/raid1/www/Hosts/bankrupt/TCR_Public/210609.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, June 9, 2021, Vol. 25, No. 159
Headlines
110 WEST PROPERTIES: Court Approves Disclosure Statement
975 WALTON: Wins Cash Collateral Access Thru Aug. 31
ADARA ENTERPRISES: Unsecureds Unimpaired in Amended Plan
ADVAXIS INC: Stockholders Approve Amendment to 2015 Incentive Plan
ARLINGTON DOUBLE DOWN: May Use Cash Collateral Up to 75% of Budget
AULT GLOBAL: Appoints Glen Tellock as Director
BGS WORKS: Plan Filing Deadline Extended to June 14
BLINK CHARGING: CEO Michael Farkas Signs Three-Year Contract
BOMBARDIER INC: S&P Rates New US$1BB Senior Unsecured Notes 'CCC'
BREWSA BREWING: Unsecured Claims Will Recover 10% in Plan
CADIZ INC: To Sell $15 Million Worth of Common Shares
CARLA'S PASTA: July 30 Extension of Cash Collateral Access OK'd
CASTEX ENERGY: Further Fine-Tunes Plan Documents
CASTEX ENERGY: Gets Ch. 11 Plan Court Confirmation With New Deal
CATHOLIC BISHOP OF CHICAGO: Moody's Rates 2021 Senior Bonds 'Ba1'
CHICK LUMBER: Seeks Continued Cash Collateral Access
CRESTWOOD EQUITY: S&P Affirms 'BB-' ICR, Alters Outlook to Stable
CRESTWOOD HOSPITALITY: U.S. Trustee Unable to Appoint Committee
CYCLE FORCE: Gets OK to Hire CR3 Partners as Financial Advisor
CYCLE FORCE: Hires Miller & Company as Ordinary Course Professional
DIGIPATH INC: Edmond DeFrank Quits as Director
EAGLE HOSPITALITY: Sells Four Properties Under Ch. 11 for $116 Mil.
ENVISION HEALTHCARE: S&P Upgrades ICR to 'CCC+', Outlook Negative
FIELDWOOD ENERGY: Asks Court for Delay of Confirmation Hearing
FIELDWOOD ENERGY: Cain & Skarnulis Advises 2 Tort Claimants
FORD STEEL: Taps James Pratt of Colliers as Real Estate Agent
FURNITURE FACTORY: $7M Sale to American Freight to Fund Plan
GAP INC: Moody's Affirms Ba2 CFR & Alters Outlook to Stable
GARTNER INC: S&P Upgrades ICR to 'BB+' on Reduced Leverage Target
GILBERT MH: Litigation vs. Hospital to Fund Payments to Unsecureds
GLOBAL CARIBBEAN: U.S. Trustee Unable to Appoint Committee
GLOBAL DISCOVERY: Taps Robertson & Culver as Special Counsel
GNIRBES INC: Unsecured Creditors to Get $1,800 in Plan
GREAT AMERICAN: Court Conditionally Approves Disclosure Statement
GVS PORTFOLIO I B: RREF III Storage Wins Case Dismissal
HEARTLAND DENTAL: S&P Upgrades ICR to 'B-', Outlook Stable
JAGUAR HEALTH: Reveals Initial Funding of US$10.8M Into Dragon SPAC
JUST ENERGY: Provides Update on CCAA Process, TSX Share Listing
KINSER GROUP II: Seeks to Hire Quarles & Brady as Legal Counsel
LIBERTY POWER: Gets OK to Hire Berkeley, Appoint CRO
LIBERTY POWER: Taps Genovese, Joblove & Battista as Legal Counsel
LITTLE DRUG CO: Court OKs Use of Cash Collateral Thru July 7
LTI HOLDINGS: GM Nameplate Acquisition No Impact on Moody's B3 CFR
M&E TRUCK: Debtor to File Plan on or Before June 30
MADDOX FOUNDRY: Aug. 5 Hearing on Disclosure Statement
MADISON IAQ: S&P Assigns Prelim 'B' ICR on Merger, Outlook Stable
MAH 710 PARK: Case Summary & 2 Unsecured Creditors
MALLINCKRODT PLC: Avoids Acthar Estimation Claims Hearing for Now
MALLINCKRODT PLC: Willkie, et al. 2nd Update on Attestor Claimants
MARY'S WOODS: Fitch Assigns 'BB' IDR, Outlook Stable
MAXLINEAR INC: Moody's Rates New 1st Lien Credit Facilities 'Ba3'
MCKISSOCK INVESTMENT: S&P Assigns 'B-' ICR, Outlook Stable
MERCURITY FINTECH: Reports First Quarter 2021 Financial Results
MOTIVA PERFORMANCE: Accord over Botched Car Upgrade Okayed
NATIONAL TRACTOR: Taps Jordan Legal Group as Real Estate Counsel
NEELKANTH HOTELS: Unsecureds to Get Payments Until August 2025
NEW YORK CLASSIC: S.D.N.Y. Judge Won't Toss Chapter 11 Case
ORIGINAL RIVERFRONT: Wins Cash Collateral Access Thru June 30
PEABODY ENERGY: S&P Lowers ICR to 'SD' on Distressed Exchange
PHD GROUP: S&P Alters Outlook to Stable, Affirms 'CCC+' ICR
PHUNWARE INC: Completes Integration of Mobile Platforms With CFSA
PREMIER DENTAL: S&P Upgrades Long-Term ICR to 'B-', Outlook Stable
PROSITE LLC: CCG Seeks Adequate Protection
PURDUE PHARMA: August 9 Plan Confirmation Hearing Set
PURDUE PHARMA: Court Approves Disclosures After Changes
PURDUE PHARMA: PI Trust Enters Claims Settlement with the US
RANDOLPH HOSPITAL: Wins Cash Collateral Access Thru July 1
RAPTOR ACQUISITION: Fitch Assigns 'B+(EXP)' Issuer Default Rating
RIVERDALE FINANCE: Fitch Affirms BB Rating on 2018A Bonds
S-TEK 1: Wins Cash Collateral Access Thru Aug 31
SANTA CLARITA: Supplements Disclosures for 100% Plan
SEALED AIR: S&P Affirms 'BB+' Issuer Credit Rating, Outlook Stable
SEAWIND DEVELOPMENT: Voluntary Chapter 11 Case Summary
SHARPE CONTRACTORS: Updates Selective & MPI's Secured Claims
SKLAR EXPLORATION: Committee, Bank Extend Challenge Period
SPANISH HEIGHTS: Unsecureds Creditors to Split $10,000 in Plan
SUN PACIFIC: Signs Deal to Secure Permanent Financing for Project
TEAM HEALTH: S&P Affirms 'B-' Issuer Credit Rating, Outlook Neg.
TECT AEROSPACE: To Proceed With Bankruptcy Auction
TIMBER PHARMACEUTICALS: Adjourns Annual Meeting Until July 1
TOWN SPORTS: Moreno-Cuevas Row Won't Proceed to Mediation
TROIKA MEDIA: Incurs $4.7 Million Net Loss in Third Quarter
UNITED PF: S&P Affirms 'CCC+' Issuer Credit Rating, Outlook Neg.
US CONSTRUCTION: Cash Collateral Use Until August 15 OK'd
VIDEOTRON LTEE: S&P Rates New C$400MM & US$500MM Unsec Debt 'BB+'
VIENTO WINES: Court Grants Cash Collateral Access Until June 30
VIP PHARMACY: Debtor's Amended Plan Due on June 30
VISTA PROPPANTS: Names Herron as Exec. Chairman After Ch. 11 Exit
WAGYU 100: Court Conditionally Approves Disclosure Statement
WARDMAN HOTEL: Chapter 11 Sale Plans Ignore Contracts, Say Unions
WILLCO XII: Court Extends Cash Collateral Access Until July 31
WOODBRIDGE HOSPITALITY: Seeks Cash Collateral Access Thru Sept. 30
WOODBRIDGE HOSPITALITY: Wilmington Trust Seeks to Bar Cash Access
ZEFNIK LLC: Voluntary Chapter 11 Case Summary
ZIG ZAG DOUGH: May Use Cash Collateral on Interim Basis
[*] Commercial Chapter 11 Filings Decreased by 66% in May
*********
110 WEST PROPERTIES: Court Approves Disclosure Statement
--------------------------------------------------------
Upon the Court having reviewed and considered the 110 West
Properties, LLC's Disclosure Statement Dated April 13, 2021; the
objection of Tarzana Crossing to that proposed Disclosure Statement
and all related documents including the proposed Plans to which the
initial and amended Disclosure Statements relate, argument of
counsel, good cause appearing, service of the Disclosure Statement
being proper and appropriate and for the reasons stated on the
record at the time of the hearing, Judge Neil W. Bason has entered
an order approving the final approval of the Amended Disclosure
Statement of 110 West Properties, LLC.
Bankruptcy and Litigation Counsel for 110 West Properties, LLC:
Jeffrey G. Huron
DYKEMA GOSSETT LLP
333 South Grand Avenue, Suite 2100
Los Angeles, CA 90071
Telephone: (213) 457-1800
Facsimile: (213) 457-1850
E-mail: jhuron@dykema.com
About 110 West Properties
110 West Properties, LLC, a privately held company in Los Angeles,
filed a voluntary Chapter 11 petition (Bankr. C.D. Cal. Case No.
19-24048) on Nov. 29, 2019. The petition was signed by Richard K.
Ullman, Sr. of RU, LLC, manager of the Debtor. At the time of the
filing, the Debtor disclosed assets of between $10 million and $50
million and liabilities of the same range. Judge Neil W. Bason
oversees the case. Dykema Gossett LLP is the Debtor's legal
counsel.
975 WALTON: Wins Cash Collateral Access Thru Aug. 31
----------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of New York has
authorized 975 Walton Bronx LLC to use cash collateral through
August 31, 2021, pursuant to an agreed budget, with a 10% variance,
and provide adequate protection to lender Walton Improvement Group
LLC.
The Debtor's multi-family residential apartment building in Bronx,
New York, is subject to a first mortgage originally issued by
Investors Bank in the principal sum of $22.5 million. The mortgage
was obtained in connection with the Debtor's acquisition of the
Property in April 2015.
As of the Petition Date, the Debtor is indebted and liable under
the Loan Documents and Transfer Documents in the aggregate
principal amount of not less than $21,667,046 plus alleged accrued
and unpaid interest, fees, costs and expenses.
The Debtor and the Lender have agreed the Debtor may use Cash
Collateral solely in accordance with the terms and conditions of
the Stipulation and the Budget. Before any Professional Person may
be paid from the Cash Collateral, the Debtor will be required to:
(i) obtain approval from the Court under Bankruptcy Code sections
327 or 328, as applicable, to retain such Professional Person; and
(ii) such Professional Person will have filed a fee application
with the Court under Bankruptcy Code sections 330 or 331, as
applicable, which fee application will have been approved pursuant
to an order entered by the Court. For the avoidance of doubt, the
Lender is not required in any manner whatsoever to consent to the
Debtor's use of cash, the Prepetition Collateral, and/or the Cash
Collateral after the Specified Period (or any subsequent extension
of such period) or the Termination Date. The Debtor reserves the
right to seek modifications of the Budget either with the written
consent of the Lender or the approval of the Bankruptcy Court.
As adequate protection, the Lender is granted a valid and perfected
replacement security interest in, and lien on, all of the Debtor's
now owned and hereafter acquired real and personal property.
The Adequate Protection Liens will be first-priority perfected
liens on all of the Adequate Protection Collateral subject only to
(A) a valid, perfected, non-avoidable, and enforceable lien in
existence on or as of the Petition Date, (B) a valid and
unavoidable lien in existence for amounts outstanding as of the
Petition Date that is perfected after the Petition Date as
permitted by section 546(b) of the Bankruptcy Code, and (C) the
Carve Out.
Subject to the Carve Out, the Adequate Protection Liens will be
binding upon all parties in interest in the Chapter 11 Case.
As further adequate protection for the Debtor's Adequate Protection
Obligations, the Lender is granted allowed superpriority
administrative expense claims in the Chapter 11 Case in the amount
of the Adequate Protection Obligations.
As further adequate protection for the Debtor's use of Cash
Collateral, the Debtor will pay to the Lender by wire transfer (a)
the monthly sum of $101,682 beginning on May 1, 2021, and
continuing monthly thereafter on or before the 10th day of each
consecutive succeeding month plus (b) within three business days
after entry of the Stipulation, $217,889.66 in respect of the
period from the Petition Date through April 30, 2021. The Adequate
Protection Payments may be sourced from Cash Collateral or
contributions made to the Debtor by its owners.
These events constitute Events of Default:
(a) The entry of an order of the Court terminating the
Debtor's right to use Cash Collateral;
(b) The failure by the Debtor to materially perform and/or
abide by any of the terms, provisions, conditions, covenants, or
obligations under this Stipulation or the Budget, which failure
continues for seven days after email notice to counsel for the
Debtor and an opportunity to cure;
(c) The entry of any order by the Court granting relief from
or modifying the automatic stay of Bankruptcy Code section 362(a)
with respect to the Property or any other material asset of the
Debtor;
(d) Dismissal of the Chapter 11 Case or conversion of the
Chapter 11 Case to a chapter 7 case, the appointment of a chapter
11 trustee or examiner with enlarged powers (or other responsible
person in the Chapter 11 Case) pursuant to section 1104 of the
Bankruptcy Code, or upon the appointment of any other fiduciary
charged with serving as a legal representative of the Debtor in the
Chapter 11 Case or any Successor Case;
(e) A default by the Debtor in complying with any of the
Reporting Requirements under the Stipulation which failure is not
cured for seven days after email notice to counsel for the Debtor;
and
(f) A default by the Debtor in paying the Adequate Protection
Payments, which is not cured within one business day after email
notice to counsel for the Debtor.
The "Carve Out" means: (a) fees under 28 U.S.C. section 1930 and 31
U.S.C. section 3717, (b) all reasonable unpaid fees, costs and
expenses incurred by persons or firms retained by the Debtor or any
Creditors' Committee pursuant to Bankruptcy Code sections 327, 328
or 36 as may be allowed by the Court under Bankruptcy Code sections
330 or 331 not to exceed the aggregate sum of $110,000. Separate
and apart from the Professional Fees, the Carve Out will also
include up to $10,000 in the aggregate for the costs of
administrative expenses that are permitted to be incurred by any
Chapter 7 trustee appointed pursuant to any order of the Court in
the Chapter 11 Case or in the event of a conversion of the Debtor's
Chapter 11 Case pursuant to Bankruptcy Code section 1112.
A copy of the order is available for free at https://bit.ly/2S8LRpy
from PacerMonitor.com.
About 975 Walton Bronx
975 Walton Bronx, LLC is a New York limited liability company,
which primarily owns a multi-family residential apartment building
at 975 Walton Avenue, Bronx, N.Y. The property consists of 182
apartments and commercial space, including a cell tower.
975 Walton Bronx sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D.N.Y. Case No. 21-40487) on Feb. 25,
2021. At the time of filing, the Debtor had between $10 million
and $50 million in both assets and liabilities.
Judge Jil Mazer-Marino oversees the case.
Goldberg Weprin Finkel Goldstein, LLP is the Debtor's legal
counsel.
Walton Improvement Group LLC, as lender, is represented by:
Benjamin Mintz, Esq.
ARNOLD & PORTER KAYE SCHOLER LLP
250 West 55th Street
New York, NY 10019
Tel: (212) 836-8000
Email: benjamin.Mintz@arnoldporter.com
ADARA ENTERPRISES: Unsecureds Unimpaired in Amended Plan
--------------------------------------------------------
Adara Enterprises Corp. filed on June 2, 2021, an Amended
Prepackaged Chapter 11 Plan of Reorganization.
As of the Petition Date, Adara was indebted to ESW Holdings under
that certain Loan and Security Agreement entered into as of July
21, 2020 in an amount totaling not less than $12,849,359. Pursuant
to the Plan, on the Effective Date, $2,000,000 of the Prepetition
Secured Obligations will be discharged and exchanged for 50% of the
New Equity of the Reorganized Debtor and the remaining
$10,849,359of the Prepetition Secured Obligations will persist as
an obligation of the Reorganized Debtor pursuant to the unsecured
Inter-Company Loan Agreement.
As of the Petition Date, ESW Capital was the holder of Preferred
Equity Interests in Adara. Pursuant to the Plan, on the Effective
Date, ESW Capital will receive the remaining 50% of the New Equity
of the Reorganized Debtor in exchange for its Preferred Equity
Interests.
On the Effective Date, ESW Holdings has committed to fund
$8,5000,000 in plan consideration, less those amounts ESW Holdings
provides to the Debtor under the DIP Facility prior to the
Effective Date ($325,000 has been provided under the DIP Facility
as of the date hereof) (the "Consideration"). Once it receives the
Consideration from the Plan Sponsor, the Debtor will have
sufficient cash on hand to consummate the transactions contemplated
under the Plan
The Plan proposes to treat claims and interests as follows:
* Prepetition Secured Lender Claim (Class 1). On or as soon as
reasonably practicable after the Effective Date, the holder of the
Allowed Prepetition Secured Lender Claim shall receive (i) 50% of
the New Equity in the Reorganized Debtor in full and complete
discharge of, and in exchange for $2,000,000 of the Prepetition
Secured Lender Claim, and (ii) the remainder of the Prepetition
Secured Lender Claim shall be treated as a continuing obligation of
the Reorganized Debtor upon the terms set forth in the Plan
Supplement, and shall not be deemed extinguished or otherwise
satisfied under the Plan. Class 1 is impaired.
* General Unsecured Claims (Class 4). Each holder of an Allowed
General Unsecured Claim shall receive (i) payment in full in cash,
plus any interest necessary to cause such Allowed General Unsecured
Claim to be unimpaired; or (ii) such other treatment to the holder
of an Allowed General Unsecured Claim as to which the Debtor, the
Plan Sponsor and the holder of such Allowed General Unsecured Claim
shall have agreed upon in writing. Class 4 is unimpaired.
* Preferred Equity Interests (Class 5). Allowed Preferred
Equity Interest shall receive 50% of the New Equity in the
Reorganized Debtor. Class 5 is impaired.
* Other Equity Interests (Class 6). The holder of Allowed Other
Equity Interests will receive on account of its Other Equity
Interests (i) all Remaining Cash and (ii) the IP Grant. Class 6 is
impaired.
Counsel to the Debtor:
Daniel Besikof, Esq.
Bethany Simmons, Esq.
LOEB & LOEB LLP
345 Park Avenue
New York, NY 10154
Telephone: (212) 407-4000
Facsimile: (212) 407-4990
Ronald S. Gellert
GELLERT SCALI BUSENKELL & BROWN, LLC
1201 N. Orange Street, Suite 300
Wilmington, DE 19801
Telephone: (302) 425-5806
Facsimile: (302) 425-5814
A copy of the Disclosure Statement is available at
https://bit.ly/3plVEV3 from Donlin Recano, the claims agent.
About Adara Enterprises
Adara Enterprises Corp. operates as an asset management business.
Currently, the Debtor's primary asset is quantitative trading
software, which was originally developed at significant expense
over the course of 10-15 years by Clinton Group, Inc., and has been
used to assist in trades of more than $50 billion by Clinton and
its former licensees.
Adara Enterprises filed a Chapter 11 petition (Bankr. D. Del. Case
No. 21-10736) on April 22, 2021. LOEB & LOEB LLP and GELLERT SCALI
BUSENKELL & BROWN, LLC, serve as counsel to the Debtor. The Debtor
tapped DONLIN RECANO & CO, Inc., as claims and noticing agent.
ADVAXIS INC: Stockholders Approve Amendment to 2015 Incentive Plan
------------------------------------------------------------------
At the 2021 Annual Meeting of Stockholders of Advaxis, Inc., the
Company's stockholders approved an Amendment to the Advaxis, Inc.
2015 Incentive Plan, which was previously approved, subject to
stockholder approval, by the Board of Directors of the Company on
Feb. 11, 2021. The Amendment increases the existing
per-participant annual award limitations under the Company's 2015
Incentive Plan to those set forth below:
* Options. The maximum number of options granted under the 2015
Incentive Plan in any calendar year to any one participant
shall be for 1,000,000 shares.
* Stock Appreciation Rights. The maximum number of stock
appreciation rights granted under the 2015 Incentive Plan in
any calendar year to any one participant shall be with respect
to 750,000 shares.
* Performance Awards. With respect to any calendar year (i) the
maximum amount that may be paid to any one participant for
performance awards payable in cash or property other than
shares shall be $10,000,000, and (ii) the maximum number of
shares that may be paid to any one participant for performance
awards payable in stock shall be 1,000,000 shares. For
purposes of applying these limits in the case of multi-year
performance periods, the amount of cash or property or number
of shares deemed paid with respect to any calendar year is the
total amount payable or shares earned for the performance
period divided by the number of calendar years in the
performance period.
* Awards to Non-Employee Directors. The maximum aggregate number
of shares associated with any award granted under the 2015
Incentive Plan in any calendar year to any of the Company's
non-employee directors shall be 200,000 shares.
Except for the increases to the existing annual award limitations
under the 2015 Incentive Plan, the Amendment does not have any
effect on the other provisions of the 2015 Incentive Plan.
About Advaxis Inc.
Advaxis, Inc. -- http://www.advaxis.com-- is a clinical-stage
biotechnology company focused on the development and
commercialization of proprietary Lm-based antigen delivery
products. These immunotherapies are based on a platform technology
that utilizes live attenuated Listeria monocytogenes (Lm)
bioengineered to secrete antigen/adjuvant fusion proteins. These
Lm-based strains are believed to be a significant advancement in
immunotherapy as they integrate multiple functions into a single
immunotherapy and are designed to access and direct antigen
presenting cells to stimulate anti-tumor T cell immunity, activate
the immune system with the equivalent of multiple adjuvants, and
simultaneously reduce tumor protection in the tumor
microenvironment to enable T cells to eliminate tumors.
Advaxis reported a net loss of $26.47 million for the year ended
Oct. 31, 2020, a net loss of $16.61 million for the year ended Oct.
31, 2019, and a net loss of $66.51 million for the year ended Oct.
31, 2018. As of Jan. 31, 2021, the Company had $45.95 million in
total assets, $8.37 million in total liabilities, and $37.57
million in total stockholders' equity.
ARLINGTON DOUBLE DOWN: May Use Cash Collateral Up to 75% of Budget
------------------------------------------------------------------
Judge Brenda T. Rhoades authorized Arlington Double Down
Enterprises, LLC to use the cash collateral, on an interim basis,
for up to a maximum of 75% of each line item in the approved budget
during the interim period. Truist Bank, f/k/a Branch Banking and
Trust Company, asserts a lien on the cash collateral.
Judge Rhoades ruled that, as adequate protection, Truist Bank is
granted replacement liens in the same amount, to the same extent
and validity as those liens existing pre-petition, for the
diminution in value of Truist Bank's interest in the cash
collateral as a result of the Debtor's use thereof.
Judge Rhoades also ruled that the Debtor shall not, without prior
Court approval, use any cash collateral to pay, provide security
for, or reduce any of the Debtor's prepetition obligation to any
creditor or other person, except according to the budget.
The Court clarified that any line item for legal fees of the
Debtor, as contained in the budget and approved by the current
interim order, shall not be deemed an allowance of such fees.
A copy of the order is available for free at https://bit.ly/3gdsgMJ
from PacerMonitor.com.
A final hearing on the motion is set for 10 a.m. on June 16, 2021.
About Arlington Double Down Enterprises, LLC
Arlington Double Down Enterprises, LLC owns and operates a Mellow
Mushroom franchise pizzeria and bar located at 200 N Center St.,
Arlington, Texas 76011. The store serves dine-in and takeout food
and alcohol. Arlington Double Down has approximately 28 employees
paid on a semi-monthly basis. In addition to payroll, its primary
expenses include utility obligations, food and alcohol inventory,
and franchisee royalties.
Arlington Double Down sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. Tex. Case No. 21-40796) on May
28, 2021. In the petition signed by Kimberly Slawson, president,
the Debtor disclosed up to $10 million in both assets and
liabilities.
Quilling, Selander, Lownds, Winslett & Moser, P.C. represents the
Debtor as counsel.
Counsel for Truist Bank, f/k/a Branch Banking and Trust Company:
Jason T. Rodriguez, Esq.
HIGIER ALLEN & LAUTIN, P.C
2711 North Haskell Ave., Suite 2400
Dallas, TX 75204
Telephone: (972) 759-1359
Email: jrodriguez@higierallen.com
AULT GLOBAL: Appoints Glen Tellock as Director
----------------------------------------------
The Board of Directors of Ault Global Holdings, Inc. appointed Glen
E. Tellock to serve as an independent director of the Company.
Subsequent to the Company's Annual Meeting of Stockholders, Mr.
Tellock will replace Jeffrey Bentz on the Audit Committee of the
Board. Mr. Tellock qualifies as an "audit committee financial
expert" as defined in the Securities and Exchange Commission
regulations and satisfies the financial sophistication requirements
set forth in the NYSE American rules. In addition, subsequent to
the Annual Meeting, Mr. Tellock will replace Jodi Brichan on the
Nominating and Governance Committee of the Board and serve as the
chair thereof.
Mr. Tellock has been the president and CEO of Lakeside Foods, a
privately-held international food processor, since May 2016 and
plans to retire from this position effective May 2021. Previously,
he served as the president and CEO of The Manitowoc Company, a
manufacturer of construction and food service equipment, from May
2007 until October 2015. He also served as Chairman of the Board
of The Manitowoc Company from February 2009 until October 2015.
Prior thereto, he served as senior vice president of The Manitowoc
Company beginning in 1999 and president and general manager of
Manitowoc Crane Group beginning in 2002. Prior to joining
Manitowoc in 1991, Mr. Tellock served as Financial Planning Manager
with the Denver Post Corporation and as Audit Manager with Ernst
and Whinney (now Ernst & Young, LLP). Mr. Tellock also currently
serves as a director on the board of Badger Meter, Inc. and Astec
Industries, Inc. The Company believes that Mr. Tellock's extensive
knowledge and experience with respect to financial reporting and
risk assessment give him the qualifications and skills to serve as
one of our directors and as one of the financial experts on the
Company's Audit Committee.
About Ault Global Holdings, Inc.
Ault Global Holdings, Inc. (fka DPW Holdings, Inc.) is a
diversified holding company pursuing growth by acquiring
undervalued businesses and disruptive technologies with a global
impact. Through its wholly and majority-owned subsidiaries and
strategic investments, the Company provides mission-critical
products that support a diverse range of industries, including
defense/aerospace, industrial, telecommunications, medical, and
textiles. In addition, the Company extends credit to select
entrepreneurial businesses through a licensed lending subsidiary.
Ault Global reported a net loss of $32.73 million for the year
ended Dec. 31, 2020, compared to a net loss of $32.94 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $234.03 million in total assets, $57.56 million in total
liabilities, and $176.47 million in total stockholders' equity.
BGS WORKS: Plan Filing Deadline Extended to June 14
---------------------------------------------------
Judge Victoria S. Kaufman has entered an order approving the Second
Stipulation to Continue Deadline for BGS Works, Inc to File
Disclosure Statement Describing Chapter 11 Plan of Reorganization
and Chapter 11 Plan of Reorganization.
The deadline for the Debtor to file its disclosure statement
describing chapter 11 plan of reorganization and chapter 11 plan of
reorganization is continued from June 1, 2021 to June 14, 2021.
No further continuances of the deadline to file a chapter 11 plan
and a
related disclosure statement will be granted.
Attorneys for debtor BGS Works, Inc.:
Matthew D. Resnik
W. Sloan Youkstetter
RESNIK HAYES MORADI LLP
17609 Ventura Blvd., Suite 314
Encino, CA 91316
Telephone: (818) 285-0100
Facsimile: (818) 855-7013
E-mail: matt@RHMFirm.com
sloan@RHMFirm.com
About BGS Works
BGS Works, Inc., based in Woodland Hills, CA, filed a Chapter 11
petition (Bankr. C.D. Cal. Case No. 20-11237) on July 15, 2020. The
petition was signed by Joseph Sternlib, owner. In its petition,
the Debtor was estimated to have $1 million to $10 million in both
assets and liabilities. The Hon. Victoria S. Kaufman presides over
the case. RESNIK HAYES MORADI, LLP, serves as bankruptcy counsel to
the Debtor.
BLINK CHARGING: CEO Michael Farkas Signs Three-Year Contract
------------------------------------------------------------
Blink Charging Co. entered into a new employment agreement with the
Company's Executive Chairman and Chief Executive Officer, Michael
D. Farkas, pursuant to which Mr. Farkas will continue to serve as
the Company's executive chairman and chief executive officer. The
term of the Employment Agreement is Jan. 1, 2021 through Dec. 31,
2023. Mr. Farkas will continue to devote his full-time business
efforts, attention, energy and skill to the performance of his
employment towards furthering the interests of the Company and its
affiliates.
Under the Employment Agreement, Mr. Farkas will receive a base
salary of $800,000 for 2021 and $850,000 and $900,000 for 2022 and
2023, respectively. Mr. Farkas will be eligible to receive an
annual performance bonus (payable in cash and securities), with a
target bonus of 100% of his base salary, with Mr. Farkas eligible
to receive up to 200% of his base salary based on the achievement
of key performance indicators established by the Board of Directors
and Mr. Farkas ("KPIs"). Mr. Farkas will receive equity awards
(one-half in restricted stock and one-half in stock options) with a
target aggregate value of $1,000,000, with the actual amount
determined by the achievement of KPIs during each year of the Term.
Mr. Farkas will also receive a special performance option of $25.0
million, which will vest if the Company's stock price on the NASDAQ
exchange reaches and remains on average for a period of 20
consecutive market days at a closing price of $90 per share during
the four-year term of the option. Additionally, Mr. Farkas will
receive one-time awards and payments in satisfaction of his 2020
bonuses, equity awards, and a salary catch-up since the expiration
of his prior agreement in June 2020.
The Employment Agreement provides that, if Mr. Farkas is terminated
without cause, resigns for good reason, dies or becomes disabled
during the Term, he will receive his base salary for the remainder
of the Term and payment of 2.6 times his target performance
bonus/equity awards and base salary. In the event of a termination
without cause or resignation for good reason within nine months
prior to or 18 months following a change in control, the multiple
in the previous sentence will be 3.5 times.
The Employment Agreement also contains covenants (a) restricting
Mr. Farkas from engaging in any activities competitive with the
Company's business during the Term and one year thereafter, (b)
prohibiting Mr. Farkas from disclosure of confidential information
regarding the Company at any time and (c) confirming that all
intellectual property developed by Mr. Farkas which specifically
relates to the EV charging business constitutes the Company's sole
and exclusive property.
The Employment Agreement provides that a commission sales agreement
entered into on Nov. 17, 2009 between an entity controlled by Mr.
Farkas and a predecessor to the Company will remain suspended and
no payments will be due thereunder for as long as Mr. Farkas is a
full-time employee of the Company and is paid a monthly salary of
at least $30,000. Finally, the Company and Mr. Farkas agreed to
resolve a dispute over Mr. Farkas' transfer of 260,000 shares of
the Company's common stock to a prior institutional investor
through a settlement agreement and payment of $1,000,000 from the
Company to Mr. Farkas.
About Blink Charging
Based in Miami Beach, Florida, Blink Charging Co. (OTC: CCGID)
f/k/a Car Charging Group Inc. -- http://www.CarCharging.com-- is
an owner and operator of electric vehicle charging stations in the
United States and a growing presence in Europe, Asia, Israel, the
Caribbean, and South America. The Blink Network utilizes
proprietary cloud-based software that operates, maintains, and
tracks the EV charging stations connected to the network, along
with the associated charging data. The Company has established key
strategic partnerships to roll out adoption across numerous
location types, including parking facilities, multifamily
residences and condos, workplace locations, health care/medical
facilities, schools and universities, airports, auto dealers,
hotels, mixed-use municipal locations, parks and recreation areas,
religious institutions, restaurants, retailers, stadiums,
supermarkets, and transportation hubs.
Blink Charging reported a net loss of $17.85 million for the year
ended Dec. 31, 2020, compared to a net loss of $9.65 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $251.94 million in total assets, $8.77 million in total
liabilities, and $243.17 million in total stockholders' equity.
BOMBARDIER INC: S&P Rates New US$1BB Senior Unsecured Notes 'CCC'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'CCC' issue-level rating and '5'
recovery rating to Bombardier Inc.'s proposed US$1 billion senior
unsecured notes due 2026. The '5' recovery rating indicates S&P's
expectation that lenders would receive modest (10%-30%; rounded
estimate: 25%) recovery in the event of default. S&P expects
Bombardier to use the proceeds to redeem senior unsecured notes
outstanding with maturities through 2023, related costs and general
corporate purposes including the repayment and/or retirement of
other outstanding debt.
The 'CCC+' issuer credit rating and negative outlook on Bombardier
reflects the company's very high debt leverage, refinancing risk
(albeit moderating) relating to the company's senior notes, and
weak profitability, which make Bombardier vulnerable to operational
missteps along its ambitious earnings recovery plan.
BREWSA BREWING: Unsecured Claims Will Recover 10% in Plan
---------------------------------------------------------
BrewSA Brewing Company LLC submitted an Amended Plan of
Reorganization.
The Plan proposes to treat claims and interests as follows:
* The Class 1 secured claim of M&T Bank will be satisfied in
full in 10 years with payment of $750 per month for December
through April and the monthly payment of $4,750 for May through
November commencing May 1, 2021. M&T Bank will retain its lien on
the Debtor's assets.
* Allowed General Unsecured Claims (Class 2). Class 2 Allowed
Claims, which consists of 16 claims and asserted in the aggregate
at $662,652, shall be satisfied by the payment of cash of 10%
percent of allowed claims with equal monthly payments in April
through October of each year commencing on the Effective Date and
ending on Oct. 1, 2026. Class 2 is impaired.
* Allowed Stockholders Interests (Class3). Class 3 consists of
the interests of the stockholders of BrewSA whose present stock
interest will be cancelled on confirmation and they will not
receive a distribution and they will each receive their portionate
share of the stock in the Reorganized BrewSA in exchange for
collective capital contribution to the reorganized BrewSA in the
sum of $10,000.00. Class 3 is impaired.
The monies needed to pay the holders of allowed claims will be
generated from the Debtor's operation of its business and the
infusion of up to $10,000 by existing stockholders.
Attorneys for the Debtor:
Marc A. Pergament
Weinberg , Gross & Pergament LLP
400 Garden City Plaza, Suite 403
Garden City, New York 11530
Tel: (516) 877-2424
A copy of the Disclosure Statement is available at
https://bit.ly/3pi2Ku1 from PacerMonitor.com.
About BrewSA Brewing Company
BrewSA Brewing Company LLC was formed in 2015 for the purpose of
manufacturing and distributing beer to retail customers and to sell
directly to the general public. BrewSA filed a Chapter 11
bankruptcy petition (Bankr. E.D.N.Y. Case No. 19-77972) on Nov. 22,
2019, estimating under $1 million in both assets and liabilities.
The Debtor is represented by Marc A. Pergament, Esq., at Weinberg
Gross & Pergament LLP.
CADIZ INC: To Sell $15 Million Worth of Common Shares
-----------------------------------------------------
Cadiz Inc. entered into a placement agent agreement with B. Riley
Securities, Inc. relating to the sale and issuance by the Company
of 1,219,512 shares of the Company's common stock to certain
institutional investors.
The shares of common stock will be sold at a purchase price of
$12.30 per share, for an aggregate purchase price of approximately
$15 million. The Company currently intends to use the net proceeds
from this offering together with cash on hand to fund the $19
million payment due by June 30, 2021 under the purchase agreement
with El Paso Natural Gas Company for the Company's acquisition of a
124-mile extension of its Northern Pipeline.
The shares of common stock are being offered and sold pursuant to a
prospectus dated Nov. 26, 2018 and a prospectus supplement dated
June 2, 2021, pursuant to the Company's registration statement on
Form S-3, as amended (File No. 333-228433), which was declared
effective by the Securities and Exchange Commission on Nov. 26,
2018.
Pursuant to the terms of the placement agent agreement, the Company
will pay the Placement Agent a cash fee equal to approximately
$450,000.
About Cadiz
Founded in 1983 and headquartered in Los Angeles, California, Cadiz
Inc. -- http://www.cadizinc.com-- is a natural resources
development company dedicated to creating sustainable water and
agricultural opportunities in California. The Company owns 70
square miles of property with significant water resources in
Southern California and are the largest agricultural operation in
San Bernardino, California, where we have sustainably farmed since
the 1980s. The Company is also partnering with public water
agencies to implement the Cadiz Water Project, which was named a
Top 10 Infrastructure Project that over two phases will create a
new water supply for approximately 400,000 people and make
available up to 1 million acre-feet of new groundwater storage
capacity for the region.
Cadiz Inc. reported a net loss and comprehensive loss applicable to
common stock of $37.82 million for the year ended Dec. 31, 2020,
compared to a net loss and comprehensive loss applicable to common
stock of $29.53 million for the year ended Dec. 31, 2019. As of
March 31, 2021, the Company had $89.55 million in total assets,
$102.60 million in total liabilities, and a total stockholders'
deficit of $13.05 million.
CARLA'S PASTA: July 30 Extension of Cash Collateral Access OK'd
---------------------------------------------------------------
Judge James J. Tancredi, at the behest of Carla's Pasta Inc. and
Suri Realty, LLC, modified the Final DIP Order extending the
Debtors' use of cash collateral until the earliest to occur of:
a. July 30, 2021;
b. the effective date of any confirmed plan of reorganization in
the Debtors' Chapter 11 cases;
c. any violation to the current order by the Debtors, including
the Debtors' non-adherence to the approved budgets;
d. the dismissal of the Chapter 11 cases or their conversion
into a case under Chapter 7 of the Bankruptcy Code;
e. the appointment of a trustee or an examiner, with enlarged
powers, relating to the operation of the business of either of the
Debtors, without the prior written consent of the Lenders;
f. the stay, reversal, amendment or modification of the current
order without the prior written consent of the Lenders;
g. entry of an order or judgment in the Debtors' Chapter 11
cases modifying, limiting, subordinating, avoiding or reducing the
amount, priority, perfection or validity of any portion of the
Prepetition Indebtedness or DIP Indebtedness, except with respect
to a Court order authorizing the sale of substantially all of the
Debtors' assets.
h. the Debtors' application for the approval or allowance of, or
entry of an order allowing, any administrative expense claim in the
Debtors' cases in aggregate amount exceeding $125,000, having any
priority over, or being pari passu with, the super administrative
priority granted to Lenders under the current order (excluding the
Carve Out);
i. the entry of an order in the Debtors' Chapter 11 cases
granting relief from the automatic stay to any holder or holders of
a lien on any property of the estate, except for de minimis assets
not subject to Lenders' liens, in allowing the holder or holders to
foreclose or otherwise realize upon such liens;
j. the filing of any motion or application by or on behalf of
the Debtors, seeking the entry of an order, or the entry of an
order, approving any subsequent DIP facility, unless such
subsequent facility and such order expressly provide for the
indefeasible payment and complete satisfaction in cash to the
Lender of all DIP Indebtedness prior to, or concurrently with, any
initial borrowings or other extensions of credit under such
subsequent facility; and
k. the failure of the Debtor, at any time, to have a chief
restructuring officer or other non-insider management reasonably
acceptable to Lenders and the Committee.
The Debtor may use the cash collateral in the ordinary course of
business, pursuant to the supplemental budget through the week
ending July 31, 2021. The supplemental budget provided for
$749,260 in total wind down expenses for the period from June 5
through July 31, 2021. The classification of amounts on the
supplemental budget as reserved or wind down expenses is for
illustration purposes only and do not set forth a comprehensive
disposition of the sale proceeds, Judge Tancredi clarified.
A copy of the order is available for free at https://bit.ly/2TO2uqT
from PacerMonitor.com.
About Carla's Pasta and Suri Realty
Carla's Pasta Inc. is a family-owned and operated business
headquartered in South Windsor, Conn. It manufactures food
products including pasta sheets, tortellini, ravioli, and steam bag
meals for branded and private label retail, foodservice
distributors, and restaurant. Founded in 1978 by Carla Squatrito,
Carla's Pasta's stock is held by members of the Squatrito family.
On Dec. 31, 2016, Carla's Pasta acquired 100% of Suri Realty, LLC's
membership interests. Suri's business is limited to the ownership
of two adjoining parcels of real property located at 50 Talbot Lane
and 280 Nut, meg Road, South Windsor, Conn.
Carla's Pasta operates its business from an approximately the
150,000-square-foot BRC+ certified production facility.
On Oct. 29, 2020, an involuntary petition for relief under Chapter
7 of the Bankruptcy Code was filed against Suri by Dennis Group, HJ
Norris, LLC, Renaissance Builders, Inc., and Elm Electrical, Inc.
On Dec. 17, the Court approved Suri's request and converted the
involuntary Chapter 7 case to one under Chapter 11.
Carla's Pasta filed a Chapter 11 petition (Bankr. D. Conn. Case No.
21-20111) on Feb. 8, 2021. It estimated assets of $10 million to
$50 million and liabilities of $50 million to $100 million.
The cases are jointly administered under Case No. 21-20111. Judge
James J. Tancredi oversees the cases.
The Debtors tapped Locke Lord LLP as their legal counsel, Verdolino
& Lowey, PC as accountant, Cowen & Co. as investment banker, and
Novo Advisors, LLC as financial advisor. Sandeep Gupta of Novo
Advisors is the Debtors' chief restructuring officer.
CASTEX ENERGY: Further Fine-Tunes Plan Documents
------------------------------------------------
Castex Energy 2005 Holdco, LLC, et al., submitted a Fourth Amended
Joint Chapter 11 Plan dated June 3, 2021.
The Liquidating Trustee shall establish the Funded Statutory P&A
Obligation Escrow, which shall be reserved as the sole source of
funding for or recovery on account of any Claim, other than a P&A
Indemnification Claim, related to any P&A Obligation arising from
the Operated Properties.
The Funded Statutory P&A Obligation Escrow shall be administered by
Walter, in accordance with applicable laws and regulations, with
the proceeds from the 412,786 shares of Escrowed Talos Stock being
allocated on a property by property basis in proportion to the
Debtors' plugging and abandonment obligations on the Walter New
Operated Properties and Debtor Terminated Leases and then with such
allocated proceeds being used in such manner as shall be necessary
to satisfy and discharge the Funded Statutory P&A Obligations to
the greatest extent reasonably possible. To the extent that the
Funded Statutory P&A Obligations are completed in accordance with
applicable law or regulation, all P&A Claims related to such
Operated Property shall be deemed fully satisfied and discharged.
The Plan will treat claims as follows:
* Class 3: Secured Debt Claims. Each Holder of an Allowed
Secured Debt Claim will receive its Pro Rata Share of the equity
interests in Lender NewCo. Class 3 is impaired.
* Class 4 General Unsecured Claims. Each Holder of an Allowed
General Unsecured Claims will receive a Pro Rata Share of interests
in the Liquidating Trust. Class 4 is impaired.
* Class 5: Intercompany Claims. On the Effective Date, all
Intercompany Claims will be adjusted or reinstated, as determined
by the Debtors, subject to the consent of the Required Lenders.
* Class 6: Section 510(b) Claims. On the Effective Date, all
of the Debtors' outstanding obligations under the Section 510(b)
Claims shall be extinguished and canceled. Class 6 is impaired.
* Class 8: Existing Interests. On the Effective Date,
Existing Interests will be canceled. Class 8 is impaired.
Plan Distributions of Cash shall be funded solely from the Debtors'
Cash on hand as of the Effective Date and not from other sources,
including, for the avoidance of doubt, any Talos Shares, proceeds
of, or recoveries on account of, the Apache Claims, or Cash
constituting the Secured Cash Amount transferred to Lender NewCo.
Attorneys for the Debtor:
Matthew S. Okin
David L. Curry, Jr.
Ryan A. O'Connor
Johnie A. Maraist
OKIN ADAMS LLP
1113 Vine St., Suite 240
Houston, Texas 77002
Tel: 713.228.4100
Fax: 888.865.2118
E-mail: mokin@okinadams.com
E-mail: dcurry@okinadams.com
E-mail: roconnor@okinadams.com
E-mail: jmaraist@okinadams.com
About Castex Energy 2005 Holdco
Castex Energy 2005 Holdco, LLC and its affiliates, Castex Energy
2005, LLC, Castex Energy Partners, LLC, and Castex Offshore, Inc.,
sought protection under Chapter 11 of the Bankruptcy Code (Bankr.
S.D. Tex. Lead Case No. 21-30710) on Feb. 26, 2021. At the time of
the filing, the Debtors disclosed assets of between $100 million
and $500 million and liabilities of the same range.
Judge David R. Jones oversees the cases.
The Debtors tapped Okin Adams LLP as bankruptcy counsel, The Claro
Group, LLC as financial advisor, and Thompson & Knight LLP as
special counsel and conflicts counsel. Douglas Brickley, managing
director at Claro Group, serves as the Debtors' chief restructuring
officer. Donlin, Recano & Company, Inc. is the notice, claims and
balloting agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. Stewart
Robbins Brown & Altazan, LLC and Howley Law, PLLC serve as the
committee's bankruptcy counsel and local counsel, respectively.
Seaport Global Securities, LLC is the committee's financial
advisor.
CASTEX ENERGY: Gets Ch. 11 Plan Court Confirmation With New Deal
----------------------------------------------------------------
Law360 reports that bankrupt oil and gas driller Castex Energy
received approval from a Texas judge Monday for its Chapter 11
reorganization plan after the company presented information about a
series of settlements addressing its well operation liabilities.
During a hearing conducted virtually, debtor attorney Matthew S.
Okin of Okin Adams LLP said Castex was able to work with its
lenders and well operating partners to deal with plugging and
abandonment obligations for its 54 onshore and offshore wells,
reaching deals that leave behind assets to cover those liabilities
while also providing a recovery to unsecured creditors.
About Castex Energy
Castex Energy Partners, L.P., and its affiliates are engaged in the
exploration, development, production and acquisition of oil and
natural gas properties located in the Gulf of Mexico, state waters
of Louisiana, onshore Louisiana, and onshore Texas.
Castex owns interests in approximately 182 oil, gas, and related
wells, and have estimated proven reserves of 2.3 MMBO (oil and gas
condensate) and 4 BCFE (natural gas). It is also a party to
numerous joint operating agreements, joint development agreements,
exploration agreements, and area of mutual interest agreements, and
own interests in certain fee lands.
Castex Energy Partners, L.P., along with 5 affiliates, sought
Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 17-35835) in
Houston, on Oct. 16, 2017, after reaching terms with lenders of a
restructuring plan that would convert debt into equity. The Plan,
which granted 100% of the equity to holders of RBL secured claims
totaling $400 million, was confirmed Feb. 28, 2018, and Castex
emerged from bankruptcy in March 2018.
On Feb. 26, 2021, Castex Energy Partners, LLC, along with three
affiliates, including Castex Offshore, Inc., returned to Chapter 11
bankruptcy. The lead case is In re Castex Energy 2005 Holdco, LLC
(Bankr. S.D. Tex. Case No. 21-30710).
Castex Energy Partners estimated assets and debt of $100 million to
$500 million as of the bankruptcy filing.
The Hon. David R. Jones oversees the present case.
In the prior case, the Debtors tapped Kelly Hart & Pitre, as
counsel; Paul Hastings LLP, as special counsel; and Alvarez &
Marsal North America, LLC, as restructuring advisor.
In the recent case, the Debtors tapped OKIN ADAMS LLP as general
bankruptcy counsel; and THE CLARO GROUP, LLC, as financial advisor.
THOMPSON & KNIGHT LLP is the special counsel & conflicts counsel.
DONLIN, RECANO & COMPANY, INC., is the claims agent.
CATHOLIC BISHOP OF CHICAGO: Moody's Rates 2021 Senior Bonds 'Ba1'
-----------------------------------------------------------------
Moody's Investors Service has assigned a Ba1 to Catholic Bishop of
Chicago's (CBC) up to $150 million of Senior Bonds, Series 2021.
Final maturity is expected to occur in 2041. Concurrently, Moody's
affirmed the Ba1 ratings on approximately $130 of outstanding rated
debt. Total debt of CBC is approximately $170 million as of June
30, 2020. The outlook remains stable.
RATINGS RATIONALE
The assignment and affirmation of the Ba1 reflect CBC's substantial
financial reserves and other assets that provide solid coverage of
liabilities. Its relatively large scale operations and investment
portfolio provide operating flexibility and a platform to cope with
ongoing misconduct claims and the challenging but improving
operating environment related to the coronavirus pandemic.
Management continues to execute its well-defined plans for
addressing financial exposures related to misconduct claims. The
management team's strong transparency provides management
credibility, a credit supportive governance consideration.
Additionally, incorporated into the rating are management's ongoing
efforts to manage expenses and sustain balanced core operations.
This involves continuous review of parishes and schools across the
archdiocese for financial sustainability. The CBC continues to
confront core social and business risks in a sector that has seen a
substantial and increasing trend of preemptive bankruptcy among
dioceses outside the state of Illinois, a pattern that shows no
correlation to soundness of financial operations, balance sheets,
differences in state laws and other nominal fundamental credit
strength. While current projections of sexual misconduct claims
appear to be manageable, their full impact and magnitude - and
their implications for defensive filing - reflect a significant
element of unpredictability given the actions of dioceses outside
the state of Illinois. Additionally, an ongoing investigation by
the Illinois attorney general could contribute to growth in
claims.
Operational and financial disruptions associated with the
coronavirus, which Moody's view as a social risk under Moody's ESG
framework, continue to be well managed. Financial aid to parishes
and schools continues to be better than budgeted, while offertories
at the parishes and philanthropic support continue to perform
better than plan.
RATING OUTLOOK
The stable outlook reflects management's ongoing strengths in
managing its operations and resources, fulfilling its mission even
during the pandemic and managing its misconduct claims well on an
ongoing basis. However, uncertainty remains over the number of
future claims. The outlook further incorporates that the real
estate market will continue to support CBC's strategy of asset
monetization and liability management.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
Mitigation of litigation exposure and demonstrated ability to
manage potential escalation of self-insurance claims
Conclusion of the attorney general investigation with evidence of
no material rise in claims
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
Further increase in the number of claims or settlement costs of
lawsuits greater than anticipated requiring use of liquidity or
raising the risk of reorganization
LEGAL SECURITY
All debt of CBC, including the proposed Series 2021 bonds, is an
unsecured general obligation. The Designated Funds is comprised of
the CBC's Pastoral Center and Catholic Cemeteries for the primary
source of repayment.
All series have three financial covenants for the Designated Funds.
There is a debt service coverage test of at least 1.2x calculated
quarterly. The second is a minimum 2.25x unrestricted cash and
investments to total indebtedness. The third is total indebtedness
of less than 45% of total indebtedness plus unrestricted cash and
investments. As of March 31, 2021, coverage was well maintained at
7.9 x, 4.6 x and 18 %, respectively. The Series 2021 bonds will
have a debt service reserve fund equal to one year of principal and
interest, consistent with outstanding bonds.
USE OF PROCEEDS
Proceeds from the Series 2021 bonds will be used to refinance the
Series 2013 bonds and a bank term loan, fund an initial deposit
into the Debt Service Reserve Fund, provide approximately $46
million for eligible corporate purposes of the CBC and to pay costs
of issuance.
PROFILE
The Archdiocese of Chicago, the third largest in the United States,
serves more than 2.2 million Catholics in 286 parishes in Cook and
Lake Counties, a geographic area of 1,411 square miles. The
archdiocese has more than 15,000 employees in its system and
ministries. The archdiocese also has one of the country's largest
seminaries. The archdiocese's 159 elementary and 3 secondary
schools comprise one of the largest U.S. private school systems.
METHODOLOGY
The principal methodology used in these ratings was Nonprofit
Organizations (Other Than Healthcare and Higher Education)
published in May 2019.
CHICK LUMBER: Seeks Continued Cash Collateral Access
----------------------------------------------------
Chick Lumber, Inc. asks the U.S. Bankruptcy Court for the District
of Hampshire for authority to use cash collateral in accordance
with its proposed budget and grant adequate protection to record
lienholders.
Based on the UCC Lien Report and the Debtor's books of account and
business records, the Debtor concluded preliminarily that only BFG
Corporation and American Express Bank, FSB hold or may hold a lien
on or interest in the Debtor's cash collateral.
The Debtor seeks to use up to $1,813,912.38 of Cash Collateral to
pay the post-petition costs and expenses incurred in the ordinary
course of business to the extent provided for in the budget from
July 1 to September 30, 2021.
Driven by the Debtor's historic business cycle, the Debtor's
current projections show that cash is expected to decrease to
$42,842.56 by the end of June 2021.
The Debtor filed an action against its landlord, Carroll County
Leasing Company, to force CCLC to rehabilitate the Debtor's
business premises located at 209 Hobbs St., Conway, New Hampshire.
It also holds causes of action against Herget Building Supply
arising out of the parties' purchase and sale transaction. CCLC
has asked the Court to approve an administrative expense claim to
which the Debtor has objected.
The Debtor has filed a Complaint to avoid the security interests
claimed by RBS Citizens and recover damages resulting from
avoidable, fraudulent and preferential transfers. None of the
potential recoveries or the cost thereof are included in the
Budget. At this time, mediation before Judge Cary continues.
The Debtor has filed five adversary complaints to recover
preference payments from creditors. The Debtor expects to
compromise Chapter 5 claims against vendors who support the Debtor
going forward. In addition, the Debtor will more probably than not
assert Chapter 5 causes of action against CCLC, and Herget Building
Supply.
On June 22, 2020, the Court entered an order granting the Debtor's
motion to reject the lease of the premises commonly known as 209
Hobbs Street, Conway, New Hampshire with CCLC. The Debtor paid the
post-petition rent required by the rejection order.
On March 4, 2020, the Court granted the Debtor's motion to reject
the lease of the House to Home location at 625 Roosevelt Trail,
Unit #3, Windham, Maine with 625 Roosevelt Trail LLC effective as
of April 1, 2020.
During the Use Term, the Debtor will continue to lease the House to
Home location in North Conway, New Hampshire from The Robert and
Dorothy Goldberg Foundation. House to Home is a division of the
Debtor. The Budget includes payments to the North Conway HH
Landlord. The North Conway landlord has agreed to the proposed
payment which represents the base rent due under the North Conway
HH Lease.
The Debtor's Proposed Cash Collateral Order includes a "winding
down" proviso under which the Court reserves the right to enter
such further orders as may be necessary regarding the use of cash
collateral to provide for payment of any administrative claims for
wage and trade creditors who have supplied goods or services to the
Debtor during the period of operation under the order (and any
stipulation) which remain unpaid at the time of termination of
authorized cash collateral usage, and which goods or services have
created additional collateral for the secured claimant.
Before the Petition Date, the Debtor paid RBS Citizens
approximately $35,000 per month in debt service on an allegedly
secured claim. The Debtor paid Amex Bank almost $80,000 per month.
Herget Building Supply, Inc. has conceded that its claim is
unsecured because its security interests lapsed when it failed to
file a continuation statement or statements as required by the New
Hampshire Uniform Commercial Code and any liens on the Debtor's
interest in any collateral have no value. Given the virtual
certainty that the liens claimed by RBS Citizens and Herget
Building Supply will be avoided and to the extension of the
maturity of the AMEX secured claim, the Debtor should be able to
reduce the debt service on those claims by $100,000 per month.
The avoidance of the RBS Citizens and Herget Building Supply
secured claims will eliminate slightly more than $3,500,000 in
secured debt from the post-petition balance sheet.
As a result, the Debtor expects to be able to reorganize itself for
the benefit of its creditors, equity holders and other parties in
interest within a reasonable period of time.
As adequate protection, the Debtor will grant all Record
Lienholders with valid, binding, enforceable and automatically
perfected liens on the Debtor's postpetition property of the same
kinds, types and description in, to and on which a Record
Lienholder held valid and enforceable, perfected liens on the
Petition Date, which will have and enjoy the same priority as such
liens had under applicable state law on the Petition Date, if any.
The Debtor proposes to pay real and property insurance invoices on
insurance policies on property of the estate as and when shown on
the Budget and provide to all Record Lienholders certificates of
property and casualty insurance in amounts not less than the lesser
of: (a) the reasonable replacement value of each property and all
of them in aggregate; or (b) the current fair market value of each
property; such certificates of insurance will name the Record
Lienholders as loss payees and will provide that the insurance
company will use its best effort to give a loss payee at least 14
days' notice of the cancellation or prospective cancellation of a
policy to each loss payee.
A copy of the Debtor's motion is available for free at
https://bit.ly/34YbdJg from PacerMonitor.com.
About Chick Lumber, Inc.
Chick Lumber, Inc. -- https://www.chicklumber.com/ -- is a dealer
of lumber, plywood, steel beams, engineered wood, trusses, steel
and asphalt roofing, windows, doors, siding, trim, stair parts, and
finish materials. It also offers drafting and design, installation,
delivery, outside sales, and plan reading and estimating services.
The Debtor sought Chapter 11 protection (Bankr. D.N.H. Case No.
19-11252) on Sept. 9, 2019, in Concord. In the petition signed by
Salvatore Massa, president, the Debtor disclosed between $1 million
and $10 million in both assets and liabilities.
Judge Bruce A. Harwood oversees the case.
William S. Gannon PLLC is the Debtor's legal counsel.
The Office of the U.S. Trustee appointed a committee of unsecured
creditors on Oct. 3, 2019. The Committee is represented by
Goldstein & McClintock, LLLP as its legal counsel.
CRESTWOOD EQUITY: S&P Affirms 'BB-' ICR, Alters Outlook to Stable
-----------------------------------------------------------------
S&P Global Ratings affirmed its 'BB-' long-term issuer credit
rating on Crestwood Equity Partners (CEQP) as well as its 'BB-'
rating on its unsecured debt and 'B-' rating on its preferred
stock.
S&P said, "The stable outlook reflects our expectation that the
partnership will use proceeds from the divestiture to pay down its
credit facility, resulting in adjusted debt to EBITDA of about
4.75x at year-end 2021.
"We view the sale of CEQP's 50% interest in Stagecoach Gas Services
LLC as a positive credit factor. CEQP and Consolidated Edison Inc.
(Con Edison) announced that their subsidiaries entered into a
purchase and sale agreement to divest Stagecoach Gas Services LLC
(Stagecoach) to a subsidiary of Kinder Morgan Inc. for $1.225
billion. CEQP and Con Edison will split the cash proceeds in line
with their 50% ownership interests in the joint venture. We expect
CEQP to use proceeds to pay down its credit facility, which had
$530 million outstanding as of March 31, 2021. In April 2021, CEQP
redeemed the remaining $288 million of principal outstanding under
its 2023 notes with borrowings under its credit facility. Pro forma
for the redemption of notes, CEQP had $818 million outstanding on
its credit facility as of March 31, 2021.
"When the partnership uses the proceeds from the Stagecoach asset
sale to pay down its credit facility, we expect the partnership to
de-leverage, resulting in adjusted debt to EBITDA of about 4.75x at
year-end 2021. The partnership does have a common and preferred
equity buyback program that we expect it will use prudently. We
treat CEQP's preferred equity as 100% debt, and so the paydown of
this security would be credit positive. We would view purchases of
CEQP's common equity as a credit negative, but we expect the
partnership will be prudent in balancing leverage metrics,
available liquidity, and common unit repurchases.
"We expect revenues and cash flows to rebound amid improved
commodity prices. With much more favorable commodity prices in 2021
and the reversal of shut-ins in the Bakken and Powder River Basins
in the second half of 2020, we now anticipate Crestwood's
volume-driven revenues--which still account for the majority of its
cash flow--to rebound in 2021. We also anticipate reduced capital
investment in 2021, with the partnership more focused on optimizing
its platforms in the Bakken, Powder River Basin, and Delaware
Permian. We forecast capital expenditures (capex) of $55
million-$70 million in 2021, with adjusted EBITDA of $570
million-$580 million.
"The partnership continues to derive the majority of its cash flows
from fixed-fee or take-or-pay contracts. Our assessment of the
partnership's business risk profile remains fair, reflecting the
partnership's size, scale, and asset diversity.
"The stable outlook reflects our expectation that the partnership
will use proceeds from its divestiture of Stagecoach Gas Services
to pay down its credit facility, resulting in adjusted debt to
EBITDA of about 4.75x at year-end 2021. We also expect the
partnership to be prudent in how it uses its common and preferred
equity buyback program."
S&P could consider a negative rating action on CEQP if:
-- S&P no longer expects the partnership's adjusted leverage to be
consistently below 5.25x. This could happen if gathering and
processing volumes are weaker than its current expectation or if
the partnership was more aggressive than we expected with its
common equity buybacks.
-- S&P no longer viewed the partnership's liquidity as adequate.
S&P views a positive rating as unlikely at this time. However, it
could consider one if the partnership materially increased its
scale while maintaining adjusted debt to EBITDA below 4x.
CRESTWOOD HOSPITALITY: U.S. Trustee Unable to Appoint Committee
---------------------------------------------------------------
The U.S. Trustee for Region 14 on June 8 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Crestwood Hospitality, LLC.
About Crestwood Hospitality
Crestwood Hospitality, LLC, a Tucson, Ariz.-based company that
operates in the hotels and motels industry, filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D. Ariz. Case No. 21-03091) on April 30, 2021. Sukhbinder Khangura,
member and vice president, signed the petition. In the petition,
the Debtor disclosed total assets of up to $10 million and total
liabilities of up to $50 million. Judge Brenda Moody Whinery
oversees the case. Sacks Tierney, PA serves as the Debtor's legal
counsel.
CYCLE FORCE: Gets OK to Hire CR3 Partners as Financial Advisor
--------------------------------------------------------------
Cycle Force Group, LLC, received approval from the U.S. Bankruptcy
Court for the Southern District of Iowa to hire CR3 Partners, LLC
to serve as financial advisor in its Chapter 11 case.
The firm's services include:
a. reviewing and analyzing the Debtor's current financial,
operational and strategic position and, if available, making
recommendations to improve financial results;
b. evaluating and making recommendations to the Debtor's plan
upon emergence from bankruptcy protection, including the Debtor's
business plan with its forecasted income statements, balance
sheets, cash flows and underlying assumptions;
c. developing strategies and analyses such as liquidation
analysis to negotiate with creditors and participating in those
discussions as directed by the Debtor and its legal counsel;
d. reviewing the Debtor's 13-week cash flow forecast,
including working capital requirements and advising the Debtor on
suggested revisions;
e. working with the Debtor's personnel to secure
debtor-in-possession financing;
f. providing oversight and support to the Debtor's other
professionals in connection with the execution of the Debtor's
business plan, any sales process and the overall administration of
activities within the Chapter 11 proceeding;
g. providing oversight and assistance in connection with the
preparation of financial-related disclosures required by the
court;
h. providing oversight and assistance in preparing financial
information for distribution to creditors and others including, but
not limited to, cash flow projections and budgets, cash receipts
and disbursements analysis of various asset and liability accounts,
and analysis of proposed transactions;
i. participating in meetings and assisting any official
committee appointed in the case, the U.S. trustee, and other
parties in interest;
j. evaluating, making recommendations and implementing
strategic alternatives as needed to maximize the value of the
Debtor's assets;
k. providing oversight and assistance in connection with the
preparation of creditor claims analyses;
l. providing oversight and assistance in evaluating and
analyzing avoidance actions;
m. analyzing the impact of the bankruptcy filing on strategic
alliances and long-term supply agreements;
n. providing testimony in litigation and bankruptcy matters
and attending court hearings;
o. advising the Debtor and its legal counsel related to any
court motions filed by other parties-in-interest;
p. evaluating the Debtor's cash flow generation capabilities
for valuation maximization opportunities;
q. providing oversight and assistance in communications and
negotiations with constituents, including investors and other
critical parties to the successful restructuring;
r. assisting the Debtor in developing a plan of reorganization
or liquidation and preparing information and analysis necessary for
the confirmation of the plan;
s. working with the Debtor's personnel to secure exit
financing to support the plan; and
t. other tasks necessary to facilitate the Debtor's
restructuring.
The firm's hourly rates are as follows:
Partners $620 to $850 per hour
Senior Directors/Directors $495 to $765 per hour
Senior Associates/Managers $350 to $495 per hour
Jeffrey Hyland and Carmen Barrett, the CR3 personnel expected to
provide financial advice, will charge $725 per hour and $575 per
hour, respectively. They will be assisted by Tom O'Donoghue who
will be paid at the rate of $725 per hour.
CR3 received a pre-bankruptcy retainer in the amount of $75,000.
As disclosed in court filings, CR3 is a "disinterested person"
within the meaning of Section 101(14) of the Bankruptcy Code.
CR3 can be reached through:
Jeffrey Hyland
Carmen Barrett
CR3 Partners, LLC
13355 Noel Road, Suite 2005
Dallas, TX 75240
Phone: (630) 817-1515/(502) 386-6640
Email: jeff.hyland@cr3partners.com
carmen.barrett@cr3partners.com
About Cycle Force Group
Ames, Iowa-based Cycle Force Group, LLC -- https://www.cyclefg.com
-- is a centrally located importer of bicycles, parts and
accessories serving all facets of the cycling industry including
independent retailers, mass retailers, sporting goods retailers,
e-commerce retailers, premium and incentive distributors and
jobbers and OEM customers worldwide.
Cycle Force Group filed a Chapter 11 petition (Bankr. S.D. Iowa
Case No. 21-00571) on April 22, 2021. In the petition, the Debtor
reported $9,795,675 in total assets and $8,516,707 in total
liabilities. Nyle Nims, president and chief executive officer of
Cycle Force Group, signed the petition.
Judge Anita L. Shodeen oversees the case.
Bradshaw, Fowler, Proctor & Fairgrave PC represents the Debtor as
bankruptcy counsel. CR3 Partners and Miller & Co. serve as the
Debtor's financial advisor and free trade zone counsel,
respectively.
The U.S. Trustee for Region 12 appointed an official committee of
unsecured creditors on May 7, 2021. Frost Brown Todd, LLC and
Cutler Law Firm, P.C. serve as the committee's bankruptcy counsel
and associate counsel, respectively.
CYCLE FORCE: Hires Miller & Company as Ordinary Course Professional
-------------------------------------------------------------------
Cycle Force Group, LLC, received approval from the U.S. Bankruptcy
Court for the Southern District of Iowa to hire Miller & Company,
P.C., a Kansas City-based law firm utilized by the company in the
ordinary course of business.
Miller & Company's services include assisting Cycle Force Group in
all aspects of establishing foreign-trade zone status for its
facility in Ames, Iowa.
Cycle Force Group will pay Miller & Company as an "ordinary course
professional."
As an OCP, Miller & Company is required to file with the court and
provide notice to the Office of the U.S. Trustee and all official
committees reports of compensation earned and expenses incurred on
a 60-day basis with a 10-day review and objection period. Should
an objection be filed, all compensation will be subject to review
by the court. Payments will be made following the submission to
and approval by the Debtor of appropriate invoices setting forth in
detail the nature of the services rendered and disbursements
actually incurred.
Miller & Company can be reached through:
Scott S. Taylor, Esq.
Miller & Company, P.C.
4929 Main Street
Kansas City, MO 64112
Phone: 816.561.4999
Fax: 816.561.5999
Email: staylor@millerco.com
About Cycle Force Group
Ames, Iowa-based Cycle Force Group, LLC -- https://www.cyclefg.com
-- is a centrally located importer of bicycles, parts and
accessories serving all facets of the cycling industry including
independent retailers, mass retailers, sporting goods retailers,
e-commerce retailers, premium and incentive distributors and
jobbers and OEM customers worldwide.
Cycle Force Group filed a Chapter 11 petition (Bankr. S.D. Iowa
Case No. 21-00571) on April 22, 2021. In the petition, the Debtor
reported $9,795,675 in total assets and $8,516,707 in total
liabilities. Nyle Nims, president and chief executive officer of
Cycle Force Group, signed the petition.
Judge Anita L. Shodeen oversees the case.
Bradshaw, Fowler, Proctor & Fairgrave PC represents the Debtor as
bankruptcy counsel. CR3 Partners and Miller & Co. serve as the
Debtor's financial advisor and free trade zone counsel,
respectively.
The U.S. Trustee for Region 12 appointed an official committee of
unsecured creditors on May 7, 2021. Frost Brown Todd, LLC and
Cutler Law Firm, P.C. serve as the committee's bankruptcy counsel
and associate counsel, respectively.
DIGIPATH INC: Edmond DeFrank Quits as Director
----------------------------------------------
Edmond A. DeFrank resigned from his position as a director of
Digipath, Inc., effective May 28, 2021.
About DigiPath
Headquartered in Las Vegas, Nevada, Digipath, Inc. --
http://www.digipath.com-- offers full-service testing lab for
cannabis, hemp and ancillary cannabis and hemp infused products
serving growers, dispensaries, caregivers, producers, patients and
eventually all end users of cannabis and botanical products.
DigiPath reported a net loss of $2.31 million for the year ended
Sept. 30, 2020, compared to a net loss of $1.80 million s for the
year ended Sept. 30, 2019. As of March 31, 2021, the Company had
$1.57 million in total assets, $2.68 million in total liabilities,
and a total stockholders' deficit of $1.11 million.
M&K CPAS, PLLC, in Houston, Texas, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
Jan. 29, 2021, citing that the Company has recurring losses from
operations and insufficient working capital, which raises
substantial doubt about its ability to continue as a going concern.
EAGLE HOSPITALITY: Sells Four Properties Under Ch. 11 for $116 Mil.
-------------------------------------------------------------------
Ameya Karve of Bloomberg News reports that Eagle Hospitality Trust,
whose units filed for bankruptcy protection earlier this year, sold
four of its 15 properties under Chapter 11 for a total of $116
million.
The company closed the sale of Sheraton Denver Tech Center, Four
Points by Sheraton San Jose Airport, Embassy Suites by Hilton
Anaheim North and Double Tree by Hilton Salt Lake City Airport on
June 3, 2021, it said in an exchange filing.
EHT expects to complete sale of one more property, the Hilton
Atlanta Northeast, on or about June 8, 2021, for an estimated $37.4
million.
About Eagle Hospitality Group
Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality
stapled group comprising Eagle Hospitality Real Estate Investment
Trust ("Eagle H-REIT") and Eagle Hospitality Business Trust. Based
in Singapore, Eagle H-REIT is established with the principal
investment strategy of investing on a long-term basis, in a
diversified portfolio of income-producing real estate which is used
primarily for hospitality and/or hospitality-related purposes, as
well as real estate-related assets in connection with the
foregoing, with an initial focus on the United States. EHT US1,
Inc., and 26 affiliates, including 15 LLC entities that each owns
hotels in the U.S., sought Chapter 11 protection (Bankr. D. Del.
Lead Case No. 21-10036) on Jan. 18, 2021.
EHT US1, Inc., estimated $500 million to $1 billion in assets and
liabilities as of the bankruptcy filing. The Debtors tapped Paul
Hastings LLP as bankruptcy counsel; FTI Consulting, Inc., as
restructuring advisor; and Moelis & Company LLC, as investment
banker. Cole Schotz P.C. is the Delaware counsel. Rajah & Tann
Singapore LLP is Singapore Law counsel, and Walkers is Cayman Law
counsel. Donlin, Recano & Company Inc. is the claims agent.
ENVISION HEALTHCARE: S&P Upgrades ICR to 'CCC+', Outlook Negative
-----------------------------------------------------------------
S&P Global Ratings raised its ratings on Envision Healthcare Corp.
by one notch, including its issuer credit rating (ICR) on the
company which S&P raised to 'CCC+' from 'CCC'.
The negative outlook reflects S&P's estimate that there is very
little room for the company underperform against our assumptions
before it could run out of available liquidity.
Patient volumes have been recovering but remain below pre-pandemic
levels. In 2020 the company, like most other health care providers,
experienced a significant decline in patient volumes that hit a
trough in May and June of last year. Full-year volumes in 2020 were
down by about 15%-20% in emergency medicine, 10%-15% in
anesthesiology, 10%-15% in radiology, and about 5% in surgery
centers as compared to pre-pandemic levels. These lower volumes
contributed to an 18% decline in revenue (including grands) during
2020 and a decline in adjusted EBITDA of close to 70%, which would
have been much worse if not for the $217 million of CARES Act
stimulus funding the company received during the year.
Volumes have been recovering since late last year and into 2021,
but for its physician staffing businesses, volume remains well
below pre-pandemic levels. Recent emergency department volumes were
down about 20% compared to the same period last year, radiology was
down about 10%, and anesthesia was down about 5%. In contrast, its
ambulatory services business has more than fully recovered, with
ambulatory surgery center cases up almost 10% vs. pre-pandemic
levels. S&P expects patient volumes, revenue, and adjusted EBITDA
generation will gradually improve over the next year but remain
10%-15% lower than 2019. This incorporates its estimate of the
effects of Envision being moved out of network by UnitedHealthcare
this year and recent contract losses.
S&P said, "While we still consider the capital structure
unsustainable over the long-term, we do not believe the company
would consider a distressed exchange offer within the next 12
months. We estimate Envision has enough liquidity to manage through
the next 12 months. However, we believe there is very little room
for underperformance against our expectations before the company
could run out of liquidity. Despite adjusted EBITDA falling close
to 70% in 2020, the company increased its cash balance to about
$1,021 million at the end of 2020 from about $196 million at the
start of the year. This was due in large part to the company
drawing down on its revolving credit and asset-backed lending (ABL)
facilities ($345 million in aggregate), payment deferrals, and
advanced Medicare payments. We expect Envision to deplete most of
its cash in 2021 based on our assumptions that patient volumes
remain below pre-pandemic levels. Specifically, we expect the
company to use $180 million-$200 million to repay advanced Medicare
payments, previously deferred payroll taxes, and other working
capital changes; about $80 million in capital expenditures; and
$180 million-$200 million distributed to noncontrolling interests.
We also expect the company to invest about $200 million to
self-fund its malpractice insurance coverage and meet its estimated
$60 million of scheduled debt amortization. We expect this outflow
to leave just over $300 million of cash on hand at the end of 2021,
of which we estimate a large portion would be held at joint
ventures and restricted to Envision.
"We forecast discretionary cash flow generation in 2022 will be
sufficient to cover scheduled debt amortization with further
improvement in subsequent years. Under these assumptions, we
believe liquidity will be sufficient, though that view could change
if patient volumes and profitability are weaker than we expect."
New surprise billing legislation is a credit positive for Envision.
On Dec. 22, 2020, Congress passed legislation that will go into
effect in 2022 to protect consumers from surprise bills for most
emergency and nonemergency services delivered by out-of-network
providers. Envision generates a portion of its revenue from
out-of-network services and S&P considers the new legislation to be
a positive development for the company, because it includes an
arbitration process. Having the option to bring payment disputes to
arbitration if negotiations fail is a big win for health care
providers because it is likely to result in more timely resolution
of payment disputes. Currently, health care providers are stuck
fighting these disputes in court, at high legal costs, against very
powerful payors that include UnitedHealthcare.
With the legislation now passed by congress and S&P views that it
includes features relatively favorable to healthcare providers, S&P
believes the uncertainty and risk from the impact of surprise
billing have abated.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and Safety
S&P said, "The negative outlook reflects our uncertainty about the
level of recovery the company will experience. It also reflects our
view that there is very little room for the company underperform
against our assumptions before it runs out of available liquidity.
"We could lower our rating on Envision if we believe the company is
likely to default due to a near-term liquidity crisis or if we
believe there is heightened risk of a distressed exchange offer or
redemption within 12 months. This scenario could occur if the
earnings and cash flow generation are weaker than we expect,
potentially due to slower-than-anticipated recovery in patient
volumes, significant contract losses, or higher operating
expenses.
"We could revise the outlook to stable if we see a lower likelihood
that Envision will pursue a distressed exchange or debt
restructuring in the next 12 months. This could occur if patient
volumes and cash flow recover in line with our expectations."
FIELDWOOD ENERGY: Asks Court for Delay of Confirmation Hearing
--------------------------------------------------------------
Law360 reports that a Texas bankruptcy judge agreed Friday, June 4,
2021, to reschedule the Chapter 11 plan confirmation hearing of
Fieldwood Energy LLC after the debtor said it wanted more time to
continue talks with stakeholders in hopes of arriving at consensus
on its plan proposal.
In its emergency motion seeking the adjournment of the confirmation
hearing from June 9 to June 18, 2021, Fieldwood said that delaying
the hearing a short time would allow it to persist in its efforts
to negotiate agreements with parties in interest.
About Fieldwood Energy
Fieldwood Energy -- https://www.fieldwoodenergy.com/ -- 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.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on Feb. 5,
2018, with a prepackaged plan that would deleverage $3.286 billion
of funded debt by $1.626 billion.
On August 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, the Debtors estimated $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 an 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 August 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan,
LLPand Conway MacKenzie, LLC, serve as the committee's legal
counsel and financial advisor, respectively.
FIELDWOOD ENERGY: Cain & Skarnulis Advises 2 Tort Claimants
-----------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Cain & Skarnulis PLLC submitted a verified
statement to disclose that it is representing Brian Cloyd, Lewis
Andrews, and Patrick Burnett in the Chapter 11 cases of Fieldwood
Energy LLC, et al.
As of June 3, 2021, the Cain-represented claimants and their
disclosable economic interests are:
Brian Cloyd
c/o Arnold & Itkin LLP
6009 Memorial Drive
Houston, Texas 77007
* Nature of Claim: Maritime tort claimant with in personam claims
against Fieldwood Energy LLC and Fieldwood
Energy Offshore LLC under the Jones Act and
general maritime law and in rem claims against
the D/B THOR.
* Principal amount of claim: Unliquidated. Claims pending against
Debtors in Cloyd v. Fieldwood Energy
Offshore, Inc. d/b/a Fieldwood Energy
(Texas), Inc., et al., No. 4:20-CV-
04032, United States District Court
for the Southern District of Texas.
Lewis Andrews
c/o Arnold & Itkin LLP
6009 Memorial Drive
Houston, Texas 77007
* Nature of Claim: Maritime tort claimant with in personam claims
against Fieldwood Energy LLC and Fieldwood
Energy Offshore LLC under the Jones Act and
general maritime law and in rem claims against
the D/B THOR.
* Principal amount of claim: Unliquidated. Claims pending against
Debtors in Andrews and Burnett v.
Fieldwood Energy Offshore, Inc. d/b/a
Fieldwood Energy (Texas), Inc., et
al., No. 4:20-CV-04009, United States
District Court for the Southern
District of Texas.
Patrick Burnett
c/o Arnold & Itkin LLP 6009
Memorial Drive
Houston, Texas 7700
* Nature of Claim: Maritime tort claimant with in personal claims
against Fieldwood Energy LLC and Fieldwood
Energy Offshore LLC under the Jones Act and
general maritime law and in rem claims against
the D/B THOR.
* Principal amount of claim: Unliquidated. Claims pending against
Debtors in Andrews and Burnett v.
Fieldwood Energy Offshore, Inc. d/b/a
Fieldwood Energy (Texas), Inc., et
al., No. 4:20-CV-04009, United States
District Court for the Southern
District of Texas.
Each of the parties listed on Exhibit A has consented to this
multiple representation by Cain & Skarnulis PLLC and Arnold & Itkin
LLP in the above-captioned matter.
Counsel for Brian Cloyd, Lewis Andrews, and Patrick Burnett can be
reached at:
Ryan E. Chapple, Esq.
Randy W. Williams, Esq.
CAIN & SKARNULIS PLLC
400 W. 15th Street, Suite 900
Austin, TX 78701
Tel: 512-477-5000
Fax: 512-477-5011
E-mail: rchapple@cstrial.com
rwilliams@cstrial.com
A copy of the Rule 2019 filing is available at
https://bit.ly/3za3mGw at no extra charge.
About Fieldwood Energy
Fieldwood Energy -- https://www.fieldwoodenergy.com/ -- 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.
Fieldwood Energy and its 13 affiliates previously sought Chapter 11
protection (Bankr. S.D. Texas Lead Case No. 18-30648) on February
5, 2018, with a prepackaged plan that would deleverage $3.286
billion of funded debt by $1.626 billion.
On August 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, the Debtors estimated $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 an 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 August 18, 2020, the Office of the U.S. Trustee appointed a
committee of unsecured creditors. Stroock & Stroock & Lavan,
LLPand Conway MacKenzie, LLC serve as the committee's legal counsel
and financial advisor, respectively.
FORD STEEL: Taps James Pratt of Colliers as Real Estate Agent
-------------------------------------------------------------
Ford Steel, LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of Texas to hire James M. Pratt, a real
estate agent at Colliers International Houston, Inc.
The Debtor requires the services of a real estate agent to market
and sell the estate's interest in a real property in Montgomery
County, Texas.
Mr. Pratt will get a commission of 4.5 percent to 5 percent of the
sales price.
In court filings, Mr. Pratt disclosed that he is a disinterested
person within the meaning of Section 101(14) of the Bankruptcy
Code.
Mr. Pratt can be reached at:
James M. Pratt
Colliers International Houston, Inc.
15999 City Walk, Suite 250
Sugarland, TX 77479
Phone: +1 281 494 4769
About Ford Steel
Porter, Texas-based Ford Steel, LLC -- http://www.fordsteelllc.com/
-- is in the business of steel product manufacturing. It
fabricates for a wide variety of industries including the
petrochemical industry, waste water treatment, transmission
communication and broadcast towers, mining, and oil and gas
industries.
Ford Steel filed a voluntary petition under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 20-34405) on Sept. 1,
2020. Herbert C. Jeffries, managing member, signed the petition.
The Debtor had between $1 million and $10 million in both assets
and liabilities. Judge Eduardo V. Rodriguez oversees the case.
The Debtor tapped Cooper & Scully, PC as bankruptcy counsel.
Muskat Mahony & Devine, LLP, and Currin Wuest Mielke Paul & Knapp,
PLLC, serve as the Debtor's special counsel.
First Financial Bank, Inc., as lender, is represented by West,
Webb, Allbritton & Gentry, PC.
FURNITURE FACTORY: $7M Sale to American Freight to Fund Plan
------------------------------------------------------------
Furniture Factory Ultimate Holding, L.P. and its affiliates, filed
with the U.S. Bankruptcy Court for the District of Delaware a
Disclosure Statement with respect to Joint Plan of Liquidation
dated June 3, 2021.
The Plan provides for the wind down of the Debtors' affairs,
continued liquidation of the Debtors' remaining assets to Cash, and
the distribution of the net proceeds, in addition to Cash on hand
on the Effective Date of the Plan, to creditors holding Allowed
Claims as of the Record Date in accordance with the relative
priorities established in the Bankruptcy Code. The Plan does not
provide for a distribution to holders of Intercompany Claims,
Subordinated Claims, or Interests, and their votes are not being
solicited as each is deemed to reject the Plan.
The Plan contemplates the appointment of a Liquidation Trustee,
selected by the Creditors' Committee, to receive the Liquidation
Trust Assets, establish and maintain such operating, reserve, and
trust accounts as are necessary and appropriate to carry out the
terms of the Liquidation Trust and the Plan, including the
Liquidation Trust Claims Reserve, invest Cash that is a Liquidation
Trust Asset, pursue objections to, estimation of, and settlements
of all Claims, regardless of whether any such Claim is listed on
the Debtors' Schedules, other than Claims that are Allowed pursuant
to the Plan, prosecute, settle, or abandon any Retained Causes of
Action, calculate all distributions made under the Plan, and
authorize and make, through the Distribution Agent, all
distributions to be made under the Plan.
On the Petition Date, the Debtors filed the Debtors' Motion for an
Order Approving Asset Purchase Agreement and Authorizing Sale of
Debtors' Assets Free and Clear of All Liens, Claims, Interests, and
Encumbrances. Pursuant to the Stalking Horse Agreement, American
Freight FFO, LLC was designated as the stalking horse bidder with a
credit bid of $7 million plus assumption of certain Assumed
Liabilities.
On December 17, 2020, the Bankruptcy Court entered the Order
approving the Asset Purchase Agreement with the Buyer, which closed
on the December 27, 2020 (the "Closing Date").
Class 4 consists of First Lien Credit Agreement Claims. Consistent
with the terms of the Sale Order and Settlement Term Sheet, holders
of Allowed Class 4 First Lien Credit Agreement Claims have agreed
to waive any distribution on account of such Allowed Class 4 First
Lien Credit Agreement Claims.
Class 5 consists of 2019 Credit Agreement Claims. Each holder of
such Allowed 2019 Credit Agreement Claim shall receive (i) to the
extent that such Allowed 2019 Credit Agreement Claim is a Secured
Claim, at the option of the Liquidation Trustee, (a) payment in
full in Cash, payable on the later of the Effective Date and the
date that is ten (10) Business Days after the date on which such
Secured 2019 Credit Agreement Claim becomes an Allowed Secured
Claim 2019 Credit Agreement Claim, in each case, or (b) delivery of
the collateral securing any such Claim., or (ii) to the extent that
such Allowed 2019 Credit Agreement Claim is not a Secured Claim,
its pro rata share of the Beneficial Trust Interests, which
Beneficial Trust Interests shall entitle the holders thereof to
receive their pro rata share of the Liquidation Trust Assets.
Class 6 consists of Grid Note Claims. Each holder of such Allowed
Grid Note Claim shall receive its pro rata share of the Beneficial
Trust Interests, which Beneficial Trust Interests shall entitle the
holders thereof to receive their pro rata share of the Liquidation
Trust Assets.
Class 7 consists of General Unsecured Claims. Each holder of such
Allowed General Unsecured Claim shall receive its pro rata share of
the Beneficial Trust Interests, which Beneficial Trust Interests
shall entitle the holders thereof to receive their pro rata share
of the Liquidation Trust Assets.
Holders of Interests in the Debtors will receive no distribution
under the Plan.
The Plan is a liquidating plan and provides for the liquidation of
the Plan Assets and the payment of the proceeds generated therefrom
to holders of Allowed Claims in accordance with the priorities set
forth in the Bankruptcy Code.
A full-text copy of the Disclosure Statement dated June 3, 2021, is
available at https://bit.ly/3giY2bd from Stretto, the claims
agent.
Counsel for the Debtors:
Domenic E. Pacitti, Esq.
Michael W. Yurkewicz, Esq.
Sally E. Veghte, Esq.
Klehr Harrison Harvey Branzburg LLP
919 N. Market Street, Suite 1000
Wilmington, DE 19801
Tel: (302) 426-1189
Fax: (302) 426-9193
About Furniture Factory Ultimate Holding
Furniture Factory Outlet, LLC retails furniture and accessories
products and serves customers in the United States. It was founded
in 1984 in Muldrow, Okla., around an original concept of providing
quality furniture at highly competitive prices with its "lowest
price every day" guarantee.
Furniture Factory and its affiliates, including Furniture Factory
Outlet, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case
No. 20-12816) on November 5, 2020. Furniture Factory was estimated
to have $10 million to $50 million in assets and liabilities.
The Honorable John T. Dorsey is the case judge.
The Debtors tapped Klehr Harrison Harvey Branzburg LLP as legal
counsel, Focalpoint Securities LLC as an investment banker, RAS
Management Advisors LLC as a financial advisor, and B. Riley Real
Estate, LLC as their real property lease consultant. Stretto is the
claims agent.
GAP INC: Moody's Affirms Ba2 CFR & Alters Outlook to Stable
-----------------------------------------------------------
Moody's Investors Service affirmed Gap, Inc. (The) corporate family
rating at Ba2, its probability of default rating at Ba2-PD, and its
senior secured rating at Ba2. At the same time, Gap's speculative
grade liquidity rating was upgraded to SGL-1 from SGL-2. The
outlook was changed to stable from negative.
"The change in outlook to stable reflects Gap's significant
improvement in its operations as it recovers from the impact of the
pandemic. A better sales trajectory has been experienced in 2021 at
all its major brands with positive comparable sales at Old Navy and
Athleta relative to 2019" said Senior Vice President, Christina
Boni. "The upgrade of its speculative grade liquidity rating to
SGL-1 from SGL-2 reflects its significant cash generation which was
supported by solid inventory and cost management. The company had
$2.5 billion of cash and short term investments at the end of the
first quarter of 2021 and no revolver borrowings" Boni added.
Affirmations:
Issuer: Gap, Inc. (The)
Corporate Family Rating, Affirmed Ba2
Probability of Default Rating, Affirmed Ba2-PD
Senior Secured Regular Bond/Debenture, Affirmed Ba2 (LGD3)
Upgrades:
Issuer: Gap, Inc. (The)
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: Gap, Inc. (The)
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The Gap, Inc.'s Ba2 corporate family rating is supported by its
solid market position in the specialty apparel market with its
ownership of leading specialty apparel brands (Old Navy, Gap,
Banana Republic, and Athleta). The relatively shorter term of its
store leases (approximately five years) has enabled the right
sizing of its mature brands (Gap and Banana Republic) while
continuing to add stores to its higher growth concepts (Old Navy
and Athleta). Investments in its online and mobile business have
also strengthened its operational profile and improved customer
experience. The company has managed the disruption posed by
COVID-19 pandemic effectively returning most of its major brands to
growth relative to 2019 (with the exception of Banana Republic).
Continued integration of its online and store experiences also
supports its efforts to increase customer conversion.
Gap's Ba2 CFR also reflects governance considerations which
includes the suspension of its common dividends as well as share
repurchases at the onset of the pandemic and its historically
conservative level of funded debt to cash balances. The company has
reinstated a common dividend at approximately 50% of its historical
level (approximately $180 million annually) and has announced a
return to modest share repurchases. The company has very good
liquidity evidenced by its free cash flow generation of over $1.0
billion LTM May 1, 2021 and its cash balance and short term
investments of roughly $2.5 billion at May 1, 2021 relative to its
$2.2 billion of reported debt.
The company enhanced its liquidity in May 2020 by securing a $1.9
billion asset based revolving credit facility and utilizing a
significant portion of its unencumbered real estate assets and
intellectual property to secure its $2.25 billion of senior secured
notes. Despite the higher funded debt levels, Moody's expect
leverage to return to approximately 2.7x in 2021 as the business
continues to recover.
The stable outlook reflects Gap's success at resetting its cost
base while stabilizing its operating performance and maintaining
very good liquidity. The outlook also reflects that Gap will
maintain a conservative financial strategy.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would require consistency of performance at all its
major brands, continued margin expansion and very good liquidity,
as well as a conservative financial policy. Quantitatively,
debt/EBITDA would need to be sustained below 3.5x and EBIT/Interest
above 3.5x.
Ratings could be downgraded should operational performance weaken
and not be poised to return to 2019 levels or liquidity
deteriorates for any reason. Ratings could also be downgraded if
debt/EBITDA is sustained above 4.0 or EBIT/Interest is sustained
below 2.5x.
The Gap, Inc. is a leading global retailer offering clothing, and
accessories for men, women, and children under the Gap, Banana
Republic, Old Navy, and Athleta. LTM net sales were approximately
$15.7 billion. The Gap, Inc. products are available for purchase in
more than 90 countries worldwide through 2,997 company-operated
stores, 574 franchise stores, and e-commerce sites.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
GARTNER INC: S&P Upgrades ICR to 'BB+' on Reduced Leverage Target
-----------------------------------------------------------------
S&P Global Ratings raised its issuer-credit rating on Gartner Inc.
to 'BB+' from 'BB'. The outlook is stable. At the same time, S&P
raised its issue-level rating on the company's senior unsecured
notes to 'BB+' from 'BB'.
S&P said, "The upgrade reflects our expectation that Gartner is
well positioned to continue to expand its business and maintain
leverage well below 3x, our upgrade threshold for the rating.
Gartner's S&P Global Ratings-adjusted leverage declined to 2.4x in
2020 and stayed at 2.4x as of the quarter ended March 2021, from
3.6x in 2019, driven by a combination of cost-avoidance
initiatives, working capital management, and revenue growth in its
research segment. The company also lowered its target gross
company-adjusted leverage guidance to the 2x-2.5x range, from
2.5x-3x previously. We expect the company will maintain S&P Global
Ratings-adjusted net leverage in the 2x-3x range over the next 12
months. Notwithstanding, we expect the company to pursue meaningful
share repurchases in 2021 using cash on hand, operating cash flows,
and revolving credit facility draws. Gartner spent over $600
million on share repurchases through April 2021 and has
approximately $790 million in repurchase authorization remaining."
Gartner is well positioned to continue to expand its business as
the economy emerges from the recession. Gartner's Conferences
segment saw a significant revenue impact in 2020, with revenue
declining almost 75% as social distancing requirements to stem the
spread of COVID-19 and travel restrictions caused virtually all
in-person events to be cancelled or postponed. As vaccination rates
pick up, particularly in developed countries, the company stands to
benefit from holding smaller in-person conferences initially and
over time hosting its larger destination conferences. Offsetting
the declines in the conferences segment, the company's research
segment grew almost 7% in 2020, driven by continued demand for its
subscription research products and new client wins. However, wallet
share gains from its existing clients slowed in 2020. S&P expects
client retention and wallet share gains to pick up in 2021 and
translate into higher revenue growth through the year as its
clients look to expand and optimize their operations emerging from
the recession and look toward Gartner for research and best
practices.
Significant cost avoidance helped boost EBITDA margins and increase
cash flows despite revenue pressures from COVID-19. Gartner
implemented significant cost-avoidance initiatives throughout 2020,
including reduced travel, cuts to compensation and benefits, and
withdrawing from investments to support future growth. As a result,
Gartner was able to improve its adjusted EBITDA margins to about
21.5% in 2020 compared with about 18.8% in 2019. S&P said, "We
believe 2021 will see further, albeit temporary, benefits to
margins as incremental investments and travel expenses take time to
ramp up through the year, but the operating leverage from higher
revenue growth in 2021 benefits EBITDA margins. We expect S&P
Global Ratings-adjusted EBITDA margins to return to the 21% area in
2022 and improve modestly in subsequent periods."
CEB Inc. integration appears to be complete, with the Global
Business Sales (GBS) segment remaining resilient through the
recession resulting from COVID-19. Gartner expanded its research
offerings outside of the information technology (IT) functional
area with the acquisition of CEB in 2017, thereby moderately
diversifying its product offerings through its newly created GBS
segment and providing longer-term opportunities for cross-selling
and new product development. The company's GBS segment is somewhat
small, comprising less than 20% of its research contract value, and
has historically grown at a comparatively slower rate than the
company's overall technology research segment. However, in 2020,
the GBS segment was able to achieve over 7% growth in contract
value and over 100% wallet retention for the year, slightly more
than the company's Global Technology Sales (GTS) segment, which had
98% wallet retention. Further, GBS contract value grew by 11.6% in
the first quarter of 2021. In addition, the company incurred
significant one-time and restructuring costs following the CEB
acquisition that have lessened over time. These factors support our
view that the company has completed the integration of CEB and is
well positioned to achieve high-single-digit to low-double-digit
revenue growth in the research segment and operate with somewhat
higher margins and cash flows than it had in recent years before
2020.
S&P said, "The stable outlook reflects our expectation that the
company will maintain S&P Global Ratings-adjusted leverage in the
2x-3x range, supported by strong performance in the research
segment and continuing improvement in the conferences segment. We
expect S&P Global Ratings-adjusted EBITDA margins in the 21% area
longer term but 2021 EBITDA margins might be meaningfully higher
due to temporarily depressed travel and entertainment (T&E) levels
and the timing of growth investments."
An upgrade is unlikely over the next 12 months and would be driven
by continued improvement in the company's business profile while
maintaining leverage in the 2x-3x range. For an upgrade, S&P would
look for the company's GBS business to exhibit consistent growth, a
meaningful improvement in the scale of the GBS research offerings,
improving EBITDA margins, and continued solid performance from the
company's GTS and other segments.
A downgrade is also unlikely over the next 12 months and would be
driven by Gartner's leverage increasing and remaining above 3x on a
sustained basis. This could result from a change in the financial
policy, with the company pursuing significant debt-funded dividends
or share buybacks, or a significant decline in operating
performance causing a slowdown in growth in its research segment
and an inability to sufficiently manage costs such that its S&P
Global Ratings-adjusted EBITDA margins declined toward the 17%
area.
GILBERT MH: Litigation vs. Hospital to Fund Payments to Unsecureds
------------------------------------------------------------------
Gilbert MH, LLC, submitted a Plan and a Disclosure Statement.
Gilbert MH, LLC, is the current owner of raw land located in
Gilbert, Arizona. The property is approximately 1 acre in size and
is located at the Southeast corner of Val Vista and Market Street
in Gilbert, Arizona (the "Gilbert Property"). The parcel is
encumbered by a first lien in favor of Coldwater-Gilbert, LLC.
The Debtor has obtained an offer to purchase the Gilbert Property.
A Motion for Order to Approve Sale of Property Free and Clear of
Liens Subject to Higher and Better Bids ("Motion to Approve Sale")
has been filed with the Court and is pending a hearing. Coldwater
has indicated its intent to credit bid $1.9 million for the
property.
The Plan proposes to treat claims and interests as follows:
* Class 1: Creditors Holding Administrative Claims. The Debtor
has employed Parker Schwartz, PLLC ("Parker Schwartz") as General
Counsel for the Debtor. Parker Schwartz received an advance
deposit of $20,000 from the Debtor. To the extent that
unencumbered funds are available to pay administrative expenses,
Counsel shall be paid from the estate.
* Class 3: Coldwater-Gilbert, LLC (real property). Coldwater
holds a consensual lien on the property located at the Southwest
corner of Val Vista and Market Street in Gilbert, Arizona. The
Debtor believes that the principal amount due Coldwater is
approximately $1.9 million, and the fair market value of the
property is approximately $1.5 million. The property is subject to
a pending Motion to Sell and Debtor believes that Coldwater will
credit bid $1.95 million. The Class 3 Claim is impaired.
* Class 4: General Unsecured Creditors without Guarantees.
Holders of allowed Class 4 Claims shall receive payments equaling
100% of their Allowed Claims if and to the extent that funds are
available through the litigation against Gilbert Hospital. There
is no other source of funds for Class 4. Payments will be made pro
rata as funds become available from the litigation. If there is no
recovery from the litigation, Class 4 Creditors shall not receive
payment. The Class 4 claims are impaired.
* Class 5: General Unsecured Creditors with Guarantees. Holders
of allowed Class 5 Claims shall receive payments equaling 100% of
their Allowed Claims if and to the extent that funds are available
through the litigation against Gilbert Hospital and to the extent
that Class 5 Creditors have not been paid from third party sources.
Other than third party guarantors, there is no other source of
funds for Class 5. Payments to Class 5 Creditors are impaired.
* Class 6: Equity Interests. The equity holders shall retain
their interest in the LLC. Class 6 Equity Interests are impaired.
Attorneys for the Debtor:
PARKER SCHWARTZ, PLLC
7310 NORTH 16TH STREET, SUITE 330
PHOENIX, ARIZONA 85020
Tel: (602) 282-0477
Fax: (602) 282-0478
E-mail: LHIRSCH@PSAZLAW.COM
A copy of the Disclosure Statement is available at
https://bit.ly/3vPYaFz from PacerMonitor.com.
About Gilbert MH
Gilbert MH, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No.
21-01948) on March 19, 2021. At the time of the filing, the Debtor
had between $1 million and $10 million in both assets and
liabilities. Judge Eddward P. Ballinger Jr. oversees the case.
The Debtor is represented by Lawrence D. Hirsch, Esq., at Parker
Schwartz, PLLC.
GLOBAL CARIBBEAN: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------------
The U.S. Trustee for Region 21, until further notice, will not
appoint an official committee of unsecured creditors in the Chapter
11 case of Global Caribbean, Inc., according to the case docket.
About Global Caribbean
Global Caribbean, Inc. sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-14402) on May 4,
2021. In its petition, the Debtor disclosed total assets of up to
$500,000 and total liabilities of up to $1 million. Judge Scott M.
Grossman oversees the case. Brian S. Behar, Esq., at Behar, Gutt &
Glazer, P.A., is the Debtor's legal counsel.
GLOBAL DISCOVERY: Taps Robertson & Culver as Special Counsel
------------------------------------------------------------
Global Discovery Biosciences Corporation seeks approval from the
U.S. Bankruptcy Court for the Central District of California to
employ Robertson & Culver, LLP as its special counsel.
The Debtor needs the firm's legal assistance in the lawsuit styled
Global Discovery Biosciences Corp., et al., adv. Khalid Al Thani,
et al., Orange County Superior Court Case No.
30-2016-00878822-CJ-BC-CJC.
Robertson & Culver's hourly rates range from $100 to $475. The
firm received a $25,000 retainer from a third-party source.
As disclosed in court filings, Robertson & Culver neither holds nor
represents any interest materially adverse to the Debtor and its
estate.
The firm can be reached through:
Jon R. Robertson, Esq.
Robertson & Culver, LLP
2601 Main St., Suite 500
Irvine, CA 92614
Phone: (714) 361-2111/714-361-2110
About Global Discovery Biosciences Corporation
Irvine, Calif.-based Global Discovery Biosciences Corporation --
https://www.gdbiosciences.com -- is a fully licensed diagnostic
laboratory running specialized, highly specific and accurate
testing for its clients, domestic and global.
Global Discovery Biosciences filed a voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif. Case
No. 21-10619) on March 11, 2021. Dan Angress, chief executive
officer and secretary, signed the petition. At the time of the
filing, the Debtor had between $1 million and $10 million in both
assets and liabilities. Judge Mark S. Wallace oversees the case.
Weiland Golden Goodrich, LLP and Robertson & Culver, LLP serve as
the Debtor's bankruptcy counsel and special counsel, respectively.
GNIRBES INC: Unsecured Creditors to Get $1,800 in Plan
------------------------------------------------------
Gnirbes, Inc., submitted a Third Amended Disclosure Statement dated
June 3, 2021.
Class Five consists of General Unsecured Claims. The General
Unsecured claims include all other allowed claims of Unsecured
Creditors of the Debtor, subject to any Objections that are filed
and sustained by the Court. The general unsecured claims (prior to
the filing of any objections) total the amount of $8,341.78. The
Debtor shall make a single lump sum payment of $1,800.00 on the
Effective Date of the Plan to be paid to this class of creditors on
a pro rata basis.
The dividend to this class of creditors is subject to change upon
the determination of objections to claims. To the extent that the
Debtor is successful or unsuccessful in any or all of the proposed
Objections, then the dividend and distribution to each individual
creditor will be adjusted accordingly. These claims are impaired.
Class Six consists of Equity Shareholders. There shall be no
distribution to the equity holder of the Debtor under the confirmed
Plan and no dividends to this class of claimant. The remaining
asset owned by the Debtor shall be transferred to 3408 Hollywood,
LLC. This claim is impaired.
The Debtor shall cease operations upon the Effective Date and the
3408 Property shall be transferred to 3408 Hollywood. 3408
Hollywood and/or Marabel individually shall make the payments under
Class Five.
The Debtor intends to assume all leases with tenants of the
Commercial Property shall be assumed and assigned to Granada, the
lease with the tenant of the 3408 Property shall be assumed on the
Effective Date.
A full-text copy of the Third Amended Disclosure Statement dated
June 3, 2021, is available at https://bit.ly/3imvmRj from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Dana Kaplan
KELLEY, FULTON & KAPLAN, P.L.
1665 Palm Beach Lakes Blvd.
The Forum - Suite 1000
West Palm Beach, Florida 33401
Telephone: (561) 491-1200
Facsimile: (561) 684-3773
About Gnirbes Inc.
Gnirbes Inc. sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Case No. 20-13992) on March 26, 2020. At
the time of the filing, the Debtor was estimated to have assets of
less than $50,000 and liabilities of between $100,001 and $500,000.
Judge Mindy A. Mora oversees the Debtor's case. The Debtor is
represented by Kelley, Fulton & Kaplan, P.L.
GREAT AMERICAN: Court Conditionally Approves Disclosure Statement
-----------------------------------------------------------------
Judge Joshua P. Searcy has entered an order conditionally approving
the Disclosure Statement of Great American Treating, Inc.
Wednesday, July 7, 2021, is fixed as the last day for filing
written acceptances or rejections of the Debtor's proposed Chapter
11 plan which must be received by 4:00 p.m. (CST).
Wednesday, July 7, 2021, is fixed as the last day for filing and
serving written objections to: (1) final approval of the Debtor's
Disclosure Statement; or (2) confirmation of the Debtor's proposed
Chapter 11 plan.
The hearing to consider final approval of the Debtor's Disclosure
Statement (if a written objection has been timely filed) and to
consider the confirmation of the Debtor's proposed Chapter 11 Plan
is fixed and shall be conducted on Tuesday, July 20, 2021 at 9:30
a.m. via virtual hearing.
The 45-day deadline imposed by 11 U.S.C. Sec. 1129(e) which expires
July 11, 2021, is extended until Tuesday, August 3, 2021.
About Great American Treating
Great American Treating, Inc.. filed a Chapter 11 bankruptcy
petition (Bankr. E.D. Tex. Case No. 21-60078) on March 4, 2021,
disclosing under $1 million in both assets and liabilities. The
Debtor is represented by Patrick Law Offices.
GVS PORTFOLIO I B: RREF III Storage Wins Case Dismissal
-------------------------------------------------------
Chief Bankruptcy Judge Christopher S. Sontchi dismissed the Chapter
11 case of GVS Portfolio I B, LLC, agreeing with creditor RREF III
Storage LLC that the case was filed in bad faith.
RREF alleges the bankruptcy case was filed shortly before it was to
conduct a court-ordered UCC foreclosure auction of the Debtor's
sole asset that was pledged to secured approximately $100 million
of indebtedness owed to RREF. RREF argues the sole purpose of the
bankruptcy case was to obtain the benefit of the automatic stay and
halt the state-law foreclosure process in favor of an alternative
process of liquidating and distributing the Debtor's assets.
RREF contends that due to certain unstayed actions that may be
taken by creditors at direct and indirect non-debtor subsidiaries,
which actually own the real properties that form the basis of any
value flowing up to the Debtor, the bankruptcy filing will
irreparably harm RREF (the Debtor's only secured creditor).
RREF claims the Debtor is not a "going concern" capable of
reorganization because it is a special purpose entity that has no
employees or operations and was created only for the limited
purpose of, and may not conduct any activities other than, owning
the 100% Membership Interest in Mezz 1 Borrower and paying the Mezz
2 Loan. RREF continues that the Debtor cannot make a showing that
Chapter 11 will maximize the value of the Debtor's estate and that
value would be lost outside of bankruptcy.
"[T]he Debtor simply owns a piece of paper, and that piece of paper
is pledged to RREF," the creditor says.
On November 30, 2018, UBS AG originated three loans to GVS: a
mortgage loan and two mezzanine loans.
UBS originated the mortgage loan in the amount of $110 million to
12 non-debtor limited liability companies -- Mortgage Borrowers --
that collectively own a portfolio of self-storage facilities
located throughout the United States. The Mortgage Loan is secured
by a first priority mortgage and security interest in the
properties, and is currently held by Wells Fargo Bank, National
Association, as Trustee, for the benefit of the Registered Holders
of UBS Commercial Mortgage Trust 2018-C15 Commercial Mortgage
Pass-Through Certificates, Series 2018-C15. Midland Loan Services,
a division of PNC Bank, National Association, is the servicer on
behalf of the Mortgage Loan Lender.
UBS originated a first mezzanine loan -- Mezz 1 Loan -- in the
amount of $103 million to the Mezz 1 Borrower, which itself owns
100% of the membership interests in the Mortgage Borrowers. The
Mezz 1 Loan is secured by Mezz 1 Borrower's interests in the
Mortgage Borrowers and is currently held by ESSGV Holdings LLC.
UBS also originated a second mezzanine loan in the amount of $63
million to the Debtor, which itself owns 100% of the membership
interests in Mezz 1 Borrower. The Initial Mezz 2 Loan is secured
by the Debtor's equity ownership interest in the Mezz 1 Borrower.
UBS later assigned it to Teachers Insurance Annuity Association of
America, and TIAA thereafter made a supplemental loan in the amount
of $19 million to the Debtor, which is also secured by the Debtor's
interests in the Mezz 1 Borrower.
The Debtor was declared in default of the Mezz 2 Loan after failing
to make a monthly debt service payment on December 6, 2019.
Subsequent negotiations with TIAA stalled as a result of the
COVID-19 pandemic.
In August 2020, the Debtor commenced an action in the New York
Supreme Court to enjoin the sale of collateral scheduled by TIAA
that was noticed to occur September 3, during the Labor Day Holiday
week. Following full briefing and argument, the NY Court on
September 18 granted GVS's motion for a preliminary injunction
finding that the First Sale was commercially unreasonable. The NY
Court instructed the parties to meet and confer as to the notice of
the sale and terms of sale and submit a stipulation to the NY Court
setting forth areas of agreement. The NY Court further instructed
the parties to submit letters to the NY Court identifying any
remaining areas of disagreement.
In October 2020, the parties submitted a stipulation to the NY
Court setting forth an agreement as to certain requirements of the
Notice of Sale and the Terms of Sale. The NY Court issued a
Supplemental Decision and Order, setting a Sale date of March 10,
2021. Two days prior to the March 10 sale, TIAA sold the Loan to
RREF for an undisclosed amount and without notice to GVS or any
other bidder who had registered to bid at the auction. Following
these events, the Debtor obtained a temporary restraining order
from the NY Court, enjoining the auction from proceeding. Following
briefing and argument, the NY State Court declined to issue a
preliminary injunction, finding the process presumptively
reasonable given the prior stipulation and without concern for
intervening events or loss of value.
As of the Petition Date, the Debtor owed RREF approximately $100
million on account of its obligations under the Mezz 2 Loan and
Mezz 2 Notes.
Natin Paul, the Founder, Chairman, President, CEO, and sole owner
of World Class Holding Company, LLC, the Debtor's indirect owner,
guaranteed the payment and performance of certain obligations in
respect of the Mezz 2 Loan as further security for the Debtor's
obligations under the Mezz 2 Loan and Mezz 2 Note. Promptly after
the bankruptcy filing, RREF commenced an action against Paul in the
New York Supreme Court for payment from Paul of the full amount due
and owing to RREF on account of the Mezz 2 Loan. The lawsuit
remains pending.
A copy of the Court's June 4, 2021 Memorandum Order is available
at:
https://www.leagle.com/decision/inbco20210607336
About GVS Portfolio
Austin, Texas-based GVS Portfolio I B, LLC is a privately-owned
chain of self-storage facilities. It owns 64 self-storage
facilities as well as parking lots for cars, boats and recreational
vehicles in 10 states. The company does business under the name
Great Value Storage, offering secure storage units with 24-hour
security systems, both climate controlled and non-climate
controlled units, RV, car, and boat parking, moving and storage
supplies and moving truck rental. It caters to personal and
business storage needs.
GVS Portfolio I B filed a Chapter 11 petition (Bankr. D. Del. Case
No. 21-10690) on April 12, 2021. At the time of the filing, the
Debtor disclosed total assets of up to $500 million and total
liabilities of up to $100 million.
The Debtor is an indirect subsidiary of World Class Holding
Company, LLC. Based in Austin, Texas, World Class describes itself
as one of the largest private real estate owners in the United
States. World Class is in the business of acquiring undervalued
businesses and assets located in 17 states for the purpose of
owning, operating, and developing properties. In addition to GVS,
World Class purports to own (a) World Class Property Company, a
real estate investment company that owns, operates, and develops
office, retail, multifamily, industrial, mixed-use, hospitality,
and self-storage assets; (b) NowSpace, a provider of co-working
office space; (c) World Class Technologies, a software development
company; (d) World Class Mortgage Capital, a private commercial
real estate lender; and (e) Westlake Industries, a commercial
construction, industrial and energy infrastructure, and property
services company.
Natin Paul is the Founder, Chairman, President, CEO, and sole owner
of World Class, and the Debtor's indirect owner. Beginning in
November 2019, at least 19 entities affiliated with World Class and
Paul have filed for bankruptcy.
Judge Christopher S. Sontchi oversees the GVS case. Morrison Cohen
LLP and Bayard, P.A. served as the Debtor's legal counsel.
HEARTLAND DENTAL: S&P Upgrades ICR to 'B-', Outlook Stable
----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Heartland
Dental LLC to 'B-' from 'CCC+' and its issue-level ratings on its
first-lien debt and senior unsecured notes to 'B-' and 'CCC',
respectively.
The stable outlook reflects S&P's expectation that Heartland will
generate adjusted debt to EBITDA of 10.5x in 2021 (including half a
year contribution from American Dental) and 9.5x in 2022, supported
by strong same office growth, addition of new offices, maturation
of those new offices, and EBITDA margin expansion.
S&P said, "The upgrade primarily reflects the company's strong
growth prospects and our expectation that its adjusted debt to
EBITDA to improve to below 10x in 2022. Heartland Dental has
significantly improved its financial results since this time last
year. The second quarter of 2020 was the most challenging for the
company due to the temporary closure of its clinics and the
deferral of elective dental procedures by its patients. Despite
these challenges, Heartland's revenue declined by less than 5% in
2020 relative to the prior year. We expect the company to increase
its revenue by about 50% in 2021 as the pandemic's effects subside,
it increases its same-office revenue, and it ramps up its new
offices, which will be supplemented by additional affiliations and
de novo activities (the opening of new dental offices). We
anticipate the increase in Heartland's same-office revenue will
stem from an improvement in its procedure volumes and favorable
payor reimbursement.
"We also assume the company's adjusted EBITDA margin will expand
modestly to the 12%-14% range over the next couple of years as it
increases its revenue and leverages its fixed cost base. While we
do not expect Heartland to reduce its costs as severely as it did
in 2020, we believe some of its costs--such as for marketing,
advertising, and traveling--will remain lower than in 2019. In
addition, the company was able to renegotiate its contracts with
its suppliers for improved pricing.
"We believe Heartland will likely maintain an aggressive growth
strategy and use all of its internally generated cash flow and
additional debt to fund its affiliations and de novos. We expect
the company to close about 110-120 affiliations in 2021, in
addition to acquiring American Dental, and open about 60 de novo
offices.
"The improvement in Heartland's EBITDA and the contributions from
American Dental will offset the incremental debt from the
acquisition. The company announced its acquisition of American
Dental that we believe will be funded primarily with the net
proceeds from its proposed $660 million incremental term loan. In
our view the acquisition will add density to Heartland's existing
markets, expands American Dental's service offerings, and provide
near-term synergies through the conversion of payor and procurement
contracts. We believe the integration risk involved in this
transaction is somewhat mitigated because the same dentists will
continue to run the acquired offices.
"The stable outlook reflects our expectation that Heartland will
generate adjusted debt to EBITDA of 10.5x in 2021 (including half a
year contribution from American Dental) and 9.5x in 2022, supported
by strong same office growth, addition of new offices, maturation
of those new offices, and EBITDA margin expansion.
"We could lower our rating on Heartland in the next 12 months if we
come to view its capital structure as unsustainable over the long
term. This could occur if we expect its adjusted debt to EBITDA to
remain above 10x for an extended period or we anticipate it will
generate a level of annual free operating cash flow (excluding de
novo investments) that barely covers its scheduled debt
amortization.
"Although unlikely, we could raise our rating on Heartland in the
next 12 months if it materially improves its competitive position.
This could occur if we come to believe that it will sustain
better-than-expected adjusted EBITDA margins in the mid- to
high-teens percent range. Under this scenario, we would also expect
the company to sustain adjusted debt to EBITDA of less than 8x and
generate sufficient free operating cash flow to cover most of its
de novo investments."
JAGUAR HEALTH: Reveals Initial Funding of US$10.8M Into Dragon SPAC
-------------------------------------------------------------------
Jaguar Health, Inc. and Milan, Italy-based Dragon SPAC S.p.A.
announced the initial funding of the private financing of Dragon
SPAC, which has named as its target Napo EU S.p.A. Dragon SPAC and
Napo Pharmaceuticals, Inc., Jaguar's wholly-owned U.S. subsidiary,
have entered into an agreement, pursuant to which Dragon SPAC will
issue units to Napo Pharma in a private placement for cash
consideration of approximately US$10.8 million, with proceeds of
such financing to be used in part for Dragon SPAC's contemplated
business combination with Napo EU. Each Unit consists of one
ordinary share of Dragon SPAC and one warrant. Each warrant will
entitle the holder thereof to purchase one ordinary share at an
exercise price of EUR 10 per ordinary share at any time prior to
the earlier of (i) the 10-year anniversary of the consummation of
the Merger and (ii) the five-year anniversary of the listing of the
combined Napo EU/Dragon SPAC entity resulting from the Merger on a
public exchange. The private financing is expected to close around
the end of Q2 2021, subject to certain conditions including the
concurrent closing of the Merger and completion of customary
items.
Proceeds from the private placement will be used exclusively for
the purposes of funding the Merger and the activities of the
Combined Company.
Napo EU, the wholly-owned Italian subsidiary of Napo Pharma, has
refined its business plan, and terms of its contemplated license
from Napo Pharma, to focus initially on conditional approval for an
important orphan indication, short bowel syndrome (SBS), a
condition leading to intestinal failure requiring intravenous
nutritional support for survival, and a global market expected to
reach US$4.6 billon by 2027, expanding at a CAGR of 26% from 2020
to 20271, rather than the previously announced indication of
prophylaxis and/or symptomatic relief of inflammatory diarrhea,
including COVID-associated diarrhea.
"We're thrilled to provide the initial funding of US$10.8 million
into Dragon SPAC using funds from the recent registered direct
offering - which closed on May 3, 2021 - by Jaguar to certain North
American institutional investors into Jaguar," stated Lisa Conte,
Napo EU's sole board member and the founder, president, and CEO of
Jaguar and Napo Pharma. "As Jaguar announced on April 29, 2021,
the proceeds from the registered direct offering were earmarked for
the benefit of our Italian subsidiary Napo EU - the named target of
Dragon SPAC," Conte said.
"With the recent choppiness and uncertain liquidity in the U.S. and
European SPAC markets, Dragon SPAC has been advised by its banking
advisors to hold off on a public financing at this time. Plans for
the Napo EU drug development opportunity are progressing, and
Dragon SPAC has decided to complete a private financing rather than
a public financing to fund the Merger," said Josh Mailman, the
founding sponsor and a board member of Dragon SPAC. "With this
first investment funded and the initial product development focus
on the devastating unmet medical need in patient suffering from
SBS, Dragon SPAC remains confident about receiving binding
commitments for this private financing from additional investors,
with closing of the private financing targeted to occur around the
end of Q2 2021, and the closing of the planned Merger to occur
within approximately 30 days thereafter. The business of the
Combined Company will be the Napo EU business, with funds that we
believe will be sufficient to complete a trial in SBS patients
suitable for a conditional marketing authorization pathway with the
EMA."
With an eye toward a potential future listing of the Combined
Company following receipt of results of data from a clinical trial
which the Combined Company expects to receive within two years of
the completion of the Merger transaction, Dragon SPAC has engaged
Equita Group S.p.A., a leading Italian independent investment bank,
to advise Dragon SPAC, and Jaguar has engaged New York-based Cantor
Fitzgerald & Co., a leading global financial services group, as a
capital markets advisor in the U.S. to assist Jaguar in its
evaluation of various financing strategies.
Additional Dragon SPAC board members include Dr. Niccolo Caderni
and Giovanni Maria Conti, who is of no relation to Lisa Conte.
An astrophysicist by training, Dr. Caderni is a former European
Space Agency Fellow at the University of Cambridge. He held a
number of research and academic positions before a change of career
in the mid 1980's to the fields of finance, technological
innovation, and fine art. He previously served as vice president,
mergers and acquisitions at Bankers Trust International, managing
director at Phillips, the third largest auction house in the world,
the chairman of Webiz, the private equity fund of the Italian
utility giant, ENEL, the Chairman of RAFT, a leading research
institute in the field of regenerative medicine, and served on the
Board of the Centre for European Policy Studies in Brussels.
Giovanni Maria Conti is a founding partner of CPAssociati, a
chartered accountant's professional firm in Italy, and has
extensive experience providing advisory services to national and
international companies in the areas of corporate governance,
finance transactions, M&A operations, and tax. He is a former
founding partner of RSC & Partners S.r.l., which is an advisory
firm, now named Oryx Finance S.r.I., that specializes in IPO
processes, M&A, debt advisory, and financial restructuring. In
2003 he participated in drafting the Italian government law to
reform the country's tax system. Mr. Conti has been listed on the
National Register of Certified Public Accountants of Milan since
1994, and on the Register of Auditors since 1999.
Dragon SPAC is selling its Units and underlying ordinary shares and
warrants only to "accredited investors" in reliance on the
exemption from registration set forth in Rule 506(c) of Regulation
D promulgated under the Securities Act of 1933, as amended. The
Securities, have not been and will not be registered under the
Securities Act or the securities laws of any state or other
jurisdiction, and may not be offered or sold without registration
or an applicable exemption from the registration requirements of
the Securities Act and applicable state securities or blue sky laws
and foreign securities laws.
About Jaguar Health
Jaguar Health, Inc. -- http://www.jaguar.health-- is a commercial
stage pharmaceuticals company focused on developing novel,
sustainably derived gastrointestinal products on a global basis.
The Company's wholly owned subsidiary, Napo Pharmaceuticals, Inc.,
focuses on developing and commercializing proprietary human
gastrointestinal pharmaceuticals for the global marketplace from
plants used traditionally in rainforest areas. Its Mytesi
(crofelemer) product is approved by the U.S. FDA for the
symptomatic relief of noninfectious diarrhea in adults with
HIV/AIDS on antiretroviral therapy.
Jaguar Health reported a net loss and comprehensive loss of $33.81
million for the year ended Dec. 31, 2020, compared to a net loss
and comprehensive loss of $38.54 million for the year ended Dec.
31, 2019. As of March 31, 2021, the Company had $68.71 million in
total assets, $36.82 million in total liabilities, and $31.89
million in total stockholders' equity.
JUST ENERGY: Provides Update on CCAA Process, TSX Share Listing
---------------------------------------------------------------
Just Energy Group Inc., a retail energy provider specializing in
electricity and natural gas commodities and bringing energy
efficient solutions and renewable energy options to customers, on
May 26 disclosed that the Ontario Superior Court of Justice
(Commercial List) (the "Court") has, among other things, extended
the stay period under the Companies' Creditors Arrangement Act
(Canada) ("CCAA") to September 30, 2021.
The Company is using the extended stay period to focus on growing
the business and to continue engaging with key stakeholders, with a
view of implementing a value maximizing emergence plan. In
addition, the Company continues to explore and develop options
regarding invoices received from the Energy Reliability Council of
Texas ("ERCOT") related to the Texas extreme weather event in
February (the "Weather Event"), including potential legislation,
the dispute resolution process initiated by the Company with ERCOT
and potential litigation challenges. The total financial impact of
the Weather Event to the Company may change due to the enactment of
legislation, the outcome of the dispute resolution process and
successful litigation challenges.
The Company has also been advised by the lenders under the US $125
million debtor-in-possession loan (the "DIP Lenders") comprised of
OC II VS XIV LP ("OC II"), a Delaware limited partnership, and
certain other funds under common management with OC II
(collectively, the "Funds"), that OC II has filed an amended early
warning report pursuant to Canadian securities laws to provide
updated disclosure relating to the Funds' plans with respect to
their current investment in Just Energy and potential participation
in the Company's restructuring, which is available at www.sedar.com
under Just Energy's issuer profile.
In addition, Just Energy previously announced plans to apply to the
TSX Venture Exchange (the "TSX-V") to transition the trading of its
common shares from the Toronto Stock Exchange to the TSX-V. The
Company has received conditional approval to list its common shares
on the TSX-V and trading is expected to commence in early June.
"Just Energy remains focused on its commitment to our customers and
driving innovation across our business, while continuing to advance
its restructuring plans," said Scott Gahn, Just Energy's President
and Chief Executive Officer. Mr. Gahn added, "We believe there are
considerable opportunities to grow our business in our key
markets."
Due to the ongoing CCAA process, the Company also announced that
the Court approved the postponement of its annual meeting of
shareholders until further notice.
Just Energy will provide additional updates as developments
warrant. Further information regarding the CCAA proceedings is
available at the Monitor's website at
http://cfcanada.fticonsulting.com/justenergy.Information regarding
the CCAA proceedings can also be obtained by calling the Monitor's
hotline at 416-649-8127 or 1-844-669-6340 or by email at
justenergy@fticonsulting.com.
About Just Energy Group Inc.
Just Energy (OTC: JENGQ) -- https://investors.justenergy.com/ -- is
a retail energy provider specializing in electricity and natural
gas commodities and bringing energy efficient solutions and
renewable energy options to customers. Currently operating in the
United States and Canada, Just Energy serves residential and
commercial customers. Just Energy is the parent company of Amigo
Energy, Filter Group Inc., Hudson Energy, Interactive Energy Group,
Tara Energy, and terrapass.
KINSER GROUP II: Seeks to Hire Quarles & Brady as Legal Counsel
---------------------------------------------------------------
Kinser Group II, LLC received approval from the U.S. Bankruptcy
Court for the District of Arizona to hire Quarles & Brady, LLP to
serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) preparing schedules of assets and liabilities and
statements of financial affairs;
(b) drafting and prosecuting certain "first day" motions,
including motion to allow the use of cash collateral;
(c) advising the Debtor regarding its powers and duties in the
continued management of its business and property;
(d) preparing and reviewing pleadings, motions and
correspondence;
(e) attending meetings and negotiating with representatives of
creditors and other parties-in-interest and consulting the Debtor
on the conduct of its bankruptcy case, including all of the legal
and administrative requirements of operating in Chapter 11;
(f) prosecuting claims and causes of action of the Debtor;
(g) acting as litigation counsel regarding the defense of any
actions commenced against the Debtor;
(h) reviewing and objecting to any claims filed against the
Debtor;
(i) advising the Debtor in connection with any contemplated
sales of assets or business combinations;
(j) advising the Debtor in connection with any financing and
cash collateral arrangements, and negotiating and drafting related
documents;
(k) advising the Debtor on matters relating to the evaluation
of the assumption, rejection or assignment of unexpired leases and
executory contracts;
(l) advising the Debtor concerning legal issues arising in or
relating to its ordinary course of business;
(m) preparing legal papers;
(n) negotiating and preparing a plan of reorganization,
disclosure statement and all related documents and taking actions
to obtain confirmation of the plan;
(o) attending meetings with third parties and participating in
negotiations;
(p) appearing before the bankruptcy court, any appellate
courts and the U.S. trustee; and
(q) other legal services necessary to administer the case.
The firm will be paid as follows:
Partners/Counsel/Associates Up to $695 per hour
Paralegals/Legal Specialists Up to $260 per hour
Isaac Gabriel, Esq., Hannah Torres, Esq., and Julie Walters, Esq.,
are the primary attorneys responsible for the firm's representation
of the Debtor. Mr. Gabriel's billing rate will be $520 per hour,
which is a discounted rate from his normal rate. Ms. Torres' and
Ms. Walters' billing rates will be $350 and $295 per hour,
respectively.
Mr. Gabriel disclosed in court filings that his firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
Quarles & Brady can be reached through:
Isaac M. Gabriel, Esq.
Quarles & Brady LLP
Renaissance One
Two North Central Avenue
Phoenix, AR 85004-2391
Tel: (602) 229-5200
Fax: (602) 229-5690
Email: isaac.gabriel@quarles.com
About Kinser Group II
Phoenix, Ariz.-based Kinser Group II, LLC sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No.
21--04208) on May 28, 2021. In the petition signed by Kenneth L.
Edwards, manager, the Debtor disclosed up to $10 million in both
assets and liabilities. Quarles & Brady LLP is the Debtor's legal
counsel.
LIBERTY POWER: Gets OK to Hire Berkeley, Appoint CRO
----------------------------------------------------
Liberty Power Holdings, LLC, received approval from the U.S.
Bankruptcy Court for the Southern District of Florida to hire
Berkeley Research Group, LLC and its managing director, Bob Butler,
as chief restructuring officer.
(a) developing and implementing a chosen course of action to
preserve asset value and maximize recoveries to stakeholders,
subject to the approval of the Debtor's Board of Directors;
(b) overseeing the Debtor's activities in consultation with
other advisors and the management team to effectuate the selected
course of action;
(c) assisting the Debtor in preparing and analyzing cash flow
(weekly and monthly) and financial projections related to liquidity
and borrowing needs, including related budget to actual variance
analysis;
(d) assisting the Debtor with contingency planning and the
assessment of strategic alternatives including a possible Chapter
11 filing;
(e) assisting as requested by management in connection with
the Debtor's development of its business plan and other related
forecasts required by creditors;
(f) assisting in data collection relating to potential
transactions with financial and strategic buyers;
(g) assisting the Debtor and its bankruptcy professionals in
developing, negotiating and executing Chapter 11 strategy, Section
363 sales or other potential sales of the Debtor's assets;
(h) providing information deemed by the CRO to be reasonable
and relevant to stakeholders and consulting with key constituents,
as necessary.
(i) offering testimony before the court and participating in
depositions;
(j) assisting in the preparation of reports to the Board of
Directors regarding the status of implementation of restructuring
initiatives;
(k) other general business consulting services.
.
The firm's hourly rates are as follows:
Managing Director $860 - $1,150
Director $600 - $895
Professional Staff $250 - $770
Support Staff $125 - $275
Prior to the Debtor's Chapter 11 filing, Berkeley received cash on
account from the Debtor in the amount of $300,000. The firm
applied the sum of $71,926.00 to its pre-bankruptcy fees and
expenses incurred through April 20, 2021. The remaining amount is
being held as a general retainer.
As disclosed in court filings, Mr. Butler and his firm neither hold
nor represent any interest adverse to the Debtor's estate.
Berkeley can be reached through:
Bob Butler
Berkeley Research Group, LLC
3350 Riverwood Parkway, Suite 1900
Atlanta, GA 30339
Phone: 678.575.4864/678.627.8334
Email: bbutler@thinkbrg.com
About Liberty Power
Established in 2001 and headquartered in Fort Lauderdale, Fla.,
Liberty Power is one of the largest and longest-tenured
owner-operated retail electricity provider in the United States.
Liberty Power provides large and small businesses, government
agencies and residential customers with competitively-priced
electricity, sustainability solutions and exceptional customer
service.
Liberty Power filed a voluntary petition for Chapter 11
reorganization (Bankr. S.D. Fla. Case No. 21-13797) on April 20,
2021. At the time of the filing, the Debtor disclosed total assets
of up to $100 million and total liabilities of up to $500 million.
Judge Scott M. Grossman oversees the case.
The Debtor tapped Genovese Joblove & Battista, P.A. as legal
counsel and Berkeley Research Group, LLC as restructuring advisor.
Bob Butler, managing director at Berkeley, serves as the Debtor's
chief restructuring officer. Stretto is the claims and noticing
agent.
LIBERTY POWER: Taps Genovese, Joblove & Battista as Legal Counsel
-----------------------------------------------------------------
Liberty Power Holdings, LLC received approval from the U.S.
Bankruptcy Court for the Southern District of Florida to hire
Genovese, Joblove & Battista, P.A., to serve as legal counsel in
its Chapter 11 case.
The firm's services include:
(a) advising the Debtor regarding its powers and duties in the
continued management and operation of its business and properties;
(b) attending meetings and negotiating with creditors and
other parties-in-interest, and consulting with the Debtor on the
conduct of the case, including all of the legal and administrative
requirements of operating in Chapter 11;
(c) advising the Debtor on any contemplated sales of assets or
business combinations;
(d) advising the Debtor on financing and cash collateral
arrangements, and negotiating and drafting documents relating
thereto;
(e) advising the Debtor on matters relating to the evaluation
of the assumption, rejection or assignment of unexpired leases and
executory contracts;
(f) advising the Debtor on legal issues arising in or relating
to the Debtor's ordinary course of business;
(g) taking all necessary action 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;
(h) preparing legal papers;
(i) negotiating and preparing a plan of reorganization,
disclosure statement and all related documents, and taking actions
to obtain confirmation of such plan;
(j) attending meetings with third parties and participating in
negotiations;
(k) appearing before the court, any appellate courts, and the
U.S. trustee; and
(l) other legal services necessary to administer the Debtor's
bankruptcy case.
The firm's hourly rates are as follows:
Paul Battista $745 per hour
Mariaelena Gayo-Guitian $550 per hour
Genovese received a retainer in the amount of $140,000.
Paul Battista, Esq., at Genovese, 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:
Paul J. Battista, Esq.
Genovese, Joblove & Battista, P.A.
100 SE 2nd St., 44th Floor
Miami, FL 33131
Tel: 305-349-2300
Email: pbattista@gjb-law.com
About Liberty Power
Established in 2001 and headquartered in Fort Lauderdale, Fla.,
Liberty Power is one of the largest and longest-tenured
owner-operated retail electricity provider in the United States.
Liberty Power provides large and small businesses, government
agencies and residential customers with competitively-priced
electricity, sustainability solutions and exceptional customer
service.
Liberty Power filed a voluntary petition for Chapter 11
reorganization (Bankr. S.D. Fla. Case No. 21-13797) on April 20,
2021. At the time of the filing, the Debtor disclosed total assets
of up to $100 million and total liabilities of up to $500 million.
Judge Scott M. Grossman oversees the case.
The Debtor tapped Genovese Joblove & Battista, P.A. as legal
counsel and Berkeley Research Group, LLC as restructuring advisor.
Bob Butler, managing director at Berkeley, serves as the Debtor's
chief restructuring officer. Stretto is the claims and noticing
agent.
LITTLE DRUG CO: Court OKs Use of Cash Collateral Thru July 7
------------------------------------------------------------
Judge Lori V. Vaughan authorized Little Drug Co., Inc. to use cash
collateral on an interim basis to pay the expenses pursuant to the
budget, through and including July 7, 2021.
The budget provided for monthly total cost of goods sold and total
expenses, as follows:
Cost of Total
Month Goods Sold Expenses
------- ----------- --------
June 2021 $160,899 $50,346
July 2021 $168,944 $50,346
August 2021 $177,391 $50,346
Each secured creditor with a security interest in cash collateral
shall have a perfected post-petition lien against cash collateral
to the same extent and with the same validity and priority as the
pre-petition lien.
A copy of the order is available for free at https://bit.ly/2TCYOIi
from PacerMonitor.com.
The hearing on the motion and any timely objection thereto is
continued to July 7, 2021 at 2 p.m., by telephone, in the U.S.
Bankruptcy Court for the Middle District of Florida, in Courtroom
6C, 6th Floor, George C. Young Courthouse, 400 West Washington
Street, Orlando, Florida. The Court will enter a subsequent Order
Establishing Procedures for Video Hearing should it decide to hold
the hearing by Zoom.
About Little Drug Co.
Little Drug Co., Inc., d/b/a Little Drug Healthmart, d/b/a Little
Drug Co., owns and operates a pharmacy, soda fountain, and
restaurant in New Smyrna Beach, Florida. On May 20, 2021, the
Debtor filed a petition under Subchapter V of Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 21-02332).
As of the Petition Date, the Debtor estimated between $100,001 and
$500,000 in assets and between $500,001 and $1,000,000 in
liabilities. Justin Sikes, president, signed the petition.
Melissa Youngman, P.A. represents the Debtor as counsel.
LTI HOLDINGS: GM Nameplate Acquisition No Impact on Moody's B3 CFR
------------------------------------------------------------------
Moody's Investors Service said that LTI Holdings, Inc.'s (Boyd)
planned acquisition of GM Nameplate ("GMN") for $122 million does
not affect the company's ratings (B3 corporate family rating, B2
first lien senior secured, Caa2 second lien senior secured, stable
outlook) at this time. Moody's said the transaction is credit
positive as Boyd will benefit from GMN's technical capabilities and
manufacturing footprint. For more information please see the issuer
comment published on www.moodys.com.
LTI Holdings, Inc. (Boyd) is a California-based manufacturer of
customized, precision products that provide thermal management
(prevent overheating) and environmental sealing (protect from heat,
moisture or radio-frequency) solutions to customers serving a broad
array of end markets including mobile electronics, medical, and
aerospace and defense among others.
M&E TRUCK: Debtor to File Plan on or Before June 30
---------------------------------------------------
Judge Eric L. Frank has entered an order that, on or before June
30, 2021, the M&E Truck Sales, Inc. shall file (and serve in
accordance with the rules of court) an amended chapter 11 plan.
About M&E Truck Sales
M&E Truck Sales, Inc. sought protection for relief from the Chapter
11 of the Bankruptcy Code (Bankr. E.D. Pa. Case No. 20-14242) on
Oct. 26, 2020, disclosing $50,000 in assets and $100,001 to
$500,000 in liabilities. Center City Law Offices, LLC, serves as
the Debtor's counsel.
MADDOX FOUNDRY: Aug. 5 Hearing on Disclosure Statement
------------------------------------------------------
Judge Karen K. Specie has entered an order that the hearing to
consider the approval of the disclosure statement of Maddox Foundry
& Machine Works, LLC shall be held on August 5, 2021, at 10:45 AM,
Eastern Time, via CourtCall.
July 29, 2021, is fixed as the last day for filing and serving
written objections to the disclosure statement.
About Maddox Foundry & Machine Works
Maddox Foundry & Machine Works, LLC, is a company that operates a
foundry machine shop. It emerged from a prior bankruptcy in 2017.
In February of 2019, Chase Hope took over control of the Debtor
from his parents, Fletcher and Mary Hope through the Debtor's
parent company, Green Health Science, LLC. By April 2019 the
Debtor started to experience financial issues. The Debtor
experienced cash-flow issues and was unable to service its
seven-figure obligations to the McGurn Entities.
Maddox Foundry & Machine Works, LLC, a company that operates a
foundry machine shop, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Fla. Case No. 20-10211) on Oct. 7,
2020. At the time of the filing, the Debtor disclosed assets of
$500,000 and liabilities of $4.495 million.
Judge Karen K. Specie oversees the case.
Seldon J. Childers, Esq., at ChildersLaw, LLC, serves as the
Debtor's legal counsel and Dawn Moesser, ASA, of ICS Asset
Management Services, Inc., as the Debtor's appraiser.
MADISON IAQ: S&P Assigns Prelim 'B' ICR on Merger, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its preliminary 'B' issuer credit
rating to U.S.-based Madison IAQ LLC, a global provider of indoor
air quality solutions, its preliminary 'B' issue-level rating to
the proposed senior secured debt, and its preliminary 'CCC+'
issue-level rating to the proposed unsecured notes.
The stable outlook reflects the potential for steady to modestly
improving credit metrics over the next year in an environment where
an improving domestic economy and a heightened awareness of indoor
air quality issues raised by the pandemic are expected to support
good demand for Madison IAQ's products.
Leverage will be high through at least 2022 because this very large
acquisition will be funded almost entirely with debt (nearly 90% of
capital raised). Madison IAQ is seeking to obtain:
-- A $1.925 billion first-lien term loan due 2028,
-- A $600 million senior secured bond due 2028,
-- An undrawn $200 million senior secured credit facility due
2026, and
-- $885 million of senior unsecured notes due 2029.
The company's parent also expects to contribute $449 million of
equity. Proceeds are earmarked for the acquisition, related
expenses, and to repay a modest amount of pre-existing Madison IAQ
debt.
S&P said, "We forecast adjusted net debt (including lease and
postretirement adjustments, as well as our pro forma EBITDA
assumptions) to be above 7x in 2021. That figure could drop
meaningfully in 2022 but would remain high at over 5.5x in 2022,
assuming EBITDA increases by more than 25% in the next 12-18
months. Funds from operations (FFO) to debt could approach 12% in
the same scenario.
"Our forecast assumes the company doesn't make any additional
acquisitions or distributions to its parent over the next 18
months. We also expect the U.S. economy to continue to expand, with
GDP growing by more than 6% this year and by about 3% next year.
Residential construction and repair and remodeling spending should
also remain healthy during this timeframe. Further, our forecast
assumes the integration of the two companies goes relatively
smoothly and that the combined company realizes some synergies, but
perhaps not as quickly as management expects.
"In this favorable economic scenario, we forecast Madison IAQ to
generate substantial free operating cash flow, particularly given
the company's manageable working capital and capital expenditure
needs. We could see adjusted net leverage drop below 5x as soon as
2023 if management either holds this cash on balance sheet or
prepays borrowings on its term loan.
"That said, this $3.4 billion acquisition is very large relative to
the legacy Madison IAQ business. We view business combinations of
this size to be inherently risky, with potential practical and
cultural challenges including achieving synergies in a timely
manner and retaining key personnel. These risks present a downside
to our base case forecast."
This business combination will create a company with meaningfully
improved scale and solid profitability, but also one with limited
scope and geographic concentration. Madison IAQ will have over $2
billion of annual revenue on a pro forma basis, considerably more
than the legacy business generated. It should also generate EBITDA
margins (not publicly disclosed) at the high end or slightly above
the range we consider to be average for building products
manufacturers.
S&P expects margins to hold or expand modestly even though input
costs remain high. Madison IAQ's improved scale should afford some
purchasing synergies. And its solid market positions in several
niches, including residential exhaust, air handling, and
dehumidification, could provide a bit of pricing power. These
strengths should offset sustained high input costs. S&P Global
Ratings assumes costs for copper, steel, and aluminum to recede
from currently very high levels but remain well above average for
the next year or two.
While the company's scale will be considerably improved, S&P views
its geographic diversity to be limited and its scope to be somewhat
narrow. Madison IAQ will derive roughly 90% of its revenue from
customers in North America. And its products are limited to the
indoor air quality industry, where it competes in some cases with
much larger competitors such as Carrier Global Corp. and Vertiv
Group Corp. That said, its end-market mix is good (with residential
construction and repair and remodeling comprising 31% of pro forma
revenue) and its product mix within the indoor air quality industry
is varied (residential ventilation, bath fans, and range hoods will
account for 25% of pro forma revenue, air handling units 11%, and
dehumidification 10%).
The stable outlook reflects the potential for steady to modestly
improving credit metrics over the next year in an environment where
an improving domestic economy and a heightened awareness of indoor
air quality issues, raised by the pandemic, are expected to support
good demand for Madison IAQ's products.
S&P will lower its ratings on Madison IAQ if adjusted debt to
EBITDA is not trending firmly to below 7x over the next year. This
could occur if EBITDA margins are 400 basis points below our
forecast level because of any combination of adverse factors,
including the loss of several large customers, weaker sales
generally, the inability to pass through higher-than-expected input
costs, and the inability to achieve synergies because the
integration does not proceed smoothly. This scenario might also
result in adjusted funds from operations (FFO) debt below 7%.
Additional downside triggers include more aggressive than
anticipated financial policies, including large distributions to
its parent, debt financed or otherwise, or additional leveraged
acquisitions such that discretionary cash flow is negligible.
S&P said, "We are unlikely to raise our ratings on the company
within the next 12 months given our expectation for adjusted net
leverage to remain above 5x EBITDA during that timeframe. We are
also unlikely to upgrade the company in the near term given our
view that it will take at least two years for the company to
demonstrate it has successfully integrated the Nortek Air business
and achieved planned synergies." S&P could raise its rating in the
longer term if the integration proceeds smoothly and the company
increases EBITDA and uses positive free operating cash flow to
repay debt such that:
-- Adjusted net debt to EBITDA falls closer to or below 5x and we
believe it would remain at that level in a less favorable economic
environment, and
-- FFO to debt can be comfortably sustained above 12%.
MAH 710 PARK: Case Summary & 2 Unsecured Creditors
--------------------------------------------------
Debtor: MAH 710 Park Avenue 19C Inc.
710 Park Avenue #19C
New York, NY 10001
Business Description: MAH 710 Park Avenue 19C Inc. is a Single
Asset Real Estate debtor (as defined in 11
U.S.C. Section 101(51B)).
Chapter 11 Petition Date: June 8, 2021
Court: United States Bankruptcy Court
Central District of California
Case No.: 21-14726
Judge: Hon. Vincent P. Zurzolo
Debtor's Counsel: Stella Havkin, Esq.
HAVKIN & SHRAGO ATTORNEYS AT LAW
5950 Canoga Avenue, #400
Woodland Hills, CA 91367
Tel: 818-999-1568
Fax: 818-234-1424
E-mail stella@havkinandshrago.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Diane Hertz, secretary.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/VESITAA/MAH_710_Park_Avenue_19C_Inc__cacbke-21-14726__0001.0.pdf?mcid=tGE4TAMA
MALLINCKRODT PLC: Avoids Acthar Estimation Claims Hearing for Now
-----------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that U.S. Bankruptcy Judge
John Dorsey on Monday deferred ruling on a request to estimate the
value of certain legal claims lodged against Mallinckrodt Plc
related to its Acthar Gel.
Health insurer Humana Inc. argued that its claims -- damages
stemming from alleged price gouging -- are so large they need to be
estimated before the drugmaker's bankruptcy exit plan can be
considered.
"If the Debtors are liable to Humana, they face billions of dollars
in prepetition damages that must be accounted for, treated and
reserved or paid under the plan," lawyers for Humana wrote in court
papers.
About Mallinckdrodt PLC
Mallinckrodt -- http://www.mallinckrodt.com/-- 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.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
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 the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC, is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MALLINCKRODT PLC: Willkie, et al. 2nd Update on Attestor Claimants
------------------------------------------------------------------
In the Chapter 11 cases of Mallinckrodt PLC, et al., the law firms
of Willkie Farr & Gallagher LLP, Eimer Stahl LLP, and Morris,
Nichols, Arsht & Tunnell LLP submitted a second amended verified
statement under Rule 2019 of the Federal Rules of Bankruptcy
Procedure to disclose an updated list of counsel.
On April 19, 2021, MNAT and Willkie filed the Verified Statement of
Willkie Farr & Gallagher LLP and Morris, Nichols, Arsht & Tunnell
LLP Pursuant to Rule 2019 of the Federal Rules of Bankruptcy
Procedure.
On May 20, 2021, MNAT and Willkie filed the Amended Verified
Statement of Willkie Farr & Gallagher LLP and Morris, Nichols,
Arsht & Tunnell LLP Pursuant to Rule 2019 of the Federal Rules of
Bankruptcy Procedure amending the Original Verified Statement. As
described in the Amended Verified Statement, on May 14, 2021,
Attestor, through affiliated entities, acquired additional
Acthar-related proof of claims, listed on Exhibit B to the Amended
Verified Statement, originally filed by United HealthCare Services,
Inc., OptumRx Group Holdings Inc. and OptumRx Holdings, LLC. On the
same day, Attestor filed notices of transfers with respect to such
claims pursuant to F.R.B.P. Rule 3001(e).
As of June 4, 2021, the Attestor claimants and their
disclosable economic interests are:
Disclosable
Economic Interests
------------------
Humana, Inc. Unliquidated
500 West Main St.
Louisville, KY 40202
Attestor Limited Unliquidated
7 Seymour Street
London
United Kingdom, W1H 7JW
The Law Firms file this Second Amended Verified Statement to add
Eimer Stahl as additional counsel to Attestor and Humana.
The information set forth in the Verified Statements, including the
exhibits thereto, is intended only to comply with Rule 2019 of the
Federal Rules of Bankruptcy Procedure and is not intended for any
other purpose. The Law Firms make no representation as to the
amount, validity, or priority of any particular member's claims and
reserves all respective rights thereto. The Verified Statements,
including the exhibits thereto, shall not constitute a waiver or
limit any of the rights of the Attestor Claimants to assert, file,
or amend any claims in accordance with applicable procedures
established by this Court, or their rights outside of this Court.
The Law Firms reserve the right to amend or supplement this Second
Amended Verified Statement as necessary in accordance with Rule
2019 of the Federal Rules of Bankruptcy Procedure.
Counsel to Attestor and Humana can be reached at:
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
Donna L. Culver, Esq.
Robert J. Dehney, Esq.
Matthew B. Harvey, Esq.
Taylor M. Haga, Esq.
Nader A. Amer, Esq.
1201 North Market Street, 16th Floor
P.O. Box 1347
Wilmington, DE 19899-1347
Telephone: (302) 658-9200
Facsimile: (302) 658-3989
E-mail: dculver@morrisnichols.com
rdehney@morrisnichols.com
mharvey@morrisnichols.com
thaga@morrisnichols.com
namer@morrisnichols.com
- and -
Matthew A. Feldman, Esq.
Joseph G. Minias, Esq.
Matthew Freimuth, Esq.
Richard Choi, Esq.
Philip F. DiSanto, Esq.
WILLKIE FARR & GALLAGHER LLP
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 728-8000
E-mail: mfeldman@willkie.com
jminias@willkie.com
mfreimuth@willkie.com
rchoi1@willkie.com
pdisanto@willkie.com
- and -
Benjamin E. Waldin, Esq.
Scott C. Solberg, Esq.
James W. Joseph, Esq.
Sarah H. Catalano, Esq.
EIMER STAHL LLP
224 South Michigan Avenue Suite 1100
Chicago, IL 60604
Telephone: (312) 660-7600
E-mail: bwaldin@eimerstahl.com
ssolberg@eimerstahl.com
jjoseph@eimerstahl.com
scatalano@eimerstahl.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3x372b3
About Mallinckdrodt PLC
Mallinckrodt -- http://www.mallinckrodt.com/-- 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.
As of March 27, 2020, the Company had $10.17 billion in total
assets, $8.27 billion in total liabilities, and $1.89 billion in
total shareholders' equity.
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 the Company.
Mallinckrodt plc disclosed $9,584,626,122 in assets and
$8,647,811,427 in liabilities as of Sept. 25, 2020.
Latham & Watkins LLP, Ropes & Gray LLP and Wachtell, Lipton, Rosen
& Katz are serving as counsel to the Company, Guggenheim
Securities, LLC is serving as investment banker and AlixPartners
LLP is serving as restructuring advisor to Mallinckrodt. Hogan
Lovells is serving as counsel with respect to the Acthar Gel
matter. Prime Clerk LLC is the claims agent.
MARY'S WOODS: Fitch Assigns 'BB' IDR, Outlook Stable
----------------------------------------------------
Fitch Ratings has assigned the 'BB' Issuer Default Rating (IDR) to
Mary's Woods at Marylhurst (MWM), and affirmed the 'BB' ratings on
the series 2018A revenue bonds issued by the Hospital Facility
Authority of Clackamas County, OR, and the series 2017A revenue
bonds issued by the Public Finance Authority on behalf of MWM.
The Rating Outlook is Stable.
SECURITY
The bonds are secured by a pledge of obligated group gross
revenues, a mortgage lien on certain property and a debt service
reserve fund.
ANALYTICAL CONCLUSION
The 'BB' rating reflects MWM's financial profile demonstrating weak
leverage and capital-related metrics as a result of significant
debt issuances in 2017 and 2018 to fund the community's assisted
living unit (ALU) and independent living unit (ILU) campus
expansion (The Village). However, MWM's leverage profile
significantly improved through fiscal 2020 and through the interim
period as temporary debt was paid off from initial entrance fees.
To date, all temporary debt was paid off, with approximately $5.6
million of excess project funds remaining, which was used to pay
down the principal balance on the series 2017 debt. Over time, as
new units at The Village continue to fill up, Fitch believes cash
flow generation has the potential to strengthen, contributing to
gradual improvements in MWM's leverage metrics over the next
several years.
KEY RATING DRIVERS
Revenue Defensibility: 'a'
Strong Demand Indicators
The primary service area boasts favorable population growth and
real estate trends, which historically supported strong demand and
high occupancy, mitigating competitive threats. This resulted in
very strong and consistent occupancy across its campus. The demand
was also reflective in the successful sale and initial filling of
the new ILUs at The Village.
Operating Risk: 'bbb'
Improvement In Operations Expected
MWM's midrange operating risk assessment reflects its very young
average age of plant given the completion of the expansion project,
offset by historically weak operating cost flexibility over the
last few years. The coronavirus pandemic contributed to the weaker
operating performance in fiscal 2020 and through the interim
period. However, initial entrance fees from new units coming online
was strong, allowing MWM to significantly pay down temporary debt
ahead of schedule, which Fitch views favorably. Given consistent
demand, Fitch expects overall occupancy rates to improve over the
next couple of years.
Financial Profile: 'bb'
Stable But Weak Leverage Metrics
While MWM's leverage metrics remain weak, the completion of
expansion project and successful filling of the new ILUs coupled
with pay down of temporary debt over the past year contributed to
moderate improvements in MWM's leverage position through fiscal
2020 (June 30 year end) and through the first nine months of fiscal
2021. All series 2017 and 2018 temporary debt is paid off YTD and
ahead of schedule, which Fitch views favorably. Fitch believes
leverage metrics will remain weak over the next few years, although
Fitch expects modest improvement.
ASYMMETRIC ADDITIONAL RISK CONSIDERATIONS
There are no asymmetric risk factors affecting the rating
determination.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Significant improvement in leverage position with cash to
adjusted debt sustained at 40% or higher.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Unrestricted cash and investments deteriorate significantly to
where capital-related metrics and cash to adjusted debt no
longer supports the current rating;
-- MWM fails to meet future covenant requirements relating to the
expansion project.
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.
MWM is a Type B life plan community that opened in 2001 in Lake
Oswego in Oregon's Willamette Valley, on land owned by the Sisters
of the Holy Names of Jesus and Mary (the Sisters). Mary's Woods
operates a life plan community consisting of 479 ILUs and 153 ALUs,
which includes new units from the recent expansion. In 2019,
management transitioned the remaining five skilled nursing beds
into ALUs and no longer has that exposure. Total operating revenues
were $36 million in fiscal 2020 (June year end).
REVENUE DEFENSIBILITY
Management is on track to meet occupancy covenant requirements for
its Stage II ILUs. Per MWM's Master Trust Indenture (MTI), the
community is required to meet 40% occupancy of the Stage II ILUs as
of June 30, 2020. As of March 31, 2021, Stage II ILU occupancy was
at 96%, well exceeding occupancy requirements. The coronavirus
pandemic temporarily affected ALU and memory care occupancy rates,
but given the strong demand, Fitch expects occupancy rates will
improve over the short term as move-ins continue.
Overall economic indicators are strong within the primary service
area, with healthy population growth and favorable median household
income. The robust wait list of 520 individual depositors as of
March 31, 2021 demonstrates strong demand.
Fitch views MWM's rates and affordability as providing moderate
price flexibility, with rate increases that occur regularly and are
affordable relative to the service area's median home values. The
increasing real estate values in the surrounding market have been a
key driver for strong demand for the community and helped lead
consistently strong occupancy levels in ILUs and ALUs.
OPERATING RISK
MWM offers Type B contracts, with the majority of residents on 80%
refundable contracts, and the remaining residents in either 50%
refundable or no-refundable contracts. The 80% refundable contract
amortizes 2% per month for five months from the date of occupancy
plus an immediate 10% upon move in. The refund is payable on
termination and re-occupancy of the unit. The nonrefundable
entrance fee contract (offered on a very limited basis) amortizes
2% per month for 45 months from the date of occupancy plus an
immediate 10% upon move in. MWM also offers 50% refundable contract
(amortizes 2% per month for 20 months from the date of occupancy
plus an immediate 10% upon move in) to The Village expansion
residents.
Due to the coronavirus pandemic, slower turnover in existing ILUs
resulted in lighter net entrance fees received in fiscal 2020 and
YTD. Due to state and local restrictions, many residents postponed
moving through the continuum of care during the pandemic. With less
ILU turnover, MWM generated $2.6 million in net entrance fees
received in fiscal 2020, compared with the historical average of
$4.7 million in net entrance fees per year. MWM generated an
operating ratio of 110.2%, net operating margin (NOM) of 6.6% and
NOM adjusted of 13.8% in fiscal 2020. However, the demand for ILU
in The Village remains healthy, with MWM generating $28.7 million
in entrance fees received from new units in fiscal 2020, offsetting
the weaker margins.
The community experienced a surge in coronavirus cases from
December 2020 through January 2021 that moderately affected memory
care occupancy rates. MWM limited admissions to memory care in
order to avoid the spread of the virus and incurred additional
expenses related to staffing and supplies. Through the first nine
months of fiscal 2021, ended March 31, 2021, MWM generated an
operating ratio of 113.7%, NOM of 2.4% and NOM adjusted of negative
0.3%. With restrictions lifted and vaccinations continuing, the
community is experiencing more demand for ALUs and memory care
units due to pent-up demand. Fitch believes operations have the
potential to recover to levels that exceed historical performance
as more residents move through the continuum of care and given the
demand for MWM's new ILUs and ALUs.
Fitch expects future capex to temper following a period of high
capital spending related to The Village expansion project.
Management projects capital spending to be at or below 50% of
depreciation over the medium term. MWM's average age of plant is
very healthy, improving to seven years as of fiscal 2020.
The Village expansion project added a combined 197 ILUs and 48 ALUs
to its current 387-unit campus, nearly doubling its unit count.
Fitch views management's oversight of the project as favorable,
with the project completed on time and under budget. Presale
activity was strong as the new ILU buildings experienced successful
fill-up, with 81% of the total new units occupied as of March 31,
2021. Fitch expects the community will be able to successfully fill
the new units given the long waitlist for existing and new units.
Capital-related metrics were weak due to significant debt issued to
fund the expansion project in 2017 and 2018. Revenue-only maximum
annual debt service (MADS) was 0.3x, MADS to revenue was 24.4% and
debt to net available was 30.9x as of fiscal 2020. Fitch expects
capital-related metrics to improve over the short term as temporary
debt is paid off and as cash flow generation improves with the new
units coming online.
FINANCIAL PROFILE
Unrestricted cash and investments of $35.9 million contributed to
healthy days cash on hand (DCOH) of 365 days, resulting in cash to
adjusted debt of 25.7% as of fiscal 2020. This includes $3.3
million in the Paycheck Protection Program loan received in fiscal
2020. However, despite cash growth through the first nine months of
fiscal 2021 with improved DCOH of 379 days, cash to adjusted debt
declined to 20.6% with the inclusion of MWM's operating lease
liability.
Total adjusted debt of $139.8 million as of fiscal 2020 consisted
of the outstanding series 2017A, 2018A and 2018B-1 (temporary debt)
bonds. However, all temporary debt has been paid off as of March
31, 2021. Following the adoption of the new lease accounting method
for lease liability under the FASB in the interim period, the
addition of $67.5 million of operating lease liability was added to
MWM's balance sheet, resulting in adjusted debt of $195.2 million
as of March 31, 2021. The lease debt is related to MWM's ground
lease -- the campus is situated on land owned by the Sisters and
MWM leases the land under a ground lease from the Sisters. The
lease obligation represents the funding level for a hypothetical
purchase of the leased asset and is included in Fitch's core
leverage metrics.
Fitch's scenario analysis supports the opinion that MWM's balance
sheet will remain weak, albeit stable, over the next five years,
with leverage metrics consistent with Fitch's 'BB' category
expectations. Although the addition of the lease obligation puts
some pressure on MWM's cash-to-adjusted debt metric in the interim
period, Fitch expects operations will improve as fill-ups continue
at The Village, contributing to improved cash flow generation and
modest improvements in key leverage metrics over the next several
years.
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.
MAXLINEAR INC: Moody's Rates New 1st Lien Credit Facilities 'Ba3'
-----------------------------------------------------------------
Moody's Investors Service affirmed MaxLinear, Inc.'s Ba3 Corporate
Family Rating and assigned Ba3 ratings on the proposed revolving
credit facility (Revolver) and Term B Loan facility, which will be
used to refinance MaxLinear's existing senior secured term loan A
and term loan B (Existing Term Loans). Moody's also upgraded the
Probability of Default Rating to Ba3-PD from B1-PD and revised the
Speculative Grade Liquidity rating to SGL-1 from SGL-2. The outlook
remains stable. The ratings for the company's Existing Term Loans
will be withdrawn upon close of the refinancing.
Affirmations:
Issuer: MaxLinear, Inc.
Corporate Family Rating, Affirmed Ba3
Assignments:
Issuer: MaxLinear, Inc.
Senior Secured 1st Lien Term Loan B, Assigned Ba3 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned Ba3
(LGD3)
Upgrades:
Issuer: MaxLinear, Inc.
Probability of Default Rating, Upgraded to Ba3-PD from B1-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2
Outlook Actions:
Issuer: MaxLinear, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The upgrade of the PDR to Ba3-PD from B1-PD reflects expectations
of an average recovery under Moody's Loss Given Default framework,
driven largely by the relaxation of the covenant package relative
to the Existing Term Loans, including the removal of the financial
maintenance covenant in the new credit facilities (Revolver and
Term Loan), which will be governed by a springing financial
covenant on the new Revolver. The Term Loan will not be governed by
any financial maintenance covenants.
The Ba3 CFR reflects MaxLinear's niche market positions in radio
frequency ("RF") chips used primarily in home networking, wireless
infrastructure, and data center systems; free cash flow (FCF)
generation due to the company's outsourced manufacturing model; and
valuable intellectual property (IP) as indicated by the high gross
margins (Moody's adjusted), which Moody's expects will remain in
the upper 40s to low 50s percent level. The credit profile also
considers MaxLinear's currently high leverage, which Moody's
expects will decline towards 2.5x debt to EBITDA (Moody's adjusted)
over the next 12 to 18 months. Although the company improved its
scale and product portfolio with its acquisitions of Intel
Corporations's Home Gateway Platform, the scale (less than $1
billion annual revenues proforma for Home Gateway) is still small
relative to key market competitors Broadcom Inc., NXP
Semiconductors N.V, and Analog Devices, Inc., which benefit from
both broader product lines and larger research and development
resources. The small revenue base also contributes to customer
concentration, as Commscope Holding Company, Inc (Commscope)
accounted for 15% of MaxLinear's revenues in 2020. This customer
concentration generates revenue volatility due to Commscope's
fluctuating end-market demand and limits MaxLinear's negotiation
leverage, potentially forcing MaxLinear to concede on terms to
maintain the customer relationship.
The stable outlook reflects Moody's expectation that revenues will
grow organically at least in the low single digits percent over the
next 12 to 18 months driven by strength in broadband demand
reflecting content and share gains in set top boxes. Moody's
expects the EBITDA margin (Moody's adjusted) to improve toward the
twenty percent level as integration and restructuring expenses
decrease. FCF will increase over the period, reflecting improving
profitability and the outsourced manufacturing model. Moody's
anticipates that MaxLinear will continue to repay debt with FCF to
debt (Moody's adjusted) improving toward 50%.
The Speculative Grade Liquidity (SGL) rating of SGL-1 reflects
MaxLinear's very good liquidity, which is supported by consistent
FCF and a large cash balance. Moody's expects that MaxLinear will
generate annual free cash flow (Moody's adjusted) of at least $150
million for the next 12 to 18 months. Given the strong FCF, Moody's
expects that the new $100 million Revolver will remain undrawn. The
Term Loan will not be governed by any financial maintenance
covenants, while the Revolver will contain a springing financial
covenant set at 3.5x (relaxed to 3.75x for permitted acquisitions
as defined), which is tested at Revolver utilization in excess of
1% of total commitments (borrowings or letters of credit).
The Ba3 rating on both the Revolver and Term Loan, which is equal
to the Ba3 CFR, reflects the collateral, comprised of a first
priority lien on the company's assets, and the minimal amount of
unsecured liabilities in the capital structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
MaxLinear's ratings could be upgraded if:
-- the company builds scale through organic revenue growth, and
-- reduces leverage through a combination of debt repayment and
EBITDA growth, with debt to EBITDA (Moody's adjusted) sustained
below 2.5x, and
-- sustains EBITDA margin (Moody's adjusted) above the
mid-twenties percent level
The ratings could be downgraded if:
-- Revenues decline, indicating a poor integration of Home Gateway
or a failure to reverse the decline in its core business
-- EBITDA margin (Moody's adjusted) remains below the twenty
percent level
-- MaxLinear does not make steady progress toward reducing
leverage to below 3.5x debt to EBITDA (Moody's adjusted) over the
next year
MaxLinear, Inc., based in Carlsbad, California, is a fabless
semiconductor firm that produces radio frequency ("RF") and
mixed-signal integrated circuits used in broadband communications,
data centers, and metro and long-haul data transport network
applications.
The principal methodology used in these ratings was Semiconductor
Methodology published in December 2020.
MCKISSOCK INVESTMENT: S&P Assigns 'B-' ICR, Outlook Stable
----------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
U.S.-based professional education solutions provider McKissock
Investment Holdings LLC, which does business as Colibri Group.
At the same time, S&P assigned 'B-' ratings and '3' recovery
ratings to Colibri's proposed $400 million term loan and $30
million revolving credit facility.
The company plans to use the term loan proceeds--along with cash on
hand--to repay its existing debt, fund a $119 million dividend to
its financial sponsors, and pay related fees.
The stable outlook reflects S&P's expectation that Colibri's
organic growth will stabilize in the low- to mid-teens percent area
in 2021 as it expands into more markets, and leverage will decline
although still remain elevated at about 7x over the next 12
months.
The issuer credit rating reflects Colibri's relatively small size
in a highly fragmented professional education solutions industry,
significant exposure to cyclical end markets, aggressive financial
policy prioritizing debt-funded acquisitions and shareholder
distributions over debt repayment, and acquisition-related
integration risks. These challenges are somewhat offset by good
growth prospects stemming from the company's new go-to-market
strategy, market position in real estate and valuation and property
services (VPS), high degree of recurring revenue from continuous
education courses, and healthy cash-flow generation.
Colibri has a small but growing revenue base in a fragmented
industry. S&P views the professional education solutions industry
as highly fragmented and competitive, as there has been an
increased demand for specialized training, certifications, and
licensing for working professionals. In addition, COVID-19-related
restrictions have accelerated the shift of content delivery and
exams to online platforms. While Colibri has more resources and
more course offerings than most small family-owned direct regional
competitors, it also has a much smaller scale than rated peers in
the broader professional education market with more diverse course
offerings. Colibri competes by acquiring direct regional
competitors and improving operations through scale, a common
content delivery platform, and a multi-channel marketing platform.
As such, the company has made several recent tuck-in acquisitions,
driving strong double-digit revenue growth in 2020. Nevertheless,
S&P believes Colibri faces integration risk from combining multiple
acquisitions into its common platform in a short timeframe.
S&P said, "We expect Colibri's adjusted leverage to remain high due
to its aggressive financial policy.Pro forma for the dividend
recapitalization transaction and recent acquisitions, we estimate
that the company will reduce its S&P Global Ratings-adjusted
leverage to 7x by 2021 from 8.3x as of March 31, 2021, on a
last-12-month basis. This is due to EBITDA growth of over 40% in
2021. We also forecast the company will further reduce leverage to
the low-6x area by 2022 as margins continue to improve from
operating leverage and scaling of recent acquisitions. We expect
Colibri to continue pursuing acquisitions that provide additional
scale, diversification, and capabilities in line with historical
periods. As such, we believe any significant credit-metric
improvements will be temporary and that Colibri will continue to
opportunistically reward its private-equity sponsors with
debt-funded acquisitions or dividends rather than prioritizing debt
repayment."
Colibri operates in a widely fragmented and highly competitive real
estate market but has a good market position. The company is one of
the largest providers of real estate licensing courses in the U.S.
with a leading position in core real estate markets. It benefits
from a good brand name in the regional real estate markets,
including in VPS, with well-known brands like Real Estate Express
and McKissock Learning. Nonetheless, the company's business is
largely concentrated in these two segments (real estate and VPS),
with a combined revenue contribution of over 70%. S&P also believes
the company's high degree of revenue from qualifying education
courses in its real estate segment poses a risk during economic and
industry downturns.
The stable outlook reflects S&P's expectation that Colibri's
organic growth will stabilize in the low- to mid-teens percent area
in 2021 as it expands into more markets, and leverage will decline
although still remaining elevated at about 7x over the next 12
months.
S&P could raise the issuer credit rating if:
-- The company exhibits a track record of significantly growing
its EBITDA base with good operating leverage and synergies from
acquisitions; and
-- It reduces leverage below 6x on a sustained basis.
S&P could lower the rating if it believes Colibri's highly
leveraged capital structure had become unsustainable. This could
occur if it:
-- Faces operating challenges, such as declining average order
volume, because of increased competition or an inability to
integrate tuck-in acquisitions; or
-- Has revenue growth challenges and margin pressure that result
in negligible cash flow.
MERCURITY FINTECH: Reports First Quarter 2021 Financial Results
---------------------------------------------------------------
Mercurity Fintech Holding Inc. announced its unaudited financial
results for the first quarter ended March 31, 2021.
Ms. Alva Zhou, chairperson of the Board and co-chief executive
officer, said: "Our operating results from this quarter continued
to reflect the stages of our ongoing business transition. A
business transition is not a linear process and often takes time,
and revenues from our new DeFi platform related products have yet
to materialize. We are going to seek new market opportunities in
the digital assets industry as we continue to execute our strategic
transition, and we remain committed to our goals of creating
sustainable growth and delivering strong performance results to our
shareholders."
Changes to the Board of Directors and Management Team in the First
Quarter 2021
On March 4, 2021, Mr. Liu Hao was appointed as a director and Mr.
Huang Cong as an independent director to the Company's Board of
Directors, effective from March 4, 2021.
On April 30, 2021, the Company appointed Mr. Liu Hao as co-chief
executive officer, effective from May 1, 2021.
Mr. Haohan Xu resigned as a director of the Board due to personal
reasons, effective from June 5, 2021.
Mr. Erez Simha, president and chief financial officer, has resigned
to pursue other opportunities, effective on June 5, 2021. Mr. Liu
Hao, director and co-chief executive officer, will take on the role
of acting chief financial officer of the Company, effective upon
Mr. Simha's departure.
Recent Developments
On April 13, 2021, the Company and certain investors entered into a
Share Subscription and Warrant Purchase Agreement pursuant to which
the investors agreed to purchase a total of 537,143,470 ordinary
shares of the Company and warrants to purchase up to 537,143,470
Ordinary Shares for an aggregate consideration of US$10,000,000, to
be settled in the form of 172.9354 bitcoins. The transaction has
not been closed by the latest closing date as provided in the
Subscription Agreement. The Company's management team is
negotiating new terms and conditions with the investors.
Summary of First Quarter Results:
Revenues for the first quarter of 2021 were $81,000, compared to
$1,392,000 in the same period last year. Revenues for the first
quarter of 2021 comprised of software development fees from a
client who entered into a contract with the Company in July 2020
and service fees from the DeFi platform.
Cost of revenues for the first quarter of 2021 was $35,000 compared
to $79,000 in the same period last year. The cost of revenues was
primarily attributable to direct costs related to the contract
signed in July 2020.
Gross profit for the first quarter of 2021 was $47,000 compared to
$1,313,000 in the same period last year.
General and administrative expenses for the first quarter of 2021
were $4,601,000, compared to $245,000 in the same period last year.
General and administrative expenses consisted primarily of
$3,833,000 in stock-based compensation costs and $768,000 in
employment costs, office expenses, and professional fees. The
increase in stock-based compensation expenses was primarily due to:
(1) awards of 587,000 Restricted Stock Units (1 RSU equals 360
ordinary shares) during the quarter, and (2) the vesting
acceleration of previously granted Restricted Stock Units. In
addition to stock-based compensation, the increase in general and
administrative expenses primarily reflected increases in employment
costs and office expenses as a result of the Company's acquisition
of NBpay Investment Limited in March 2020.
Loss from operations for the first quarter of 2021 was $4,554,000,
compared to income from operations of $1,068,000 in the same period
last year.
Loss before provision for income taxes for the first quarter of
2020 was $4,554,000, compared to income before taxes of $1,068,000
in the same period last year.
Cash and cash equivalents were $287,000 as of March 31, 2021,
compared to $175,000 as of Dec. 31, 2020.
Total shareholders' equity was $10.2 million as of March 31, 2021,
compared to total shareholders' equity of $10.2 million as of
Dec. 31, 2020.
About Mercurity
Formerly known as JMU Limited, Mercurity Fintech Holding Inc.'s
current principal business is to design and develop digital asset
transaction platforms based on blockchain technologies for
customers to facilitate asset trading, asset digitalization and
cross-border payments and provide supplemental services for such
platforms, such as customized software development services,
maintenance services and compliance support services. The Company
started this new business since its acquisition of Mercurity
Limited (previously known as Unicorn Investment Limited) in May
2019.
Mercurity reported a net loss of $1.65 million for the year ended
Dec. 31, 2020, a net loss of $1.22 million for the year ended Dec.
31, 2019, a net loss of $123.24 million for the year ended Dec. 31,
2018, and a net loss of $161.90 million for the year ended Dec. 31,
2017.
MOTIVA PERFORMANCE: Accord over Botched Car Upgrade Okayed
----------------------------------------------------------
Bankruptcy Judge David T. Thuma has approved a compromise the
Chapter 7 trustee for Motiva Performance Engineering, LLC, reached
with Creig Butler.
"The compromise is a creative and fair resolution of the estate's
potential disputes with Butler," Judge Thuma said in a June 3, 2021
Opinion.
In 2014, Butler hired Motiva to upgrade a 2009 Hummer H3TX. The
work did not go well. Butler sued Motiva in 2017 in New Mexico
state court, alleging that Motiva agreed to upgrade the Hummer for
$20,000, but two years and $70,000 later, Motiva returned the
Hummer in an undrivable condition. After a four-day trial in
October 2018, a jury returned a verdict against Motiva for $292,001
plus costs, attorney fees, and post-judgment interest. The judgment
was increased to $337,317 in April 2019 to include attorney fees
and costs.
In November 2018, the state court issued a writ of execution,
directing the sheriff to levy Motiva's property to satisfy the
judgment. Before the deputies could levy, however, William
Ferguson, a well-known local attorney and one of Motiva's owners,
intervened, claiming Avatar Recoveries, which is also owned by
Ferguson, had a landlord's lien on all of Motiva's property,
superior to Butler's judgment. Ferguson threatened to sue the
sheriff personally if he levied any of Motiva's property.
Ferguson's partners are David Rochau and Scott Fox. Ferguson also
owns several other businesses including Dealerbank Financial
Services, Ltd, (auto financing and leasing); Armageddon High
Performance Solutions (manufactures turbo kits); Armageddon Tool &
Die (no active operations); and Avatar Recoveries (miscellaneous
investments). Avatar Recoveries owned the building that was leased
to Motiva.
Butler went back to state court, and sought and obtained a
preliminary injunction on May 7, 2019, freezing Motiva's assets,
including a 2012 Ferrari FF and $40,948.49 in insurance proceeds
for damage to the Ferrari. The state court also added Ferguson and
some of his businesses -- Ferguson Affiliates -- as "relief
defendants" in the State Court Action, which gave the court
jurisdiction over them so the court could determine which assets
Motiva owned. Unbeknownst to Butler, his counsel, or the state
court, while Ferguson and Butler's counsel were negotiating the
form of order related to the preliminary injunction, Dealerbank
borrowed $120,000 from a local bank and pledged the Ferrari as
collateral. Dealerbank used the loan proceeds to pay down
Ferguson's line of credit at the lending bank.
In early October 2019, the state court held an evidentiary hearing
on who owned the Ferrari, turbo kits, and Motiva's other assets.
The court issued 129 findings of fact and conclusions of law on
October 28, 2019, finding, inter alia, that Motiva owned the
Ferrari and the insurance proceeds; that Ferguson wrongfully and
inequitably asserted that Avatar had a landlord's lien on Motiva's
property so that he could delay the levy; and that Motiva's
property, including the proceeds of any sales after December 5,
2018, was subject to execution and/or garnishment. The court
ordered that the Ferrari be returned to Motiva, free and clear of
liens; that Ferguson account for the insurance proceeds and pay
them to Butler or Motiva; that the sheriff levy the Ferrari and
insurance money to satisfy Butler's judgment; and that Butler could
seek a further order recovering proceeds from the Ferguson
Affiliates' earnings after October 26, 2018, if necessary to
satisfy the judgment.
Postpetition, Butler's counsel learned that Dealerbank had
encumbered the Ferrari. Arguing that the Ferguson entities and/or
Ferguson violated the preliminary injunction by using the Ferrari
as collateral, Butler moved for stay relief so he could seek a
contempt order from the state court. The Bankruptcy Court granted
the motion.
Butler filed a motion in the state court for an order to show cause
why Ferguson and his affiliates should not be held in contempt and
sanctioned for violating the preliminary injunction. In January
2021, the state court entered Findings of Fact and Conclusion of
Law on Order to Show Cause and Order of Civil Contempt and
Sanctions against Dealerbank, Ferguson, and the law firm. The state
court found that Ferguson and his affiliates deliberately
circumvented the court's authority by encumbering the Ferrari. The
court also called into question Ferguson's veracity and ethics in a
number of ways. To purge the contempt, Ferguson, Dealerbank, and
the law firm were ordered to remove the lien on the Ferrari,
transfer title to Motiva free and clear of liens, and deposit the
insurance proceeds into the court registry for later disposition.
Separately, the court held that Ferguson "may purge the civil
contempt as to him" by paying Butler's judgment in full.
In September 2020, the Chapter 7 trustee reached an agreement with
Ferguson and the Ferguson Affiliates, whereby Armageddon would
purchase Motiva's inventory of turbo kits and related items for
$20,000; Ferguson would turn over $30,938.49 held in Motiva's
debtor-in-possession account to the chapter 7 trustee; and Ferguson
agreed the estate had no liability for a $41,000.00 "loan" he to
Motiva. The agreement was approved on October 29, 2020.
In January 2021, the Chapter 7 trustee struck a deal with Butler to
settle a number of potential disputes with the estate. The terms of
the settlement are:
* Butler agrees that he does not have a lien on estate
property;
* The trustee will pursue estate claims against the Ferguson
Affiliates, while Butler will pursue his individual claims against
the Ferguson Affiliates. The recoveries will be pooled;
* The trustee will hire Butler's counsel as special counsel,
on a contingency fee basis, to pursue estate claims. Some claims
may be pursued separately and some together;
* Recovered funds will be distributed as follows:
-- First, to pay attorney fees;
-- Second, $35,000 is paid to Butler;
-- $15,000 is paid to the estate;
-- all remaining funds are split between Butler (70%)
and the estate (30%)
* Butler will be entitled to a distribution from the estate
(to the extent funds remain after paying administrative expenses
and payment of priority claims), but Butler's claim shall be
reduced by the funds he has received.
In April 2021, the chapter 7 trustee sold the Ferrari for $82,200.
The estate has a little over $133,000 in cash.
The Ferguson Affiliates filed the only objection, arguing that
Butler's interests are not aligned with the trustee's and that the
settlement is not fair to unsecured creditors.
According to Judge Thuma, Butler's claim could be secured by a lien
of some kind. The trustee's desire to compromise this dispute is
reasonable. Judge Thuma also points out that, in exchange for
agreeing to give Butler more from any recovery than he would get if
there were no settlement and his secured claim were disallowed, the
estate gets:
* A favorable resolution of the lien dispute;
* A share of any recovery from Butler's independent claims;
* Saving the attorney fees that would be spent litigating with
Butler;
* The benefit of using Butler's counsel, who has been
litigating with Ferguson for five years; and
* No out-of-pocket attorney fees to pursue the claims against
Ferguson and the Ferguson Affiliates.
In contrast, if the trustee lost the lien dispute he might end up
with no funds at all and an administratively insolvent estate.
Given this possibility, the settlement is well within the range of
reasonableness from the standpoint of unsecured creditors, Judge
Thuma says.
A copy of the Court's Opinion is available at:
https://www.leagle.com/decision/inbco20210607339
About Motiva Performance Engineering
Motiva Performance Engineering, LLC, owned and operated an
automotive performance, repair and dynamometer facility in
Albuquerque, New Mexico.
Motiva Performance filed for Chapter 11 bankruptcy (Bankr. D.N.M.
Case No. 19-12539) on Nov. 1, 2019. In the petition signed by
David Rochau, authorized representative, the Debtor was estimated
to have $100,000 to $500,000 in assets and $1 million to $10
million in liabilities. The Hon. David T. Thuma oversees the case.
Lawyers at Walker & Associates, P.C., served as counsel to the
Debtor.
Motiva's case was converted from Chapter 11 to Chapter 7 on April
15, 2020. Philip Montoya was appointed the Chapter 7 trustee.
NATIONAL TRACTOR: Taps Jordan Legal Group as Real Estate Counsel
----------------------------------------------------------------
National Tractor Parts, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Illinois to hire
Jordan Legal Group, Ltd. as its real estate counsel.
The Debtor requires the services of a real estate counsel in
connection with the sale of its property located at 12127 Galena
Road, Plano, Ill.
Jordan Legal Group will receive a flat fee of $1,175, payable at
the closing of the sale.
John Neuenkirchen, Esq., the firm's attorney who will be providing
the services, disclosed in a court filing that he and his firm are
disinterested persons within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached through:
John Neuenkirchen, Esq.
Jordan Legal Group, Ltd.
150 S.E. 2nd Avenue, Third Floor
Miami, FL 33131
Phone: (305) 814-3190
Fax: (800) 517-5649
About National Tractor Parts
Plano, Ill.-based National Tractor Parts, Inc. --
https://www.ntparts.com/ -- is a family-owned business in the heavy
equipment parts industry.
National Tractor Parts sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. N.D. Ill. Case No. 20-20833) on Nov. 30,
2020. In the petition signed by Charles H. Gunier Jr., president,
the Debtor disclosed $1,844,491 in assets and $3,098,844 in
liabilities. Judge David D. Cleary oversees the case.
Springer Brown, LLC and Jordan Legal Group, Ltd. serve as the
Debtor's bankruptcy counsel and real estate counsel, respectively.
NEELKANTH HOTELS: Unsecureds to Get Payments Until August 2025
--------------------------------------------------------------
Neelkanth Hotels, LLC, submitted an Amended Plan and a Disclosure
Statement.
In the years preceding the commencement of the case, the Hotel
generated revenue of $1,985,422 in 2018, $781,596 in 2019, and
$629,616 in January through August of 2020.
During the first 7 months after the case was commenced, the Debtor
reported total receipts of $869,904 and total distributions of
$679,657 in the Monthly Operating Reports filed with the Court.
The Debtor's monthly operating reports disclose approximately
$10,000 of accounts receivable, including Best Western rewards
redemptions and travel card receivables. Debtor anticipates that
such receivables are collectible.
The most recent appraisal of the Debtor's assets is the appraisal
of Midland's expert appraiser, who has provided testimony of his
opinions in this case. The appraiser offered three value opinions:
(1) a "quick sale" value of $3.65 million, including $3.125 million
for real property and $525,000 for personal property, (2) an
"as-is" value as of July 31, 2020, of $6.1 million, broken down as
$5.225 million for real property and $875,000 for personal
property, and (3) a "stabilized" value of $7.175 million by July
2022, broken down as $6.55 million for real estate and $625,000 for
personal property.
The Plan proposes to treat claims and interests as follows:
* Class A: Allowed Secured Claims of Midland totaling
$6,000,000. On the last calendar day of each month following the
Effective Date, Midland will be paid monthly payments of $30,216
which will be applied first to interest accruing that month at the
rate of 4.75% per annum, and then to principal. The payments will
be made until the earlier of (1) the allowed claim is fully paid,
including by early payment, or (2) August 31, 2025, at which time a
balloon payment of the entire amount of outstanding principal and
interest shall be due. On January 31 of each year beginning in
January 2023, the Debtor will make a payment to Midland in the
amount of any excess cash flow from operations accumulated during
the preceding year in excess of the amount determined by the Debtor
to establish adequate working capital and capital expenditure
reserves for the current year which payment shall be applied to
principal. The Class A Claimant is impaired
* Class B: Allowed Secured Claims. Commencing on the Effective
Date, Debtor shall contribute $5,701.17 per month to be paid to
Class B claimants on a pro rata basis, which will be applied first
to interest accruing that month at the rate of 4.75% per annum and
then to principal, until the earlier of (1) the amount of such
allowed claim is fully paid, or (2) August 31, 2025, at which time
a balloon payment of the entire amount of outstanding principal and
interest shall be due. Class B Claimants are Impaired.
* Class C: Allowed claim of Best Western International, Inc. for
the cure of pre-petition franchise. Commencing on the Effective
Date, Debtor shall pay $3,541 per month to Best Western
International, Inc. until its allowed claim is paid in full. Class
C Claimant is Impaired.
* Class D: General Unsecured Claims. Commencing after full
payment of Class C claims and until August 2025, Debtor shall make
monthly payments of $3,541 per month into a Plan Funding Pool. Not
less than every 180 days thereafter, the Debtor shall make pro rata
distributions from the Plan Funding Pool to holders of Class D
Claims, until such allowed claims are paid in full. The Debtor has
scheduled general unsecured claims in the total amount of $165,467
in this case. Class D Claimants are Impaired.
* Class E: Equity Interests. Equity Interests will retain their
respective interests, but will be prohibited from taking any
distributions from the Reorganized Debtor until such time as all of
the other administrative, priority, and unsecured claims in this
Plan have been paid in the amounts and manner provided in the Plan.
Class E Claimants are Impaired.
The Plan will be funded from (1) funds accrued during this Chapter
11 Case (2) future income derived from the Hotel, (3) the
guarantees of Equity Interests described above, and (4) refinancing
of the property prior to the balloon payments contemplated to Class
A and Class B claims.
Attorneys for the Debtor:
Schreeder, Wheeler & Flint, LLP
1100 Peachtree Street NE, Suite 800
Atlanta, Georgia 30309
Tel: (404) 681-3450
A copy of the Disclosure Statement is available at
https://bit.ly/3pkG4ZR from PacerMonitor.com.
About Neelkanth Hotels
Neelkanth Hotels, LLC is a privately held company in the traveler
accommodation industry. It is a single asset real estate (as
defined in 11 U.S.C. Section 101(51B)).
Neelkanth Hotels filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No.
20-69501) on Aug. 31, 2020. In the petition signed by Hemant
Thaker, member and manager, the Debtor estimated $1 million to $10
million in both assets and liabilities.
Judge Jeffery W. Cavender oversees the case.
Schreeder, Wheeler & Flint, LLP is the Debtor's legal counsel.
NEW YORK CLASSIC: S.D.N.Y. Judge Won't Toss Chapter 11 Case
-----------------------------------------------------------
Bankruptcy Judge Martin Glenn declined the request of Hudson River
Park Trust and Daniel P. Kurtz for an order: (1) dismissing New
York Classic Motors, LLC's bankruptcy petition pursuant to 11
U.S.C. section 1112(b), and (2) declaring that the automatic stay
does not prevent the termination of a concession agreement pursuant
to its terms, or acts to recover possession of premises occupied by
the Debtor, pursuant to 11 U.S.C. sections 362(b)(10) and
(n)(1)(B),1 or, alternatively, conditioning, modifying or
dissolving the automatic stay pursuant to section 362(d).
Judge Glenn held that the automatic stay applies to the Concession
Agreement and the stay should not be lifted to permit HRPT to take
any action in state court to recover possession of the Property.
The Debtor opposed the request. The Official Committee of
Unsecured Creditors filed a statement and reservation of rights in
support of the objection.
The Debtor, together with its affiliates, operates an automobile
showroom that is open to the public and a luxury private automobile
club that features a lounge, two bars, a restaurant, and a terrace
overlooking the Hudson River. In the spring of 2016, the Debtor
entered into the Concession Agreement with HRPT under which it took
possession of the Premises at the southern annex of Pier 76. In
accordance with the Concession Agreement, the Debtor provides a
number of services to the public at no cost: monthly auto shows,
mechanic/shop classes, outdoor seating at the southern portion of
the Premises, and science and technology programming, which has
included F1 in Schools (an international STEM competition for grade
school). The Debtor currently has nine employees that assist in
running its operations.
As a result of the COVID-19 pandemic, the State of New York issued
guidelines requiring full and partial closures of restaurants and
in-person events. As a result, the Debtor and its affiliates
contend they lost $4 million in revenues. Even before the
shutdown, the Debtor experienced a decrease in its revenues. The
Debtor reached out to HRPT and requested relief. The parties
agreed the Debtor would only have to pay half rent, which was
accepted by HRPT and Kurtz for at least six months between June and
November of 2020.
On January 4, 2021, HRPT served a notice of default and demand to
cure and threatened termination of the Concession Agreement for
noncompliance. On that same day, HRPT served a letter invoking its
right to terminate the Concession Agreement on one-year's notice
because of proposed redevelopment of the Premises. The Debtor
disputes the Termination Notice was properly issued under Article 9
of the Concession Agreement.
On February 1, 2021, to preserve its rights and protect its
interest in the Premises and the Concession Agreement, the Debtor
commenced an action in New York Supreme Court, New York County,
captioned New York Classic Motors, LLC v. Hudson River Park Trust,
Index No. 650712/2021 and filed an Order to Show Cause in State
Court seeking a so-called Yellowstone injunction. The Debtor
sought to toll the various notices served by HRPT to adjudicate the
issues between the Debtor and HRPT. The Debtor was granted a
Yellowstone injunction in the State Court Action. But the State
Court also required the Debtor to pay three months of past-due rent
in full (approximately $175,000), as well as post a bond equal to
the amount of past due rent claimed by HRPT (approximately
$585,000).
The Debtor filed for Chapter 11 claiming to protect its operations
and valuable assets, which include (i) bank accounts, (ii) accounts
receivable, (iii) automotive parts and supplies, (iv) office
furniture, fixtures, and equipment, (v) artwork, (vi) vehicles,
(vii) shop equipment, (viii) contingent and unliquidated claims,
and (ix) interest in the Concession Agreement. The Debtor also
removed the State Court Action, which is now pending in Bankruptcy
Court.
HRPT says the bankruptcy case should be dismissed as a bad faith
filing pursuant to section 1112(b). HRPT contends that the
bankruptcy petition was filed merely to frustrate HRPT, where the
Debtor lacks any legitimate ability to reorganize.
Judge Glenn disagrees, pointing out, among others, that:
1. The debt owed to HRPT totals $557,526.07, which is 7.13% of
the Debtor's total liabilities. The Schedules list a total of
$7,821,469.63 of liabilities, consisting of $3,410,827.52 in
secured debts, $268,947.48 in priority unsecured debts, and
$4,141,694.63 in nonpriority unsecured debts.
2. The Debtor's interest in the Concession Agreement is not
its sole asset. The Debtor has additional assets and, more
importantly, the interests of additional creditors should be taken
into account.
3. The bankruptcy case is not a two-party dispute. The Debtor
has numerous legitimate creditors whose interests should be
considered by the Court. Further, due to the COVID-19 pandemic,
the Debtor's ability to operate its business has been limited, with
the Debtor's business allegedly suffering a loss of $4 million in
revenue. The Debtor's financial hardships resulting from the
COVID-19 pandemic are another significant factor in the Debtor's
decision to file its Chapter 11 case.
4. The Debtor has been in contact with third parties who are
prepared to invest in the Debtor's business once the State Court
Action has been resolved. Allowing the Debtor to operate is the
only way to maximize the value of the Debtor's assets for all
creditors and interest holders.
A copy of the Court's June 4 Memorandum Opinion and Order is
available at:
https://www.leagle.com/decision/inbco20210607340
About New York Classic
New York Classic Motors LLC, doing business as Classic Car Club
Manhattan, is a classic car dealer in New York. The company filed
for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No.
21-10670) in Manhattan on April 9, 2021. It listed assets of about
$50 million and liabilities of about $50 million. Kirby Aisner &
Curley LLP is the Debtor's counsel.
Rozario Touma, P.C., represents Hudson River Park Trust and Daniel
P. Kurtz.
Arent Fox LLP is the proposed counsel to the Official Committee of
Unsecured Creditors.
ORIGINAL RIVERFRONT: Wins Cash Collateral Access Thru June 30
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Victoria Division, has authorized Original Riverfront RV Park, LLC
on a limited basis, to use cash collateral only as provided in
strict accordance with the terms and conditions provided in the
Cash Collateral Order.
The Debtor is permitted to use Cash Collateral through June 30,
2021, solely to pay expenditures provided in the budget, with a 15%
variance.
The Debtor's known lenders that assert liens on estate property are
Royal Holdings, LLC, Goose Creek ISD, Harris County Tax Assessor,
and Harris County WCID 1. However, Riverfront, believes the only
known creditor with an interest in Cash Collateral is Royal
Holdings.
Royal Holdings will receive monthly adequate protection payments as
provided in the Debtor's Interim Budget.
As adequate protection for the Debtor's use of cash collateral, the
Secured Lender is granted valid and perfected additional and
replacement security interests in, and liens upon all of all of the
Debtor's assets, but only to the extent and priority that the
Secured Creditors had valid prepetition liens and security
interests in such collateral as of the bankruptcy filing date. The
priority of any postpetition replacement liens granted to the
Secured Creditors will be the same as existed on as of the Filing
Date.
To the extent of the aggregate diminution of value, if any, of
their respective interests in the Cash Collateral, and subject to
the Carve-Out, the Secured Creditors are granted, in addition to
claims under section 503(b) of the Bankruptcy Code, an allowed
superpriority administrative expense claim pursuant to section
507(b) of the Bankruptcy Code.
The priority of any postpetition replacement liens granted to the
Secured Lenders will be the same as existed of the Filing Date. The
Adequate Protection Liens and Adequate Protection Superpriority
Claims shall be valid only to the extent the Secured Lender's
prepetition claims and liens exist, are valid, prior to all others,
and not subject to defense, offset, avoidance or subordination.
The term "Carve-Out" will mean quarterly fees required to the
United States Trustee pursuant to 28 U.S.C. section 1930(a)(6),
including Subchapter V Trustee fees, and any fees payable to the
Clerk of the Bankruptcy Court. All liens and claims of the Secured
Creditors, regardless of their nature or priority, will be subject
to the Carve-Out.
The final hearing on the matter is scheduled for June 29 at 1 p.m.
A copy of the order and the Debtor's budget for the period from
June to October 2021 is available for free at
https://bit.ly/2T9ulBi from PacerMonitor.com.
The Debtor projects a total income of $ 20,374.28 and total
expenses of $ 15,347.18 for June.
About Original Riverfront RV Park, LLC
Original Riverfront RV Park, LLC is a manager-managed Texas limited
liability company incorporated on September 18, 2017. Riverfront
owns a 3.5-acre riverfront lot, commonly known as 1204 S Main St,
Highlands, Texas 77562 on the San Jacinto river. Riverfront
operates a recreational vehicle park on the Riverfront Lot and
provides nightly and monthly rentals to its customers. Riverfront
provides water, electricity, trash pickup, and wifi for its
customers. Riverfront owns another 10,010-square foot lot with a
small building located at 1906 N Main St, Highlands, Texas 77562
that it utilizes as an office and storage facility.
Riverfront sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-60054) on May 31,
2021. In the petition signed by Jeffrey J. Lacombe, manager, the
Debtor disclosed up to $1million in assets and up to $500,000 in
liabilities.
Judge Christopher Lopez oversees the case.
Tran Singh, LLP is the Debtor's counsel.
PEABODY ENERGY: S&P Lowers ICR to 'SD' on Distressed Exchange
-------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
coal producer Peabody Energy Corp. to 'SD' (selective default) from
'CCC+' and the issue-level rating on the 2022 notes to 'D' from
'CCC-'.
S&P said, "The downgrade follows the completion of a
debt-for-equity exchange with certain holders of Peabody's 2022
notes that we view as distressed and tantamount to default.The
company exchanged approximately $26.5 million of principal
outstanding of its 6% senior notes due in 2022 for common equity.
We view these transactions as providing less than the promise of
the original securities due to the junior ranking of the common
equity being offered relative to the senior notes. We view the
transactions as distressed because the 'CCC+' rating on Peabody
prior to the exchanges indicates that, in our opinion, the company
is vulnerable and dependent on favorable business, financial, and
economic conditions, including substantially better domestic and
international market conditions and improved access to financing
sources to meet its financial commitments. We plan to reassess the
issuer credit rating and the issue level rating on the 2022 notes
in the coming days."
PHD GROUP: S&P Alters Outlook to Stable, Affirms 'CCC+' ICR
-----------------------------------------------------------
S&P Global Ratings revised its outlook on fast-casual restaurant
operator PHD Group Holdings LLC (Portillo) to stable from negative
and affirmed its 'CCC+' issuer credit rating.
S&P said, "At the same time, we affirmed our 'CCC+' issue-level
rating on the company's first-lien term loan and our 'CCC-'
issue-level rating on its second-lien term loan. Our '3' and '6'
recovery ratings on its first- and second-lien term loan
facilities, respectively, remain unchanged.
"The stable outlook reflects Portillo's improving performance and
business prospects, which are offset by our continued belief that
its capital structure is unsustainable due to its high leverage,
its onerous interest burden, and its redeemable payment-in-kind
(PIK) preferred equity units (currently accruing at 11%).
"The affirmation reflects Portillo's highly leveraged capital
structure, which exhibits unique refinancing risks that, in our
view, render it unsustainable over the long term. In addition to
its $330 million first-lien term loan due 2024 and $155 million
high-interest second-lien term loan due 2024, the company's capital
structure includes a sizable amount of preferred equity units,
which are redeemable beginning in 2026. The preferred units are
currently valued at over $200 million and accrue PIK interest at
11%, which will step up to 13% over the next few years.
"Given the optional redemption feature effective in 2026, we would
value these units at about $300 million if they remain unredeemed
when the term loans mature. We believe Portillo's will need to
address the preferred shares, either through a pay down or
redemption, before it can successfully refinance. While we
anticipate the company's EBITDA and free operating cash flow (FOCF)
generation will improve over the next 12-24 months, we expect the
pace of the expansion to be slower than necessary to offset the
increasing value of the preferred units and improve its refinancing
prospects. We expect Portillo's S&P Global Ratings-adjusted
leverage, which incorporates its lease obligations and preferred
shares, to remain above 8.0x as of the end of 2022, which compares
with 9.2x as of the end of 2020.
"Based on our current forecast, we believe the company will need
external capital to redeem its preferred shares. We do not
anticipate its sponsor, Berkshire Partners, will readily provide it
with the capital to redeem these shares and also believe it will be
unable to raise additional debt for this purpose given the recent
trading levels of, and high interest rates on, its second-lien term
loan.
"Despite its problematic capital structure, we expect Portillo's
operating performance to be resilient over the next 12-24 months
given its loyal customer following in the Midwest, which is
supported by its unique restaurant format and value-oriented
offerings. We believe the growing pace of COVID-19 vaccinations and
easing social distancing restrictions will continue to support its
sales recovery. Portillo's operating performance improved through
the first quarter of 2021 as it reported a slight increase in
comparable sales relative to the same period the prior year. It
also realized over 300 basis points (bps) of commodity and
labor-cost efficiencies. While we anticipate the company will
continue to increase its sales this year, we believe labor and
commodity price inflation, as well as a shift back toward
less-efficient on-premise dining, will offset some of the expansion
in its margin, which ramped up in the second half of 2020.
Portillo's new restaurant developments will likely also add
incremental expenses and pressure its profit margins in 2021.
Nevertheless, we anticipate the company's S&P Global
Ratings-adjusted EBITDA margin will be in the mid-19% area, which
indicates an increase of about 100 bps relative to its pre-pandemic
profitability. This reflects some benefits from scale and its more
efficient operating model following an exercise to reduce costs
last year.
"We expect the company's S&P Global Ratings-adjusted leverage to be
in the mid- to high-8x range in fiscal year 2021 and estimate it
will generate FOCF in the $25 million-$30 million range. We also
forecast that Portillo's will consistently generate FOCF in this
range going forward while modestly improving its leverage and
making progress on its growth initiatives by building 5-10 new
units annually. Still, its ability to address the preferred units
ahead of the refinancing of its term loans remains unclear in our
view.
"The stable outlook on Portillo's reflects its improved operating
performance, good liquidity, and lack of near-term debt maturities.
However, we continue to view the company's capital structure as
unsustainable given the uncertainty around its ability to address
its preferred units, which are redeemable at the unitholders'
option beginning in 2026."
S&P could lower its rating on Portillo's if:
-- S&P envisions a specific default scenario over the next 12
months, including a transaction that we view as distressed; or
-- S&P expects a near-term liquidity shortfall or financial
covenant violation.
S&P could raise its rating on Portillo's if:
-- S&P believes it will be able to address its onerous capital
structure such that we no longer view it as unsustainable;
-- It sustains good operating performance in line with our
forecast; and
-- S&P believes a transaction that it views as distressed, which
could include a below-par repurchase of its debt, is unlikely.
PHUNWARE INC: Completes Integration of Mobile Platforms With CFSA
-----------------------------------------------------------------
Phunware, Inc. has previously entered into a Master Relationship
Agreement with Carrier Fire & Security Americas Corporation
pursuant to which the Company will provide a license of Phunware's
Location Based Services Software Development Kit and certain other
related services to CFSA and their affiliates to integrate into
some or all of their existing mobile platforms. The Company has
now completed the necessary integrations and CFSA is initially
going to market with Phunware's LBS SDK and related services
available to LenelS2 BlueDiamond mobile application customers.
About Phunware
Headquartered in Austin, Texas, Phunware, Inc. --
http://www.phunware.com-- is a Multiscreen-as-a-Service (MaaS)
company, a fully integrated enterprise cloud platform for mobile
that provides companies the products, solutions, data and services
necessary to engage, manage and monetize their mobile application
portfolios and audiences globally at scale.
Phunware reported a net loss of $22.20 million for the year ended
Dec. 31, 2020, compared to a net loss of $12.87 million for the
year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$54.93 million in total assets, $38.37 million in total
liabilities, and $16.56 million in total stockholders' equity.
PREMIER DENTAL: S&P Upgrades Long-Term ICR to 'B-', Outlook Stable
------------------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit rating on
Premier Dental Services Inc. to 'B-' from 'CCC+'. S&P also raised
its rating on the company's first-lien debt 'B-' from 'CCC+'.
S&P said, "The stable outlook reflects our view that Premier
Dental's operating performance gradually normalizes in 2021 and we
believe the company can generate break-even to modestly positive
free cash flows in the coming years.
"We expect the COVID-19 pandemic headwinds to dissipate gradually
over 2021 and enable the company to achieve a more normalized
operating performance.Premier Dental's financial results for the
first quarter of 2021 reflected gradual recovery in demand from the
pandemic-related decline. The revenues increased sequentially to
$188 million from a trough of $51 million in the second quarter
2020. At the same time, revenue in the first quarter of 2021 was
still 14% below the company's pre-pandemic level, compared to the
first quarter of 2019.
"Although we believe Premier Dental's path to recovery might be
somewhat uneven, as some hesitancy toward deferable dental
procedures may linger on, we still expect the company's sales to
gradually improve over the coming quarters, and reach pre-COVID
levels by the end of 2021--beginning 2022. In addition, in the
first quarter of 2021, profitability has improved compared to
pre-COVID levels by about 200 basis points, driven by higher
volumes and lower bad debt rate.
"We believe stable to positive Medicaid reimbursement in the
company's main markets, combined with the company's focus on
improving collections and bad debt metrics, should enable it to
sustain its improved profitability at near current levels.
"Premier Dental's free cash flow improved in the first quarter of
2021, but we believe this level was transitory. However, we still
expect positive cash flow generation in 2021. The company's
first-quarter free cash flow was about $31 million, reflecting
higher profitability and working capital inflows, driven by an
increase in accrued salaries and wages, and decrease in other
current assets. We believe these working capital inflows are
transitory in nature and will be reversed over the coming quarters.
At the same time, we estimate the company's free cash flow
generation will remain positive, but we see a modest risk to this
scenario if the company accelerates its de novo expansion or if it
is unsuccessful at retaining self-pay revenue collection at higher
levels.
"Given the private equity ownership, we expect the company to
sustain leverage above 5x. We forecast Premier Dental's improved
EBITDA margin and free cash flow generation will be above pre-COVID
levels over the next few quarters, supporting the potential for
gradual deleveraging to around 5x in 2021. However, given the
company's private equity ownership, we expect the company to
prioritize shareholder returns or acquisitions over permanent debt
reduction. Hence, we believe the leverage will be sustained over 5x
in the long term.
"The stable outlook reflects our view that Premier Dental's
operating performance gradually normalizes in 2021 and we believe
the company can generate breakeven to modestly positive free cash
flows in the coming years."
S&P could consider lowering the rating if:
-- There is an increased risk that Premier Dental's operating
performance may deteriorate compared to S&P's base case, so free
cash flow turns negative for an extended period with limited chance
for improvement. This could result from stronger-than-expected
COVID-19 pandemic headwinds or unexpected negative change in
reimbursement environment in one or more of the company's main
markets; or
-- The company's financial policy turns out to be more aggressive
than S&P expects, and it prioritizes debt-funded acquisitions,
resulting in leverage above 7x and persistent cash flow deficits.
S&P said, "We view an upgrade in the next year as unlikely because
of the company's geographic concentration, exposure to government
reimbursement, and small size. We could consider a higher rating if
Premier Dental increases its geographic diversity away from
California, lessens its dependence on Denti-Cal, and establishes a
record of free cash flow in the $15 million-$20 million range. We
would view deleveraging below 5x as temporary because we expect the
company to be acquisitive and maintain an aggressive financial
policy because of its private equity owners."
PROSITE LLC: CCG Seeks Adequate Protection
------------------------------------------
Commercial Credit Group Inc., in July 2020, granted loans to
ProSite LLC, evidenced by two promissory notes, for $509,280 (Note
1) and for $210,768 (Note 2). The obligations under the Notes were
secured by CCG's security interest in and lien on all of the
Debtor's goods, chattels and all property of whatever nature and
kind in which the Debtor has any right or interest. CCG timely
filed a UCC-1 Financing Statement to perfect its interest in the
collateral. Based on the records maintained by the N.C. Secretary
of State, CCG has a first lien on the collateral.
The Debtor defaulted on its obligations under the note by failing
to (i) remit payments to CCG, (ii) insure the collateral for loss
and name CCG as loss payee, and (iii) pay ad valorem taxes on a
timely basis.
As of the Petition Date, the Debtor owes $483,612 on Note 1 and
$483,612 on Note 2. Interest continues to accrue on the unpaid
balance of the notes at 18% per annum until paid, plus costs, fees
and advances, plus attorney's fees of 15% of the outstanding
balance due. Upon information and belief, the Debtor currently
does not maintain "all risks" insurance on the Collateral, and uses
the Collateral in the normal course of business.
On April 8, 2021, based on the Debtor's defaults, CCG sued the
Debtor in a civil action before the Clerk of Superior Court of
Rowan North Carolina (Case No. 21-CVS-696), seeking to recover a
monetary judgment and for possession of the Collateral, among other
claims for relief.
The Debtor filed a Chapter 11 bankruptcy petition on June 2, 2020.
Accordingly, pursuant to a Referral Order entered by the Chief
United States District Court Judge for the Western District of
North Carolina, CCG asks the United States Bankruptcy Court for the
Western District of North Carolina to:
* require the Debtor to obtain and maintain adequate insurance
coverage on its property which are the collateral for the debts the
Debtor contracted with CCG before the Petition Date;
* modify the automatic stay and allow CCG to foreclose on and
sell the Collateral and otherwise enforce its rights on the
collateral as permitted by North Carolina law and the terms of the
notes -- should the Debtor not keep and maintain adequate insurance
on the Collateral;
* require the Debtor to pay monthly adequate protection payments
to CCG to compensate for diminution in value of the collateral and
to allow employees or agents of CCG to inspect and appraise the
Collateral upon reasonable notice;
* enjoin the Debtor from using or consuming CCG's cash
collateral
without adequate protection of the Collateral, to segregate and
account for the cash collateral and to surrender and remit the same
to CCG pending further Order of the Bankruptcy Court.
CCG also asks the Bankruptcy Court to be allowed reimbursement of
reasonable attorney's fees.
A copy of CCG's motion is available for free at
https://bit.ly/3g1ZCQ1 from PacerMonitor.com.
Commercial Credit Group a foreign corporation that has been
authorized by the N.C. Secretary of State to transact business
within the State of North Carolina. Its office is in Charlotte,
North Carolina.
About ProSite LLC
ProSite LLC, f/d/b/a Third Creek Pipeline, LLC, with principal
place of business at 675 Ervin Farm Rd., Mooresville, North
Carolina, filed a Chapter 11 petition (Bankr. W.D. N.C. Case No.
21-40092) on June 2, 2021.
In the petition signed by Martin A. Overcash, member/manager, the
Debtor estimated between $500,001 and $1,000,000 in assets and
between $100,001 and $500,000 in liabilities.
Law Offices of R. Keith Johnson, P.A., represents the Debtor as
counsel.
The firm may be reached through:
R. Keith Johnson, Esq.
Law Offices of R. Keith Johnson, P.A.
1275 S. Highway 16
Stanley, NC 28164
Telephone: 704-827-4200
Email: kjparalegal@bellsouth.net
Counsel for Commercial Credit Group Inc.:
Jeffrey A. Bunda, Esq.
HUTCHENS LAW FIRM LLP
6230 Fairview Road, Suite 315
Charlotte, NC 28210
Telephone: (704) 362-9255
Email: jeff.bunda@hutchenslawfirm.com
PURDUE PHARMA: August 9 Plan Confirmation Hearing Set
-----------------------------------------------------
Purdue Pharma L.P. and its affiliates filed with the U.S.
Bankruptcy Court for the Southern District of New York a motion for
entry of an order approving the adequacy of information in the
Disclosure Statement for the Fifth Amended Chapter 11 Plan.
On June 3, 2021, Judge Robert D. Drain granted the motion and
ordered that:
* The Disclosure Statement is approved as providing holders of
Claims entitled to vote on the Plan.
* July 7, 2021, at 4:00 p.m., is the deadline to object to
claims for voting purposes.
* July 14, 2021, at 4:00 p.m., is the voting deadline.
* July 19, 2021, at 4:00 p.m., is the deadline to file any
objections to confirmation of the Plan.
* August 2, 2021, at 4:00 p.m., is the deadline to file and
serve the confirmation brief or omnibus reply to Plan objections.
* August 9, 2021, at 10:00 a.m., is the Confirmation Hearing
Date.
* The Debtors are authorized to take all actions necessary to
effectuate the relief granted pursuant to this Order in accordance
with the Motion.
Counsel to the Debtors:
Marshall S. Huebner
Benjamin S. Kaminetzky
Timothy Graulich
Eli J. Vonnegut
Christopher S. Robertson
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 701-5800
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19
23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation facing the Company.
The Company's consolidated balance sheet at Aug. 31, 2019, showed
$1.972 billion in assets and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain, in White Plains, New York, has
been assigned to oversee Purdue's Chapter 11 case.
Davis Polk & Wardwell LLP and Dechert LLP are serving as legal
counsel to Purdue. PJT Partners is serving as investment banker,
and AlixPartners is serving as financial advisor. Prime Clerk LLC
is the claims agent.
PURDUE PHARMA: Court Approves Disclosures After Changes
-------------------------------------------------------
Purdue Pharma L.P., et al. submitted a Fifth Amended Joint Plan of
Reorganization and a Disclosure Statement on June 2, 2021.
Following a hearing on May 26, a supplemental hearing on the
Disclosure Statement for the Fourth Amended Plan was held before
the Bankruptcy Court on June 1, 2021. The Bankruptcy Court found
that the Disclosure Statement for Fourth Amended Plan contains
sufficient information pursuant to Section 1125(a) of the
Bankruptcy Code, subject to certain changes set forth on the record
at the hearing. As a result, the Debtors filed the Fifth Amended
Plan and corresponding Disclosure Statement ahead of the hearing on
June 2, 2021.
The Settlement Plan
Under the Plan, the vast majority of the Debtors' assets will be
dedicated to programs to abate the opioid crisis. Billions of
dollars will flow into abatement trusts established for the benefit
of states and localities, as well as other creditor groups such as
Native American Tribes, hospitals, and children with a history of
Neonatal Abstinence Syndrome and their guardians. Each of these
abatement trusts will require that the funds be dedicated
exclusively to opioid abatement efforts, and there will be
transparency to so ensure.
The Plan also significantly improves on the initial settlement
framework that was in place at the commencement of these Chapter 11
Cases, most notably by increasing the amount that Purdue Pharma's
existing shareholders will be required to pay in the aggregate from
$3.0 billion to $4.5 billion. Of this sum, $225 million has been
paid by the shareholders to satisfy their civil settlement with the
United States Department of Justice, leaving $4.275 billion for the
creditors in this bankruptcy case. This material improvement in the
recovery from the shareholders directly increases by $1.275 billion
the amount of funds that can be directed toward abatement
As a result of the improvements to the settlement framework, it is
expected that approximately $5 billion in value will be provided to
trusts, each with a mission to fund abatement of the opioid crisis.
An additional $700 to $750 million will be provided to a trust that
will make distributions to qualified personal injury claimants.
Shortly before the Petition Date, after more than a year of intense
negotiations, the Debtors, their ultimate owners (trusts for the
benefit of members of the Raymond Sackler family and Mortimer
Sackler family (the "Sackler Families")), and a critical mass of
important plaintiff constituencies reached an agreement in
principle on the structure of a global resolution of the Pending
Actions (the "Settlement Framework"). The Settlement Framework had
three key basic components. As part of a resolution of the
litigation:
(i) Purdue Pharma's existing shareholders would relinquish all
of their equity interests in the Debtors and consent to the
transfer of all of the Debtors' assets to a trust or similar
post-emergence structure for the benefit of claimants and the U.S.
public, "free and clear" of liabilities to the fullest extent
permitted by law;
(ii) Purdue Pharma's existing shareholders would engage in a
sale process for their ex-U.S. pharmaceutical companies; and
(iii) Purdue Pharma's existing shareholders would contribute at
least an additional $3 billion over seven years (in addition to
100% of the value of all 24 Debtors), with the hope of substantial
further contemplated contributions from the sales of their ex-U.S.
pharmaceutical businesses.
The Settlement Framework, however, was far from a final settlement.
Indeed, the Debtors made clear on multiple occasions that the
Settlement Framework left many items to be negotiated and resolved.
The Debtors, together with the Creditors' Committee, the Ad Hoc
Committee of Governmental and Other Contingent Litigation Claimants
(the "AHC" or "Ad Hoc Committee"), the Ad Hoc Group of
Non-Consenting States (the "NCSG") and the Multi-State Governmental
Entity Group (the "MSGE" and, together with the AHC and the NCSG,
the "Non-Federal Public Claimants"), worked tirelessly for more
than a year continuing to negotiate improved settlement terms that
could be supported by a greater number of significant creditors.
The negotiations included a Mediation, conducted by skilled,
neutral mediators, lasting months that took place in two phases.
The first phase of Mediation concerned how the value of the
Debtors' Estates should be allocated among creditor constituencies,
while the second primarily concerned settlement of the Debtors' and
third-party civil causes of action against the Sackler Families.
The first phase of Mediation resulted not only in an agreement on
allocation of estate resources among major creditor constituencies,
but also an extraordinary commitment from the states, territories,
tribes, municipalities and other governmental units, treatment
providers, thirdparty payors and insurance carriers and legal
guardians of children born with neonatal abstinence syndrome to
accept distributions in the form of funding for programs designed
to abate the opioid crisis (distributions to holders of PI
Channeled Claims will not be subject to such provision). Under the
structure agreed to in the first phase of Mediation, which is
embodied in the Plan, funds created for the benefit of each group
associated with the Private Claimants will receive fixed cash
distributions over time,4 with varying values and time periods for
each such group.
Specifically, of the approximately $5 billion in value that will be
provided to trusts with a mission to fund abatement of the opioid
crisis, approximately $250 million will be distributed to a trust
for hospitals, $365 million will be distributed to a trust for
insurers and other third-party payors, and $60 million will be
distributed to a trust for NAS monitoring programs. The remainder
will be distributed to the two abatement trusts established for
non-federal domestic governmental entities and tribal authorities.
A description of each of the abatement trusts, how they will be
funded, which types of creditors may qualify for distributions from
each trust and how distributions will be made is set forth in
Article IIIS. Copies of the final trust distribution procedures
(the "Trust Distribution Procedures") for each such trust will be
included in the Plan Supplement by no later than the July 7, 2021
deadline to file the final Plan Supplement.5 The current drafts of
the Trust Distribution Procedures have already been filed.
An additional $700 to $750 million, minus amounts prepaid to the
United States on account of certain opioid-related claims and liens
held by the United States against Holders of PI Claims ("PI
Claimants") will be provided to a trust (the "PI Trust") that will
make distributions to qualified personal injury claimants. Those
funds will be split between two separate groups of personal injury
claimants: "NAS PI Claimants," who are individuals with personal
injury claims arising from intrauterine exposure to opioids
resulting from opioid use by a biological mother, and "Non-NAS PI
Claimants," who are individuals with personal injury claims arising
from their own Purdue opioid use as well as individuals with claims
arising from the death of someone else who used Purdue opioids. The
funds provided to the PI Trust under the Plan will be split between
a fund for NAS Claimants, which is entitled to receive $45 million
in value, and a fund for the Non-NAS Claimants, which is entitled
to receive $650 to $700 million in value, in each case gross of
deductions and holdbacks for certain claims, liens, expenses,
costs, and fees, as described in more detail herein.
Various federal healthcare programs hold claims or liens against PI
Claimants or their recoveries under the Plan on the basis of
amounts that the healthcare programs previously paid to, or on
behalf of, those claimants for opioid-related injuries. The PI
Trust (on behalf of the PI Claimants) has entered into a settlement
with the United States to resolve these claims and liens in a way
that minimizes administrative expense and maximizes the value that
PI Claimants ultimately receive. This settlement is called the
"United States-PI Claimant Medical Expense Claim Settlement" and is
set forth in more detail in Section 5.2(h) of the Plan. In summary,
the PI Trust has assigned to the United States the right to receive
$26 million of the PI Trust's $700 million to $750 million of
expected receipts under the Plan, and various United States
healthcare programs have agreed to waive the claims and liens that
otherwise would have entitled them to take a portion of recoveries
away from some PI Claimants' Distributions. The $26 million is a
prepayment by the PI Trust of amounts owed by certain PI Claimants.
The PI Trust will equitably allocate that prepayment to, and recoup
it from, the PI Claimants who actually owed money to these federal
healthcare programs. It will do so by reducing those claimants'
Distributions under the PI TDP and the Plan.
A copy of the Disclosure Statement for the Fifth Amended Plan is
available at https://bit.ly/34Nahr6
Counsel to the Debtors:
Marshall S. Huebner
Benjamin S. Kaminetzky
Eli J. Vonnegut
James I. McClammy
Christopher S. Robertson
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 701-5800
A copy of the Disclosure Statement is available at
https://bit.ly/34Nahr6 from PacerMonitor.com.
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation facing the Company.
The Company's consolidated balance sheet at Aug. 31, 2019, showed
$1.972 billion in assets and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain, in White Plains, New York, has
been assigned to oversee Purdue's Chapter 11 case.
Davis Polk & Wardwell LLP and Dechert LLP are serving as legal
counsel to Purdue. PJT Partners is serving as investment banker,
and AlixPartners is serving as financial advisor. Prime Clerk LLC
is the claims agent.
PURDUE PHARMA: PI Trust Enters Claims Settlement with the US
------------------------------------------------------------
Purdue Pharma L.P., et al., submitted a Disclosure Statement for
Fifth Amended Joint Chapter 11 Plan of Reorganization dated June 3,
2021.
The Plan is supported by most of the Debtors' creditor
constituencies, including the Ad Hoc Committee, the MSGE, the
Native American Tribes Group, the Ad Hoc Group of Individual
Victims, the Ad Hoc Group of Hospitals, the Third-Party Payor
Group, the Ratepayer Mediation Participants and the NAS Committee.
Various federal healthcare programs hold claims or liens against PI
Claimants or their recoveries under the Plan on the basis of
amounts that the healthcare programs previously paid to, or on
behalf of, those claimants for opioid-related injuries. The PI
Trust (on behalf of the PI Claimants) has entered into a settlement
with the United States to resolve these claims and liens in a way
that minimizes administrative expense and maximizes the value that
PI Claimants ultimately receive. This settlement is called the
"United States-PI Claimant Medical Expense Claim Settlement."
In summary, the PI Trust has assigned to the United States the
right to receive $26 million of the PI Trust's $700 million to $750
million of expected receipts under the Plan, and various United
States healthcare programs have agreed to waive the claims and
liens that otherwise would have entitled them to take a portion of
recoveries away from some PI Claimants' Distributions. The $26
million is a prepayment by the PI Trust of amounts owed by certain
PI Claimants. The PI Trust will equitably allocate that prepayment
to, and recoup it from, the PI Claimants who actually owed money to
these federal healthcare programs. It will do so by reducing those
claimants' Distributions under the PI TDP and the Plan.
NAS PI Channeled Claims Liquidated Pursuant to the NAS PI TDP. In
order to recover, the NAS PI Claim must be held by an NAS Child,
which is a natural person who has been diagnosed by a licensed
medical provider with a medical, physical, cognitive or emotional
condition resulting from such natural person's intrauterine
exposure to opioids or opioid replacement or treatment medication,
including but not limited to the condition known as neonatal
abstinence syndrome. The diagnosis can be made by any licensed
medical professional, specifically including physicians, nurses,
physician assistants, mental health counselor or therapist, or
professional at a rehabilitation center.
Evidence must be submitted showing that the NAS Child who is the
subject of the claim was diagnosed by a licensed medical provider
with a medical, physical, cognitive or emotional condition
resulting from such natural person's intrauterine exposure to
opioids or opioid replacement or treatment medication, including
but not limited to the condition known as neonatal abstinence
syndrome ("NAS").
The PI Claims Administrator will examine the evidence provided with
each claim form to determine which claims are eligible for
recovery. Claims that are eligible for recovery are expected to be
allocated approximately a gross $7,000 per claimant, before
deductions and holdbacks for costs, fees and expenses.
The LRP Agreement is a document under which certain private
"third-party payors" or "TPPs," have agreed to a consensual
resolution of their liens against the recoveries of PI Claimants
with respect to PI Channeled Claims that are liquidated under the
liquidation provisions of the PI TDP. This consensual resolution
includes voluntary reductions by those TPPs of their liens to 30%
of the distribution or less or a cap on their recovery, plus a
waiver of all liens against distribution amounts of $3,500 or less.
The Plan provides that, except to the extent a Holder of an Allowed
Other General Unsecured Claim and the Debtor against which such
Claim is asserted agree to different treatment, each Holder of an
Allowed Other General Unsecured Claim shall receive, on account of
such Allowed Claim, such Holder's Pro Rata Share of the Other
General Unsecured Claim Cash, up to payment in full of such Allowed
Claim.
Counsel to the Debtors:
Marshall S. Huebner
Benjamin S. Kaminetzky
Timothy Graulich
Eli J. Vonnegut
Christopher S. Robertson
DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, New York 10017
Telephone: (212) 450-4000
Facsimile: (212) 701-5800
About Purdue Pharma LP
Purdue Pharma L.P. and its subsidiaries --
http://www.purduepharma.com/-- develop and provide prescription
medicines and consumer products that meet the evolving needs of
healthcare professionals, patients, consumers and caregivers.
Purdue's subsidiaries include Adlon Therapeutics L.P., focused on
treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and
related disorders; Avrio Health L.P., a consumer health products
company that champions an improved quality of life for people in
the United States through the reimagining of innovative product
solutions; Imbrium Therapeutics L.P., established to further
advance the emerging portfolio and develop the pipeline in the
areas of CNS, non-opioid pain medicines, and select oncology
through internal research, strategic collaborations and
partnerships; and Greenfield Bioventures L.P., an investment
vehicle focused on value-inflection in early stages of clinical
development.
Opioid makers in the U.S. are facing pressure from a crackdown on
the addictive drug in the wake of the opioid crisis and as state
attorneys general file lawsuits against manufacturers. More than
2,000 states, counties, municipalities and Native American
governments have sued Purdue Pharma and other pharmaceutical
companies for their role in the opioid crisis in the U.S., which
has contributed to the more than 700,000 drug overdose deaths in
the U.S. since 1999.
OxyContin, Purdue Pharma's most prominent pain medication, has been
the target of over 2,600 civil actions pending in various state and
federal courts and other fora across the United States and its
territories.
On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated
debtors each filed a voluntary petition for relief under Chapter 11
of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No.
19-23649), after reaching terms of a preliminary agreement for
settling the massive opioid litigation facing the Company.
The Company's consolidated balance sheet at Aug. 31, 2019, showed
$1.972 billion in assets and $562 million in liabilities.
U.S. Bankruptcy Judge Robert Drain, in White Plains, New York, has
been assigned to oversee Purdue's Chapter 11 case.
Davis Polk & Wardwell LLP and Dechert LLP are serving as legal
counsel to Purdue. PJT Partners is serving as investment banker,
and AlixPartners is serving as financial advisor. Prime Clerk LLC
is the claims agent.
RANDOLPH HOSPITAL: Wins Cash Collateral Access Thru July 1
----------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of North Carolina
has entered an order approving the Stipulation and Agreed Sixteenth
Interim Order authorizing Randolph Hospital, Inc. d/b/a Randolph
Health and its affiliates to use cash collateral until the earliest
of (i) the close of business on July 1, 2021; (ii) the conclusion
of the further hearing on the Cash Collateral Motion; or (iii) the
termination of the use of cash collateral upon the occurrence of
any Termination Event.
An immediate need exists for the Debtors to have continued access
to the Cash Collateral in order to continue their operations, meet
their payroll, and other necessary, ordinary course business
expenditures, administer and preserve the value of the estates, and
maintain adequate access to cash in amounts customary and necessary
for hospitals of this size in this industry to maintain customer
and vendor confidence.
On August 31, 2012, Randolph entered into a Term Loan Agreement
with Bank of America, N.A. and the Trustee under the Deed of Trust
in the original principal amount of $44.9 million. Additionally,
in 2008, Randolph entered into an ISDA Master Agreement as amended
and supplemented from time to time with BOA. In accordance with the
terms of the Swap Agreement, Randolph and BOA entered into a
Transaction pursuant to the confirmation with a trade date of July
21, 2008, an initial Notional Amount equal to $22.9 million and a
termination date of October 1, 2037. The Swap Agreement constitutes
an obligation under the Loan Agreement secured by Obligations No. 3
and No. 4 issued under the Master Indenture. The Transaction was
terminated as of June 18, 2019 and in connection with the
termination of the Transaction, Randolph currently owes BOA
approximately $2.6 million. First Horizon Bank is a minority
participant in the Loan Agreement.
The term loan under the Loan Agreement matured on February 28,
2020. As of the petition date, the aggregate amount due under the
Loan Agreement and SWAP obligation is approximately $24.0 million.
The Debtors, BOA, and their respective agents, advisors, and
employees have acted in good faith in negotiating, consenting, and
agreeing to the Debtors' use of BOA Cash Collateral and the use,
sale, and lease of other BOA Pre-Petition Collateral in the
ordinary course of business as contemplated and provided by the
Agreed Sixteenth Interim Order.
To the extent BOA is not secured in the BOA Pre-Petition
Collateral, BOA will not have Replacement Liens or a Super-Priority
Claim with regard to any use of cash or cash equivalents that is
not found to be their Cash Collateral pursuant to Section 363 of
the Bankruptcy Code.
As adequate protection for the Debtors' use of cash collateral, the
Debtors will pay BOA an adequate protection payment to BOA
consistent with the approved Budget.
The Debtors grant, assign, and pledge to BOA valid, perfected, and
enforceable liens and security interests in all of the Debtors'
accounts receivable created from and after the Petition Date and
all of the Debtors' right, title, and interest in, to, and under
the BOA Pre-Petition Collateral, to the extent same existed on the
Petition Date and the proceeds, products, offspring, rents, and
profits of all of the foregoing, all as may otherwise be described
in the Loan Agreement. In addition, the Debtors grant, assign, and
pledge to BOA a valid, perfected, and enforceable lien and security
interest on the equipment of the Debtors, as more particularly
described in the Collateral Evaluation Associates, Inc. appraisal
dated April 23, 2020 and as set forth on the Debtors' Schedule A/B.
The Debtors assert the Equipment has a forced liquidation value of
approximately $2,109,050. BOA's lien on the Equipment will be
perfected by virtue of the Order without the necessity of the
Debtors executing any security documents or the filing of UCC
financing statements and a copy of the Order may be filed in the
public registry to reflect this perfected security interest.
Notwithstanding the foregoing, the Debtor will execute such
security documents as reasonably requested by BOA to reflect its
perfected security interest in the Equipment.
Solely to the extent that the BOA Replacement Liens are later
proven to be insufficient as a form of adequate protection, BOA is
granted an administrative expense claim as and to the extent
provided by Section 507(b) of the Bankruptcy Code with priority
over all other administrative expense claims, now existing or
hereafter arising, of the kind specified in or ordered pursuant to
Section 105, 326, 330, 331, 351, 503(b), 506(c), 507(a) and 1114 of
the Bankruptcy Code.
The Debtors will also maintain adequate insurance and provide
evidence thereof to the Bankruptcy Administrator and BOA.
A further hearing on the matter is scheduled for July 1 at 9:30
a.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3cpR0Ao from Epiq Corporate Restructuring, LLC, the
claims agent.
The Debtor projects total operating receipts of $10,278,302 and
total operating disbursements of $11,460,380 for the five-week
period ending July 2.
About Randolph Hospital
Randolph Hospital -- https://www.randolphhealth.org/ -- operates as
a hospital that provides inpatient and outpatient services in North
Carolina. The Company offers, among other services, cancer care,
imaging, maternity services, cardiac services, surgical services,
outpatient specialty clinics, rehabilitation services, and
emergency services.
Randolph Hospital, Inc. and its affiliates, MRI of Asheboro, LLC
and Randolph Specialty Group Practice, each filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code (Bankr.
M.D.N.C. Lead Case No. 20-10247) on March 6, 2020. In the petition
signed by CRO Louis E. Robichaux IV, Randolph Hospital was
estimated to have $100 million to $500 million in both assets and
liabilities.
Judge Lena Mansori James oversees the case.
The Debtor is represented by Jody A. Bedenbaugh, Esq. and Graham S.
Mitchell, Esq., at Nelson Mullins Riley & Scarborough LLP. Epiq
Corporate Restructuring, LLC is the claims agent.
Bank of America, as Lender, is represented by:
Scott Vaughn, Esq.
McGuire Woods, LLP
201 North Tryon Street, Suite 3000
Charlotte, NC 28202
The Official Committee of Unsecured Creditors is represented by:
Andrew H. Sherman, Esq.
Boris I. Mankovetskiy, Esq.
Sills, Cummis & Gross, P.C.
One Riverfront Plaza
Newark, NJ 07102
RAPTOR ACQUISITION: Fitch Assigns 'B+(EXP)' Issuer Default Rating
-----------------------------------------------------------------
Fitch Ratings has assigned a first-time Issuer Default Rating (IDR)
of 'B+(EXP)' to Raptor Acquisition Corp. (Great Canadian Gaming
Corp, GCGC). Fitch has also assigned ratings of 'BB+'/'RR1'(EXP) on
GCGC's proposed senior secured revolver, senior secured term loan B
and secured notes; and a rating of 'B'/'RR5'(EXP) on GCGC's senior
unsecured notes. The Rating Outlook is Stable.
The 'B+' IDR considers GCGC's rent-adjusted leverage -- with pro
rata share of joint venture (JV) debt -- will be modest based on
funded debt at closing and upon the reopening and recovery of
Canada's regional gaming market, and the contributions from GCGC's
development pipeline. However, the long-term leverage profile is
less certain given the lack of constraints (e.g. financial policy,
maintenance covenants) and the potential recapitalization of the
Greater Toronto Area (GTA) JV bundle during the rating horizon.
GCGC has multiple factors consistent with the 'BB' category,
including strong competitive positions in its primary markets and
robust FCF generation. The Stable Outlook reflects meaningful
leverage headroom at the 'B+' level.
KEY RATING DRIVERS
Canadian Regional Gaming Recovery: The rating reflects that GCGC's
portfolio of casinos in Canada have and will generate fairly
durable cash flows as a result of their strong competitive
positions and/or exclusivity agreements. However, GCGC's properties
are closed due to the pandemic, and reopening largely hinges on
vaccine penetration and other heath indicators. Fitch assumes
GCGC's casinos will reopen in 3Q21 and fully recover to
pre-pandemic demand levels by 4Q22. This is a slightly slower
trajectory compared with U.S. regional gaming, which has shown a
healthy level of pent-up demand.
Canada detailed more cautious reopening plans and initially
experienced a slower a vaccine rollout, and there is less certainty
regarding consumers' willingness to gamble upon reopening.
Positively, GCGC will benefit from its reliance on local, drive-in
customers and limited international tourism exposure.
Unclear Long-Term Leverage: Fitch estimates GCGC's adjusted
leverage will be in the low-6.0x range in 2022 and improve to
around 5.0x in 2023 and 2024 after GTA JV's expansions have opened
and regional gaming performance normalizes. Fitch proportionally
includes GCGC's 50% share of GTA JV's debt, capitalized rent and
EBITDAR in leverage. Fitch has not assumed FCF will be directed
toward debt repayment given the lack of financial policy and
incentive to do so. Leverage could increase when the JV's
construction credit facility maturity is addressed in 2023, given
its unrestricted designation and strong debt servicing ability. The
'B+' IDR considers GCGC is operating with adjusted leverage within
the 5.0x-6.0x range and the likelihood additional debt can be
raised at the JV.
Strong FCF Generation: Fitch estimates the restricted group will
generate an annual FCF margin in the high teens once operations
normalize, given the remaining growth capex is at the GTA JV level.
The GTA JV should also generate strong FCF margins in excess of 20%
beginning in 2023 as capex declines and EBITDA grows from the
expansions.
Favorable Regulatory Environment: GCGC enjoys solid competitive
positions and/or economic exclusivity under long-dated operating
agreements. It is the only operator in the GTA, has nearly 50%
share in the Vancouver market and operates three of four casinos in
New Brunswick/Nova Scotia. The average operating agreement
expiration in the more lucrative Ontario and British Columbia
provinces is 2038. Exclusivity comes at a high cost, with
provincial crowns retaining roughly 60% of gross gaming revenue.
This is partially countered by governmental support for certain
capex, including slots in British Columbia, which is roughly 27% of
GCGC's total slot count. These high barriers to entry and minimal
new competitive supply are viewed positively and set GCGC's
operating environment apart from its U.S. regional peers.
Some Geographic Diversification: GCGC operates 26 properties across
three provinces in Canada. GCGC's diversification improved
following the acquisition of certain gaming bundles in Ontario from
2016 to 2018. Despite being the largest commercial operator in
Canada, the company is concentrated in Ontario and British
Columbia, making up 52% and 40% of its pre-pandemic earnings
attributable to the restricted group, respectively. GCGC has
favorable competitive positions in these two cities, which are
solid markets, which helps offset its more limited diversification
compared with its U.S. regional gaming peers.
Proportional Consolidation of GTA: Fitch proportionally
consolidates the GTA JV in GCGC's credit metrics by removing 50% of
GTA's debt, capitalized rent and EBITDAR attributable to Brookfield
Business Partners. GCGC manages GTA JV's four casinos in Toronto
and fully consolidates the subsidiary's financials into its own
statements. The JV is considered strategically important to both
owners given its casino exclusivity in Toronto and ongoing gaming
and nongaming development. The JV is an unrestricted subsidiary
relative to the GCGC restricted group.
ESG Considerations -- Governance Structure: GCGC has an
Environmental, Social and Governance (ESG) Relevance Score of '4'
for Governance Structure due to the board composition being
primarily composed of non-independent directors and the lack of
financial policy surrounding leverage, which are not atypical in
sponsor-owned companies. When coupled with the sponsor's history in
the gaming sector, this could have a negative impact on the credit
profile and is relevant to the ratings in conjunction with other
factors.
Fitch will convert the Expected Ratings to Final Ratings upon
receipt of final debt documentation and closing amounts if they are
consistent with Fitch's expectations.
DERIVATION SUMMARY
GCGC's 'B+'(EXP) IDR reflects it modest leverage, strong
discretionary FCF generation (under normalized operating
conditions) and favorable regulatory environments, in which it
enjoys varying degrees of exclusivity. This is offset by
uncertainty surrounding its financial policy toward long-term
leverage. GCGC's exclusivity in the greater Toronto area compares
similarly to Seminole Tribe of Florida (BBB/Stable; exclusivity in
deep Florida market), Crown Resorts Limited (BBB/Rating Watch
Negative) and Star Entertainment, which enjoy exclusivity in
certain Australian markets. Similarly, Las Vegas Sands Corp
(BBB-/Negative) has exposure to Singapore and Macau, two deep
international jurisdictions with only two and six operators,
respectively. Fitch has less tolerance for leverage at GCGC
relative to Las Vegas Sands, as the latter has international
diversification and a well-articulated conservative financial
policy. GCGC's operating environment is more favorable than most of
its U.S. regional gaming peers, most of which have credit profiles
consistent with the mid to high 'B' category.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Canadian casinos reopen in 3Q21, with same-store revenues down
85% and 60% in 3Q21 and 4Q21, respectively, compared with
2019;
-- Gaming revenues recover to pre-pandemic levels by the end of
2022, with 1H22 down roughly 25% relative to 2019. Same-store
revenues grow by the low to midsingle digits thereafter;
-- EBITDAR margins initially see up to 300bp increase upon
reopening compared with pre-pandemic levels due to pandemic
savings and reduced amenities, some of which are long-term
structural savings. An additional 300bp-400bp margin benefit
from Apollo Global Management's cost-saving initiatives
(midpoint of guidance) is achieved by year two post
transaction;
-- Fitch assumes 10%-15% returns on GTA JV's expansion projects,
with a two- to three-year ramp-up period upon completion.
CAD800 million of growth capex is spent through YE 2022 at the
JV level for the Woodbine expansion. Maintenance capex is
estimated at roughly CAD30 million at both the restricted
group and GTA JV levels.
-- FCF is allocated primarily toward gaming and nongaming
investments and some form of shareholder returns. Fitch
assumes no debt paydown at either the restricted group or GTA
JV given lack of financial policy.
-- Fitch assumed no cash distributions out of or into the JV from
the restricted group, and assumed this debt cannot be a
catalyst for any event of default or similar in the restricted
group.
Recovery Assumptions
The 'BB+ (EXP)'/'RR1' and 'B (EXP)'/'RR5' ratings for GCGC's senior
secured first-lien debt and senior unsecured notes are notched from
its 'B+ (EXP)' IDR based on a bespoke analysis. The recovery
analysis assumes the GCGC restricted group would be reorganized as
a going-concern in bankruptcy rather than liquidated. Fitch
estimates an enterprise value (EV) on a going concern basis of
CAD1.6 billion for GCGC's restricted group. The EV assumption is
based on post-reorganization EBITDA approximately CAD240 million, a
7.5x multiple and a deduction of 10% for administrative claims
Fitch projects a post-restructuring sustainable cash flow, which
assumes both depletion of the current position to reflect the
distress that provoked a default, and a level of corrective action
Fitch assumes either would have occurred during restructuring, or
would be priced into a purchase price by potential bidders. The GC
EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the EV.
GCGC's restricted group's going concern EBITDA of about CAD240
million considers recessionary pressures, such as property
closures, competitive openings and/or weaker consumer spending.
This is nearly 30% below normalized EBITDA, but reflects a forward
view of operating pressures that would drive negative FCF and
ultimately a default or restructuring.
The 7.5x EV multiple assumption is higher than that assumed for
most U.S. regional peers given GCGC's strong competitive position
and the high barriers to entry due to long-standing exclusivity
agreements. GCGC's restricted group also has minimal rent expense,
which increases its financial flexibility relative to some U.S.
regional peers. Fitch uses a range of 5.0x-7.0x recovery multiples
for most U.S. regional peers, dependent on market position,
diversification and materiality of rent expense. Fitch uses an 8.0x
multiple for Macau operators' recovery analyses given the market's
depth, long-term growth prospects and exclusivity. In applying the
distributable proceeds, Fitch assumes CAD1.6 billion of senior
secured debt, including a fully drawn revolving credit facility and
CAD400 million of senior unsecured notes.
The restricted group could benefit from GCGC's 50% ownership in the
GTA JV. However, Fitch does not include any residual equity in its
recovery analysis given uncertainty surrounding the subsidiary's
long-term capital structure post refinancing of its construction
credit facility. The current JV capital structure of CAD1.1 billion
(if fully drawn) relative to CAD450 million of estimated run-rate
EBITDA (full ramp-up of its expansion) provides a substantial
amount of residual equity. As Fitch receives greater clarity about
the JV's long-term capital structure, it could begin ascribing
residual equity to GCGC's restricted group's recovery analysis,
which could increase the recovery rating for and notching of the
unsecured notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Gross adjusted leverage sustaining below 5.0x;
-- Greater clarity about the company's financial policy,
specifically tolerance for leverage or capital allocation;
-- Leverage-neutral refinancing of GTA JV's credit facility
relative to GCGC's proportionally consolidated leverage
metrics.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Gross adjusted leverage increasing above 6.0x;
-- FCF primarily funding shareholder returns, as opposed to
gaming and nongaming reinvestment;
-- Prolonged operating weakness in GCGC's primary markets,
including pandemic-related trends (i.e. property closures,
operating restrictions).
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
GCGC's liquidity upon transaction close will consist of CAD250
million of revolver availability and CAD150 million of cash at the
restricted group. This is comfortable in the context of the CAD5
million monthly cash burn rate while the properties remain closed.
FCF generation at the restricted group will significantly increase
beginning in 2022 as operations normalize and there are only modest
maintenance capex requirements.
The GTA JV has moderate liquidity relative to its remaining
discretionary growth capex. The JV had CAD65 million of cash and
CAD405 million of credit facility availability as of March 31,
2021, with the portion of capex expected to be funded by operating
cash flow under Fitch's base case assumptions. Fitch expects FCF to
turn meaningfully positive in 2023 and incraese further in 2024 as
the Pickering and Woodbine developments ramp up. GTA's credit
facility matures in March 2023.
ESG Considerations
GCGC has an ESG Relevance Score of '4' for Governance Structure due
to the board composition being primarily composed of
non-independent directors and lack of financial policy surrounding
leverage, which are not atypical in sponsor-owned companies. When
coupled with the sponsor's history in the gaming sector, this could
have a negative impact on the credit profile and is relevant to the
ratings 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.
ISSUER PROFILE
GCGC is a large Canadian gaming company, with casinos in Ontario,
British Columbia, Nova Scotia and New Brunswick. The company is in
the process of being acquired by Apollo, after which Raptor
Acquisition Corp. (the acquisition funding vehicle) will be renamed
Great Canadian Gaming Corp.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch proportionally consolidates GTA JV's debt, capitalized rent
and EBITDAR when calculating GCGC's leverage metrics.
RIVERDALE FINANCE: Fitch Affirms BB Rating on 2018A Bonds
---------------------------------------------------------
Fitch Ratings has affirmed the 'BB' rating on the following
Riverdale Finance Corporation, IL income tax securitized bonds:
-- $7.5 million income tax securitized bonds, series 2018A.
Fitch also affirmed the 'CCC' Issuer Default Rating (IDR) on the
village of Riverdale, IL.
The Rating Outlook on the corporation's bonds is Stable.
SECURITY
The income tax securitized bonds have a first lien on the village's
local share of the statewide income tax. The pledged revenue
includes all distributions under Section 2 of the State Revenue
Sharing Act from the Local Government Distributive Fund (LGDF) of
income tax amounts payable by the state of Illinois to the village.
The lien is closed to additional bonds. Final maturity is on Oct.
1, 2047.
IDR ANALYTICAL CONCLUSION
The 'CCC' IDR reflects the village's very poor credit fundamentals,
including its distressed financial position and a limited tax base.
Fitch expects that revenues would decline through an economic cycle
and that the village will continue to be challenged to balance
financial operations.
DEDICATED TAX ANALYTICAL CONCLUSION
The 'BB' income tax securitized bond rating is based on the very
strong legal structure which supports a true sale of the revenues
and, in Fitch's opinion, significantly insulates bondholders from
operating risk of the village of Riverdale. As the structure is a
securitization specifically authorized by state law, the rating can
be up to six notches above the village's 'CCC' IDR, pursuant to
Fitch criteria.
ECONOMIC SUMMARY
Riverdale is located approximately 22 miles south of downtown
Chicago with a population of approximately 13,000. Residential
properties make up approximately 60% of the tax base, while
commercial, industrial and railroad properties comprise the
majority of the remainder. The village became a home rule
municipality in 2006.
IDR KEY RATING DRIVERS
Revenue Framework: 'bbb'
Fitch expects general fund revenue without rate adjustments will
decline through an economic cycle. The village has unlimited
independent legal ability to increase revenues as a home rule
municipality, although its practical ability to do so is
constrained.
Expenditure Framework: bb
Expenditures seem likely to grow at an extremely high rate compared
to expectations for revenue declines, creating budget gaps that
will be difficult to address. The village has a constrained ability
to adjust expenditures.
Long-Term Liability Burden: a
The village's long-term liability burden, including the net pension
liability and overall debt, is elevated but moderate.
Operating Performance: bb
Fitch believes that the village has extremely limited gap-closing
capacity and that the already distressed operations will worsen
further in the current economic downturn. Fitch expects that the
village will face significant challenges in maintaining positive
reserve levels after fiscal 2023 when principal payments on the
Riverdale Finance Corporation's debt will begin.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
For the IDR:
-- Sustained improvement in the reserve position;
-- Maintenance of positive available general fund reserves.
For the dedicated tax bonds:
-- Long-term stabilization of income tax revenue trends;
-- Upgrade of the IDR.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
For the IDR:
-- Further erosion of financial resilience that portends an
inability to pay obligations.
For the dedicated tax bonds:
-- Sustained pledged revenue declines, beyond the range of
Fitch's expectations;
-- A downgrade of the IDR.
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.
CURRENT DEVELOPMENTS
The village finished fiscal 2020 (April 30 fiscal YE) with a small
surplus and positive available reserves for the first time in six
years, due to non-recurring actions. The surplus was largely
enabled by the underfunding the village's pension actuarially
determined contribution (ADC), as the village has done
historically. The positive reserve levels are primarily due to a $2
million working capital fund that was financed by the Riverdale
Finance Corporation's debt issuance. In fiscal 2021, the village
expects to finish with a $400,000 to $500,000 surplus, which was
generated by a health insurance change and some workforce
reductions, as well as continued underfunding of the pension ADC.
For fiscal 2022, management expects to receive approximately $1.6
million in American Rescue Plan (ARP) funds, which it will use for
permitted capital expenditures. The village will also increase the
property tax levy by 3%, although the low property tax collection
rate of below 70% may indicate an inability of the tax base to pay
the higher levy. Fitch assumes that the ongoing structural
imbalance, especially as the corporation's debt service increases
in fiscal 2023 will challenge village financial operations.
ECONOMIC RESOURCE BASE
The village's population has declined by about 3.5% since 2010, and
assessed value (AV) is still well below its pre-Great Recession
levels. About 26% of the village's residents live under the poverty
level, and income levels are well below the county, state, and
national levels.
IDR CREDIT PROFILE
REVENUE FRAMEWORK
The village's property taxes made up 38% of fiscal 2020 (April 30
fiscal YE) general fund revenue and finance corporation fund
revenue. The village's share of the state income tax (collected by
the finance corporation, with the residual transferred to the
village after paying debt service) made up around 10%.
Fitch assesses the village's revenues as having negative growth
prospects absent policy action. The village's population and AV
have declined since 2010. Those declines have pressured both the
local share of the state income tax and property tax revenue. The
village's property tax collection rates have also been very low,
declining to under 70% in fiscals 2018 through 2020. The village
passed an ordinance instructing the county clerk to collect a loss
factor of 20%, which essentially increases the levy by that amount
to counteract the low collection rate. While management has been
active in its attempts to stimulate the underlying tax base and
generate new revenue, such as a new gas tax effective in fiscal
2019, substantial negative pressure on the revenue stream remains.
Riverdale is a home rule municipality and not subject to the
state's Property Tax Extension Limitation Law. The village has used
this flexibility to adjust property tax rates on an annual basis
and maintains the independent legal ability to adjust the sales tax
or other tax rates, although the weak economic and tax base,
demonstrated by the low collection rate, limits the practical
ability of the village to increase tax revenues.
EXPENDITURE FRAMEWORK
Public safety makes up the largest portion of the village's general
fund expenditures, at approximately 57% of 2020 expenditures.
The natural pace of expenditure growth is likely to be extremely
high in relation to the prospects for declining revenue growth,
creating challenging budget gaps that require active management of
both revenues and expenditures. The village will likely also have
significant growth in pension contributions, as it is required to
increase the funding for its police and fire funds to achieve a 90%
funded ratio by 2040 pursuant to state law.
The village has limited flexibility to adjust its main expenditure
items. Fitch expects net pension liabilities to put increasing
pressure on expenditure flexibility, as the due to the 90% pension
funding requirements to the police and fire pension plans. Fixed
carrying costs for debt service and retiree benefits (incorporating
the pension ADC) are already elevated at approximately 37% of
expenditures in 2020. A 20-year amortization at a 5% interest rate
for the village's pension liabilities more than triples the pension
contributions compared to the ADC.
LONG-TERM LIABILITY BURDEN
Riverdale's long-term liability burden is elevated but still in the
moderate range, with direct and overlapping debt and the unfunded
pension liability 24% of personal income. The village has no
near-term debt plans, although management may consider
restructuring some of its outstanding debt for budget relief in the
next several years. Management expects to utilize ARPA funds for
permitted capital expenditures.
The village participates in four defined benefit pension plans: the
agent multiple-employer Illinois Municipal Retirement Fund (IMRF)
and Sheriff's Law Enforcement Personnel Fund (SLEP), and the
single-employer Police Pension Plan (PPP) and Firefighters' Pension
Plan (FPP). The IMRF and SLEP are funded at the ADC amount by
statute, and the PPP and FPP are funded annually at a rate
significantly lower than the actuarially determined amount.
Underfunding of the pension plans is likely to result in continued
growth in the liability. Fitch calculates the village's total
pension funding ratio of 23%, assuming a 6% discount rate for the
IMRF and SLEP and the actual (lower) discount rate assumptions
required by the PPP and FPP.
OPERATING PERFORMANCE
The village has distressed financial operations and was unable to
close its structural budget gap during the previous national
economic recovery. The village minimized the accumulated deficit in
fiscal 2019 by using some proceeds of the recent income tax
securitization to create a working capital fund. Management
eliminated the deficit balance in fiscal 2020.
However, Fitch expects ongoing downward pressure on revenue and
increasing expenditures will continue to strain operations. Despite
the village's notable legal revenue-raising flexibility due to its
home rule status, Fitch believes general fund financial operations
are at risk of worsening as its vulnerable tax and revenue base
will have to support increasing pension and debt service costs.
The village had operating deficits in six of the last seven years
even with annual pension contributions of less than one-half the
ADC. Fiscal 2019 operations would have been negative without the
transfer of $2 million from the Riverdale Finance Corporation to
bolster the village's cash position. The village finished fiscal
2020 with a small surplus, leading to slightly positive available
reserves.
Interest on the finance corporation income tax securitization bonds
is capitalized through 2023, which postpones the budgetary stress
related to the borrowing. Management's plans once interest of over
$2.6 million becomes due include reviewing the structure of some of
its outstanding debt to restructure payments and to attempt to
rebuild general fund balance. Fitch considers debt restructuring as
deficit financing as it does not provide recurring savings.
DEDICATED TAX KEY RATING DRIVERS
Strong Legal Framework: Fitch believes the bankruptcy-remote,
statutorily defined nature of the issuer and a bond structure
involving a perfected first-lien security interest in the income
tax revenues are key credit strengths. Fitch considers the credit
quality of the corporation's bonds as somewhat insulated from that
of Riverdale. Therefore, the BB corporation bond rating can be
higher than the village's IDR under Fitch criteria's dedicated tax
bond analysis.
Declining Pledged Revenue Prospects: Pledged income tax revenues
increased over the 10 fiscal years ending 2020 by approximately
1.5% annually on average. This was largely due to a significant
increase in fiscal 2019, which was partially due to the state
lessening the reduction in income tax revenue to 5% from 10% that
it had implemented in its 2018 biennium budget as well as a
one-time large increase in 2013. Fitch expects pledged revenue to
decrease going forward due to continued population declines in the
village and flat to modest state revenue growth.
Resilience Through Economic Cycles: The pledged revenue structure
is expected to show a moderate level of resiliency to anticipated
declines in an economic downturn scenario or further state action
in altering the local share of revenue. Based on 2020 results, the
structure could tolerate a 50% decline in pledged revenue and still
provide 1.0x coverage. The 50% decline is 2.6x the largest
historical decline and 7.6x the potential impact of Fitch's stress
scenario due to the current economic downturn, as modeled by the
FAST Econometric API - Fitch Analytical Stress Test Model (FAST).
Fitch expects fiscal 2021 debt service coverage will be in line
with fiscal 2020. No additional debt is allowed under the bond
resolution.
DEDICATED TAX CREDIT PROFILE
Riverdale sold all right, title and interest in the pledged
revenues to Riverdale Finance Corporation, a limited purpose
entity. The state will direct all pledged income tax revenues to
the trustee for benefit of corporation bondholders, and the
residual will flow to the village for any lawful purpose. Pledged
revenues include the village's share of the state-collected
statewide income tax.
The pledged income tax revenue is collected by the Illinois
Department of Revenue, which certifies the amount collected to the
state comptroller on a monthly basis. The comptroller must deposit
the local share of the income tax revenue to the LGDF no later than
60 days after the comptroller receives that certification. The
statewide income tax rate has changed several times since it was
first established in 1969 and three times since 2011. The rate is
currently 4.95% on individuals and 7.00% on corporations. The local
share is 6.06% of the individual income tax and 6.85% of the
corporate tax. Allocations to individual municipalities are made on
the basis of that municipality's proportionate share of the state's
population. This introduces some downward pressure on revenue, as
the village's population has declined at a faster rate than the
states.
Growth prospects for the pledged revenue stream are negative.
Income tax receipts are allocated to the village based on its
population as a proportion of the state population, meaning
relative declines in population at a higher rate than the growth
rate in state income tax revenue would lead to declines in the
pledged revenue. The village's population declined from over 15,000
in 2000 to 13,549 in the 2010 Census, and further to an estimated
12,912 in 2019, a 4.7% decline since 2010. In the meantime, the
state's population declined at a slower rate (1.2%) since 2010.
To evaluate the sensitivity of the dedicated revenue stream to
cyclical decline, Fitch considers both revenue sensitivity results,
using a 1% decline in national GDP scenario, and the largest
decline in revenues over the period covered by the revenue
sensitivity analysis. Based on the historical performance of
pledged income tax revenues since 2000, FAST generates a 6.6%
scenario decline. The largest cumulative decline was an
approximately 19% decline between 2008 and 2010.
Fitch also considered a scenario in which the state decreases the
local share of income tax revenue by 10%, as it did in fiscal 2018,
in the same year of the largest decline. This would result in a
pledged revenue decline of around 27%. Based on current coverage,
the revenue stream could withstand a 50% decline before not fully
covering maximum annual debt service. This is 1.9x the stressed 27%
decline. The bonds have a cash-funded debt service reserve fund,
which provides some additional cushion.
In addition to the sources of information identified in Fitch's
applicable criteria specified below, this action was informed by
information from Lumesis.
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.
S-TEK 1: Wins Cash Collateral Access Thru Aug 31
------------------------------------------------
The U.S. Bankruptcy Court for the District of New Mexico has
authorized S-Tek 1, LLC to use cash collateral on an interim basis
through August 31, 2021.
S-Tek acquired the business under an agreement with Surv-Tek, Inc.
to purchase all or a substantial portion of Surv-Tek's assets.
S-Tek executed a promissory note payable to Surv-Tek for
approximately $1,550,000. Under the terms of the Note, S-Tek agreed
to pay $16,440.15 per month. S-Tek granted Serv-Tek a security
interest in certain collateral, including S-Tek's accounts,
accounts receivable, and the proceeds of such collateral to secure
the indebtedness under the Note. The lien against accounts
receivable is a floating lien that includes after-acquired
receivables.
In July 2019, S-Tek sued Surv-Tek and others in the Second Judicial
District Court of New Mexico alleging fraud, negligent
misrepresentation, material breach of contract, breach of contract,
breach of good faith and fair dealing, equitable recovery, and
violation of the Uniform Commercial Code. Surv-Tek answered the
complaint and counterclaimed, alleging S-Tek's failure to timely
pay the Note, among other things. If S-Tek's defenses to payment of
the Note and its offset claims are disregarded, the amount owed to
Surv-Tek substantially exceeds the value of its collateral.
As of the Petition Date, S-Tek had $33,013.58 in cash on deposit in
its bank account and $203,429.01 in accounts receivable. However,
the accounts receivable amount included $24,678.05 billed to Salls
Brothers Construction, which Salls Brothers Construction disputes.
Surv-Tek had a lien in cash collateral and receivables on the
Petition Date, excluding the disputed Salls Brothers Construction
receivable, in the total amount of $211,764.54, consisting of cash
on hand, cash in deposit accounts, and accounts receivable.
As of the date of the final hearing, the total value of cash
collateral and receivables was $238,190.59, including $191,203.06
in accounts receivable (not including the amount invoiced to Salls
Brothers Construction), $16,987.53 in the DIP Account, and $30,000
deposited in the Debtor's counsel's trust account, representing
proceeds of a settlement with one of the defendants in the State
Court Action.
In its previous order permitting S-Tek's use of cash collateral,
the Court found that SurvTek's interest in cash collateral would be
adequately protected by certain reporting and accounting
reconciliation requirements, by requiring S-Tek to make adequate
protection payments to Surv-Tek if the Petition Date value of its
interest in the combined value of cash collateral and receivables
decreased post-petition, and by other protections, such as
maintaining insurance on S-Tek's other collateral.
In its objection to S-Tek's Cash Collateral Motion, Surv-Tek argues
there are "significant irregularities and inconsistencies" in
S-Tek's accounts receivable aging reports and that S-Tek is
"fabricating receivables to avoid making adequate protection
payments to Surv-Tek." At the final hearing, Surv-Tek characterized
the conduct as fraudulent. Surv-Tek also argued that its interest
in cash collateral is not adequately protected because many of
S-Tek's receivables are not collectible and, therefore, the cash
collateral has decreased since the Petition Date. Surv-Tek further
argued that it should be paid $16,440.15 per month pursuant to the
terms of the Note, and that S-Tek's receivables should be audited
by a third-party certified public accountant or chapter 11
examiner.
Although the Court agrees S-Tek has not always following ordinary
business practices in the way in which it books and ages
receivables, the Court has determined that in doing so S-Tek has
not committed fraud, fabricated receivables, or engaged in willful
misconduct. The Court has also determined that Sur-Tek is not
entitled to adequate protection payments of $16,440.15 per month.
The Court has concluded that Surv-Tek will be adequately protected
for S-Tek's use of cash collateral by imposing several requirements
for use of cash collateral through August 31.
Pursuant to the order, the Debtor is authorized to use cash
collateral in the ordinary course of business to pay:
a. expenses listed on the budget, including payment of
employees, for services rendered post-petition, not to exceed the
greater of $500 or 110% of any asterisked line item amount in the
Budget in any month, except that payments to S-Tek's licensed
surveyor may not exceed 150% of the Budgeted amount and any unused
amount in a month may be carried over to future months. If there is
insufficient cash to make a full payment of Randy Asselin's payroll
expense for a particular payroll period, the shortfall may be paid
in successive payroll periods provided sufficient cash is
available;
b. other ordinary operating expenses and additional amounts
for budgeted expenses as the subchapter V trustee may, after
consultation with Surv-Tek, approve in writing;
c. any additional amounts for post-petition taxes,
unemployment taxes, and New Mexico CRS taxes that become due; and
d. any other amounts approved by Surv-Tek in writing or
permitted by further Court order.
As adequate protection, Surv-Tek will continue to have a security
interest in, and the Debtor's obligations to Surv-Tek will be
secured by, a security interest in all assets in which Surv-Tek had
a lien or security interest as of the Petition Date, and proceeds
thereof, in the same lien priority that existed at that time, which
will be subject to the same defenses and avoidance powers (if any)
as existed on the Petition Date.
Surv-Tek is granted a lien in the property of the same type in
which Surv-Tek held a lien on the Petition Date that Debtor
acquires postpetition to the extent the combined value of Debtor's
accounts receivable, cash on deposit, cash on hand and other cash
equivalents. The Replacement Lien will have the same lien priority,
be deemed perfected, and be subject to the same defenses and
avoidance powers (if any), as existed on the Petition Date with
respect to the Prepetition Collateral without further filing or
recording under any applicable law.
A copy of the order and the Debtor's three-month budget is
available for free at https://bit.ly/3fWEYAw from
PacerMonitor.com.
The Debtor projects $184,000 in total cash available against
$44,740 in total expenses for the month of June.
About S-Tek 1, LLC
Based in Albuquerque, N.M., S-Tek 1 LLC, also known as SurvTek --
https://www.survtek.com -- is a land surveying and consulting firm
providing services to both the private and public sectors
throughout New Mexico.
S-Tek 1 filed a Chapter 11 petition (Bankr. D.N.M. Case No.
20-12241) on Dec. 2, 2020. In its petition, the Debtor disclosed
$355,177 in assets and $2,251,153 in liabilities. Randy Asselin,
managing member, signed the petition.
Judge Robert H. Jacobvitz presides over the case.
The Debtor tapped Nephi D. Hardman Attorney at Law, LLC as its
bankruptcy counsel and FPM & Associates, LLC as its accountant.
SANTA CLARITA: Supplements Disclosures for 100% Plan
----------------------------------------------------
Santa Clarita, LLC submitted a Supplement to Second Amended
Disclosure Statement.
below.
I. Escrow Deposit Required Under the Property Purchase Sale
Agreement
The Debtor and Prologis have entered into that certain First
Amendment to Purchase and Sale Agreement (the "Amended Property
Purchase-Sale Agreement") to amend Sections 1.1(d) and 1.1(e) of
the Property Purchase-Sale Agreement. As set forth in the Amended
Property Purchase-Sale Agreement, Section 1.1(d) of the Property
Purchase-Sale Agreement is amended to increase the amount Prologis
is required to deposit into that certain escrow account from $5
million to $14 million or roughly 5% of the $286 million purchase
price (the "Escrow Deposit"). Additionally, the under Amended
Property Purchase-Sale Agreement, Prologis is required to deposit
the Escrow Deposit 10 business days from the Effective Date, which
is defined as one (1) business day after the date the Court enters
an order approving the Disclosure Statement.
II. Liquidation Analysis
The Debtor's Plan meets this requirement. Creditors are projected
to receive a full payment under the Debtor's Plan. The Debtor has
undertaken steps to detail and calculate creditors' claims in full,
as of the petition date, and the anticipated administrative
expenses in this case to show that full payment of all allowed
claims is realistic and obtainable. In comparison, under a Chapter
7 liquidation, the best case scenario would be the sale of the
Property for $286 million—the current sale price of the Property
in the Purchase Property-Sale Agreement—which would more likely
than not provide for the payment of allowed claims in full. This
scenario, of course, is based on numerous assumptions that are
outlined in the attached Schedule 2.
Attorneys for Debtor:
Christopher H. Bayley
Steven D. Jerome
James G. Florentine
Molly J. Kjartanson
SNELL & WILMER L.L.P.
One Arizona Center
400 E. Van Buren St., Ste. 1900
Phoenix, AZ 85004-2202
Telephone: (602) 382-6000
Email: cbayley@swlaw.com
sjerome@swlaw.com
jflorentine@swlaw.com
mkjartanson@swlaw.com
About Santa Clarita
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 the Debtor's legal
counsel.
SEALED AIR: S&P Affirms 'BB+' Issuer Credit Rating, Outlook Stable
------------------------------------------------------------------
S&P Global Ratings affirmed its 'BB+' issuer credit rating on
designer and manufacturer of automated packaging systems, material
and services, Sealed Air Corp. The outlook remains stable.
S&P said, "We are affirming our 'BBB-' issue level rating on the
revolving credit and term loan A facilities, and 'BB+' issue level
rating on the unsecured notes. The recovery rating on the revolver
and term loan A remains '1', indicating our expectation of 90%-100%
recovery (rounded estimate: 95%) in the event of a payment default.
The recovery rating on the unsecured notes remains '4', indicating
our expectation of 30%-50% recovery (rounded estimate: 35%).
"The stable outlook reflects our expectations that the company's
operating conditions will continue to improve. We also believe
Sealed Air will manage their cost base well, resulting in S&P
Global Ratings-adjusted debt to EBITDA to be in the 3.0x-3.5x
area.
"Sealed Air's operating performance during the pandemic was
resilient, and we believe earnings will continue to improve over
the next 12 months. The company outperformed our expectations for
fiscal 2020 and we expect long-term growth trends to remain
favorable, as global per capita meat consumption continues to rise
and consumers show an increasing preference for fresh, uncooked
protein. While we continue to expect some headwinds from the
company's protective segment's exposure to cyclical end markets,
such as industrials and electronics (roughly half of its sales), we
believe the company has managed its business well through the
difficult period and has positioned itself to take advantage of
expected growing demand for e-commerce fulfillment centers. In our
view, the company will continue to expand margins supported by its
Reinvent SEE business transformation designed to drive continuous
productivity and a favorable economic recovery in 2021.
"Good organic growth and improving margins should enable the
company to reduce debt leverage. Sealed Air ended fiscal 2020 with
S&P Global Ratings-adjusted debt leverage at 3.5x, a meaningful
improvement compared to our previous expectations. We believe the
company has managed its costs well, which has helped offset any
meaningful EBITDA decline and should help offset some resin price
volatility expected this year. Further, our ratings incorporate our
view that the company should be able to operate with S&P Global
Ratings-adjusted debt to EBITDA below 3.5x, due to a
quicker-than-expected recovery in the company's end markets.
"We anticipate Sealed Air will maintain leverage below 3.5x over
the next 12-18 months. Our forecast incorporates our belief that
Sealed Air will maintain a disciplined approach to acquisition
spending and share buybacks so that S&P Global Ratings-adjusted
debt to EBITDA stays below 3.5x, on average. We expect the company
to continue with modest dividend growth each year. However, our
base-case forecast does not incorporate any large, debt-funded
acquisitions.
"The stable outlook reflects our expectation that Sealed Air will
maintain leverage in the 3.0x-3.5x range over the next 12 months.
We expect continued demand in the company's food segment and
operational improvements attributable to the Reinvent SEE
initiative will help offset softness in Sealed Air's protective
segment. We expect the company will maintain positive operating
cash flow, which--combined with ample capacity on its revolving
credit facility--should be sufficient to meet ongoing capital
expenditures and shareholder rewards while improving leverage
modestly."
S&P could lower its ratings on Sealed Air if:
-- The company's adjusted debt-to-EBITDA weakens and approaches
5x; or
-- The company pursues acquisitions or shareholder rewards that
result in credit metrics deteriorating to the aforementioned
levels.
Although highly unlikely over the next 12 months, S&P could raise
its ratings on Sealed Air if:
-- The company's adjusted debt-to-EBITDA improves to below 3x on a
sustained basis; and
-- The company commits to financial policies that support an
investment-grade rating.
SEAWIND DEVELOPMENT: Voluntary Chapter 11 Case Summary
------------------------------------------------------
Debtor: Seawind Development Corp.
933 Pike Springs Road
Kimberton, PA 19442
Business Description: Seawind Development Corp. is a manufacturer
of aerospace products and parts.
Chapter 11 Petition Date: June 8, 2021
Court: United States Bankruptcy Court
District of Delaware
Case No.: 21-10910
Judge: Hon. Kate J. Stickles
Debtor's Counsel: Daniel K. Astin, Esq.
CIARDI CIARDI & ASTIN
1204 N. King Street
Wilmington, DE 19801
Tel: 302-658-1100
E-mail: dastin@ciardilaw.com
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Terry Silva as executrix of the Estate
of Richard F. Silva, president.
The Debtor failed to include in the petition a list of its 20
largest unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7P3B7IA/Seawind_Development_Corp__debke-21-10910__0001.0.pdf?mcid=tGE4TAMA
SHARPE CONTRACTORS: Updates Selective & MPI's Secured Claims
------------------------------------------------------------
Sharpe Contractors, LLC, submitted a Second Amended Disclosure
Statement with regard to its Chapter 11 Plan dated June 3, 2021.
The Debtor shall assume its executory contract with AVR Atlanta
Hotel, SLLC. Debtor shall also assume its executory contract with
AVR Atlanta Hotel NW Tenant, LLC.
Professional Fee Claims with regard to the period prior to entry of
the Confirmation Order will be paid in the amount awarded pursuant
to orders of the Bankruptcy Court and will be paid in full in Cash
as soon as practicable after the later of the Effective Date or the
date such Claim becomes an Allowed Administrative Claim, unless
otherwise agreed to by the Holder thereof. As of the date of this
Disclosure Statement, the estimated professional fees for Wiggam &
Geer, LLC are $40,000.00.
Class 2 consists of the secured claim of Selective Insurance
Company of America. Upon information and belief, Selective asserts
a junior claim in all Debtor's assets, with the exception of
certain "Bonded Contract Funds" as that term is defined in
Selective's Objection to Debtor's Amended Disclosure Statement and
Plan. Selective asserts a first position security interest in the
Bonded Contract Funds, which represent contract balances on three
projects, the Holiday Inn Express Project, the Panorama Project,
and the Tru Hotel Northlake Parkway Project, all bonded by
Selective (the "Bonded Projects").
Any security interest asserted by Selective against Debtor's assets
other than the Bonded Contract Funds is junior in priority to the
lien of the Class 1 Secured Claimant. As a result, Debtor's Class 1
Collateral has no equity for Selective's claim. Selective shall
have a secured claim to the extent any Bonded Contract Funds are
paid or due to be paid to it by the respective obligees on the
Bonded Projects and shall receive no direct payment from Debtor on
its secured claim unless the Debtor receives any Bonded Contract
Funds from any source that the Court determines should be paid to
Selective. Selective and Debtor estimate the value of the Bonded
Contract Funds to be $2,012,395.96 for voting purposes, though the
actual amount received may be lower. Selective's remaining claim
shall be treated as unsecured in Class 9.
Class 8 consists of the secured claim of Michael Page
International, Inc. ("MPI"). Upon information and belief, asserts a
junior claim in Debtor's assets pursuant to a judgment lien. Any
security interest or attachment asserted by MPI is junior in
priority to the lien of the Class 1 Secured Claimant. As a result,
Debtor's collateral has no equity for MPI's claim, and Debtor will
treat MPI's entire claim as an unsecured claim in Class 9. MPI
shall have a secured claim of $0.00. Upon confirmation of the Plan,
the lien shall be void unless an Order of the Court provides for
such relief prior to the Confirmation Date.
The Second Amended Disclosure Statement does not alter the proposed
treatment for unsecured creditors and the equity holder:
* Class 9 consists of all non-insider general unsecured
creditors of the Debtor, including all Secured Claimants'
deficiency claims that are reclassified as Class 9 claimants.
Holders of Class 9 claims shall be paid a pro rata share of
$800,000.00. Mr. Shane Sharpe shall contribute the entire amount of
the disbursements to Class 9 in 14 semi-annual payments of
$40,000.00 beginning 6 months following the Effective Date and
continuing every 6 months until the 14th payment is made. Mr.
Sharpe shall also make a payment of $80,000.00 on month 24, month
48, and month 72 following the Effective Date.
* Class 10 consists of the equity holders of the Debtor. Each
equity security holder will retain its/his Interest in the
Reorganized Debtor as such Interest existed as of the Petition
Date. This class is not impaired and is not eligible to vote on the
Plan.
Funds necessary to fund the plan will be derive from two sources.
The payments to the Class 1 creditors will be made by the Debtor
form its operating income. The payments to unsecured creditors will
be made by Shane Sharpe, the Debtor's sole member. Mr. Sharpe shall
contribute a total of $800,000.00 to the General Unsecured
Creditors over a 7 year time frame.
A full-text copy of the Second Amended Disclosure Statement dated
June 3, 2021, is available at https://bit.ly/3g2HyF7 from
PacerMonitor.com at no charge.
Attorney for Debtor:
Will B. Geer
Georgia Bar No. 940493
50 Hurt Plaza, SE, Suite 1150
Atlanta, Georgia 30303
Tel: (404) 233-9800
Fax: (404) 287-2767
About Sharpe Contractors
Sharpe Contractors, LLC, filed a Chapter 11 bankruptcy petition
(Bankr. N.D. Ga. Case No. Case 20-72638) on Dec. 14, 2020. At the
time of filing, the Debtor estimated 100,001 to $500,000 in assets
and $1,000,001 to $10 million in liabilities. The Debtor hired
Wiggam & Greer, LLC, as counsel, and Simmons & Jamieson, CPA as
accountant.
SKLAR EXPLORATION: Committee, Bank Extend Challenge Period
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The Official Committee of Unsecured Creditors of Sklar Exploration
Company, LLC, and East West Bank, in its capacity as prepetition
agent and lead arranger, stipulate to extend, through and including
July 31, 2021, the challenge period solely with respect to the
Committee, pursuant to an Amended Ninth Stipulation.
The Final Order Authorizing Use of Cash Collateral, Granting
Adequate Protection, and Providing Related Relief originally
entered in Sklar Exploration's case on June 15, 2020, allows the
Committee to timely file appropriate pleadings, and timely commence
appropriate proceedings (i) challenging the legality, validity,
enforceability, or avoidability of the Obligations, the Prepetition
Indebtedness or the Prepetition Liens, or (ii) otherwise asserting
or prosecuting any avoidance actions or any other claims,
counterclaims, causes of action, objections, contests, or defenses
against EWB or the so-called Released Parties by no later than July
17, 2020. The Challenge Period has been extended several times,
the latest of which through and including the earlier of
confirmation of a plan or April 31, 2021.
A copy of the Amended Ninth Stipulation is available for free at
https://bit.ly/3imHZMg from Epiq, claims agent.
About Sklar Exploration Company
Sklar Exploration Company, LLC -- https://sklarexploration.com/ --
is an independent exploration production company owned and managed
by Howard F. Sklar. With offices in Boulder, Colo., Shreveport,
La., and Brewton, Ala., Sklar owns interests in oil and gas wells
located throughout the United States. Its exploration and
production activities have historically focused on the
hydrocarbon-rich Lower Gulf Coast basins and in the Interior Gulf
Coast basins of East Texas, North Louisiana, South Mississippi,
South Alabama, and the Florida Panhandle.
Sklar Exploration Company and Sklarco, LLC, sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Lead Case No.
20-12377) on April 1, 2020. At the time of the filing, Sklar
Exploration had estimated assets of between $1 million and $10
million and liabilities of between $10 million and $50 million.
Sklarco disclosed assets of between $10 million and $50 million and
liabilities of the same range.
Judge Elizabeth E. Brown oversees the cases.
The Debtors tapped Kutner Brinen, P.C., as bankruptcy counsel, and
Berg Hill Greenleaf & Ruscitti, LLP and Armbrecht Jackson, LLP, as
special counsel. Epiq is the Debtor's claim agent.
The U.S. Trustee for Region 19 appointed a committee to represent
unsecured creditors in the Debtors' Chapter 11 cases. The
Committee is represented by Munsch Hardt Kopf & Harr, P.C.
East West Bank is represented by:
Bryce A. Suzuki, Esq.
SNELL & WILMER L.L.P.
One Arizona Center
400 E. Van Buren, Suite 1900
Phoenix, AZ 85004-2202
Telephone: 602-382-6000
Email: bsuzuki@swlaw.com
- and -
Stephanie A. Kanan, Esq.
SNELL & WILMER L.L.P.
1200 17th Street, Suite 1900
Denver, CO 80202
Telephone: (303) 634-2086
Email: skanan@swlaw.com
SPANISH HEIGHTS: Unsecureds Creditors to Split $10,000 in Plan
--------------------------------------------------------------
Spanish Heights Acquisition Company, LLC, submitted a Proposed
Disclosure Statement.
SHAC is a real estate investment company in Las Vegas, Nevada. SHAC
owns one residential property located at 5148 Spanish Heights
Drive, Las Vegas, NV 89148 (APN 163-29-615-007) ("Property") that
it acquired in November 2017. SHAC believes the Property is worth
$6.2 million.
The Property is encumbered by two deeds of trust that SHAC believes
are valid encumbrances on the Property.
The Debtor has focused on developing and executing a reorganization
strategy to: (a) maximize the value of its Estate; (b) address the
factors that led to the bankruptcy filing; and (c) enable the
Debtor to emerge from chapter 11 as a stronger, more viable
company.
The Debtor contemplates two sources to fund its Chapter 11 Plan.
The first is a capital infusion from the Debtor's owner, SJC
Ventures Holdings, LLC, in the amount required to fund Debtor's
exit from bankruptcy ("New Value Contribution"). The second revenue
source to fund the Plan will be a new lease of the Property to the
current tenant, SJC Ventures Holdings, LLC ("SJC Exit Lease"). The
amount of the rent under the Exit Lease will be sufficient to pay
the payments required by the Plan, including (1 ) payments to
secured creditors, ongoing maintenance and related expenses, taxes
and insurance. As of the date this Disclosure Statement is filed,
the liability insurance for the Property is paid in full through
March 11, 2022.
The Plan will treat unsecured claims and equity interests as
follows:
* Class 6 — Allowed Unsecured Claims. Holders of Allowed
Unsecured Claims (including the Unsecured portion of the Class 3
Claim) will receive their pro-rata share of $10,000, with payments
made from the Distribution Account within 90 days after the
Effective Date. Such payment shall be in full satisfaction of each
Holder's Allowed Unsecured Claim.
* Class 7 — Disputed Unsecured Claims. Holders of Disputed
Unsecured Claims shall receive no distribution on account of their
Claims unless or until the Claim becomes an Allowed Claim. If the
Disputed Claim becomes an Allowed Unsecured Claim, it will be
treated as Class 6 Claims.
* Class 8 — Disputed Judgment Lien Claims. Class 8 consists of
parties who have filed or recorded judgments rendered against
Kenneth Antos, his spouse and/or entities owned or controlled by
him and purport to constitute liens on the Property. The Class 8
Claims have been listed by Debtor as Disputed. If any Claims are
filed by Class 8 Claimants, Debtor intends to object to such
Claims(s).
* Class 9 — Equity Interests. The Holder of the Allowed Class
9 Interest will receive nothing on account of its Class 9 interest,
but the Holder shall retain their membership interest in the
reorganized Debtor in return for payment to the Reorganized Debtor
its proportional share of the sum of $350,000.00, which amount
shall be the Equity Interest Holder's New Value Contribution.
Attorneys for the Debtor:
James D. Greene, Esq.
GREENE INFUSO, LLP
3030 South Jones Boulevard
Suite 101
Las Vegas, Nevada 89146
Telephone: (702) 570-6000
Facsimile: (702) 463-8401
E-mail: j greene@greeneinfusolaw.com
A copy of the Disclosure Statement is available at
https://bit.ly/3igL7JB from PacerMonitor.com.
About SHAC
Spanish Heights Acquisition Company, LLC filed its voluntary
petition for relief under Chapter 11 of the Bankruptcy Code (Bankr.
D. Nev. Case No. 21-10501) on Feb. 3, 2021. Jay Bloom, manager and
owner of SJC Ventures Holdings, LLC, signed the petition.
At the time of the filing, the Debtor had estimated assets of
between $1 million and $10 million and liabilities of less than
$50,000.
Greene Infuso, LLP and Maier Gutierrez & Associates serve as the
Debtor's bankruptcy counsel and special counsel, respectively.
SUN PACIFIC: Signs Deal to Secure Permanent Financing for Project
-----------------------------------------------------------------
Sun Pacific Holding Corp. entered into a Net Profit Participation
Agreement and Assignment on behalf of its wholly owned subsidiary
MedRecycler, LLC and with MedRecycler-RI, Inc. in order to secure
permanent financing for its medical waste to energy project.
Under the deal, Sun Pacific Holding has agreed to relinquish its
interest in the equity of MRRI held by MRLLC while the company is
provided an economic interest in the project without liabilities.
About Sun Pacific
Headquartered in Manalapan NJ, Sun Pacific Holding Corp --
http://www.sunpacificholding.com-- offers "Next Generation" solar
panel and lighting products by working closely with design,
engineering, integration and installation firms in order to deliver
turnkey solar and other energy efficient solutions. It provides
solar bus stops, solar trashcans and "street kiosks" that utilize
advertising offerings that provide State and local municipalities
with costs efficient solutions. The Company provides general,
electrical, and plumbing contracting services to a range of both
public and commercials customers in support of its goals of
expanding its green energy market reach.
Sun Pacific reported a net loss of $1.86 million in 2020, a net
loss of $1.78 million in 2019, and a net loss of $1.77 million in
2018. As of March 31, 2021, the Company had $9.30 million in total
assets, $15.74 million in total liabilities, and a total deficit of
$6.44 million.
Dallas, Texas-based Turner, Stone & Company, L.L.P., the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated April 15, 2021, citing that the Company has suffered
recurring losses from operations since inception and has a
significant working capital deficiency, both of which raise
substantial doubt about its ability to continue as a going concern.
TEAM HEALTH: S&P Affirms 'B-' Issuer Credit Rating, Outlook Neg.
----------------------------------------------------------------
S&P Global Ratings affirmed its ratings on Team Health Holdings
Inc., including the 'B-' issuer credit rating on the company. The
outlook is negative.
S&P said, "The negative outlook primarily reflects our forecast for
very weak credit measures this year, including negative free
operating cash flow generation, and that a weaker-than-expected
recovery in patient volumes may lead to our view that the capital
structure is unsustainable.
"The COVID-19 impact on Team Health's cash flow generation to date
has proved less severe than we had initially expected. The effects
from the pandemic on Team Health's cash flow generation has been
less severe than we had expected when we revised the outlook to
negative in April 2020. This stemmed from federal stimulus funding
the company received through the CARES Act (about $216 million
recorded) along with measures it took to reduce costs and preserve
cash in response to lower patient volumes. These factors
contributed to just over $900 million of cash on hand at March 31,
2021. In our view, Team Health's large cash balance, even under our
assumption that the company repays the full amount outstanding
under its revolver in this year, should enable it to withstand our
estimate of a free operating cash flow (FOCF) deficit of $60
million to $90 million in 2021. We expect FOCF to become positive
in 2022, which is also the year we expect patient volumes to
recover to pre-pandemic levels.
"Patient volumes remain well below pre-pandemic levels and are
recovering slower than we initially expected.Team Health's patient
volume continues to recover at a slower pace than we had initially
expected and we believe there is little room for the company to
underperform against our assumptions before we could consider the
capital structure unsustainable. Team Health's patient volumes, net
revenue, and cash flow were all negatively affected by COVID-19 due
in large part to some people avoiding hospitals out of fear of
contracting the virus. As one would expect, lower acuity cases, for
which Team Health is over-indexed, experienced steeper declines in
volume. The second quarter of 2020 was the hardest hit with total
billed patient volumes down 28% year-over-year. Patient volumes
improved in subsequent quarters with volumes down 20.5%
year-over-year during the first quarter of 2021. We expect volumes
will continue to recover and anticipate a slower recovery back to
pre-pandemic levels than previously assumed, contributing to credit
measures that are likely to remain weak this year, including
adjusted debt to EBITDA of 12x-13x and negative adjusted FOCF
generation. Our updated forecast assumes that patient volumes
largely recover to pre-pandemic levels in 2022 with organic revenue
and EBITDA generation recovering to 2019 levels by 2023, about two
year later than we previously assumed.
"We view new surprise billing legislation viewed as a credit
positive for Team Health.On Dec. 22, 2020, Congress passed a
surprise billing legislation that will go into effect in 2022 to
protect consumers from surprise bills for most emergency and
nonemergency services delivered by out-of-network providers. Team
Health generates a portion of its revenue from out-of-network
services and we consider the new legislation to be a positive
development for the company, because it includes an arbitration
process that could result in more timely resolution of payment
disputes. Currently, health care providers have to settle disputes
in court, at high legal costs, against very powerful payors that
include UnitedHealthcare. Given that the losing party in most
states will be required to pay for arbitration, we believe it is
likely that legal costs for the company will decline over time and
that the payor's negotiating power is somewhat reduced beyond
2022."
Surprise billing legislation has been in the works for the past
couple of years and there was a relatively high degree of
uncertainty as to what it would look like and what the impact could
be for health care providers like Team Health. With the legislation
now passed by Congress and S&P's view that it includes features
relatively favorable to health care providers, it believes the
uncertainty and risk from the impact of surprise billing have
abated.
S&P said, "Our rating on the company reflects Team Health's
position as one of the largest incumbents in the highly fragmented
and competitive physician staffing industry and continued rate
pressure from large payors.Team Health is the second-largest
participant in the narrow health care physician staffing industry,
with significant market positions in the emergency medicine (about
60% of net revenue in 2020), hospitalist (about 17% of net
revenues), and anesthesiology (about 12% of net revenues) staffing
segments. Our rating on the company incorporates our view that the
industry is highly fragmented and competitive with low barriers to
entry. Longer term, we expect organic revenue growth to be in the
low single digit percentage area as new contract wins and a modest
increase in rates are largely offset by our view that emergency
department volumes should be flat to down 1% per year. Our
longer-term outlook on emergency department volumes reflects our
view that barriers to entry within the industry are low and there
is a proliferation of alternatives to emergency departments for
lower acuity care, including tele health (which has benefited from
a flood of first-time users during the pandemic) and the growing
popularity of urgent care sites and multi-care facilities.
Federal and state governments on both sides of the political aisle
are focused on reigning in health care spending in response to
increasing deficits in their budgets. S&P said, "In our view, this
translates into meaningful reimbursement risk, particularly from
large government payors such as Medicare and Medicaid, which
together accounted for about one-third of the net revenue generated
by Team Health in 2020. We believe the pricing power of these
government payors combined with the desire to reduce health care
costs should somewhat constrain revenue growth and profit margin
expansion for Team Health over the long term." The company is also
exposed to reimbursement risk from large and powerful private
third-party payors such as UnitedHealthcare. In addition to
aggressively negotiating for lower rates, these payors could
exclude physicians and hospitals managed by Team Health from their
networks. Such an event could make Team Health's services more
expensive for patients within that network and potentially result
in a loss in market share to competing in-network service
providers.
S&P said, "The negative outlook primarily reflects our forecast for
very weak credit measures this year, including negative free
operating cash flow generation, with little room for the company to
underperform against our assumptions before we could consider its
capital structure unsustainable. The negative outlook also reflects
more prevalent downside risks to our forecast stemming from
uncertainty in the pace of patient volume recovery over the next
few quarters.
"We could lower our ratings on the company within the next 12
months if we expect adjusted FOCF to debt to remain below 1.5%
under normal working capital investment levels or if we expect
adjusted EBITDA interest coverage to remain below 1.5x for a
prolonged period. In this scenario, we are likely to consider the
company's capital structure unsustainable over the long term. This
could occur if higher costs result in weaker-than-expected EBITDA
margins or if patient volumes are lower than we expect, potentially
due to the spread of a new COVID-19 variant, increased competition,
or contract loses. We could also lower our ratings on Team Health
if we believe the company's sources of liquidity are insufficient
to cover its fixed charges.
"We could revise our outlook on the company to stable within the
next six months if we gain more conviction that patient volumes
should continue to recover over the next couple of years,
contributing to improved earnings and credit measures, such that
adjusted FOCF to debt should return above 1.5% when working capital
investments normalize. In this scenario, we would also expect that
Team Health maintain sufficient sources of liquidity to comfortably
cover its fixed charges over the next 12 months."
TECT AEROSPACE: To Proceed With Bankruptcy Auction
--------------------------------------------------
Leslie A. Pappas of Bloomberg Law reports that bankrupt TECT
Aerospace Group Holdings Inc. will proceed with an auction to sell
its headquarters and manufacturing facilities in Kansas, despite
lender Boeing Co.'s refusal to back the opening bid.
Moving ahead with the auction later this month, even without a
stalking horse, would help TECT avoid jeopardizing the sale process
and its $60 million debtor-in-possession financing to be provided
by Boeing, TECT's attorney, Paul Heath of Richards, Layton & Finger
P.A., said at a hearing Monday, June 7, 2021.
Judge Karen B. Owens approved the aerospace company's bidding
procedures at the hearing in the U.S. Bankruptcy Court for the
District of Delaware.
About TECT Aerospace
TECT Aerospace Group Holdings, Inc., and its affiliates manufacture
high precision components and assemblies for the aerospace
industry, specializing in complex structural and mechanical
assemblies, and, machined components for a variety of aerospace
applications. TECT produces assemblies and parts used in flight
controls, fuselage/interior structures, doors, wings, landing gear,
and cockpits.
TECT operates manufacturing facilities in Everett, Washington, and
Park City and Wellington, Kansas and their corporate headquarters
is located in Wichita, Kansas. TECT currently employs approximately
400 individuals nationwide.
TECT and its affiliates are privately held companies owned by Glass
Holdings, LLC and related Glass-owned or Glass controlled
entities.
TECT Aerospace Group Holdings, Inc., and six affiliates sought
Chapter 11 protection (Bankr. D. Del. Case No. 21-10670) on April
6, 2021.
TECT Aerospace estimated assets of $50 million to $100 million and
liabilities of $100 million to $500 million as of the bankruptcy
filing.
The Debtors tapped RICHARDS, LAYTON & FINGER, P.A., as counsel;
WINTER HARBOR, LLC, as restructuring advisor; and IMPERIAL CAPITAL,
LLC, as investment banker. KURTZMAN CARSON CONSULTANTS LLC is the
claims agent.
The Boeing Company, as DIP Agent, is represented by:
Alan D. Smith, Esq.
Perkins Coie LLP
E-mail: ADSmith@perkinscoie.com
- and -
Kenneth J. Enos, Esq.
Young Conaway Stargatt & Taylor, LLP
E-mail: kenos@ycst.com
TIMBER PHARMACEUTICALS: Adjourns Annual Meeting Until July 1
------------------------------------------------------------
Timber Pharmaceuticals, Inc.'s 2021 Annual Meeting of Stockholders
was convened without a quorum on June 3, 2021. As a result, in
order to provide stockholders additional time within which to vote
their eligible shares to establish a quorum, the Annual Meeting was
adjourned.
The adjourned meeting will be held at 1:00 p.m. ET on Thursday,
July 1, 2021 at the following url:
www.virtualshareholdermeeting.com/TMBR2021. The record date for
the Annual Meeting remains April 12, 2021.
About Timber Pharmaceuticals
Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation --
http://www.timberpharma.com-- is a biopharmaceutical company
focused on the development and commercialization of treatments for
orphan dermatologic diseases. The Company's investigational
therapies have proven mechanisms-of-action backed by decades of
clinical experience and well-established CMC (chemistry,
manufacturing and control) and safety profiles. The Company is
initially focused on developing non-systemic treatments for rare
dermatologic diseases including congenital ichthyosis (CI), facial
angiofibromas (FAs) in tuberous sclerosis complex (TSC), and
localized scleroderma.
Timber reported a net loss of $15.12 million for the year ended
Dec. 31, 2020. For the period from Feb. 26, 2019, through Dec. 31,
2019, the Company reported a net loss of $3.04 million. As of
March 31, 2021, the Company had $9.77 million in total assets,
$2.07 million in total liabilities, $1.94 million in redeemable
series A convertible preferred stock, and $5.75 million in total
stockholders' equity.
Short Hills, New Jersey-based KPMG LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 23, 2021, citing that the Company has suffered recurring
losses from operations that raise substantial doubt about its
ability to continue as a going concern.
TOWN SPORTS: Moreno-Cuevas Row Won't Proceed to Mediation
---------------------------------------------------------
Chief Magistrate Judge Mary Pat Thynge on April 20, 2021,
recommended that the matter of Ramon Moreno-Cuevas, Appellant, v.
Town Sports International, LLC, Appellee, C.A. No. 21-458 (MN) (D.
Del.), be withdrawn from the mandatory referral for mediation and
proceed through the appellate process of the District Court. No
objections to the Recommendation were filed and the District Court
does not find the Recommendation to be clearly erroneous or
contrary to law. Accordingly, in a June 3 order, District Judge
Maryellen Noreika adopted the Recommendation and the matter is
withdrawn from the mandatory referral for mediation. The parties
are directed to submit a proposed briefing schedule to the Court no
later than June 17.
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.
Judge Sontchi confirmed the Debtors' Second Amended Plan in an
order dated December 18, 2020.
TROIKA MEDIA: Incurs $4.7 Million Net Loss in Third Quarter
-----------------------------------------------------------
Troika Media Group, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $4.68 million on $3.85 million of net project revenues for the
three months ended March 31, 2021, compared to a net loss of $7.82
million on $3.62 million of net project revenues for the three
months ended March 31, 2020.
For the nine months ended March 31, 2021, the Company reported a
net loss of $9.22 million on $12.44 million of net project revenues
compared to a net loss of $15.19 million on $20.76 million of net
project revenues for the nine months ended March 31, 2020.
As of March 31, 2021, the Company had $32.96 million in total
assets, $30.50 million in total liabilities, and $2.46 million in
total stockholders' equity.
The Company has incurred net losses since its inception and
anticipates net losses and negative operating cash flows until
fiscal year 2022. For the nine months ended March 31, 2021, the
Company had a net loss of $9,223,000 which increased the
accumulated deficit to $180.1 million at March 31, 2021 from $170.9
million at June 30, 2020. At March 31, 2021, the Company had
approximately $1.4 million in cash and cash equivalents and a total
of $4.8 million in current assets in relation to $21.2 million in
current liabilities. While the Company continues to find
efficiencies with its acquisitions of Troika Design Group, Inc. and
Mission Group, the departure of Mission's President and Founder in
fiscal year 2019 together with the coronavirus (COVID-19) pandemic
in fiscal years 2020 and 2021 impacted revenue more than
anticipated.
With the acquisition of Mission Group, the Company anticipated
increasing Troika's footprint in a major media markets, such as NY
and London. The Company also continues to expand its consulting
services and breadth of product offering with existing Mission and
Troika clients and increase business development in NY and London
as a result of the Mission acquisition. Additionally, the Company
intends to add to Mission business development due to Troika’s
existing clientele.
During the fiscal year ended June 30, 2020, the Company entered
into an agreement with a financial advisory firm to analyze
potential financing transactions including preparing the Company
for an initial public offering (IPO). In April 2021, the Company's
Form S-1 registration statement was declared effective by the U.S.
Securities and Exchange Commission. The Company received net
proceeds of $21.9 million 'and the Company's securities were listed
on the Nasdaq Capital Market. Management believes the proceeds
from the IPO will be more than sufficient to meet the Company's
cash requirements until the Company generates positive cash flow.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/Archives/edgar/data/1021096/000147793221003780/troi_10q.htm
About Troika
Troika Media Group -- www.thetmgrp.com -- is an end-to-end brand
solutions company that creates both near-term and long-term value
for global brands in entertainment, sports and consumer products.
Applying emerging technology, data science, and world-class
creative, TMG helps brands deepen engagement with audiences and
fans throughout the consumer journey and builds brand equity.
Clients include Apple, Hulu, Riot Games, Belvedere Vodka, Unilever,
UFC, Peloton, CNN, HBO, ESPN, Wynn Resorts and Casinos, Tiffany &
Co., IMAX, Netflix, Sony and Coca-Cola.
UNITED PF: S&P Affirms 'CCC+' Issuer Credit Rating, Outlook Neg.
----------------------------------------------------------------
S&P Global Ratings affirmed its 'CCC+' issuer credit rating on
United PF Holdings LLC, its 'CCC+' issue-level rating on its
first-lien term loan due 2026, and its 'CCC-' issue-level rating on
its second-lien term loan due 2027. S&P's '3' recovery rating on
the first-lien loan and '6' recovery rating on the second-lien loan
remain unchanged.
S&P said, "We affirmed our issuer credit rating despite our
expectation for very high leverage and negative cash flow because
we believe United PF will maintain adequate liquidity over the next
12 months.It is our understanding that the company generated
positive free operating cash flow (FOCF) in the fourth quarter of
2020. However, we believe that this was aided by United PF's
decision to delay a significant portion of its discretionary growth
capital spending in 2020 to 2021. Given that we expect the
company's development capital expenditure to increase materially in
the current fiscal year, primarily to fund new club expansions, we
believe United PF will burn cash in fiscal year 2021. However, we
expect United PF to maintain adequate liquidity, including its $108
million of cash as of March 2021 and the $38 million of
availability under its $40 million revolving credit facility.
Therefore, we do not expect the company to default or enter into a
distressed debt restructuring over the next 12 months.
"In our updated base-case forecast, we expect United PF's
membership base to recover throughout 2021 as the U.S.' vaccination
rollout continues. We also expect its gyms to remain open going
forward and anticipate COVID-related restrictions on its clubs,
which have started to be rolled back, will continue to ease
throughout the summer. We forecast United PF will end the year with
approximately 1.1 million members, which is approximately 8% below
its pre-pandemic peak of 1.2 million in March 2020 but in line with
its membership base as of December 2019. We also estimate its
aggregate electronic funds transfer (EFT) billing will be about
5%-10% below pre-pandemic levels for the year. However, due to its
new club additions we expect the company to increase its total
revenue by approximately 35%-40% in 2021, and end the year at or
slightly above its results in 2019. We assume United PF's
membership base will also continue to recover given its additional
club development activity and believe it will match its peak
pre-pandemic membership level of approximately 1.2 million by the
end of fiscal year 2022. We forecast the company will increase its
total revenue by approximately 10% in fiscal year 2022. We forecast
United PF will improve its reported EBITDA margin to the 26%-27%
range in 2021, which would exceed the margins it reported in fiscal
year 2019 when its EBITDA was compressed by significant
acquisition-related expenses and for EBITDA margin to be
approximately 28% in 2022. Lastly, we believe United PF's total
capital expenditure will be approximately $50 million-$60 million
this year due to its planned club count expansion. Incorporating
our assumptions, we believe the company's leverage will remain
elevated with S&P Global Ratings-adjusted debt to EBITDA in the
9.0x-9.5x range in 2021 before possibly recovering to the 8.0x area
in 2022.
"We believe Planet Fitness' position as a low-cost fitness club
operator led to a smaller decline in the company's membership
during the pandemic than at its peers and could support a faster
recovery in its membership in 2021.We believe the low price point
of the company's memberships led to a less severe decline in its
membership rolls over the course of the pandemic. We also believe
these factors will likely support a faster recovery in its
membership relative to some of its rated peers as the effects of
the pandemic dissipate. At its low point in December 2020, the
company's membership base fell to approximately 980,000, or 18%
below its pre-pandemic peak, which is in line with the performance
of its fitness peers. However, fitness operators that offer
memberships at significantly higher monthly rates have a
significantly higher percentage of members still on hold than at
United PF. Therefore, we believe that the company's membership
levels could recover to 2019 levels by the end of fiscal year
2021.
"The negative outlook reflects our forecast for negative free cash
flow, significantly higher debt service costs, low EBITDA coverage
of interest expense, and very high leverage through 2022.Given
United PF's planned club expansion, we expect its free cash flow
will likely be negative through 2021 and near zero in 2022. The
company has contractual rights to open a specified number of clubs
through 2024 per its Area Development Agreements (ADAs) with
franchisor Planet Fitness and we understand that it delayed some of
its planned 2020 club openings to 2021 due to COVID-19-related
business disruptions. We expect United PF to have capital
expenditures of $50 million-$60 million in 2021 incorporating its
maintenance and development capital expenditure, IT projects,
equipment refreshes. Therefore, we estimate its discretionary cash
flow will be significantly negative and forecast to the company
will burn $35 million-$45 million of cash this year. Additionally,
incorporating our base-case assumption for modest expansion capital
spending of approximately $15 million through 2024, we anticipate
its discretionary cash flow could remain near zero through fiscal
year 2022 before increasing to approximately $5 million-$15 million
in 2023. However, we believe that United PF's position as the
largest Planet Fitness franchisee, given that it owns approximately
8% of all Planet Fitness-branded clubs, provides it with the
negotiating power to amend the terms of its ADA for a period of
time under certain circumstances. We are confident that the company
could postpone some of the capital expenditure related to its
required club openings if there are legitimate constraints on its
liquidity or it experiences difficulty in sourcing suitable
locations, which was partly the case during the pandemic.
Nonetheless, we would need to believe that United PF's revenue and
EBITDA have recovered to the extent that it can cover its fixed
charges and materially reduce its cash burn such that it is caused
solely by moderate amounts of discretionary spending on new club
development before revising our outlook to stable or positive.
"The negative outlook on United PF reflects our expectation for
very high leverage and negative free cash flow in 2021."
S&P could lower its rating on United PF if the recovery in its
membership, revenue, and EBITDA materially underperform its
base-case assumptions due to lingering consumer apprehensions about
the safety of gyms and S&P believes:
-- Its liquidity position could worsen; or
-- It could default or enter into a debt restructuring in the
subsequent 12 months.
S&P could revise its outlook on United PF to stable or positive or
raise our ratings if:
-- The company's membership base, EBITDA, and cash flow recover in
such a way that it can comfortably cover its fixed charges and
modest amounts of growth capital spending and it becomes confident
its capital structure is sustainable over the long term; or
-- S&P believes the company will sustain leverage of less than
7.5x through 2022.
US CONSTRUCTION: Cash Collateral Use Until August 15 OK'd
---------------------------------------------------------
Judge Jeffrey P. Norman authorized US Construction Services, LLC to
use the cash collateral necessary to operate its business until
August 15, 2021, pursuant to the approved budget.
The Court ruled that Veritex Community Bank is granted a continuing
valid, binding, enforceable, and automatically perfected
post-petition security interest in, and replacement liens on all
assets of the Debtor, with the same validity and priority as the
Lender's lien on the Debtor's property as existed on the Petition
Date, as adequate protection against the diminution in value of the
Lender's interests in the cash collateral.
The Court also ruled that the Debtor shall make adequate protection
payments of $5,500 to the Lender no later than 2 p.m. on each of
July 1 and August 1, 2021. The Debtor must also make adequate
protection payment to the Lender for $9,500 by 2 p.m. on June 4.
The Court directed the Debtor to file a plan and disclosure
statement no later than August 15, 2021, and to have a plan
confirmed no later than October 15.
A final hearing on the cash collateral motion is scheduled for
August 20, 2021 at 9:30 a.m., during which time, the Court will
also consider the Lender's motion to convert the Debtor's case to a
case under Chapter. Any material breach by the Debtor of the terms
of the current order may be used by the Lender in support of its
motion to convert.
A copy of the order is available for free at https://bit.ly/3pryPiO
from PacerMonitor.com.
About US Construction Services
US Construction Services, LLC is a Dickinson, Texas-based company
in the residential building construction industry.
US Construction Services sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. S.D. Texas Case No. 21-80029) on Feb. 19,
2021. Whitney Jones, the managing member, signed the petition. In
the petition, the Debtor declared total assets of $2,400,000 and
total liabilities of $1,262,826.
Judge Jeffrey P. Norman oversees the case.
Zendeh Del & Associates, PLLC and Patout Law, PLLC serve as the
Debtor's bankruptcy counsel and special litigation counsel,
respectively.
Veritex Community Bank, lender, is represented by Crady Jewett
Mcculley & Houren LLP.
VIDEOTRON LTEE: S&P Rates New C$400MM & US$500MM Unsec Debt 'BB+'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue-level rating and '3'
recovery rating to Quebec-based telecom and wireless provider
Videotron Ltee's proposed C$400 million and US$500 million
unsecured debt. Videotron is a fully owned subsidiary of Quebecor
Media Inc. (QMI). The '3' recovery rating on the proposed debt
indicates our expectations for meaningful (50%-70%; rounded
estimate: 65%) recovery in a simulated default.
The company plans to use cash proceeds and about C$750 million cash
on hand to fully repay the Videotron's 5% senior notes due 2022 and
a portion of QMI's senior notes due 2023. S&P's net debt to EBITDA
ratio (S&P Global Ratings' adjusted) is essentially unchanged and
S&P's 'BB+' issuer credit rating (ICR) on QMI is unchanged.
ISSUE RATINGS - RECOVERY ANALYSIS
Key analytical factors:
-- The issue-level and recovery ratings on Videotron's debt are
unchanged.
-- QMI's (the holding company) secured debt is secured by the
equity interests in the company's operating subsidiaries (Videotron
and 68.4%-owned TVA Group Inc.) and other holding company-level
assets. Hence, QMI is structurally subordinated to subsidiary-level
creditors.
-- The current and future secured debt held by QMI's operating
subsidiaries has the highest priority over their respective assets,
followed by the unsecured debt held by each subsidiary. There are
no cross-company guarantees among the operating subsidiaries' debt
or guarantees from QMI.
-- S&P's simulated default scenario incorporates the assumption
that QMI will default in 2026, following deterioration in the
financial performance of Videotron--by far the largest contributor
to QMI's cash flow. In this highly distressed scenario, we assume a
combination of the following factors leads to a payment default at
QMI: declining basic cable subscribers due to increased cord
shaving, increased price competition, increased sales and marketing
expenses, and higher debt from acquisitions and network
investments.
-- S&P assumes the company would be reorganized or sold as a going
concern as opposed to being liquidated based on its viable business
model and leading market share position in the Quebec telecom
market.
-- Because the debt at Videotron has first priority, the
enterprise value is first shared by Videotron debtholders. As a
result, after the secured revolving debt is fully covered we
estimate that Videotron senior unsecured noteholders could expect
meaningful (50%-70%; rounded estimate: 65%) recovery, which
corresponds to a '3' recovery rating and a 'BB+' issue-level
rating.
-- There is limited value upstreamed to QMI debtholders after
TVA's debtholders are paid. For QMI's secured debtholders, S&P
estimates modest (30%-50%; rounded estimate: 40%) recovery, which
corresponds to a '4' recovery rating and a 'BB+' issue-level
rating.
-- Because all enterprise value has been allocated to the secured
debtholders, for QMI's unsecured notes S&P expects negligible
(0%-10%; rounded estimate: 0%) recovery in a distressed scenario,
which corresponds to a '6' recovery rating and a 'BB-' issue-level
rating (two notches below the ICR).
Simulated default assumptions:
-- Simulated year of default: 2026
-- Emergence EBITDA: C$749 million
-- EBITDA multiple: 7x
-- Net recovery value after administrative expenses (5%): C$4.9
billion*
-- Obligor/non-obligor valuation split: 96%/4%
Simplified waterfall (for Videotron):
-- Net recovery value for waterfall after administrative expenses
(5%): C$4.8 billion
-- Estimated priority claims: C$1.32 billion
-- Remaining recovery value: C$3.5 billion
-- Senior unsecured debt and pari passu claims: C$5.1 billion
--Recovery range: capped at 50%-70% (rounded estimate capped at
65%)
Simplified waterfall (for QMI):
-- Secured first-lien debt: C$265 million
-- Value available for secured claim (less value for Videotron and
TVA): C$106 million
--Recovery range: 30%-50% (rounded estimate: 40%)
-- Estimated senior unsecured debt and pari passu deficiency
claims: C$1.85 billion
--Recovery range: 0%-10% (rounded estimate: 0%)
*Includes enterprise value from Videotron and TVA.
VIENTO WINES: Court Grants Cash Collateral Access Until June 30
---------------------------------------------------------------
Judge Trish M. Brown authorized Viento Wines Inc. to use cash
collateral, in which First Interstate Bank (FIB) has interest, to
pay for the Debtor's operating expenses and costs of
administration, pursuant the budget, until the earliest to occur of
June 30, 2021, or a termination event.
A termination event consists of any of the following:
a. the Debtor's failure to deposit on a weekly basis all cash
receipts and collections in its post-petition DIP
account(s) or other accounts as approved by the Court;
b. payment by the Debtor of any prepetition claim, except as
permitted by a Court order or in the budget;
c. dismissal of the Debtor's Chapter 11 case, or its
conversion to a case under Chapter 7 of the Bankruptcy
Code;
d. the Debtor's failure to (i) maintain insurance in such
amounts and against such risks as are customarily
maintained by companies of established repute engaged in
the same or similar businesses operating in the same or
similar locations and all insurance required to be
maintained pursuant to the Loan Documents, not otherwise
furnished by the Co-Obligors Richard & Robin Cushman, or
(ii) furnish to FIB information in reasonable detail as to
the insurance so maintained.
Before the Petition Date, the Debtor obtained two loans from FIB,
as follows:
a. 10237 Loan in the original principal amount of $742,500,
pursuant to a Business Loan Agreement and Construction Loan
Agreement, both dated January 7, 2011, and evidenced by a
promissory note the Debtor executed in favor of
CenterPointe Community Bank.
10237 Loan is secured by:
1. a Construction Deed of Trust dated January 7, 2011
executed individually by Richard J. Cushman and Robin
Maria Cushman, as grantor, to Columbia Gorge Title as
trustee, for the benefit of CenterPointe. The
Construction Deed of Trust encumbered the real property
and improvements located at 301 Country Club Road, Hood
River, Oregon.
2. an Assignment of Rents dated January 7, 2011, executed
by Mr. Cushman and Robin Maria Cushman, individually, as
assignor, and CenterPointe, as assignee, encumbering the
Tasting Room Property.
b. 1043000 Loan for $350,000, pursuant to a Business Loan
Agreement and Commercial Construction Loan Agreement, both
dated July 16, 2013, evidenced by a promissory note the
Debtor executed in favor of CenterPointe.
Thereafter, CenterPointe merged into Inland Northwest Bank,
which thereafter merged into FIB.
1043000 Loan is secured by:
1. a Commercial Security Agreement dated July 16, 2013
granting FIB a security interest in its inventory which
consists of bulk wine and bottled wine. CenterPointe
caused a financing statement on its interest in the wine
inventory.
2. a Commercial Construction Real Estate Deed of Trust
dated July 16, 2013, and an Assignment of Leases and
Rents, both dated July 16, 2013, executed by Richard J.
Cushman and Robin Maria Cushman, individually as
grantor, to Columbia Gorge Title LLC, as trustee, for
the benefit of CenterPointe, encumbering the Tasting
Room Property.
On April 15, 2019, the parties entered into a Forbearance
Agreement, later amended on July 29, pursuant to which, the Debtor
caused additional real estate collateral to be pledged to secure
the Debtor's obligations under the two notes.
The Court ruled that, as adequate protection of its interest in the
Prepetition Collateral securing the Prepetition Obligations, FIB is
entitled to adequate protection of its interest in the Prepetition
Collateral in an amount equal to the amount of Cash Collateral used
from and after the Petition Date. FIB, subject to a motion and
hearing, is also entitled to adequate protection of its interest in
the amount of aggregate diminution in the value of its interests in
the Prepetition Collateral from and after the Petition Date.
The Court further ruled that, as security for all of the Debtor's
indebtedness to FIB under the Loan Documents and to the extent of
the adequate protection obligations, the Debtor shall grant FIB a
first priority post-petition security interest in and lien on all
of the Debtor's assets to the same priority, validity and extent
that FIB held a properly perfected pre-petition security interest
in such assets which are acquired or generated after the Petition
Date.
The approved Final Cash Collateral Budget provided for $8,895 in
total expenses over a 30-day period, against an average monthly
income of $18,500.
A copy of the Court's order is available for free at
https://bit.ly/3x6Ggih from PacerMonitor.com.
About Viento Wines, Inc.
Viento Wines Inc. -- http://vientowines.com/-- is a winemaker
offering Gorge wines ranging from Sparkling, White, Rose, Red &
Dessert wine. Viento Wines sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D. Ore. Case No. 21-30690) on
March 29, 2021. In the petition signed by Richard Cushman,
president, the Debtor disclosed $679,176 in assets and $1,272,818
in liabilities.
Judge Trish M. Brown oversees the case.
Michael D. O'Brien, Esq., at Michael D. O'Brien & Associates, P.C.,
is the Debtor's counsel.
VIP PHARMACY: Debtor's Amended Plan Due on June 30
--------------------------------------------------
Judge Eric L. Frank has entered an order that on or before June 16,
2021, the VIP Pharmacy, Inc. will file (and serve in accordance
with the rules of court) all motions whose resolutions are
necessary to the confirmation of the Debtor's chapter 11 plan.
On or before June 30, 2021, the Debtor shall file (and serve in
accordance with the rules of court) an amended chapter 11 plan.
About VIP Pharmacy, Inc.
VIP Pharmacy Inc. is a privately held company in the health care
business. It sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D. Pa. Case No. 1-10428) on February 23,
2021. In the petition signed by Kaushal Patel, president, the
Debtor disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge Eric L. Frank oversees the case.
Paul Winterhalter, Esq., at OFFIT KURMAN, P.A. is the Debtor's
counsel.
Woori America Bank, as Lender, is represented by Charles N. Shurr,
Jr., Esq. at KOZLOFF STOUDT.
VISTA PROPPANTS: Names Herron as Exec. Chairman After Ch. 11 Exit
-----------------------------------------------------------------
On June 7, 2021, V SandCo, LLC, formerly Vista Proppants and
Logistics, LLC and dba Vista Sand, announced that following its
successful emergence from Chapter 11 proceedings in November 2020,
Steve Herron was named Executive Chairman of Vista's Board of
Directors. The Company also announced the expansion of its
executive leadership team with the hiring of Michael ("Mike")
Miclette as President and Tony Curcio as Executive Vice President
of Sales. Messrs. Herron, Miclette and Curcio join long-time Vista
leaders Kristin Smith, Chief Financial Officer, and Mike Fleet,
Executive Vice President of Operations.
During his career, Mr. Herron has founded and built several
successful businesses revolving around large scale industrial sand
supply and distribution. He is a licensed geologist and has spoken
and published extensively on the geology of industrial minerals,
sustainable development, stakeholder engagement and urban resource
development. Mr. Herron has been credited with the geologic
discovery of the first regional sand play in Nebraska, the first
pure play sand logistics company, and he was the first geologist to
commercialize the West Texas Sandhills. The commercialization of
the Sandhills is considered one of the most significant discoveries
of oilfield minerals in the past several decades. Mr. Herron earned
a Bachelor of Arts in Geology from Hanover College, a Master of
Science in Geology from Ball State University, and a Certificate in
Strategic Marketing Management from Harvard Business School.
Mr. Herron commented, "I am pleased to join Vista's Board and look
forward to working closely with the Board and executive leadership
team as we capitalize on our new strategic vision of primarily
focusing on sand production at our three Texas-based mines. Our
successful financial restructuring has significantly improved our
balance sheet and provides important flexibility as we identify and
execute on opportunities to strategically grow our business in the
energy and industrial sectors. The Board is pleased to have Mike
join Vista as President and believe his extensive leadership
experience in industrial minerals will serve the Company well as we
focus on providing our customers with quality products from our
footprint of mines that are strategically located near a number of
prolific oil and gas producing regions."
Mr. Miclette has more than 27 years of engineering, operations
management and leadership development experience in industrial
minerals having worked in Ohio, Michigan, Colorado, California and
Texas. He most recently served as Director of Operations for
Pioneer Sands LLC, a subsidiary of Pioneer Natural Resources.
"I am pleased to join the Vista team and appreciate the confidence
of Steve and the other members of the Board as we redefine our core
focus primarily to the production of high-quality, fine grade
sand," said Mr. Miclette. "We look forward to continuing to
leverage the cost advantages afforded as a regional producer as we
provide our customers a wide, in-demand product offering. We also
remain focused on pursuing attractive opportunities to further
diversify and promote the long-term sustainability of our
business."
Mr. Curcio is a senior sales executive with proven experience in
driving growth, development and sustainability for various
organizations within the oilfield industry, and has a deep
knowledge of the industry’s supply chain, material handling,
logistics services and regulations. He most recently served as Vice
President of Sales and Business Development for Silica Services,
LLC. Prior to that, Mr. Curcio served as National Sales Manager for
Hi-Crush, Inc. (formerly Hi-Crush LMS LLC).
Separately, Vista announced that it recently moved its corporate
offices to 6050 Southwest Blvd, Suite 300, Fort Worth, Texas 76109.
The respective addresses for the Company’s field offices remain
unchanged.
About Vista Proppants and Logistics
Vista Proppants and Logistics, LLC -- https://www.vprop.com/ -- is
a pure-play, in-basin provider of frac sand solutions in producing
regions in Texas and Oklahoma, including the Permian Basin, Eagle
Ford Shale and SCOOP/STACK. It is headquartered in Fort Worth,
Texas.
Vista Proppants and its affiliates sought protection under Chapter
11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 20-42002)
on June 9, 2020. The petitions were signed by Gary Barton, chief
restructuring officer. At the time of the filing, Vista Proppants
had estimated assets of less than $50,000 and liabilities of
between $100 million and $500 million.
Judge Edward L. Morris oversees the cases.
The Debtors tapped Haynes and Boone, LLP, as their legal counsel;
Jackson Walker LLP as special litigation counsel; and Alvarez &
Marsal North America, LLC, as chief restructuring officer. Kurtzman
Carson Consultants, LLC, is the Debtors' claims, noticing,
balloting and solicitation agent.
WAGYU 100: Court Conditionally Approves Disclosure Statement
------------------------------------------------------------
Judge Joshua P. Searcy has entered an order conditionally approving
the Disclosure Statement of Wagyu 100, LLC.
Wednesday, July 7, 2021, is fixed as the last day for filing
written acceptances or rejections of the Debtor's proposed Chapter
11 plan which must be received by 4:00 p.m. (CST).
Wednesday, July 7, 2021, is fixed as the last day for filing and
serving written objections to (1) final approval of the Debtor's
Disclosure Statement; or (2) confirmation of the Debtor's proposed
Chapter 11 plan.
The hearing to consider final approval of the Debtor's Disclosure
Statement (if a written objection has been timely filed) and to
consider the confirmation of the Debtor's proposed Chapter 11 Plan
is fixed and shall be conducted on Monday, July 19, 2021, at 9:30
a.m. via virtual hearing.
The 45-day deadline imposed by 11 U.S.C. Sec. 1129(e) which expires
July 11, 2021, is extended until Monday, August 2, 2021.
About Wagyu 100
Wagyu 100, LLC filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No.
21-60039) on Feb. 1, 2021. Eric A. Liepins, Esq., at Eric A.
Liepins, PC serves as the Debtor's counsel.
WARDMAN HOTEL: Chapter 11 Sale Plans Ignore Contracts, Say Unions
-----------------------------------------------------------------
Law360 reports that two labor unions representing workers at
Washington's bankrupt Wardman Park Hotel objected late Wednesday,
June 2, 2021, to the debtor's proposed Chapter 11 sale plans,
saying the procedures don't inform potential bidders of their
obligations under collective bargaining agreements.
In the objection, UNITE HERE Local 25 and the International Union
of Operating Engineers Local 99 said they are currently engaged in
arbitration proceedings with debtor Wardman Hotel Owner LLC over
its obligations to act as the successor under the union contracts
after the debtor terminated a hotel operating agreement with
Marriott International Inc.
About Wardman Hotel Owner
Wardman Hotel Owner, L.L.C., owns Marriott Wardman Park Hotel, a
convention hotel located at 2600 Woodley Road NW, in the Woodley
Park neighborhood of Washington, D.C.
Wardman Hotel Owner, L.L.C., filed a Chapter 11 bankruptcy petition
(Bankr. D. Del. Case No. 21-10023) on Jan. 11, 2021. In the
petition signed by James D. Decker, manager, the Debtor estimated
$100 million to $500 million in assets and liabilities. The Hon.
John T. Dorsey is the case judge. PACHULSKI STANG ZIEHL & JONES
LLP, led by Laura Davis Jones, is the Debtor's counsel.
WILLCO XII: Court Extends Cash Collateral Access Until July 31
--------------------------------------------------------------
Judge Thomas B. McNamara approved the stipulation between Willco
XII Development, LLLP and FirstBank extending the Debtor's access
to cash collateral until July 31, 2021.
Nothing in the stipulation, however, shall affect FirstBank's
rights and remedies with regard to the use of its cash collateral
between January 29, 2021 and February 22, 2021.
About Willco Development, LLLP
Willco XII Development, LLLP, owns the hotel property at 4851
Thompson Parkway, in Johnstown Colorado, currently identified as
the Comfort Inn & Suites in Johnstown. The company is a unit of
William G. Albrecht's Spirit Hospitality, LLC.
Willco XII Development sought Chapter 11 protection (Bankr. D.
Colo. Case No. 20-16307) on Sept. 23, 2020, to stop its lender from
foreclosing on the property.
The Debtor disclosed $14.2 million in assets and $10.274 million in
liabilities as of the bankruptcy filing. The Debtor's property is
valued at $13 million and secures a $6.4 million first mortgage to
the FirstBank of Colorado and a $3.46 million second mortgage to
Wells Fargo.
Lance J. Goff represents the Debtor as the counsel.
FirstBank, as lender, is represented by Chad Caby, Esq., at Lewis
Roca Rotgherber Christie LLP.
WOODBRIDGE HOSPITALITY: Seeks Cash Collateral Access Thru Sept. 30
------------------------------------------------------------------
Woodbridge Hospitality, LLC asks the U.S. Bankruptcy Court for the
District of Arizona for authority to use cash collateral to pay
ordinary and necessary operating expenses, in accordance with the
Budget, as augmented by a 10% total variance, through September 30,
2021.
The Debtor says its estate is solvent by over $4 million. The
Debtor also contends its senior lender, Wilmington Trust, National
Association, as Trustee, for the benefit of the holders of COMM
2015-CCRE26 Mortgage Trust Commercial Mortgage Pass-Through
Certificates, is over-secured by approximately $8.2 million, an 88%
equity cushion. The Debtor's property, Suites on Scottsdale hotel,
located in Scottsdale, Arizona, is currently under contract for
sale to SRE Partners, LLC for a purchase price of $17,500,000. The
Debtor says the purchase price is sufficient to pay all asserted
claims in full, and the sale is scheduled to close before yearend.
Historically, the Debtor operated profitably. In fact, in 2019,
under Ledgestone Hospitality's management, the Debtor had revenues
of about $3,831,000 and $819,203 in annual profit.
Like many industries, the hospitality industry in general, and the
Suites on Scottsdale Hotel specifically, were significantly
adversely affected by the global COVID-19 pandemic, and the
Debtor's operations and revenues suffered greatly in 2020. In fact,
the Debtor's revenues declined by approximately 69% in 2020.
On December 8, 2020, the Debtor entered into a Purchase and Sale
Agreement providing for the sale of the Hotel to SRE who intends to
convert the Hotel to apartments.
On May 13, 2021, the Debtor entered into a Subcontract Agreement in
Support of Department of Homeland Security, Immigration and Customs
Enforcement, Emergency Family Staging Centers dated May 28, 2021
with Family Endeavors, Inc., a Texas non-profit corporation d/b/a
San Antonio Family Endeavors, which provides for the operation of
the Hotel as a temporary shelter and emergency family staging
center for non-citizen families under the supervision of the
Department of Homeland Security, Immigration and Customs
Enforcement.
The Endeavors Contract provides for funding to the Debtor of up to
$1,336,593 for the four month period governed by the Endeavors
Contract. Pursuant to the payment formula in the Endeavors
Contract, the Debtor will receive at least approximately $316,000
of revenue per month.
Endeavors began housing families at the Hotel on or about May 28,
2021.
The Debtor requests authority to use the Revenues generated by the
Endeavors Contract to pay the Expenses in accordance with the Cash
Collateral Budget.
The Hotel is encumbered by an asserted first position deed of trust
in favor of Wilmington Trust, National Association, as Trustee, for
the benefit of the holders of COMM 2015-CCRE26 Mortgage Trust
Commercial Mortgage Pass-Through Certificates, by and through
CWCapital Asset Management LLC, special servicer for the Lender.
The Lender asserts that, as of April 12, 2021, the total
outstanding balance due to the Lender on the loan allegedly secured
by the Hotel was $9,266,269.
The Debtor disputes the amount alleged to be due to the Lender.
Additionally, according to the Debtors' records, through April
2021, the Lender held approximately $1,469,000 in reserve funds
supplied by the Debtor.
When the Debtor's revenues declined in 2020, the Debtor fell behind
in its payments to the Lender, and the Lender accelerated the Loan.
The Lender asserts the Debtor is in default under the Loan for,
among other things, failure to make the payments.
Despite the existence of an equity cushion of approximately 88%,
prior to the Petition Date, the Lender initiated an action in the
Maricopa County Superior Court seeking the appointment of a
receiver over the Hotel and the issuance of a temporary restraining
order to prevent the Debtor's use of the Hotel pursuant to the
terms of the Endeavors Contract. Additionally, the Lender noticed
a Trustee's Sale of the Hotel for July 27, 2021.
The State Court set an evidentiary hearing regarding the TRO for
May 26, 2021, and an evidentiary hearing regarding the Lender's
request for the appointment of a receiver for June 9, 2021.
To avoid the costs associated with defending the State Court
Action, to prevent the Trustee's Sale of the Hotel, and to prevent
the loss of approximately $8.2 million in value that can and will
be used to, among other things, pay other financial obligations of
the Debtor, the Debtor filed its bankruptcy petition.
In 2017 and 2018, the previous management company that operated the
Hotel for the Debtor, American Hospitality Inc., failed to file
returns for, and pay, Arizona State transaction privilege taxes for
the Debtor, resulting in a tax liability to the State of Arizona in
excess of $1.2 million.
In February 2019, after discovering AHI's unauthorized failure to
file TPT returns and pay the TPT taxes, the Debtor removed AHI as
its hotel manager, and retained Ledgestone to manage the Hotel.
Ledgestone continues to manage the Hotel and has timely filed
returns for, and paid, all Arizona State TPT and other taxes.
In 2019, the Debtor entered into an agreement with the Arizona
Department of Revenue to make payments to ADOR of $45,000 per month
to reduce the delinquent TPT taxes.
Pursuant to a global workout with ADOR involving the Debtor and an
affiliated entity, these payments to ADOR were reduced to $22,500
per month.
Upon the onset of the COVID-19 pandemic, the Debtor and ADOR agreed
to reduce the monthly payments on the delinquent TPT taxes to
$4,000 per month. As of the Petition Date, the Debtor was current
on its reduced payment agreement with ADOR.
In addition to the Lender's Loan encumbering the Hotel, Maxim
Commercial Capital, LLC asserts a junior lien on the Hotel and on
the Debtor's personal property to secure an alleged equipment lease
financing arrangement.
Maxim asserts that the amount of the Maxim Claim is $1.2 million.
Maxim has filed a UCC1 financing statement with the Arizona
Secretary of State and has recorded a Deed of Trust in the Maricopa
County Recorder's Office with respect to this alleged obligation.
Maxim asserts that other entities affiliated with the Debtor --
i.e., Khangura Development, LLC, Optima Lodging, LLC and Crestwood
Hospitality, LLC -- are obligated to pay the Maxim Claim.
The Debtor disputes the propriety and amount of Maxim's Claim and
alleged liens.
The Debtor also obtained Paycheck Protection Program loans in the
amounts of approximately $140,455.47 from CIT Bank and $231,018
from Canyon Community Bank, respectively, and an Economic Injury
Disaster Loan from the Small Business Administration in the amount
of $150,000.
The Debtor used the PPP loan funds as required by the PPP. The
first PPP loan from CIT Bank has already been forgiven and the
Debtor is in the process of seeking forgiveness on the second PPP
loan from Canyon.
The Debtor has used all of the EIDL loan funds. In connection with
the EIDL, the SBA asserts a lien on the Debtor's personal property
and has filed a UCC-1 Financing Statement with respect to such
asserted lien.
HHC asserts the Debtor was delinquent on certain fees and other
amounts alleged to be due under the Franchise Agreement at the time
of its termination. Specifically, HHC asserts that the Debtor is
obligated to HHC in the amount of approximately $209,656.
The Debtor disputes this asserted liability to HHC.
The total amount of asserted secured claims encumbering the Hotel
as of the Petition Date is approximately $10,500,000 (approximately
$9,300,000 asserted by the Lender and approximately $1,200,000
asserted by Maxim).
The Debtor estimates that all remaining claims against the Debtor,
including the ADOR claims, HHC's asserted claims, EIDL and PPP
loans, FF&E loans, and vendor and other debts is less than
$2,500,000.
Consequently, the value of the Hotel, based on the Purchase Price,
exceeds the amount of all asserted claims against the Debtor's
estate by at least approximately $4,500,000.
The Debtor asserts that the Lender is adequately protected by the
equity cushion. Other secured creditors are equally protected by
the equity cushion above their secured claims. The value of the
Hotel exceeds the sum of all asserted secured claims by
approximately $7,000,000.
As further adequate protection, in the event that the Secured
Creditors are determined to have a lien on cash collateral, the
Debtor is willing to grant the Secured Creditors a replacement lien
on their collateral, to the same extent, and with the same validity
and priority, as held on the Petition Date.
A copy of the motion and the Debtor's budget is available for free
at https://bit.ly/3z4SHge from PacerMonitor.com.
The Debtor projects total revenue of $1,364,965 and total
departmental expenses of $354,676 from May to September.
About Woodbridge Hospitality, LLC
Woodbridge Hospitality, L.L.C., operates the Suites on Scottsdale.
It filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 21-04096)
on May 26, 2021.
In the petition signed by Sukhbinder Khangura, manager, the Debtor
disclosed up to $50 million in both assets and liabilities. Judge
Paul Sala oversees the case.
Sacks Tierney P.A. is the Debtor's counsel.
Wilmington Trust, National Association, as Trustee, for the benefit
of the holders of COMM 2015-CCRE26 Mortgage Trust Commercial
Mortgage Pass-Through Certificates, as senior asserted Lender, is
represented by:
Brian C. Lake, Esq.
David Neff, Esq.
Bradley A. Cosman, Esq.
PERKINS COIE LLP
2901 N. Central Avenue, Suite 2000
Phoenix, AZ 85012
Email: Blake@perkinscoie.com
DNeff@perkinscoie.com
BCosman@perkinscoie.com
Canyon Community Bank, as lender, is represented by:
Michael McGrath, Esq.
MESCH CLARK ROTHCHILD
259 N. Meyer Avenue
Tucson, AZ 85701
E-mail: mmcgrath@mcrazlaw.com
Maxim Commercial Capital LLC, as lender, is represented by:
John G. Sinodis, Esq.
James L. Ugalde, Esq.
JENNINGS HAUGH CUNNINGHAM
2800 N. Central Avenue, Suite 1800
Phoenix, AZ 85004
E-mail: JGS@JHC.law
JLU@JHC.law
WOODBRIDGE HOSPITALITY: Wilmington Trust Seeks to Bar Cash Access
-----------------------------------------------------------------
Wilmington Trust, National Association, as Trustee, for the benefit
of the holders of COMM 2015-CCRE26 Mortgage Trust Commercial
Mortgage PassThrough Certificates, asks the Bankruptcy Court to
prohibit Woodbridge Hospitality, LLC from using cash collateral.
On April 23, 2021, the Lender filed a complaint seeking the
appointment of a receiver for the Debtor's Property, formerly known
as the Homewood Suites by Hilton hotel and the Suites on
Scottsdale, located at 9880 N. Scottsdale Road in Scottsdale,
Arizona, on account of the Debtor's alleged breach under the Loan
Documents that the Debtor contracted prepetition with the Lender.
The Lender complained that the Debtor failed to deposit into
designated accounts, amounts earmarked for tax, insurance, capital,
and seasonal working capital, with respect to the hotel, as
required under the Loan Agreement. As a result, the Debtor owed
these amounts:
* $117,293 for the required deposits for taxes due from May
2020 up to and including April 2021;
* at least $51,484 for the required deposits for insurance due
from May 2020 up to and including April 2021;
* at least $165,096 for the required deposits into the
Capital/FF&E Reserve Subaccount from May 2020 up to and including
April 2021;
* at least $269,780 for the required deposits into the Seasonal
Working Capital Reserve Subaccount from October 2020 up to and
including April 2021.
The Debtor, according to the Lender, is also in breach under the
Loan Agreement for having incurred a junior-secured debt against
the Property with (i) Maxim Commercial Capital, LLC; and with (ii)
the Small Business Administration on account of the COVID-19
Economic Injury Disaster Loan.
The Lender says the Debtor's conduct, actions and inactions caused
a default under the Hilton Franchise Agreement, as a result of
which, Hilton terminated or canceled the Franchise Agreement for
the Property around the end of 2020. Moreover, the Lender
discloses that the Arizona Department of Revenue (AZDOR) filed a
proof of claim in the Debtor's Chapter 11 case for $1,065,748 for
unpaid sales taxes relating to the operations at the Property. The
Lender asserts that each of these circumstances constitute an event
of default on the part of the Debtor, and a breach under the Loan
Agreement.
On July 24, 2020, the Lender's counsel delivered to the Debtor a
demand letter (i) providing formal notice to the Debtor of certain
of its defaults under the Loan Documents; (ii) informing the Debtor
that the Loan had been accelerated and that all amounts due under
the Loan Documents were due and payable and bearing interest at the
default rate; and (iii) reserving the Lender's right to exercise
its remedies under the Loan Documents.
On May 13, 2021, the Debtor signed a Subcontract Agreement in
Support of Department of Homeland Security (DHS), Immigration and
Customs Enforcement (ICE) and Emergency Family Staging Centers
(EFCS). Pursuant to the ICE/DHS Contract, the Debtor's hotel
facility will be used as a detention center for immigrant families
being held in ICE custody who are awaiting deportation, continued
custody, or release determinations by ICE, DHS or the Department of
Justice from May 23, 2021 through September 30, 2021, and possibly
longer.
On May 24, 2021, the Lender filed a Verified First Amended
Complaint addressing the new issues related to the ICE/DHS
Contract, and concurrently filed an Application for a TRO to
prevent the Debtor and its agents from moving forward with any
performance of the ICE/DHS Contract.
On May 26, 2021, one hour before the hearing on the TRO, the Debtor
filed for Chapter 11 of the Bankruptcy Code, staying the state
court litigation.
On May 27, 2021, the Lender filed a notice of non-consent of use of
cash collateral with the Bankruptcy Court. The Lender said that as
of June 1, 2021, the Debtor still has not filed a motion to use
cash collateral.
For these reasons, the Lender asserts that the Court should deny
the Debtor's request to use the Lender's cash collateral, and that
in the absence of an offer by the Debtor and solid proof of
adequate protection to the Lender to compensate it for the
substantial loss in value of its collateral, the Court cannot
permit the Debtor to use cash collateral.
A copy of the motion is available for free at
https://bit.ly/3fT8irI from PacerMonitor.com.
Counsel to Wilmington Trust, National Association, as Trustee, for
the benefit of the holders of COMM 2015-CCRE26 Mortgage Trust
Commercial Mortgage PassThrough Certificates:
David M. Neff, Esq.
Bradley A. Cosman, Esq.
Kathleen A. Allare, Esq.
PERKINS COIE LLP
2901 North Central Avenue, Ste. No. 2000
Phoenix, AZ 85012-2788
Telephone: (602) 351-8000
Email: DNeff@perkinscoie.com
BCosman@perkinscoie.com
KAllare@perkinscoie.com
About Woodbridge Hospitality, LLC
Woodbridge Hospitality, L.L.C., operates the Suites on Scottsdale.
It filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 21-04096)
on May 26, 2021.
In the petition signed by Sukhbinder Khangura, manager, the Debtor
disclosed up to $50 million in both assets and liabilities.
Judge Paul Sala oversees the case. Sacks Tierney P.A. is the
Debtor's counsel.
Wilmington Trust, National Association, as Trustee, for the benefit
of the holders of COMM 2015-CCRE26 Mortgage Trust Commercial
Mortgage Pass-Through Certificates, as senior asserted Lender, is
represented by Perkins Coie LLP.
Canyon Community Bank, as lender, is represented by Mesch Clark
Rothchild.
Maxim Commercial Capital LLC, as lender, is represented by Jennings
Haugh Cunningham.
ZEFNIK LLC: Voluntary Chapter 11 Case Summary
---------------------------------------------
Debtor: Zefnik, LLC
101 South Street
Rochester, MI 48307
Business Description: Zefnik, LLC is a Single Asset Real Estate
debtor (as defined in 11 U.S.C. Section
101(51B)).
Chapter 11 Petition Date: June 7, 2021
Court: United States Bankruptcy Court
Eastern District of Michigan
Case No.: 21-44889
Debtor's Counsel: Yuliy Osipov, Esq.
OSIPOV BIGELMAN, P.C.
20700 Civic Center Drive, Suite 420
Southfield, MI 48076
Tel: 248-663-1800
Email: yo@osbig.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Zef Nikprelaj, authorized
representative.
The Debtor stated it has no creditors holding unsecured claims.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/PJOLMKI/Zefnik_LLC__miebke-21-44889__0001.0.pdf?mcid=tGE4TAMA
ZIG ZAG DOUGH: May Use Cash Collateral on Interim Basis
-------------------------------------------------------
Judge Brenda T. Rhoades authorized Zig Zag Dough, LLC to use the
cash collateral and proceeds thereof, on an interim basis, pursuant
to the approved budget.
As adequate protection, the U.S. Small Business Association, which
asserts a lien on the cash collateral, is granted replacement liens
in the same amount, extent and validity as those liens existing
pre-petition, to the extent of any diminution in value of the SBA's
interest in such cash collateral as a result of the Debtor's use
thereof.
A copy of the order is available for free at https://bit.ly/3uXqQvc
from PacerMonitor.com.
A final hearing on the motion is set for June 16, 2021 at 10 a.m.
About Zig Zag Dough, LLC
Zig Zag Dough, LLC owns and operates a Mellow Mushroom franchise
pizzeria and bar located at 3455 Blue Bonnet Cir., Fort Worth,
Texas. The store serves dine-in and takeout food and alcohol. The
Debtor sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. E.D. Tex. Case No. 21-40798) on May 28, 2021. In the
petition signed by Kimberly Slawson, managing member, the Debtor
disclosed up to $1 million in assets and up to $10 million in
liabilities.
Quilling, Selander, Lownds, Winslett & Moser, P.C. is the Debtor's
counsel.
[*] Commercial Chapter 11 Filings Decreased by 66% in May
---------------------------------------------------------
ABL Advisor reports that total commercial Chapter 11 filings in May
decreased 66 percent from the previous year, according to data
provided by Epiq, the American Bankruptcy Institute said.
Commercial Chapter 11 filings totaled 246 in May 2021, down from
the 725 commercial Chapter 11 filings in May 2020.
Total commercial filings decreased 31 percent in May, as the 1,787
filings were down from the 2,599 total commercial filings
registered in May 2020. The 34,760 total bankruptcy filings in May
2021 were down 13 percent from the 39,993 total filings in May
2020. Total consumer filings decreased 12 percent in May 2021, as
the 32,973 filings fell from the 37,394 consumer filings registered
in May 2020.
"Continued stabilization efforts by the federal government,
forbearance by lenders and sustained low interest rates have helped
keep many businesses and households afloat during the crisis," said
ABI Executive Director Amy Quackenboss. "As the pandemic relief
runs its course, however, mounting financial challenges may result
in more households and companies seeking the shelter of
bankruptcy."
A separate analysis on ABI's SBRA Resources webpage showed that the
2,000th case was filed in May under the new subchapter V of chapter
11 of the Bankruptcy Code, established by the Small Business
Reorganization Act of 2019 (SBRA). The SBRA went into effect on
Feb. 19, 2020, to provide Main Street business debtors with a more
streamlined path for restructuring their debts. The CARES Act was
subsequently enacted on March 27, 2020, which increased the
eligibility limit for small businesses looking to file under the
SBRA's subchapter V from $2,725,625 of debt to $7,500,000. The
threshold was originally scheduled to return to $2,725,625 after
one year, but was extended to 2022 with the enactment of the
COVID-19 Bankruptcy Relief Extension Act on March 27, 2021.
May’s commercial Chapter 11 filings represented a 14 percent
decrease from the 287 filings in April 2021. Total commercial
filings were also down 14 percent from the April 2021 commercial
filing total of 2,083. Total bankruptcy filings in May represented
a 15 percent decrease from the 40,913 total filings recorded the
previous month. Total noncommercial filings for May also
represented a 15 percent decrease from the April 2021 noncommercial
filing total of 38,830.
The average nationwide per capita bankruptcy filing rate in May
2021 was 1.41 (total filings per 1,000 per population), a slight
decrease from the 1.43 filing rate during the first four months of
2021. Average total filings per day in May 2021 were 1,738, a 13
percent decrease from the 2,000 total daily filings in May 2020.
States with the highest per capita filing rates (total filings per
1,000 population) in May 2021 were:
Alabama (3.20)
Nevada (2.93)
Tennessee (2.55)
Delaware (2.40)
Indiana (2.29)
*********
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
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Copyright 2021. All rights reserved. ISSN: 1520-9474.
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