's revenue defensibility is mid-range and reflects its leading
inpatient market share in its primary service area (PSA) of
Reading, Pennsylvania, as well as the counties of Berks,
Montgomery, Chester and the northwest portion of the city of
Philadelphia. A demographically strong population in the immediate
service area has only moderate levels of Medicaid and self-pay
patients. The CMP acquisition broadened Tower's market position and
service offerings, although successful integration remains an
operational challenge.
Operating Risk: 'b'
Continued Significant Operational Losses
Tower's operating risk profile assessment is considered 'weak'
based on the system's most recent operating EBITDA margin in fiscal
2020 and expected fiscal 2021 results. While much of the financial
disruption in fiscal 2020 can be attributed to the impact of the
coronavirus, residual integration and volume challenges continue to
hamper the organization. Fitch expects improvement in operating
EBITDA margins over the longer term, not only from Tower's
historically strong Reading Hospital business but also from the
addition and development of new service lines, most notably Tower's
transplant services.
Financial Profile: 'b'
Deteriorating Liquidity Cushion
Tower's leverage and liquidity remains weak, even for the lower
rating category, and until operational issues and non-performing
assets are successfully resolved, negative pressure will remain.
Break-even operating income levels and limited capital spending
would lead to more favorable operating EBITDA margins and improve
cash-to-adjusted debt.
Tower has an Environmental, Social and Governance (ESG) Relevance
Score of '5' for Management Strategy due to strategic deviation
from its historic market and a more localized strategy that
resulted in significant cash flow deterioration and liquidity
degradation. This strategy change brought multiple years of
operating losses and declining liquidity levels. Continued
operational and financial results have put the organization in a
highly precarious financial position, much more than originally
anticipated due to the CMP acquisition.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No asymmetric risk considerations were considered in this rating
determination.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A higher rating over the Outlook period would be limited to
only exceptionally positive impacts to Tower's operational
trend line or unrestricted liquidity position over the next
year.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to begin improvement such that Tower Health is on a
trajectory to realize a 6% operating EBITDA margin, could
result in further pressure on Tower's current rating;
-- Balance sheet dilution from either incremental debt or capital
spending, such that cash to adjusted debt falls to levels
below 25% could also further pressure the rating.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
As of Oct. 1, 2017, Reading Health System was renamed Tower Health.
Concurrent with the rebranding, Tower acquired five acute care
hospitals from CHS (Brandywine Hospital in Coatesville, Chestnut
Hill Hospital in Philadelphia, Jennersville Regional Hospital in
West Grove, Phoenixville Hospital in Phoenixville, and Pottstown
Memorial Medical Center in Pottstown), which added 753 beds. Tower
currently consists of six acute care hospitals (1,468 licensed
beds), Tower Health Medical Group, Tower Health/UPMC Health Plan
and a foundation, as well as numerous other non-obligated
affiliates. Tower had over $1.9 billion in revenues in fiscal
2020.
Four of the five acquired entities are located in Chester and
Montgomery Counties, between the Reading Hospital campus and
Northwestern Philadelphia. Chestnut Hill Hospital is located in
Philadelphia. The acquisition significantly expanded Tower's PSA
allowing it to serve a larger population. The transaction increased
Tower's revenue base by over 60% and positioned the organization
for population health and value-based payment arrangements.
Tower Health and Drexel University announced a joint branch school
of medicine campus within a half-mile of the main Reading Hospital
campus. Given the relationship with Drexel, Tower has entered into
a 50/50 JV with Drexel and has acquired St. Christopher's Hospital
for Children, whereby Tower is responsible for management. Tower
has also successfully recruited the entire liver and kidney
transplant team from Hahnemann University Hospital.
REVENUE DEFENSIBILITY
Medicaid and self-pay volumes accounted for around 19% in fiscal
2020, well below Fitch's threshold of 25%; which is consistent with
the prior year. Fitch believes there is no immediate threat of
payor mix deterioration in the service area.
The expansion of Tower's primary service area (PSA) places the
organization into a more competitive operating environment
associated with Philadelphia and its surrounding areas.
Historically, Reading Hospital held around a two-thirds inpatient
market share in its immediate PSA; post-acquisition, Tower has a
stable 44+% market share in its geographically expanded PSA.
Tower's inpatient service area of Reading and surrounding markets
are growing and demographically favorable compared with state and
national levels. Based on U.S. Census Bureau and U.S. Bureau of
Labor Statistics data, population growth trends and median
household income levels in Berks, Chester and Montgomery Counties
are better than both state and national averages. Similarly, the
unemployment rate is below the state and national averages.
OPERATING RISK
Weaker operations over the last several years are attributed to
multiple factors, including extra expenses related to an Epic
software installation, the challenging integration of the CMP
hospitals, and business disruptions caused by the coronavirus
pandemic. Tower, even with stimulus funding, saw margins decreased
from both the temporary loss of elective surgeries and procedures
as well as elevating costs primarily in the form of staffing and
supplies.
Tower's financials showed a sizeable loss for fiscal 2020, despite
significant expense mitigation efforts (including staffing
furloughs and even FTE reductions) and stimulus funding of
approximately $98.0 million. Operational losses remain at all of
the CMP hospitals and most significantly at St. Christopher's and
the Tower Health Medical Group.
Tower's capital spending requirements are necessarily curtailed at
this time. Given Tower's strong market share, the average age of
plant is adequate at approximately 12 years, and the system has
spent 125% of annual depreciation over the last four audited years.
Fitch expects that the system will spend about $400 million of
capital planned between fiscal 2021 and fiscal 2025, or about $80
million per year on average. These are effectively minimal levels
for only necessary capital (break/fix or coronavirus related)
initially, but Fitch expects capital spending to grow over time as
operational performance improves.
FINANCIAL PROFILE
Tower had just under $1.6 billion of total debt outstanding at
audited fiscal year-end 2020, which includes long term bond debt,
short-term notes and new lease accounting treatment. At year-end
2020, the system had $723 million of unrestricted cash and
investments as calculated by Fitch. Tower's balance sheet saw gains
both from the equities market and also realized an increase of
approximately $205 million in unrestricted cash from a real estate
monetization and sale/leaseback of 23 properties. Fitch does not
include the approximately $170 million in advance and accelerated
payments for Medicare in Tower's unrestricted cash figures.
Unrestricted cash and investment levels at fiscal year-end in 2020
are largely unchanged over the prior year's levels.
Adjusted debt includes total debt outstanding and an unfunded
pension liability up to the 80% funding level, approximately $148
million. The system's net adjusted debt position (adjusted debt
minus unrestricted cash and investments) in fiscal 2020 is elevated
at $970 million, which translates to cash-to-adjusted debt of about
43%.
Through its baseline scenario or best estimate of the most likely
scenario of financial performance over the next five years given
the current economic environment, Fitch expects that Tower will see
slow but gradual operational improvement after another challenging
year in fiscal 2021. However, this will not likely be enough to
materially improve cash-to-debt leverage ratios without additional
operational changes. Fitch's forward-looking analysis includes an
issuer-specific portfolio sensitivity analysis based on Tower's
portfolio asset allocation for the current fiscal year and is
consistent with Fitch's current expectations for economic
uncertainty.
Under Fitch's current assumptions, Tower's leverage metrics do not
recover to current levels in our out years, which is indicative of
the currently precarious financial position Tower is in, and is one
reason for this subsequent downgrade. Significant strategic and
operational improvements will be needed to rebuild balance sheet
strength over the longer term. With so much depending on the
progress of the vaccine and economy over the next several months,
there is a large degree of uncertainty around our scenario.
ESG CONSIDERATIONS
Tower has an ESG Relevance Score of '5' for Management Strategy due
to strategic deviation from its historic market and a more
localized strategy that resulted in significant cash flow
deterioration and liquidity degradation. This has a negative impact
on the credit profile and is highly relevant to the rating,
resulting in a downgrade of the system's ratings.
TOWN SPORTS: NY Attorney General Resolves Covid Gym Fees Suit
-------------------------------------------------------------
New York Attorney General Letitia James on March 3, 2021, announced
that she has resolved her lawsuit against the parent company of New
York Sports Clubs (NYSC) and Lucille Roberts for unlawfully
charging monthly dues to members and for partaking in a variety of
illegal and fraudulent practices involving consumers' cancellation
rights during the coronavirus disease 2019 (COVID-19) pandemic. If
approved by the court, the agreement with Town Sports International
(TSI) could make $250,000 available in the future for potential
restitution to affected New York gym members who were charged for
gym services that were not available to them.
"From the beginning of my office's investigation, I have made clear
to New York Sports Clubs and Lucille Roberts that the COVID-19
pandemic would not give them a free pass to violate the law and
take advantage of members," said Attorney General James. "A public
health crisis did not give these gyms license to lift up their
finances through unlawful charges. Today's agreement holds the
former parent company for these gyms accountable and brings us one
step closer to recovering a $250,000 bond posted by the parent
company for potential distribution to members harmed by their
unlawful practices."
On March 16, 2020, all health clubs were ordered closed in an
effort to stop the further spread of COVID-19. The vast majority
of gyms and health clubs in New York responded by committing to
freezing memberships at no cost until the clubs reopened, some
going even further by promising to automatically credit consumers
for days the clubs were closed. However, NYSC and Lucille Roberts
refused to do the same, and, instead, continued to charge some
members membership dues and refused to honor some cancellation
requests -- imposing fees and conditions on cancellation and freeze
requests even though all clubs were closed. In April, Attorney
General James sent a letter to TSI, demanding immediate changes to
the unlawful manner in which TSI responded to the mandatory closing
of gyms and health clubs.
Despite overtures that the company would change its practices, it
did not. As a result, in September 2020, Attorney General James
sued TSI, alleging that NYSC and Lucille Roberts clubs violated
numerous New York state laws by charging consumers membership dues
for services not being offered; failing to issue credits as
promised; imposing unlawful fees and advance notice requirements on
cancellation requests; misleading consumers about their rights to
cancel their memberships; and refusing to honor cancellation
requests. As part of her lawsuit, Attorney General James sought to
recover a $250,000 bond the company had posted in 2015 pursuant to
a provision of the New York Health Club Services Law. The law
requires all gyms to post a bond to provide a source of recovery
for members if the gym files for bankruptcy or violates the law.
The bond is currently being held by a third-party bond company.
Days before Attorney General James filed her lawsuit TSI filed for
bankruptcy. In November 2020, the bankruptcy court approved a
transaction that allowed a third-party to purchase TSI's assets
without assuming liability for any of TSI’s conduct prior to the
transaction. The bankruptcy court order also required TSI’s
remaining assets to be sold and for the company to be shut down.
The transaction closed on November 30, 2020, and, since that time,
all gyms branded New York Sports Club or Lucille Roberts have been
purchased and are now operated by a different company. TSI no
longer has any role in owning or managing NYSC or Lucille Roberts
gyms.
TSI's agreement with the Office of the Attorney General (OAG)
requires the company to forfeit all rights to the $250,000 bond and
to assist Attorney General James in obtaining the bond from the
bond company. Attorney General James plans to use the $250,000 bond
to provide potential restitution to affected members. NYSC and
Lucille Roberts members who were improperly charged during the
pandemic or denied requests for cancellation can still file
complaints if they have not already done so on the OAG’s website.
Consumers are encouraged to submit any documentation they have
along with their complaints.
TSI no longer owns or operates any health clubs in New York or
across the country and will soon cease to exist.
Today's agreement does not involve the new owner of NYSC or Lucille
Roberts and therefore the company remains subject to all New York
laws. Attorney General James advises any New Yorker who belongs to
one of these gyms and believes they continue to be treated
unlawfully to file a complaint with the OAG.
This matter is being handled by Assistant Attorney General
Christopher L. McCall, Deputy Bureau Chief Laura J. Levine, and
Bureau Chief Jane M. Azia — all of the Consumer Frauds and
Protection Bureau. The Consumer Frauds and Protection Bureau is a
part of the Division for Economic Justice, which is led by Chief
Deputy Attorney General Chris D’Angelo and First Deputy Attorney
General Jennifer Levy.
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.
TRANQUILITY GROUP: Seeks to Hire Berman DeLeve as Legal Counsel
---------------------------------------------------------------
Tranquility Group, LLC seeks approval from the U.S. Bankruptcy
Court for the Western District of Missouri to hire Berman, DeLeve,
Kuchan & Chapman, LLC, as its legal counsel.
The firm's services include:
(a) advising the Debtor regarding its rights and obligations
and compliance with the Bankruptcy Code;
(b) preparing and filing of any and all petitions, schedules,
statement of affairs, motions, applications, plan of reorganization
and any and all other pleadings and documents which may be required
in this proceeding;
(c) representing the Debtor at the meeting of creditors,
confirmation, and related hearings and any continued or adjourned
hearings thereof;
(d) soliciting consents to the Debtor's proposed plan of
reorganization; disclosures and communications with creditors
relating thereto; and securing confirmation of said plan;
(e) representing the Debtor with respect to any matters that
may arise in connection with the Debtor's reorganization proceeding
and the conduct and operation of the Debtor's business; and
(f) examining claims of creditors.
The hourly rate currently charged by Ronald S. Weiss, Esq., and
Joel Pelofsky, Esq., is $325 per hour. Paralegals and document
maintenance personnel charge $120 per hour and $75 per hour,
respectively.
Mr. Weiss disclosed in a court filing that he and his firm are
"disinterested persons" as defined in Section 101(14) of the
Bankruptcy Code.
Berman can be reached through:
Berman can be reached through:
Ronald S. Weiss, Esq.
Joel Pelofsky, Esq.
Berman, DeLeve, Kuchan & Chapman, LLC
1100 Main, Suite 2850
Kansas City, MO 64105
Phone: (816) 471-5900
Fax: (816) 842-9955
Email: rweiss@bdkc.com
Email: jpelofsky@bdkc.com
About Tranquility Group
Tranquility Group owns a vacation destination offering tree houses,
log cabins, and bungalows.
Tranquility Group filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. W.D. Mo. Case No.
21-60120) on Feb. 26, 2021. The petition was signed by Michael R.
Hyams, chief operating officer and partner. At the time of filing,
the Debtor estimated $1 million to $10 million in both assets and
liabilities. Berman, DeLeve, Kuchan & Chapman, LLC represents the
Debtor as counsel.
TRANSOCEAN LTD: Incurs $568 Million Net Loss in 2020
----------------------------------------------------
Transocean Ltd. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $568
million on $3.15 billion of contract drilling revenues for the year
ended Dec. 31, 2020, compared to a net loss of $1.25 billion on
$3.08 billion of contract drilling revenues for the year ended Dec.
31, 2019.
As of Dec. 31, 2020, the Company had $21.80 billion in total
assets, $1.38 billion in total current liabilities, $8.98 billion
in total long-term liabilities, and $11.43 billion in total
equity.
At Dec. 31, 2020, the Company had $1.2 billion in unrestricted cash
and cash equivalents and $406 million in restricted cash and cash
equivalents. In the year ended Dec. 31, 2020, the Company's
primary sources of cash were net cash proceeds from the issuance of
debt and net cash provided by operating activities. The Company's
primary uses of cash were repayments of debt and capital
expenditures.
Net cash provided by operating activities increased primarily due
to reduced operating activities and reduced cash paid for interest
and taxes, partially offset by an aggregate cash payment of $125
million released from restricted cash accounts in June 2020 to
satisfy the Company's remaining obligations under the Plaintiff
Steering Committee settlement agreement.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1451505/000145150521000020/rig-20201231x10k.htm
About Transocean
Transocean is an international provider of offshore contract
drilling services for oil and gas wells. The company specializes
in technically demanding sectors of the offshore drilling business
with a particular focus on ultra-deepwater and harsh environment
drilling services. The company's mobile offshore drilling fleet is
considered one of the most versatile fleets in the world.
* * *
As reported by the TCR on Dec. 1, 2020, S&P Global Ratings raised
its issuer credit on Switzerland-based offshore drilling contractor
Transocean Ltd. to 'CCC-' from 'SD' (selective default). The
upgrade follows the company's repurchase of at least $347.6 million
of the principal amount on various of its secured and unsecured
debt issues (with maturities ranging from 2020 to 2025) for about
$213 million in cash.
TRIDENT BRANDS: Delays Filing of 2020 Annual Report
---------------------------------------------------
Trident Brands Incorporated filed a Form 12b-25 with the Securities
and Exchange Commission notifying the delay in the filing of its
Annual Report on Form 10-K for the year ended Nov. 30, 2020.
The Company was unable to file, without unreasonable effort and
expense, its Form 10-K Annual Report for the year ended Nov. 30,
2020 because the Registrant's auditor has not completed their
review of the Form 10-K. It is anticipated that the Form 10-K,
will be filed on or before the 15th calendar day following the
prescribed due date of the Registrant's Form 10-K.
The Company anticipates that its loss from operations for the year
ended Nov. 30, 2020 will be approximately $4.1 million, compared
with a net loss from operations of approximately $6.1 million in
the comparable prior period. The approximate $2.0 million decrease
in loss from operations was due primarily to an approximate $2.4
million decrease in general and administrative expense, partially
offset by a decrease in gross margin due to an approximate $1.0
million decrease in revenue.
About Trident Brands
Based in Brookfield, Wisconsin, Trident Brands Incorporated, f/k/a
Sandfield Ventures Corp., is focused on the development of high
growth branded and private label consumer products and ingredients
within the nutritional supplement, life sciences and food and
beverage categories. The platforms the Company is focusing on
include: life science technologies and related products that have
applications to a range of consumer products; nutritional
supplements and related consumer goods providing defined benefits
to the consumer; and functional foods and beverages ingredients
with defined health and wellness benefits.
Trident Brands reported a net loss of $12.22 million for the 12
months ended Nov. 30, 2019, compared to a net loss of $8.42 million
for the 12 months ended Nov. 30, 2018. As of Aug. 31, 2020, the
Company had $2.54 million in total assets, $58.07 million in total
liabilities, and a total stockholders' deficit of $55.54 million.
MaloneBailey, LLP, in Houston, Texas, the Company's auditor since
2015, issued a "going concern" qualification in its report dated
March 16, 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.
UNITI GROUP: Delays Filing of 2020 Annual Report
------------------------------------------------
Uniti Group Inc. filed with the Securities and Exchange Commission
a Notification of Late Filing on Form 12b-25 with respect to its
Annual Report on Form 10-K for its fiscal year ended Dec. 31, 2020.
The Company has determined that it is unable to file its Annual
Report within the prescribed time period without unreasonable
effort or expense because it requires additional time to complete
its financial statements and assessment of internal controls over
financial reporting. As a result, KPMG LLP, the Company's
independent registered public accounting firm, has not yet
completed its audit procedures. The Company believes that it will
file the Annual Report on or before the fifteenth calendar day
following the prescribed due date.
Based on currently available information, the Company expects to
report a material weakness in the effectiveness of its internal
control over financial reporting related to the testing of goodwill
for impairment, and it expects its internal controls over financial
reporting and disclosure controls will be ineffective as of Dec.
31, 2020. The material weakness has not resulted in any material
misstatements or omissions in previously reported financial
statements.
The Company expects to report total revenues of approximately
$1,067.0 million for the year ended Dec. 31, 2020 compared to total
revenues of $1,057.6 million for the year ended Dec. 31, 2019. The
Company expects to report net loss attributable to common
shareholders of approximately $707.4 million for the year ended
Dec. 31, 2020 compared to net income attributable to common
shareholders of approximately $8.3 million for the year ended Dec.
31, 2019. The decrease in net income attributable to common
shareholders is primarily attributable to $650.0 million of
settlement expense incurred in connection with the Company's
previously disclosed settlement with Windstream Holdings, Inc. and
a goodwill impairment charge of $71.0 million in the Company's
fiber segment.
About Uniti
Headquartered in Little Rock, Arkansas, Uniti --
http://www.uniti.com-- is an internally managed real estate
investment trust. It is engaged in the acquisition and
construction of mission critical communications infrastructure, and
is a provider of wireless infrastructure solutions for the
communications industry. As of Sept. 30, 2020, Uniti owns 6.7
million fiber strand miles and other communications real estate
throughout the United States.
PricewaterhouseCoopers LLP, in Little Rock, Arkansas, the Company's
auditor since 2014, issued a "going concern" qualification in its
report dated March 12, 2020, citing that the Company's most
significant customer, Windstream Holdings, Inc., which accounts for
approximately 65.0% of consolidated total revenues for the year
ended Dec. 31, 2019, filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code, and uncertainties surrounding
potential impacts to the Company resulting from Windstream
Holdings, Inc.'s bankruptcy filing raise substantial doubt about
the Company's ability to continue as a going concern.
As of Sept. 30, 2020, the Company had $4.83 billion in total
assets, $6.83 billion in total liabilities, and a total
shareholders' deficit of $1.99 billion.
* * *
In March 2020, S&P Global Ratings placed all ratings on U.S.
telecom REIT Uniti Group Inc., including the 'CCC-' issuer credit
rating, on CreditWatch with positive implications. The CreditWatch
placement follows the company's announcement it reached an
agreement in principle with its largest tenant Windstream Holdings
Inc. to resolve all legal claims it asserted against Uniti in the
context of Windstream's bankruptcy proceedings.
UNIVERSITY OF THE ARTS: Fitch Lowers Issuer Default Rating to BB
----------------------------------------------------------------
Fitch Ratings has downgraded the rating on approximately $50
million of series 2017 bonds issued by the Philadelphia Authority
for Industrial Development, PA on behalf of The University of the
Arts (UArts) to 'BB' from 'BB+'.
In addition, Fitch has downgraded UArts' Long-Term Issuer Default
Rating (IDR) to 'BB' from 'BB+'.
The Rating Outlook is revised to Negative from Stable.
SECURITY
The bonds are secured by general, unrestricted revenues of UArts as
well as a first lien mortgage on certain university property (i.e.
three academic and/or residential buildings) in Philadelphia, PA.
ANALYTICAL CONCLUSION
The downgrade of the ratings from 'BB+' to 'BB' reflects weakening
of the university's historically thin cushion of available funds
(AF) to adjusted debt in the context of the university's business
profile, which has been challenged by the coronavirus pandemic.
Fitch's 'bbb' assessment of the university's revenue defensibility
includes asymmetric rating factor consideration, reflecting
weakened demand in fall 2020. Fitch's 'bbb' assessment of the
university's operating risk reflects a history of consistent yet
thin cash flow and high capital needs. The university exhibits a
financial profile consistent with the 'bb' assessment, with AF to
adjusted debt levels providing limited but still adequate capacity
to absorb revenue and investment stresses.
The Negative Outlook reflects Fitch's concern that enrollment and
associated revenue pressures may persist, given the university's
niche academic offerings, elevating the risk of further balance
sheet erosion in Fitch's downside stress scenario.
Revenue Defensibility: 'bbb'
Pressured Demand in Niche Market
The university's 'bbb' revenue defensibility assessment is
characteristic of modest acceptance rates, more moderate
matriculation, and variable enrollment, consistent with UArts'
niche market, as well as a relatively price sensitive student base.
Fall 2020 enrollment is down nearly 19% from prior year levels, and
Fitch's assessment reflects asymmetric rating factor considerations
due to the risks of weakening demand. Revenues from donors, trust,
and endowment remain stable and sustainable.
Operating Risk: 'bbb'
Limited Cash Flow; High but Manageable Capital Needs
The 'bbb' operating risk assessment reflects UArts' steady
performance in fiscal 2020, tempered by Fitch's expectations for
pressured cash flow margins in fiscal 2021 as the university
reduces spending in line with meaningful revenue declines.
Lifecycle investment needs are high but manageable with near-term
major capital projects being completed in fiscal 2021.
Financial Profile: 'bb'
Thin Balance Sheet Cushion
UArt's 'bb' financial profile assessment reflects relatively high
leverage compared to the vulnerability of the university's business
profile. AF declined in fiscal 2020 with the completion of major
capital projects and from pandemic-related revenue shocks, limiting
the university's ability to absorb any further economic and revenue
stresses through Fitch's downside stress scenario.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
No asymmetric additional risk considerations apply to UArt's
rating.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A consistent trend of increasing enrollment and net tuition
revenue approaching historical levels;
-- A buildup in unrestricted cash and investments over time
resulting in sustained AF to adjusted debt at or above 40%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Continued demand pressure, suppressing student revenues well
below historical levels beyond fiscal 2021;
-- Failure to maintain cash flow margins at levels consistently
above 7% and comfortably covering annual debt service
requirements;
-- A trend of AF to adjusted debt persistently below 30%.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of three notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
CREDIT PROFILE
The University of the Arts is an independent, co-educational
university established in 1876, located in downtown Philadelphia.
UArts offers 26 undergraduate and 20 graduate programs through the
College of Art, Media & Design, the College of Performing Arts, and
the Division of Liberal Arts. Through its two colleges, the
university comprises six schools: Design, Art, Film, Dance,
Theater, and Music. UArts' student body is primarily undergraduates
and comprises more than 1,463 students on a full time equivalent
(FTE) enrollment basis, two-thirds of whom reside in either
Pennsylvania or New Jersey.
In 1969, the Middle States Commission on Higher Education first
accredited UArts institution-wide. The most recent reaccreditation
was in 2019.
Coronavirus Impact
The ongoing coronavirus pandemic and related government-led
containment measures create an uncertain environment for the U.S.
Public Finance higher education sector. Fitch's forward-looking
analysis is informed by management expectations and Fitch's
macroeconomic scenarios, and scenarios will evolve as needed during
this dynamic period. For UArts, the baseline case assumes continued
remote learning through fiscal 2021 followed by a return to
in-person offerings and a resultant rebound in demand remaining
modestly below historical levels throughout the forward look.
The rating sensitivities address potential rating implications
under Fitch's downside scenario, which assumes a slower economic
recovery and prolonged or recurring pandemic-induced disruptions,
including further tuition, auxiliary, and other related revenue
pressures into fiscal 2022.
REVENUE DEFENSIBILITY
UArts' revenue defensibility is characterized by moderate demand
indicators and volatile enrollment, given the university's niche
performing and visual arts demand base in the Northeast region.
Enrollment declined by nearly 20% in fall 2020/fiscal 2021 due to
the pandemic and Fitch remains concerned that near to intermediate
term enrollment and related tuition and fee revenue growth
prospects remain uncertain. Beyond student-driven revenues, other
revenue sources are meaningful and more stable, somewhat offsetting
demand volatility.
The university's demand profile reflects the high levels of
self-selection consistent with an arts institution with high
acceptance rates (over 70%) and more moderate matriculation
(generally over 30%). Matriculation declined to 23% for fall 2021
as many prospective students re-evaluated college plans due to the
pandemic and retention (historically over 80%) declined to 73%.
The university retains a solid reputation as a specialized
institution for performing and visual arts education in the region.
The university's draw within the Northeast region has remained
somewhat stable despite demographic challenges in Pennsylvania and
New Jersey, which are the university's primary market, and make up
more than half of UArts' enrollment base.
Full time equivalent (FTE) enrollment declined to 1,463 in fall
2020, from around 1,800 the prior year. Tuition and fee revenue is
expected to decline by about 20% in fiscal 2021 (about $9 million),
and auxiliary revenues are budgeted to fall by nearly 50% (over $3
million).
UArts' revenues are largely student-driven, which historically
account for about 75% of total operating revenues. Beyond
student-generated revenue, the university's revenue picture relies
on stable, moderate annual giving and draws from its endowment to
support operations. Together, these revenue streams make up more
than 20% of the university's operating budget and soften the total
revenue decline posed by near-term demand erosion. Fitch considers
UArts' endowment draw rate of 5% to be sustainable and expects the
university to maintain prudent endowment management going forward.
OPERATING RISK
UArts' operating cost flexibility has generally been somewhat
limited, with cash flow margins consistently below 10% in recent
years and consistent operating deficits. Fiscal 2020 ended with an
0.5% operating loss and a 9.9% operating cash flow margin,
generating 1.8x annual debt service coverage. However, fiscal 2021
will reflect a meaningful drop in student-based revenue correlated
to the 19% enrollment decline.
Management indicates that efforts to cut spending to the
university's current enrollment and programming base will be
sufficient to maintain cash flow near historical levels and yield
cost savings in future years, allowing for potential cash flow
growth. However, execution risk is elevated, given the university's
student-fee dependent revenue base, and its somewhat depleted
available funds provide limited financial flexibility to absorb
operating volatility.
The university's capital spending requirements are high manageable,
reflecting the historic nature of many downtown campus facilities.
UArts recent capital improvements culminated in the completion of
major capital upgrades related to key program offerings with the
2017 bond proceeds. Work on related projects continued into fiscal
2020, resulting in high levels of capex from AF, but projects are
expected to wind down considerably in fiscal 2021 with only modest
routine maintenance planned for future years.
UArts' campus comprises historic buildings near Philadelphia's city
center, which would generally reflect a higher average age of plant
even with routine capital upkeep. Given these factors, Fitch will
monitor the university's investment in plant, and the effect that
facilities upkeep has on spending and student demand going
forward.
FINANCIAL PROFILE
As of fiscal 2020, UArts had about $49 million in long-term debt,
consisting primarily of the series 2017 fixed rate bonds. The bonds
have level debt service, and UArts has no plans to issue additional
debt. Covenants related to the 2017 bonds include annual DSC of at
least 1.1x, which was comfortably exceeded through fiscal 2020, and
management indicates that sufficient expense cuts will allow
continued compliance in fiscal 2021. Inclusive of UArts'
non-cancellable operating lease under a standard 5x multiple, total
adjusted debt equaled just over $54 million. Against $14.5 million
in available funds, leverage was a much thinner 26% from fiscal
2019's 52.9%. UArts utilized its $7 million line of credit and had
$2.5 million drawn at fiscal year-end.
Fitch's baseline scenario assumes revenue pressure and expense
reductions in line with management's fiscal 2021 expectations and
incorporates a severe yet plausible investment stress in year one
of the scenario followed by improving performance in future years.
As a result, by year five of Fitch's base case, UArts' AF to
adjusted debt grows to over 40%, consistent with the 'bb'
assessment.
Fitch's downside case incorporates a more severe economic stress to
UArts' investment portfolio. In addition, given the university's
niche market position, Fitch's stress includes further revenue
stress, reflecting a slower and more protracted recovery period.
Under these conditions, UArts' financial profile continues to erode
throughout the downside stress, with AF to adjusted debt declining
to below 20% through year five of the scenario.
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.
US GLOVE: Seeks to Hire Emory & Co as Valuation Consultant
----------------------------------------------------------
U.S. Glove, Inc. seeks approval from the U.S. Bankruptcy Court for
the District of New Mexico to employ Emory & Co., LLC as its
appraiser and valuation consultant.
The firm's services include:
(a) appraising, valuing or pricing the Debtor's business;
(b) providing expert consulting services to the Debtor and its
other professionals relating to the overall value or pricing of the
business, and treatment of secured creditors under any proposed
Chapter 11 plan filed by the Debtor;
(c) reviewing and advising the Debtor and its professionals
regarding appraisal reports and value opinions that may be offered
by other appraisers or experts;
(d) providing testimony as an expert witness; and
(e) assisting the Debtor in other matters within the skills,
experience or expertise of the firm.
The firm will be paid at these rates:
John Emory, Jr. $500 per hour
F.R. Dengel $350 per hour
Taylor Kotkeand $300 per hour
Emory & Co. is "disinterested" as defined in Section 101(14) of the
Bankruptcy Code, according to court filings.
The firm can be reached through:
John Emory, Jr.
Emory & Co., LLC
250 E Wisconsin Ave., Suit 910
Milwaukee, WI 53202
Phone: 414-273-9991 / 414-831-5644
Fax: 414-273-9992
Email: jdemory@EmoryCo.com
About U.S. Glove Inc.
U.S. Glove, Inc. is a New Mexico Corporation with its headquarters
located at 6801 Washington St. NE, Albuquerque, N.M. It
manufactures hand and wrist support products for gymnastics and
cheerleading, and a variety of other ancillary products.
U.S. Glove sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.N.M. Case No. 21-10172) on Feb. 14, 2021.
At the time of the filing, the Debtor had estimated assets of less
than $500,000 and liabilities of between $1 million and $10
million.
Judge David T. Thuma oversees the case.
The Debtor tapped Michael Best & Friedrich LLP as its bankruptcy
counsel and Walker & Associates, PC as its local counsel.
USIC HOLDINGS: S&P Alters Outlook to Stable, Affirms 'B-' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
are affirmed its 'B-' issuer credit rating on Indianapolis-based
USIC Holdings Inc.
S&P said, "We are affirming our 'B-' issue-level ratings on the
company's first-lien term loan and revolver. The '3' recovery
ratings indicate our expectation for meaningful recovery (50%-70%,
rounded estimate: 50%) in the event of a payment default.
"At the same time, we are affirming our 'CCC' issue-level rating on
the company's second-lien term loan. The '6' recovery rating
indicates our expectation for negligible recovery (0%-10%, rounded
estimate: 0%) in the event of a payment default.
"The stable outlook reflects our forecast for steady profitability
in 2021, which should result in debt to EBITDA below 6x and
continued positive free operating cash flow generation.
"We expect demand for the company's locate services will strengthen
as the construction markets rebound. The company's revenue and
earnings improved through the latter part of 2020 after volumes
declined earlier in the year because of construction restrictions
associated with the coronavirus pandemic. Infrastructure
construction (underground facility operators), residential, and
commercial construction drive the demand for USIC's line-locating
services. S&P Global Ratings' economists expect residential
construction to grow 5.5% in 2021 and nonresidential construction
to grow 0.2%. In addition, favorable pricing terms, tuck-in
acquisitions, and cost reductions should maintain profitability in
2021 consistent with that seen in the second half of 2020, further
improving debt leverage in the near term.
"Low maintenance capital expenditures and a relatively flexible
cost structure should result in continued positive free operating
cash flow (FOCF). FOCF to debt improved in 2020 from 2019 levels,
and we forecast it will remain positive in 2021 as the company
supports top-line growth. We do not forecast substantial intra-year
working capital swings and expect availability on its cash flow
revolver and receivables facility will support adequate liquidity.
"The stable outlook on USIC reflects our expectation for the
company's continued improved operating performance through top-line
growth and increased profitability, resulting in positive free
operating cash flow generation. We expect debt to EBITDA below 6x
in 2021.
"We could lower our ratings on USIC over the next 12 months if it
appears FOCF will turn negative on a sustained basis or its
liquidity position becomes constrained. This could occur due to a
demand decline stemming from a slowdown in construction end markets
or a decline in EBITDA margins due to larger-than-anticipated
damage expenses, for example. We could also lower the rating if we
view the company's long-term financial commitments as
unsustainable, even though it may not face a credit or payment
crisis within the next 12 months.
"We could raise our rating on USIC in the next 12 months if the
company improves its FOCF generation such that its FOCF to debt
remains around 5% and if debt to EBITDA remains below 6.5x on a
sustained basis. This could occur, for example, through favorable
pricing on upcoming contract renewals or continued benefit from
recent operational initiatives."
VALARIS PLC: Court Approves $7-Billion Debt-for-Equity Plan
-----------------------------------------------------------
Valaris plc (OTC: VALPQ) on March 3, 2021, announced that it has
received approval from the United States Bankruptcy Court for the
Southern District of Texas of its prearranged Plan of
Reorganization (the "Plan"). In addition to Bankruptcy Court
confirmation, the Plan received support from approximately 80% of
the Company's unsecured notes ("Noteholders") and bank lenders
representing 100% of the Company's credit facility claims. In
addition, approximately 81% of the Company's voting shareholders
voted to accept the Plan.
"I am pleased that we have received strong support for the
Company’s amended plan. This is an important milestone, as it
clears the path for Valaris to emerge from chapter 11 early in the
second quarter. The overwhelming support from our noteholders and
bank lenders shows their confidence in our go-forward strategy and
strength as a company," said Tom Burke, President and Chief
Executive Officer of Valaris. "This achievement would not have
been possible without the continued dedication and loyalty from our
employees, customers, vendors and other partners. We look forward
to emerging swiftly with our strengthened capital structure which,
combined with our high-quality rig fleet and personnel, positions
the company well in a still challenging offshore drilling market."
Upon emergence and implementation of the Plan, Valaris will
eliminate $7.1 billion of existing debt. Valaris will receive a
$520 million capital injection through the issuance of a $550
million secured note maturing in 2028. The note includes the
option of an 8.25% cash coupon, 10.25% half cash, half paid-in-kind
coupon or 12% paid-in-kind coupon, all at the Company’s election.
Valaris has also reached an agreement with Daewoo Shipbuilding &
Marine Engineering Co., Ltd. to amend its two newbuild drillship
contracts to extend each delivery date to December 31, 2023, while
giving the company the option to take delivery early or terminate
the contracts on a non-recourse basis. Final payments for the
VALARIS DS-13 and VALARIS DS-14 are estimated to be approximately
$119 million and $218 million, respectively.
* * *
Law360 reports that U.S. Bankruptcy Judge Marvin Isgur approved the
plan following a short virtual hearing in which he was told the
plan will leave Valaris with less than net zero debt, an unusual
position for its industry. "The terms of this restructuring are a
total victory for Valaris," Valaris counsel Spencer Winters said.
About Valaris PLC
Valaris plc (NYSE: VAL) provides offshore drilling services. It is
an English limited company with its corporate headquarters located
at 110 Cannon St., London. On the Web: http://www.valaris.com/
On Aug. 19, 2020, Valaris and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 20-34114). The Debtors
had total assets of $13,038,900,000 and total liabilities of
$7,853,500,000 as of June 30, 2020.
The Debtors tapped Kirkland & Ellis LLP and Slaughter and May as
their bankruptcy counsel, Lazard as investment banker, and Alvarez
& Marsal North America LLC as their restructuring advisor. Stretto
is the claims agent, maintaining the page
http://cases.stretto.com/Valaris
Kramer Levin Naftalis & Frankel LLP and Akin Gump Strauss Hauer &
Feld LLP serve as legal advisors to the consenting noteholders
while Houlihan Lokey Inc. serves as their financial advisor.
VBI VACCINES: Incurs $46.2 Million Net Loss in 2020
---------------------------------------------------
VBI Vaccines Inc. filed with the Securities and Exchange Commission
its Annual Report on Form 10-K disclosing a net loss of $46.23
million on $1.06 million of revenues for the year ended Dec. 31,
2020, compared to a net loss of $54.81 million on $2.22 million of
revenues for the year ended Dec. 31, 2019.
As of Dec. 31, 2020, the Company had $209.37 million in total
assets, $17.35 million in total current liabilities, $20.32 million
in total non-current liabilities, and $171.70 million in total
stockholders' equity.
VBI ended the fourth quarter of 2020 with $119.1 million cash, cash
equivalents, and short-term investments compared with $44.2 million
as of Dec. 31, 2019.
Iselin, New Jersey-based EisnerAmper LLP issued a "going concern"
qualification in its report dated March 2, 2021, citing that the
Company has an accumulated deficit as of Dec. 31, 2020 and cash
outflows from operating activities for the year-ended Dec. 31, 2020
and, as such, will require significant additional funds to conduct
clinical and non-clinical trials, achieve regulatory approvals, and
subject to such approvals, commercially launch its products. These
factors raise substantial doubt about its ability to continue as a
going concern.
Annual Note from Jeff Baxter, President and CEO
"2020 was, unfortunately, a historic year, marked by unprecedented
disruption, with severe public health, societal, and economic
consequence. Every single person, worldwide, felt the devastating
effects of the ongoing COVID-19 pandemic. Industries and companies
went through extraordinary change and, amidst the temporary
adjustments, new normals were established. The impact of this
pandemic is likely to be felt for years, if not decades, to come.
"The events of 2020 led to impressive collaboration, progress, and
transformation across the biotechnology industry, governments, and
foundations. We added two new vaccine candidates to our pipeline
in 2020 - a multivalent pan-coronavirus vaccine candidate,
VBI-2901, and a monovalent COVID-19 vaccine candidate, VBI-2902.
To support the advancement of these candidates, we received an
award from the Strategic Innovation Fund of the Government of
Canada and partnered with both the National Research Council of
Canada (NRC), Canada's largest federal R&D organization, and
Resilience Biotechnologies, a Contract Development and
Manufacturing Organization. The preclinical results of these two
candidates continue to excite us and we are working hard to get
these candidates into the clinic in forms that are optimized both
for clinical outcome and long-term commercial viability. We
recognize the possibility that COVID-19, in some form, may be here
to stay, especially with the recent emergence of additional
variants, and we are committed to the long-term control of known
and emerging coronaviruses.
"Our 2020 achievements and progress, however, extend well beyond
our coronavirus programs. We successfully completed the pivotal
Phase 3 program for our 3-antigen prophylactic hepatitis B (HBV)
vaccine candidate and submitted applications for approval in the
U.S. and Europe. We believe this vaccine candidate has the
potential to be a meaningful intervention for adults in the fight
against HBV and we look forward to working with both the U.S. Food
and Drug Administration (FDA) and the European Medicines Agency
(EMA) throughout 2021 as they conduct their review.
"In addition to the advancement of these prophylactic vaccine
candidates, we continue to see meaningful data generated by the
clinical studies of our therapeutic vaccine candidates targeting
both chronic HBV infection, VBI-2601, and recurrent glioblastoma
(GBM), VBI-1901. With both of these candidates, we are seeking to
address diseases that are challenging and aggressive, with few, if
any, effective treatment options available to patients. Based on
the positive data seen to-date, we and our partners expect to
initiate subsequent clinical studies in both indications in 2021.
"These achievements are a result of the continued hard work,
dedication, and flexibility of every member of the VBI team. Our
team remains united across the US, Canada, and Israel in our
mission to protect and enhance human life, and we thank our
shareholders and partners for their support. With $119.1 million
in cash, cash-equivalents, and short-term investments on-hand at
the end of 2020, we entered 2021 well-positioned to achieve
meaningful milestones across all of our lead pipeline programs over
the next 12 months, and beyond."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/764195/000149315221005171/form10-k.htm
About VBI Vaccines Inc.
Cambridge, Massachusetts-based VBI Vaccines Inc. --
http://www.vbivaccines.com-- is a biopharmaceutical company driven
by immunology in the pursuit of powerful prevention and treatment
of disease. Through its innovative approach to virus-like
particles, including a proprietary enveloped VLP platform
technology, VBI develops vaccine candidates that mimic the natural
presentation of viruses, designed to elicit the innate power of the
human immune system. VBI is committed to targeting and overcoming
significant infectious diseases, including hepatitis B,
coronaviruses, and cytomegalovirus (CMV), as well as aggressive
cancers including glioblastoma (GBM). VBI is headquartered in
Cambridge, Massachusetts, with research operations in Ottawa,
Canada, and a research and manufacturing site in Rehovot, Israel.
VISTRA CORP: S&P Places 'BB+' ICR on CreditWatch Negative
---------------------------------------------------------
S&P Global Ratings placed its 'BB+' issuer credit rating on Vistra
Corp. on CreditWatch with negative implications.
S&P will update its views as we incorporate new information and
could resolve the CreditWatch listing over the next several weeks,
though it may wait until after the end of the first quarter.
The CreditWatch placement follows Vistra's announcement that it
expects the dislocation of its operations caused by the polar
vortex to have a $900 million-$1.3 billion impact on its cashflow.
The company is not a taxpayer due to its carryforward losses, thus
the storm's effect will directly translate into a reduction in its
funds from operations (FFO).
The company also announced its 2020 financial results, which
surpassed our previous expectations for the year. Specifically,
Vistra's adjusted EBITDA exceeded our expectation of about $3.10
billion-$3.25 billion. The company's performance through the
pandemic has enabled it to establish a track record for its
integrated wholesale-retail business model. However, the massive
impact from Winter Storm Uri has overwhelmed the benefits from its
2020 performance.
S&P noted in its commentary titled "Texas Power Failure: Picking Up
Nickels In Front Of Steamrollers", published Feb. 24, 2021, that
the greatest potential impact the storm would have on Vistra's
EBITDA would be due to a mismatch of its non-performing assets
(outage or fuel deliverability is irrelevant) against the load.
From the details the company has provided in its earnings call, S&P
learned that the effects on its performance came from a combination
of factors, including:
-- Lower generation from coal plants, which it substituted with
natural gas-fired units that acquired fuel at substantially higher
prices;
-- The unavailability of gas-fired units due to outages, including
the material non-deliverability of fuel; and
-- Significant demand in the North Texas region despite the
rolling blackouts.
Despite about 18 gigawatts (GW) of plants available to dispatch
during the storm, Vistra was eventually net short because of
natural gas compression issues on the pipelines serving its units
due to challenges with handling fuel already on site given the
freezing conditions. S&P said, "Based on estimated daily generation
of about 48 GW-50 GW in ERCOT during February 15-16 and Vistra's
25%-30% contribution to ERCOT's aggregate generation, we now
estimate that about 5.0 GW of the company's generation was
unavailable because of fuel unavailability, which caused the storm
to have a greater effect on its performance than we anticipated. If
our calculations turn out correct, it will speak more to the
failure of the market under a stress environment."
S&P assumes that by suspending its ongoing share repurchase program
and cutting some discretionary growth capital expenditure (capex),
along with its previously announced voluntary debt repayments,
Vistra will mitigate this cashflow impact by half. However, the
effects of the storm will still add about $600 million-$650 million
of incremental debt, which will negatively affect its deleveraging
efforts.
As of Dec. 31, 2020, Vistra had total available liquidity of about
$2.4 billion, including cash and cash equivalents of $406 million,
about $2 billion of availability under its revolving credit
facility, and $5 million of availability under its various
bilateral letters of credit facilities.
S&P said, "Winter Storm Uri caused Vistra to post a significant
amount of collateral. The company has more than $1.5 billion of
availability in cash and under its credit lines, which we are
monitoring daily. Vistra has issued a few additional LCs under its
uncommitted bi-lateral LC facilities. While Vistra currently
appears to have enough liquidity, and we expect net inflows from
ERCOT, its ability to access the credit markets will likely decline
due to the potential concerns about its ERCOT exposure." It also
posted an excess of collateral relative to its collateral posting
requirements with ERCOT to provide it with commercial flexibility
in the day-ahead market.
S&P said, "We will monitor developments over the next few weeks and
provide updates as required. While ERCOT settlements data suggest
that it has already accounted for the major effects of the storm,
the effects of its counterparty exposures could still result in an
incremental impact. Over the following weeks, we will monitor how
the company reprioritizes its capital allocation decisions,
including its incremental maintenance capex needs, in our
assessment."
Vistra has a large exposure to ERCOT among the independent power
producers (IPPs). ERCOT likely requires market reforms and spending
on its electric/gas infrastructure to remedy the issues that the
effects of Uri have exposed. Even though the company's performance
may potentially revert to the levels we projected and the impact on
its debt to EBITDA may only be about 30 basis points-35 basis
points by year-end 2022, any forward momentum in its credit quality
has been halted. S&P will assess the company's business risk
profile in the context of the market reforms that will be
implemented and the lingering effects of the storm into 2022. While
the effects of the storm do not eliminate the potential for an
improvement in its credit quality in 2022, they will affect our
timing expectations.
S&P expects to resolve the CreditWatch over the next several
weeks.
VIZIV TECHNOLOGIES: Seeks to Hire Stout Risius as Investment Banker
-------------------------------------------------------------------
Viziv Technologies, LLC seeks approval from the U.S Bankruptcy
Court for the Northern District of Texas to employ Stout Risius
Ross, LLC as its investment banker.
The firm's services include:
a. assist the Debtor in the development and distribution of
selected information, documents, and other materials;
b. contact persons known to Stout who may have an interest in
the investment in Debtor, financing for the Debtor, or purchase of
the Debtor's business or assets;
c. advise the Debtor on the structure of any transactions;
d. provide expert advice and testimony regarding financial
matters relating to the transaction;
e. attend meetings with the Debtor's board of managers and
with creditor groups and other constituencies as requested by the
Debtor; and
f. provide other investment banking services.
The firm will be paid as follows:
a. Initial Payment: $50,000
b. Monthly Fee: $25,000, deferred until payment of the
transaction fee, confirmation of a plan or termination of the
agreement.
c. Equity Transaction Fee: 5 percent of the dollar value of
any new equity raised by the Debtor.
d. Asset Sale Transaction Fee: The greater of $500,000 or 3
percent of the so-called "aggregate gross consideration" received
by the Debtor in an asset sale transaction.
e. Financing Transaction Fee: The sum of 2 percent of gross
proceeds secured by a first priority lien on the Debtor's assets
and 3 percent of gross proceeds secured by a junior lien or is
subordinated or unsecured; and 5 percent of the gross proceeds from
any equity or equity-linked securities.
f. Reimbursement of expenses.
Ann Miller, managing director at Stout, disclosed in a court
filing that her firm is a "disinterested person" within the meaning
of Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Ann M. Miller
Stout Risius Ross, LLC
120 West 45th Street, Suite 2900
New York, NY 10036
Phone: +1 646 807 4232
Mobile: +1 646 335 8941
Email: amiller@stout.com
About Viziv Technologies
Viziv Technologies, LLC is an electronics company that specialized
in the field of electromagnetic surface waves.
On Oct 7, 2020, creditors Surface Energy Partners LP, Kendol C.
Everroad and Jamison Partners, LP filed an involuntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Texas
Case No. 20-32554) against Viziv Technologies. The creditors are
represented by Kenneth Stohner Jr., Esq., at Jackson Walker, LLP.
Judge Stacey G. Jernigan oversees the case.
Cavazos Hendricks Poirot, PC is the Debtor's bankruptcy counsel.
The Debtor tapped Allred & Wilcox, PLLC, The Beckham Group and King
& Fisher Law Group, PLLC as its special counsel, and Stout Risius
Ross, LLC as its investment banker.
WC 4TH AND COLORADO: March 31 Plan Confirmation Hearing Set
-----------------------------------------------------------
On Feb. 23, 2021, the U.S. Bankruptcy Court for the Western
District of Texas conducted a hearing to consider approval of the
Second Amended Disclosure Statement in Support of Second Amended
Chapter 11 Plan of Reorganization filed by debtor WC 4th and
Colorado, LP.
On February 24, 2021, Judge Tony M. Davis approved the Disclosure
Statement and ordered that:
* March 24, 2021 at 5:00 p.m. is fixed as the last day for
filing and serving written objections to confirmation of the Plan.
* March 24, 2021 at 5:00 p.m. is fixed as the last day for
submitting ballots for acceptances or rejections of the Plan.
* March 26, 2021 at 5:00 p.m. is fixed as the last day for the
counsel for the Debtor to file with the Court a ballot summary in
the form required by Local Bankruptcy Rule 3018(b) with a copy of
the ballots.
* March 31, 2021 at 9:00 a.m. at the U.S. Bankruptcy Court,
Courtroom No. 1, 903 San Jacinto Blvd., Austin, Texas via Webex is
the hearing on the confirmation of the Plan.
A full-text copy of the order dated Feb. 24, 2021, is available at
https://bit.ly/2OkEOaQ from PacerMonitor.com at no charge.
Proposed Attorneys for the Debtor:
Omar J. Alaniz, Esq.
Michael P. Cooley, Esq.
Devan J. Dal Col, Esq.
Reed Smith LLP
2850 N. Harwood, Suite 1500
Dallas, TX 75201
Tel: (469) 680-4200
Fax: (469) 680-4299
About WC 4th and Colorado
WC 4th and Colorado, LP, is an Austin, Texas-based single asset
real estate debtor (as defined in 11 U.S.C. Section 101(51B)).
WC 4th and Colorado sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W. D. Texas Case No. 20-10881) on Aug. 4,
2020. Brian Elliot, authorized agent, signed the petition. At the
time of the filing, the Debtor had estimated assets of between $10
million and $50 million and liabilities of between $1 million and
$10 million.
Mark Ralston, Esq., is the Debtor's legal counsel.
WC 8120 RESEARCH: Unsecured Creditors Owed $74,967 to Recover 100%
------------------------------------------------------------------
WC 8120 Research, LP, filed an Amended Plan and an Amended
Disclosure Statement on Feb. 26, 2021.
The Disclosure Statement describes the Debtor's Plan, which
provides for the reorganization of the Debtor and the treatment
(and payment in full) of all Allowed Claims against and Interests
in the Debtor.
The Debtor owns approximately 42,000 square feet of real property
improved by an income-producing retail shopping center in Austin
(the "Property"). There are over 10 tenants at the Property, which
diversifies the Debtor's income stream.
Since the filing of this case, the Debtor has been in the process
of investigating potential claims and causes of action against
Noteholder, including (but not limited to) potential claims and
causes of action stemming from Noteholder's interference with the
Debtor's operations and efforts to reorganize. The Debtor reserves
the right to conduct discovery of and/or examine, pursuant to
Federal Rule of Bankruptcy Procedure 2004, any entity in connection
with their investigation. The Debtor also reserves any and all
rights to assert potential claims and causes of action against
Noteholder and any parties working in concert with Noteholder (each
such assertion of rights, a "Noteholder Action").
The Property is the Debtor's principal asset. The Debtor will in
short order be submitting an appraisal prepared by Ankura
Consulting Group, LLC, completed in accordance with the Uniform
Standards of Professional Appraisal Practice (USPAP) and the Code
of Professional Ethics and Standards of Professional Appraisal
Practice of the Appraisal Institute. The Debtor believes the
professional appraisal will substantiate a significant equity
cushion in the Property of over $5 million.
The Plan provides:
* Class 1 - Bancorp-South Bank totaling $4,343,167 will be paid
from cash from proceeds of refinancing or sale on or before October
6, 2021. Interest will accrue post- Effective Date at 4.25%.
* Class 3 - Allowed Secured Claims of Allkin totaling $118,441
will be paid in full over 60 months, with 25% interest.
* Class 4 - Allowed Unsecured Claims totaling $74,967 will
receive payment in full of the allowed amount of each holder's
claim, to be paid on the later of 30 days after the Effective Date
or 10 days after such Claim becomes an Allowed Claim.
All consideration necessary for the payment or tender of
Distributions under the Plan will be derived from (i) Cash on hand
on the Effective Date, (ii) income generated by the Reorganized
Debtor from operations, and (iii) the proceeds from any sale or
refinancing of the Property.
Counsel for the Debtor:
Mark H. Ralston
State Bar No. 16489460
Fishman Jackson Ronquillo PLLC
Three Galleria Tower
13155 Noel Road, Suite 700
Dallas, TX 75240
Telephone: (972) 419-5544
Facsimile: (972) 4419-5500
E-mail: mralston@fjrpllc.com
A copy of the Interim Order is available at https://bit.ly/2ML3jNX
from PacerMonitor.com.
About WC 8120 Research LP
WC 8120 Research LP is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)) based in Austin, Texas.
WC 8120 Research sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Tex. Case No. 20-11106) on Oct. 6,
2020. The petition was signed by Natin Paul, manager of general
partner. At the time of the filing, the Debtor had estimated
assets of between $10 million and $50 million and liabilities of
between $1 million and $10 million. Fishman Jackson Ronquillo PLLC
is the Debtor's legal counsel.
WILLCO X DEVELOPMENT: Disclosures Deadline Extended to March 29
---------------------------------------------------------------
Judge Thomas B. McNamara has entered an order extending by 30 days,
through and including March 29, 2021, Willco X Development, LLLP's
deadline to file a Plan and a Disclosure Statement.
In seeking an extension, the Debtor explained that it has just
received an offer to purchase the hotel, which offer is currently
in the process of being negotiated. A sale of the hotel would
greatly impact the contents of the Disclosure Statement. Indeed,
the sale will become the focus of the Disclosure Statement if a
sale contract is pending.
The purchase offer is clearly made in good faith and appears to be
within the financial ability of the purchaser to perform, however,
additional due diligence on the part of the Debtor is necessary and
ongoing.
The foregoing notwithstanding, the Plan, as drafted, would
accommodate a sale as contemplated by the pending offer, although
the Disclosure Statement will look quite different and would be
much more specific
About Willco X Development
Willco X Development, LLLP, operator of the Hilton Garden Inn of
Thornton in Colo., filed a Chapter 11 petition (Bankr. D. Colo.
Case No. 20-16438) on Sept. 29, 2020. The Debtor was estimated to
have $10 million to $50 million in assets and liabilities as of the
bankruptcy filing.
Judge Thomas B. Mcnamara oversees the case.
Weinman & Associates, P.C., led by Jeffrey A. Weinman, is the
Debtor's legal counsel.
X-BUILT LLC: Seeks to Hire Century 21 as Realtor
------------------------------------------------
X-Built, LLC seeks approval from the U.S. Bankruptcy Court for the
Northern District of Ohio to employ Century 21 Caroline Riley
Realty as its realtor.
The firm will assist the Debtor in liquidating its real property
908 and 914 Iredell Avenue, Akron, Ohio 44310.
The firm will receive the following compensation:
-- $150 per parcel for appraisal; and
-- 6 percent commission on the sales price for each parcel.
Patrick Riley, specialist at Century 21, disclosed in a court
filing that his firm is disinterested within the meaning of Section
101(14) of the Bankruptcy Code.
The firm can be reached through:
Patrick Riley
Century 21 Caroline Riley Realty
141 Merz Boulevard
Fairlawn, OH 44333
Phone: 330-388-8611
Fax: 330-864-4121
About X-Built LLC
X-Built, LLC sought Chapter 11 protection (Bankr. N.D. Ohio Case
No. 20-52045) on Nov. 12, 2020. At the time of the filing, the
Debtor disclosed assets of between $100,001 and $500,000 and
liabilities of the same range.
Judge Alan M. Koschik oversees the case.
The Debtor tapped David A. Mucklow, Esq., and Aaron A. Ridenbaugh,
Esq., as its legal counsel.
YOUFIT HEALTH: Wins May 8 Plan Exclusivity Extension
----------------------------------------------------
Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District
of Delaware extended the periods within which YouFit Health Clubs,
LLC and its affiliates have the exclusive right to file a Chapter
11 plan through and including May 8, 2021, and to solicit votes
through and including July 9, 2021.
Among other things, the Debtors have been focused on myriad
time-sensitive items, including preparing the schedules and
statements of financial affairs, marketing the Debtors' assets and
obtaining approval of bidding procedures, and conducting a sale
process, and obtaining the Court's approval of a sale of their
assets. These processes have required substantial time and
attention of the Debtors' management in addition to operating the
Debtors' business. These facts warrant an extension of the
Exclusivity Periods while the Debtors complete the closing of the
Sale and engage in further restructuring efforts.
The Debtors have made substantial progress in negotiations with
their major stakeholders. Indeed, the Debtors have filed a Plan
that incorporates a global settlement reached among the Debtors,
the Committee, and the Debtors' secured lenders.
The Debtors are paying their bills in the ordinary course of
business as they become due and will continue to do so during the
pendency of these chapter 11 cases. Also, the Debtors are not
seeking to extend the Exclusivity Periods to pressure creditors to
accede to the Debtors' reorganization demands. Rather, the Debtors
have negotiated a largely consensual Sale and filed the Plan.
Therefore, because the Debtors have already resolved the key issues
in these cases with their key stakeholders, the extension will not
be used to coerce creditors.
A copy of the Debtor's Motion to extend is available at
https://bit.ly/2ZYB41p from donlinrecano.com.
A copy of the Court's Extension Order is available at
https://bit.ly/3uXuAOC from donlinrecano.com.
About YouFit Health Clubs
YouFit Health Clubs, LLC, and its affiliates --
https://www.youfit.com/ -- own and operate 85 fitness clubs in the
states of Alabama, Arizona, Florida, Georgia, Louisiana, Maryland,
Pennsylvania, Rhode Island, Texas, and Virginia.
On November 9, 2020, YouFit Health Clubs and its affiliates sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-12841).
YouFit was estimated to have $50 million to $100 million in assets
and $100 million to $500 million in liabilities as of the filing.
The Honorable Mary F. Walrath is the case judge. The Debtors tapped
Greenberg Traurig LLP as its bankruptcy counsel, FocalPoint
Securities LLC as an investment banker, Red Banyan Group LLC as a
communications consultant, and Hilco Real Estate LLC as a real
estate advisor. Donlin Recano & Company Inc. is the claims agent.
On Nov. 18, 2020, the U.S. Trustee for Region 3 appointed a
committee to represent unsecured creditors in the Debtors' Chapter
11 cases. The committee tapped Berger Singerman LLP and Pachulski
Stang Ziehl & Jones LLP as its legal counsel, and Dundon Advisers
LLC as its financial advisor.
YUM! BRANDS: Moody's Affirms Ba2 CFR & Alters Outlook to Stable
---------------------------------------------------------------
Moody's Investors Service affirmed Yum! Brands Inc.'s Ba2 corporate
family rating, Ba2-PD probability of default rating and B1 senior
unsecured ratings. Moody's also affirmed KFC Holdings Co.'s Ba1
senior secured ratings and Ba3 senior unsecured ratings. Yum's
speculative grade liquidity rating was upgraded to SGL-1 from
SGL-2. In addition, Moody's assigned a Ba1 rating to KFC's proposed
$1.25 billion senior secured revolving credit facility, $750
million senior secured term loan A and $1.5 billion senior secured
term loan B. The outlook for Yum was changed to stable from
negative. In addition, Moody's assigned a stable outlook to KFC.
The proposed financing will extend the maturities of the $1.25
billion revolver and $750 million term loan A to 2026 and the $1.5
billion term loan B to 2028. The increase in the TL A along with
additional balance sheet cash will be used to paydown a portion of
the TL B.
"The affirmation and stable outlook reflects Yum's improving
operating performance that is gradually strengthening credit
metrics and its improved liquidity. We expect the trends in same
store sales to improve in 2021 due in part to easier comparisons to
prior year and as restrictions begin to lessen over time" stated
Bill Fahy, Moody's Senior Credit Officer. "Yum's very good
liquidity provides it with the ability to manage the uncertainties
that still exist due to the continued government restrictions and
as its reduces leverage to be in line with its net leverage target
of around 5.0x," Fahy added. The upgrade to SGL-1 reflects Yum's
$1.25 billion undrawn revolver, material cash balances and positive
free cash flow.
Affirmations:
Issuer: KFC Holding Co.
Senior Secured Bank Credit Facility, Affirmed Ba1 (LGD2)
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD4)
Issuer: Yum! Brands Inc.
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)
Senior Unsecured Shelf, Affirmed (P)B1
Assignments:
Issuer: KFC Holding Co.
Senior Secured Revolving Credit Facility, Assigned Ba1 (LGD2)
Senior Secured Term Loan A, Assigned Ba1 (LGD2)
Senior Secured Term Loan B, Assigned Ba1 (LGD2)
Upgrades:
Issuer: Yum! Brands Inc.
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: Yum! Brands Inc.
Outlook, Changed To Stable From Negative
Issuer: KFC Holding Co.
Outlook, Changed To Stable From No Outlook
RATINGS RATIONALE
Yum's Ba2 CFR benefits from the continuation of drive-through,
delivery and curbside pick-up operations, its very good liquidity
to manage through the uncertainty that still exist due to the
coronavirus and government restrictions, as well as Moody's
expectation that Yum will manage the business to achieve its
targeted leverage of about 5.0 times (as defined by Yum) in the
first half of 2021. Yum also benefits from its significant scale,
geographic reach, brand diversity and franchise based business
model which has helped add stability to revenues and earnings
during the pandemic as compared to some other restaurant operators.
Yum is constrained by its relatively high leverage driven in part
by its target net leverage and reliance on securitizations to
support cash flows.
The stable outlook reflects our view that same store sales will
continue to improve and help drive higher earnings that Moody's
expect to result in lower leverage while maintaining good interest
coverage and very good liquidity despite ongoing government
restrictions imposed as a result of the pandemic. The stable
outlook also anticipates that the company follows a prudent
financial policy towards dividends and share repurchases and
maintains very good liquidity.
The coronavirus outbreak, the government measures put in place to
contain it, and the weak global economic outlook continue to
disrupt economies and credit markets across sectors and regions.
Moody's analysis has considered the effect on the performance of
the restaurant sector from the current weak U.S. economic activity
and a gradual recovery for the coming months. Although an economic
recovery is underway, it is tenuous and its continuation will be
closely tied to containment of the virus. As a result, the degree
of uncertainty around Moody's forecasts is unusually high. Moody's
regards the coronavirus outbreak as a social risk under Moody's ESG
framework, given the substantial implications for public health and
safety.
Yum's board of directors is a good mix of industry and industry
related experience, as well as directors with large company
experience and varied periods of board tenure. Yum's board has 12
members, 11 of which are independent. The board's involvement in
business strategy, succession planning and responsible leadership
are also important qualitative factors and served it well during
the orderly transition and appointment of two different CEO's over
the past 5-years.
Restaurants are deeply entwined with sustainability, social and
environmental concerns given their operating model with regards to
sourcing food and packaging, as well as having an extensive labor
force and constant consumer interaction. While these may not
directly impact the credit, these factors could impact brand image
and change consumer perception of the brand overall.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could result in an upgrade include a sustained
improvement across all restaurant concepts along with a financial
policy that results in debt to EBITDA sustained below 5.0 times and
EBIT to Interest sustained above 3.0 times. A higher rating would
also require at least very good liquidity.
Factors that could result in a downgrade include an inability to
strengthen credit metrics from current levels under current
conditions or if restrictions on restaurants were lifted.
Specifically, ratings could be downgraded if debt to EBITDA
remained at or above 5.7 times or EBIT to Interest was below 2.5
times on a sustained basis.
Yum is headquartered in Louisville, Kentucky, and is the owner,
operator and franchisor of quick service restaurants with brands
that include KFC, Taco Bell, Pizza Hut and the Habit Burger Grill.
Revenues are around $4.3 billion (excluding franchise contributions
for advertising) although systemwide sales exceed $50 billion.
The principal methodology used in these ratings was Restaurant
Industry published in January 2018.
ZENITH ENERGY: Fitch Withdraws B- LongTerm Issuer Default Rating
----------------------------------------------------------------
Fitch Ratings has affirmed Zenith Energy U.S. Logistics Holdings,
LLC's (Zenith) Long-Term Issuer Default Rating (IDR) at 'B-' and
its senior secured term loan and senior secured revolver at
'B'/RR3'. The Recovery Rating reflects Fitch's expectations of a
good recovery in the event of a default. The Outlook remains
Negative. Simultaneously, Fitch has withdrawn the ratings.
Fitch has withdrawn the ratings for commercial reasons.
KEY RATING DRIVERS
Leverage Drives Negative Outlook: Zenith's leverage (defined by
Fitch as total debt to operating EBITDA) is expected to be high
even though it decreased to just under 6.0x on a pro forma basis at
YE20 from 10.0x at YE19. Pro forma YE20 leverage improved due to
the West Coast terminals, which greatly benefited from higher
storage. Fitch expects that leverage may be in a range of 7.2x to
7.6x by YE21.
New Terminals Increase Cash Flow: Zenith has been growing via
acquisitions. As part of the company's strategy to enhance its
position in the Midwest, Marcellus and Utica, Zenith acquired three
bulk terminal storage assets located in Ohio, Pennsylvania, and
West Virginia in February 2021. Total storage capacity for the
three terminals is 560,000 barrels. These assets will be used for
renewable diesel, biofuel and ethanol storage.
In October 2020, Zenith made a significant acquisition when it
purchased three West Coast crude terminals from Plains All
American. In total, the three terminals have storage of 8.2 million
barrels, which greatly increases Zenith's total storage capacity.
The terminals are connected to deep water docks and pipelines from
northern California as well as systems in southern California.
Capex and Liquidity: Zenith's capex program is relatively large,
considering the size of the company's cash flows. Liquidity is
sufficient and is limited to availability on its secured revolver
and equity injections from its sponsor. Cash on the balance sheet
remains minimal.
Strategy and Growth: The company's strategy is to focus on
secondary markets with limited competition. The assets were
acquired through several acquisitions and consist of terminaling,
storage, throughput and transloading facilities spread across the
U.S. Lower 48. Zenith has numerous terminals in diverse locations
throughout the U.S.
Arc Logistics Partners LP (ARCX) agreed in August 2017 to be
acquired by Zenith, a portfolio company of sponsor Warburg Pincus
LLC and Kelso & Company, L.P. ARCX was viewed as lacking size and
scale, and had limited access to public capital markets, which
hindered its growth as a master limited partnership. Zenith has
access to equity funding through its sponsors and eliminated
distributions.
Take-or-Pay Contracts: Management estimates approximately
two-thirds of revenues are from take-or-pay contracts. These
arrangements remove direct commodity price exposure, benefiting
Zenith's cash flows. However, Zenith's average contract life is
just under two and a half years leaving recontracting risk as a
concern.
Gulf LNG Uncertainty: Legal battles continue for Gulf LNG and its
two customers and the outcome is unknown. While Gulf LNG's debt is
in place, Gulf LNG cannot pay out distributions to its owners and
Zenith owns a 15.8% stake. It is expected that Gulf LNG's debt will
be fully repaid by mid-2021 and Zenith will once again receive
distributions provided the one customer continues to pay under the
terms of the original contract. Debt at Gulf LNG is non-recourse to
Zenith.
DERIVATION SUMMARY
Zenith's terminaling and storage assets are relatively small
compared with higher rated peers primarily focused on crude oil.
Zenith lacks the competitive advantage of ITT Holdings LLC's
(BB+/Stable) strategic location in the New York Harbor and on the
lower Mississippi River. Zenith also lacks the size, scale and
diversity of other storage and terminal operators, such as Kinder
Morgan, Inc. (BBB/Stable); Buckeye Partners, L.P. (BB/Stable); and
NuStar Energy LP (BB-/Stable). Fitch typically views small-scale
standalone midstream companies with EBITDA below $100 million as
possessing higher risk credit profiles due to business
concentration risk, leading to lower competitive and financial
advantages that larger scale and diversity generally provide.
Zenith is best compared to similarly rated Rockpoint Gas Storage
Partners, L.P. (ROCGAS, B-/Stable), another small storage company.
However, ROCGAS is focused on natural gas storage, generates more
EBITDA than Zenith and has significantly lower leverage. Fitch
expects ROCGAS to have leverage of 5.3x at fiscal YE21, much lower
than Fitch's forecast of 7.2x to 7.6x at YE21. Both Zenith and
ROCGAS issuers have supportive sponsors.
TransMontaigne Partners LLC (BB/Stable) is a terminaling company
operating in 20 U.S. states, with slightly less storage capacity
than ITT Holdings and significantly greater capacity than Zenith.
TransMontaigne is focused on refined products, and 100% of its
revenue comes from fee-based contracts, roughly 75%-80% of which is
take or pay. TransMontaigne has slightly larger EBITDA than ROCGAS
and much lower leverage than Zenith. Fitch expects TransMonaigne's
leverage to approach 4.0x in the forecast period.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Total capex is largely unchanged in 2021 against 2020;
-- Adjusted EBITDA in 2021 is lower than 2020 on a pro forma
basis only because the West Coast terminals had an exceptional
2020;
-- Since there is uncertainty about the Gulf LNG arbitration
outcome, no cash distributions are assumed from a favorable
resolution.
For the Recovery Rating Fitch utilized a going-concern approach
with a 6.0x EBITDA multiple, which is in line with recent
reorganization multiples in the energy sector. There have been a
limited number of bankruptcies and reorganizations within the
midstream space, but bankruptcies at Azure Midstream Partners, LP
and Southcross Holdco had multiples between 5.0x and 7.0x by
Fitch's best estimates. In its bankruptcy case study report Energy,
Power and Commodities Bankruptcy Enterprise Value and Creditor
Recoveries (2019 Fitch Case Studies) published in April 2019, the
median enterprise valuation exit multiplies for 29 energy cases for
which this measurement was available was 6.7x, with a wide range of
multiples observed.
Fitch's corporate recovery analysis uses $53 million sustainable,
post-default EBITDA, mainly reflecting the loss of customer
contracts as they come up for renewal. The estimated going-concern
value then allocated 10% of the value for administrative claims.
The distributable value was allocated to the first-lien secured
credit facility and term loan on a pari passu basis. Fitch's
recovery scenario analysis results in a recovery rating of 'RR3'.
RATING SENSITIVITIES
Rating sensitivities do not apply as the ratings have been
withdrawn.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Zenith had $37 million available on its $50
million secured revolver as of Dec. 31, 2020. The secured credit
facility matures in December 2022. In addition, its sponsors have
provided additional liquidity.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch removed $5.7 million from 2018 revenues to adjust for a
one-time contract termination payment. For adjusted EBITDA, cash
distributions from unconsolidated affiliates were added to adjusted
EBITDA, rather than adding equity earnings. Fitch also removed $0.2
million in 2017, $2.7 million in 2018 and $1.0 million from the net
income associated to noncontrolling interest. A standard multiple
of 8.0x is applied to operating lease expense to derive
lease-equivalent debt.
ESG CONSIDERATIONS
Zenith has an ESG Relevance Score of '4' for Governance Issues for
its Group Structure. The company operates under a complex group
structure with exposure to financial issues arising elsewhere in
the group. This has a negative impact on its 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.
Following the withdrawal of ratings for Zenith, Fitch will no
longer be providing the associated ESG Relevance Scores.
[*] One-Year Extension of Subchapter V's $7.5M Debt Ceiling Pushed
------------------------------------------------------------------
Kwame Akuffo, Patrick Fitzmaurice, and Patrick Potter of Pillsbury
Winthrop Shaw Pittman LLP wrote on JDSupra an article titled
"Subchapter V Alert–Congress Begins Legislative Action to Extend
$7.5 Million Debt Ceiling, Which Remains Set to Expire on March 27,
2021, if Not Passed and Enacted".
Congress introduces legislation to extend the $7.5 million debt
ceiling for Subchapter V eligibility for an additional year to
March 27, 2022.
TAKEAWAYS
Subchapter V was designed to be a cost-effective distress tool for
small business debtors and allow debtors to retain ownership of the
business and obtain fast-track reorganization.
New legislation seeks to extend the chapter 11 alternative for
companies with debts between $2,725,625 and $7.5 million.
If the legislation is not passed and enacted by March 27, 2021,
then Subchapter V filings could spike by end of March and a
reportedly successful chapter 11 alternative for companies with
debts exceeding $2,725,625 could evaporate.
This is our third alert on Subchapter V issues, the first being on
the CARES Act's expansion of eligibility under Subchapter V, and
the second regarding recent changes to section 365(d)(3) of the
Bankruptcy Code. Here, we discuss the potential implications of the
expiring $7.5 million debt ceiling and newly introduced legislation
to extend the debt ceiling for an additional year to March 27,
2022.
Subchapter V Small Business Reorganizations
The Small Business Reorganization Act ("SBRA") went into effect on
February 19, 2020. SBRA added "Subchapter V" to the Bankruptcy
Code, which affords small business debtors the option of pursuing
chapter 11 restructuring under either the substantive, and
procedural laws and rules of (a) "traditional" chapter 11, or (b)
Subchapter V. SBRA was designed to provide certain benefits for
small businesses, including no disclosure statement requirement or
creditor's committee, no competing plans or U.S. Trustee quarterly
fees, payment of administrative expense claims through the life of
a Subchapter V plan and abolition of the absolute priority rule.
As originally enacted, a debtor was eligible for Subchapter V if it
owes less than $2,725,625 million in non-contingent, liquidated
secured and unsecured debts. Subsequently, the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act), enacted March 27,
2020, increased the eligibility debt ceiling to $7.5 million until
March 27, 2021. We observe that statistics show many small
businesses have taken advantage of the increased eligibility
window. According to the American Bankruptcy Institute (ABI), more
than 1100 Subchapter V cases were filed after the CARES Act's
effective date. As of this writing, more than 200 Subchapter V
cases have been filed in 2021. Since SBRA went effective, most
Subchapter V cases have been filed in the Fifth, Ninth, and
Eleventh Circuits.
The Subchapter V alternative to traditional chapter 11 is
cost-effective and has reportedly been a success. See, e.g., In re
Ellingsworth Residential Cmty. Ass'n, Case No. 20-01346 (KSJ) [Dkt.
No. 340] (Bankr. M.D. Fla. Oct. 16. 2020)(eight months); In re
Desert Lake Group, LLC, Case. No. 20-22496 (KRA) [Dkt. No. 115]
(Bankr. D. Utah Sept. 30, 2020) (five months); In re Olson, Case
No. 20-23408 (RKM) [Dkt. No. 59](Bankr. D. Utah Sept. 16,
2020)(four months); In re Sustainable Restaurant Holdings, Inc.,
Case No. 20-11087(JTD)[Dkt. No. 212](Bankr. D. Del. July 16,
2020)(two months). According to judges and other constituents, most
cases are successful where the Subchapter V Trustee is proactive in
facilitating a consensual plan and settlements, particularly in the
early stages of the case. Cases are also reportedly more successful
when small business debtors develop reliable projections.
On February 25, 2021, it was reported that Senators Dick Durbin
(D-IL) and Chuck Grassley (R-IA)introduced a legislation to extend
the expiring debt ceiling for an additional year to March 27, 2022.
The new legislation, COVID-19 Bankruptcy Relief Extension Act,
seeks to provide additional relief for small businesses continuing
to face economic challenges due to the ongoing COVID-19 pandemic.
The proposed legislative extension may be encouraging news to some.
However, the proposed legislation also seeks to extend several
modifications made under the CARES Act to the Bankruptcy Code
(e.g., statutory definitions of current monthly income and
disposable income in chapter 7 and 13 cases, respectively), which
may or may not be more controversial. Until the uncertainty of the
proposed legislation is removed by passage and enactment, one might
expect to see a spike in Subchapter V filings between now and March
27, 2021.
Conclusion
Subchapter V was designed as an option for small businesses and a
cost-effective distress tool that could allow debtors to retain
ownership of their business and obtain a fast-track process to
reorganization.
The new legislation may be welcome news for companies with debts
between $2,725,625 and $7.5 million, who would otherwise be forced
to file for the more cumbersome traditional chapter 11 or forgo
bankruptcy altogether and likely liquidate if the current debt
ceiling is not extended. However, it is not obvious that the
legislation will be passed and enacted in time, in part due to
other features of the proposed legislation.
Absent a solution to fast-track the new legislation extending the
current debt ceiling, it would be understandable to see an increase
in Subchapter V filings between now and March 27, 2021.
*********
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