/raid1/www/Hosts/bankrupt/TCR_Public/210923.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, September 23, 2021, Vol. 25, No. 265
Headlines
AARNA HOTELS: May Use Cash Collateral Thru Sept 28
ADVANCED TISSUE: Taps Wooley Auctioneers to Sell Equipment
ALLTECH INC: Moody's Assigns First Time B2 Corporate Family Rating
ALLTECH INC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
ALPHA ENTERTAINMENT: Ex-XFL Chief Can't Oust Depose K&L Attorney
AMERICAN SLEEP: May Use Cash Collateral Until Sept. 28
ANGEL'S SQUARE: Plan Fails to Specify Time of Payment, County Says
ARCHDIOCESE OF AGANA: $2.4M Remains from $7M Church Assets Sale
ARRAY CANADA: S&P Cuts ICR to 'SD' on Debt-for-Equity Transactions
ARRAY MIDCO: Moody's Assigns Caa1 CFR & Appends "LD" to PDR
ASTROTECH CORP: Incurs $7.6M Net Loss in Fiscal Year Ended June 30
AULT GLOBAL: Reports 4.67% Stake in BriaCell Therapeutics
AZ HEALTH: Wins Cash Collateral Access Thru Dec 15
B. AVERY SALON: Obtains Final OK on Cash Collateral Use
BANROC CORP: Case Summary & 12 Unsecured Creditors
BEZH SERVICES: Taps Perry Realty as Real Estate Broker
BIZGISTICS INC: Sept. 30 Hearing on Continued Cash Collateral Use
BL SANTA FE: Seeks to Employ Frank J. Wright as Co-Counsel
BL SANTA FE: Seeks to Employ Stretto as Administrative Advisor
BL SANTA FE: Seeks to Hire Young Conaway as Bankruptcy Co-Counsel
BONNIE TILE: Gets Court Nod on Cash Use Through Nov. 16
BOY SCOUTS OF AMERICA: Court Refuses Plan Disclosure Delay
BOY SCOUTS OF AMERICA: Court Sets Key Bankruptcy Case Hearing
BRAZOS ELECTRIC: Shearman Represents NRG Energy, 3 Others
BROOKS AUTOMATION: Moody's Puts Ba3 CFR Under Review for Downgrade
CAMBER ENERGY: Turner Stone & Co. Replaces Marcum LLP as Accountant
CANO HEALTH: Moody's Cuts CFR to B3 & Rates New Unsec. Notes Caa2
CANO HEALTH: S&P Affirms 'B' ICR, Outlook Stable
CHIP'S SOUTHINGTON: May Use Cash Collateral Until Oct. 31
COMMUNITY ECO: Obtains Final OK on Amended Invoice Purchase Deal
COMSTOCK RESOURCES: S&P Upgrades ICR to 'B+' on Increasing Scale
COTY INC: Moody's Raises CFR to B2 & Senior Secured Debt to B1
CYTODYN INC: Chairman to Present at World Antiviral Congress
EASTERN NIAGARA HOSPITAL: Patient Care Ombudsman Files 3rd Report
ELANCO ANIMAL: Moody's Cuts CFR to Ba2 & Alters Outlook to Stable
ENACT HOLDINGS: Moody's Hikes LongTerm Issuer Rating to Ba2
EXPEDIEN INC: Files for Chapter 7 Bankruptcy Protection
FANNIE MAE: Signs Letter Agreement With Treasury
FREDDIE MAC: Enters Into Letter Agreement With Treasury
FRESH ACQUISITIONS: Committee Seeks to Increase Fee Cap to $60K
FRESH ACQUISITIONS: Seeks $4.3 Million Sale to New Buyer
G & J TRANSPORTATION: Wins Cash Collateral Access Thru Oct. 31
GBG USA: Gets Court Okay to Sell Aquatalia Brand for $23 Million
GFL ENVIRONMENTAL: $250MM Notes Add-on No Impact on Moody's B1 CFR
GIRARDI & KEESE: Court Dismisses Fraud Claims Against Nano Banc
HENRY FORD VILLAGE: Facility Found Compliant at Renewal Inspection
HILTON GRAND: Fitch Affirms 'BB-' LongTerm IDR, Outlook Negative
IDEANOMICS INC: To Increase Stake in Energica Motor to 70%
IMERYS TALC: Judge Mulls Johnson & Johnson Bid to Stop Vote Changes
INNOVATIVE DESIGNS: Incurs $36K Net Loss in Quarter Ended Jan. 31
INSTAPAY FLEXIBLE: Seeks Cash Collateral Access
ION GEOPHYSIAL: Gates Capital Entities Report 11.1% Equity Stake
J&J VENTURES: $73MM Term Loan Add-on No Impact on Moody's B2 CFR
JACK OHIO: Moody's Assigns B2 CFR & Rates New $250MM Term Loan B2
JACK OHIO: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable
JOHNSON & JOHNSON: NJ Judge Won't Stop 'Texas Two-Step' Talc Suits
KBR INC: Moody's Raises CFR to Ba2 & Alters Outlook to Stable
LAJ CONSTRUCTION: May Use Cash Collateral Through Oct. 31
LATAM AIRLINES: Chapter 11 Exit Worries of Creditors Are Premature
LFS TOPCO: Fitch Assigns Final B Rating on $300MM Unsec. Notes
LIVEXLIVE MEDIA: All Proposals Passed at Annual Meeting
LPL HOLDINGS: Moody's Affirms Ba1 CFR & Alters Outlook to Positive
LRGHEALTHCARE: Unsecureds to Get Share of Liquidation Proceeds
LSF11 A5: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
LUCKIN COFFEE: Settles Class Action Suit, Seeks Plan Approval
MADU INC: Seeks 5-Week Access to Cash Collateral
MAIN STREET INVESTMENTS II: Taps McDonald Carano as New Counsel
MALLETT INC: Begins Chapter 11 Bankruptcy Process
MALLETT INC: Former Antique Dealer to Liquidate Under Chapter 11
MITCHELL INT'L: Moody's Affirms B3 CFR & Rates New Secured Debt B2
MITCHELL TOPCO: S&P Affirms 'B-' ICR on Recapitalization
MOBREWZ LLC: Gets OK to Hire David Johnston as Bankruptcy Attorney
MOUNTAINEER MERGER: Moody's Gives First Time B2 Corp Family Rating
MOUNTAINEER MERGER: S&P Assigns 'B' ICR, Outlook Stable
NESV ICE: Gets Interim Cash Access
NS8 INC: Wants to Block Ex-CEO from Insurance Coverage
PACIFIC BELLS: S&P Assigns 'B-' ICR, Outlook Stable
PADAGIS HOLDING: Fitch Affirms 'BB-' IDR, Outlook Stable
PEACE PARK: S&P Assigns Prelim BB- (sf) Rating on Class E Notes
PHILIPPINE AIRLINES: Earmarks 20.5% of Newco Shares to Unsecureds
PHILIPPINE AIRLINES: Seeks to Hire 'Ordinary Course' Professionals
PHILIPPINE AIRLINES: Sept. 30 Hearing on Plan Support Deals
RAM DISTRIBUTION: Disclosure Hearing Oct. 14; Files Amended Plan
REALOGY GROUP: Moody's Affirms B1 CFR & Hikes 2nd Lien Notes to Ba3
REDEEMED CHRISTIAN CHURCH: Taps Lorenzo Wooten as Broker
REDEEMED CHRISTIAN CHURCH: Taps Okeh & Associates as Accountant
RIVERSTREET VENTURES: Seeks Approval to Hire Novogradac Consulting
ROCKDALE MARCELLUS: Files for Chapter 11 to Find Buyer
ROCKET MORTGAGE: Moody's Rates New $1.5BB Unsecured Notes 'Ba1'
ROCKET MORTGAGE: S&P Rates New Senior Unsecured Notes 'BB+'
SAMURAI MARTIAL: May Use Cash Collateral Until Final Hearing
SEEDTREE MANAGEMENT: Oct. 12 Hearing on Disclosure Statement
SENIOR HEALTHCARE: Wins Cash Collateral Access Thru Oct 31
SEQUENTIAL BRANDS: Seeks to Hire Gibson Dunn & Crutcher as Counsel
SEQUENTIAL BRANDS: Seeks to Hire Pachulski as Co-Counsel
SEQUENTIAL BRANDS: Taps Kurtzman as Administrative Advisor
SEQUENTIAL BRANDS: Taps Miller Buckfire & Co. as Financial Advisor
SHEA HOMES: Moody's Affirms B1 CFR & Alters Outlook to Positive
SIMPLY FIT: Wins Cash Collateral Access
SOFT FINISH: Court OKs Cash Collateral Use Through Dec. 31
SPHERATURE INVESTMENTS: Court Conditionally Approves Disclosures
SRI VARI CRE: Wins Cash Collateral Access Thru Sept 28
STEM HOLDINGS: Acquires Artifact Extracts
SUMMIT FINANCIAL: Seeks Access to Cash Collateral Thru Dec. 31
SUNLIGHT RIVER: Seeks to Hire Sonoran Capital as Financial Advisor
TAP ROCK: Moody's Assigns First Time 'B2' Corporate Family Rating
TAP ROCK: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable
TAURIGA SCIENCES: David Wolitzky Quits as Director
TD HOLDINGS: Two Directors Quit From Board
TEMPUR SEALY: Fitch Rates $800MM Unsecured Notes 'BB+'
TEMPUR SEALY: Moody's Rates New Senior Unsecured 10-Yr. Notes 'Ba2'
TEMPUR SEALY: S&P Ups ICR to 'BB+' on Improved Performance
TUESDAY MORNING: Names Metcalf as Chief Merchant
TUKHI BUSINESS: Seeks to Hire Anyama Law Firm as Bankruptcy Counsel
TURNING POINT: Moody's Puts B2 CFR Under Review for Downgrade
U.S. GLOVE: May Use Cash Collateral Through November 19
VERTEX AEROSPACE: Moody's Puts B2 CFR Under Review for Downgrade
VIZIV TECHNOLOGIES: Nov. 8 Hearing on Disclosure Statement Set
WAND NEWCO 3: Moody's Lowers CFR to B3 & Alters Outlook to Stable
WASATCH RAILROAD: Seeks Interim Use of Cash Collateral
WESTMOUNT GROUP: Seeks to Hire Barron & Newburger as Legal Counsel
WORLD ACCEPTANCE: Moody's Assigns B2 CFR & Rates Unsecured Debt B3
WORLD ACCEPTANCE: S&P Rates New $300MM Unsecured Notes 'B'
[*] A&G Wins TMA Award for Work on Tuesday Morning Case
[*] Dentons' Brian E. Greer Moves to Greenberg Traurig
[*] Greenberg Traurig's Brody to Co-Chair TMA's Mid-Atlantic Summit
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
AARNA HOTELS: May Use Cash Collateral Thru Sept 28
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The U.S. Bankruptcy Court for the Western District of North
Carolina, Charlotte Division, has authorized Aarna Hotels, LLC to
use cash collateral through 11:59 p.m. on September 28, 2021, the
date of the continued hearing on the Debtor's cash collateral
motion.
The Debtor and its secured lender, M2 Charlotte Airport, LLC, have
agreed that the Debtor may continue using cash collateral through
and including the date of the continued hearing on the conditions
set forth in the First Interim Order.
A copy of the order is available for free at https://bit.ly/3EBRkIR
from PacerMonitor.com.
The September 28 hearing will be held at 9:30 a.m. in the United
States Bankruptcy Court, Charles Jonas Federal Building, JCW
Courtroom 2B, 401 West Trade Street, Charlotte, North Carolina.
About Aarna Hotels
Aarna Hotels, LLC is a limited liability company formed in 2017
under the laws of the State of North Carolina. It owns and operates
an Aloft branded hotel located at 3928 Memorial Parkway in
Charlotte, North Carolina.
Aarna Hotels sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. N.C. Case No. 21-30249) on April 29,
2021. In the petition signed by Anuj N. Mittal, manager, the Debtor
disclosed up to $50 million in both assets and liabilities.
Judge Laura T. Beyer presided over the case before Judge J. Craig
Whitley took over. Richard S. Wright, Esq., at Moon Wright &
Houston, PLLC, is the Debtor's legal counsel.
ADVANCED TISSUE: Taps Wooley Auctioneers to Sell Equipment
----------------------------------------------------------
Advanced Tissue, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Arkansas to employ Wooley Auctioneers
to conduct an online sell of its equipment.
The firm will receive a 10 percent commission to be paid as a
buyer's premium and not out of the sales proceeds.
Brad Wooley of Wooley Auctioneers 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:
Brad Wooley
Wooley Auctioneers
8504 McArthur Dr.
North Little Rock, AR 72118
Tel: (501) 868-4877
About Advanced Tissue LLC
Little Rock, Ariz.-based Advanced Tissue, LLC filed a petition for
Chapter 11 protection (Bankr. E.D. Ark. Case No. 21-12261) on Aug.
23, 2021, listing up to $10 million in assets and up to $50 million
in liabilities. Robert Betchley, chief executive officer, signed
the petition. Judge Phyllis M. Jones oversees the case. Kevin P.
Keech, Esq., at Keech Law Firm, PA is the Debtor's legal counsel.
ALLTECH INC: Moody's Assigns First Time B2 Corporate Family Rating
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Moody's Investors Service assigned first-time ratings to Alltech,
Inc. including a B2 Corporate Family Rating, a B2-PD Probability of
Default Rating, and B2 ratings on the company's proposed senior
secured credit facility consisting of a $305 million first lien A &
B revolvers due 2026, a $425 million first lien term loan A due
2026, and a $400 million term loan B due 2028. The rating outlook
is stable.
Proceeds from the $425 million first lien term loan A and the $400
million term loan B will be used to refinance existing first lien
term loan facilities and a second lien term loan facility, along
with associated transaction fees and expenses.
The rating assignments reflect elevated leverage with projected
debt-to-EBITDA of 4.6x as of the LTM period ended June 30, 2021 and
pro forma for the proposed refinancing, historically volatile free
cash flow, and exposure to the volatility of the protein and
agriculture industry cycles. The liquidity is good with
expectations to hold nominal cash on the balance sheet and good
projected free cash flow relative to required term loan
amortization, along with full capacity on an undrawn $305 million
revolving credit facility that could be used to partially fund
future acquisitions.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Alltech, Inc.
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured 1st Lien Term Loan A, Assigned B2 (LGD4)
Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD4)
Senior Secured 1st Lien Multicurrency Revolving A Credit Facility,
Assigned B2 (LGD4)
Senior Secured 1st Lien Revolving B Credit Facility, Assigned B2
(LGD4)
Outlook Actions:
Issuer: Alltech, Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
Alltech, Inc.'s B2 Corporate Family Rating reflects the company's
leading position in the very specialized and fragmented animal feed
specialty ingredients industry, very strong customer and geographic
diversification, and good liquidity. Offsetting these factors are
the company's high financial leverage with Moody's adjusted
debt/EBITDA of 4.6x as of the LTM period ended June 30, 2021 and
pro forma for the proposed refinancing, historically volatile free
cash flow, and exposure to the volatility of the protein and
agriculture industry cycles. Moody's projects debt-to-EBTIDA will
decline to a mid 4x range over the next 12-to-18 months due to debt
amortization.
Alltech's science based proprietary technology allows the company
to provide unique sustainable feed solutions for farmers. The
company does not sell anti-biotic medicated specialty feed
ingredients and is one of the largest non-pharmaceutical animal
health companies in the world. As such, current societal trends of
improved animal welfare and reduced environmental impact are a
strong tailwind. Offsetting this tailwind is the company's
susceptibility to end market farmer conditions. In a weak economic
environment for farmers, the company could see a decline in
revenues and EBITDA as its customers may forego or reduce the use
of Alltech's higher margin specialty ingredients products.
Alltech's specialty ingredients business represents approximately
37% of its overall revenues and 60% of its EBITDA. Considering the
large portion of its EBITDA that is derived from the specialty
ingredients business, an economic downtown for farmers could have a
negative impact on the company's revenue, cash flow and credit
metrics.
Moody's expects that Alltech, Inc. will operate with good
liquidity. This incorporates the rating agency's estimate of $42
million of pro-forma cash, approximately $90 million in annual
projected free cash flow in Fiscal 2022, full capacity on the
undrawn $305 million revolver, and no meaningful debt maturities
through 2026. The cash sources provide ample resources for the
$20.25 million of required annual amortization, reinvestment needs
and potential acquisitions.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, there is uncertainty
around Moody's forecasts. Moody's regards the coronavirus outbreak
as a social risk under its ESG framework, given the substantial
implications for public health and safety. Notwithstanding, Alltech
and many other protein & agriculture companies are likely to be
more resilient than companies in other sectors, although some
volatility can be expected through 2022 due to uncertain demand
characteristics, channel shifting, and the potential for supply
chain disruptions and difficult comparisons following these
shifts.
Governance risk includes Alltech's financial strategies, which
Moody's views as aggressive given its high financial leverage,
strategic capital partnership with investment company Temasek and
private equity firm LittleJohn, and focus on growth through
acquisitions that can lead to increased debt and integration
risks.
Environmental considerations are not material direct considerations
in the rating. However, the company's protein and agricultural
customers are subject to meaningful environmental considerations
including land and water usage. Demand for Alltech's products could
be adversely affected if environmental considerations negatively
affect customer demand and profitability.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that Alltech will
continue to grow its revenues in low single digit range, apply free
cash flow to debt reduction, and consistently generate annual
positive free cash flow of at least $20 million.
The ratings could be upgraded if organic growth is consistently
positive, the company generates consistent and comfortably positive
free cash flow, maintains good liquidity, and Moody's adjusted debt
to EBITDA is sustained below 4.0x. Alternatively, ratings could be
downgraded if EBITDA declines, free cash flow is low or negative,
liquidity deteriorates, or Moody's adjusted debt-to-EBTIDA is
sustained above 5.0x.
The proposed first lien credit agreement is expected to provide
covenant flexibility that could negatively affect creditors,
including the following:
Provisions for incremental debt capacity in an amount up to the sum
of: the greater of $200 million and 100% of trailing four quarter
consolidated EBITDA, and such other amounts subject to a pro forma
Consolidated Lien Leverage Ratio not to exceed 4.0x (if pari passu
secured).
No portion of the incremental may be incurred with an earlier
maturity than the initial term loans.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
Subsidiaries must provide guarantees whether or not wholly-owned,
eliminating the risk that guarantees will be released because they
cease to be wholly-owned.
There are no express protective provisions prohibiting an
up-tiering transaction.
The proposed terms and the final terms of the credit agreement may
be materially different.
The principal methodology used in these ratings was Protein and
Agriculture published in May 2019.
Headquartered in Nicholasville, Kentucky, Alltech, Inc. is a
manufacturer and distributor of animal feed and specilty
ingredients used primarily in the production of animal proteins and
products (i.e beef, poultry, dairy, pork, etc.). Alltech is
privately held by the Lyons family. Revenue for the 12 months ended
June 30, 2021 was approximately $1.8 billion.
ALLTECH INC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to feed
and specialty ingredients manufacturer Alltech Inc. S&P has also
assigned its 'B' issue-level and '3' recovery ratings to the
company's proposed senior secured credit facility.
The stable outlook reflects S&P's expectation for EBITDA growth of
8%-9% driven by higher volumes in its higher-margin specialty
ingredients segment, as well as a modest reduction in leverage
closer to 5x over the next year.
The ratings reflect the company's still-high leverage and our
expectation that operating performance will improve after Alltech
rationalizes costs over the past two years following industry
downturn. Alltech remains highly leveraged with a pro forma
leverage of 5.7x. The company's debt balances remain elevated
following a series of debt-financed mergers and acquisitions prior
to an industry downturn in 2019, from which it has now largely
restructured. In fact, the company's 2020 S&P Global
Ratings-adjusted EBITDA margin was about 11%, which recovered from
its trough of 6.5% in 2019. Over the past two years, Alltech has
rationalized and optimized its cost base by decreasing selling,
general, and administrative costs by almost 14%. S&P believes that
in addition to a leaner cost structure, the outlook and demand
trends for specialty ingredients have improved because China has
increased its production of swine herds, and American farmers are
benefiting from higher domestic pork and chicken prices. Alltech
will likely also benefit from continued growth in its higher-margin
specialty ingredients business as volumes increase from new product
launches. S&P forecasts that this will result in top-line growth of
about 8%-9% in 2021 and 3%-3.5% in 2022, as well as EBITDA growth
of about 8%-10% over the next 12-18 months.
Improving free operating cash flow (FOCF) will enable Alltech to
repay debt and reduce leverage closer to 5x. S&P said, "We expect
capital expenditure (capex) of about $50 million-$55 million (about
3% of sales) over the next two years focused on facility upgrades,
efficiency, and growth projects, along with regular maintenance
requirements of about 1% of sales. We expect working capital to be
a large use of cash in 2021 as all regions continue to experience
shipping and transportation delays, which has caused Alltech to
carry excess inventory for key raw materials and products. Still,
given the EBITDA growth, we expect FOCF of about $30 million in
2021, improving to more than $90 million in 2022 as COVID-19
pandemic-related inventory build decreases with fewer supply chain
constraints."
This should enable Alltech to prioritize debt repayment,
particularly its 15% payment-in-kind preferred shares, which will
become redeemable by May 2023. Given the terms of the preferred
shares S&P treats them as 100% debt. S&P believes the preferred
shares will likely get refinanced with lower cost debt once they're
redeemable, given that operating performance has stabilized. This
will lead to adjusted leverage remaining in the 5x area over the
next few years. Specifically, leverage will be about 5.7x for pro
forma 2021 (4.6x when excluding the preferred shares), declining to
about 5.3x (4.2x without the preferred shares) by year-end 2022.
S&P said, "Our ratings also reflect the company's narrow product
focus in niches that command premium pricing and generate higher
margins than its competitors. Alltech's specialty ingredients
business generates more than half of the company's EBITDA because
of the premium pricing of its specialized products. The feed
segment, which has grown rapidly over the past several years,
manufactures feed formulations that are highly customized to each
end user's specifications. Given this degree of specialization, the
company's margins have improved to the 8%-11% range, up from the
6%-8% range the company experienced in 2018 and 2019 because of
higher commodity input costs. The favorable margins are in part due
to growing demand for all-natural, organic, and antibiotic-free
food, along with general concerns about animal welfare, public
health, and environmental impacts. We believe Alltech's research
and development (R&D) capabilities, coupled with its long-term
customer relationships, are competitive advantages that partially
offset its narrow product focus."
Alltech benefits from favorable global demand for feed and
specialty ingredients, but it remains a niche player competing
against larger peers. The company operates in the animal nutrition
ingredients and feed markets, which have favorable growth
prospects. According to Mordor Intelligence (data provided by the
company), the global nutritional ingredients market totaled about
$30 billion in market revenue in 2020, and it is expected to reach
about $40 billion by 2025. These favorable growth trends are
bolstered by population growth, rising protein consumption and
regulatory, sustainability, and technology advancements in food
consumption. Alltech's products add nutritional value naturally,
which is a favorable selling point for protein producers, and they
are supported by demand for all-natural, organic, and
antibiotic-free food. Alltech's R&D (about 1% of revenues)
capabilities develop products with high benefits for the animal
with an overall lower percent of cost to the farmer resulting in
stickier customer relationships. Its product portfolio should also
allow it to leverage the favorable industry growth outlook and
improve its product mix within the geographies it serves into
higher-margin specialty ingredients and sustain margins of greater
than 10%. Still, despite its good niche position within the
specialty ingredients business, Alltech remains a niche player that
competes with peers that have much larger scale and financial
flexibility. Cargill Inc. and Land O'Lakes Inc. both have greater
scale, which could be leveraged for growth on the higher-margin
specialty ingredients side of the business through acquisitions
such as Cargill's acquisition of Diamond V in 2017. Therefore, S&P
believes Alltech may face pricing and margin pressure in
less-favorable market conditions.
S&P said, "The stable outlook reflects our expectation for
sustained EBITDA margins in the 11% area and good cash flow
generation. We also expect modest leverage reduction to closer to
5x over the next year from EBITDA growth of 8%-9% on higher volumes
in its higher-margin specialty ingredients segment."
S&P could consider lowering the ratings if Alltech sustains debt to
EBITDA above 6.5x. This could result from either of the following:
-- The company experiences a significant increase in its commodity
costs, specialty ingredients margin contraction, or unforeseen
supply chain disruption. S&P estimates that if any of these events
occur, it could lead to a gross margin contraction of more than 300
basis points, resulting in debt to EBITDA of above 6.5x.
-- Alltech raises more debt for either a large acquisition or
shareholder returns, increasing debt to EBITDA to over 6.5x.
S&P could consider raising the ratings if Alltech sustains leverage
below 5x, improves FOCF generation to above $100 million, and
sustainably strengthens financial performance. A higher rating
would also be predicated on the company's commitment to manage
leverage below 5x. This could occur if Alltech uses discretionary
cash flow to repay debt and does not pursue additional
debt-financed acquisitions.
ALPHA ENTERTAINMENT: Ex-XFL Chief Can't Oust Depose K&L Attorney
----------------------------------------------------------------
Rachel Scharf of Law360 reports that the former XFL Commissioner
Oliver Luck cannot depose the K&L Gates LLP partner whose
investigation allegedly convinced the league to fire him, a
Connecticut federal judge said Friday, September 17, 2021, in an
order hinting at forthcoming sanctions against Luck for supposedly
destroying evidence.
The findings came in a 74-page opinion from U.S. District Judge
Victor A. Bolden weighing a number of discovery spats in Luck's $24
million lawsuit, which alleges the XFL's former parent company
Alpha Entertainment LLC and founder Vince McMahon terminated him
without cause when the football league filed for bankruptcy in
Delaware in April 2020.
About Alpha Entertainment
Alpha Entertainment LLC, which does business as the "Xtreme
Football League" -- https://www.alphaentllc.com/ -- is a
professional American football league. The XFL kicked off with
games beginning in February 2020. The XFL offered fast-paced,
three-hour games with fewer play stoppages and simpler rules. The
XFL featured eight teams, 46-man active rosters, and a 10-week
regular season schedule, with a postseason consisting of two
semifinal playoff games and a championship game. The eight XFL
teams were the DC Defenders, the Dallas Renegades, the Houston
Roughnecks, the Los Angeles Wildcats, the New York Guardians, the
St. Louis BattleHawks, the Seattle Dragons, and the Tampa Bay
Vipers.
Alpha Entertainment, based in Stamford, CT, filed a Chapter 11
petition (Bankr. D. Del. Case No. 20-10940) on April 13, 2020. The
Hon. Laurie Selber Silverstein oversees the case. In its petition,
the Debtor was estimated to have $10 million to $50 million in both
assets and liabilities. The petition was signed by John Brecker,
independent manager.
The Debtor hired Young Conaway Stargatt & Taylor, LLP as counsel.
Donlin Recano & Company, Inc., is the claims agent and
administrative advisor.
AMERICAN SLEEP: May Use Cash Collateral Until Sept. 28
------------------------------------------------------
Judge Charles M. Walker of the U.S. Bankruptcy Court for the Middle
District of Tennessee authorized American Sleep Medicine, LLC to
use cash collateral to fund employee payroll and benefits expenses
due after the Petition Date. The Debtor is also authorized to use
up to $1,500 of cash collateral to pay, in the ordinary course of
business, other postpetition legitimate business expenses.
The Debtor's authority expires at 11:59 p.m. on September 28,
2021.
Lender, ServisFirst Bank, holds a validly perfected security
interest in all of the Debtor's assets on account of loans extended
to the Debtor aggregating $2,134,369 in principal balance,
including a loan under the Paycheck Protection Program for which
the Debtor is to seek forgiveness.
The Lender is granted a first priority replacement lien and
security interest on all assets of the Debtor. The Lender is also
granted an administrative priority claim to the extent the liens
and security interests granted prove
insufficient to secure any diminution in value of the Lender's
interest in its collateral.
A copy of the order is available for free at https://bit.ly/3AoveH4
from PacerMonitor.com.
About American Sleep Medicine LLC
American Sleep Medicine, LLC filed a petition for Chapter 11
protection (Bankr. M.D. Tenn. Case No. 21-02741) on Sept. 8, 2021,
listing up to $50,000 in assets and up to $500,000 in liabilities.
Jerry Lauch, president of American Sleep Medicine, signed the
petition. Judge Charles M. Walker oversees the case. Steven L.
Lefkovitz, Esq., at Lefkovitz and Lefkovitz is the Debtor's legal
counsel.
ANGEL'S SQUARE: Plan Fails to Specify Time of Payment, County Says
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Broward County, a political subdivision of the State of Florida,
objects to the Angel's Square, Inc.'s Chapter 11 Plan and
Disclosure Statement to the extent that the Plan fails to specify a
definite time for payment of the County's claim for property
taxes.
The County points out that the Plan includes reference to payment
of the County's claims but does not state a time for payment.
The County asserts that the Plan does not stipulate the time that
the County will receive the escrow funds being held nor when the
remaining balance of approximately $73,992 will be paid to the
County.
According to the County, since August 3, 2021, the County's counsel
has exchanged several emails and a phone call with the Debtor's
counsel, who provided assurances that the Plan would be amended to
provide that the County would be paid upon the Plan's effective
date. The Plan has not yet been amended, and tomorrow is the
deadline for objections, at least to the Disclosure Statement.
The County can be reached at:
Scott Andron
Assistant County Attorney
sandron@broward.org
About Angel's Square
Fort Lauderdale, Fla.-based Angel's Square, Inc., is a single asset
real estate debtor (as defined in 11 U.S.C. Section 101(51B)).
Angel's Square sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. S.D. Fla. Case No. 21-13576) on April 15, 2021.
Fernando D. Gill, registered agent, signed the petition. In its
petition, the Debtor disclosed total assets of up to $10 million
and total liabilities of up to $1 million. Judge Peter D. Russin
oversees the case. Behar Gutt & Glazer, P.A. is the Debtor's legal
counsel.
ARCHDIOCESE OF AGANA: $2.4M Remains from $7M Church Assets Sale
---------------------------------------------------------------
Haidee Eugenio Gilbert, writing for The Guam Daily Post, reports
that just $2.4 million remains of the $7.03 million in net proceeds
from the sale of the Archdiocese of Agana's two major real estate
properties that were supposed to go toward paying clergy sex abuse
claims, a financial report that Archbishop Michael Jude Byrnes
released shows.
Of the $7 million net proceeds of the sale, more than $4 million
has been used to pay legal fees in the archdiocese's ongoing
bankruptcy case as of June 30.
There are more legal fees that the archdiocese is ordered to pay
under the bankruptcy case, including those that a federal judge
recently approved.
Other sources of funding for the payouts to nearly 300 Guam clergy
sex abuse claimants are insurance companies and contributions from
Catholic parishes and others, but the archdiocese has yet to
present a payment plan to the court.
About Agana Archdiocese
Roman Catholic Archdiocese of Agana is an ecclesiastical territory
or diocese of the Catholic Church in the United States that
comprises the United States dependency of Guam.
Roman Catholic Archdiocese of Agana sought Chapter 11 protection
(Bankr. D. Guam Case No. 19- 00001) on Jan. 9, 2019. In the
petition signed by Most Rev. Michael Jude Byrnes, Coadjutor
Archbishop of Agana, it listed $22.96 million in assets, with
$45.66 million in liabilities. The case is handled by Honorable
Judge Frances M Tydingco-Gatewood. Edwin H. Caldie, of Stinson
Leonard Street LLP, is the Debtor's counsel.
ARRAY CANADA: S&P Cuts ICR to 'SD' on Debt-for-Equity Transactions
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S&P Global Ratings lowered its issuer credit rating on
Toronto-based Array Canada Inc. to 'SD' (selective default) from
'CCC'.
S&P lowered its issue-level rating on the Array's term loan and
cash flow revolver to 'D' (default) from 'CCC'.
S&P will reassess its ratings on Array once it has reviewed the
company's new capital structure, liquidity position and business
prospects in the coming days.
The downgrade follows the completion of a debt-for-equity exchange
with 100% of Array's first-lien (term loan and revolving facility)
lenders that we view as distressed and tantamount to default as per
S&P Global Ratings' criteria. This debt-for-equity exchange has
reduced the company's debt by more than 50%. S&P views these
transactions as providing less than the promise of the original
securities and the junior ranking of the common equity being
offered relative to the first-lien secured debt.
S&P views the transactions as distressed because the 'CCC' issuer
credit rating on Array before the exchanges indicated, in its
opinion, a possibility of specific default scenarios including but
not limited to a liquidity crisis or a distressed debt exchange.
The company has already executed on its new US$174 million term
loan and plans to enter into a new approx. US$35 million
asset-based lending facility. S&P is reviewing the company's new
capital structure, which could include new sponsor equity, and will
assess our ratings on Array in the coming days.
Array provides in-store marketing services for retailers and brand
manufacturers in the beauty and cosmetics space. It offers
merchandising solutions including counter units, environments,
fixtures, floor stands, and open service presentations. The company
provides end-to-end retail display solutions for its customers,
including design, production, distribution, installation, and
aftermarket care. In addition, it offers global manufacturing
solutions in acrylics, injection molding, vacuum forming, metal,
solid surfaces, wood, LED lighting, and wire mediums.
ARRAY MIDCO: Moody's Assigns Caa1 CFR & Appends "LD" to PDR
-----------------------------------------------------------
Moody's Investors Service has assigned ratings to Array Midco,
Corp., consisting of a Caa1 Corporate Family Rating, a Caa1-PD/LD
probability of default rating, and Caa1 ratings to its senior
secured credit facilities. The outlook is positive. At the same
time, Moody's has withdrawn all ratings and the outlook on Array
Canada Marketing, Inc.
The assignment of ratings to Array Midco, Corp. is the result of a
recapitalization transaction at Array Canada Marketing, Inc., which
closed on September 17, 2021. As part of the transaction, holders
of Array Canada Marketing, Inc.'s term loans exchanged
approximately $330 million in principle outstanding for a blend of
equity and around $147 of new debt in the form of a term loan B
issued at Array Midco, Corp. At the same time the company issued a
new $27 term loan A, with both debts maturing in 2026. Moody's
views this transaction as a distressed exchange and appended
Array's PDR with an "/LD" designation to indicate a limited
default, which will be removed after approximately three business
days.
The positive outlook reflects the significant reduction in Array's
level debt of following the recapitalization transaction, which
combined with modest EBITDA growth should lead to improving credit
metrics over the next 12-18 months. Moody's expects recovering
traffic at beauty retailers will lead to renewed investment on
in-store displays that were curtailed during the coronavirus
pandemic.
Array's Caa1 CFR is the same as Array Canada Marketing, Inc.'s Caa1
CFR because of the uncertainty around the pace recovery in spending
from Array's core customers in the retail cosmetic industry. If the
recovery is slower than expected, it could delay Array's path to
improved credit metrics. Additionally, while Array's internal
sources of liquidity are stronger post recapitalization, the pace
of recovery could also necessitate that Array increase its
investments in working capital, leading to negative free cash flow
for longer than expected.
Assignments:
Issuer: Array Midco, Corp.
Corporate Family Rating, Assigned Caa1
Probability of Default Rating, Assigned Caa1-PD /LD
Senior Secured Term Loan A, Assigned Caa1 (LGD3)
Senior Secured Term Loan B, Assigned Caa1 (LGD3)
Withdrawals:
Issuer: Array Canada Marketing Inc.
Corporate Family Rating, Withdrawn , previously rated Caa1
Probability of Default Rating, Withdrawn , previously rated
Caa1-PD
Senior Secured Bank Credit Facility, Withdrawn , previously rated
Caa1 (LGD3)
Outlook Actions:
Issuer: Array Midco, Corp.
Outlook, Assigned Positive
Issuer: Array Canada Marketing Inc.
Outlook, Changed To Rating Withdrawn From Negative
RATINGS RATIONALE
Array's credit profile (Caa1 CFR) is constrained by: 1) the
company's very small scale, with revenues of less than $250 million
expected in 2021; 2) concentration risks stemming from its narrow
focus on the cosmetics industry; and 3) aggressive financial
policies as a result of it being privately owned by a group that
includes former lenders and the former private equity sponsor,
highlighted by the company's recent distressed exchange. The
company's credit profile benefits from: 1) its good market position
and long-standing relationships with key customers in the cosmetics
industry; 2) its good geographic diversity with operations in North
America, Europe and Asia; and 3) improving global retail
environment that should support modest revenue growth and
improvements in credit metrics over the next 12-18 months.
Array is exposed to governance risk through its ownership by a
group of former lenders that Moody's expects will employ aggressive
financial policies. These aggressive financial policies are
highlighted by the company's recapitalization transaction September
2021, which Moody's views as a distressed exchange.
Array has adequate liquidity. Sources of liquidity are around $53
million over the next four quarters versus uses of around $1.5
million. Moody's expect the company will generate around break even
cash flow over the next four quarters. Sources are comprised of
around $38 million internal cash (around $45 million on balance
sheet expected at the close of the recapitalization less around $5
million in cash Moody's believe Array requires to operate the
business and around $1.5 million required to support the
receivables facility) and availability of around $15 million under
its $30 million receivables credit facility (subject to certain
limitations such as maintaining restricted cash on balance sheet in
the amount of 10% of the amount drawn). Uses of free cash flow are
comprised of term loan amortization of around $1.5 million over the
next 4 quarters. Array has limited ability to generate liquidity
from asset sales.
Array's first lien credit facilities have a first priority lien on
all assets, and are rated Caa1, which is the same level as the
corporate family rating (CFR) since they make up the bulk of the
company's debt capital structure.
Array Canada Marketing Inc., headquartered in Toronto, Ontario, is
a designer, manufacturer and distributor of retail merchandising
displays and fixtures for mass market and high-end cosmetics brands
and retailers. The company has operations in North America, Europe
and Asia. Array is majority-owned and controlled by a group of
lenders, with private equity firm The Carlyle Group's ownership
diluted to around 17% post recapitalization transaction.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Array showed a material
improvement in its liquidity profile driven by sequential positive
free cash flow generation, if it showed sequential EBITDA growth in
an improving industry environment, and it if sustained EBIT to
interest sustained above 1x (around 0.7x expected in 2022). The
ratings could be downgraded if Array's liquidity profile
deteriorated as a result of sustained negative free cash flow or
through distributions to its owners, or if it sustained EBIT to
interest below 0.5x.
The principal methodology used in these ratings was Consumer
Durables published in September 2021.
ASTROTECH CORP: Incurs $7.6M Net Loss in Fiscal Year Ended June 30
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Astrotech Corporation filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$7.60 million on $344,000 of revenue for the year ended June 30,
2021, compared to a net loss of $8.31 million on $488,000 of
revenue for the year ended June 30, 2020.
As of June 30, 2021, the company had $65.63 million in total
assets, $4.43 million in total liabilities, and $61.21 million in
total stockholders' equity.
Astrotech's annual report on Form 10-K for the fiscal year ended
June 30, 2020 indicated substantial doubt as to its ability to
continue as a going concern. During the fiscal year 2021, the
company successfully completed several public offerings of its
common stock, raising net proceeds of approximately $67.6 million.
"We believe this solves our liquidity issue, and we no longer have
substantial doubt about our ability to continue as a going concern.
We will continue to evaluate opportunities to further strengthen
our liquidity, including selling the company or a portion thereof,
licensing some of our technology, raising additional funds through
the capital markets, debt financing, equity financing, merging, or
engaging in a strategic partnership," Astrotech stated in the SEC
filing.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/Archives/edgar/data/1001907/000156459021048370/astc-10k_20210630.htm
About Astrotech
Astrotech (NASDAQ: ASTC) -- http://www.astrotechcorp.com-- is a
science and technology development and commercialization company
that launches, manages, and builds scalable companies based on
innovative technology in order to maximize shareholder value. 1st
Detect develops, manufactures, and sells trace detectors for use in
the security and detection market. AgLAB is developing chemical
analyzers for use in the agriculture market. BreathTech is
developing a breath analysis tool to provide early detection of
lung diseases. Astrotech is headquartered in Austin, Texas.
AULT GLOBAL: Reports 4.67% Stake in BriaCell Therapeutics
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Ault Global Holdings, Inc. disclosed in an amended Schedule 13D
filed with the Securities and Exchange Commission that as of Sept.
16, 2021, it beneficially owns 715,000 shares of common stock of
BriaCell Therapeutics Corp., which represents (i) 675,000 common
shares held by Digital Power Lending, LLC and (ii) 40,000 common
shares underlying current exercisable warrants held by Digital
Power Lending, LLC.
The shares represent 4.67% based upon 15,269,583 shares
outstanding, which is the total number of shares outstanding as of
Sept. 8, 2021, as reported in a press release from BriaCell filed
with the SEC on Sept. 9, 2021.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/896493/000121465921009658/p92212sc13da1.htm
About Ault Global Holdings
Ault Global Holdings, Inc. (fka DPW Holdings, Inc.) is a
diversified holding company pursuing growth by acquiring
undervalued businesses and disruptive technologies with a global
impact. Through its wholly and majority-owned subsidiaries and
strategic investments, the Company provides mission-critical
products that support a diverse range of industries, including
defense/aerospace, industrial, telecommunications, medical, and
textiles. In addition, the Company extends credit to select
entrepreneurial businesses through a licensed lending subsidiary.
Ault Global reported a net loss of $32.73 million for the year
ended Dec. 31, 2020, compared to a net loss of $32.94 million for
the year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$259.10 million in total assets, $27.71 million in total
liabilities, and $231.39 million in total stockholders' equity.
AZ HEALTH: Wins Cash Collateral Access Thru Dec 15
--------------------------------------------------
The U.S. Bankruptcy Court for the District of Arizona has entered a
stipulated order authorizing AZ Health Partners, PLLC to use cash
collateral and provide adequate protection through December 15,
2021.
The Debtor and Citizens Bank have entered into the Stipulated Order
to (i) preserve the value of the estates' assets; and (ii) avoid
protracted and costly litigation over cash collateral the amount of
adequate protection to be paid to Citizens and to provide for the
lifting of the automatic stay in the event that the Debtor defaults
on its obligations set forth in the Order.
On February 22, 2019, Citizens Bank loaned the Debtor $656,800.
Contemporaneously, the Debtor executed a Security Agreement
conveying a security interest in all of its assets to Citizens
Bank.
As of the Petition Date, the balance due and owing to Citizens is
$538,032.
The Debtor defaulted under the terms of the Note and the Security
Agreement by failing to make required payments due in August and
September of 2021.
The Debtor use approximately $75,000 of Citizens' cash collateral
postpetition without either permission from Citizens or authority
from the Court.
The Debtor will be permitted to continue to collect all of the
monies paid to it from any source until the confirmation of a
Chapter 11 Plan or the dismissal of the case and may use those
funds each month only to make the payments for the purposes and in
the amounts set forth in the Cash Collateral Budget.
As adequate protection of Citizens' interest in its cash collateral
and all of the other property in which it holds liens, the Debtor
will pay to Citizens:
$4,500 on September 15, 2021,
$5,000 on October 15, and
$5,500 on November 15.
As further adequate protection of Citizens' interest, the Debtor
grants a replacement lien on any and all receivable, cash and other
assets created or acquired after the Petition Date.
A copy of the order and the Debtor's budget for the first 60 days
is available at https://bit.ly/3hSGWT8 from PacerMonitor.com.
The Debtor projects $80,000 in total ADV collections and $74,722.53
in total expenses.
About AZ Health Partners, PLLC
AZ Health Partners, PLLC, d/b/a Arizona Spine Disc and Sport, is in
the business of chiropractic care. The company filed a Chapter 11
petition (Bankr. D. Ariz. Case No. 21-05142) on July 1, 2021.
On the Petition Date, the Debtor estimated $1,000,000 to
$10,000,000 in assets and $500,000 to $1,000,000 in liabilities.
The petition was signed by Eric Breure, manager.
Judge Daniel P. Collins is assigned to the case. Brown &
Associates PLLC serves as the Debtor's counsel.
Citizens Bank, as lender, is represented by:
Christopher R. Kaup, Esq.
Seventh Floor, Camelback Esplanade II
2525 East Camelback Road
Phoenix, AZ 85016
E-Mail: crk@tblaw.com
B. AVERY SALON: Obtains Final OK on Cash Collateral Use
-------------------------------------------------------
Judge Ronald B. King of the U.S. Bankruptcy Court for the Western
District of Texas authorized B. Avery Salon & Barbershop, LLC, on a
final basis, to use cash collateral in the ordinary course of
business, pursuant to the budget, from entry of the final order
through and including the earlier of (i) six months and (ii) the
date of Plan confirmation.
As adequate protection for any postpetition diminution in the value
of the prepetition collateral, Square Capital, LLC and The LCF
Group are granted postpetition replacement lien on all property
presently securing the claim, together with any postpetition
proceeds thereof.
Square Capital asserts a claim against the Debtor for $10,833 as of
the Petition Date, secured by a first-priority blanket lien on all
of the Debtor's assets in Bexar. The LCF Group asserts a secured
claim against the Debtor for $15,804 as of the Petition Date,
secured by a second lien on the prepetition collateral. LCF is
undersecured by an estimated $10,592.
As further adequate protection, the Debtor will pay Square Capital
$800 monthly, and LCF $200 monthly, on or before the 25th day of
each month to be applied to principal reduction.
HFH Capital also asserts a secured claim against the Debtor for
$52,941, but is wholly undersecured on account of its third
priority lien. HFH is not treated to adequate protection
measures.
A copy of the final order is available for free at
https://bit.ly/3tVEbW3 from PacerMonitor.com.
About B. Avery Salon
B. Avery Salon & Barbershop, LLC filed a Chapter 11 petition
(Bankr. W.D. Texas Case No. 21-50924) on July 28, 2021. At the time
of the filing, the Debtor listed as much as $50,000 in assets and
as much as $500,000 in liabilities. Benjamin Avery Pineda, owner,
signed the petition. Judge Ronald B. King oversees the case. Heidi
McLeod Law Office, PLLC serves as the Debtor's legal counsel.
BANROC CORP: Case Summary & 12 Unsecured Creditors
--------------------------------------------------
Debtor: Banroc Corp
d/b/a Solara Homes
103 Glades Boulevard
Unit No. 103
Naples, FL 34112
Business Description: Banroc Corp is in the real estate business.
Chapter 11 Petition Date: September 22, 2021
Court: United States Bankruptcy Court
Middle District of Florida
Case No.: 21-01258
Debtor's Counsel: Mike Dal Lago, Esq.
DAL LAGO LAW
999 Vanderbilt Beach Rd. Suite 200
Naples, FL 34108
Tel: 239-571-6877
E-mail: mike@dallagolaw.com
Total Assets: $2,925,000
Total Liabilities: $4,261,913
The petition was signed by Roland H. Bandinel as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's 12 unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/VOWYK7I/Banroc_Corp_dba_Solara_Homes__flmbke-21-01258__0001.0.pdf?mcid=tGE4TAMA
BEZH SERVICES: Taps Perry Realty as Real Estate Broker
------------------------------------------------------
Bezh Services, LLC and Menucha Enterprises, LLC seek approval from
the U.S. Bankruptcy Court for the District of Colorado to hire
Perry Realty & Associate, a Centennial, Colo.-based real estate
broker.
The Debtors require a real estate broker to market and sell their
properties located at (i) 12285 East 50th Ave., Denver; (ii) 625
North Pennsylvania St., Suite 406, Denver; and (iii) 1306 South
Parker Road, Suite 264, Denver.
Perry Realty & Associate will receive a 5.6 percent commission on
the gross purchase price of the properties, of which 2.8 percent
will be paid to the buyer's agent or a transaction broker. In the
event the East 50th property is sold to a buyer procured by the
Debtor or the firm, the commission paid to the firm for such
property will be reduced to 5 percent of the gross purchase price.
Perry Friedentag of Perry Realty & Associate disclosed in a court
filing that he is a "disinterested person" as the term is defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Perry Friedentag
Perry Realty & Associate
5597 S. Mobile Street
Centennial, CO 80015
Telephone: (303) 523-3568
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.
BIZGISTICS INC: Sept. 30 Hearing on Continued Cash Collateral Use
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida has
authorized Bizgistics, Inc. to use cash collateral on an interim
basis pending a further hearing scheduled for September 30, 2021 at
1:30 p.m.
The Debtor is authorized to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including payments to the US
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 ReadyCap Lending, LLC.
The Court says ReadyCap will have 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 maintain insurance coverage for its property in
accordance with the obligations under the loan and security
documents with ReadyCap and FedEx.
A copy of the order and the Debtor's four-week budget from
September 23 to October 4, 2021 is available for free at
https://bit.ly/3hRiem9 from PacerMonitor.com.
The Debtor projects $40,478 in available income and $39,169 in
total expenses for the fourth week.
About Bizgistics, Inc.
Bizgistics, Inc. provides freight transportation arrangement
services. The company sought Chapter 11 protection (Bankr. M.D.
Fla. Case No. 21-02197) on September 12, 2021. In the Petition
signed by Darrell Giles, chief executive officer/director, the
Debtor estimated $1 million to $10 million in both assets and
liabilities.
Judge Roberta A. Colton oversees the case.
Underwood Murray, P.A. is the Debtor's counsel.
BL SANTA FE: Seeks to Employ Frank J. Wright as Co-Counsel
----------------------------------------------------------
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC seek approval from
the U.S. Bankruptcy Court for the District of Delaware to hire the
Law Offices of Frank J. Wright, PLLC as bankruptcy co-counsel with
Young Conaway Stargatt & Taylor, LLP.
The firm's services include:
(a) advising the Debtors with respect to their powers and
duties in the continued management and operation of their business
and property;
(b) assisting in the preparation of a Chapter 11 plan of
reorganization and disclosure statement;
(c) taking all necessary actions to protect and preserve the
Debtors' estates during the pendency of their Chapter 11 cases,
including prosecution of actions by the Debtors, the defense of any
action commenced against the Debtors, and negotiations concerning
litigation in which the Debtors are involved;
(d) providing legal advice regarding any bankruptcy plan filed
in the Debtors' cases and with respect to the process for
confirming the plan; and
(e) performing other necessary legal services.
The firm's hourly rates are as follows:
Frank J. Wright, Esq. $900 per hour
Jeffery M. Veteto, Esq. $550 per hour
Frank Wright, Esq., one of the attorneys who will be representing
the Debtors, disclosed in a court filing that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Frank J. Wright, Esq.
Jeffery M. Veteto, Esq.
Law Offices of Frank J. Wright, PLLC
2323 Ross Avenue, Suite 730
Dallas, TX 75201
Telephone: (214) 935-9100
Emails: frank@fjwright.law
jeff@fjwright.law
About BL Santa Fe
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC own and operate
Bishop's Lodge, a luxury resort located at 1297 Bishops Lodge Road,
Santa Fe, N.M.
The Debtors filed a petition for Chapter 11 protection (Bankr. D.
Del. Lead Case No. 21-11190) on Aug. 30, 2021, listing $50 million
to $100 million in both assets and liabilities. Judge Craig T.
Goldblatt oversees the cases.
The Law Offices of Frank J. Wright, PLLC and Young Conaway Stargatt
& Taylor, LLP represent the Debtors as legal counsel. Stretto
serves as the Debtors' claims and noticing agent and administrative
advisor.
BL SANTA FE: Seeks to Employ Stretto as Administrative Advisor
--------------------------------------------------------------
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC seek approval from
the U.S. Bankruptcy Court for the District of Delaware to hire
Stretto, Inc. as administrative advisor.
The firm's services include:
(a) if applicable, assisting in the preparation of the
Debtors' schedules of assets and liabilities, schedules of
executory contracts and unexpired leases, and statements of
financial affairs;
(b) assisting in the solicitation, balloting and tabulation of
votes, and preparing any appropriate reports in support of
confirmation of a Chapter 11 plan;
(c) testifying, if necessary, in support of the ballot
tabulation results;
(d) assisting in the preparation of claims objections and
exhibits, claims reconciliation and related matters, if required;
(e) providing a confidential data room if requested;
(f) managing and coordinating any distributions pursuant to a
Chapter 11 plan; and
(g) providing other bankruptcy administrative services.
The firm's hourly rates are as follows:
Analyst $33 - $66 per hour
Consultant (Associate/Senior Associate) $70 - $200 per
hour
Director/ Managing Director $210 - $250 per
hour
Executive Management waived
Solicitation Associate $230 per hour
Director of Securities & Solicitations $250 per hour
The Debtor paid a retainer fee in the amount of $10,000 to the
firm.
Sheryl Betance, senior managing director at Stretto, 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:
Sheryl Betance
Stretto, Inc.
410 Exchange, Ste. 100
Irvine, CA 92602
Telephone: 714.716.1872
Email: sheryl.betance@stretto.com
About BL Santa Fe
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC own and operate
Bishop's Lodge, a luxury resort located at 1297 Bishops Lodge Road,
Santa Fe, N.M.
The Debtors filed a petition for Chapter 11 protection (Bankr. D.
Del. Lead Case No. 21-11190) on Aug. 30, 2021, listing $50 million
to $100 million in both assets and liabilities. Judge Craig T.
Goldblatt oversees the cases.
The Law Offices of Frank J. Wright, PLLC and Young Conaway Stargatt
& Taylor, LLP represent the Debtors as legal counsel. Stretto
serves as the Debtors' claims and noticing agent and administrative
advisor.
BL SANTA FE: Seeks to Hire Young Conaway as Bankruptcy Co-Counsel
-----------------------------------------------------------------
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC seek approval from
the U.S. Bankruptcy Court for the District of Delaware to hire
Young Conaway Stargatt & Taylor, LLP as bankruptcy co-counsel with
the Law Offices of Frank J. Wright, PLLC.
The firm's services include:
(a) providing legal advice with respect to the Debtors' powers
and duties in the continued maintenance of their business and the
management of their property;
(b) preparing documents in connection with the confirmation of
any Chapter 11 plan and approval of any disclosure statement;
(c) preparing legal papers and appearing in court;
(d) performing all other necessary legal services.
The firm's hourly rates are as follows:
Matthew B. Lunn, Esq. $845 per hour
Joseph M. Barry, Esq. $885 per hour
Robert F. Poppiti, Jr., Esq. $735 per hour
Joseph M. Mulvihill, Esq. $575 per hour
Katelin A. Morales, Esq. $485 per hour
Catherine C. Lyons, Esq. $450 per hour
Troy Bollman $310 per hour
The Debtor paid a retainer fee in the amount of $250,000 to the
firm.
Matthew Lunn, Esq., a partner at Young Conaway, 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:
Matthew B. Lunn, Esq.
Joseph M. Barry, Esq.
Robert F. Poppiti, Jr., Esq.
Joseph M. Mulvihill, Esq.
Young Conaway Stargatt & Taylor, LLP
1000 North King Street
Wilmington, Delaware 19801
Telephone: (302) 571-6600
Facsimile: (302) 571-1253
Emails: mlunn@ycst.com
jbarry@ycst.com
rpoppiti@ycst.com
jmulvihill@ycst.com
About BL Santa Fe
BL Santa Fe, LLC, and BL Santa Fe (MEZZ), LLC own and operate
Bishop's Lodge, a luxury resort located at 1297 Bishops Lodge Road,
Santa Fe, N.M.
The Debtors filed a petition for Chapter 11 protection (Bankr. D.
Del. Lead Case No. 21-11190) on Aug. 30, 2021, listing $50 million
to $100 million in both assets and liabilities. Judge Craig T.
Goldblatt oversees the cases.
The Law Offices of Frank J. Wright, PLLC and Young Conaway Stargatt
& Taylor, LLP represent the Debtors as legal counsel. Stretto
serves as the Debtors' claims and noticing agent and administrative
advisor.
BONNIE TILE: Gets Court Nod on Cash Use Through Nov. 16
-------------------------------------------------------
Judge Mindy A. Mora authorized Bonnie Tile II, LLC to use cash
collateral in the regular course of its business, on an interim
basis through November 16, 2021, based on the budget. The budget
provided for total expenses aggregating $34,461 for October 2021
and $35,745 for November 2021.
A copy of the budget is available for free at
https://bit.ly/3Cww8lk from PacerMonitor.com.
Knight Capital Funding; Wellen Capital, LLC; and Caymus Funding,
Inc., who may have an interest in the cash collateral, are granted
postpetition liens as adequate protection for cash collateral use.
A copy of the interim order is available for free at
https://bit.ly/3Apd9J6 from PacerMonitor.com.
The Court will convene a further hearing on the cash collateral
motion on November 16, 2021 at 1:30 p.m., via video conference.
About Bonnie Tile II, LLC
Bonnie Tile II, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-16210) on June 25,
2021. In the petition signed by Dennis R. Hughes, managing member,
the Debtor disclosed up to $50,000 in assets and up to $1 million
in liabilities.
Judge Mindy A. Mora oversees the case.
Craig I. Kelley, Esq., at Kelley, Fulton & Kaplan, P.L is the
Debtor's counsel.
BOY SCOUTS OF AMERICA: Court Refuses Plan Disclosure Delay
----------------------------------------------------------
Rick Archer, writing for Law360, reports that a Delaware bankruptcy
judge opened a Tuesday, September 21, 2021, hearing on the Boy
Scouts of America's Chapter 11 disclosure statement by denying tort
claimants' and insurance carriers' request for more time to study
settlements the organization reached last week.
U.S. Bankruptcy Laurie Selber Silverstein began an all-day virtual
hearing on the BSA's disclosure statement by hearing and rejecting
calls to adjourn the proceeding for two weeks by parties
complaining they had only had three business days to examine how
settlements with a major insurer and a major scout troop sponsor
changed the Chapter 11 plan.
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.
BOY SCOUTS OF AMERICA: Court Sets Key Bankruptcy Case Hearing
-------------------------------------------------------------
Randall Chase of the Associated Press reports that a key hearing
before a Delaware judge could determine whether the Boy Scouts of
America might be
able to emerge from bankruptcy later this 2021.
The Boy Scouts, based in Irving, Texas, sought bankruptcy
protection in February 2020 amid an onslaught of lawsuits by men
who said they were sexually abused as children.
Tuesday's hearing was scheduled more than a month ago. It was
called for the judge to consider whether the Boy Scouts'
explanation of a reorganization plan, filed in July, contained
sufficient detail for abuse claimants to make informed decisions on
whether to accept it.
But several key stakeholders are asking the judge to postpone the
hearing for at least three weeks to allow them time to review and
file objections to a new plan that was filed just days ago. The
delay is being sought by the official victims committee, along with
several law firms and insurance companies.
U.S. Bankruptcy Judge Laura Selber Silverstein must decide whether
to grant the postponement or proceed with the hearing on a
disclosure statement outlining the BSA's reorganization plan. That
hearing could last several days.
Two of the major changes in the new plan are settlement agreements
involving one of the organization’s major insurers, The Hartford,
and its former largest troop sponsor, the Church of Jesus Christ of
Latter-day Saints, commonly known as the Mormon church.
The Hartford has agreed to pay $787 million into a fund for sexual
abuse claimants, and the Mormon church has agreed to contribute
$250 million. In exchange, both entities would be released from any
further liability involving child sex abuse claims filed by men who
said they were molested decades ago by scoutmasters and others.
The official victims committee describes the settlements as
"grossly unfair."
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.
BRAZOS ELECTRIC: Shearman Represents NRG Energy, 3 Others
---------------------------------------------------------
Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure,
the law firm of Shearman & Sterling LLP submitted a verified
statement to disclose that it is representing NRG Energy, Inc.,
ENGIE Energy Marketing N.A., Inc., NextEra Energy Marketing, LLC
and Talen Energy Supply, LLC, in the Chapter 11 cases of Brazos
Electric Power Cooperative, Inc.
Each of the Claimants has retained Shearman & Sterling as its
attorney in connection with the allowance of their 503(b)(9) Claims
in the chapter 11 case of the above-captioned Debtor.
Shearman & Sterling does not represent the Claimants as a
"committee" as such term is used in Bankruptcy Code and Bankruptcy
Rules and does not undertake to represent the interests of, and is
not a fiduciary for, any creditor, party in interest, or other
entity that has not signed a retention agreement with Shearman &
Sterling.
The Claimants have claims against the Debtor arising from the
Debtor's failure to pay for electricity following the February 2021
storm. Each of the Claimants is a participant in ERCOT's Nodal
Protocols. When parties, like the Debtor, do not pay for the
electricity they received from ERCOT generators, this non-payment
necessarily results in a "short pay" that leaves each power
generator in the relevant period "short paid" for the goods it
produced, pursuant to ERCOT's Nodal Protocols Section 9.19. As a
result, each of the Claimants has asserted administrative claims
against the Debtor for a portion of the electricity provided during
the 20-day period prior to Debtor's bankruptcy filing. The
aggregate disclosable economic interest of the Claimants is no less
than $83 million.
As of Sept. 20, 2021, each Claimants and their disclosable economic
interests are:
NRG Energy, Inc.
804 Carnegie Center
Princeton, NJ 08540
* Claim No. 415
ENGIE Energy Marketing NA, Inc.
1360 Post Oak Boulevard
Suite 400
Houston, TX 77056
* Claim No. 416
Talen Energy Supply, LLC
1780 Hughes Landing Blvd. Suite 800
The Woodlands, TX 77380
* Claim No. 397
NextEra Energy Marketing, LLC
700 Universe Blvd.
Juno Beach, FL 33408
* Claim Nos.: 328, 329, 330, 331, 332, 333, 334, 338, 339, 340,
341, 342 and 345.
Shearman & Sterling reserves the right to amend and/or supplement
this Statement in accordance with the requirements of Bankruptcy
Rule 2019 at any time in the future.
Counsel for NRG Energy, Inc., et. al can be reached at:
SHEARMAN & STERLING LLP
C. Luckey McDowell, Esq.
Ian E. Roberts, Esq.
2828 North Harwood Street
Dallas, TX 75201
Tel.: 214-271-5350
E-mail: luckey.mcdowell@shearman.com
ian.roberts@shearman.com
Joel Moss, Esq.
535 Mission Street
24th Floor
San Francisco, CA 94105
Tel.: 212-848-4693
E-mail: joel.moss@shearman.com
- and -
Jonathan M. Dunworth, Esq.
599 Lexington Avenue
New York, NY 10022
Tel.: 212-848-5288
E-mail: jonathan.dunworth@shearman.com
A copy of the Rule 2019 filing, downloaded from PacerMonitor.com,
is available at https://bit.ly/39uFX77
About Brazos Electric Power Cooperative
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-30725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP and O'Melveny &
Myers LLP as bankruptcy counsel; Foley & Lardner LLP and Eversheds
Sutherland US LLP as special counsel; Collet & Associates LLC as
investment banker; and Berkeley Research Group, LLC as financial
advisor. Ted B. Lyon & Associates, The Gallagher Law Firm, West &
Associates LLP, Butch Boyd Law Firm and Boyd Smith Law Firm, PLLC
serve as special litigation counsel. Stretto is the claims and
noticing agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. and
Lazard Freres & Co. LLC serve as the committee's financial advisor
and investment banker, respectively.
BROOKS AUTOMATION: Moody's Puts Ba3 CFR Under Review for Downgrade
------------------------------------------------------------------
Moody's Investors Service stated that while Brooks Automation, Inc.
announced sale of the semiconductor business to TH Lee is credit
positive, the ratings remain unchanged. All ratings, including the
Ba3 Corporate Family Rating, are on Review for Downgrade following
the announcement on May 10, 2021 of Brooks' plans to separate into
two independent publicly traded companies comprised of the
operations of the semiconductor business and the life sciences
business.
The sale of the semiconductor business will provide a large source
of net proceeds, anticipated to total about $2.4 billion (of the
$3.0 billion sale price), to the remaining Brooks business
(comprised of the life sciences business). The remaining company
plans to use the proceeds to fund the growth of the life sciences
business, which is currently growing rapidly. This should allow the
company to replace the lost semiconductor business revenues with a
larger pool of less volatile life sciences revenues.
Still, Brooks will lose the large, though volatile, semiconductor
business revenue stream following the sale. Thus, the Brooks
business will be less diverse following the divestiture. Moreover,
Moody's expect that the remaining Brooks business will pursue a
growth strategy incorporating acquisitions, some of which may be
transformative and entail significant integration execution risk.
CAMBER ENERGY: Turner Stone & Co. Replaces Marcum LLP as Accountant
-------------------------------------------------------------------
The Audit Committee of the Board of Directors of Camber Energy,
Inc, Inc., dismissed Marcum LLP as its independent registered
public accounting firm, effective as of Sept. 16, 2021.
The report of Marcum on the Company's consolidated financial
statements as of March 31, 2020 and March 31, 2019, and for the
years then ended did not contain an adverse opinion or disclaimer
of opinion, and was not qualified or modified as to uncertainty,
audit scope, or accounting principles, other than an explanatory
paragraph relating to the Company's ability to continue as a going
concern. The consolidated financial statements as of March 31, 2020
and March 31, 2019, and for the years then ended were the most
current audited financial statements of the Company, the Company
changed its fiscal year to December 31st on Feb. 4, 2021, and on
Sept. 11, 2021, the Company determined that those audited financial
statements should not be relied on, and filed a Current Report on
Form 8-K with the Securities and Exchange Commission on or about
Sept. 16, 2021, regarding that non-reliance.
During the Company's prior fiscal years ended March 31, 2020 and
March 31, 2019, the transition period ended Dec. 31, 2020, and
through Sept. 16, 2021, there were no disagreements (as defined in
Item 304(a)(1)(iv) of Regulation S-K and the related instructions
to Item 304 of Regulation S-K) with Marcum on any matter of
accounting principles or practices, financial statement disclosure,
or auditing scope or procedures, which disagreements, if not
resolved to the satisfaction of Marcum, would have caused Marcum to
make reference to the matter in its report on the consolidated
financial statements for such year.
On Sept. 17, 2021, the Audit Committee approved the appointment of
Turner, Stone & Company, L.L.P. as the Company's independent
registered public accounting firm for the fiscal years ended March
31, 2020 and March 31 2019, and for the transition period ended
Dec. 31, 2020, and such engagement was formalized on Sept. 21,
2021. During the prior fiscal years ended March 31, 2020 and March
31, 2019, the transition period ended Dec. 31, 2020, and through
Sept. 21, 2021, neither the Company nor anyone on their behalf
consulted with Turner Stone with respect to either (i) the
application of accounting principles to a specific transaction,
either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements, and
neither written nor oral advice was provided to the Company that
Turner Stone concluded was an important factor considered by the
Company in reaching a decision as to any accounting, auditing or
financial reporting issue; or (ii) any matter that was either the
subject of disagreement as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a reportable event as described in Item
304(a)(1)(v) of Regulation S-K.
About Camber Energy
Based in Houston, Texas, Camber Energy -- http://www.camber.energy
-- is primarily engaged in the acquisition, development and sale of
crude oil, natural gas and natural gas liquids from various known
productive geological formations, including from the Hunton
formation in Lincoln, Logan, Payne and Okfuskee Counties, in
central Oklahoma; the Cline shale and upper Wolfberry shale in
Glasscock County, Texas; and Hutchinson County, Texas, in
connection with its Panhandle acquisition which closed in March
2018.
Camber Energy reported a net loss of $3.86 million for the year
ended March 31, 2020, compared to net income of $16.64 million for
the year ended March 31, 2019. As of Sept. 30, 2020, the Company
had $11.79 million in total assets, $1.61 million in total
liabilities, $6 million in preferred stock (series C), and $4.18
million in total stockholders' equity.
Marcum LLP, in Houston, Texas, the Company's auditor since 2015,
issued a "going concern" qualification in its report dated June 29,
2020, citing that the Company has incurred significant losses from
operations and had an accumulated deficit as of March 31, 2020 and
2019. These factors raise substantial doubt about its ability to
continue as a going concern.
CANO HEALTH: Moody's Cuts CFR to B3 & Rates New Unsec. Notes Caa2
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Cano Health,
LLC including the Corporate Family Rating from B2 to B3, and the
Probability of Default Rating from B2-PD to B3-PD. Concurrently,
Moody's affirmed the ratings of Cano's First Lien Senior Secured
Credit Facilities at B2 and assigned Caa2 ratings to the new Senior
Unsecured Notes. The rating outlook remains stable. The Speculative
Grade Liquidity Rating was downgraded from SGL-2 (good) to SGL-3
(adequate).
The rating actions follow Cano's announcement to add $100 million
incremental Senior Secured Term Loan B, and new $300 million 7-year
Senior Unsecured Notes. The new debt will be used to fund the $250
million Senior Unsecured Bridge Facility and add about $140 million
of cash to the balance sheet to use for future acquisitions.
The downgrade to B3 reflects the more aggressive nature of Cano's
financial policies, a key governance risk. Leverage, pro-forma for
the transactions rises to 8.4x for FYE 2021. Expenses are
anticipated to increase as Cano ramps up its new clinic expansions,
which will have a delayed impact on EBITDA, compared with a higher
level of acquisitions. Additionally, Cano is now planning to use
stock-based compensation as a public entity, forecasting spending
about $28 million annually in 2022 and beyond. Following Cano's
more aggressive growth strategy, Moody's expects that debt/EBITDA
will remain above 5.5x beyond the next 12-18 months. Cano would
also be more weakly positioned to absorb any unexpected operating
setbacks or incremental debt.
The B2 rating on the first lien senior secured credit facilities is
one notch above the B3 CFR reflects the loss absorption provided by
the new unsecured debt in Cano's pro forma capital structure. A
one-notch negative override was applied to the LGD model for the
first lien term loan, given the company's current projections, and
the level of support from the second lien term loan which is
uncertain in a default scenario. The Caa2 rating on the new senior
unsecured notes is two notches below the CFR, reflects their junior
position in the capital structure.
The stable outlook balances the good near-term growth outlook with
some longer-term uncertainty around the business model. While
planned acquisitions will add scale and expand Cano's footprint
into new geographies, there is integration risk and execution
risk.
The downgrade of Cano's liquidity rating to SGL-3 reflects Moody's
expectation that Cano will be more aggressive in its growth
prospects, adding more new facilities than was previously
anticipated, and as a result will be free cash flow negative in
2021. However, Cano should be able to maintain an adequate cash
balance despite anticipated cash burn, supported by an undrawn and
upsized $60 million committed revolving credit facility and about
$250 million of cash pro forma for the transaction. Cano has a
springing maximum first lien net leverage covenant with step-downs
over time, that springs at 35% utilization. The revolver is not
currently being used, but if it were, Moody's expects the company
to maintain an adequate cushion.
Moody's took the following rating actions:
Downgrades:
Issuer: Cano Health, LLC
Corporate Family Rating downgraded to B3 from B2
Probability of Default Rating downgraded to B3-PD from B2-PD
Speculative Grade Liquidity Rating downgraded to SGL-3 from SGL-2
Affirmations:
Issuer: Cano Health, LLC
Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2
(LGD3)
Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3)
Senior Secured 1st Lien Delayed Draw Term Loan, Affirmed B2 (LGD3)
Assignments:
Issuer: Cano Health, LLC
Senior Unsecured Notes assigned at Caa2 (LGD5)
Outlook Actions:
Issuer: Cano Health, LLC
Outlook, Remains Stable
RATINGS RATIONALE
The B3 CFR is constrained by Cano's high financial leverage, with
pro forma adjusted debt to EBITDA of around 8.4 times FYE 2021,
moderate scale, and Moody's anticipated cash burn in 2021. The CFR
is constrained by significant geographic concentration in Florida.
Further, Cano's high reliance on Humana for about 40% of its
members reflects material customer concentration risk. Moody's
expects these exposures to remain high over the next 12-18 months,
but to moderate over time as Cano enters new states and expands its
relationships with other Medicare Advantage plan providers. An
inherent challenge within Cano's business model is that it requires
the company to aggressively manage the cost of patient care and
other expenses, given that it earns revenues on a capitated basis
from Medicare Advantage plan providers. The company's ambitious
plans for growth through organic and acquisitive means will give
rise to a significant amount of execution and integration risk.
The B3 CFR is supported by the company's rapid pace of organic
growth and its focus on treating patients with Medicare Advantage
health insurance plans in a cost-effective manner. Moody's expects
enrollment of retirees in Medicare Advantage plans to continue
outstripping that of Medicare fee-for-service plans by a wide
margin. This represents a significant opportunity for good
performing, value-based providers that can offer low costs to
payers.
The SGL-3 rating reflects Moody's expectation Cano should be able
to maintain an adequate cash balance despite anticipated cash burn.
This is supported by an undrawn and upsized $60 million committed
revolving credit facility and about $250 million of cash pro forma
for the transaction.
The stable outlook balances the good near-term growth outlook with
some longer-term uncertainty around the business model. While
planned acquisitions will add scale and expand Cano's footprint
into new geographies, there is integration risk and execution risk.
Moody's expects that Cano will experience rapid growth which should
help to reduce its high geographic and customer concentration risk
over the next 12-18 months to more moderate levels.
Moody's considers Cano to face social risks such as the rising
concerns around the access and affordability of healthcare
services. However, Moody's does not consider Cano to face the same
level of social risk as many other healthcare providers, like
hospitals. Given its high percentage of revenue generated from
Medicare Advantage, Cano is exposed to regulatory changes and state
budget challenges. From a governance perspective, Moody's expects
Cano's financial policies to remain aggressive due to its
acquisition led growth strategy despite becoming a public company
and management previous communication of operating with a target
leverage in the low 3x range. In addition, the recent transactions
are particularly aggressive as Cano is issuing debt to fund
acquisitions and pre-fund future growth only 6 months after issuing
a $100 million debt funded dividend.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded if Cano's operating performance
deteriorates, or if it experiences material integration related
disruptions. Additionally, the ratings could be downgraded if
Moody's expects debt/EBITDA to not decline below 7.5 times by the
end of 2022 or the company's liquidity erodes. Further, debt-funded
shareholder returns or acquisitions could also result in a
downgrade.
The ratings could be upgraded if Cano achieves greater diversity by
state and customer and improves its profitability and cash flow.
Cano will also need to establish a longer track record of
effectively managing its aggressive acquisition-led growth strategy
before Moody's would consider a higher rating. An upgrade would
also be supported by the company adopting more conservative
financial policies and maintaining debt/EBITDA below 5.5 times.
Cano Health's clinics provide primary care health services to more
than 208,000 members in Florida, Texas, California, and Nevada,
with a focus on Medicare Advantage members. Cano operates across 34
markets through 113 owned medical centers with relationships with
nearly 1,300 employed or affiliate providers. Cano's PF LTM revenue
as of June 30, 2021 was approximately $1.8 billion. Cano is
publicly traded on the NYSE under ticker "CANO". ITC Rumba, LLC
(InTandem Capital Partners) maintains about 34% equity stake.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
CANO HEALTH: S&P Affirms 'B' ICR, Outlook Stable
------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on
Medicare Advantage-focused primary care service provider Cano
Health Inc., and its 'B' issue-level rating on its senior secured
debt. S&P's '3' recovery rating on the company's secured debt
remains unchanged, though S&P revised its rounded recovery estimate
to 65% from 50%.
S&P said, "At the same time, we assigned our 'CCC+' issue-level
rating and '6' recovery rating to Cano's proposed $300 million
senior unsecured notes. The '6' recovery rating indicates our
expectation for negligible recovery (0%-10%; rounded estimate: 0%)
in the event of a payment default.
"The stable outlook reflects our expectation that these
transactions will increase Cano's S&P Global Ratings-adjusted debt
leverage to the 8x-9x range in 2022. While we consider this level
of leverage to be high for the rating, we expect the company to
materially reduce its leverage over the next couple of years. In
addition, we continue to view the Medicare Advantage primary care
industry as favorable and believe management is steadily building a
successful operating track record.
"Our 'B' issuer credit rating and stable outlook on Florida-based
Cano Health Inc. reflect its growing position in the Medicare
Advantage and primary care markets, which is partially offset by
its aggressive acquisition and expansion policies. These policies
have contributed to the improvement in the company's size, scale,
and geographic footprint, though they have also increased its
leverage and led it to generate free operating cash flow (FOCF)
deficits. We project Cano's leverage will be in the 8x-9x range in
2022 following the over $1 billion it spent on acquisitions thus
far this year. We believe management will moderate its acquisition
pace through 2022 and anticipate that its leverage will steadily
decline as it benefits from its larger scale and continued
expansion. However, we project the company will generate negative
FOCF in 2022, due in large part to its high level of growth capital
expenditure (capex) to support the de-novo build-out of its
network, before turning positive in 2023.
"We continue to view the Medicare Advantage and primary care
markets as favorable and anticipate management will successfully
integrate Doctor's Medical Center (DMC) based on its growing track
record of effectively integrating its acquisitions and realizing
related synergies. In our view, Cano Health's business risk profile
is somewhat limited by its narrow focus and geographic
concentration. The company specializes in providing primary care
services and seeks to serve as the front line to improve patients'
quality of care while lowering overall costs, such as by increasing
preventative care and reducing unnecessary emergency room visits.
The company focuses on Medicare Advantage patients, which account
for approximately 36% of the rising $800 billion of total Medicare
spending. Cano Health's revenue and membership base have expanded
rapidly in the past couple of years and we believe it is well
positioned to benefit from the increase in Medicare Advantage plans
and shift toward value-based care models." The Medicare Advantage
market is projected to expand by 14% annually. This is not only due
to the aging demographics in the U.S. but also the increasing
penetration of managed care-sponsored Medicare Advantage plans,
which provide greater coverage for Medicare beneficiaries, and the
increasing shift toward value-based delivery of care (with a focus
on lowering costs while maximizing quality of care).
Cano Health derives a significant portion of its revenue (over 95%)
from value-based contracts, under which it takes on capitated risk
in managing the health care of Medicare Advantage and Medicaid plan
enrollees for a monthly per-enrollee fee. The company then uses its
primary care physician network and technology platform, comprising
patient health data, patient monitoring, and statistical models, to
manage its patients for improved outcomes while lowering costs.
Cano has built a solid reputation, including earning strong quality
scores, and contracts with all of the major managed care providers,
which provides some stability and predictability to its revenue.
Cano has been very aggressive by spending over $1 billion on
acquisitions this year to increase its and size and scale, which
will enable it to further leverage its infrastructure and expand
its geographic presence. The company's most recent large
acquisition--of Florida-based primary care provider DMC for $300
million--added 7,000 Medicare Advantage members, 31,000 Medicaid
members, and 14,000 Affordable Care Act enrollees, as well as 18
medical centers, to its portfolio. Cano Health, through its organic
growth and acquisitions, has expanded its membership base to
approximately 208,000 members and 113 medical centers as of August
11, 2021.
S&P said, "We believe the company will likely remain acquisitive
because its market is highly fragmented. However, Cano has
indicated that it plans to moderate its acquisition pace and focus
more on gradual expansion via the opening of de-novo centers.
Specifically, the company plans to add 15-20 new centers in 2021
and increase its pace to 54-59 centers in 2022. We believe the
company will fund this expansion with its operating cash flows and
cash on hand, which we estimate will increase to roughly $250
million following the proposed term loan add-on and notes
offering.
"The switch in management's focus will likely enable Cano to
steadily deleverage. We project its S&P Global Ratings-adjusted
debt to EBITDA will be in the 8x-9x range in 2022 before declining
to about 7x by the end of 2023 as it increases its EBITDA and
operating cash flow. We also assume the integration of its large
acquisitions will proceed smoothly and that it will realize S&P
Global Ratings-adjusted EBITDA margins in the 5% area due to the
benefits of its increased scale and efficiencies.
"Our stable outlook on Cano reflects our expectation it will
continue to expand its presence in the fast-growing Medicare
Advantage market, improve its margins by leveraging its increased
size and scale, and that its S&P Global Rating-adjusted debt
leverage will steadily decline to the 7x area over the next two
years. We also project the company's operating cash flow generation
will steadily improve over the same period due to a strong
expansion in its new members and our assumption of a S&P Global
Ratings-adjusted EBITDA margin in the 5% area.
"We could downgrade Cano Health in the next 12 months if we expect
its S&P Global Ratings-adjusted debt to EBITDA to exceed 8x or its
S&P Global Ratings-adjusted operating cash flow to debt to be below
3% for a sustained period. This could occur if the company adopts a
more aggressive acquisition strategy that leads to an increase in
its debt. This could also occur if its margins and EBITDA
deteriorate, potentially due to operational missteps or
higher-than-anticipated operating costs.
"It is unlikely we will raise our rating on Cano in the next 12
months given the significant increase in its S&P Global
Ratings-adjusted leverage due to its recent string of acquisitions.
That said, we could consider upgrading the company if it company
successfully executes on its expansion program, including steadily
improving EBITDA margins, S&P Global Ratings-adjusted debt to
EBITDA of less than 5x, S&P Global Ratings-adjusted funds from
operations (FFO) to debt of more than 12%, and consistent positive
FOCF generation."
CHIP'S SOUTHINGTON: May Use Cash Collateral Until Oct. 31
---------------------------------------------------------
Judge James J. Tancredi of the U.S. Bankruptcy Court for the
District of Connecticut approved the stipulation between Chip's
Southington, LLC and M&T Bank allowing the Debtor access to cash
collateral until the earlier of (i) October 31, 2021; or (ii) the
occurrence of a termination event, to pay its actual, necessary and
ordinary course expenses as set forth in the budget.
The budget, covering the period from September 27 through October
31, 2021, provided for the following total of weekly costs:
$59,236 for the week ending October 3, 2021;
$29,155 for the week ending October 10, 2021;
$29,155 for the week ending October 17, 2021;
$29,155 for the week ending October 24, 2021; and
$55,397 for the week ending October 31, 2021.
Prepetition, M&T Bank extended a loan to the Debtor for $1,200,000,
secured, among others, by a General Security Agreement granting M&T
Bank a first priority security interest in substantially all of the
Debtor's assets. As of the Petition Date, $1,038,135 is
outstanding on the loan.
Other Claimants on the Debtor's cash collateral include Celtic Bank
Corporation; The Business Backer, LLC; American Express National
Bank; and the U.S. Small Business Administration.
As adequate protection for the use of cash collateral, the
Claimants are granted senior security interests in and liens on all
personal property and real estate of the Debtor, to attach with the
same validity, extent and priority that the Claimants possessed as
to said liens on the Petition Date. The Claimants shall also have
allowed administrative expense claims to the extent of postpetition
diminution in value of their interests, except with respect to the
carve-out.
The carve-out includes the allowed administrative claims accrued
during the cash collateral period through October 31, 2021 of (i)
Green & Sklarz LLC for $42,000; (ii) Premier Tax Consultant, LLC
for $3,000; and (iii) the Subchapter V Trustee, George Purtill, for
$10,500.
In addition, the Debtor shall pay M&T Bank, monthly interest of
$3,689 by October 31, 2021.
A copy of the stipulation and order is available for free at
https://bit.ly/2Xzyeli from PacerMonitor.com.
The Court will continue hearing on the Debtor's use of cash
collateral on October 27, 2021 at 2 p.m. via Zoom. Objections are
due by 5 p.m. on October 25.
About Chip's Southington
Southington, Conn.-based Chip's Southington LLC is a privately
owned restaurant founded in 1966. It conducts business under the
name Chip's Family Restaurant.
Chip's Southington filed a Chapter 11 petition (Bankr. D. Conn.
Case No. 20-21458) on Dec. 29, 2020. In its petition, the Debtor
estimated $500,000 to $1 million in assets and $1 million to $10
million in liabilities.
Judge James J. Tancredi presides over the case.
Green & Sklarz LLC is the Debtor's bankruptcy counsel. The Debtor
tapped the law firms of DanaherLagnese, PC, Kanner & Whiteley, LLC
and Sweeney Merrigan Law, LLP as its special counsel. George
Purtill is the Debtor's Subchapter V Trustee.
COMMUNITY ECO: Obtains Final OK on Amended Invoice Purchase Deal
----------------------------------------------------------------
Judge Elizabeth D. Katz of the U.S. Bankruptcy Court for the
District of Massachusetts authorized, on a final basis, Community
Eco Power, LLC and its debtor-affiliates to borrow from Alterna
Capital Solutions, LLC pursuant to an Amended Invoice Purchase and
Security Agreement.
Judge Katz also authorized the Debtors to use cash collateral on a
final basis, pursuant to the budget, including the proceeds
advanced by Alterna under the Agreement. The Debtors have an
immediate need to assume the Agreement, as amended, to borrow funds
thereunder, and to use cash collateral in order to have adequate
liquidity to provide for, among other things, the orderly
continuation of the operation of their businesses, to maintain
business relationships with vendors, suppliers and customers, to
make payroll, and to satisfy other working capital and operational,
financial and general corporate needs.
Prepetition, the Debtors and Alterna are parties to the Invoice
Purchase and Security Agreement dated August 19, 2020, pursuant to
which Alterna provides advances to the Debtors, so long as such
advances do not cause the ratio of the Debtors' obligations (to
Alterna) to the value of the Debtors' eligible accounts to exceed
that set forth in the Agreement. As of the Petition Date, the
Debtors owed Alterna not less than $1,169,285, subject to
adjustment based on Alterna's application of funds in the Lockbox
on the Petition Date.
The Debtor's other prepetition secured creditor is SDI, Inc. to
which the Debtor owed $5,395,000, as of the Petition Date, under a
prepetition Note and Security Agreement. The SDI Obligations are
secured by an interests in, and valid, perfected liens on all or
substantially all of the assets of the Debtors.
To secure the Alterna Obligations, Alterna is granted a security
interest in the collateral as set forth in the Amended Agreement
and in all real property owned by the Debtors. Excluding the Carve
Out, the DIP Liens are senior to the liens of any entity claiming
an interest in the DIP Collateral. Alterna shall be entitled to
demand payment of its reasonable attorneys' fees and other expenses
relating to the Agreement and the Amended Agreement. Alterna is
also granted an allowed superpriority claim against the Debtors to
the extent of the DIP Obligations under the Amended Agreement.
As adequate protection to SDI's interest, SDI is granted Second
Lien Adequate Protection to the extent of any diminution in the
value of its interests in the SDI Prepetition Collateral, as well
as an allowed administrative claims for the remaining unsatisfied
Second Lien Adequate Protection Obligation to the extent the Second
Lien Adequate Protection Liens are insufficient to cover the Second
Lien Adequate Protection Obligations, which shall have priority in
payment except with respect to the Alterna Superpriority DIP Claim
and the Carve Out.
The budget provided for total weekly disbursements, as follows:
$678,279 for the week ending September 25, 2021;
$240,496 for the week ending October 2, 2021;
$407,247 for the week ending October 9, 2021;
$418,642 for the week ending October 16, 2021;
$498,091 for the week ending October 23, 2021;
$670,028 for the week ending October 30, 2021;
$495,510 for the week ending November 6, 2021;
$420,429 for the week ending November 13, 2021;
$406,259 for the week ending November 20, 2021;
$617,940 for the week ending November 27, 2021; and
$546,243 for the week ending December 4, 2021.
The Court further ruled that any chapter 11 plan or plans filed by
the Debtors shall provide a minimum of a total distribution of
$100,000 in cash to holders of allowed general unsecured claims.
A copy of the final order, including the budget, is available for
free at https://bit.ly/3CuWWmb from PacerMonitor.com.
The Court will convene a final hearing on the continued use of Cash
Collateral on December 2, 2021, at 12 p.m. Objections must be
filed not later than 4 p.m. on November 30.
About Community Eco Power
Community Eco Power, LLC and affiliates, Community Eco Pittsfield,
LLC and Community Eco Springfield, LLC, sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Lead Case
No. 21-30234) on June 25, 2021. Their cases are jointly
administered under Community Eco Power, LLC.
On the Petition Date, Community Eco Power disclosed up to $50,000
in assets and up to $10 million in liabilities. Affiliates,
Community Eco Pittsfield and Community Eco Springfield each
disclosed $1 million to $10 million in both assets and
liabilities.
The petitions were signed by Richard Fish, president and chief
executive officer.
D. Sam Anderson, Esq., Adam R. Prescott, Esq., and Kyle D. Smith,
Esq. at Bernstein, Shur, Sawyer and Nelson, PA, serve as the
Debtor's counsel.
COMSTOCK RESOURCES: S&P Upgrades ICR to 'B+' on Increasing Scale
----------------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
oil and gas exploration and production (E&P) company Comstock
Resources Inc. and its issue-level ratings on its debt to 'B+' from
'B'. S&P also revised its recovery rating on the company's
unsecured debt to '3' from '4', reflecting its expectation of
meaningful (50%-70%; rounded estimate: 60%) recovery in the event
of a payment default.
The stable outlook incorporates Comstock's lack of near-term debt
maturities, low-cost structure, and sizable hedge position that
supports expected cash flows. S&P forecasts funds from operations
(FFO) to debt will exceed 30%, with debt to EBITDA of about 2x, in
2021 and expect revolver borrowings will continue to be repaid over
the next 12-18 months as the company generates meaningful free cash
flow.
Comstock's scale has continued to increase. The company produced
almost 1.4 billion cubic feet equivalent per day (Bcfe/d) (98% gas)
in the second quarter of 2021 and had year-end 2020 proved reserves
of about 5.6 trillion cubic feet equivalent, along with a developed
reserve life of approximately 4.5 years. S&P said, "We expect
production will continue to grow at a mid-single-digit percentage
next year, and we believe total proved reserves will likely
increase at the end of this year primarily due to higher gas prices
than 2020. However, Comstock's high proportion (64%) of undeveloped
reserves and relatively low developed reserve life continue to lag
higher-rated natural gas producing peers. We expect the company to
run five to six drilling rigs in the near-term, with a capital
budget of about $600 million-$700 million. Although acquisition and
divestiture (A&D) activity has been quiet since its acquisition of
Covey Park in 2019, we believe management will be opportunistic
with both acquisitions and divestitures, with the Haynesville shale
remaining the primary focus."
S&P said, "Leverage metrics have improved, and cash flow is being
used to reduce debt. Based on our latest oil and gas price
assumptions, we forecast the company's average FFO-to-debt ratio
will be between 35% and 40% over the next two years, with debt to
EBITDA at about 2x. The balance sheet has significantly improved
over the past 18 months due to a combination of higher commodity
prices as well the company's liability management, which included
repayment of the series A preferred stock last year as well as
several debt refinancing transactions this year that extended most
of its term debt maturities to 2029 and beyond while reducing
interest costs by more than $65 million. Comstock has also
generated more than $50 million of free cash flow year to date, and
we anticipate more robust free operating cash flow (FOCF) in the
second half of 2021 as well as in 2022 will be used to further
reduce the $475 million of borrowings outstanding on its $1.4
billion revolving credit facility (unrated). As the facility is
gradually repaid, we believe alternate uses for FOCF could include
retirement of its senior notes as well as acquisitions or
shareholder returns, noting that the company has not paid a
dividend on its common stock since 2014."
Consistent hedging and low-cost structure support financial
metrics. Comstock has hedged a significant portion of production
historically and continues to do so, with more than 60% of forecast
natural gas volumes hedged in 2021 and approximately 50% in 2022.
Although the existing hedges are generally priced well below the
spot market, they do protect against potential negative price
volatility. Furthermore, Comstock benefits from highly competitive
margins compared with natural gas producing peers due to its
proximity to natural gas demand centers along the Gulf Cast as well
as its cash operating costs of about $0.60/Mcfe, which are among
the lowest in the industry.
S&P said, "Our stable outlook incorporates Comstock's lack of
near-term debt maturities, low-cost structure, and sizable hedge
position that supports expected cash flows. We forecast FFO to debt
will exceed 30%, with debt to EBITDA of about 2x in 2021, and
expect revolver borrowings will continue to be repaid over the next
12-18 months as the company generates meaningful free cash flow.
"We could lower our rating on Comstock if its FFO to debt
approaches 20% on a sustained basis or its liquidity significantly
deteriorates."
This could occur if:
-- Commodity prices fall and the company relies predominantly on
its revolving credit facility to fund its capital spending or
acquisitions; or
-- Its production rates and costs were weaker than S&P currently
project.
S&P could raise its rating on Comstock if it further expands its
production and developed reserves to levels that are more
comparable with those of its higher-rated peers. The company would
also need to maintain a low proportion of outstanding RBL facility
borrowings relative to its capacity and FFO to debt sustained above
30%.
COTY INC: Moody's Raises CFR to B2 & Senior Secured Debt to B1
--------------------------------------------------------------
Moody's Investors Service upgraded Coty Inc.'s Corporate Family
Rating to B2 from Caa1, its probability of default rating to B2-PD
from Caa1-PD, and the company's senior secured credit facility
ratings to B1 from B3, including Coty's first lien revolving credit
facility and its first lien term loan. Moody's also upgraded the
company's senior secured notes rating to B1 from B3 and its
unsecured notes rating to Caa1 from Caa3. Coty's Speculative Grade
Liquidity fating was changed to SGL-3 from SGL-4. The rating
outlook is stable.
The upgrade reflects Coty's good progress in reducing financial
leverage, and Moody's estimates that debt-to-EBITDA leverage will
improve to about 5.7x in fiscal 2022 ending June 30th, 2022 from
about 7.1x in fiscal 2021 ending June 30, 2021. Improved leverage
reflects additional debt repayment and continued earnings momentum.
Reduced debt will be driven by good free cashflow due to improved
earnings, inventory reduction, and proceeds from strategic
initiatives, some of which include proceeds from the Brazil IPO and
other potential dispositions. KKR's recent partial conversion of
preferred stock into common stock also reduces cash dividends by
approximately $30 million annually. In late 2020, Coty paid down a
meaningful amount of debt from proceeds following the divestiture
of a 60% interest in its Wella assets. Stronger earnings will be
driven by improved market demand for Coty's products as consumers
continue to get vaccinated and resume more away-from-home
activities. Better earnings also reflect the effects of Coty's
continued business transformation and ongoing cost reduction
initiatives.
Coty faces high execution risk reflecting the company's multiple
growth initiatives, which in part includes the continued
premiumization of its Prestige business away from sales in low
quality channels. Nonetheless, Moody's recognizes that Coty has
shown good earnings momentum over the last 12 months driven by the
successful turnaround strategies of its new management team led by
Sue Nabi, the company's Chief Executive Officer since September
2020. Stronger earnings performance is necessary to further reduce
leverage, improve reinvestment capacity in the highly competitive
beauty industry, and provide more flexibility to address the still
significant 2023 maturities.
The stable outlook reflects Moody's expectation that Coty will
improve liquidity, including the successful refinancing of its
significant 2023 debt maturities in a timely manner. The outlook
also reflects that Coty will continue to improve credit metrics
over the next 12-to-18 months through an ongoing recovery in
earnings from the weakness experienced during the coronavirus
downturn and continue debt repayment.
Ratings Upgraded:
Issuer: Coty Inc.
Corporate Family Rating, Upgraded to B2 from Caa1
Probability of Default Rating, Upgraded to B2-PD from Caa1-PD
Speculative Grade Liquidity Rating, Upgraded to SGL-3 from SGL-4
Senior Secured 1st Lien Revolving Credit Facility, Upgraded to B1
(LGD3) from B3 (LGD3)
Senior Secured 1st Lien Term Loan, Upgraded to B1 (LGD3) from B3
(LGD3)
Senior Secured Regular Bond/Debenture, Upgraded to B1 (LGD3) from
B3 (LGD3)
Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 (LGD5)
from Caa3 (LGD5)
Outlook Actions:
Issuer: Coty Inc.
Outlook, Remains Stable
RATINGS RATIONALE
Coty's B2 CFR reflects the company's high debt to EBITDA financial
leverage that Moody's estimates at about 7.1x in fiscal 2021 ending
June 30th. Moody's expects debt-to-EBITDA leverage to improve by
about one turn over the next year to about 5.7x due to stronger
earnings and debt repayment funded from free cash flow and asset
sales. Coty continues to recover from weak revenue levels driven by
efforts to contain the coronavirus and pressure on discretionary
consumer income. Demand for the company's products will improve
over the next year as the number of vaccinated consumers continues
to increase, and as consumers slowly resume more away-from-home
activities that will help drive a rebound in beauty products
demand. The rating also reflects Moody's belief that the company
will generate strong free cash flow of about $350-400 million over
the next year due to good earnings growth and a meaningful working
capital improvement, driven by reduced inventory levels.
Coty's concentration in fragrance and color cosmetics creates
exposure to discretionary consumer spending and requires continuous
product and brand investment to minimize revenue volatility as
these categories tend to be more fashion driven than other beauty
products. Coty will remain more concentrated than its primary
competitors in mature developed markets. The company also relies
more heavily on licenses to support its prestige brands relative to
greater ownership of its mass beauty brands. Moody's believes
reliance on licensing results in a weaker market position than many
of its larger competitors that own the bulk of the prestige beauty
brands. These factors create growth challenges and investment needs
to more fully build its global distribution capabilities and brand
presence. The ratings are supported by the company's large scale,
its portfolio of well-recognized brands, and good product and
geographic diversification.
The upgrade to SGL-3 from SGL-4 reflects the company's improved
free cash flow and higher potential to comply with a financial
maintenance leverage covenant that contains meaningful step downs.
The SGL-3 Speculative Grade Liquidity rating reflects Moody's view
that Coty's liquidity is adequate because the company will have
weak headroom under the total net leverage covenant over the next
12 months. The $2.75 billion revolver expiring in 2023 and the term
loan A are subject to a maximum 5.25x total net leverage financial
covenant with step downs. The covenant steps down to 5.0x in March
2022, 4.75x in June 2022, 4.50x in September 2022, 4.25x in
December 2022 and 4.0x in March 2023 and thereafter. Coty will need
to reduce leverage to meet the step downs, which creates reliance
on a recovering economy, good execution, and, potentially,
identification of additional cost saving opportunities to avoid a
covenant violation.
ENVIRONMENTAL SOCIAL AND GOVERNANCE CONSIDERATIONS
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, the recovery is tenuous, and continuation will be closely
tied to containment of the virus. As a result, a degree of
uncertainty around Moody's forecasts remains. Moody's regards the
coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Social considerations impact Coty in several other ways. First,
Coty is a "beauty" company. It sells products that appeal to
customers almost entirely due to "social" considerations. That is,
such products such as makeup and fragrance help individuals fit in
to society and comply with social mores and customs. Hence social
factors are the primary driver of Coty's sales, and hence the
primary reason it exists. To the extent such social customs and
mores change, it could have an impact -- positive or negative -- on
the company's sales and earnings. However, Moody's believes such
risk is manageable as such customs and mores change at a measured
pace, and as the company is able to adapt to changing "fashion"
trends, and hence offset such social changes. The company engages
with social media influencers, which is in line with demographic
and societal trends. While negative product reviews for the company
have historically been modest, Moody's recognizes that a high
number of adverse product reviews could negatively impact product
demand.
Coty's ratings also reflect governance considerations related to
its financial policies and board independence. Moody's views Coty's
financial policies as aggressive given its appetite for debt
financed acquisitions. In addition, the company's board of
directors has limited independence given that four of the nine
board members are related to JAB, Coty's majority shareholder. The
company favorably suspended the dividend to preserve cash and
bolster liquidity until leverage is reduced. Coty's plan to reduce
net debt-to-EBITDA leverage to 4.0x (based on the company's
calculation) by the end of calendar 2022 from 5.1x as of June 2021
demonstrates a continued focus on lowering leverage and governance
risk.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Coty's ratings could be downgraded if Coty is unable to
successfully refinance its remaining debt due 2023 in a timely
manner. The ratings could also be downgraded if operating
performance does not continue to improve, as demonstrated by
consistent revenue and earnings growth. The inability to further
reduce financial leverage to below 6.5x and improve liquidity, or
the pursuit of material debt funded acquisitions or shareholder
returns could also lead to a downgrade.
Coty's ratings could be upgraded if the company successfully
refinances its remaining debt due 2023 in a timely manner, and
improves liquidity overall. The ratings could also be upgraded if
Coty reduces financial leverage such that debt to EBITDA approaches
5.0x. Coty would also need to consistently generate good revenue
and earnings growth such that the company continues to generate
strong free cash flow.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
Coty Inc. ("Coty"), a public company headquartered in New York, NY,
is one of the leading manufacturers and marketers of fragrance,
color cosmetics, and skin and body care products. The company's
products are sold in over 150 countries. The company generates
roughly $4.6 billion in annual revenues. Coty is 57% owned by a
German based investment firm, JAB Holding Company S.a.r.l. (JAB),
with the rest publicly traded or owned by management. KKR owns
preferred stock that is convertible into a 11% interest in the
company.
CYTODYN INC: Chairman to Present at World Antiviral Congress
------------------------------------------------------------
Dr. Scott Kelly, CytoDyn Inc.'s chairman of the Board, chief
medical officer and head of business development, will be
presenting at the World Antiviral Congress 2021. The Congress will
be held from November 30 to Dec. 2, 2021, in San Diego.
Dr. Kelly will speak on Wednesday, Nov. 30, 2021, at 2:55 p.m. PDT
about emerging approaches to antivirals, specifically focusing on
leronlimab. Dr. Kelly's segment is entitled, "Leronlimab -- a
platform mab CCR5 antagonist and its role in antiviral
indications."
Dr. Kelly stated, "It is an exceptional honor to be asked to
present at the World Antiviral Congress and a testament to the
incredible potential the medical community sees with leronlimab.
The Congress brings together thought leaders and representatives of
the largest pharmaceutical companies and the most prestigious
academic institutions from around the world to discuss the future
of antiviral therapy. I look forward to this opportunity to
explain leronlimab's applications in HIV, COVID-19, and COVID-19,
Long Hauler's syndrome and the possibilities of other antiviral
indications through immunomodulation and immune restoration."
The World Antiviral Congress 2021 agenda is available here:
https://www.terrapinn.com/conference/world-antiviral-congress/agenda.stm.
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.
EASTERN NIAGARA HOSPITAL: Patient Care Ombudsman Files 3rd Report
-----------------------------------------------------------------
Michele McKay, Patient Care Ombudsman for Eastern Niagara Hospital,
Inc., reported on her visit at the Debtor's facility for the period
from December 5, 2020 to February 18, 2021. In a Third Report
filed with the U.S. Bankruptcy Court for the Western District of
New York, she noted no findings of decline in medical or nursing
care in the hospital. Eastern Niagara Hospital provides
satisfactory care to their patients, she said.
The PCO, however, noted a patient complaint about lack of
organization in patient assignments and about the noise at the
nurse desk during a certain patient's stay at the hospital. The
PCO said that the Senior Director of Nursing will follow up with
the patient and reach out to the staff involved to address the
patient's concern.
A copy of the Ombudsman's Third Report is available for free at
https://bit.ly/3CskRmm from PacerMonitor.com.
About Eastern Niagara Hospital, Inc.
Eastern Niagara Hospital -- http://www.enhs.org-- is a
not-for-profit organization, focused on providing general medical
and surgical services. The Hospital offers radiology, surgical
services, rehabilitation services, cardiac services, respiratory
therapy, obstetrics & women's health, emergency services, acute &
intensive care, chemical dependency treatment, occupational
medicine services, DOT medical exams, dialysis, laboratory
services, and express care.
Eastern Niagara Hospital previously sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. W.D. N.Y. Case No. 19-12342)
on November 7, 2019.
Eastern Niagara Hospital again sought Chapter 11 protection (Bankr.
W.D.N.Y. Case No. 20-10903) on July 8, 2020. In the petition signed
by Anne E. McCaffrey, president and CEO, the Debtor disclosed
between $10 million to $50 million in both assets and liabilities.
Judge Michael J. Kaplan oversees the case. The Debtor tapped
Jeffrey Austin Dove, Esq., at Barclay Damon LLP, as its legal
counsel.
The U.S. Trustee for Region 2 appointed creditors to serve on the
official committee of unsecured creditors on November 22, 2019. The
committee is represented by Bond, Schoeneck & King, PLLC.
Michele McKay was appointed as health care ombudsman in the
Debtor's bankruptcy case.
On August 27, 2020, the Court appointed Hunt Commercial Real Estate
as a broker.
ELANCO ANIMAL: Moody's Cuts CFR to Ba2 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service downgraded Elanco Animal Health
Incorporated's Corporate Family Rating to Ba2 from Ba1 and
Probability of Default Rating to Ba2-PD from Ba1-PD. At the same
time, Moody's downgraded the senior secured bank credit facilities'
ratings to Ba1 from Baa3, and unsecured ratings to B1 from Ba2.
There was no change to the SGL-1 Speculative Grade Liquidity
Rating. The outlook changed to stable from ratings under review.
This action concludes the rating review initiated on June 17,
2021.
On August 27, Elanco closed the acquisition of KindredBio, a
development stage, pet health company for a total purchase price of
$444 million. Elanco funded the transaction with incremental
secured debt which Moody's estimates increases its pro forma
debt/EBITDA by about half of a turn to 6.2x.
The ratings downgrade reflects an increase in financial leverage
and Moody's expectation that, despite debt repayment and earnings
growth, debt/EBITDA will remain above 4.5x until 2023. The
acquisition comes at a time when Elanco's credit metrics are
already weak for its rating, due to the acquisition of Bayer's
animal health business in 2020 including significant integration
costs, and negative demand impacts due in part to the pandemic.
Governance risk considerations are material to the rating. Elanco
has yet to establish a track record for deleveraging since becoming
an independent company in 2018, given its penchant for
acquisitions, including KindredBio, a governance risk.
Downgrades:
Issuer: Elanco Animal Health Incorporated
Corporate Family Rating, Downgraded to Ba2 from Ba1
Probability of Default Rating, Downgraded to Ba2-PD from Ba1-PD
Senior Secured Bank Credit Facility, Downgraded to Ba1 (LGD3) from
Baa3 (LGD3)
Senior Unsecured Regular Bond/Debenture, Downgraded to B1 (LGD6)
from Ba2 (LGD5)
Outlook Actions:
Issuer: Elanco Animal Health Incorporated
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
Elanco's Ba2 Corporate Family Rating reflects its high financial
leverage and execution risks related to integrating the Bayer
business without material disruption or cost overruns. Following
the acquisition of KindredBio, Moody's believes Elanco's gross
debt/EBITDA will peak at around 6x in 2021 improving to about 5x in
2022 through earnings growth and debt repayment (including
yet-to-be realized synergies).
The rating is supported by Elanco's size and scale with revenue of
more than $4.5 billion, making it one of the largest animal health
companies globally. Once fully integrated with the legacy Bayer
business, Elanco's profitability and free cash flow will be
significant, affording stronger deleveraging potential in 2022 and
beyond. The animal health industry has lower business risk than
many other healthcare sectors and has a number of tailwinds that
will drive growth over the long-term.
ESG considerations are material to the rating. Elanco still faces
risk of future cost overruns and business disruptions as it
integrates the legacy Bayer business, a governance consideration.
Social considerations include the risk of rising regulation to curb
the use of Elanco's antibiotic products in animal protein
production globally. Longer-term, declining meat consumption in the
US and Europe may be a headwind, but Moody's believes this will be
more than offset by growing meat consumption in emerging markets
and increasing pet ownership worldwide.
The stable outlook reflects Moody's expectation that Elanco's
earnings will improve over the next 12-18 months, but that
financial leverage will remain high.
The SGL-1 Speculative Grade Liquidity Rating reflects Moody's
expectation that free cash flow will be positive in 2022. Elanco
reported $580 million of cash at June 30, 2021, and no drawings on
its $750 million secured revolver that expires in 2025. Elanco's
revolver has financial maintenance covenants. These include a
maximum net debt/EBITDA ratio of 7.71x and a minimum interest
coverage ratio of 2.0x, using pro forma EBITDA, and Moody's expects
ample cushion. Elanco has no upcoming debt maturities in 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include stable top-line
growth and margin expansion. Specifically, debt/EBITDA sustained
below 4.5x could lead to an upgrade.
Factors that could result in a downgrade include failure to realize
cost synergies or material disruption stemming from the integration
of Bayer. If Moody's expects debt/EBITDA to be sustained above
5.0x, the ratings could be downgraded.
Headquartered in Greenfield, Indiana, Elanco Animal Health Inc. is
a global manufacturer of animal health products. The company
develops, manufactures and markets products for a variety of
companion and food animals. Elanco revenue, pro forma for the
legacy Bayer business approximated $4.4 billion in 2020.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
ENACT HOLDINGS: Moody's Hikes LongTerm Issuer Rating to Ba2
-----------------------------------------------------------
Moody's Investors Service has upgraded Genworth Mortgage Insurance
Corporation (GMICO) insurance financial strength (IFS) rating to
Baa2 from Baa3, and Enact Holdings, Inc. (NASDAQ: ACT)(Enact) long
term issuer rating and senior unsecured debt rating to Ba2 from
Ba3. In addition, Moody's has upgraded Genworth Holdings, Inc.
(Genworth Holdings) backed senior unsecured debt rating to B1 from
Caa1. The outlook for the ratings is stable.
This rating action follows Genworth Financial, Inc.'s (Genworth)
minority IPO of its US mortgage insurance (USMI) business through
its intermediate holding company Enact. Genworth sold approximately
18.4% of Enact (all common shares) in its initial public offering
(IPO), resulting in net proceeds of around $535 million. Genworth
intends to use the net proceeds and existing cash on hand to repay
the AXA (senior unsecured A2) liability of $344 million which
includes the full paydown of the promissory note and estimate of
expected future losses, and partially repay other outstanding debt
obligations. AXA will fully release the pledged Enact common stock
upon paydown of the promissory note.
The IFS ratings of Genworth's life insurance subsidiaries, Genworth
Life Insurance Company and Genworth Life Insurance Company of New
York (IFS rating Caa1, stable) and Genworth Life and Annuity
Insurance Company (IFS rating B3, stable) are unaffected by this
rating action.
RATINGS RATIONALE
Enact
The rating upgrade reflects Enact's strong position in the USMI
sector with an approximate 16%-17% market share, good client
diversification, its consistent GSE's PMIER's sufficiency ratio
165% as of June 30, 2021, and consistent profitability that has
increased liquidity at the company. Enact remains majority owned
and controlled by Genworth with an ownership around 80%. However,
the ratings upgrade is also supported by Moody's expectations that
as a publicly traded company with third party investors and a
stronger balance sheet, the IPO of Enact reduces the event risk for
the company related to Genworth's potential inability to address
its own debt maturities and restructure its organization. Enact's
enhanced governance structure with the expansion of external board
members and an independent capital committee are expected to
benefit the organization as it transitions as a public company.
These strengths are tempered by the commodity-like nature of the
mortgage insurance product and the potential for price competition
in the USMI market, and the uncertainties related to mortgage loan
credit performance due to the economic disruption created by the
coronavirus pandemic.
The stable outlook on Enact and its primary insurance subsidiary,
GMICO, reflects a healthy level of capital adequacy, comprehensive
reinsurance protection on its entire insured portfolio, and a
conservative investment portfolio, together with underwriting
discipline aimed at improved profitability and market presence.
Additionally, Moody's expects Enact to balance shareholder,
creditor and policyholder considerations, with respect to product
risk, profitability, and financial flexibility ratios consistent
with its peers. Enact's leverage ratios are expected to be below
20%.
Genworth Holdings
The rating upgrade reflects the close of a minority IPO of Enact
which improves Genworth Holdings' financial flexibility including a
clear path to managing its debt maturities beyond 2021 and improves
holding company financial flexibility including increased dividend
capacity from its insurance companies. The net proceeds will
provide liquidity to the company to repay its obligation with AXA
and reduce its debt ladder. Genworth Holdings' risk profile
significantly improves with the infusion of liquidity and the
improved position the company is in relative to near term debt
obligations, uncertainty about which had constrained the rating.
The company's strengths are offset by the company's challenges to
organically build liquidity and a cash buffer, and the pressure on
financial flexibility from reduced dividends from Enact during a
stressed scenario or economic downturn. Genworth Holdings' ratings
reflect the structural subordination of the holding company's
liabilities to the liabilities of Enact and the risks associated
with the dividend inflows from its insurance companies.
The stable outlook on Genworth Holdings reflects the company's
enhanced liquidity following the monetization of a portion of its
ownership in Enact and the continued reduction in its outstanding
debt. After recently paying down 2021 debt maturities and its
expected AXA obligation, the company will significantly reduce its
interest expense benefiting its coverage ratio. The stable outlook
also reflects the expectation that Genworth Holdings will further
increase liquidity with periodic dividends from Enact subject to
its board approval and the continued emergence of cash tax payments
from its subsidiaries as part of its tax sharing arrangements.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Enact
The following factors could result in an upgrade of the ratings: 1)
Continued improvement of Enact's stand-alone credit profile as
evidenced by top-tier market share at attractive pricing levels,
and continued improvement in earnings; 2) continued maintenance of
a comprehensive reinsurance coverage; 3) Enact's adjusted financial
leverage (excl. AOCI) in the 15% - 20% range; and 4) sustained
PMIERs compliance with the maintenance of a comfortable capital
adequacy buffer
The following factors could lead to a downgrade of the rating: 1)
decline in shareholders' equity (including share repurchases) by
more than 10% over a rolling twelve month period; 2) Enact's
adjusted financial leverage (excl. AOCI) remains above 25%; 3)
deterioration in Enact's ability to meet its debt service
requirements; 4) non-compliance with the PMIERs; or 5) significant
deterioration in Enact's profitability metrics.
Genworth Holdings
According to Moody's, the following factors could result in an
upgrade of Genworth Holdings' ratings are: 1) an improvement of
financial flexibility including increased dividend capacity; 2)
further reduction in its debt ladder with financial leverage
(excluding U.S. life business equity) that is around the 25% range;
and 3) an upgrade of Enact's ratings.
The following factors could lead to a downgrade in the company's
rating are: 1) a downgrade of Enact's ratings; 2) a deterioration
in financial flexibility including decreased dividend capacity; or
3) a public policy decisions that significantly diminish the role
of mortgage insurance in the US housing finance market.
The following ratings have been upgraded:
Genworth Holdings, Inc.:
backed senior unsecured to B1 from Caa1;
backed senior unsecured shelf to (P)B1 from (P)Caa1
backed junior subordinate to B2 (hyb) from Caa2 (hyb)
backed subordinate shelf to (P)B2 from (P)Caa2
Genworth Mortgage Insurance Corporation:
insurance financial strength to Baa2 from Baa3.
Enact Holdings, Inc.:
long-term issuer rating to Ba2 from Ba3;
senior unsecured to Ba2 from Ba3.
Outlook Actions:
Genworth Holdings, Inc. - outlook changed to stable from
developing
Genworth Mortgage Insurance Corporation - outlook changed to stable
from positive
Enact Holdings, Inc. - outlook changed to stable from positive
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Mortgage
Insurers Methodology published in November 2019.
Genworth Holdings is the intermediate holding company of Genworth,
an insurance and financial services holding company headquartered
in Richmond, Virginia. Genworth Holdings also acts as a holding
company for its respective subsidiaries including its life and
mortgage insurance businesses. In addition, Genworth Holdings
relies on the financial resources of Genworth including Enact to
meet its obligations. As of June 30, 2021, Genworth reported total
assets of $100.6 billion and shareholders' equity of $15.2 billion.
EXPEDIEN INC: Files for Chapter 7 Bankruptcy Protection
-------------------------------------------------------
Vince Sullivan, writing for Law360, reports that software developer
Expedien filed for Chapter 7 bankruptcy late Monday, Sept. 20,
2021, in Texas, opting to wind down its business in the wake of a
$62 million judgment against it and another company for conspiring
to steal the trade secrets of apartment rental software company
ResMan LLC.
The company said in its bankruptcy filings that it owes $44 million
as part of a judgment handed down by a Texas federal judge earlier
this 2021 following a jury verdict that Karya Property Management
allowed Expedien to access ResMan's apartment management software
so Expedien could develop a competing product.
About Scarlet InfoTech
Scarlet InfoTech, doing business as Expedien, provides information
technology and strategy consulting services. The Company offers
business intelligence, data migration, management, warehousing,
integration, governance, and archiving solutions.
Scarlet Infotech Inc. sought Chapter 7 protection (Bankr. S.D. Tex.
Case No. 21- 33094) on Sept. 20, 2021. The case is handled by
Honorable Judge David R. Jones. Kyung Shik Lee, of Parkins Lee &
Rubio LLP, is the Debtor's counsel.
FANNIE MAE: Signs Letter Agreement With Treasury
------------------------------------------------
Fannie Mae (formally known as the Federal National Mortgage
Association), through the Federal Housing Finance Agency, acting on
Fannie Mae's behalf in its capacity as conservator, and the United
States Department of the Treasury, entered into a letter agreement
on Sept. 14, 2021. The Letter Agreement temporarily suspended the
following provisions of the Amended and Restated Senior Preferred
Stock Purchase Agreement, as amended, between Fannie Mae and
Treasury:
* Section 5.12(c)-relating to the single counterparty volume cap
on single-family acquisitions for cash;
* Section 5.13-relating to the limit on multifamily volume;
* Section 5.14(a)-relating to the limit on specified higher-risk
single-family acquisitions; and
* Section 5.14(b)-relating to the limit on acquisitions of
single-family mortgage loans backed by second homes and investment
properties.
These suspended provisions were new business restrictions contained
in the Jan. 14, 2021 letter agreement to the SPSPA. The Letter
Agreement provides that the suspension of these provisions will
terminate on the later of one year after the date of the agreement
and six months after Treasury notifies Fannie Mae.
Treasury beneficially owns more than 5% of the outstanding shares
of Fannie Mae's common stock by virtue of the warrant Fannie Mae
issued to Treasury on Sept. 7, 2008.
A full-text copy of the Letter Agreement is available for free at:
https://www.sec.gov/Archives/edgar/data/310522/000031052221000543/september142021letteragree.htm
About Fannie Mae and Freddie Mac
Federal National Mortgage Association (OTCQB: FNMA), commonly known
as Fannie Mae, is a government-sponsored enterprise (GSE) that was
chartered by U.S. Congress in 1938 to support liquidity, stability
and affordability in the secondary mortgage market, where existing
mortgage-related assets are purchased and sold. Fannie Mae helps
make the 30-year fixed-rate mortgage and affordable rental housing
possible for millions of Americans. The Company partners with
lenders to create housing opportunities for families across the
country. Visit -- http://www.FannieMae.com
Fannie Mae has been under conservatorship, with the Federal Housing
Finance Agency ("FHFA") acting as conservator, since Sept. 6, 2008.
As conservator, FHFA succeeded to all rights, titles, powers and
privileges of the company, and of any shareholder, officer or
director of the company with respect to the company and its assets.
The conservator has since provided for the exercise of certain
authorities by the Company's Board of Directors. The Company's
directors do not have any fiduciary duties to any person or entity
except to the conservator and, accordingly, are not obligated to
consider the interests of the company, the holders of the Company's
equity or debt securities, or the holders of Fannie Mae MBS unless
specifically directed to do so by the conservator.
A brother organization of Fannie Mae is the Federal Home Loan
Mortgage Corporation (FHLMC), better known as Freddie Mac Freddie
Mac (OTCBB: FMCC) -- http://www.FreddieMac.com-- was established
by Congress in 1970 to provide liquidity, stability and
affordability to the nation's residential mortgage markets.
Freddie Mac supports communities across the nation by providing
mortgage capital to lenders.
As of June 30, 2021, Fannie Mae had $4.15 trillion in total assets,
$4.12 trillion in total liabilities, and $37.34 billion in total
stockholders' equity.
FREDDIE MAC: Enters Into Letter Agreement With Treasury
-------------------------------------------------------
Freddie Mac (formally known as the Federal Home Loan Mortgage
Corporation), acting through the Federal Housing Finance Agency
(FHFA) as its Conservator, and the U.S. Department of the Treasury
(Treasury) entered into a letter agreement. The Letter Agreement
suspends certain requirements that were added on Jan. 14, 2021 to
the Amended and Restated Senior Preferred Stock Purchase Agreement
dated as of Sept. 26, 2008, as amended (Purchase Agreement),
between Treasury and Freddie Mac, acting through FHFA as its
Conservator.
The Letter Agreement suspended the requirements under the Purchase
Agreement related to Freddie Mac's cash window activities in
section 5.12(c), multifamily loan purchase activity in section
5.13, acquisitions of single-family loans with certain
loan-to-value, debt-to-income, and credit score characteristics at
origination in section 5.14(a), and acquisitions of single-family
loans secured by investment properties and second homes in section
5.14(b). Each such suspension shall terminate on the later of
Sept. 14, 2022 and six months after Treasury so notifies Freddie
Mac.
As a result of the Company's previous issuance to Treasury of a
warrant to purchase shares of its common stock equal to 79.9% of
the total number of shares of its common stock outstanding, on a
fully diluted basis, Freddie Mac is deemed a related party to the
U.S. government.
About Freddie Mac
Federal National Mortgage Association (Freddie Mac) is a GSE
chartered by Congress in 1970. The Company's public mission is to
provide liquidity, stability, and affordability to the U.S. housing
market. Freddie Mac does this primarily by purchasing residential
mortgage loans originated by lenders. In most instances, it
packages these loans into guaranteed mortgage-related securities,
which are sold in the global capital markets and transfer
interest-rate and liquidity risks to third-party investors. In
addition, the Company transfers mortgage credit risk exposure to
third-party investors through its credit risk transfer programs,
which include securities- and insurance-based offerings. The
Company also invests in mortgage loans and mortgage-related
securities. The Company does not originate loans or lend money
directly to mortgage borrowers.
Since September 2008, Freddie Mac has been operating under
conservatorship with FHFA as Conservator. The support provided by
Treasury pursuant to the Purchase Agreement enables the company to
maintain access to the debt markets and have adequate liquidity to
conduct its normal business operations. The amount of funding
available to Freddie Mac under the Purchase Agreement was $140.2
billion at June 30, 2021.
Due to changes to the terms of the senior preferred stock pursuant
to the January 2021 Letter Agreement, the company will not be
required to pay a dividend to Treasury until it has built
sufficient capital to meet the capital requirements and buffers
set
forth in the Enterprise Regulatory Capital Framework (ERCF). As a
result, the company was not required to pay a dividend to Treasury
on the senior preferred stock in June 2021. As the company builds
capital during this period, the quarterly increases in its Net
Worth Amount have been, or will be, added to the aggregate
liquidation preference of the senior preferred stock. The
liquidation preference of the senior preferred stock increased to
$91.4 billion on June 30, 2021 based on the $2.4 billion increase
in the Net Worth Amount during the first quarter of 2021, and will
increase to $95.0 billion on Sept. 30, 2021 based on the $3.6
billion increase in the Net Worth Amount during the second quarter
of 2021.
Freddie Mac reported net income of $2.77 billion for the quarter
ended March 31, 2021, compared to net income of $2.91 billion for
the quarter ended March 31, 2020. As of June 30, 2021, Freddie Mac
had $2.84 trillion in total assets, $2.81 trillion in total
liabilities, and $22.40 billion in total equity.
FRESH ACQUISITIONS: Committee Seeks to Increase Fee Cap to $60K
---------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 cases of Fresh Acquisitions, LLC and its affiliates
asked the U.S. Bankruptcy Court for the Northern District of Texas
to modify its previous order that authorized the employment of
Advisors, LLC as the committee's financial advisor.
In its motion, the unsecured creditors' committee requested a
modification to increase the monthly cap on Caliber's fees to
$60,000.
The court's June 25 order approved the $15,000 monthly cap on fees
charged by the firm for its financial advisory services.
Caliber Advisors can be reached at:
David Gonzales
Caliber Advisors, LLC
7373 E Doubletree Ranch Road Suite 210
Scottsdale, AZ 85258
Email: dave@caliber-advisors.com
About Fresh Acquisitions LLC
and Buffets LLC
Fresh Acquisitions LLC and Buffets, LLC operate independent
restaurant brands and are based in San Antonio, Texas. Prior to the
COVID-19 pandemic, Fresh Acquisitions and its affiliates were a
significant operator of buffet-style restaurants in the United
States with approximately 90 stores operating in 27 states. Fresh
Acquisitions' concepts include six buffet restaurant chains and a
full-service steakhouse, operating under the names Furr's Fresh
Buffet, Old Country Buffet, Country Buffet, HomeTown Buffet,
Ryan's, Fire Mountain, and Tahoe Joe's Famous Steakhouse,
respectively.
Buffets Holdings, Inc. filed for Chapter 11 relief in January 2008
and won confirmation of a reorganization plan in April 2009. In
anuary 2012, Buffets again sought Chapter 11 protection and emerged
from bankruptcy in July 2012.
On Aug. 19, 2015, Alamo Ovation, LLC acquired Buffets Restaurants
Holdings, Inc., and as a result of the merger, Buffets operated
over 300 restaurants in 35 states. Down to 150 restaurants in 25
states after closing unprofitable locations, Buffets LLC and its
affiliated entities sought Chapter 11 protection (Bankr. W.D. Texas
Case No. Lead Case No. 16-50557) in San Antonio, Texas, on March 7,
2016. On April 27, 2017, the court confirmed the Debtors' Second
Amended Joint Plan of Reorganization. The effective date of the
Plan was May 18, 2017.
Fresh Acquisitions and 14 affiliates, including Buffets LLC (also
known as Ovation Brands) sought Chapter 11 protection (Bankr. N.D.
Texas Lead Case No. 21-30721) on April 20, 2021. Fresh Acquisitions
was estimated to have $1 million to $10 million in assets and $10
million to $50 million in liabilities.
The Hon. Harlin Dewayne Hale is the case judge.
In the 2021 cases, the Debtors tapped Gray Reed as bankruptcy
counsel, Katten Muchin Rosenman LLP as special counsel, Hilco Real
Estate, LLC as real estate consultant, and GlassRatner Capital &
Advisory Group LLC, doing business as B. Riley Advisory Services,
as restructuring advisor. Mark Shapiro, GlassRatner's senior
managing director, serves as the Debtors' chief restructuring
officer. BMC Group, Inc. is the claims and noticing agent.
Arizona Bank & Trust, as creditor, is represented by Patrick A.
Clisham, Esq., at Engelman Berger, PC while the Debtors' DIP lender
is represented by J. Michael Sutherland, Esq., at Carrington
Coleman.
On April 30, 2021, the U.S. Trustee for Region 7 appointed an
official committee of unsecured creditors in the Debtors' Chapter
11 cases. Dickinson Wright, PLLC and Caliber Advisors, LLC serve as
the committee's legal counsel and financial advisor, respectively.
FRESH ACQUISITIONS: Seeks $4.3 Million Sale to New Buyer
--------------------------------------------------------
Daniel Gill of Bloomberg Law reports that Old Country Buffet,
HomeTown Buffet, and other affiliated restaurant chains are seeking
to sell their assets for $4.3 million to a new buyer after a
bankruptcy judge rejected an earlier proposed sale to a lender.
Serene Investment Management LLC is offering $3.2 million in cash,
plus up to an additional $1 million to resolve defaults in
contracts that the buyer would take over, according to court papers
filed Monday, September 20, 2021.
The purchaser also agreed to pay sales costs up to $100,000 and
cover operating costs from now until the sale closes, lead debtor
Fresh Acquisitions LLC told the U.S. Bankruptcy Court.
The sale to Serene will be subject to higher and better offers.
Serene is granted "stalking horse" bidder status at the auction.
According to the recently-approved bid procedures, the bid deadline
will be Sept. 29, 2021. An auction will be conducted on Oct. 1,
2021, if qualified bids are received by the deadline. The sale
hearing will be on Oct. 7, 2021, at 9:30 a.m.
Serene's counsel:
Lance N. Jurich, Esq.
Loeb & Loeb LLP
10100 Santa Monica Blvd., Ste. 2200
Los Angeles, CA 90067-4120
Tel: (310) 282-2100
E-mail: ljurich@loeb.com
vrubinstein@loeb.com
About Fresh Acquisitions LLC
and Buffets LLC
Fresh Acquisitions LLC and Buffets, LLC operate independent
restaurant brands and based in San Antonio, Texas. Prior to the
COVID-19 pandemic, Fresh Acquisitions and its affiliates were a
significant operator of buffet-style restaurants in the United
States with approximately 90 stores operating in 27 states. Fresh
Acquisitions' concepts include six buffet restaurant chains and a
full-service steakhouse, operating under the names Furr's Fresh
Buffet, Old Country Buffet, Country Buffet, HomeTown Buffet,
Ryan's, Fire Mountain, and Tahoe Joe's Famous Steakhouse,
respectively.
Buffets Holdings, Inc., filed for Chapter 11 relief in January 2008
and won confirmation of a reorganization plan in April 2009. In
January 2012, Buffets again sought Chapter 11 protection and
emerged from bankruptcy in July 2012.
On Aug. 19, 2015, Alamo Ovation, LLC acquired Buffets Restaurants
Holdings, Inc., and as a result of the merger, Buffets operated
over 300 restaurants in 35 states. Down to 150 restaurants in 25
states after closing unprofitable locations, Buffets LLC and its
affiliated entities sought Chapter 11 protection (Bankr. W.D.
Texas
Case No. Lead Case No. 16-50557) in San Antonio, Texas, on March 7,
2016. On April 27, 2017, the court confirmed the Debtors' Second
Amended Joint Plan of Reorganization. The effective date of the
Plan was May 18, 2017.
Fresh Acquisitions and 14 affiliates, including Buffets LLC (also
known as Ovation Brands) sought Chapter 11 protection (Bankr. N.D.
Texas Lead Case No. 21-30721) on April 20, 2021. Fresh Acquisitions
was estimated to have $1 million to $10 million in assets and $10
million to $50 million in liabilities.
The Hon. Harlin Dewayne Hale is the case judge.
In the 2021 cases, the Debtors tapped Gray Reed as bankruptcy
counsel, Katten Muchin Rosenman LLP as special counsel, Hilco Real
Estate, LLC as real estate consultant, and GlassRatner Capital &
Advisory Group LLC, doing business as B. Riley Advisory Services,
as restructuring advisor. Mark Shapiro, GlassRatner's senior
managing director, serves as the Debtors' chief restructuring
officer. BMC Group, Inc. is the claims and noticing agent.
Arizona Bank & Trust, as creditor, is represented by Patrick A.
Clisham, Esq., at Engelman Berger, PC while the Debtors' DIP lender
is represented by J. Michael Sutherland, Esq., at Carrington
Coleman.
On April 30, 2021, the U.S. Trustee for Region 7 appointed an
official committee of unsecured creditors in the Debtors' Chapter
11 cases. Dickinson Wright, PLLC and Caliber Advisors, LLC serve
as the committee's legal counsel and financial advisor,
respectively.
G & J TRANSPORTATION: Wins Cash Collateral Access Thru Oct. 31
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Hampshire to
authorize use of cash collateral in the ordinary course of its
business during the period from September 10 through October 31,
2021 in accordance with the budget.
The Debtor is permitted to use cash collateral of secured
creditors, CAT Financial, Co Bank, Financial Pacific Leasing,
Merrimack Valley Credit Union, Pawnee Leasing, and PNC Equipment
Finance in the ordinary course of its business to avoid immediate
and irreparable harm to the estate pending a final hearing.
As adequate protection for the Debtor's use of cash collateral, the
Secured Creditors are granted Replacement Liens with the same
priority, validity and enforceability as such liens on the Cash
Collateral. The Replacement Liens will not attach to any avoidance
powers held by any of the Debtor or any trustee for any Debtor.
The Debtor will pay CAT Financial, Co Bank, Financial Pacific
Leasing, Merrimack Valley Credit Union, Pawnee Leasing, and PNC
Equipment Finance their monthly payments of $2,525.40, $1,232.54,
$1,236.55, $2,350.00, $1,815.64, and $4,237.17, respectively, each
month commencing September 14, 2021. These payments will be the
normal loan payments going forward. These payments will continue
pending further order of the Court.
Absent the Court's entry of a further order extending the
authorization, the Order will terminate upon the earliest of: (i)
the last day of the Interim Use Period; (ii) the earliest date on
which a preliminary or final hearing on cash collateral
requirements can be held under the notice and service requirements
of Bankruptcy Rules 4001(b) and (d) and 7004(h); (iii) appointment
of a Trustee pursuant to Bankruptcy Code Section 1104; (iv)
conversion of the Debtor's case to one under Chapter 7 of the
Bankruptcy Code; (v) dismissal of the Debtor's case; or (vi) entry
of an order granting a Motion for Relief from Automatic Stay with
respect to any property that's collateral.
A final hearing on the Debtor's use of Cash Collateral is scheduled
for October 6 at 9 a.m.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3zvqtKw from PacerMonitor.com.
The Debtor projects $53,000 in total income and $40,921.46 in total
expenses for September and $73,078.54 in total income and
$46,871.46 in total expenses for October.
About G & J Transportation, LLC
New Hampshire-based G & J Transportation, LLC provides
transportation services to Whiteman Family Wood Processing, LLC,
transporting products, equipment, mulch and wood chips to various
locations. The company filed a Chapter 11 Petition (Bankr. D.N.H.
Case No. 21-10544) on September 10, 2021.
On the Petition Date, the Debtor disclosed $773,364 in total assets
and $1,219,603 in total liabilities. George G. Whiteman, Jr.,
owner, signed the petition.
Judge Bruce A. Harwood oversees the case. Victor W. Dahar,
Professional Association, is the Debtor's counsel.
GBG USA: Gets Court Okay to Sell Aquatalia Brand for $23 Million
----------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that U.S. Bankruptcy Judge
Michael Wiles on Tuesday, Sept. 21, 2021, approved GBG USA's motion
to sell its Aquatalia brand assets for $23 million in cash. The
buyer, Saadia Group, emerged as the winning bidder at an auction.
Judge Wiles said he'd approve the sale pending minor changes to
documentation discussed in the Sept. 21 hearing.
GBG intends to auction its Ely & Walker and Sean John brands on
Thursday, court papers show.
About GBG USA
Global Brands Group Holding Limited (SEHK Stock Code: 787) is a
leading branded apparel and footwear company. The Group designs,
develops, markets and sells products under a diverse array of owned
and licensed brands.
The Group's Europe wholesale business operates under legal entities
entirely separate and independent from the wholesale business in
North America. It primarily supplies apparel, footwear and
accessories to retailers and consumers across Europe under licenses
separately entered into by the Europe entities of the Group. The
Group's global brand management business operates on a different
business model and is distinctly separate from the wholesale
businesses in North America and Europe.
Global Brands' innovative design capabilities, strong brand
management focus, and strategic vision enable it to create new
opportunities, product categories and market expansion for brands
on a global scale.
GBG USA is a company incorporated under the laws of Delaware and is
an indirect wholly owned subsidiary of the Company. GBG USA is
primarily engaged in operating the wholesale and direct-to-consumer
footwear and apparel business in North America.
GBG USA and 10 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 21-11369) on July 29, 2021. In the petition
signed, GBG estimated both assets and liabilities between $1
billion and $10 billion. The cases are handled by Honorable Judge
Michael E Wiles.
Willkie Farr & Gallagher LLP is the Debtors' counsel. Ankura
Consulting Group, LLC, is the Debtors' restructuring advisor.
Ducera Partners LLC is the Debtors' financial advisor.
Prime Clerk LLC is the claims and noticing agent.
GFL ENVIRONMENTAL: $250MM Notes Add-on No Impact on Moody's B1 CFR
------------------------------------------------------------------
Moody's Investors Service said GFL Environmental Inc.'s B1
corporate family rating, B1-PD probability of default rating, Ba3
term loan and senior secured notes rating, B3 senior unsecured
notes rating, and SGL-2 speculative-grade liquidity ratings remain
unchanged following the announcement of $250 million in add-on
senior unsecured notes. The proceeds from the add-on senior
unsecured notes will be used for general corporate purposes. The
transaction is expected to increase GFL's pro forma leverage for
LTM Q2/2021 from 5.3x to 5.5x. The ratings outlook is unchanged at
stable.
RATINGS RATIONALE
GFL's B1 CFR is constrained by: 1) its history of aggressive
debt-financed acquisition growth strategy; 2) Moody's expectation
that leverage will remain above 4x in the next 12 to 18 months
(about 5.5x pro forma for the add-on issuance); 3) the short time
frame between acquisitions which increases the potential for
integration risks and creates opacity of organic growth; and 4)
GFL's majority ownership by private equity firms, which may
continue to hinder deleveraging. However, GFL benefits from: 1) the
company's diversified business model; 2) high recurring revenue
supported by long term contracts; 3) its good market position in
the stable Canadian and US non-hazardous waste industry; 4) EBITDA
margins that compare favorably with those of its investment grade
rated industry peers; and 5) good liquidity.
The stable outlook reflects Moody's view that GFL will sustain
leverage in the high 4x range and continue to maintain its stable
margins and good liquidity in the next 12 to 18 months.
GFL has good liquidity (SGL-2). Sources are approximately C$960
million compared to C$60 million ($46 million) of mandatory
payments payable under the amortizing notes of the tangible equity
units over the next 12 months. GFL will have about C$310 million
($250 million) of cash pro forma for the issuance, approximately
C$250 million of availability under its C$628 million and $40
million revolving credit facilities, and Moody's expected free cash
flow of about C$400 million over the next 12 months to June 2022.
GFL's revolver is subject to a net leverage covenant, which Moody's
expects will have at least a 40% cushion over the next four
quarters. GFL has limited flexibility to generate liquidity from
asset sales as its assets are encumbered.
Environmental risks considered material are the various regulations
and requirements that GFL is subjected to for the collection,
treatment and disposal of waste. GFL has a long track record of
adhering to the requirements for the proper handling of the waste
materials encountered.
The governance considerations Moody's make in GFL's credit profile
include the majority ownership by private equity firms as well as
its history of debt-financed acquisitions and aggressive financial
policies, which may be reversed after the completion of the IPO
earlier this year. Moody's also considered GFL's track record of
successfully integrating its acquisitions for the expansion of its
business as well as the management team's experience in the
amalgamation of the businesses.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if GFL demonstrates consistent and
visible organic revenue growth, maintains good liquidity and
sustains adjusted debt/EBITDA below 4.0x (5.5x pro forma pro forma
for issuance and acquisitions). The ratings could be downgraded if
liquidity weakens, possibly caused by negative free cash flow, if
there is a material and sustained decline in margins due to
challenges integrating acquisitions or if adjusted Debt/EBITDA is
sustained above 5.0x (5.5x pro forma for the issuance and
acquisitions).
The Ba3 ratings on the existing senior secured notes and term loan
are one notch above the CFR due to the senior debt's first priority
access to substantially all of the company's assets as well as loss
absorption cushion provided by the senior unsecured notes. The B3
ratings on the add-on and existing senior unsecured notes are two
notches below the CFR due to the senior unsecured notes' junior
position in the debt capital structure.
GFL Environmental Inc., headquartered in Toronto, provides solid
waste and liquid waste collection, treatment and disposal solutions
and soil remediation services to municipal, industrial and
commercial customers in Canada and the US. Pro forma for
acquisitions, annual revenue is approximately C$5.5 billion. GFL is
publicly traded on the Toronto Stock Exchange and New York Stock
Exchange.
GIRARDI & KEESE: Court Dismisses Fraud Claims Against Nano Banc
---------------------------------------------------------------
Craig Clough of Law360 reports that a California judge on Monday,
Sept. 21, 2021, dismissed fraud and other claims brought by former
partners of disgraced attorney Thomas Girardi alleging Nano Banc
improperly entered into loan agreements with Girardi on a
partnership property he used as collateral without their knowledge,
but the court ruled the lawyers can amend their complaint and also
add new claims.
In a December 2020 complaint, three of Girardi's former Girardi
Keese partners, Robert Keese, Robert Finnerty and James O'Callahan,
sued Girardi and Nano Banc, alleging they are owed at least $2. 3
million in lost earnings and equity for the $7.5 million in loans
they never agreed to.
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
HENRY FORD VILLAGE: Facility Found Compliant at Renewal Inspection
------------------------------------------------------------------
Andrew R. Vara, United States Trustee for Regions 3 and 9, filed
with the U.S. Bankruptcy Court for the Eastern District of Michigan
a Fifth Report prepared by Salli A. Pung, Patient Care Ombudsman of
Henry Ford Village, Inc. The PCO reported on the Debtor's two
facilities -- the Debtor's Henry Ford Village, Inc. and Henry Ford
Assisted Living, Inc. -- for the 60-day period through September
16, 2021.
Henry Ford Village, Inc. is licensed as a nursing home by the
Michigan Department of Licensing and Regulatory Affairs (LARA).
Henry Ford Village, which is licensed for 89 beds, was 60% occupied
at the time of in-person visits.
Henry Ford Village Assisted Living, Inc., which is licensed by LARA
as a home for the aged with 132 beds, was 40% occupied at the time
of visit.
According to the PCO, LARA-BCHS found Henry Ford Village Assisted
Living in substantial compliance with the public health code and
administrative rules regulating home for the aged facilities during
a renewal inspection conducted on July 1, 2021. Michelle Danou,
the Local Ombudsman who visited Henry Ford Village in behalf of the
PCO, reported no concerns by staff at said facility regarding
personal protective equipment, medical supplies and tools.
Likewise, the Medical Director reported no concerns, the Local
Ombudsman said; and vendor relationships are stable, according to
the facility Administrator.
A copy of the Fifth Report is available for free at
https://bit.ly/3tRM7aG from Kurtzman Carson Consultants, claims
agent.
About Henry Ford Village
Henry Ford Village, Inc., is a non-profit, non-stock corporation
established to operate a continuing care retirement community
located at 15101 Ford Road, Dearborn, Mich. It provides senior
living services comprised of 853 independent living units, 96
assisted living units and 89 skilled nursing beds.
Henry Ford Village sought Chapter 11 protection (Bankr. E.D. Mich.
Case No. 20-51066) on Oct. 28, 2020. In the petition signed by CRO
Chad Shandler, Henry Ford Village was estimated to have $50 million
to $100 million in assets and $100 million to $500 million in
liabilities.
The Hon. Mark A. Randon is the case judge.
The Debtor has tapped Dykema Gossett PLLC as its legal counsel, and
FTI Consulting, Inc., as its financial advisor. Kurzman Carson
Consultants, LLC, is the claims agent.
HILTON GRAND: Fitch Affirms 'BB-' LongTerm IDR, Outlook Negative
----------------------------------------------------------------
Fitch Ratings has affirmed Hilton Grand Vacations, Inc. (NYSE: HGV)
and Hilton Grand Vacations Borrower LLC, Long-Term Issuer Default
Rating (IDR) of 'BB-'. Following the completion of the financing
transactions in conjunction with the acquisition of Diamond Resorts
International, Inc. Fitch has converted expected ratings to final
'BB+'/'RR1' ratings to HGV's senior secured term loan, and
'BB-'/'RR4' ratings to the senior unsecured notes. The Rating
Outlook is Negative.
The Negative Outlook reflects integration risk of the acquisition,
given the near-term increase in leverage, and the impact of the
coronavirus pandemic on the travel and leisure sectors. The
company's ability to reduce leverage following the transaction and
the recovery trajectory of vacation ownership intervals (VOIs)
sales will be key considerations in stabilizing the ratings.
KEY RATING DRIVERS
Diamond Acquisition a Long-Term Positive: Fitch views HGV's
increased scale and greater geographic diversification post
acquisition as credit positives. The acquisition raises the
company's EBITDA contribution from more recurring sources (club and
resort management and consumer financing) to 50% from 40%. Diamond
will double the size of HGV's ownership network to more than
730,000 and expand its resort count from 62 to 150 locations,
including in new markets such as Arizona, New Mexico, Virginia,
North Carolina, Tennessee and Canada. The addition of Diamond
Resorts will expand the company's offerings, broadening the
company's target market. The average price point of HGV's VOIs is
approximately $60,000, compared with $25,000 for Diamond.
However, the acquisition and subsequent deleveraging pose notable
execution risk. Based on HGV's leverage calculation, the firm
intends to de-lever from 6.5x pro forma to below 3.0x within 24
months. HGV intends to reduce leverage via EBITDA growth as the
timeshare industry recovers from the pandemic and from $125 million
in cost synergies. Per Fitch's leverage calculation, which makes
adjustments for the captive finance subsidiary, Fitch expects HGV
to achieve leverage in the low-4x range in 2023 and 2024.
Strong Brand Affiliation and Network: HGV's exclusive rights to the
Hilton name for the timeshare business on a 100 year license, as
well as marketing access to the 118 million members of Hilton's
Honors loyalty program, provide a strong competitive position.
Royalty fees owed to Hilton are fully variable based on revenues.
HGV also benefits from its network of resorts, which gives the
company a presence in most key locations, including resort and
urban destinations such as NYC, Las Vegas, Orlando, Hawaii, Myrtle
Beach, Park City and San Diego, and overseas in Europe. HGV Club
members may exchange their VOIs for stays at any HGV resort or any
property in the Hilton system, as well as experiential vacation
options. The acquisition of Diamond will expand HGV's resort
network to 150 properties and its number of members from
approximately 328,000 to more than 730,000 post acquisition.
Financing Income Stable During Pandemic: Financing revenues,
largely consisting of interest income on timeshare financing
receivables, declined just 4% during 2020. Defaults remained
manageable, at just 6% in 2020, compared with 5% in 2019. The
industry's focus on targeting higher-FICO score customers following
the 2008 recession, and the job losses experienced during the
pandemic, has kept finance payments relatively stable during 2020.
Defaults, when they do occur, act as a lower cost of inventory
acquisition for the timeshare operators, and can be resold to
recover the loan balance.
Speculative Grade Financial Flexibility: HGV's financial
flexibility is generally consistent with speculative-grade ratings.
The company has financial policies in place, but Fitch expects the
company to show some flexibility around implementation that could
lead it to temporarily exceed downward rating sensitivities. The
firm's debt structure consists of a senior secured revolving credit
facility and senior secured term loan, along with senior unsecured
notes. HGV is reliant on the timeshare ABS market to fund its
timeshare customer lending beyond its warehouse facilities. Fitch
expects HGV will upsize its warehouse facility in conjunction with
the acquisition of Diamond.
Cyclicality of Timeshare Industry: The domestic timeshare market is
mature, with above-average economic cyclical sensitivity owing to
the consumer discretionary nature of the product. Entry barriers
are limited, and there are a variety of competitive alternatives,
including rapid growth and adoption of alternative lodging
accommodation companies.
DERIVATION SUMMARY
HGV's ratings reflect the company's strong position in the
timeshare industry, along with its strong brand affiliation and
network. The discretionary and cyclical nature of timeshare sales
balance the ratings.
Following the acquisition of Diamond, HGV is the second largest
timeshare operator with about 730,000 owners in its system. Travel
+ Leisure, Co. (TNL; BB-/Negative) is the largest timeshare
operator with approximately 900,000 owners. Marriott Vacations is
HGV's closest peer with roughly 660,000 owners.
HGV's revenues are less diversified than TNL's, which owns the
timeshare exchange network RCI. Per Fitch's leverage calculation,
HGV has historically operated with lower leverage than Travel +
Leisure and Marriott Vacations. However, post the Diamond
acquisition, Fitch expects HGV will operate with leverage more in
line with that of peers.
Fitch links and synchronizes the IDRs of the parent and subsidiary
operating partnership due to entities operating as a single
enterprise with strong legal and operational ties.
According to Fitch's "Corporate Rating Criteria," when analyzing a
corporate issuer with a captive finance subsidiary, Fitch
calculates an appropriate target debt-to-equity ratio for the
finance subsidiary based on its asset quality, funding, and
liquidity. If the finance subsidiary's target debt-to-equity ratio,
based on Fitch's calculations, is lower than the actual ratio,
Fitch assumes that the parent injects additional equity into the
finance subsidiary to bring the debt-to-equity ratio down to the
appropriate target level. Fitch then considers the effect of this
equity injection in its analysis of the parent's credit profile.
KEY ASSUMPTIONS
-- Revenues increase 190% in 2021 due to the acquisition of
Diamond and the recovery of timeshare industry fundamentals.
Revenues subsequently increase by 50% and 20% in 2022 and
2023, respectively, to reflect growth in sales from
development projects and the continued recovery in the sector;
-- EBITDA margins recover to 17% during 2021 and subsequently are
maintained in the low-20% range during the remainder of the
forecast period;
-- Share repurchases of $50 million in 2022 and $100 million per
annum in 2023 and 2024;
-- Excluding HGV's acquisition of Diamond, no additional
acquisitions or dispositions occur during the forecast period.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Adjusted debt to operating EBITDAR sustaining below 4.0x;
-- Greater cash flow diversification by brand and/or business
line;
-- Evidence of through-the-cycle sustainability in the company's
capital-light inventory sources.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deterioration in the company's liquidity position, possibly
due to greater off-balance sheet timeshare inventory purchase
commitments, leading to EBITDAR/(gross interest + rents)
sustaining below 2.0x;
-- Adjusted debt to operating EBITDAR and FCF/debt above 5.0x
and/or lower than 5.5%, respectively;
-- Material decline in profitability, leading to EBITDAR margins
sustaining around 15%;
-- Consistently negative FCF.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: HGV's liquidity position is adequate
considering its $800 million revolving credit facility, strong cash
flow generation and $318 million of unrestricted cash as of June
30, 2021. In connection with HGV's acquisition of Diamond, the firm
refinanced its existing debt and issued a $1.3 billion secured term
loan due 2028 along with unsecured notes issuances of $850 million
and $500 million. The notes are scheduled to mature in 2029 and
2031, respectively.
HGV is reliant on the ABS market to help fund its timeshare
customer lending activities beyond its warehouse facility. A
significant economic downturn resulting in tightened credit markets
could pressure HGV's securitization market access and potentially
require the company to provide support to its finance subsidiary.
ISSUER PROFILE
Hilton Grand Vacations Inc., a timeshare company, develops,
markets, sells, and manages vacation ownership resorts primarily
under the Hilton Grand Vacations brand. The company operates in two
segments, Real Estate Sales and Financing; and Resort Operations
and Club Management. It sells VOIs; manages resorts; operates a
points-based vacation club; and finances and services loans
provided to consumers for their timeshare purchases.
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.
IDEANOMICS INC: To Increase Stake in Energica Motor to 70%
----------------------------------------------------------
Ideanomics has entered into an agreement to launch a voluntary
conditional tender offer in concert with the Founders of Energica
for shares of Energica Motor Company S.p.A. (Energica), a
manufacturer and distributor of 100% battery-powered electric
motorcycles, pursuant to which Ideanomics plans to increase its
investment in Energica to approximately 70%. The Energica Founders
shall continue to own 29% of Energica.
Manufactured in the heart of the Italian Motor Valley in historic
Modena, Energica motorcycles are the ultimate expression of Italian
exclusivity, performance, and design. With state-of-the-art,
race-derived technology, Energica owners experience the kind of
thrills evoked by the highest peak and sustained performance of any
homologated electric motorcycle available for road use. On the
track or on the road, Energica motorcycles embody the evolution of
emissions-free excellence.
Energica nearly doubled their sales in 2020 and the first half of
2021 has been strong with the firm accepting its largest order to
date. This performance is fueling a swift expansion in the
European market as well as in Asia, the Middle East and Africa
(AMEA).
The Energica lineup of high-performance electric motorcycles
includes:
* Energica EGO, EGO+ and EGO+ RS: The Energica EGO series offers
riders the highest top speed and sustained performance of any
electric motorcycle on the market. Coupled with surprisingly
nimble handling even at lower speeds, the bike sports immense
torque, blistering acceleration, sophisticated on-board technology,
and DC Fast Charging (DCFC) as standard - all with zero emissions.
* Energica EVA Ribelle and EVA Ribelle RS: A true electric
e-fighter, Energica's EVA Ribelle is the naked version of the
Energica EGO, with the same torque, power, acceleration, and range,
with key differences being riding position and top speed. Perfect
for aggressive riding with an urban mojo, or an
assertive-yet-upright riding position instead of the typical track
day crouch, the EVA Ribelle also easily transforms into a
long-distance sport touring bike with the simple addition of side
panniers, windshield, and tank bag.
* Energica EVA EsseEsse9, EVA EsseEsse9+ and EVA EsseEsse9+ RS:
The Energica EVA EsseEsse9 shares the technology and sophistication
of both the EGO and the EVA Ribelle but is made more suitable for
casual riding without the demanding hyper-performance of the other
two models. The EVA EsseEsse's classic bench seat and relaxed
riding position make it the ideal bike for two-up riding and the
preferred choice for long-distance electric wanderers around the
world.
With its investments in Energica, Ideanomics continues to expand
its global footprint in the electric vehicle (EV) industry,
especially in the high-growth two-wheeler market, complementing
Ideanomics' Treeletrik business, headquartered in Malaysia and
serving the ASEAN market.
"The two-wheeler electric market is poised for significant growth,
and we couldn't be more excited about the synergies between
Ideanomics and Energica that will allow us to be a prime player in
this space," said Shane McMahon, executive chairman of Ideanomics.
"This vibrant piece we are adding to the mobility business will not
only expand our market reach, but also add significant weight to
the mechanical expertise and technology innovation in the
two-wheeler space."
"We are grateful for Energica's continued interest in growing
synergistically alongside other brands within the Ideanomics
Mobility ecosystem," said Alf Poor, CEO of Ideanomics. "With
exceptional management and leadership in place and a full range of
innovative zero-emissions products already in market, we believe
Energica has the opportunity to benefit strongly from Ideanomics
Capital's resources, transforming their growth trajectory and
positioning them as a global leader in the electric motorcycle
market."
The global high performance electric motorcycle market is expected
to grow at a CAGR of over 35% from 2019-2024. With its
state-of-the-art battery technology development, Energica was
chosen by Dorna as a single manufacturer for the FIM Enel MotoE
World Cup.
"We are thrilled to further our relationship with Ideanomics as
they continue to expand their global footprint in the EV industry,
especially the promising two-wheeler market," said Livia Cevolini,
CEO of Energica Motor Company S.p.A. "Ideanomics provides access
to a synergistic network of innovative companies addressing global
challenges within the zero-emission transportation segment. We
look forward to continued growth, innovation and collaboration
within the Ideanomics ecosystem."
The transaction is subject to regulatory approval, and other
customary closing conditions.
Advisors
Ideanomics was assisted by Venable LLP and Greco Vitali e Associati
acting as Ideanomics' legal advisors, while Energica and the
founding members were assisted by Nctm.
About Ideanomics
Ideanomics is a diversified solutions provider for electric
mobility. The company provides turn-key vehicle, finance and
leasing, and energy management services for commercial fleet
operators. The Company is headquartered in New York, NY, with
operations in the U.S., China, Ukraine, and Malaysia.
Ideanomics reported a net loss of $106.04 million for the year
ended Dec. 31, 2020, compared to a net loss of $96.83 million for
the year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$698.05 million in total assets, $145.39 million in total
liabilities, $1.26 million in convertible redeemable preferred
stock, $7.72 million in redeemable non-controlling interest, and
$543.68 million in total equity.
IMERYS TALC: Judge Mulls Johnson & Johnson Bid to Stop Vote Changes
-------------------------------------------------------------------
Maria Chutchian of Reuters reports that Johnson & Johnson on Monday
attempted to discredit efforts by lawyers representing personal
injury claimants to change their votes on the restructuring plan of
J&J's former talc supplier, Imerys Talc America Inc.
Allowing the claimants to change their votes would "make a mockery"
of the bankruptcy plan voting process, J&J attorney Ronit Berkovich
of Weil, Gotshal & Manges said during Monday's virtual hearing
before U.S. Bankruptcy Judge Laurie Selber Silverstein.
The dispute stems from two law firms that moved to swap their
clients' votes against the Imerys reorganization plan to votes in
favor of the plan, which would provide critical support for the
proposal. J&J, which has opposed the plan, has urged Silverstein
to prevent them from changing the votes or to toss them
altogether.
Imerys, represented by Latham & Watkins, filed for bankruptcy in
February 2019 to deal with about 15,000 lawsuits alleging its
products caused ovarian cancer and asbestos-related mesothelioma.
The plan, if approved by the bankruptcy court, would set up a trust
to compensate personal injury claimants. J&J, which has also faced
extensive litigation over its talc products and has denied
wrongdoing, argues that Imerys is trying to make it easier for
cancer victims to sue J&J instead.
The pharmaceutical giant asked the judge to reject motions to
change more than 15,000 plan votes submitted by one law firm, Bevan
& Associates, and several hundred more from a second firm, Williams
Hart Boundas Easterby. J&J also filed a separate motion to
disqualify those votes altogether. More than 80,000 votes were cast
overall.
Silverstein did not rule but appeared reluctant to
“disenfranchise” votes submitted by attorney Thomas Bevan on
behalf of his clients.
"(Bevan) should vote in the way that he believes is in his best
interest. I don't really get to second guess that, do I?" she
said.
J&J argues that the votes were changed after the voting deadline
and that there's no reason for Bevan’s clients to support the
plan because very few of them will be eligible for recoveries from
the trust. Bevan said at the hearing that he was changing his
clients' votes because of a misunderstanding of how a vote on the
Imerys plan could affect his clients' rights in another
talc-related bankruptcy, that of Cyprus Mines Corp.
But even with the misunderstanding clarified, there's still no good
reason for Bevan's clients to support the plan, Berkovich said.
"It's as if Mr. Bevan is voting to accept because he believes two
plus two equals five, or the earth is flat," she said.
When asked if any of his clients instructed him to vote in favor of
the plan, Bevan said he does "what's best for my clients as a
whole."
Bevan also testified that neither his clients nor his firm were
offered anything in exchange for switching their votes.
Imerys, once the U.S.-based arm of French group Imerys SA, was sold
to Magris Resources Canada Inc for $223 million in 2020. Those
proceeds will go to a trust that, under the company's proposed
plan, will pay personal injury claims.
For Imerys: Jeffrey Bjork, Kimberly Posin, Helena Tseregounis and
Richard Levy of Latham & Watkins; and Mark Collins, Michael
Merchant, Amanda Steele and Brett Haywood of Richards, Layton &
Finger
For Johnson & Johnson: Diane Sullivan, Gary Holtzer, Ronit
Berkovich and Theodore Tsekerides of Weil Gotshal & Manges, and
Patrick Jackson of Faegre Drinker Biddle & Reath
For the tort committee: Natalie Ramsey, Mark Fink and Michael
Enright of Robinson & Cole; Rachel Strickland, Jeffrey Korn, Dan
Forman and Stuart Lombardi of Willkie Farr & Gallagher; and Kami
Quinn of Gilbert
About Imerys Talc America
Imerys Talc America, Inc. and its subsidiaries --
https://www.imerys-performance-additives.com/ -- are in the
business of mining, processing, selling and distributing talc. Its
talc operations include talc mines, plants and distribution
facilities located in Montana (Yellowstone, Sappington, and Three
Forks); Vermont (Argonaut and Ludlow); Texas (Houston); and
Ontario, Canada (Timmins, Penhorwood, and Foleyet). It also
utilizes offices located in San Jose, Calif., and Roswell, Ga.
Imerys Talc America and its subsidiaries, Imerys Talc Vermont, Inc.
and Imerys Talc Canada Inc., sought Chapter 11 protection (Bankr.
D. Del. Lead Case No. 19-10289) on Feb. 13, 2019. The Debtors were
estimated to have $100 million to $500 million in assets and $50
million to $100 million in liabilities as of the bankruptcy
filing.
Judge Laurie Selber Silverstein oversees the cases.
The Debtors tapped Richards, Layton & Finger, P.A., and Latham &
Watkins LLP as their legal counsel, Alvarez & Marsal North America,
LLC as financial advisor, and CohnReznick LLP as restructuring
advisor. Prime Clerk, LLC, is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
tort claimants in the Debtors' Chapter 11 cases. The tort
claimants' committee is represented by Robinson & Cole, LLP.
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.
INNOVATIVE DESIGNS: Incurs $36K Net Loss in Quarter Ended Jan. 31
-----------------------------------------------------------------
Innovative Designs, Inc. filed with the Securities and Exchange
Commission its Quarterly Report on Form 10-Q disclosing a net loss
of $35,965 on $40,017 of net revenues for the three months ended
Jan. 31, 2021, compared to a net loss of $68,890 on $47,426 of net
revenues for the three months ended Jan. 31, 2020.
As of Jan. 31, 2021, the Company had $1.59 million in total assets,
$757,196 in total liabilities, and $836,958 in total stockholders'
equity.
During the three month period ended Jan. 31, 2021, the Company
funded its operations from revenues from sales, a loan of $200,000
and sale of its common stock in the amount of $25,000. In May of
2020, the Company was granted a Paycheck Protection Program loan in
the amount of $33,652. The loan was forgiven in June 2021.
"We will continue to fund our operations from sales and the sale of
our securities. We continue to pay our creditors when payments are
due. We will require more funds to be able to order the material
for our INSULTEX products and to purchase equipment needed for the
manufacture of the INSULTEX product. The Company reached an
agreement with the manufacturer of the INSULTEX material to
purchase a machine capable of producing the INSULTEX material.
Also included in the proposed agreement will be the propriety
formula that creates INSULTEX. The Company took delivery of the
equipment in December 2015. The Company will have to have the
machine installed and ensure that it can be operated in compliance
with all environmental rules and regulations. It is the Company
intentions to have the equipment operational but cannot currently
provide a time estimate. Among the factors affecting the time
estimate are financial resources available to the Company, finding
a suitable facility and bringing technical personal from abroad to
install the equipment. The Company has currently made deposits of
$600,000 on the equipment. The Company has incurred $17,000 of
additional expenses related to shipping. The Company will produce
INSULTEX under its own brand name," Innovative Designs said.
The Company will continue to fund its operations from revenues,
borrowings from private parties and the possible sale of its
securities. Should the Company not be able to rely on the private
sources for borrowing and /or increased sales, its operations would
be severely affected as it would not be able to fund its purchase
orders to its suppliers for finished goods and its efforts to
produce its own INSULTEX would be delayed.
A full-text copy of the Form 10-Q is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/1190370/000173112221001527/e3097_10q.htm
About Innovative Designs
Headquartered in Pittsburgh, Pennsylvania, Innovative Designs, Inc.
operates in two separate business segments: cold weather clothing
and a house wrap for the building construction industry. Both of
its segment lines use products made from INSULTEX, which is a
low-density foamed polyethylene with buoyancy, scent block, and
thermal resistant properties. The Company has a license agreement
directly with the owner of the INSULTEX Technology.
Innovative Designs recorded a net loss of $280,743 for the year
ended Oct. 31, 2020, compared to a net loss of $520,591 for the
year ended Oct. 31, 2019.
Bayville, NJ-based Boyle CPA, LLC, the Company's auditor since
2020, issued a "going concern" qualification in its report dated
Aug. 4, 2021, citing that the Company had net losses and negative
cash flows for the years ended Oct. 31, 2020 and an accumulated
deficit at Oct. 31, 2020. These factors raise substantial doubt
about its ability to continue as a going concern for one year from
the issuance of these financial statements.
INSTAPAY FLEXIBLE: Seeks Cash Collateral Access
-----------------------------------------------
Instapay Flexible, LLC and Flexible Funding Ltd. Liability Co. ask
the U.S. Bankruptcy Court for the Northern District of Texas, Fort
Worth Division, for authority to use cash collateral and provide
adequate protection.
The Debtors seek emergency relief to use cash collateral in the
operation of their businesses. Even a few days interruption in
funding could be detrimental for the Debtors' borrowers. The
Debtors estimate that some 20,000 employees are employed by the
Debtors' borrowers in the staffing industry that depend on routine
funding to pay payroll and other operating costs. The Debtors'
trucking clients depend on daily funding to cover transportation
costs to continue operations and to get their truckers back home
after deliveries.
The Debtors are borrowers pursuant to the Credit Agreement dated as
of December 19, 2019, with Umpqua Bank, as administrative agent,
and Umpqua Bank, CIT Bank, N.A., and Horizon Bank, as lenders. The
Umpqua Credit Agreement provides the Debtors with a $100 million
revolving line of credit pursuant to the terms of the Umpqua Credit
Agreement.
The obligations under the Umpqua Credit Facility are secured by a
blanket lien in all assets of the Debtors as provided in the Umpqua
Credit Agreement and related loan documents.
As of the Petition Date, the Debtors were indebted to the Umpqua
Lenders in the approximate amount of $78,204,000. The Debtors
estimate that the amount recoverable on their loan portfolio is
approximately $108,774,813 as of the Petition Date. This provides
the Umpqua Lenders with a substantial equity cushion based on
accounts alone.
Flexible is obligated to Bison Investors, LLC pursuant to that
Secured Promissory Note in the principal amount of $2,000,000 dated
May 2, 2019. The Bison Note is secured by a blanket lien in
Flexibile's assets. As of the Petition Date, Flexible was indebted
to Bison pursuant to the Bison Note in the approximate amount of
$2,000,000.
Flexible is also obligated as borrower to Medalist Partners
Opportunity Master fund IIA, L.P. pursuant to that Subordinated
Financing Agreement dated as of September 27, 2019, which provides
Flexible with a line of credit in the maximum amount of
$20,000,000. Instapay has guaranteed Flexible's obligations under
the Medalist Facility. Both Flexible's obligations to Medalist
under the Medalist Facility and Instapay's obligations under its
guaranty agreement are secured by a blanket lien in the Debtors'
assets. Medalist's security interest in the Medalist Prepetition
Collateral is subordinated to the security interests of the Umpqua
Lenders in those assets pursuant to an intercreditor agreement. As
of the Petition Date, the Debtors were indebted to Medalist in the
approximate amount of $15,700,000.
The Debtors estimate that the total of their secured obligations to
the Lenders as of the Petition Date is approximately $95,904,000,
and that the amount recoverable on their loan portfolio is
approximately $108,774,813. The Debtors anticipate that their loan
portfolio will retain is value during the bankruptcy case through
continued operations. Thus, each of the Lenders are adequately
protected by equity in their Prepetition Collateral. Nevertheless,
to the extent of any diminution in value of each Lender's security
interest in their Prepetition Collateral occasioned by the use of
Cash Collateral, the Debtors propose to grant the Lenders
replacement liens in such assets in the same order of priority as
presently existing in the Prepetition Collateral. In addition, the
Debtors propose to continue to pay post-petition interest to each
of the Lenders at the non-default rate of interest. In doing so,
the Debtors will provide further adequate protection to such
Lenders, and will preserve the value of the Debtors' assets for the
benefit of all other creditors.
A copy of the motion and the Debtor's budget for the period from
September 10 to October 1, 2021 is available at
https://bit.ly/2Z6htPt from PacerMonitor.com.
The Debtor projects $90,954,395 in total receipts and $$1,088,847
in total operating costs.
About Flexible Funding and Instapay
Instapay Flexible, LLC and Flexible Funding Ltd. Liability Co. are
privately held asset based lending and factoring companies,
primarily focused on the staffing and transportation industries.
Instapay is a whollyowned subsidiary of Flexible. Instapay engages
in factoring for clients in the transportation industry, while
Flexible focuses on ABL, mainly for the staffing industry.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Tex. Case No. 21-42214) on September
19, 2021. In the petition signed by Paula DeLuca and Steve Capper
as managers of Instapay Flexible and managing members of Flexible
Funding, the Instapay disclosed up to $50 million in both assets
and liabilities while Flexible Funding disclosed up to $500 million
in bothassets and liabilities.
Judge Edward L. Morris oversees the case.
Jeff P. Prostok, Esq. at Forshey Prostok represents the Debtors as
counsel.
ION GEOPHYSIAL: Gates Capital Entities Report 11.1% Equity Stake
----------------------------------------------------------------
Gates Capital Management, L.P., Gates Capital Management GP, LLC,
Gates Capital Management, Inc., and Jeffrey L. Gates disclosed in
an amended Schedule 13D filed with the Securities and Exchange
Commission that as of Sept. 16, 2021, they beneficially own
3,301,103 shares of common stock of ION Geophysical Corporation,
which represent 11.1% of the shares outstanding.
The percentage is based upon 29,637,478 shares of common stock
outstanding as of the Aug. 9, 2021, as reported in ION's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2021,
filed by the issuer with the SEC on Aug. 12, 2021.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/866609/000090266421004273/p21-2173sc13da.htm
About ION
Headquartered in Houston, Texas, ION -- http://www.iongeo.com-- is
an innovative, asset light global technology company that delivers
powerful data-driven decision-making offerings to offshore energy,
ports and defense industries. The Company is entering a fourth
industrial revolution where technology is fundamentally changing
how decisions are made. The Company provides its services and
products through two business segments -- E&P Technology & Services
and Operations Optimization.
ION Geophysical reported a net loss of $37.11 million for the year
ended Dec. 31, 2020, compared to a net loss of $47.21 million on
$174.68 million for the year ended Dec. 31, 2019. As of June 30,
2021, the Company had $179.26 million in total assets, $243.99
million in total liabilities, and a total deficit of $64.73
million.
Houston, Texas-based Grant Thornton LLP, the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated Feb. 11, 2021, citing that as of Dec. 31, 2020, the Company
had outstanding $120.6 million aggregate principal amount of its
9.125% Senior Secured Second Priority Notes, which mature on Dec.
15, 2021. The Notes, classified as current liabilities, caused the
Company's current liabilities to exceed its current assets by
$150.9 million and its total liabilities exceeds its total assets
by $71.1 million. These conditions, along with other matters,
raise substantial doubt about the Company's ability to continue as
a going concern.
* * *
As reported by the TCR on June 7, 2021, S&P Global Ratings raised
its issuer credit rating on U.S.-based marine seismic data company
ION Geophysical Corp. to 'CCC' from 'SD' (selective default). S&P
said, "Our 'CCC' rating reflects the company's unsustainable
leverage and the potential for a liquidity shortfall over the next
12 months. After a 30% year-over-year decline in its revenue in
2020 and a 49% sequential decline in the first quarter of 2021, ION
is highly dependent on an improvement in demand for offshore
seismic data to survive."
J&J VENTURES: $73MM Term Loan Add-on No Impact on Moody's B2 CFR
----------------------------------------------------------------
Moody's Investors Service said that J&J Ventures Gaming, LLC's
plans to issue a $73 million add-on to the company's existing $575
million term loan due 2028 and use the proceeds to acquire an
Illinois-based private terminal operator for that same amount are
credit positive.
J&J has a B2 Corporate Family Rating, B2-PD Probability of Default
Rating, B2 senior secured first lien term loan and first lien
revolving credit facility ratings and a stable rating outlook.
Moody's views the acquisition as favorable as it will increase the
company's footprint and market share in Illinois, and is consistent
with the company's strategy of opportunistic growth through
acquisition. Additionally, while J&J plans to fund the acquisition
entirely with debt, the company has performed better than Moody's
expected at the time the initial B2 Corporate Family Rating was
assigned to the company on 23-Mar-2021. As a result, J&J's ability
to meet Moody's initial leverage expectations -- debt-to-EBITDA for
the fiscal year-end 31-Dec-2021 at 6.2x dropping to 5.0x by the
fiscal year-ended 31-Dec-2022 -- remains intact. Debt-to-EBITDA for
the latest 12-months ended 30-Jun-2021 was 6.5x.
The company's B2 CFR and stable outlook are not affected because
the incremental increase in leverage is modest, projected leverage
remains within Moody's expectations for the rating, and because of
the aforementioned operating benefits.
The add-on does not change the ratings on J&J's revolver or term
loan. Pro forma for the add-on, the term loan and revolver will
continue to comprise all the debt capital structure of company, are
part of the same credit agreement, and share the same collateral
package -- a first priority perfected lien on substantially all
tangible and intangible assets of the borrower and a first priority
perfected lien on substantially all tangible and intangible assets
of the borrower and guarantors (including capital stock).
J&J Ventures Gaming, LLC is a terminal operator in the Illinois
Video Gaming Terminal (VGT) market and owns and operates 11,156
VGTs across 2,140 third-party establishments in Illinois including
bars, gaming cafes, convenience stores and truck stops. In December
2019, Oaktree Capital Management, L.P. invested $155 million to
acquire a minority equity position. Oaktree's ownership is about
57% with management-related entities owning the remaining minority
position. Revenue for the latest 12-month period ended 30-Jun-2021
was $148 million.
JACK OHIO: Moody's Assigns B2 CFR & Rates New $250MM Term Loan B2
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 Corporate Family Rating and
a B2-PD Probability of Default Rating to Jack Ohio Finance LLC. A
B2 was assigned to the company's proposed $250 million term loan
due 2028 and $25 million revolver that expires in 2026. The rating
outlook is stable.
Proceeds from the proposed credit facilities will be used to make a
$157 million distribution to its shareholders, refinance the
company's existing $62 million funded debt in full, help to prefund
$25 million of future capital spending, and pay $6 million in
transaction related fees. JACK is a regional gaming operator with
two properties in the Cleveland market, JACK Cleveland Casino and
JACK Thistledown Racino. Development projects include a new garage
and smoking patio at JACK Cleveland and regional sportsbooks.
The following ratings/assessments are affected by the action:
New Assignments:
Issuer: Jack Ohio Finance LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured Bank Credit Facility, Assigned B2 (LGD4)
Outlook Actions:
Issuer: Jack Ohio Finance LLC
Outlook, Assigned Stable
RATINGS RATIONALE
"JACK's B2 Corporate Family Rating reflects the good performance of
the Cleveland gaming market in terms of monthly gross gaming
revenue along with the limited amount of direct competition to JACK
in that market and the company's positive free cash flow profile,"
stated Keith Foley, a Senior Vice President at Moody's. "At the
same time, the ratings consider the risk associated with JACK's
small size in terms of revenue, single market concentration,
vulnerability to reductions in discretionary consumer spending, and
an aggressive financial policy including high leverage," added
Foley.
Moody's projects lease-adjusted debt-to-EBITDA leverage will
decline from 7.1x as of June 2021 and pro forma for the proposed
transaction to a 5.0x-5.5x range by the end of 2022 primarily
through earnings growth. Cost vigilance, revenue from development
projects and an ongoing recovery in visitation relative to the
second half of 2020, when the state of Ohio imposed operating hour
restrictions on casinos, will support earnings. The company's
obligation to Vici Properties L.P. resulting from a January 2020
sale leaseback of the real estate assets of its two properties
accounts for the bulk of the company's debt. Proceeds from the
lease were utilized to repay debt under prior ownership and the
benefits of such reduction continue into the current structure.
However, the proceeds were also used to fund a distribution to
former ownership and the transaction reduced financial flexibility
by eliminating a tangible asset that the company must lease
indefinitely to generate the revenue and cash flow supporting the
rated debt.
The B2 assigned to JACK's credit facilities consider that these
facilities will represent 100% of the company's funded debt. The
facilities have a first priority perfected lien on substantially
all tangible and intangible assets of JACK including capital stock
with the exception of certain excess land in Cleveland currently
under contract for sale. The proposed revolver and term loan will
be unconditionally and irrevocably guaranteed jointly and severally
on a senior basis by JACK and each existing and subsequently
acquired or organized direct or indirect wholly owned U.S.
organized restricted subsidiary of the company.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, the recovery is tenuous, and continuation will be closely
tied to containment of the virus. As a result, a degree of
uncertainty around Moody's forecasts remains. Moody's regards the
coronavirus outbreak as a social risk under Moody's ESG framework,
given the substantial implications for public health and safety.
The gaming sector has been one of the sectors most significantly
affected by the shock given its sensitivity to consumer demand and
sentiment. More specifically, JACK remains vulnerable to a renewed
spread of the outbreak and government imposed operating
restrictions.
JACK also remains exposed to discretionary consumer spending that
leave it vulnerable to shifts in market sentiment in these
unprecedented operating conditions. Additional social risk for
gaming companies includes evolving consumer preferences related to
entertainment choices and population demographics that may drive a
change in demand away from traditional casino-style gaming. Younger
generations may not spend as much time playing casino-style games
(particularly slot machines) as previous generations.
Data security and customer privacy risk is elevated given the large
amount of data collected on customer behavior. In the event of data
breaches, the company could face higher operational costs to secure
processes and limit reputational damage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook considers that JACK will continue to generate
substantial free cash flow that can be used to manage the company's
leverage at a level consistent with Moody's expectations for the
company's B2 Corporate Family Rating.
A higher rating requires that JACK continue to generate positive
free cash flow and maintain good liquidity. The company would also
need to achieve and sustain debt-to-EBITDA below 4.0x and adhere to
financial policies that maintain low leverage. A higher rating also
requires a higher degree of confidence on Moody's part that the
risks related to the coronavirus have lessened further and the
operating environment improves along with revenue and earnings
visibility.
JACK's ratings could be downgraded if liquidity deteriorates or if
the company is unable to increase EBITDA and reduce debt-to-EBITDA
below 6.0x. Factors such as volume pressures, higher operating
costs, or lower-than-expected earnings from development projects
could limit the amount of EBITDA improvement.
As proposed, the new credit facilities are expected to provide
covenant flexibility that if utilized could negatively impact
creditors. Notable terms include the following: Incremental first
lien debt capacity up to the greater of $90 million and 100% of
trailing four-quarter pro form adjusted EBITDA, plus unlimited
amounts subject to closing date pro forma first lien net leverage
ratio. No portion of the incremental may be incurred with an
earlier maturity than the initial term loans. There are no express
"blocker" provisions which prohibit the transfer of specified
assets to unrestricted subsidiaries; such transfers are permitted
subject to carve-out capacity and other conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
There are no express protective provisions prohibiting an
up-tiering transaction. The above are proposed terms and the final
terms of the credit agreement may be materially different.
The principal methodology used in these ratings was Gaming
published in June 2021.
JACK Entertainment is a regional gaming operator with two
properties in the Cleveland market, JACK Cleveland Casino and JACK
Thistledown Racino. Jack Cleveland Casino is the only property in
the Cleveland gaming market offering table games and is located
within walking distance to many urban attractions in the heart of
Downtown Cleveland. Jack Thistletown Racino is the home of the Ohio
Derby. The company, which is majority owned by the management team,
is private and does not release detailed financial information. Net
revenue for the latest 12-month period ended June 30, 2021 was $441
million.
JACK OHIO: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable
----------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
Cleveland-based regional casino operator Jack Ohio Finance LLC. S&P
also assigned its 'B-' issue-level and '3' recovery ratings to
Jack's proposed senior secured credit facility, which reflects its
expectation for meaningful (50%-70%; rounded estimate: 65%)
recovery in the event of a payment default.
S&P said, "The stable outlook reflects our expectation that the
company will exhibit steady operating performance with revenue
growth driven by contributions from its newly constructed Revel Oak
smoking patio, and soon-to-be-built smoking patio at Jack
Cleveland, albeit offset by moderating consumer demand and
increased costs as consumers are exposed to an increasing array of
entertainment choices. We expect Jack will maintain adequate
liquidity over the next 12 months and its S&P Global
Ratings-adjusted leverage will remain elevated in the 6x-6.5x area
through 2022, mainly on account of its large lease obligation.
"Our 'B-' rating on Jack primarily reflects the company's high
lease-adjusted leverage and small scale of operations compared with
rated gaming peers. Additionally, we believe the company's minimal
geographic diversity with operations solely based in the Cleveland
metropolitan area heightens the risk of regional economic
weaknesses and event risk." Offsetting these factors are the
company's strong market presence, good asset quality, high barriers
to entry for additional gaming operators in the Cleveland market,
as well as its average EBITDA margin profile compared to peers and
good expected cash flow generation in future years.
Jack has benefited from solid recovery in demand, boosting earnings
in the first half of 2021.
Regional gaming operators, including Jack, experienced elevated
demand through the first half of 2021. Jack's properties have
generated monthly revenue 10%-40% above 2019 levels despite
operating fewer total gaming positions in the beginning of the
year. S&P believes pent-up demand, limited competition from other
entertainment options, and fewer operating restrictions at the
company's properties have been the primary drivers of the recovery.
Additionally, the U.S. vaccination effort has given consumers
confidence to return to more normalized entertainment patterns and
excess savings during the pandemic have supported a robust
recovery. Jack has also benefited from the opening of a smoking
patio (Revel Oak) at its Thistledown Racino. Nevertheless, we
expect quarter-over-quarter sequential operating performance to
decline somewhat in the second half of 2021 as a broader array of
entertainment choices become available to consumers and economic
stimulus programs end.
Despite holding a favorable position in a growing gaming market,
Jack faces meaningful competitive pressures.
Jack operates in a highly competitive environment in Cleveland with
MGM Northfield Park (a racino) just 35 miles outside of the city
and nearly a dozen other competitors across Ohio and nearby markets
in adjacent states. We believe high levels of competition could
force operators such as Jack to spend heavily on promotional
allowances in order to attract customers. Additionally, although
Ohio has a more favorable gaming tax rate than nearby markets like
Pennsylvania and West Virginia, Jack faces a relatively higher tax
burden than many other regional gaming operators. Partially
offsetting these risks are the favorable demographics in Cleveland,
the lack of new competition in Ohio on the immediate horizon, and
management's experience in improving the profitability of
underperforming casinos. The expansion of commercial casinos in
Ohio would require a constitutional amendment and could require
significant capital investment from new operators.
Jack holds a strong position in the Cleveland market, with market
share of approximately 62%. Additionally, growth in the Cleveland
gaming market has outpaced that of the state of Ohio and the
broader regional gaming segment since 2014. Meanwhile, Jack has
gained market share over competitors the last few years and as of
2020 is generating greater than its fair share of gaming revenue.
We expect the company to maintain some of these market share gains
in 2022 as the company intends to open its Cleveland smoking patio,
which will be the only indoor smoking facility in the metro area.
Jack's small scale and operations in a single market could increase
operational volatility and event risk compared to larger, more
diversified peers.
As Jack operates in a single market with only two properties, the
company lacks geographic diversity. Additionally, the company pays
a large annual fixed rent expense, as it does not own its casino
real estate. Jack relies on its two properties in Cleveland to
generate cash flow and service its debt and lease obligations. This
heightens its vulnerability to adverse competitive changes, event
risk such as casino closures or stringent operating restrictions
because of public health concerns, severe weather, and regional
economic weakness. Furthermore, Jack is vulnerable to adverse
changes in the regulatory environment in Ohio, including changes in
gaming tax rates and further expansion of gaming activities in the
state. While not currently expected at this time, an expansion of
commercial casino licenses in Ohio beyond the four currently in
place could cause significant operating pressure at Jack's
properties. Such adverse events could lead to significant EBITDA
volatility and liquidity stress.
S&P expects Jack to maintain S&P Global Ratings-adjusted leverage
of 6x-6.5x and EBITDA coverage of interest of approximately 2x
through 2022.
S&P said, "Both of Jack's properties are currently open at full
capacity and in our forecast, we assume the properties do not face
additional closures or pandemic-related capacity restrictions. Our
forecast for adjusted leverage incorporates our expectation for
2021 revenue to decline sequentially in the second half of the year
but for revenue generation to remain significantly above 2019
levels as consumers continue to return to Jack's properties. We
believe overall revenue could be flat to up single-digit percentage
points in 2022 with modest decline in organic demand and revenues
from gaming offset by revenue growth contribution from the
company's smoking patio at Jack Cleveland, which we expect to open
in late 2021, full-year contribution from Revel Oak, and the
completion of the north parking garage at Jack Cleveland."
Since the current management team took over operations in 2016,
Jack has steadily increased EBITDA margins from 16.1% in 2016 to
40% on an S&P Global Ratings-adjusted basis in 2020 (and before
rent expense) by rationalizing both marketing and operational
expenses. S&P said, "Although we expect some EBITDA margin
compression in 2022 to the 33%-34% area as the company brings back
some expenses that had been reduced during the pandemic, we believe
margins will remain above 2019 levels over the next two to three
years. We expect S&P Global Ratings-adjusted leverage to be
elevated at about 6.5x in 2021, declining to the low-6x area in
2022 and EBITDA interest coverage of about 2x through 2022. As a
limited liability company, Jack does not pay meaningful direct
income taxes, but it pays distributions to its owners to fund their
tax liabilities. We expect these distributions to be significant
and believe discretionary cash flows after shareholder
distributions as a percentage of debt to be an important metric in
analyzing the company's cash flow coverage. We expect Jack's
discretionary cash flows to debt will be negative in 2021 on
account of shareholder dividends concurrent with the proposed
transaction but will likely increase to the 2%-3% area in 2022.
Downside risks to our forecasts include implementation of
social-distancing measures to stem the spread of COVID such as
capacity restrictions or mask mandates."
S&P said, "The stable outlook reflects our expectation that Jack
will have adequate liquidity over the next 12 months and maintain
S&P Global Ratings-adjusted leverage in the 6x-6.5x area through
2022, mainly on account of its large lease obligation.
"We could raise the rating if Jack's S&P Global Ratings-adjusted
leverage improves comfortably below 6.5x and the company grows and
maintains discretionary cash flow to debt above 2%. This would
likely be driven by continued solid casino visitation resulting in
revenue growth and solid EBITDA margins in addition to the absence
of significant dividend payments.
"We could lower the ratings on Jack if we believe its capital
structure is unsustainable. A significant increase in leverage or a
decline in discretionary cash flows are the most likely drivers of
a downgrade. These could be driven by prolonged capacity
restrictions or property closures, an economic downturn that
significantly reduces consumer discretionary spend, and increased
competitive pressures. Although unlikely due to the company's good
cash balance pro forma for the proposed transaction, liquidity
challenges could also cause a downgrade."
JOHNSON & JOHNSON: NJ Judge Won't Stop 'Texas Two-Step' Talc Suits
------------------------------------------------------------------
Bill Wichert, writing for Law360, reports that a New Jersey state
judge refused to preemptively block Johnson & Johnson from engaging
in a bankruptcy maneuver, the so-called Texas Two-Step, that cancer
patients say would unlawfully shield company assets from claims its
talcum powder products caused their illness.
In rejecting their application for a temporary restraining order
and preliminary injunction against the pharmaceutical giant,
Superior Court Judge John C. Porto on Monday, September 20, 2021,
said that plaintiffs Brandi Carl and Diana Balderrama want him "to
assume the defendants intend to conduct a fraudulent transaction"
but that he "cannot make that leap.
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.
Faced with more than 34,000 ovarian cancer lawsuits, J&J has told
attorneys for the victims that the company is actively exploring
options to transfer its potential talc-related liabilities --
valued at approximately $24 billion -- to a stand-alone subsidiary
and seek bankruptcy protection for that business entity.
Under a scheme known in legal circles as the "Texas Two-Step,"
economically viable companies can incorporate in Texas and then
transfer liabilities to another entity with limited assets.
Attorneys for ovarian cancer claimants have sought a TRO, arguing
that the bankruptcy strategy violates fraudulent conveyance laws in
New Jersey and most other states.
KBR INC: Moody's Raises CFR to Ba2 & Alters Outlook to Stable
-------------------------------------------------------------
Moody's Investors Service has upgraded the ratings of KBR, Inc.
Moody's upgraded the corporate family rating to Ba2 from Ba3, the
probability of default to Ba2-PD from Ba3-PD, and the senior
unsecured notes to Ba3 from B1. Moody's also affirmed the senior
secured credit facility rating of Ba1. Concurrently Moody's
downgraded the speculative grade liquidity rating to SGL-2 from
SGL-1 and changed the outlook to stable from positive.
The upgrade of the CFR follows continued organic revenue and
backlog growth of KBR's government services segment along with
KBR's rising scale, technical capabilities and revenue diversity.
Future results will be stronger and more predictable following
KBR's decision to forego energy sector related engineering,
procurement and construction projects, which were volatile. Moody's
expects that the potential for losses from unconsolidated joint
ventures, particularly the Ichthys JV, will diminish in 2022,
further improving the stability of cash flows in the future.
The downgrade of the speculative grade liquidity rating to SGL-2
(good liquidity) reflects Moody's expectation of lower cash and
revolver borrowing capacity due to the pending Frazer Nash
acquisition.
Upgrades:
Issuer: KBR, Inc.
Probability of Default Rating, Upgraded to Ba2-PD from Ba3-PD
Corporate Family Rating, Upgraded to Ba2 from Ba3
Senior Unsecured Notes, to Ba3 from B1 (LGD5 )
Affirmations:
Issuer: KBR, Inc.
Senior Secured Revolving Credit Facility, Affirmed Ba1 (LGD2)
Senior Secured Term Loan, Affirmed Ba1 (LGD2)
Downgrades:
Issuer: KBR, Inc.
Speculative Grade Liquidity Rating, Downgraded to SGL-2 from
SGL-1
Outlook Actions:
Issuer: KBR, Inc.
Outlook, Changed To Stable From Positive
RATINGS RATIONALE
The Ba2 CFR reflects KBR's $6 billion revenue scale in defense
services with good technical capabilities, its ability to lead
large contracts, and favorable revenue diversity -- spanning the US
defense and federal sector as well as the foreign government
market. Acquisitions will continue to supplement organic growth and
Moody's expects debt/EBITDA to range between mid-3x to low-4x with
free cash flow to debt of 10%-15%.
The government services portfolio benefits from KBR's strong
reputation for project management within infrastructure management,
operational readiness and mission support. Technical capabilities
being added through M&A are enabling KBR's presence within space,
intelligence and civilian agency communities to similarly evolve.
Defense system and equipment modernization will increasingly
require service contractors of scale who can innovate and manage
complex, long-term programs.
The sustainable technology and solutions segment, while smaller and
less directly synergistic with the government services business,
diversifies the revenue base and holds promising growth potential.
Migration toward cleaner energy sources should drive demand for new
product offerings by KBR. The end market is less well developed but
KBR already possesses competitive scale in the business. The
company's technical and project management skill set should benefit
the development of new products and service offerings.
Exposure to a lower US defense spending, the risk of government
shutdowns and potential for project related charges continue to be
key risks. KBR's revenue and backlog also has project concentration
risk. For example, in 2020 a project with the UK government
constituted about 10% of revenue and about 40% of backlog. Further,
KBR's business has evolved significantly in recent years and the
limited track record in its current form adds risk that stronger
recent results may not be sustained.
The Ba1 rating of the secured loan facilities is one notch above
the CFR, reflecting the presence of lower priority debt that would
absorb first loses in a stress scenario, and thereby benefit
recoveries under the loan facilities. While the CFR was upgraded
one notch, the first lien facility rating was affirmed as the
company's capital structure has become more heavily weighted
towards secured debt. The Ba3 rating on the senior unsecured notes,
one notch below the CFR, reflects their effectively junior position
relative to the secured debt.
Moody's expects KBR to maintain good liquidity. Following the
Frazer Nash acquisition, KBR's cash balance outside of consolidated
joint ventures will approximate $125 million. The company will also
have about $400 million of availability under its $1 billion
revolving line of credit. The liquidity profile benefits from
Moody's expectation that free cash flow will be around $200 million
over the next 12 months, with modest scheduled amortization under
the term loan. Moody's anticipates there will be sufficient cushion
under the company's financial ratio maintenance covenants.
The stable outlook reflects Moody's view that KBR will generally
maintain debt/EBITDA below 4.0x while continuing to be acquisitive
and build scale within the rapidly consolidating defense services
sector.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating momentum will depend on greater scale, higher
earnings quality, and continued de-risking of the sustainable
technology and solutions segment. Quantitatively, debt/EBITDA
sustained below 3.5x and free cash flow to debt over 15% could
support an upgrade.
Downward rating pressure would follow debt/EBITDA sustained above
4.5x, free cash flow to debt below 10%, or significant project
related charges. Material margin pressure or a more aggressive
financial policy could also lead to a downgrade.
KBR, Inc., headquartered in Houston, Texas, is a global provider of
differentiated professional services and technologies delivered
across a wide government, defense and industrial base. Revenues for
the last twelve months ended June 30, 2021 were approximately $5.8
billion.
The principal methodology used in these ratings was Aerospace and
Defense Methodology published in July 2020.
LAJ CONSTRUCTION: May Use Cash Collateral Through Oct. 31
---------------------------------------------------------
As told by the Troubled Company Report, the Debtor's Chapter 11
trustee, Hank M. Spacone, has sought Court approval of a
stipulation he entered in the Debtor's behalf with Cynthia Frazier
and Amit Sharma to use cash collateral from May 1 to October 31,
2021.
Judge Christopher D. Jaime of the U.S. Bankruptcy Court for the
Eastern District of California approved the stipulation.
Pursuant to the stipulation, Frazier will receive 50% of all rent
payments received by the Trustee on account of the real property at
9000 Gerber Road, in Sacramento, California. Frazier asserts a
$1,127,440 prepetition claim, secured by a trust deed recorded
against the Property. Sharma also asserts a claim amounting to
$492,000, which is secured by two trust deeds recorded against the
same Property.
A copy of the order is available for free at https://bit.ly/3krRmeg
from PacerMonitor.com.
About LAJ Construction
LAJ Construction, Inc., owns six properties in Sacramento, Calif.,
valued by the company at $18.86 million. LAJ Construction filed a
voluntary petition under Chapter 11 of the Bankruptcy Code (Bankr.
E.D. Cal. Case No. 19-25566) on Sep. 4, 2019. In the petition
signed by LAJ President Madan Lal Sharma, Debtor disclosed
$18,860,100 in assets and $6,989,494 in liabilities.
Judge Christopher D. Jaime oversees the case.
Mark J. Hannon, Esq., is the Debtor's legal counsel.
LATAM AIRLINES: Chapter 11 Exit Worries of Creditors Are Premature
------------------------------------------------------------------
Jeremy Hill of Bloomberg News reports that Latam Airlines Group SA
is still working to formulate a bankruptcy exit strategy and
creditor concerns over the forthcoming plan are "are both premature
and purely hypothetical," the Chilean carrier said in court
papers.
Responding to criticisms espoused by unsecured creditors of an
illustrative term sheet, lawyers for Latam said the company is
"committed to formulating a plan of reorganization that is in the
best interests of their stakeholders" and complies with both the
U.S. bankruptcy code as well as Chilean law.
The Debtors have filed a motion for a one-month extension of its
exclusive periods to propose a Chapter 11 Plan.
"[T]he Debtors have pursued a robust marketing process for exit
financing and capital, negotiating more than sixty non-disclosure
agreements with a number of stakeholders and many of the world's
largest and most sophisticated distressed and airline investors.
Contrary to the Committee's broad-brush assertion, the Debtors have
not concentrated their efforts in this plan process on any
particular group of stakeholders, but instead solicited interest
from a large group of stakeholders and other potential
parties-in-interest, and have focused on ensuring that any exit
strategy allows the Debtors to emerge with a sustainable capital
structure, adequate liquidity, and the ability to successfully
execute their business plan. Crucially, and as the Debtors have
also made clear in the Disclosure Materials, any exit strategy will
necessarily comply with the relevant requirements of the Bankruptcy
Code and other applicable law, including Chilean law, in order for
the plan to be confirmed and implemented consensually and
expeditiously around the world. Such a consensual plan is
ultimately to the benefit of all interested parties, including the
unsecured creditors represented by the Committee. The Debtors are
focused on crafting a plan that can be confirmed in the United
States and implemented in Chile and hope that this goal will
continue to be supported by diligent, collaborative efforts by all
parties involved in the Chapter 11 Cases, including the Committee,"
LATAM said in court filings.
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 Winters
Jureller 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.
LFS TOPCO: Fitch Assigns Final B Rating on $300MM Unsec. Notes
--------------------------------------------------------------
Fitch Ratings has assigned a final rating of 'B'/'RR4' to LFS
Topco, LLC's (Lendmark) $300 million 5.875% senior unsecured notes
due 2026. Proceeds will be used to repay existing borrowings and
for general corporate purposes. Fitch is also withdrawing its
'CCC+' rating on Lendmark's subordinated debt now that it has been
fully repaid with the proceeds of the senior unsecured debt
offering.
The assignment of the final rating follows receipt of documents
conforming to information already received by Fitch. The final
ratings are the same as the expected ratings assigned to the senior
unsecured debt on Sept. 13, 2021.
KEY RATING DRIVERS
IDRs AND SENIOR DEBT
The rating on Lendmark's senior unsecured debt is equalized with
the Long-Term Issuer Default Rating (IDR), reflecting Fitch's
expectation of average recovery prospects and structural seniority
of the notes.
Lendmark's IDR reflects its modest but growing market position in
the U.S. personal installment lending industry, robust
risk-adjusted yields, relatively solid credit quality, and an
increasingly diversified funding profile. The ratings also reflect
Lendmark's monoline business model, higher risk appetite reflecting
a heightened exposure to subprime borrowers, elevated leverage
metrics and its partial private equity ownership, which increases
the possibility of shareholder-friendly actions and adds long-term
strategic uncertainty.
Lendmark's leverage has trended higher in recent years and is
viewed as a rating constraint. Debt to tangible equity, as
calculated by Fitch, stood at 7.8x in 2Q21, benchmarking to 'b and
below' category on Fitch's quantitative benchmark matrix for high
balance sheet usage finance and leasing companies, compared to 6.3x
at YE 2019 and 5.3x at YE 2018, and is above its closest peers
after adjusting for the Current Expected Credit Loss (CECL)
accounting standard, which Lendmark has not yet adopted.
The leverage increase was largely driven by goodwill/intangibles
created from the company's sale to Lightyear Capital and Ontario
Teachers in 2019. Management expects leverage to decline over the
next few years as earnings are accreted into capital and is
targeting a leverage ratio of 6.0x to 7.0x, which Fitch views as
high given the higher risk profile of its loan portfolio. Pro forma
2Q21 leverage is expected to increase to 8.4x from 7.8x following
this debt issuance, which is already contemplated in the ratings.
Lendmark's funding profile is largely secured, which although
non-recourse to Lendmark, Fitch views less favorably due to the
encumbrance of assets, which provides less financial flexibility
during periods of stress.
Pro forma for the $300 million unsecured notes Lendmark's
percentage of unsecured debt increased to be 14% of total funding
sources as of June 30, 2021, from 7% previously. Fitch views this
increase in funding diversification favorably and an increase in
unencumbered assets as incrementally positive. The issuance results
in an implied funding, liquidity and coverage score that maps to
the 'bb' category within Fitch's quantitative benchmark matrix,
compared to a previous implied score of 'b and below'.
The Stable Outlook reflects expectations for the maintenance of
strong risk-adjusted returns, sound credit quality and prudent
balance sheet growth.
ESG CONSIDERATIONS
Lendmark has an ESG Relevance Score of '4' for Customer Welfare -
Fair Messaging, Privacy & Data Security due to the importance of
fair collection practices and consumer interactions and the
regulatory focus on them, which has a negative impact on the credit
profile, and is relevant to the ratings in conjunctions with other
factors.
Lendmark has an ESG Relevance Score of '4' for Governance Structure
due to the presence of private equity ownership, 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.
RATING SENSITIVITIES
IDRs AND SENIOR DEBT
The senior unsecured debt ratings are primarily sensitive to
changes in Lendmark's Long-Term IDR and the availability of
unencumbered assets.
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- A sustained decline in leverage below 6.0x, an increase in the
proportion of unsecured funding to at least 20% of total debt,
an ability to sustain charge-offs within management's targeted
range through credit cycles, and further diversification of
the business model either through product or geographical
expansion or revenue streams.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- Meaningful deterioration in credit quality relative to peers
and above Lendmark's targeted range of 5% to 8%, an inability
to reduce leverage toward its targeted 6.0x-7.0x range over
the Outlook horizon, and/or the imposition of new and more
onerous regulations that negatively impact Lendmark's ability
to execute its business model.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond issuers have a best-case rating upgrade scenario
(defined as the 99th percentile of rating transitions, measured in
a positive direction) of three notches over a three-year rating
horizon; and a worst-case rating downgrade scenario (defined as the
99th percentile of rating transitions, measured in a negative
direction) of four notches over three years. The complete span of
best- and worst-case scenario credit ratings for all rating
categories ranges from 'AAA' to 'D'. Best- and worst-case scenario
credit ratings are based on historical performance.
LIVEXLIVE MEDIA: All Proposals Passed at Annual Meeting
-------------------------------------------------------
LiveXLive Media, Inc. held its 2021 Annual Meeting of Stockholders
at which the stockholders:
(1) elected Robert S. Ellin, Jay Krigsman, Craig Foster, Ramin
Arani, Patrick Wachsberger, Kenneth Solomon, Bridget Baker, Maria
Garrido, and Kristopher Wright as directors;
(2) approved, on a non-binding advisory basis, the compensation
of the named executive officers of the company; and
(3) ratified the appointment of BDO USA, LLP as the company's
independent registered public accounting firm for the fiscal
year ending March 31, 2022.
About LiveXLive Media
Headquartered in West Hollywood, CA, LiveXLive --
http://www.livexlive.com-- is engaged in the acquisition,
distribution and monetization of live music events, Internet radio,
podcasting/vodcasting and music-related subscription, streaming and
video content. Through its comprehensive service offerings and
innovative content platform, the Company provides music fans the
ability to listen, watch, attend, engage and transact.
LiveXLive Media reported a net loss of $41.82 million for the year
ended March 31, 2021, compared to a net loss of $38.93 million for
the year ended March 31, 2020. As of June 30, 2021, the Company
had $92.39 million in total assets, $85.87 million in total
liabilities, and $6.51 million in total stockholders' equity.
Los Angeles, California-based BDO USA, LLP, the Company's auditor
since 2018, issued a "going concern" qualification in its report
dated July 14, 2021, citing that the Company has suffered recurring
losses from operations, negative cash flows from operating
activities and has a net capital deficiency that raise substantial
doubt about its ability to continue as a going concern.
LPL HOLDINGS: Moody's Affirms Ba1 CFR & Alters Outlook to Positive
------------------------------------------------------------------
Moody's Investors Service affirmed LPL Holdings, Inc.'s Ba1
Corporate Family Rating. Moody's also affirmed LPL's Ba2 senior
unsecured notes and Baa3 senior secured term loan and revolving
credit facility ratings. LPL's outlook was changed to positive from
stable.
Moody's has taken the following rating actions:
Issuer: LPL Holdings, Inc.
Corporate Family Rating, Affirmed at Ba1
Backed Senior Secured Bank Credit Facility, Affirmed at Baa3
Senior Secured Bank Credit Facility, Affirmed at Baa3
Senior Unsecured Regular Bond/Debenture, Affirmed at Ba2
Outlook Actions:
Issuer: LPL Holdings, Inc.
Outlook, Changed to Positive from Stable
RATINGS RATIONALE
Moody's said the ratings' affirmation reflects LPL's strong
franchise, increasing scale with solid organic growth, and its
favorable shift in revenue mix shift towards recurring advisory
asset fees. LPL has also maintained a strong earnings profile and
creditor-friendly financial policies.
The change in LPL's outlook to positive from stable reflects
Moody's expectation that growth in revenue and profitability
derived from LPL's expanding scale and growing mix of advisory
revenue will more than offset the headwinds associated with the
adverse impact of the low interest rate environment on the firm's
cash sweep income. The positive outlook also reflects Moody's
expectation that LPL will maintain its solid organic growth,
healthy liquidity and prudent financial and strategic policies.
Additionally, Moody's has improved its measure of the competitive
dynamics and industry fundamentals of the US independent
broker-dealer sector, with this operating environment no longer
having a downward impact on Moody's assessment of LPL's
creditworthiness.
Moody's said LPL's advisory assets have grown to 52% of its total
client assets as of July 2021 (compared to 47% two years ago),
resulting in a greater portion of LPL's revenue from advisory fees
on these assets, as opposed to less-predictable, client-driven
commission income. Although Moody's considers advisory fees as a
higher quality and more recurring source of revenue, they are
highly linked to broad equity market levels, and the fees could
decline should there be a market downturn. However, LPL' scale and
product offerings have expanded, driven by a combination of solid
organic growth and acquired assets, as well as from market
appreciation. This along with LPL's strong balance sheet (including
$0.9 billion in cash at June 30, 2021) and ability to generate
positive operating leverage would buffer the effect of a market
downturn on its credit profile.
In April 2021, LPL closed the acquisition of Waddell & Reed's
wealth management business adding about $70 billion in client
assets, funded through a combination of cash and new debt. As a
result, LPL's Moody's-adjusted debt leverage increased to 3.1x for
the trailing-12 months through June 30, 2021, worsening from 2.8x
at the end of 2020. Moody's said that should additional M&A
opportunities arise, LPL may increase leverage temporarily, but its
positive cash generating capabilities would permit delevering
within a reasonable timeframe. Moody's expects LPL's M&A activity
to be structured around recruiting, as opposed to large and complex
transactions, while maintaining an overall creditor-friendly
funding strategy. Since 2018, LPL's management has committed to a
net debt leverage target (defined by LPL's credit agreement) of
2.0x -- 2.75x, from 3.25x - 3.5x prior. LPL's transparent and
maintained focus on managing its capital structure and leverage
appetite has been credit positive.
Moody's also said that favorable secular and regulatory trends and
heightened barriers to entry at scale have improved the competitive
dynamics and industry fundamentals of the US independent
broker-dealer sector. Significant ongoing investments in
technology, compliance functions and client services are required
to develop platforms that service independent financial advisors in
a way that is attractive to new advisors and scalable for the
growth necessary to remain competitive and profitable.
Moody's said the affirmation of LPL's Ba2 senior unsecured notes
and Baa3 senior secured term loan and revolving credit facility,
reflects the application of Moody's Loss Given Default (LGD) for
Speculative-Grade Companies methodology. The higher-rated senior
secured bank credit facility is reflective of its priority ranking
in LPL's capital structure, whereas the lower-rated senior
unsecured notes reflects the notes' weaker ranking in LPL's capital
structure.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
LPL's ratings could be upgraded should its scale and competitive
position within the wealth management space continue to improve,
resulting in an increase in pretax earnings above $700 million and
increased profit margins. Continued demonstration of prudent
financial policies and a strategic approach to inorganic growth,
resulting in maintaining Moody's-adjusted debt leverage below 2.5x
could also lead to an upgrade.
LPL's ratings could be downgraded should there be a shift in its
financial policy that significantly increases debt to fund
shareholder-friendly capital plans. M&A activity that would result
in a sustained level of Moody's-adjusted debt leverage above 3.5x
could result in a downgrade. A significant failure in LPL's
regulatory compliance or technology infrastructure could also lead
to a downgrade.
The principal methodology used in these ratings was Securities
Industry Service Providers Methodology published in November 2019.
LRGHEALTHCARE: Unsecureds to Get Share of Liquidation Proceeds
--------------------------------------------------------------
HGRL, formerly known as LRGHealthcare, filed with the U.S.
Bankruptcy Court for the District of New Hampshire a Chapter 11
Plan of Liquidation and a Disclosure Statement on Sept. 20, 2021.
On Dec. 24, 2020, the Court entered an order approving the sale of
substantially all of the Debtor's assets, and the sale closed on
May 1, 2021. Concord Hospital Inc. acquired the Debtor's two New
Hampshire hospitals for $30 million.
Pursuant to the Plan, the Debtor proposes an orderly liquidation of
the Debtor's remaining assets.
The Plan provides that all funds realized from the collection and
liquidation of the Debtor's assets will be paid to creditors on
account of their allowed claims in accordance with the distributive
priorities of the Bankruptcy Code and the Plan.
The Plan will be implemented by establishing a Liquidating Trust
that will be administered by the Liquidating Trustee. On the
Effective Date, the Debtor's Assets, except the D&O Claims and Tort
Claims will be transferred to the Liquidating Trust for the benefit
of Holders of Allowed Claims.
On the Effective Date, the Estate's interest in any D&O Claims and
Tort Claims (including any rights in and proceeds of any related
Insurance Policies) will revest in the Debtor. The Debtor
Representative shall be authorized to institute and to prosecute
through final judgment or settle any D&O Claims and Tort Claims.
Upon the entry of a final judgment or settlement, the relevant
proceeds of the D&O Claims and Tort Claims shall be transferred to
the Liquidating Trust for the benefit of the Holders of Allowed
Claims.
Class 1 consists of Priority Non-Tax Claims of the Debtor. Each
Holder of an Allowed Priority Non-Tax Claim will receive, in full
and final satisfaction of such Claim, Cash in an amount equal to
the amount of such Allowed Priority Non-Tax Claim on or before the
date that is 30 Business Days after the later of (i) the Effective
Date and (ii) the date such Priority Non-Tax Claim becomes Allowed,
or as soon thereafter as is practicable. The Priority Non-Tax
Claims are not Impaired.
Class 2 consists of the HUD Claims. Following the payment of all
(i) Allowed Administrative Expense and Allowed Priority Claims;
(ii) fees payable to the U.S. Trustee; (iii) any amounts payable to
any Secured Creditors other than HUD under the Plan; and (iv) the
costs of administering the Plan and the Liquidating Trust, the
Liquidating Trustee shall determine the Net Distributable Assets
and pay the HUD Share to HUD, retaining the GUC Share for
distribution consistent with the terms of the Plan.
Class 3 consists of the Secured Claims of Other Lienholders. To the
extent a Secured Claim of an Other Lienholder is Allowed, it will
be treated, in the sole discretion of the Liquidating Trustee, in
one of the following ways:
* as of the Effective Date, the legal, equitable, and
contractual rights of the Holder of the Allowed Secured Claim shall
be reinstated notwithstanding any contractual provision or
applicable non-bankruptcy law that entitles such Holder to demand
or receive payment of such Claim before the stated maturity of such
Claim from and after the occurrence of a default;
* the Holder of the Allowed Secured Claim shall (i) retain a
Lien securing such Claim from and after the Effective Date and (ii)
receive deferred Cash payments from the Liquidating Trust totaling
at least the value of such Claim as of the Effective Date in full
and final satisfaction of such Claim;
* on the Effective Date, or as soon thereafter as reasonably
practicable, the Collateral securing the Allowed Secured Claim
shall be surrendered to the Holder of such Claim in full
satisfaction of such Claim; or
* the Holder of the Allowed Secured Claim shall be paid, in
Cash, an amount equal to such Claim, on or before the date that is
30 Business Days after the later of (i) the Effective Date and (ii)
the date such Secured Claim becomes Allowed, or as soon thereafter
as is practicable, in full and final satisfaction of such Claim.
Class 4 consists of all General Unsecured Claims. Each Holder of an
Allowed General Unsecured Claim will receive, in full and final
satisfaction of such Claim, on one or more GUC Distribution Dates,
a Pro Rata share of the net Liquidating Trust Assets. Class 4(a) is
Impaired. Therefore, Holders of Class 4(a) Claims are entitled to
vote to accept or reject the Plan.
Class 5 consists of Convenience Claims. Each Holder of an Allowed
Convenience Claim will receive, in full and final satisfaction of
such Claim, Cash equal to 10% of their Allowed Claim on the later
of (i) the Effective Date or (ii) ten days after an Order allowing
such Claim becomes a Final Order, or as soon thereafter as
reasonably practicable. This Class is Impaired.
Class 6 consists of all Insured Claims. Each Holder of an Allowed
Insured Claim will recover only from the available insurance
coverage of the Debtor (including any Insurance Policy), and the
Debtor, its Estate, the Liquidating Trust, and the Liquidating
Trust Estate will have no liability of any kind or nature with
respect to any amount that a Claim is alleged or determined to
exceed the amount of available insurance coverage. Such treatment
shall be in full and final satisfaction of such Claim. Class 6 is
Impaired.
The Plan provides for the disposition of substantially all the
Assets and the distribution of the net proceeds thereof to Holders
of Allowed Claims, consistent with the priority provisions of the
Bankruptcy Code. The Plan further provides for the winding down of
the Debtor and its affairs by the Liquidating Trustee and the
Wind-Down Committee. The Plan also creates a mechanism for the
Liquidating Trustee and Debtor Representative to pursue Claims and
Causes of Action, including D&O Claims and Tort Claims, to enable
recoveries to Creditors.
Following the Sale of the Debtor's assets, the Debtor, Committee
and HUD engaged in extensive settlement discussions in order to
pave a way to an orderly wind-down of the Debtor's estate. At
issue were the value of the Debtor's unencumbered assets, the
treatment of HUD's asserted secured and deficiency claims, and the
potential funds available for distribution to creditors.
As a result of those discussions, the Committee and HUD
conditionally agreed that, among other things, (i) HUD will receive
88.5% of the Net Distributable Assets, with the remainder retained
by the Liquidating Trust for distribution consistent with the terms
of the Plan, (ii) HUD will receive 60% of any Net Cause of Action
Proceeds, with the remainder retained by the Liquidating Trust for
distribution consistent with the terms of the Plan, and (iii) HUD
will be entitled to apply the MRF as set forth in the Stay Relief
Motion (the "9019 Settlement").
In addition, HUD conditionally agreed that HUD will not receive any
payment in the Chapter 11 Case or under the Plan other than as set
forth in Article IV(B)(2) of the Plan. The Debtor estimates that
pursuant to this settlement arrangement, up to approximately $6.2
million in Net Distributable Assets may be distributed to HUD, with
up to approximately $805,000 in Net Distributable Assets available
for distribution to General Unsecured Creditors. Additional funds
may become available for distribution to both HUD and General
Unsecured Creditors to the extent of any Net Cause of Action
Proceeds. As of the date of this Disclosure Statement, HUD has not
obtained final approval of the 9019 Settlement but hopes to obtain
such approval by the Confirmation Hearing.
Through this settlement, certain funds, including funds for the
purpose of satisfying Administrative Expense Claims, Priority
Claims, and the costs of administering the Plan and the Liquidating
Trust prior to the determination of the Net Distributable Assets,
have been made available to the Debtor's estate, which the Debtor
believes will provide for (i) the ability of the Debtor to confirm
and consummate the Plan and (ii) a potential distribution to
Holders of Allowed General Unsecured Claims. The Debtor believes
that, in the absence of the 9019 Settlement, there would be little,
if any, assets available for either purpose.
The Combined Hearing to approve the Disclosure Statement and
confirm the Plan will be held on November 1, 2021 at 10:00 a.m.
A full-text copy of the Disclosure Statement dated September 20,
2021, is available at https://bit.ly/3hTwOK0 from PacerMonitor.com
at no charge.
Counsel to the Debtor:
NIXON PEABODY LLP
Morgan C. Nighan
900 Elm Street
Manchester, NH 03101-2031
Telephone: (603) 628-4000
Facsimile: (603) 628-4040
E-mail: mnighan@nixonpeabody.com
- and -
Victor G. Milione
Christopher M. Desiderio
Christopher J. Fong
55 West 46th Street
New York, NY 10036
Telephone: (212) 940-3000
E-mail: cdesiderio@nixonpeabody.com
cfong@nixonpeabody.com
About LRGHealthcare
LRGHealthcare -- http://www.lrgh.org-- was a not-for-profit
healthcare charitable trust operating Lakes Region General Hospital
(LRGH), Franklin Regional Hospital, and numerous other affiliated
medical practices and service programs.
LRGH was a community-based acute care facility with a licensed bed
capacity of 137 beds, and FRH is a 25-bed critical access hospital
with an additional 10-bed inpatient psychiatric unit. In 2002,
Lakes Region Hospital Association and Franklin Regional Hospital
Association merged, with the merged entity renamed LRGHealthcare.
LRGHealthcare offered a wide range of medical, surgical, specialty,
diagnostic, and therapeutic services, wellness education, support
groups, and other community outreach services.
LRGHealthcare filed a Chapter 11 petition (Bankr. D.N.H. Case No.
20-10892) on Oct. 19, 2020. The petition was signed by Kevin W.
Donovan, president and chief executive officer. At the time of the
filing, the Debtor estimated to have $100 million to $500 million
in both assets and liabilities.
Judge Bruce A. Harwood was assigned to the case before Judge
Michael A. Fagone took over.
The Debtor tapped Nixon Peabody LLP as legal counsel; Baker Newman
Noyes as accountant; and Deloitte Transactions and Business
Analytics, LLP and Kaufman, Hall & Associates, LLC as financial
advisors. Epiq Corporate Restructuring, LLC is the claims,
noticing, solicitation, and administrative agent.
The U.S. Trustee for Region 1 appointed a committee of unsecured
creditors on Oct. 23, 2020. The committee is represented by the
law firms of Sills Cummis & Gross P.C. and Drummond Woodsum. CBIZ
Accounting, Tax and Advisory of New York, LLC serves as the
committee's financial advisor.
In December 2020, the U.S. Bankruptcy Court, District of New
Hampshire issued a final order approving Concord Hospital's
acquisition of Lakes Region General Hospital, Franklin Hospital and
their ambulatory sites from LRGHealthcare. The healthcare system
and its two hospitals were sold to Concord Hospital for $30
million.
On May 5, 2021, the Debtor filed its change of name from
LRGHealthcare to HGRL with the Secretary of State for the State of
New Hampshire and the Laconia Town Clerk.
LSF11 A5: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating and 'B'
issue-level rating on coatings, colorants, and composite resins
producer AOC's parent holding company LSF11 A5 HoldCo LLC's secured
debt issues. The outlook is stable.
S&P assigned its 'B-' issue-level rating on the unsecured notes.
All ratings are based on proposed terms and conditions.
S&P will discontinue its ratings on predecessor company Composite
Resins Subholding B.V. after the transaction closes.
The stable outlook reflects S&P's view that economic conditions and
operational execution will allow the company to maintain
appropriate credit measures for the ratings, with S&P Global
Ratings-adjusted debt to EBITDA that is no greater than 6.5x on a
run-rate basis.
S&P said, "AOC is being sold to a new financial sponsor whose
financial policies we view as likely to be aggressive. With AOC's
sale to Lone Star Funds from CVC Capital Partners, financial
policies are a key determinant of the ratings. In our view,
financial sponsor Lone Star Funds is unlikely to commit to
financial policies that are conservative enough for a higher
rating. We believe the risk of re-leveraging is high, as over the
long run the sponsor will seek to earn an appropriate level of
return on its substantial equity commitment. This may be
effectuated via a large dividend recapitalization transaction,
and/or a sale to another financial sponsor which increases debt
leverage (such as the current situation)."
"AOC's credit measures are likely to be strong for the rating,
providing it with some cushion to undertake tuck-in acquisitions.
AOC has a September fiscal year-end, and we believe the company's
adjusted debt to EBITDA ratio at Sept. 30, 2021, is likely to be
roughly 5.5x, which is at the low-to-medium end of the range we
typically see for companies with similar ratings. With conducive
industry conditions (including high capacity utilization rates and
stable customer demand globally) we see AOC's credit measures
improving. By the same point next year, debt leverage will have
eased to 4.4x, while the EBITDA to interest coverage ratio remains
relatively healthy at the same 4.4x despite the higher interest
burden associated with the additional debt. Although we have not
factored in additional acquisitions, AOC should have capacity to
engage in tuck-in deals from time to time. An example of a useful
acquisition the company made was its purchase of Ashland's maleic
anhydride operations in late 2020, providing it with some vertical
integration in the supply chain.
"The company's operational profile has evolved toward more
specialty products, which should boost the quality of earnings and
cash flows. While conventional composite resins are seen as
commodity-like products, we recognize that this segment comprises
about half of the AOC's volumes and only one-third of its adjusted
EBITDA. It derives the other half of its volume and two-thirds of
its profitability from its specialty CASE and colorants
formulations. These products require a good deal of collaboration
with customers who are seeking highly specific quality and
performance characteristics. Roughly 70% of the company's SKUs
pertain to these types of specialty formulations where demand
stability and pricing strength is likely to be higher. There is
evidence supporting this in recent periods, as AOC saw its unit
contribution margins increase through 2021 despite market prices of
raw materials increasing sharply. The company was able to realize
consistent price gains to offset the rising cost of raw materials.
AOC's sales are roughly half and half split between contracted and
non-contracted, with contract length averaging three to five years.
Only about 30% of its contracted work is tied to an index, so
management must be adept at negotiating the price increases and
decreases on the majority of its work during periods of great
change in raw material prices. As raw material prices ease in the
future, it's conceivable that AOC's contribution margins may also
dip a bit; however, assuming that competitive dynamics among the
industry's three main participants (which now account for about 80%
of the market share in the U.S. and Europe) remain rational given
the tight industry capacity, we assume the degree of margin
degradation from the peak would be manageable. The company has made
good progress in reducing procurement and administrative costs in
the past few years and envisions additional product innovation and
more sourcing/supply optimization by 2025. These initiatives could
support base volume gains and keep profitability and cash flows
healthy and resilient enough for AOC to continue to generate
appropriate credit measures for the ratings.
"The stable outlook on AOC reflects our belief that despite the
increase in debt from the new LBO, the company's adjusted debt to
EBITDA ratio will be healthy enough to provide ample cushion
relative to the 5.0x-6.5x range we see as appropriate for the
current ratings. Our base-case scenario also contemplates EBITDA
interest coverage remaining well above 1.5x with liquidity
remaining adequate. Stable economic conditions, high capacity
utilization, a specialized portfolio of value-added products (over
70% of AOC's products are customized), and rational competitive
industry dynamics should offset raw material inflation. AOC's good
operational execution is likely to elicit solid operating
performance over the next year. The outlook recognizes that the
company may opt to engage in tuck-in acquisitions, but does not
envision the new financial sponsor Lone Star Funds taking actions
that are deleterious to credit quality over the next year, such as
a large dividend recapitalization transaction.
"We view a negative rating action in the next 12 months, driven by
a deterioration of AOC's operating performance, as unlikely given
the material rating headroom under our current base case." However,
S&P may lower its ratings on AOC over the next 12 months if:
-- Business conditions in the coatings, colorants, adhesives, and
composite resins spaces deteriorate such that AOC's EBITDA declines
by more than 10%, causing adjusted debt leverage to exceed 6.5x or
EBITDA interest coverage to drop to 1.5x;
-- The company experiences unexpected delays or large adverse
changes in input costs without being able to realize sufficient
pricing gains on the sales side, which compresses margins and
diminishes credit metrics;
-- It undertakes more aggressive financial policies (e.g.,
additional dividend payouts or engaging in an unexpectedly large
debt-financed acquisition), which sustains adjusted leverage above
6.5x with no clear prospects of recovery; or
-- Any combination of the above or other factors result in the
company's liquidity becoming constrained.
Rating upside over the next 12 months is constrained by the
majority private equity ownership, which we view as potentially
aggressive. However, S&P could consider an upgrade if:
-- Lone Star Funds' (or any financial sponsor's) control of the
company diminishes to, and remains below, less than 40%, perhaps
via an initial public offering to a diverse set of institutional
owners who are likely to abide by less-aggressive financial
policies;
-- S&P believes there is a strong explicit commitment from
management and shareholders that adjusted leverage will be
sustainably maintained below 5.0x at all times;
-- The company exhibits a track record of abiding by conservative
financial policies with a low risk of re-leveraging; and
-- The company reduces the potential for volatility in earnings
and cash flows.
LUCKIN COFFEE: Settles Class Action Suit, Seeks Plan Approval
-------------------------------------------------------------
On September 21, 2021, Luckin Coffee Inc. (OTC: LKNCY) announced
that it has entered into a binding term sheet to settle its US
securities class action lawsuit with the lead plaintiffs. The
coffeehouse chain also filed a petition and summons for directions
in the Grand Court of the Cayman Islands seeking to convene a
meeting with its creditors related to the mandated restructuring of
its outstanding senior notes.
These recent actions are still related to the ongoing liquidation
of the company after it had filed Chapter 15 bankruptcy in February
2021. The Chinese coffee company reportedly misrepresented its
financials in 2019, inflating its revenue by approximately US$310
million. In December 2020, the company settled the accounting fraud
case with US Securities and Exchange Commission for US$180 million
without admitting or denying the allegations.
The settlement of the provisionally certified class action is
connected to resolving current and future claims of holders of the
company's American depository shares holders between May 17, 2019
and July 15, 2020. The binding term sheet documents and seeks
approval from the Cayman court, which oversees the liquidation, and
the US court handling the US class action that the settlement
amount will be based on the global settlement amount of US$187.5
million. This will be reduced on a pro-rata basis based on the
valid opt-out notices that will be reported by the US court on
October 8, 2021.
"Upon final approval, this settlement will resolve a significant
contingent liability and enable Luckin Coffee to move forward with
a greater focus on our operations and the execution of our
strategic plan," said Luckin Coffee Chairman and CEO Dr. Jinyi Guo,
who took the helm in July 2020 after the former company chief
Charles Zhengyao Lu was removed by the shareholders.
On the same day, the company also launched an arrangement scheme to
restructure its outstanding US$460 million 0.75% convertible senior
notes due 2025. Per its filed petition with the Cayman court, the
company seeks to convene a single meeting with the creditors to
approve the scheme envisaged by the restructuring support
agreement. The approval is necessary under Cayman law since the
aggregate principal amount of the existing notes held by creditors
party to the agreement is above the 75% voting threshold required
to approve an arrangement scheme.
The Cayman court is expected to confirm the date of the hearing to
adjudicate the sought convening order with the company’s
creditors. Dr. Guo added, "With this announcement, we are taking
another important step in our restructuring process."
While the coffeehouse chain still operates its Chinese locations,
the company has been delisted from the Nasdaq Stock Market since
June 2020.
Luckin Coffee last traded at US$14.55 on the OTC.
About Luckin Coffee
Luckin Coffee Inc., was a Xiamen, Fujian-based coffee chain.
In July 2020, Luckin Coffee called in liquidators to oversee a
corporate restructuring and negotiate with creditors to salvage its
business, less than four months after shocking the market with a
US$300 million accounting fraud, South China Morning Post said.
The Company hired Houlihan Lokey as financial advisers to implement
a workout with creditors. The start-up company also named Alexander
Lawson of Alvarez & Marsal Cayman Islands and Tiffany Wong Wing Sze
of Alvarez & Marsal Asia to act as "light-touch" joint provisional
liquidators (JPLs) under a Cayman Islands court order, it said in a
regulatory filing in New York.
The move was in response to a winding-up petition by an undisclosed
creditor.
The Joint Provisional Liquidators of Luckin Coffee, Alexander
Lawson of Alvarez & Marsal Cayman Islands Limited and Wing Sze
Tiffany Wong of Alvarez & Marsal Asia Limited, on Feb. 5 filed a
verified petition under chapter 15 of title 11 of the United States
Code with the United States Bankruptcy Court for the Southern
District of New York. The Chapter 15 Petition seeks, among other
things, recognition in the United States of the Company's
provisional liquidation pending before the Grand Court of the
Cayman Islands, Financial Services Division, Cause No. 157 of 2020
(ASCJ) and related relief.
MADU INC: Seeks 5-Week Access to Cash Collateral
------------------------------------------------
Madu, Inc., in a joint motion filed with the U.S. Bankruptcy Court
for the Southern District of Texas, asked the Court to authorize
the use of cash collateral in order to continue as a going concern
during the pendency of its Chapter 11 case. Affiliated Debtor,
Asha Property, is seeking the same relief in said joint motion.
The Debtors operate two separate real estate businesses.
Prepetition, the Debtors granted a security interest in three
parcels of real property and the rents derived from those
properties in favor of Navy Army Community Credit Union for the
loans of affiliated borrowers amounting to (1) $1,427,600 and (2)
$260,000 in original principal amounts. The borrowers have
defaulted on the loans.
Madu is seeking that its two properties securing the loans -- the
property at 415 South Austin St., Rockport, Texas; and at 402
Magnolia Street, Rockport, Texas -- be listed for over $2,500,000.
There are no other encumbrances on the two properties other than
that of Navy Army. The Debtors proposed to provide a replacement
lien to any creditor holding a perfected prepetition lien on the
cash collateral, as adequate protection.
Madu's budget provided for $736 in weekly utilities expenses due on
each of Week 1 and Week 5 of the budget, a copy of which is
available for free at https://bit.ly/3kluZHk from PacerMonitor.com.
A copy of the joint motion is available for free at
https://bit.ly/3nOMbaf also from PacerMonitor.com.
About Madu, Inc.
Madu, Inc. is primarily engaged in renting and leasing real estate
properties. The company filed a Chapter 11 petition (Bankr. S.D.
Tex. Case No. 21-21226) on September 6, 2021.
On the Petition Date, the Debtor estimated $1 million to $10
million in both assets and liabilities. The petition was signed by
Sathesh Janaki as president. Judge David R. Jones presides over
the case. Hayward PLLC is the Debtor's counsel.
The Debtor is seeking the joint administration of its case with
that of Asha Property, LLC, which also filed a Chapter 11 petition
on September 6, 2021. The request is currently pending in Court.
Both Debtors share the same management and bankruptcy counsel.
Catherine Stone Curtis has been appointed as Chapter 11 Subchapter
V Trustee.
MAIN STREET INVESTMENTS II: Taps McDonald Carano as New Counsel
---------------------------------------------------------------
Main Street Investments II, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Nevada to hire McDonald
Carano, LLP to substitute for the Law Office of Corey B. Beck,
P.C.
The firm's services include:
(a) providing legal advice and assistance to the Debtor
relative to the administration of its Chapter 11 case;
(b) representing the Debtor at hearings held before the court
and communicating with the Debtor regarding issues raised as well
as the decisions of the court;
(c) assisting the Debtor in its examination and analysis of
the conduct of its affairs and the reasons for the Chapter 11
filing;
(d) reviewing and analyzing all legal documents, statements of
operations and bankruptcy schedules filed by the Debtor or third
parties, advising the Debtor as to their propriety, and taking
appropriate action after consultation with the Debtor;
(e) assisting the Debtor in preparing legal papers;
(f) apprising the court of the Debtor's analysis of its
operations;
(g) conferring with other bankruptcy professionals so as to
advise the Debtor and the court more fully of the Debtor's
operations;
(h) assisting the Debtor in its negotiations with creditors
and other parties in interest;
(i) assisting the Debtor in preparing and seeking confirmation
of its plan of reorganization;
(j) providing other services necessary to obtain confirmation
of the plan;
(k) assisting the Debtor in evaluating and prosecuting claims
that it may have against third parties; and
(l) performing other necessary legal services.
The firm's hourly rates are as follows:
Ryan J. Works, Esq. $550 per hour
Amanda M. Perach, Esq. $450 per hour
Tara U. Teegarden, Esq. $300 per hour
Brian Grubb $225 per hour
The Debtor paid a retainer fee of $20,000 to the law firm.
Ryan Works, Esq., a partner at McDonald Carano, disclosed in a
court filing that he is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Ryan J. Works, Esq.
McDonald Carano, LLP
2300 W. Sahara Avenue, Suite 1200
Las Vegas, NV 89102
Telephone: 702.873.4100
Fax: (702) 873-9966
Email: rworks@mcdonaldcarano.com
About Main Street Investments II
Las Vegas-based Main Street Investments II, LLC filed its voluntary
petition for Chapter 11 protection (Bankr. D. Nev. Case No.
21-10361) on Jan. 27, 2021, listing as much as $10 million in both
assets and liabilities. Judge Natalie M. Cox oversees the case.
McDonald Carano, LLP serves as the Debtor's legal counsel.
MALLETT INC: Begins Chapter 11 Bankruptcy Process
-------------------------------------------------
Laura Chesters of Antiques Trade Gazette reports that stamp and
coin dealership Stanley Gibbons Group has begun a Chapter 11
process in the United States for its US subsidiary Mallett Inc.
The issue relates to a property on New York's Madison Avenue that
the group had leased when it was operating the Mallett furniture
brand from the premises.
It had bought Mallett in 2014 and, although the brand was later
sold in 2018 to valuation firm Gurr Johns (which owns auction house
Dreweatts), the lease and subsidiary in New York remained with the
Stanley Gibbons Group.
The group had sublet the New York premises to luxury brand Stella
McCartney however during the pandemic the shop closed and according
to Stanley Gibbons (and a subsequent court case) the Stella
McCartney brand stopped paying rent in April 2020.
Stanley Gibbons said that this meant "in turn... Mallett was unable
to pay the landlord" rent due.
In August 2021 Mallett reached a settlement agreement with the
tenant which terminated their tenancy. However the group said:
"Mallett Inc has been unable to negotiate a settlement with the
landlord for the outstanding rental arrears and has been unable to
negotiate early termination of the lease."
"Minimise future liabilities"
On advice of the group's attorneys, it decided to enter Mallett
into a Chapter 11 process in the United States.
It added: "The Chapter 11 bankruptcy filing will allow Mallett to
promptly liquidate its assets in the order of priority required by
the US federal Bankruptcy Code, with timing and amount paid to
creditors approved by the New York Bankruptcy Court before
distributions are made."
Graham Shircore CEO said: "It was always our hope that we could
reach a negotiated settlement with all parties in connection with
the New York lease. Unfortunately, this has not been possible with
regard to one of the parties concerned. Therefore, in order to
protect the group's remaining assets and minimise the future
liabilities the decision to place Mallett Inc in to Chapter 11 has
been taken. We hope that the Chapter 11 process in the US can be
concluded as swiftly as possible and in a manner which is optimal
for all creditors which include a number of other Group
companies."
The group said it will update shareholders on any material
developments in the Chapter 11 process as and when they occur.
Further details of Stanley Gibbons Group's update is on the London
Stock Exchange website.
About Mallett Inc.
Mallett, Inc., was an antique dealer. It operated a store at 929
Madison Avenue, New York. Mallett is a U.S. subsidiary of
London-based Mallett PLC, one of the oldest established antique
dealers in the world. Mallett PLC was acquired by rare stamps
collector Stanley Gibbons Group in 2014.
Mallett Inc. sought Chapter 11 protection (Bankr. S.D.N.Y. Case No.
21-11619) on Sept. 15, 2021. In the petition signed Graham
Shircore as director, it disclosed total assets amounting to
$3,665,011 and total liabilities of $13,181,708. The case is
handled by Honorable Judge James L. Garrity Jr. Mark Frankel,
Esq., of BACKENROTH FRANKEL & KRINSKY, LLP, is the Debtor's
counsel.
MALLETT INC: Former Antique Dealer to Liquidate Under Chapter 11
----------------------------------------------------------------
Its antique business wound up, Mallett, Inc., has filed Chapter 11
protection to liquidate according to the priority scheme mandated
by the Bankruptcy Code.
The Debtor is an antique dealer whose business declined. The
Debtor operated a store at 929 Madison Avenue, New York, New York.
In 2016, the Debtor closed the store and subleased the Premises to
Stella McCartney, a fashion retailer.
According to a court filing, during the pandemic, the Subtenant
stopped paying rent to the Debtor and the Debtor, in turn, could
not pay rent to its landlord, 929 Madison Avenue LLC.
The Debtor sued the Subtenant and the Landlord sued the Debtor.
The Supreme Court ordered mediation. The Debtor settled with the
Subtenant, but not with the Landlord. Once the settlement with the
Subtenant was complete, on or about Aug. 31, 2021, the Debtor
surrendered possession and the keys to the Premises to the
Landlord. The Landlord returned the keys and is attempting to
refuse turnover.
The Landlord was recently awarded judgment against the Debtor for
$1,281,068 for overdue rent, but formal judgment has not been
entered. In addition, to the Landlord's claim, the Debtor owes
affiliated companies approximately $11 million, and a relatively
small amount of other vendor debt.
The Debtor's assets are cash in the amount of $3,500,000, most of
which constitutes the Subtenant settlement proceeds, a $100,000
security deposit held by the Landlord, and the potential right to
recover New York City real property taxes paid in advance.
The antique business has been wound up and the Debtor filed this
case to liquidate according to the priority scheme mandated by the
Bankruptcy Code.
The Debtor anticipates no post-bankruptcy operating income or
expenses.
About Mallett Inc.
Mallett, Inc., was an antique dealer. It operated a store at 929
Madison Avenue, New York. Mallett, Inc., is a U.S. subsidiary of
London-based Mallett PLC, one of the oldest established antique
dealers in the world. Mallett PLC was acquired by rare stamps
collector Stanley Gibbons Group in 2014.
Mallett Inc. sought Chapter 11 protection (Bankr. S.D.N.Y. Case No.
21-11619) on Sept. 15, 2021. In the petition signed Graham
Shircore as director, it disclosed total assets amounting to
$3,665,011 and total liabilities of $13,181,708. The case is
handled by Honorable Judge James L. Garrity Jr. Mark Frankel,
Esq., of BACKENROTH FRANKEL & KRINSKY, LLP, is the Debtor's
counsel.
MITCHELL INT'L: Moody's Affirms B3 CFR & Rates New Secured Debt B2
------------------------------------------------------------------
Moody's Investors Service affirmed Mitchell International, Inc.'s
B3 corporate family rating and B3-PD probability of default rating,
pro forma for the proposed capital structure refinancing and
dividend distribution. Moody's assigned a B2 instrument rating to
the new senior secured first lien credit facilities, including a
$2,475 million 7-year term loan and a $275 million 5-year
multi-currency revolver. Moody's also assigned a Caa2 instrument
rating to the new $525 million 8-year senior secured second lien
term loan. The outlook remains stable.
Proceeds from the new debt facilities, along with cash on hand,
will be used to finance a $457 million (roughly) dividend
distribution, to repay the existing first lien and second lien
credit facilities and to pay transaction fees. Changes to the
proposed capital structure could result in updates to the ratings.
Issuer: Mitchell International, Inc.
Assignments:
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD3)
Senior Secured 1st Lien Mulicurrency Revolving Credit Facility,
Assigned B2 (LGD3)
Senior Secured 2nd Lien Term Loan, Assigned Caa2 (LGD6)
Affirmations:
Probability of Default Rating, Affirmed B3-PD
LT Corporate Family Rating, Affirmed B3
Withdrawals:
Senior Secured 1st Lien Revolving Credit Facility, Withdrawn ,
previously rated B2 (LGD3)
Senior Secured 1st Lien Term Loan, Withdrawn , previously rated B2
(LGD3)
Senior Secured 2nd Lien Term Loan, Withdrawn , previously rated
Caa2 (LGD6)
Outlook Actions:
Outlook, Remains Stable
RATINGS RATIONALE
Mitchell's B3 corporate family rating reflects its very high
debt/EBITDA leverage, at roughly 8.8x (Moody's adjusted as of June
2021, pro forma for the recapitalization and twelve month
contributions from Coventry and QualCare, excluding unrealized
future cost savings). Mitchell is exposed to the cyclical nature of
workers' compensation and auto claim volumes, which generate the
majority of its revenue. Volumes are expected to continue to
improve from the 2Q20 trough caused by the coronavirus pandemic but
the recovery timeline is uncertain, given the ongoing resurgence of
viral variants, which elevates credit risk. Weak free cash flow to
debt, with expected FCF/debt below 3.0% in 2021 also weighs on the
credit. Mitchell faces risks to integrate the 2020 acquisition of
PPO network provider Coventry, an asset that experienced revenue
declines under previous owner CVS/Aetna. The proposed dividend
recapitalization is consistent with Mitchell's past financial
policies, which Moody's views as aggressive; the rating
incorporates the expectation for future debt-funded transactions
that will keep financial leverage very high as Mitchell continues
to pursue M&A targets and distribute capital to shareholders.
Mitchell's expected long-term organic growth rate, in the low to
mid single-digit percentage rates, combined with cost reduction
initiatives, will support credit improvement as claim volumes
recover from the coronavirus shock. The company was able to sustain
positive free cash flow in 2020, despite the revenue decline caused
by the pandemic, which reflects the ability to manage variable
costs and partially offsets its exposure to cyclical claims.
Mitchell's retrospective cost-containment technology, Genex's
prospective clinical services and Coventry's leading workers'
compensation PPO network create an attractive value proposition for
clients seeking to reduce spend. The combination of assets adds
scale and offers a one-stop shop that is difficult to replicate.
Mitchell's broad product suite provides competitive advantages and
cross-sell opportunities that support long-term growth
expectations.
The stable outlook reflects Moody's view that Mitchell will have
sufficient but stressed financial capacity to resume deleveraging
towards 8.0x following the recapitalization. Moody's expects that
Mitchell's revenue declines will moderate in 2021, compared to the
7.7% decline in 2020 (pro forma with Coventry), driven by claim
volume recovery and a stabilization of Coventry's historical
revenue base. Debt/EBITDA, albeit elevated at closing, will benefit
from the ongoing integration of Coventry and cost reduction
initiatives. Integration costs, a sizeable interest expense burden,
elevated capex, working capital dynamics and higher taxes are
expected to keep free cash flow to debt below 5% over the
projection period through the end of 2023. After 2021, Moody's
anticipates organic revenue growth will return to mid to low
single-digit percentage rates, and EBITDA margin will stabilize in
the 21% - 23% range (all metrics Moody's adjusted).
The ratings for the individual debt instruments incorporate
Mitchell's overall probability of default, reflected in the B3-PDR,
and the loss given default assessments for the individual
instruments. The new senior secured first lien credit facilities,
consisting of the $275 million revolver due 2026, and the $2,475
million term loan due 2028, are rated B2, one notch higher than the
B3 corporate family rating, with a loss given default assessment of
LGD3. The B2 first lien instrument rating reflects their relative
size and senior position ahead of the second lien term loan that
would drive a higher recovery for first lien debt holders in the
event of a default. Mitchell's new $525 million senior secured
second lien term loan, due 2029, is rated Caa2, two notches below
the corporate family rating, with a loss given default assessment
of LGD6. The new credit facilities are expected to include portable
provisions that allow for the transfer of ownership without
triggering a change of control. The credit facilities are expected
to contain covenant flexibility for transactions not disclosed at
this time that could adversely affect creditors, including the
omission of certain material lender protections.
Liquidity is adequate, with a pro forma cash balance of $50 million
at closing of the transaction, an undrawn $275 million revolver and
anticipated free cash flow to debt in the 1% - 3% range over the
next 12 months, which will suffice to cover mandatory debt
amortization. The first lien senior secured credit facility is
covenant lite, with a loose 8.75x springing first lien leverage
limit, applicable only when there is at least 40% outstanding under
the revolver. Moody's anticipates Mitchell will be in compliance
with the covenant over the next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Mitchell's ratings could be upgraded (all metrics Moody's adjusted)
if Moody's expects 1) stronger than anticipated revenue and
profitability growth; 2) a significant improvement in leverage
metrics, with debt/EBITDA sustained below 6x and free cash flow as
a percentage of total debt above 5%; and 3) a track record of more
conservative financial policies.
Mitchell's ratings could be downgraded (all metrics Moody's
adjusted) if 1) long-term revenue growth or profitability decline
materially due to integration challenges, customer losses, pricing
pressures or increasing competition; 2) Moody's expects weaker than
anticipated long-term growth or deteriorating margins will keep
leverage above 8x without a clear path to deleveraging; 3)
liquidity diminishes or free cash flow to debt falls to break-even
levels or becomes negative; or 4) Moody's expects (EBITDA --
capex)/interest expense coverage to decline below 1x.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Mitchell International, Inc. is a leading provider of cost
containment and clinical solutions for insurance companies, third
party administrators ("TPA") and self-insured employers. The
company operates four business segments: network solutions,
clinical, casualty and auto physical damage ("APD"). Private equity
sponsor Stone Point Capital acquired both Mitchell and Genex in
early 2018, and combined the two companies in October 2018. The
acquisition of Coventry closed in July 2020. Pro forma with
Coventry, the company generated roughly $1.6 billion of revenue in
2020.
MITCHELL TOPCO: S&P Affirms 'B-' ICR on Recapitalization
--------------------------------------------------------
S&P Global Ratings affirmed its 'B-' issuer credit ratings on
Mitchell Topco. The outlook remains stable.
S&P said, "We also assigned a 'B-' issue rating to Mitchell Topco's
first-lien credit facility, including a $275 million (undrawn)
revolving credit facility due in 2026 and $2,475 million first-lien
term loan due in 2028. The recovery rating is '3', indicating our
expectation for meaningful (50%-70%; rounded estimate: 55%)
recovery of principal in the event of default. Additionally, we
assigned our 'CCC' issue rating to the $525 million second-lien
term loan due in 2029. The recovery rating is '6', indicating our
expectation for minimal (0%-5%; rounded estimate: 0%) recovery of
principal in the event of default.
"We expect the company to use the $3 billion proceeds to repay its
$2.574 billion existing debt, allowing it to extend the duration
and lower the cost of its borrowings. Additionally, we expect the
extra $426 million raised and excess cash on hand to fund a
distribution to shareholders. While the company upsized the
revolving credit facility to $275 million from $125 million, we
expect Mitchell to use the facility on an as needed basis to fund
future acquisitions.
"The stable outlook reflects S&P Global Ratings' expectation that
Mitchell's leverage will remain elevated from the recapitalization
and funded dividend at around 9.0x, though we anticipate it will
improve to below 8.5x within the next 12 months of the transaction
closing from improved margins of 22%-25%, integration cost savings
realization, and continued recovery of business units from
COVID-19. We expect Mitchell's liquidity to remain sufficient and
cash flow after debt servicing to remain modestly positive in
2021.
"We could lower the ratings in the next 12 months if leverage
exceeds and remains above 10x, with EBITDA interest coverage
declining to the mid-1x range. Mounting liquidity pressures, such
as covenants limiting full revolver access, or sustained drops in
free cash flow, could also lead to a downgrade.
"While unlikely, we could raise our ratings in the next 12 months
if Mitchell reduces and sustains adjusted leverage below 7.0x with
free operating cash flow to debt in the mid-single-digit range.
This could happen if claims volume improves significantly above
expected recovery levels, or if margins improve because of
additional synergy benefits achieved, while free cash flow usage is
focused on debt repayment instead of mergers and acquisitions or
dividend recapitalizations."
MOBREWZ LLC: Gets OK to Hire David Johnston as Bankruptcy Attorney
------------------------------------------------------------------
MoBrewz, LLC received approval from the U.S. Bankruptcy Court for
the Eastern District of California to employ David Johnston, Esq.,
an attorney practicing in Modesto, Calif., to handle its Chapter 11
case.
The attorney will be paid at the rate of $420 per hour and will be
reimbursed for out-of-pocket expenses incurred. It will also
receive a retainer fee in the amount of $5,000.
Mr. Johnston 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:
David C. Johnston, Esq.
Attorney at Law
1600 G Street, Suite 102
Modesto, CA 95354
Tel: (209) 579-1150
Fax: (209) 900-9199
Email: david@johnstonbusinesslaw.com
About MoBrewz LLC
MoBrewz, LLC, doing business as Seventy Brewing Company, filed a
petition for Chapter 11 protection (Bankr. E.D. Calif. Case No.
21-90378) on Aug. 18, 2021, listing under $1 million in both assets
and liabilities. Judge Ronald H. Sargis oversees the case.
The Debtor is represented by David C. Johnston, Esq.
MOUNTAINEER MERGER: Moody's Gives First Time B2 Corp Family Rating
------------------------------------------------------------------
Moody's Investors Service assigned a first time B2 Corporate Family
Rating and a B2-PD probability of default rating to Mountaineer
Merger Corporation (parent of Gabriel Brothers, Inc., "Gabe's").
Additionally Moody's also assigned a B2 rating to the company's
proposed $250 million senior secured Term Loan. The term loan will
refinance existing debt and fund a dividend to the financial
sponsor Warburg Pincus. The outlook is stable.
Assignments:
Issuer: Mountaineer Merger Corporation
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured First Lien Term Loan, Assigned B2 (LGD3)
Outlook Actions:
Issuer: Mountaineer Merger Corporation
Outlook, Assigned Stable
RATINGS RATIONALE
Gabe's B2 corporate family rating reflects governance
considerations particularly financial strategies and high leverage.
Pro forma for proposed refinancing and dividend payment Moody's
adjusted debt/EBITDA will temporarily increase to over 5.0x.
Moody's estimates that leverage will improve to about 4.5x in the
next 12 months due to continued topline and EBITDA growth with
EBIT/interest expected to remain over 2.0x's. The rating also
reflects the company's small scale in a highly competitive business
environment with very large and well capitalized competitors and as
a result even small declines in EBITDA can impact credits metrics
significantly. The rating also reflects the somewhat discretionary
nature of the company's products.
The company performed well during the pandemic and has reported
same store sales growth every quarter since 2019 other than Q1 of
2020 when mandatory lockdowns were put in place. Approximately 90%
of the company's inventory purchases are opportunistic and its
inventory purchasing cycle is shorter than its competitors which
allows the company to quickly change assortments depending on
consumer preferences. The Company's operating flexibility was
recently exhibited during the onset of the pandemic, as it quickly
changed its inventory assortment to increase categories like
everyday essentials and deemphasize categories like apparel,
jewelry and luggage, enabling the company to minimize store
closures and be designated an essential retailer. The company's
good liquidity, its solid execution in off-price retail, a segment
which has historically grown faster than other retail sub-sectors
and has performed relatively well during economic downturns,
further supports its rating. Nonetheless, headwinds from increased
wages and freight costs will pressure margin expansion in 2021.
The B2 rating on the proposed senior secured term loan is the same
level as the B2 CFR reflecting that first lien debt comprises the
majority of Gabe's capital structure. The B2 term loan rating also
reflects its position in the proposed capital structure where it is
junior to the $80 million asset based revolving credit facility but
senior to Gabe's general unsecured claims.
As proposed, the term loan is expected to contain covenant
flexibility that could adversely affect lenders, including:
incremental first lien debt capacity up to: (i) the greater of $80
million and 100% consolidated EBITDA, plus (ii) any amounts
reallocated from the general debt basket, plus (iii) an unlimited
amount subject to (a) closing date Senior Secured First Lien Net
Leverage Ratio (for pari passu debt) no greater than 3.25x or
Senior Secured First Lien Net Leverage immediately prior to such
transaction. Amounts up to the greater of $80 million and 100%
consolidated EBITDA may be incurred with an earlier maturity date
than the initial term loans. Collateral leakage is permitted
through the transfer of assets to unrestricted subsidiaries, to the
extent permitted under the carve outs, with no additional "blocker"
provisions restricting such transfers. Only wholly-owned
subsidiaries must provide guarantees, raising the risk of guarantee
release following a partial change in ownership; there are no
explicit protective provisions limiting such guarantee releases.
There are no express protective provisions prohibiting an
up-tiering transaction.
The proposed terms and the final terms of the credit agreement may
be materially different.
The stable outlook reflects Moody's expectation that the company's
operating performance will remain strong. The outlook also reflects
Moody's expectation that the company will maintain good liquidity
and financial policies will support debt repayment from excess free
cash flow and not become more aggressive.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Although unlikely in the near term, a ratings upgrade could be
triggered by sustained improvement in earnings and larger scale
while maintaining good liquidity and financial policies which would
support an improvement in credit metrics. Specifically, an upgrade
would require debt/EBITDA to be sustained below 4.0 times and
EBIT/interest expense sustained above 3.0 times with financial
policies that support metrics to be sustained at these levels.
The ratings could be downgraded if operating performance weakens
such that margins erode or topline growth stalls, should financial
policies become more aggressive, or liquidity deteriorates.
Specifically, the ratings could be downgraded if debt/EBITDA is
sustained above 5.0 times or EBIT/interest expense is sustained
below 2.0 times.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
Gabe's is an off-price retailer with 119 stores across 14 states.
The company is owned by Warburg Pincus and generated about $760
million in revenue for the LTM period ending July 31, 2021.
MOUNTAINEER MERGER: S&P Assigns 'B' ICR, Outlook Stable
-------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Morgantown, W.V.-based off-price retailer Mountaineer Merger Corp.
(d/b/a Gabe's).
At the same time, S&P assigned its 'B' issue-level rating and '3'
recovery rating to the proposed $250 million senior secured
first-lien term loan due in 2028.
The stable outlook reflects S&P's expectation that continued
operating momentum will lead to adjusted leverage in the mid-4x
area in fiscal 2021.
S&P said, "Our ratings reflect Gabe's small operating scale in the
competitive off-price sector and limited track record of comparable
store sales growth. The company differentiates itself by serving
lower-income consumers and positions itself as an extreme
discounter with products priced 20%-70% below department stores and
mass retailers. It offers lower average retail price per unit
relative to peers such as TJX Companies and Ross Stores, which we
think results from its inventory of less premium brands that caters
to its target customer. Although we believe Gabe's lacks
significant negotiating leverage with suppliers given its smaller
scale, it benefits from a nimble sourcing strategy with a faster
purchase cycle than most off-price and mass merchant peers. Its
sourcing strategy, which capitalizes on retailer missteps, store
closures, bankruptcies, and accelerating returns from e-commerce
growth, leads to a surplus of attractive inventory available to the
company and rapidly changing merchandise assortment. We think
Gabe's relatively short track record of comparable sales growth
under the current management team presents additional risk to its
operating success in the highly competitive off-price sector." The
company made several strategic missteps in 2018 that led to
negative comparable store sales, including introducing a smaller
store format and more prestigious brands that didn't resonate with
consumers. However, management swiftly addressed these factors and
has demonstrated positive comparable sales growth year-over-year
since 2019, excluding March and April of 2020 due to
COVID-19-induced mandatory lockdowns.
Gabe's competes with much larger off-price retailers that possess
sophisticated supply chains with vast and established vendor
networks as well as better negotiating leverage with vendors. This
greater scale allows the company's peers to build customer loyalty
and drive recurring traffic through more consistent merchandise
refreshes. The off-price model is not easily replicated on a large
scale because it takes considerable time and investment to
establish a diversified vendor base and store footprint to achieve
operating leverage. S&P believes it will take time for Gabe's to
garner the size and scale necessary to achieve operational
benefits, though we expect the company to focus on expanding its
store location mostly in adjacent markets.
Favorable industry tailwinds in the off-price sector should support
further growth following Gabe's revenue expansion and increased
profitability during the pandemic. S&P said, "We forecast revenue
growth in the low-20% area and low-double-digit percent area in
fiscal 2021 and fiscal 2022, respectively, supported by good growth
fundamentals in the off-price sector and the company's customer
value proposition. Consumers remain focused on price value and
demonstrate willingness to switch to lesser-known, lower-priced
brands that offer similar quality to national brands. These
positive tailwinds compound Gabe's good performance in fiscal 2020
when the company outperformed its off-price peers. Despite
exclusively selling through brick-and-mortar stores, the company
rapidly pivoted its merchandise to stock stores with essential
goods and remain open while competitors were forced to temporarily
close their doors. Revenue increased 10.9% and S&P Global
Ratings-adjusted EBITDA margins improved 140 basis points to 10.9%
in fiscal 2020. Although government stimulus payments and elevated
unemployment benefits likely buoyed recent performance, Gabe's
focus on improved merchandising should support ongoing
profitability. The company is shifting its categories to greater
essential offerings to meet consumer demand and higher-margin home
goods while paring down its less profitable apparel offerings. We
anticipate these strategic shifts and operational efficiencies
should lead to adjusted EBITDA margins in the low-12% area over the
next 12 months."
S&P said, "We expect Gabe's S&P Global Ratings-adjusted leverage
will be in the mid-4x area in fiscal 2021 before declining to the
low-4x area in 2022. Pro forma for the transaction, Gabe's capital
structure will consist of a $250 million senior secured term loan
due 2028 and an undrawn $80 million ABL revolver due 2026. Although
we believe credit measures will strengthen over the next two years
on earnings improvement, our assessment of a highly leveraged
financial risk profile reflects the company's controlling ownership
by Warburg Pincus. We expect Gabe's financial policies to remain
aggressive and anticipate it could use cash flows or future debt
issuance to fund its growth strategy and shareholder returns. We
forecast modestly positive free operating cash flow in fiscal 2021,
turning moderately negative next year as the company invests in a
new distribution center to support future growth.
"The stable outlook reflects our expectation that continued
operating momentum and sector tailwinds will enable Gabe's to grow
profitability, leading to modest improvement in S&P Global
Ratings-adjusted leverage."
S&P could lower its rating on Gabe's if:
-- Operational missteps or intensifying competitive pressures
result in consistently negative comparable sales and declining
profitability, leading us to view the business less favorably. This
could occur due to sustained margin or sales pressure from a lack
of merchandise availability, greater markdowns, or increasing
competitive threats from online retailers to the off-price channel;
or
-- S&P expects adjusted leverage to approach 6x, leading to
consistently flat or negative free operating cash flow. This could
occur if the positive trajectory of its operating performance
reverses and credit metrics weaken or if the company pursues a more
aggressive financial policy.
S&P could raise the rating on Gabe's if:
-- S&P expects adjusted leverage sustained below 5x and it does
not anticipate new leveraging transactions such as debt-funded
dividends. This would require a demonstrated commitment to less
aggressive financial policy; and
-- Gabe's sustains profitable growth through continued successful
new unit development, increasing overall scale and consistently
positive comparable sales growth.
NESV ICE: Gets Interim Cash Access
----------------------------------
The U.S. Bankruptcy Court for the District of Massachusetts,
Eastern Division, has authorized NESV Ice, LLC and affiliates to
use cash collateral on the terms and conditions discussed at the
hearing.
The Debtor's counsel is directed to circulate a proposed form of
order and revised budget incorporating the changes discussed on the
record to counsel to SHS ACK, LLC, Ashcroft Sullivan Sports Village
Lender, LLC, and the US Trustee, and to submit the proposed order
in Word format and the revised budget to cjp@mab.uscourts.gov.
A telephonic hearing on the continued use of cash collateral is
scheduled for December 2, 2021 at 1:30 p.m.
About NESV Ice, LLC
NESV Ice, LLC and affiliates NESV Swim, LLC, NESV Field, LLC, NESV
Hotel, LLC, NESV Tennis, LLC, NESV Land, LLC, and NESV Land East,
LLC, offer fitness and sports training services. The Debtor sought
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D.
Mass. Case No. 21-11226) on August 26, 2021. The petitions were
signed by Stuart Silberberg as manager.
Judge Christopher J. Panos oversees the case.
William McMahon, Esq., at Downes McMahon LLP is the Debtor's
counsel.
NS8 INC: Wants to Block Ex-CEO from Insurance Coverage
------------------------------------------------------
Daniel Gill, writing for Bloomberg Law, reports that bankrupt NS8
seeks to stop former CEO from insurance coverage.
Bankrupt NS8 Inc. is vying to prevent its former CEO from accessing
the cybersecurity company's insurance policies to cover his legal
fees.
Adam Rogas, who's also the company's founder, requested to tap its
directors and officers insurance to pay for his defense to federal
charges of securities fraud.
Rogas' alleged fraud spurred the company's bankruptcy filing in
October 2020.
"Throughout NS8's history, Rogas had intentionally and grossly
overstated its revenue, gross margin, and the extent and
profitability of NS8's operations," the company, now known as Cyber
Litigation Inc., said in an objection filed Monday, September 20,
2021, with the U.S. Bankruptcy Court.
About NS8 Inc.
Las Vegas-based NS8 Inc. is a developer of a comprehensive fraud
prevention platform that combines behavioral analytics, real-time
scoring, and global monitoring to help businesses minimize risk.
On the Web: https://www.ns8.com/
NS8 sought Chapter 11 protection (Bankr. D. Del. Case No. 20-12702)
on Oct. 27, 2020. The petition was signed by Daniel P. Wikel, the
chief restructuring officer.
The Debtor was estimated to have $10 million to $50 million in
assets and $100 million to $500 million in liabilities at the time
of the filing.
The Hon. Christopher S. Sontchi is the case judge.
The Debtor tapped Blank Rome LLP and Cooley LLP as its legal
counsel, and FTI Consulting Inc. as its financial advisor. Stretto
is the claims agent.
* * *
The company changed its name to Cyber Litigation after it sold
substantially all of its assets to Codium Software LLC in December
2020.
PACIFIC BELLS: S&P Assigns 'B-' ICR, Outlook Stable
---------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
U.S.-based Taco Bell franchisee Pacific Bells LLC, reflecting its
high leverage and position as a small player in the highly
fragmented quick-service restaurant (QSR) segment.
S&P also assigned its 'B-' issue-level and '3' recovery ratings to
the company's proposed first-lien credit facilities.
The stable outlook reflects S&P's expectation for consistent
operating results and steady credit metrics over the next 12
months, with adjusted leverage in the mid-7x area which
incorporates our treatment of the $120 million preferred equity
component as debt.
The 'B-' issuer credit rating reflects Pacific Bells' high adjusted
leverage along with its participation in the intensely competitive
QSR segment. Pacific Bells is the fifth largest Taco Bell
franchisee in the United States with a store base of about 250 Taco
Bell units across nine states. While Pacific Bells operates in the
fast-growing Mexican QSR subsegment and has a consistent track
record of positive same-store sales, its single-concept focus
limits its brand and menu diversity while making it dependent on
Taco Bell's product innovation strategies and marketing initiatives
to drive sales.
S&P said, "We view the capital structure as highly leveraged but
expect the company will focus on deleveraging post transaction. We
expect adjusted leverage of roughly 7.5x in 2021, declining towards
the low 7x area in 2022. We believe Pacific Bells will pursue
leverage reduction as EBITDA expands from new unit developments and
store remodels while improving its positive cash flow generation.
However, given Pacific Bells' financial sponsor ownership, we
expect the company could pursue large acquisitions or issue large
dividend payments, leading to increased leverage.
Given Taco Bells' focus on the value segment of the market, demand
for its menu items is less susceptible to economic downturns.
Pacific Bells' operating performance is susceptible to commodity
price fluctuations on various proteins such as beef and chicken,
which combined with the pressure of rising labor costs, could hurt
future cash flows. However, Pacific Bells has demonstrated the
ability to effectively manage food costs as a percentage of sales
despite input price volatility. Additionally, Pacific Bells already
operates within states such as California that have the highest
minimum wage requirements in the U.S. which S&P expects will reduce
the impact of future wage pressures. The company has a steady track
record of positive operating trends and has expanded its operating
margins demonstrating its efficient execution strategies.
S&P said, "The stable outlook reflects our expectation for
relatively stable credit metrics over the next 12 months, with
adjusted debt to EBITDA sustained in the mid 7x range for 2021. We
expect modest EBITDA base expansion driven by new unit developments
and continued positive same-store sales growth."
S&P could lower its rating if:
-- The company cannot execute on its growth strategy, leading to
lagging sales and EBITDA; and
-- S&P expects liquidity would be constrained as the company
approaches sustained negative free operating cash flow (FOCF)
generation.
S&P could raise its rating if:
-- The company adopts a more conservative financial policy such
that S&P expected S&P Global Ratings-adjusted leverage to remain
below 6.5x on a sustained basis; and
-- Pacific Bells broadens its operating scale and increases
profitability through continued successful new store developments
and explores incorporating new concepts into the portfolio.
PADAGIS HOLDING: Fitch Affirms 'BB-' IDR, Outlook Stable
--------------------------------------------------------
Fitch Ratings has affirmed the 'BB-' Issuer Default Ratings of
Padagis Holding Company LLC and Padagis LLC with Stable Rating
Outlooks. The rating actions reflect Padagis' strong position in
the extended topicals generic prescription drug market and
consistently strong FCF. Fitch has also converted the
'BB+(EXP)'/'RR1' ratings of Padagis LLC's senior secured revolving
credit facility and senior secured term loan to 'BB+'/'RR1'. The
company has a narrow geographic focus with approximately 89% of
total firm revenues generated in the U.S. and the remainder in
Israel. The ratings contemplate capital deployment that will
maintain leverage (total debt/EBITDA) at or below 4.0x.
KEY RATING DRIVERS
Continued Price Pressure: The company continues to experience
pricing pressure, although it has moderated relative to 2018-2019.
The key drivers behind the pricing reductions were competitive
regulatory approvals for products in its portfolio resulting in
increased competition. Fitch expects pricing erosion to continue to
affect the segment at roughly 4%-5% annually. Continued increases
in manufacturing efficiencies and new product launches should help
to mitigate this pressure.
R&D/New Products: Fitch expects the company will focus on complex
formulations, first-to-file opportunities, generic drugs that
require clinical studies or have other active pharmaceutical
ingredient and/or regulatory hurdles. In the continuum of generic
prescription drugs, there are varying degrees of complexity and
difficulties in manufacturing processes offer barriers to entry and
competitive advantages. Padagis currently has 22 pending and 10
tentatively approved abbreviated new drug applications (ANDAs). Of
the 22 pending, 18 pending ANDAs are confirmed first to file or
first to market. Topicals and extended topicals comprise 85% of its
ANDAs.
Coronavirus Impact: Fitch expects the operating environment will
continue to improve in 2H21 and thereafter as the vaccination rate
increases, new cases decline and hospitalizations decline. Starting
in the second quarter of 2020, Padagis experienced a reduction in
demand for certain of its existing base products due to lower
prescription volumes driven by the coronavirus pandemic's impact on
doctor visits. Dermatological products were the most negatively
affected as they are generally less critical than other
life-threatening or life extending therapeutics.
Debt Reduction and Growth: Fitch expects Padagis will consistently
generate strong FCF and prioritize a significant portion of that
for debt reduction during the next two years. In addition, the
company will invest in organic growth opportunities through ongoing
research and development efforts, investing in new manufacturing
capabilities that complement its extended topical focus, and
expanding into new geographies. Its Padagis' international business
(primarily in Isreal) and channel partners should help the company
in geographic expansion. Capex requirements should remain
manageable for the firm.
Favorable Demographics: Fitch expects aging populations in
developed markets and increasing access to healthcare in emerging
markets will support volume growth for Padagis and its generic
pharmaceutical peers. In addition, continued patent expiries on
branded drugs will provide greenfield opportunities for the
industry. However, price erosion is expected to meaningfully offset
such growth over the near term.
Albuterol Quality Issue: Padagis initiated a voluntary nationwide
recall of its albuterol sulfate inhalation aerosol in September
2020. The recall was driven by complaints from patients that some
units may not dispense due to clogging. The company is working on
corrective action plans but Fitch does not expect the company to
reintroduce the product until 2022, at the earliest.
Supply Disruption: Fitch recognizes the potential supply disruption
in 2Q21 of a generic prescription manufactured by a third party.
The disruption could adversely affect the company's ability to sell
and ship the product to customers in a timely manner. While Padagis
has identified one or more potential alternative suppliers of the
product, delays in qualifying such alternative supplier may result
in a supply disruption for the duration of 2021 and possibly during
2022.
DERIVATION SUMMARY
Padagis' (BB-/ROS) closest key peers are Teva (BB-/RON) and Viatris
(BBB/ROS) in terms of manufacturing generic prescription
pharmaceuticals and similar U.S. customers. However, Teva and
Viatris are significantly larger in scale, breadth and depth of
products. Viatris and Teva are pursuing biosimilar drugs and
Padagis is not. Padagis primarily manufactures generic prescription
drugs, while Viatris markets branded generic prescription drugs in
emerging markets and Teva markets a few branded drugs that have
market exclusivity. Both also have greater geographic reach, given
than Padagis primarily generates approximately 89% of its revenue
in the U.S. Padagis' contingent liability risk is more benign than
Teva's and generally similar to Viatris'.
Fitch expects Padagis to operate with leverage (total debt/EBITDA)
at or below 4.0x. Teva is more highly leveraged than other 'BB'
rated healthcare companies operating in different industry
subsectors typically have leverage sensitivities in the 3.0x-4.0x
range.
Another peer that can be considered is Endo International. The
company has both an innovative portfolio, as well as a sizable
generic prescription drug portfolio. Endo is slightly more similar
in scale to Padagis, but has a much more onerous contingent
liability risk profile. The company is still addressing its pelvic
mesh litigation settlements and working to address in
opioid-related lawsuits. Padagis' expected leverage is also
expected to be materially lower than Endo's.
Fitch rates Padagis Holding Company LLC (parent) and Padagis LLC
(subsidiary) using Fitch's Parent Subsidiary Linkage criteria. The
approach taken of a weak parent/strong subsidiary with the overall
linkage and individual legal, operational and strategic linkage as
strong. Therefore, there is no notching of the ratings between the
parent and subsidiary.
KEY ASSUMPTIONS
-- Low- to mid-single-digit organic revenue growth during the
forecast period, driven primarily by new products, partly
offset by low- to mid-single-digit price declines;
-- Incremental margin improvement driven by a focus on costs and
an improving sales mix;
-- Manageable annual capital expenditures of $20 million-$30
million;
-- Annual FCF (cash flow from operations minus capex minus
dividends) greater than $100 million during 2021-2024;
-- Significant portion of FCF prioritized for debt repayment;
-- Targeted acquisitions of products within or adjacent to its
core competencies;
-- No cash dividends during the forecast period;
-- Total debt with equity credit/EBITDA generally at or below
4.0x during the forecast period.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Improving operations including new product development that
support long-term positive revenue growth and stable operating
margins;
-- Continued progress on expanding its product portfolio and
geographic reach;
-- A commitment and ability to a cash deployment strategy that
maintains total debt/EBITDA durably below 3.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Material and lasting deterioration in operations and FCF,
possibly driven by lack of new product launches and increased
pricing pressure;
-- Durably and significantly deteriorating FCF margins;
-- Leveraging acquisitions without the prospect of timely
debt/leverage reduction;
-- Total debt/EBITDA persistently above 4.5x.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity/Manageable Maturities: Padagis has adequate
liquidity, including full availability on a $100 million revolving
credit facility that matures in 2026. Liquidity is bolstered by
consistent cash generation. At Dec. 31, 2020, Padagis had $39.8
million in cash and cash equivalents. Fitch expects liquidity to
remain strong throughout the ratings horizon. Debt maturities are
manageable in the interim but concentrated when the term loan
matures ($850 million) in in 2028.
ISSUER PROFILE
Padagis develops, manufactures and markets a portfolio of generic
prescription drugs. The company's product portfolio includes an
array of dosage forms such as creams, ointments, lotions, gels,
shampoos, foams, suppositories, sprays, liquids, suspensions and
solutions.
ESG Considerations
Padagis has an ESG Relevance Score of '4' for Exposure to Social
Impacts due to pressure to contain healthcare spending growth, a
highly sensitive political environment, exposure to price-fixing
and opioid litigation, and social pressure to contain costs or
restrict pricing. This has a negative impact on the credit profile
and is relevant to the rating in conjunction with other factors.
Padagis has ESG Relevance Scores of '4' for Management Strategy and
Governance Structure, given its private equity owner. This has a
negative impact on the credit profile and is relevant to the rating
in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
PEACE PARK: S&P Assigns Prelim BB- (sf) Rating on Class E Notes
---------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to Peace Park
CLO Ltd./Peace Park CLO LLC's floating- and fixed-rate notes.
The note issuance is a CLO transaction backed primarily by broadly
syndicated speculative-grade (rated 'BB+' and lower) senior secured
term loans that are governed by collateral quality tests.
The preliminary ratings are based on information as of Sept. 21,
2021. Subsequent information may result in the assignment of final
ratings that differ from the preliminary ratings.
The preliminary ratings reflect:
-- The diversification of the collateral pool;
-- The credit enhancement provided through the subordination of
cash flows, excess spread, and overcollateralization;
-- The experience of the collateral manager's team, which can
affect the performance of the rated notes through collateral
selection, ongoing portfolio management, and trading; and
-- The transaction's legal structure, which is expected to be
bankruptcy remote.
Preliminary Ratings Assigned
Peace Park CLO Ltd./Peace Park CLO LLC
Class X, $1.63million: AAA (sf)
Class A, $388.05 million: AAA (sf)
Class B-1, $86.45 million: AA (sf)
Class B-2, $19.50 million: AA (sf)
Class C (deferrable), $39.00 million: A (sf)
Class D (deferrable), $39.00 million: BBB- (sf)
Class E (deferrable), $23.66 million: BB- (sf)
Subordinated notes, $64.18 million: Not rated
PHILIPPINE AIRLINES: Earmarks 20.5% of Newco Shares to Unsecureds
-----------------------------------------------------------------
Philippine Airlines Inc. on Sept. 21, 2021, filed with the U.S.
Bankruptcy Court an amended Plan Term Sheet, which reflects certain
non-material updates.
The Plan Term Sheet outlining the terms of a proposed plan of
reorganization is attached to each restructuring support agreement
signed by Philippine Airlines Inc. with substantially all of the
Debtor's:
-- primary aircraft lessors and lenders -- Aircraft
Counterparties;
-- original equipment manufacturers ("OEMs");
-- maintenance, repair, and overhaul service providers
("MROs"); and
-- certain funded debt lenders (the "Local Banks").
The Philippine's flag carrier contemplates a Chapter 11 plan that
provides for, among other things:
(a) the fully consensual restructuring of the Debtor's
financial obligations to eliminate approximately
$2.1 billion of obligations;
(b) a $505 million infusion of working capital from the
Debtor's ultimate primary shareholder (the "DIP
Lender") to fund the Debtor's ongoing operations
during the chapter 11 case and upon emergence;
(c) optimizing the Debtor's fleet size, composition and
ownership costs to meet the demands of the post-COVID
19 market and the new market;
(d) maintaining and enhancing the Debtor's key commercial
contracts and business relationships to strengthen
the Company's viability during the pending COVID-19
pandemic and beyond; and
(e) obtaining commitments for a $150 million exit
facility from new investors to provide additional
liquidity.
Treatment of Claims and Interests
Treatment of claims and interests under the restructuring are as
follows:
* Administrative Claims: Administrative Claims shall be
unimpaired.
* Priority Claims: Priority Claims shall be unimpaired.
* Secured Bridge Loan(s):
Feb. 10, 2021, $60 million secured bridge facility
to be refinanced in full by the DIP
Term Loan Facility;
May 27, 2021, $25 million secured bridge facility to
be refinanced in full by the DIP Term
Loan Facility;
Aug. 19, 2021, $15 million secured bridge facility
to be refinanced in full by the DIP
Term Loan Facility.
* Other Secured Debt: Secured Debt, including Aircraft
Secured Debt to be restructured per agreement
(including all Secured Debt held by parties to RSAs).
* General Unsecured Claims (Excluding Ordinary Course
Trade Claims):
-- General unsecured claims (including, for the
avoidance of doubt, all unsecured claims held by
parties to RSAs) shall receive their pro-rata
portion of 20.5% of the equity of the reorganized
Company.
-- Unsecured claims held by DIP Lenders to be waived
upon consummation of the Acceptable Plan.
* Ordinary Course Trade Claims; Litigation Claims;
Employee Claims:
-- Ordinary Course Trade Claims held by a trade
creditor, vendor, supplier, service provider,
independent contractor or professional that will
be providing goods and services to the
Reorganized Debtor post-Effective Date shall be
paid in the ordinary course of business pursuant
to the orders entered by the Bankruptcy Court
and otherwise shall be unimpaired.
-- Prepetition Litigation Claims shall be disputed
in the ordinary course of business and resolved
in accordance with any settlements and orders
issued by underlying courts (subject to
Bankruptcy Court approval as required during the
pendency of the case and in the ordinary course
of business upon emergence) and otherwise shall
be unimpaired.
-- Employee Claims shall be paid in the ordinary
course of business pursuant to the orders
entered by the Bankruptcy Court and otherwise
shall be unimpaired.
* Intercompany Accounts: All intercompany accounts
between Philippine Airlines, Inc. and its affiliates
and subsidiaries shall be paid in the ordinary course
of business pursuant to the orders entered by the
Bankruptcy Court and otherwise shall be unimpaired.
* Existing Equity: All existing equity interests of
Philippine Airlines, Inc. (including common stock,
preferred stock and any options, warrants, profit
interest units, or rights to acquire any equity
interests) shall be cancelled1 and holders of the
interests shall receive no recovery on account of
the interests.
* Equity Interests in Subsidiaries: All existing
equity interests held by Philippine Airlines, Inc.
in any subsidiaries shall be reinstated and remain
in place.
Credit Facilities
The credit facilities implemented as part of restructuring are:
* DIP Term Loan Facility - Tranche A. A $250 million
multi-draw commitment, $20 million of which will be
available in a single draw upon entry of an order
approving the DIP Term Loan Facility on an interim
basis. Upon the Plan effective date, the Tranche A
Security Package shall be released and the DIP Term
Loan Facility Tranche A will convert into an
unsecured loan facility for the remainder of the
original 63-month post-petition term.
* DIP Term Loan Facility - Tranche B. $255 million
multi-draw commitment, available upon entry of
Final DIP Order. Upon the Effective Date,
conversion into 79.50% of the equity of the
reorganized Company (such conversion to be elected
at the Company's sole discretion).
* Optional Exit Facility. The Company may, in its
sole discretion, determine to enter into an
optional exit facility to provide incremental
additional funding for general operational purposes.
The exit facility will have a $125 million
commitment with a maturity of three years.
Other Terms
As part of the overall Restructuring, the Company shall reduce its
aircraft fleet from 91 aircraft as of year-end 2019 to a long term
operating fleet of 70 aircraft as of the Effective Date. All
leases not otherwise assumed shall be rejected
The reorganized Company's initial board of directors will consist
of directors to be designated by the DIP Term Loan Facility Tranche
B Lender(s) in a manner to be determined (if converted at the
Debtor's election).
A copy of the Amended Plan Term Sheet is available at
https://bit.ly/3iinVdd
About Philippine Airlines
Philippine Airlines, Inc., is the flag carrier of the Philippines
and the country's only full-service network airline. PAL was the
first commercial airline in Asia and marked its 80th anniversary in
March 2021. PAL's young fleet of Boeing 777s, Airbus A350s, Airbus
A330s, Airbus A321s and De Havilland DHC Q400 aircraft operate out
of hubs in Manila, Cebu and Davao to 29 destinations in the
Philippines and 32 destinations in Asia, North America, Australia,
Europe and the Middle East. PAL was rated a 4-Star Global Airline
by Skytrax in 2018 and a 5-Star Major Airline by the Association of
Airline Passengers (APEX) in 2020, and was likewise voted the
World's Most Improved Airline in the 2019 Skytrax worldwide
passenger survey with a ranking of 30th best airline in the world.
On Sept. 3, 2021, Philippine Airlines, Inc. (PAL) filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 21-11569) to seek approval of a
restructuring plan negotiated with lenders and lessors.
As of July 31, 2021, the Debtor's overall assets and liabilities
were approximately $4.1 billion and $6.07 billion, respectively.
The Honorable Shelley C. Chapman is the case judge.
The Debtor tapped Debevoise & Plimpton LLP as general bankruptcy
counsel; Norton Rose Fulbright as aircraft counsel; and Seabury
Securities LLC and Seabury International Corporate Finance LLC as
restructuring advisor and investment banker. Angara Abello
Concepcion Regala & Cruz (ACCRA) is acting as legal advisor in the
Philippines. Kurtzman Carson Consultants LLC is the claims agent.
Buona Sorte Holdings, Inc. and PAL Holdings Inc., as DIP lenders,
are represented by White & Case LLP.
PHILIPPINE AIRLINES: Seeks to Hire 'Ordinary Course' Professionals
------------------------------------------------------------------
Philippine Airlines, Inc. seeks approval from the U.S. Bankruptcy
Court for the Southern District of New York to hire professionals
who provide services in the ordinary course of business.
The request, if granted by the court, would allow the Debtor to
hire "ordinary course" professionals without filing separate
employment and fee applications.
The ordinary course professionals under Tier 1 are as follows:
Professionals Services
Hogan Lovells U.S. regulatory counsel;
certain non-bankruptcy
U.S.-based litigation
Togut, Segal & Segal LLP Expert retained in connection
with Philippine insolvency
proceedings
Angara Abello Concepcion Philippine legal counsel
Regala & Cruz Law Offices
Quisumbing Torres Counsel for certain labor matters
(Baker McKenzie)
Each ordinary course professional under Tier 1 will receive total
compensation and reimbursements of up to $75,000 per month (on
average over a rolling three-month basis).
Moreover, the ordinary course professionals under Tier 2 are as
follows:
Professionals Services
Holman Fenwick Willan Middle East regulatory counsel
Middle East LLP
Holman Fenwick Willan Asia and UK regulatory counsel;
Singapore LLP advise on certain customer claims
Lowndes Jordan New Zealand regulatory counsel
Stikeman Elliot Canadian regulatory counsel
Laguesma Magsalin Counsel for certain labor matters
Consulta & Gastardo
Zambrano & Gruba Counsel for certain tax matters
Law Offices
Each ordinary course professional under Tier 2 will receive total
compensation and reimbursements of up to $10,000 per month (on
average over a rolling three-month basis).
As disclosed in court filings, the firms are "disinterested
persons" as the term is defined in Section 101(14) of the
Bankruptcy Code.
About Philippine Airlines
Philippine Airlines, Inc., is the flag carrier of the Philippines
and the country's only full-service network airline. PAL was the
first commercial airline in Asia and marked its 80th anniversary in
March 2021. PAL's young fleet of Boeing 777s, Airbus A350s, Airbus
A330s, Airbus A321s and De Havilland DHC Q400 aircraft operate out
of hubs in Manila, Cebu and Davao to 29 destinations in the
Philippines and 32 destinations in Asia, North America, Australia,
Europe and the Middle East. PAL was rated a 4-Star Global Airline
by Skytrax in 2018 and a 5-Star Major Airline by the Association of
Airline Passengers (APEX) in 2020, and was likewise voted the
World's Most Improved Airline in the 2019 Skytrax worldwide
passenger survey with a ranking of 30th best airline in the world.
On Sept. 3, 2021, Philippine Airlines, Inc. (PAL) filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 21-11569). As of July 31, 2021, the
Debtor's overall assets and liabilities were approximately $4.1
billion and $6.07 billion, respectively.
The Honorable Shelley C. Chapman is the case judge.
The Debtor tapped Debevoise & Plimpton LLP as general bankruptcy
counsel; Norton Rose Fulbright as aircraft counsel; and Seabury
Securities LLC and Seabury International Corporate Finance LLC as
restructuring advisor and investment banker. Angara Abello
Concepcion Regala & Cruz (ACCRA) is acting as legal advisor in the
Philippines. Kurtzman Carson Consultants LLC is the claims agent.
Buona Sorte Holdings, Inc. and PAL Holdings Inc., as DIP lenders,
are represented by White & Case LLP.
PHILIPPINE AIRLINES: Sept. 30 Hearing on Plan Support Deals
-----------------------------------------------------------
Philippine Airlines, Inc., will seek approval from the U.S.
Bankruptcy Court for the Southern District of New York on Sept. 30,
2021, at 10:00 a.m. (prevailing Eastern Time) of its motion to
assume and perform under its restructuring support agreements with
its creditors.
The Restructuring Support Agreements serve as the backbones of the
Debtor's restructuring and ultimately the Debtor's chapter 11 plan
of reorganization. In particular, the RSAs detail the process that
the Debtors will undertake during this chapter 11 case with a view
towards emerging as a viable and healthy airline in a matter of
months.
The RSAs were entered into with substantially all of the Debtor's
primary aircraft lessors and lenders, original equipment
manufacturers and maintenance, repair, and overhaul service
providers, and certain funded debt lenders.
The resolutions memorialized in the RSAs address several critical
issues facing the Debtor both during the Chapter 11 Case, as well
as post-emergence. The RSAs contain critical operational
agreements regarding the Debtor's long term leases, loans and
ability to use the aircraft during the Chapter 11 case.
In addition to each RSA containing amendments to the applicable
aircraft leases and agreements, the RSAs also contain additional
exhibits that form critical and indispensable parts of the
comprehensive agreements. The RSAs contain exhibits setting forth
agreed terms of lease rejections pursuant to Rejection Stipulations
and "super soft landing" stipulations, which govern the return of
aircraft that the Debtor believes it no longer requires for its
revised business plan and fleet. The RSAs also contain Usage
Stipulations that govern the Debtor's use of the aircraft during
the Chapter 11 Case and resolve any adequate protection claims of
the applicable Supporting Creditor.
Moreover, the Debtor has agreed to the allowance of the claims of
certain Supporting Creditors in their respective RSAs:
(a) Airbus: The Debtor has agreed with Airbus that Airbus
shall have an allowed unsecured claim against the Debtor in the net
amount of $1,557,629 for sales of parts and/or provision of
services by the Airbus under purchase orders that are not related
to the Existing Documents (as defined in the applicable RSA), which
claim shall (i) be and be deemed in full and final satisfaction of
all claims that are not related to the Existing Documents and (ii)
treated as an Ordinary Course Trade Claim as described in the
Proposed Plan attached to the RSA; provided, however, that the
foregoing shall not limit or impair Airbus's rights to assert an
administrative or other claim permitted or otherwise allowed under
the RSA or the applicable Amendment Agreements, including
additional Ordinary Course Trade Claims under certain purchase
orders in the asserted amount of $1,944,839.25 that Airbus
acknowledges is subject to reconciliation and agreement between
itself and the Debtor, which claims shall also be treated as
Ordinary Course Trade Claims as described in the Proposed Plan to
the extent the amount is agreed and reconciled by the Parties.
(b) Asia United Bank Corporation ("AUB"): The Debtor has
agreed with AUB that AUB shall have a prepetition unsecured claim
against the Debtor in the net amount of $75,486,656, which claim
shall be treated as an impaired General Unsecured Claim as
described in the Proposed Plan.
(c) Philippine National Bank ("PNB"): The Debtor has agreed
with PNB that PNB shall have a prepetition unsecured claim against
the Debtor in the amount of (x) US$113,776,031 plus (y) any accrued
interest and any other amount which are due and payable under the
SBLC Facility (as defined in the applicable RSA) and the Revolving
Facility (as defined in the applicable RSA) as of the Petition Date
less (z) the value of the Collateral, which has been agreed to be
PHP1,360,963,000, which amount shall be converted into US Dollars
using the exchange rate on the first Business Day prior to the
Petition Date, as quoted at 4:00 p.m. (Manila Time), the BAP AM
Weighted Average Rate of exchange for Philippine Pesos as published
in Bloomberg, which claim shall (i) be and be deemed
in full and final satisfaction of all claims related to the SBLC
Facility and the Revolving Credit Facility, and (ii) be treated as
an impaired General Unsecured Claim as described in the Proposed
Plan.
(d) Rolls-Royce PLC: The Debtor has agreed with Rolls-Royce
that Rolls-Royce shall have: (i) a prepetition unsecured claim
against the Debtor in the net amount of $89,496,109 (the "RR
Prepetition Unsecured Claim"); and (ii) a cure claim associated in
the net amount of $33,463,519 (the "RR Cure Claim"), which RR Cure
Claim shall be paid in accordance with the terms of the applicable
Amendment Agreements. The RR Prepetition Unsecured Claim shall be
treated as an impaired General Unsecured Claim as described in the
Proposed Plan.
RSA Parties
As of Sept. 6, 2021, parties that have entered into individualized
and specific agreements with the Debtors are:
A. Aircraft Counterparties - Operating Leases
* Aircraft MSN 6201 LLC and Aircraft MSN 6253 LLC;
* PP5012 Aircraft Leasing Limited and PP5103 Aircraft Leasing
Limited;
* Pajun Aviation Leasing 1 Limited and Pajun Aviation Leasing 2
Limited;
* Pajun Aviation Leasing 3 Limited;
* Avation Pacific Leasing II Pte. Ltd.;
* CIT Aerospace International, SAF Leasing II (AOE 2) Limited,
Avolon Aerospace AOE 95 Limited, CIT Group Finance (Ireland), HKAC
Leasing 6291 (Ireland) Limited, Avolon Aerospace AOE 106 Limited,
and Avolon Aerospace AOE 108 Limited;
* ECAF I 1482 DAC and ECAF I 6363 DAC;
* Fly Aircraft Holdings Twenty-One Ltd, Fly Aircraft Holdings
Twenty-Two Ltd, Fly Aircraft Holdings Twenty-Six Ltd, and Fly
Aircraft Holdings Twenty-Eight Ltd;
* Wilmington Trust SP Services (Dublin) Limited ("Castlelake");
* Wilmington Trust SP Services (Dublin) Limited ("Chorus");
* AWAS 1 Ireland Limited and AWAS 5371 Trust;
* DCAL 2 Leasing Limited and DCAL 1 Leasing Limited;
* Celestial Aviation Trading 68 Limited, Celestial EX-IM Trading
1 Limited, LAF Leasing Ireland 3 Limited, and Celestial Aviation
Trading 100 Limited;
* RSA entered into with Nanshi Aviation Leasing Limited;
* HAITONG Unitrust No. 3 Limited and HAITONG Unitrust No. 4
Limited;
* JPL Stratos Leasing 1 Limited;
* JPA No. 112 Co., Ltd., and DVB Bank SE, Singapore Branch;
* Macquarie Airfinance Acquisitions (UK) Ltd;
* Orix Aviation Systems Limited;
* RRPF Engine Leasing Limited;
* SMBC Aviation Capital Limited; and
* TrueNoord Pinatubo Limited.
B. Aircraft Counterparties - Finance Leases
* BDO Unibank, Inc.- Trust and Investments Group, Ascend
Aircraft Leasing Limited I, Ascend Aircraft Leasing Limited II,
Ascend Aircraft Leasing Limited III, BDO Unibank, Inc., and BDO
Capital & Investment Corporation;
* Cathay United Bank, Co., Ltd. and Prime Aviation Leasing;
* China Banking Corporation, China Banking Corporation – Trust
and Asset Management Group, Pioneer Aircraft Leasing I Limited,
Pioneer Aircraft Leasing II Limited, and Pioneer Aircraft Leasing
III Limited;
* JA Mitsui Leasing, Ltd. and Paragon Aircraft Leasing Limited;
* MUFG Bank, Ltd., Singapore Branch, and Peak Aircraft Leasing
Limited II;
* Ascend Aircraft Leasing Limited IV and PK AirFinance S.a
r.l.;
* Peak Aircraft Leasing Limited I and PK AirFinance S.a r.l.;
* Premiere Aero Leasing Limited and PK AirFinance S.a r.l.;
* Paramount Aircraft Leasing Limited and PK AirFinance S.à
r.l.;
* Philippine National Bank, Phoenix Aircraft Leasing Limited,
and Prima Aircraft Leasing Limited; and
* Pacific Aircraft Leasing (2012) LLC, Pacific Aircraft Leasing
(2012) Trust, Porto Aircraft Leasing (2012) LLC, Porto Aircraft
Leasing (2012) Trust, Penta Aircraft Leasing (2013) LLC, Penta
Aircraft Leasing (2013) Trust, Wilmington Trust Company, Wells
Fargo Trust Company, National Association, and Export Import Bank
of the United States.
C. Original Equipment Manufacturers
* Airbus S.A.S.;
* Rolls Royce plc; and
* IAE International Aero Engines AG and International Aero
Engines, LLC.
D. Local Banks
* Asia United Banking Corporation;
* Union Bank of the Philippines; and
* Industrial and Commercial Bank of China Limited - Manila
Branch.
On Sept. 17, 2021, the Debtor disclosed that additional RSAs were
reached with:
* Alhena Ltd. and BNP Paribas (Singapore branch); and
* Paramount Aircraft Leasing Limited and PK AirFinance S.a r.l.
About Philippine Airlines
Philippine Airlines, Inc., is the flag carrier of the Philippines
and the country's only full-service network airline. PAL was the
first commercial airline in Asia and marked its 80th anniversary in
March 2021. PAL's young fleet of Boeing 777s, Airbus A350s, Airbus
A330s, Airbus A321s and De Havilland DHC Q400 aircraft operate out
of hubs in Manila, Cebu and Davao to 29 destinations in the
Philippines and 32 destinations in Asia, North America, Australia,
Europe and the Middle East. PAL was rated a 4-Star Global Airline
by Skytrax in 2018 and a 5-Star Major Airline by the Association of
Airline Passengers (APEX) in 2020, and was likewise voted the
World's Most Improved Airline in the 2019 Skytrax worldwide
passenger survey with a ranking of 30th best airline in the world.
On Sept. 3, 2021, Philippine Airlines, Inc. (PAL) filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 21-11569) to seek approval of a
restructuring plan negotiated with lenders and lessors.
As of July 31, 2021, the Debtor's overall assets and liabilities
were approximately $4.1 billion and $6.07 billion, respectively.
The Honorable Shelley C. Chapman is the case judge.
The Debtor tapped Debevoise & Plimpton LLP as general bankruptcy
counsel; Norton Rose Fulbright as aircraft counsel; and Seabury
Securities LLC and Seabury International Corporate Finance LLC as
restructuring advisor and investment banker. Angara Abello
Concepcion Regala & Cruz (ACCRA) is acting as legal advisor in the
Philippines. Kurtzman Carson Consultants LLC is the claims agent.
Buona Sorte Holdings, Inc. and PAL Holdings Inc., as DIP lenders,
are represented by White & Case LLP.
RAM DISTRIBUTION: Disclosure Hearing Oct. 14; Files Amended Plan
----------------------------------------------------------------
Ram Distribution Group LLC d/b/a Tal Depot, submitted a Fifth
Amended Disclosure Statement for its Fourth Amended Plan dated
September 20, 2021.
The Bankruptcy Court has scheduled October 14, 2021 at 11:00 AM as
the hearing to consider approval of the adequacy of the Disclosure
Statement.
Class 5 consists of all Interest Holders of the Debtor. In exchange
for contributing new capital of $10,000, all Interest holders of
the Debtor shall retain their Interests in the Reorganized Debtor.
The Interest Holders shall not receive any distributions on account
of such Interests. Accordingly all holders of Class 5 Claims are
conclusively deemed to have rejected the Plan in accordance with
section 1126(g) of the Bankruptcy Code. Such Holders are not
entitled to vote to accept or reject the Plan.
Like in the prior iteration of the Plan, the Debtor shall make
monthly payments in the amount of one thousand one hundred seventy
five dollars ($1,175) per month to be shared on a Pro Rata basis by
Claimants holding Allowed Unsecured Claims commencing at the
beginning of month seventeen (17) following the Effective Date, as
shown on the Seven Year Projections which at this juncture is
projected to be approximately 1%.
A full-text copy of the Fifth Amended Disclosure Statement dated
September 20, 2021, is available at https://bit.ly/2XC3Wi7 from
PacerMonitor.com at no charge.
Counsel to the Debtor and Debtor-in-Possession:
Btzalel Hirschhorn, Esq.
SHIRYAK, BOWMAN, ANDERSON, GILL & KADOCHNIKOV, LLP
8002 Kew Gardens, Suite 600
Kew Gardens, NY 11415
Tel: (718) 263-6800
Fax: (718) 520-9401
Email: Bhirschhorn@sbagk.com
About Ram Distribution Group
Tal Depot owns and operates an e-commerce website at
https://taldepot.com/ that sells snacks, drinks, groceries,
wellness, and home goods products.
Ram Distribution Group, LLC, d/b/a Tal Depot, filed for Chapter 11
bankruptcy protection (Bankr. E.D.N.Y. Case No. 19-72701) on April
12, 2019. In the petition signed by CEO Jeremy J. Reichmann, the
Debtor was estimated to have $100,000 to $500,000 in assets and $10
million to $50 million in liabilities.
Btzalel Hirschhorn, Esq., at Shiryak, Bowman, Anderson, Gill &
Kadochnikov LLP is the Debtor's counsel. Analytic Financial Group,
LLC, d/b/a Corporate Matters, serves as financial advisors to the
Debtor.
REALOGY GROUP: Moody's Affirms B1 CFR & Hikes 2nd Lien Notes to Ba3
-------------------------------------------------------------------
Moody's Investors Service affirmed Realogy Group LLC's corporate
family rating at B1, probability of default rating at B1-PD and
senior secured bank credit facilities at Ba1. Moody's upgraded
Realogy's senior secured 2nd lien notes to Ba3 from B1 and senior
unsecured notes to B2 from B3. The speculative grade liquidity
rating is SGL-1. The outlook is stable.
On Friday, Realogy announced that it had repaid in full its $197
million senior secured term loan A due 2023 and $237 million term
loan B due 2025 with cash.
RATINGS RATIONALE
"By repaying about one half a turn of debt leverage, Realogy
positions itself well to maintain strong credit metrics and very
good liquidity as it seeks to extend maturities and secure better
terms on its remaining debt in 2022," said Edmond DeForest, Moody's
Senior Vice President.
The B1 CFR reflects Moody's expectations for over $200 million of
free cash flow and debt to EBITDA well below 5.0 times in 2021.
Financial leverage may rise from debt to EBITDA of 3.9 times as of
June 30, 2021, pro forma for the term loan repayments, due to the
roll off of approximately $150 million of temporary cost cuts
implemented in 2020 and potential revenue and EBITDA declines from
the high levels recorded in the LTM period if the existing home
sale market cools.
All financial metrics cited reflect Moody's standard adjustments.
The rating upgrades to Ba3 from B1 on the senior secured second
lien notes and to B2 from B3 on the senior unsecured notes reflect
the lower proportion of senior secured debt following the term loan
repayments. Moody's anticipates that Realogy will repay or
refinance a substantial portion of its debts over the next 12 to 18
months, so the proportion of secured to total debt could change and
drive further changes in instrument ratings.
Moody's expects the US existing home sales market will remain
robust in the second half of 2021, but that the market is likely to
peak this year. Therefore, Moody's also expects that Realogy's
revenue may decline in 2022 versus 2021, driven by the maturing of
the post-COVID economic recovery leading to fewer existing home
sale transactions, mitigated somewhat by rising average home sale
prices. Operating leverage in Realogy's owned brokerage unit and
permanent cost reductions should help EBITA rates rebound to above
10% in 2022.
Additional support is provided by a strong portfolio of brands and
leading existing homes sale brokerage market position. Realogy's
owned brokerage operations are concentrated in the largest US
markets, including most large markets experiencing an existing home
sale market boom. Pressure from lagging conditions in the New York
City market, where Realogy has a large, multi-brand owned brokerage
presence, should continue to abate in the third quarter as sales
and rental activity continue to improve. Moody's considers the
residential real estate brokerage market volatile, cyclical and
seasonal. Although commission costs are variable, Realogy's owned
brokerages have a high degree of fixed operating costs. A high
proportion of its profits reflect home sale market activity as
opposed to less-transactional franchise fees. Realogy's leading
position in the residential real estate brokerage market positions
the company well to improve financial metrics steadily while
existing home sale volumes and price continue to grow.
Moody's expects the residential real estate brokerage industry will
continue to benefit from low interest rates and the strong housing
market that has developed over the previous year into the second
half of 2021. However, Moody's anticipates that the number of home
sale transactions may plateau or decline in the second half of 2021
versus late 2020 levels as the post-COVID boom concludes, and that
transactions may decline further in 2022, although likely remain
above 2019 levels. Competition from non-traditional
technology-enabled competitors, including RedFin and Zillow,
own-to-rent buyers and home flippers has grown.
Additionally, Realogy's high operating and financial leverage could
limit its flexibility if competition increases or the negative
impacts of the pandemic on the existing home sale market linger for
an extended period. Moody's regards the coronavirus outbreak as a
social risk under its ESG framework, given the substantial
implications for public health and safety.
As a public company, Realogy provides transparency into its
governance and financial results and goals. The 11-person board of
directors is controlled by independent directors. Moody's expects
Realogy to maintain conservative financial strategies including
repaying debt, building liquidity and eschewing large debt-funded
M&A or large share repurchase in 2022.
The Ba1 rating on the senior secured bank credit facilities
reflects their priority position in the capital structure and a
Loss Given Default ("LGD") assessment of LGD2. The debt is secured
by a pledge of substantially all of the company's domestic assets
(other than excluded entities and excluding accounts receivable
pledged for the securitization of the facility) and 65% of the
stock of foreign subsidiaries. The Ba1 rating, three notches above
the CFR, benefits from loss absorption provided by the junior
ranking debt and non-debt obligations.
The Ba3 rating on the senior secured second lien notes reflects
their subordination to the first lien senior secured bank
facilities, seniority to the senior unsecured notes, and an LGD
assessment of LGD3. The second lien is secured by a second lien on
substantially all of the company's domestic assets (other than
excluded entities and excluding accounts receivable pledged for the
securitization facility) and 65% of the stock of foreign
subsidiaries.
The B2 rating on the senior unsecured notes reflects the B1-PD PDR
and a LGD assessment of LGD5. The LGD assessment reflects effective
subordination to all the secured debt. The senior notes are
guaranteed by substantially all of the company's domestic assets
(other than excluded entities and excluding accounts receivable
pledged for the securitization facility) and 65% of the stock of
foreign subsidiaries). The unrated exchangeable notes are ranked
pari passu with Realogy's rated unsecured notes in Moody's
hierarchy of claims at default.
The SGL-1 speculative grade liquidity rating reflects Realogy's
very good liquidity profile. As of June 30, 2021 and pro forma for
the term loan repayments, Realogy had a cash balance of over $400
million. Moody's anticipates more than $230 million of free cash
flow in 2021 and full availability under the company's $1.425
billion revolving credit facilities. A $477 million portion of the
revolver matures in 2023 while $948 million matures in 2025 so long
as Realogy repays or refinances its 4.875% senior notes due June
2023 before March 2023. Realogy's cash flow is seasonal, with
negative cash flow typically in the 1st fiscal quarter. Moody's
expects Realogy will maintain a comfortable margin below the
maximum senior secured net debt to EBITDA (as defined in the
facility agreement) financial maintenance covenant applicable to
the secured 1st lien debt over the 12 to 15 months. Realogy has
only around $7.5 million of annual required term loan principal
payments.
The stable outlook reflects Moody's anticipation that Realogy will
maintain debt to EBITDA well below 5.0 times and very good
liquidity despite declines in revenue and EBITDA expected over the
next 12 to 18 months as the current housing boom levels off,
leading to somewhat higher debt leverage and diminished free cash
flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Moody's expects Realogy will
sustain through market cycles: 1) debt to EBITDA below 4.5 times,
2) free cash flow to debt of at least 8%, 3) very good liquidity,
and 4) balanced financial strategies, including an emphasis upon
repaying debt and extending its debt maturity profile.
The ratings could be downgraded if Moody's anticipates: 1) debt to
EBITDA to remain above 5.5 times, 2) diminished liquidity, or 3)
Realogy will not repay debt and adopt more aggressive financial
strategies featuring large, debt-financed acquisitions or
shareholder returns.
Issuer: Realogy Group LLC
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Secured Bank Credit Facility, Affirmed Ba1 (LGD2)
Senior Secured Regular Bond/Debenture, Upgraded to Ba3 (LGD3) from
B1 (LGD3)
Backed Senior Unsecured Regular Bond/Debenture, Upgraded to B2
(LGD5) from B3 (LGD5)
Outlook remains Stable
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Realogy Holdings Corp. (NYSE: RLGY) provides integrated US
residential real estate services, encompassing franchise,
brokerage, relocation, and title and settlement businesses as well
as a mortgage joint venture. Realogy's brand portfolio includes
Better Homes and Gardens(R) Real Estate, CENTURY 21(R), Coldwell
Banker(R), Coldwell Banker Commercial(R), Corcoran(R), ERA(R), and
Sotheby's International Realty(R). Moody's expects 2021 revenues of
approaching $7 billion.
REDEEMED CHRISTIAN CHURCH: Taps Lorenzo Wooten as Broker
--------------------------------------------------------
The Redeemed Christian Church of God, River of Life Maryland seeks
approval from the U.S. Bankruptcy Court for the District of
Maryland to hire Lorenzo Wooten, a real estate broker at Marcus &
Millichap.
The Debtor requires the services of a real estate broker to market
for sale some of its properties in Riverdale, Md.
The broker will receive a 7 percent commission, which is customary
in commercial and church-related brokerages.
Mr. Wooten disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
Mr. Wooten can be reached at:
Lorenzo Wooten
Marcus & Millichap
7200 Wisconsin Ave, Suite 1101
Bethesda, MD 20814
Telephone: (202) 536-3700
About The Redeemed Christian Church
The Redeemed Christian Church of God, River of Life, is a
tax-exempt religious organization in Riverdale, Md.
The Redeemed Christian Church of God filed its voluntary petition
for Chapter 11 protection (Bankr. D. Md. Case No. 21-14554) on July
9, 2021, listing as much as $10 million in both assets and
liabilities. David Ijeh, director and pastor, signed the petition.
Judge Thomas J. Catliota oversees the case.
John D. Burns, Esq., at The Burns Law Firm, LLC and Okeh &
Associates, P.C. serve as the Debtor's legal counsel and
accountant, respectively.
REDEEMED CHRISTIAN CHURCH: Taps Okeh & Associates as Accountant
---------------------------------------------------------------
The Redeemed Christian Church of God, River of Life Maryland seeks
approval from the U.S. Bankruptcy Court for the District of
Maryland to hire Okeh & Associates, P.C. as its accountant.
The firm's services include the preparation of the Debtor's monthly
operating reports and financial statements that may be required
during the course of its Chapter 11 case.
The firm will be paid at an hourly rate of $200 for the monthly
operating report and other accounting services.
Ofobuike Okeh, a certified public accountant at Okeh & Associates,
disclosed in a court filing that he is a "disinterested person" as
the term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Okeh can be reached at:
Ofobuike N. Okeh, CPA
Okeh & Associates, P.C.
9208 Annapolis Rd.
Lanham, MD 20706
Phone: 301-918-0555 / 202-291-3322
Fax: 301-918-0577 / 202-618-4475
Email: info@okehcpa.com
About The Redeemed Christian Church
The Redeemed Christian Church of God, River of Life, is a
tax-exempt religious organization in Riverdale, Md.
The Redeemed Christian Church of God filed its voluntary petition
for Chapter 11 protection (Bankr. D. Md. Case No. 21-14554) on July
9, 2021, listing as much as $10 million in both assets and
liabilities. David Ijeh, director and pastor, signed the petition.
Judge Thomas J. Catliota oversees the case.
John D. Burns, Esq., at The Burns Law Firm, LLC and Okeh &
Associates, P.C. serve as the Debtor's legal counsel and
accountant, respectively.
RIVERSTREET VENTURES: Seeks Approval to Hire Novogradac Consulting
------------------------------------------------------------------
Riverstreet Ventures, LLC seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Louisiana to hire Novogradac
Consulting, LLP to update its appraisal of the company's real
property in Orleans Parish, La.
Novogradac had previously conducted a valuation of the property
that will be used for a newly constructed multifamily development.
Riverstreet needs an updated appraisal of the property for a
potential lender as well as witness and expert testimonies from the
firm related to the appraisal.
The firm's hourly rates are as follows:
Brad Weinberg $475 per hour
Lindsey Sutton $475 per hour
Managers $235 - $295 per hour
Novogradac requested a retainer fee in the amount of $5,000.
Brad Weinberg, a partner at Novogradac, disclosed in a court filing
that he is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Brad Weinberg
Novogradac Consulting, LLP
1160 Battery Street, East Building, 4th Floor
San Francisco, CA 94111
Phone: 415.356.8000
Fax: 415.356.8001
About Riverstreet Ventures LLC
Metairie, La.-based Riverstreet Ventures, LLC sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La. Case No.
21-10818) on June 23, 2021, disclosing total assets of up to $10
million and total liabilities of up to $50 million. Philip J.
Spiegelman, president, signed the petition.
Judge Meredith S. Grabill oversees the case.
Simon Peragine Smith & Redfearn, LLP and Middleburg Riddle Group
serve as the Debtor's bankruptcy counsel and special counsel,
respectively.
ROCKDALE MARCELLUS: Files for Chapter 11 to Find Buyer
------------------------------------------------------
Natural gas driller Rockdale Marcellus, LLC and Rockdale Marcellus
Holdings, LLC, have sought bankruptcy protection intending to sell
substantially all assets by December this year.
Together, the Debtors comprise an independent exploration and
production company with a natural gas focused asset base. The
Debtors' primary production and development activities are located
in the Marcellus Shale in Pennsylvania with many administrative
functions relating to such activities being performed from the
Debtors' offices in Canonsburg, Pennsylvania.
The Debtors' assets consist of, among other things, more than
49,000 net leasehold acres, including 68 currently producing
horizontal natural gas wells in the northeastern Pennsylvania
counties of Lycoming, Bradford, and Tioga. The Debtors are
organized as limited liability companies under Title 3 of the Texas
Business Organizations Code.
Efforts to sell the business began prepetition. In connection with
the Debtors' obligations under agreements with certain prepetition
secured lenders, the Debtors engaged Intrepid Partners, LLC, on
Jan. 15, 2021, to market and sell substantially all of the Debtors'
assets. Ten prospective buyers submitted indications of interests,
and three prospective buyers submitted binding bids by the March
deadline set by Intrepid. But all price indications were below the
balance of the Debtors' first lien secured debt.
In May 2021, funds managed by Alta Fundamental Advisers LLC
acquired 100% of the loans and commitments under the Debtors' first
lien credit facility. When Alta purchased the Debtors' first lien
debt, the immediate pressure to consummate a sale transaction from
the preceding first lien lender subsided. Given that breathing
space, the Debtors, in consultation with Alta, decided to pause the
sale process to make a considered determination as to whether
viable alternative restructuring paths existed that might yield
more value for the Debtors and their creditors.
In the months that followed, the Debtors and Alta explored a
variety of alternative restructuring paths, including an equity
recapitalization, restructuring the Debtors' second lien debt, and
negotiating more favorable terms under their gas gathering
agreement with UGI Texas Creek, LLC. Unfortunately, none of these
paths proved viable within the time available to the Debtors.
On Sept. 11, 2021, the Debtors, the Debtors' prepetition first lien
agent, and Alta entered into the Eleventh Amendment to Forbearance
Agreement and Nineteenth Amendment to Credit Agreement. In
connection with the Eleventh Forbearance Amendment, the Debtors
informed Alta that they were contemplating filing chapter 11
petitions in the Court and requested that Alta negotiate certain
matters relating to a filing with the Debtors. Among other things,
the Debtors and Alta agreed to discuss and negotiate the terms of a
process under section 363 of the Bankruptcy Code to sell
substantially all of the Debtors' assets, provided that the Debtors
may contemporaneously with that sale process also pursue a
standalone restructuring that could include a plan sponsor to fund
a plan of reorganization. The Debtors also agreed that they would
use commercially reasonable efforts to engage an investment banker
in connection with the Chapter 11 Cases.
Consistent with this goal, the Debtors' new investment banker,
Houlihan Lokey Capital, Inc., began a new marketing process on the
Petition Date.
With their Chapter 11 filing, the Debtors have filed a motion
seeking approval of the Bidding Procedures to establish an open
process for the solicitation, receipt, and evaluation of bids on a
timeline that is aligned with the milestones set forth in the
Debtors' post-petition credit agreement.
Under the proposed bidding procedures, parties will have until Dec.
13, 2021 to submit initial bids, and an auction will be conducted
on Dec. 16. A qualified bid and/or a successful bid may take the
form of a sale transaction to be consummated either through a
Section 363 sale of all or substantially all of the assets or a
restructuring transaction.
The Debtors have not yet signed a deal for Alta or any other party
to serve as stalking horse bidder. The Debtors though reserve the
authority to select a stalking horse bidder, who will receive a
break-up fee of up to 3% of the purchase price and expense
reimbursement of up to $550,000.
About Rockdale Marcellus
Rockdale Marcellus is a northeast Pennsylvania natural gass
driller. It owns and operates 66 producing wells on 42,897 net
acres in three northeast PA counties.
On Sept. 21, 2021, Rockdale Marcellus, LLC and Rockdale Marcellus
Holdings, LLC filed petitions seeking relief under chapter 11 of
the United States Bankruptcy Code (Bankr. W.D. Pa. Lead Case No.
21-22080). The Debtors' cases have been assigned to Judge Gregory
L. Taddonio.
Rockdale LLC listed $100 million to $500 million in assets and
liabilities as of the bankruptcy filing.
REED SMITH LLP is serving as the Debtors' counsel. HURON
CONSULTING SERVICES LLC is the restructuring advisor. HOULIHAN
LOKEY CAPITAL, INC., is the investment banker. EPIQ is the claims
agent.
ROCKET MORTGAGE: Moody's Rates New $1.5BB Unsecured Notes 'Ba1'
---------------------------------------------------------------
Moody's Investors Service has assigned Ba1 ratings to Rocket
Mortgage, LLC's proposed $1.5 billion long-term senior unsecured
notes offering: $750 million maturing 2026 and $750 million
maturing 2033. The company intends to use the net proceeds from the
offering to retire some of its existing unsecured debt and for
general corporate purposes. Rocket Mortgage's outlook is positive.
Assignments:
Issuer: Rocket Mortgage, LLC
Senior Unsecured Regular Bond/Debenture, Assigned Ba1
RATINGS RATIONALE
Rocket Mortgage's Ba1 corporate family rating (CFR) reflects the
company's strengthened franchise in the US mortgage market,
supporting its strong profitability and solid funding profile, but
also captures some governance risk from its ownership structure.
The company has a unique franchise strength attributed to the
complementary businesses held under Rocket Companies, Inc., its
parent.
For the year ended December 31, 2020, Rocket Mortgage was the
largest overall US mortgage originator with a market share of
around 8%, up from around 7% in 2019 and 5% from 2014 through 2018.
In addition, the company was the largest retail originator in the
US. With interest rates declining, mortgage originations,
particularly refinancing, surged in 2020, constraining industry
capacity. Origination volumes more than doubled in 2020 versus 2019
and a material increase in gain-on-sale margins boosted Rocket
Mortgage's profitability, with $8.9 billion in net income
corresponding to around 31% of average assets (ROA) in 2020. While
profitability has declined in 2021, in particular as industry
capacity has largely caught up to demand driving a decrease in
gain-on-sale margins, profitability remained very strong in the
first six months of 2021 with ROA of 21%. Moody's expects
longer-term profitability for Rocket Mortgage to remain strong,
with ROA being around 5% or more.
The positive outlook reflects the continued strengthening of the
company's financial profile, which Moody's expects to continue over
the next 12-18 months.
The Ba1 senior unsecured bond rating is based on Rocket Mortgage's
Ba1 corporate family rating and the application of Moody's Loss
Given Default for Speculative-Grade Companies (LGD) methodology and
model, which incorporate their priority of claim and strength of
asset coverage.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The company's ratings could be upgraded if it were able to
demonstrate improved profitability from its purchase mortgage
originations while achieving and maintaining: 1) expected long-term
strong profitability such as net income to assets (excluding MSR
fair value marks) in excess of 5.0%, 2) a strong capital position
with its ratio of tangible common equity (TCE) to tangible managed
assets (TMA) remaining above 20%, 3) solid financial flexibility,
such as reducing its secured debt to gross tangible assets ratio to
less than 50%, 4) low refinance risk on its warehouse facilities
with at least 40% or more of its warehouse lines having average
remaining maturities of 18 months or more and 5) disciplined growth
coupled with a lack of significant operational or regulatory
issues.
Given the positive outlook, a ratings downgrade is unlikely over
the next 12-18 months. Negative ratings pressure may develop if
Rocket Mortgage's financial profile or franchise position weakens,
for example if the company's: 1) origination market share drops
materially, 2) profitability weakens whereby Moody's expects net
income to average assets to remain below 4.0% for an extended
period of time, 3) TCE to TMA ratio declines to less than 17.5%, or
4) percentage of non-GSE and non-government loan origination
volumes grow to more than 7.5% of its total originations without a
commensurate increase in alternative liquidity sources and capital
to address the riskier liquidity and asset quality profile that
such an increase would entail. In addition, an aggressive reach for
market share would be viewed negatively.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
ROCKET MORTGAGE: S&P Rates New Senior Unsecured Notes 'BB+'
-----------------------------------------------------------
S&P Global Ratings assigned its 'BB+' issue rating to Rocket
Mortgage LLC's (BB+/Stable/--) proposed senior unsecured notes due
2026 and 2033. The company will use some of the proceeds to
refinance all or a portion of its existing 2028 bonds and will use
the remainder for general corporate purposes, including
self-funding originations and paying fees and expenses associated
with the transaction.
The company's leverage as of the end of the second quarter was
under 1.0x. However, a decrease in EBITDA (due to a potential
decline in originations) in 2022 or 2023 could pressure leverage in
the longer term. Given the large amount of nonfunding debt
outstanding following this transaction, leverage could rise above
2.0x if conditions deteriorate, which is higher than S&P's downside
threshold, in 2022 and 2023. However, the transaction does further
unencumber the balance sheet while decreasing the company's
reliance on warehouse financing to finance originations.
S&P said, "We expect Rocket Mortgage will operate with a
net-debt-to-EBITDA ratio below 1.0x in 2021, supported by continued
strong originations despite gain on sale margins returning toward
pre-pandemic levels. Although ongoing volatility in EBITDA remains
a risk to leverage, we believe the company will sustain leverage
below 2.0x on a long-term basis, even with this increase in
nonfunding debt--if current conditions persist. We expect net debt
to tangible equity to remain below 1.0x, countering earnings
volatility."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P simulated default scenario for our recovery analysis on
Rocket Mortgages's $5.4 billion senior unsecured debt, including
the revolving credit facility, contemplates a default occurring in
2026 arising from reduced origination volumes and rapid prepayments
of mortgages, resulting in an outflow of mortgage servicing rights
(MSRs).
-- S&P also believes financial pressures could arise as a result
of regulatory changes or operational issues.
-- As financial pressure mounts, S&P assumes the company's assets
will be diluted as it sells MSRs to garner additional liquidity to
fund operations.
-- S&P believes that in a default scenario, creditors would seek
to liquidate the company's assets to receive the value of what they
are owed and incur an additional realization factor, or discount,
because of the challenge of selling assets when the company is
distressed.
Simulated default assumptions
-- Regulatory and compliance deficiencies
-- A sustained period of rapid amortization of MSRs with limited
ability to refinance or recapture mortgage originations
-- Reduced new origination activity
-- An increase in borrower delinquencies
-- An increase in the discount rate to value MSRs
Simplified waterfall
-- Net enterprise value (after 5% administrative costs): $2.9
billion
-- Collateral value available to senior unsecured creditors: $2.9
billion
-- Senior unsecured debt: $5.4 billion
--Recovery expectations: 50%
Note: All debt amounts include six months of prepetition interest.
SAMURAI MARTIAL: May Use Cash Collateral Until Final Hearing
------------------------------------------------------------
Judge Eduardo V. Rodriguez authorized Samurai Martial Sports, Inc.
to continue using cash collateral, on an interim basis, to fund its
necessary business expenses, according to the budget, until the
final hearing on the cash collateral motion. The budget provided
for $29,850 in total monthly expenses for each of September,
October and November 2021.
The Court ruled that BankUnited and Texas Citizens Bank shall
continue to have the same liens and security interests in the cash
collateral generated postpetition, and on all proceeds thereof.
The Court also directed the Debtor to include in the budget a line
item for ad valorem tax liability, and to pay to BankUnited the
monthly ad valorem tax to be held in escrow, for payment in January
2022.
A copy of the interim order is available for free at
https://bit.ly/3nN6mp4 from PacerMonitor.com.
The Court will hold a further hearing on the motion on November 16,
2021 at 11 a.m. by audio and video electronic means.
About Samurai Martial Sports Inc.
Samurai Martial Sports, Inc. is a Houston-based company that
operates a sports complex, camps, after school care and related
matters.
Samurai Martial Sports filed a petition for Chapter 11 protection
(Bankr. S.D. Tex. Case No. 21-32250) on July 2, 2021, listing as
much as $10 million in both assets and liabilities. Ihab Ahmed,
president of Samurai Martial Sports, signed the petition.
Judge Eduardo V. Rodriguez oversees the case.
Reese Baker, Esq., at Baker & Associates and Norris & Associates
serve as the Debtor's legal counsel and accountant, respectively.
SEEDTREE MANAGEMENT: Oct. 12 Hearing on Disclosure Statement
------------------------------------------------------------
The hearing on the adequacy of the Disclosure Statement of Seedtree
Management Group, LLC shall be held before the Honorable John K.
Sherwood on October 12, 2021 at 10:00 am in 50 Walnut St., Newark,
NJ 07102 via Court Solutions.
Written objections to the adequacy of the Disclosure Statement
shall be filed and served no later than 14 days prior to the
hearing before this Court.
About Seedtree Management Group
Cliffside Park, N.J.-based Seedtree Management Group, LLC, is a
single asset real estate debtor (as defined in 11 U.S.C. Section
101(51B)).
Seedtree Management Group sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 21-12760) on April 5, 2021.
Leslie Boamah, member, signed the petition. In its petition, the
Debtor disclosed assets of between $1 million and $10 million and
liabilities of the same range. Judge John K. Sherwood oversees the
case.
Scura, Wigfield, Heyer, Stevens & Cammarota, LLP and the Law Office
of Michael D. Mirne, LLC serve as the Debtor's bankruptcy counsel
and special counsel, respectively.
SENIOR HEALTHCARE: Wins Cash Collateral Access Thru Oct 31
----------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland, Greenbelt
Division, has authorized Senior Healthcare Inc. to use cash
collateral on an interim basis in accordance with the budget
through October 31, 2021.
Pursuant to various loan documents, including two promissory notes
dated October 6, 2017 in the original principal amounts of $151,000
and $174,000 and two corresponding Deeds of Trust recorded in the
land records of Montgomery County, Maryland, the Debtor is indebted
to the Lender on a secured basis. As of the Petition Date, the
aggregate balance due and owing on the Notes was not less than
$467,242.
The Debtor granted security interests in and liens on substantially
all of the property of the Debtor.
As adequate protection for the Debtor's use of cash collateral, the
Lender is granted a valid and perfected replacement lien in all of
the Debtor's post-petition assets, to the same extent and with the
same priority as the Lender's interest in the Prepetition
Collateral. The Adequate Protection Lien granted to the Lender to
protect the Lender's interest in the Cash Collateral used or
consumed by the Debtor after the commencement of the case will at
all times be senior to the rights of the Debtor and any successor
trustee or any creditor in the case or any subsequent proceedings
under the Bankruptcy Code.
The liens and security interests granted are duly perfected without
the necessity for the execution, filing or recording of financing
statements, security agreements and other documents which might
otherwise be required pursuant to applicable non-bankruptcy law.
A copy of the order and the Debtor's budget for August to October
2021 is available for free at https://bit.ly/3CybGkk from
PacerMonitor.com.
The Debtor projects $15,000 in revenue and $18,255 in total
expenses.
About Senior Healthcare Inc.
Senior Healthcare, Inc. filed a Chapter 11 bankruptcy petition
(Bankr. D. Md. Case No. 21-15037) on Aug. 2, 2021, listing as much
as $1 million in assets and as much as $500,000 in liabilities.
Judge Thomas J. Catliota oversees the case.
Cohen Baldinger & Greenfeld, LLC serves as the Debtor's legal
counsel.
SEQUENTIAL BRANDS: Seeks to Hire Gibson Dunn & Crutcher as Counsel
------------------------------------------------------------------
Sequential Brands Group, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Gibson Dunn & Crutcher, LLP to serve as legal counsel in their
Chapter 11 cases.
The firm's services include:
a) advising the Debtors with respect to their powers and duties
in the continued management and operation of their businesses and
properties;
b) advising and consulting on the conduct of the cases,
including all of the legal and administrative requirements of
operating in Chapter 11;
c) advising the Debtors in connection with a restructuring of
their financial obligations, attending meetings and negotiating
with representatives of creditors and other parties in interest;
d) taking all necessary actions to protect and preserve the
Debtors' estates, including prosecuting actions on the Debtors'
behalf, defending any action commenced against the Debtors, and
representing the Debtors in negotiations concerning litigation in
which they Debtors are involved;
e) preparing legal papers;
f) representing the Debtors in connection with obtaining
authority to continue using cash collateral and procuring
post-petition financing;
g) advising the Debtors in connection with potential asset
sales;
h) appearing before the bankruptcy court and any appellate
courts;
i) advising the Debtors regarding tax matters;
j) assisting the Debtors in negotiating, preparing and seeking
approval of a disclosure statement and confirmation of a Chapter 11
plan;
k) preparing organizational documents and other corporate
documents in connection with the Debtors' restructuring efforts;
and
l) performing all other necessary legal service.
The firm's hourly rates are as follows:
Partners $1,095 to $1,645 per hour
Counsel $1,025 to $1,210 per hour
Associates $610 to $1,060 per hour
Paraprofessionals $335 to $645 per hour
Gibson received advance payments totaling $3,339,314.93. The firm
will also receive reimbursement for out-of-pocket expenses
incurred.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Gibson
disclosed the following:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
pre-petition, disclose your billing rates and material financial
terms for the pre-petition engagement, including any adjustments
during the 12 months pre-petition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Response: The firm has represented the Debtors in the 12 months
prior to their Chapter 11 filing. The billing rates and material
financial terms of the pre-bankruptcy engagement are the same as
those proposed by the Debtors, subject to customary annual rate
increases typically effective as of Jan. 1 each year and step-ups
in rates for associates when they advance in class seniority.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Response: The Debtors will approve a prospective budget and
staffing plan for the firm's engagement for the anticipated
post-petition period. In accordance with the U.S. Trustee
Guidelines, the budget may be amended as necessary to reflect
changed or unanticipated developments.
Joshua Brody, Esq., a partner at Gibson, 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:
Joshua K. Brody, Esq.
Gibson Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Tel: (212) 351-4000
Fax: (212) 351-4035
Email: jbrody@gibsondunn.com
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG) together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021.
The company disclosed total assets of $442,774,937 and debt of
$435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC is the
claims agent and administrative advisor.
King & Spalding, LLP is counsel to the debtor-in-possession lenders
(and the consenting lenders under the restructuring support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as the
DIP lenders' local counsel.
SEQUENTIAL BRANDS: Seeks to Hire Pachulski as Co-Counsel
--------------------------------------------------------
Sequential Brands Group, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Pachulski Stang Ziehl & Jones, LLP as co-counsel with Gibson Dunn &
Crutcher, LLP.
The firm's services include:
a. providing legal advice regarding local rules, practices and
procedures;
b. reviewing and commenting on drafts of documents to ensure
compliance with local rules, practices and procedures;
c. filing documents as requested by co-counsel, Gibson Dunn &
Crutcher, and coordinating with the Debtors' claims agent for
service of documents;
d. preparing agenda letters, certificates of no objection,
certifications of counsel, and notices of fee applications and
hearings;
e. preparing hearing binders of documents and pleadings,
printing of documents and pleadings for hearings;
f. appearing in court and at any meeting of creditors;
g. monitoring the docket for filings and coordinating with
Gibson Dunn & Crutcher on pending matters that need responses;
h. preparing and maintaining critical dates memorandum to
monitor pending applications, motions, hearing dates and other
matters and the deadlines associated with same, and distributing
critical dates memorandum with co-counsel for review;
i. handling inquiries and calls from creditors and legal counsel
to interested parties regarding pending matters and the general
status of the Debtors' Chapter 11 cases, and, to the extent
required, coordinating with Gibson Dunn & Crutcher on any necessary
responses; and
j. providing additional administrative support to co-counsel, as
requested.
The firm's hourly rates are as follows:
Partners $845 to $1,695 per hour
Of Counsel $679 to $1,275 per hour
Associates $695 to $725 per hour
Paraprofessionals $375 to $475 per hour
Pachulski received payments in the amount of $350,000 from the
Debtors during the year prior to their Chapter 11 filing. The firm
will also receive reimbursement for out-of-pocket expenses
incurred.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases,
Pachulski disclosed the following:
Question: Did you agree to any variations from, or alternatives
to, your standard or customary billing arrangements for this
engagement?
Response: No.
Question: Do any of the professionals included in this
engagement vary their rate based on the geographic location of the
bankruptcy case?
Response: No.
Question: If you represented the client in the 12 months
pre-petition, disclose your billing rates and material financial
terms for the pre-petition engagement, including any adjustments
during the 12 months pre-petition. If your billing rates and
material financial terms have changed post-petition, explain the
difference and the reasons for the difference.
Response: The firm represented the Debtors during the 12 month
period prior to their Chapter 11 filing. The material financial
terms for the pre-bankruptcy engagement remained the same as the
engagement was hourly-based subject to economic adjustment.
Meanwhile, the billing rates and material financial terms for the
post-petition period remain the same as the pre-bankruptcy period
subject to an annual economic adjustment. The standard hourly rates
of the firm are subject to periodic adjustment in accordance with
the firm's practice.
Question: Has your client approved your prospective budget and
staffing plan, and, if so for what budget period?
Response: The Debtors and the firm expect to develop a
prospective budget and staffing plan to comply with the U.S.
trustee's requests for information and additional disclosures,
recognizing that in the course of these large chapter 11 cases,
there may be unforeseeable fees and expenses that will need to be
addressed by the Debtors and the firm.
Laura Davis Jones, Esq., a partner at Pachulski, 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:
Laura Davis Jones, Esq.
Pachulski Stang Ziehl & Jones LLP
919 North Market Street, 17th Floor
Wilmington, DE 19801
Tel: (302) 652-4100
Fax: (302) 652-4400
Email: ljones@pszjlaw.com
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG) together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021.
The company disclosed total assets of $442,774,937 and debt of
$435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC is the
claims agent and administrative advisor.
King & Spalding, LLP is counsel to the debtor-in-possession lenders
(and the consenting lenders under the restructuring support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as the
DIP lenders' local counsel.
SEQUENTIAL BRANDS: Taps Kurtzman as Administrative Advisor
----------------------------------------------------------
Sequential Brands Group, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Kurtzman Carson Consultants, LLC as administrative advisor.
The firm's services include:
(a) assisting in the preparation of the Debtors' schedules of
assets and liabilities, schedules of executory contracts and
unexpired leases and statements of financial affairs;
(b) assisting in the solicitation, balloting, tabulation and
calculation of votes, and preparing reports in support of
confirmation of a Chapter 11 plan;
(c) preparing an official ballot certification and, if
necessary, testifying in support of the ballot tabulation results;
(d) assisting in the preparation of claims objections and
exhibits, claims reconciliation and related matters; and
(e) providing other bankruptcy administrative services.
Kurtzman received a retainer in the amount of $50,000. The firm
will also receive reimbursement for out-of-pocket expenses
incurred.
Robert Jordan, a senior managing director at Kurtzman, 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:
Robert Jordan
Kurtzman Carson Consultants LLC
222 North Pacific
Coast Highway, 3rd Floor
El Segundo, CA 90245
Tel: (310) 823-9000
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG) together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021.
The company disclosed total assets of $442,774,937 and debt of
$435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC is the
claims agent and administrative advisor.
King & Spalding, LLP is counsel to the debtor-in-possession lenders
(and the consenting lenders under the restructuring support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as the
DIP lenders' local counsel.
SEQUENTIAL BRANDS: Taps Miller Buckfire & Co. as Financial Advisor
------------------------------------------------------------------
Sequential Brands Group, Inc. and its affiliates seek approval from
the U.S. Bankruptcy Court for the District of Delaware to employ
Miller Buckfire & Co., LLC and Stifel Nicolaus & Co., Inc. as
financial advisor and investment banker.
The firms' services include:
(a) assisting the Debtors in structuring and effecting the
financial aspects of the transactions contemplated under the
engagement letters;
(b) assisting the Debtors in preparing and seeking approval of
the Debtors' restructuring plan;
(c) assisting the Debtors in structuring any new securities to
be issued under the plan;
(d) participating or otherwise assisting the Debtors in
negotiations with entities or groups affected by the plan;
(e) assisting the Debtors in structuring and effecting any
financing;
(f) identifying and contacting potential investors and
participating or otherwise assisting in negotiations with
investors;
(g) assisting with any sale of the Debtors' assets;
(h) identifying and contacting potential acquirers and
participating or otherwise assisting in negotiations with
acquirers;
(i) preparing a sale memorandum for use in soliciting
potential acquirers; and
(j) participating in hearings before the court.
The firms will be paid as follows:
a. A monthly fee of $100,000.
b. A fee for each sale, equal to: (i) if the aggregate
consideration is less than $100 million, the greater of $300,000
and 2 percent of the aggregate consideration, or (ii) if the
aggregate consideration is at least $100 million, the greater of $2
million and 1.5 percent of the aggregate consideration.
c. A fee equal to $4 million due upon a restructuring.
d. Reimbursement of expenses incurred.
James Doak, a managing director at Miller, disclosed in a court
filing that the firm and its affiliate, Stifel Nicolaus & Co., are
"disinterested persons" as that term is defined in Section 101(14)
of the Bankruptcy Code.
Mr. Doak can be reached at:
James Doak
Miller Buckfire & Co., LLC
787 Seventh Avenue
New York, NY 10019
Telephone: (212) 895-1829/(212) 895-1800
Facsimile: (212) 895-1853
Email: james.doak@millerbuckfire.com
info@millerbuckfire.com
About Sequential Brands Group
Sequential Brands Group, Inc. (NASDAQ:SQBG) together with its
subsidiaries, owns various consumer brands. The New York-based
company licenses its brands for a range of product categories,
including apparel, footwear, fashion accessories, and home goods.
Sequential Brands Group and its affiliates sought Chapter 11
protection (Bankr. D. Del. Lead Case No. 21-11194) on Aug. 31,
2021.
The company disclosed total assets of $442,774,937 and debt of
$435,073,539 as of Aug. 30, 2021.
Judge John T. Dorsey oversees the cases.
The Debtors tapped Gibson, Dunn & Crutcher, LLP and Pachulski Stang
Ziehl & Jones, LLP as legal counsel. Miller Buckfire & Co. and its
affiliate, Stifel Nicolaus & Co., Inc., serve as financial advisor
and investment banker. Kurtzman Carson Consultants, LLC is the
claims agent and administrative advisor.
King & Spalding, LLP is counsel to the debtor-in-possession lenders
(and the consenting lenders under the restructuring support
agreement) while Morris, Nichols, Arsht & Tunnell, LLP serve as the
DIP lenders' local counsel.
SHEA HOMES: Moody's Affirms B1 CFR & Alters Outlook to Positive
---------------------------------------------------------------
Moody's Investors Service revised the outlook of Shea Homes Limited
Partnership to positive from stable. Moody's also affirmed the
company's B1 Corporate Family Rating, B1-PD Probability of Default
Rating and B1 senior unsecured rating. The company's speculative
grade liquidity rating is unchanged at SGL-2.
The outlook revision reflects Moody's expectation of continued
improvement in profitability amidst very strong housing demand and
limited supply. This supply/demand imbalance has allowed Shea Homes
to increase the average sales price of its homes by 11% year over
year to about $745,000 as of June 30, 2021, despite increased
material and labor costs. "Shea Homes' ability to maintain strong
profitability and a conservative leverage profile while
successfully executing on its growth strategy will be key
considerations during our outlook period", says Griselda Bisono,
Moody's Vice President-Senior Analyst.
Affirmations:
Issuer: Shea Homes Limited Partnership
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed B1 (LGD4)
Outlook Actions:
Issuer: Shea Homes Limited Partnership
Outlook, Changed To Positive From Stable
RATINGS RATIONALE
Shea Homes' B1 CFR reflects the company's diverse product mix,
strong brand recognition and conservative leverage profile, with
adjusted homebuilding debt to book capitalization expected to
decline to about 41% by year-end 2021 and 35% by year-end 2022.
Moody's forecast incorporates significant revenue and EBITDA
growth, driven largely by an expected increase in community count
and large backlog of homes under contract. Furthermore, margin
improvement considers Shea Homes' continued pricing power across
all product categories. These factors are offset by the company's
concentration of sales in California, which made up over 42% of new
home orders for the six months ended June 30, 2021. Finally, the
rating reflects industry cost pressures, including land, labor and
materials that could negatively impact gross margin, as well as the
cyclical nature of the homebuilding industry that could lead to
protracted revenue declines.
Moody's expects Shea Homes to maintain good liquidity over the next
12 to 18 months. Moody's expect the company to comfortably cover
its capital needs with cash on balance sheet, despite increased
land investment in 2021 to support growth. At June 30, 2021 the
company had $369 million of unrestricted cash. Moody's expects the
company's $175 million senior unsecured revolver will remain
largely undrawn over the next 18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded should the company grow in size and
scale while maintaining adjusted gross margins approaching 20%. An
upgrade would also require adjusted debt leverage sustained below
45% and maintenance of good liquidity.
The ratings could be downgraded if adjusted debt leverage trends
back up above 55% at fiscal year-ends, interest coverage dips below
2x, California concentration increases substantially, and/or
liquidity deteriorates noticeably.
Established in 1968 and headquartered in Walnut, CA, Shea Homes
Limited Partnership is one of the largest private homebuilding
companies in the US.
The principal methodology used in these ratings was Homebuilding
And Property Development Industry published in January 2018.
SIMPLY FIT: Wins Cash Collateral Access
---------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida, Tampa
Division, has authorized Simply Fit, LLC to use cash collateral in
accordance with the budget until further Court order.
The Debtor is permitted to use cash collateral to pay: (a) amounts
expressly authorized by the Court, including payments to the U.S.
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 United Community Bank.
The Court says each creditor with a security interest in cash
collateral will have 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 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 preliminary hearing on the matter is continued to December 16,
2021 at 1:30 p.m.
A copy of the order and the Debtor's budget for September 2021 is
available at https://bit.ly/2XzJSN0 from PacerMonitor.com.
The Debtor projects $25,260 in cash receipts and $10,907 in total
expenses for the month.
About Simply Fit, LLC
Simply Fit, LLC owns and operates an Anytime Fitness franchise gym
in Largo, Florida. Simply Fit provides its members with 24-hour
access to its state-of-the-art fitness facilities and more than
4,700 additional locations worldwide, as well as optional fitness
consultants, team workouts, and personal training.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. Md. Fla. Case No. 8:21-bk-04636) on
September 8, 2021. In the petition signed by Tyrone Joy, authorized
member, the Debtor disclosed up to $100,000 in assets and up to $1
million in liabilities.
Amy Denton Harris, Esq., at Stichter, Riedel, Blain & Postler, P.A.
is the Debtor's counsel.
SOFT FINISH: Court OKs Cash Collateral Use Through Dec. 31
----------------------------------------------------------
Judge Barry Russell of the U.S. Bankruptcy Court for the Central
District of California authorized Soft Finish, Inc. to use cash
collateral through December 31, 2021 to pay for expenses, as set
forth in the budget.
As adequate protection, the Debtor is directed to continue paying
Pacific City Bank its regular monthly payment of $19,437 and the
Internal Revenue Service the monthly payment of $3,000.
Pacific City Bank and the IRS are granted a replacement lien on the
cash on hand and accounts receivable generated postpetition to the
extent the creditors' cash collateral is actually used.
A copy of the order is available for free at https://bit.ly/3zuTWEt
from PacerMonitor.com.
About Soft Finish, Inc.
Soft Finish manufactures clothing, specifically denim product such
as jeans, denim jackets, skirts, shorts, shirts. Soft Finish
specializes in "distressing" garments, taking hard, rigid,
untreated denim fabric and washing the product to soften garments
and using techniques to "beat up" or "age" garments. Distressing
includes hand sanding garments to create natural wear areas, adding
holes to garments to make them look used or old, stone washing to
give the garment a softer feel and a lighter color as well as other
hand treatments.
Soft Finish is the successor in interest to US Garment LLC. In late
2017, US Garment LLC transferred its assets to Soft Finish and Soft
Finish assumed 100% of the US Garment debt. The owners of US
Garment were Jae K. Chung and a minority interest with her son
Wesley Chung. Jae K. Chung is the sole owner of Soft Finish. Soft
Finish sought protection under Chapter 11 of the U.S. Bankruptcy
Code (Bankr. C.D. Calif. Case No. 21-12038) on March 15, 2021. In
the petition signed by Jae K. Chung, as president, the Debtor
disclosed $203,316 in assets and $1,404,553 in liabilities.
Judge Barry Russell oversees the case.
M. Jonathan Hayes, Esq., at Resnik Hayes Moradi, LLP, is the
Debtor's counsel.
SPHERATURE INVESTMENTS: Court Conditionally Approves Disclosures
----------------------------------------------------------------
Judge Brenda T. Rhoades has entered an order conditionally
approving the Disclosure Statement for the Third Amended Joint
Chapter 11 Plan of Spherature Investments LLC, et al.
The combined hearing to consider final approval of the Disclosure
Statement and confirmation of the Plan is set on Oct. 21, 2021, at
1:30 p.m. (prevailing Central Time).
The deadline to object to the Disclosure Statement and Plan,
including the sale transaction and all other transactions
contemplated therein, is set as Oct. 14, 2021 at 4:00 p.m.
(prevailing Central Time).
The Plan voting deadline is set for Oct. 8, 2021 at 4:00 p.m.
(prevailing Central Time).
The deadline for filing and serving Rule 3018 motions is Sept. 30,
2021. The deadline for filing objections to the 3018 Motions, if
any, is Oct. 8, 2021.
About Spherature Investments
Plano, Texas-based Spherature Investments LLC and its affiliates
sought Chapter 11 protection (Bankr. E.D. Texas Lead Case No. 20
42492) on Dec. 21, 2020. Spherature Investments' affiliates
include WorldVentures Marketing, LLC, a company that sells travel
and lifestyle community memberships providing a diverse set of
products and experiences.
At the time of the filing, Spherature Investments had between $50
million and $100 million in both assets and liabilities.
The Hon. Brenda T. Rhoades is the case judge.
The Debtors tapped McDermott Will & Emery, LLP as their legal
counsel and Larx Advisors, Inc., as their restructuring advisor.
Erik Toth, a partner at Larx Advisors, serves as the Debtors' chief
restructuring officer. Stretto is the claims agent.
The U.S. Trustee for Region 6 appointed an official unsecured
creditors' committee on Jan. 22, 2021. The committee tapped
Pachulski Stang Ziehl & Jones, LLP as its legal counsel and
GlassRatner Advisory & Capital Group, LLC as its financial advisor.
SRI VARI CRE: Wins Cash Collateral Access Thru Sept 28
------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of North
Carolina, Charlotte Division, has authorized Sri Vari CRE
Development, LLC to continue using cash collateral through 11:59
p.m. on the date of the continued hearing consistent with the terms
of the First Interim Order and the Budget.
The Court will hold the continued hearing on September 28, 2021, at
9:30 a.m. in the U.S. Bankruptcy Court, Charles Jonas Federal
Building, JCW Courtroom 2B, 401 West Trade Street, in Charlotte,
North Carolina.
A copy of the order is available for free at https://bit.ly/39ozE4U
from PacerMonitor.com.
About Sri Vari CRE Development
Sri Vari CRE Development, LLC is a limited liability company formed
in 2017 under the laws of the State of North Carolina. The company
owns and operates the Courtyard by Marriott branded hotel located
at 8536 Outlets Boulevard in Charlotte, N.C.
Sri Vari CRE Development sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D. N.C. Case. No. 21-30250) on April 29,
2021. In the petition signed by Anuj N. Mittal, manager, the
Debtor disclosed up to $50 million in assets and up to $10 million
in liabilities. Judge Laura T. Beyer presided over the case before
Judge J. Craig Whitley took over. The Debtor tapped Richard S.
Wright, Esq., at Moon Wright & Houston, PLLC, as legal counsel and
Greerwalker, LLP as financial advisor.
STEM HOLDINGS: Acquires Artifact Extracts
-----------------------------------------
Stem Holdings, Inc., doing business as Driven by Stem, had acquired
Artifact Extracts, a premier cannabis extraction company based in
Oregon known for its award-winning concentrates, as well as two
dispensaries.
Strategic Highlights:
With the acquisition of Artifact, the Company will be positioned to
capture additional market share, expand its presence in the
fast-growing concentrates segment, and maximize value for all its
shareholders.
* Increases footprint of fully-owned dispensaries on the West
Coast to six locations.
* Expands Oregon presence with a dispensary in Salem, to be
re-named TJ's on Broadway, and a dispensary in Eugene, to be
re-named TJ's on 7th, flanking its two existing dispensaries in the
city. Cannabis sales in Salem/Marion County have shown consistent
growth over the past few years.
* Immediately launch the Budee proprietary delivery platform in
Salem, extending its consumer reach with expedited service, with
service expansion to Eugene in October.
* Supply consistent, high-quality biomass for Artifact from its
cultivation operations for Stem's TJ's Gardens and Yerba Buena
brands in Oregon, with a view toward achieving accretive margins.
* Integrate Artifact's line of concentrates including budder,
badder, shatter, crumble, rosin, THC A crystals, and other popular
forms into Stem's family of brands and product lines.
* Expands the Company's distribution footprint by cross-selling
into dispensaries not yet supplied with the full portfolio of
Stem's brands, as well as including Artifact's presence in all TJ's
dispensaries.
* Strengthen Stem's experienced management team with the
integration of Artifact's skilled R&D leadership.
The transaction closed Sept. 17, 2021, with all Oregon Liquor
Control Commission approvals having been granted. In connection
with the transaction, Stem issued 8,209,178 shares of common stock
of Stem at a deemed aggregate value of US$2,925,000 (a 24% premium
to Stem's closing share price of common stock on Sept. 17, 2021.
The share consideration will be held in escrow for a period of six
months with a "leak out" provision applicable for the following six
months.
About Stem Holdings
Headquartered in Boca Raton, Florida, Stem Holdings, Inc. --
http://www.stemholdings.com-- is a multi-state, vertically
integrated, cannabis company that, through its subsidiaries and its
investments, is engaged in the manufacture, possession, use, sale,
distribution or branding of cannabis, and holds licenses in the
adult use and medical cannabis marketplace in the states of Oregon,
Nevada, California, Oklahoma and Massachusetts.
Stem Holdings reported a net loss of $11.49 million for the year
ended Sept. 30, 2020, compared to a net loss of $28.98 million for
the year ended Sept. 30, 2019. As of June 30, 2021, the Company
had $118.31 million in total assets, $28.05 million in total
liabilities, and $90.26 million in total shareholders' equity.
LJ Soldinger Associates, LLC, in Deer Park, IL, the Company's
auditor since 2017, issued a "going concern" qualification in its
report dated Dec. 24, 2020, citing that the Company and its
affiliates, had net losses of $11.5 million and $28.985 million,
negative working capital of $9.235 million and $2.635 million and
accumulated deficits of $51.386 million and $40.384 million as of
and for the year ended Sept. 30, 2020 and 2019, respectively. In
addition, the Company has commenced operations in the production
and sale of cannabis and related products, an activity that is
illegal under United States Federal law for any purpose, by way of
Title II of the Comprehensive Drug Abuse Prevention and Control Act
of 1970, otherwise known as the Controlled Substances Act of 1970.
These facts raises substantial doubt as to the Company's ability to
continue as a going concern.
SUMMIT FINANCIAL: Seeks Access to Cash Collateral Thru Dec. 31
--------------------------------------------------------------
Summit Financial, Inc. asked the U.S. Bankruptcy Court for the
Central District of California to authorize the use of cash
collateral, on an emergency basis, to pay the operating costs and
expenses of its business through December 31, 2021, pursuant to a
proposed budget. The Debtor's primary expenses relate to paying
rent, wages, insurance, taxes and license fees, utilities, and
other necessary expenses to continue operation of the Debtor's nail
salons.
The budget provided for the $32,288 in total operating expenses for
the period from September 18 to 30, 2021; and $73,525 in total
operating expenses for each of October, November and December
2021.
The Debtor intends to pay the first priority lienholder regular
monthly loan payments as called for under the loan, as adequate
protection. For all secured creditors, to the extent of any
diminution in the value of the cash collateral, the Debtor proposed
to grant secured creditors replacement liens on assets of the same
kind, type, and nature as the collateral in which the secured
creditors held a lien prepetition.
A copy of the motion is available for free at
https://bit.ly/3ECtcFT from PacerMonitor.com.
About Summit Financial, Inc.
Summit Financial, Inc., which operates six high-end luxury nail
salons in Southern California, sought Chapter 11 protection (Bankr.
C.D. Cal. Case No. 21-12276) on September 18, 2021. On the
Petition Date, the Debtor estimated $100,000 to $500,000 in assets
and $1,000,000 to $10,000,000 in liabilities. The petition was
signed by Hao Tang as chief executive officer.
The Honorable Scott C. Clarkson presides over the case.
Arent Fox LLP is the Debtor's counsel.
SUNLIGHT RIVER: Seeks to Hire Sonoran Capital as Financial Advisor
------------------------------------------------------------------
Sunlight River Crossing, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Arizona to hire Sonoran
Capital Advisors, LLC as financial advisor.
The firm's services include assisting the Debtor with general
financial consulting and the generation of funds necessary to make
payments under the Debtor's proposed Chapter 11 plan of
reorganization.
Sonoran will receive as compensation a "success fee" equal to 3
percent of the amount of new debt that is raised. The success fee
is due and payable upon consummation of a refinancing transaction.
Bryan Perkinson, managing director at Sonoran, disclosed in a court
filing that he is a "disinterested person" as the term is defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Bryan Perkinson
Sonoran Capital Advisors, LLC
1733 N Greenfield Rd. Ste 104
Mesa, AZ 85205
Tel: (480) 825-6650
Email: bperkinson@sonorancap.com
About Sunlight River Crossing
Cornville, Ariz.-based Sunlight River Crossing, LLC filed its
voluntary petition for Chapter 11 protection (Bankr. D. Ariz. Case
No. 21-04364) on June 4, 2021, listing as much as $10 million in
both assets and liabilities. Judge Brenda K. Martin presides over
the case.
Allen Barnes & Jones, PLC and Sonoran Capital Advisors, LLC serve
as the Debtor's legal counsel and financial advisor, respectively.
988, LLC, as lender, is represented by Bryan Wayne Goodman of
Goodman & Goodman, PLC.
TAP ROCK: Moody's Assigns First Time 'B2' Corporate Family Rating
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Moody's Investors Service assigned first time ratings to Tap Rock
Resources, LLC, including a B2 Corporate Family Rating, B2-PD
Probability of Default Rating, and a B3 rating to the company's
proposed $450 million senior unsecured notes due 2026. The rating
outlook is stable.
Tap Rock is a privately held, independent oil and natural gas
company headquartered in Golden, Colorado, engaged in the
acquisition, exploration and development of oil and natural gas
assets in the Northern Delaware Basin, with operations principally
focused in Lea and Eddy Counties, New Mexico. Tap Rock is seeking
to raise $450 million of senior unsecured notes with proceeds used
to fully repay the outstanding borrowings under its $500 million
senior secured revolving credit facility and make a distribution to
its equity owners.
"Tap Rock's ratings reflect its low financial leverage and prolific
acreage in the Permian's Delaware Basin offset by its smaller,
albeit growing size and scale, limited track record, modest capital
outspend and exposure to federal lands," commented Sreedhar Kona,
Moody's Senior Analyst. "Despite using a portion of the offering to
fund a distribution, the stable outlook reflects Moody's
expectation that Tap Rock will execute its development program
while still delivering strong financial leverage metrics."
Assignments:
Issuer: Tap Rock Resources, LLC
Probability of Default Rating, Assigned B2-PD
Corporate Family Rating, Assigned B2
Senior Unsecured Notes, Assigned B3 (LGD5)
Outlook Actions:
Issuer: Tap Rock Resources, LLC
Outlook, Assigned Stable
RATINGS RATIONALE
Tap Rock's B2 CFR is constrained by the company's smaller yet
growing average daily production and reserves scale, limited track
record, cash flow outspend in the near-term and planned ongoing
distributions to its equity owners. The company's credit profile
benefits from its moderate debt burden relative to cash flow and
correspondingly low financial leverage metrics. The company's
operations in the prolific Northern Delaware Basin of the Permian
equip the company with a deep inventory of drilling locations. The
company needs to execute on its development plan to achieve size
and scale. A significant portion of Tap Rock's reserve base is
proved undeveloped and the company's capital spending program to
develop the acreage will not enable the company to be significantly
free cash flow positive until 2022. The company is also constrained
by its geographic concentration in a single basin and exposure to
federal lands. The company maintains a consistent and somewhat
aggressive distribution policy, with a provision for unlimited
distributions at less than 1x net debt leverage on a trailing last
twelve months basis. However, management has a stated financial
policy of maintaining less than 1.5x leverage and a 50%
reinvestment rate.
The company benefits from its substantial commodity hedge position
which provides significant downside protection into 2023. The
company's significant midstream options provide the company with
flow assurance without any material minimum volume commitments. The
company is sponsored by Natural Gas Partners, an experienced oil
and gas investor.
Tap Rock's $450 million senior unsecured notes due in 2026 are
rated B3, one-notch below the CFR, reflecting the priority ranking
of the company's $500 million borrowing base senior secured RBL
facility. If the borrowing base were to increase significantly or
if the company were to heavily utilize the RBL borrowing capacity
then the notes rating could be downgraded.
Moody's expects Tap Rock to maintain adequate liquidity. At closing
of the proposed notes issuance, Tap Rock will have a nominal cash
balance and no outstanding borrowings under its $500 million
borrowing base RBL facility due in November 2023. Moody's forecasts
that Tap Rock will fund its capital spending, debt service and
equity distributions through 2022 from its operating cash flow.
Under the RBL credit agreement, Tap Rock is required to maintain
consolidated total leverage ratio of less than 3.5x and a current
ratio of greater than 1x. Tap Rock will maintain compliance with
its financial covenants through 2022.
Tap Rock's stable outlook reflects Moody's expectation that the
company will execute its development program while maintaining
strong financial leverage metrics and approaching free cash flow
generation.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
A ratings upgrade could be considered if Tap Rock generates
consistent positive free cash flow while growing both production
and proved developed reserves, and maintaining retained cash flow
to debt above 35% and leveraged full cycle ratio above 1.5x. The
company's debt to proved developed reserves ratio falling below $8
per boe and average daily production approaching 75,000 boe per day
would be supportive of an upgrade.
Factors that could lead to a downgrade include declining
production, a significant rise in debt or a deterioration of
liquidity. Retained cash flow to debt below 20% could lead to a
ratings downgrade.
Tap Rock is an independent exploration & production company focused
primarily on developing oil & natural gas properties in the
Northern Delaware Basin of the Permian.
The principal methodology used in these ratings was Independent
Exploration and Production published in August 2021.
TAP ROCK: S&P Assigns 'B-' Issuer Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned a 'B-' issuer credit rating to Golden,
Colorado-headquartered oil and gas exploration and production (E&P)
company Tap Rock Resources LLC. S&P also assigned a 'B' issue-level
credit rating to the company's unsecured notes, with a recovery
rating of '2'.
The stable outlook reflects S&P's expectation of production growth
and positive free cash flow in 2022, strong credit metrics, and
adequate liquidity.
Tap Rock has a relatively small production and reserve base
compared to higher rated peers. Tap Rock has approximately 26,000
net acres in the Permian Basin, with more than 700 identified
horizontal drilling locations, 450 of which generate a greater than
30% internal rate of return at $40 per barrel (bbl) West Texas
Intermediate (WTI) oil prices. Its acreage is across Eddy and Lea
counties in New Mexico, which provides over a 10-year development
runway when utilizing four rigs. Almost 90% of Tap Rock's acreage
is held by production. Although some of Tap Rock's acreage is on
federal land in New Mexico, which could be at risk of more
stringent federal regulations, it currently has drilling permits in
hand for the next 18 months. Tap Rock has total proved reserves as
of July 31, 2021, of 184 million barrels of oil equivalent (mmboe),
(52% oil, 24% natural gas liquids [NGLS] and 24% natural gas), on
the smaller side of our ratings universe. The proportion of proved
undeveloped reserves, which will require significant additional
capital to develop, is above average at about 58%.
S&P expects production to increase next year, then taper in 2023.
The company is currently running a six rig program with plans to
drop to four rigs in 2022 and beyond. Tap Rock uses a synchronized
rig development approach to minimize parent/child well issues and
maximize full cycle economics. Production is expected to increase
from the second quarter (33,400 boe/d) and average around 45,000
boe/d to 50,000 boe/d for 2021. In 2022, S&P expects production in
the range of 65,000-70,000 boe/d. The production growth rate in
2022 from utilizing six drilling rigs is unsustainable as the
company drops down to a four-rig program and it expects volumes to
modestly decline in 2023. Tap Rock's exposure to liquids in both
production and reserves provide for stronger profitability compared
with peers.
S&P said, "We assess Tap Rock's financial risk as highly leveraged
based on private equity ownership. Tap Rock was formed in 2016 with
an initial investment from NGP Energy Capital (NGP). NGP holds
approximately 93% of the equity and controls the board of directors
with two seats and the right to add one more director to the
five-member board. We expect Tap Rock to maintain funds from
operations (FFO)/debt over 60% and debt to EBITDA around 1x-1.5x
for at least the next two years. However, companies owned by
financial sponsors typically follow a more aggressive financial
policy to achieve their sponsors' desired returns, and Tap Rock's
financial profile assessment reflects this risk. Additionally, Tap
Rock plans to make quarterly distributions to its equity holders,
including $115 million funded with proceeds from its initial debt
offering. We expect Tap Rock to generate modest free cash flow in
2022, supported by hedges on approximately 75% of its expected
production. Furthermore, we anticipate Tap Rock will remain focused
on improving its cost structure and capital returns.
"The stable outlook reflects our view that Tap Rock will increase
production and reserves through 2022 while maintaining adequate
liquidity and strong financial measures over the next 12 months,
including FFO to debt above 60%. We expect production to increase
in 2022, and decline in 2023 as the company drops rigs.
Additionally, the company's strong hedging program provides a
measure of cash flow protection and we expect the company to
generate positive free cash flow in 2022.
"We could lower the rating if we viewed leverage as unsustainable,
with FFO to debt approaching 12% given Tap Rock's current business
risk, or if liquidity became constrained. This would most likely
occur if commodity prices fall below our expectations, if the
company does not meet expected production targets, or if its
capital spending is significantly above our expectations.
Additionally, liquidity could be constrained by any reduction in
the company's current borrowing base or shareholder distributions
above our current forecast.
"We could raise our ratings on Tap Rock if the company increases
the scale of its reserves and production to levels more consistent
with higher rated peers, while maintaining adequate liquidity. We
could also upgrade if we re-evaluate Tap Rock's private equity
ownership and potential impact to financial policies, most likely
in conjunction with a decrease in sponsor ownership."
TAURIGA SCIENCES: David Wolitzky Quits as Director
--------------------------------------------------
David Wolitzky, Ph.D. resigned from his position on the board of
directors of Tauriga Sciences, Inc. effective Sept. 20, 2021, in
order to attend to personal matters, and not due to any
disagreement with the company regarding any matter related to its
operations, policies or practices.
Mr. Wolitzky's service to the board has been greatly appreciated by
management and the other board members. In expression of his years
of service, Tauriga has determined to issue him 2,500,000 shares of
restricted common stock based on the closing price of Sept. 20,
2021 and a cash payment of $10,000. He has served on the board
since March 2013.
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. 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.
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.
TD HOLDINGS: Two Directors Quit From Board
------------------------------------------
Qun Xie resigned from his positions as the chief strategy officer
of TD Holdings, Inc., and as a director of the board of directors
of the company, effective Sept. 16, 2021.
Kecen Liu also resigned from her positions as a director of the
board of directors of the company, the chairwoman of the
compensation committee of the Board, and as a member of the audit
committee and nominating and governance committee of the Board,
effective Sept. 16, 2021.
TD Holdings stated that the resignations are not as a result of any
disagreement with the company relating to its operations, policies
or practices.
Appointment of Donghong Xiong
On Sept. 16, 2021, the Board appointed Mr. Donghong Xiong, a
current independent director of the Board, to serve as the chairman
of the Compensation Committee and as a member of the Audit
Committee and Nominating Committee, filling in the vacancies
created by the resignation of Ms. Kecen Liu.
About TD Holdings
TD Holdings, Inc. is a service provider currently engaging in
commodity trading business and supply chain service business in
China. Its commodities trading business primarily involves
purchasing non-ferrous metal product from upstream metal and
mineral suppliers and then selling to downstream customers. Its
supply chain service business primarily has served as a one-stop
commodity supply chain service and digital intelligence supply
chain platform integrating upstream and downstream enterprises,
warehouses, logistics, information, and futures trading. For more
information, please visit http://ir.tdglg.com.
TD Holdings reported a net loss of $5.95 million for the year ended
Dec. 31, 2020, compared to a net loss of $6.94 million for the year
ended Dec. 31, 2019. As of June 30, 2021, the Company had $186.59
million in total assets, $37.33 million in total liabilities, and
$149.26 million in total equity.
TEMPUR SEALY: Fitch Rates $800MM Unsecured Notes 'BB+'
------------------------------------------------------
Fitch Ratings has assigned a 'BB+'/'RR4' rating to Tempur Sealy
International, Inc.'s (TPX) $800 million senior unsecured notes
offering. Net proceeds of the new notes will be used to repay
outstanding balances under the revolving credit facility and
accounts receivable securitization with the remaining balance
utilized for general corporate purposes. The Rating Outlook is
Stable.
TPX's 'BB+' rating reflects the strong operating performance, which
has been driven by expanded distribution and market share gains
supported by operating initiatives that expanded TPX's omni-channel
presence, enhanced the brand/product portfolio and improved
manufacturing capabilities.
Fitch believes this has led to a sustainable competitive advantage
with increased confidence in TPX's ability to sustain EBITDA of
over $1 billion. Barring a large debt financed acquisition, Fitch
projects TPX will maintain long-term gross leverage in the low 2x
range
KEY RATING DRIVERS
Strong Operating Momentum: TPX is experiencing strong operating
momentum with broad-based revenue growth due to expanded
distribution including existing and new retailers and channels,
build-out of company-owned stores, M&A, share gains from previously
untapped markets and increased pricing. TPX's 1H21 revenue
increased around 57% to $2.2 billion over a two-year period
supported by strong share gains of the higher margin Tempur-Pedic
brand. TPX re-entered into supply agreements with Mattress Firm
following bankruptcy protection by Mattress Firm in late 2018 to
reintroduce its product lines in about 2,300 stores that began in
4Q19.
TPX's growth rate in North America at over 20% for 2020 was higher
than the industry growth rate of 4%, according to International
Sleep Products Association (ISPA) estimates as disclosed in
BedTimes. Fitch believes a significant portion of the market share
gains came at the expense of TPX's main competitor, Serta Simmons
Bedding, LLC (Serta). The two companies hold a considerable portion
of overall mattress industry sales.
Sustainable EBITDA Over $1 Billion: For 2021, Fitch projects
revenue could increase by approximately 35% to more than $4.9
billion and EBITDA by about 40% to just over $1 billion. TPX's
strong projected growth with revenue up 49% through first half 2021
compares to ISPA 2021 industry projections of 6%, as disclosed in
BedTimes. TPX's strong execution on operating initiatives has
increased share and led to a sustainable competitive advantage.
This has increased Fitch's confidence in the company's ability to
sustain share gains and maintain EBITDA of over $1 billion.
Fitch's projections for 2022 assume a modest pullback in demand.
Moderation of consumer at-home spending for large ticket items
could result in revenue declining in the low-single digits, absent
considerations for the Dreams acquisition. This compares to ISPA
industry projections as disclosed in BedTimes for growth of 3%.
Over the medium term, Fitch expects TPX to grow revenue in the low
single digits and maintain EBITDA in the low $1 billion range
supported by consumer spending for mattresses on a global basis,
good execution on new revenue growth opportunities and further
market share gains with positive product mix. Risks to the business
include inflation/pricing pressures, a material downturn in
consumer spending and the competitive environment.
Leading Diversified Global Position: TPX maintains a strong global
market position with a portfolio of well-known, established brands
with a wide variety of price points, anchored by the Tempur-Pedic
brand. The recent acquisition of Dreams, a leading vertically
integrated specialty bed retailer in the UK, increased TPX's
geographic diversification by nearly doubling its international
revenues with sales in markets outside of North America to over $1
billion or around 20% of 2021 pro forma total sales, vs. about 17%
in 2019.
Competitive Industry Environment: The mattress industry has been
susceptible to irrational pricing, secular shifts in consumer
preferences and bankruptcies in the supplier and distribution side.
Over the past few years, TPX faced intense competition from the
e-commerce/"bed-in-a-box" space (i.e. Casper, Amazon and other
mattress e-tailers). Sales have increased rapidly from this segment
in the past five years, reaching roughly 10% of industry sales. In
addition to convenience, attractively-priced e-commerce mattresses
have fueled price competition.
Fitch believes the material improvement in TPX's operating and
credit profile should help mitigate potential volatility in
earnings. The company maintains a strong innovation pipeline with
product line refreshes every three to five years supported by
significant investments in marketing and promotion to sustain its
competitive position. TPX has also responded by selling
"bed-in-a-box" alternatives across several price points, expanding
offerings on its e-commerce platform and acquiring Sherwood
Bedding, a private label and OEM bedding manufacturer in early
2020.
Long-term Leverage Low 2x: Fitch expects TPX's capital allocation
over the medium to longer term will be focused on capital
investments, bolt-on acquisitions and shareholder returns within
the context of targeting net debt/EBITDA of 2.0x-3.0x. TPX's net
leverage calculation is normally comparable to Fitch's gross
leverage, defined as total debt to operating EBITDA after
associates and minorities, assuming cash levels around $50
million-$75 million. Following the $800 million debt issuance,
TPX's cash position is expected materially higher than historical
levels. Fitch expects the excess liquidity will be used over the
forecast period to execute its capital allocation framework.
Fitch projects pro forma gross leverage following the Dreams
acquisition and the debt issuance in the low 2x range for 2021 vs.
1.7x at the end of 2020. Barring any large debt financed
acquisitions, Fitch projects TPX will maintain long-term gross
leverage in the low 2x range.
Shareholder Return Assumptions: Fitch expects FCF defined as cash
from operations, less capital spending, less dividends will be
deployed towards share repurchases and acquisitions. Fitch assumes
share buybacks in 2021 and 2022 will be at least 6% of shares
outstanding, or roughly $500 million to $600 million, which is
above the Company's long-term target of 3%. Fitch expects TPX will
maintain the moderate dividend implemented in early 2021 at 15% of
net income.
DERIVATION SUMMARY
TPX's 'BB+'/Stable rating reflects its leading market position as a
vertically integrated global bedding company with well-known,
established brands across a wide variety of price points anchored
by the Tempur-Pedic brand that are distributed across a number of
wholesale and direct channels. Pro forma for the Dreams
acquisition, the direct-to-consumer business represents around 25%
of global sales, up from around 5% five years ago.
The ratings are tempered by the single product focus in a highly
competitive, fragmented market that can be exposed to potential
pullbacks in discretionary consumer spending during periods of
macroeconomic weakness. Fitch believes the material improvement in
TPX's operating and credit profile supported by a higher level of
cash flow should help mitigate potential volatility in earnings.
Fitch projects TPX will maintain long-term gross leverage in the
low 2x range.
TPX has a stronger financial profile than its main competitor,
Serta, which is private equity owned. Serta has experienced
material operating and financial stress reflected by a highly
leveraged capital structure. Similarly rated credits in Fitch's
consumer portfolio include Levi Strauss & Co (BB+/Stable), Spectrum
Brands, Inc. (BB/Stable), ACCO Brands Corporation (BB/Stable) and
Mattel, Inc (BB/Stable).
TPX and Levi Strauss & Co. share similar distribution strategies
across specialty retailers and department stores along with
self-distribution through company-operated stores and ecommerce
with Levi having similar scale in revenues and reliance on
self-distribution.
Levi's 'BB+' rating reflects its improving operating trajectory,
and Fitch's view that the company's EBITDA will approach
pre-pandemic levels in fiscal 2021 (ending November 2021) based on
a rebound in revenue, good cost control, and channel shifts toward
the more profitable direct-to-consumer channel. Fitch expects
adjusted debt/EBITDAR (capitalizing leases at 8.0x) to improve
below 3.5x in fiscal 2021. Levi's ratings also reflect the
company's position as one of the world's largest branded apparel
manufacturers, with broad channel and geographic exposure, while
also considering the company's narrow focus on the Levi brand
(around 85% of revenue) and in bottoms (around 72% of revenue).
Mattel's 'BB' rating reflects the company's meaningfully improved
operating trajectory, which has increased Fitch's confidence in the
company's longer-term prospects and financial flexibility. EBITDA
in 2020 reached approximately $710 million, up from the 2017/2018
trough of approximately $270 million, largely on cost reductions.
EBITDA improvement caused FCF to turn positive in 2019/2020 after
four years of outflows; gross debt/EBITDA improved from the 11.0x
peak in 2017/2018 to 4.1x in 2020. Revenue has stabilized in the
$4.5 billion range with many of Mattel's key brands demonstrating
good consumer trends at retail.
ACCO's 'BB' rating reflects the company's good position in the
global office and business products industry. The ratings are
constrained by secular challenges in the office products industry
in North America, Europe and Australia. The company has taken steps
over the last few years to manage costs given pressures on U.S.
organic growth and has executed well on diversifying its customer
base toward higher-growth, higher-margin channels in North America
as well as acquisitions in better-performing categories and
international markets. The rating also reflects ACCO's good balance
sheet management, which has led to gross leverage trending around
3.0x over time.
Spectrum's 'BB' rating reflects the company's diversified portfolio
across products and categories with well-known brands, and
commitment to maintaining leverage (net debt/EBITDA) between 3.0x
and 4.0x, which equates to a similar gross debt/EBITDA target
assuming $100 million-$150 million in cash longer term. The rating
also reflects expectations for modest organic revenue growth over
the long term, reasonable profitability with EBITDA margins near
15% and positive FCF. These positive factors are offset by recent
profit margin pressures across segments and the company's
acquisitive posture, which could cause temporary leverage spikes
following a transaction.
KEY ASSUMPTIONS
-- Revenue and EBITDA growth in 2021 of approximately 35% and
40%, respectively, resulting in revenue of approximately $5
billion and EBITDA of $1.04 billion. Fitch's projections for
2022 assume a modest pullback in demand due in part to a
moderation in consumer at-home spending. Including the Dreams
acquisition, Fitch projects growth in the mid-single digits to
$5.2 billion. Fitch projects EBITDA in the low $1 billion
range;
-- Annual capital spending between $150 million to $160 million;
-- Annual FCF (defined as cash from operations, less capital
spending, less dividends) in the upper $400 million range in
2021 and 2022;
-- Pro forma gross leverage in 2021 in the low 2x range and
adjusted debt/EBITDAR in the upper 2x range. Over the medium
term, Fitch projects gross leverage will be maintained in the
lower half of the 2.0x to 3.0x range and adjusted debt/EBITDAR
in the lower half of the 3.0x to 4.0x, reflecting capital
allocation toward share repurchases and acquisitions.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch could consider an upgrade with demonstrated ability to
sustain EBITDA well above $1.0 billion supported by increased
geographic diversification, mid-single digit revenue growth,
sustained market share gains, demonstrated operating
resiliency through shifts in the competitive environment and
economic cycles with sustained gross leverage (total
debt/operating EBITDA after associates and minorities) under
2.5x and total adjusted debt/operating EBITDAR below 3.5x.
-- This would require the company to commit to maintaining TPX's
long-term net leverage (similar to Fitch gross leverage
calculation) target at less than 2.5x or less versus its
current publicly stated leverage net target of 2.0x to 3.0x.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- EBITDA levels trending below $800 million caused by sales
and/or margin declines, debt-funded shareholder-friendly
policies and/or large debt-financed acquisitions leading to
gross leverage sustained above 3.0x and total adjusted
debt/operating EBITDAR above 4.0x.
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
Adequate Liquidity: Liquidity was $987.4 million as of June 30,
2021, consisting of $58.1 million in cash, undrawn $300 million
delayed draw term loan and approximately $629.3 million of
availability (after netting $95.6 million of borrowings and $0.1
million of outstanding LOC) on a $725 million revolving credit
facility maturing 2024. Fitch expects TPX will use the revolving
credit facility occasionally to finance working capital needs and
for general corporate purposes. Subsequent to the quarter ending,
TPX closed the Dreams acquisition by fully drawing the delayed draw
term loan.
The company also maintains an accounts receivable securitization
program maturing April 2023 with an overall limit of $200 million.
TPX has fully drawn down the program with $160.7 million of
borrowings as of June 30, 2021.
Following the proposed $800 million debt issuance, Fitch expects
TPX will fully repay outstanding balances on the revolving credit
facility and accounts receivable securitization program.
TPX was in compliance with all of its covenant requirements as of
June 30, 2021 including consolidated total net leverage ratio in
the credit agreement of less than 5.0x. TPX's total net leverage
ratio, per the bank calculation, was 1.4x as of June 30, 2021.
Long-term debt maturities through 2022 are modest and include $36
million in annual term loan amortization. TPX does not have a
significant maturity until late 2024 when the $425 million senior
secured term loan ($393 million outstanding) and $300 million
senior secured delay draw term loan matures.
ISSUER PROFILE
Tempur Sealy International is the world's largest bedding
manufacturer. It develops, manufactures, markets, and distributes
bedding products, which are sold globally in approximately 100
countries.
SUMMARY OF FINANCIAL ADJUSTMENTS
-- EBITDA adjusted to exclude stock-based compensation and one
time/non-ordinary charges;
-- Operating lease expense capitalized by 8.0x to calculate
historical and projected lease-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.
TEMPUR SEALY: Moody's Rates New Senior Unsecured 10-Yr. Notes 'Ba2'
-------------------------------------------------------------------
Moody's Investors Service assigned a Ba2 rating to Tempur Sealy
International Inc.'s new senior unsecured 10-year notes. All other
ratings for the company are not affected including the Ba1
Corporate Family Rating, the Ba1-PD Probability of Default rating
and the Ba2 rating on the existing senior unsecured notes. The
outlook remains stable and the Speculative Grade Liquidity Rating
remains SGL-1.
Net proceeds of the new notes will be used for general corporate
purposes including for the refinancing of existing borrowings under
the company's revolving credit facility and accounts receivable
securitization facility (estimated at $346 million pro-forma for
the Dreams acquisition in August 2021). Moody's expects any
proceeds in excess of this amount will be used towards future
growth investment opportunities in the business including for plant
investment and tuck-in acquisitions. Additionally, Moody's expects
the company to continue shareholder distributions with 6% share
repurchased in 2021 and 3% in 2022. The refinancing favorably
extends Tempur Sealy's unsecured debt maturities to 2031 and
provides it with additional liquidity for future growth. Although
the increase in debt will likely increase gross leverage by about
0.3x, Moody's is taking no action on the Ba1 CFR or stable outlook
because Moody's-adjusted debt-to-EBITDA leverage is expected to
remain low at around 2.5x, pro forma for the Dreams acquisition and
offering, over the next 12 -- 18 months.
Assignments:
Issuer: Tempur Sealy International Inc.
Senior Unsecured Regular Bond/Debenture, Assigned Ba2 (LGD5)
RATINGS RATIONALE
Tempur Sealy's credit profile (Ba1 CFR) reflects the company's
leading market position, brand strength, product innovation,
breadth of products in varying pricing points, and diverse
omnichannel approach. Tempur's reduced leverage target and strong
free cash flow provide good flexibility to reinvest in growing the
business including through acquisitions. The company also maintains
very good liquidity. The credit profile also incorporates the
discretionary nature of the company's products, and sensitivity to
changes in macroeconomic conditions and consumer spending. Tempur
Sealy's credit profile is constrained by its sensitivity to
economic cycles.
Tempur Sealy is moderately exposed to environmental, social and
governance (ESG) risks. The company uses, transports, and stores
chemicals in its foam manufacturing process and also utilizes other
commodities, water, and energy. A failure to adhere to
environmental regulations and safe practices could result in
financial penalties and remediation costs. From a governance
standpoint, Tempur Sealy's share repurchases are at times
aggressively financed with debt but there is flexibility to pull
back on share buybacks when operating pressures increase, as it did
in early 2020. Moody's also views corporate governance as improving
and a key driver to the ratings given the transition by management
over the last two years to a more conservative leverage target of
2.0x-3.0x debt-to-EBITDA (company calculated). The company
commenced a quarterly dividend in Q1 2021 at a manageable level of
10%-15% of net earnings. The majority of Tempur Sealy's board
members are independent directors and have extensive consumer
product experience. But the Chairman of the Board is also the CEO.
Tempur Sealy is a widely held public company.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, there is uncertainty
around Moody's forecasts. Moody's regards the coronavirus outbreak
as a social risk under its ESG framework, given the substantial
implications for public health and safety. The consumer durables
industry is one of the sectors most meaningfully affected by the
coronavirus because of exposure to discretionary spending. After
initial sales declines in part related to temporary production
pullbacks, demand for mattress increased meaningfully because
consumers spent a higher share of income on home-related products.
A return of some spending away from the home could present a sales
headwind but Moody's expects a strong housing market and low
interest rates to sustain good mattress demand for the next
12-to-18 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that the mattress
industry will remain steady and Tempur Sealy will maintain a good
market position and operating performance over the next 12-18
months including annual free cash flow exceeding $400 million. The
outlook also reflects Moody's view that the company will continue
to demonstrate a disciplined financial policy and manage its
leverage at the lower end of its target.
Ratings could be upgraded if Tempur Sealy's operating performance
materially improves and leverage remains at a low level for a
sustained period. Specifically, ratings could be upgraded if
Moody's-adjusted debt to EBITDA is sustained below 2.0x and the
company generates consistent strong free cash flow. The company
would also need to maintain financial policies that sustain low
leverage and a conservative approach to balance sheet management
and cash usage.
Ratings could be downgraded if liquidity deteriorates, the company
adopts a more aggressive financial policy, operating performance
weakens, or if leverage increases. A significant drop in consumer
confidence or any material disruption in the housing market could
also lead to a downgrade. Moody's-adjusted Debt to EBITDA above
3.0x or free cash flow-to-debt below 20% could result in a
downgrade.
The principal methodology used in this rating was Consumer Durables
published in September 2021.
Tempur Sealy International Inc. develops, manufactures, markets,
and sells bedding products, including mattresses, foundations and
adjustable bases, and other products such as pillows and
accessories. Revenue for the publicly-traded company approximates
$4.4 billion for the last-twelve-month period ended June 30, 2021.
TEMPUR SEALY: S&P Ups ICR to 'BB+' on Improved Performance
----------------------------------------------------------
S&P Global Ratings raised its issuer credit rating on U.S.-based
Tempur Sealy International Inc. to 'BB+' from 'BB' reflecting the
improved credit metrics, expanded scale of the business, and strong
execution.
S&P said, "At the same time, we assigned a 'BB+' rating to the
company's new $800 million proposed senior unsecured notes due
2031. The recovery rating is '3', indicating our expectation for a
meaningful recovery (50%-70%; rounded recovery: 65%).
"We also raised our rating on the company's existing senior
unsecured notes to 'BB+' from 'BB', commensurate with the higher
issuer-credit rating. The recovery rating remains '3', indicating
our expectation for a meaningful recovery (50%-70%; rounded
recovery: 65%).
"The stable outlook reflects our expectation that the company will
maintain adjusted leverage in the low-2x area over the next 12
months."
The upgrade reflects the company's strong performance and S&P's
expectation of continued EBITDA growth.
Tempur Sealy's revenue growth continued as sales grew 38.4% to $4.4
billion for the last 12 months ended June 30, 2021, over the
prior-year period. This resulted in EBITDA doubling to $1.1 billion
for the 12 months ended June 30, 2021, resulting in leverage of
1.7x compared to EBITDA of $545 million and leverage of 3.6x over
the prior-year period. The company has been able to grow sales and
profitability primarily through distribution wins, improved product
mix, and overall industry growth. S&P said, "While we acknowledge
the company benefitted from the pandemic-fueled demand surge, the
majority of its growth has been from market share and distribution
gains along with successful acquisitions. The company took over as
the top mattress maker in U.S. retail in 2021 with a share of about
35% compared with 31% in 2020, according to ISPA, Furniture Today,
and management estimate. We believe the company has surpassed Serta
Simmons Bedding LLC as the leading mattress manufacturer in the
U.S. We expect continued top line growth of 35% in 2021 due
primarily to the Sherwood acquisition, Dreams acquisition (which
will contribute at least $400 million of revenues on an annual
basis), growth of direct-to-consumer, increased average selling
prices as mix and pricing improves, and continued demand for
household durable products."
Leverage remains unchanged following the proposed bond deal and
proceeds will be utilized for reinvestment.
The company will be issuing an $800 million senior unsecured bond
due 2031; it will use approximately $350 million of proceeds from
the bond to fully repay its revolver balance, accounts receivable
securitization, fees, and reinvest the remainder in the business
(largely capital expansion projects) and pursue potential
acquisitions. Pro forma for the bond deal along with the Dreams
acquisition, net leverage will be 2x for the 12 months ended June
30, 2021, as compared to 1.7x pre-Dreams acquisition.
The company's increased distribution and vertical integration will
continue to drive growth.
The company continues to execute on its vertical integration and
international expansion strategy through the acquisitions of
Sherwood in 2020 and Dreams in 2021. It has leveraged its
distribution to accelerate Sherwood's sales growth, generating $150
million in 2020 sales and targeting $600 million of original
equipment manufacturer (OEM) annual sales in the next five years,
which in turn will drive stronger operating leverage and more
favorable supply agreements through greater scale. Additionally,
the company continues to leverage its strong omnichannel
distribution strategy to grow. As of second quarter fiscal 2021,
sales since 2019 have been driven by 50% new distribution, 35%
acquisitions, direct-to-consumer, OEM, and share gains, and 15%
driven by industry growth. S&P said, "While we expect industry
growth to moderate to the mid-single digits after cycling the
demand surge, we expect future growth to be driven by increased
distribution as the company expands its own store footprint both
domestically and internationally through Dreams, which generated
approximately $75 million EBITDA in 2020. Absolute EBITDA growth
will be driven by improved sales as well as increased operational
leverage and mix. Increased OEM sales and higher overall volumes
will drive sustained operating leverage improvement while new
innovations and pricing continues to drive higher average unit
selling prices (AUSPs). We forecast EBITDA of about $1.1 billion
for fiscal 2021 and $1.2 billion for fiscal 2022."
Underlying industry dynamics should remain supportive for growth
According to Euromonitor, the domestic mattress retail industry
grew about 9.6% in fiscal 2020, with retail volumes growing 7.7% to
42 million units, and we expect continued growth throughout 2021
and 2022 as consumers continue to spend in home durables
categories. According to research from the Federal Reserve Bank of
St. Louis, historically consumers from 2000 to 2007 spent around
2.7%-2.9% of disposable income on furnishings and durable household
equipment. From 2012 to 2020 consumers spent around 2.0%-2.2%, with
2% being the lowest amount of spend over the last 20 years. While
S&P may not see spending return to previous levels, we believe
spending will remain supportive. Additionally, S&P Global
economists expect housing to remain steady with 1.59 million starts
in 2021 and 1.53 million in 2022, and real residential investment
will increase by 11.4% in 2021 followed by a normalization in 2022
resulting in a slight decline of 1.6%.
S&P said, "We believe the company's improved business mix and scale
can support more debt and better withstand another downturn.
However, we expect the company to maintain leverage at the lower
end of its stated target range of 2x-3x.
"While the company has increased the total amount of gross debt on
its balance sheet in the past year through the Dreams acquisition
and bond issuance (which resulted in a gross debt increase of $800
million), we believe the company will maintain S&P Global
Ratings-adjusted leverage of around 2.0x-2.5x over the longer term.
The company has expanded its scale, further vertically integrated
(including adding an OEM of scale), and expanded its geographical
presence through the Dreams acquisition, such that we believe the
company's EBITDA should be more stable against an economic
downturn. We believe leverage could rise close to 3x in an economic
downturn or if the company funded a large, debt-financed
acquisition. Leverage headroom should the drift towards the higher
end of its stated leverage range, particularly if there is a
slowdown or downturn in the mattress market. While its expanded
retail and manufacturing footprint further increases its leadership
position in the market, if there's an economic downturn, the
company's fixed cost footprint could result in temporary
profitability deterioration."
The stable outlook reflects S&P's expectation that the company will
maintain leverage of below 3x over the next 12 months.
S&P could lower the ratings if:
-- The company sustains leverage above 3x;
-- Margins decline and supply chain pressures increase due to
inflation, which the company is unable to sufficiently offset;
Consumer demand tapers off greater than S&P expects;
-- Macroeconomic weakness causes consumers to trade down or delay
mattress purchases; or
-- The company adopts a more aggressive debt-funded share
repurchase plan or acquisition strategy.
While unlikely given its current leverage policy, S&P could raise
the ratings if there is a substantial improvement in the business
profile and credit metrics such that the company would weather a
housing driven recessionary environment or severe downturn in the
mattress market without material deterioration in leverage, and the
company further improves its business profile. S&P believes this
could occur if:
-- The company further increases its scale and distribution,
bolsters its portfolio, and diversifies its geographical sales
presence to insulate its profitability from a steep decline during
a downturn;
-- Revenues, margins, and free operating cash flows continue to
grow on an organic basis; and
-- The company demonstrates a more conservative financial policy
consistent with an investment grade issuer.
TUESDAY MORNING: Names Metcalf as Chief Merchant
------------------------------------------------
Plamedie Ifasso of Dallas Business Journal reports that Tuesday
Morning announced Thursday it has appointed Paul Metcalf as
principal and chief merchant, as the company continues to reset its
C-suite.
Metcalf has more than 30 years of experience, and since April 2019
he has served as the home goods retailer's acting chief merchant in
a consulting capacity. He will oversee the Dallas-based company's
merchant, planning and allocation organization.
"I am very excited about the opportunities at Tuesday Morning and
look forward to once again working with Fred and Marc Katz, as well
as the entire Tuesday Morning organization," Metcalf said in a news
release.
Metcalf was the executive vice president and chief merchandising
officer at Burlington Stores Inc. where he oversaw the
transformation of the merchant organization and helped take the
company public in 2013. Before working at Burlington, Metcalf
served as a senior leader in the merchant organization for TJX
Companies Inc. and began his career working at May Department
Stores, where he served in various positions within the merchant
organization.
"I am very pleased to welcome Paul as a permanent member of the
team," Fred Hand, Tuesday Morning's CEO, said in a news release.
"Paul is an exceptional merchant and his experience and successful
track record will help advance Tuesday Morning's repositioning as
we work to return the Company to a leader in the off-price
segment."
Metcalf will join a C-Suite that has seen a number of changes in
the months since the company emerged from Chapter 11 bankruptcy.
In May 2021, the retailer appointed Hand who took over from Steven
Becker and was promoted from his COO position. Just last week, the
company filled the COO role that Hand left vacant, appointing Marc
Katz as to the position. Jennifer Robinson was also named CFO at
that time.
The appointments come after a rocky year. The company filed
Chapter 11 bankruptcy last May in light of challenges from the
COVID-19 pandemic. It emerged in January with a $110 million
asset-backed lending facility from J.P. Morgan, Wells Fargo, and
Bank of America. Tuesday Morning currently operates 490 stores in
40 states, a 35 percent decrease since Becker took over as CEO in
2015.
Tuesday Morning also sold its 100,000 square foot Dallas
headquarters and three local warehouses as part of its
restructuring. It leased back its headquarters for 10 years and
the warehouses for an initial term of 2.5 years, followed by a
one-year extension.
About Tuesday Morning Corp.
Tuesday Morning Corporation, then with around 700 stores in 40
states, filed Chapter 11 protection on May 27, 2020 (Bankr. N.D.
Tex. Lead Case No. 20-31476). Tuesday Morning, which sought
bankruptcy protection with its subsidiaries, disclosed total assets
of $92 million and total liabilities of $88.35 million as of April
30, 2020.
The Hon. Harlin Dewayne Hale was the case judge.
The Debtors tapped Haynes and Boone, LLP as general bankruptcy
counsel; Alixpartners LLP as financial advisor; Stifel, Nicolaus &
Co., Inc. as investment banker; A&G Realty Partners, LLC as real
estate consultant; and Great American Group, LLC as liquidation
consultant. Epiq Corporate Restructuring, LLC was the claims and
noticing agent. The official committee of unsecured creditors
tapped Munsch Hardt Kopf & Harr, P.C., as counsel.
* * *
Tuesday Morning announced Jan. 4, 2021, it has successfully
completed its reorganization and emerged from Chapter 11
bankruptcy. Tuesday Morning is supported by a $110 million
asset-backed lending facility provided by J.P. Morgan, Wells Fargo,
and Bank of America. The Company further optimized its store
footprint and exited Chapter 11 with 490 of its best performing
stores.
Following emergence from Chapter 11, Tuesday Morning began trading
on Jan. 21 on OTCQX under the symbol "TUEM."
TUKHI BUSINESS: Seeks to Hire Anyama Law Firm as Bankruptcy Counsel
-------------------------------------------------------------------
Tukhi Business Group, LLC seeks approval from the U.S. Bankruptcy
Court for the Central District of California to employ Anyama Law
Firm, APC to serve as legal counsel in its Chapter 11 case.
The firm's services include:
a. legal advice on issues, including the sale or lease of
property of the estate, use of cash collateral and post-petition
financing, requests for security interests, relief from the
automatic stay, and payment of pre-bankruptcy obligations;
b. negotiation with creditors and preparing a plan of
reorganization and disclosure statement;
c. possible prosecution of claims of the estate and preparation
of objections to claims; and
d. other necessary legal services concerning the rights and
remedies of the Debtor with regard to the assets of the estate and
with regard to secured, priority or unsecured claims, which may be
asserted in the bankruptcy case.
The firm's hourly rates are as follows:
Attorneys $400 per hour
Paralegals $150 per hour
The firm will be paid a retainer in the amount of $6,500 and
reimbursed for out-of-pocket expenses incurred.
Onyinye Anyama, Esq., a partner at Anyama Law Firm, disclosed in a
court filing that the firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Onyinye N. Anyama, Esq.
Anyama Law Firm, APC
18000 Studebaker Road, Suite 325
Cerritos, CA 90703
Tel: (562) 645-4500
Fax: (562) 645-4494
Email: info@anyamalaw.com
About Tukhi Business Group
Tukhi Business Group, LLC sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. C.D. Calif. Case No. 21-12090) on Aug. 27,
2021, listing as much as $1 million in both assets and liabilities.
Judge Scott C. Clarkson oversees the case. Onyinye N. Anyama,
Esq., at Anyama Law Firm, A Professional Corporation represents the
Debtor as legal counsel.
TURNING POINT: Moody's Puts B2 CFR Under Review for Downgrade
-------------------------------------------------------------
Moody's Investors Service placed the ratings of Turning Point
Brands, Inc. under review for downgrade, including the company's
Corporate Family Rating of B2, the Probability of Default Rating of
B2-PD, and the senior secured notes rating of Ba3. The speculative
grade liquidity rating remains SGL-1.
On September 17, 2021, Turning Point disclos ed [1] that the
company was notified by the Food and Drug Administration (FDA) that
the agency issued a Marketing Denial Order (MDO) in response to a
Premarket Tobacco Application (PMTA) relating to certain of the
company's vapor products. The company also announced that it will
explore options for appealing the FDA's decision and plans to take
appropriate measures to manage and mitigate any risk exposure that
may result from these and any future MDOs.
In the review, Moody's will focus on assessing (1) the impact of
the FDA's decision on the NewGen business and the company's
strategy, (2) the impact to the company's ability to generate free
cash flow, as well as (3) the overall impact to the company's
financial profile including potential increase in financial
leverage if EBITDA materially declines.
The following ratings/assessments are affected by the action:
On Review for Downgrade:
Issuer: Turning Point Brands, Inc.
Corporate Family Rating, Placed on Review for Downgrade, currently
B2
Probability of Default Rating, Placed on Review for Downgrade,
currently B2-PD
GTD Senior Secured Global Notes, Placed on Review for Downgrade,
currently Ba3 (LGD2)
Outlook Actions:
Issuer: Turning Point Brands, Inc.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATINGS
Turning Point's existing B2 CFR reflects the company's moderate
financial leverage, its relatively small size, and the elevated
execution risks associated with pursuing an acquisition-heavy
growth strategy with investments into new generation products.
Turning Point competes against significantly larger, better
resourced, and well-known branded tobacco manufacturers, as well as
a variety of smaller companies focused on niche market segments.
Regulatory risks will remain high over the next year given the
highly regulated nature of its products and focus by the FDA on the
e-vapor category. Turning Point's credit profile benefits from good
market share and position in niche tobacco categories, good free
cash flow generation ability, and minimal capital spending
requirements in its asset-light model. The company also has very
good liquidity.
Moody's could downgrade the ratings if financial leverage is
sustained above 5.0x debt to EBITDA, operating performance
deteriorates, distribution of the company's products is reduced or
halted due to regulatory actions, or if the company's liquidity
weakens.
Although highly unlikely at this time, Moody's could upgrade the
ratings if the company increases its scale while reducing financial
leverage below 3.0x debt to EBITDA. The company would also need to
successfully integrate acquisitions as well as maintain growth
across its businesses as whole with a stable to higher EBITDA
margin before Moody's would consider an upgrade.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
Turning Point manufactures and sells smokeless tobacco products,
smoking products, and new-generation (NewGen) products. Smokeless
products include loose leaf chewing tobacco, moist snuff, moist
snuff pouches, and snus. Smoking products consist of cigarette
papers, large cigars, make-your-own (MYO) cigar wraps, MYO cigar
smoking tobacco, MYO cigarette smoking tobacco and traditional pipe
tobacco. The NewGen products consist of liquid vapor products,
tobacco vaporizer products, a range of non-tobacco products, and
other non-nicotine products. Turning Point's brands include
Zig-Zag, Beech-Nut, Stoker's, Trophy, Havana Blossom, Durango, Our
Pride and Red Cap. Annual revenues are approximately $440 million
for the last twelve-month period ending June 2021.
U.S. GLOVE: May Use Cash Collateral Through November 19
-------------------------------------------------------
Judge David T. Thuma of the U.S. Bankruptcy Court for the District
of New Mexico authorized U.S. Glove, Inc., a New Mexico
corporation, to use cash collateral on an interim basis through
November 19, 2021, according to the approved budget.
As adequate protection, the Debtor grants Michael Jacobs and the
U.S. Small Business Administration replacement liens in an amount
equal to and in the same priority as the creditors had as of the
Petition Date. The Debtor shall also make monthly cash payments to
Jacobs for $5,000.
A copy of the order is available for free at https://bit.ly/3AstpJ3
from PacerMonitor.com.
About U.S. Glove, Inc.
U.S. Glove, Inc. is a New Mexico Corporation with its headquarters
located at 6801 Washington Street NE, Albuquerque, New Mexico. It
manufactures hand and wrist support products for gymnastics and
cheerleading, as well as a variety of other ancillary products,
including wristbands, chalk, athletic tape, and grip brushes
designed to enhance athletic performance.
U.S. Glove sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. N.M. Case No. 21-10172) on February 14,
2021. In the petition signed by Randolph Chalker, authorized
person, the Debtor disclosed up to $500,000 in assets and up to $10
million in liabilities.
Judge David T. Thuma oversees the case.
The Debtor tapped Michael Best & Friedrich LLP as its bankruptcy
counsel and Walker & Associates, PC as its local counsel.
VERTEX AEROSPACE: Moody's Puts B2 CFR Under Review for Downgrade
----------------------------------------------------------------
Moody's Investors Service has placed all ratings of Vertex
Aerospace Services Corp. on review for downgrade, including the B2
corporate family rating, the B2-PD probability of default rating,
and the B2 rating on the senior secured term loan.
The review follows Vertex's plan to acquire Raytheon Technologies'
Defense Training and Mission Critical Solutions Business Lines.
The review for downgrade will assess the operational, investment
and financial changes that will result from the acquisition. The
transaction will be transformational, more than doubling the
company's size and will broaden the service offerings/end markets.
Aspects of the credit that will be under consideration include: the
anticipated financial metrics, cash flows, liquidity position and
capital structure. The business integration plan, the go-forward
investment requirements and expected financial policies will also
factor into the review.
Governance considerations, including the company's financial
policies and tolerance for leverage on an ongoing basis will also
factor into the review. In 2020 Vertex spun out its Aerospace
Fabrication & Manufacturing assets, then in early 2021 the company
paid a $100 million dividend to the equity sponsor. The dividend
extracted all of Vertex's free cash flow that had accumulated since
the sponsor acquired the company in 2018. These actions were
negative for creditors and indicate that the company may choose to
operate with an aggressive financial policy going forward.
On Review for Downgrade:
Issuer: Vertex Aerospace Services Corp.
Probability of Default Rating, Placed on Review for Downgrade,
currently B2-PD
Corporate Family Rating, Placed on Review for Downgrade, currently
B2
Senior Secured Term Loan, Placed on Review for Downgrade,
currently B2 (LGD4)
Outlook Actions:
Issuer: Vertex Aerospace Services Corp.
Outlook, Changed To Rating Under Review From Stable
RATINGS RATIONALE
The B2 CFR (currently on review for downgrade) reflects the
company's high debt-to-EBITDA, moderate scale in the highly
competitive defense services industry and lackluster financial
performance in recent years despite strong industry growth. Further
there is contract concentration. For example, there will be an
important contract recompete decision announced in 2021,
representing about 20% of Vertex's annual revenues. Vertex's credit
profile is supported by the US Department of Defense's emphasis on
operational readiness and equipment modernization, where Vertex has
qualifications. The company benefits from good operational
efficiency, a long-standing position within military aircraft MRO,
and a large bid pipeline. The level of new business wins improved
in 2020 which will help Vertex regain some market share that it had
lost in previous years. A supportive US defense budgetary
environment will favor Vertex's effort to sustain the sales
momentum in 2022.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The following factors may change as a result of the
transformational acquisition that Vertex is undertaking and the
rating review process:
Upward rating movement would depend on debt to EBITDA below 5x,
free cash flow to debt above 10%, annual revenue rising toward $1.2
billion with an encouraging backlog trend.
Downward rating movement would follow contract losses, leverage
approaching 6x, a weak liquidity profile or annual free cash flow
generation below $15 million.
Vertex Aerospace Services Corp., headquartered in Madison, MS, is
an aviation and aerospace technical services company managing and
servicing aircraft and other equipment, primarily for government
customers. Total revenue for the twelve-month period ended June 30,
2021 was approximately $739 million. The company is owned by
affiliates of American Industrial Partners.
The principal methodology used in these ratings was Aerospace and
Defense Methodology published in July 2020.
VIZIV TECHNOLOGIES: Nov. 8 Hearing on Disclosure Statement Set
--------------------------------------------------------------
In the Chapter 11 case of Viviz Technologies, LLC, the U.S.
Bankruptcy Court for the District of Texas on Sept. 7, 2021,
convened a hearing the Motion to Appoint Chapter 11 Trustee and
Request for Related Relief. Counsel for Surface Energy Partners
L.P., the Jameson Partners, LP, and KBST Investors LLC
(collectively "KBST Parties") requested that the hearing on the
Trustee Motion be passed for hearing and continued to be reset at a
future date by the movants. The Court also heard from counsel for
the Debtor, counsel for 3:10 Capital WPF Funds VII LCC and related
parties, counsel for the KBST Parties, and counsel for David
Griffith, Basil Pinzone, their related trusts, Texzon Utilities
Ltd. Steve Wilson (Texzon Utilities Ltd. and Steve Wilson referred
as the "Texzon Parties") as well as comments from the Independent
Director Robin Phelan concerning the pleadings filed prior to the
hearing, including the Motion for Approval of Solicitation and
Related Procedures filed by the Debtor (the "Voting Procedures
Motion"), the Plan of Reorganization filed by the 3:10 Capital
Parties, and the Plan of Liquidation filed by the KBST Parties.
The Court on Sept. 15, 2021, ordered that:
* The Trustee Motion is passed for hearing and continued,
without prejudice, to be reset at a future date by the movants.
* The Texzon Parties and any other person who wishes to file a
plan of reorganization for consideration by the Court shall file
such a plan by no later than 5:00 p.m. on Sept. 17, 2021.
* The 3:10 Capital Parties, the KBST Parties, the Texzon
Parties, and any other person who has timely filed a plan of
reorganization pursuant to this Order (each a "Plan Proponent" and
together the "Plan Proponents") shall deliver to counsel for the
Debtor by no later than 5:00 p.m. on September 24, 2021: (a) a copy
of the plan of reorganization of the Plan Proponent (each a "Plan")
and together the "Plans"); (b) a plan summary that provides
adequate disclosure under 11 U.S.C. Sec. 1125 regarding the Plan,
including (i) the treatment of claims and interests, (ii) means for
and implementation of the Plan, (iii) the tax treatment of claims
and interests, (iv) releases, settlements and injunctions against
conduct not otherwise enjoined under the Bankruptcy Code, and (v)
all other matters relevant to the particular Plan of the Plan
Proponent as required for disclosure under 11 U.S.C. Sec. 1125
(each a "Plan Summary" and together the "Plan Summaries"); and (c)
a proposed form of ballot (the "Ballot") for the classes entitled
to vote under the proposed Plan of the Plan Proponent.
* The Debtor shall file a disclosure statement pursuant to 11
U.S.C. Sec. 1125 setting forth adequate information relating to the
history and business of the Debtor, the assets of the bankruptcy
estate, the claims and interests of creditors and interest holders,
the history of this Case, the risk factors common to the Plans, and
other matters the Debtor believes necessary for adequate
information, and incorporating the Plans and Plan Summaries
provided by the Plan Proponents (the "Disclosure Statement"). The
Disclosure Statement, together with its appropriate exhibits, shall
be filed by the Debtor by no later than 5:00 p.m. on Sept. 29, 2021
and served pursuant to Bankruptcy Rule 3017(a).
* A hearing is set for Monday, Nov. 8, 2021 at 9:30 a.m. (the
"Disclosure Statement Hearing Date") to consider (a) the adequacy
of the Disclosure Statement; (b) the Voting Procedures Motion, as
such motion may be amended; and (c) any objections to the foregoing
filed by a party in interest. The Debtor shall file and serve a
Notice of Hearing that shall give at least 28 days' notice of the
Disclosure Statement Hearing Date as required by Bankruptcy Rule
3017(a), and further provide that any objections to the Disclosure
Statement (including any objection to a Plan Summary or related
Ballot) shall be filed and served on the Debtor, the Plan Sponsors,
the United States Trustee, and to parties who have filed a notice
of appearance in the Case by no later than 5:00 p.m. on November 3,
2021.
About Viziv Technologies
Viziv Technologies, LLC is an electronics company in Italy, Texas,
which specializes in the field of electromagnetic surface waves.
On Oct. 7, 2020, creditors Surface Energy Partners LP, Kendol C.
Everroad and Jamison Partners, LP, filed an involuntary petition
for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Tex. Case No. 20-32554) against Viziv Technologies. The creditors
are represented by Kenneth Stohner Jr., Esq., at Jackson Walker,
LLP.
Judge Stacey G. Jernigan, who oversees the case, entered an order
for relief on Oct. 12.
Cavazos Hendricks Poirot, PC, is the Debtor's bankruptcy counsel.
The Debtor tapped Allred & Wilcox, PLLC, The Beckham Group and King
& Fisher Law Group, PLLC as special counsel; Stout Risius Ross, LLC
as investment banker; RSM US LLP as auditor; and Johnson McNamara,
LLC as accountant.
WAND NEWCO 3: Moody's Lowers CFR to B3 & Alters Outlook to Stable
-----------------------------------------------------------------
Moody's Investors Service downgraded ratings of Wand NewCo 3, Inc.
(dba "Caliber"), including the corporate family rating which was
downgraded to B3 from B2. The outlook was changed to stable from
negative.
"The rating actions recognize the persistent weakness in Caliber's
credit metrics due to the combination of its aggressive expansion
activity and pandemic-driven declines in volume, resulting in
debt/EBITDA approaching 9 times and EBIT/interest remaining below 1
time," stated Moody's Vice President Charlie O'Shea. "In addition,
given the vagaries of the operating environment as COVID issues
remain, there is limited visibility as to potential timing of a
meaningful rebound in segment fundamentals that would lead to an
improvement in Caliber's credit metrics," continued O'Shea. "On a
positive note, Caliber's liquidity remains good, which is a key
driver of the stable outlook."
Downgrades:
Issuer: Wand NewCo 3, Inc.
Corporate Family Rating, Downgraded to B3 from B2
Probability of Default Rating, Downgraded to B3-PD from B2-PD
Senior Secured First Lien Term Loan, Downgraded to B2 (LGD3) from
B1 (LGD3)
Senior Secured First Lien Revolving Credit Facility, Downgraded to
B2 (LGD3) from B1 (LGD3)
Senior Secured Second Lien Term Loan, Downgraded to Caa2 (LGD5)
from Caa1 (LGD5)
Outlook Actions:
Issuer: Wand NewCo 3, Inc.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
Caliber's B3 rating reflects its weak credit metrics, with
debt/EBITDA approaching 9 times following adjustments, and interest
coverage of well-below 1 time for the LTM period ended June 30,
2021, as well as its continued high level of EBITDA adjustments and
private equity ownership. Caliber's rating is supported by its
leading market position -- with virtually full national coverage -
in the highly fragmented collision repair sub-sector, and its
strong relationships with national and major insurance carriers,
which represent the vast majority of its revenues. Credit metrics
have the potential to improve over the next twelve to eighteen
months if volumes increase, though Moody's notes visibility
surrounding the timing and level of these increases and improvement
is limited.
The stable outlook recognizes Caliber's good liquidity which
provides credit cushion until volumes recover to levels sufficient
to result in an improvement in credit metrics.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Caliber is able to sustain
EBIT/interest above 1.25 time with debt/EBITDA reducing to around
6.5 times and liquidity remaining at least adequate. Ratings could
be downgraded if liquidity were to weaken, or if debt/EBITDA and
EBIT/interest do not begin to show sequential improvement over the
next few quarters.
Wand NewCo 3, Inc. is a leading collision repair provider with over
1,300 locations in the United States under the Caliber Collision
banner, with annual revenues of over $4 billion. The company is
majority owned by Hellman & Freidman LLC.
The principal methodology used in these ratings was Retail Industry
published in May 2018.
WASATCH RAILROAD: Seeks Interim Use of Cash Collateral
------------------------------------------------------
Wasatch Railroad Contractors asked the U.S. Bankruptcy Court for
the District of Wyoming to authorize the interim use of cash
collateral, according to the budget, in order to continue operating
its business as a going concern.
The five-month budget filed in Court provided for total monthly
disbursements, as follows:
$201,879 for September 2021;
$198,779 for October 2021;
$200,018 for November 2021;
$199,803 for December 2021; and
$201,575 for January 2022.
A copy of the budget is available for free at
https://bit.ly/2VSSga0 from PacerMonitor.com.
Gulf Coast Bank and Trust Company has a security interest in the
Debtor's assets, including the Debtor's facility in Shoshoni,
Wyoming; cash; accounts; receivables; inventory; and proceeds from
the Debtor's operations.
As adequate protection, the Debtor proposed to provide Gulf Coast a
postpetition lien on all postpetition cash, accounts receivable,
inventory and income derived from the Debtor's assets and the
operation of its business, to the extent of decrease in value of
the creditor's interest.
A copy of the motion is available for free at
https://bit.ly/2XwKHWS from PacerMonitor.com.
About Wasatch Railroad Contractors
Wasatch Railroad Contractors, d/b/a Wasatch Railcar Repair
Contractors, specializes in railroad equipment restoration. The
company sought Chapter 11 protection (Bankr. D. Wyo. Case No.
21-20392) on September 14, 2021.
On the Petition Date, the Debtor listed $1,511,372 in total assets
and $3,337,129 in total liabilities. The petition was signed by
John E. Rimmasch as CEO.
Markus Williams Young & Hunsicker LLC is the Debtor's counsel.
WESTMOUNT GROUP: Seeks to Hire Barron & Newburger as Legal Counsel
------------------------------------------------------------------
Westmount Group, Inc. seeks approval from the U.S. Bankruptcy Court
for the Western District of Texas to employ Barron & Newburger, PC
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
the continued management of its assets;
(b) reviewing the nature and validity of claims asserted
against the property of the Debtor and advising the Debtor
concerning the enforceability of such claims;
(c) preparing legal documents and reviewing all financial
reports to be filed in its bankruptcy case;
(d) advising the Debtor concerning and preparing responses to
legal papers, which may be filed in the case;
(e) advising the Debtor in connection with the formulation,
negotiation and promulgation of a plan of reorganization and
related documents;
(f) working with professionals retained by other parties in
interest in this case to obtain approval of a consensual plan of
reorganization for the Debtor; and
(f) performing all other necessary legal services.
The firm's hourly rates are as follows:
Stephen Sather $350 per hour
Paul Hammer $350 per hour
Greg Friedman $250 per hour
Other Attorneys $250-350 per hour
Support Staff $40-100 per hour
Barron & Newburger received a retainer in the amount of $15,000,
plus the filing fee of $1,738. The firm will receive reimbursement
for out-of-pocket expenses incurred.
Stephen Sather, Esq., a partner at Barron & Newburger, 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.
Barron & Newburger can be reached at:
Stephen W. Sather, Esq.
Barron & Newburger , PC
7320 N. Mopac Expy., Ste. 400
Austin, TX 78731
Tel: (512) 476-9103
Email: ssather@bn-lawyers.com
About Westmount Group Inc.
El Paso, Texas-based Westmount Group, Inc. filed its voluntary
petition for Chapter 11 protection (Bankr. W.D. Texas Case No.
21-30633) on Aug. 23, 2021, listing up to $1 million in assets and
up to $10 million in liabilities. Westmount Group President Keyvan
Parsa signed the petition. Judge Christopher H. Mott oversees the
case. Stephen W. Sather, Esq., at Barron & Newburger, PC
represents the Debtor as legal counsel.
WORLD ACCEPTANCE: Moody's Assigns B2 CFR & Rates Unsecured Debt B3
------------------------------------------------------------------
Moody's Investors Service has assigned a B2 Corporate Family Rating
and B3 Senior Unsecured rating to World Acceptance Corporation
(WRLD) in connection with the firm's proposed issuance of $300
million in senior unsecured notes. WRLD's outlook is stable.
Assignments:
Issuer: World Acceptance Corporation
Corporate Family Rating, Assigned B2
Senior Unsecured Regular Bond/Debenture, Assigned B3
Outlook Actions:
Issuer: World Acceptance Corporation
Outlook, Assigned Stable
RATINGS RATIONALE
WRLD's ratings reflect the firm's established track record of
providing installment loans to consumers with subprime credit
profiles. The ratings also reflect improving asset quality trends
and resolution of a US government investigation related to the
firm's now discontinued Mexican business, which should allow WRLD
to maintain strong profitability and capitalization in the coming
quarters. WRLD's creditors benefit from strong capitalization, with
a ratio of tangible common equity to tangible managed assets
(TCE/TMA) of approximately 38% as of June 30, 2021, which should
protect creditors in the event of unexpected losses. The proposed
senior unsecured notes will be used primarily to partially repay
amounts outstanding on the firm's $685 million revolving credit
facility. The issuance will improve the firm's funding and
liquidity profile and provide it with ample room to fund loan
growth and to meet its liquidity needs. The planned unsecured
issuance will also reduce the company's reliance on secured sources
of funding, improving its access to alternate forms of liquidity in
times of need.
The ratings also consider a number of credit challenges. Namely,
WRLD has operated at a relatively thin cushion to covenants under
its revolving credit facility, particularly the debt/equity
covenant. WRLD also faces a high degree of regulatory risk inherent
to subprime consumer lenders. Finally, the firm has experienced
periods of high loan growth, which exposes it to potentially higher
credit losses and high earnings volatility.
The B3 senior unsecured rating reflects the relative position of
the firm's unsecured debt within the firm's overall debt capital
structure, and the asset coverage of the notes.
WRLD's stable outlook reflects Moody's expectation that the firm
will maintain solid profitability, capitalization and liquidity in
the next 12-18 months. The outlook also considers the benefit to
the firm's funding and liquidity as a result of the proposed
issuance.
In assigning WRLD's ratings, Moody's considered its governance,
which is a relevant consideration in assessing the creditworthiness
of all financial institutions. Moody's said it does not have any
particular concerns with respect to WRLD's governance at its rating
level.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
WRLD's ratings could be upgraded if the firm sustainably improves
cushions to financial covenants while maintaining stable
profitability, asset quality and capitalization.
WRLD's ratings could be downgraded if the firm experiences a
significant decline in earnings or capitalization, or if it
experiences a material operational failure.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
WORLD ACCEPTANCE: S&P Rates New $300MM Unsecured Notes 'B'
----------------------------------------------------------
S&P Global Ratings assigned its 'B' issue credit rating to World
Acceptance Corp.'s (B/Stable/--) proposed issuance of $300 million
senior unsecured notes due 2026. S&P expects this transaction to be
leverage neutral as the company intends to use the net proceeds to
repay a portion of its outstanding borrowings under its senior
secured revolving credit facility and to pay related transaction
fees and expenses. As of June 30, 2021, the company's leverage,
measured as debt to adjusted total equity (ATE), was 1.23x
S&P said, "Our issuer credit rating on World Acceptance reflects
the company's exposure to regulatory, legislative, and operational
risks, as well as its concentrated funding profile. World
Acceptance's concentration in the deep subprime sector of consumer
finance increases its credit risk and limits the rating. The
company's low leverage and strong cash flow generation partially
offset some of these weaknesses.
"Our 'B' rating on World Acceptance's senior unsecured notes
reflects that the company will have a moderate amount of priority
senior secured debt and assets in excess of amounts necessary for
repayment of priority debt, at least equal to the amount of its
unsecured debt outstanding. Pro forma for the transaction, the
company's debt will include $168 million under the revolver and
$300 million in new senior unsecured notes. We expect the company
to increase its draw on the revolver to about $300-$400 million to
support loan portfolio growth and meet seasonal demands. If
priority debt were to increase to more than 30% of adjusted assets
and we expect it to remain above that level, we could lower our
rating on the unsecured debt to a notch below the issuer credit
rating.
"We also expect World Acceptance to maintain assets in excess of
amounts necessary for repayment of priority debt at least equal to
the amount of its unsecured debt outstanding; otherwise, we could
lower our unsecured debt rating by another notch to 'B-'.
"The stable outlook reflects S&P Global Ratings' expectation that
over the next 12 months, World Acceptance will maintain leverage,
as measured by debt to adjusted total equity, of 1.5x-2.0x. In our
base case, we expect the company will continue to operate with
charge-offs well below 18% and maintain adequate covenant
cushions.
"We could downgrade the company if operating or credit performance
deteriorates, the company's covenant cushions erode, or leverage
increases substantially above our base-case expectations. We could
also downgrade the company if regulatory issues materially affect
the company's operations.
"We believe an upgrade is unlikely at this time. Over the longer
term, we could upgrade the company if it can materially lessen its
regulatory risk, or meaningfully diversify its funding sources."
[*] A&G Wins TMA Award for Work on Tuesday Morning Case
-------------------------------------------------------
For its work on the Chapter 11 bankruptcy restructuring of
off-price home goods retailer Tuesday Morning, A&G Real Estate
Partners was one the winners of the Turnaround Management
Association's 2021 Turnaround/Transaction of the Year Awards.
The awards recognize 2021's 10 "most successful turnarounds and
impactful transactions industrywide," according to TMA, a nonprofit
serving corporate renewal and restructuring professionals
worldwide. Tuesday Morning was honored in the category of Large
Company Turnaround/Transaction (for entities with annual revenues
of $300 million to $1 billion at the time of the turnaround).
Melville-based A&G—an advisory firm specializing in lease
restructuring, real estate sales and auctions nationwide—was
recognized along with other professional, advisory and banking
firms that assisted Tuesday Morning on the restructuring.
Tuesday Morning, which filed for bankruptcy protection in May 2020,
announced this past January that it had successfully completed its
financial and operational reorganization and emerged from Chapter
11. A&G spearheaded the retailer's efforts to optimize its real
estate portfolio and emerge with 490 of its top-performing stores.
The Turnaround/Transaction of the Year Awards are chosen based on a
rigorous peer-review process by the volunteer TMA Awards Committee.
This process includes extensive diligence of each nominated case.
As the judges review all components of each entry, they look for
well-defined, measurable outcomes. "This year's award winners have
made a significant impact on the global economy during one of the
most challenging times for business in generations," said TMA
Global Chief Executive Officer Scott Y. Stuart, Esq.
Chicago-based TMA will honor this 2021's 10 award recipients at the
TMA Annual Conference October 26-29 in Nashville and online. Andrew
Graiser, Co-President of A&G, will accept the award on behalf of
the firm.
In the award announcement, TMA also cited A&G's coparticipants in
the Tuesday Morning process: Barry Folse, formerly AlixPartners;
Clint Neider, AlixPartners; Michele Michaelis, BDO Consulting
Group; Rudy Morando, BRG; Ian T. Peck, Haynes and Boone, LLP;
Edward L. Schnitzer, Montgomery McCracken Walker & Rhoads LLP;
Bradford J. Sandler, Pachulski Stang Ziehl & Jones; Tero Janne, PJ
Solomon; Stacie Shirley, formerly Tuesday Morning Corporation, and
William L. Wallander, Vinson & Elkins LLP.
This past June, the Global M&A Network also recognized A&G's real
estate advisory work on Tuesday Morning, naming the project a "Deal
of the Year" in the Corporate Turnaround-Large category. At that
event, A&G was also cited for its work on several other corporate
turnaround and sale transactions and, for the second year in a row,
was named "Real Estate Restructuring Firm of the Year."
"We are pleased to be part of the team that was once again honored
for its work on this flawlessly executed reorganization," said
Graiser. "For our part, working with Tuesday Morning's management
and landlords, we were able to successfully restructure the 490
go-forward leases, generating aggregate rent savings of
approximately $75 million."
About Tuesday Morning Corp.
Tuesday Morning Corporation, then with around 700 stores in 40
states, filed Chapter 11 protection on May 27, 2020 (Bankr. N.D.
Tex. Lead Case No. 20-31476). Tuesday Morning, which sought
bankruptcy protection with its subsidiaries, disclosed total assets
of $92 million and total liabilities of $88.35 million as of April
30, 2020.
The Hon. Harlin Dewayne Hale was the case judge.
The Debtors tapped Haynes and Boone, LLP as general bankruptcy
counsel; Alixpartners LLP as financial advisor; Stifel, Nicolaus &
Co., Inc. as investment banker; A&G Realty Partners, LLC as real
estate consultant; and Great American Group, LLC as liquidation
consultant. Epiq Corporate Restructuring, LLC was the claims and
noticing agent. The official committee of unsecured creditors
tapped Munsch Hardt Kopf & Harr, P.C., as counsel.
* * *
Tuesday Morning announced Jan. 4, 2021, it has successfully
completed its reorganization and emerged from Chapter 11
bankruptcy. Tuesday Morning is supported by a $110 million
asset-backed lending facility provided by J.P. Morgan, Wells Fargo,
and Bank of America. The Company further optimized its store
footprint and exited Chapter 11 with 490 of its best performing
stores.
Following emergence from Chapter 11, Tuesday Morning began trading
on Jan. 21 on OTCQX under the symbol "TUEM."
[*] Dentons' Brian E. Greer Moves to Greenberg Traurig
------------------------------------------------------
Citing a continued uptick in activity, global law firm Greenberg
Traurig, LLP expanded its global Restructuring & Bankruptcy
Practice with the addition of former Dentons partner Brian E. Greer
as a shareholder in the firm's New York office.
Greer will find familiar faces at Greenberg Traurig. He previously
worked with Oscar N. Pinkas, chair of the firm' New York
Restructuring & Bankruptcy Practice, while both practiced at
Dentons. Greer also recently worked on a case with John Houghton,
who joined Greenberg Traurig earlier this month, as the chair of
the firm's London Restructuring & Bankruptcy Practice.
Greer has substantial experience representing creditors, debtors,
equity investors and directors in cross-border and domestic
restructuring matters, both in and out of court. He guides clients
through complex restructurings, bankruptcies, liquidations, and
other stressed or distressed situations.
"Greenberg Traurig's restructuring practice is continually active
in addressing clients' needs, including out-of-court restructurings
and related matters; many of which are the result of conditions
brought about by the pandemic. Adding Brian and John highlights our
best-in-class approach to meet the changing needs of clients on a
global scale and with the urgency for which the firm is known,"
said Richard A. Rosenbaum, Greenberg Traurig's Executive Chairman.
"Brian is a significant asset to our practice given his broad
experience. He is a magnet for financial investors because he
understands how to proactively help them address opportunities that
may arise in complex distressed situations," Pinkas said. "The fact
that John, Brian, and I have previously worked together is just
another plus and demonstrates that we strategically bring in high
caliber attorneys at the right time and for the right reasons."
Greer's practice spans a multitude of sectors including financial
services, hospitality, commercial real estate and real estate
investment trusts (REITs), healthcare, oil and gas, energy,
construction, manufacturing, pharmaceuticals, information
technology (IT) consulting, and life sciences.
"The addition of Brian along with Oscar and John further rounds out
the team and gives us the opportunity to represent an increasingly
wider spectrum of clients across a broad range of needs. Brian's
addition to the New York office is particularly important given our
strong practice there" said Shari Heyen and David Kurzweil,
Co-Chairs of the firm's Global Restructuring & Bankruptcy
Practice.
"The continuous growth of my financial investor practice is key to
furthering my goals, as is playing an additive role within the
global team," Greer said. "The firm's unique position in the
marketplace and its enviable domestic and global platform across
areas of practice and sectors were central to my decision to come
here. The added bonus was being able to continue to work with Oscar
and John."
Greer, who also regularly helps clients capitalize on opportunities
as purchasers, sellers, and lenders in distressed mergers and
acquisitions (M&A) transactions, has been recognized by IFLR 1000
as a restructuring and insolvency Highly Regarded attorney and by
the Legal 500 U.S. as a leading restructuring attorney. He earned
his J.D. from The Maurice A. Deane School of Law at Hofstra
University and a B.A. from Stony Brook University.
About Greenberg Traurig LLP
Greenberg Traurig -- http://www.gtlaw.com/-- is an international
law firm founded in Miami, Florida, in 1967 by Larry J. Hoffman,
Mel Greenberg and Robert Traurig. Greenberg Traurig (GT) has
approximately 2,300 attorneys in 40 locations in the United States,
Latin America, Europe, Asia, and the Middle East. GT has been
recognized for its philanthropic giving, diversity, and innovation,
and is consistently among the largest firms in the U.S. on the
Law360 400 and among the Top 20 on the Am Law Global 100. The firm
is net carbon neutral with respect to its office energy usage and
Mansfield Rule 4.0-Plus Certified.
About GT's Restructuring & Bankruptcy Practice
Greenberg Traurig's internationally recognized Restructuring &
Bankruptcy Practice provides clients with deep insight and
knowledge acquired over decades of advisory and litigation
experience. The team has a broad and diverse range of experience
developing creative and effective solutions to the highly complex
issues that arise in connection with in- and out-of-court
reorganizations, restructurings, workouts, liquidations, and
distressed acquisitions and sales. Using a multidisciplinary
approach, the firm's vast resources and invaluable business
network, the team helps companies navigate challenging times and
address the full range of issues that can arise in the course of
their own restructurings or dealings with other companies in
distress.
[*] Greenberg Traurig's Brody to Co-Chair TMA's Mid-Atlantic Summit
-------------------------------------------------------------------
Alan J. Brody, a Restructuring & Bankruptcy shareholder in global
law firm Greenberg Traurig, LLP's New Jersey office, will co-chair
the 2021 Turnaround Management Association (TMA) Mid-Atlantic
Networking Summit on Sept. 23-24 at the Hard Rock Hotel & Casino in
Atlantic City, NJ. The conference is the "premier event for the
Mid-Atlantic region" and will provide attendees with "networking,
dealmaking, and professional development" opportunities, according
to TMA.
Brody focuses his practice on bankruptcy, corporate restructuring,
commercial insolvency, and financing. He has a wide range of
experience representing clients in a variety of bankruptcy
proceedings, as well as insolvency issues in business transactions,
out-of-court restructurings, asset-based loans, and
debtor-in-possession financing. Brody also has experience in
complex bankruptcy and creditors' rights litigation and has
represented entities in the restructuring, financing and
acquisition of assets in bankruptcy courts throughout the United
States. Among his clients are lenders, private equity funds,
receivers, secured and trade creditors, and creditors' committees.
About Greenberg Traurig LLP
Greenberg Traurig is an international law firm founded in Miami,
Florida, in 1967 by Larry J. Hoffman, Mel Greenberg and Robert
Traurig. Greenberg Traurig (GT) has approximately 2,300 attorneys
in 40 locations in the United States, Latin America, Europe, Asia,
and the Middle East. GT has been recognized for its philanthropic
giving, diversity, and innovation, and is consistently among the
largest firms in the U.S. on the Law360 400 and among the Top 20 on
the Am Law Global 100. The firm is net carbon neutral with respect
to its office energy usage and Mansfield Rule 4.0-Plus Certified.
On the Web: http://www.gtlaw.com/
About GT's Restructuring & Bankruptcy Practice
Greenberg Traurig’s internationally recognized Restructuring &
Bankruptcy Practice provides clients with deep insight and
knowledge acquired over decades of advisory and litigation
experience. The team has a broad and diverse range of experience
developing creative and effective solutions to the highly complex
issues that arise in connection with in- and out-of-court
reorganizations, restructurings, workouts, liquidations, and
distressed acquisitions and sales. Using a multidisciplinary
approach, the firm's vast resources and invaluable business
network, the team helps companies navigate challenging times and
address the full range of issues that can arise in the course of
their own restructurings or dealings with other companies in
distress.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re 594 Realty Holdings LLC
Bankr. E.D.N.Y. Case No. 21-42331
Chapter 11 Petition filed September 14, 2021
See
https://www.pacermonitor.com/view/SAWHJCI/594_Realty_Holdings_LLC__nyebke-21-42331__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re KPA Holdings LLC Series 8600 West Charleston 2138
Bankr. D. Nev. Case No. 21-14494
Chapter 11 Petition filed September 15, 2021
See
https://www.pacermonitor.com/view/4YRSQRQ/KPA_HOLDINGS_LLC_SERIES_8600_WEST__nvbke-21-14494__0001.0.pdf?mcid=tGE4TAMA
represented by: David Riggi, Esq.
RIGGI LAW
E-mail: riggilaw@gmail.com
In re Christina Fama-Chiarizia
Bankr. E.D.N.Y. Case No. 21-42341
Chapter 11 Petition filed September 15, 2021
represented by: Sari Placona, Esq.
In re Joseph Fama, Jr.
Bankr. E.D.N.Y. Case No. 21-42342
Chapter 11 Petition filed September 15, 2021
represented by: Sari Placona, Esq.
In re Lakeside Manor Inn, LLC
Bankr. M.D. Pa. Case No. 21-02009
Chapter 11 Petition filed September 15, 2021
See
https://www.pacermonitor.com/view/GE2VS3Q/Lakeside_Manor_Inn_LLC__pambke-21-02009__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re MJ Auto Center, LLC
Bankr. W.D. Tenn. Case No. 21-23000
Chapter 11 Petition filed September 15, 2021
See
https://www.pacermonitor.com/view/ZA66JBA/MJ_Auto_Center_LLC__tnwbke-21-23000__0001.0.pdf?mcid=tGE4TAMA
represented by: John Dunlap, Esq.
LAW OFFICE OF JOHN E. DUNLAP
E-mail: jdunlap00@gmail.com
In re Terry Lawson James
Bankr. E.D. Tex. Case No. 21-41319
Chapter 11 Petition filed September 15, 2021
represented by: Brandon Tittle, Esq.
In re Saleh's Co.
Bankr. W.D. Wash. Case No. 21-11737
Chapter 11 Petition filed September 16, 2021
See
https://www.pacermonitor.com/view/AXXYYMQ/Salehs_Co__wawbke-21-11737__0001.0.pdf?mcid=tGE4TAMA
represented by: Geoffrey Groshong, Esq.
GROSHONG LAW PLLC
E-mail: geoff@groshonglaw.com
In re Tipsy of Plantation, Inc.
Bankr. S.D. Fla. Case No. 21-18981
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/7GSI5OI/Tipsy_of_Plantation_Inc__flsbke-21-18981__0001.0.pdf?mcid=tGE4TAMA
represented by: Wesley E. Terry, Esq.
WESLEY E. TERRY PA
E-mail: wes@wterrylaw.com
In re Nine Degrees Hacking Corp.
Bankr. E.D.N.Y. Case No. 21-42356
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/ZJ7YV3Q/Nine_Degrees_Hacking_Corp__nyebke-21-42356__0001.0.pdf?mcid=tGE4TAMA
represented by: Alla Kachan, Esq.
LAW OFFICES OF ALLA KACHAN, P.C.
E-mail: alla@kachanlaw.com
In re Shulamit Hacking Corp.
Bankr. E.D.N.Y. Case No. 21-42357
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/UFHDBSI/Shulamit_Hacking_Corp__nyebke-21-42357__0001.0.pdf?mcid=tGE4TAMA
represented by: Alla Kachan, Esq.
LAW OFFICES OF ALLA KACHAN, P.C.
E-mail: alla@kachanlaw.com
In re Boyd Taxi, Inc.
Bankr. E.D.N.Y. Case No. 21-42358
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/VZ3WYGI/Boyd_Taxi_Inc__nyebke-21-42358__0001.0.pdf?mcid=tGE4TAMA
represented by: Alla Kachan, Esq.
LAW OFFICES OF ALLA KACHAN, P.C.
E-mail: alla@kachanlaw.com
In re York Parking, LLC
Bankr. S.D.N.Y. Case No. 21-11636
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/BT4KKCI/York_Parking_LLC__nysbke-21-11636__0001.0.pdf?mcid=tGE4TAMA
represented by: Peter Corey, Esq.
MACCO LAW GROUP, LLP
E-mail: pcorey@maccolaw.com
In re American Sleep Products LLC
Bankr. M.D. Tenn. Case No. 21-02850
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/FU35GZI/American_Sleep_Products_LLC__tnmbke-21-02850__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven L. Lefkovitz, Esq.
LEFKOVITZ & LEFKOVITZ
E-mail: slefkovitz@lefkovitz.com
In re EverBuilding Group, Inc.
Bankr. M.D. Tenn. Case No. 21-02847
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/FEVI2LI/EverBuilding_Group_Inc__tnmbke-21-02847__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven L. Lefkovitz, Esq.
LEFKOVITZ & LEFKOVITZ
E-mail: slefkovitz@lefkovitz.com
In re Luttmann Enterprises, Ltd.
Bankr. M.D. Tenn. Case No. 21-02858
Chapter 11 Petition filed September 17, 2021
See
https://www.pacermonitor.com/view/KD2PVTQ/LUTTMANN_ENTERPRISES_LTD__tnmbke-21-02858__0001.0.pdf?mcid=tGE4TAMA
represented by: Steven L. Lefkovitz, Esq.
LEFKOVITZ & LEFKOVITZ
E-mail: slefkovitz@lefkovitz.com
In re George Robert Luttman
Bankr. M.D. Tenn. Case No. 21-02852
Chapter 11 Petition filed September 17, 2021
represented by: Steven L. Lefkovitz, Esq.
LEFKOVITZ & LEFKOVITZ
E-mail: slefkovitz@lefkovitz.com
In re David Woodrow Hughes
Bankr. N.D. Tex. Case No. 21-31676
Chapter 11 Petition filed September 17, 2021
represented by: Joyce Lindauer, Esq.
In re Lusso Auto, LLC
Bankr. D. Nev. Case No. 21-14567
Chapter 11 Petition filed September 18, 2021
See
https://www.pacermonitor.com/view/GXYGK5A/Lusso_Auto_LLC__nvbke-21-14567__0001.0.pdf?mcid=tGE4TAMA
represented by: James W. Kwon, Esq.
JAMES KWON, PLLC
E-mail: jkwon@jwklawfirm.com
In re Richard Edward Johnston
Bankr. N.D. Cal. Case No. 21-30651
Chapter 11 Petition filed September 20, 2021
represented by: James Shepherd, Esq.
In re Domus Contemporary Living LLC
Bankr. M.D. Fla. Case No. 21-04242
Chapter 11 Petition filed September 20, 2021
See
https://www.pacermonitor.com/view/GIJSZXI/Domus_Contemporary_Living_LLC__flmbke-21-04242__0001.0.pdf?mcid=tGE4TAMA
Filed Pro Se
In re Cats On The Bay Corp.
Bankr. E.D.N.Y. Case No. 21-42368
Chapter 11 Petition filed September 20, 2021
See
https://www.pacermonitor.com/view/JVNTW7I/Cats_On_The_Bay_Corp__nyebke-21-42368__0001.0.pdf?mcid=tGE4TAMA
represented by: Alla Kachan, Esq.
LAW OFFICES OF ALLA KACHAN, P.C.
E-mail: alla@kachanlaw.com
In re Designer Diva Resale, LLC
Bankr. S.D. Tex. Case No. 21-33093
Chapter 11 Petition filed September 20, 2021
See
https://www.pacermonitor.com/view/H2IYTDY/Designer_Diva_Resale_LLC__txsbke-21-33093__0001.0.pdf?mcid=tGE4TAMA
represented by: Russell Van Beustring, Esq.
RUSSELL VAN BEUSTRING, P.C.
In re Karen Square Inc.
Bankr. E.D. Pa. Case No. 21-12600
Chapter 11 Petition filed September 21, 2021
See
https://www.pacermonitor.com/view/XEYLDUQ/KAREN_SQUARE_INC__paebke-21-12600__0001.0.pdf?mcid=tGE4TAMA
represented by: Maggie Soboleski, Esq.
CENTER CITY LAW OFFICES, LLC
E-mail: msoboles@yahoo.com
In re House N Box Movers LLC
Bankr. W.D. Tex. Case No. 21-10726
Chapter 11 Petition filed September 21, 2021
See
https://www.pacermonitor.com/view/BZEJ6XQ/House_N_Box_Movers_LLC__txwbke-21-10726__0001.0.pdf?mcid=tGE4TAMA
represented by: Robert Chamless Lane, Esq.
THE LANE LAW FIRM
E-mail: notifications@lanelaw.com
In re Salvador A. Aldape and Teodula C. Carreno
Bankr. W.D. Tex. Case No. 21-10725
Chapter 11 Petition filed September 21, 2021
represented by: Stephen Sather, Esq.
*********
Monday's edition of the TCR delivers a list of indicative prices
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
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
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Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo
Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors.
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