/raid1/www/Hosts/bankrupt/TCR_Public/210827.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, August 27, 2021, Vol. 25, No. 238
Headlines
4-K HOUSING: S&P Lowers 2017A-1/2 Revenue Bonds Rating to 'B+(sf)'
5505 5TH AVENUE: Remote Public Auction Set for Sept. 1
7Four on Stone: Gets OK to Employ Craig Elggren as Accountant
801 ASBURY AVENUE: Expects Sale Plan to Pay 100% to Unsecureds
893 4TH AVENUE: Seeks Hire Vincent Lentini as Bankruptcy Attorney
ADTALEM GLOBAL: S&P Downgrades ICR to 'BB-', Off CreditWatch
ADVANCED CONTAINER: Incurs $297K Net Loss in Second Quarter
AEMETIS INC: Amends $300M Sales Agreement With H.C. Wainwright
AERKOMM INC: Incurs $1.5 Million Net Loss in Second Quarter
AIKIDO PHARMA: Receives Noncompliance Notice from Nasdaq
AIR FLIGHT: Wins Cash Collateral Access Thru Nov 18
ALL IN JETS: $650K Equity from Air Charter to Fund Plan
ALL WHEEL DRIVE: Wins Cash Collateral Access Thru Oct 31
ALLEGHENY TECHNOLOGIES: Egan-Jones Keeps B- Sr. Unsecured Ratings
ALLIANCE DATA: Egan-Jones Keeps B Senior Unsecured Ratings
ALPHA LATAM: Proposes Oct. 28 Auction of Assets
AMMA421 LLC: Seeks Approval to Hire Klestadt as Legal Counsel
ANDINA GOLD: Incurs $2.6 Million Net Loss in Second Quarter
ANNALY CAPITAL: Egan-Jones Hikes Senior Unsecured Ratings to B
APPLOVIN CORP: S&P Alters Outlook to Positive, Affirms 'B+' ICR
ARCLINE FM: Target Transaction No Impact on Moody's B3 CFR
BARENZ INVESTMENTS: Unsec. Creditors to be Paid in Full in 5 Years
BASIC ENERGY: 341(a) Meeting Set for Sept. 13
BEZH SERVICES: Affiliate Seeks to Hire START Real Estate as Broker
BIOMARIN PHARMACEUTICAL: Egan-Jones Cuts Sr. Unsec. Ratings to BB-
BIONICA INC: Case Summary & 20 Largest Unsecured Creditors
BIOXXEL LLC: Seeks to Hire Best Best & Krieger as Special Counsel
BOUCHARD TRANSPORTATION: Solicitation Period Extended Thru Sept. 13
BOUCHARD TRANSPORTATION: Wells Fargo Contributes $15M to Fund Plan
BOY SCOUTS OF AMERICA: Methodist Churches to Cut Ties
BRIDGEPORT HEALTH: Seeks to Hire Zeisler & Zeisler as Legal Counsel
BROOKLYN IMMUNOTHERAPEUTICS: Adjourns Annual Meeting to Sept. 3
CAMBIUM LEARNING: Moody's Withdraws B3 CFR on Debt Repayment
CARPENTER TECHNOLOGY: Egan-Jones Keeps BB- Sr. Unsecured Ratings
CCMW LLC: Seeks to Employ Debra Brower as Accountant
CINCINNATI BELL: Egan-Jones Keeps B- Senior Unsecured Ratings
CITRIX SYSTEMS: Egan-Jones Keeps BB+ Senior Unsecured Ratings
COEUR MINING: Egan-Jones Lowers Senior Unsecured Ratings to BB-
CONTINENTAL RESOURCES: Egan-Jones Hikes Sr. Unsecured Ratings to BB
CORSAIR-USA-NJ: Seeks to Hire Hampton as Real Estate Broker
COVANTA HOLDING: Moody's Affirms Ba3 CFR Following EQT Transaction
COVANTA HOLDING: S&P Alters Outlook to Pos., Affirms 'B+' ICR
CRAVE BRANDS: Wins Cash Collateral Access Thru Sept 15
CYTODYN INC: Provides Rosenbaum/Patterson Group Litigation Update
DANA INC: Egan-Jones Lowers Senior Unsecured Ratings to BB-
DILLARDS INC: Fitch Raises LT IDR to 'BB+', Outlook Positive
EASTSIDE DISTILLING: All Proposals Passed at Annual Meeting
ELWYN INC: S&P Affirms 'BB' Long-Term Rating on 2017 Bonds
ENDO INTERNATIONAL: S&P Places 'B-' ICR on CreditWatch Negative
EQT CORP: Egan-Jones Keeps B- Senior Unsecured Ratings
EQUESTRIAN EVENTS: Unsecureds to Get $728 Per Month for 24 Months
ETHEMA HEALTH: Delays Filing of Second Quarter Form 10-Q
ETHEMA HEALTH: Incurs $2.6 Million Net Loss in Second Quarter
EXACTUS INC: Posts $125K Net Income in Second Quarter
FIRSTENERGY CORP: Egan-Jones Keeps BB Senior Unsecured Ratings
FIRSTENERGY CORP: Fitch Alters Outlook on 'BB+' LT IDR to Stable
FISERV INC: Egan-Jones Keeps BB+ Senior Unsecured Ratings
GBT TECHNOLOGIES: Extends Maturity of Iliad Note Until Dec. 31
GBT TECHNOLOGIES: Incurs $27.1 Million Net Loss in Second Quarter
GEORGE WASHINGTON BRIDGE: Court Okays $26.5 Million Bankruptcy Sale
GEX MANAGEMENT: Incurs $182K Net Loss in Second Quarter
GIRARDI & KEESE: Erika Refuses to Give Up Rich Lifestyle
GREATER WORKS: Seeks to Hire Brooks, McGinnis & Co. as Accountant
GROM SOCIAL: Incurs $2.5 Million Net Loss in Second Quarter
GROWLIFE INC: Incurs $909K Net Loss in Second Quarter
H-CYTE INC: Incurs $2.1 Million Net Loss in Second Quarter
HARBOUR COMMUNITY: U.S. Trustee Unable to Appoint Committee
HARI 108: Wins Cash Collateral Access on Final Basis
HESS CORPORATION: Egan-Jones Keeps B+ Senior Unsecured Ratings
HEXCEL CORPORATION: Egan-Jones Keeps B- Senior Unsecured Ratings
HILL-ROM HOLDINGS: Egan-Jones Keeps BB+ Senior Unsecured Ratings
HOSPEDERIA VILLA: Wins Cash Collateral Access Thru Aug 31
IMAGEWARE SYSTEMS: Posts $11.3 Million Net Income in Second Quarter
INOVALON HOLDINGS: S&P Places 'B+' ICR on CreditWatch Negative
INTERNATIONAL LAND: Incurs $1.97-Mil. Net Loss in Second Quarter
INTRADO CORP: Fitch Lowers LongTerm IDR to 'B-', Outlook Stable
JOHNSON & JOHNSON: Purdue Pharma Legal Spats Give Ch.11 Options
JTF LLC: Seeks to Hire Tydings & Rosenberg as Legal Counsel
KAR AUCTION: CARWAVE Transaction No Impact on Moody's B2 CFR
LAS VEGAS SANDS: Egan-Jones Keeps BB- Senior Unsecured Ratings
LECLAIRRYAN PLLC: Trustee Aims at Co-Founder in UnitedLex Lawsuit
LOBLAW COMPANIES: Egan-Jones Keeps BB+ Senior Unsecured Ratings
MACY INC: Fitch Raises LongTerm IDRs to 'BB+', Outlook Stable
MALLINCKRODT PLC: Ending Injunctions Puts Chapter 11 at Risk
MARY BRICKELL: Wins Cash Collateral Access Thru Oct 31
MEDALLION GATHERING: S&P Upgrades ICR to 'B' on Refinancing
MUSCLE MAKER: Paul Menchik to Join Audit Committee
MY FL MANAGEMENT: Set to Exit from Ch. 11 After Creditor Settlement
MY FL MANAGEMENT: Wins Cash Collateral Access Thru Aug 31
N.G. PURVIS: Seeks Approval to Hire David Lawhon as Appraiser
NATIONAL FINANCIAL: U.S. Trustee Unable to Appoint Committee
NORTHWEST BIOTHERAPEUTICS: Posts $4.4M Net Income in 2nd Quarter
OLIN CORP: S&P Ups ICR to 'BB+' on Debt Repayment, Outlook Stable
OWENS & MINOR: Egan-Jones Keeps B+ Senior Unsecured Ratings
OWENS CORNING: Egan-Jones Keeps BB+ Senior Unsecured Ratings
PELCO STRUCTURAL: Wins Interim Cash Collateral Access Thru Oct 31
PIONEER NATURAL: Egan-Jones Hikes Senior Unsecured Ratings to BB+
PITNEY BOWES: Egan-Jones Keeps B- Senior Unsecured Ratings
POLYCONCEPT NORTH: Moody's Alters Outlook on B3 CFR to Stable
PRECISION CASTPARTS: Egan-Jones Keeps B- Senior Unsecured Ratings
PURDUE PHARMA: Court Schedules to Rule Opioid Settlement Oct. 27
QUANTUM CORP: Appoints John Hurley as Chief Revenue Officer
QUANTUM CORP: Incurs $4.2 Million Net Loss in First Quarter
R.A. BORRUSO: Further Fine-Tunes Plan Documents
REMARK HOLDINGS: Stockholders Elect Five Directors
RESOLUTE FOREST: Egan-Jones Hikes Senior Unsecured Ratings to BB+
RESTIERI HEALTHCARE: Wins Cash Collateral Access Thru Sept 21
RHCSC ROME AL: Case Summary & 30 Largest Unsecured Creditors
ROYAL CARIBBEAN: Egan-Jones Keeps B- Senior Unsecured Ratings
RTECH FABRICATIONS: Unsecureds to Recover 80% to 100% in 60 Months
SAVI TECHNOLOGY: Opts to Close Commercial Software Business
SAVI TECHNOLOGY: Wins Access to Cash Collateral
SBW PROPERTIES: Reorganization Plan Has Sept. 28 Hearing
SEIN DIVINE: Seeks to Employ Essex Richards as Bankruptcy Counsel
SERVICE CORPORATION: Egan-Jones Keeps BB+ Senior Unsecured Ratings
SHOOTING SPORTS: Bankr. Administrator Unable to Appoint Committee
SILGAN HOLDINGS: Egan-Jones Keeps BB Senior Unsecured Ratings
SMG INDUSTRIES: Incurs $319,624 Net Loss in Second Quarter
SOTO'S AUTO & TRUCK: Seeks to Hire Stichter as Legal Counsel
SOUTHEAST SUPPLY: Moody's Lowers CFR & Sr. Unsecured Debt to Ba2
SPINEGUARD INC: Exits Chapter 11; Plan Takes Effect
SPIRIT AIRLINES: Fitch Alters Outlook on 'BB-' LT IDR to Stable
STONEWAY CAPITAL: Seeks to Hire RSM Canada as Tax Services Provider
SUNCOR ENERGY: Egan-Jones Keeps BB+ Senior Unsecured Ratings
SUSGLOBAL ENERGY: Unit Closes Purchase of Hamilton Facility
TAKATA CORP: Defective Airbag Claims Process Ongoing
TAURIGA SCIENCES: Incurs $832K Net Loss in First Quarter
TOPPS COMPANY: Moody's Cuts CFR & 1st Lien Credit Facilities to B2
U.S. TOBACCO: Seeks to Hire McGuireWoods LLP as Special Counsel
UNITED AIRLINES: S&P Alters Outlook to Stable, Affirms 'B+' ICR
UNITED RENTALS: Egan-Jones Keeps BB- Senior Unsecured Ratings
VALERO ENERGY: Egan-Jones Keeps BB Senior Unsecured Ratings
WASATCH CO: Seeks to Hire Leslie Cohen Law as Bankruptcy Counsel
WASHINGTON PRIME: Pachulski Stang Represents Shareholders
WASHINGTON PRIME: Reaches Settlement with Plan Sponsor & OEC
WASHINGTON PRIME: Taps Kroll LLC to Perform Valuation Services
WC SOUTH CONGRESS: $42MM DIP Loan, Cash Collateral Access OK'd
WIRTA HOTELS: Taps Colliers International as Appraiser
YUM! BRANDS: Egan-Jones Keeps B+ Senior Unsecured Ratings
ZAYAT STABLES: Company Must Hand Over Docs to Ch. 7 Trustee
[*] COVID-19 Triggered Increase in Energy Sector Bankruptcies
[^] BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
*********
4-K HOUSING: S&P Lowers 2017A-1/2 Revenue Bonds Rating to 'B+(sf)'
------------------------------------------------------------------
S&P Global Ratings lowered its long-term ratings on New Hope
Cultural Education Facilities Finance Corp., Texas' senior living
revenue bonds (4-K Housing Inc.--Stoney Brook Project) series
2017A-1 and A-2 (class I, $30.2 million outstanding) to 'B+' (sf)
from 'BB-' (sf), mezzanine series 2017B (class II, $16.7 million
outstanding) bonds to 'B' (sf) from 'B+' (sf), and junior series
2017C (class III, $2.7 million outstanding) bonds to 'B-' (sf) from
'B' (sf). The outlook is negative.
In April 2017, bond proceeds were used to acquire a pool of three
senior rental properties, branded as Stoney Brook (in Belton,
Copperas Cove, and Hewitt), consisting of 221 units. The borrower
is 4-K Housing Inc., an affiliate of The Emmaus Calling Inc.
(TEC).
"The rating action follows further declining coverage in 2020, and
a second default within TEC's portfolio, leaving three projects
that S&P Global Ratings now rates," said S&P Global Ratings credit
analyst Adam Torres.
The ratings on all bond tiers reflect our opinion of the
project's:
-- Coverage and liquidity that we consider very weak for all bond
classes, including the lack of a debt service reserve for the class
I bonds and debt service coverage (DSC) below 1x for classes II and
III;
-- Very weak management and governance assessment of the project
owner and associated parties, due to a second default within TEC's
portfolio, having followed turnover in both asset manager and
property manager roles in 2019; and
-- Weak market position, as evidenced by adequate occupancy, that,
while somewhat improved as of June 2021, still has risk due to
ongoing COVID-19 pandemic challenges.
S&P said, "We have analyzed the project's environmental, social,
and governance risks relative to its coverage and liquidity,
management and governance, and market position. Our rating action
incorporates our view regarding the health and safety risks posed
by the COVID-19 pandemic, which have affected all affordable
housing developments. Specifically, the risk of increasing expenses
and decreases in rental revenue related to the social risks of the
pandemic have been evaluated in our rating. We view the obligor's
governance risk to be higher than average compared with the sector,
based on its lack of risk mitigation policies and strategic plans,
which leaves the projects vulnerable to operational volatility.
Environmental risks are in line with those of the sector, as there
are no elevated environmental threats present in the area in which
the project is located.
"We could lower the ratings further should occupancy prove
unstable, leading to significant deterioration from the DSC ranges
indicated for the end of fiscal 2020.
"We could revise the outlook to stable should occupancy rates
improve through 2021, leading to coverage and liquidity that we
consider to be stable."
5505 5TH AVENUE: Remote Public Auction Set for Sept. 1
------------------------------------------------------
Pursuant to the orders of the Hon. Elizabeth S. Stong dated Nov.
10, 2020, the real property located at the commonly known as 4811
5th Avenue, Brooklyn, New York 11220 (Block 775, Lot 4), 5505 5th
Avenue, Brooklyn, New York 11220 (Block 832, Lot 7) and 5507 5th
Avenue, Brooklyn, New York 11220 (Block 832, Lot 6) is to be sold
at public auction on Sept. 1, 2021, at 2:00 p.m. (EST) by remote
auction via Cisco Webex Remote Meeting, Meeting Link:
https://bit.ly/5thAveBKUCC (Case Sensitive) Meeting number:
182-321-7396, Password: SunsetAuc (78573828 from phones and video
systems) or by phone +1-415-655-0001 US Toll US Toll Access Code:
182-321-7396.
5th Avenue Mixed Use LLC ("Plan Proponent" or "Lender") reserves
the right to adjourn the sale from time to time. The sale will be
conducted by:
William Mannion
Mannion Auctions LLC
Tel: (212) 267-6698
Email: wmannion@jpandr.com
Interested parties who intend to bid on the collateral must contact
the lender's counsel:
Jaspan Schlesinger LLP
Attn: Christopher D. Palmieri, Esq.
Tel: (516) 393-8221
Email: cpalmieri@jaspanllp.com
- or -
Rosewood Realty Group
Plan proponent's marketing agent
Attn: Gregory Corbin
Tel: (212) 359-9904
Email: greg@rosewoodrg.com
7Four on Stone: Gets OK to Employ Craig Elggren as Accountant
-------------------------------------------------------------
7Four on Stone Apartments, LLC received approval from the U.S.
Bankruptcy Court for the District of Arizona to hire Craig Elggren,
an Arizona-based certified public accountant.
The Debtor needs an accountant to assist in the preparation of its
monthly operating reports and to help with general accounting
matters during the pendency of its Chapter 11 case, including
general ledger management, preparation of financial documents, and
cash management.
Mr. Elggren will be paid at an hourly rate of $215.
In a court filing, Mr. Elggren disclosed that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
Mr. Elggren can be reached at:
Craig Elggren, CPA
Craig Elggren, CPA, P.C.
1467 W. Elliot Rd. Suite 102
Gilbert, AZ 85233
Tel.: (480) 464-0205
Fax: (480) 464-4674
Email: craig@clecpa.com
About 7Four on Stone Apartments
7Four on Stone Apartments, LLC, a Scottsdale, Ariz.-based company
engaged in activities related to real estate, filed a petition for
Chapter 11 protection (Bankr. D. Ariz. Case No. 21-05717) on July
26, 2021, listing as much as $10 million in both assets and
liabilities. Albert Brown, the Debtor's managing member, signed
the petition.
Judge Scott H. Gan oversees the case.
The Debtor tapped May, Potenza, Baran & Gillespie, PC as legal
counsel and Craig Elggren, CPA, as accountant.
801 ASBURY AVENUE: Expects Sale Plan to Pay 100% to Unsecureds
--------------------------------------------------------------
801 Asbury Avenue, LLC and 176 Route 50, LLC filed with the U.S.
Bankruptcy Court for the District of New Jersey an Original
Disclosure Statement describing Chapter 11 Plan dated August 24,
2021.
801 Asbury Avenue, LLC, acquired the property and improvements
known as 801 Asbury Avenue in 2019. It was forced to file its
bankruptcy petition as a result of insufficient income and reduced
cash flow due to various factors, but, most notably, the COVID-19
pandemic. The Debtor lost, and was unable to replace tenants,
creating an inability to service their debt obligations and forcing
them to operate at a cash flow deficit.
This is a combined Plan of Reorganization and Liquidation. In other
words, 801 Asbury Avenue seeks to accomplish payments under the
Plan by operating its business while it continues to market and
ultimately sell its real property.
The Plan will treat claims as follows:
* Class 1 consists of the First Mortgage Secured Claim of KMP.
From and after the Effective Date, KMP shall (i) continue to
receive its portion of the Debtor's monthly adequate protection
payment totaling $3,340, plus an overage, if any, in accordance
with the Court approved cash collateral orders from the rent or
lease proceeds of the Property and (ii) after payment of normal and
customary Closing costs, receive payment in full of any Allowed
Claim from the proceeds of sale of the Property.
* Class 2 consists of the Second Mortgage Secured Claim of
NCM. From and after the Effective Date, NCM shall (i) continue to
receive its portion of the Debtor's monthly adequate protection
payment totaling $3,340, plus an overage, if any, in accordance
with the Court approved cash collateral orders from the rent or
lease proceeds of the and (ii) after payment of normal and
customary Closing costs, receive payment in full of any Allowed
Claim from the proceeds of sale of the Property.
* Class 3 consists of the Third Mortgage Secured Claim of NCM.
From and after the Effective Date, NCM shall (i) continue to
receive its portion of the Debtor's monthly adequate protection
payment totaling $3,340, plus an overage, if any, in accordance
with the Court approved cash collateral orders from the rent or
lease proceeds of the Property and (ii) after payment of normal and
customary Closing costs, receive payment in full of any Allowed
Claim from the proceeds of sale of the Property.
* Class 4 consists of 801 Asbury Associates, L.P. Judgment
Claim. After payment of normal and customary Closing costs, plus
the payment of all superior liens and claims, including the Secured
Claims of KCM and NCM, 801 Asbury Associates, L.P. shall receive
payment in full of any Allowed Claim from the proceeds of sale of
the Property at Closing.
* Class 5 consists of Unsecured Claims. After payment of
normal and customary Closing costs, plus the payment of all
superior liens and claims, including Secured, Administrative and
Priority Claims, Class 5 Unsecured Creditors shall receive payment
on account of any Allowed Claim from the proceeds of sale of the
Property within 30 days following the Closing on the Property.
Based upon the General Unsecured Claims scheduled by the Debtor and
the Unsecured Claims timely filed by Class 5 Creditors, as well as
the valuation of the Property, the Debtor estimates the percentage
distribution to Class 5 Allowed Claims to be 100% of Claims;
however, if following the payment of all superior liens and claims,
the remaining proceeds of sale are insufficient to pay Class 5
Allowed Claims in full, holders of such Claims shall receive a Pro
Rata distribution of the remaining sale proceeds.
* Class 6 consists of all Interests in the Debtor. As of the
Plan filing, the Debtor is aware of only the sole Interest Holder
with 100% of the membership interests in the Debtor: James
McCallion. On the Effective Date, all Interests in the Debtor shall
transfer and become Interests in the Reorganized Debtor for the
purpose of fulfilling the obligations of the Reorganized Debtor
under the Plan until the liquidation of the Debtor's remaining
Assets; the holder of Interests shall not receive any distributions
on account of such Interests, unless and until all Creditors are
paid in full in accordance with the Plan.
The Debtor shall continue to market the Property for sale free and
clear of liens, claims and encumbrances in accordance with the
applicable provisions of the Bankruptcy Code on Loop.net where the
Property is currently listed for $7.6 million. The Loop.net listing
has yielded multiple inquiries, visits/tours by interested
purchasers of the Property, a proffered letter of intent from a
real estate developer for the joint development of the Property,
and an anticipated letter of intent (on or before August 31, 2021)
from a second real estate developer for the purchase of the
Property. The Debtor shall fund the payment of all Property real
estate taxes, insurance and carry costs to the extent of the rental
income generated by the Property until the Closing.
If the Debtor fails to close on the Property on or before the
one-year anniversary of the Effective Date (or such later date as
consented to and approved in writing by NCM), the Debtor shall hire
a third-party commercial real estate auctioneer to conduct a public
auction of the Property free and clear of liens, claims and
encumbrances in accordance with the applicable provisions of the
Bankruptcy Code.
The Plan is designed to settle all of the existing debts of Debtor
by selling all of its assets. The provisions for claims in the Plan
are in full, complete and final satisfaction of all claims, known
or unknown, mature or unmatured, contingent, of every kind
whatsoever that can or could be asserted against the Debtor.
The Plan envisions the Debtor to fund the Plan through current
operations until the Property sale is complete. The Debtor has
reduced monthly expenditures and reorganized operations to be able
to operate until the Closing. It is anticipated that creditors will
receive more from the operations and fair market sale of the
Property than in a liquidation.
A full-text copy of the Disclosure Statement dated August 24, 2021,
is available at https://bit.ly/3sNsTlY from PacerMonitor.com at no
charge.
Counsel for Debtor:
ROBERT M. GREENBAUM (RG 2150)
SMITH KANE HOLMAN, LLC
112 Moores Road, Suite 300
Malvern, PA 19355
(610) 407-7215
About 801 Asbury Avenue
801 Asbury Avenue, LLC is a New Jersey limited liability
corporation which owns and operates commercial real property in
Ocean City.
801 Asbury Avenue, LLC along with affiliate 176 Route 50, LLC
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. D.N.J. Case No. 21-14401 and 21-14402) on May 26, 2021. In
the petition signed by James McCallion, sole member, 801 Asbury
disclosed up to $10 million in both assets and liabilities.
Judge Andrew B. Altenburg, Jr. oversees the jointly administered
cases.
David B. Smith, Esq. at Smith Kane Holman, LLC is the Debtors'
counsel.
893 4TH AVENUE: Seeks Hire Vincent Lentini as Bankruptcy Attorney
-----------------------------------------------------------------
893 4th Avenue Lofts, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of New York to employ Vincent
Lentini, Esq., an attorney practicing in Manhasset, N.Y., to handle
its Chapter 11 case.
Mr. Lentini's services include:
a. advising the Debtor with respect to its powers and duties
and the continued management of its property and business affairs;
b. representing the Debtor in the bankruptcy court and at all
hearings on matters pertaining to its affairs;
c. assisting the Debtor in the preparation and negotiation of
a plan of reorganization with its creditors;
d. preparing legal documents;
e. performing all other legal services.
Mr. Lentini will charge $600 per hour for his services. The
attorney received a retainer in the amount of $10,000.
In court papers, Mr. Lentini disclosed that he is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Mr. Lentini can be reached at:
Vincent M. Lentini, Esq.
1129 Northern Blvd. Ste. 404
Manhasset, NY 11030
Tel: (516) 228-3214
Cell: (516) 225-5214
Email: Vincentmlentini@gmail.com
About 893 4th Avenue Lofts
893 4th Avenue Lofts, LLC, owner of an apartment building in
Brooklyn, N.Y., filed a voluntary Chapter 11 petition (Bankr. E.D.
N.Y. Case No. 21-41467) on May 24, 2021, listing up to $50,000 in
assets and up to $10 million in liabilities. Judge Jil
Mazer-Marino oversees the case. Vincent M. Lentini, Esq., serves
as the Debtor's legal counsel.
ADTALEM GLOBAL: S&P Downgrades ICR to 'BB-', Off CreditWatch
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
for-profit education provider Adtalem Global Education Inc. to
'BB-' from 'BB' and removed all its ratings on the company from
CreditWatch with negative implications, where they were placed on
Sept. 16, 2020. S&P also affirmed its 'BB-' ratings on Adtalem's
$400 million revolver, $850 million term loan B, and $800 million
secured notes.
The stable outlook reflects S&P's expectation that Adtalem will
continue to benefit from high demand for healthcare professionals.
S&P expects low- to mid-single-digit-percent revenue growth and
realized synergies to result in leverage declining to the mid-3x
area in fiscal 2022.
The downgrade follows the Walden University acquisition and
Adtalem's elevated leverage. Adtalem's acquisition of Walden
University from Laureate Education Inc. closed on Aug. 12, 2021. As
a result, pro forma leverage is about 4.0x as of June 30, 2021, up
from 1.6x prior to the transaction. S&P said, "We expect the
company to deleverage through organic revenue growth, realization
of $60 million annual cost synergies, and good cash flow
generation. However, we expect leverage to remain elevated above
2.5x over the next 24 months. We forecast leverage to decline to
the mid-3x area in 2022 and high 2x in 2023." In addition, the
company announced that it is exploring strategic alternatives of
its financial services segment that may include a sale of the
business.
Adtalem's issuance of additional debt to fund the Walden University
acquisition could pressure the ability to meet financial
requirements imposed by the Department of Education (DOE). The
additional debt the company issued to fund the transaction could
make it increasingly challenging to remain compliant with the
financial responsibility requirements set forth by the DOE. While
the DOE has been widely favorable to for-profit schools under the
previous administration, any policy change could hinder for-profit
operators. For example, implementing the Borrower Defense Rule or a
reconsideration of the Gainful Employment standard could create
additional uncertainty and lead to new requirements for the
combined entity. Therefore, S&P believes Adtalem would need to use
most of its excess cash flow to pay down its debt to mitigate
concerns.
The acquisition of Walden University strengthens Adtalem's
portfolio and focus as a healthcare education provider. The
addition of Walden's primarily graduate programs to Adtalem's
existing portfolio will improve the combined company's growth
profile and scale in a vertical that is in growing demand. S&P
said, "In addition, due to the increased need for healthcare
professionals and optimized cost-sharing, we expect Adtalem's
EBITDA margins to improve, as online education comprises more of
the revenue base. As a result, we now view the company's
competitive position more favorably. The combination should also
allow for synergies based on shared advertising and marketing
spending and pooling of faculty and academic resources.
Nevertheless, we view the increased political risk and regulatory
risk due to higher dependence of Title IV funding as partially
offsetting some of the benefits of the merger. Additionally, we
believe the sale of the financial services segment will reduce the
company's revenue diversification."
S&P said, "We expect the company's financial policy to remain
conservative following the CEO transition and acquisition of
Walden. As Lisa Wardell transitions to the role of executive
chairman and Stephen Beard transitions to CEO, we do not expect a
significant change in the company's direction or financial policy.
Before the Walden acquisition, Adtalem's debt leverage was about
2x. We expect the company will maintain a similar financial policy
and low-leverage profile after the acquisition. Therefore, we
expect the company will use most of its internally generated cash
flow to reduce its debt. We expect minimal share repurchases or
other large debt-funded acquisitions until the company's S&P Global
Ratings-adjusted leverage declines to the low-3x area.
"The stable outlook reflects our expectation that Adtalem Global
Education will continue to benefit from the high demand for
healthcare professionals that will enable the company to generate
low- to-mid-single-digit-percent revenue growth. As a result, we
expect leverage to temporarily exceed 4x, then decline to the
mid-3x area in fiscal 2022. In addition, Adtalem will maintain
strong liquidity to provide flexibility to meet existing and
potential stricter regulatory requirements.
"We could lower the rating on Adtalem if it cannot successfully
integrate the Walden acquisition, possibly due to regulatory
concerns, jeopardizing the ability of either entity to access Title
IV funding. We could also lower the rating if Adtalem sustains
leverage above 4x, indicating a lack of debt pay-down or EBITDA
deterioration.
"We could raise the rating if the company can demonstrate prudent
capital management, resulting in leverage decreasing and sustained
below 3x over the 12 months after the acquisition closes. An
upgrade would also entail a decline in the overall percentage of
Title IV revenue from current levels, indicating Adtalem's success
in diversifying revenue sources."
ADVANCED CONTAINER: Incurs $297K Net Loss in Second Quarter
-----------------------------------------------------------
Advanced Container Technologies, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $297,412 on $758,572 of sales for the three months
ended June 30, 2021, compared to a net loss of $256,930 on $293,040
of sales for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $594,385 on $2.63 million of sales compared to a net loss
of $590,322 on $849,169 of sales for the same period during the
prior year.
As of June 30, 2021, the Company had $4.41 million in total assets,
$2.23 million in total liabilities, and $2.18 million in total
stockholders' equity.
The Company stated, "The Company needs a substantial amount of
additional capital to fund its business, including expansion of its
operations, and for repayment of its debts. No assurance can be
given that any additional capital can be obtained or, if obtained,
will be adequate to meet its needs. If adequate capital cannot be
obtained on a timely basis and on satisfactory terms, the Company's
operations could be materially negatively impacted it may need to
take certain measures to remain a going concern, or it could be
forced to terminate operating.
To mitigate losses during the Covid-19 pandemic and the ensuing
recovery period, the Company terminated serveral of the 18
employees that it had in early 2020, such that it now has 8
employees, including officers, which it believes is the minimum
necessary to maintain its operations. The Company's chief
executive officer has waived current payment of his salary since
June 1, 2020; however, the Company is accruing it and is obligated
to pay the deferred amount, which was $178,750 as of June 30, 2021,
at some future time. In addition, the Company is deferring employer
payroll taxes, as permitted by the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act"). The Company does not
intend to restore its staffing to pre-pandemic levels, although it
may add personnel depending on demand for GrowPods and related
products. The Company is also purchasing fewer Medtainers than
required under the production contract with their manufacturer;
while doing so has enabled the Company to preserve cash by reducing
expenses, it also has subjected it to claims for breach of that
agreement."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1096950/000172186821000527/f2sactx10q082021.htm
About Advanced Container
Corona, Calif.-based Advanced Container Technologies, Inc.
--www.advancedcontainertechnologies.com -- markets and sells two
principal products: (i) GrowPods, which are specially modified
insulated shipping containers manufactured by GP Solutions, Inc.,
in which plants, herbs and spices may be grown hydroponically in a
controlled environment and (ii) Medtainers, which may be used to
store pharmaceuticals, herbs, teas and other solids or liquids and
can grind solids and shred herbs.
Advanced Container reported a net loss of $579,031 for the year
ended Dec. 31, 2020, compared to a net loss of $1.41 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$4.33 million in total assets, $2.44 million in total liabilities,
and $1.89 million in total stockholders' equity.
Irvine, California-based Haskell & White LLP, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated April 15, 2021, citing that the Company has a working capital
deficit, continued operating losses since inception, and has notes
payable that are currently in default. These matters raise
substantial doubt about the Company's ability to continue as a
going concern.
AEMETIS INC: Amends $300M Sales Agreement With H.C. Wainwright
--------------------------------------------------------------
Aemetis, Inc. entered into a letter agreement amending that certain
At Market Issuance Sales Agreement with H.C. Wainwright & Co., LLC.
In accordance with the terms of the agreement, Aemetis may offer
and sell from time to time through H.C. Wainwright its common stock
having an aggregate offering price of up to $300 million. The
shares will be issued pursuant to Aemetis' shelf registration
statement on Form S-3 (Registration No. 333-258322). Aemetis filed
a prospectus supplement dated Aug. 18, 2021, with the Securities
and Exchange Commission in connection with the offer and sale of
the shares.
Sales of the shares, if any, will be made by means of ordinary
brokers' transactions on the NASDAQ Stock Market at market prices,
in block transactions or as otherwise agreed by Aemetis and H.C.
Wainwright. The company shall pay to H.C. Wainwright in cash, upon
each sale of shares pursuant to the agreement, an amount up to 3.0%
of the gross proceeds from each sale of shares.
Under the terms of the agreement, Aemetis may also sell shares from
time to time to H.C. Wainwright as principal for its own account at
a price negotiated at the time of sale. Any sale of shares to H.C.
Wainwright as principal would be pursuant to the terms of a
separate agreement between H.C. Wainwright and the company.
About Aemetis
Headquartered in Cupertino, California, Aemetis --
http://www.aemetis.com-- is an international renewable natural
gas, renewable fuels and byproducts company focused on the
acquisition, development and commercialization of innovative
technologies that replace traditional petroleum-based products.
The Company operates in two reportable geographic segments: "North
America" and "India."
Aemetis reported a net loss of $36.66 million for the year ended
Dec. 31, 2020, compared to a net loss of $39.48 million for the
year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$143.29 million in total assets, $62.90 million in total current
liabilities, $204.41 million in total long-term liabilities, and a
total stockholders' deficit of $124.02 million.
AERKOMM INC: Incurs $1.5 Million Net Loss in Second Quarter
-----------------------------------------------------------
Aerkomm Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $1.54
million on $72,000 of net sales for the three months ended June 30,
2021, compared to a net loss of $2.12 million on zero sales for the
three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $5.76 million on $72,000 of net sales compared to a net
loss of $4.49 million on zero sales for the same period during the
prior year.
As of June 30, 2021, the Company had $56.89 million in total
assets, $22.29 million in total liabilities, and $34.60 million in
total stockholders' equity.
As of June 30, 2021, the Company had cash and cash equivalents of
$3,250,487. To date, the Company has financed its operations
primarily through cash proceeds from financing activities,
including through its completed public offering, short-term
borrowings and equity contributions by its stockholders.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1590496/000121390021044350/f10q0621_aerkomm.htm
About Aerkomm
Headquartered in Nevada, USA, Aerkomm Inc. --
http://www.aerkomm.com-- is a full-service development stage
provider of in-flight entertainment and connectivity (IFEC)
solutions, intended to provide airline passengers with a broadband
in-flight experience that encompasses a wide range of service
options. Those options include Wi-Fi, cellular, movies, gaming,
live TV, and music. The Company plans to offer these core
services, which it is currently still developing, through both
built-in in-flight entertainment systems, such as a seat-back
display, as well as on passengers' own personal devices.
Aerkomm reported a net loss of $9.11 million for the year ended
Dec. 31, 2020, compared to a net loss of $7.98 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $56.72
million in total assets, $17.68 million in total liabilities, and
$39.03 million in total stockholders' equity.
AIKIDO PHARMA: Receives Noncompliance Notice from Nasdaq
--------------------------------------------------------
Aikido Pharma Inc. received a staff deficiency notice from The
Nasdaq Stock Market, informing the company that its common stock,
par value $0.0001 per share, failed to comply with the $1.00
minimum bid price required for continued listing on The Nasdaq
Capital Market under Nasdaq Listing Rule 5550(a)(2). Nasdaq's
letter advised the company that, based upon the closing bid price
during the period from June 28, 2021 to Aug. 9, 2021, the company
no longer meets this test.
Pursuant to Nasdaq Marketplace Rule 5810(c)(3)(A), Aikido Pharma
has been provided with a compliance period of 180 calendar days, or
Feb. 7, 2022, to regain compliance with the minimum bid price
requirement. To regain compliance, the closing bid price of the
company's common stock must meet or exceed $1.00 per share for a
minimum of 10 consecutive business days prior to Feb. 7, 2022.
About Aikido Pharma
Headquartered in New York, NY, Aikido Pharma Inc. fka Spherix
Incorporated -- http://www.spherix.com-- was initially formed in
1967 and is currently a biotechnology company seeking to develop
small-molecule anti-cancer therapeutics. The Company's activities
generally include the acquisition and development of technology
through internal or external research and development. In
addition, the Company seeks to acquire existing rights to
intellectual property through the acquisition of already issued
patents and pending patent applications, both in the United States
and abroad. The Company may alone, or in conjunction with others,
develop products and processes associated with technology
development. Recently, the Company has invested in and helped
develop technology with Hoth Therapeutics, Inc., DatChat, Inc. and
with its recent asset acquisition with CBM BioPharma, Inc. in
December 2019.
Aikido Pharma reported a net loss of $12.34 million for the year
ended Dec. 31, 2020, compared to a net loss of $4.18 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $104.93 million in total assets, $559,000 in total liabilities,
and $104.37 million in total stockholders' equity.
AIR FLIGHT: Wins Cash Collateral Access Thru Nov 18
---------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, has authorized Air Flight, Inc. to use
cash collateral on an interim basis through November 18, 2021.
The Debtor is authorized to use the cash collateral, with continued
monthly adequate protection payments to:
(a) First National Bank in the amount of $1,000; and
(b) The First State Bank in the amount of $250.
The Debtor will have a five-day grace period in the event of any
delinquent payments.
The Court says any liens in favor of the Banks including, without
limitation, the Adequate Protection Lien(s), will be subject to
carve-out for all fees due to the U.S. Trustee and/or Clerk of
Court and Debtor is authorized to pay the U.S. Trustee fees without
further Court order.
Hearing on the matter has been continued to November 18 at 10:30
a.m. via Zoom video conference.
A copy of the order is available for free at https://bit.ly/3zjfTap
from PacerMonitor.com.
The Debtor projects total income of $108,000 and total expenses of
$475,975 for August.
About Air Flight, Inc.
Air Flight, Inc. filed a Chapter 11 bankruptcy petition (Bankr.
S.D. Fla. Case No. 21-11039) on Feb. 2, 2021, disclosing under $1
million in both assets and liabilities.
Judge Peter D. Russin oversees the case.
The Debtor is represented by Van Horn Law Group, Inc.
ALL IN JETS: $650K Equity from Air Charter to Fund Plan
-------------------------------------------------------
All In Jets, LLC, d/b/a JetReady, filed with the U.S. Bankruptcy
Court for the Southern District of New York a Third Amended Plan
dated August 23, 2021.
The Debtor's primary asset is its Part 135 Certificate and the
corresponding Standard Operating Procedures, manuals and protocols
as well as employees maintained by the Debtor that are attendant to
the Part 135 Certificate. The Debtor has approximately $5,000,000
in unsecured debt and ceased jet charter and aircraft management
operations prior to the petition date.
The Debtor believes its Part 135 Certificate to be worth
approximately $600,000 based upon its knowledge of the market and
the sale process it instituted in this bankruptcy case with the
filing of its motion for authority to sell certain assets free of
liens, claims, and encumbrances (the "Sale Motion") on December 21,
2020. The Debtor filed the Sale Motion to reflect a new buyer and a
bidding structure agreed upon by parties in interest. A new buyer,
Aviation House Investments, LLC, emerged during the bidding process
and was qualified by the Debtor.
However, prior to the auction, the FAA, through the United States
Attorney's Office, objected to the proposed sale of the Part 135
Certificate. The Debtor filed the Second Amended Plan to appease
both the FAA and Aviation House Investments, LLC. Unfortunately,
the FAA was ultimately unable to certify Aviation House
Investments, LLC because it is based outside of the United States.
This entity therefore withdrew from contention for the Debtor's
assets and its deposit was subsequently returned by the Debtor.
Incredibly, the Debtor located a new plan funder.
Pursuant to the Plan, funding will come from cancellation of all
existing membership interests of the Debtor and the issuance of new
interests to Air Charter Holdings, LLC ("ACH") in return for
funding the distribution under the Plan in the amount of $650,000
(the "Purchase Price"). ACH has agreed to place a deposit of
$75,000 in escrow and has already been certified by the FAA as it
already owns a Part 135 Certificate. Upon confirmation, ACH will
own the Debtor and fund the Plan distributions.
The Plan proposes that the Debtor cancels all of its existing
equity and reissues 100% of new equity to ACH upon Confirmation of
the Plan. Pursuant to the terms of the Plan, post-confirmation, the
Debtor will pay $650,000 with $75,000 distributed to the
Liquidating Trustee at Confirmation plus a note for $75,000 (the
"ACH Note").
Class 1 consists of Priority Wage Claims. Holders of Class 1 claims
shall be paid cash, on the effective date of the Plan, of a value
equal to the allowed amount of each such claim. Holders of Class 1
claims are considered unimpaired by the Plan.
Class 2 consists of all Allowed General Unsecured Claims. The Plan
proposes to pay holders of Class 2 claims their pro rata share of
whatever remains from the $650,000 distribution after payment of
administrative claims, priority wages and priority taxes plus the
net proceeds of any causes of action brought by the Liquidating
Trustee. Holders of Class 2 claims are considered impaired.
Class 3 consists of the pre-petition membership interests of the
Debtor held by Seth Bernstein. The Plan proposes to cancel those
interests upon Confirmation. Holders of Class 3 interests will not
receive any property or be entitled to share in any disbursements
under the Plan on account of such interests.
Upon confirmation of the Plan, the Reorganized Debtor will pay
$75,000 and provide the ACH Note to the Liquidating Trustee. Such
payments shall not be derived from the commercial operations of the
Reorganized Debtor's business.
Payments to creditors shall be distributed according to
priorities:
* Second, holders of Administrative Expense Claims shall be
paid in full prior to the payment of all other claims.
* Third, holders of Priority Tax Claims shall be paid in full
prior to the payment of all other claims, after payment of the
foregoing claims.
* Fourth, holders of all other claims entitled to priority
shall be paid in full prior to the payment of allowed general
unsecured claims.
* Fifth, after payment of the foregoing claims, sums disbursed
by the Liquidating Trustee shall be paid to holders of general
unsecured claims on a pro rata basis.
A full-text copy of the Third Amended Plan dated August 23, 2021,
is available at https://bit.ly/3mxZkDY from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Albert A. Ciardi, III, Esq.
Jennifer Cranston McEntee, Esq.
CIARDI CIARDI & ASTIN
2005 Market Street, Suite 3500
Philadelphia, PA 19103
Tel: (215) 557-3550
E-mail: aciardi@ciardilaw.com
jcranston@ciardilaw.com
About All In Jets
All In Jets, LLC -- https://www.flyjetready.com/ -- is a private
jet charter operator and aircraft management company offering
flights worldwide with a floating charter fleet of heavy to midsize
jets including Gulfstream GIVSPs, Gulfstream GIVs, Challenger 601s
and Hawker 800 models.
All In Jets, LLC d/b/a Jet Ready, based in New York, NY, filed a
Chapter 11 petition (Bankr. S.D. N.Y. Case No. 20-11831) on Aug. 9,
2020. In the petition signed by Seth Bernstein, member, the Debtor
was estimated to have $500,000 to $1 million in assets and $1
million to $10 million in liabilities. The Hon. Michael E. Wiles
presides over the case. CIARDI CIARDI & ASTIN, serves as
bankruptcy counsel.
ALL WHEEL DRIVE: Wins Cash Collateral Access Thru Oct 31
--------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Texas,
Sherman Division, authorized All Wheel Drive Tuning, Inc. to use
cash collateral on an interim basis through the later of October
31, 2021, or the date of a final hearing on the cash collateral
motion.
The Debtor has an immediate need to use the cash collateral in the
ordinary course of its business operations, as well as to complete
the work and service obligations currently in progress, and to
service additional clients going forward.
The Debtor is indebted to Frost Bank, with an outstanding balance
of approximately $80,000. The Frost Claim may be collateralized by,
among other things, the Debtor's personal property some of which
may constitute cash collateral, including but not limited to its
accounts, work in process, inventory, as well as other assets,
which are estimated to be not more than $50,000. There are other
creditors who assert security interests in the Debtor's collateral,
but such claims are junior to the Frost Claim and, as such, have no
interest in the Debtor's purported cash collateral, as of the
Petition Date.
As adequate protection for the Debtor's use of cash collateral,
Frost is granted a valid and automatically perfected, continuing
replacement lien on all post-petition collateral to the same
extent, nature, validity and priority Frost Bank possessed
prepetition, to the extent of decrease in value of Frost Bank's
interest in the prepetition collateral resulting from the Debtor's
use thereof. The Replacement Lien will be in addition to the liens
that Frost Bank had in the Debtor's assets as of the Petition
Date.
The final hearing on the matter is scheduled for October 28 at 10
a.m.
A copy of the order and the Debtor's 60-day budget from September 1
to October 31, is available at https://bit.ly/3mzvv64 from
PacerMonitor.com. The Debtor projects $229,200 in net revenue and
$222,090 in total expenses every 30 days.
About All Wheel Drive Tuning
All Wheel Drive Tuning, Inc. owns and operates an automotive repair
and maintenance facility specializing in high performance Subaru
vehicles. The business suffered reduced demand and associated
revenue due to the economic downturn and depressed business
environment resulting from the COVID-19 pandemic.
All Wheel Drive Tuning sought protection under Chapter 11 (Bankr.
E.D. Tex. Case No. 21-40790) on May 27, 2021. At the time of
filing, the Debtor had between $100,001 and $500,000 in assets and
between $500,001 and $1,000,000 in liabilities. Larry Keith
Fields, its president, signed the petition.
Judge Brenda T. Rhoades oversees the case.
Susan B. Hersh, P.C. is the Debtor's legal counsel.
ALLEGHENY TECHNOLOGIES: Egan-Jones Keeps B- Sr. Unsecured Ratings
-----------------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Allegheny Technologies, Inc. EJR also maintained its
'B' rating on commercial paper issued by the Company.
Headquartered in Pittsburgh, Pennsylvania, Allegheny Technologies,
Inc. produces specialty materials.
ALLIANCE DATA: Egan-Jones Keeps B Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on August 20, 2021, maintained its 'B'
foreign currency and local currency senior unsecured ratings on
debt issued by Alliance Data Systems Corporation. EJR also
maintained its 'C' rating on commercial paper issued by the
Company.
Headquartered in Columbus, Ohio, Alliance Data Systems Corporation
provides data-driven and transaction-based marketing and customer
loyalty solutions.
ALPHA LATAM: Proposes Oct. 28 Auction of Assets
-----------------------------------------------
Law360 reports that Latin American payday lender Alpha Latam
Management LLC filed a bidding procedures proposal late Tuesday,
August 24, 2021, in Delaware bankruptcy court that calls for an
Oct. 28, 2021 auction as it pursues a Chapter 11 sale of its
assets.
In the motion, the debtor said it has been exploring a sale of its
assets for several months after determining that such a transaction
would maximize their value for the benefit of creditors, and told
the court that a bankruptcy sale was the best way to accomplish
that goal.
"Even before the commencement of these Chapter 11 Cases, the
proposed sale of the Assets was identified as the best path for
maximizing the value of the Debtors' estates. To test this thesis,
the Debtors initiated a thoughtful process in May to solicit
indications of interest for the Assets. During their prepetition
negotiations and restructuring analysis, it became evident that the
best way to maximize value for the Assets was to pursue an in-court
sale via section 363 of the Bankruptcy Code, which was one of the
reasons the Debtors commenced these Chapter 11 Cases. Buyers will
receive comfort from this Court's approval of the Sale and the
Section 363 sale process, including the Bidding Procedures proposed
herein, will allow for a robust marketing process to achieve the
highest and best price for the Assets," the Company said in the
court filing.
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt
WintersJureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados,
is the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
Ad Hoc Committee of Shareholders.
AMMA421 LLC: Seeks Approval to Hire Klestadt as Legal Counsel
-------------------------------------------------------------
Amma421, LLC seeks approval from the U.S. Bankruptcy Court for the
Southern District of New York to hire Klestadt Winters Jureller
Southard & Stevens, LLP to serve as legal counsel in its Chapter 11
case.
The firm will provide these services:
a. advise the Debtor with respect to its rights, powers and
duties in the continued management and operation of its business
and assets;
b. attend meetings and negotiating with representatives of
creditors and other parties in interest, and advising and
consulting on the conduct of the case, including all of the legal
and administrative requirements of operating under Chapter 11;
c. take all necessary action to protect and preserve the
Debtor's estate, including prosecution of actions on behalf of the
Debtor, the defense of any actions commenced against the estate,
negotiations concerning litigation in which the Debtor may be
involved and objections to claims filed against the estate;
d. prepare legal papers;
e. assist the Debtor in its analysis and negotiations with any
third party concerning matters related to creditors' recovery;
f. represent the Debtor at all hearings and other proceedings;
g. assist the Debtor in its analysis of matters relating to
the legal rights and obligations of the Debtor with respect to
various agreements and applicable laws;
h. review and analyze all applications, orders, statements,
and schedules filed with the court and advise the Debtor as to
their propriety;
i. assist the Debtor in preparing pleadings and applications
as may be necessary in furtherance of its interests and objectives;
j. assist and advise the Debtor with regard to its
communications to the general creditor body regarding any proposed
Chapter 11 plan or other significant matters in this Chapter 11
case;
k. assist the Debtor with respect to consideration by the
court of any disclosure statement or Chapter 11 plan prepared or
filed and take any necessary action to obtain confirmation of such
plan;
l. perform other necessary legal services.
The firm's hourly rates are as follows:
Tracy L. Klestadt $795 per hour
Partners $550 to $795 per hour
Associates $395 to $550 per hour
Paralegals $175 per hour
Klestadt Winters will be paid based upon its normal and usual
hourly billing rates.
Tracy Klestadt, a partner at Klestadt, disclosed in a court filing
that her firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
Klestadt Winters can be reached at:
Tracy L. Klestadt, Esq.
Brendan M. Scott, Esq.
Christopher J. Reilly, Esq.
Klestadt Winters Jureller Southard & Stevens, LLP
200 West 41st Street, 17th Floor
New York, NY 10036
Tel: (212) 972-3000
Fax: (212) 972-2245
Email: tklestadt@klestadt.com
bscott@klestadt.com
creilly@klestadt.com
About Amma421 LLC
New York-based Amma421, LLC filed its voluntary petition for
Chapter 11 protection (Bankr. S.D.N.Y. Case No. 21-11333) on July
21, 2021, disclosing up to $50,000 in assets and up to $10 million
in liabilities. Paulette M. Cole, managing member, signed the
petition. Judge David S. Jones oversees the case. Klestadt
Winters Jureller Southard & Stevens, LLP represents the Debtor as
legal counsel.
ANDINA GOLD: Incurs $2.6 Million Net Loss in Second Quarter
-----------------------------------------------------------
Andina Gold Corp. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $2.58
million on zero sales for the three months ended June 30, 2021,
compared to a net loss of $773,008 on $769,555 of net sales for the
three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $3.63 million on zero sales compared to a net loss of $4.37
million on $781,455 of net sales for the same period during the
prior year.
As of June 30, 2021, the Company had $13.72 million in total
assets, $9.21 million in total liabilities, and $4.51 million in
total shareholders' equity.
During 2021 Q2, the Company obtained a total of $4,690,000 cash
through a convertible debt unit offering consisting of a
convertible note and a warrant to purchase shares. These funds are
available to cover operating expenses while exploring new business
opportunities. On June 23, 2021, the Company consummated purchase
of assets of Cryocann USA Corp.
As of June 30, 2021, the Company had working capital of $5,277,185
and cash balance of $431,306. The Company estimates that it needs
approximately $3,000,000 to cover overhead costs plus an additional
$2,000,000 to support the operations and growth of the assets
acquired from CryoCann USA Corp, over the next twelve months.
There can be no assurance that the Company will be able to source
financing to fund these operations, on reasonable terms, or at all.
Andina Gold stated, "COVID-19 has resulted in, and may continue to
result in, significant disruption of financial markets, which may
reduce the Company's ability to access capital or its customers'
ability to pay the Company for past or future purchases, which
could negatively affect the Company's liquidity. The Company
believes that the cash balances and cash from operations will be
sufficient to satisfy its cash needs for the next few months until
it can obtain new long-term financing or other sources of capital.
If we are unable to attain additional financing, we will have to
seek additional strategic alternatives and relief from our
additional liabilities accumulated during COVID-19.
The impact of COVID-19 developments and uncertainty with respect to
the economic effects of the pandemic have introduced significant
volatility in the financial markets. The uncertainties associated
with COVID-19 related to our industry present risk and doubt about
the Company's ability to continue as a going concern.
Management believes that we will continue to incur losses for the
immediate future. Therefore, we may either need additional equity
or debt financing until we can achieve profitability and positive
cash flows from operating activities, or proceeds from the sale of
assets. These conditions raise substantial doubt about our ability
to continue as a going concern."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1533030/000121390021044295/f10q0621_andinagoldcorp.htm
About Andina Gold
Headquartered in Englewood, Colorado, Andina Gold Corp --
www.redwoodgreencorp.com -- provides marketing, IP and management
services to two cannabis dispensaries and to a cannabis grow
facility, for which cannabis licenses are held by Andina Gold
Corp's principal business partner, Critical Mass Industries, LLC
DBA Good Meds ("CMI").
Andina Gold reported a net loss of $11.82 million for the year
ended Dec. 31, 2020, compared to a net loss of $3.06 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$8.21 million in total assets, $4.79 million in total liabilities,
and $3.42 million in total shareholders' equity.
Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since
2020, issued a "going concern" qualification in its report dated
March 30, 2021, citing that the Company has suffered recurring
losses from operations that raises substantial doubt about its
ability to continue as a going concern.
ANNALY CAPITAL: Egan-Jones Hikes Senior Unsecured Ratings to B
--------------------------------------------------------------
Egan-Jones Ratings Company, on August 20, 2021, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Annaly Capital Management, Inc. to B from B-. EJR
also maintained its 'C' rating on commercial paper issued by the
Company.
Headquartered in New York, New York, Annaly Capital Management,
Inc. is a capital manager that invests in and finances residential
and commercial assets.
APPLOVIN CORP: S&P Alters Outlook to Positive, Affirms 'B+' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlook on mobile game developer and
performance-based marketing technology provider, AppLovin Corp. to
positive from negative and affirmed its 'B+' issuer credit rating
on the company and on its first-lien credit facility. The recovery
rating remains '3'.
S&P said, "The positive outlook reflects our view that the company
will achieve its financial guidance for 2021 and that good growth
rates and rapid deleveraging will continue into 2022. We expect
AppLovin's revenues and earnings will continue growing even as
Apple's IDFA privacy change takes full effect and as the company
spends heavily on user acquisition costs to promote its owned
mobile games.
"AppLovin significantly reduced its leverage during the second
quarter of 2021 as a result of debt reduction and quick earnings
growth. Our leverage calculation for AppLovin improved to 3.9x from
the high-5x area at the end of 2020, pro forma for its
debt-financed acquisition of Adjust. We note leverage would have
declined during 2021 even without the revolver repayment in April
as the company is on track to post at least 80% organic revenue
growth in 2021 and EBITDA margins in the low- to mid-20% range.
This is stronger than our previous expectations as we previously
noted that we estimate the market for consumer spending on mobile
games is growing in the mid-20% range annually. We view AppLovin's
recent above market growth favorably and attribute the performance
to the company's top charts and AppDiscovery offering (powered by
the company's AXON machine learning technology) attracting higher
levels of customer spend. Despite recent privacy changes taking
effect with Apple's change in IDFA, we still expect strong revenue
and earnings growth to continue. AppLovin now has over 200
free-to-play mobile games, from which it can source first-party
data for effective ad monetization, and its ad recommendation
engine will continue to benefit as advertisers bid for space in the
top mobile games.
"We expect deleveraging to continue even with high user acquisition
and start-up gaming costs Management's guidance states EBITDA
margins in the mid-20% range for 2021. The company posted good
margin improvement in the second quarter of 2021—its reported
EBITDA margin improved to 21% from 17% year over year. We believe
most of the growth was the result of a favorable mix shift as
Applovin's high margin business software segment grew 256% in the
quarter, higher than the growth rates of its other segments,
resulting in favorable margin improvement. We note EBITDA margins
may fluctuate somewhat depending on user acquisition costs on newer
games and start-up costs to build new gaming apps. While most of
AppLovin's games are hyper-casual and do not require much
investment to build, we note that management has started to show
interest in the mid-core gaming category as evidenced by its
MachineZone acquisition in 2020. MachineZone produces games which
require a higher level of investment such as Final Fantasy XV: A
New Empire and Game of War: Fire Age. We expect deleveraging will
continue even if EBITDA margins compress somewhat toward the
low-20% area because the overall level of revenue growth should
offset some margin deterioration, resulting in continued EBITDA
improvement."
AppLovin has been very acquisitive and it funded some of its larger
acquisitions with debt. The company does not have a stated leverage
target. AppLovin's business strategy includes purchasing gaming
content studios and integrating them into AppLovin's marketing data
engine to achieve sizable revenue synergies. The company also makes
acquisitions in the mobile app technology space geared toward
improving mobile app developer customers in order to grow the
userbase of their games. During the first half of 2021, AppLovin
spent about $1 billion on acquisitions (about half financed with
debt and half with cash), almost double the amount spent during the
same period last year. In 2020, the company spent $674 million on
acquisitions, mostly related to its gaming studio acquisition of
MachineZone. S&P said, "We expect the company will continue to
spend on acquisitions sometimes using debt to fund larger deals.
However, we do not expect leverage to remain elevated for very long
as the company has displayed a track record of accelerating growth
after acquisitions, allowing for a quick pace of deleveraging. The
company has no stated leverage target, and we have included a
negative financial policy modifier in our analysis to account for
the risk that leverage may sometimes rise close to 4x, one of our
rating triggers."
S&P said, "The positive outlook reflects our expectation that
AppLovin's strong growth will continue due to favorable industry
trends, such as the rising number of mobile app installs and
increasing number of payments occurring in mobile app ecosystems.
We expect organic revenue growth rate to be very strong in 2021 and
S&P Global Ratings'-adjusted EBITDA margins in the low-20% area. We
also expect free cash flow to debt to be in the high-teen
percentages in 2021, before improving to around 20% in 2022. We do
not expect the recent user data tracking policy changes to cause
declines in revenue or earnings as we believe AppLovin has a strong
first-party app ecosystem from which they can already extract
value.
"We could raise the rating if the company's strong growth continues
to support deleveraging to the low-3x area and we believe the
company's financial policies will support leverage below 4x even
when accounting for acquisitions and investment spend for new
games."
S&P could revise the outlook to stable if it expects leverage to
remain in the 4x to 5x area. This could occur if:
-- User data tracking policy changes materially slows revenue
growth or pressures profitability, including weaker returns from
customer acquisition and app marketing costs; or
-- More aggressive financial policies including debt-financed
acquisitions that cause leverage to rise above 4x for a period.
ARCLINE FM: Target Transaction No Impact on Moody's B3 CFR
----------------------------------------------------------
Moody's Investors Service has announced that its ratings of Arcline
FM Holdings, LLC ("Fairbanks Morse Defense" or the "company")-- B3
Corporate Family Rating, B3-PD Probability of Default Rating, B2
first lien term loan and Caa2 second lien term loan—are
unaffected by the planned acquisition of a manufacturer of fluid
control subsystems ("Target"). The stable outlook is also
unaffected. To help fund the purchase, Fairbanks Morse Defense will
issue incremental first and second lien term loans under existing
credit facilities. The first and second lien term loans will be
increased by $203 million and $43 million respectively. The
company's sponsor will also contribute a meaningful amount of cash
equity.
RATING RATIONALE
The B3 CFR continues to reflect very high leverage against a solid
performance outlook that will enable some de-leveraging starting
within six to 12 months of the acquisition of Target. Moody's
estimates LTM June 30, 2021 debt/EBITDA pro forma for the pending
transaction at 9x. That said, Moody's expects that leverage will
quickly decline with earnings growth bringing debt/EBITDA to
high-7x by the end of 2021. Fairbanks Morse Defense has had good
order momentum across the past year. The higher backlog provides
revenue visibility across the next twelve months. Target has
reported similar business development progress in 2021 and its
revenue and backlog characteristics are similar to those of the
company. Revenues and margin will expand over the next 12 months
based on existing/pending orders and pricing/cost actions recently
undertaken.
In addition to high leverage, the rating is constrained by product
and customer concentration. The company mainly supplies engines and
engine aftermarket parts to the US Navy. Target's emphasis on fluid
control subsystems will lessen the reliance on engine and engine
parts demand from the US Navy but will further increase
concentration on US Navy ship construction/maintenance. Most
contracts are fixed price and therefore weak operational execution
or cost overruns could lead to significant volatility in earnings
and cash flow. Further, the company remains exposed to potential
declines in US Navy ship spending in the future.
Strong competitive positioning will continue benefitting Fairbanks
Morse Defense. As a sole source domestic supplier of engines to the
US Navy, barriers to entry are substantial. Target also possesses
significant specialization with a large installed base,
particularly on US Navy aircraft carriers and submarines. The
company's relatively high profit margins demonstrate its strong
competitive position. Moody's anticipates that EBITDA margin could
reach 25% (Moody's adjusted basis) for the company by 2022.
The stable rating outlook reflects Moody's expectation of good
growth prospects as the US Navy is expanding its ship fleet. Demand
for new military ships, aftermarket parts and related services will
drive a revenue CAGR of 4%-5% over the next 2-3 years. Moody's
expects Fairbanks Morse Defense to maintain an aggressive financial
policy and acquisition related borrowing will likely sustain high
leverage in the future.
Moody's expects the company will maintain adequate liquidity. Cash
will be less than $10 million at the close of the transaction but
free cash flow will be $25 million over the next 12 months. This is
more than sufficient to cover annual term loan amortization of $7
million. Fairbanks Morse Defense has an (unrated) $75 million
asset-based revolving credit facility. The revolver will be
unutilized at transaction close. Across the next twelve months,
Moody's expects that borrowings on the revolver will be brief and
will not exceed $10 million.
The B2 rating on the first lien facility, one notch above the CFR,
benefits from the presence of the junior second lien facility. In a
stress scenario the second lien facility would absorb significant
loss and it is accordingly rated Caa2, two notches below the CFR.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if debt/EBITDA is sustained around 6x
with free cash flow to debt above 5%. A less aggressive posture
towards dividends and M&A would also support an upgrade. The
ratings could be downgraded if debt/EBITDA fails to decline below
the mid-7x range, or if the company fails to generate consistently
positive free cash flow.
Fairbanks Morse Defense is a provider of propulsion systems,
ancillary power units, motors and electric controllers for the US
Navy and US Coast Guard. Pro forma for the planned acquisition of
Target, revenues over the last twelve months ended July 31, 2021
were about $350 million. The company is owned by entities of
Arcline Investment Management.
BARENZ INVESTMENTS: Unsec. Creditors to be Paid in Full in 5 Years
------------------------------------------------------------------
Barenz Investments, LLC, a Florida Limited Liability Corporation,
filed with the U.S. Bankruptcy Court for the Middle District of
Florida a Plan of Reorganization for Small Business dated August
23, 2021.
The nation was consumed by the world-wide COVID-19 epidemic and the
Hotel was effectively shut down from March 2020 through the last
week of May 2021. Since Debtor was not operating during the
pandemic, it was essentially generating no income. On September 15,
2020, American Capital Group, LLC, which holds a first lien
position against the Hotel, initiated a foreclosure against the
property. A sale date was scheduled for May 25, 2021. On May 24,
2021 ("Petition Date"), Debtor filed a Chapter 11, Subchapter V
Bankruptcy in order to stop the sale and reorganize its business
and debts.
Since the Petition Date, Debtor has re-opened the Hotel and is
operating at or near the pre-COVID levels. In July 2021, the area
was once again inflicted with a wide-spread outbreak of red tide.
Red tide causes scores of dead fish and debris washing up on the
beaches, a foul odor and respiratory problems. Notwithstanding the
actual and perceived damage caused by the red tide, Debtor has
continued to maintain its operations, stabilized rents and pay all
operating expenses.
Debtor estimates that the value of the Hotel exceeds $2,300,000.
Debtor believes it can propose a feasible plan of reorganization to
pay all administrative, secured and unsecured claims in full.
Debtor anticipates that the Plan will be confirmed in October 2021.
There are no Class 1 Priority Claims. Payments to Class 2 American
Capital Group, LLC which holds a mortgage against the Hotel and is
fully secured, will commence on January 1, 2022. American Capital
Group, LLC will be paid in full.
Class 3 is an unsecured claim by the First Bank of the Lake for a
PPP loan sponsored by the United States Small Business
Administration. Debtor anticipates that this claim will be forgiven
and no payments are scheduled to be made to Class 3. Payments to
Class 4 unsecured creditors shall be made on a quarterly basis over
a period of 5 years or 20 quarters commencing March 1, 2022 and the
final distribution to unsecured creditors will be made on or about
December 1, 2027. All Class 4 unsecured creditors will be paid in
full.
Class 5 is comprised of all equity interests in the Debtor, which
are owned 50% by David Alan Barenz and 50% by Eric John Barenz.
Barenz will retain their equity interests in the Debtor. No
distributions will be made to Barenz until the distributions to
Class 4 have been paid in full. Nothing contained herein shall
restrict Barenz from receiving a reasonable salary for services
rendered in connection with operating the business.
Payments required under the Plan will be funded from (i) existing
cash on hand on the Effective Date, (ii) revenues generated by
continued operations; and (iii) proceeds from refinancing or sale
of the Hotel.
A full-text copy of the Plan of Reorganization dated August 23,
2021, is available at https://bit.ly/3zc3rsO from PacerMonitor.com
at no charge.
Attorney for Debtor:
DEBT RELIEF LEGAL GROUP, LLC
Alan Borden, Esq, FBN: 58250
Email: ABorden@1800DebtRelief.com
Richard Feinberg, Esq, FBN: 802808
Email: Feinberg@1800DebtRelief.com
901 West Hillsborough Avenue
Tampa, Florida 33603
Telephone: (813) 231-2088
About Barenz Investments
Barenz Investments, LLC, a Treasure Island, Fla.-based company that
operates a boutique beach guest house and a hotel, filed a Chapter
11 petition (Bankr. M.D. Fla. Case No. 21-02682) on May 24, 2021,
listing $3,009,800 in total assets and $1,427,953 in total
liabilities. David Alan Barenz, manager, signed the petition.
Judge Caryl E. Delano oversees the case.
Debt Relief Legal Group, LLC and Accounting & Business Partners,
LLC serve as the Debtor's legal counsel and accountant,
respectively.
BASIC ENERGY: 341(a) Meeting Set for Sept. 13
---------------------------------------------
The U.S. Trustee for Region 7 will convene a meeting of creditors
of Basic Energy Services Inc. and its debtor-affiliates on Sept.
13, 2021, at 10:00 a.m. (CT), United States Courthouse, 515 Rusk
Avenue, Houston, Texas 77002. Parties wishing to participate must
do so telephonically using the number 1-888-235-7501, and entering
the participant passcode 2123108636.
The meeting may be continued or adjourned to a later date. If so,
the date will be on the court docket. The Debtor's representative
must attend the meeting to be questioned under oath. Creditors may
attend, but are not required to do so.
About Basic Energy Services
Basic Energy Services -- http://www.basices.com/-- provides
wellsite services essential to maintaining production from the oil
and gas wells within its operating areas. The Company's operations
are managed regionally and are concentrated in major United States
onshore oil-producing regions located in Texas, California, New
Mexico, Oklahoma, Arkansas, Louisiana, Wyoming, North Dakota,
Colorado and Montana. Specifically, the Company has a significant
presence in the Permian Basin, Bakken, Los Angeles and San Joaquin
Basins, Eagle Ford, Haynesville and Powder River Basin.
Basic Energy Services, Inc., and 12 affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 21-90002) on Aug. 17,
2021. The Company disclosed total assets of $331 million and debt
of $549 million as of March 31, 2021.
The Hon. David R. Jones is the case judge.
The Debtors tapped Weil, Gotshal & Manges LLP as counsel;
Alixpartners LLP as restructuring advisor; and Lazard Freres &
Company as financial advisor. Prime Clerk is the claims agent.
BEZH SERVICES: Affiliate Seeks to Hire START Real Estate as Broker
------------------------------------------------------------------
Menucha Enterprise, LLC, a debtor-affiliate of Bezh Services, LLC,
seeks approval from the U.S. Bankruptcy Court for the District of
Colorado to employ START Real Estate as its real estate broker.
The firm's services include:
a. performing the terms of any written or oral agreement with
the Debtor;
b. presenting all offers to and from the Debtor in a timely
manner regardless of whether a property is subject to a contract
for sale;
c. disclosing to the Debtor adverse material facts actually
known to the broker;
d. advising the Debtor regarding the transactions and advising
the Debtor to obtain expert advice as to material matters about
which the broker knows but the specifics of which are beyond the
expertise of the broker;
e. accounting in a timely manner for all money and property
received;
f. keeping the Debtor fully informed regarding the
transactions;
g. promoting the interests of the Debtor with the utmost good
faith, loyalty and fidelity;
h. seeking prices and terms that are set forth in the listing
contracts; and
i. counseling the Debtor as to any material benefits or risks
of a transaction that are actually known by the broker.
START will receive a commission equal to 4.5 percent of the gross
purchase price, of which 2.5 percent will be paid to the buyer's
agent or a transaction broker.
In the event a property is sold to Harvey Mamich, Perry Friedentag
or certain parties, the commission paid to the broker for such
property will be reduced to a flat fee of $2,500.
Leah Rice, the primary broker in charge of the Debtor's account,
disclosed in a court filing that she is a disinterested person as
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Leah Rice
START Real Estate
1055 Auraria Parkway
Denver, CO 80204
Phone: (720) 482-3000/(970) 712-4597
About Bezh Services and Menucha Enterprises
Bezh Services, LLC and Menucha Enterprises, LLC, a company engaged
in the business of owning and operating residential real property,
filed Chapter 11 bankruptcy petitions (Bankr. D. Colo. Lead Case
No. 21-10745) on Feb. 17, 2021 and on March 9, 2021, respectively.
At the time of the filing, Bezh Services listed as much as $50,000
in assets and as much as $500,000 in liabilities while Menucha
Enterprises listed $1 million to $10 million in both assets and
liabilities.
Judge Thomas B. Mcnamara oversees the cases.
Kutner Brinen, P.C. and RubinBrown, LLP serve as the Debtors' legal
counsel and accountant, respectively.
BIOMARIN PHARMACEUTICAL: Egan-Jones Cuts Sr. Unsec. Ratings to BB-
------------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, lowers the foreign
currency and local currency senior unsecured ratings on debt issued
by BioMarin Pharmaceutical Inc. to BB- from B+.
Headquartered in Novato, California, BioMarin Pharmaceutical Inc.
develops and commercializes therapeutic enzyme products.
BIONICA INC: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Bionica Inc.
5112 Bailey Loop
McClellan, CA 95652
Business Description: Bionica Inc. is a manufacturer of medical
equipment and supplies.
Chapter 11 Petition Date: May 11, 2021
Court: United States Bankruptcy Court
Eastern District of California
Case No.: 21-21751
Judge: Hon. Ronald H. Sargis
Debtor's Counsel: Roderick L. MacKenzie, Esq.
MACKENZIE & BRODY
1107 Second Street, Suite 330
Sacramento, CA 95814
Tel: 916-448-6436
E-mail: rodmac48@aol.com
Estimated Assets: $50,000 to $100,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Trevor L. Gilbert, manager & president.
A copy of the Debtor's list of 20 largest unsecured creditors is
available for free at PacerMonitor.com at:
https://www.pacermonitor.com/view/HOJ4HRI/Bionica_Inc__caebke-21-21751__0004.0.pdf?mcid=tGE4TAMA
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/XWSWBXY/Neelam_Inc__njbke-21-14967__0001.0.pdf?mcid=tGE4TAMA
BIOXXEL LLC: Seeks to Hire Best Best & Krieger as Special Counsel
-----------------------------------------------------------------
BioXXel, LLC seeks approval from the U.S. Bankruptcy Court for the
Central for the District of California to employ Best Best &
Krieger, LLP as its special counsel to assist with corporate
matters, including post-confirmation corporate documentation.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Caroline R. Djang, Esq. $550 per hour
Margaret Hosking, Esq. $475 per hour
Paralegals $250 - 265 per hour
The firm received a retainer in the amount of $3,000.
As disclosed in court filings, Best Best & Krieger is a
"disinterested person" within the meaning of Bankruptcy Code
Section 101(14).
The firm can be reached through:
Caroline R. Djang, Esq.
Margaret Hosking, Esq.
Best Best & Krieger, LLP
3750 University Avenue, Suite 400
P.O. Box 1028
Riverside, CA 92502-1028
Tel: (951) 686-1450
Fax: (951) 686-3083
Email: caroline.djang@bbklaw.com
margaret.hosking@bbklaw.com
About BioXXel, LLC
BioXXel, LLC, is a single asset real estate company based in Lake
Forest, Calif. It is owned by Bioxxel Investment Holding Inc. and
Pharmaxx, Inc. Both BIHI and Pharmaxx are owned by Mr. Phoung
Nguyen, who owns and operates four of the tenants at BioXXel's
industrial building in California. The tenants are Pharmaxx,
International Pharmaceutical Distribution Co. Ltd., ExxelUSA, Inc.
and Pharmaxx Medical Inc.
BioXXel filed a petition for Chapter 11 protection (Bankr. C.D.
Calif. Case No. 21-10256) on Feb. 2, 2021, listing as much as $50
million in both assets and liabilities. Judge Theodor Albert
oversees the case.
David A. Wood, Esq., at Marshack Hays, LLP, represents the Debtor
as legal counsel. Joshua Teeple of Grobstein Teeple LLP acts as
the Debtor's chief restructuring officer. The CRO has retained
Onyx Asset Advisors, LLC to market and sell the Debtor's property.
Secured creditor BREF1 30590 Cochise LLC is represented by Jennifer
R. Tullius, Esq., at Tullius Law Group.
BOUCHARD TRANSPORTATION: Solicitation Period Extended Thru Sept. 13
-------------------------------------------------------------------
At the behest of Bouchard Transportation, Inc. and its affiliates,
Judge David R. Jones of the U.S. Bankruptcy Court for the Southern
District of Texas, Houston Division, extended the period in which
the Debtors may solicit acceptances of chapter 11 Plan through and
including September 13, 2021.
The Debtors have made substantial progress during these chapter 11
cases. Through the extensive efforts by the Debtors, their
employees, and their advisors, the Debtors have taken significant
strides towards unlocking significant value for their estates, and
the finish line is in sight.
Upon commencement of these chapter 11 cases, the Debtors' efforts
were focused on stabilizing operations and taking the necessary
steps to return to ordinary course business operations. After it
became clear that a return to regular operations was not workable,
the Debtors and their advisors turned their focus to the sale of
the Debtors' assets and confirmation of a value-maximizing chapter
11 plan. These efforts culminated in two Court-approved sales of
the Debtors' vessels comprising the entirety of their fleet. The
first of these sales was consummated on August 5, 2021, and the
second sale closed on August 12, 2021.
With the granted extension, the Debtors will now be able to focus
on resolving the surcharge dispute with Wells Fargo Bank,
confirmation of the Debtors' proposed chapter 11 plan, obtaining
final approval of the accompanying disclosure statement,
administering the wind-down of the Debtors' estates contemplated
under the Plan, and working toward confirmation and effectiveness
of the Plan.
A copy of the Debtors' Motion to extend is available at
https://bit.ly/2Wfsxs4 from Stretto.com.
A copy of the Court's Extension Order is available at
https://bit.ly/3sO0I6x from Stretto.com.
About Bouchard Transportation
Founded in 1918, Bouchard Transportation Co., Inc.'s first cargo
was a shipment of coal. By 1931, Bouchard acquired its first oil
barge. Over the past 100 years and five generations later, Bouchard
has expanded its fleet, which now consists of 25 barges and 26 tugs
of various sizes, capacities, and capabilities, with services
operating in the United States, Canada, and the Caribbean.
Bouchard and certain of its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-34682) on September 28, 2020. At
the time of the filing, the Debtors estimated assets of between
$500 million and $1 billion and liabilities of between $100 million
and $500 million.
Judge David R. Jones oversees the cases.
The Debtors tapped Kirkland & Ellis LLP, Kirkland & Ellis
International LLP, and Jackson Walker LLP as their legal counsel;
Portage Point Partners, LLC as restructuring advisor; Jefferies LLC
as investment banker; Berkeley Research Group, LLC as financial
advisor; and Grant Thornton, LLP as a tax consultant. Stretto is
the claims agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' cases. The committee tapped
Ropes & Gray LLP as bankruptcy counsel, Clyde & Co US LLP as
maritime counsel, and Berkeley Research Group LLC as financial
advisor.
BOUCHARD TRANSPORTATION: Wells Fargo Contributes $15M to Fund Plan
------------------------------------------------------------------
Bouchard Transportation Co., Inc., and its debtor-affiliates,
submitted a First Amended Joint Chapter 11 Plan and Disclosure
Statement dated August 23, 2021.
Upon the closing of the DIP Collateral Asset Sale, the Replacement
DIP Lender's credit bid of the DIP Claims resulted in full and
final satisfaction of all Allowed DIP Claims as of the closing of
the DIP Collateral Asset Sale, and the Debtors have no further
obligation to the Replacement DIP Lenders or any other party with
respect to the DIP Claims.
Class 3 consists of any Prepetition Revolving Credit Facility
Secured Claims against any applicable Debtor. Each Holder of an
Allowed Prepetition Revolving Credit Facility Secured Claim shall
receive its Pro Rata share of (not to exceed the amount of such
Holder's Prepetition Revolving Credit Facility Secured Claim) the
Sale Proceeds Recovery attributable to the Prepetition Revolving
Credit Facility Collateral.
Class 4A consists of any General Unsecured Claims. Except to the
extent that a Holder of an Allowed General Unsecured Claim agrees
to less favorable treatment of its Allowed Claim, in full and final
satisfaction, settlement, release, and discharge of, and in
exchange for, each Allowed General Unsecured Claim, each such
Holder shall receive:
* the Sale Proceeds Recovery; and
* all Cash of the Post-Effective Date Debtor, after taking
into account the WindDown Budget then in effect;
provided that any recovery to Holders of Allowed General Unsecured
Claims after the first $20 million of such recovery shall be shared
Pro Rata between Holders of Allowed Claims in Class 4A and Class 4B
as if such Claims comprised a single Class.
Class 4B consists of any Prepetition Revolving Credit Facility
Deficiency Claims. Class 4B shall be Allowed in the amount of $39
million. Each such Holder shall receive:
* Proceeds Recovery; and
* all Cash of the Post-Effective Date Debtor, after taking
into account the WindDown Budget then in effect;
provided that Holders of Allowed Prepetition Revolving Credit
Facility Deficiency Claims shall receive no recovery until Holders
of Allowed General Unsecured Claims shall have received a total of
$20 million (in the aggregate); provided, further, that any
recovery thereafter shall be shared Pro Rata between Holders of
Allowed Claims in Class 4A and Class 4B as if such Claims comprised
a single Class.
Class 6 consists of any Section 510(c) Claims. Each such Holder
shall receive: its Pro Rata share of (not to exceed the amount of
such Holder's Allowed Section 510(c) Claim) the Sale Proceeds
Recovery. Under the Sale Transactions, the Sale Proceeds Recovery
to which Holders of Allowed Section 510(c) Claims would be entitled
is $0.
Class 7 consists of all Existing Equity Interests. Each Holder of
an Allowed Existing Equity Interest shall receive its Pro Rata
share of the Sale Proceeds Recovery. Under the Sale Transactions,
the Sale Proceeds Recovery to which Holders of Allowed Existing
Equity Interests would be entitled is $0.
Class 9 consists of all Section 510(b) Claims. Each Holder of an
Allowed Section 510(b) Claim shall receive its Pro Rata share of
the Sale Proceeds Recovery. Under the Sale Transactions, the Sale
Proceeds Recovery to which Holders of Allowed Section 510(b) Claims
would be entitled is $0.
The Debtors shall fund distributions under the Plan, as applicable,
with: (1) the Debtors' Cash on hand; (2) the Sale Proceeds; (3)
proceeds of Causes of Action; and (4) the Wells Fargo Plan
Contribution.
"Wells Collateral Asset Purchase Agreement" means the asset
purchase agreement entered into by and between the Debtors and
Pennantia, L.L.C. pursuant to which the Wells Collateral Asset Sale
is consummated.
"Wells Fargo Plan Contribution" means (i) the $15 million Cash
contribution made by Wells Fargo to the Debtors' estates and (ii)
the waiver, release, and discharge of any adequate protection or
similar or like claim Wells Fargo has against the Debtors.
A copy of the First Amended Joint Plan is available for free at
https://bit.ly/3jbwM0V from Stretto, claims agent.
Counsel for the Debtors:
Matthew D. Cavenaugh, Esq.
Genevieve M. Graham, Esq.
Jackson Walker LLP
1401 McKinney Street, Suite 1900
Houston, TX 77010
Telephone: (713) 752-4200
Facsimile: (713) 752-4221
Email: mcavenaugh@jw.com
ggraham@jw.com
- and -
Ryan Blaine Bennett, P.C.
Whitney Fogelberg, Esq.
Kirkland & Ellis LLP
Kirkland & Ellis International LLP
300 North LaSalle Street
Chicago, IL 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: ryan.bennett@kirkland.com
whitney.fogelberg@kirkland.com
- and -
Christine A. Okike, P.C.
Kirkland & Ellis LLP
Kirkland & Ellis International LLP
601 Lexington Avenue
New York, NY 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: christine.okike@kirkland.com
About Bouchard Transportation
Founded in 1918, Bouchard Transportation Co., Inc.'s first cargo
was a shipment of coal. By 1931, Bouchard acquired its first oil
barge. Over the past 100 years and five generations later,
Bouchard has expanded its fleet, which now consists of 25 barges
and 26 tugs of various sizes, capacities and capabilities, with
services operating in the United States, Canada and the Caribbean.
Bouchard and certain of its affiliates sought Chapter 11 protection
(Bankr. S.D. Tex. Lead Case No. 20-34682) on Sept. 28, 2020. At the
time of the filing, the Debtors estimated assets of between $500
million and $1 billion and liabilities of between $100 million and
$500 million.
Judge David R. Jones oversees the cases.
The Debtors tapped Kirkland & Ellis LLP, Kirkland & Ellis
International LLP and Jackson Walker LLP as their legal counsel;
Portage Point Partners, LLC as restructuring advisor; Jefferies LLC
as investment banker; Berkeley Research Group, LLC as financial
advisor; and Grant Thornton, LLP as tax consultant. Stretto is the
claims agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtors' cases. The committee tapped
Ropes & Gray LLP as bankruptcy counsel, Clyde & Co US LLP as
maritime counsel, and Berkeley Research Group LLC as financial
advisor.
BOY SCOUTS OF AMERICA: Methodist Churches to Cut Ties
-----------------------------------------------------
Philip Joens of Des Moines Register reports the Iowa Conference of
the United Methodist Church is advising local churches to stop
sponsoring Boy Scouts of America units until the organization
emerges from bankruptcy.
The BSA filed for Chapter 11 bankruptcy protection in February 2020
to protect it from hundreds of lawsuits by victims who have said
they were sexually abused during their time with the organization.
A federal bankruptcy judge in Delaware last week signed off on part
of an $850 million settlement agreement BSA reached with a majority
of the attorneys for sex abuse claimants in the case.
The $850 million offer was praised in July as the largest
settlement of sex abuse claims in U.S. history, according to USA
Today. BSA made past assurances that the organization had insurance
to cover chartered organizations — the civic and religious groups
that host and sponsor BSA units — according to a letter sent
Wednesday by Iowa Area Bishop Laurie Haller.
But her letter said BSA did not have "enough or sufficient"
coverage to protect chartered organizations. The letter also said
that local churches may have to pay legal fees to defend themselves
in lawsuits.
"They are leaving their chartered organizations out on a limb by
themselves," Haller wrote in the letter. "The local churches are at
risk of having to pay significant sums to victims to compensate
them for the damages they suffered at the hands of some scout
leaders ... All of this is because the BSA did not fulfill their
promise to have enough insurance to protect the local churches."
The Rev. Bill Poland, with the Des Moines-based Iowa Conference of
the United Methodist Church, said the letter is similar to one
being sent out by Methodist churches across the country. Poland has
pastored at three churches with Boy Scout troops. Faith is an
integral part of scouting, he said.
"While we highly value scouting, we also want to make sure we're
doing our best to protect our local churches and all of the people
in them," Poland said.
The Rev. Bill Poland, with the Des Moines-based Iowa Conference of
the United Methodist Church, said the letter is similar to one
being sent out by Methodist churches across the country. Poland has
pastored at three churches with Boy Scout troops. Faith is an
integral part of scouting, he said.
"While we highly value scouting, we also want to make sure we're
doing our best to protect our local churches and all of the people
in them," Poland said.
Specifically, the letter recommends that churches that currently
charter a scouting unit not renew the agreement with their local
councils, although churches can extend current agreements until
Dec. 31, the letter said.
Churches with existing charters could also decline to renew
charters but sign facilities use agreements with local councils
through Dec. 31. This would essentially allow local councils to
lease spaces from churches.
"After Dec. 31, we should be in a better position to see how the
future will unfold," the letter said. "Once a BSA plan is approved
by the bankruptcy court, we will know better how to proceed."
The Des Moines-based Mid-Iowa Council of the Boy Scouts of America
covers 27 counties in central Iowa. Matt Hill, the council's
executive, said the move will affect 50 Cub Scout, Venture and
Scouts BSA groups in central Iowa.
The Mid-Iowa Council supports about 2,900 volunteer leaders and
10,600 Boy Scouts and Cub Scouts in 27 counties, including the Des
Moines metro and Ames.
"Scouting is going to continue to remain viable," Hill said. "We
value our partnership with all of our chartering organizations and,
on a local level, we've had a longstanding relationship with so
many of these charter partners."
Nationwide, the United Methodist Church charters almost 20% of Boy
Scouts of America units serving more than 350,000 youths, according
to the Memphis Conference of the United Methodist Church. Poland
said officials don't have an exact count, but Methodist churches
serve at least 135 Boy Scouts units in Iowa.
On Aug. 17, the United Methodist Church joined the Roman Catholic
Church in objecting to the Boy Scouts of America's reorganization
plan in federal bankruptcy court in Delaware. The churches argued
that the reorganization shifted much of the burden for paying
survivors to the chartered organizations that could be sued.
The plan also denied chartered organizations adequate insurance
coverage to shield them from lawsuits, the brief said.
"While the Catholic and Methodist Committees would like to see
debtors emerge from bankruptcy, undermining chartered
organizations’ contractual rights is not a proper path forward,"
the brief said.
It has still not been determined yet how much each local council
will contribute to a victims' trust fund, according to USA Today.
After the Boy Scouts of America filed for bankruptcy, the Mid-Iowa
Council of the Boy Scouts of America did not file for bankruptcy
because BSA and the Mid-Iowa Council are legally separate
entities.
Hill said he could not say how much money the Mid-Iowa Council may
have to pay because negotiations are ongoing.
A hearing was scheduled for Wednesday to review the latest BSA
reorganization plan, which would have been the next milestone in
the case. Attorneys for the Boy Scouts of America postponed the
hearing until Sept. 21, casting uncertainty over the future of the
case, according to Insurance Journal, an insurance trade
publication.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BRIDGEPORT HEALTH: Seeks to Hire Zeisler & Zeisler as Legal Counsel
-------------------------------------------------------------------
Bridgeport Health Care Realty Co. seeks approval from the U.S.
Bankruptcy Court for the District of Connecticut to employ Zeisler
& Zeisler, P.C. to serve as legal counsel in its Chapter 11 case.
The firm's services include:
a. advising the Debtor of its rights, powers, and duties in
continuing to operate and manage its businesses and properties;
b. assisting the Debtor in the negotiation and documentation
of financing agreements, debt restructuring and related
transactions;
c. reviewing the nature and validity of liens asserted against
the properties of the Debtor and advising the Debtor concerning the
enforceability of such liens;
d. advising the Debtor concerning actions that it might take
to collect and to recover property for the benefit of its estate;
e. preparing legal documents and reviewing all financial
reports to be filed in the case;
f. advising the Debtor concerning, and preparing responses to,
applications, motions, pleadings, notices, and other papers which
will be filed and served in the bankruptcy case;
g. preparing and prosecuting a motion seeking approval to sell
the Debtor's assets;
h. advising the Debtor in connection with the formulation,
negotiation, and promulgation of a plan of reorganization and
related documents; and,
i. performing all other legal services.
The firm received a retainer in the amount of $30,000.
Stephen Kindseth, Esq., managing partner at Zeisler & Zeisler,
disclosed in a court filing that the firm and its attorneys are
"disinterested persons" within the meaning of Section 101(14) of
the Bankruptcy Code.
The firm can be reached through:
Stephen M. Kindseth, Esq.
Zeisler & Zeisler, PC
10 Middle St Floor 15
Bridgeport, CT 06604
Phone: +1 203-368-4234
Email: skindseth@zeislaw.com
About Bridgeport Health Care Realty Co.
Bridgeport Health Care Realty Co., a company that operates
non-residential buildings, filed its voluntary Chapter 11 petition
(Bankr. D. Conn. Case No. 21-50521) on Aug. 20, 2021, disclosing up
to $10 million in assets and up to $50 million in liabilities.
Miriam Stern, a partner at Bridgeport, signed the petition. Judge
Julie A Manning oversees the case. Stephen M. Kindseth, Esq., at
Zeisler & Zeisler, P.C., represents the Debtor as legal counsel.
BROOKLYN IMMUNOTHERAPEUTICS: Adjourns Annual Meeting to Sept. 3
---------------------------------------------------------------
Brooklyn ImmunoTherapeutics, Inc.'s 2021 Annual Meeting of
Stockholders, scheduled to be held at 9 a.m., Eastern time, on Aug.
20, 2021, was convened and adjourned, without any business being
conducted, due to lack of the required quorum.
In order to have a quorum that enables Brooklyn to proceed with its
Annual Meeting, at least 83% of the shares of common stock
outstanding as of 5 p.m., Eastern time, on June 21, 2021 (the
record date for the Annual Meeting) must be present virtually or
represented by proxy at the Annual Meeting. There were fewer than
83% of the shares entitled to vote present, either virtually or by
proxy at the meeting on Aug. 20, 2021. In the absence of a quorum
as of Aug. 20, 2021, the Annual Meeting of Stockholders was
adjourned to 9 a.m., Eastern time, on Friday, Sept. 3, 2021, to
allow additional time for Brooklyn's stockholders to vote on the
proposals set forth in Brooklyn's definitive proxy statement filed
with the Securities and Exchange Commission on July 1, 2021, as
amended by a supplement filed with the SEC on July 26, 2021.
During the current adjournment, Brooklyn continues to solicit votes
from its stockholders with respect to the proposals set forth in
Brooklyn's proxy statement, as supplemented. Brooklyn has engaged
a proxy solicitor, Alliance Advisors, LLC, to assist the board of
directors and management in obtaining adequate votes to achieve the
required quorum for the Annual Meeting.
Only stockholders of record, as of the record date, June 21, 2021,
are entitled to and are being requested to vote. Proxies
previously submitted in respect of the Annual Meeting will be voted
at the adjourned Annual Meeting unless properly revoked, and
stockholders who have previously submitted a proxy or otherwise
voted need not take any action.
Brooklyn encourages all stockholders of record as of 5 p.m.,
Eastern time, on June 21, 2021 whom have not yet voted to do so by
Sept. 2, 2021 at 11:59 p.m., Eastern time. Stockholders who have
any questions or require any assistance with completing a proxy or
voting instruction form or who do not have the required materials,
may contact the Company's Proxy Solicitation agent, Alliance
Advisors at (855) 835-8314.
If the number of additional shares of common stock voted at the
adjourned Annual Meeting is not sufficient to reach a quorum,
Brooklyn may determine to adjourn the Annual Meeting again, which
would require Brooklyn to incur additional costs.
About Brooklyn ImmunoTherapeutics
Brooklyn (formerly NTN Buzztime, Inc.) is focused on exploring the
role that cytokine-based therapy can have in treating patients with
cancer, both as a single agent and in combination with other
anti-cancer therapies. The company is also exploring opportunities
to advance therapies using leading edge gene editing/cell therapy
technology through its option agreement with Factor
Bioscience/Novellus. Brooklyn's most advanced program is studying
the safety and efficacy of IRX-2 in patients with head and neck
cancer. In a Phase 2A clinical trial in head and neck cancer,
IRX-2 demonstrated an overall survival benefit. Additional studies
are either underway or planned in other solid tumor cancer
indications.
NTN Buzztime reported a net loss of $4.41 million for the year
ended Dec. 31, 2020, compared to a net loss of $2.05 million for
the year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$64.71 million in total assets, $29.53 million in total
liabilities, and $35.18 million in total stockholders' and members'
equity.
San Diego, California-based Baker Tilly US, LLP, the Company's
auditor since 2013, issued a "going concern" qualification in its
report dated March 11, 2021, citing that the Company incurred a
significant net loss for the year ended Dec. 31, 2020 and as of
Dec. 31, 2020 had a negative working capital balance, and does not
expect to have sufficient cash or working capital resources to
fund
operations for the twelve-month period subsequent to the issuance
date of these financial statements. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
CAMBIUM LEARNING: Moody's Withdraws B3 CFR on Debt Repayment
------------------------------------------------------------
Moody's Investors Service has withdrawn Cambium Learning Group,
Inc.'s ratings including the B3 Corporate Family Rating, the B3-PD
probability of default rating, and the B3 rating on the first lien
credit facilities (revolver and term loan). The rating action
follows the full repayment and cancellation of the credit
facilities.
Withdrawals:
Issuer: Cambium Learning Group, Inc.
Corporate Family Rating, Withdrawn, previously rated B3
Probability of Default Rating, Withdrawn, previously rated B3-PD
Senior secured first lien credit facilities (revolver and term
loan), Withdrawn, previously rated B3 (LGD4)
Outlook Actions:
Issuer: Cambium Learning Group, Inc.
Outlook, Changed To Rating Withdrawn From Stable
RATINGS RATIONALE
Moody's has withdrawn the ratings because Cambium's debt previously
rated by Moody's has been fully repaid following a privately placed
refinancing transaction.
Headquartered in Dallas, Texas, Cambium is a provider of
predominantly subscription-based digital online educational
curriculum content and assessments to the pre-K to 12 grade school
market.
CARPENTER TECHNOLOGY: Egan-Jones Keeps BB- Sr. Unsecured Ratings
----------------------------------------------------------------
Egan-Jones Ratings Company, on August 20, 2021, maintained its
'BB-' foreign currency and local currency senior unsecured ratings
on debt issued by Carpenter Technology Corporation.
Headquartered in Philadelphia, Pennsylvania, Carpenter Technology
Corporation manufactures, fabricates, and distributes stainless
steels, titanium, and specialty metal alloys.
CCMW LLC: Seeks to Employ Debra Brower as Accountant
----------------------------------------------------
CCMW, LLC seeks approval from the U.S. Bankruptcy Court for the
Middle District of North Carolina to hire Debra Brower, a certified
public accountant at Debbie Brower CPA, LLP, to prepare its tax
returns.
Ms. Brower will be paid at an hourly rate of $200 or $1,200 for the
six hours of services rendered. The Debtor will request for the
court's approval in the event the services exceed six hours.
In a court filing, Ms. Brower disclosed that she is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
Ms. Brower can be reached at:
Debra S. Brower, CPA
Debbie Brower CPA, LLP.
3330 Battleground Avenue, Suite 302
Greensboro, NC 27410
Tel.: (336) 285-7547
Fax: (336) 285-7547
Email: db@debbiebrowercpa.com
About CCMW LLC
Greensboro, N.C.-based CCMW, LLC filed a petition for Chapter 11
protection (Bankr. M.D. N.C. Case No. 21-10395) on July 20, 2021,
listing as much as $10 million in both assets and liabilities.
Judge Benjamin A. Kahn oversees the case.
The Debtor tapped Ivey, McClellan, Siegmund, Brumbaugh & McDonough,
LLP as its legal counsel. Lynn, Webb & Smith, PLLC and Debbie
Brower CPA, LLP serve as the Debtor's financial consultant and
accountant, respectively.
CINCINNATI BELL: Egan-Jones Keeps B- Senior Unsecured Ratings
-------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Cincinnati Bell Inc. EJR also maintained its 'B'
rating on commercial paper issued by the Company.
Headquartered in Cincinnati, Ohio, Cincinnati Bell Inc. is a local
exchange and wireless provider serving residential and business
customers.
CITRIX SYSTEMS: Egan-Jones Keeps BB+ Senior Unsecured Ratings
-------------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Citrix Systems, Inc.
Headquartered in Fort Lauderdale, Florida, Citrix Systems, Inc.
designs, develops, and markets technology solutions that allow
applications to be delivered, supported, and shared on-demand.
COEUR MINING: Egan-Jones Lowers Senior Unsecured Ratings to BB-
---------------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Coeur Mining, Inc. to BB- from B+.
Headquartered in Chicago, Illinois, Coeur Mining, Inc. operates as
a mining company.
CONTINENTAL RESOURCES: Egan-Jones Hikes Sr. Unsecured Ratings to BB
-------------------------------------------------------------------
Egan-Jones Ratings Company, on August 20, 2021, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Continental Resources, Inc. to BB from BB-.
Headquartered in Oklahoma City, Oklahoma, Continental Resources,
Inc., based in Oklahoma City, is focused on the exploration and
production of on-shore oil-prone plays in the United States.
CORSAIR-USA-NJ: Seeks to Hire Hampton as Real Estate Broker
-----------------------------------------------------------
Corsair-USA-NJ, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Pennsylvania to hire Hampton Preferred
Real Estate, Inc. to market for sale its property at 627 Old Elm
St., Norristown, Pa.
The real estate broker will receive a flat fee of 5 percent upon
the sale of the property. Should another broker assist with finding
a buyer for the property, the broker's fee will be split to 2.5
percent.
As disclosed in court filings, Hampton is not an insider and is a
disinterested party to the Debtor.
The firm can be reached through:
David Teitelman
Hampton Preferred Real Estate Inc.
696 2nd St Pike
Richboro, PA 18954
Phone: (215) 357-3900
Mobile: (215) 432-9988
About Corsair-USA-NJ
Corsair-USA-NJ, LLC filed a petition for Chapter 11 protection
(Bankr. E.D. Pa. Case No. 21-11632) on June 8, 2021, listing as
much as $50,000 in both assets and liabilities. Jason Konek,
managing member, signed the petition. Judge Ashely M. Chan
oversees the case. The Debtor tapped Center City Law Offices, LLC
as legal counsel.
COVANTA HOLDING: Moody's Affirms Ba3 CFR Following EQT Transaction
------------------------------------------------------------------
Moody's Investors Service affirmed the ratings of Covanta Holding
Corporation, including its Ba3 Corporate Family Rating, Ba3-PD
probability of default rating and B1 senior unsecured rating. At
the same time, Moody's upgraded Covanta's Speculative Grade
Liquidity rating to SGL-2 from SGL-3. The rating outlook is stable.
The ratings affirmation follows the announcement of a financing
plan by EQT Infrastructure, which announced on July 14 that it will
acquire Covanta for approximately $5.3 billion.
RATINGS RATIONALE
"Under the ownership of EQT, we expect Covanta's fundamental credit
drivers will continue to exhibit positive momentum" stated Jairo
Chung, Moody's analyst. "We do not expect the modestly higher debt
level in place immediately after the EQT financing plan is executed
or the transition to a privately-owned company to negatively affect
Covanta's current ratings," added Chung.
The affirmation of its Ba3 CFR reflects Moody's view that Covanta
will continue to benefit from its key credit strengths that include
highly contracted waste revenues, diversification into the UK waste
market, and revenue increases from organic growth and new
initiatives. In addition, Covanta is not expected to distribute
dividends under the sponsorship of EQT, a credit positive aspect of
the acquisition, as Covanta has had to raise debt to fund dividend
obligations in the past.
However, Covanta is expected to carry approximately $500 million of
additional debt on its balance sheet based on the financing plan
related to this transaction, a credit negative. However, Moody's do
not expect Covanta's overall credit profile to be impacted
materially. As part of the financing plan, Covanta is expected to
issue approximately $1.275 billion of Term Loan B and $100 million
of Term Loan C. Also, it plan to issue approximately $1.625 billion
of senior unsecured debt, which will be comprised of existing and
new bonds. If there are any changes to the financing plan as
announced, this could affect Covanta's ratings at the time the
acquisition is executed in the fall.
Moody's expect Covanta's cash flow to improve over the next 12-18
months, mitigating to some degree its high and increasing leverage
as a result of the EQT transaction. Covanta has benefited from the
higher contract prices through renewals of contracts with its
long-term customers. As Covanta pursues opportunities to transition
into a broader sustainable waste solution company under the new
ownership, Moody's note that Covanta lacks the fully-integrated
business model which most of its waste management company peers
possess, especially in the Northeast and New England, where there
are constraints on waste disposal.
Covanta is also expected to benefit from its new projects in the
United Kingdom as they become operational. The Rookery project is
on track to be in service in the first quarter of 2022 and the
Earls Gate project is scheduled to become operation in late 2022 or
early 2023. Two other projects, Newhurst and Protos, are expected
to be in service in 2023 and 2024, respectively. Finally, Covanta
has benefited from improved commodity prices, both in energy and
metals, in recent months. However, Moody's continue to view the
merchant power market as challenging and waste metals prices will
continue to be volatile.
Liquidity
Covanta's SGL rating has been upgraded to SGL-2 from SGL-3. Over
the next 12-18 months, Moody's expect Covanta to generate higher
internally generated cash flow due to continued strong plant
operating performance and higher commodity prices for power and
metals. Also, under the sponsorship of EQT, Covanta is not expected
to distribute any dividends, resulting in an improvement in
Covanta's ability to meet it cash obligation with its internally
generated cash flow.
As part of the financing plan, Covanta will have access to a new
$440 million revolving credit facility which is expected to remain
largely undrawn. Also, the proceeds of a $100 million Term Loan C
expected to be issued in the fall of 2021 is expected to remain in
a cash collateral account and be only available to repay certain
letters of credit issued by banks and have no other use. Moody's
expect Covanta's ability to meet its covenants to remain strong,
although there may be new covenants implemented as part of the
financing plan, which could change Moody's view. Alternative
liquidity sources are limited given the highly specialized nature
of the energy from waste business, few other players, and plans on
the part of EQT to add secured debt to the capital structure.
Rating Outlook
The stable outlook reflects Moody's view that Covanta will continue
to maintain a consistent operational and financial performance over
the next 12-18 months. Moody's expect the company to maintain
generally predictable cash flow from long-term contracts and
generate key credit metrics that are appropriate for the current
rating. It also reflects Moody's expectation that the financing
plan for the EQT acquisition will not adversely affect Covanta's
rating or fundamental credit quality.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors That Could Lead to an Upgrade
A rating upgrade could be possible if Covanta mitigates financial,
market and operational risk such that its cash flow becomes more
predictable on a sustained basis. Positive rating action could also
occur if the company's leverage is reduced and US power market
dynamics improve such that power prices increase significantly.
Factors That Could Lead to a Downgrade
A rating downgrade could be considered if key credit metrics
deteriorate, including cash flow from operations before changes in
working capital (CFO pre-WC) to debt below 7%, on a sustained
basis. Also, if Covanta increases its leverage significantly to
finance an acquisition or if the EQT financing plan deviates from
what is currently envisioned, a rating downgrade could be possible.
A rating downgrade could also occur if there is a deterioration of
power market dynamics, resulting in a significant decline in power
prices on a sustained basis.
Upgrades:
Issuer: Covanta Holding Corporation
Speculative Grade Liquidity Rating, Upgraded to SGL-2 from SGL-3
Affirmations:
Issuer: Covanta Holding Corporation
Probability of Default Rating, Affirmed Ba3-PD
Corporate Family Rating, Affirmed Ba3
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD5)
Issuer: NATIONAL FINANCE AUTHORITY
Senior Unsecured Revenue Bonds, Affirmed B1 (LGD5)
Issuer: Niagara Area Development Corporation
Senior Unsecured Revenue Bonds, Affirmed B1 (LGD5)
Issuer: Pennsylvania Economic Dev. Fin. Auth.
Senior Unsecured Revenue Bonds, Affirmed B1 (LGD5)
Issuer: Virginia Small Business Financing Authority
Senior Unsecured Revenue Bonds, Affirmed B1 (LGD5)
Outlook Actions:
Issuer: Covanta Holding Corporation
Outlook, Remains Stable
Headquartered in Morristown, New Jersey, Covanta Holding
Corporation is one of the world's largest developers, owners and
operators of waste management infrastructure with 41
waste-to-energy (WtE) projects. In 2020, waste and services
represented 74% of consolidated revenues while electricity and
steam represented 19% and the remainder came from recycled metals
and other businesses.
The principal methodology used in these ratings was Unregulated
Utilities and Unregulated Power Companies published in May 2017.
COVANTA HOLDING: S&P Alters Outlook to Pos., Affirms 'B+' ICR
-------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based waste to
energy (WtE) provider Covanta Holding Corp. to positive from stable
and affirmed its 'B+' issuer credit rating. At the same time, S&P
assigned its 'BB' issue-level rating and '1' recovery rating to the
company's proposed senior secured debt and its 'B' issue-level
rating and '5' recovery rating to its proposed unsecured debt. The
'1' recovery rating indicates its expectation for full recovery in
the event of a default. The '5' recovery rating indicates its
expectation for minimal recovery in the event of a default.
S&P also affirmed its 'B' issue-level rating on Covanta's existing
unsecured debt.
The positive outlook reflects S&P's expectation that the company
will materially deleverage over its forecast horizon.
S&P views EQT Infrastructure's acquisition of Covanta as supportive
of its credit metrics.
Covanta is being acquired by a fund operated by EQT Infrastructure,
which is a global private equity firm with roughly $80 billion of
assets under management. EQT has pledged not to take a dividend
from Covanta for the foreseeable future. S&P said, "Because equity
dividends would be unsupportive of the company's credit quality, we
believe this policy will allow Covanta to deleverage faster than we
previously expected. S&P historically viewed Covanta's dividend
policy as a significant constraint on its ability to deleverage.
The company paid out $133 million and $89 million of dividends in
2019 and 2020, respectively, and in S&P's last review, S&P
forecasts it would pay $242 million of dividends through 2023." By
forgoing dividends, the company can instead use this cash to either
repay debt or reinvest in operating assets, which would allow it to
deleverage by expanding its EBITDA.
S&P said, "Importantly, we consider EQT to be an infrastructure
fund and do not designate it as a financial sponsor under our
criteria, which could limit our assessment of Covanta's financial
risk in future periods. Our rationale for this determination is
based on EQT's commitment to forgo taking a dividend from Covanta
and the representations it made to us regarding its historical
holding periods in other investments. If EQT begins to take a
dividend or otherwise take steps that would materially increase
Covanta's leverage, we may reassess our designation of EQT as an
infrastructure fund."
Covanta's strong operating trends will enable it to support the
incremental debt in its capital structure.
S&P said, "At close, Covanta's capital structure will comprise
roughly $3.12 billion of funded debt, which is an increase of about
$530 million (or 20%) relative to before the acquisition. That
said, the company's recent operating trends have been strong and
led us to materially increase our forecast for its 2021 EBITDA. In
addition, Covanta's financial performance has exceeded our
expectations so far in 2021. For example, the company reported a 9%
increase in its revenue through June, which compared with our
expectation for a top-line improvement of 3%-4%. We expect these
improving trends--most notably the increase in metals and power
pricing from their 2020 lows and continued steady tip-fee
growth--to continue in the near term.
"We now forecast Covanta will generate roughly $500 million of S&P
Global Ratings-adjusted EBITDA in 2021, which--together with our
debt adjustments--implies a debt to EBITDA ratio of about 6.1x.
This leverage ratio represents an improvement from 2019 and 2020,
when Covanta's S&P Global Ratings-adjusted leverage was 6.5x and
6.6x, respectively.
"We expect the company's leverage to decline below 5x by 2023.
"Our base-case scenario assumes recent operating trends continue
through 2023. It also incorporates the expansion of Covanta's U.K.
operations with four new WtE facilities capable of collectively
processing about 1.5 million metric tons of waste, which management
expects to come online by 2024. We expect the EBITDA contribution
(EBITDA from O&M operations plus distributions) from Covanta's U.K.
operations to rise to about $30 million by 2023 and about $50
million by 2026 from about $9 million in 2020. This
increase--combined with increased levels of debt repayment due to
the change in its dividend policy--will lead to forecast leverage
of 5.5x in 2022 and 4.7x in 2023. Our positive outlook reflects the
company's improved ability to deleverage."
The strengths of Covanta's business model supports S&P's rating.
S&P said, "More broadly, we rate Covanta 'B+' despite its current
leverage of more than 6x due to our view of its business strengths.
Specifically, Covanta's strongest credit features are its largely
predictable cash flows through contracted service agreements and
power hedging arrangements, the critical infrastructure nature of
its assets, its strong operating track record, its business model
(that enables it to earn revenue from both its inputs [waste] and
outputs [power and recycled metals]), and the dominant competitive
position it enjoys among WtE operators in the U.S. The company also
maintains good EBITDA coverage of interest for the current rating
level. We believe all these features will remain intact under EQT's
ownership.
"The positive outlook on Covanta reflects our expectation for
material deleveraging over our forecast horizon. We expect the
company's new owner, EQT Infrastructure, to refrain from taking a
dividend and will instead use discretionary cash flow to either
reinvest in the company or repay debt. We forecast Covanta's S&P
Global Ratings-adjusted debt to EBITDA will be 6.1x in 2021 and
5.5x in 2022.
"We could potentially downgrade Covanta due to a poor operational
performance, including boiler availability of less than 90% or
further declines in metals and power prices, that leads its S&P
Global Ratings-adjusted debt to EBITDA to rise above 7x or its
funds from operations (FFO) to debt to fall below 9% on a sustained
basis. We could also consider a downgrade if the company's
financial policy, which has become more favorable in our opinion,
becomes more aggressive, including capital allocations that are
disadvantageous to its creditors.
"We could consider an upgrade if Covanta's operating results remain
solid, its performance from recontracting WtE assets stays strong,
and its financial performance improves such that we become
confident its S&P Global Ratings-adjusted debt to EBITDA and FFO to
debt will remain below 6x and above 12%, respectively, on a
sustained basis."
CRAVE BRANDS: Wins Cash Collateral Access Thru Sept 15
------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois,
Eastern Division, has authorized Crave Brands LLC and Meathead
Restaurants LLC to use cash collateral in which LQD Financial Corp.
claims an interest on an interim basis through September 15, 2021.
The Debtors are permitted to use cash collateral to pay actual,
ordinary, and necessary expenses, in accordance with the budget,
with a 10% variance.
The Debtors have stipulated that (a) the indebtedness described in
the loan agreements executed by and between LQD and the Debtors
matured on March 31; and (b) as of the Petition Date, the balance
due to LQD is not less than $6,550,000 in principal plus accrued
interest at the rate of 17% per annum.
As adequate protection for the Debtor's use of cash collateral, LQD
is granted replacement liens and security interests on the Debtors'
property and assets, to the same extent, validity and priority as
LQD's pre-petition liens and security interests, if any, with any
such liens and security interests automatically perfected without
further action. The replacement liens will be in an amount equal to
the aggregate post-petition cash collateral used.
In addition to the replacement liens granted, LQD is granted a
super-priority administrative claim under Sections 503(b)(1),
507(a), and 507(b) of the Bankruptcy Code for the amount by which
the replacement lien proves to be inadequate and LQD will have all
the rights accorded to it pursuant to Section 507(b).
The Debtors are also directed to maintain insurance of the kind of
covering their property.
A further hearing on the matter is scheduled for September 13 at 2
p.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3BcUsrT from PacerMonitor.com.
The Debtor projects $2,008,718 in total receipts and $1,196,222 in
total disbursements from August 26 to September 22.
About Crave Brands
Crave Brands LLC, a company based in Chicago, Ill., sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
N.D. Ill. Case No. 21-04729) on April 9, 2021. In the petition
signed by Steve Karfaridis, manager, the Debtor disclosed total
assets of up to $50,000 and liabilities of up to $10 million.
Judge Timothy A. Barnes oversees the case.
Matthew Brash is the Subchapter V trustee appointed in the Debtor's
bankruptcy case.
David A. Warfield, Esq., at Thompson Coburn LLP, represents the
Debtor as bankruptcy counsel.
LQD Financial Corp., a creditor, is represented by the Law Office
of William J. Factor, Ltd.
CYTODYN INC: Provides Rosenbaum/Patterson Group Litigation Update
-----------------------------------------------------------------
The Board of Directors of CytoDyn Inc. issued the following
statement regarding "the continued efforts of an activist group led
by Paul Rosenbaum and Bruce Patterson to mislead shareholders and
engage in an unlawful proxy contest to replace a majority of the
Company's Board."
"Over the past week, the Rosenbaum/Patterson Group has made several
SEC and court filings related to its attempt to unlawfully
effectuate a hostile takeover of CytoDyn's Board. These filings
continue the pattern of selective disclosures, misrepresentations
and falsehoods that have characterized the Group's efforts to date.
The Group's new disclosures were intended to retroactively rectify
certain violations and omissions we have previously raised –
indicating a tacit admission that the Group previously willfully
failed to properly disclose material information to shareholders.
Shareholders should be asking themselves what else the
Rosenbaum/Patterson Group is seeking to hide, and what other
critical facts they could be withholding that they simply haven't
been forced to publicly reveal yet?
Consider the following:
* The Group indirectly admitted that its initial proxy statement
was materially misleading to investors. As evidence of this, the
Group's proxy filings include over a dozen pages with corrective
and new disclosures. Would these disclosures ever have been made
if the Group had not been forced by our lawsuit to correct its
misrepresentations?
* The Group's new disclosures reveal the "dark money" funding
its hostile takeover attempt. Specifically, the Group has now
identified the previously undisclosed 71 financing sources of CCTV
Proxy Group, LLC ("CCTV") compared to the only 28 group members
disclosed in their Schedule 13D filed with the SEC. CCTV is an
entity controlled by Paul Rosenbaum, which is funding the Group's
attempted solicitation. Notably, these financial backers include:
-- Two former CytoDyn directors who were or continue to be in
litigation with CytoDyn
-- A law firm called "The Greenan Law Firm"
- - A secretive investment fund called "Eisenberg
Investments,
LLC"
-- Family members of Paul Rosenbaum and other parties to the
Schedule 13D filed in connection with the proxy contest
-- All of the Schedule 13D group members
While the Rosenbaum/Patterson Group claims in its revised proxy
statement that these financial backers have "no involvement,
control or ability to influence the solicitation being conducted by
the Investor Group," the obvious and potential interconnections
with the Schedule 13D group members, nominees and "formal" proxy
contest participants of the Group calls the veracity of that
statement into question.
* The new filings raise further questions about the motivations
and goals of the Rosenbaum/Patterson Group. For example, it is
unclear what the relationship is between the backers of CCTV and
the Group. The Group's filings now state: "We cannot be certain
that the other stockholders named in the Schedule 13D will support
the Nominees," yet the Group's Schedule 13D filed on May 24, 2021
stated the Group "may seek stockholder representation on the Board,
as appropriate, including but not limited to through the initiation
of a proxy contest at the Issuer's 2021 annual meeting of
stockholders."
* The Group admits that its members engaged in a "shadow
campaign" to solicit votes from shareholders without having made
the required filings to do so. By issuing a corrective proxy
filing on August 13, 2021, which included social media posts, the
Group is implicitly acknowledging that these posts violated federal
securities laws. As a legal matter, all of the Group's written
solicitation activity was required to be identified as such and
publicly filed with the SEC the same day. The Group was also
forced to admit that that the Reddit user with the alias
"/u/superchet," which was used to moderate a forum regarding the
Company and posted comments in favor of the hostile takeover, is in
fact Group member Jeffrey P. Beaty. Thus, not only did Group
members seek to illegally solicit votes, at least one of them hid
behind an anonymous online alias in an attempt to do so without
being identified. Lastly, concerned shareholders have made us
aware that Paul Rosenbaum and Bruce Patterson conducted secret Zoom
conference calls with potential investors to solicit their support
to take over the Company's Board - many weeks, or even months,
before the Group filed its Schedule 13D on May 24, 2021.
* The Group continues to blatantly mislead shareholders about
the IncellDx proposal to be acquired by CytoDyn. They now claim
that IncellDx's $350 million proposal was solicited by the Company,
which is completely misleading. Dr. Patterson approached the
Company's management team on several occasions to propose that
IncellDx be acquired by CytoDyn, which is well documented. The
management team, consistent with its fiduciary duties, told Dr.
Patterson that IncellDX had to submit a formal proposal in order
for the Board to consider such a transaction. Shareholders should
be asking themselves why would CytoDyn want to acquire a private
entity with under $4 million in revenues and uncertain EBITDA for
$350 million?
* The Group has yet to present a plan for the future of
CytoDyn despite continuing its attempt to take control of the
Board. In its filings last week, the Group merely said "We look
forward to publicly releasing a comprehensive turnaround plan over
the coming weeks and months." The Group echoed this statement in
its revised proxy statement filed yesterday. Shareholders must ask
themselves why the Group has yet to disclose any of its mysterious
plans – nearly three months after its initial Schedule 13D filing
announcing its intent to run a proxy contest. If this Group has
yet to put forth any business plan for consideration by the
shareholders, how many years will be lost in the regulatory
advancement of leronlimab?
These myriad issues and open questions make it impossible for
shareholders to fully and fairly evaluate the motivations behind
and potential conflicts of interests inherent in the
Rosenbaum/Patterson Group's attempts to take over the Board of
CytoDyn. We will continue to act in the best interests of all
CytoDyn shareholders and will not allow the Rosenbaum/Patterson
Group to wage an illegal proxy contest while hiding behind the
smokescreen of misleading communications and selective
disclosures.
Despite these distractions, we remain focused on what matters most
to our Company, shareholders and patients: securing approval for
leronlimab and bringing its lifesaving potential to market. Last
week we announced more encouraging news on this front, noting that
we have received comments from the U.S. Food and Drug
Administration ("FDA") on the Company's recently submitted dose
justification report, an important component to the Company's
resubmission of its Biologics License Application ("BLA") for HIV.
We are confident that we will be able to successfully address these
comments, allowing the further advancement of our BLA
resubmission.
This news, coupled with the near-term initiation of two important
COVID-19 trials in Brazil, and possibly a strong clinical trial in
the U.S. for COVID-19 long-haulers, indicates that the next two to
three months could be transformative for the Company. We look
forward to sharing more information with shareholders soon."
About CytoDyn Inc.
Headquartered in Vancouver, Washington, CytoDyn Inc. --
http://www.cytodyn.com-- is a late-stage biotechnology company
focused on the clinical development and potential commercialization
of leronlimab (PRO 140), a CCR5 antagonist to treat HIV infection,
with the potential for multiple therapeutic indications.
Cytodyn reported a net loss of $154.67 million for the year ended
May 31, 2021, compared to a net loss of $124.40 million for the
year ended May 31, 2020. As of May 31, 2021, the Company had
$132.08 million in total assets, $153.10 million in total
liabilities, and a total stockholder's deficit of $21.02 million.
Birmingham, Alabama-based Warren Averett, LLC, the Company's
auditor since 2007, issued a "going concern" qualification in its
report dated July 30, 2021, citing that the Company incurred a net
loss of approximately $154,674,000 for the year ended May 31, 2021
and has an accumulated deficit of approximately $511,294,000
through May 31, 2021, which raises substantial doubt about its
ability to continue as a going concern.
DANA INC: Egan-Jones Lowers Senior Unsecured Ratings to BB-
-----------------------------------------------------------
Egan-Jones Ratings Company, on August 20, 2021, downgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Dana Incorporated to BB- from B.
Headquartered in Maumee, Ohio, Dana Incorporated engineers,
manufactures, and distributes components and systems for worldwide
automotive, heavy truck, off-highway, engine, and industrial
markets.
DILLARDS INC: Fitch Raises LT IDR to 'BB+', Outlook Positive
------------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Issuer Default Rating
(IDR) for Dillard's, Inc. to 'BB+' from 'BB'. The Rating Outlook is
Positive.
The upgrade reflects Dillard's improving topline trajectory and
strong cost reduction, with Fitch projecting 2021 EBITDA to be at
or above $800 million versus $391 million in 2019 on significantly
improved EBITDA margin at 13.1% versus 6.2% pre-pandemic. Fitch
expects EBITDA beginning 2022 to be around $500 million annually on
EBITDA margin of 8.0%-8.5%, on more normalized gross margins in the
34% range and SG&A increases relative to 2021 to support ongoing
investments in its omnichannel initiatives.
An upgrade to 'BBB-' could result from increased confidence in
Fitch's projections of sustained low-single-digit positive comps,
EBITDA above $500 million with EBITDA margin in the high single
digits, and adjusted debt/EBITDAR leverage sustained under 1.5x.
KEY RATING DRIVERS
EBITDA Rebound: Dillard's EBITDA has rebounded sharply, with 1H21
EBITDA of approximately $546 million, significantly higher than
$171 million reported in first half 2019. Revenue in 2Q21 increased
12% versus 2019, a significant improvement compared with a 9%
decline in the first quarter. Record EBITDA margin at 11.9% in 2Q21
and 6.7% in 1Q21 were significantly higher than the pre-pandemic
levels of 5.8%, due to increased full pricing selling and low
clearance activity on reduced inventory purchases (inventory down
26% at the end of 4Q20 and down 17% at 1Q21 relative to comparable
2019 levels) and significant expense reduction.
Fitch projects 2021 revenue could be close to pre-pandemic levels
of $6 billion, a significant recovery from the $4.2 billion in
2020, assuming revenue in 2H21 is down low single digits from 2019
levels. Revenue beginning in 2022 is expected to stabilize at this
level, with comps flat to up low single digits. While Fitch expects
EBITDA margins in 2021 to be in the low double digits given the
dynamics described above, Fitch expects EBITDA margin to moderate
to 8%-8.5% in 2022, on more normalized retail gross margins in the
34% range as inventory levels build and SG&A increases to support
higher revenue levels and ongoing investments in its omnichannel
initiatives.
Fitch recognizes a number of unknowns continue to exist, including
the levels of pent-up and pull-forward demand which may have
benefitted 1H21 apparel and accessories sales, and the potential
impact of rising delta variant cases on consumer behavior.
Longer Term Pandemic Impacts: Dillard's initiatives and competitor
actions during the pandemic could benefit leaders in the apparel
and accessories space and improve the company's revenue prospects
in the medium term, although this could be offset by the continued
secular shifts that have reduced mall traffic.
Notable actions over the past several years include closing
underperforming stores (with overall square footage down around 10%
over the last 10 years) and pulling back on low-turning inventory
to minimize unprofitable sales,. During 2020, Dillard's curtailed
capex to $60 million to preserve liquidity, reduced inventory
receipts by over 20% in the second half of 2020 and cut SG&A
expenses by around 30% in light of pandemic-related challenges.
Capex is expected to be at around $130 million annually beginning
2021.
Reduced industry square footage - due to store closures from strong
and weaker players as well as larger scale retrenchment by, or even
elimination of, struggling industry participants - should lead to
lower industry-wide inventory levels of apparel and accessories,
which could structurally reduce industry markdown activity, and
protect market share of industry leaders both in the mall and
off-mall channel.
Dillard's operating profitability has historically lagged its large
industry peers with EBITDA margin in the mid-single-digits, the
company's operations are geographically concentrated in with
locations largely in the Southeast, Central and Southwestern
regions and 50% of its sales coming from four states. Dillard's has
improved its merchandise assortment toward more upscale brands,
better in-store execution and strong inventory control.
The company has been able to add strong brands to its portfolio
over the last several years due to its focus on a non-promotional
strategy, which is a differentiating factor within its peer group.
Dillard's ability to stabilize its share of the mid-tier apparel,
accessories and home space and drive EBITDA margins in the high
single digits will depend on execution against its omnichannel
initiatives and strong inventory and expense control.
Demonstrated Financial Conservatism and Flexibility: Dillard's good
credit profile is underscored by its actions and financial
flexibility since the beginning of the pandemic. The company
maximized near-term cash flow through payables negotiations, lower
inventory buys and significantly reducing capex. Given its strong
liquidity and FCF of $178 million in 2020, combined with minimal
debt maturities, Dillard's completed $103 million in share
buybacks.
Dillard's has reduced its debt load by close to $600 million over
the last four years or by over half to less than $500 million in
2020 (giving $200 million subordinated debentures due 2038 50%
equity treatment). The company has also generated positive FCF over
the last few years despite EBITDA declines. Fitch expects adjusted
debt/EBITDAR to be under 1x in 2021 and trend in the low to mid 1x
beginning 2022. This compares with leverage of 1.6x in 2019.
DERIVATION SUMMARY
Dillard's ratings reflect its improving topline trajectory and
strong cost reduction, with Fitch projecting 2021 EBITDA to be at
or above $800 million on significantly improved EBITDA margin at
13.1% versus 6.2% pre-pandemic. Fitch expects EBITDA beginning 2022
to be around $500 million annually on EBITDA margin of 8%-8.5%, on
more normalized gross margins in the 34% range and SG&A increases
to support ongoing investments in its omnichannel initiatives.
Increased confidence in Fitch's projections of sustained low single
digit positive comps, EBITDA above $500 million with EBITDA margin
in the high single digits could lead to a positive rating action.
Dillard's ratings reflect the company's historical lower operating
profitability relative to its larger department store peers,
Kohl's, Nordstrom and Macy's and geographical concentration. The
ratings also consider Dillard's strong liquidity, FCF and minimal
debt maturities, with adjusted debt/EBITDAR expected to trend in
the low to mid 1x.
Macy's (BB+/Stable) ratings reflect its improving topline
trajectory and strong cost reduction, with Fitch projecting 2021
EBITDA to be at or above $2.5 billion on significantly improved
EBITDA margin at 10.4%. Fitch expects EBITDA beginning 2022 to be
around $2 billion on EBITDA margin of 8% on more normalized gross
margins and SG&A increases relative to 2021 to support ongoing
investments in its omnichannel initiatives. This, alongside Macy's
recent redemption of its $1.3 billion senior secured notes, have
improved Fitch's confidence in its ability to sustain adjusted
leverage under 3x.
Macy's ratings consider its position as the largest department
store chain in the U.S. Results in recent years have been pressured
given long term weak mall traffic trends and heightened competition
from alternate channels. Macy's ability to stabilize its share of
the mid-tier apparel, accessories and home space will depend on
execution against its omnichannel and other growth initiatives.
Kohl's (BBB-/Stable) ratings reflect its position as the second
largest department store in the U.S. and its well-developed
omnichannel strategies, with digital sales expected to contribute
to approximately 35% of revenues going forward. Kohl's off-mall
real estate footprint provides some insulation from mall traffic
challenges. Assuming a sustained topline recovery, EBITDA could
return to 2019 levels of $2.5 billion and adjusted debt/EBITDAR
could return to under 3x in 2022.
Nordstrom's (BBB-/Negative) ratings reflect its historically good
market position in the apparel, footwear and accessories space,
with its differentiated merchandise and high level of customer
service enabling the company to enjoy strong customer loyalty.
However, the Negative Outlook reflects concerns that recent
pre-pandemic operating challenges could suggest some combination of
execution shortfalls and increased susceptibility to secular
headwinds in the department store space, which could limit the
company's ability to return revenue and profitability close to
pre-pandemic levels. Nordstrom's ability to sustain its 'BBB-'
rating would depend on the operating rebound potential through
2022, with increased confidence in Nordstrom's ability to achieve
Fitch's projections and bring adjusted leverage to under 3.5x
through both EBITDA expansion and debt reduction.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Fitch projects Dillard's 2021 net sales could increase
approximately 43% to nearly $6 billion from depressed 2020
levels, close to 2019 levels assuming revenue in the second
half of 2021 is down low single digits relative to 2019 levels
versus up 12% in 2Q21 and down 9% in 1Q21. Sales growth is
expected to stabilize at this level beginning 2022 with flat
to low single digit comps growth;
-- EBITDA, which declined to $133 million in 2020 from
approximately $390 million in 2019, could improve to over $800
million in 2021, the company's best performance since 2012
2014 on sales recovery, gross margin in the high 30s (versus
around 33% in 2019) due to low inventory levels and better
than expected recovery in demand and strong expense reduction.
EBITDA margins in 2021 are now expected to be around 13%, well
above the 6.2% reported in 2019 due to these factors. EBITDA
in 2022 could trend toward the low $500 million range on high
single digit margins assuming gross margin moderate to the 34%
range and SG&A expense increases from 2021 (but still 5% lower
than 2019 levels);
-- FCF (after dividends) is expected to be around $250 million
$300 million given Fitch's EBITDA projections. Fitch expects
FCF will be directed towards share buybacks;
-- Adjusted debt/EBITDAR is projected to be under 1x in 2021 and
trend in the low to mid 1x beginning 2022. This compares to
leverage of 1.6x in 2019.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Increased confidence in Fitch's projections of sustained low
single digit positive comps, EBITDA above $500 million with
EBITDA margin in the high single digits, while maintaining
adjusted debt/EBITDAR leverage under 1.5x;
-- Fitch could stabilize Dillard's ratings on flat comps, EBITDA
trending in the mid-$400 million range, while maintaining
adjusted debt/EBITDAR leverage in the 1.5x-2x range.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Fitch could downgrade Dillard's ratings on reduced confidence
in the company's longer-term business profile or ability to
stabilize its operating trajectory, as evidenced by declines
in revenue in the low single digits and EBITDA trending well
below $400 million and EBITDA margin trending toward the mid
single digits, and/or with adjusted debt/EBITDAR sustained
above 2x.
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
Dillard's ended 2020 with a cash balance of $360 million and $662
million available under its $800 million credit facility, net of
zero borrowings and $20.1 million of letters of credit outstanding
against a borrowing base of $682.1 million.
On April 30, 2020, the company amended its $800 million credit
facility to be secured by certain deposit accounts of the company
and certain inventory and deposit accounts of certain subsidiaries.
The borrowing base is deemed an amount equal to i) 90% multiplied
by the appraised value multiplied by eligible inventory, minus (ii)
the aggregate amount of all availability reserves. The company
recently extended the maturity to April 28, 2026.
Fitch expects the company to generate FCF in the $250 million to
$300 million range annually with projected capex of $130 million,
with excess cash being diverted mainly toward share buybacks given
minimal near-term debt maturities and low leverage which Fitch
projects in the low to mid 1x range beginning 2022. The next
maturity is January 2023, when $45 million of the 7.88% senior
unsecured notes come due and Fitch expects this will be paid down
with cash on hand.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes.
Dillard's $800 million senior secured revolver has been affirmed at
'BBB-'/'RR1', indicating outstanding (91%-100%) recovery prospects.
The senior unsecured notes have been upgraded to 'BB+'/'RR4' from
'BB/RR4', indicating average (31%-50%) recovery prospects. The $200
million in capital securities due 2038 are rated two notches below
the IDR at 'BB-'/'RR6', reflecting their structural subordination.
Dillard's owns 90% of its retail sf, all of which is unencumbered.
ISSUER PROFILE
Dillard's is the fifth largest department store chain in the U.S.
in terms of sales with 2019 pre-pandemic retail revenue of $6
billion on 257 stores and 28 clearance centers in 29 states
concentrated in the southeast, central and southwest.
SUMMARY OF FINANCIAL ADJUSTMENTS
Summary of Financial Statement Adjustments - Financial statement
adjustments that depart materially from those contained in the
published financial statements of the relevant rated entity or
obligor are disclosed.
-- EBITDA adjusted to exclude stock-based compensation;
-- Operating lease expense capitalized by 8x to calculate
historical and projected adjusted debt.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
EASTSIDE DISTILLING: All Proposals Passed at Annual Meeting
-----------------------------------------------------------
Eastside Distilling, Inc. held its Annual Meeting of Stockholders
in virtual meeting over the Internet, at which the stockholders:
(1) elected Paul Block, Eric Finnsson, Robert Grammen,
Stephanie
Kilkenny, and Elizabeth Levy-Navarro as directors to serve
until the next annual meeting of stockholders and until his
or her successor has been elected and qualified, or until
his
or her earlier death, resignation, or removal;
(2) approved, on an advisory basis, the compensation of
Eastside's named executive
officers;
(3) approved an amendment to Eastside's articles of
incorporation
to increase the number of authorized shares of Eastside's
Common Stock from 15,000,000 to 35,000,000;
(4) approved an anti-dilution protection provisions included in
$3,300,000 of principal amount of 6% secured convertible
promissory notes and warrants to purchase up to 900,000
shares of the company's common stock; and
(5) ratified the appointment of M&K CPAS, PLLC as the company's
independent registered public accounting firm for the fiscal
year ending Dec. 31, 2021.
The stockholders also approved an adjournment of the Annual
Meeting. The proxy holders determined not to seek to continue,
adjourn, or postpone the Meeting to solicit additional proxies, as
Proposals 3 and 4 were approved.
About Eastside Distilling
Headquartered in Portland, Oregon, Eastside Distilling, Inc. --
www.eastsidedistilling.com -- manufactures, acquires, blends,
bottles, imports, exports, markets, and sells a wide variety of
alcoholic beverages under recognized brands.
Eastside Distilling reported a net loss of $9.86 million for the
year ended Dec. 31, 2020, compared to a net loss of $16.91 million
for the year ended Dec. 31, 2019. As of June 30, 2021, the Company
had $27.20 million in total assets, $18.52 million in total
liabilities, and $8.68 million in total stockholders' equity.
ELWYN INC: S&P Affirms 'BB' Long-Term Rating on 2017 Bonds
----------------------------------------------------------
S&P Global Ratings revised its outlook to stable from negative and
affirmed its 'BB' long-term rating on Delaware County Authority,
Penn.'s series 2017 bonds, issued for Elwyn Inc. now operating
under a new corporate name Elwyn of Pennsylvania and Delaware
(Elwyn).
"The outlook revision to stable reflects our view of Elwyn
management's successful turnaround strategies to preserve cash flow
and create a more financially sustainable organization," said S&P
Global Ratings credit analyst Wendy Towber. "Management's actions
have resulted in a trend of improving operations and steady balance
sheet growth, which support higher coverage and key liquidity
metrics," Ms. Towber added.
S&P said, "We analyzed Elwyn's environmental, social, and
governance risks relative to essentiality, management, and provider
market position, as well as the corresponding effects on the
financial profile and determined that all are in line with our view
of sector peers. While some payer concentration exists, this is
typical for human service provider organizations and in line with
our view of the sector. Similarly, while Elwyn has experienced
recent and upcoming senior management turnover, notably for the CFO
role, we believe this does not contribute to elevated governance
risks given the stability of the larger team, expected smooth
transition, and emerging trend of improving financial
performance."
Elwyn is a niche organization providing essential services to
people with special needs for more than 165 years. As a pioneer in
developing programs for children and adults with developmental
disabilities, the organization helps more than 22,000 clients
annually. The main campus in Elwyn, Penn., is about 300 acres.
Other programs and locations are in Philadelphia and the
surrounding counties, Southern New Jersey, Delaware, and
California. With the fiscal 2019 acquisition of Fellowship Health
Resources, Elwyn expanded its operations into Maine, Massachusetts,
North Carolina, Rhode Island, and Virginia.
ENDO INTERNATIONAL: S&P Places 'B-' ICR on CreditWatch Negative
---------------------------------------------------------------
S&P Global Ratings placed all of its ratings on Dublin-based
pharmaceutical company Endo International PLC on CreditWatch with
negative implications to reflect the risk that any one of several
events over the next six months could lead S&P to view its capital
structure as unsustainable and commensurate with a rating at least
one notch lower.
Endo expects to receive the verdicts from its multibillion-dollar
opioid-related trials in California and New York over the next 3-6
months. In addition, it continues to seek a settlement with
thousands of plaintiffs from other states, cities, counties, and
municipalities. If Endo is judged to be liable in the opioid
trials, S&P may view its capital structure as unsustainable due to
the potential for a very large legal liability.
S&P placed its ratings on Endo on CreditWatch with negative
implications because it believes several events occurring in the
next six months could lead it to view its capital structure as
unsustainable. These events include:
-- The outcome of its Vasostrict patent litigation with Eagle
Pharmaceuticals Inc., which could lead it to face generic
competition sooner than expected. If the company's patents are
invalidated and Eagle launches its competing product, S&P thinks
Endo's EBITDA could decline by 10%-25% in 2022 (depending on
pricing and market share), which would lead to materially weaker
S&P Global Ratings-adjusted gross debt to EBITDA potentially in the
9x-10x area. Given the limited near-term prospects for
deleveraging, S&P would likely view its capital structure as
unsustainable;
-- The verdicts of the opioid-related trials in California and New
York, which could leave the company exposed to very large legal
liabilities that exceed its cash balance;
-- The company could announce a broader opioid-related settlement,
which is more likely with the upcoming verdicts in California and
New York. The plaintiffs also recently agreed to settlements with
other defendants, including Johnson & Johnson, McKesson,
Amerisource Bergen, and Cardinal Health; and
-- Endo's unsecured notes are trading at distressed levels, which
S&P believes increases the likelihood that it will offer to buy
back its unsecured notes at below par or otherwise complete a debt
exchange that it views as distressed and tantamount to a default.
If Endo successfully defends its patents for Vasostrict and
receives a favorable outcome to its opioids litigation, S&P would
be more likely to view its capital structure as sustainable. A
favorable outcome to the opioids litigation would include winning
the California and New York trials or reaching a settlement with
nearly all plaintiffs for an amount less than roughly $1.4
billion.
CreditWatch
S&P said, "We plan to resolve the CreditWatch in the next three to
six months if the company loses the Vasostrict patent trial, the
California opioid trial, or the New York opioid trial. We could
also resolve the CreditWatch if we think a distressed exchange has
become more likely due to the company's debt trading levels and
fundamental factors. Under these downside scenarios, we would
expect to lower our rating by at least one notch.
"We could also resolve the CreditWatch if an opioid-related
settlement is announced, assuming the company successfully defends
its Vasostrict patents. Under this scenario, we could consider
affirming our 'B-' rating if the size of the settlement is
manageable at its current cash and debt levels (estimated in the
$1.4 billion area).
"We could also resolve the CreditWatch if the company wins both
opioid-related trials and the Vasostrict trial. Under this
scenario, we would likely affirm our 'B-' rating."
EQT CORP: Egan-Jones Keeps B- Senior Unsecured Ratings
------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by EQT Corporation. EJR also maintained its 'B' rating
on commercial paper issued by the Company.
Headquartered in Pittsburgh, Pennsylvania, EQT Corporation is an
integrated energy company with emphasis on Appalachian area
natural-gas supply, transmission, and distribution.
EQUESTRIAN EVENTS: Unsecureds to Get $728 Per Month for 24 Months
-----------------------------------------------------------------
Equestrian Events, LLC, filed with the U.S. Bankruptcy Court for
the Northern District of Illinois a Second Amended Subchapter V
Plan of Reorganization dated August 23, 2021.
During the bankruptcy case, the Debtor has continued to operate in
a profitable manner. The Debtor also obtained an order authorizing
Debtor in Possession financing in the amount of $1,450,000. This
amount is being used to pay the existing secured lenders, Skyylight
Services and Silver Bottom. Pursuant to the settlement between
Debtor, Skyylight Services and Silver Bottom, the Debtor paid the
full amount received from the DIP financing and executed a new,
post-petition promissory note in favor of Silver Bottom, which is
to be paid down through boarding services provided by Debtor. The
settlement resolves all disputes between the Debtor and its primary
pre petition creditors.
The financial projections provided by the Debtor assume that the
Debtor will be able to operate at full capacity with a projected
occupancy of 95% of horse stalls in use, and assume the same demand
for services as existed prior to the Covid pandemic. As the Covid
pandemic eases, the Debtor will likely be able to begin hosting
events and parties, which will generate additional revenue.
Finally, the Debtor earns some revenues from the sale of horses,
which are sold at least once or twice per year and in the ordinary
course of the Debtor's business. The Debtor expects to earn
substantial revenues in the form of repayment of boarding fees and
expenses related to the development of the horses for sale in
cooperation with its owner or the owner of the horses. The Debtor's
financial projections show that the Debtor will have projected
disposable income of $7,217 per month. The final plan payment is
expected to be paid on November 1, 2023.
This Plan of Reorganization proposes to pay creditors of the Debtor
from cash flow generated by its business operations. This Plan
provides for 1 class of secured claims; 1 class of unsecured
claims; and 1 class of equity security holders. Unsecured creditors
holding allowed claims will receive distributions, which the
proponent of this Plan has valued at approximately 100 cents on the
dollar. This Plan also provides for the payment of administrative
claims over a period of 24 months.
Class 1 consists of Administrative Claims, which are payable in
full over a period of 24 months with an estimated payment of
$833.33 per month.
Class 2 consists of the Secured Claims of Kane County, Illinois and
TD Auto Finance. Kane County, IL shall be paid in full at the
estimated rate of $2,873.29 per month for a period of 24 months. TD
Auto Finance shall be paid in full according to the terms of the
existing contract.
Class 3 consists of General Unsecured Creditors. Unsecured
creditors will be paid in full at the rate of $728.13 per month for
24 months.
Class 4 consists of Equity Security Holders of the Debtor. Equity
security holder, Brian Anderson, shall retain his interest in the
Debtor.
The Plan will be funded by the continued operations of the Debtor
and income derived from operations of the Debtor as set forth on
the projections. Brian Anderson is Manager and 100% Member of the
Debtor and is responsible for overseeing the operations of the
Debtor. Brian Anderson shall remain Manager and of the Debtor and
remain responsible for the operations of the Debtor after Plan
Confirmation.
A full-text copy of the Second Amended Plan dated August 23, 2021,
is available at https://bit.ly/3DfWOYO from PacerMonitor.com at no
charge.
Attorney for the Plan Proponent:
Joshua D. Greene, Esq.
Springer Larsen Greene, LLC
300 South County Farm Rd., Suite G
Wheaton, IL 60187
Telephone: (630) 510-0000
Facsimile: (630) 510-0004
Email: jgreene@springerbrown.com
About Equestrian Events
Equestrian Events, LLC operates a horse boarding business at
45W015-45W017 Welter Rd, Maple Park, Illinois. It has 100%
ownership interest in the property, which has a current value of
$2.10 million.
Equestrian Events filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
20-21793) on Dec. 21, 2020. Brian Anderson, its manager, signed the
petition.
At the time of filing, the Debtor disclosed total assets of
$2,186,326 and total liabilities of $3,162,525.
Judge Timothy A. Barnes oversees the case.
Springer Larsen Greene, LLC serves as the Debtor's legal counsel.
Skyylight Services and Silver Bottom, LLC, as Lenders, are
represented by Mark A. Carter, Esq., Richard Polony, Esq., and
Daniel L. Morriss, Esq., at Hinshaw & Culbertson LLP as counsel.
ETHEMA HEALTH: Delays Filing of Second Quarter Form 10-Q
--------------------------------------------------------
Ethema Health Corporation filed a Form 12b-25 with the Securities
and Exchange Commission notifying the delay in the filing of its
Quarterly Report on Form 10-Q for the period ended June 30, 2021.
Ethema was unable to file its Quarterly Report on Form 10-Q for the
three months ended June 30, 2021 by the prescribed date without
unreasonable effort or expense because it was unable to compile and
review certain information required in order to permit the company
to file a timely and accurate report on its financial condition.
The company believes that the Quarterly Report will be completed
and filed within the five day extension period provided under Rule
12b-25 of the Securities Exchange Act of 1934, as amended.
About Ethema Health
Headquartered in West Palm Beach, Florida, Ethema Health
Corporation -- http://www.ethemahealth.com-- operates in the
behavioral healthcare space specifically in the treatment of
substance use disorders. Ethema developed a unique style of
treatment over the last eight years and has had much success with
in-patient treatment for adults. Ethema will continue to develop
world class programs and techniques for North America.
Ethema reported net income of $3.08 million for the year ended Dec.
31, 2020, a net loss of $14.96 million for the year ended Dec. 31,
2019, and a net loss of $8.18 million for the year ended Dec. 31,
2018. As of March 31, 2021, the Company had $4.09 million in total
assets, $18.52 million in total liabilities, $400,000 in preferred
stock, and a total stockholders' deficit of $14.83 million.
Sunrise, Florida-based Daszkal Bolton LLP, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated April 15, 2021, citing the Company had accumulated deficit of
approximately $42.4 million and negative working capital of
approximately $12.9 million at Dec. 31, 2020, which raises
substantial doubt about its ability to continue as a going concern.
ETHEMA HEALTH: Incurs $2.6 Million Net Loss in Second Quarter
-------------------------------------------------------------
Ethema Health Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $2.63 million on $96,158 of revenues for the three months ended
June 30, 2021, compared to net income of $9.04 million on $82,301
of revenues for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $4.99 million on $186,951 of revenues compared to a net
loss of $1.30 million on $165,843 of revenues for the same period
during the prior year.
As of June 30, 2021, the Company had $4.19 million in total assets,
$19.10 million in total liabilities, $400,000 in preferred stock,
and a total stockholders' deficit of $15.31 million.
Cash used in operating activities was $383,358 and $114,394 for the
six months ended June 30, 2021 and 2020, respectively, an increase
of $268,964.
Cash used in investing activities was $498,020 and cash released
from investing activities was $5,995 for the six months ended June
30, 2021 and 2020, respectively, the increase is attributable to
the advances made to Evernia, which acquisition closed on July 1,
2021.
Cash provided by financing was $691,302 and $110,618 for the six
months ended June 30, 2021 and 2020, respectively. In the current
period the Company raised convertible debt funding of $1,262,149
and repaid convertible debt of $709,778 out of those proceeds.
Ethema said, "Over the next twelve months we estimate that the
company will require approximately $1.5 million in working capital
as it continues to develop the Evernia facility and it is also
exploring several other treatment center options and sources of
patients throughout the country. The company may have to raise
equity or secure debt. There is no assurance that the Company will
be successful with future financing ventures, and the inability to
secure such financing may have a material adverse effect on the
Company's financial condition. In the opinion of management, the
Company's liquidity risk is assessed as medium."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/792935/000172186821000524/f2sgrst10q081521.htm
About Ethema Health
Headquartered in West Palm Beach, Florida, Ethema Health
Corporation -- http://www.ethemahealth.com-- operates in the
behavioral healthcare space specifically in the treatment of
substance use disorders. Ethema developed a unique style of
treatment over the last eight years and has had much success with
in-patient treatment for adults.
Ethema reported net income of $3.08 million for the year ended Dec.
31, 2020, a net loss of $14.96 million for the year ended Dec. 31,
2019, and a net loss of $8.18 million for the year ended Dec. 31,
2018. As of March 31, 2021, the Company had $4.09 million in total
assets, $18.52 million in total liabilities, $400,000 in preferred
stock, and a total stockholders' deficit of $14.83 million.
Sunrise, Florida-based Daszkal Bolton LLP, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated April 15, 2021, citing the Company had accumulated deficit of
approximately $42.4 million and negative working capital of
approximately $12.9 million at Dec. 31, 2020, which raises
substantial doubt about its ability to continue as a going concern.
EXACTUS INC: Posts $125K Net Income in Second Quarter
-----------------------------------------------------
Exactus, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing net income of $124,529 on
$5.07 million of revenue for the three months ended June 30, 2021,
compared to net income of $618,110 on $6.22 million of revenue for
the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported net
income of $437,107 on $5.68 million of revenue compared to a net
loss of $1.49 million on $7.12 million of revenue for the six
months ended June 30, 2020.
As of June 30, 2021, the Company had $23.64 million in total
assets, $11.62 million in total liabilities, and $12.02 million in
total stockholders' equity.
On June 30, 2021, the Company had approximately $6.152 million in
cash and liquid stock of 22nd Century Group, Inc. (NASDAQ:XXII).
The Chief Executive Officer of the Company holds the XXII shares
pursuant to the pledge agreement and has the power at any time to
permit the Company to sell the shares to provide working capital.
Panacea has borrowed substantial sums from Leslie Buttorff, the
Company's chief executive officer, to meet its working capital
obligations. On June 30, 2021 Panacea issued an affiliate of Ms.
Buttorff a 12% demand promissory note for $4,062,713 and issued Ms.
Buttorff a 10% demand promissory note for $1,624,000 secured by a
pledge of certain XXII common stock owned by Panacea.
Additionally, the Company has a line of credit with Ms. Buttorff
through which it may borrow up to $1 million at a 10% annual
interest rate.
"We may not have sufficient cash resources to sustain our
operations for the next 12 months, particularly if the large sales
contracts we have do not result in the revenue anticipated. We may
be dependent on obtaining financing from one or more debt or equity
offerings or further loans from Ms. Buttorff assuming she agrees to
advance further funds," said Exactus in the regulatory filing.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1552189/000149315221021035/form10-q.htm
About Exactus
Exactus Inc. (OTCQB:EXDI) -- http://www.exactusinc.com-- is a
producer and supplier of hemp-derived ingredients and feminized
hemp genetics. Exactus is committed to creating a positive impact
on society and the environment promoting sustainable agricultural
practices. Exactus specializes in hemp-derived ingredients
(CBD/CBG/CBC/CBN) and feminized seeds that meet the highest
standards of quality and traceability. Through research and
development, the Company continues to stay ahead of market trends
and regulations. Exactus is at the forefront of product
development for the beverage, food, pets, cosmetics, wellness, and
pharmaceutical industries.
Exactus reported a net loss of $10.94 million for the year ended
Dec. 31, 2020, compared to a net loss of $10.12 million for the
year ended Dec. 31, 2019.
Henderson, NV-based RBSM LLP, the Company's auditor since 2014,
issued a "going concern" qualification in its report dated April
23, 2021, citing that the Company has an accumulated deficit,
recurring losses, and expects continuing future losses that raises
substantial doubt about the Company's ability to continue as a
going concern.
FIRSTENERGY CORP: Egan-Jones Keeps BB Senior Unsecured Ratings
--------------------------------------------------------------
Egan-Jones Ratings Company, on August 18, 2021, maintained its 'BB'
foreign currency and local currency senior unsecured ratings on
debt issued by FirstEnergy Corp.
Headquartered in Akron, Ohio, FirstEnergy Corp. operates as a
public utility holding company.
FIRSTENERGY CORP: Fitch Alters Outlook on 'BB+' LT IDR to Stable
----------------------------------------------------------------
Fitch Ratings has affirmed the Long- and Short-Term Issuer Default
Ratings (IDR) of FirstEnergy Corporation (FE) and FirstEnergy
Transmission, LLC (FET) at 'BB+' and 'B', respectively. Fitch has
also affirmed the Long- and Short-Term IDRs of FE's utility
subsidiaries at 'BBB-' and 'F3', respectively. The Rating Outlook
for FE and its subsidiaries has been revised to Stable from
Negative.
The rating affirmation and Stable Outlook consider the deferred
prosecution agreement (DPA) reached by the U.S. Attorney's Office
(USAO) and FE regarding the Department of Justice (DoJ) criminal
investigation. Fitch believes the agreement is constructive from a
credit perspective. The ratings and Stable Outlooks also consider
the potential adverse impact of admissions contained in the DPA on
the regulatory compact in Ohio. Fitch believes sufficient headroom
exists, in a reasonable worst-case outcome, for FE and its
Ohio-based utilities to absorb financial pressure from future
regulatory actions in pending Ohio rate proceedings.
KEY RATING DRIVERS
FIRSTENERGY CORP
DPA Settlement: Fitch believes FE's July 20, 2021 agreement with
the U.S. Attorney's Office (USAO) for the Southern District of Ohio
resolving the Department of Justice's (DoJ) investigation is a
constructive development from a credit perspective.
Under the terms of the DPA, FE has agreed to the government's
filing of a single charge of conspiracy to commit honest services
wire fraud, which will be dismissed in three years, if FE meets
certain conditions. Salient features of the settlement include a
$230 million penalty, cooperation with the government's
investigation, continued implementation of programs to detect and
prevent violation of U.S. laws, forfeiture of approximately $6.5
million to the U.S. government and disclosure of payments to
entities controlled by public officials made by FE in 2021, among
other things.
FE is being investigated by several agencies, including the SEC and
Federal Energy Regulatory Commission (FERC) and several suits are
pending, including the Ohio Attorney General (OAG) and certain Ohio
cities' civil complaints against FE alleging violation of the Ohio
Corrupt Activity Act in connection with passage of HB6.
Reputational Damage: While admissions contained in the DPA damage
FE's reputation with key constituents, the settlement removes
significant source of uncertainty and provides an opportunity for
FE to rehabilitate its reputation. FE has cooperated significantly
with federal investigators, as acknowledged in the DPA, and the
company plans to continue to cooperate with the investigation.
FE has been vocal in its commitment to empower a culture of
compliance and transparency while rebuilding its reputation and
cooperating with ongoing government and regulatory investigations.
Fitch believes efforts underway at FE to enhance transparency and
strengthen compliance with the company's code of conduct and other
policies are credit supportive. Failure to realize meaningful
improvement in corporate governance and culture at FE would result
in adverse credit rating actions.
FE has strengthened its board and executive leadership, hiring John
Somerhalder as Vice-Chairperson and Executive Director. Somerhalder
will work with FE management to strengthen governance and
compliance functions and enhance relationships with external
stakeholders. Among other things, FE has hired a new chief legal
officer and chief ethics and compliance officer. Five new directors
joined FE's board in 2021.
Challenges in Ohio: Admissions in the DPA's statement of facts by
FE create a challenging regulatory environment in Ohio, in Fitch's
view. Further financial pressure is likely to emerge from pending
Ohio regulatory proceedings, including several opened to
investigate impacts from FE's past corrupt activity. Fitch believes
FE and its Ohio operating utilities have sufficient headroom in
their credit metrics to absorb a reasonable worst-case outcome,
supporting the rating affirmations and Stable Outlooks.
Credit Metrics Pressured: Based on Fitch's estimates, FE credit
metrics are expected to remain weak in 2021 and 2022, primarily
driven by Ohio regulatory proceedings, before improving in 2023 and
2024. Fitch estimates FFO leverage of approximately 7.4x and 8.2,
respectively, in 2021 and 2022, before improving to 7.1x and 6.4x
in 2023 and 2024.
Parent and Subsidiary Rating Linkage: Fitch considers FE's
subsidiary distribution and transmission utility operating
companies (OpCos) to be generally stronger than their corporate
parent, reflecting the utilities' relatively low business risk
profile, balanced rate regulation and solid FFO-adjusted leverage.
While operational and strategic ties are robust, prescribed
regulatory capital structures for FE's opcos leads to moderate
rating linkage, allowing the utilities' IDRs to be notched above
FE's IDR. Fitch applies a bottom-up approach rating FE's opcos.
FE's utility subsidiary IDRs reflect their standalone credit
profiles and moderate rating linkage with FE, while FE's IDR
incorporates a consolidated approach.
Manageable Leverage: While FE's consolidated leverage is manageable
for its current rating category, parent-only leverage is high. FE's
consolidated balance sheet debt totaled $23.8 billion as of June
30, 2021, and includes $7.8 billion of parent-only debt. FE's
parent-only debt accounted for approximately 33% of consolidated
debt at the end of 2Q 2021.
Utility Focused Growth Strategy: Fitch believes FE management's
strategic focus on regulated utility growth is credit supportive.
Rate base growth is expected to approach 6% in 2020-2023, driven by
estimated capex of up to $2.9 billion in 2021 ($1.7 billion
distribution and $1.1 billion transmission). Total capex is
projected in a range of $2.9 billion-$3.2 billion in 2022 and $2.7
billion-$3.1 billion in 2023. Management foresees $20 billion of
post-2023 transmission investment opportunities.
Ohio Utilities: Ohio Edison (OE), Cleveland Electric Illuminating
Co. (CE) and Toledo Edison (TE)
Ohio Regulatory Update: Fitch believes economic regulation is
likely to prove challenging as FE works to regain the trust of
regulators, customers and other constituents in light of admissions
contained in the DPA. Significant deterioration in the Ohio
regulatory compact is a key credit concern and could pressure OE's,
CE's, TE's and FE's creditworthiness. PUCO has opened several
proceedings investigating OE, CE and TE. Open dockets include a
review of charitable and political spending, corporate separation
audit, distribution modernization rider review and review of vendor
payments as part of PUCO's delivery capital rider audit.
In addition, the PUCO has consolidated ESP IV related significantly
excessive earnings test (SEET) proceedings for OE, CE and TE for
2017, 2018 and 2019 in its quadrennial review of the utilities' ESP
IV. FE does not believe it has significantly excessive earnings,
while intervenors in the proceeding assert significant excessive
earnings.
FE management is committed to pursuing an open dialogue to reach a
global settlement of matters before the PUCO with an eye toward
addressing regulatory concerns and uncertainties. FE hopes through
this process to establish greater trust with constituents and
restore its reputation. Worse than expected outcomes in open PUCO
proceedings from a credit perspective cannot be ruled out and could
result in future adverse credit rating actions. The Stable Rating
Outlook for OE, CE, TE and their corporate parent reflects headroom
in the operating utilities' credit metrics sufficient, in Fitch's
view, to absorb a reasonable worst-case outcome.
Parent and Subsidiary Rating Linkage: Rating linkage between CE,
OE, TE and FE is moderate. FE is dependent on cash distributions
from its operating utility and transmission subsidiaries. While
FE's rated subsidiaries, including CE, OE and TE, have direct
access to capital markets and are subject to cost-of-service
regulation and jurisdictional capital requirements, they have
relatively strong strategic and operational links to their
corporate parent. Operating utility subsidiary funding is
facilitated through central treasury operations including
sub-limits under FE's fully committed bank agreement and
participation in FE's regulated money pool.
Solid Credit Metrics: OE's, CE's and TE's IDRs and Stable Outlooks
reflect solid underlying credit metrics, constructive rate design
in Ohio and a balanced outcome in the utilities' Electric Security
Plan (ESP) IV proceeding before the PUCO. Fitch estimates that
average annual 2022-2024 FFO leverage in a range of 3.3x-3.6x for
OE, 5.4x-6.9x for CE and 4.7x-5.5x for TE.
Pennsylvania Utilities: Metropolitan Edison Co. (ME); Pennsylvania
Electric Co. (PN); West Penn Power (WP); and, Pennsylvania Power
Co. (PP)
Solid Credit Metrics: Factors supporting the ratings and Stable
Rating Outlooks for ME, PN, WP and PP include solid underlying
credit metrics reflecting constructive rate design in Pennsylvania
including settlement agreements in the utilities' past two base
rate cases. In Fitch's assessment, business risk at ME, PN, WP and
PP, as pure transmission and distribution utilities providing
essential electric utility services in parts of Pennsylvania, is
low and cash flows relatively stable. Fitch estimates annual
2021-2024 FFO leverage will 5.0x or better for ME, PN, WP and PP.
Constructive Regulation: Fitch views the regulatory compact in
Pennsylvania favorably from a credit point of view. Rate lag under
Pennsylvania rate regulation is mitigated by use of forecast test
years in base rate cases and adjustment mechanisms to recover
infrastructure investment, smart meter costs, purchase power for
default service and energy efficiency costs mandated by Act 129
outside of base rate case proceedings. In Fitch's view, authorized
PUC default service plans adequately protect utilities operating in
the state from exposure to market price volatility.
Distribution utility capex in Pennsylvania is expected to
approximate $525 million-$565 million per year during 2021-2023 in
aggregate for WP, PP, ME and PN. Constructive Pennsylvania rate
regulation mitigates Fitch's concerns regarding the utilities'
large capex program. The utilities' last two base rate cases were
resolved through PPUC-approved settlement agreements in 2015 and
2017 resulting in base rate increases of $291 million in 2017 and
$293 million in 2015.
LTIIP Approved: In January 2020, the PUC approved WP, PP, ME and
PN's Long-Term Infrastructure Investment Plan (LTIIP). FE's
Pennsylvania utility operating companies (OpCos) filed individual
LTIIPs with the PUC in August 2019. PPUC's order authorizes capital
investment of $572 million as proposed collectively by FE's
Pennsylvania-based OpCos for 2020-2024. Cost associated with FE's
LTIIP will be recovered through the utilities' Distribution System
Investment Charge (DSIC) outside of base rate case proceedings.
In March 2020, the PPUC approved a settlement authorizing a
temporary increase in PP's DSIC recoverability cap to 7.5% from
5.0%. The cap will expire with the effective date of new rates in
PP's next base rate case filing or expiration of its LTIIP II
program.
EE&C Settlement Approved: On March 25, 2021, the PPUC approved a
settlement agreement reached by FE with intervenors in the
proceeding in the company's Phase IV energy efficiency and
conservation (EE&C) plan without modification. The plan is
operative from June 2021 through May 2026 and sets demand reduction
targets relative to 2007 to 2008 peak demand at 2.9% MW for ME,
3.3% MW for PN, 2.0% MW for PP and 2.5% MW for WP.
In addition, the PPUC-approved settlement authorizes energy
consumption demand target reductions as a percentage of the
companies historic 2009 to 2010 reference load 3.1% MWH for ME,
3.0% MWH for PN, 2.7% MWH for PP and 2.4% MWH for WP.
PA Divestiture Pending: In February, 2021, PN agreed to sell its
Waverly, NY distribution assets to Tri-County Rural Electric
Cooperative (Tri-County). PN, through the Waverly Electric Light &
Power Company, serves approximately 4,000 customers in the Waverly
NY vicinity. The transfer of assets and customers to Tri-County is
subject to several closing conditions including regulatory
approvals and is expected to close in 2022.
Parent and Subsidiary Rating Linkage: Rating linkage between ME,
PN, WPP, PP and FE is moderate-to-strong. FE is dependent on cash
distributions from its operating utility and transmission
subsidiaries. While FE's rated subsidiaries, including ME, PN, WPP
and PP, have direct access to capital markets and are subject to
cost-of-service regulation and jurisdictional capital requirements,
they have relatively strong strategic and operational linkage with
their corporate parent. Operating utility subsidiary funding is
facilitated through centralized treasure function. Salient features
include sub-limits under FE's fully committed bank agreement and
its subsidiaries participate in FE's regulated money pool.
Jersey Central Power & Light (JCP&L)
Low Stand-Alone Business Risk: JCP&L's ratings and Stable Outlook
consider the utility's relatively low, stand-alone business risk
profile as a pure transmission and distribution utility,
predictable earnings and cash flows and solid projected 2022-2024
FFO leverage, reflecting the constructive effects of JCP&L's
recent, commission approved base rate case settlement. New Jersey
Board of Public Utilities and FERC rate regulation is generally
balanced, in Fitch's opinion, from a credit perspective. Fitch
estimates FFO leverage will improve from 5.7x in 2021 to average
4.5x during 2022-2024, due in large part to a balanced outcome in
JCP&L's most recent base rate case, and is supportive of JCP&L's
current ratings.
Large Capex Program: JCP&L is targeting 2021-2023 transmission and
distribution (T&D) capex in the $1.1 billion to $1.2 billion range,
or approximately 14% of FE's total T&D capex of $8.2 billion to
$8.9 billion. Projected 2021-2023 capex for JCP&L's transmission
business represents 52% of total JCP&L capex in its low case, and
57% in its high case with distribution spending representing the
remainder.
JCP&L's T&D capex program is focused on improving grid resilience
and reliability with shorter outages, while modernizing the grid to
facilitating clean energy goals. Proposed capex initiatives include
electric vehicle charging, advanced meters and energy efficiency
and conservation initiatives.
Coronavirus Impact Manageable: Fitch expects the effects of the
coronavirus pandemic on JCP&L's operations and financials to be
manageable within its current rating category, all else equal. The
BPU has authorized tracking of coronavirus-related costs and
deferral of bad debt expense for future recovery in rates.
Final BPU Decision: JCP&L reached a settlement in its last base
rate case with intervenors, which was approved by the BPU in
October 2020. The BPU-approved settlement included, among other
things, a $94 million annual revenue increase based on a 9.6%
authorized ROE and a 51.4% equity capital component, with new rates
effective Nov. 1, 2021. The rate increase represents 51% of JCP&L's
updated $185 million revenue increase supported by the utility at
the time of the BPU's final decision.
The delay in the effective date of the rate increase is partially
offset by amortization of deferrals and use of proceeds from the
sale of the Yards Creek generating facility of approximately $109
million to reduce regulatory assets for previously incurred storm
costs.
Management Audit: In October 2020, the BPU initiated a JCP&L
management audit. In December 2020, the commission issued a request
for proposals seeking bids from firms interested in conducting the
audit. The audit is expected to examine reliability and resilience,
vegetation management, internal and external communications,
distribution circuit undergrounding, affiliate transactions and
operational and investment decision making.
Parent and Subsidiary Rating Linkage: JCP&L's rating linkage with
FE is moderate. Fitch takes a strong subsidiary/weak parent
approach in its analysis. JCP&L has close strategic, operational
and financial ties with FE, which has a centralized treasury and
management structure and is dependent on cash distributions from
its operating subsidiaries to meet its obligations. JCP&L
participates in FE's utility money pool and relies on a sub-limit
under FE's bank facility, in part, to meet its liquidity needs.
JCP&L has direct access to debt capital markets and is regulated by
the BPU and FERC on a cost-of-service basis and subject to
jurisdictional capital requirements.
Monongahela Power Co. (MP), Potomac Edison Co. (PE) and Allegheny
Generating Co. (AGC)
Solid Credit Metrics: The IDRs and Stable Outlooks for MP, AGC and
PE reflect solid projected credit metrics in the wake of relatively
constructive outcomes in West Virginia rate proceedings in recent
years for MP and the Maryland Public Service Commission's (MPSC)
order in PE's last base rate case. In addition, the ratings for MP
and PE reflect the impact of coronavirus pandemic on MP and PE,
lower revenue due to the Tax Cuts and Jobs Act of 2017 and solid
C&I growth in deliveries 2021-2023. Fitch projects annual 2021-2024
FFO-adjusted leverage will average 4.4x for MP, 5.1x for PE and
3.4x for AGC.
Low Business Risk: MP is an integrated electric utility serving
parts of West Virginia while PE is a pure T&D utility primarily
serving parts of Maryland and West Virginia. MP provides power
supply services to PE in West Virginia and the companies file joint
rate case proceedings before the West Virginia Public Service
Commission (WVPSC). Fitch believes MP offers a somewhat higher
operating risk profile compared with PE's pure transmission and
distribution utility business risk profile. MP owns or controls
3,580MW of primarily coal-fired, rate regulated generating
capacity.
WV Regulatory Environment: Utilities operating in West Virginia
file rate cases based on historical test years, utilizing an
average base rate. In addition, final WVPSC decisions are typically
issued a year or more after the established test year. These
factors contribute to regulatory lag and ROEs tend to be below the
industry average. While regulation is somewhat challenging, in
Fitch's view, signs of improvement include more balanced outcomes
MP's most recent base rate cases and adoption of cost recovery
riders for fuel and purchased power and vegetation management.
AGC Rating Linked to MP: Allegheny Generating Co. is a
FERC-regulated wholly owned subsidiary of MP. AGC's sole asset is a
16% ownership interest (480-mW) in the Bath County Project's (BCP)
3000-MW pumped storage generating facility. All of the output from
AGC's ownership interest in BCP is sold under a power sales
agreement with MP at cost-plus rates.
MD Rate Regulation: Similar to West Virginia, Maryland regulation
tends to rely on historic test years and has been reluctant to
adopt innovative cost recovery mechanisms. However, Fitch notes
that the MPSC in PE's last general rate case incorporated a
partially forecasted test year supplementing a full 12 months of
actual data. In addition, Maryland is considering alternative
ratemaking including multi-year rate plans, which, if implemented
in a balanced manner, would be constructive from a credit
perspective.
PE's last rate case was filed in August 2018 and the PSC issued an
order approving a $10.4 million base rate increase, adopting
company proposed electric distribution investment surcharge (EDIS)
and addressing issues associated with the federal tax changes
enacted in 2017. PE supported a $17.6 million rate increase at the
time of the MPSC decision. The EDIS rider facilitates recovery of
distribution investment to enhance system reliability outside of
base rate case filings and is reconciled annually. The MPSC
decision requires PE to file a base rate case at the end of the
approved EDIS program in early 2023. Fitch believes the final MPSC
decision is credit neutral for PE.
WV and MD Capex: FE plans distribution investment of $255
million-$285 million per year in West Virginia 2021-2023 and $70
million-$95 million per year in Maryland.
Parent and Subsidiary Rating Linkage: MP's and PE's rating linkage
with FE is moderate. Fitch takes a strong subsidiary/weak parent
approach in its analysis. MP and PE have close strategic,
operational and financial ties with FE, which has a centralized
treasury and management structure and is dependent on cash
distributions from its operating subsidiaries to meet its
obligations. MP and PE participate in FE's utility money pool and
relies on sub-limits under FE's bank facility, in part, to meet
their liquidity needs. MP and PE have direct access to debt capital
markets and are regulated by the MPSC, WVPSC and FERC on a
cost-of-service basis and subject to jurisdictional capital
requirements. AGC's rating linkage with MP is strong reflecting
close strategic, operational and financial ties.
FirstEnergy Transmission Co. (FET), American Transmission Systems,
Inc. (ATSI), Mid-Atlantic Interstate Transmission, LLC (MAIT),
Trans-Allegheny Interstate Line Co. (TrAIL)
Solid Credit Metrics: Factors supporting the IDRs and Stable
Outlooks for ATSI, MAIT and TrAIL include solid underlying credit
metrics, formula-based rate design and balanced FERC rate
regulation. Fitch estimates average annual 2021-2024 FFO-adjusted
leverage of 5.5x for FET and better than 4.0x for ATSI, MAIT and
TrAIL.
Large Capex Program: FE, is targeting transmission capex of $1.1
billion in 2021, $1.2 billion to $1.5 billion in 2022 and $1.1
billion-$1.5 billion in 2023. Projected 2021 through 2023 total
capex for ATSI, TrAIL and MAIT on average represents approximately
75%, 65% and 67% of FE's annual consolidated transmission capital
spend over the same time horizon. The transmission build-out is
designed to improve FE's system reliability and customer service
and consist of a large number of relatively small projects. FE has
identified more than $20 billion of post-2023 investment
opportunities in its transmission business.
Constructive Price Regulation: FET's, ATSI's, MAIT's and TrAIL's
IDRs and Stable Outlooks consider balanced FERC rate regulation,
which includes forward-looking test years, formula-based rates with
annual true-up and relatively attractive ROE. These factors
mitigate regulatory lag and Fitch's concerns regarding FET's and
its subsidiaries' large capital investment program.
Counterparty Risk: While FET's operating subsidiaries are dependent
on the FE operating companies for a substantial proportion of its
revenues, counterparty risk is with the regional transmission
organizations (PJM), not the utilities that ultimately collect the
funds from the end customers. Fitch believes PJM has appropriate
credit policies in place including, collateral requirements and
settlement procedures that would minimize financial impacts to FET
or other transmission owners of a default or failure to pay by a
transmission user.
Shift to Formula-Based Rates: As a part of its transmission
business expansion strategy, FET's corporate parent, FE, has
shifted the regulatory paradigm so that a substantial proportion of
FE's transmission assets and investment is housed at FET's
subsidiaries, subject to FERC formula-based rates with relatively
low regulatory lag and competitive authorized ROE. Fitch believes
the shift to formula-based rates is a positive development from a
credit point of view.
Fitch notes that FERC's methodology for calculating electric
transmission utility ROE gives rise to a measure of uncertainty as
a result of an April 2017 District of Columbia Circuit Court of
Appeals decision vacating the agency's methodology for calculating
ROE. In Fitch's view, uncertainty regarding FERC's ROE methodology
is manageable within FET's and its subsidiaries' current rating
categories, given the transmission utilities'.
Parent and Subsidiary Rating Linkage: FET is an intermediate
holding company for FE's three transmission subsidiaries, with no
operations other than ownership of ATSI, MAIT and TrAIL. Rating
linkage with FE is strong reflecting close strategic, operational
and financial ties and a centralized management structure,
including a centralized treasury function and participation in FE's
unregulated companies' money pool. As a result, FET's ratings are
impacted by strong linkage with its corporate parent under Fitch
criteria.
ATSI's, MAIT's and TrAIL's rating linkage with FET and FE is
moderate. The utilities' have close strategic, operational and
financial ties with FE and FET, which have a centralized treasury
and management structures and are dependent on cash distributions
from their operating subsidiaries to meet their obligations. FET's
transmission utility subsidiaries participate in FE's utility money
pool and rely on sub-limits under FET's bank facility to meet their
liquidity needs.
ATSI, MAIT and TrAIL have direct access to debt capital markets and
are regulated by the FERC on a cost-of-service basis and, unlike
FET, subject to jurisdictional capital requirements.
MAIT Settlement: FET subsidiary, MAIT filed a settlement agreement
with FERC in its formula-based transmission rate proceeding in
October 2017 that was approved by the commission in May 2018. The
FERC in a May 2018 order accepted a settlement without conditions,
establishing a formula-based rate template incorporating 10.3%
authorized ROE (9.8% base plus a regional transmission operator
participation adder of 0.50%) and a 50% equity — 50% debt
hypothetical capital structure for 2017 and 2018 (as agreed to in
the MAIT asset transfer proceedings) and a 60% equity ceiling for
2019-2021.
The 60% equity ceiling will remain in effect until changed through
a subsequent rate case filing. Under the terms of the FERC-approved
settlement no party to the settlement, including MAIT, may file for
a change in ROE or capital structure with an effective date earlier
than Jan. 1, 2022.
ESG Considerations: Fitch has revised FE's Environmental, Social
and Governance (ESG) Relevance Score to '4' from '5' for Management
Strategy, Governance Structure, Group Structure and Financial
Transparency reflecting the signed DPA settling the federal
criminal investigation of FE and ongoing efforts to ameliorate weak
internal controls and corporate governance issues as discussed
above. FE's ESG Relevance Scores of '4' for Management Strategy,
'4' for Governance Structure, '4' for Group Structure and '4' for
Financial Transparency, are relevant to the ratings and have an
impact on FE's ratings in combination with other factors.
Fitch has also revised OE's, CE's and TE's Environmental, Social
and Governance (ESG) Relevance Score to '4' from '3' for Management
Strategy, Governance Structure, Group Structure and Financial
Transparency reflecting the signed DPA settling the federal
criminal investigation of FE and ongoing efforts to ameliorate weak
internal controls and corporate governance issues as discussed
above. FE's ESG Relevance Scores of '4' for Management Strategy,
'4' for Governance Structure, '4' for Group Structure and '4' for
Financial Transparency, are relevant to the ratings and has an
impact on FE's ratings in combination with other factors.
Except for the matters discussed above, the highest level of ESG
credit relevance, if present, is a score of 3 - ESG issues are
credit neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
DERIVATION SUMMARY
FE's IDR of 'BB+'/Stable is three notches lower than other large,
multi-utility holding company peers American Electric Power (AEP;
BBB+/Stable); Exelon Corporation (EXC; BBB+/Stable) and WEC Energy
Group, Inc. (BBB+/Stable). FE's comparatively low ratings reflect
weak, albeit improving, corporate governance risk, heightened
reputational risk in the wake of its DPA, potential exposure to
ongoing federal agency and other pending investigations and
regulatory proceedings, especially in Ohio. AEP, EXC and WEC, like
FE, are large utility holding companies with operations spanning
several states focused strategically on maximizing relatively
predictable operating utility returns.
Similarly rated 'BB' category FE peers include DPL, Inc. (DPL;
BB/Negative) and PG&E Corp. (PCG; BB/Stable), which are single
utility-holding companies with operations in Ohio and California,
respectively. Unlike PCG and DPL, FE provides electric utility
service in parts of six Mid-Atlantic states and benefits from
greater regulatory diversity than either PCG or DPL. FE is
significantly larger than DPL, which provides electric utility
services in a relatively small service territory in western Ohio,
but smaller than PCG, which owns one of the largest combination
electric and gas utilities in the nation, Pacific Gas and Electric
Company (BB/Stable), serving central and northern California. PCG's
creditworthiness is challenged by catastrophic wildfire activity,
related potentially outsized third-party liabilities and
safety-related and operational issues. DPL's creditworthiness has
been adversely impacted by regulatory developments in Ohio,
primarily due to a PUCO order blocking distribution modernization
charges of $105 million per year, and reflect high parent-only
debt.
FE's parent-only debt approximates 33% of total consolidated debt,
higher than PCG's 12% but meaningfully lower than DPL's 60%
parent-only debt. Fitch estimates FFO leverage at FE will
approximate 6.4x-8.2x during 2021-2024, which compares to 7.7x for
DPL in 2022 and approximately 6x and 5x for PG&E in 2021 and 2022,
respectively.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Fitch assumes FE will comply fully with its federal DPA and
the sole charge dropped;
-- DPA penalty of $230 million paid in 2021 as per terms of the
agreement;
-- Baseline distribution deliveries growth is projected at one
percent per annum on average 2021-2023;
-- Distribution and transmission utility rate base growth of ~5%
and ~8%, respectively, through 2023;
-- Consolidated FE capex estimated at $2.9 billion in 2021, $2.9
billion-$3.2 billion in 2022 and $2.7 billion-$3.1 billion in
2023;
-- Gradual improvement in Ohio economic regulation following
ongoing proceedings examining FE's conduct in light of H.B. 6
related revelations;
-- Continued credit-supportive economic regulation in
Pennsylvania, New Jersey, Maryland and West Virginia;
-- Continuation of generally balanced rate regulation;
-- Rate increase at JCPL effective November 2021;
-- Reflects decoupling revenues as per settlement and FE's
voluntary decision to forego collection of lost distribution
revenues;
-- Equity issuance of $1 billion and no asset monetization.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade for FE:
-- Favorable resolution of rate proceedings currently pending
before the PUCO and gradual improvement in the regulatory
compact in Ohio;
-- Full compliance with the requirements of the recently
announced DPA over the agreements three-year term and
resolution of federal investigations and legal proceeding
underway regarding FE's actions with regard to HB 6 and
related matters;
-- Sustained efforts to address admitted failings of FE's
corporate governance and culture to ensure no future
violations of its code of conduct and resolve weak internal
controls;
-- FFO leverage of 6.5x or better coupled with meaningfully
improved internal controls and corporate governance;
-- Continued balanced rate regulation by jurisdictional
authorities in Pennsylvania, New Jersey, West Virginia,
Maryland and FERC;
-- Improvement in leverage driven by prudent asset monetization
and equity issuance;
-- Continued strategic focus on relatively low-risk utility and
transmission businesses.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for FE:
-- A worse than expected outcome in pending ratemaking matters
before the PUCO;
-- An unexpected inability to comply with the terms of the DPA;
-- Inability to ameliorate corporate governance issues and
material weakness of internal controls;
-- Meaningfully worse than anticipated outcomes in pending
federal investigations and legal proceedings;
-- Significant deterioration in FE's rate regulation or
unanticipated operating or other developments, resulting in
lower than expected earnings and cash flows and higher
leverage, including greater than expected impact from the
coronavirus pandemic;
-- A change in corporate strategy embracing investment in
businesses with higher risk profiles;
-- These or other factors resulting in sustained FFO leverage
greater than 7.3x.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for OE, Pennsylvania Power Company (PP), CE
or TE include:
-- A credit rating upgrade at the utilities' corporate parent FE;
-- Rehabilitation of the utilities' reputation and normalization
of the regulatory compact in Ohio;
-- Balanced outcomes in pending rate cases and audits currently
before the PUCO;
-- FFO leverage of 5.0x or better on a sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for OE, PP, CE or TE include:
-- An adverse credit rating action at FE;
-- FFO leverage of higher than 6.0x;
-- Significant deterioration in jurisdictional price regulation
in Ohio;
-- An unexpected, catastrophic event resulting in a prolonged
outage.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for Metropolitan Edison Company (ME),
Pennsylvania Electric Company (PN) or West Penn Power Company (WP)
include:
-- A credit rating upgrade at the utilities' corporate parent FE;
-- FFO leverage of 5.0x or better on a sustained basis;
-- Continued balanced jurisdictional price regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for ME, PN or WP include:
-- An adverse credit rating action at FE;
-- FFO leverage higher than 6.0x;
-- Significant deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in a prolonged
outage.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for Jersey Central Power & Light Company
(JCP&L) include:
-- A credit rating upgrade at the utility's corporate parent;
-- FFO leverage of 5.0x or better on a sustained basis;
-- Continued balanced jurisdictional price regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for JCP&L include:
-- An adverse credit rating action at FE;
-- FFO leverage of higher than 6.0x;
-- Deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in a prolonged
outage.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for MP and PE include:
-- A credit rating upgrade at the utilities' corporate parent;
-- FFO leverage of 5.0x or better;
-- Continued balanced jurisdictional price regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for MP and PE include:
-- An adverse rating action at FE;
-- FFO leverage of worse than 6.0x on a sustained basis;
-- Deterioration in jurisdictional price regulation;
-- An unexpected, catastrophic event resulting in prolonged
outages.
Factor that could, individually or collectively, lead to positive
rating action/upgrade for Allegheny Generating Co.:
-- An upgrade at MP and FFO leverage of 5.0x or lower at
Allegheny Generating Co.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for Allegheny Generating Co.
-- Deterioration in the company's FFO leverage to above 6.0x;
-- Meaningful deterioration in FERC rate regulation;
-- Downgrade of corporate parent and off-taker MP;
-- A prolonged catastrophic outage at Bath County Project.
Factor that could, individually or collectively, lead to positive
rating action/upgrade for FET:
-- A credit rating upgrade at corporate parent FE.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for FET:
-- An adverse rating action at FE;
-- Significant deterioration in FERC regulation;
-- FFO leverage sustaining at 6.0x or higher due to deterioration
in regulatory oversight or other factors;
-- An unexpected catastrophic outage or event at FET's
transmission subsidiaries.
Factors that could, individually or collectively, lead to positive
rating action/upgrade for ATSI, MAIT and TrAIL include:
-- An upgrade at FE along with FFO leverage sustaining at 5.0x or
lower;
-- Continued balanced FERC rate regulation.
Factors that could, individually or collectively, lead to negative
rating action/downgrade for ATSI, MAIT and TrAIL include:
-- An adverse rating actions at FE;
-- Significant deterioration in FERC regulation;
-- FFO leverage sustaining at 6.0x or higher due to deterioration
in regulatory oversight or other factors;
-- An unexpected catastrophic outage or event.
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
In Fitch's opinion, FE's liquidity position is generally solid, and
is on more stable ground in light of the signed DPA. As discussed
above, FE was unable to comply with covenants contained in the
Representations and Warranties section of FE's bank facilities due
to FE's inability to rule out corruption with regard to the 4Q 2020
disclosure of a $4.3 million third-party contract payment in 2019
and for a short period of time FE and its subsidiaries were unable
to access their RCFs pending waivers from their bank group. With
such waivers provided, FE borrowed just under $2 billion of the
$3.5 billion of total borrowing capacity available under its credit
facilities in November 2020 in a proactive measure to ensure
financial flexibility and fully repaid such borrowings shortly
following the DPA announcement July 2021.
FE again was permitted by its bank group to again amend its RCFs to
provide modifications necessitated by facts and circumstances
described in the recently announced DPA. The amendments allowed FE
regain compliance and maintain access to its RCFs. Fitch does not
expect the DoJ investigation, with the signed DPA in place, to
result in further disruption in FE access to its RCFs.
FE and FET had remaining short-term borrowings under their RCFs of
$350 million and $150 million, respectively, as of June 30, 2021.
FE and FET repaid their RCFs and had full access to the facilities,
with the exception of $4 million of letters of credit issued at FE
as of July 21, 2021. FE has issued unsecured and secured debt
across several subsidiaries earlier this year, demonstrating solid
access to debt capital markets during the pendency of the DoJ
investigation.
As of July 21, 2021, FE had total available liquidity of $4.0
billion, composed of $460 million of cash and cash equivalents and
available borrowing capacity of $3.5 billion under FE's and FET's
RCFs. FE's and FET's RCFs terminate December 2022. FE's long-term
debt maturities are manageable with $1.8 billion scheduled to
mature annually on average during 2021-2024.
ISSUER PROFILE
FE provides regulated electricity services in the Midwest and
Mid-Atlantic regions of the U.S. and is one of the largest electric
systems in the nation. FE provides distribution, transmission and
default and regulated generation services to approximately six
million customers in six states across a 65,000 square mile service
territory.
ESG CONSIDERATIONS
FirstEnergy Corporation has an ESG Relevance Score of '4' for
Management Strategy due to material weakness in internal controls
over FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
FirstEnergy Corporation has an ESG Relevance Score of '4' for Group
Structure due to material weakness in internal controls over FE's
financial reporting and uncertainties associated with admissions
included in FE's DPA discussed above, which has a negative impact
on the credit profile, and is relevant to the ratings in
conjunction with other factors.
FirstEnergy Corporation has an ESG Relevance Score of '4' for
Governance Structure due to material weakness in internal controls
over FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
FirstEnergy Corporation has an ESG Relevance Score of '4' for
Financial Transparency due to material weakness in internal
controls over FE's financial reporting and uncertainties associated
with admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Ohio Edison Company has an ESG Relevance Score of '4' for
Management Strategy due to material weakness in internal controls
over FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Ohio Edison Company has an ESG Relevance Score of '4' for Group
Structure due to material weakness in internal controls over FE's
financial reporting and uncertainties associated with admissions
included in FE's DPA discussed above, which has a negative impact
on the credit profile, and is relevant to the ratings in
conjunction with other factors.
Ohio Edison Company has an ESG Relevance Score of '4' for
Governance Structure due to material weakness in internal controls
over FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
Ohio Edison Company has an ESG Relevance Score of '4' for Financial
Transparency due to material weakness in internal controls over
FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
The Cleveland Electric Illuminating Company has an ESG Relevance
Score of '4' for Management Strategy due to material weakness in
internal controls over FE's financial reporting and uncertainties
associated with admissions included in FE's DPA discussed above,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
The Cleveland Electric Illuminating Company has an ESG Relevance
Score of '4' for Group Structure due to material weakness in
internal controls over FE's financial reporting and uncertainties
associated with admissions included in FE's DPA discussed above,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
The Cleveland Electric Illuminating Company has an ESG Relevance
Score of '4' for Governance Structure due to material weakness in
internal controls over FE's financial reporting and uncertainties
associated with admissions included in FE's DPA discussed above,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
The Cleveland Electric Illuminating Company has an ESG Relevance
Score of '4' for Financial Transparency due to material weakness in
internal controls over FE's financial reporting and uncertainties
associated with admissions included in FE's DPA discussed above,
which has a negative impact on the credit profile, and is relevant
to the ratings in conjunction with other factors.
The Toledo Edison Company has an ESG Relevance Score of '4' for
Management Strategy due to material weakness in internal controls
over FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
The Toledo Edison Company has an ESG Relevance Score of '4' for
Group Structure due to material weakness in internal controls over
FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
The Toledo Edison Company has an ESG Relevance Score of '4' for
Governance Structure due to material weakness in internal controls
over FE's financial reporting and uncertainties associated with
admissions included in FE's DPA discussed above, which has a
negative impact on the credit profile, and is relevant to the
ratings in conjunction with other factors.
The Toledo Edison Company has an ESG Relevance Score of '4' for
Financial Transparency due to material weakness in internal
controls over FE's financial reporting and uncertainties associated
with admissions included in FE's DPA discussed above, which has 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.
FISERV INC: Egan-Jones Keeps BB+ Senior Unsecured Ratings
---------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Fiserv, Inc.
Headquartered in Brookfield, Wisconsin, Fiserv, Inc. provides
integrated information management and electronic commerce systems
and services.
GBT TECHNOLOGIES: Extends Maturity of Iliad Note Until Dec. 31
--------------------------------------------------------------
GBT Technologies Inc. and Iliad Research and Trading, L.P. entered
into agreement on Aug. 20, 2021, to further extend the maturity of
the Iliad Note until Dec. 31, 2021 in consideration of an extension
fee of $1,000 representing the fourth extension of the original
note. Following the application of extension fee of $1,000, the
principal amount under the Iliad Note is $345,776.40.
On Feb. 27, 2019, GBT issued Iliad a Promissory Note in the
principal amount of $2,325,000, due in one year. On Feb. 27, 2020,
the Company and Iliad entered to an Amendment to the Iliad Note
pursuant to which the maturity date of the Iliad Note was extended
to Aug. 27, 2020, provided that the Iliad Note may be converted
into shares of common stock of the Company at a conversion price
equal to 80% multiplied by the lowest trading daily VWAP for the
common stock during the 20 trading day period ending on the latest
complete trading day prior to the conversion date. Further, the
Company made a payment to Iliad of an extension fee equal to 7.5%
of the outstanding balance of the Iliad Note resulting in a new
balance of the Iliad Note of $2,765,983 and provided that the
Company's failure to deliver shares of common stock within three
trading days of a conversion would result in an event of default.
Iliad has agreed to restrict its ability to convert the Iliad Note
and receive shares of common stock such that the number of shares
of common stock held by it and its affiliates after such conversion
or exercise does not exceed 9.99% of the then issued and
outstanding shares of common stock.
On July 20, 2020, the Company and Iliad entered into agreement to
extend the maturity of the Iliad Note until Feb. 27, 2021 in
consideration of an extension fee of $1,000. Following the
application of extension fee of $1,000 the principal amount under
the Iliad Note is $2,591,999.11. On Feb. 28, 2021, the Company and
Iliad entered into agreement to further extend the maturity of the
Iliad Note until May 31, 2021 in consideration of an extension fee
of $1,000 representing the third extension of the original note.
On May 19, 2021, the Company and Iliad entered into agreement to
further extend the maturity of the Iliad Note until Aug. 31, 2021
in consideration of an extension fee of $1,000 representing the
fourth extension of the original note.
About GBT
Headquartered in Santa Monica, CA, GBT Technologies, Inc. is
targeting growing markets such as development of Internet of Things
(IoT) and Artificial Intelligence (AI) enabled networking and
tracking technologies, including wireless mesh network technology
platform and fixed solutions, development of an intelligent human
body vitals device, asset-tracking IoT, and wireless mesh networks.
The Company derived revenues from the provision of IT services.
The Company is seeking to generate revenue from the licensing of
its technology.
GBT Technologies reported a net loss of $17.99 for the year ended
Dec. 31, 2020, compared to a net loss of $186.51 for the year ended
Dec. 31, 2019. As of June 30, 2021, the Company had $3 million in
total assets, $34.15 million in total liabilities, and a total
stockholders' deficit of $31.15 million.
Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
March 31, 2021, citing that the Company's significant operating
losses raise substantial doubt about its ability to continue as a
going concern.
GBT TECHNOLOGIES: Incurs $27.1 Million Net Loss in Second Quarter
-----------------------------------------------------------------
GBT Technologies Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $27.05 million on $45,000 of sales for the three months ended
June 30, 2021, compared to a net loss of $3.60 million on $45,000
of sales for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $32.42 million on $90,000 of sales compared to a net loss
of $13.60 million on $90,000 of sales for the six months ended June
30, 2020.
As of June 30, 2021, the Company had $3 million in total assets,
$34.16 million in total liabilities, and a total stockholders'
deficit of $31.16 million.
GBT stated, "In the first quarter of 2020, the COVID-19 outbreak
caused disruptions in our development operations, which resulted in
delays on exiting projects. The State of California and the
economy in general has begun to slowly re-open following the
introduction of the COVID-19 vaccine. However, in the event
COVID-19 or other variant is to again surface any further
unforeseen delay in our operations of the development, delivery and
assembly process within any of our activities could continue to
result in, increased costs and reduced revenue.
We cannot foresee whether the outbreak of COVID-19 and its variants
will continue to be effectively contained. If the outbreak of
COVID-19 is not effectively and timely controlled, our business
operations and financial condition may be materially and adversely
affected as a result of the deteriorating market outlook for sales,
the slowdown in regional and national economic growth, weakened
liquidity and financial condition of our customers and vendors or
other factors that we cannot foresee. Any of these factors and
other factors beyond our control could have an adverse effect on
the overall business environment, cause uncertainties, cause our
business to suffer in ways that we cannot predict and materially
and adversely impact our business, financial condition and results
of operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1471781/000173112221001343/e3011_10q.htm
About GBT
Headquartered in Santa Monica, CA, GBT Technologies, Inc. is
targeting growing markets such as development of Internet of Things
(IoT) and Artificial Intelligence (AI) enabled networking and
tracking technologies, including wireless mesh network technology
platform and fixed solutions, development of an intelligent human
body vitals device, asset-tracking IoT, and wireless mesh networks.
The Company derived revenues from the provision of IT services.
The Company is seeking to generate revenue from the licensing of
its technology.
GBT Technologies reported a net loss of $17.99 for the year ended
Dec. 31, 2020, compared to a net loss of $186.51 for the year ended
Dec. 31, 2019. As of March 31, 2021, the Company had $4.83 million
in total assets, $25.45 million in total liabilities, and a total
stockholders' deficit of $20.62 million.
Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
March 31, 2021, citing that the Company's significant operating
losses raise substantial doubt about its ability to continue as a
going concern.
GEORGE WASHINGTON BRIDGE: Court Okays $26.5 Million Bankruptcy Sale
-------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that George Washington Bridge
Development Venture LLC, the bankrupt developer of the George
Washington Bridge bus terminal won court approval to sell its
retail area lease to lender JMB Capital Partners Lending LLC for
about $26.5 million, seeking to wrap up the deal after receiving
only tepid interest from potential investors.
JMB's bid forgives an $18 million bankruptcy loan issued to George
Washington Bridge Bus Station Development Venture LLC and provides
up to $8.5 million in cash to cover professional fees and other
priority expenses.
About George Washington Bridge
Bus Station Development Venture
George Washington Bridge Bus Station Development Venture LLC is the
entity contracted to renovate the George Washington Bridge Bus
Station in New York. The bus station was reopened in 2016
following a delayed and costly renovation. As part of the deal, the
company was granted a 99-year lease to operate and maintain the
retail portion of the bus station.
George Washington Bridge Bus Station Development Venture LLC sought
Chapter 11 protection (Bankr. S.D.N.Y. Case No. 19-13196) on Oct.
7, 2019. The Company estimated assets between $50 million and $100
million, and liabilities between $100 million and $500 million.
The Hon. Shelley C. Chapman is the case judge.
Cole Schotz P.C. is the Debtor's counsel. BAK Advisors Inc., is the
Debtor's financial advisor, and BAK's Bernard A. Katz is presently
serving as the Debtor's sole manager.
GEX MANAGEMENT: Incurs $182K Net Loss in Second Quarter
-------------------------------------------------------
GEX Management, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $182,487 on $384,352 of revenues for the three months ended June
30, 2021, compared to a net loss of $63,196 on $107,880 of revenues
for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $555,050 on $588,115 of revenues compared to a net loss of
$67,271 on $162,178 of revenues for the same period a year ago.
As of June 30, 2021, the Company had $3.40 million in total assets,
$5.05 million in total liabilities, and a total shareholders'
deficit of $1.64 million.
GEX Management stated, "The Company has identified several
potential financing sources in order to raise the capital necessary
to fund operations through December 31, 2021. Management believes
that it has been historically difficult for minority and women
owned businesses to get access to reasonably price capital at scale
which creates an opportunity to invest into these companies and
receive a greater than average return for our shareholders.
However, the opportunity to make a significant return for our
investors is so overwhelmingly compelling that management had in
the past taken short term working capital loans against future
receivables in order to timely fund the growth of the company.
Management intends to move away from these expensive debt like
obligations and rely on other traditional and non- traditional debt
instruments primarily in the form of convertible notes as well as
explore various other alternatives including debt and equity
financing vehicles, strategic partnerships, government programs
that may be available to the Company, as well as trying to generate
additional sales and increase margins. However, at this time the
Company has no commitments to obtain any additional funds, and
there can be no assurance such funds will be available on
acceptable terms or at all. If the Company is unable to obtain
additional funding, the Company's financial condition and results
of operations may be materially adversely affected and the Company
may not be able to continue operations."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1681556/000149315221020984/form10-q.htm
About GEX Management
GEX Management -- http://www.gexmanagement.com-- is a professional
business services company that was originally formed in 2004 as
Group Excellence Management, LLC d/b/a MyEasyHQ. The Company
formed GEX Staffing, LLC in March 2017.
GEX Management reported a net loss of $224,947 in 2020, a net loss
of $100,200 in 2019, and a net loss of $5.10 million in 2018. As
of March 31, 2021, the Company had $3.31 million in total assets,
$4.82 million in total liabilities, and a total shareholders'
deficit of $1.51 million.
GIRARDI & KEESE: Erika Refuses to Give Up Rich Lifestyle
--------------------------------------------------------
Katy Forrester of The U.S. Sun reports that Erika Jayne is
"refusing to give up her wealthy lifestyle" of private jets and
designer clothes and has been branded "tone deaf" by the lawyer
dealing with her ex's bankruptcy case.
The embattled reality star, who allegedly owes Tom Girardi's firm
Girardi Keese $25million, continues to flaunt her wealth, it has
been claimed.
Her 82-year-old ex is accused of stealing millions of dollars from
plane crash victims who were awarded settlements, while Erika has
denied knowing about her husband's finances.
Ronald Richards, the lawyer for the trustee overseeing the Girardi
Keese bankruptcy, spoke to The Sun exclusively about the ongoing
case.
Asked how he feels about her life of luxury, he said: "I think it's
kind of tone deaf for the people that have lost all their money in
the settlements.
"I don't think she's changed her lifestyle that much. She lives in
a beautiful townhouse in one of the nicest parts of Los Angeles.
She's traveled for trips.
"I think that she's got to take a reflection on what's going on and
try to come up with an economic solution for her that gets her some
peace."
Erika has moved out of the $9.9million Pasadena mansion she once
shared with Tom and is now renting a $2.3million property close to
Hancock Park.Her new residence is a 1920s Spanish-style home, which
also sports a kitchen that includes modern and state-of-the-art
appliances.
Although she has had to give up her flashy cars and glam team, she
still has a closet full of expensive items, and was pictured
boarding a private jet for a July 4 vacation earlier this year.
Richards claims she has spent more than half a million dollars on
legal fees so far after being dragged into her ex's situation.
"So far her legal fees have gotten her no victories in court and
really only delayed the process," he claimed.
"I don't know what the purpose of her legal expeditions have been.
They haven't been effective for her at all, she would be much
better off providing all the things that are requested so we can
complete our investigation. And we're hopeful that we get her
continued cooperation.
"I think that if the position is, 'Hey, I had a husband that just
let me spend whatever I want, and I have no culpability because
that money could be sourced to settlement payments that were not
made.'
"That's a misunderstanding of the law with respect to whether she's
going to have liability."
He added: "She has unlimited resources still to fly privately, and
she has unlimited resources to defend herself. There's been no
slowing of the litigation process."
The Sun has reached out to Erika's rep and lawyers for comment, but
did not receive responses.
Erika filed for divorce in November and has denied wrongdoing after
her ex was accused of misappropriating $2million intended for
victims of Indonesia's Lion Air 610 crash.
Lawyers for the trustee overseeing the bankruptcy allege Tom's
company transferred $25million to Jayne's EJ Global LLC, according
to a letter they sent to her lawyer earlier this month, Page Six
reported.
The letter will reportedly be filed with the bankruptcy court as a
part of the legal proceedings.
From 2008 to 2020, she allegedly spent more than $14million on her
American Express card and $1.4 on unknown purchases - as well as
more than $1.532million on dance agency McDonald Selznick
Associates.
Her company also reportedly forked out more than $102k on Erika and
Kim Kardashian's former assistant, Stephanie Shepherd.
EJ Global also reportedly paid $17,415 to Opus Beauty - a
management agency - and $1,000 to makeup artist Mario Dedivanoic
who has worked with a number of A listers.
Thousands of dollars were also paid to E5 Global Media — which
publishes The Hollywood Reporter and Billboard, along with Los
Angeles Times Magazine.
"Mrs. Girardi signed under penalty of perjury the return and
personally approved the charges allocated to the breakdown," the
letter reads, according to Page Six.
But Erika's attorney insists that "no money whatsoever went to
Erika" and that she never had a role in managing her ex’s
company.
'FLAUNTING HER WEALTH'
Meanwhile, lawyer Richards slammed Erika's co-stars for supporting
her, including Lisa Rinna, who hit out at trolls this week after
getting death threats online.
Asked if he thinks the cast should back Erika, the lawyer told The
Sun: "No, I don't think it's a good idea. They're just going to
draw a subpoena for testimony because we would want to know the
basis of why they think she had no knowledge [of Tom's finances].
"They're just kind of embroiling themselves in sort of vouching for
a person that they know nothing about.
"I mean, on the show, it looks like they're all friends, but in
reality, they're not all friends," he claimed.
"This is non-scripted television. It means they're all on a show
together where they purport to be friends. There's a big
difference."
Richards also predicts the case could drag on for a further SIX
months to a year, and she could end up spending more than a million
in legal fees fighting her court battles.
He feels it will be a struggle for her to be successful again
whatever the outcome, saying: "I don't see her having sort of the
talent depth that's going to be able to sustain [a career] without
having the backing of her husband, the type of the type of income
she would need to be quite successful.
"She does have a brand to some people, but I would advise her that
unless she wants to have the cost of litigation basically bankrupt
her.
"She needs to acknowledge the benefits of some of this victim money
and work out a resolution once we're ready to have one. That's what
I think is going to be an important thing for her."
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It
served clients in California in a variety of legal areas. It was
known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee.
The Chapter 7 trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
GREATER WORKS: Seeks to Hire Brooks, McGinnis & Co. as Accountant
-----------------------------------------------------------------
Greater Works Childcare and Community Development Inc. seeks
approval from the U.S. Bankruptcy Court for the Northern District
of Georgia to employ Brooks, McGinnis & Company, LLC as its
accountant.
The firm will render these services:
a. review and correct monthly operating reports for February
2021 through April 2021;
b. prepare monthly operating reports for May 2021 and June
2021; and
c. prepare monthly operating reports after June 2021.
Brooks will charge $1,500 to $2,500 for the operating reports and
will collect a $1,000 retainer fee. The firm's standard hourly
rates range from $80 to $360 for other ongoing consulting or
accounting services.
The firm will also receive reimbursement for out-of-pocket expenses
incurred.
Tiffany Orr, a partner at Brooks, disclosed in a court filing that
her firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
Brooks McGinnis can be reached at:
Tiffany T. Orr
Brooks, McGinnis & Company, LLC
5607 Glendridge Drive, Suite 650
Atlanta, GA 30342
Tel: (404) 531-4940
About Greater Works Childcare
and Community Development
Greater Works Childcare and Community Development Inc. filed a
voluntary petition for Chapter 11 protection (Bankr. N.D. Ga. Case
No. 20-72185) on Nov. 30, 2020, listing as much as $1 million in
both assets and liabilities. Judge James R. Sacca oversees the
case. Paul Reece Marr, P.C., serves as the Debtor's legal counsel.
GROM SOCIAL: Incurs $2.5 Million Net Loss in Second Quarter
-----------------------------------------------------------
Grom Social Enterprises, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $2.50 million on $1.39 million of sales for the three
months ended June 30, 2021, compared to a net loss of $953,108 on
$1.75 million of sales for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $4.82 million on $3.26 million of sales compared to a net
loss of $2.30 million on $3.04 million of sales for the same period
a year ago.
As of June 30, 2021, the Company had $24.76 million in total
assets, $5.92 million in total liabilities, and $18.84 million in
total stockholders' equity.
At June 30, 2021, the Company had cash and cash equivalents of
$8,161,908.
Net cash used in operating activities for the six months ended June
30, 2021 was $2,622,824, compared to net cash used in operating
activities of $767,926 during the six months ended June 30, 2020,
representing an increase in cash used of $1,854,898, primarily due
to the increase in its loss from operations and the change in
working capital assets and liabilities.
Net cash used in investing activities for the six months ended
June 30, 2020 was $2,790, compared to net cash used in investing
activities of $38,025 during the six months ended June 30, 2020
representing a decrease in cash used of $35,235. This change is
attributable to a decrease in the amount of fixed assets purchased
and/or leasehold improvements made by the Company's animation
studio in Manilla, Philippines during the six months ended June 30,
2021.
Net cash provided by financing activities for the six months ended
June 30, 2021 was $10,644,545, compared to net cash provided by
financing activities of $1,015,767 for the six months ended June
30, 2020, representing an increase in cash provided of $9,628,778.
The Company's primary sources of cash from financing activities
were attributable to $8,953,616 in proceeds from the sale of its
common stock, $908,500 in proceeds from the sale of 8% - 12%
convertible notes, and $950,000 and $100,000 in proceeds from the
sale of its Series B Stock and Series C Stock, respectively, during
the six months ended June 30, 2021, as compared to $3,655,000 in
proceeds from the sale of 12% senior secured convertible notes
during the six months ended June 30, 2020. On March 16, 2020, the
Company repaid $3,000,000 in principal due to the former
shareholders of TD Holdings Limited on a convertible note
originally dated Sept. 20, 2016.
Based upon the Company's current cash balances, the Company
believes it has adequate working capital to meet its operational
needs for at least the next 12 months.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1662574/000168316821003856/grom_i10q-063021.htm
About Grom Social
Boca Raton, Florida-based Grom Social Enterprises, Inc. --
www.gromsocial.com -- is a media, technology and entertainment
company focused on delivering content to children under the age of
13 years in a safe secure Children's Online Privacy Protection Act
("COPPA") compliant platform that can be monitored by parents or
guardians. The Company operates its business through the following
four wholly-owned subsidiaries: Grom Social, Inc., TD Holdings
Limited, Grom Educational Services, Inc. , and Grom Nutritional
Services, Inc.
Grom Social reported a net loss of $5.74 million for the year ended
Dec. 31, 2020, compared to a net loss of $4.59 million for the year
ended Dec. 31, 2019. As of March 31, 2021, the Company had $17.51
million in total assets, $6.77 million in total liabilities, and
$10.74 million in total stockholders' equity.
BF Borgers CPA PC, in Lakewood, Colorado, the Company's auditor
since 2015, issued a "going concern" qualification in its report
dated April 13, 2021, citing that the Company has incurred
significant operating losses since inception and has a working
capital deficit which raises substantial doubt about its ability to
continue as a going concern.
GROWLIFE INC: Incurs $909K Net Loss in Second Quarter
-----------------------------------------------------
GrowLife, Inc. filed with the Securities and Exchange Commission
its Quarterly Report on Form 10-Q disclosing a net loss of $909,168
on $2.17 million of net revenue for the three months ended June 30,
2021, compared to a net loss of $610,523 on $1.85 million of net
revenue for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $3.79 million on $3.84 million of net revenue compared to a
net loss of $1.90 million on $3.51 million of net revenue for the
same period during the prior year.
As of June 30, 2021, the Company had $5.08 million in total assets,
$10.07 million in total current liabilities, $777,858 in total
long-term liabilities, and a total stockholders' deficit of $5.77
million.
GrowLife stated, "The accompanying financial statements have been
prepared assuming that we will continue as a going concern.
However, since inception, we have sustained significant operating
losses and such losses are expected to continue for the foreseeable
future. As of June 30, 2021, we had an accumulated deficit of
$158.6 million, cash and cash equivalents of $1.2 million and a
working capital deficit of $2.754 million excluding derivative
liability, convertible debt, right of use liability and deferred
revenue). Net cash used in operating activities was $(23,000),
($1,951,000) and ($2,910,000) for the six months ended June 30,
2021 and the years ended December 31, 2020 and 2019, respectively.
The Company believes that its cash on hand will be sufficient to
fund our operations only until September 30, 2021 because the
majority of the Company's cash is currently held at EZ Clone and as
a result of the ongoing litigation with EZ Clone Founder's, such
cash is not accessible for general corporate use.
To fund further operations, we will need to raise additional
capital. We may obtain additional financing in the future through
the issuance of its common stock, or through other equity or debt
financings. Our ability to continue as a going concern or meet the
minimum liquidity requirements in the future is dependent on its
ability to raise significant additional capital, of which there can
be no assurance. If the necessary financing is not obtained or
achieved, we will likely be required to reduce its planned
expenditures, which could have an adverse impact on the results of
operations, financial condition and our ability to achieve its
strategic objective. There can be no assurance that financing will
be available on acceptable terms, or at all. The financial
statements contain no adjustments for the outcome of these
uncertainties. These factors raise substantial doubt about our
ability to continue as a going concern and have a material adverse
effect on our future financial results, financial position and cash
flows."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1161582/000165495421009353/phot_10q.htm
About GrowLife
GrowLife, Inc. (PHOT)-- http://www.shopgrowlife.com-- aims to
become the nation's largest cultivation service provider for
cultivating organics, herbs and greens and plant-based medicines.
GrowLife is headquartered in Kirkland, Washington and was founded
in 2012.
GrowLife reported a net loss of $6.38 million in 2020, a net loss
of $7.37 million in 2019, and a net loss of $11.47 million in 2018.
As of March 31, 2021, the Company had $5.15 million in total
assets, $11.19 million in total current liabilities, $845,312 in
total long-term liabilities, and a total stockholders' deficit of
$6.89 million.
Walnut Creek, California-based BPM LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
April 15, 2021, citing that the Company has sustained recurring
losses from operations and has an accumulated deficit since
inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
H-CYTE INC: Incurs $2.1 Million Net Loss in Second Quarter
----------------------------------------------------------
H-Cyte, Inc. filed with the Securities and Exchange Commission its
Quarterly Report on Form 10-Q disclosing a net loss of $2.06
million on $450,456 of revenues for the three months ended June 30,
2021, compared to a net loss of $6.43 million on $19,500 of
revenues for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $3.47 million on $826,625 of revenues compared to a net
loss of $8.85 million on $1.04 million of revenues for the six
months ended June 30, 2020.
As of June 30, 2021, the Company had $1.98 million in total assets,
$5.63 million in total liabilities, and a total stockholders'
deficit of $3.65 million.
H-Cyte said, "COVID-19 has adversely affected the Company's
financial condition and results of operations. The impact of the
outbreak of COVID-19 on the economy in the U.S. and the rest of the
world is expected to continue to be significant. The extent to
which the COVID-19 outbreak will continue to impact the economy is
highly uncertain and cannot be predicted. Accordingly, the Company
cannot predict the extent to which its financial condition and
results of operations will be affected."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1591165/000149315221019638/form10-q.htm
About H-CYTE Inc.
Headquartered in Tampa, Florida, H-CYTE -- http://www.HCYTE.com--
is a hybrid-biopharmaceutical company dedicated to developing and
delivering new treatments for patients with chronic respiratory and
pulmonary disorders.
H-Cyte reported a net loss of $6.46 million for the year ended Dec.
31, 2020, compared to a net loss of $29.81 million for the year
ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $2.20
million in total assets, $3.25 million in total liabilities, and a
total stockholders' deficit of $1.05 million.
Tampa, Florida-based Frazier & Deeter, LLC, issued a "going
concern" qualification in its report dated March 25, 2021, citing
that the Company has negative working capital, has an accumulated
deficit, has a history of significant operating losses, and has a
history of negative operating cash flow. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
HARBOUR COMMUNITY: U.S. Trustee Unable to Appoint Committee
-----------------------------------------------------------
The U.S. Trustee for Region 15 on Aug. 25 disclosed in a court
filing that no official committee of unsecured creditors has been
appointed in the Chapter 11 case of Harbour Community, LP.
About Harbour Community
Harbour Community LP filed a petition for Chapter 11 protection
(Bankr. C.D. Calif. Case No. 21-11313) on Aug. 3, 2021, disclosing
up to $50 million in assets and up to $10 million in liabilities.
Judge Maureen Tighe oversees the case. Goodman Law Offices, A
Professional Corporation serves as the Debtor's legal counsel.
HARI 108: Wins Cash Collateral Access on Final Basis
----------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Illinois
authorized HARI 108, LLC to use cash collateral on a final basis to
pay actual, ordinary and necessary operating expenses as set forth
in the budget.
Parties asserting an interest in the cash collateral include (1)
Associated Wholesale Grocers, Inc. (AWG); (2) MBH Investments, LLC
(MBH); (3) U.S. Small Business Administration (SBA); (4) United
Food and Commercial Workers Unions and Employers Midwest Pension
Fund (UFCWEMP); and (5) United Food and Commercial Workers
International Union-Industry Pension Fund (UFCWI).
The Debtor entered into certain prepetition loan agreements with
the SBA, AWG and MBH. Pursuant to the loan documents, the Debtor
granted the SBA, AWG and MBH perfected first priority security
interests certain of the Debtor's property, some of which
constitutes Cash Collateral.
Moreover, before the Petition Date, the UFCWEMP and UFCWI issued
Illinois citations to discover assets. The citations may also give
rise to a Cash Collateral right in the funds in the bank accounts.
The Debtor reserves the right to object to the validity, extent and
priority of any lien they may have acquired.
As adequate protection for the Debtor's use of cash collateral, the
Creditors are granted valid, binding, enforceable and perfected
liens and security interests in any of the Debtor's collateral, to
the same extent, validity and priority held by the Creditors prior
to the Petition Date, and to the extent of the diminution in the
amount of Cash Collateral used by the Debtor after the Petition.
The Replacement Liens will be (x) a first priority perfected lien
on all of the postpetition collateral that is not otherwise
encumbered by a validly perfected, non-avoidable security interest
or lien on the Petition Date, (y) a first priority, senior, priming
and perfected lien upon postpetition collateral subject to a lien
that is junior to the liens securing the prepetition obligations,
and (z) junior perfected lien on all collateral, which is subject
to any validly perfected, non-avoidable lien that would be senior
to the Replacement Liens under applicable law.
The Court also directed the Debtor to maintain insurance coverage
on the property and assets.
These events constitute an "event of default":
(a) the use of any Cash Collateral for any purpose other than
those set forth in the Budget;
(b) the entry of an order dismissing the Case; and
(c) the Debtors' failure to comply with any material
provision, term, covenant or representation of the Order.
A copy of the order and the Debtor's budget is available for free
at https://bit.ly/38aswZh from PacerMonitor.com. The Debtor
projects $220,954 in gross sales and $214,348.82 in total
expenses.
About HARI 108, LLC
HARI 108, LLC, doing business as Illinois Valley Food & Deli, is a
grocery and delicatessen operating in LaSalle, Ill. Hari was formed
in February 17, 2011. It acquired IVFD, a business that had been
operating in LaSalle for over 60 years.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ill. Case No. 21-08044) on June 30,
2021. In the petition signed by Sanjay Amin, manager, the Debtor
disclosed up to $500,000 in assets and up to $10 million in
liabilities.
Judge Timothy A. Barnes oversees the case.
O. Allan Fridman, Esq., at the Law Office of Allan Fridman is the
Debtor's counsel.
HESS CORPORATION: Egan-Jones Keeps B+ Senior Unsecured Ratings
--------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, maintained its 'B+'
foreign currency and local currency senior unsecured ratings on
debt issued by Hess Corporation.
Headquartered in New York, New York, Hess Corporation operates as a
global independent energy company.
HEXCEL CORPORATION: Egan-Jones Keeps B- Senior Unsecured Ratings
----------------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Hexcel Corporation.
Headquartered in Stamford, Connecticut, Hexcel Corporation
develops, manufactures, and markets reinforcement products,
composite materials, and engineered products.
HILL-ROM HOLDINGS: Egan-Jones Keeps BB+ Senior Unsecured Ratings
----------------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Hill-Rom Holdings, Inc.
Headquartered in Chicago, Illinois, Hill-Rom Holdings, Inc.
manufactures equipment for the healthcare industry and provides
wound care, pulmonary, and trauma management services.
HOSPEDERIA VILLA: Wins Cash Collateral Access Thru Aug 31
---------------------------------------------------------
Judge Michael Caban Flores of the U.S. Bankruptcy Court for the
District of Puerto Rico approved the joint motion filed between
Hospederia Villa Verde Inc. and secured creditor Yajad 77, LLC
which extends their Stipulation for the Interim Use of Cash
Collateral, Adequate Protection and Reservation of Rights.
The Debtor and YAJAD continue to negotiate the treatment of YAJAD's
claim under the reorganization plan.
The parties negotiated and agreed to a further extension of the
Stipulation until August 31 pursuant to the same terms and
conditions of the approved Stipulation.
As previously reported by the Troubled Company Reporter, the Court
approved the Stipulation for Interim Use of Cash Collateral,
Adequate Protection and Reservation of Rights filed by the Debtor
and YAJAD 77. Pursuant to the terms and conditions of the
Stipulation, the Secured Creditor consented to the use of its Cash
Collateral commencing on the Petition Date until July 31, 2021. The
Stipulation provides that the Parties may extend the use of the
Cash Collateral if they are able to reach a written agreement.
A copy of the order is available at https://bit.ly/3yigLKU from
PacerMonitor.com.
About Hospederia Villa Verde
Hospederia Villa Verde, Inc., owner and operator of the Villa Verde
Inn, sought protection under Chapter 11 of the Bankruptcy Code
(Bankr. D.P.R. Case No. 21-01015) on March 31, 2021, listing
$500,001 to $1 million in both assets and liabilities.
Harold A. Frye Maldonado, Esq., at Frye Maldonado Law Office,
serves as the Debtor's legal counsel.
YAJAD 77, LLC, as secured creditor, is represented by Hermann D.
Bauer, Esq. and Gabriel A. Miranda Rivera, Esq. at O'Neill and
Borges LLC.
IMAGEWARE SYSTEMS: Posts $11.3 Million Net Income in Second Quarter
-------------------------------------------------------------------
Imageware Systems, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing net income
of $11.27 million on $942,000 of revenue for the three months ended
June 30, 2021, compared to a net loss of $2.90 million on $733,000
of revenue for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported net
income of $9.38 million on $1.67 million of revenue compared to a
net loss of $6.03 million on $1.53 million of revenue for the same
period during the prior year.
As of June 30, 2021, the Company had $8.77 million in total assets,
$16.70 million in total liabilities, $5.20 million in mezzanine
equity, and a total shareholders' deficit of $13.14 million.
"Historically, our principal sources of cash have included customer
payments from the sale of our products, proceeds from the issuance
of common and preferred stock and proceeds from the issuance of
debt. Our principal uses of cash have included cash used in
operations, product development, and payments relating to purchases
of property and equipment. We expect that our principal uses of
cash in the future will be for product development, including
customization of identity management products for enterprise and
consumer applications, further development of intellectual
property, development of Software-as-a-Service ("SaaS")
capabilities for existing products as well as general working
capital requirements. Management expects that, as our revenue
grows, our sales and marketing and research and development expense
will continue to grow, albeit at a slower rate and, as a result, we
will need to generate significant net revenue to achieve and
sustain positive cash flows from operations. Historically the
Company has not been able to generate sufficient net revenue to
achieve and sustain positive cash flows from operations and
management has determined that there is substantial doubt about the
Company's ability to continue as a going concern," Imageware stated
in the regulatory filing.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/941685/000165495421009368/iwsy_10q.htm
About ImageWare Systems
Headquartered in San Diego, CA, ImageWare Systems, Inc. --
http://www.iwsinc.com-- provides defense-grade biometric
identification and authentication for access to your data,
products, services or facilities. The Company delivers
next-generation biometrics as an interactive and scalable
cloud-based solution. ImageWare brings together cloud and mobile
technology to offer two-factor, biometric, and multi-factor
authentication for smartphone users, for the enterprise, and across
industries.
Imageware Systems reported a net loss of $7.25 million for the year
ended Dec. 31, 2020, compared to a net loss of $11.58 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company had
$11.83 million in total assets, $31.37 million in total
liabilities, $3.39 million in series D convertible redeemable
preferred stock, and a total shareholders' deficit of $22.93
million.
San Diego, California- based Mayer Hoffman McCann P.C., the
Company's auditor since 2011, issued a "going concern"
qualification in its report dated April 2, 2021, citing that the
Company does not generate sufficient cash flows from operations to
maintain operations and, therefore, is dependent on additional
financing to fund operations. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
INOVALON HOLDINGS: S&P Places 'B+' ICR on CreditWatch Negative
--------------------------------------------------------------
S&P Global Ratings placed its 'B+' issuer credit ratings on Bowie,
Md.-based health care technology company Inovalon Holdings Inc. on
CreditWatch with negative implications. The issue-level ratings are
unaffected because S&P expects the existing debt to be fully repaid
on close of the transaction.
The rating action is in response to the announcement of Inovalon's
definitive agreement to be acquired by an equity consortium
consisting of Nordic Capital, Insight Partners, and 22C Capital.
The company's founder and CEO, Keith Dunleavy, M.D., and certain
other existing investors will retain ownership stakes. The deal is
subject to regulatory and shareholder approvals, and S&P expects
closing in late 2021 or early 2022. If the deal closes as proposed,
it expects a large increase in debt leading to a downgrade of one
or more notches, depending on the magnitude of the increase in
leverage.
S&P will monitor developments related to the transaction, including
necessary shareholder approvals, regulatory clearances, and
customary closing conditions.
CreditWatch
S&P said, "We plan to resolve the CreditWatch placement once we
have further details of the transaction and future financial
policy. We expect this to occur by late 2021 or early 2022. We
could lower the rating if adjusted debt leverage after the
transaction is significantly higher than before the transaction and
if financial policies become more aggressive due to financial
sponsor ownership."
INTERNATIONAL LAND: Incurs $1.97-Mil. Net Loss in Second Quarter
----------------------------------------------------------------
International Land Alliance, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing a
net loss of $1.97 million on $8,340 of net revenues for the three
months ended June 30, 2021, compared to a net loss of $463,527 on
$10,749 of net revenues for the three months ended June 30, 2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $2.97 million on $17,559 of net revenues compared to a net
loss of $1.31 million on $25,832 of net revenues for the six months
ended June 30, 2020.
As of June 30, 2021, the Company had $5.31 million in total assets,
$4.38 million in total liabilities, $293,500 in preferred stock
Series B, and $641,723 in total stockholders' equity.
International Land stated, "Management evaluated all relevant
conditions and events that are reasonably known or reasonably
knowable, in the aggregate, as of the date the consolidated
financial statements were available to be issued and determined
that substantial doubt exists about the Company's ability to
continue as a going concern. The Company's ability to continue as
a going concern is dependent on the Company's ability to generate
revenues and raise capital. The Company has faced significant
liquidity shortages as shown in the accompanying financial
statements. As of June 30, 2021, the Company's current liabilities
exceeded its current assets by $2.4 million. The Company has
recorded a net loss for the six months ended June 30, 2021, and has
an accumulated deficit of $12.6 million as of June 30, 2021. Net
cash used in operating activities for the six months ended June 30,
2021, was approximately $0.4 million. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
Management anticipates that the Company's capital resources will
significantly improve if its plots of land gain wider market
recognition and acceptance resulting in increased plot sales.
Subsequent to June 30, 2021, the Company entered into securities
purchase agreements with institutional and accredited investors for
the issuance of an aggregate of 3,000,000 shares of common stock
with an equivalent number of warrants for net proceeds of $1.9
million."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1657214/000149315221020918/form10-q.htm
About Land International
International Land Alliance, Inc. -- https://ila.company -- is an
international land investment and development firm based in San
Diego, California. The Company is focused on acquiring attractive
raw land primarily in Northern Baja California, often within
driving distance from Southern California. The Company's principal
activities are purchasing properties, obtaining zoning and other
entitlements required to subdivide the properties into residential
and commercial building lots, securing financing for the purchase
of the lots, improving the properties' infrastructure and
amenities, and selling the lots to homebuyers, retirees, investors
and commercial developers.
International Land reported a net loss of $2.67 million for the
year ended Dec. 31, 2020, compared to a net loss of $1.59 million
for the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $2.64 million in total assets, $4.02 million in total
liabilities, $293,500 in preferred stock series B, and a total
stockholders' deficit of $1.66 million.
Irvine, California-based Haskell & White LLP, the Company's auditor
since 2019, issued a "going concern" qualification in its report
dated April 2, 2021, citing that the Company has experienced
recurring losses from operations, has limited financial resources
to repay its debt obligations, will require substantial new capital
to execute its business plans, and the real estate industry in
which it operates faces significant uncertainty due to the
COVID-19
pandemic, which raise substantial doubt about its ability to
continue as a going concern.
INTRADO CORP: Fitch Lowers LongTerm IDR to 'B-', Outlook Stable
---------------------------------------------------------------
Fitch Ratings has downgraded Intrado Corporation's Long-Term Issuer
Default Rating to 'B-' from 'B'. The Rating Outlook remains Stable.
Fitch has also downgraded the senior secured debt, including
revolving credit facility and term loans to 'B'/'RR3' from
'BB-'/'RR2'. Additionally, the senior unsecured notes were
downgraded to 'CCC'/'RR6' from 'CCC+'/'RR6'.
The downgrade follows steeper than expected revenue declines in
non-core traditional conferencing during 1H21, causing Fitch to
lower its expectations for revenue and Adjusted EBITDA projections
over the forecast. The lower EBITDA means leverage remains above
Fitch's negative sensitivity threshold of 6.5x through 2023. The
Stable Outlook reflects expectation of a reversal of negative
revenue trends, as UCaaS scales in the long term, and traditional
conferencing becomes non-existent by 2023.
KEY RATING DRIVERS
Revenue Underperformance: Fitch's rating action incorporates
steeper than expected revenue declines in traditional conferencing
in 1H21 and revised expectation for 2021 revenue declines in line
with 1H trends. The new EC segment, which now represents the legacy
conferencing and telecom services business, reported a revenue
decline over 60% in 1H21. While both Digital Media and Life &
Safety reported strong growth, the Cloud Collaboration (CC)
segment, which houses the UCaaS business, reported mid to high
single digit revenue declines, due to the loss of a major
customer.
Fitch expects exacerbated revenue declines in traditional
conferencing for the next 12-18 months. The revenue decline is
expected to improve significantly as EC becomes de minimis after
that, returning to stability in the latter years of Fitch's
forecast.
Elevated Leverage: The Health Advocate (HA) sale closed on June 22
for approximately $690 million. Intrado utilized a significant
portion of net proceeds (approximately $590 million after taxes and
expenses) towards debt reduction, paying down $350 million on the
term loans, and $100 million on 2025 senior notes. However, Fitch
expects leverage to remain elevated above 6.5x through 2023,
largely due to revenue and EBITDA declines in traditional
conferencing due to secular declines, loss of pandemic benefits,
and the company's ongoing recast efforts to migrate legacy
customers to UCaaS.
With the $350 million of accelerated payments, the company has
eliminated all future mandatory payments on the term loans.
However, in the absence of sufficient qualifying
investments/expenditure and after taking into account the Hubb
acquisition, the use of proceeds covenants under either Intrado's
credit agreement and/or bond indenture could require applying the
remaining proceeds balance towards paydown of debt. The company may
also opportunistically repurchase a portion of senior notes.
However, given the near-term drag on revenue from the legacy
business, Fitch does not anticipate leverage returning below 6.5x
sensitivity threshold within the rating horizon.
Evolving Revenue and Margin Mix: Intrado's revenue mix continues to
diversify away from EC revenue (represents only legacy portion per
re-segmentation effective Jan 1, 2021), as combined non-EC segments
currently contribute approximately 80% of total revenue. Fitch
expects EC's contribution in the overall revenue mix to be marginal
by 2023. This trend will help Intrado arrest revenue declines
exacerbated by declining legacy conferencing revenue in EC.
It will also help improve overall EBITDA margins in the long-term,
as the EC segment currently has lower margins relative to other
Core segments except CC for 1H21. Fitch expects margins to also
benefit from growing and higher-margin Life & Safety and Digital
Media (DM)segments. DM is expected to benefit from sustained near
to medium term growth in virtual events, spurred by the pandemic.
Cost Savings to Support EBITDA: Intrado continues to expand its
cost management efforts, with the identification of $125 million of
additional cost savings in phase 2 of the cost savings program.
Additional cost take-outs focus more on strategic initiatives,
including product rationalization and a review of technology
assets. In addition, unifying brands acquired over the years from
acquisitions presents additional cross selling opportunities. Given
the track record, execution risks related to achieving future
identified cost synergies are modest.
Industry Tailwinds Support Long-term Growth: The pandemic-driven
shift to work-from-home accelerated the already growing demand for
UCaaS solutions by enterprises and SMBs. The UCaaS market is
expected to grow at 23.5% CAGR to approximately $170 billion by
2027, driven by low installation and maintenance costs and ability
to support remote work and scalability, relative to legacy PBX
systems.
The virtual events market that also saw a significant
pandemic-spurred increase in volumes in 2020, is expected to
continue to show strength, as Fitch believes that social distancing
will likely continue in the near term, as uncertainty looms with
the onset of new variants. Fitch believes that even when physical
events return, they will likely include a virtual component as they
are cost-effective for companies and may be time-effective for
participants who are uncomfortable returning to social gatherings
in the near to medium term. Fitch forecasts a double-digit growth
in Intrado's DM segment for 2021.
Financial Flexibility: Intrado has sufficient financial flexibility
for the rating category supported by the company's cash balances,
full availability under $315 million revolver and positive FCFs.
While 2021 FCFs are expected to be lower than 2020 levels, the FCF
margins are expected to improve supported by stabilizing EBITDA and
relatively lower interest expense over the forecast.
Highly Competitive Marketplace: Intrado's markets are highly
competitive and include leaders, who are larger and have greater
financial flexibility. In CC, the company partners and competes in
the enterprise market with Microsoft and Cisco, while focusing on
scaling its recently launched proprietary platform, Hoot, catered
to SMB market. Intrado competes with companies such as Zoom, 8x8,
LogMeIn and RingCentral in this space.
DERIVATION SUMMARY
Intrado's business profile entails an amalgamation of a diverse
portfolio of technology solutions, and is not directly comparable
to its peers, which may provide similar but different mix of
technology services. In the unified communications business,
Intrado competes with technology and telecom industry giants such
as Microsoft Corporation (AAA/Stable), AT&T (BBB+/Stable) and
Citrix Systems (BBB/Stable), which are investment grade issuers. In
this category, it also competes with several mid- and small-sized
companies such as Avaya (B/Positive) and LogMeIn (B/Stable).
Intrado has higher EBITDA margins than Avaya, but also operates at
a higher leverage. LogMeIn has comparable EBITDA margins but lower
leverage when compared with Intrado's metrics.
In the Life and Safety segment, Intrado competes with Bandwidth
(NR) and Motorola Solutions (BBB-/ Stable), while in Digital Media
competes with companies such as Business Wire (NR), Cision (NR)and
several other specialized service providers.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Revenue declines in high teens in 2021 due to steep declines
in legacy conferencing. Declines moderate over the forecast as
EC increasingly becomes inconsequential in the overall revenue
mix;
-- EBITDA margins are expected to benefit from change in revenue
mix, continued realization of cost savings and synergies from
acquisitions;
-- Capex intensity is anticipated averaging near 5% over the
rating horizon;
-- No dividends assumed in the model following cessation in 2017;
-- Moderate levels of M&A activity assumed to reflect
opportunistic M&A activity.
Recovery Rating Assumptions
-- The recovery analysis assumes that Intrado would be considered
a going concern in a bankruptcy and that the company would be
reorganized rather than liquidated;
-- Fitch has assumed a 10% administrative claim;
-- The revolving facility is assumed to be fully drawn upon
default at the restated commitment of $315 million.
Fitch estimates a post-reorganization enterprise valuation based on
5.5x multiple, which considers the following factors:
-- The mid-market multiples of comparable companies in Intrado's
industry have ranged from 8x-16x;
-- The Apollo transaction valued Intrado at approximately 7.8x
EV/EBITDA;
-- Avaya, a comparable to Intrado in unified conferencing, filed
for bankruptcy in 2017 and re-emerged with an estimated
midpoint EV/Post Emergence EBITDA multiple of 8.1x per Fitch's
TMT Bankruptcy EVs and Credit Recoveries Report published in
April 2020;
-- The going-concern EBITDA estimate reflects Fitch's view of a
sustainable, post-reorganization EBITDA level, and is based on
LTM EBITDA, pro forma for acquisitions;
-- Going concern EBITDA is assumed approximately 12% below the PF
2021 EBITDA to reflect a decline in revenue representing loss
of a significant customer and Intrado's inability to scale
UcaaS related revenue that is sufficient enough to cushion
declines in traditional audio conferencing under the ongoing
recast efforts;
-- The recovery analysis assigns a recovery rating of 'RR3' to
the company's senior secured debt and 'RR6' to the unsecured
notes.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improvement in operating profile including positive revenue
growth exceeding Fitch's expectations, expansion of margins
due to restructuring efforts and/or realization of synergies
and expansion of customer base.;
-- Leverage (total debt/EBITDA) sustained below 6.5x;
-- (CFO-Capex)/Total Debt sustained above 5%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Inability to sustain organic revenue growth due to EC segment
declines offsetting revenue growth from other segments;
-- Deterioration of operating profile due to competition, an
inability to achieve desired efficiencies impacting operating
margins;
-- Consistently negative FCFs;
-- FFO interest coverage sustained below 2.0x.
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
Fitch believes Intrado's liquidity is sufficient supported by the
cash balances, full availability under the revolver and positive
FCFs. In August 2021, the revolver's maturity was extended from
October 2022 to August 2026, and the revolver's commitment was
reduced to $315 million from $350 million. FCF margins in 2021 are
projected in low single digits and expected to improve over the
forecast.
Intrado's debt structure as of June 30, 2021 includes a $315
million revolving facility due August 2026, $2,805 million
outstanding in first-lien term loans maturing in 2024, and $685
million outstanding on 2025 senior unsecured notes pro-forma for
$100 million in debt redemptions in July 2021. Following the 2017
refinancing, Intrado maintains roughly $11 million of its 5.375%
unsecured notes maturing 2022.
ISSUER PROFILE
Intrado Corporation is a leading global provider of
technology‐enabled communication and network infrastructure
services. The company provides a vast array of essential solutions
for a diverse client base that includes Fortune 1000 companies,
state and local governments, along with small and medium
enterprises in a variety of vertical industries. Intrado has sales
and/or operations in the United States, Canada, Europe, the Middle
East, Asia-Pacific, Latin America and South America.
SUMMARY OF FINANCIAL ADJUSTMENTS
ESG Considerations
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
JOHNSON & JOHNSON: Purdue Pharma Legal Spats Give Ch.11 Options
---------------------------------------------------------------
Steven Church and Jeremy Hill of Bloomberg News reports that tThe
billionaire owners of OxyContin maker Purdue Pharma LP and lumber
giant Georgia-Pacific are in high-stakes legal battles to shed
billions of dollars of liabilities in bankruptcy -- the first over
their company's alleged role in America's opioid crisis and the
second for 64,000 asbestos claims.
If they are successful, it threatens to reduce the bargaining power
of alleged victims of corporate abuse for years to come. The
outcome could also benefit, Johnson & Johnson, which is fighting
tens of thousands of health-related lawsuits.
In New York, U.S. Bankruptcy Judge Robert Drain could rule as early
as Thursday, August 20, 2021, on whether to grant the Sackler
family broad immunity to all current and future lawsuits related to
the addictive painkiller. Meanwhile, in North Carolina,
Georgia-Pacific is trying to use a strategy nicknamed the "Texas
Two-Step" to rid itself of lawsuits related to asbestos, an
industrial product that causes lung cancer, by siphoning them off
to a unit.
The two cases could tip bankruptcy rules in favor of companies and
away from people trying to sue, Adam J. Levitin, a research
professor at Georgetown University Law Center, said in an
interview.
"They are trying to get the benefits of bankruptcy on the cheap,"
he said.
Companies have been using bankruptcy courts to consolidate their
liabilities since the 1980s, applying the restructuring process to
wipe out tens of thousands of lawsuits for less than the cost of
litigating the claims individually in court. The recent cases
threaten to set a precedent that other company owners could use as
a legal hammer against victims during negotiations.
"The company is going to say, 'Here is the offer we're going to
give you. If you don’t play nice we are going to use the
bankruptcy process to, at the very least, drag this on for years.'
Now we all know how that will go. It’s going to mean lower
recoveries for tort victims," Levitin said.
Purdue is asking a federal court to approve a landmark settlement
that would hand all of its assets -- along with more than $4
billion from the Sacklers -- to cities, states and counties
fighting the U.S. opioid crisis. To get the family on board, the
court must agree to permanently insulate the owners from opioid
lawsuits.
In a written declaration to the court, David Sackler made clear
that his family won't support the plan or pay the settlement amount
"unless all civil claims against us for Purdue’s Opioid-Related
Activities are fully, finally and permanently released."
Even after Purdue narrowed the legal releases sought by the
Sacklers this week, the U.S. Trustee, a federal watchdog for
corporate bankruptcies, continued to oppose the legal immunity,
arguing it remains is too broad and vague.
Representatives for members of the Sackler family either declined
to comment or didn't reply to requests for comment. The family has
previously denied wrongdoing.
Texas Two-Step
In asbestos cases, a strategy popped up a few years ago that came
to be known as the Texas Two-Step. In step one, Georgia-Pacific,
which is owned by Koch Industries Inc., incorporated in Texas,
according to court documents. There, a business-friendly law lets a
company conduct a so-called divisive merger to break itself into
two parts.
In one entity, Georgia-Pacific kept its most valuable assets,
including its operating businesses. The other part was saddled with
64,000 asbestos claims and assets worth about $177 million, and
then put into bankruptcy, according to court records.
The restructuring left the new, smaller company, Bestwall LLC, “a
hollow shell, with no employees, no operations, no ongoing
business,” creditors who have attacked the maneuver said in a
filing. The $177 million is "a nearly inconsequential asset value
when compared with what old GP would owe."
Georgia-Pacific disputed the idea that its strategy would make it
harder for asbestos victims to hold corporations accountable.
"Bestwall filed for bankruptcy to fairly and permanently resolve
current and future asbestos claims," Georgia-Pacific representative
Greg Guest said in an email. "Bestwall has been working and will
continue to work with representatives of current and future
claimants – who are appointed by the court -- to reach agreement
on a global resolution that will pay legitimate asbestos claims in
full."
The case is months away from resolution as lawyers for asbestos
victims and the company battle over arcane points of law.
Meanwhile, asbestos victims who blame the talc in baby powder made
by J&J were so concerned about the Texas Two-Step that they
preemptively asked a federal judge to block the consumer products
giant from doing it. J&J faces potentially billions in lawsuits
from people claiming they developed ovarian cancer from baby powder
tainted with asbestos.
J&J shouldn't be blocked from using any legal strategy it believes
will benefit it, company attorney Theodore E. Tsekerides said
during a court hearing on Tuesday. Victim lawyers are wrongly
assuming J&J will somehow hurt them with whatever tactics it
chooses to employ in the future.
"They are prejudging their fight," Tsekerides told a judge in
Wilmington, Delaware on Tuesday, August 24, 2021. "They are saying
whatever we do is harm.”
U.S. Bankruptcy Judge Laurie Selber Silverstein said she would
decide in the coming days whether to temporarily bar J&J from using
the strategy.
"Johnson & Johnson hasn't really denied that this is a
possibility," Silverstein said in court. "There has been no denying
that a Texas Two-Step…is within the realm of possibility." The
company has won more than a half a dozen such cases at trial
outside of bankruptcy court in recent years, but it's also lost
some, including a $2.1 billion award in 2018 to 20 women who sued
in St. Louis.
Cramdown Provisions
When David Sackler took the stand in Purdue's bankruptcy trial last
week, he testified that his family could only free itself of all
its legal woes related to the OxyContin maker if they get sweeping
immunity as part of the case.
"I don't know of any other forum that would allow this kind of
global solution," he said in court.
Indeed, the linchpin of trying to win relief from future lawsuits
in bankruptcy often comes down to so-called third-party releases,
which raises the stakes for precedent-setting cases that risk
tilting the scales against victims.
These releases carry the ability to force a settlement onto
holdouts. Once 75% of creditors who participate in a vote agree to
back a deal, everyone else can be dragged along if the judge
greenlights it. Outside of bankruptcy, there's no way to force
someone to settle a case if they demand to go to trial.
"It's the only forum that can compel future demand holders to
accept the payments,:" said former bankruptcy judge Judith K.
Fitzgerald, who oversaw the reorganization of specialty chemical
maker W.R. Grace & Co., one of the longest running asbestos-related
bankruptcy case in history.
About Johnson & Johnson
Based in Skillman, New Jersey, Johnson & Johnson Consumer Companies
Inc. engages in the research and development of products. The
Company provides products for newborns, babies, toddlers, and
mothers, including cleansers, skin care, moisturizers, hair care,
diaper care, sun protection, and nursing products.
* * *
Johnson & Johnson has chosen law firm Jones Day to advise it as it
explores placing a subsidiary in bankruptcy to settle thousands of
personal injury claims linking talcum-based baby powder to cancer,
Dow Jones reported. J&J could move talc-related liabilities into a
new unit formed specifically for bankruptcy, protecting
income-producing assets.
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.
JTF LLC: Seeks to Hire Tydings & Rosenberg as Legal Counsel
-----------------------------------------------------------
JTF, LLC seeks approval from the U.S. Bankruptcy Court for the
District of Maryland to employ Tydings & Rosenberg, LLP to serve as
legal counsel in its Chapter 11 case.
The firm's services include:
a. providing the Debtor with legal advice with respect to its
powers and duties, the operation of its business and management of
its property;
b. representing the Debtor in defense of proceedings
instituted to reclaim property or to obtain relief from the
automatic stay under Section 362(a) of the Bankruptcy Code;
c. preparing legal papers and appearing in proceedings
instituted by or against the Debtor;
d. assisting the Debtor in the preparation of bankruptcy
schedules, statements of financial affairs, and any amendments
thereto;
e. assisting in the evaluation of a possible sale of the
Debtor's business and assets, if necessary;
f. assisting the Debtor in the preparation of a Chapter 11
plan and disclosure statement, if necessary;
g. assisting the Debtor with all bankruptcy legal work; and
h. performing other necessary legal services.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Partners $400 to $600 per hour
Associates $275 to $300 per hour
Paralegal $175 per hour
The firm received a retainer in the amount of $25,000 from the
Debtor.
Tydings & Rosenberg is a "disinterested person" within the meaning
of Section 101(14) of the Bankruptcy Code as disclosed in court
filings.
The firm can be reached through:
Joseph M. Selba, Esq.
Tydings & Rosenberg LLP
1 E. Pratt Street, Suite 901
Baltimore, MD 21202
Tel: 410-752-9700
Email: jselba@tydingslaw.com
About JTF LLC
JTF LLC, a Joppa, Md.-based company engaged in renting and leasing
real estate properties, filed its voluntary Chapter 11 petition
(Bankr. D. Md. Case No. 21-15103) on Aug. 5, 2021, disclosing up to
$50,000 in assets and up to $10 million in liabilities. Brian J.
Miller, owner and member, signed the petition. Joseph M. Selba,
Esq., at Tydings & Rosenberg LLP, represents the Debtor as legal
counsel.
KAR AUCTION: CARWAVE Transaction No Impact on Moody's B2 CFR
------------------------------------------------------------
Moody's Investors Service said KAR Auction Services, Inc's recently
announced plan to acquire CARWAVE Holdings LLC, an online
dealer-to-dealer marketplace, for a purchase price of $450 million
has modestly negative credit implications. Moody's expects that KAR
will utilize cash from its balance sheet ($621.6 million as of June
30, 2021) to fund this transaction which will reduce liquidity and
somewhat constrain near term financial flexibility. Additionally,
the company's ongoing focus on acquisitions of online marketplaces
such as CARWAVE, which follows the $421.0 million purchase (net of
cash acquired) of BacklotCars in September 2020 and the $92.2
million purchase of Auction Frontier, LLC (net of cash acquired,
including estimated contingent payments) in May 2021, is indicative
of KAR's aggressive financial strategies that limits Moody's
expectation for material deleveraging from current pro forma levels
of more than 7x (Moody's adjusted, including securitization debt).
However, the strategic benefits of the asset purchase will bolster
KAR's overall presence in the wholesale used vehicle market
(particularly in California) and further enhance the company's
digital capabilities,
KAR's B2 corporate family rating and stable outlook are not
affected by the acquisition. While the company's SGL-1 speculative
grade liquidity rating ("SGL") is unchanged, Moody's notes that
this rating is more weakly positioned following the outflow of cash
related to the CARWAVE transaction, which is expected to close
prior to year-end. All other ratings, including the B2-PD
probability of default rating, the Ba3 rating on KAR's senior
secured credit facilities and Caa1 rating on the company's senior
unsecured notes, also remain unchanged.
KAR is a leading provider of vehicle auction services in North
America. The company provides used car auction services through its
wholly-owned subsidiary, ADESA, Inc. ("ADESA"), and short-term
floor plan financing to independent dealers through its
wholly-owned subsidiary, Automotive Finance Corporation ("AFC").
Moody's projects that KAR will generate annual revenues of more
than $2.4 billion in 2021.
LAS VEGAS SANDS: Egan-Jones Keeps BB- Senior Unsecured Ratings
--------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, maintained its
'BB-' foreign currency and local currency senior unsecured ratings
on debt issued by Las Vegas Sands Corp.
Headquartered in Las Vegas, Nevada, Las Vegas Sands Corp owns and
operates casino resorts and convention centers.
LECLAIRRYAN PLLC: Trustee Aims at Co-Founder in UnitedLex Lawsuit
-----------------------------------------------------------------
David Thomas of Reuters reports that LeClairRyan PLLC trustee
targets firm co-founder in UnitedLex lawsuit.
The Chapter 7 trustee overseeing the dissolution of law firm
LeClairRyan on Wednesday, August 25, 2021, unveiled new claims
against Gary LeClair, the firm's co-founder and longtime leader,
for shepherding an agreement with alternative legal services
provider UnitedLex that contributed to the Virginia-based law
firm's 2019 bankruptcy.
The 94-page complaint alleges that LeClairRyan's 2018 deal with
UnitedLex added more debt to the struggling law firm while giving
UnitedLex control over the firm's operations and the ability to use
its intellectual property.
LeClair, meanwhile, enriched himself in his law firm's final years,
with LeClairRyan operating as a Ponzi scheme by using capital
contributions from new lateral hires to pay out legacy
shareholders, Chapter 7 trustee Lynn Tavenner alleged.
"For those left unpaid when the music stopped, it was no different
than a ‘money in, money out’ con game," Tavenner added.
LeClair's attorney, J. Scott Sexton, a senior litigation partner at
Gentry Locke, called Tavenner's amended complaint "factually
untethered and wildly misleading" in a statement.
Sexton said LeClair has a nearly 40-year track record of "ethically
impeccable conduct," and had not been involved in the firm's
management for years.
J. Gregory Milmoe, a Greenberg Traurig shareholder who is
representing the UnitedLex entities, declined to comment.
Tavenner's attorneys at Quinn Emanuel Urquhart & Sullivan did not
respond to a request for comment, nor did LeClair.
Tavenner, of Tavenner & Beran, was tapped as the trustee in October
2019, one month after the law firm filed for bankruptcy. In October
2020, Tavenner, in her capacity as trustee, sued UnitedLex.
Earlier this August 2021, Tavenner sought permission to add more
claims and add LeClair as a defendant, filing the amended complaint
under seal. Last third week of August 2021, a bankruptcy judge in
Richmond gave Tavenner the go-ahead to proceed with her amended
complaint
U.S. Bankruptcy Judge Kevin Huennekens pushed back a scheduled
trial in the case from October to April to account for the fact
that LeClair was added as a defendant.
UnitedLex and LeClairRyan created ULX Partners in 2018, promising a
new model for supporting law firm operations that could expand to
other firms.
But the deal allowed ULX Partners to take control of LeClairRyan's
accounting, marketing, conflict management, and business
development operations, Tavenner alleged. UnitedLex also pressured
the firm to prioritize payments to it as opposed to other
creditors, the trustee added.
UnitedLex and its affiliated entities, ULX Partners LLC and ULX
Manager LLC, represented by attorneys from Greenberg Traurig,
pushed back hard against Tavenner's claims on Wednesday, filing its
own 73-page answerand a motion to dismiss on the same day.
In its answer, the alternative legal services provider accused
Tavenner of trying to "strong-arm money" from the company, and
ignoring the fact that UnitedLex is LeClairRyan's largest
creditor.
"Rather than investigating objectively the facts underlying the
demise of LeClairRyan, the trustee chose to manufacture a bizarre
and perverted story cobbling together baseless and defamatory
accusations and twisting facts to fit inapplicable legal theories,"
UnitedLex wrote.
About LeClairRyan PLLC
Founded in 1988, LeClairRyan PLLC is a national law firm with 385
attorneys, including 160 shareholders, at its peak. The firm
represented thousands of clients, including individuals and local,
regional, and global businesses.
Following massive defections by its attorneys LeClairRyan, members
of the firm in July 2019 voted to effect a wind-down of the
Debtor's operations.
LeClairRyan PLLC sought Chapter 11 protection (Bankr. E.D. Va. Case
No. 19-bk-34574) on Sept. 3, 2019, to effect the wind-down of its
affairs.
In its Chapter 11 petition, the firm listed a range of 200-999
creditors owed between $10 million and $50 million. The firm claims
assets of $10 million to $50 million.
The Hon. Kevin R Huennekens is the case judge.
Richmond attorneys Tyler Brown and Jason Harbour of Hunton Andrews
Kurth are representing LeClairRyan in the case. Protiviti is its
financial adviser for the liquidation.
LOBLAW COMPANIES: Egan-Jones Keeps BB+ Senior Unsecured Ratings
---------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Loblaw Companies.
Headquartered in Brampton, Canada, Loblaw Companies Limited is a
retail and wholesale food distributor with operations across
Canada.
MACY INC: Fitch Raises LongTerm IDRs to 'BB+', Outlook Stable
-------------------------------------------------------------
Fitch Ratings has upgraded the Long-Term Issuer Default Ratings
(IDR) for Macy's Inc., Macy's Retail Holdings, LLC. (MRH) and
Macy's Inventory Funding LLC to 'BB+' from 'BB'. The Rating Outlook
is Stable.
The upgrade reflects Macy's improving topline trajectory and strong
cost reduction. Fitch projects 2021 EBITDA to be at or above $2.5
billion on significantly improved EBITDA margin at 10.4% versus
8.6% pre-pandemic. Fitch expects EBITDA beginning 2022 to be around
$2 billion on EBITDA margin of 8% on more normalized gross margins,
and SG&A increases relative to 2021 to support investments in its
omnichannel initiatives.
In addition, Macy's recent redemption of its $1.3 billion in senior
secured notes has improved Fitch's confidence in Macy's ability to
sustain adjusted leverage under 3x. Increased confidence in Macy's
ability to sustain low single digit positive comps, EBITDA growth
of at least low single digits, and EBITDA margin sustained above
10% would be a rating positive.
Fitch Ratings is withdrawing the Short-term IDR and commercial
paper ratings at MRH as it is no longer considered by Fitch Ratings
to be relevant to the agency's coverage because the CP program is
not currently active.
KEY RATING DRIVERS
EBITDA Rebound: Macy's EBITDA has rebounded sharply, with 1H21
EBITDA of approximately $1.3 billion, over 60% higher than the
comparable 2019 results. Revenue in 2Q21 increased 2% versus 2019,
a significant improvement compared to a 14% decline in the first
quarter. 2Q21 EBITDA margin at 13.9% and 1Q21 EBITDA margin at 9.3%
were significantly higher than pre-pandemic levels of 7%, due to
increased full pricing selling and low clearance activity on
reduced inventory purchases (inventory down 27% at the end of 4Q20
and 23% at 1Q21 relative to comparable 2019 levels) and significant
expense reduction.
Fitch projects revenue could reach $23.5 billion in 2021 versus
$17.3 billion in 2020, and $24.6 billion in 2019, reflecting strong
comp recovery offset somewhat by lost revenue from closed stores.
Revenue beginning 2022 is expected to stabilize at this level
assuming low single digit comp increases offset by lost revenue
from continued store closings, as Macy's completes its targeted 125
store closings announced in Feb. 2020.
While Fitch expects EBITDA margins in 2021 to be in the low double
digits, given the dynamics described above, Fitch expects EBITDA
margin to moderate to around 8% in 2022, on more normalized gross
margins in the 39.5%-40% range, as inventory levels build up and
SG&A increases relative to 2021 levels to support ongoing
investments in its omnichannel initiatives.
Fitch recognizes that a number of unknowns remain, including the
levels of pent-up and pull-forward demand, which may have
benefitted 1H21 apparel and accessories sales, and the potential
impact of rising delta variant coronavirus cases on consumer
behavior.
Longer Term Pandemic Impacts: Macy's initiatives and competitor
actions during the pandemic could benefit leaders in the apparel
and accessories space and improve the company's revenue prospects
in the medium term, although this could be offset by continued
secular shifts that have reduced mall traffic.
Macy's continued to execute against its $1.5 billion cost reduction
program, which is designed to provide Macy's with reinvestment
opportunity in Macy's digital business, strengthening customer
relationships, in-store enhancements, and private label expansion.
The company benefited from its accelerated omnichannel investment.
Macy's currently expects digital sales to be around $8.4 billion or
35% of its 2021 forecast sales versus 25% of sales in 2019, but
expects the business to grow to $10 billion by 2023.
The company previously announced the closure of 125 (accounted for
about $1.4 billion or less than 10% of 2019 revenue and generated
minimal EBITDA) of Macy's lower-volume locations, primarily in
secondary or tertiary markets, which will be completed by 2022.
Post closures, Macy's full line stores will decline to around 400
locations from about 520 stores at the end of 3Q19, and will
account for 93% of store revenue and 88% of stores going forward,
with close to 85% of the locations located in A and B rated malls.
Overall, Macy's branded stores account for 88% of total company
revenue with the remaining 12% coming from Bloomingdales and
Bluemercury.
Reduced industry square footage, due to store closures from strong
and weaker players, as well as larger scale retrenchment by, or
even elimination of, struggling industry participants, should lead
to lower industry-wide inventory levels of apparel and accessories,
which could structurally reduce industry markdown activity, and
protect market share of industry leaders both in the mall and
off-mall channel.
While Fitch acknowledges Macy's proactive approach to real estate
portfolio rationalization and efforts to invest in defending share,
the heightened retrenchment of the store base and cost cutting
required to stabilize operations is evidence of the dislocation in
the business and ongoing secular pressure in the department store
space. Longer term, Macy's ability to stabilize its share of the
mid-tier apparel, accessories and home space will depend on
execution against its omnichannel and other growth initiatives.
Demonstrated Financial Conservatism and Flexibility: Macy's good
credit profile is underscored by its actions and financial
flexibility since the beginning of the pandemic. The company
maximized near-term cash flow through payables negotiations, lower
inventory buys and significantly reducing capex to $470 million in
2020 from its initially targeted $1 billion. The company announced
an incremental $630 million of annual savings from restructuring
and cost cutting, on top of the $1.5 billion announced as part of
its restructuring plan in February 2020, and suspended its dividend
($1.51 per share or approximately $470 million annually) beginning
the second quarter of 2020.
Given the strong cash generation, Macy's repaid the $1.3 billion of
senior secured notes in August 2021 it had issued mid-2020. The
company reinstated a dividend at $0.60 per share or approximately
$180 million annually and announced a share authorization program
of $500 million (the first since 2016), which Fitch expects will be
completed in 2021. Capex in 2022 is expected to return to $1
billion from $650 million projected in 2021.
Macy's financial discipline and adherence to its publicly stated
financial policy (leverage of 2.5x to 2.8x, or 2.4x to 2.7x on a
Fitch-calculated basis) has supported the company's credit profile
over the past few years, and Fitch expects adjusted debt/EBITDA to
return to under 3x beginning 2021.
DERIVATION SUMMARY
Macy's BB+/Stable ratings reflect its improving topline trajectory
and strong cost reduction. Fitch projected 2021 EBITDA is expected
to be at or above $2.5 billion on significantly improved EBITDA
margin at 10.4%. Fitch expects EBITDA beginning 2022 to be around
$2 billion on EBITDA margin of 8% on more normalized gross margins
and SG&A increases relative to 2021 to support ongoing investments
in Macy's omnichannel initiatives. In addition, Macy's recent
redemption of its $1.3 billion senior secured notes have improved
Fitch's view in Macy's ability to sustain adjusted leverage under
3x.
Macy's ratings consider its position as the largest department
store chain in the U.S. Results in recent years have been pressured
given long-term weak mall traffic trends and heightened competition
from alternate channels. Macy's ability to stabilize its share of
the mid-tier apparel, accessories and home space will depend on
execution against its omnichannel and other growth initiatives.
Kohl's (BBB-/Stable): Kohl's ratings reflect its position as the
second largest department store in the U.S. and its well-developed
omnichannel strategies, with digital sales expected to contribute
to approximately 35% of revenues going forward. Kohl's off-mall
real estate footprint provides some insulation from mall traffic
challenges. Assuming a sustained topline recovery, EBITDA could
return to 2019 levels of $2.5 billion and adjusted debt/EBITDAR
could return to under 3x in 2022.
Nordstrom (BBB-/Negative): Nordstrom's ratings reflect its
historically good market position in the apparel, footwear, and
accessories space, with its differentiated merchandise and high
level of customer service enabling the company to enjoy strong
customer loyalty. However, the Negative Outlook reflects concerns
that recent pre-pandemic operating challenges could suggest some
combination of execution shortfalls and increased susceptibility to
secular headwinds in the department store space, which could limit
the company's ability to return revenue and profitability close to
pre-pandemic levels. Nordstrom's ability to sustain its 'BBB-'
rating would depend on the operating rebound potential through
2022, with increased confidence in Nordstrom's ability to achieve
Fitch's projections and bring adjusted leverage to under 3.5x
through both EBITDA expansion and debt reduction.
Dillard's (BB+/Positive): Dillard's ratings reflect its improving
topline trajectory and strong cost reduction, with Fitch projecting
2021 EBITDA to be at or above $800 million on significantly
improved EBITDA margin at 13.1% versus 6.2% pre-pandemic. Fitch
expects EBITDA beginning 2022 to be around $500 million annually on
EBITDA margin of 8%-8.5%, on more normalized gross margins in the
34% range and SG&A increases to support ongoing investments in its
omnichannel initiatives. Increased confidence in Fitch's
projections of sustained low single digit positive comps, EBITDA
above $500 million with EBITDA margin in the high single digits
could lead to a positive rating action.
Dillard's ratings reflect the company's historical lower operating
profitability, geographical concentration and low ecommerce
penetration relative to its larger department store peers, Kohl's,
Nordstrom and Macy's. The ratings also consider Dillard's strong
liquidity, FCF and minimal debt maturities, with adjusted
debt/EBITDAR expected to trend in the low to mid 1x
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Fitch projects Macy's 2021 net sales could increase
approximately 35% to $23.5 billion from depressed 2020 levels,
assuming revenue in the second half of 2021 is down low single
digits relative to 2019 levels versus up 2% in 2Q21 and down
14% in 1Q21. Sales growth is expected to stabilize at this
level beginning 2022 with low single digit comps offset by
sales loss from ongoing store closures;
-- EBITDA, which was essentially breakeven in 2020 relative to
approximately $2.2 billion in 2019, could improve toward $2.5
billion in 2021 on sales recovery, strong gross margin due to
low inventory levels and better than expected recovery in
demand and strong expense reduction. EBITDA margins in 2021
are expected to be around 10.4%, above the 8.6% reported in
2019 due to these factors. EBITDA could trend towards $2
billion in 2022 on high single digit EBITDA margins assuming
some gross margin moderation to the mid-39% range and SG&A
expense increases from 2021 (but still 5% lower than 2019
levels);
-- FCF (after recently reinstated dividends of $180 million
annually) is expected to be $1.0 billion to $1.1 billion in
2021, given Fitch's EBITDA projections. FCF could be around
$250 million beginning 2022 assuming EBITDA levels of $2
billion and increased capex of $1 billion annually versus $650
million projected in 2021. Fitch expects $500 million in share
buybacks in 2021 and assumes FCF beginning 2022 will be
directed towards share buybacks;
-- Adjusted debt/EBITDAR is projected to be in the low 2x in 2021
and high 2x beginning 2022 on EBITDA recovery and the recent
paydown of $1.3 billion of secured debt and paydown of $294
million debt maturing in January 2022. This compares to
leverage of 2.9x in 2019.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- For an upgrade to 'BBB-', increased confidence in Macy's
ability to sustain low single digit positive comps, EBITDA
growth of at least low single digits, and EBITDA margin
sustained above 10%.
-- Maintaining adjusted debt/EBITDAR under 3.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Reduced confidence in the company's longer-term business
profile or ability to stabilize its operating trajectory, as
evidenced by declines in revenue in the low single digits and
EBITDA trending well below $2 billion and EBITDA margin
trending towards the mid-single digits.
-- Sustained adjusted debt/EBITDAR sustained above 4x would also
be a rating concern.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Macy's ended 2020 with a cash balance of $1.7 billion and no
borrowings under its $2.941 billion secured ABL facility (with
availability subject to a borrowing base net of letters of credit).
The company put in place a $2.941 billion ABL facility and a $300
million short-term bridge revolving facility (matured in December
2020) in June 2020, that replaced the existing $1.5 billion
unsecured credit facility with the same maturity of May 9, 2024.
The $2.941 billion ABL facility at a newly created SPV, Macy's
Inventory Funding LLC, has a first lien priority on inventory.
Borrowings under the ABL facility are subject to a borrowing base
based on 90% of NOLV of inventory minus customary reserves.
The company also issued $1.3 billion of senior secured notes
collateralized by certain real estate assets in June 2020. The real
estate collateral for the secured notes were transferred to a newly
created Propco. It included three flagship stores (Union Square,
San Francisco; Brooklyn, New York; and State Street, Chicago), 35
full-line mall locations (33 Macy's and two Bloomingdales) in 'A'
rated malls, and 10 distribution centers. The $365 million in notes
issued by MRH in July 2020 are secured by a second-priority lien on
the same collateral securing the $1.3 billion senior secured
notes.
Macy's owns a considerable amount of real estate, including 389
(298 owned and 91 ground leased) of its 507 Macy's full line stores
and 21 (14 owned and seven ground leased) of its 35 Bloomingdales
full line stores.
In March 2021, Macy's issued $500 million of new unsecured notes
due 2029, the proceeds of which were used to tender approximately
$500 million of debt maturing between 2022 and 2025. The company
now has $294 million of debt maturing in 2022, $665 million in
2023, and $468 million in 2024. Fitch expects the remaining balance
on the January 2022 maturity post the bond transaction to be paid
down with cash on hand; Macy's could choose to refinance or pay
down 2023/2024 maturities.
Given the strong cash generation, Macy's repaid the $1.3 billion of
senior secured notes in August 2021it had issued mid-2020. The
company reinstated a dividend at $0.60 per share or approximately
$180 million annually and announced a share authorization program
of $500 million (the first since 2016) which Fitch expects will be
completed in 2021. Capex in 2022 is expected to return to $1
billion from $650 million projected in 2021.
RECOVERY CONSIDERATIONS
Fitch does not employ a waterfall recovery analysis for issuers
assigned ratings in the 'BB' category. The further up the
speculative-grade continuum a rating moves, the more compressed the
notching between the specific classes of issuances becomes. The
$2.941 billion secured ABL facility has been affirmed at
'BBB-'/'RR1', indicating outstanding recovery prospects (91%-100%).
The $360 million second lien secured notes due 2024 to 2034 and the
unsecured notes have been upgraded to 'BB+'/'RR4' from 'BB/RR4',
indicating average (31%-50%) recovery prospects. All non-first lien
debt is capped at 'RR4' for generic ratings under Fitch's revised
corporate recovery ratings and instrument ratings criteria.
ISSUER PROFILE
Macy's is the largest department store in the U.S. with $25 billion
in revenues in 2019 that dropped to $17 billion in 2020 due to the
severe impact of the pandemic. As of July 31, the company operated
507 Macy's full line stores, 54 Macy's furniture and furniture
clearance stores, 7 standalone Backstage stores, 56 Bloomingdale's
stores (including 20 outlet locations and 1 furniture stores) and
160 Bluemercury stores.
SUMMARY OF FINANCIAL ADJUSTMENTS
Financial statement adjustments that depart materially from those
contained in the published financial statements of the relevant
rated entity or obligor are disclosed.
-- EBITDA adjusted for stock-based compensation;
-- Operating lease expense capitalized by 8x for historical and
projected adjusted debt.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
MALLINCKRODT PLC: Ending Injunctions Puts Chapter 11 at Risk
------------------------------------------------------------
Law360 reports that bankrupt drugmaker Mallinckrodt PLC told a
Delaware federal judge Wednesday, August 25, 2021, that if an
injunction barring the prosecution of claims against it and related
parties isn't extended, its efforts to gain approval of a Chapter
11 plan next month would likely be derailed.
During a virtual hearing, debtor attorney Robert J. Stearn Jr. of
Richards Layton & Finger PA said a pair of preliminary injunctions
issued by the bankruptcy court in late 2020 had allowed
Mallinckrodt to make substantial progress in its bankruptcy
proceedings, and if they are allowed to lapse, thousands of claims
against related parties.
About Mallinckrodt PLC
Mallinckrodt is a global business consisting of multiple
wholly-owned subsidiaries that develop, manufacture, market and
distribute specialty pharmaceutical products and therapies. The
company's Specialty Brands reportable segment's areas of focus
include autoimmune and rare diseases in specialty areas like
neurology, rheumatology, nephrology, pulmonology and ophthalmology;
immunotherapy and neonatal respiratory critical care therapies;
analgesics; and gastrointestinal products. Its Specialty Generics
reportable segment includes specialty generic drugs and active
pharmaceutical ingredients. Visit http://www.mallinckrodt.comfor
more information.
On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates
sought Chapter 11 protection in Delaware in the U.S. (Bankr. D.
Del. Lead Case No. 20-12522) to seek approval of a restructuring
that would reduce total debt by $1.3 billion and resolve
opioid-related claims against them. Mallinckrodt plc disclosed
$9,584,626,122 in assets and $8,647,811,427 in liabilities as of
Sept. 25, 2020.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Latham & Watkins LLP and Richards, Layton &
Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell,
Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray
LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim
Securities LLC as investment banker; and AlixPartners LLP as
restructuring advisor. Prime Clerk, LLC is the claims agent.
The official committee of unsecured creditors retained Cooley LLP
as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon
Advisers LLC as its financial advisor.
On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an
official committee of opioid related claimants. The OCC tapped Akin
Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz as
Delaware co-counsel, Province Inc. as financial advisor, and
Jefferies LLC as investment banker.
The Debtors filed their plan of reorganization and disclosure
statement on April 20, 2021.
MARY BRICKELL: Wins Cash Collateral Access Thru Oct 31
------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas, Miami
Division, has authorized Mary Brickell Village Hotel, LLC to use
cash collateral on an interim basis and provide adequate protection
through October 31, 2021.
The Debtor is permitted to use cash collateral to pay post-petition
expenses and pre-petition claims to the extent payment is allowed
pursuant to another order by the Court upon proper notice and
hearing, if applicable.
The Debtor is directed to continue paying all franchise fees,
royalties and reimbursable expenses due to Marriott International
Inc. arising under an Aloft Hotels New Build License Agreement
between Marriott as Franchisor and the Debtor dated as of December
9, 2010.
DF VII REIT Holdings, LLC, a Delaware limited liability company, is
the sole entity with a lien interest in the Cash Collateral.
As adequate protection to the Lender for the Debtor's use of Cash
Collateral, the Debtor will pay to the Lender $123,960.84 on or
before August 5, and the 5th day of each successive month, or if
the 5th falls on a weekend or Federal holiday, the next business
day thereafter.
As further adequate protection and only to the extent of any
diminution in value of the Lender's interest in Pre-Petition
Collateral, the Lender is granted a valid and perfected
first-priority lien on and security interest in (i) all property
acquired by the Debtor after the Petition Date that is of the same
or similar nature, kind or character as the Lender's Pre-Petition
Collateral, and (ii) to the extent not already provided for under
the terms of the Loan Documents, all cash, rents and receivables
generated by the Lender's Pre-Petition Collateral which are held by
the Debtor, and (iii) the proceeds thereof.
Additionally, with respect to any diminution in value of the
Lender's interest in prepetition collateral, the Lender is entitled
to superpriority administrative expense claim treatment to the
extent provided by Sections 503(b) and 507(b) of the Bankruptcy
Code, which claim will have priority over all administrative
expense claims and unsecured claims against the Debtor or its
estate.
The Secured Lender's lien(s) granted pursuant to the terms of the
Order will be at all times subject and junior to all unpaid fees
due to the Office of the United States Trustee pursuant to 28
U.S.C. section 1930; and all unpaid fees required to be paid to the
Clerk of the Bankruptcy Court. The Debtor is authorized to pay fees
due to the Office of the U.S. Trustee pursuant to 28 U.S.C. section
1930 even though the Debtor did not include the fees as a separate
line item in the Budget; the payment of the fees will not be a
default under the Order.
A copy of the order is available for free at https://bit.ly/3ygA1Z9
from PacerMonitor.com.
About Mary Brickell Village Hotel
Mary Brickell Village Hotel, LLC operates the Aloft Miami Brickell
Hotel. The Hotel consists of 14 stories, 160 rooms, a fitness
center, a large pool deck, a 900-square-foot terrace for events,
and 100 valet parking spaces.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-17103) on July 21,
2021. In the petition signed by Pedro Villar, president, the Debtor
disclosed up to $50 million in both assets and liabilities.
Judge Robert A. Mark oversees the case.
Joseph A. Pack, Esq., at Pack Law is the Debtor's counsel.
MEDALLION GATHERING: S&P Upgrades ICR to 'B' on Refinancing
-----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Texas-based
crude oil gathering and processing company Medallion Gathering &
Processing LLC to 'B' from 'B-'.
S&P said, "At the same time, we raised our issue-level rating on
Medallion's $724 million outstanding senior secured term loan B to
'B' from 'B-'. Our recovery rating on the company's debt remains
'3', which indicates meaningful (50%-70%; rounded estimate: 65%)
recovery in the event of default."
S&P expects steady cash flows to support Medallion's deleveraging.
S&P said, "Our 'B' issuer credit rating reflects Medallion's
proactive extension of the maturity date on its revolving credit
facility to April 2024 from October 2022, which removes the
near-term debt refinancing risk. We anticipate the improvement in
commodity prices will result in production growth in Medallion's
dedicated acreage. This, combined with the lack of material
expansion projects, will lead to strong discretionary cash flow the
company could use to reduce its leverage. We expect S&P Global
Ratings-adjusted debt to EBITDA at about 5x in 2021, declining to
4.5x-4.7x in 2022."
The improving fundamentals in the Midland Basin support S&P's
expectation for an increase in Medallion's volumes.
The company's total volumes increased 29% to 532,000 barrels per
day in 2020 because drilling activity and well completions in the
Midland Basin recovered in the second half of the year.
Specifically, the number of active rigs on Medallion's dedicated
acreage increased in late 2020 and currently stands at about 75% of
pre-pandemic levels. S&P said, "We anticipate total throughput in
2021 will grow by the high-single digits with support from
improving well productivity and a further decline in well
completion costs. Our base-case scenario assumes the exploration
and production companies in the Midland basin will continue to
increase their drilling activity during the next 12 to 24 months
given our forecast for West Texas Intermediate (WTI) spot prices of
more than $50 per barrel, which is higher than their $30-$35 per
barrel break-even level."
Medallion operates a sizable asset base, though it is relatively
small as measured by its EBITDA.
While the company operates one of the largest crude gathering and
transportation systems in the Permian basin (based on total
capacity and dedicated acreage), it is relatively small given S&P's
expectation for EBITDA of $145 million-$155 million in 2021 and
2022. Medallion is also exposed to volumetric risk given that its
portfolio of acreage dedication contracts contains minimal minimum
volume commitments (MVCs) and it derives about half of its volumes
from producers with weaker credit quality.
S&P said, "The stable outlook reflects our expectation that
Medallion will continue to increase its throughput volumes and
EBITDA, while reducing its leverage to about 5x in 2021 and further
reducing it to 4.5x-4.7x in 2022. We anticipate Medallion will
generate strong free operating cash flows with support from
production growth in its dedicated acreage, which the company could
use to reduce its outstanding debt.
"We could take a negative rating action if Medallion's leverage
exceeds 6x on a sustained basis. This could happen if its volumes
remain flat or debt increases because of significant capital
expenditures or dividends.
"Although unlikely during the next 12 months, we could take a
positive rating action if Medallion increases its scale and scope
of operations, and adds minimum volume commitment contracts to its
portfolio, while maintaining its current credit metrics."
MUSCLE MAKER: Paul Menchik to Join Audit Committee
--------------------------------------------------
Paul L. Menchik, an independent director of Muscle Maker, Inc.,
will be appointed to the audit committee to fill the vacancy
resulting from the death of Peter S. Petrosian, a member of the
company's Board of Directors and audit committee.
Muscle Maker is extremely grateful for Mr. Petrosian's dedication
and service to the company. The company's management and Board of
Directors extends its sincerest condolences to Mr. Petrosian's
family.
About Muscle Maker
Headquartered in League City, Texas, Muscle Maker is a fast casual
restaurant concept that specializes in preparing healthy-inspired,
high-quality, fresh, made-to-order lean, protein-based meals
featuring chicken, seafood, pasta, hamburgers, wraps and flat
breads. In addition, the Company features freshly prepared entree
salads and an appealing selection of sides, protein shakes and
fruit smoothies.
Muscle Maker reported a net loss of $10.10 million for the year
ended Dec. 31, 2020, compared to a net loss of $28.39 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $9.34 million in total assets, $5.26 million in total
liabilities, and $4.08 million in total stockholders' equity.
Melville, NY-based Marcum LLP, the Company's auditor since 2016,
issued a "going concern" qualification in its report dated April
15, 2021, citing that the Company has incurred significant losses
and net cash used in operations and needs to raise additional funds
to meet its obligations and sustain its operations. These
conditions raise substantial doubt about the Company's ability to
continue as a going concern.
MY FL MANAGEMENT: Set to Exit from Ch. 11 After Creditor Settlement
-------------------------------------------------------------------
Matthew Arrojas of South Florida Business Journal reports that the
Royal Beach Palace hotel, in Fort Lauderdale, FLorida, is set to
emerge from Chapter 11 bankruptcy later this August 2021 after
reaching a settlement with its largest creditor.
The owners of Royal Beach Palace in Fort Lauderdale, listed as My
FL Management LLC in bankruptcy documents, reached a deal with
Hollywood-based lender A&D Mortgage to pay back what is owed on the
loan it defaulted on in 2020.
Brett Lieberman of Edelboim Lieberman Revah Oshinsky PLLC, who
represented the hotel at 3711 N. Ocean Blvd. in the bankruptcy
case, said this negotiation was made possible through the
bankruptcy declaration.
The hotel's owner filed for bankruptcy protection in February
2021.
As part of the settlement, My FL Management agreed to pay just over
$692,000 in past-due payments on its loan, according to court
documents. It also agreed to pay a cure amount of $660,000, and the
principal amount remaining on the loan will be $10.5 million.
Lieberman said the most notable part of the settlement is that the
hotel owner was able to decelerate the mortgage.
When My FL Management went into default, the lender had the power
to accelerate the loan, meaning the owner would have to immediately
pay 100% of the remaining balance. This is the case with many
commercial property mortgages, he said.
But because the hotel missed a payment during the Covid-19
pandemic, the owner had few opportunities to get another loan to
pay back A&D Mortgage. My FL Management would also likely have to
sell at a discount if it chose to sell the property to pay back its
lender.
Rather than let the hotel be foreclosed upon, Lieberman said the
owners chose to file for Chapter 11 bankruptcy.
In doing so, a deal was reached in bankruptcy court to decelerate
the loan, meaning My FL Management no longer has to pay the full
remaining balance of the loan, which is just over $11 million, at
once, Lieberman said.
"That's huge, because if you're a hotel and you're fighting a
foreclosure suit right now, outside of getting a new loan, you
can't just say, 'Let me pay you what we owe you,'" he said.
"Through Chapter 11, you can."
He added that the hotel is worth about $23 million.
A judge approved the settlement deal in bankruptcy court on Monday.
It is set for confirmation Aug. 31, 2021.
About Royal Beach Palace
MY FL Management LLC, owns Royal Beach Palace, a hotel located in
the residential Lauderdale-by-the-Sea, about a 10-minute walk to
the beach.
Fort Lauderdale, Florida-based MY FL Management LLC sought Chapter
11 protection (Bankr. S.D. Fla. Case No. 21-11028) on Feb. 2, 2021.
The Debtor estimated assets and debt of $1 million to $10 million
as of the bankruptcy filing. EDELBOIM LIEBERMAN REVAH OSHINSKY
PLLC, led by Brett Lieberman, is the Debtor's counsel.
MY FL MANAGEMENT: Wins Cash Collateral Access Thru Aug 31
---------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Florida,
Fort Lauderdale Division, authorized My FL Management, LLC to use
cash collateral on a final basis through August 31, 2021.
The Debtor is permitted to use the Cash Collateral to operate in
the ordinary course of its business as provided in the Debtor's
Budget, subject to a 10% variance.
The Court ruled that A&D Mortgage LLC, the creditor, will receive
monthly payments in the amount of $69,202 as contemplated by the
Budget, as adequate protection payments.
As additional adequate protection, A&D is granted valid and
perfected replacement liens on any and all of the Debtor's property
that A&D had valid and perfected liens on as of the Petition Date.
A copy of the order and the Debtor's budget from August to October
is available at https://bit.ly/3BbRALZ from PacerMonitor.com.
The Debtor projects $409,500 in total income and $331,477.33 in
total expenses for August.
About My FL Management
MY FL Management LLC owns Royal Beach Palace, a hotel located in
the residential Lauderdale-by-the-Sea.
Fort Lauderdale, Fla.-based MY FL Management sought Chapter 11
protection (Bankr. S.D. Fla. Case No. 21-11028) on Feb. 2, 2021.
Yuri Gnesin, manager, signed the petition. In the petition, the
Debtor disclosed assets of between $1 million and $10 million and
liabilities of the same range.
Judge Scott M. Grossman oversees the case.
The Debtor tapped Edelboim Lieberman Revah Oshinsky, PLLC as its
legal counsel and Karlinsky & Golub CPAs, PLLC as its accountant.
N.G. PURVIS: Seeks Approval to Hire David Lawhon as Appraiser
-------------------------------------------------------------
N.G. Purvis Farms, Inc. seeks approval from the U.S. Bankruptcy
Court for the Eastern District of North Carolina to employ David
Lawhon Appraisal, Inc. to conduct an appraisal of its real
properties.
The firm will be compensated at the rate of $130 per hour, not to
exceed $22,640 for the appraisal, and will be reimbursed for
work-related expenses incurred.
As disclosed in court filings, David Lawhon Appraisal is a
disinterested party and does not represent interest adverse to the
Debtor and its estate.
The firm can be reached through:
David Lawhon
David Lawhon Appraisal, Inc.
2684 Lake Waccamaw Trail
Apex, NC 27502
Phone: (919) 614-5677
About N.G. Purvis Farms
N.G. Purvis Farms, Inc. operates throughout the Southeast as a
farrow-to-finish pork producer, which breeds, farrows, weans, and
raises weaner pigs, feeder pigs and market hogs, and then sold to
pork processors. It owns and operates 12 farms in North Carolina
and two farms in Georgia, together with associated facilities, on
which it maintains herds of sows, breeds piglets, and raises market
hogs. It contracts with numerous independent growers to feed and
finish at their facilities weaned pigs and feeder pigs furnished
and owned by the company into market hogs.
N.G. Purvis Farms sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-01068) on May 6, 2021.
In the petition signed by Jerry M. Purvis, Sr., president, the
Debtor disclosed $34,268,361 in assets and $53,126,237 in
liabilities. Judge Stephani W. Humrickhouse oversees the case.
The Debtor tapped Butler & Butler, LLP and Hendren, Redwine, Malone
PLLC as bankruptcy counsel, Robbins May & Rich LLP as special
counsel, Frost PLLC as accountant, and NutriQuest Business
Solutions LLC as restructuring advisor. Steve Weiss of NutriQuest
Business Solutions serves as the Debtor's chief restructuring
officer.
On May 27, 2021, the U.S. Bankruptcy Administrator for the Eastern
District of North Carolina appointed an official committee of
unsecured creditors. The committee tapped Waldrep Wall Babcock &
Bailey, PLLC as legal counsel and Dundon Advisers, LLC as financial
advisor.
NATIONAL FINANCIAL: 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 National Financial Holdings, Inc., according to court
dockets.
About National Financial
Founded in 2015 as Finova Financial, National Financial Holdings,
Inc. operates a vehicle title loan financing company in Palm Beach
Gardens, Fla.
National Financial filed a Chapter 11 petition (Bankr. S.D. Fla.
Case No. 21-16989) on July 17, 2021, disclosing up to $50,000 in
assets and up to $10 million in liabilities. Derek Acree, chief
legal officer, signed the petition.
Judge Erik P. Kimball was assigned to the case before Judge Mindy
A. Mora took over.
Kelley, Fulton & Kaplan, P.L. serves as the Debtor's counsel.
NORTHWEST BIOTHERAPEUTICS: Posts $4.4M Net Income in 2nd Quarter
----------------------------------------------------------------
Northwest Biotherapeutics, Inc. filed with the Securities and
Exchange Commission its Quarterly Report on Form 10-Q disclosing
net income of $4.41 million on $416,000 of total revenues for the
three months ended June 30, 2021, compared to a net loss of $58.05
million on $2,000 of total revenues for the three months ended June
30, 2020.
For the six months ended June 30, 2021, the Company reported net
income of $287,000 on $655,000 of total revenues compared to a net
loss of $55.43 million on $572,000 of total revenues for the same
period during the prior year.
As of June 30, 2021, the Company had $28.77 million in total
assets, $378.61 million in total liabilities, and a total
stockholders' deficit of $349.84 million.
The Company has incurred annual net operating losses since its
inception. The Company used approximately $20 million of cash in
its operating activities during the six months ended June 30,
2021.
Northwest Biotherapeutics said, "The Company does not expect to
generate material revenue in the near future from the sale of
products and is subject to all of the risks and uncertainties that
are typically faced by biotechnology companies that devote
substantially all of their efforts to R&D and clinical trials and
do not yet have commercial products. The Company expects to
continue incurring annual losses for the foreseeable future. The
Company's existing liquidity is not sufficient to fund its
operations, anticipated capital expenditures, working capital and
other financing requirements until the Company reaches significant
revenues. Until that time, the Company will need to obtain
additional equity and/or debt financing, especially if the Company
experiences downturns in its business that are more severe or
longer than anticipated, or if the Company experiences significant
increases in expense levels resulting from being a publicly-traded
company or from expansion of operations. If the Company attempts
to obtain additional equity or debt financing, the Company cannot
assume that such financing will be available to the Company on
favorable terms, or at all.
Because of recurring operating losses and operating cash flow
deficits, there is substantial doubt about the Company's ability to
continue as a going concern within one year from the date of this
filing."
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1072379/000110465921106389/nwbo-20210630x10q.htm
About Northwest Biotherapeutics
Headquartered in Bethesda, MD, Northwest Biotherapeutics, Inc. --
www.nwbio.com -- is a biotechnology company focused on developing
personalized immune therapies for cancer. The Company has
developed a platform technology, DCVax, which uses activated
dendritic cells to mobilize a patient's own immune system to attack
their cancer.
The Company reported a net loss of $529.82 million for the year
ended Dec. 31, 2020, compared to a net loss of $20.81 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $32.46 million in total assets, $385.66 million in total
liabilities, and a total stockholders' deficit of $353.20 million.
Tampa, Florida-based Cherry Bekaert LLP, the Company's auditor
since 2021, issued a "going concern" qualification in its report
dated March 31, 2021, citing that the Company has recurring losses
and negative cash flows from operations that raise substantial
doubt about its ability to continue as a going concern.
OLIN CORP: S&P Ups ICR to 'BB+' on Debt Repayment, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on Olin Corp. to
'BB+' from 'BB'. At the same time, S&P raised its issue-level
rating on the company's unsecured notes to 'BB+' from 'BB' and
revised its recovery rating to '3' from '4'. The '3' recovery
rating indicates its expectation for meaningful (50%-70%; rounded
estimate: 65%) recovery in the event of a payment default.
S&P said, "Concurrently, we lowered our issue-level rating on
Olin's term loan and revolving credit facilities to 'BB+' from
'BBB-' and revised our recovery rating to '3' from '1'. These
facilities are now unsecured and pari passu with the company's
unsecured notes following the termination of the security agreement
that provided guarantees and collateral securing the facilities.
"The upgrade reflects our updated forecast, under which we expect
the company to generate more than $2 billion of EBITDA in 2021
(well above its previous peak earnings in 2018)."
Olin generated over $1.1 billion of S&P Global Ratings-adjusted
EBITDA over the first half of 2021. In addition, it has
sequentially improved EBITDA and margins across all segments of its
portfolio since the most recent cyclical trough in the third
quarter of 2020. Underlying this improvement has been a cyclical
upturn in the sector, with strong chlorine and caustic soda end-use
demand and improving ECU profitability. The strong demand for the
company's chlorine, caustic, and epoxy products has been supported
by a rebound in the auto, construction, and coatings sectors and on
the supply side via weather-related outages in the first half of
the year. In addition to the cyclical factors cited above, Olin's
relatively new strategy to maximize ECU value by targeting market
participation to the weak side of the ECU (caustic soda in recent
quarters) has enhanced its profitability. Management has also
focused on matching output to demand and has stated its willingness
to reduce volume--substantially if necessary--of key upstream
products, such as elemental chlorine, epichlorohydrin, and
ammunition, to retain pricing rather than chasing volume. S&P said,
"We believe the company's earnings will remain strong into the back
half of the year supported by chlorine and caustic pricing, which
remain elevated relative to recent historical averages. However, we
continue to view Olin's earnings in the chlor-alkali subsector as
volatile over the long run given the segment's susceptibility to
factors including demand downturns, supply increases, and energy
costs fluctuations, all of which can lead to variability in its
earnings. We view the company's current upcycle earnings as
unsustainable over an extended period. However, we expect the
run-rate EBITDA of Olin's Winchester segment to remain higher than
in past years (and above $400 million in 2021) due to the company's
long-term military ammunition contract at Lake City, incremental
demand from a rise in first-time gun owners, and higher ammunition
pricing."
S&P expects that Olin's 2021 financial policies, under which it has
prioritized debt repayment, will lead to a material and sustainable
improvement in its credit metrics.
In the first half of 2021, the company reduced its gross debt by
approximately $500 million. This includes its redemption of
higher-cost unsecured debt. In January, the company redeemed the
remaining portion of its $120 million 9.75% notes due 2023 and, in
April, it fully repaid its $500 million 10% notes due 2025. Olin
has publicly stated its intention to further reduce its debt with a
target of about $1 billion in 2021. S&P said, "In our view, the
company's material deleveraging via debt repayment during a period
of record earnings will provide it with significantly more
flexibility during future cyclical downturns. We consider this to
be particularly important given the elevated level of volatility in
Olin's past product pricing and earnings. In the most recent
recession in 2020, during which its S&P Global Rating-adjusted debt
to EBITDA rose to nearly 8x and its FFO to debt fell to 7%, the
company was forced to seek covenant amendments and raise additional
funding at markedly higher interest rates. We believe management's
debt-reduction measures, as well as its aforementioned pricing
initiatives, will lead to a step change in its credit measures and
significantly reduce the probability that its debt leverage will
approach these elevated levels in a future downturn. We now expect
Olin's weighted-average (including the recession year of 2020) FFO
to debt to be in the 30%-45% range and remain in the 20%-30% range
after incorporating potential future downturns."
S&P's assessment of the company's business risk reflects its
leading global market positions in many of its segments, as well as
its status as having the largest chlorine production capacity
globally.
Olin is the largest global producer of chlorine, caustic soda, and
chlorinated organics and the No. 1 global supplier of epoxy
materials. The company also benefits from its position at the lower
end of the global cost curve for some of its raw materials,
particularly electricity, which it usually purchases from natural
gas or hydroelectric sources. S&P said, "We expect U.S.-based
chlor-alkali to have a sustained low-cost advantage, particularly
given our expectation that natural gas prices will remain in the
$2.50 per million Btu (mmBtu)-$3.50 mmBtu range over the next few
years. Despite the weakness in 2019-2020, we view the chlor-alkali
industry's medium- to long-term fundamentals as favorable and
expect increasing demand to outpace supply additions over the next
several years because we believe current chlor alkali prices are
not sufficient to support supply additions." Even if prices improve
materially and remain elevated, building a new greenfield facility
typically takes three to four years to complete and there are few
such projects currently underway. Additionally, Olin has closed
certain non-economic facilities in recent years, reducing its total
chlor-alkali capacity by 655,000 tons since 2020. The company's
advantages are partially offset by its dependence on the highly
cyclical end markets served by the chlor-alkali industry and the
fluctuations in its raw material costs. Caustic soda is a key input
in the pulp and paper market, which is in structural decline.
Additionally, alumina consumption is a key driver of caustic demand
and is heavily tied to the cyclical automotive market.
Expansion in the global housing market and increased industrial
manufacturing production are the primary drivers of the demand for
Olin's chlorine and caustic soda products, while it sells the
majority of its epoxy products into the coatings, adhesives, and
electronics end markets. The company has increased its downstream
chlorine applications and reduced its proportion of merchant
chlorine and merchant caustic soda sales, which has helped reduce
its high freight costs. S&P said, "We expect Olin to continue to
implement initiatives focused on moving its customer contract
pricing away from what it considers to be backward-looking industry
price benchmarks. We believe the company's Winchester ammunition
segment will be more stable and contribute a materially higher
level of EBITDA than it has in past years. We also expect the Lake
City contract, which it was awarded in late 2020, will lead to a
more balanced exposure across the commercial, military, and law
enforcement ammunition markets. However, we note that the
commercial portion of this segment will remain susceptible to the
evolution of perceptions and potential regulations on weapons and
ammunition producers, which could depress Olin's future earnings."
S&P said, "The stable outlook reflects our view that the increase
in Olin's EBITDA and free cash flow generation in 2021 will
materially exceed our previous expectations. Rising demand from an
improving macroeconomic environment, market tightness related to
adverse weather conditions, and management's ECU optimization
strategy have substantially increased the company's profitability
during the first half of 2021 and we now forecast its full-year S&P
Global Ratings-adjusted EBITDA will exceed $2 billion. Under our
base-case scenario, we assume Olin's higher earnings and debt
reduction of about $1 billion leads to a substantial improvement in
its credit metrics, including weighted average S&P Global
Ratings-adjusted FFO to debt of between 30% and 45%. At the current
rating, we would expect the company to maintain FFO to debt in the
20%-30% range after incorporating earnings volatility and a
potential future downturn. The presence of activist investor Sachem
Head Capital Management, which held a 9% stake in the company as of
June 2021, imparts some unpredictability to its future financial
policy decisions. Nonetheless, we consider Olin's financial
policies, including its large level of absolute debt reduction in
2021, as supportive of its ability to maintain credit metrics we
consider appropriate for the current rating. We do not expect the
company to shift its financial policy; however, we also do not
assume any further debt reduction beyond 2021.
"We could lower our rating on Olin by one notch in the next 12
months if the prices for its key products, such as chlorine,
caustic soda, or epoxy, significantly decline, which could occur if
the U.S. housing market and industrial production are much weaker
than we expect. We could also consider a downgrade if the company's
pricing strategy is not successful in structurally increasing its
profitability over an extended period of time, particularly during
cyclical downturns. Specifically, we could consider lowering our
rating if Olin's revenue is significantly weaker than we project
(greater than 5%-10% below our base case forecast) and its EBITDA
margin drops by at least 600 basis points (bps) such that its
weighted-average FFO to debt falls below 20% with no prospects for
improvement. We could also consider a lower rating if the company
does not maintain prudent financial policies that support credit
metrics we view as commensurate with the current rating. We would
view the pursuit of large debt-funded growth initiatives or
shareholder rewards as inconsistent with our current financial
policy expectations.
"We could upgrade Olin to investment grade in the next 12 months if
the prices for its caustic soda, chlorine, and epoxy products, as
well as its segment margins, remain elevated for an extended period
such that its revenue rises by 5% and its EBITDA margins improve by
at least 300 bps relative to our base-case expectations. Before
raising our rating, we would expect Olin to improve its
weighted-average FFO to debt to about 45% and maintain it at that
level after accounting for potential pricing volatility. Equally
important, we would require the company to commit to maintain
financial policies that support the maintenance of credit metrics
that we consider appropriate for the rating."
OWENS & MINOR: Egan-Jones Keeps B+ Senior Unsecured Ratings
-----------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, maintained its 'B+'
foreign currency and local currency senior unsecured ratings on
debt issued by Owens & Minor, Inc.
Headquartered in Virginia, Owens & Minor, Inc. distributes medical
and surgical supplies throughout the United States.
OWENS CORNING: Egan-Jones Keeps BB+ Senior Unsecured Ratings
------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Owens Corning.
Headquartered in Toledo, Ohio, Owens Corning produces residential
and commercial building materials, glass-fiber reinforcements, and
engineered materials for composite systems.
PELCO STRUCTURAL: Wins Interim Cash Collateral Access Thru Oct 31
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas,
Victoria Division, has authorized Pelco Structural, L.L.C. to use
cash collateral on an interim basis in accordance with the budget.
The Debtor requires the use of funds that certain parties may claim
constitute cash collateral to pay the day-to-day operating expenses
associated with its business, maintain its property interests, make
payments authorized by the Court, cover the administrative costs
incurred in the case, and for such other expenses necessary to
preserve the value of the Debtor's estate.
Pelco Industries, Inc. claims an interest in the Debtor's cash on
account of security interests granted by the Debtor prior to the
Petition Date. Exelon Business Services Company, LLC is also
claiming an interest in certain of the Debtor’s cash by virtue of
supplementary proceedings on a prepetition judgment.
The Debtor is permitted to use cash collateral through the date
which is the earliest to occur of (a) the occurrence of an Event of
Default; or (b) October 31, 2021, subject to renewal by the entry
of a further Order. The Budgeted expenses will not exceed 120% of
the amount set forth for the respective expense category set forth
in the Budget.
An "Event of Default" will occur if the Debtor fails to perform
fully and in a timely manner any provision, term, or condition of
the Order. Upon the occurrence of an Event of Default, any person
claiming an interest in cash collateral, including Industries and
Exelon, will give notice to the Debtor, Industries, and Exelon
describing the alleged Event of Default and stating that the
Debtor's right to use cash collateral will automatically terminate
if the Debtor does not cure such Event of Default within 10
business days.
As adequate protection against any diminution in value of their
validly perfected and unavoidable prepetition security interest or
lien (if any) as a result of the use of cash collateral, Industries
and Exelon will receive adequate protection in the form of
Replacement Liens up to the value of such creditor's validly
perfected and unavoidable prepetition security interest or lien (if
any) as of the Petition Date.
Subject to the Carve-Out, the Replacement Liens will be (i) first
priority perfected liens on all of the Post-petition Collateral as
to which such relevant creditor had a valid and perfected first
priority lien or security interest as of the Petition Date and (ii)
junior perfected liens on all Post-petition Collateral that is
subject to a validly perfected lien or security interest with
priority over such creditor's liens or security interests as of the
Petition Date, in the same priority as existed prior to the
Petition Date.
The Carve Out means: (i) statutory fees payable to the United
States Trustee; (ii) fees payable to the clerk of the Bankruptcy
Court; (iii) reasonable and documented expenses payable to any
statutory committee appointed in the case; and (iv) professional
fees and expenses incurred by professionals retained by the Debtor
pursuant to 11 U.S.C. sections 327(a) and 1103 and allowed by the
Court.
The Replacement Liens are deemed valid and perfected without the
need to file any document as may otherwise be required by law.
As additional adequate protection, to the extent that the
Replacement Liens prove insufficient to provide adequate protection
against any diminution in value of their validly perfected and
unavoidable prepetition security interest or lien, Industries and
Exelon are granted allowed superpriority administrative expense
claims.
A hearing on the matter is scheduled for October 28 at 10 a.m.
A copy of the order is available at https://bit.ly/3zj0g2J from
PacerMonitor.com.
About Pelco Structural LLC
Pelco Structural LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. Okla. Case No. 21-11926) on July 16,
2021. In the petition signed by Stephen P. Parduhn, president and
CEO, the Debtor disclosed up to $50 million in both assets and
liabilities.
Clayton D. Ketter, Esq. at Phillips Murrah P.C. is the Debtor's
counsel.
Pelco Industries, Inc., as lender, is represented by:
Stephen J. Moriarty, Esq.
Fellers, Snider, Blankenship, Bailey & Tippens, P.C.
100 N. Broadway Ave., Suite 1700
Oklahoma City, OK 73102
Tel: (405) 232-0621
Fax: (405) 232-9659
Exelon Business Services Company, LLC, as lender, is represented
by:
Kiran A. Phansalkar, Esq.
Conner & Winters, LLP
1700 One Leadership Square
211 N. Robinson Ave.
Oklahoma City, OK 73102
Tel: (405) 272-5711
Fax: (405) 232-2695
Email: kphansalkar@cwlaw.com
- and -
Charles S. Stahl, Jr., Esq.
Swanson, Martin & Bell, LLP
2525 Cabot Drive, Suite 204
Lisle, IL 60532
Tel: (630) 799-6990
Fax: (630) 799-6901
Email: cstahl@smbtrials.com
- and -
Joseph P. Kincaid, Esq.
Swanson, Martin & Bell, LLP
330 N. Wabash, Suite 3300
Chicago, IL 60611
Tel: (312) 321-8442
Fax: (312) 321-9100
Email: jkincaid@smbtrials.com
PIONEER NATURAL: Egan-Jones Hikes Senior Unsecured Ratings to BB+
-----------------------------------------------------------------
Egan-Jones Ratings Company, on August 20, 2021, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Pioneer Natural Resources Company to BB+ from BB-.
Headquartered in Irving, Texas, Pioneer Natural Resources Company
operates as an independent oil and gas exploration and production
company.
PITNEY BOWES: Egan-Jones Keeps B- Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Pitney Bowes Inc. EJR also maintained its 'B' rating
on commercial paper issued by the Company.
Headquartered in Stamford, Connecticut, Pitney Bowes Inc. sells,
finances, rents, and services integrated mail and document
management systems.
POLYCONCEPT NORTH: Moody's Alters Outlook on B3 CFR to Stable
-------------------------------------------------------------
Moody's Investors Service affirmed Polyconcept North America
Holdings, Inc.'s ratings, including its Corporate Family Rating at
B3, its Probability of Default Rating at B3-PD, and the rating on
the company's senior secured first lien term loans due 2023 at B3.
The outlook was changed to stable from negative.
The ratings affirmation and stable outlook reflects Polyconcept's
better than anticipated revenue and EBITDA over the past few
months, Moody's expectations for a continuation of revenue and
earnings recovery toward pre-pandemic levels over the next 12-18
months, and the company's good liquidity. Polyconcept reported
year-over-year organic revenue growth of 2% and 75% for the year to
date and second quarter periods ending June 30, 2021, respectively,
and pro forma for acquisitions. Although revenue remains below 2019
levels, monthly order and sales recovery accelerated in the last
few months benefitting from the continued recovery and reopening in
the economy, and pro forma revenue is currently down in the
mid-to-high single percentage relative to the same period in 2019.
Moody's expects Polyconcept's pro forma revenue and EBITDA to
continue to recover in the second half of 2021 and continue to
sequentially improve in 2022, supported by good economic growth,
recent price increases that should mitigate costs pressures, and
market share gains. As a result, Moody's expects debt/EBITDA
leverage to meaningfully improve to below 7.0x over the next few
quarters, as the company lapses weak periods in 2020.
Polyconcept's liquidity remains good, supported by a relatively
healthy cash balance of $103 million and access to an undrawn $88
million revolver as of June 30, 2021, which provides the company
with financial flexibility to fund working capital and growth
investments.
Moody's took the following rating actions:
Affirmations:
Issuer: Polyconcept North America Holdings, Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Term Loan (cash pay), Affirmed B3 (LGD4)
Senior Secured 1st Lien Term Loan (PIK), Affirmed B3 (LGD4)
Outlook Actions:
Issuer: Polyconcept North America Holdings, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Polyconcept's B3 CFR reflects its modest size with annual revenue
under $1.0 billion, and elevated financial leverage with
debt/EBITDA at around 8.3x for the twelve month period ended June
30, 2021, pro forma for recent acquisitions. The company is exposed
to cyclical headwinds due to the discretionary nature of its
products, and curtailed business spending because of the
coronavirus pandemic will continue to negatively impact new order
volumes at least for the remainder of 2021. However, Moody's
expects revenue and profitability to sequentially improve over the
next 12-18 months as the economy continues to recover from a
coronavirus induced recession resulting in debt/EBITDA leverage
improving below 7.0x. Governance factors include aggressive
financial policies under private equity ownership. The credit
profile also reflects the company's solid industry positioning,
supported by a broad product portfolio and ability to execute quick
order turnaround times, its competitive advantage in low-cost
sourcing and its diverse geographic presence. Polyconcept's
mitigation of recent costs pressures through the implementation of
price increases is helping to increase earnings as revenue
recovers.
The company's good liquidity reflects its relatively healthy cash
balance of $103 million and access to an undrawn $88 million
revolver as of June 30, 2021, and relatively low capital
expenditures. Free cash flow is nevertheless weak relative to debt
despite the payment-in-kind of roughly $12.5 million of interest.
Moody's projects $20-25 million of annual free cash flow in 2021
and $45-50 million in 2022, pressured by anticipated working
capital investments needed as sales recover. Because the first lien
debt matures in August 2023 and second lien term loan matures in
2024 (unrated), refinancing risk will increase if the company does
not proactively address the maturities.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that Polyconcept's
revenue and earnings will gradually recover over the next 12-18
months, resulting in debt/EBITDA leverage improving to under 7.0x,
and that the company will maintain good liquidity which provides
financial flexibility to fund investments in working capital as
sales recover.
Ratings could be upgraded if the company demonstrates consistent
organic revenue growth and EBITDA margin expansion, while
debt/EBITDA is sustained below 6.0x. A ratings upgrade would also
require the company to maintain at least adequate liquidity, and
sustain good positive free cash flow on an annual basis. The
company would also need to proactively address the 2023/2024 debt
maturities and maintain financial policies that support credit
metrics at the above levels.
Ratings could be downgraded if the pace of revenue recovery stalls
or reverses, if Moody's expects debt/EBITDA to be sustained above
7.0x, or if liquidity deteriorates for any reason including
sustained negative free cash flows, increasing revolver reliance,
or the company does not proactively address upcoming refinancing
needs.
Headquartered in New Kensington, Pennsylvania, Polyconcept designs,
sources, distributes and decorates promotional products through its
main offices in the US, Europe, Hong Kong, Canada and China. The
company supplies a wide range of promotional, lifestyle and gift
products to several hundred thousand companies ranging from small
enterprises to global corporations in over 100 countries, with a
primary focus on North America and Europe. The company operates
through three segments including Polyconcept North America (PCNA),
Europe (PFCI), and Private Label. Polyconcept was acquired by an
affiliate of private equity firm Charlesbank Capital Partners in
August 2016 for $975 million, including the repayment of debt and
fees and expenses. Polyconcept generated approximately $639 million
of revenue for the twelve-month period ended June 30, 2021.
The principal methodology used in these ratings was Consumer
Durables Industry published in April 2017.
PRECISION CASTPARTS: Egan-Jones Keeps B- Senior Unsecured Ratings
-----------------------------------------------------------------
Egan-Jones Ratings Company, on August 18, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Precision Castparts Corp. EJR also maintained its
'B' rating on commercial paper issued by the Company.
Headquartered in Portland, Oregon, Precision Castparts Corp
manufactures and sells metal components. The Company provides
extruded pipe, fittings, forgings, and clad products.
PURDUE PHARMA: Court Schedules to Rule Opioid Settlement Oct. 27
----------------------------------------------------------------
Maria Chutchian of Reuters reports that a U.S. judge in the Purdue
Pharma bankruptcy case expects to rule on Friday, Aug. 27, 2021, on
the OxyContin maker's request to approve its settlement of
opioid-related litigation.
During a hearing on Wednesday, August 25, 2021, U.S. Bankruptcy
Judge Robert Drain in White Plains, New York, said he plans to rule
at the end of the week. A trial over the plan and settlement began
on Aug. 12, 2021.
The deal, which Purdue says is worth more than $10 billion, has
widespread support but is still opposed by nine U.S. states.
Members of the Sackler family who own the company have said they
will contribute about $4.5 billion in exchange for legal
protections against opioid-related litigation.
Judge Drain stated at the conclusion of Wednesday's, August 25,
2021, hearing that Purdue, the Sacklers and the opposing states
should continue efforts to reach a deal before Friday, August ,
2021.
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.
QUANTUM CORP: Appoints John Hurley as Chief Revenue Officer
-----------------------------------------------------------
Quantum Corporation has appointed John Hurley as chief revenue
officer. Hurley is an accomplished sales leader with more than 25
years of experience selling to and growing some of the world's
largest enterprise accounts and building high-performing teams.
His experience will be instrumental in driving Quantum's global
expansion and the company's evolution from hardware appliance
vendor to subscription-based software and as-a-Service provider of
comprehensive video and data management and analysis solutions.
Prior to Quantum, Hurley led multiple client segments at Cisco,
including his most recent role as vice president, global commercial
segment, where his team was responsible for driving the
multi-billion dollar commercial business. Hurley also spent
several years overseeing Cisco's service provider business that
delivered billions in sales through a strong network of sell to and
sell thru partnerships. Additionally, Hurley led transformational
enterprise relationships with Cisco's largest enterprise customers
in aerospace and automotive.
"The appointment of John Hurley demonstrates the scope of our
ambition as a company. His experience working with the largest
global enterprise, commercial, and service provider customers will
prove invaluable as we accelerate our growth trajectory," said
Jamie Lerner, CEO, Quantum. "We're now supporting organizations in
cloud services, government, media and entertainment, research,
transportation, finance, and beyond to achieve their digital
transformation goals. Not only in the markets we've traditionally
served, but also in emerging areas that are increasingly harnessing
the power of video and data to drive business forward."
Hurley's other career highlights include serving as Dell
Technologies' area vice president, Midwest Global/Corporate
Business Group, where he led regional sales directors and their
teams to support multiple Fortune 100 customers. He also held
leadership roles at transformational early-stage software
companies, where he helped drive the businesses to successful
acquisitions by industry leaders Microsoft and HP.
"I'm excited to be joining Quantum to help accelerate the growth of
the company as it evolves into a best-in-class software and
as-a-Service company," added Hurley. "Quantum's experience in
helping clients orchestrate colossal amounts of video and
unstructured data sets the company apart from the competition, and
I look forward to building on this to generate growth in new
markets around the globe."
About Quantum Corp.
Based in San Jose, California, Quantum Corp. (NYSE:QTM) --
http://www.quantum.com-- provides technology and services that
stores and manages video and video-like data delivering the
industry's top streaming performance for video and rich media
applications, along with low cost, high density massive-scale data
protection and archive systems. The Company helps customers
capture, create and share digital data and preserve and protect it
for decades.
Quantum reported a net loss of $35.46 million for the year ended
March 31, 2021, compared to a net loss of $5.21 million for the
year ended March 31, 2020. As of March 31, 2021, the Company had
$194.92 million in total assets, $307.17 million in total
liabilities, and a total stockholders' deficit of $112.25 million.
QUANTUM CORP: Incurs $4.2 Million Net Loss in First Quarter
-----------------------------------------------------------
Quantum Corporation filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $4.15 million on $89.10 million of total revenue for the three
months ended June 30, 2021, compared to a net loss of $10.74
million on $73.31 million of total revenue for the three months
ended June 30, 2020.
As of June 30, 2021, the Company had $178.18 million in total
assets, $291.11 million in total liabilities, and a total
stockholders' deficit of $112.93 million.
Net cash used in operating activities was $6.9 million for the
three months ended June 30, 2021. This use of cash is primarily
attributable to changes in working capital of $10.0 million driven
by an increase in manufacturing and service parts inventories of
$4.4 million, an increase in accounts payable, accrued
compensation, deferred revenue of $3.2 million, $4.9 million and
$6.3 million, respectively, in addition to miscellaneous changes in
other current and non-current assets and liabilities, partially
offset by a reduction in accounts receivable of $15.2 million. The
decrease in deferred revenue reflects the seasonal nature of
service contract renewals which peak in the fourth fiscal quarter.
Net cash used in operating activities was $9.0 million for the
three months ended June 30, 2020. This use of cash is primarily
attributable to the net loss adjusted for non-cash items of $4.0
million and changes in working capital of $4.9 million. Cash used
related to working capital was driven by a decrease of $21.0
million in accounts receivable more than offset by the increase in
manufacturing and service inventory of $3.2 million and decreases
in accounts payable, deferred revenue and other assets and
liabilities of $9.9 million, $8.2 million and $4.2 million,
respectively. The decrease in deferred revenue reflects the
seasonal nature of service contract renewals which peak in the
fourth fiscal quarter.
Net cash used in investing activities was $1.2 million in the three
months ended June 30, 2021, which included approximately $1.0
million related to new ERP systems software.
Net cash used in investing activities was $0.5 million in the three
months ended June 30, 2020, which was mostly flat compared to the
same period in the prior year. The Company's capital expenditures
in both periods consisted primarily of tooling purchases and
leasehold improvements.
Net cash used in financing activities was $0.5 million in the three
months ended June 30, 2021 related to debt principal amortization
payment.
Net cash provided by financing activities was $26.3 million in the
three months ended June 30, 2020 which included new Senior Secured
Term Loan borrowings of $19.4 million (net of lender fees of $0.6
million), $10.0 million in borrowings under the Paycheck Protection
Program and the net pay-down of its Amended PNC Credit Facility.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/709283/000070928321000043/qtm-20210630.htm
About Quantum Corp.
Based in San Jose, California, Quantum Corp. (NYSE:QTM) --
http://www.quantum.com-- provides technology and services that
stores and manages video and video-like data delivering the
industry's top streaming performance for video and rich media
applications, along with low cost, high density massive-scale data
protection and archive systems. The Company helps customers
capture, create and share digital data and preserve and protect it
for decades.
Quantum reported a net loss of $35.46 million for the year ended
March 31, 2021, compared to a net loss of $5.21 million for the
year ended March 31, 2020. As of March 31, 2021, the Company had
$194.92 million in total assets, $307.17 million in total
liabilities, and a total stockholders' deficit of $112.25 million.
R.A. BORRUSO: Further Fine-Tunes Plan Documents
-----------------------------------------------
R.A. Borruso, Inc., submitted an Amended Second Amended Plan of
Reorganization for Small Business under Chapter 11 dated August 23,
2021.
The Debtor's financial projections show that the Debtor will be
able to make the plan payments to administrative, secured, and
priority claimants and distribute projected disposable income to
unsecured creditors. The Debtor anticipates that the Plan will be
confirmed in September 2021, the Plan will be effective on or about
October 1, 2021, the first quarterly distribution to unsecured
creditors will be made on January 1, 2022, and the final quarterly
distribution to unsecured creditors will be made on January 1,
2027. The distributions under the Plan will be derived from (i)
existing cash on hand on the Effective Date, and (ii) revenues
generated by continued business operations.
Class 1 consists of Priority claims. Class 1 Claims are unimpaired
by the Plan, and each holder of a Class 1 Priority Claim will be
paid in full, in cash, on the later of the Effective Date of the
Plan and the date on which such claim is allowed by a final non
appealable order, or on such other terms as may be agreed on by the
holder of the claim and the Debtor.
Class 2 consists Secured Claims of Ameris Bank. Ameris Bank was
scheduled as holding a secured claim in the amount of
$1,226,877.77. Ameris Bank's Class 2 Claims shall be allowed in the
amount of $180,000 or such other amount as fixed by the Court,
amortized, over 9 years payable in monthly installments of
principal and interest at the rate of 5%. The Class 2 Claims shall
mature and become due and payable in full five years from the
anniversary of the first plan payment.
Class 3 consists of non-priority unsecured claims. Class 3 claims
are impaired by the Plan. Every holder of a non-priority unsecured
claim against Borruso shall receive its pro-rata share of the
Debtor's projected disposable income. Payments shall be made on a
quarterly basis over a period of 5 years, commencing 3 months after
the Effective Date.
Holders of equity interests shall retain their interests.
Payments required under the Plan will be funded from (i) existing
cash on hand on the Effective Date, and (ii) revenues generated by
continued operations.
A full-text copy of the Amended Second Amended Plan of
Reorganization dated August 23, 2021, is available at
https://bit.ly/2Wnw0FA from PacerMonitor.com at no charge.
Attorneys for Debtor:
Scott A. Stichter(FBN0710679)
Stichter Riedel Blain & Postler, P.A.
110 East Madison Street, Suite 200
Tampa, Florida 33602
Tel: (813)229-0144
E-mail: sstichter@srbp.com
About R.A. Borruso, Inc.
R.A. Borruso, Inc., sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 20-06495) on August 27,
2020. The Debtor's case is jointly administered with that of
affiliated companies, Nine Family Circle Holdings, Inc. and AJRANC
Insurance Agency, Inc. (Bankr. M.D. Fla. Lead Case No. 20-06493).
AJRANC Insurance Agency's case is the lead case.
In the petition signed by Ryan A. Borruso, president, the Debtor
R.A. Borruso disclosed up to $50,000 in assets and $10 million in
liabilities.
Judge Caryl E. Delano oversees all three cases.
Scott A. Stichter, Esq. at Stichter, Riedel, Blain and Postler,
P.A. is the Debtors' counsel.
REMARK HOLDINGS: Stockholders Elect Five Directors
--------------------------------------------------
Remark Holdings, Inc. held its annual meeting of stockholders on
Aug. 23, 2021, at which the stockholders elected Theodore P. Botts,
Brett Ratner, Daniel Stein, Kai-Shing Tao, and Elizabeth Xu as
directors to serve until the Company's 2022 annual meeting of
stockholders and until their successors are duly elected and
qualified.
The stockholders also ratified the appointment of Weinberg &
Company, P.A. as the Company's independent registered public
accounting firm for the fiscal year ending Dec. 31, 2021.
About Remark Holdings
Remark Holdings, Inc. (NASDAQ: MARK) --
http://www.remarkholdings.com-- delivers an integrated suite of AI
solutions that enable businesses and organizations to solve
problems, reduce risk and deliver positive outcomes. The company's
easy-to-install AI products are being rolled out in a wide range of
applications within the retail, financial, public safety and
workplace arenas. The company also owns and operates digital media
properties that deliver relevant, dynamic content and ecommerce
solutions. The company is headquartered in Las Vegas, Nevada, with
additional operations in Los Angeles, California and in Beijing,
Shanghai, Chengdu and Hangzhou, China.
Remark Holdings reported a net loss of $13.68 million for the year
ended Dec. 31, 2020, compared to a net loss of $25.61 million for
the year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$13.73 million in total assets, $28.94 million in total
liabilities, and a total stockholders' deficit of $15.21 million.
Los Angeles, California-based Weinberg & Company, the Company's
auditor since 2020, issued a "going concern" qualification in its
report dated March 31, 2021, citing that the Company has suffered
recurring losses from operations and negative cash flows from
operating activities and has a negative working capital and a
stockholders' deficit that raise substantial doubt about its
ability to continue as a going concern.
RESOLUTE FOREST: Egan-Jones Hikes Senior Unsecured Ratings to BB+
-----------------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, upgraded the
foreign currency and local currency senior unsecured ratings on
debt issued by Resolute Forest Products Inc. to BB+ from BB-.
Headquartered in Canada, Resolute Forest Products Inc manufactures
newsprint, coated and uncoated groundwood papers, bleached kraft
pulp, and lumber products.
RESTIERI HEALTHCARE: Wins Cash Collateral Access Thru Sept 21
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Jacksonville Division, has authorized Restieri Healthcare Services,
LLC to use cash collateral on an interim basis through September
21, 2021, the date of the final hearing.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including payments to the United
States Trustee for quarterly fees; (b) the current and necessary
expenses set forth in the budget, plus an amount not to exceed 10%
for each line item; and (c) such additional amounts as may be
expressly approved in writing by CRF Small Business Loan Company,
LLC, the secured creditor.
As adequate protection for the Debtor's use of cash collateral, the
Secured Creditor is granted a perfected post-petition lien against
cash collateral to the same extent and with the same validity and
priority as the prepetition lien, without the need to file or
execute any document as may otherwise be required under applicable
non-bankruptcy law.
The Debtor will pay CRF Small Business Loan Company, LLC $5,000
monthly beginning September 1 and due on the 1st of the month
thereafter.
The Debtor is also directed to maintain insurance coverage for its
property in accordance with the obligations under the loan and
security documents with the Secured Creditor.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3sRfOZ8 from PacerMonitor.com.
The Debtor projects $41,000 in fee for service income and $28,005
in total expenses.
About Restieri Healthcare Services, LLC
Restieri Healthcare Services, LLC provides regenerative therapy for
joint pain and other conditions which services the Gainesville,
Florida area. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 3:21-bk-01843) on
July 28, 2021. In the petition signed by Dr. Lawrence T. Restie,
manager, the Debtor disclosed up to $1 million in assets and up to
$10 million in liabilities.
Jason A. Burgess, Esq. at The Law Offices of Jason A. Burgess, LLC
is the Debtor's counsel.
RHCSC ROME AL: Case Summary & 30 Largest Unsecured Creditors
------------------------------------------------------------
Seventeen affiliates that concurrently filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code:
Debtor Case No.
------ --------
RHCSC Rome AL Holdings LLC 21-41032
1168 Chulio Road, SE
Rome, GA 30161
RHCSC Rome Health Holdings LLC 21-41033
Regional Housing & Community Services Corporation 21-41034
RHCSC Columbus AL Holdings LLC 21-41035
RHCSC Columbus Health Holdings LLC 21-41036
RHCSC Douglas AL Holdings LLC 21-41037
RHCSC Douglas Health Holdings LLC 21-41038
RHCSC Gainesville AL Holdings LLC 21-20922
RHCSC Gainesville Health Holdings LLC 21-20923
RHCSC Montgomery I Al Holdings LLC 21-41039
RHCSC Montgomery I Health Holdings, LLC 21-41040
RHCSC Montgomery II AL Holdings LLC 21-41041
RHCSC Montgomery II Health Holdings LLC 21-41043
RHCSC Savannah AL Holdings LLC 21-41044
RHCSC Savannah Health Holdings LLC 21-41046
RHCSC Social Circle AL Holdings LLC 21-41047
RHCSC Social Circle Health Holdings LLC 21-41048
Business Description: The Debtors operate continuing care
retirement communities and assisted living
facilities for the elderly.
Chapter 11 Petition Date: August 26, 2021
Court: United States Bankruptcy Court
Northern District of Georgia
Judge: Hon. Paul W. Bonapfel
Debtors' Counsel: J. Robert Williamson, Esq.
SCROGGINS & WILLIAMSON, P.C.
4401 Northside Parkway
Suite 450
Atlanta, GA 30327
Tel: 404-893-3880
Email: centralstation@swlawfirm.com
Debtors'
Chief
Restructuring
Officer: Katie Goodman
GGG PARTNERS, LLC
RHCSC Social Circle Health's
Estimated Assets: $10 million to $50 million
RHCSC Social Circle Health's
Estimated Liabilities: $10 million to $50 million
The petitions were signed by Bryan W. Starnes as authorized
officer.
Full-text copies of the petitions are available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/4ABYA5A/RHCSC_Rome_AL_Holdings_LLC__ganbke-21-41032__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/ZHAIZSA/RHCSC_Douglas_Health_Holdings__ganbke-21-41038__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/MYGVJMQ/RHCSC_Rome_Health_Holdings_LLC__ganbke-21-41033__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/LOW23BA/RHCSC_Columbus_AL_Holdings_LLC__ganbke-21-41035__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/LVXLU4A/RHCSC_Columbus_Health_Holdings__ganbke-21-41036__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/L7YWDJA/RHCSC_Douglas_AL_Holdings_LLC__ganbke-21-41037__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/ZHAIZSA/RHCSC_Douglas_Health_Holdings__ganbke-21-41038__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/YUFT5HI/RHCSC_Gainesville_AL_Holdings__ganbke-21-20922__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/Y7PJBDY/RHCSC_Gainesville_Health_Holdings__ganbke-21-20923__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/HDUCHJA/RHCSC_Montgomery_I_AL_Holdings__ganbke-21-41039__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/HL4KCNI/RHCSC_Montgomery_I_Health_Holdings__ganbke-21-41040__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/HSE6OUI/RHCSC_Montgomery_II_AL_Holdings__ganbke-21-41041__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/W4N2JMQ/RHCSC_Montgomery_II_Health_Holdings__ganbke-21-41043__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/XGYHRGY/RHCSC_Savannah_AL_Holdings_LLC__ganbke-21-41044__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/XNSVAWI/RHCSC_Savannah_Health_Holdings__ganbke-21-41046__0001.0.pdf?mcid=tGE4TAMA
https://www.pacermonitor.com/view/7MLO7NY/RHCSC_Social_Circle_Health_Holdings__ganbke-21-41048__0001.0.pdf?mcid=tGE4TAMA
Consolidated List of Debtors' 30 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Moore & Van Allen, PLLC Goods and $92,193
Suite 4700 Services
100 North Tryon Street
Charlotte, NC
28202-4003
Patrick Harvey
Tel: 704-331-1000
Email: patharvey@mvalaw.com
2. Chatham County Property Taxes $43,084
Tax Commissioner
222 W Oglethorpe Ave
Savannah, GA 31401
Sonya L. Jackson
Tel: 912-652-7271
Email: tax@chathamcounty.org
3. Muscogee County Property Taxes $16,031
Tax Collector
PO Box 1441
Columbus, GA 31902
Lula Huff
Tel: 706-653-4211
Email: spollard@columbusga.org
4. Osceola Supply, Inc. Goods and $11,734
915 Commerce Blvd Services
Midway, FL 32343
Ian White
Tel: 850-580-980
Email: iwhite@osceolasupply.com
5. One Source Utilities $9,401
Communications
PO Box 8385
1655 East Arlington Blvd
Greenville, NC 27858
Christina Reddick
Tel: 252-616-3467
Email: creddick@onesource.net
6. Georgia Power Utilities $9,009
96 Annex
Atlanta, GA 30396
Lisa Allen
Tel: 888-660-5890
Email: r2gpcrpb@southernco.com
7. Alabama Power Utilities $7,970
PO Box 242
Birmingham, AL 35292
Cindy Yang
Tel: 888-430-5787
Email: leaseidgpc@southernco.com
8. Montgomery Water Works Utilities $5,884
PO Box 1670
Montgomery, AL 36102
Tina Lesser
Email: customercare@mwwssb.com
Tel: 334-705-5500
9. Floyd County Water Dept Utilities $5,810
PO Box 1169
Rome, GA 30162
Steve Hulsey
Tel: 706-291-5132
Email: water@floydcountyga.org
10. City of Gainesville Property Taxes $4,379
PO Box 2496
Gainesville, GA 30503
Ed Bielarski
Tel: 770-535-6878
Email: webmaster@gru.com
11. Sharp Electronics Goods and $4,244
Corporation Services
Dept AT 40322
Atlanta, GA 31192
Marshall Brookover
Tel: 704-672-3074
Email: marshall.brookover@sharpusa.com
12. Coffee County Tax Property Taxes $4,000
Commissioner
PO Box 1207
Douglas, GA 31534
Monty Vickers
Tel: 912-384-4895
Email: monty.vickers@cof
feecounty-ga.gov
13. Smartlinx Solutions, LLC Goods and $3,634
PO Box 22598 Services
New York, NY 10087
Teresa Ozga
Tel: 877-501-1310 x0174
Email: teresa.ozga@smartlinx.com
14. Amber Sprinkler Goods and $3,550
Inspection Co. Services
855 Marathon Parkway
Suite 2
Lawrenceville, GA 30046
Lee Cawthon
Tel: 678-495-0050
Email: lcawthon@c2cresources.com
15. Georgia Dept of Goods and $2,950
Community Health Services
Healthcare Facility
Regulation Div.
2 Peachtree Street NW
Atlanta, GA 30303
Caylee Noggle
Tel: 404-656-4507
Email: hit.info@dch.ga.gov
16. Tierce Industrial Goods and $2,750
Service, Inc Services
PO Box 680780
Prattville, AL 36068
Angie Tierce
Tel: 334-272-7130
Email: tierce2590@aol.com
17. Montgomery County Revenue Property Taxes $2,449
Commissioner
PO Box 4720
Montgomery, AL 36103
Janet Buskey
Tel: 334-832-1250
Email: allysonholland@mc-ala.org
18. De lage Landen Equipment Lease $1,326
Financial Services
PO Box 41602
Philadelphia, PA 19101
Steve Long
Tel: 800-355-1987
Email: customercarecente
r@leasedirect.com
19. Columbus Water Works Utilities $1,261
PO Box 1600
Columbus, GA 31904
Lynn Hammer
Tel: 706-649-3400
Email: customercare@columbusww.com
20. SBS Leasing Equipment Lease $1,128
PO Box 41602
Philadelphia, PA 19101
Liza Lacey
Tel: 800-736-0220
Email: llacey@leasedirect.com
21. Edwards Plumbing Goods and $1,040
Heating AC Inc Services
PO Box 70399
Montgomery, AL 36107
Gary Edwards
Tel: 334-834-6120
Email: service@edwardshvac.com
22. GFL Environmental Goods and $940
PO Box 555193 Services
Detroit, MI 48255
Theresa Edwards
Tel: 252-264-2996
Email: theresaedwards@gflenv.com
23. Creative Security Goods and $714
Systems Services
PO Box 211358
Montgomery, AL 36121
Brittney Long
Tel: 334-244-2251
Email: accounting@creati
vesecsys.com
24. Roto-Rooter Goods and $700
PO Box 680780 Services
Prattville, AL 36068
Angie Tierce
Tel: 334-272-7130
Email: tierce2590@aol.com
25. Waste Management Utilities $695
of Atlanta Hauling
PO Box 4648
Carol Stream, IL 60197
Kim Little
Tel: 866-319-5397
Email: customercare@wa
stemanagement.com
26. City of Social Circle Property Taxes $650
PO Box 310
Social Circle, GA 30025
Georgia Hooks
Tel: 770-464-2380
Email: ghooks@socialcirclega.gov
27. Montgomery Area Goods and $599
Chamber of Commerce Services
41 Commerce Street
Montgomery, AL 36104
Craig Bruce
cbruce@montgom
erychamber.com
Tel: 334-240-9494
28. Republic Services Utilities $582
PO Box 9001099
Louisville, KY 40290
Helen Knott
Email: hknott@republicse
rvices.com
Tel: 800-546-4285
29. Greater Hall Goods and $490
Chamber of Services
Commerce, Inc
230 E Butler Parkway
Gainesville, GA 30501
Christen Wilbanks
Email: cwilbanks@ghcc.com
Tel: 770-532-6206
30. Speramus, Inc. Goods and $480
PO Box 741686 Services
Los Angeles, CA 90074
Juval Lerner
Email: juval@crewapp.com
Tel: 832-808-0016
ROYAL CARIBBEAN: Egan-Jones Keeps B- Senior Unsecured Ratings
-------------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its 'B-'
foreign currency and local currency senior unsecured ratings on
debt issued by Royal Caribbean Cruises Ltd. EJR also maintained its
'B' rating on commercial paper issued by the Company.
Headquartered in Miami, Florida, Royal Caribbean Cruises Ltd.
operates as a global cruise company operating a fleet of vessels in
the cruise vacation industries.
RTECH FABRICATIONS: Unsecureds to Recover 80% to 100% in 60 Months
------------------------------------------------------------------
Rtech Fabrications, LLC, filed with the U.S. Bankruptcy Court for
the District of Idaho a First Amended Plan of Reorganization under
Subchapter V dated August 23, 2021.
As of the filing of the Chapter 11 case, the Debtor continues to
fabricate and customize vehicles, but requires the protections
afforded under the Bankruptcy Code to ensure its long-term
existence and continued operations; otherwise, the Debtor would be
forced to close its doors and payment of ongoing expenses would not
be possible. The Debtor is confident that it can successfully
reorganize under Subchapter C of Chapter 11 of the Bankruptcy Code
and propose a feasible plan that allows the Debtor to restructure
its debts, keep its business operating, and maximize value to the
creditors.
The Debtor's financial projections show that the Debtor will have
projected disposable income of approximately $660,000.00. Based on
the anticipated class of unsecured creditors, the Debtor projects
general unsecured creditors will receive between 80 to 100 percent
of their allowed claim amounts, provided all claims objections are
resolved.
The final Plan Payment is expected to be paid on the 60th month, or
September 30, 2026, which date may change based on amendments to
the Plan, and liquidation of assets.
Class 3 consists of all timely filed unsecured claims that are not
entitled to priority and not expressly included in the definition
of any other class. Class 3 consists of all claims, and to the
extent allowed, Class 3a, Class 3e, and Class 3f. Such claims shall
be paid in quarterly installments bearing no interest over 60
months, after payment in full of all administrative claims of Class
1b, and concurrent with payment of 1a priority tax claims and Class
2a and 2b secured claims, which will be paid monthly, payment shall
be made out of remaining funds available.
Class 6 shall consists of the claim of equity security holders
Randall and Dru-Ann Robertson. Equity Security Holders will receive
nothing through this Plan.
The Debtor shall continue its full-time operation of its vehicle
custom fabrication shop. The Debtor anticipates a modest but
substantial increase in growth over the three to five years
projected for this Plan. The Debtor shall pay its net discretionary
income in to this Plan, which amount may vary on a quarterly basis.
Debtor shall dedicate all disposable income to the Plan.
Class 1.a. priority and Class 2.1. and 2.b. secured claims shall be
paid on a monthly basis. Administrative claims for professionals
shall be paid on the effective date. Unsecured creditors shall be
paid on a quarterly basis. Any payments of Class 3 claims only
shall be escrowed until all claims objections are resolved. Debtor
shall sell its prized inventory piece, "Grey Matter." Once sold,
any proceeds shall be used to fund the Plan.
Further, the Kabureck claim shall be paid in full in roughly four
months after the effective date. Payment of that claim shall free
up more money towards payment of the other claims. It is
anticipated that this may be a 100% payment plan towards general
unsecured claims, with no interest, however, this budget may
substantially vary based on Catt and Neville claims, for which
adversary proceedings have been filed.
A full-text copy of the First Amended Plan of Reorganization dated
August 23, 2021, is available at https://bit.ly/2WmIAo6 from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Bruce A. Anderson, Esq.
Elsaesser Anderson, Chtd.
320 East Neider Avenue, Suite 102
Coer D Alene, ID 83815
Tel: (208) 667-2900
Fax: (208) 667-2150
Email: brucea@eaidaho.com
About Rtech Fabrications
Rtech Fabrications -- https://www.rtechfabrications.com/ -- is a
restoration shop specializing in 67-72 GM trucks.
Rtech Fabrications filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Court (Bankr. D. Idaho Case No.
21-20048) on Feb. 19, 2021. Randall T. Robertson, managing member,
signed the petition. In the petition, the Debtor had estimated
assets of between $1 million and $10 million and liabilities of
less than $1 million.
Judge Noah G. Hillen oversees the case.
The Debtor tapped Elsaesser Anderson, Chtd. as legal counsel and
CORE Accounting & Consulting as accountant.
SAVI TECHNOLOGY: Opts to Close Commercial Software Business
-----------------------------------------------------------
Savi(R), an innovator in supply chain visibility software and
sensor technology, made the difficult decision to close the
commercial software business and file for Chapter 11 bankruptcy
protection while they restructure to focus on their Government
contracts and customers.
Savi is the sole awardee for the active RFID (aRFID) V contract,
which has a $42 million ceiling for Savi to equip the U.S.
Department of Defense (DoD) and other government agencies with a
comprehensive, cutting-edge array of hardware and software products
and support services. Products include aRFID tags, readers,
satellite communications (SATCOM) and portable deployment kits
(PDKs).
Part of the Internet of Things (IoT), Savi’s aRFID infrastructure
provides "always on" information on the location and condition of
in-transit supplies and equipment to enable critical situational
awareness for emergency response or military operations. These
smart technologies and connected devices support mission readiness
in even austere, hostile environments, enabling warfighters, first
responders and military logisticians to efficiently manage and
track personnel, equipment and sustainment cargo around the world.
"For more than 30 years, the DoD has trusted Savi to support its
complex and critical logistics needs around the world and we are
proud to continue this strong partnership," said Rosemary Johnston,
Savi’s CEO. "Our asset tracking technology and in-transit
visibility services, along with our pioneering leadership in
military RFID systems, will provide warfighters with the logistics
tools they need to fulfill the mission today and tomorrow."
Savi’s Chairman, Sean McGuinness, added, "We expect to reorganize
and emerge from bankruptcy as a stronger and leaner operation."
"We want to reassure our customers that Savi will continue to honor
our commitments for exceptional service, products, and support as
we restructure the business and focus on delivering intransit
visibility and asset tracking capabilities to the warfighters."
About Savi Technology
Savi Technology, Inc., sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. E.D. Pa. Case No. 21-11369) on Aug. 4,
2021. Rosemary Johnston, acting president and chief executive
officer, signed the petition. At the time of the filing, the Debtor
disclosed $1 million to $10 million in assets and $10 million to
$50 million in liabilities.
Judge Ashely M. Chan oversees the case.
The Debtor tapped Benjamin P. Smith of Shulman, Rogers, Gandal,
Pordy & Ecker, P.A. as legal counsel.
SAVI TECHNOLOGY: Wins Access to Cash Collateral
-----------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Virginia has
authorized Savi Technology, Inc. to continue using the cash
collateral of Eastward Fund Management, LLC on an interim basis
through October 31, 2021, in accordance with the budget, with a 10%
variance.
The Debtor is permitted to use cash collateral to meet its ordinary
cash needs to maintain and preserve its assets and continued
operation of its business.
The Debtor is indebted to Eastward pursuant to various loan
documents in the original principal amount of up to $5,000,000,
plus interest thereafter. To secure all indebtedness owed by the
Debtor to Eastward under the Loan Documents, the Debtor executed
and delivered to the Lender a Master Lease dated November 5, 2018
and Eastward filed a UCC-1 financing statement granting it a first
priority security interest in substantially all of the Debtor's
assets.
As adequate protection for the Debtor's use of Cash Collateral,
Edward is granted a replacement perfected security interest under
Section 361(2) of the Bankruptcy Code, nunc pro tunc to the
Petition Date, to the extent Eastward's cash collateral is used by
the Debtor. The validity, perfection and priority of such
replacement lien will not be affected by the automatic stay of
Bankruptcy Code Section 362(a) or subject to the "equities of the
case" exception of Bankruptcy Code Section 552(b)(1) and (2).
The replacement lien and security interests granted are
automatically deemed perfected upon entry of the Order without the
necessity of Eastward's taking possession or filing financing
statements or any other documents.
To the extent the adequate protection provided proves insufficient
to protect Eastward's interest in and to the Debtor's Collateral,
Eastward will have a superpriority administrative expense claim,
pursuant to Bankruptcy Code Section 507(b), senior to any and all
claims against the Debtor under Bankruptcy Code Section 507(a),
whether in the proceeding or in any superseding proceeding.
These events constitute an "Event of Default:"
a. The Debtor fails to comply with any of the terms or
provisions of the Interim Order, including, without limitation,
making payments in excess of the Interim Budget or the failure to
keep disbursements of any amounts for any line-item in the Interim
Budget no greater than the amounts set forth therein subject to a
10% cumulative variance of the Net Cash Flow over the time period
encapsulated in the Interim Budget;
b. Entry of an order dismissing the Chapter 11 case or
converting the case to a case under Chapter 7 of the Bankruptcy
Code;
c. An order is entered that by its terms would (i) permit any
administrative expense claim (now existing or hereafter arising, of
any kind or nature whatsoever) to have priority equal or superior
to the priority of the Pre-Petition Liens and/or the replacement
liens of Eastward, or (ii) grant or permit the grant of a lien on
any Collateral of Eastward;
d. An order is entered by the Court granting relief from the
automatic stay that allows any person to collect, repossess, or
foreclose upon any portion of the Collateral as to which Eastward
claims a lien; or
e. The Debtor makes any payment on any claim that arose before
the Petition Date without the express prior written consent of
Eastward or by order of the Court.
A copy of the order is available at https://bit.ly/3mz4r6T from
PacerMonitor.com.
About Savi Technology, Inc.
Savi Technology, Inc. -- https://www.savi.com/ -- is an innovator
in supply chain visibility and sensor technology, providing
real-time information about the location, condition and security of
in-transit goods and assets. The company sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Case No.
21-11369) on August 4, 2021.
On the Petition Date, the Debtor estimated $1 million to $10
million in assets and $10 million to $50 million in liabilities.
The petition was signed by Rosemary Johnston as acting president
and CEO.
Judge Brian F. Kenney oversees the case.
Shulman, Rogers, Gandal, Pordy & Ecker, P.A. serves the Debtor's
counsel.
Eastward Fund Management, LLC, as secured lender, is represented by
Richard E. Hagerty, Esq. at Troutman Pepper Hamilton Sanders LLP.
SBW PROPERTIES: Reorganization Plan Has Sept. 28 Hearing
--------------------------------------------------------
Judge Michelle V. Larson has entered an order approving the Amended
Disclosure Statement of SBW Properties, LLC.
Sept. 28, 2021, at 2:00 p.m. is fixed for the hearing on
confirmation of the Plan in the Courtroom of the Honorable Michelle
Larson 1100 Commerce Street, 14th Floor, Dallas, Texas.
Sept. 21, 2021, is fixed as the last day for filing and serving
written acceptances or rejections of the Plan in the form of a
ballot.
Sept. 21, 2021, is fixed as the last day for filing and serving
written objections to confirmation of the Plan.
Chapter 11 Plan
SBW Properties submitted an Amended Disclosure Statement explaining
its Chapter 11 Plan.
The Debtor proposes to restructure its current indebtedness and
continue its operations to provide a dividend to the creditors of
Debtor.
The Debtor's current business operations consist of the rental
income derived from the Property. The Debtor currents rents to
Bouquet Nails, The Slay Bar and Subperb Deli.
The Debtor owns 2 rental properties in Dallas, Texas. The value of
the assets of the Debtor if liquidated would not cover the secured
tax creditors. The Debtor believes there is very little likelihood
of any dividend to the unsecured creditors in the event of a
liquidation of the assets of the Debtor.
Class 3 Claimants (Allowed Secured Claim of Hunter-Kelsey II, LLC)
is impaired and shall be satisfied as follows: On or about
September 7, 2018 Debtor executed that certain Property Tax Lien
Contract with Hunter-Kelsey II, LLC in the original amount of
$140,955.33. The Note was secured by certain property tax liens in
the real property located at 4815 South 2nd Ave, Dallas, Texas.
Hunter has filed a Proof of Claim in the amount of $199,480.59.
Hunter shall have a secured claim in the amount of $199,480.59. The
Hunter Secured Claim shall be paid in 120 equal monthly
installments with interest at the rate of 15.25% per annum
commencing on the Effective Date.
The Plan does not identify or classify any unsecured claims.
The Debtor anticipates the continued operations of the business and
the rentals from the properties to fund the Plan.
Attorneys for the Debtor:
Eric A. Liepins
ERIC A. LIEPINS, P.C.
12770 Coit Road
Suite 850
Dallas, Texas 75251
Ph. (972) 991-5591
Fax (972) 991-5788
A copy of the Order dated August 18, 2021, is available at
https://bit.ly/3mixAmH from PacerMonitor.com.
A copy of the Disclosure Statement dated August 18, 2021, is
available at https://bit.ly/3kcZsG4 from PacerMonitor.com.
About SBW Properties
SBW Properties, LLC filed a voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No.
21-30035) on Jan. 8, 2021. At the time of the filing, the Debtor
disclosed assets of between $100,001 and $500,000 and liabilities
of the same range. Eric A. Liepins, Esq., serves as the Debtor's
legal counsel.
SEIN DIVINE: Seeks to Employ Essex Richards as Bankruptcy Counsel
-----------------------------------------------------------------
Sein Divine, LLC seeks approval from the U.S. Bankruptcy Court for
the Western District of North Carolina to hire Essex Richards, P.A.
to serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) providing legal advice concerning the responsibilities as
a Chapter 11 debtor-in-possession and the continued management of
its business;
(b) negotiating, preparing, and pursuing confirmation of a
Chapter 11 plan and approval of disclosure statement, and all
related reorganization agreements or documents;
(c) preparing legal papers;
(d) appearing in the bankruptcy court to protect the Debtor's
best interests;
(e) prosecuting and defending the Debtor in all adversary
proceedings related to its bankruptcy case; and
(f) performing all other necessary legal services.
The firm's hourly rates are as follows:
John C. Woodman, Esq. $300 per hour
David R. DiMatteo, Esq. $275 per hour
Paralegal $135 per hour
Staff $65 per hour
Rohit Patel, principal of the Debtor, paid $5,000 to the law firm
as a retainer fee.
John Woodman, Esq., a member of Essex Richards, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
Ms. Brower can be reached at:
John C. Woodman, Esq.
David R. DiMatteo
Essex Richards, P.A.
1701 South Boulevard
Charlotte, NC 28203
Tel.: (704) 337-4300
Email: jwoodman@essexrichards.com
ddimatteo@essexrichards.com
About Sein Divine
Sein Divine, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. N.C. Case No. 21-30468) on Aug 12,
2021, listing as much as $1 million in both assets and liabilities.
Judge J. Craig Whitley oversees the case. Essex Richards, P.A.
serves as the Debtor's legal counsel.
SERVICE CORPORATION: Egan-Jones Keeps BB+ Senior Unsecured Ratings
------------------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Service Corporation International.
Headquartered in Houston, Texas, Service Corporation International
provides death care services worldwide.
SHOOTING SPORTS: Bankr. Administrator Unable to Appoint Committee
-----------------------------------------------------------------
The U.S. Bankruptcy Administrator for the Eastern District of North
Carolina on Aug. 24 disclosed in a court filing that no official
committee of unsecured creditors has been appointed in the Chapter
11 case of Shooting Sports Wholesale, LLC.
About Shooting Sports
Shooting Sports Wholesale, LLC, a wholesaler of firearms and
Ammunition based in Raleigh, N.C., filed a Chapter 11 bankruptcy
petition (Bankr. E.D.N.C. Case No. 21-01669) on July 27, 2021,
listing $81,766 in assets and $2,344,295 in liabilities. Judge
Joseph N. Callaway oversees the case. Paul D. Bradford, PLLC, led
by Danny Bradford, Esq., is the Debtor's counsel.
SILGAN HOLDINGS: Egan-Jones Keeps BB Senior Unsecured Ratings
-------------------------------------------------------------
Egan-Jones Ratings Company, on August 17, 2021, maintained its 'BB'
foreign currency and local currency senior unsecured ratings on
debt issued by Silgan Holdings Inc.
Headquartered in Stamford, Connecticut, Silgan Holdings Inc. and
its subsidiaries manufacture consumer goods packaging products.
SMG INDUSTRIES: Incurs $319,624 Net Loss in Second Quarter
----------------------------------------------------------
SMG Industries, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $319,624 on $12.24 million of revenues for the three months
ended June 30, 2021, compared to a net loss of $3.26 million on
$7.50 million of revenues for the three months ended June 30,
2020.
For the six months ended June 30, 2021, the Company reported a net
loss of $4.18 million on $19.85 million of revenues compared to a
net loss of $6.24 million on $11.86 million of revenues for the six
months ended June 30, 2020.
As of June 30, 2021, the Company had $30.38 million in total
assets, $43.93 million in total liabilities, and a total
stockholders' deficit of $13.55 million.
Net cash used in operating activities was $4,170,176 for the
quarter ended June 30, 2021, compared to $2,219,563 for the quarter
ended June 30, 2020, including $608,519 of cash provided by
discontinued operations during the quarter ended June 30, 2021, and
$581,439 of cash used in discontinued operations during the quarter
ended
June 30, 2020.
For the six months ended June 30, 2021, net cash used in continuing
operating activities of $4,778,695 consisted of net loss from
continuing operations of $4,227,928, plus $274,156 of non-cash
items, consisting primarily of depreciation and amortization of
$2,737,505, amortization of deferred financing costs of $566,039,
amortization of right of use assets - operating leases of $209,753,
less a gain on forgiveness of PPP loan of $3,148,100 and $824,923
changes in operating assets and other operating activities.
For the quarter ended June 30, 2020, net cash used in continuing
operating activities of $1,638,124 consisted of net loss from
continuing operations of $5,722,847, plus $2,458,273 of non-cash
items, consisting primarily of depreciation and amortization of
$1,972,185, amortization of deferred financing costs of $255,460
and amortization of right of use assets – operating leases of
$115,086, plus $1,626,450 changes in operating assets and other
operating activities.
Net cash used in investing activities was $132,026 for the six
months ended June 30, 2021, compared to $6,485,716 for the six
months ended June 30, 2020.
For the six months ended June 30, 2021, net cash used in investing
activities consisted of $35,000 paid to the buyer of MG Cleaners
and fixed asset purchases of $97,026. For the six months ended
June 30, 2020, net cash used in investing activities consisted of
$6,320,168 cash paid for the acquisition of 5J Entities and
$165,548 of fixed asset purchases.
Net cash provided by financing activities was $4,041,070 for the
six months ended June 30, 2021, compared to $9,496,289 for the
quarter ended June 30, 2020, including $226,932 cash used in
discontinued operations and $781,437 cash provided by discontinued
operations, respectively.
For the six months ended June 30, 2021, net cash provided by
financing activities consisted of net proceeds from notes payable
of $1,874,002, proceeds from convertible notes payable of
$1,405,000 and net proceeds on secured lines of credit of
$1,819,234, offset by payments on notes payable of $830,234.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1426506/000110465921108510/tmb-20210630x10q.htm
About SMG Industries
Headquartered in Houston, Texas, SMG Industries Inc. --
www.SMGIndustries.com -- is a growth-oriented transportation
services company focused on the domestic logistics market.
SMG Industries reported a net loss of $15.87 million for the year
ended Dec. 31, 2020, compared to a net loss of $3.98 million for
the year ended Dec. 31, 2019. As of March 31, 2021, the Company
had $27.24 million in total assets, $41.76 million in total
liabilities, and a total stockholders' deficit of $14.51 million.
Houston, Texas-based MaloneBailey, LLP, the Company's auditor since
2017, issued a "going concern" qualification in its report dated
April 19, 2021, citing that the Company has suffered recurring
losses from operations and has a net capital deficiency that raises
substantial doubt about its ability to continue as a going concern.
SOTO'S AUTO & TRUCK: Seeks to Hire Stichter as Legal Counsel
------------------------------------------------------------
Soto's Auto & Truck Repairs Service, Inc. seeks approval from the
U.S. Bankruptcy Court for the Middle District of Florida to hire
Stichter, Riedel, Blain & Postler, 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 under
the Bankruptcy Code, the continued operation of its business, and
the management of its property;
b. preparing legal papers;
c. appearing before the court and the Office of the U.S.
Trustee;
d. participating in negotiations with creditors and other
parties in interest in formulating a plan of reorganization and
taking necessary legal steps to confirm the plan;
e. representing the Debtor in all adversary proceedings,
contested matters, and matters involving administration of its
Chapter 11 case;
f. representing the Debtor in negotiations with potential
financing sources, and preparing the necessary documents to obtain
financing; and
g. other legal services that may be necessary for the
administration of the case.
Stichter Riedel received $16,738 on account of pre-bankruptcy
services and as a retainer for post-petition services.
Emily Clendenon, Esq., a partner at Stichter Riedel, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Emily S. Clendenon, Esq.
Stichter Riedel Blain & Postler, P.A.
110 East Madison Street, Suite 200
Tampa, FL 33602
Phone: (813) 229-0144 – Phone
Email: eclendenon@srbp.com
About Soto's Auto & Truck Repairs Service
Soto's Auto & Truck Repairs Service, Inc. is a family-owned diesel
truck repair company founded in March 2004. It provides heavy-duty
truck repair and maintenance services, including engine repairs,
overhauls, and replacements, as well as mobile truck repair and
maintenance services.
Soto's Auto & Truck filed a petition for Chapter 11 protection
(Bankr. M.D. Fla. Case No. 21-04131) on Aug. 6, 2021, disclosing up
to $500,000 in assets and up to $1 million in liabilities. Soto's
Auto & Truck President John Soto signed the petition.
Emily S. Clendenon, Esq., at Stichter, Riedel, Blain & Postler,
P.A. is the Debtor's legal counsel.
SOUTHEAST SUPPLY: Moody's Lowers CFR & Sr. Unsecured Debt to Ba2
----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Southeast
Supply Header, LLC (SESH) including its Corporate Family Rating to
Ba2 from Ba1, it's Probably of Default to Ba2-PD from Ba1-PD, and
its senior unsecured rating to Ba2 from Ba1. The Speculative Grade
Liquidity rating is unchanged at SGL-2. The outlook is negative.
RATINGS RATIONALE
"Southeast Supply Header's competitive position has weakened
considerably as exhibited by a material decline in utilization
following the expiration of its largest contract in September 2020
and the failure of the pipeline to replace most of this lost
capacity since that time," stated Edna Marinelarena. As of the
first quarter of 2021, the pipeline's utilization had declined to
52% from almost 100% historically when the pipeline's capacity was
fully contracted. Given that about half of this capacity remains
uncontracted on a long-term basis, the company's financial profile
is likely to continue to decline including a funds from operations
(FFO) to debt ratio falling to the low single digits from nearly
20% historically.
The Ba2 CFR reflects weak pipeline utilization that is pressuring
both revenue and cash flow. Although management has had some
success entering into a few new contracts, these are at lower rates
and with comparatively short tenors. The contracted firm revenues
are insufficient to mitigate the revenue loss that followed the
expiration of SESH's largest contract with Florida Power & Light
Company (FPL, A1 stable) last year. Based on Moody's scenario
analysis, FFO to debt could deteriorate to as low as 3% in 2021,
which is very weak for a Ba rated pipeline.
The company faces significant additional recontracting risk as the
original 2008 contracts continue to expire or are near their
two-year notification periods. These contracts represent about 28%
of total capacity. Although SESH was able to renew an existing
contract with Duke Energy Florida, LLC. (A3 stable), the pipeline's
second largest shipper, this contract was for a shorter tenor than
the expiring contract. As a result of these trends, the weighted
average contract tenor is now weak at 2.78 years.
Positively, the pipeline's largest shippers remain for the most
part highly rated utility companies that operate in the Florida
market. While the state relies heavily on natural gas for power
generation, which could support the pipeline's utilization longer
term, it is also adding material levels of renewable generation
which could eventually negatively affect the demand for natural gas
in the state. While negotiations with shippers are ongoing, the
inability to recontract a substantial portion of the available
capacity over the last year raises the level of credit risk
associated with the pipeline. As a result, Moody's expect SESH to
experience revenue declines over the next 12 months as the company
continues to seek market sales for its available capacity.
Additionally, Moody's see any new contracts being set at lower
pricing than the original 2008 contracted rates because most of the
executed contracted rates were set in 2008, when the pipeline
originally came on line; a period of high natural gas prices. Over
the years, the pipeline's competitive position weakened as natural
gas prices fell, substantial new supply was added from shale gas
regions and additional pipeline capacity was built to serve the
critical Florida market. This includes Sabal Trail Transmission,
LLC (Baa1 stable), a largely contracted pipeline that entered
service in 2017 and is 42.5% owned by NextEra Energy, Inc. (Baa1
stable), whose utility FPL was formerly the largest shipper on
SESH.
The SGL-2 reflects the company's good liquidity with still strong
internal cash flow generation offset by a lack of external
liquidity. Moody's expect SESH to maintain about $30 million of
unrestricted cash balances on hand and to generate about $50
million in operating cash flow, which has been sufficient to meet
its immediate obligations including capex. Similar to most of its
peers in the natural gas pipeline sector, SESH does not have an
external bank revolving credit facility and dividends its free cash
flow to its sponsors. With only $400 million of unsecured debt on
the balance sheet that is due in 2024, alternate liquidity sources
could include a pledge of security on this debt if necessary.
Outlook
The negative outlook reflects the continued high volume, commodity
and recontracting risk that is driving revenue and cash flow
declines and leading to a deterioration of financial metrics. The
outlook further incorporates the volatile operating environment and
uncertainty around any new contracts as it relates to tenor,
pricing and the credit quality of the shippers.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade
The negative outlook limits the likelihood of a rating upgrade over
the near term. The outlook could be stabilized if there is an
improvement in the pipeline's competitiveness through an increase
in long-term contracted utilization and volume sales growth
sufficient that will sustain a FFO to debt ratio comfortably above
9%.
Factors that could lead to a downgrade
A rating downgrade could occur if utilization continues to remain
low, there is no improvement in the pipeline's long-term contracted
capacity, pricing remains under pressure, or if the pipeline's FFO
to debt ratio remains in the single digits.
SESH is a 287-mile header system with approximately 1.1 Bcf/d
transportation capacity extending from northern Louisiana, through
Mississippi and into Alabama where it interconnects with the
Gulfstream Natural Gas System L.L.C. (Baa2 stable). SESH is a joint
venture owned 50% by a wholly owned subsidiary of Enbridge Inc.
(Baa1 stable) and 50% by affiliates of Enable Midstream Partners,
LP (Baa3 stable).
Downgrades:
Issuer: Southeast Supply Header, LLC
Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD
Corporate Family Rating, Downgraded to Ba2 from Ba1
Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from
Ba1
Outlook Actions:
Issuer: Southeast Supply Header, LLC
Outlook, Remains Negative
The principal methodology used in these ratings was Natural Gas
Pipelines published in July 2018.
SPINEGUARD INC: Exits Chapter 11; Plan Takes Effect
---------------------------------------------------
SpineGuard, an innovative company that deploys its DSG(R) (Dynamic
Surgical Guidance) sensing technology to secure and streamline the
placement of bone implants, on Aug. 25 disclosed that as a result
of the hearing held on Tuesday, August 24, 2021, the United States
Bankruptcy Court for the District of Delaware entered an order
confirming SpineGuard Inc.'s exit from Chapter 11.
The plan of reorganization proposed by SpineGuard, calling for
payment in full of all creditors including the bond holders, is now
effective and Spineguard Inc. is no longer a debtor-in-possession
in a bankruptcy case.
SpineGuard is focused on the following priorities while striving to
remain close to breakeven:
1. Boost commercial activities with the launch of the
DSG-Connect visual interface.
2. Accelerate the implementation of the DSG digital technology
in ortho-robotics through the deployment of AI algorithms, new
scientific evidence, and additional patents.
3. Intensify the collaboration with ConfiDent ABC for the dental
application and co-develop a new generation of products embedding
the DSG technology.
4. Affirm the company's technological shift and sign strategic
partnerships in particular for the use of DSG technology in the
robotic field.
Next financial press release: 2021 Half-year financial results on
September 15, 2021
About Spineguard Inc.
Based in San Francisco, California, SpineGuard, Inc. (FR0011464452
– ALSGD) (Paris:ALSGD) -- https://www.spineguard.com/ -- is an
importer and distributor of single-use, disposable, Dynamic
Surgical Guidance (DSG) instruments that measure the density of the
tissue and enable surgeons to drill holes, safely and without
damaging nerves, into the pedicles of a vertebral body in the spine
during spinal fusion surgery.
A wholly-owned subsidiary of SpineGuard, S.A., SpineGuard, Inc.,
filed a Chapter 11 petition (Bankr. D. Del. Case No. 20-10332) on
Feb. 13, 2020. In the petition signed by Steve McAdoo, general
manager, USA, the Debtor estimated between $1 million and $10
million in both assets and liabilities. Judge John T. Dorsey is
assigned to the case. Hanson Bridgett LLP is the Debtor's
counsel.
SPIRIT AIRLINES: Fitch Alters Outlook on 'BB-' LT IDR to Stable
---------------------------------------------------------------
Fitch Ratings has revised the Rating Outlook for Spirit Airlines
(Spirit) to Stable from Negative and affirmed its Long-Term Issuer
Default Rating (IDR) at 'BB-'. Fitch has also affirmed Spirit's
senior secured notes at 'BB+'/'RR1'. The Outlook revision reflects
the rebound in domestic leisure traffic in the U.S. and an
improvement in debt levels from the height of the pandemic. The
rollout of multiple effective coronavirus vaccines and limited
impact from the Delta variant on domestic travel to date has
increased Fitch's confidence in Spirit's ability to manage through
the pandemic and that a continued recovery will allow the company's
credit metrics to fall within its negative rating sensitivities in
2023.
Spirit's ratings are also supported by the company's low-cost
structure, liquidity compared with peers and its limited exposure
to international markets. Spirit had $1.79 billion in cash and
equivalents on the balance sheet plus $106.3 million in short-term
investments at YE 2020, or 85.4% of LTM revenue.
KEY RATING DRIVERS
Domestic Leisure Recovery Benefits Spirit: Fitch's updated forecast
for Spirit anticipates that total revenue will be as much as 85%
for the full year of 2021 compared with 2019 levels. This compares
with 68% for 2021 in Fitch's prior forecast. Fitch forecast total
revenues could top 2019 levels in 2022. The rise of Delta variant
cases in recent weeks has driven more uncertainty into the
forecast. However, Fitch believes that widespread vaccine coverage
should prevent a material decline in leisure travel from current
levels. Though not anticipated, future developments around Delta
variant or other vaccine resistant virus variants represent
material risks to air traffic that could drive future negative
rating actions.
After a weaker than expected recovery in airline traffic in the
first quarter, domestic air travel has experienced a strong rebound
since March 2021. The rollout of effective COVID-19 vaccines and
loosening pandemic-era restrictions have encouraged a surge in
domestic leisure travel in the second quarter. Passenger counts are
improving with rolling seven-day averages recovering to around 20%
below 2019 levels in July and August 2021. Spirit reported total
revenues of $859 million in the second quarter, 85% compared with
2019 levels, as it benefited from the recovery in domestic leisure
travel in visiting friends and relatives (VFR).
Liquidity Position Better than Expected: Spirit's liquidity
position has improved in the past year, and provides a material
cushion against potential weakening demand. The company ended 2Q21
with total available liquidity of $2.2 billion including $106
million in short-term investments and $240 million available in its
credit facility, compared with cash and cash equivalents of $979
million and short-term investments of $105 million at the end of
2019. Spirit issued $1.5 billion in long-term debt over the last
twelve months to help strengthen its liquidity and refinance
existing borrowings. In September 2020, Spirit issued $850 million
in 8% senior secured notes due 2025 and, in April 2021, Spirit
issued $500 million in 1% convertible senior notes due 2026.
Combined with the $370.8 million in net proceeds from the direct
equity placement to the holders of its convertible senior notes in
the first half of 2021, the company retired existing debt,
including $340 million of its 8% senior secured note, and lowered
interest expense. The congressional extension of the payroll
support program (PSP 2 & 3) provided Spirit with roughly $410
million in cash through a combination of grants and loans in the
first half. Fitch's base case which assumes a recovery in domestic
travel in 2021 with a FCF outflow of $712 million, still leaving
Spirit with a healthy liquidity balance at YE 2021.
Summer Disruptions, Near-Term Weakness: Spirit experienced
operational disruptions from July 30, 2021 to August 9, 2021
because of adverse weather and staffing shortages, leading to 2,826
flight cancellations and lost revenue of $50 million. Fitch
believes the operational disruptions will slow the company's
deleveraging path in 2021 and 2022, but will not materially affect
the company's brand and market position longer-term. Fitch expects
the lost sales from cancellations and weaker bookings, combined
with higher expenses, to lead to EBITDA margins to turn negative in
the third quarter but to recover in the subsequent quarter.
Low Cost Structure Remains an Advantage: Spirit's Cost Per
Available Seat Mile (CASM) excluding fuel is more than 30% below
its closest competitor, which is a key advantage in that the
company can stimulate demand with low fares and remain profitable.
This will be particularly important as other carriers increasingly
compete for domestic and leisure travel due to a slow rebound in
business and international traffic.
Rising Jet Fuel Costs May Dampen Recovery: Recent increases in
crude oil prices to the mid-$60 per barrel, from the low $40's per
barrel a year ago, may present a headwind to margins and cash flows
even as traffic begins to recover. Unit fuel costs reached 2.1
cents per mile in 2Q21, from 1.1 cents a year ago, accounting for
28% of Revenue Per Available Seat Mile. With total traffic expected
to remain below 2019 levels into 2022, Fitch believes that the
airlines' ability to pass higher fuel costs through to passengers
may be limited. Higher costs may drive weaker margins, with
leverage metrics remaining elevated for longer than initially
expected.
This risk is partly offset by lower levels of expected capacity in
the market, and by improved average fuel efficiency stemming from
the retirement of many older aircraft during the pandemic. Should
higher fuel prices, combined with other factors, materially limit
Spirits' ability to de-lever, and drain liquidity, the Outlook may
be revised back to Negative.
DERIVATION SUMMARY
Spirit's 'BB-' rating is in line with JetBlue (BB-/Negative) and
above United Airlines (B+/Stable) and American Airlines
(B-/Stable). Fitch views Spirit's focus on domestic and leisure
travel to be a benefit compared with United Airlines and American
Airlines, which are more exposed to international and business
travel are likely to be under pressure longer due to the
coronavirus pandemic. JetBlue's credit metrics are expected to be
better than Spirit's, but this is partly offset by Spirit's
low-cost base. Spirit's network and route diversification still
lags behind peers, but has strengthened as the carrier has
continued to grow.
KEY ASSUMPTIONS
-- Spirit's traffic (RPMs) remains at 92% or below 2019 levels in
2021 and growing by 18.7% and 13.0% in 2022 and 2023;
-- Passenger yields recovering to 2019 levels in 2023;
-- Jet fuel prices averaging around $2.01/gallon in 2021.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Adjusted debt/EBITDAR sustained below 4.25x;
-- FFO fixed-charge coverage sustained around 3.0x;
-- FCF generation above Fitch's base case expectations.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Adjusted debt/EBITDAR sustained above 4.75x;
-- EBITDAR margins deteriorating into the low double-digit range;
-- FFO fixed-charged coverage sustained at 2x or below;
-- Liquidity declining toward 15% of LTM revenue;
-- A material deterioration in passenger traffic due to an
outbreak of new variants of the coronavirus or new or
lingering travel 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
Solid Liquidity: As of June 30, 2021, Spirit had cash and cash
equivalents of $1,863.7 million plus $106.4 million in short-term
investments, equaling 88.7% of LTM revenue. Spirit's short-term
investments consist of U.S. treasury and government agency
securities with maturities of less than 12 months. The company also
has $240 million in credit facility availability. Fitch views
Spirit's upcoming debt maturities as manageable given its cash on
hand and undrawn revolver. Maturities total $99.2 million for the
last six months of 2021, $192 million in 2022 and $335.5 million in
2023.
Spirit's debt structure primarily consists of term loans and
enhanced equipment trust certificate debt, all of which is secured
by aircraft. The company also has $510 million in senior secured
notes, $528.2 million in convertible notes and $240 million in
senior secured revolving credit facility that is undrawn. The
senior secured notes (BB+/RR1) are secured by Spirit's loyalty
program, including revenues from its co-brand credit cards and
Spirit Saver$ Club, and other intellectual property. Spirit has
$28.2 million in 4.75% convertible notes due 2025 and $500 million
in 1.00% convertible notes due 2026.
ISSUER PROFILE
Spirit Airlines, Inc. (Spirit) is a Florida-based, ultra-low-cost
air carrier. The company began operations in 1980 and has expanded
its network to include 80 destinations throughout the United
States, Latin America and the Caribbean as of March 31, 2021.
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.
STONEWAY CAPITAL: Seeks to Hire RSM Canada as Tax Services Provider
-------------------------------------------------------------------
Stoneway Capital Corporation and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of New York to
hire RSM Canada LLP as tax services provider.
The firm's services include:
(a) preparation and filing of certain Canadian Federal and
Provincial Corporate Income Tax Returns and related information;
(b) preparation and filing of certain T1134 – Information
Return Relating to Controlled and Non-Controlled Foreign
Affiliates;
(c) preparation and filing of certain Form T106 –
Information Return of Non-Arm's Length Transactions with
Non-Residents;
(d) preparation and filing of certain T1135 – Foreign Income
Verification Statement;
(e) advice on Canadian tax matters and other business matters;
and
(f) other services for the Debtors as appropriate and proper
in the Chapter 11 cases, as requested.
RSM will receive fixed fees for the following services:
Services Fees Total
-------- ---- -----
Stoneway Power Generation Inc. C$10,000/return C$30,000
Canadian Federal and Provincial
Corporate Income Tax Returns and
related information schedules
Stoneway Capital Corporation C$20,000/return C$40,000
Canadian Federal and Provincial
Corporate Income Tax Returns and
related information schedules
T1134 - Information Return Relating C$3,500/form C$56,000 (16
forms expected)
to Controlled and Non-Controlled
Foreign Affiliates (4 forms)
Form T106 – Information Return of C$1,000/slip C$14,000
(14 forms expected)
Non-Arm's Length Transactions with
Non-Residents (for all Canadian
reporting entities, if applicable)
T1135 – Foreign Income C$2,000/form C$10,000
(5 forms expected)
Verification Statement
Fees for additional services will be based on RSM's customary
hourly rates. The hourly rates for those individuals anticipated
for this engagement are as follows:
Tax Partner C$745 – C$1,055 per hour
Tax Director C$715 – C$855 per hour
Tax Manager C$420 – C$735 per hour
Tax Staff C$140 – C$400 per hour
Enzo Testa, a partner at RSM, disclosed in a court filing that his
firm is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code.
The firm holds office at:
Enzo Testa, CPA
RSM Canada LLP
11 King Street West, Suite 700, Box 27
Toronto, ON M5H 4C7 Canada
Tel.: +1 416 480 0160
Fax: +1 416 480 2646
About Stoneway Capital Corp.
Stoneway Capital Corporation is a limited corporation incorporated
in New Brunswick, Canada, formed for the purpose of owning and
operating, through its Argentine subsidiaries, power generation
projects that will provide electricity to the wholesale electricity
markets in Argentina. The Argentine subsidiaries operate four
power-generating plants in Argentina that provide electricity to
the wholesale electricity market in Argentina.
Stoneway is 100% owned by GRM Energy Investment Limited.
On Oct. 8, 2020, the Company commenced proceedings under the Canada
Business Corporations Act (the "CBCA"). The Debtors were well on
the way toward closing the consensual restructuring when on Dec. 4,
2020, the Argentine Supreme Court issued a decision in an ongoing
noise discharge dispute involving one of the Generation Facilities
located in Pilar, Argentina. The Argentine Supreme Court Decision
created significant uncertainty as it overturned a decision of the
federal appeals court in San Martin, Buenos Aires.
As a result of the looming expiration of the informal standstill
arrangement, the Debtors commenced chapter 11 cases in the U.S. in
order to put the automatic stay in place, maintain the status quo
pending resolution of the various issues in Argentina, and ensure
that neither the Indenture Trustee nor the Argentine Trustee takes
any action that could be detrimental or value destructive to the
Company.
Stoneway Capital Ltd. and five related entities, including Stoneway
Capital Corp., sought Chapter 11 bankruptcy protection (Bankr.
S.D.N.Y. Case No. 21-10646) on April 7, 2021. Stoneway estimated
liabilities of $1 billion to $10 billion and assets of $500 million
to $1 billion.
Judge James L. Garrity, Jr. oversees the cases.
The Debtors tapped Shearman & Sterling LLP as bankruptcy counsel,
Bennett Jones LLP as Canadian counsel, Lazard Freres & Co. LLC as
investment banker, and RSM Canada LLP as tax services provider.
Prime Clerk, LLC is the claims agent and administrative advisor.
SUNCOR ENERGY: Egan-Jones Keeps BB+ Senior Unsecured Ratings
------------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its
'BB+' foreign currency and local currency senior unsecured ratings
on debt issued by Suncor Energy, Inc.
Headquartered in Calgary, Canada, Suncor Energy, Inc. is an
integrated energy company focused on developing the Athabasca oil
sands basin.
SUSGLOBAL ENERGY: Unit Closes Purchase of Hamilton Facility
-----------------------------------------------------------
SusGlobal Energy Corp.'s wholly-owned subsidiary, SusGlobal Energy
Canada I Ltd., completed the purchase of a 40,535-square-foot
facility on 3.26 acres located at 520 Nash Road North, in Hamilton,
Ontario, which includes an Environmental Compliance Approval to
process 65,884 metric tonnes per annum of organic waste, 24 hours
per day 7 days a week.
As per the terms of the Purchase Agreement, SusGlobal Canada I
provided an initial deposit of US$158,440 (CA$200,000) on Feb. 10,
2021 and conducted both a Phase I and a Phase II Environmental Site
Assessment. The parties signed a waiver of all due diligence and
the Company advanced a further US$118,830 (CA$150,000) on June 1,
2021 towards the purchase price of US$3,564,900 (CA$4,500,000). On
Aug. 3, 2021, the vendor agreed to credit the Company as an
adjustment on Closing US$297,075 (CA$375,000) and receive 300,000
common shares of the Company. Of the balance of the purchase price
(including adjustments), the Company paid US$1,415,455
(CA$1,786,739) in cash and it paid US$1,584,400 (CA$2,000,000) in
the form of a take-back mortgage granted in favour of the seller on
closing on Aug. 17, 2021.
The facility will be designed to produce, distribute and warehouse
the Company's SusGro organic liquid fertilizer and other products
that are provided under private label and sold through big box
retailers, consumer lawn and garden suppliers, and for end use to
the wine, cannabis and agriculture industries. With the addition
of a further 11,000 square feet of office space and R&D labs, the
Hamilton facility will also house the continued development of
SusGlobal's proprietary formulations and branded liquid and dry
organic fertilizers.
"We are pleased to have taken ownership title of an additional
facility with a high-value Environmental Compliance Approval and
strategically located to provide a contingency plan to our
municipal clients that are already using our Bellville facility
where we intake organic waste. Equally important is the Hamilton
facility's proximity to agricultural clients who purchase our
outbound products including liquid and dry organic fertilizers.
This acquisition exponentially increases SusGlobal's capacity for
commercialization and distribution of our proprietary products,
enabling us we believe to ramp revenues and cash flows through
fertilizer sales, tipping fees for intaking municipal organic
waste, and carbon credits as Leaders in The Circular Economy,"
stated Marc Hazout, president and CEO of SusGlobal.
About SusGlobal
Headquartered in Toronto, Ontario, Canada, SusGlobal Energy Corp.
-- www.susglobalenergy.com -- is a renewables company focused on
acquiring, developing and monetizing a global portfolio of
proprietary technologies in the waste to energy and regenerative
products application.
SusGlobal Energy reported a net loss of $2.01 million for the year
ended Dec. 31, 2020, compared to a net loss of $2.89 million for
the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had
$5.76 million in total assets, $10.52 million in total liabilities,
and a total stockholders' deficiency of $4.76 million.
Toronto, Canada-based MNP LLP, the Company's auditor since 2020,
issued a "going concern" qualification in its report dated April
15, 2021, citing that the Company has experienced operating losses
since inception and expects to incur further losses in the
development of its business. These conditions, along with other
matters, raise substantial doubt about Company's ability to
continue as a going concern.
TAKATA CORP: Defective Airbag Claims Process Ongoing
----------------------------------------------------
Professor Eric D. Green, Special Master for the Department of
Justice's Takata Airbag Individual Restitution Fund and Trustee of
the Tort Compensation Trust Fund Created in the Takata Bankruptcy
Cases, issued the following statement.
Takata Defective Airbag Claims
Professor Eric D. Green, as Special Master and Trustee, announced a
compensation program in May 2018 for individuals who have suffered
or will suffer personal injury or wrongful death caused by the
rupture or aggressive deployment of a Takata phase-stabilized
ammonium nitrate airbag inflator (a "Takata Airbag Inflator
Defect"). Under that program, claimants may seek compensation from
the Department of Justice's $125 million Individual Restitution
Fund ("IRF") and/or the approximately $140 million Takata Airbag
Tort Compensation Trust Fund ("TATCTF"). The claim process is
ongoing and eligible claimants still have time to act.
There are three types of claims that can be brought by individuals
who suffered injury or wrongful death caused by a Takata Airbag
Inflator Defect: (i) an "IRF Claim" against Takata for compensation
from the IRF, the personal injury and wrongful death restitution
fund overseen by the Special Master and established under the
Restitution Order entered by the United States District Court for
the Eastern District of Michigan in connection with the Department
of Justice's criminal case against Takata, U.S. v. Takata
Corporation, Case No. 16-cr-20810 (E.D. Mich.); (ii) a "Trust
Claim" against Takata for compensation from the TATCTF, the
personal injury and wrongful death trust fund overseen by the
Trustee and established in connection with Takata's Chapter 11 Plan
of Reorganization in the Bankruptcy Court for the District of
Delaware, and (iii) a "POEM Claim" against a Participating Original
Equipment Manufacturer (a "POEM;" presently the only POEM is
Honda/Acura) for compensation from the POEM, which must be resolved
through the TATCTF overseen by the Trustee.
Each of these three types of claims has its own eligibility
requirements; however, each claim type covers only physical
injuries and wrongful death resulting from a Takata Airbag Inflator
Defect. Claims related to injuries or wrongful death caused by
other airbag components -- such as airbag failure to deploy,
spontaneous airbag deployment, crash injuries unrelated to the
inflator, or economic losses unrelated to physical injuries or
death -- are not covered by the three types of claims described
above.
Individuals can access the claim forms, which include detailed
instructions regarding how to file a claim, on the IRF website,
www.takataspecialmaster.com, or on the TATCTF website,
www.TakataAirbagInjuryTrust.com.
Oversight of the Claims Process and Resources for More Information
Professor Green was appointed by the District Court to serve as the
Special Master overseeing IRF Claims and was appointed by the
Bankruptcy Court to serve as the Trustee overseeing Trust Claims
and POEM Claims.
For more information about eligibility requirements, filing
deadlines and how to file a claim, please visit
www.takataspecialmaster.com, www.TakataAirbagInjuryTrust.com, email
Questions@TakataAirbagInjuryTrust.com, or call us toll-free at
(888) 215-9544.
About TAKATA Corp.
Japan-based Takata Corporation (TYO:7312) --
http://www.takata.com/en/-- develops, manufactures, and sells
safety products for automobiles. The Company offers seatbelts,
airbags, steering wheels, child seats, and trim parts.
Headquartered in Tokyo, Japan, Takata operates 56 plants in 20
countries with approximately 46,000 global employees worldwide. The
Company has subsidiaries located in Japan, the United States,
Brazil, Germany, Thailand, Philippines, Romania, Singapore, Korea,
China, and other countries.
Takata Corp. filed for bankruptcy protection in Tokyo and the U.S.,
amid recall costs and lawsuits over its defective airbags. Takata
and its Japanese subsidiaries commenced proceedings under the Civil
Rehabilitation Act in Japan in the Tokyo District Court on June 25,
2017.
Takata's main U.S. subsidiary TK Holdings Inc. and 11 of its U.S.
and Mexican affiliates each filed voluntary petitions under Chapter
11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No.
17-11375) on June 25, 2017. Together with the bankruptcy filings,
Takata announced it has reached a deal to sell all its global
assets and operations to Key Safety Systems (KSS) for US$1.588
billion.
Nagashima Ohno & Tsunematsu is Takata's counsel in the Japanese
proceedings. Weil, Gotshal & Manges LLP and Richards, Layton &
Finger, P.A., are serving as counsel in the U.S. cases.
PricewaterhouseCoopers is serving as financial advisor, and Lazard
is serving as investment banker to Takata. Ernst & Young LLP is tax
advisor. Prime Clerk is the claims and noticing agent. The Debtors
Meunier Carlin & Curfman LLC, as special intellectual property
counsel.
Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal
counsel, KPMG is serving as financial advisor, Jefferies LLC is
acting as lead financial advisor. UBS Investment Bank also provides
financial advice to KSS.
On June 28, 2017, TK Holdings, as the foreign representative of the
Chapter 11 Debtors, obtained an order of the Ontario Superior Court
of Justice (Commercial List) granting, among other things, a stay
of proceedings against the Chapter 11 Debtors pursuant to Part IV
of the Companies' Creditors Arrangement Act. The Canadian Court
appointed FTI Consulting Canada Inc. as information officer. TK
Holdings, as the foreign representative, is represented by McCarthy
Tetrault LLP.
The U.S. Trustee has appointed an Official Committee of Unsecured
Trade Creditors and a separate Official Committee of Tort
Claimants.
The Official Committee of Unsecured Creditors has selected
Christopher M. Samis, Esq., L. Katherine Good, Esq., and Kevin F.
Shaw, Esq., at Whiteford, Taylor & Preston LLC, in Wilmington,
Delaware; Dennis F. Dunne, Esq., Abhilash M. Raval, Esq., and Tyson
Lomazow, Esq., at Milbank Tweed Hadley & McCloy LLP, in New York;
and Andrew M. Leblanc, Esq., at Milbank, Tweed, Hadley & McCloy
LLP, in Washington, D.C., as its bankruptcy counsel. The Committee
has also tapped Chuo Sogo Law Office PC as Japan counsel. The
Official Committee of Tort Claimants selected Pachulski Stang Ziehl
& Jones LLP as counsel. Gilbert LLP will evaluate the insurance
policies. Sakura Kyodo Law Offices is serving as special counsel.
Roger Frankel, the legal representative for future personal injury
claimants of TK Holdings Inc., et al., tapped Frankel Wyron LLP and
Ashby & Geddes PA to serve as co-counsel.
Takata Corporation ("TKJP") and affiliates Takata Kyushu
Corporation and Takata Services Corporation commenced Chapter 15
cases (Bankr. D. Del. Case Nos. 17-11713 to 17-11715) on Aug. 9,
2017, to seek U.S. recognition of the civil rehabilitation
proceedings in Japan. The Hon. Brendan Linehan Shannon oversees
the Chapter 15 cases. Young, Conaway, Stargatt & Taylor, LLP,
serves as Takata's counsel in the Chapter 15 cases.
* * *
In February 2018, the U.S. Bankruptcy Court confirmed the Fifth
Amended Chapter 11 Plan of Reorganization filed by TK Holdings,
Inc. ("TKH"), Takata's main U.S. subsidiary, and certain of TKH's
subsidiaries and affiliates.
TAURIGA SCIENCES: Incurs $832K Net Loss in First Quarter
--------------------------------------------------------
Tauriga Sciences, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $832,364 on $33,367 of net revenue for the three months ended
June 30, 2021, compared to a net loss of $945,661 on $64,804 of net
revenue for the three months ended June 30, 2020.
As of June 30, 2021, the Company had $2.76 million in total assets,
$1.50 million in total liabilities, and $1.25 million in total
stockholders' equity.
At June 30, 2021, the Company had cash of $66,894 and 1,557,222 of
securities compared to March 31, 2021 of $49,826 and $1,334,425 of
trading securities. The Company has historically met its cash
needs through a combination of proceeds from private placements of
its securities, loans and convertible notes. The Company's cash
requirements are generally for purchases of inventory as well as
selling, general and administrative activities. The Company
believes that its cash balance is not sufficient to finance its
cash requirements for expected operational activities, capital
improvements, and partial repayment of debt through the next 12
months.
Net Cash provided by in financing activities during the three
months ended June 30, 2021 and 2020 was $771,701 and $622,218,
respectively. During the three months ended June 30, 2021, the
Company received $790,000 proceed from notes payable, $100,000 from
the sale of common stock offset by the repayment of note principal
of $112,299. During 2020, the Company had proceeds from the sale
of registered shares under the Tangiers Investment Agreement in the
amount of $154,418, proceeds from the sale of common stock in the
amount of $75,000 and $492,800 proceeds from notes payable.
As of June 30, 2021, current assets exceeded the Company's current
liabilities by $1,286,438 compared to current assets exceeding
current liabilities by $1,229,211 at March 31,2021. At June 30,
2021, current assets were $2,668,603 compared to $2,396,567 at
March 31, 2021. During fiscal year 2021, the Company's increase in
net assets was due to a $22,797 increase in the investment in
trading securities. At June 30, 2021, current liabilities were
$1,382,165 compared to $1,167,356 at March 31, 2021. The Company's
increase in current liabilities was mainly due to increased notes
payable of $499,796 offset by lower accounts payable of $225,965.
During the fourth quarter of the year ended March 31, 2019, the
Company began sales and marketing efforts for its Tauri-GumTM
product line. During the three months ended June 30, 2021, the
Company recognized net sales of $33,367 and a gross profit of
$18,164, compared to net sales of $64,804 and a gross profit of
$19,273 for the same period during the same period in the prior
year. During the year ended March 31, 2021, the Company has in
place multiple distribution agreements, was approved and
provisioned to sell to many large retailers and ecommerce
platforms. At June 30, 2021, the Company had a working capital
surplus of $1,286,438 compared to $1,229,211 for the year ended
March 31, 2021. The Company said that although the Company has a
working capital surplus, there is no guarantee that this will
continue therefore it still believes that there is uncertainty with
respect to continuing as a going concern.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1142790/000149315221020179/form10q.htm
About Tauriga
Tauriga Sciences, Inc. -- www.taurigum.com -- is a diversified life
sciences company, engaged in several major business activities and
initiatives. The company manufactures and distributes several
proprietary retail products and product lines, mainly focused on
the Cannabidiol and Cannabigerol Edibles market segment.
Tauriga reported a net loss of $3.63 million for the year ended
March 31, 2021, a net loss of $ $3.03 million for the year ended
March 31, 2020, and a net loss of $1.10 million for the year ended
March 31, 2019.
Lakewood, Co-based BF Borgers CPA PC, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
June 29, 2021, citing that the Company has suffered recurring
losses from operations and has a significant accumulated deficit.
In addition, the Company continues to experience negative cash
flows from operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
TOPPS COMPANY: Moody's Cuts CFR & 1st Lien Credit Facilities to B2
------------------------------------------------------------------
Moody's Investors Service downgraded The Topps Company, Inc.'s
Corporate Family Rating to B2 from B1, its Probability of Default
Rating to B2-PD from B1-PD, its Speculative Grade Liquidity rating
to SGL-4 from SGL-1, and the rating on its senior secured first
lien credit facilities to B2 from B1, consisting of a $30 million
first lien revolver due April 2022 and a $197 million first lien
term loan due October 2022. The outlook is negative.
The downgrades and negative outlook reflects that the termination
of Topps' planned merger agreement with Mudrick Capital Acquisition
Corporation II (MUDS) and cancellation of a proposed debt offering
increases near term refinancing risks, and that the prospective
loss of the company's flagship baseball license agreements will
significantly and negatively affect revenue and earnings. In
addition, the company's liquidity is meaningfully constrained by
the upcoming maturity of its $197 million term loan on October
2022.
On August 20, 2021, Topps terminated its planned merger with MUDS
by mutual agreement and said that it will remain a private company.
The merger termination came after Major League Baseball (MLB) and
the Major League Baseball Players Association (MLBPA) notified
Topps that they would not renew their respective license agreements
with Topps after they expire at the end of 2025 for MLB and 2022
for MLBPA. The company expects that it will be able to produce
substantially all its current licensed baseball products through
2025, pursuant to its existing agreements. However, Moody's
anticipates that the company's current leading market share in the
Major League Baseball card market will erode after the MLBPA
license expires at the end of 2022. The prospective loss of the
baseball licensing contracts represents a significant weakening of
the company's market position amid increased competition in a
shifting trading card business. Moody's believes the abrupt
contract losses will weaken the Topps brand and create challenges
to overcoming the lost revenue and restoring the market position.
The contract losses create uncertainty regarding the company's
strategic direction and plans to overcome the lost earnings.
Topps' operating performance has been very strong over the past
year, resulting in low debt/EBITDA leverage at 1.2x for the for the
last twelve months period (LTM) ending July 3, 2021. The company
reported year-over-year revenue growth of 77.7% and
management-adjusted EBITDA growth of 144% for the second quarter
period that ended July 3, 2021, following very strong results in
fiscal 2020 with consolidated revenue growing 23% and EBITDA rising
98% over 2019 levels. Topps' low financial leverage helps to
somewhat mitigate near term refinancing risks. However, Moody's
expects that prospective leverage will weaken because of the loss
of earnings related to baseball cards, and will make it more
challenging and costly to refinance maturities beyond the
MLB/MLBPA/player license cessation dates.
Moody's took the following rating actions:
Downgrades:
Issuer: The Topps Company, Inc.
Corporate Family Rating, Downgraded to B2 from B1
Probability of Default Rating, Downgraded to B2-PD from B1-PD
Speculative Grade Liquidity Rating, Downgraded to SGL-4 from
SGL-1
Senior Secured 1st Lien Revolving Credit Facility, Downgraded to
B2 (LGD3) from B1 (LGD2)
Senior Secured 1st Lien Term Loan, Downgraded to B2 (LGD3) from B1
(LGD2)
Outlook Actions:
Issuer: The Topps Company, Inc.
Outlook, Changed To Negative From Stable
RATINGS RATIONALE
Topps' B2 CFR broadly reflects that the prospective loss of its
flagship baseball license agreements will negatively affect revenue
earnings, and the near-term refinancing risks related to the
expiration of its revolver in April 2022 and term loan maturity in
October 2022. The company's revenue scale is relatively small, it
has niche product focus in mature categories, and its products are
discretionary with demand exposed to cyclical consumer
discretionary spending. Topps is also exposed to the inherent
volatility in the sports and entertainment (S&E) collectibles
industry, tied to licensing agreements, the popularity of upcoming
rookie athletes and sports tournaments. The very high demand in the
S&E collectibles market over the past year creates tough comps over
the next 12 months, particularly as consumer discretionary spending
shifts back to categories that were limited because of the
coronavirus pandemic such as travel and dinning.
Topps' rating also reflects its current solid position in the
domestic S&E collectibles market. However, Moody's anticipates that
the company's current leading market share in the Major League
Baseball card market will erode after the MLBPA license expires at
the end of 2022. There is potential for increased demand for Topps
baseball cards over the remaining licensing terms given collectors'
possible desire for continuity and the company's very long and
iconic baseball card history. Any such demand would nevertheless be
temporary and the lost revenue and earnings when the licenses
expire will be significant. The company benefits from its moderate
segment diversification with a sizable confections business and
growing digital gift card segment. Topps' low financial leverage at
around 1.2x debt-to-EBITDA for the LTM ending July 3, 2021, helps
to somewhat mitigate near-term refinancing risk. However, Moody's
anticipates prospective leverage will weaken given anticipated loss
of earnings related to baseball cards.
The downgrade to SGL-4 from SGL-1 reflects the cancellation of the
proposed debt refinancing, which creates weak liquidity because the
company still needs to address the upcoming maturity of its $197
million term loan on October 2022. The company relatively healthy
cash balance of about $190 million as of July 3, 2021, and
currently low financial leverage helps to somewhat mitigate the
near term refinancing risks related to the term loan maturity.
However, a portion of cash on hand relates to Topps' growing gift
cards business, and the company would need to significantly
increase cash on hand over the next 12 months to repay the term
loan with internal resources. Moody's believes this creates
reliance on accessing capital markets to refinancing the maturity
and that such access is likely to be more difficult given the
prospective contract losses.
Moody's regard the coronavirus outbreak as a social risk under its
ESG framework, given the substantial implications for public health
and safety. During 2020, Topps' confections segment was materially
affected by disruptions across some of its retail distribution
channels because of the coronavirus outbreak, and this segment
remains vulnerable to the outbreak spreading. In addition, ongoing
concerns regarding childhood obesity and sugar intake, particularly
in North America, the company's biggest market, presents long-term
demand risks for the company's confectionery products. Governance
considerations primarily relate to the company's ownership by a
private equity sponsor, and the potential for aggressive financial
policies including risks of acquisitions and shareholder
distributions that may be funded with incremental debt.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects the near-term refinancing risks
related to the company's upcoming maturity of its capital structure
in 2022, and the uncertainty around the timing and ultimate
negative impact from the loss of its baseball related licenses.
The ratings could be upgraded if the company profitably offsets all
or a material portion of the revenue and earnings related to the
MLB and MLBPA licenses with new long-term agreements, such that
Moody's expects debt/EBITDA leverage will be sustained below 3.5x
after accounting for the anticipated decline in baseball cards
sales. A ratings upgrade would also require maintenance of at least
good liquidity, including an improved debt maturity profile, and
Moody's expectations of financial policies that support credit
metrics at the above levels.
The ratings could be downgraded if the company fails to address the
upcoming maturity of its capital structure over the next few
months, or if the risks of a debt restructuring or event of default
increases for any reason. The ratings could also be downgraded if
liquidity deteriorates for any reason, if the company's operating
performance weakens such as from declines in organic revenue or
from higher licensing fees, or if debt/EBITDA is above 5.0x.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
The Topps Company, Inc., founded in 1938, is a global consumer
products company with a multiplatform product portfolio that
includes physical and digital collectibles, trading cards, trading
card games, sticker and album collections, memorabilia, curated
experiential events, gift cards and novelty confections. The
company is co-owned by Madison Dearborn Partners and The Tornante
Company, and generated approximately $720 million in revenue for
the last 12 months that ended July 3, 2021.
U.S. TOBACCO: Seeks to Hire McGuireWoods LLP as Special Counsel
---------------------------------------------------------------
U.S. Tobacco Cooperative Inc. seeks approval from the U.S.
Bankruptcy Court for the Eastern District of North Carolina to
employ McGuireWoods, LLP as special counsel.
The firm will represent the Debtor in litigation matters, including
the lawsuit it filed against Certain Underwriters at Lloyd's (Case
No. 5:19-CV-00430-BO) pending in the U.S. District Court for the
Eastern District of North Carolina.
The Debtor will compensate the firm as follows:
a. To the extent that the insurer pays the Debtor on account
of any fees and costs incurred in the federal court litigation
before the petition date, the Debtor agrees to pay the firm 100
percent of any such amount up to $72,627.13, with the Debtor
retaining the remainder of the amount.
b. For work performed by McGuireWoods on or after the petition
date, the Debtor will pay: (i) the firm's prevailing standard rates
with a 10 percent discount, along with any costs and expenses
relating to the litigation, including, without limitation, travel
and filing fees; and (ii) 10 percent of any gross recovery obtained
in the federal court litigation, capped at 125 percent of the
firm's standard rate value of time for work post-petition.
The attorneys who will be providing the services are:
Shelby S. Guilbert, Jr., Esq. $950 per hour
Mark E. Anderson, Esq. $1015 per hour
Nicole Arcodia, Esq. $425 per hour
Amy E. Dehnel, Esq. $650 per hour
Shelby Guilbert Jr., Esq., a partner at McGuireWoods, disclosed in
a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Shelby S. Guilbert Jr., Esq.
McGuireWoods LLP
1230 Peachtree Street, N.E.. Suite 2100
Atlanta, GA 30309-3534
Tel: +1 404 443 5500
Fax: +1 404 443 5599
Email: sguilbert@mcguirewoods.com
About U.S. Tobacco Cooperative
U.S. Tobacco Cooperative produces U.S. flue-cured tobacco grown by
more than 500 member growers in Florida, Georgia, South Carolina,
North Carolina, and Virginia. Member-grown tobacco is processed
and sold as raw materials to cigarette manufacturers worldwide.
U.S. Tobacco Cooperative and affiliates sought Chapter 11
protection (Bankr. E.D.N.C. Lead Case No. 21-01511) on July 7,
2021. In the petition signed by Keith H. Merrick, chief financial
officer, U.S. Tobacco Cooperative estimated assets of between $100
million and $500 million and estimated liabilities of between $100
million and $500 million.
Judge Joseph N. Callaway oversees the cases.
The Debtors tapped Hendren, Redwine & Malone, PLLC as bankruptcy
counsel and McGuireWoods, LLP as special counsel. BDO Consulting
Group, LLC, SSG Advisors, LLC and CliftonLarsonAllen serve as the
Debtors' financial advisor, investment banker and accountant,
respectively.
UNITED AIRLINES: S&P Alters Outlook to Stable, Affirms 'B+' ICR
---------------------------------------------------------------
S&P Global Ratings revised its outlooks on United Airlines Holdings
and its operating subsidiary United Airlines Inc. to stable from
negative and affirmed its 'B+' issuer credit ratings.
At the same time, S&P raised its issue-level ratings on two
enhanced equipment trust certificates (EETCs)--the 2007-1 Class A
and 2007-1 Class B originally issued by Continental Airlines Inc.
(since merged into United Airlines Inc.)--to reflect their
improving collateral coverage as they amortize.
The stable outlook incorporates S&P's expectation for diminished
downside risk given the generally positive industry trends and
United's very ample liquidity.
The strong demand for domestic leisure travel has boosted the
company's revenue, though the COVID-19 resurgence will likely slow
any further gains. United, like other U.S. airlines, has benefited
from a surge in U.S. (and nearby Mexico and the Caribbean) traffic
for vacations and visiting friends and relatives over the summer.
This has enabled it to fill its planes and return its leisure fares
to 2019 levels. When the airline reported its second-quarter 2021
results in mid-July, it predicted narrow profits for the third and
fourth quarters. However, the rapid rise in COVID-19 cases fueled
by the contagious Delta variant has cast doubt on that forecast.
This is particularly true for its intercontinental flying, where
government restrictions and passenger concerns have held back a
recovery despite some major travel markets, such as Europe, opening
up to American visitors. United is more affected by these issues
than its peers American Airlines Group Inc. and Delta Air Lines
Inc. because it derives somewhat more (about 38%) of its normal
revenue from its international operations. S&P said, "We also
anticipate the demand for business travel will be significantly
sensitive to changes in health conditions, though to a lesser
degree than international travel. To the extent that companies
postpone the return of employees to their offices, this will likely
continue to depress the demand for business travel as well. We
still forecast improving revenue for United, though the trend will
likely be more uneven and protracted than it appeared just several
weeks ago."
United's large order for narrowbody aircraft will likely reduce its
operating expense over time but also slow the deleveraging of its
balance sheet. The company recently added 200 Boeing 737 MAX
(mostly MAX 10) and 70 Airbus A321 neo aircraft to its existing
orders. These large narrowbody aircraft, and United's planned
retirement of many of its small 50-seat regional jets, are intended
to improve the operating efficiency and profitability of its
domestic routes. This is consistent with the fleet plans of its
competitors Delta and American, which they have already implemented
successfully, and will likely lower United's operating costs per
available seat mile (ASM; an industry measure of capacity).
However, United's plans are more aggressive than those of its peers
because it anticipates expanding its overall ASM capacity at a
compound annual growth rate of 4%-6% from 2019 through 2026. The
company's success in achieving its forecast goals, which include a
pretax margin of about 9% in 2023 (close to 2019 levels) and 14% in
2026, could depend--in part--on whether its traffic and ticket
pricing recover from their COVID-19-related lows as quickly as
management expects. In addition, the new orders will increase the
company's capital spending to more than $8 billion in 2023 from
more than $4 billion annually in 2021 and 2022. While we forecast
United will deleverage its balance sheet, this heavy level of
aircraft spending will likely lead to a more gradual process than
at some of its peer airlines.
United's more than $22 billion of liquidity provides it with an
ample cushion against potential downside risk. United Airlines
Holdings had $21 billion of unrestricted cash and short-term
investments--plus an undrawn $1.75 billion revolving credit
facility--as of June 30, 2021. The company also has debt and lease
maturities of about $2.6 billion over the next 12 months and
planned capital spending of more than $4 billion both this year and
next. Accordingly, even if its operating cash flow remains modest
over the near term, S&P believes it is well-positioned to withstand
a more protracted recovery than it might have previously expected.
Environmental, social, and governance (ESG) credit factors for this
credit rating change:
-- Health and safety
S&P said, "We expect United's earnings, cash flow, and credit
measures to improve in the second half of 2021 and into 2022,
though the rate and extent of its gains will be influenced by the
pace of new COVID-19 infections, vaccinations, and the degree of
consumer confidence in air travel.
"Although unlikely until 2022, we could raise our ratings on United
over the next 12 months if it reports sustained improvements in its
revenue and earnings and we are confident its funds from operations
(FFO) to debt will increase above 12% in 2022 and continue to
improve thereafter. We would also expect the company to maintain at
least adequate liquidity to support a higher rating.
"Although unlikely, we could lower our rating on United over the
next 12 months if we revise our assessment of its liquidity to
adequate from strong and we expect its FFO to debt to decline to
the single digit percent area or lower in 2022. This could occur if
the progress on mitigating the spread of COVID-19 through
vaccinations and other measures is materially slower than we expect
such that the volume of air traffic remains very weak, which would
erode United's liquidity."
UNITED RENTALS: Egan-Jones Keeps BB- Senior Unsecured Ratings
-------------------------------------------------------------
Egan-Jones Ratings Company, on August 16, 2021, maintained its
'BB-' foreign currency and local currency senior unsecured ratings
on debt issued by United Rentals (North America), Inc.
Headquartered in Stamford, Connecticut, United Rentals (North
America), Inc. provides construction and industrial equipment
rental services.
VALERO ENERGY: Egan-Jones Keeps BB Senior Unsecured Ratings
-----------------------------------------------------------
Egan-Jones Ratings Company, on August 18, 2021, maintained its 'BB'
foreign currency and local currency senior unsecured ratings on
debt issued by Valero Energy Corporation.
Headquartered in San Antonio, Texas, Valero Energy Corporation is
an independent petroleum refining and marketing company that owns
and operates refineries in the United States, Canada, and Aruba.
WASATCH CO: Seeks to Hire Leslie Cohen Law as Bankruptcy Counsel
----------------------------------------------------------------
Wasatch Co. seeks approval from the U.S. Bankruptcy Court for the
Central District of California to hire Leslie Cohen Law, PC to
serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) advising the Debtor regarding its rights and
responsibilities under the U.S. Bankruptcy Code, the Federal Rules
of Bankruptcy Procedure and the Local Bankruptcy Rules, and how the
application of such provisions relates to the administration of the
Debtor's estate;
(b) assisting the Debtor in the preparation of certain
documents to be filed with the bankruptcy court or the Office of
the United States Trustee;
(c) representing the Debtor, with respect to bankruptcy
issues, in the context of its pending Chapter 11 case and
representing the Debtor in contested matters;
(d) assisting the Debtor in the negotiation, formulation and
confirmation of a plan of reorganization; and
(e) rendering services for the purpose of pursuing, litigating
or settling litigation.
The firm's hourly rates are as follows:
Leslie Cohen, Esq. $575 per hour
J'aime Williams, Esq. $410 per hour
Senior Contract Attorneys $350 per hour
Paraprofessionals $110 per hour
The Debtor paid $80,000 to the law firm as a retainer fee.
Leslie Cohen, Esq., president and sole shareholder of the firm,
disclosed in a court filing that her firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Leslie A. Cohen, Esq.
J'aime K. Williams Esq.
Leslie Cohen Law, PC
506 Santa Monica Blvd., Suite 200
Santa Monica, CA 90401
Tel.: (310) 394-5900
Fax: (310) 394-9280
Email: leslie@lesliecohenlaw.com
jaime@lesliecohenlaw.com
About Wasatch Co.
Wasatch Co., a wholesaler of t-shirts and towels based in Lynwood,
Calif., filed its voluntary Chapter 11 petition (Bankr. C.D. Calif.
Case No. 21-16429) on Aug. 12, 2021, listing $3,904,413 in assets
and $10,329 in liabilities. Wasatch President Abdul Wahab signed
the petition. Leslie Cohen Law, PC serves as the Debtor's legal
counsel.
WASHINGTON PRIME: Pachulski Stang Represents Shareholders
---------------------------------------------------------
In the Chapter 11 cases of Washington Prime Group, Inc., et al.,
the law firm of Pachulski Stang Ziehl & Jones LLP submitted a
verified statement under Rule 2019 of the Federal Rules of
Bankruptcy Procedure, to disclose that it is representing the Ad
Hoc Committee of Individual Preferred Shareholders.
As of Aug. 25, 2021, members of the Ad Hoc Committee of Individual
Preferred Shareholders and their disclosable economic interests
are:
Griffus, Dave
* Preferred H: 21,027
Gui, Adam
* Preferred H: 23,744
* Preferred I: 38,982
Voytov, Ilya
* Preferred H: 7,400
* Preferred I: 7,924
Stanley, Michael
* Preferred H: 4,000
Scholten, Michael H., CFA
* Preferred H: 24,685
* Preferred I: 260,189
On or around July 22, 2021, the Ad Hoc Committee of Individual
Preferred Shareholders retained PSZJ to represent them in
connection with the Debtors' restructuring.
Counsel represents only the Ad Hoc Committee of Individual
Preferred Shareholders in connection with these chapter 11 cases.
Each member of the Ad Hoc Committee of Individual Preferred
Shareholders is aware of, and has consented to, Counsel's "group
representation" of the Ad Hoc Committee of Individual Preferred
Shareholders. No member of the Preferred Shareholders represents or
purports to represent any other entities in connection with these
chapter 11 cases.
Counsel for the Ad Hoc Committee of Individual Preferred
Shareholders can be reached at:
Michael D. Warner, Esq.
Ayala A. Hassell, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
440 Louisiana Street, Suite 900
Houston, TX 77002
Telephone: (713) 691-9385
Facsimile: (713) 691-9407
Email: mwarner@pszjlaw.com
ahassell@pszjlaw.com
- and -
Robert J. Feinstein, Esq.
Bradford J. Sandler, Esq.
Shirley S. Cho, Esq.
PACHULSKI STANG ZIEHL & JONES LLP
780 Third Avenue, 34th Floor
New York, NY 10017
Telephone: (212) 561-7700
Facsimile: (212) 561-7777
Email: rfeinstein@pszjlaw.com
bsandler@pszjlaw.com
scho@pszjlaw.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/3yh9JGs
About Washington Prime Group
Washington Prime Group Inc. (NYSE: WPG) --
http://www.washingtonprime.com/-- is a retail REIT and a
recognized leader in the ownership, management, acquisition and
development of retail properties. It combines a national real
estate portfolio with its expertise across the entire shopping
center sector to increase cash flow through rigorous management of
assets and provide new opportunities to retailers looking for
growth throughout the U.S.
Washington Prime Group and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 21-31948) on June 13,
2021. At the time of the filing, Washington Prime Group's property
portfolio consists of material interests in 102 shopping centers in
the United States totaling approximately 52 million square feet of
gross leasable area. The company operates 97 of the 102
properties.
As of March 31, 2021, Washington Prime Group had total assets of
$4.029 billion against total liabilities of $3.471 billion.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as lead bankruptcy counsel; Jackson Walker, LLP
as co-counsel; Alvarez & Marsal North America, LLC as restructuring
advisor; Guggenheim Securities, LLC as investment banker; Deloitte
Tax, LLP as tax services provider; and Ernst & Young, LLP as
auditor. Prime Clerk LLC is the claims agent, maintaining the page
http://cases.primeclerk.com/washingtonprime
SVPGlobal, the Debtors' lender, tapped Davis Polk & Wardwell, LLP
and Evercore Group, LLC as its legal counsel and investment banker,
respectively.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors in the Debtors' cases on June 25, 2021.
Greenberg Traurig, LLP and FTI Consulting, Inc. serve as the
committee's legal counsel and financial advisor, respectively.
On July 15, 2021, the U.S. Trustee appointed an official committee
of equity security holders. The equity committee tapped Porter
Hedges, LLP, and Brown Rudnick, LLP as legal counsel; Province,
LLC, as financial advisor; and Newmark Knight Frank Valuation &
Advisory, LLC as real estate appraiser and valuation advisor.
WASHINGTON PRIME: Reaches Settlement with Plan Sponsor & OEC
------------------------------------------------------------
Washington Prime Group Inc., and its Debtor Affiliates submitted a
First Amended Joint Plan of Reorganization and Disclosure Statement
dated August 24, 2021.
Class 5 consists of any Unsecured Notes Claims. Each Holder of an
Allowed Unsecured Notes Claim shall receive on or about the
Effective Date as provided in the Restructuring Steps Memorandum,
its Pro Rata share of (i) 100% of the New Common Equity, less any
New Common Equity distributed to Holders of Existing Equity
Interests pursuant to the Equity Option, and subject to dilution on
account of the Management Incentive Plan, the Backstop Equity
Premium, and the Equity Rights Offering, and (ii) the Unsecured
Noteholder Rights.
Class 6 consists of any Property-Level Mortgage Guarantee Claims.
Each such Holder shall receive, at the option of the applicable
Debtor(s) Reinstatement; or such other treatment reasonably
acceptable to the Plan Sponsor rendering such Property-Level
Mortgage Guarantee Claim Unimpaired in accordance with section 1124
of the Bankruptcy Code.
Class 7 consists of any General Unsecured Claims. On or as promptly
as practicable after the Effective Date, as provided in the
Restructuring Steps Memorandum, each holder of an Allowed General
Unsecured Claim shall receive, at the option of the applicable
Debtor payment in full in Cash; Reinstatement; or such other
treatment reasonably acceptable to the Plan Sponsor rendering such
General Unsecured Claim Unimpaired in accordance with section 1124
of the Bankruptcy Code.
Class 10 consists of any Existing Preferred Equity Interests. On
the Plan Effective Date or as soon as reasonably practicable
thereafter, the Series I-1 Preferred Stock shall be considered
redeemed for the Series I Preferred Stock of WPG Inc. (or its
successor) and receive the treatment of the Existing Preferred
Equity Interests, and each Holder of an Allowed Existing Preferred
Equity Interest shall receive such Holder's Pro Rata share of the
(i) Preferred Equity Cash Pool, or (ii) if such Holder is an
Eligible Election Participant, and such Holder elects the Preferred
Equity Option, such Holder's Pro Rata share of the Preferred Equity
Equity Pool in lieu of the distribution in the preceding clause.
Class 11 consists of any Existing Common Equity Interests. On the
Plan Effective Date, the Existing Common Equity Units (which for
the avoidance of doubt, other than any such Existing Common Equity
Units owned at such time, directly or indirectly, by WPG Inc.)
shall be considered redeemed for the common equity of WPG Inc. (or
its successor) and receive the treatment of Existing Common Equity
Interest, and each Holder of an Allowed Existing Common Equity
Interest shall receive such Holder's Pro Rata share of (i) the
Common Equity Cash Pool, or (ii) if such Holder is an Eligible
Election Participant, and such Holder elects the Common Equity
Option, such Holder's Pro Rata share of (A) the Common Equity
Equity Pool in lieu of the distribution from the Common Equity Cash
Pool in the preceding clause i), and (B) the Existing Common Equity
Interest Rights.
"OEC" means the Official Committee of Equity Security Holders
appointed by the U.S. Trustee in the Chapter 11 Cases, pursuant to
section 1102(a) of the Bankruptcy Code, as it may be reconstituted
from time to time.
"OEC Member Fees" means up to $100,000 of reasonable and documented
fees and expenses of the members of the OEC in the aggregate,
including reasonable and documented fees and expenses of
professionals retained on behalf of the members of the OEC.
"OEC Settlement" means that certain settlement in principal between
the Debtors, the Plan Sponsor, and the OEC reached on or about
August 19, 2021.
Specifically, the settlements and compromises pursuant to and in
connection with the Plan, including the OEC Settlement, are
substantively fair based on the following factors: (i) the balance
between the litigation's possibility of success and the
settlement's future benefits; (ii) the likelihood of complex and
protracted litigation; (iii) the proportion of creditors and
parties in interest that support the settlement; (iv) the
competency of counsel reviewing the settlement; and (v) the extent
to which the settlement is the product of arm's-length bargaining.
On or about the Effective Date, as provided in the Restructuring
Steps Memorandum, Reorganized WPG shall enter into and deliver the
New LLC Agreement to each holder of New Common Equity, including
each New Common Equity Beneficial Owner, and such holders shall be
required to duly execute and deliver the New LLC Agreement to
Reorganized WPG prior to such holder's receipt of New Common Equity
(provided that to the extent that delivery to any such holder is
not reasonably practicable, filing of the New LLC Agreement on the
docket of these Chapter 11 Cases shall be deemed effective
delivery), either directly or through DTC.
On or about the Effective Date, as provided in the Restructuring
Steps Memorandum, Reorganized WPG and all holders of New Common
Equity then outstanding shall be deemed to be parties to the New
LLC Agreement, regardless of execution by any such holder, and the
New LLC Agreement shall be binding on Reorganized WPG and all
parties receiving, and all holders of New Common Equity (including
each New Common Equity Beneficial Owner).
On July 14, 2021, the Debtors distributed the Equity Rights to the
Holders of Unsecured Notes Claims and the Backstop Parties in
accordance with the Equity Rights Offering Procedures and on August
26, 2021, the Debtors shall further distribute the Existing Common
Equity Interests Rights to Holders of Existing Common Equity
Interests that are Eligible Election Participants in accordance
with the Equity Rights Offering Procedures. Each Holder of an
Allowed Unsecured Notes Claim or each Eligible Election Participant
that has made a valid Common Equity Option election (such Eligible
Election Participant, an "Eligible Common Equity Holder") that is
an "accredited investor" shall be permitted to participate in the
Equity Rights Offering.
For the Existing Common Equity Interest Rights, the Equity Rights
remain attached to the Existing Common Equity Interests, and an
Eligible Common Equity Holder's election to exercise the Equity
Rights shall be irrevocable when the Eligible Common Equity Holder
submits a valid Subscription Form or via DTC's ATOP platform, as
applicable, and remits the corresponding aggregate purchase price
by September 17, 2021 at 1:00 p.m. (the "Equity Subscription Form
and Payment Deadline").
Proposed Co-Counsel to the Debtors:
Matthew D. Cavenaugh
Kristhy M. Peguero
Genevieve Graham
JACKSON WALKER LLP
1401 McKinney Street, Suite 1900
Houston, Texas 77010
Telephone: (713) 752-4200
Facsimile: (713) 752-4221
Email: mcavenaugh@jw.com
kpeguero@jw.com
ggraham@jw.com
Proposed Co-Counsel to the Debtors:
Joshua A. Sussberg, P.C.
Alexander J. Nicas
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
601 Lexington Avenue
New York, New York 10022
Telephone: (212) 446-4800
Facsimile: (212) 446-4900
Email: joshua.sussberg@kirkland.com
alexander.nicas@kirkland.com
- and -
Chad J. Husnick, P.C.
A. Katrine Jakola, P.C.
KIRKLAND & ELLIS LLP
KIRKLAND & ELLIS INTERNATIONAL LLP
300 North LaSalle Street
Chicago, Illinois 60654
Telephone: (312) 862-2000
Facsimile: (312) 862-2200
Email: chad.husnick@kirkland.com
katie.jakola@kirkland.com
About Washington Prime Group
Washington Prime Group Inc. (NYSE: WPG) --
http://www.washingtonprime.com/-- is a retail REIT and a
recognized leader in the ownership, management, acquisition and
development of retail properties. It combines a national real
estate portfolio with its expertise across the entire shopping
center sector to increase cash flow through rigorous management of
assets and provide new opportunities to retailers looking for
growth throughout the U.S.
Washington Prime Group and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 21-31948) on June 13,
2021. At the time of the filing, Washington Prime Group's property
portfolio consists of material interests in 102 shopping centers in
the United States totaling approximately 52 million square feet of
gross leasable area. The company operates 97 of the 102
properties.
As of March 31, 2021, Washington Prime Group had total assets of
$4.029 billion against total liabilities of $3.471 billion.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as lead bankruptcy counsel; Jackson Walker, LLP
as co-counsel; Alvarez & Marsal North America, LLC as restructuring
advisor; Guggenheim Securities, LLC as investment banker; Deloitte
Tax, LLP as tax services provider; and Ernst & Young, LLP as
auditor. Prime Clerk LLC is the claims agent, maintaining the page
http://cases.primeclerk.com/washingtonprime
SVPGlobal, the Debtors' lender, tapped Davis Polk & Wardwell, LLP
and Evercore Group, LLC as its legal counsel and investment banker,
respectively.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors in the Debtors' cases on June 25, 2021.
Greenberg Traurig, LLP and FTI Consulting, Inc. serve as the
committee's legal counsel and financial advisor, respectively.
On July 15, 2021, the U.S. Trustee appointed an official committee
of equity security holders. The equity committee tapped Porter
Hedges, LLP and Brown Rudnick, LLP as legal counsel; Province, LLC
as financial advisor; and Newmark Knight Frank Valuation &
Advisory, LLC as real estate appraiser and valuation advisor.
WASHINGTON PRIME: Taps Kroll LLC to Perform Valuation Services
--------------------------------------------------------------
Washington Prime Group, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the Southern District of Texas to
employ Kroll, LLC to perform valuation services.
The firm's services include:
(a) recognizing and measuring the fair value of identifiable
assets acquired, the liabilities assumed, and any acquired
non-controlling interests, if applicable; and
(b) estimating the remaining useful life of the identifiable
assets acquired in accordance with ASC 350.
The hourly rates that will be charged by Kroll, estimated at a
total of $700,000 to $750,000, are as follows:
Managing Directors $1,185 per hour
Director $1,070 per hour
Vice President $850 per hour
Senior Associate $645 per hour
Analyst $450 per hour
Administrative Staff $180 per hour
Kroll is a "disinterested person" within the meaning of Section
101(14) of the Bankruptcy Code as disclosed in court filings.
The firm can be reached through:
Ross Prindle
Kroll, LLC
d/b/a Duff & Phelps
167 N. Green St., 12th Floor
Chicago IL 60607
Phone: +1 312 697 4600 / +1 312 697 4740
About Washington Prime Group
Washington Prime Group Inc. (NYSE: WPG) --
http://www.washingtonprime.com/-- is a retail REIT and a
recognized leader in the ownership, management, acquisition and
development of retail properties. It combines a national real
estate portfolio with its expertise across the entire shopping
center sector to increase cash flow through rigorous management of
assets and provide new opportunities to retailers looking for
growth throughout the U.S.
Washington Prime Group and its affiliates sought Chapter 11
protection (Bankr. S.D. Tex. Lead Case No. 21-31948) on June 13,
2021. At the time of the filing, Washington Prime Group's property
portfolio consists of material interests in 102 shopping centers in
the United States totaling approximately 52 million square feet of
gross leasable area. The company operates 97 of the 102
properties.
As of March 31, 2021, Washington Prime Group had total assets of
$4.029 billion against total liabilities of $3.471 billion.
Judge Marvin Isgur oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as lead bankruptcy counsel; Jackson Walker, LLP
as co-counsel; Alvarez & Marsal North America, LLC as restructuring
advisor; Guggenheim Securities, LLC as investment banker; Deloitte
Tax, LLP as tax services provider; and Ernst & Young, LLP as
auditor. Prime Clerk LLC is the claims agent, maintaining the page
http://cases.primeclerk.com/washingtonprime
SVPGlobal, the Debtors' lender, tapped Davis Polk & Wardwell, LLP
and Evercore Group, LLC as its legal counsel and investment banker,
respectively.
The U.S. Trustee for Region 6 appointed an official committee of
unsecured creditors in the Debtors' cases on June 25, 2021.
Greenberg Traurig, LLP and FTI Consulting, Inc. serve as the
committee's legal counsel and financial advisor, respectively.
On July 15, 2021, the U.S. Trustee appointed an official committee
of equity security holders. The equity committee tapped Porter
Hedges, LLP and Brown Rudnick, LLP as legal counsel; Province, LLC
as financial advisor; and Newmark Knight Frank Valuation &
Advisory, LLC as real estate appraiser and valuation advisor.
WC SOUTH CONGRESS: $42MM DIP Loan, Cash Collateral Access OK'd
--------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of Texas, Austin
Division, authorized WC South Congress Square LLC to, among other
things, use cash collateral on a final basis.
The Debtor is also permitted to obtain post-petition financing and
other financial accommodations, comprising, among other things, a
superpriority senior secured multiple-draw term loan facility in an
aggregate principal amount of up to $42,000,000, of which a single
draw of $39,000,000 will be funded by the DIP Lenders on the
Closing Date and remaining amounts will be funded by the DIP
Lenders in accordance with the DIP Documents.
All of the DIP Obligations will constitute allowed senior
administrative expense claims of Kennedy Lewis Investment
Management LLC, the DIP Agent and the DIP Lenders against the
Debtor's estate.
The Court says the terms of the Final Order, regarding repayment of
the Debtor's obligations to noteholder 510 South Congress Lender
LLC under an Existing Promissory Note will govern and control in
the event of any conflict between the Final Order, the Motion, the
DIP Credit Agreement, and/or any of the DIP Documents. As of August
23, 2021, the total amount due to the Noteholder by the Debtor
under the Existing Promissory Note is $38,051,954, with per diem
interest accruing in the amount of $11,209.87 until paid in full.
The Debtor has an ongoing and immediate need to obtain credit
pursuant to the DIP Facility and use the Cash Collateral in order
to, among other things: (i) repay its obligations to the Noteholder
under the Existing Promissory Note (in the Noteholder Payoff
Amount); (ii) pay property taxes; (iii) pay administrative,
priority and general unsecured claims up to an aggregate amount of
$470,000; (iv) satisfy working capital and general corporate
expenditures; and (v) pay the costs of the administration of the
Case.
Proceeds of the DIP Loans and Cash Collateral will be used solely
for the purposes permitted under the DIP Credit Agreement and the
Final Order and in accordance with the DIP Budget, the DIP
Documents and this Final Order.
The DIP Documents will constitute valid, binding and non-avoidable
obligations of the Debtor enforceable against the Debtor in
accordance with their respective terms and the terms of the Final
Order for all purposes during the Case, any subsequently converted
Case of the Debtor to a case under Chapter 7 of the Bankruptcy Code
or after the dismissal of the Case.
The Debtor is permitted to use cash collateral and the proceeds of
the DIP Facility to:
-- repay its obligations under the Existing Promissory Note,
-- pay the Property Taxes,
-- fund working capital requirements,
-- fund general corporate purposes,
-- pay administrative, priority and general unsecured claims
up to an aggregate amount of $470,000, and the costs and expenses
of administering the Case.
The proceeds of the Initial Draw will be used to repay the Debtor's
obligations under the Existing Promissory Note in the Noteholder
Payoff Amount, pay outstanding property taxes for the Property due
to Travis County, Texas, in the amount of $433,572 and pay
transaction costs, fees and expenses under the DIP Facility.
As security for the DIP Obligations, the DIP Agent for the benefit
of the DIP Agent and the other DIP Parties, are granted:
-- a valid, binding, continuing, enforceable, fully-perfected
first priority senior security interest in and lien upon all
prepetition and post-petition property of the Debtor;
-- a valid, binding, continuing, enforceable, fully-perfected
first priority senior priming security interest in and lien upon
all prepetition and post-petition property of the Debtor;
-- a valid, binding, continuing, enforceable, fully-perfected
security interest in and lien upon all prepetition and
post-petition property of the Debtor.
The Court order provides for a "Carve Out" for (i) all fees
required to be paid to the Clerk of the Court and to the Office of
the U.S. Trustee under 28 U.S.C. section 1930(a) plus interest at
the statutory rate (without regard to the notice set forth in (iii)
below); (ii) all reasonable fees and expenses up to 25,000
incurred by a trustee under Bankruptcy Code section 726(b) (without
regard to the notice set forth in (iii) below); (iii) to the extent
allowed, whether by interim order, procedural order or otherwise,
and subject in all respects to the DIP Budget, all unpaid fees and
expenses incurred by persons or firms retained by the Debtor
pursuant to section 327, 328 or 363 of the Bankruptcy Code at any
time before or on the first business day following delivery by the
DIP Agent or the DIP Lenders of a Carve Out Trigger Notice, whether
allowed by the Court prior to or after delivery of a Carve Out
Trigger Notice; and (iv) Allowed Professional Fees of the Debtor
Professionals, in an aggregate amount not to exceed $75,000,
incurred after the first business day following delivery by the DIP
Agent or the DIP Lenders of the Carve Out Trigger Notice.
A copy of the order and the Debtor's 13-week DIP budget is
available at https://bit.ly/3mte1YS from PacerMonitor.com.
The Debtor projects $39,623,934 in total expenditures for the
13—week period through Nov. 15, 2021.
About WC South Congress Square
Based in Austin, Texas, WC South Congress Square LLC owns a
multi-family apartment community with 115 rental units located at
500 South Congress Avenue in Austin, as well as two adjacent office
buildings with a total of over 70,000 square feet of office space.
The managing member of WC South Congress Square is World Class
Holdings VI, LLC, which is controlled by Natin Paul, a real estate
entrepreneur very active in the Austin market.
WC South Congress Square sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. Texas Case No. 20-11107) on Oct. 6,
2020. Natin Paul, manager of general partner, signed the petition.
At the time of filing, the Debtor had estimated assets of between
$50 million and $100 million and liabilities of between $10 million
and $50 million. Judge Tony M. Davis oversees the case. Fishman
Jackson Ronquillo, PLLC serves as the Debtor's legal counsel and
Columbia Consulting Group, PLLC as financial advisor.
510 South Congress Lender LLC, as noteholder, is represented by:
Kell C. Mercer, Esq.
KELL C. MERCER, PC
1602 E. Cesar Chavez Street
Austin, TX 78702
Tel: (512) 627-3512
Fax: (512) 597-0767
E-mail: kell.mercer@mercer-law-pc.com
Kennedy Lewis Investment Management LLC, as DIP Agent, may be
reached at:
KENNEDY LEWIS INVESTMENT MANAGEMENT LLC
c/o Anthony Pasqua
111 West 33rd Street, Suite 1910
New York, NY 10120
E-mail: anthony.pasqua@klimllc.com
The DIP Agent is represented by:
Lucas Charleston, Esq.
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park
New York, NY 10036
E-mail: lcharleston@akingump.com
WIRTA HOTELS: Taps Colliers International as Appraiser
------------------------------------------------------
Wirta Hotels, LLC seeks approval from the U.S. Bankruptcy Court for
the Western District of Washington to hire Colliers International
Valuation & Advisory Services, LLC, an appraiser based in Portland,
Ore.
Colliers will provide appraisal services, which include providing a
report that opines on the value of Quality Inn & Suites, a hotel in
Sequim, Wash., owned by the Debtor.
Colliers will receive a flat fee of $5,000 for its appraisal
services and will be paid at the rate of $300 per hour for
deposition and testimony. The retainer fee is $5,000.
Matthew Mintier, a broker at Colliers, disclosed in a court filing
that his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Matthew Mintier, MAI
Colliers International Valuation & Advisory Services, LLC
851 SW Sixth Avenue, Suite 200
Portland, OR 97204
Direct +1 503-542-5472
Mobile: +1 503-449-4565
Email: matthew.mintier@colliers.com
About Wirta Hotels
Wirta Hotels, LLC owns and operates Quality Inn & Suites at Olympic
National Park, a hotel located at 134 River Road, Sequim, Wash.
Wirta Hotels filed a petition for Chapter 11 protection (Bankr.
W.D. Wash. Case No. 21-11556) on Aug. 13, 2021, listing $3,136,280
in assets and $5,193,377 in liabilities. Judge Christopher M.
Alston oversees the case.
Foster Garvey, PC and Premier Capital Associates, LLC serve as the
Debtor's legal counsel and financial consultant, respectively.
YUM! BRANDS: Egan-Jones Keeps B+ Senior Unsecured Ratings
---------------------------------------------------------
Egan-Jones Ratings Company, on August 19, 2021, maintained its 'B+'
foreign currency and local currency senior unsecured ratings on
debt issued by Yum! Brands, Inc.
Headquartered in Louisville, Kentucky, Yum! Brands, Inc, owns and
franchises quick-service restaurants worldwide.
`
ZAYAT STABLES: Company Must Hand Over Docs to Ch. 7 Trustee
-----------------------------------------------------------
Law360 reports that a New Jersey bankruptcy judge has ruled that
the company behind Triple Crown-winning thoroughbred racehorse
American Pharoah must turn over business documents sought by the
company's Chapter 7 trustee in order to handle the estate's
affairs. U. S. Bankruptcy Judge Vincent F. Papalia on Tuesday
granted the bid by trustee Jeffrey T. Testa of McCarter & English
LLP to receive electronically stored materials held by Zayat
Stables LLC, over company owner Ahmed A. Zayat's objections that
his private information would be revealed. But Section 541 of
bankruptcy law entitles a trustee to property of the estate, and
that includes information on Zayat.
About Zayat Stables
Headquartered in Hackensack, New Jersey, Zayat Stables owned 203
thoroughbred horses. The horses, which are collateral for the bank
loan, are worth $37 million, according to an appraisal mentioned in
a court paper. Ahmed Zayat said in a court filing that he
personally invested $40 million in the business.
The Company filed for Chapter 11 bankruptcy protection (Bankr.
D.N.J. Case No. 10-13130) on Feb. 3, 2010. The Company estimated
$10 million to $50 million in assets and the same range of
liabilities as of the bankruptcy filing. The Debtor tapped Cole,
Schotz, Meisel, Forman & Leonard, P.A., as bankruptcy counsel.
Ahmed A. Zayat, the owner of the Triple Crown-winning horse
American Pharoah, filed for personal bankruptcy protection (Bankr.
D.N.J. 20-20387) on Sept. 8, 2020, seeking to discharge more than
$19 million of debts. He disclosed $1.9 million in assets and $19.4
million in liabilities in the bankruptcy petition. Zayat's stables
were listed as insolvent, according to a Bloomberg report.
[*] COVID-19 Triggered Increase in Energy Sector Bankruptcies
-------------------------------------------------------------
Allie Schwartz, Joseph B. "J.B." Doyle and Nicholas D. Yavorsky
wrote on the The National Law Review that the COVID-19 pandemic
triggered a spike in large corporate bankruptcy filings not seen
since the global financial crisis. The number of large corporate
bankruptcies in 2020 was second only to 2009's peak, and bankruptcy
filings by companies with more than $1 billion in assets were the
highest since 2005.
As the economic recovery began to take hold, however, bankruptcies
returned to lower levels in the first half of 2021. This pattern
was consistent across most industries.
This report examines trends in Chapter 7 and Chapter 11 bankruptcy
filings between January 2005 and June 2021. Unless specified
otherwise, the bankruptcies analyzed in this report involve public
and private companies with over $100 million in assets.[1]
A total of 155 companies filed for bankruptcy in 2020. This is the
second-highest annual number of bankruptcy filings since 2005, only
behind the 161 bankruptcy filings in 2009. (page 2)
Of the 155 bankruptcy filings in 2020, 104 occurred in Q2 and Q3
2020. In contrast, there were only 17 such bankruptcies in Q4 2020.
(page 3)
In 1H 2021, 43 companies filed for bankruptcy, less than half of
the number of bankruptcies (89) filed in 1H 2020, but slightly
above the 2005–2020 annual average of 79 bankruptcy filings
(i.e., 39 per half year). (page 3)
Bankruptcy filings by private companies constituted 79% of all
bankruptcies in 1H 2021, substantially higher than the annual
average of 37% for 2005–2020.
There were 60 "mega bankruptcies" (i.e., those filed by companies
with over $1 billion in reported assets) in 2020. More than half
(31) of the mega bankruptcies in 2020 were filed in Q2 2020. (page
2)
Only nine Chapter 11 mega bankruptcies were filed in 1H 2021. This
is considerably lower than the 2020 level, although comparable to
the 2005–2020 half-year average of 11. Of the mega bankruptcies
in 1H 2021, four were filed by companies in the real estate
industry. (page 3)
The largest bankruptcies in 2020 and 1H 2021 were filed by The
Hertz Corporation with $25.84 billion in assets at the time of
filing, and Seadrill Limited with $7.29 billion in assets at the
time of filing, respectively. (page 6)
Energy Sector Spotlight
Bankruptcies in the Mining, Oil, and Gas industry have historically
been associated with low oil prices. For example, 62 Mining, Oil,
and Gas companies filed for bankruptcy in 2015–2016, after oil
prices dropped by over 50% in the seven months preceding January
2015.
During March and April 2020, West Texas Intermediate (WTI) crude
oil spot prices declined by almost 60%. Consistent with the
historical relationship, bankruptcies filed by Mining, Oil, and Gas
companies increased by nearly 70% from 26 in 2019 to 44 in 2020.
In January 2021, the WTI crude oil spot price returned to its
February 2020 level for the first time since the COVID-19 pandemic
began.
69%: Increase in Mining, Oil, and Gas bankruptcy filings from 2019
to 2020.
Consistent with the rebound in oil prices, there were only six
bankruptcies by Mining, Oil, and Gas companies in 1H 2021, compared
to 21 and 23 in 1H 2020 and 2H 2020, respectively. Five of the 2020
bankruptcies were coal mining companies.
While higher oil and commodity prices have granted Mining, Oil, and
Gas companies a reprieve, President Biden's pledge to cut U.S.
greenhouse gas emissions leaves this industry facing potential
large volatility and falling demand.[2] Two coal companies-- White
Stallion and Lighthouse -- declared bankruptcy in late 2020.
Bankruptcies in this sector can be complicated by environmental
remediation liabilities.
Extreme weather and fires continue to drive electric utility
bankruptcies. While PG&E has exited its 2019 bankruptcy stemming
from California fire-related lawsuits, other electric utilities in
drought-stricken areas may face similar risks. The February 2021
Texas storm Uri resulted in three large Electric Services
bankruptcies, with Brazos being the largest. Nationwide, five large
Electric Services companies declared bankruptcy in 1H 2021,
compared to three in all of 2020.
[^] BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles
-------------------------------------------------------------
Author: Sallie Tisdale
Publisher: BeardBooks
Softcover: 270 pages
List Price: $34.95
Review by Henry Berry
Order your own personal copy at http://is.gd/9SAfJR
An earlier edition of "The Sorcerer's Apprentice" won an American
Health Book Award in 1986. The book has been recognized as an
outstanding book on popular science. Tisdale brings to her subject
of the wide nd engrossing field of health and illness the
perspective, as well as the special sympathies and sensitivities,
of a registered nurse. She is an exceptionally skilled writer.
Again and again, her descriptions of ill individuals and images of
illnesses such as cancer and meningitis make a lasting impression.
Tisdale accomplishes the tricky business of bringing the reader to
an understanding of what persons experience when they are ill; and
in doing this, to understand more about the nature of illness as
well. Her style and aim as a writer are like that of a medical or
science journalist for leading major newspaper, say the "New York
Times" or "Los Angeles Times." To this informative, readable style
is added the probing interest and concern of the philosopher
trying to shed some light on one of the central and most
unsettling aspects of human existence. In this insightful,
illuminating, probing exploration of the mystery of illness,
Tisdale also outlines the limits of the effectiveness of
treatments and cures, even with modern medicine's store of
technology and drugs. These are often called "miracles" of modern
medicine. But from this author's perspective, with the most
serious, life-threatening, illnesses, doctors and other health-
care professionals are like sorcerer's trying to work magic on
them. They hope to bring improvement, but can never be sure what
they do will bring it about. Tisdale's intent is not to debunk
modern medicine, belittle its resources and ways, or suggest that
the medical profession holds out false hopes. Her intent is do
report on the mystery of serious illness as she has witnessed it
and from this, imagined what it is like in her varied work as a
registered nurse. She also writes from her own experiences in
being chronically ill when she was younger and the pain and
surgery going with this.
She writes, "I want to get at the reasons for the strange state of
amnesia we in the health professions find ourselves in. I want to
find clues to my weird experiences, try to sense the nature of
being sick." The amnesia of health professionals is their state of
mind from the demands placed on them all the time by patients,
employers, and society, as well as themselves, to cure illness, to
save lives, to make sick people feel better. Doctors, surgeons,
nurses, and other health-care professionals become primarily
technicians applying the wonders of modern medicine. Because of
the volume of patients, they do not get to spend much time with
any one or a few of them. It's all they can do to apply the
prescribed treatment, apply more of it if it doesn't work the
first time, and try something else if this treatment doesn't seem
to be effective. Added to this is keeping up with the new medical
studies and treatments. But Tisdale stepped out of this problem-
solving outlook, can-do, perfectionist mentality by opting to
spend most of her time in nursing homes, where she would be among
old persons she would see regularly, away from the high-charged
atmosphere of a hospital with its "many medical students,
technicians, administrators, and insurance review artists." To
stay on her "medical toes," she balanced this with working
occasional shifts in a nearby hospital. In her hospital work, she
worked in a neonatal intensive care unit (NICU), intensive care
unit (ICU), a burn center, and in a surgery room. From this
combination of work with the infirm, ill, and the latest medical
technology and procedures among highly-skilled professionals,
Tisdale learned that "being sick is the strangest of states." This
is not the lesson nearly all other health-care workers come away
with. For them, sick persons are like something that has to be
"fixed." They're focused on the practical, physical matter of
treating a malady. Unlike this author, they're not focused
consciously on the nature of pain and what the patient is
experiencing. The pragmatic, results-oriented medical profession
is focused on the effects of treatment. Tisdale brings into the
picture of health care and seriously-ill patients all of what the
medical profession in its amnesia, as she called it, overlooks.
Simply in describing what she observes, Tisdale leads those in the
medical profession as well as other interested readers to see what
they normally overlook, what they normally do not see in the
business and pressures of their work. She describes the beginning
of a hip-replacement operation, the surgeon "takes the scalpel and
cuts--the top of the hip to a third of the way down the thigh--and
cuts again through the globular yellow fat, and deeper. The
resident follows with a cautery, holding tiny spraying blood
vessels and burning them shut with an electric current. One small,
throbbing arteriole escapes, and his glasses and cheek are
splattered." One learns more about what is actually going on in an
operation from this and following passages than from seeing one of
those glimpses of operations commonly shown on TV. The author
explains the illness of meningitis, "The brain becomes swollen
with blood and tissue fluid, its entire surface layered with
pus...The pressure in the skull increases until the winding
convolutions of the brain are flattened out...The spreading
infection and pressure from the growing turbulent ocean sitting on
top of the brain cause permanent weakness and paralysis,
blindness, deafness...." This dramatic depiction of meningitis
brings together medical facts, symptoms, and effects on the
patient. Tisdale does this repeatedly to present illness and the
persons whose lives revolve around it from patients and relatives
to doctors and nurses in a light readers could never imagine, even
those who are immersed in this world.
Tisdale's main point is that the miracles of modern medicine do
not unquestionably end the miseries of illness, or even
unquestionably alleviate them. As much as they bring some relief
to ill individuals and sometimes cure illness, in many cases they
bring on other kinds of pains and sorrows. Tisdale reminds readers
that the mystery of illness does, and always will, elude the
miracle of medical technology, drugs, and practices. Part of the
mystery of the paradoxes of treatment and the elusiveness of
restored health for ill persons she focuses on is "simply the
mystery of illness. Erosion, obviously, is natural. Our bodies are
essentially entropic." This is what many persons, both among the
public and medical professionals, tend to forget. "The Sorcerer's
Apprentice" serves as a reminder that the faith and hope placed in
modern medicine need to be balanced with an awareness of the
mystery of illness which will always be a part of human life.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA.
Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine
Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog,
Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa,
Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
*** End of Transmission ***