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/raid1/www/Hosts/bankrupt/TCR_Public/211108.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, November 8, 2021, Vol. 25, No. 311 Headlines 18 IRVING STREET: Gets OK to Tap Irene Bremis as Real Estate Broker A & G PIZZA: Wins Cash Collateral Access ALGON CORP: Wins Cash Collateral Access Thru Nov 30 ALLSPRING BUYER: Fitch Assigns Final 'BB' LT IDR, Outlook Stable ALPHA METALLURGICAL: Posts $83.3M Net Income in Third Quarter AMERICAN AIRLINES: Meadows Bid to Review Estimation Order Denied ARCH RESOURCES: Moody's Alters Outlook on B2 CFR to Positive ARUBA INVESTMENTS: Fitch Lowers LongTerm IDR to 'B' ARUBA INVESTMENTS: Moody's Cuts CFR to B3, Alters Outlook to Stable ARUBA INVESTMENTS: S&P Affirms 'B-' ICR, Outlook Stable AUTO-SWAGE PRODUCTS: Amends Plan to Add CT-DEEP Subordinated Claim AUTO-SWAGE PRODUCTS: Further Fine-Tunes Plan Documents BASIC ENERGY: Court Approves Bankruptcy Wind-Down Settlement BCP RENAISSANCE: Fitch Affirms B+ Rating on Sr. Secured Debt BEAR COMMUNICATIONS: Dentons Represents Creditors Committee BEAR VALLEY RANCH: Wins Cash Collateral Access Thru Nov 30 BOOZ ALLEN: Moody's Hikes Rating on Sr. Unsecured Notes From Ba2 BOSTON DONUTS: Gets Cash Collateral Access Thru Nov 18 BVF FUND II: Unsecured Creditors Will Get 100% of Claims in Plan CANACOL ENERGY: Moody's Hikes CFR & Senior Unsecured Notes to Ba3 CARVANA CO: Incurs $68 Million Net Loss in Third Quarter CAUSE TECH: Unsecureds Will Get 20% of Claims in 60 Months CHG PPC: Moody's Affirms B2 CFR, Outlook Stable CONWAY COURT: Gets Interim Cash Collateral Access Thru Nov 30 CPESAZ LIQUIDATING: Hawkins, Scott Represent CPES Claimants CRC INVESTMENTS: Wins Cash Collateral Access Thru Dec 31 CREATD INC: Gets $7.8M from Stock Offering, Warrants Exercise CYBER LITIGATION: Court Clarifies Decision on Bar Date Notice DCP MIDSTREAM: Fitch Rates Proposed Sr. Unsec. Notes 'BB+' DCP MIDSTREAM: Moody's Gives Ba1 Rating on New $400MM Senior Notes DCP MIDSTREAM: S&P Assigns 'BB+' Rating on Senior Unsecured Notes DLVAM1302 NORTH SHORE: Seeks Cash Collateral Access DRIVEN BRANDS: S&P Assigns 'B+' ICR, Outlook Stable DRIVEN HOLDINGS: Moody's Assigns B2 CFR & Rates New Term Loan B2 EAGLE HOSPITALITY: Court Okays Bankruptcy Plan for Creditor Vote EDISON INT'L: Fitch Assigns BB Rating on Preferred Stock Series B EDISON INTERNATIONAL: S&P Rates Perpetual Preferred Stock B 'BB+' EHT US1 INC: Claims Will be Paid from Sale Proceeds EHT US1: EHT Asset Denied Further Extension to File Appeal Notice EMPIRE RESORTS: Fitch Assigns Final 'B+' LT IDR, Outlook Stable ENDO INTERNATIONAL: Bankruptcy Filing One of Contingency Plans EXPRESS GRAIN: Taps Dennis Gerrard of CR3 Partners as CRO FENDER MUSICAL: Moody's Rates New $375MM Secured Term Loan B 'B2' FORTRESS INVESTMENT: Fitch Affirms 'BB' LT IDR, Outlook Stable FROZEN FOODS: Seeks Cash Collateral Access Thru Nov. 19 GLAUKOM LLC: Voluntary Chapter 11 Case Summary GTT COMMUNICATIONS: Unsecureds Will Get 100% in Prepackaged Plan GULF COAST HEALTH: Law Firm of Russel Represent Utility Companies GULF COAST: Asks Court to Transfer Control of 24 Nursing Homes GVS TEXAS: Reaches Deal to Duck Appointment of Ch.11 Trustee HARMAN PRESS: Has Deal on Cash Collateral Access Thru Jan 2022 HEALTHCARE ROYALTY: Fitch Withdraws Ratings HELIUS MEDICAL: Receives PoNS Market Authorization in Australia HOOT THE DOG: Wins Permission to Use Cash Collateral HORIZON GLOBAL: Incurs $2.8 Million Net Loss in Third Quarter HOYA MIDCO: S&P Raises ICR to 'B', on Merger with Horizon HRNI HOLDINGS: Fitch Assigns FirstTime 'B(EXP)' LongTerm IDR HUDSON PACIFIC: S&P Assigns 'BB' Rating on New Preferred Stock INFINERA CORP: Incurs $53.8 Million Net Loss in Third Quarter ION GEOPHYSICAL: Posts $440K Net Loss in Third Quarter J.S. CATES: Wins Cash Collateral Access Thru Jan 2022 JOHNSON & JOHNSON: Seeks to Revive Strategy to Resolve Powder Suits JONES SODA: Board OKs Chastain as Beverage Division President, COO JONES SODA: Incurs $59K Net Loss in Third Quarter KADMON HOLDINGS: Stockholders Approve Merger Deal With Sanofi Unit KOPIN CORPORATION: Incurs $2.1 Million Net Loss in Third Quarter L'INC D'ALINE: Unsecured Creditors to Get $172K in 5 Years LATAM AIRLINES: Aires Settles Dispute With Regional One, Dash LATAM AIRLINES: Kramer Levin 2nd Update on Parent Claimants LEGENDARY FIELD: Bankr. Court OKs Settlement of Class Claims LTL MANAGEMENT: Talc Committee Approved Over Venue Concerns MALLINCKRODT PLC: Can Use Chapter 11 to Duck Acthar Royalties MALLINCKRODT PLC: Cleared by Court on $94 Mil. Ch.11 Bond Penalty MARA DAY: Files Emergency Bid to Use Cash Collateral MENUCHA ENTERPRISES: Unsecureds Will Get 22.9% of Claims in Plan METHODIST UNIVERSITY: S&P Rates 2021 Revenue Refunding Bonds 'BB' MID ATLANTIC PRINTERS: Taps Magee Goldstein Lasky as Legal Counsel MIKEN OIL: Unsecureds Will Get 40% of Claims in 60 Months MIND TECHNOLOGY: Hikes 9.00% Series A Preferred Stock Exchange Cap MKS GROUP: Eggspectation Franchisee Seeks Chapter 11 NASHEF LLC: Wins Cash Collateral Access Thru Nov 18 NATURE COAST: Wins Cash Collateral Access Thru March 2022 NEP/NCP HOLDCO: Moody's Rates New $210MM 1st Lien Loan Add-on 'B3' NEP/NCP HOLDCO: S&P Rates New $210MM Incremental Term Loan 'B' NEUTRAL POSTURE: Wins Cash Collateral Access NEW HOPE: S&P Places 2016B Bonds 'B' Rating on Watch Negative NOISE SOLUTIONS: Case Summary & 20 Largest Unsecured Creditors NORCROSS LODGING: Wins Cash Collateral Access Thru Dec 10 PATH MEDICAL: Committee Taps Greenberg Traurig as Legal Counsel PECF USS III: Revised Financing No Impact on Moody's B3 CFR PLAYA HOTELS: Incurs $12.4 Million Net Loss in Third Quarter PWM PROPERTY: Wins Cash Collateral Access Thru Dec 3 QUALITY REHABILITATION: Gets OK to Hire Shippen Pope as Accountant R & R INDUSTRIES: Unsecureds to be Paid in Full in 60 Months R. INVESTMENTS: Updates Unsecured Claims Pay Details; Amends Plan R.R. DONNELLEY: Moody's Puts B2 CFR Under Review for Downgrade RONNY'S A-LA-CARTE: Amends Executory Contract Provisions RUBY PIPELINE: S&P Lowers ICR to 'CC' On Near-Term Default Risk S&S HOLDINGS: Moody's Hikes CFR to B2, Outlook Remains Stable S&S HOLDINGS: S&P Upgrades ICR to 'B' on Continued Deleveraging SCULPTOR CAPITAL: Fitch Withdraws Ratings SENIOR HEALTHCARE: Unsecureds Will Get 49.2% of Claims in Plan SEQUENTIAL BRANDS: Ex-CEO Shmidman Gets Jo's Jeans Brand SEQUENTIAL BRANDS: Jessica Simpson Wins OK to Buy Back Brand SILVER LAKES RESORT: Taps Porter & Lasiewicz as Accountant SOUTHWESTERN ENERGY: Fitch Alters Outlook on 'BB' LT IDR to Stable SOUTHWESTERN ENERGY: S&P Places 'BB' ICR on CreditWatch Positive STERICYCLE INC: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable T2 BIOSYSTEMS: Issues Going-Concern Warning TELIGENT INC: Unsecured Creditors Balk at Steep Roll-Up of Ares TWO'S COMPANY: Taps Business Consultants as Accountant UNITI GROUP: Posts $43.7 Million Net Income in Third Quarter URBAN ONE: Posts $13.9 Million Net Income in Third Quarter VINE ENERGY: Moody's Hikes Rating on Senior Unsecured Notes to B1 W.R. GRACE: Moody's Assigns B1 Rating to Senior Secured Notes YUNHONG CTI: Closes Redemption of Equity Interest in Flexo [*] Commercial Chapter 11 Filings Up 21.1% in October 2021 [^] BOND PRICING: For the Week of November 1 to 5, 2021 ********* 18 IRVING STREET: Gets OK to Tap Irene Bremis as Real Estate Broker ------------------------------------------------------------------- 18 Irving Street, LLC received approval from the U.S. Bankruptcy Court for the District of Massachusetts to employ Irene Bremis, a real estate broker based in Somerville, Mass. Ms. Bremis will market and sell the Debtor's residential real estate located at 18 Irving St., Somerville. She will get a commission of 5 percent of the gross sales price. Ms. Bremis 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: Irene Bremis 120 College Ave 120 College Ave. Somerville, MA 02144 Telephone: (617) 623-2500 Email: IBremis@LAERrealty.com About 18 Irving Street LLC Somerville, Mass.-based 18 Irving Street, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 21-10776) on May 27, 2021, listing as much as $10 million in both assets and liabilities. Gina Strauss, manager and sole member, signed the petition. Judge Janet E. Bostwick oversees the case. The Debtor tapped Alex R. Hess Law Group as legal counsel. A & G PIZZA: Wins Cash Collateral Access ---------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, has authorized A & G Pizza, Inc. to use cash collateral on an interim basis in accordance with the budget through October 31, 2021, with a 10% variance. The Debtor requires the use of cash collateral to pay its expenses and maintain constant cash flow. US Foods, Inc. the Internal Revenue Service, and the North Carolina Department of Revenue assert an interest in the Debtor's cash collateral. US Foods, Inc. is identified as the secured party in a UCC Financing Statement filed with the NC Secretary of State (file number 20180014280H). The Debtor does not believe that any outstanding accounts payable are owed to US Foods. The North Carolina Department of Revenue also has an interest in Cash Collateral by virtue of a tax lien filed in 2020 in the amount of $17,168. In its Proof of Claim filed in the case, the Internal Revenue Service assets a secured claim in the amount of $57,506. Adequate protection of the Secured Creditors' interest in the collateral exists in the form of replacement liens in after-acquired revenue to the same extent as they had prior to the bankruptcy. Following the period covered by the Order, the Debtor believes it will be in a position where it can responsibly determine what, if any, additional adequate protection can be offered. The Court ruled that the Debtor may use cash collateral provided that the secured creditors will be granted liens in after-acquired revenue to the same extent and priority as they had prior to the filing of the case. A further hearing on the matter is scheduled for November 30, at 1:30 p.m A copy of the order and the Debtor's budget for the period from November 1 to 30, 2021 is available at https://bit.ly/2YpGh5c from PacerMonitor.com. The Debtor projects $35,000 in total available cash and $30,430 in total expenses. About A & G Pizza, Inc. A & G Pizza, Inc. operates "Milano Pizza" in Zebulon, North Carolina. Milano Pizza has been in business for over 30 years. The debtor-entity, owned by Aiman Abdelhadi, has operated Milano Pizza since 2015. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D.N.C. Case No. 21-02160) on September 29, 2021. In the petition filed by Aiman Abdelhadi, president, the Debtor disclosed up to $50,000 in assets and up to $500,000 in liabilities. Travis Sasser, Esq., at Sasser Law Firm is the Debtor's counsel. ALGON CORP: Wins Cash Collateral Access Thru Nov 30 --------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida, Miami Division, authorized Algon Corporation to continue using cash collateral on an interim basis through the end of November 2021. The Court says the prior Order authorizing continued use of cash collateral, with all conditions set forth therein, is reaffirmed and modified only to provide that the Debtor may continue to use cash collateral in the ordinary course of business and within the budget constraints set forth in the separately filed November budget [ECF 338] through the end of November 2021, predicated upon the payment of $15,000 adequate protection to the secured creditors by the close of business on November 12. A continued hearing on the Debtor's access to cash collateral is set for November 15 at 2 p.m. via Zoom. A copy of the order and the Debtor's budget for November 2021 is available for free at https://bit.ly/3o2iIIu from PacerMonitor.com. The Debtor projects $75,000 in cash receipts and $77,818 in total disbursements for the month. About Algon Corporation Miami, Fla.-based Algon Corporation -- https://www.algon.com/ -- is a worldwide distributor of raw materials and industrial parts for the pharmaceutical, cosmetic, and food industries. Algon Corp sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 19-18864) on July 1, 2019. In the petition signed by its president, Alfredo Suarez, the Debtor was estimated to have assets and liabilities of less than $10 million. The case is assigned to Judge Robert A. Mark. The Debtor is represented by Geoffrey S. Aaronson, Esq., at Aaronson Schantz Beiley P.A. ALLSPRING BUYER: Fitch Assigns Final 'BB' LT IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned a final Long-Term Issuer Default Rating (IDR) and senior secured debt rating of 'BB' to Allspring Buyer LLC, the main debt-issuing subsidiary of Allspring Global Investments. The Rating Outlook is Stable. The conversion of ratings follows the finalization of the separation from Wells Fargo & Company (WFC; A+/Negative) and the execution of the secured funding facilities. Allspring Buyer LLC, formerly known as Zebra Buyer LLC, is a debt-issuing subsidiary that incorporated to acquire Wells Fargo Asset Management from WFC by GTCR LLC and Reverence Capital. At the transaction close, there was $140 million reduction in the term loan borrowing and a $110 million increase in balance sheet cash, relative to the terms anticipated when expected ratings were assigned in April 2021. KEY RATING DRIVERS The ratings reflect Allspring's good franchise in the traditional investment management (IM) space, assets under management (AUM) diversification by asset class, product and distribution channel, a scalable business model and strong reported investment performance relative to benchmarks. Ratings also reflect an experienced senior management team, a cash generative business model and a long-term distribution agreement with WFC, which should mitigate the risks of immediate AUM attrition following the transaction close. The ratings are constrained by the relatively high initial cash flow leverage, as measured by gross debt/adjusted fee-related EBITDA (FEBITDA), lower profitability margins relative to peers, the fully-secured funding profile and limited balance sheet liquidity. Other rating constraints include a lack of operating history as a standalone entity and elevated execution risk associated with a business carve-out, including the challenges of bringing a new IM brand to market and setting up standalone operations and risk controls. An inability to successfully execute the carve-out strategy may lead to higher initial costs, lower AUM levels, as a result of lower fund sales and/or increased client attrition and, consequently, weaker operating performance and higher leverage. Fitch also believes that the firm's private equity ownership introduces the potential for more equity-oriented actions in the medium term, which is partially mitigated by the track record of Allspring's private equity owners in the financial services sector. Fitch believes Allspring is well-positioned among the large traditional IMs, with $604 billion in AUM as of June 30, 2021, although it remains materially smaller than the industry leaders. Allspring's AUM is well diversified by asset class, which is viewed favorably by Fitch. However, $200 billion of AUM (33.2%) is in short-term money market funds (MMFs) as of June 30, 2021, which Fitch believes could increase AUM volatility, liquidity risk in a stressed scenario, and result in revenue pressure, particularly in a low interest rate environment. Allspring's profitability is below that of large public peers. Fitch expects the run-rate adjusted FEBITDA margin to initially be in the 18% range, which is at the higher end of Fitch's 'bb' category benchmark range of 10%-20%. FEBITDA is adjusted for nonrecurring and one-off carve-out costs, money market revenue normalization, and over-allocation of corporate costs and other noncore legacy gains and losses. Fitch believes margin expansion could be driven by cost optimization over time, as revenue growth may prove challenging, in light of on-going competitive pressures in the industry. Allspring's net flows have averaged 2% of beginning AUM over the last four years (2017-2020), supported by inflows to short-term MMF, but were negative 1.8% in 1H21. Flows into long-term funds averaged a negative 3.3% from 2017-2020 and remained a negative 3.2% in 1H21, which are consistent with Fitch's 'bbb' category benchmark range for traditional IMs of-5% to 5%. Pro forma for the $1.1 billion term loan issuance to fund the acquisition, cash flow leverage is estimated to be 5.6x on a gross debt/adjusted FEBITDA basis for the TTM ended 2Q21, which is above Fitch's 'bb' category quantitative benchmark range for traditional IMs of 3.0x-5.0x. Leverage could reduce substantially if the firm executes on projected cost reductions and adjusting for one-off separation costs. An inability to reduce leverage toward or below 4.5x over the outlook horizon would be viewed negatively. Fitch estimates interest coverage, as measured by pro forma run-rate adjusted FEBITDA/interest expenses, at 6.2x for the TTM ended 2Q21, which is just above Fitch's 'bb' category benchmark range of 3.0x-6.0x for traditional IMs. Coverage of fixed charges, consisting of both interest expense and the 1% annual loan amortization, was 4.9x for the same period. Fitch views Allspring's liquidity as adequate. An increase in balance sheet cash amounts by $110 million relative to initial expectations provides additional financial flexibility should there be increased transition and separation costs, and is viewed favorably by Fitch. Allspring also has $170 million of revolver capacity, but the availability could be constrained by a market dislocation that reduces FEBITDA, given the leverage covenant in the facility (6.5x tested at 35% utilization). Allspring's funding profile is fully-secured and consists of a single seven-year $1.1 billion first-lien secured term loan, which is weaker than higher-rated peers that have largely unsecured funding profiles. Still, the funding profile is partially mitigated by the cash flow generative business model. The Stable Outlook reflects Fitch's expectation that Allspring will demonstrate sound execution of the carve out strategy, good operating performance, as reflected in EBITDA margins above 15%, a decrease in leverage towards 4.5x or below, and sound interest coverage. The secured debt rating is equalized with the Long-Term IDR reflecting Fitch's expectations for average recovery prospects under a stressed scenario. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- A sustained improvement in reported cash flow leverage approaching 3.5x; -- Gross FEBITDA margins sustained above 20%; -- A sustained improvement in fixed charge coverage above 5.0x; -- Improved funding diversity, including an increased proportion of unsecured funding; -- Favorable investment performance and sustained positive long term net client flows; and -- Successful transition to a standalone business and execution of strategic objectives, including meaningful fund sales through new third-party channels. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Material differences between future consolidated audited financial statements relative to management representations; -- An inability to reduce cash flow leverage below 4.5x, particularly if driven by the debt-financed shareholder- friendly distributions; -- Sustained material investment underperformance and/or meaningful long-term AUM outflows; -- A liquidity shortfall or a decline in interest and fixed- charge coverage below 3.0x; and -- An inability to execute on the operating strategy, leading to excessive costs or operational failures, or a decline in FEBITDA margins below 10%. The secured debt rating is primarily sensitive to changes in Allspring's IDR, and secondarily, to material changes in Allspring's capital structure and/or changes in Fitch's assessment of the recovery prospects for the debt instrument. 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. ESG CONSIDERATIONS Allspring Buyer LLC has an ESG Relevance Score of '4' for Financial Transparency due to reflecting the sensitivity of the rating to alignment of audited financial data with management representations, which has a negative impact on the credit profile, and is relevant to the rating[s] in conjunction with other factors. Allspring Buyer LLC has an ESG Relevance Score of '4' for Management Strategy due to the execution risk associated with establishing the firm as a standalone business, achievement of envisioned cost savings and deleveraging, which has a negative impact on the credit profile, and is relevant to the rating[s] 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. ALPHA METALLURGICAL: Posts $83.3M Net Income in Third Quarter ------------------------------------------------------------- Alpha Metallurgical Resources, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing net income of $83.26 million on $648.84 million of total revenues for the three months ended Sept. 30, 2021, compared to a net loss of $68.64 million on $335.59 million of total revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported net income of $31.35 million on $1.43 billion of total revenues compared to a net loss of $346.75 million on $1.09 billion of total revenues for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $1.68 billion in total assets, $1.43 billion in total liabilities, and $248.10 million in total stockholders' equity. "We have consistently reiterated that Alpha is well-positioned to capitalize on market opportunities and this quarter's outstanding performance is proof of our ability to deliver on those high expectations," said David Stetson, Alpha's chair and chief executive officer. "Additionally, we made meaningful progress on our commitment to deleveraging the company by reducing our overall long-term debt and legacy obligations by more than $75 million during the quarter. We expect to continue this positive momentum to create value for our shareholders, and we look forward to what we believe will be a productive and successful 2022." "As expected, third quarter met export realizations came in strong thanks to the robust market and the outstanding work of our sales team to capitalize on it," said Andy Eidson, Alpha's president and chief financial officer. "The vast midyear improvement in the Australian indices is now evident in our financial performance, with third quarter realizations on export tons tied to Aussie indices up $91.10, or 134%, from second quarter levels. Realizations for export tons priced against other mechanisms were up $23.64, or 23%, from second quarter realizations." "In higher pricing environments, costs of coal sales increase due to a number of factors outside our direct control, including royalties and taxes," said Jason Whitehead, executive vice president and chief operating officer. "Similar to many other companies, we're also experiencing some inflationary pressure with the cost of materials increasing. Despite these challenges, I'm proud of our operations teams for remaining disciplined and continuing to manage the costs we can control." In the third quarter, the company's Met segment cost of coal sales increased to an average of $76.62 per ton as compared to $69.94 per ton in the prior quarter. Cost of coal sales for the All Other category increased to $47.47 in the third quarter from a second quarter average cost of $42.77 per ton. Liquidity and Capital Resources "Beyond Alpha's very positive revenue results, we reduced our long-term debt and legacy obligations by over $75 million during the third quarter," said Eidson. "In addition to $6.6 million in scheduled long-term principal payments for the quarter, we elected to make a voluntary prepayment of $31.0 million in principal on the term loan, and we repurchased, at a discount, roughly $18.7 million in outstanding principal borrowings from existing lenders. Coupled with the previously-announced $21.2 million payment in July to extinguish the reclamation funding obligations with the West Virginia Department of Environmental Protection (WVDEP), these actions should serve as a roadmap for what shareholders can expect from us in the coming quarters as we continue strengthening our balance sheet." "Subsequent to the quarter end, we made an early payment of $4 million to the WVDEP eliminate the legacy obligations related to water treatment in West Virginia. Additionally, we made a payment of $3.3 million to fully satisfy the remaining legacy reclamation funding and water treatment obligations owed to the State of Kentucky. This follows our early extinguishment of the West Virginia reclamation funding obligations that was announced last quarter. These examples further demonstrate our strong commitment to debt reduction and deleveraging the company," Eidson said. Cash provided by operating activities for the third quarter of 2021 was $96.0 million, which includes the receipt of the $70 million tax refund and related interest, compared to the prior period in which cash used in operating activities was $6.3 million. Cash provided by operating activities includes discontinued operations. Third quarter 2021 capital expenditures were $22.3 million compared to $17.6 million in capital expenditures in the second quarter. As of Sept. 30, 2021, Alpha had $78.3 million in unrestricted cash and $121.7 million in restricted cash, deposits and investments. Total long-term debt, including the current portion of long-term debt as of Sept. 30, 2021, was $505.2 million. At the end of the third quarter, the company had total liquidity of $183.3 million, which represents an increase of 38% compared to our total liquidity at the end of the second quarter, including cash and cash equivalents of $78.3 million and $105.0 million of unused availability under the Asset-Based Revolving Credit Facility (ABL). The future available capacity under the ABL is subject to inventory and accounts receivable collateral requirements and the maintenance of certain financial ratios. As of Sept. 30, 2021, the company had no borrowings and $120.0 million in letters of credit outstanding under the ABL. Operational Update and Planned 2022 Investments "Alpha's exceptional third quarter performance is a testament to the continued dedication of our operations teams and the success of our ongoing portfolio optimization efforts," said Whitehead. "With Slabcamp, our sole remaining thermal mine, on pace to close in the summer of next year, our 2022 production guidance reflects the final stage of our transition to a pure-play metallurgical resources company. As we look forward to capitalizing on current market opportunities, 2022 Met segment production is expected to increase slightly over the already-increased full year 2021 guidance level. I'm confident that our teams across the enterprise have the ability to deliver on these ambitious goals we've outlined for the coming year." During the quarter, a number of key structural milestones were met to add the fourth section at Road Fork 52, putting the project ahead of schedule and allowing the section to begin producing in mid-October. Additionally, the company has recently completed its budget for 2022, and the Company'scapital expenditures guidance for next year includes several important projects that will help modernize and strategically improve Alpha's operations and prep plant infrastructure. These upgrades are expected to provide increased efficiency and extend the life of these facilities in return for modest levels of capital investment. Whitehead commented on the importance of capex projects in 2022: "As we envision what Alpha can do in the next several years, we recognize the critical role that preparation plants play in washing and loading the coal we mine and preparing it for delivery to our customers. In partnership with our sales teams, we aim to maximize these facilities, and we believe modest investment in a few of our plants will allow for additional output and better capabilities for the specific coal qualities we're sending through each facility. Additionally, we plan to begin development on the Cedar Grove No. 3 mine and the Glen Alum mine in the coming year. Both of these locations are adjacent to current Alpha operations in West Virginia, allowing us to leverage existing infrastructure as we expand into these mines. Lastly, we have decided to move ahead with adding a fourth section at our Lynn Branch mine. All together, we see this group of projects as a boost to the organization's future efficiency and effectiveness. Furthermore, we believe we can accomplish each of these in a timely manner and at a very reasonable investment level. Therefore, at the midpoint, our capex guidance for next year includes an increased maintenance capital projection of approximately $120 million dollars to account for inflation, and roughly $55 million to invest in Alpha's future through various projects across the organization." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001704715/000170471521000074/amr-20210930.htm About Alpha Metallurgical Alpha Metallurgical Resources (NYSE: AMR) (formerly known as Contura Energy) -- www.AlphaMetResources.com -- is a Tennessee-based mining company with operations across Virginia and West Virginia. Alpha Metallurgical reported a net loss of $446.90 million for the year ended Dec. 31, 2020, compared to a net loss of $316.32 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $1.67 billion in total assets, $1.50 billion in total liabilities, and $170.16 million in total stockholders' equity. * * * As reported by the TCR on Dec. 22, 2020, S&P Global Ratings affirmed its 'CCC+' issuer credit rating on U.S.-based coal producer Contura Energy Inc. and revised the liquidity assessment to less than adequate. S&P said, "We view Contura's business as vulnerable due to declining thermal demand and prices, which is driving the company to exit these operations and begin reclamation work at some of its mines." In April 2020, Moody's Investors Service downgraded all long-term ratings for Contura Energy, Inc., including the Corporate Family Rating to Caa1 from B3. "Contura has idled the majority of its mines due to weak market conditions. Moody's expects that demand for metallurgical coal will weaken further in the near-term as blast furnace steel producers adjust to reduced demand due to the Coronavirus," said Ben Nelson, Moody's vice president -- senior credit officer and lead analyst for Contura Energy, Inc. "The rating action is entirely driven by macro-level concerns resulting from the global outbreak of coronavirus." AMERICAN AIRLINES: Meadows Bid to Review Estimation Order Denied ---------------------------------------------------------------- The United States Bankruptcy Court for the Southern District of New York denied two motions filed by Lawrence M. Meadows related to the 2011 bankruptcy case of AMR Corporation and American Airlines: 1. A request by Mr. Meadows to temporarily stay the Court's Order Granting Reorganized Debtors' Motion to Estimate Maximum Amount of Proof of Claim No. 9676 Under Bankruptcy Code Sections 105(a) and 502(c) for a period of no less than 14 days. 2. A request for reconsideration of the Estimation Order and also includes an additional request for a stay of the Estimation Order pending appeal. The Court ruled that Mr. Meadows has not met the burden necessary for reconsideration of either the Estimation Order or the Court's underlying Estimation Decision. Mr. Meadows states that he was denied the right to put on expert and witness testimony at the hearing. But the Court noted that Mr. Meadows had previously submitted a description of the witness testimony that he intended to provide and was permitted to make a proffer of that testimony at the hearing, all of which was considered by the Court. In addition to this proffer and the Court hearing extensively from Mr. Meadows himself, the Court also heard from Herman J. Straub during the hearing on the Estimation Motion. Moreover, as noted by the Court at the hearing, the merits of the Consent Decree are not directly at issue in the Estimation Motion; this Court's approval of the Consent Decree is already on appeal, and that record on appeal already includes Mr. Meadows' arguments about the merits of the Consent Decree. The Court found that the balance of the factors weighs against granting a stay pending appeal. To start, the Court does not find that Mr. Meadows would sustain irreparable injury if his request for a stay is denied. As noted in the Estimation Decision, Mr. Meadows does not have any pending claims in these bankruptcy cases; all proofs of claim that he previously filed have been disallowed by this Court. Moreover, the Reorganized Debtors previously acknowledged that pilots may participate under the terms of the settlement between the Reorganized Debtors and the EEOC. Nor does approval of the Estimation Motion deprive Mr. Meadows of any rights that he may have with the EEOC for any alleged ongoing discrimination. But other parties would suffer a substantial injury if a stay were granted, the Court said. As noted in the Estimation Decision, three years of delay necessitated by the appeals of Mr. Meadows have prevented further distributions in the Reorganized Debtors' bankruptcy proceeding given the need to hold monies in reserve for an EEOC claim that would otherwise be undetermined in amount, absent the settlement. A full-text copy of the Memorandum of Decision and Order dated October 28, 2021, is available at https://tinyurl.com/c8apbf3x from Leagle.com. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. The Debtors tapped Weil, Gotshal & Manges LLP as bankruptcy counsel; Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, as special counsel; Rothschild Inc., as financial advisor; and Garden City Group Inc. as claims and notice agent. The Official Committee of Unsecured Creditors retained Skadden, Arps, Slate, Meagher & Flom LLP as counsel; Togut, Segal & Segal LLP as co-counsel for conflicts and other matters; Moelis & Company LLC as investment banker; and Mesirow Financial Consulting, LLC, as financial advisor. AMR Corp., emerged from Chapter 11 bankruptcy protection on Dec. 9, 2013, upon which it merged with US Airways Group. ARCH RESOURCES: Moody's Alters Outlook on B2 CFR to Positive ------------------------------------------------------------ Moody's Investors Service affirmed all ratings for Arch Resources, Inc., including the company's B2 Corporate Family Rating, and revised the rating outlook to positive from stable based largely on the expectation that the company will reduce debt and non-debt liabilities in the near-term. Moody's also upgraded the company's Speculative Grade Liquidity Rating ("SGL") to SGL-1 from SGL-2 based on expectations for meaningfully stronger free cash flow generation in the next 12-18 months. "Arch completed the Leer South project on time and on budget. Given the recent strengthening in coal market fundamentals, stronger export prices, and meaningfully lower capital spending, Arch should generate significant free cash flow in 2022 that will allow the company to reduce debt," said Ben Nelson, Moody's Vice President -- Senior Credit Officer and lead analyst for Arch Resources, Inc. Affirmations: Issuer: Arch Resources, Inc. Probability of Default Rating, Affirmed B2-PD Corporate Family Rating, Affirmed B2 Senior Secured Bank Credit Facility, Affirmed B2 (LGD4) Issuer: WEST VIRGINIA ECONOMIC DEVELOPMENT AUTHORITY Senior Secured Revenue Bonds, Affirmed B2 (LGD4) Upgrades: Issuer: Arch Resources, Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Outlook Actions: Issuer: Arch Resources, Inc. Outlook, Changed To Positive From Stable RATINGS RATIONALE Moody's expects that robust metallurgical coal prices will translate into stronger earnings and cash flow in the second half of 2021 with continued strength in 2022. Management indicated that the company's new metallurgical coal mine in West Virginia (Leer South) is completed and ramping up production. Business conditions in the Powder River Basin are temporarily strong on a variety of factors including high natural gas pricing in regions that consume PRB coal that encourages gas-to-coal switching by power generators and various logistical issues present across the region that limits the coal industry's ability to produce and deliver coal. As the company takes advantage of a strong market in 2021 and signs new contracts for 2022, Moody's expects a significant improvement in earnings and cash flow. Moody's expects that adjusted financial leverage will fall below 1.5x in the coming quarters and the company will generate enough cash to achieve a net debt zero position in 2022. The company will have the opportunity to leverage the current upcycle in pricing to achieve significant reduction of debt and non-debt liabilities. However, Moody's believes that investor concerns about the coal industry's ESG profile are still intensifying and, notwithstanding current strength in coal pricing and better debt trading levels, coal producers will be increasingly challenged by access to capital issues in the early-to-mid 2020s. An increasing portion of the global investment community is reducing or eliminating exposure to the coal industry with greater emphasis on moving away from thermal coal. A shift toward metallurgical coal, compared to a legacy position more focused on thermal coal, is an emerging positive factor from an ESG standpoint. Moody's expects that Arch will shift in this direction, but maintain substantial thermal coal operations with a slow but steady scale down to occur in the coming years. The aggregate impact on the credit quality of the coal industry is that debt capital will become more expensive over this horizon, particularly in the public bond markets and other business requirements, such as surety bonds, which together will lead to much more focus on individual coal producers' ability to fund their operations and articulate clearly their approach to addressing environmental, social, and governance considerations -- including reducing net debt in the near-to-medium term. Arch reported about $555 million of total debt as of September 30, 2021. The B2 CFR reflects a diverse platform of seven coal mining assets in the United States capable of strong cash flow generation. The company's approach to maintaining low debt levels and a significant liquidity cushion helped the company withstand difficult industry conditions despite severe earnings compression.Operational risk is a constraint, with meaningful concentration of earnings and cash flow expected at specific mining sites: Black Thunder thermal coal mine in the Powder River Basin, Leer mining complex in Northern Appalachia, and the new Leer South mining complex in Northern Appalachia. Credit quality is constrained more significantly by the inherent volatility of the global metallurgical coal industry, ongoing secular decline in the US thermal coal industry, and ESG factors. The rating also takes into consideration that some mining assets have less favorable long-term operating prospects in the coming years and, therefore, could be subject to more significant reclamation-related spending over the rating horizon. The SGL-1 reflects Moody's expectation for very good liquidity to support operations over the next 12-18 months. Moody's expects that the company will generate significant free cash flow in 2022. The primary source of liquidity beyond internally-generated free cash flow is the company's cash balance combined with modest availability under an accounts receivables securitization facility and an unrated inventory-based revolving credit facility. The SGL rating could be downgraded to SGL-2 if available liquidity remains below $300 million. ESG CONSIDERATIONS Environmental, social, and governance factors are important factors influencing Arch's credit quality. The company is exposed to ESG issues typical for a company in the coal mining industry, including increasing global demand for renewable energy that is detrimental to demand for thermal coal, especially in the United States and Western Europe. Exposure to carbon transition risk and environmental reclamation obligations are the most significant environmental exposures. Social issues include factors such as community relations, operational track record, and health and safety issues associated with coal mining such as black lung disease. Through capital investment in the Leer South project, Arch Resources has been reducing exposure to thermal coal, which carries greater ESG-related risks, and increasing exposure to metallurgical coal, which carries lower ESG-related risks. Arch Resources sold its last thermal coal mine in Appalachia in December 2019 -- a surface mine called Coal-Mac -- and has signaled an intention to reduce emphasis on thermal coal mining in other regions. Governance-related risks are representative of a publicly traded coal company with an ongoing emphasis on maintaining balance sheet cash and very good liquidity. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The positive outlook signals the potential for a rating upgrade in response to meaningful debt reduction. Moody's could upgrade the rating with expectations for free cash flow generation above $100 million, meaningful debt reduction, and financial policies consistent that support maintaining a low net debt position in the medium-to-long term. Moody's could downgrade the rating with weakening in metallurgical coal pricing below long-term averages, expectations for available liquidity to fall below $175 million, or any meaningful operational issues at the company's Black Thunder or Leer mines. Arch Resources is one of the largest coal producers in the United States. The company has two mining complexes in the Powder River Basin, four mining complexes in Appalachia, and one mine in Colorado. The company generated about $1.5 billion of revenue in 2020. The principal methodology used in these ratings was Mining published in October 2021. ARUBA INVESTMENTS: Fitch Lowers LongTerm IDR to 'B' --------------------------------------------------- Fitch Ratings has downgraded Aruba Investments, Inc.'s (d/b/a ANGUS Chemical Company) Long-Term Issuer Default Rating (IDR) to 'B' from 'B+', first lien secured revolver and term loans to 'BB-'/'RR2' from 'BB'/RR2', and second lien term loan to 'CCC+'/'RR6' from 'B-'/'RR6'. In addition, Fitch has assigned Aruba's new five-year $200 million unsecured HoldCo notes a 'CCC'/'RR6' rating, following the company's announcement that it intends to raise $100 million in new secured debt and $200 million in new unsecured HoldCo notes in order to fund a $300 million distribution to shareholders. Fitch has also assigned Kobe US Midco 2, Inc. (HoldCo), the holder of the new notes a 'B-' IDR. The Rating Outlook is Stable. The downgrade reflects the addition of $300 million in new debt to the company's already highly levered capital structure. KEY RATING DRIVERS Elevated Leverage, High FCF: More than a year after taking on roughly $450 million in secured debt in conjunction with Ardian's purchase of a 50% stake in the company, Aruba is again adding on around $300 million in new debt. Although $200 million of the new debt will be issued at the HoldCo level, and exists outside of the secured debt's borrowing group, and lacks guarantees, the new debt's Pay if You Can PIK Toggle structure may materially impact OpCo's cash generation nonetheless. Fitch believes that the company will likely retire notes as soon as is feasible, as they are likely to be the company's highest-cost piece of debt. The new debt, alongside the $100 million in new secured debt issued at the OpCo level, will weigh on the company's credit metrics, leading to total debt with equity credit/operating EBITDA above 6.0x and FFO Interest Coverage below 2.0x throughout the forecast period. Although the HoldCo notes, issued at the HoldCo level, will not contribute to Aruba Investments, Inc.'s (OpCo's) leverage metrics, Fitch notes that their Pay if You Can PIK Toggle structure indicates they may nonetheless require regular upstream distributions. Fitch forecasts FCF generation of above $60 million by 2024, which could help pay down some of the company's debt; however, materially deleveraging will also require robust EBITDA growth. Resilient, Consistent Performance: Aruba's yoy revenue and EBITDA increased throughout 2020 and into 2021 despite the pandemic's economic impact, which Fitch believes reflects the resilience of Aruba's business through economic downturns. Growth in Aruba's Life Sciences and Personal Care segments has been supported in part during the pandemic by demand for its chemical products, which have experienced increased demand to combat the spread of COVID-19, for products like hand sanitizers, vaccines, as well as diagnostic testing kits. Softer demand in certain industrial end markets, such as metalworking fluids, that weakened during the pandemic as end markets slowed, have largely recovered, further supporting Aruba's performance. The company continues to invest in shifting its sales mix toward the higher growth end markets of Life Sciences and Personal Care, with 49% of sales now attributable to these markets. The shift has been supported by greater organic growth trends and investments. The continued rebalancing toward these end markets, which offer more pricing power and greater potential to increase product breadth through new market demands, provides a pathway to simultaneously grow and stabilize the company's cash flows. Global Producer of Nitroalkanes: Aruba is the only global commercial producer of nitroalkanes, and the only manufacturer in the world to use propane nitration technology, which can yield a highly specialized nitroalkane derivate product portfolio. It is often the only supplier for many of its key products. The majority of Aruba's end markets are characterized by high switching costs with Aruba having a low share of end-product costs. Products are also frequently essential ingredients in formulations and processes. This contributes to the longevity of customer relationships. As a niche producer in the additives industry, Aruba has significant scale and technical expertise barriers to prospective entrants. Limited Input Price Risk: Aruba utilizes over 100 different raw materials as inputs into its chemistries. The most prominent of these are propane, ammonia, formaldehyde, hydrogen and natural gas. Most of these inputs are directly or indirectly linked to natural gas prices, as ammonia production uses natural gas, propane can be a co-product of natural gas processing, and formaldehyde is indexed to methanol, which is tied to natural gas. Aruba's Sterlington, LA site is strategically located to take advantage of raw material security through the abundance of U.S. shale production in the region. Risks to Aruba arising from fluctuations in raw material input costs are limited due to the company's value-based approach to pricing. DERIVATION SUMMARY In the 'B' rating category, Aruba compares well against rated peers Kronos Worldwide Inc. (B+/Stable), TPC Group Inc. (B-/Negative) and Tronox Limited in terms of EBITDA margin, FFO interest coverage and FCF generation. It is towards the lower end of the peer group in terms of size based on revenue and at the top with Tronox in terms of gross leverage. At $348 million in 2020 revenues, Aruba is significantly smaller then Kronos Worldwide at $1.6 billion and public chemical peer Tronox Holdings at $2.7 billion. Aruba's EBITDA margins in the 40% range are at the top end of the peer group, notably higher than Kronos Worldwide, Inc. (volatile margins between approximately 10% and 25%) and chemical peer Tronox Holdings' (18%-25%). Aruba also exceeds chemicals peer TPC Group's margins in the low to mid-teens. Aruba's high EBITDA margins reflect its products' barriers to entry and its customers' high switching costs. Parent-Subsidiary Linkage: Fitch rates the HoldCo's IDR one notch below that of its stronger subsidiary, OpCo. The notching stems from the legal and structural separations between the two, including covenant protections for OpCo's debt, which limit the ability of the direct parent to dilute its credit quality. Key covenants include limitations on guarantees to affiliates, restrictions on dividends, asset sales and restrictions on the incurrence of additional indebtedness. OpCo does not guarantee HoldCo debt and a HoldCo default does not cross default OpCo. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Sales growth is driven by gains in Life Sciences and Home and Personal Care throughout the forecast period while Custom Chemicals and Industrial Specialties experience more moderate growth. Near-term moderation in Personal Care, as sanitizers and benefiting pandemic-related demand normalizes; -- EBITDA margins expand modestly throughout the forecast period as raw material prices normalize; -- Modest voluntary 1L debt repayment - HoldCo notes repaid by 2024 to manage cost of capital; -- Capex at roughly 7.5% of sales. KEY RECOVERY RATING ASSUMPTIONS Going-Concern (GC) Approach Fitch's recovery analysis uses a consolidated approach and a $145 million going concern EBITDA. This going concern approximates a bottom-cycle EBITDA in the stress case and reflects the economic resilience Aruba has demonstrated through the pandemic. An EV multiple of 7.0x is applied in Fitch's recovery analysis. The 7.0x multiple is at the upper end within Fitch's chemicals portfolio, and is warranted to reflect relatively lower cash flow risk, as demonstrated by Aruba's performance during the pandemic, strong EBITDA and FCF margin and the inherent growth of its Life Science segment. The 7.0x multiple is also within the range of historical bankruptcy case study exit multiples for peer companies, which ranged from 5.2x-7.7x, but above the median of 5.9x. It is also significantly below the multiple Aruba was acquired for (by Golden Gate Capital in 2015), and the multiple at which Ardian's current investment was made. Fitch estimates the going concern EV value to be approximately $1,015 million. This is greater than the liquidation value, which includes the value of Aruba's IP discounted at 50%. After a 10% adjustment for administrative claims, $914 million remains for creditors. With an assumed 80% draw on the company's $125 million revolving facility, ~$960 million USD equivalent first lien term loan B tranches and a $345 million second lien term loan B, the going concern EV approach results in a recovery rating of 'BB-'/'RR2' for the first lien facilities, a 'CCC+'/'RR6' for the second lien term loan, and a 'CCC'/'RR6' for the HoldCo notes. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Demonstrated prioritization of debt reduction over shareholder distributions, leading to total debt with equity credit/operating EBITDA durably below 6.0x; -- FFO interest charge coverage durably above 2.5x; -- Continued revenue growth and end market diversification led by Life Sciences and Personal Care, while maintaining EBITDA margins. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO interest charge coverage sustained below 2.0x; -- A prioritization of shareholder returns or an inability to achieve gross debt reduction; -- Weakening in EBITDA margins and FCF resulting in total debt with equity credit/operating EBITDA durably above 6.5x. 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, Limited Maturities: Fitch anticipates Aruba will generally hold around $20 million in cash. Excess cash is likely to be used to reduce debt, and Fitch notes that the HoldCo notes' Pay if You Can PIK Toggle structure may result in upstream dividends for the purpose of debt service. Working capital requirements are manageable, and Aruba can utilize its cash balance as well as its $125 million revolving credit facility for any short- or medium-term liquidity needs. High margins and modest capex requirements have supported FCF growth in recent years up to $57 million for 2019 and $54 million for 2020. ISSUER PROFILE Aruba Investments, Inc. is a global specialty chemicals producer with a 70+ year track record, operating in four major categories: Life Sciences, Personal Care, Industrial Specialties, and Custom Chemicals. Originally a subsidiary of The Dow Chemical Company, Aruba is commonly known as ANGUS Chemical Company. ARUBA INVESTMENTS: Moody's Cuts CFR to B3, Alters Outlook to Stable ------------------------------------------------------------------- Moody's Investors Service has downgraded Aruba Investments Holdings, LLC's (dba ANGUS Chemical Company) Corporate Family Rating to B3 from B2, Probability of Default Rating to B3-PD from B2-PD and first lien credit facilities to B2 from B1. The second lien term loan is affirmed at Caa1. The outlook changed to stable from negative. Moody's also assigned a Caa2 rating to the proposed $200 million senior PIK toggle notes due 2026 issued by Kobe US Midco 2, Inc. "The downgrade is a result of a more aggressive financial policy than previously expected and reflects the increased leverage related to the proposed debt-financed dividend which follows a dividend in 2020 and subsequent acquisition that had already pressured the rating," said Domenick R. Fumai, Vice President and lead analyst for Aruba Investments Holdings, LLC. Downgrades: Issuer: Aruba Investments Holdings, LLC Corporate Family Rating, Downgraded to B3 from B2 Probability of Default Rating, Downgraded to B3-PD from B2-PD Gtd Senior Secured 1st Lien Bank Credit Facility, Downgraded to B2 (LGD3) from B1 (LGD3) Affirmed: Issuer: Aruba Investments Holdings, LLC Gtd.Senior Secured 2nd Lien Bank Credit Facility, Affirmed Caa1 (LGD5) Assigned: Issuer:Kobe US Midco 2, Inc. Senior Unsecured Regular/Bond Debenture, Assigned Caa2 (LGD6) Outlook Action: Issuer: Aruba Investments Holdings, LLC Outlook, changed to Stable from Negative RATINGS RATIONALE Moody's views the increased debt resulting from the proposed transaction, which includes a $100 million first lien term loan add-on plus the issuance of $200 million in senior unsecured HoldCo PIK toggle notes as a credit negative following a substantial increase in debt in November 2020 to fund Golden Gate Capital's sale of a 50% ownership stake in the company to Ardian. Moreover, the sizable dividend reflects a more aggressive financial policy than previously expected given ANGUS only recently paid a dividend of $70 million less than a year ago. Pro forma for the term loan add-on and PIK toggle notes, Moody's estimates ANGUS' Debt/EBITDA of about 9.0x, including standard adjustments, in FY 2021 improving towards 8.1x in FY 2022. Moody's considers the company's credit metrics as more reflective of a B3 rating and will exceed the previous rating trigger of 6.0x for a sustained period. ANGUS' B3 rating is constrained by elevated leverage following the recapitalization and debt-financed dividend. ANGUS added roughly $450 million in debt to fund Ardian's investment and the proposed transaction would add another $300 million of debt. The amount of total debt relative to the asset base and size of the company further temper the rating. The lack of scale and significant operational concentration with dependence on two plants are additional considerations limiting the rating. The rating also includes heightened risks associated with private equity ownership including an aggressive financial policy and minority representation by independent directors. The B3 CFR is underpinned by ANGUS' strong EBITDA margins and ample free cash flow generation. ANGUS' business profile is characterized by very good geographic diversity and solid market positions serving a varied number of end markets, including several fairly defensive end markets such as pharmaceutical, life sciences and HPC (home and personal care), that partially offset exposure to its industrial-related end markets. The company enjoys multiple barriers to entry including advanced formulations and backward integration that support strong profitability and attractive EBITDA margins and many of its products benefit from its strong position in nitroalkanes. The stable outlook reflects expectations that ANGUS' operating performance will continue to perform well, including further revenue and EBITDA growth and free cash flow generation to support the additional leverage. STRUCTURAL CONSIDERATIONS The Caa2 rating for the proposed $200 million senior unsecured PIK toggle notes issued by Kobe US Midco 2, Inc., two notches below the B3 CFR, reflects the fact that the holding company debt is structurally and contractually subordinated to debt at Aruba Investments Holdings, LLC. Moody's believes that Aruba Investments Holdings, LLC is adequately ring-fenced from Kobe US Midco 2, Inc. and that the debt at Aruba Investments Holdings, LLC is therefore closer to the assets and cash flow. Moody's expects the PIK toggle notes to have limited recovery prospects given the substantial amount of debt with priority claims that rank ahead of them. However, given that the PIK toggle notes mature prior to the existing debt at Aruba Investments Holdings, LLC, Moody's expects these notes will be refinanced with additional debt at Aruba rather than be repaid at maturity. The B2 ratings assigned to the senior secured first lien credit facilities are one notch above the B3 CFR reflecting their seniority in the debt capital structure. The Caa1 rating assigned to the second lien term loan, one notch below the B3 CFR, reflects the subordination to the first lien credit facilities which have a claim on substantially all the assets of the company and guarantors and rank ahead of the second lien term loan in terms of claims on such assets. ESG CONSIDERATIONS Moody's also evaluates environmental, social and governance factors in the rating consideration. Governance was a major factor in the rating action as evidenced by the aggressive financial policy of ANGUS' financial sponsors, Golden Gate Capital and Ardian. Other governance risks include a board of directors with majority representation by members affiliated with the sponsors and reduced financial disclosure requirements as a private company, though the company does provide more information in its financial statements than most companies owned by private equity sponsors. The chemical properties of several key raw materials, including ammonia, propane and formaldehyde, could result in future product and environmental liability claims if improperly handled; however, ANGUS does not currently have any substantial litigation or remediation related to environmental issues. ANGUS has clearly stated sustainability and environment, health and safety policies on its website. Several of the company's products are important chemical intermediates in the pharmaceutical and life sciences industries, which are important social considerations. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade is unlikely over the 18 months due to the elevated financial leverage; however, Moody's would consider an upgrade if Debt/EBITDA is sustained below 6.5x, retained cash flow-to-debt (RCF/Debt) is maintained above 10%, and the financial sponsors commit to a more conservative financial policy. Moody's would downgrade the ratings if free cash flow is negative for a sustained period, liquidity deteriorates below $75 million, or operating performance is significantly below expectations. In addition, other factors such as an adverse operational event, particularly at the company's main production facility in Louisiana, could result in a downgrade. The principal methodology used in these ratings was Chemical Industry published in March 2019. Aruba Investments Holdings, LLC is a holding company that owns ANGUS Chemical Company. Headquartered in Buffalo Grove, IL, ANGUS produces performance additives for end markets including paints and coatings, pharmaceuticals, biotech, metalworking fluids, personal care, agriculture, and biocides. Golden Gate Capital purchased the company from Dow Chemical in a leveraged transaction which closed in February 2015. In November 2020, private equity firm, Ardian, acquired a 50% ownership interest in ANGUS from Golden Gate Capital, which retains a 50% stake, for a total enterprise value of $2.25 billion. ANGUS generated approximately $370 million in revenue for the twelve months ending June 30, 2021. ARUBA INVESTMENTS: S&P Affirms 'B-' ICR, Outlook Stable ------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issuer credit rating on Aruba Investments Holdings LLC (doing business as Angus Chemical Co.). The outlook is stable. S&P said, "We also assigned our 'CCC' issue-level rating to Kobe US Midco 2 Inc.'s newly proposed senior PIK toggle notes. The recovery rating is '6'. "At the same time, the issue-level rating on the company's existing first-lien debt remains 'B-', and the issue-level rating its existing second-lien debt remains 'CCC'. The recovery ratings are '3' and '6', respectively. "The stable rating outlook on Angus reflects our expectation that its operating performance will enable it to maintain credit measures we view as appropriate for the current rating, including debt to EBITDA above 7x while maintaining strong profitability measures." The rating action follows Angus' announcement that it will add additional debt to fund a dividend to shareholders. Angus is planning to add on $100 million to its existing term loan B while at the same time issuing $200 million of senior PIK toggle notes out of a parent organization, Kobe US Midco 2 Inc. to fund a $300 million dividend to its shareholders. With the increase in leverage, Angus's credit metrics remain on the weaker end of highly leveraged compared with similarly rated specialty chemical companies such as Diamond (BC) B.V. The rating on Angus reflects S&P's view of its leading market position in the niche nitroalkane specialty chemicals industry, above-average profitability in the sector, and positive free cash flow generation. The company delivers key product offerings to a wide range of end markets, including life sciences, paints and coatings, and pharmaceutical products. High barriers to entry, customer stickiness, and Angus' high product performance relative to cost continue to support its leading market positions and overall margin profile. Angus' EBITDA margins have remained well above average compared with other specialty chemical rated peers such as Cabot Microelectronics. In addition to Angus continuing to operate with its very high EBITDA margins, it also benefits from the location of its facilities and the lack of direct competition for most of its specialty chemical products. It is the only manufacturer of some of its chemicals in the world and a critical input for many of its customers products. S&P Global Ratings notes that Angus' willingness to fund a dividend with 100% debt financing represents aggressive financial policies that are reflected in the 'B-' issuer-credit rating. S&P said, "We continue to assess the financial risk profile of Angus as highly leveraged. We forecast Angus' weighted-average adjusted debt to EBITDA to be in the 7x-8x range and funds from operations (FFO) to debt to be below 12% over the next 12 months. The company is owned by two financial sponsors, Ardian and Golden Gate Capital. "The stable outlook on Angus reflects our expectation that it will continue to benefit from its niche specialty chemical offering to favorable end markets the company serves. We also believe some of Angus' key end markets--such as metalworking fluids, coatings, and electronics will see improvement as we recover from the global pandemic. Our base case expectations are that weighted-average debt to EBITDA will remain above 7x in 2021 and FFO to debt will be 8%-9% over the next 12 months. "We could take a negative rating action over the next 12 months if we believed debt to EBITDA would increase to above 9x for consecutive quarters, because we would consider that to be approaching unsustainable levels. Debt to EBITDA could approach 9x if EBITDA margins dropped significantly from our 2021 expectations, such as by 400 basis points (bps) from our 2021 base case expectations. This would likely happen if Angus' end markets performed worse than we expect as a result of economic uncertainty or supply chain issues or if the company experienced any operating issues at its plants. This could also occur if financial policies were more aggressive then we currently factor in, such as if there were additional debt-funded dividends beyond the $300 million proposed or an acquisition. "We could take a positive rating action over the next 12 months if Angus maintained debt to EBITDA below 7x on a sustained basis. Debt to EBITDA could approach 7x if EBITDA margins improved by more than 400 bps from our 2021 base case expectations. These improvements would likely be the result of Angus weathering the current macroeconomic environment better than we expect and continued improvement across all key end markets." AUTO-SWAGE PRODUCTS: Amends Plan to Add CT-DEEP Subordinated Claim ------------------------------------------------------------------ Auto-Swage Products, Inc. submitted a Second Amended Disclosure Statement for Liquidating Plan of Reorganization dated October 29, 2021. Since the Petition Date, the Debtor has been working toward consummating a sale and marketing the Property. On September 15, 2021, the Court granted the Debtor's Application to Retain Levey Miller Maretz, LLC as Real Estate Broker and Consultant to the Debtor. Since that time LMM has been actively marketing and showing the Property. The Property is listed on LoopNet, a "for Sale" sign has been placed at the Property, and showings have occurred. Given the extensive pre-petition marketing and additional post petition marketing, the Debtor submits that the Property has been extensively exposed to the market. Therefore, the Court has set the following dates and deadlines to expeditiously effectuate a sale of the Property. * December 14 at 3:00 p.m., December 15, 2021 at 10:00 a.m. is the Sale Hearing/Confirmation Hearing. * December 10, 2021 at 12:00 noon is the Objection to Sale/Confirmation with Closing no later than December 17, 2021. This is a single-asset real estate case. Accordingly, the Debtor's only material asset is the Property. Additional assets include: (a) cash on hand; (b) an oral lease with Wilson Anchor Sleeve, LLC (the "Tenant") for $1,200 per month; and (c) remaining personal property at the Property. The Debtor has retained a small amount of equipment. It is the view of Mr. Brenton that this equipment, which has been sitting unused for more than 3 years, is valueless at this time. However, a 2018 appraisal of the equipment indicates a value then of approximately $26,000.00. Should any party be interested in purchasing this equipment, they may propose to do so. The Debtor intends to sell this equipment pursuant to the Bankruptcy Code, and distribute any proceeds to Holders of Allowed Claims, in accordance with the Bankruptcy Code. Class 8 – General Unsecured Claims: Class 8 consists of all Allowed Unsecured Claims in the approximate amount of $24,000.00. Allowed Class 8 Claims (General Unsecured Claims) shall be paid a pro rata share of the Unsecured Creditors Fund, which sum shall be no less than $5,000.00. Payment shall be the later of (a) the Effective Date or (b) upon an Unsecured Claim becoming an Allowed Unsecured Claim. Class 9 - CT DEEP Subordinated Claim: Class 9 consists of the claims of CT-DEEP that exceed the value of its Class 7 Allowed Claim. On October 7, 2021, CT-DEEP filed a Proof of Claim (Claim No. 4-1) in the amount of $1,008,768.66. Therefore, the amount of the CT-DEEP Subordinated Claim is $850,373.05. Based on negotiations of the parties, CT-DEEP has agreed to subordinate the CT-DEEP Subordinated Claim to Class 8 Allowed Claims. It is not presently anticipated that the CT-DEEP Subordinated Claim will receive a payment. However, if Class 8 Allowed Claims are paid in full, Class 9 will receive a distribution in accordance with Bankruptcy Code. The Debtor intends to sell the Property pursuant to the Stalking Horse Agreement, subject to higher and better offers as set forth in the Sale Motion and Bidding Procedures. While the Debtor has extensively marketed the Property for several years prior to the Petition Date, the Debtor has retained Levey Miller & Maretz, LLC (the "Broker") to engage in a marketing program for a period of approximately 2 months from September 15, 2021 until November 19, 2021, and, if additional Qualified Bidders are identified, to hold an auction among the Stalking Horse Bidder and other Qualified Bidders. If no other Qualified Bidders are identified, the Debtor will sell the Property pursuant to the Stalking Horse Agreement. The Bankruptcy Court has set December 14, 2021 at 3:00 p.m. for the Confirmation Hearing on the Plan. The Court has set December 10, 2021 at 12:00 noon, as the deadline for filing and serving objections to the confirmation of the Plan. A full-text copy of the Second Amended Disclosure Statement dated October 29, 2021, is available at https://bit.ly/2YeXyxJ from PacerMonitor.com at no charge. Debtor's Counsel: Jeffrey M. Sklarz (ct20938) Joanna M. Kornafel (ct29199) Green & Sklarz LLC 1 Audubon St, 3rd Fl New Haven, CT 06511 Tel: 203-285-8545 Fax: 203-823-4546 Email: jsklarz@gs-lawfirm.com jkornafel@gs-lawfirm.com About Auto-Swage Products Auto-Swage Products, Inc., is a Connecticut corporation engaged in metal finishing operations. The Debtor sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Conn. Case No. 21 50502) on Aug. 7, 2021, disclosing $626,883 in total assets and $1,239,385 in total liabilities. Judge Julie A. Manning oversees the case. Jeffrey M. Sklarz, Esq., at Green & Sklarz, LLC serves as the Debtor's legal counsel. AUTO-SWAGE PRODUCTS: Further Fine-Tunes Plan Documents ------------------------------------------------------ Auto-Swage Products, Inc., submitted a Third Amended Disclosure Statement for Liquidating Plan of Reorganization dated November 1, 2021. The Bankruptcy Court has ordered that original Ballots for the acceptance or rejection of the Plan must be received on or before December 6, 2021. Since the Petition Date, the Debtor has been working toward consummating a sale and marketing the Property. On September 15, 2021, the Court granted the Debtor's Application to Retain Levey Miller Maretz, LLC as Real Estate Broker and Consultant to the Debtor. Since that time LMM has been actively marketing and showing the Property. The Property is listed on LoopNet, a "for Sale" sign has been placed at the Property, and showings have occurred. This is a single-asset real estate case. Accordingly, the Debtor's only material asset is the Property. Additional assets include: (a) cash on hand; (b) an oral lease with Wilson Anchor Sleeve, LLC (the "Tenant") for $1,200 per month; and (c) remaining personal property at the Property. The Third Amended Disclosure Statement does not alter the proposed treatment for unsecured creditors and the equity holder: * Class 8 consists of all Allowed Unsecured Claims in the approximate amount of $24,000.00. Allowed Class 8 Claims (General Unsecured Claims) shall be paid a pro rata share of the Unsecured Creditors Fund, which sum shall be no less than $5,000.00. Payment shall be the later of (a) the Effective Date or (b) upon an Unsecured Claim becoming an Allowed Unsecured Claim. * Class 10 consists of the Equity Interests in the Debtor. Class 10 is impaired by the Plan, and each holder of a Class 10 Equity Interest is conclusively presumed to have rejected the Plan pursuant to Bankruptcy Code § 1126(g). Interests will be terminated upon consummation of the Plan. The Debtor intends to sell the Property pursuant to the Stalking Horse Agreement, subject to higher and better offers as set forth in the Sale Motion and Bidding Procedures. While the Debtor has extensively marketed the Property for several years prior to the Petition Date, the Debtor has retained Levey Miller & Maretz, LLC (the "Broker") to engage in a marketing program for a period of approximately 2 months from September 15, 2021 until November 19, 2021, and, if additional Qualified Bidders are identified, to hold an auction among the Stalking Horse Bidder and other Qualified Bidders. If no other Qualified Bidders are identified, the Debtor will sell the Property pursuant to the Stalking Horse Agreement. A full-text copy of the Third Amended Disclosure Statement dated November 01, 2021, is available at https://bit.ly/3bKcLtU from PacerMonitor.com at no charge. Debtor's Counsel: Jeffrey M. Sklarz Joanna M. Kornafel Green & Sklarz LLC 1 Audubon St, 3rd Fl New Haven, CT 06511 Tel: 203-285-8545 Fax: 203-823-4546 E-mail: jsklarz@gs-lawfirm.com jkornafel@gs-lawfirm.com About Auto-Swage Products Auto-Swage Products, Inc., is a Connecticut corporation engaged in metal finishing operations. The Debtor sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Conn. Case No. 21 50502) on Aug. 7, 2021, disclosing $626,883 in total assets and $1,239,385 in total liabilities. Judge Julie A. Manning oversees the case. Jeffrey M. Sklarz, Esq., at Green & Sklarz, LLC serves as the Debtor's legal counsel. BASIC ENERGY: Court Approves Bankruptcy Wind-Down Settlement ------------------------------------------------------------ Alex Wolf of Bloomberg Law reports that Basic Energy Services Inc. and its creditors won bankruptcy court approval to enter into a deal dividing the proceeds of the oil and gas company's remaining assets sold for about $100 million. The settlement, approved during a virtual hearing Friday by Judge David Jones of the U.S. Bankruptcy Court for the Southern District of Texas, enables the parties to move forward without pursuing a formal Chapter 11 liquidation plan. Key stakeholders rejected loose frameworks of a plan that would formally wrap up the case. According to the court filing, as a result of a competitive marketing process, the Debtors generated significantly greater value than originally provided under the stalking horse bids through an increase in the aggregate purchase price for such assets by more than $27 million, and realized approximately $100 million in sale proceeds, while preserving over 2,200 jobs. The $35 million debtor-in-possession financing funded by members of the Ad Hoc Group was predicated on the Debtors agreeing to work with the Ad Hoc Group and other parties in good faith during the Chapter 11 Cases to formulate a plan for how the estates would be resolved after the sales closed. The Debtors provided parties with a proposed wind down budget or waterfall recovery analysis on Oct. 8, 2021. The Debtors' initial chapter 11 plan wind down budget contemplated substantial costs payable from secured creditors' collateral, and consequently diminished recoveries for secured creditors. As a result, the Ad Hoc Group indicated to the Debtors that they could not reasonably support the Debtors' chapter 11 proposal. Although a revised wind down budget subsequently provided by the Debtors reduced wind down costs slightly, the Ad Hoc Group projected that a chapter 7 liquidation would result in lower costs than the Debtors' chapter 11 alternative. Faced with the inability to access cash collateral and the threat of conversion to chapter 7, the Debtors pursued discussions with the Ad Hoc Group and the Creditors' Committee on an alternative resolution to these cases. Specifically, the Global Settlement provides, among other things: * The consolidation of all remaining assets of the Debtors' estates in the main case, with the remaining administration of the Debtors' estates to be managed by a newly appointed wind down director who will replace the existing board. Basic's chapter 11 case will continue and remain subject to supervision of the Court; * A pool of $1.5 million from the proceeds of Prepetition Secured Notes Collateral for distributions to administrative creditors, $250,000 of which will be funded immediately and an additional $1.25 million will be reserved from Future Proceeds; * A pool of $1.5 million from the proceeds of Prepetition Secured Notes Collateral for prepetition general unsecured creditors, $250,000 of which will be funded immediately plus an additional $1.25 million will be reserved from Future Proceeds; * Satisfaction in full of secured tax claims that benefit from senior tax liens as well as the Debtors' portion of 2021 taxes that are required to be paid under the Court-approved asset purchase agreements (the "Asset Purchase Agreements"), which the Debtors estimate at $4.7 million; * Full payments of any unpaid employee health and welfare claims up to $2.5 million from the proceeds of Prepetition Secured Notes Collateral, $2 million of which will be funded immediately with an additional $500,000 to be funded from Future Proceeds; * The appointment of a wind down representative and establishment of a wind down reserve of $1.5 million from the proceeds of Prepetition Secured Notes Collateral to administer remaining claims and assets of the Debtors' estates, $1.25 million of which will be funded immediately plus an additional $250,000 will be reserved from Future Proceeds; and * An immediate interim cash distribution to Prepetition Secured Noteholders of the current cash proceeds of Prepetition Secured Notes Collateral less various reserves described below plus future distributions of cash proceeds of Prepetition Secured Notes Collateral so long as cash on hand after such distribution exceeds $1 million; provided, that, the portion of such distributions on account of Prepetition Secured Notes held by Ascribe will be held in a disputed claim reserve. * The estimated amount of the interim distribution to Prepetition Secured Noteholders is approximately $12 million. About Basic Energy Services Basic Energy Services, Inc. -- http://www.basices.com/-- provides wellsite services essential to maintaining production from the oil and gas wells within its operating areas. Its operations are managed regionally and are concentrated in major United States onshore oil-producing regions located in Texas, California, New Mexico, Oklahoma, Arkansas, Louisiana, Wyoming, North Dakota, Colorado and Montana. Specifically, Basic Energy Services has a significant presence in the Permian Basin, Bakken, Los Angeles and San Joaquin Basins, Eagle Ford, Haynesville and Powder River Basin. Basic Energy Services and 12 affiliates sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No. 21-90002) on Aug. 17, 2021. As of March 31, 2021, Basic Energy disclosed total assets of $331 million and debt of $549 million. Judge David R. Jones oversees the cases. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel, AlixPartners LLP as restructuring advisor, and Lazard Freres & Company as financial advisor. Prime Clerk is the claims agent. The U.S. Trustee for Region 7 appointed an official committee of unsecured creditors in the Debtors' Chapter 11 cases. Snow & Green, LLP and Brown Rudnick, LLP, serve as the committee's legal counsel. Riveron RTS, LLC, formerly known as Conway MacKenzie, LLC, is the financial advisor. BCP RENAISSANCE: Fitch Affirms B+ Rating on Sr. Secured Debt ------------------------------------------------------------ Fitch Ratings has affirmed the senior secured debt issued by BCP Renaissance Parent, LLC (BCP) at 'B+'/'RR3'. The Rating Outlook is revised to Stable from Negative. RATING RATIONALE The rating reflects continued exposure to weak or unrated counterparties for most revenue at the Rover Pipeline (Rover) entity, Rover's favorable competitive position, and significant refinance risk at BCP in 2024 when the project's term loan B's (TLB) mature. The revision in the Rating Outlook reflects the easing in 2021 of significant downward credit pressures on most of Rover's gas producing counterparties that occurred in 2020 due primarily to market dislocation caused by the COVID-19 pandemic. Counterparty risk is partly mitigated by Rover's favorable position of offering firm transportation to export natural gas volumes produced in the Marcellus and Utica regions into higher priced hubs, though there is competition for this service. Under rating case assumptions, leverage at TLB maturity is about 6.7x. The recovery rating reflects a default scenario in which BCP is assumed unable to refinance its debt at maturity and the recovery valuation is based on a significant loss of volumes from low or unrated shippers. KEY RATING DRIVERS Fixed-Price Contracts - Revenue Risk: Midrange Revenue risk primarily reflects the fixed-price structure of the take-or-pay shipping contracts at Rover that are intended to provide revenue stability through 2032. However, much revenues is earned from shippers with weak creditworthiness or are unrated by Fitch. In the event a shipper fails to pay commitments, Rover will have to remarket capacity at prevailing market rates, which could be well below contracted rates and volatile. The potential for a longer-term reduction in demand or entry of competing pipeline development could put downward pressure on the pricing of any remarketed capacity. Abundant Natural Gas - Supply Risk: Midrange Fitch believes Rover should be able to remarket capacity based on the fundamental economics of the Marcellus and Utica shale production regions, particularly in the near to medium term when Rover represents one of the only available transportation options for the contracted shippers. Rover provides shippers with access to multiple regions of steady industrial demand and gas storage locations such that shipper netbacks would improve considerably versus local markets which are oversupplied due to a lack of takeaway capacity. The competitive position of Rover should support full utilization of the pipeline system going forward, though pricing could be lower than originally contracted following any potential shipper bankruptcy or due to increased competition. Established Operating Profile - Operation Risk: Midrange. Operation risk is generally low based the asset's low complexity, the use of conventional technology, and the operator's extensive experience. Tempering the otherwise low-risk operating profile is the lack of risk transfer from the Rover operating company to third parties. High Leverage and Refinance Risk - Debt Structure: Weaker. BCP's debt structure includes high leverage, some variable interest rate risk, and significant refinancing risk under Fitch's case. The transaction is structured to reduce refinance risk through an excess cash flow sweep that targets repayment of about 40% of original debt by maturity, but the effectiveness of the reduction will depend on strength over the debt tenor and the viability of cash flow beyond maturity. Financial metrics are generally robust during the term loans but BCP's project life coverage ratio (PLCR) around the time of debt maturity is 1.1x under rating case assumptions. The risk of structural subordination of BCP's indebtedness to Rover is low due to the lack of distribution covenants at Rover in conjunction with restrictions on additional indebtedness and capital expenditure activity at the Rover level. Financial Profile Annual debt service coverage ratios (DSCR) average 1.9x under rating case conditions during the tenor of the term loans and average 1.85x in the post-refinancing period under Fitch's assumption that debt at maturity is refinanced in a similar structure, reflecting the benefit of the flexible repayment profile and the long-term value of Rover's contracts. Leverage at term loan debt maturity in these conditions is 6.7x. Leverage does not decline below 4.0x until 2030. Fitch estimates a PLCR of 1.1x in late 2024 when the term loans mature, based on forecasts of cash flow available for debt service (CFADS) through 2037, the extent of the model for the transaction. The Rover useful asset life extends well beyond 2037 suggesting that the PLCR may be underestimated. PEER GROUP Fitch has assigned ratings to comparable pipeline systems, such as Rockies Express Pipeline, LLC (Rockies: BB+/Stable) and Ruby Pipeline, LLC (Ruby: CCC+). Rockies provides bidirectional gas transportation from Wyoming to eastern Ohio with about 2.6 billion cubic feet per day (bcf/d) in west-bound export capacity from the Appalachian region. Rockies has a much larger shipper portfolio than Rover reflecting its much larger geographical market reach, with an overall credit profile superior to Rover's. Rockies' leverage is forecast by Fitch to be around 4x to 5x in the 2022 to 2024 period, far below the 7x or so level forecast for Rover in the Fitch rating case for the same period. Ruby's credit profile reflects a weakened market position of gas transportation from south Oregon to southwestern Wyoming where supply and demand dynamics are stressed due to competition from low cost Canadian gas. Fitch expects Ruby's cash flow to decline materially in advance of the company's large April 2022 debt maturity, with leverage approaching around 8x at that time. Rover will also have similarly high leverage in its 2024 refinance year but a much stronger market position than Ruby and shipping contracts that don't start to fall off until 2032. BCP has the potential to rapidly de-lever under the term loans, suggesting some capacity to improve the capital structure over time if economic conditions are favorable and the shipper contracts remain in force. RATING SENSITIVITIES Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Increased exposure to material merchant risk following a key shipper bankruptcy, such that Rover is forced to remarket a large amount of capacity at lower-than-contracted pricing. -- Adverse market conditions that interfere with BCP's ability to meet target amortization levels and/or refinance the balloon maturity in 2024, particularly if leverage at that time exceeds 10x absent mitigating factors. -- Additional indebtedness at Rover that is not offset by an increase in revenue, such that cash distributions to BCP fall materially below base case levels. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Financial performance that indicates BCP will consistently meet target amortization levels. -- Improvement in the credit quality of shipper counterparties such that a large majority of cash flow comes from shippers that have a credit profile consistent with the 'BB' category. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. TRANSACTION SUMMARY BCP is a special purpose company created to finance and acquire a minority equity interest in the Rover pipeline project, which consists of a greenfield 713-mile interstate pipeline designed to transport 3.425 billion cubic feet per day (bcf/d) of natural gas. The pipeline is primarily situated in northern Ohio, extending from the Vector Pipeline interconnection in southeastern Michigan to Ohio's eastern border, with laterals reaching into West Virginia and Pennsylvania. The project has contracted about 90% of the pipeline's capacity with nine natural gas producers/shippers under long-term take-or-pay agreements with 15-20-year terms. An affiliate of ETP Legacy, LP is operating the project. CREDIT UPDATE The downward credit pressures experienced by most of Rover's shipping counterparties over the past year have generally stabilized. However, the creditworthiness of most of Rover's shippers remains weak. Gulfport Energy Corp., which provides about 5% of Rover cash flow, emerged from bankruptcy in May 2021 but continues its efforts to reject its shipping contract with Rover. Favorably, Southwest Energy (BB/Positive) acquired Montage Resources Corp. in May 2021, which improved the credit profile of the approximate 6% of Rover cash flow expected from the Montage capacity. The significant exposure to low shipper creditworthiness is partly mitigated by nearly all shippers having most if not all core operations in the Marcellus and Utica regions, strong gas production in the region and a favorable competitive position as one of the few large export pipelines that can deliver regional production to higher priced markets in the upper Midwest. Rover's strong competitive position is reflected in contract and spot volumes consistently at the maximum pipeline capacity. The U.S. Energy Information Agency reports that Marcellus and Utica share gas production increased 3.6% and 2.7%, respectively, for the 12-months ended Aug. 1, 2021. Most producers in the region continue to spend significant capex to maintain or increase production. Elevated natural gas prices in the U.S markets presently add additional incentives for producers to continue spending considerable sums to expand production. Rover's competitive position continues to strengthen as potentially competing natural gas pipelines announce development cancellations or endure additional completion delays due to the inability to secure environmental permits. The sponsors of the PennEast Pipeline Co. project that was planned to export 1.1bcf/d from the Marcellus into New Jersey has suspended development of the project in September 2021 citing an inability to secure essential state environmental permits. Developers of the Mountain Valley Pipeline that is being designed to transport 2 bcf/d of shale gas from the Marcellus and Utica region into Virginia announced in May 2021 that the target in-service date for the pipeline was extended by over one year, to summer 2022 due to expected delays in obtaining necessary state permits. Rover remains exposed to litigation involving construction related activities, but impact, if any, is likely to be very small. The Ohio EPA has proposed penalties of $2.6 million for alleged violations by Rover related to spilling drilling fluids and other pollutants into waterways. In April 2020, the Ohio Supreme Court took up the case for review but oral arguments have yet to be scheduled. FERC is also investigating Rover's demolition of a house, the Stoneman House, a potential historic structure, allegedly without approval and notification to FERC. In March 2021, FERC issued a directive to Rover and Energy Transfer Partners, L.P.(ETP) to show cause why they should not be assessed civil penalties for the alleged unauthorized demolition of the Stoneman House. Rover and ETP responded but the matter remains unresolved. Rover's distributions were in line with Fitch's rating case forecast in 2020 but well above in the first half of 2021. Performance in 2020 was negatively affected by lower short-term and spot volumes for a portion of the year due to COVID-19 impact. Those volumes improved in most of 2021. Pipeline volumes are essentially at capacity. For 2020, Fitch estimates a DSCR of 2.0x for BCP compared to the rating case forecast of 1.44x, the differential due to lower than forecast interest expense for the period. For the first half of 2021, Rover's distributions were about 34% above Fitch's rating case forecast. FINANCIAL ANALYSIS In its base case, Fitch assumes current levels of contract, short-term, and spot volumes through term loan maturity in Oct 2024, reflecting actual performance along with expectations of favorable market conditions over the near term. After October 2024, Fitch applies a 10% reduction through 2037 to volumes associated with short-term and spot sales and to all volumes associated with shippers that are rated below 'BB-' or unrated by Fitch. The post-maturity reduction to volume sales recognizes the potential for one or more shipper bankruptcies and inability to remarket lost volumes fully due to competitiveness issues. The case also assumes an effective extension of the term facility and the high cash sweep at an all-in average interest rate of 8%. DSCRs average 2.1x during the tenor of the term loan facility and 2.0x post-refinancing. At term loan refinance, leverage is 5.6x and the PLCR based on revenue through late 2037 is about 1.3x at an 8% discount rate. Fitch's rating case further stresses the base case assumptions by increasing O&M costs by 10% and adding another 5% haircut through 2037 to volumes associated with short-term and spot sales and to all volumes associated with shippers that are rated below 'BB-' or are unrated by Fitch. DSCRs average 1.9x during the tenor of the term loan and average 1.8x in the post-refinancing period, reflecting the benefit of the flexible repayment profile and the long-term value of Rover's contracts. At term loan refinance, leverage is 8x and the PLCR based on revenue through late 2037 is about 1.1x at an 8% discount rate. Recovery Given the completion and strong market performance of Rover and continued strong growth in production on natural gas from the Marcellus, the recovery scenario is primarily that Rover experiences a permanent 30% reduction in volumes from shippers rated below the 'BB' category or are unrated and from spot sales. In this scenario, default is assumed to occur at maturity in 2024 when the debt service reserve is exhausted. EBITDA (or rather, distributed cash from Rover to BCP) is about $85 million, giving an enterprise value (EV) of $680 million (versus BCP's approximate $2 billion share of the Rover $6 billion capital outlay) based on an 8x EBITDA multiple. Total value for lenders in EV less 10% for administrative claims, or $611 million. This value provides a 70% return on the $872 million in term loan debt outstanding at maturity in this scenario. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. BEAR COMMUNICATIONS: Dentons Represents Creditors Committee ----------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, the law firms of Dentons Bingham Greenebaum LLP and Dentons US LLP submitted a verified statement to disclose that they are representing the Official Committee of Unsecured Creditors in the Chapter 11 cases of Bear Communications, LLC. As of Nov. 3, 2021, each of the Committee members and their disclosable economic interests are: Advance Business Capital, LLC d/b/a Triumph Business Capital 651 Canyon Drive, Suite 105 Coppell, TX 75019 * Proof of Claim No. 69-1, asserting claim in the amount of $4,311,662.82 Erica Burnette c/o Trey J. Malbrough P.O. Box 531383 Birmingham, AL 35253 * Proof of Claim No. 133-1, asserting claim in the amount of $250,000.00 Eagle Capital Corp. P.O. Box 4215 Tupelo, MS 38803 * Proof of Claim No. 18-1, asserting claim in the amount of $93552.87 KLJ Engineering, LLC f/k/a Kadrmas, Lee & Jackson, Inc. 4585 Coleman St. Bismarck, ND 58503 * Proof of Claim No. 80-1, asserting claim in unstated amount but Scheduled claim in the amount of $1,213,333.67 Poblocki Paving Corp. 525 S. 116th St. West Allis, WI 53214 * Proof of Claim No. 79-1, asserting claim in the amount of $550,000.00 RC Underground, LLC 6421 Key Island Ave. Apollo Beach, FL 33572 * Proof of Claim No. 82-1, asserting claim in the amount of $318,318.25 Verizon Sourcing, LLC One Verizon Way Mail Stop: 54S097A Basking Ridge, NJ 07920 * Proofs of Claim Nos. 135-1, 136-1, 137-1 and 138-1, asserting claim in an amount not less than $61,307,782.21 Pursuant to Bankruptcy Rule 2019(c)(2)(B), as of the date of formation of the Committee, each of the Committee members holds a Claim against the Debtor arising from the Debtor's failure to pay for certain goods or services, or for tort liability. As of the date of this filing, the exact amount of each of these Claims is unknown or disputed. Further, the Debtor has asserted its own Claim against at least one of the Committee members, Verizon Sourcing, LLC, which Verizon contests. These Claims, however, are the only economic interest held in relation to the Debtor. Counsel for the Official Committee of Unsecured Creditors can be reached at: James R. Irving, Esq. Christopher B. Madden, Esq. DENTONS BINGHAM GREENEBAUM LLP 3500 PNC Tower 101 S. Fifth Street Louisville, Kentucky 40202 Tel.: (502) 589-3606 E-mail: james.irving@dentons.com chris.madden@dentons.com - and - Robert Hammeke, Esq. DENTONS US LLP 4520 Main Street, Suite 1100 Kansas City, MO 64111 Tel.: (816) 460-2457 E-mail: robert.hammeke@dentons.com A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/3o3eobV and https://bit.ly/3o3BGhX About Bear Communications Lawrence, Kansas-based Bear Communications, LLC -- http://www.bearcommunications.net-- is a communications contractor offering aerial construction, underground construction, splicing, subscriber drop placement, residential and commercial installations, residential and commercial wiring, consulting, and testing services. Bear Communications filed its voluntary petition for Chapter 11 protection (Bankr. D. Kansas Case No. 21-10495) on May 28, 2021, disclosing total assets of up to $50 million and total liabilities of up to $100 million. Judge Dale L. Somers presides over the case. W. Thomas Gilman, Esq., at Hinkle Law Firm LLC, represents the Debtor as legal counsel. The U.S. Trustee for Region 20 appointed an official committee of unsecured creditors in the Debtor's case on June 29, 2021. The committee is represented by Robert Hammeke, Esq., at Dentons US LLP. BEAR VALLEY RANCH: Wins Cash Collateral Access Thru Nov 30 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California has authorized Bear Valley Ranch Market & Liquor Inc. to use cash collateral on a final basis in accordance with the budget, with a 10% variance through and including November 30, 2021. All parties asserting a lien or interest against the cash collateral are granted a replacement lien on all postpetition property of the Debtor, to the same extent, validity and priority existing as of the Petition Date -- except for causes of action -- for the diminution in the value of lien or interest as of the Petition Date. A copy of the order is available for free at https://bit.ly/3o5fggc from PacerMonitor.com. About Bear Valley Ranch Market & Liquor Bear Valley Ranch Market & Liquor Inc. owns and operates a single market and liquor store located at 32475 Clinton Keith Road, Suite 111-112, Wildomar, Calif. Bear Valley Ranch filed a petition for Chapter 11 protection (Bankr. C.D. Cal. Case No. 21-14536) on Aug. 24, 2021, listing as much as $500,000 in both assets and liabilities. Salam Haddad, president of Bear Valley Ranch, signed the petition. Judge Mark Houle oversees the case. The Law Offices of J. Luke Hendrix serves as the Debtor's legal counsel. BOOZ ALLEN: Moody's Hikes Rating on Sr. Unsecured Notes From Ba2 ---------------------------------------------------------------- Moody's Investors Service has upgraded the senior unsecured rating of Booz Allen Hamilton Inc. ("BAH" or the "company") to Baa3 from Ba2 and upgraded the senior secured rating to Baa2 from Baa3. Concurrently, the former Ba1 corporate family rating and Ba1-PD probability of default rating have been withdrawn, along with the former SGL-1 speculative grade liquidity rating. The rating outlook is stable. The ratings upgrade reflects the strong continued track record of execution and organic growth, which has resulted in a company with about $8 billion of revenue and increasing importance within the US federal services market. A total backlog of $29 billion, which has grown 80% since FY2018, will support continued strong growth. The upgrade was also prompted by the company's articulation of a financial strategy that Moody's believes will support an investment grade profile while allowing for acquisitions that will further strengthen the company's technical capabilities and competitive position. Moody's also believes that risks around some of the company's Department of Justice and SEC investigations are receding and that any potential monetary penalties could easily be absorbed within the company's current liquidity. The upgrade also reflects Moody's view that, over time, BAH's capital structure will evolve such that secured debt will represent a diminishing part of total debt. Upgrades: Issuer: Booz Allen Hamilton Inc. Senior Secured First Lien Term Loan, Upgraded to Baa2 from Baa3 (LGD2) Senior Secured First Lien Revolving Credit Facility, Upgraded to Baa2 from Baa3 (LGD2) Senior Unsecured Notes, Upgraded to Baa3 from Ba2 (LGD5) Withdrawals: Issuer: Booz Allen Hamilton Inc. Probability of Default Rating, Withdrawn , previously rated Ba1-PD Speculative Grade Liquidity Rating, Withdrawn , previously rated SGL-1 Corporate Family Rating, Withdrawn , previously rated Ba1 Outlook Actions: Issuer: Booz Allen Hamilton Inc. Outlook, Changed To Stable From Positive RATINGS RATIONALE The ratings reflect BAH's significant scale at nearly $8 billion of revenue, with good contract diversity and a strong contract execution track record. Unlike many of its competitors, BAH's growth in recent years has been organic, notably outpacing federal budgetary growth. Solid contract execution standards along with BAH's increasingly specialized workforce and internal technology investments have driven market share gains. The rating is also supported by Moody's expectation of annual free cash flow (after dividends) in the $300 to $400 million range and interest coverage (EBITDA-capex/interest expense) in excess of 9.0x. The company's recently announced plans to complement organic growth with acquisition spending will further BAH's already strong place in the market. The company will focus on acquisitions that help the government advance technologically, rather than on acquisitions that simply add scale. BAH publicly articulated that, while it will deploy capital for share repurchases, dividends and acquisitions, it will abide by a maximum net leverage target of 3.5x. Moody's believes that bolt-on to medium sized acquisitions are more likely than transformational large-sized M&A deals as the company intends to preserve its organizational culture. The ratings are constrained by the company's concentration of revenues in US defense/intelligence communities, with 70% revenue derived from these customers. This makes BAH vulnerable to changing US budgetary priorities or persistent budgetary pressures. Risks inherent in the business also include litigation or reputational harm that could arise from cyber or other security breaches. Following negative publicity related to rogue employees in recent years, BAH has emphasized employee related controls in its operating practices. Governance related to compliance with government contracting protocols will remain critical for bid qualifications. The stable rating outlook reflects Moody's assumption that BAH will maintain its strong scale and business position within the US defense/federal contracting market while maintaining measured financial policies. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating momentum would depend on continuing growth, reduced dependence on US defense/intelligence agency communities, EBITDA margin close to 12% and strong backlog trends. A significantly reduced proportion of secured debt in the capital structure, along with debt/EBITDA maintained below 3.0x could also support an upgrade. A significant reduction in government spending that leads to meaningfully reduced backlog, contract execution problems or rising litigation exposure could lead to a downgrade. A financial policy that leads to leverage above the company's current stated maximum, weakening of liquidity or acquisitions that lead to operational disruption could also cause downward rating pressure. Booz Allen Hamilton Inc. is a provider of management and technology consulting and engineering services to governments in the defense, intelligence and civil markets, global corporations and not-for-profit organizations. Booz Allen Hamilton is headquartered in McLean, VA and reported revenues of approximately $8 billion for the fiscal year ended September 30, 2021. The principal methodology used in these ratings was Aerospace and Defense published in October 2021. BOSTON DONUTS: Gets Cash Collateral Access Thru Nov 18 ------------------------------------------------------ The U.S. Bankruptcy Court for the District of Massachusetts has authorized Boston Donuts, Inc. and its affiliates to continue using cash collateral on the same terms and conditions as set forth in the Eleventh Order Authorizing the Use of Cash Collateral through November 18, 2021, the date of the hearing. As previously reported by the Troubled Company Reporter, the Debtors was permitted to use cash collateral solely up to the amounts stated for any line item for the purposes identified in the Budget, with a 10% variance or as expressly consented to in advance in writing by the Secured Parties, with notice to the US Trustee. Hometown Bank, Quickstone Capital, and the Massachusetts Department of Revenue (MDOR) were granted a continuing post-petition replacement lien and security interest in all post-petition property of the estate of the same type against which they held validly perfected liens and security interest as of the Petition Date. The Replacement Liens will maintain the same priority, validity and enforceability as the liens on the collateral and will be recognized only to the extent of any diminution in the value of the collateral. The November 18 hearing will be conducted by telephone at 1:30 p.m. Objections to the continued use of cash collateral will be filed no later than November 16 at 4:30 p.m. A copy of the order is available at https://bit.ly/3GVSTlM from PacerMonitor.com. About Boston Donuts, Inc. Boston Donuts, Inc., generates revenues by manufacturing and selling donuts. The Company sought Chapter 11 protection (Bankr. D. Mass. Lead Case No. 19-41141) on July 11, 2019, along with its debtor-affiliates Costa Cafe Inc., Maple Avenue Donuts, Inc., W&E Trust, Inc., and EOR Holding Corporation. Their cases are jointly administered. Judge Christopher J. Panos oversees the case. James P. Ehrhard, Esq., at Ehrhard & Associates, P.C., represents the Debtors as counsel. BVF FUND II: Unsecured Creditors Will Get 100% of Claims in Plan ---------------------------------------------------------------- BVF Fund II, LLC, filed with the U.S. Bankruptcy Court for the Western District of Texas a Plan of Reorganization for Small Business dated October 29, 2021. Debtor is a Texas Limited Liability Company which was formed in June, 2016. The Debtor was established with a business model of investing in litigation support receivables for storm damage insurance claims. This case was filed, in part, to obtain an extension of limitation periods, and to assist the Debtor in reorganizing, and to ensure the business continues to operate in a matter that maximizes the return of the remaining members' investments. The Debtor's financial projections show that the Debtor will have projected disposable income of $1,543,725.60. The final Plan payment is expected to be paid on or before September 30, 2026. This Plan of Reorganization proposes to pay creditors of BVF Fund II, LLC from an infusion of capital, the pursuit and liquidation of certain contingent claims, collection of accounts receivable, cash flow from the operations of the company and future income. It is estimated that non-priority unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has valued at approximately 100 cents on the dollar based upon an estimate of the value of the claims owned by the Debtor. The actual payout less depending upon the success in recovering upon contingent claims owned by the Debtor and the administrative costs involved. This Plan also provides for the payment of administrative and priority claims. Class 1 consists of Allowed Unsecured Claims held by noninsiders [Objecting Members, whose claims are the subject of Adversary No. 21-5098 RBK, and other Allowed Unsecured claims under § 502 of the Code held by noninsiders]. The Allowed Unsecured Claims held by noninsiders shall be treated as follows: * For Allowed Unsecured Claims held by Objecting Members: (A). Within 10 business days of the Effective Date, Debtor's Manager shall execute promissory notes payable to each of the Objecting Members in the amount of their original investment ($100,000 each) plus a pro rata share of the portion of each Objecting Member's proof of claim attributable to their portion of the total attorney's fees and costs of court incurred prior to the Petition Date; (B). Each Objecting Member shall be deemed to have forfeited their Membership interests in the Debtor in exchange for the promissory notes; (C). * For other holders of Allowed Unsecured Claims: Debtor shall pay the Allowed Unsecured Claims of other non-insiders on a pro rata basis at the same time distributions are made on the Allowed Unsecured Claims held by Objecting Members. * The Allowed Unsecured Claims held by noninsiders shall be paid as follows: After payment of any Allowed Administrative and Priority Claims, payments from the Creditors' Trust shall be paid first to satisfy the Allowed Claims of Class 1 Creditors. All such payments shall be paid at the discretion of the Trustee in the amounts and at the time intervals the Trustee decides, or as may be ordered by the Court. Class 2 consists of Allowed Unsecured Claim of Debtor's Manager – an Insider. The Allowed Unsecured Claim of Debtor's Manager shall be paid in full only after all Allowed Claims in Class 1 are paid in full, and as funds may be available from the Creditor Trust. Class 3 consists of Equity Members of the Debtor. All Equity Members other than the Objecting Members (hereinafter referred to as "the Majority Members") shall retain their membership interests in the Reorganized Debtor. Further, the membership interests of the Objecting Members shall be divided and allocated among the Majority Members on a pro rata basis to increase their membership interests in the Debtor accordingly. Estimated Percentage of Claims Which Unsecured Creditors Would Receive or Retain in a Chapter 7 Liquidation (depending on size of unsecured creditor pool in a Ch. 7 case and assuming no additional recovery on Contingent claims) is 37% or 9.6%. Estimated Percentage of Claims Which Unsecured Creditors Will Receive or Retain under the Plan is 100%. The Plan will be implemented as follows: * Within 15 days of the Effective Date, Debtor's manager shall contribute the following assets to facilitate the implementation of the Plan: -- A cash contribution of $25,000 to the Debtor's operating account, for use as working capital for the Debtor's future operations; -- To the Creditor Trust, all liens held by Buena Vista Finance, LLC, on all outstanding Public Adjuster fees which were due to Correct Claim Public Adjusters, LLC, matters involving the Debtor; -- A 40% equity interest in the entity known as Pre Litigation Support Services, LLC – a Texas Limited Liability Company which is presently operating and handling storm damage claims. Such interest shall be divided pro rata among the Debtor's members holding membership interests after confirmation, and after the adjustment in membership interests occurring as a result of the reallocation of membership interests. A full-text copy of the Plan of Reorganization dated October 29, 2021, is available at https://bit.ly/3EJ7rTT from PacerMonitor.com at no charge. The Debtor is represented by: H. Anthony Hervol, Esq. Law Office of H. Anthony Hervol 4414 Centerview Drive, Suite 207 San Antonio, TX 78228 Telephone: (210) 522-9500 Facsimile: (210) 522-0205 Email: hervol@sbcglobal.net About BVF Fund II BVF Fund II, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Texas Case No. 21-50951) on July 31, 2021, listing as much as $1 million in both assets and liabilities. David Komet, authorized representative, signed the petition. Judge Craig A. Gargotta oversees the case. H. Anthony Hervol, Esq., serves as the Debtor's legal counsel. CANACOL ENERGY: Moody's Hikes CFR & Senior Unsecured Notes to Ba3 ----------------------------------------------------------------- Moody's Investors Service upgraded Canacol Energy Ltd.'s corporate family rating to Ba3 from B1. The senior unsecured rating on its existing notes was also upgraded to Ba3 from B1. The outlook on the ratings is stable. Upgrades: Issuer: Canacol Energy Ltd. Corporate Family Rating, Upgraded to Ba3 from B1 Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 from B1 Outlook Actions: Issuer: Canacol Energy Ltd. Outlook, Remains Stable RATINGS RATIONALE The upgrade on Canacol's rating to Ba3 was based on the company's positive operating and financial track record since 2018 regarding production and credit metrics. Canacol's Ba3 rating reflects the company's small production and reserves size, which is balanced by stable and predictable cash flow, derived from contracted sales with solid fixed prices that reduce volume and commodity price risk. Operating margins are solid due to Canacol's low-cost operating structure, which supports stable operating netback. Canacol currently has access to 230 mmcf per day of pipeline capacity. In the first six months of 2021, its production of natural gas reached about 176,000 Mscfpd (30,000 Mboed), a volume that will increase materially in the next few years as the company steps up capital investments in exploration and production of natural gas. Canacol has limited volume and price risk since about 80% of the company's sales are secured through long-term take-or-pay contracts that have an average weighted life of six years. In addition, prices are 80% fixed in the contractual period at profitable levels, resulting in stable EBITDA margins of about 78%. Canacol's production comes mostly from a prolific area in Colombia, Lower Magdalena Valley basin. In addition, its proved reserve life is adequate at over six years and management is committed to replacing reserves at an annual rate of 100-120%. The company's business model is based on continued production and reserves growth through a combination of exploration and property development. Canacol has adequate liquidity. Cash and equivalents of $35 million as of June 2021 plus $208 million in cash from operations that Moody's expect from July 2021 to December 2022 are enough to fund Canacol's capital spending program of about $130 million as well as interest expenses and dividends of $30 million each, in the same period. Moreover, the company's debt maturity profile is comfortable because no major debt matures before 2025. Canacol has a $46 million committed revolver that matures in 2023. The stable rating outlook reflects Moody's expectation that Canacol will be able to continue to increase production and reserves as planned. The stable outlook also assumes that management will maintain solid financial policies. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Canacol's Ba3 ratings could be upgraded if it manages to increase production closer to 100 MMboed and to raise its reserve size efficiently, with minimal deterioration in financial metrics. Quantitatively, an upgrade would require that its leveraged full-cycle ratio, which measures an oil company's ability to generate cash after operating, financial and reserve replacement costs, is consistently above 2.5 times for a sustained period. Canacol's Ba3 ratings could be downgraded if retained cash flow (funds from operations less dividends) to total debt declines to below 30%, or if its interest coverage, as per EBITDA to interest expense, falls to below 4.5 times with limited prospects of a quick turnaround. In addition, a deterioration of the company's liquidity profile could lead to a negative rating action. The principal methodology used in these ratings was Independent Exploration and Production published in August 2021. Canacol, with headquarters in Alberta, Canada, is an independent natural gas & oil exploration and production company in Colombia. As of June 2021, its total assets amounted to $696 million. CARVANA CO: Incurs $68 Million Net Loss in Third Quarter -------------------------------------------------------- Carvana Co. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $68 million on $3.48 billion of net sales and operating revenue for the three months ended Sept. 30, 2021, compared to a net loss of $18 million on $1.54 billion of net sales and operating revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $105 million on $9.06 billion of net sales and operating revenues compared to a net loss of $308 million on $3.76 billion of net sales and operating revenues for the same period during the prior year. As of Sept. 30, 2021, the Company had $5.36 billion in total assets, $4.65 billion in total liabilities, and $708 million in total stockholders' equity. "The third quarter was another great quarter for Carvana. We delivered over 110,000 cars to our customers growing 74% vs a year ago and continued laying the foundations necessary to sell over 2 million cars per year," said Ernie Garcia, founder and CEO of Carvana. "Despite the complexities of managing through all the change of the last 2 years, our team has continually executed and persevered as we bought and sold over 3x as many cars from our customers in the third quarter as we did in the third quarter of 2019. Thank you to our entire team for all the effort and care these accomplishments have required." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001690820/000169082021000310/cvna-20210930.htm About Carvana Founded in 2012 and based in Tempe, Arizona, Carvana Co. -- http://www.carvana.com-- is a holding company that was formed as a Delaware corporation on Nov. 29, 2016. Carvana is an e-commerce platform for buying and selling used cars. The Company owns and operates Carvana.com, which enables consumers to quickly and easily shop vehicles, finance, trade-in or sell the ir current vehicle to Carvana, sign contracts, and schedule as-soon-as-next-day delivery or pickup at one of Carvana's patented, automated Car Vending Machines. * * * As reported by the TCR on May 24, 2021, S&P Global Ratings revised its ratings outlook to positive from stable and affirmed its 'CCC+' issuer credit rating on online used-car retailer Carvana Co. "The positive outlook indicates that we could raise the ratings on Carvana if the company continues to make progress in leveraging its scale to improve margins such that it can achieve near breakeven EBITDA while maintaining sufficient liquidity to pay for its cash burn for at least 18 months," S&P said. CAUSE TECH: Unsecureds Will Get 20% of Claims in 60 Months ---------------------------------------------------------- Cause Tech LLC filed with the U.S. Bankruptcy Court for the Southern District of Florida a First Amended Plan of Reorganization dated October 29, 2021. Debtor was incorporated as Big Couch Holdings, LLC on March 29, 2016. Its name was changed to Cause Tech LLC in 2019 by Amendment to the Articles of Incorporation, filed with the state of Florida. The company is operated by its managing member, Albert Clay Williams. Class I consists of Wells Fargo, Claim #2 (Impaired). Claim #2, in the amount of $321,973.78 is owed to Wells Fargo, as evidenced by the Note (the "Note"). The obligation is unsecured as to the Debtor, but it is fully secured by a Mortgage with a third position lien on the Williams' residence (the "Mortgage"). The Mortgage secures only the Note comprising claim #2. It does not crosscollateralize any other obligation. The Note matures June 21, 2026. The Note's interest rate is fixed at 5.90%. Debtor will pay Claim# 2 in full, with interest at the contractual rate, plus reasonable attorney's fees and costs to the extent provided for in the Note. The Note is modified only to alter the timing and amount of the monthly payment obligations, permitting the Debtor to pay the outstanding balance in full over the remaining term of the Note, and to eliminate certain default provisions. Commencing with the first payment on the effective date, Debtor will pay 100% of the principal balance of the Note ($313,990.20) in regular monthly installments, with interest at 5.9%, amortized from the effective date through June 21, 2026. Accrued pre-petition interest of $7,923.58, post-petition interest at 5.9%, and allowed attorney's fees will be paid in full, on or before June 21, 2026, separately from the regular monthly installments of principal and interest. If the Plan is confirmed on a nonconsensual basis, the Subchapter V trustee will make all such payments in accordance with Section 6. Class II consists of General Unsecured Creditors (Impaired). The Debtor shall pay monthly, commencing with the first payment on the effective date. Claimants will be paid 20% of their allowed claims in regular monthly installments over 60 months. If the Plan is confirmed on a nonconsensual basis, the Subchapter V trustee will make all such payments in accordance with Section 6. If the Debtor incurs administrative claims that must be paid out over the term of the Plan, these payments will not impact the payments to unsecured creditors. Class III consists of Equity Holders (Unimpaired). The Debtor's equity interest holders include Albert Clay and Mariana Williams (jointly 97.84%), Georgianne Brown (1.08%) and John Studdard (1.08%). The existing equity holders will retain their interest and are unimpaired. Equity Holder Albert Clay and Mariana Williams will submit $20,000 of new value to fund the Debtor's obligations under the Plan. The Debtor has the capacity to apply its net disposable income for 5 years toward a payment to its creditors, or if necessary, to the supervision and control of the Subchapter V trustee for execution of the Plan. Additionally, the Debtors' principals, Albert Clay Williams and Mariana Williams shall contribute $20,000 as new value to fund the Debtors' initial obligations under the Plan. A full-text copy of the First Amended Plan of Reorganization dated October 29, 2021, is available at https://bit.ly/3mKGhWQ from PacerMonitor.com at no charge. About Cause Tech LLC Cause Tech, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-13201) on April 1, 2021. At the time of filing, the Debtor had estimated assets of between $100,001 and $500,000 and liabilities of between $500,001 and $1 million. The Debtor is represented by the Law Offices of Malinda L. Hayes. Wells Fargo Bank, N.A., as lender is represented by Dana L. Kaplan. CHG PPC: Moody's Affirms B2 CFR, Outlook Stable ----------------------------------------------- Moody's Investors Service affirmed the ratings of CHG PPC Parent LLC ("C.H. Guenther") including its Corporate Family Rating at B2 and, its Probability of Default Rating at B2-PD. Moody's upgraded C.H. Guenther's existing EUR190 million senior secured term loan due 2025 to B1 from B2 and assigned a B1 rating to a proposed $250 million first lien revolver due 2026 and a proposed $910 million first lien term loan due 2028. The outlook is stable. Proceeds from the proposed issuance will be used to refinance C.H. Guenther's $125 million first lien revolver due 2023 and $675 million first lien term loan due 2025, both currently rated B2, in addition to its $175 million second lien term loan due 2023 that is not rated. The refinancing is in connection with a minority equity recapitalization of the company. Moody's took no action on the B2 ratings on the existing $125 million first lien revolver due 2023 and the existing $675 million first lien term loan due 2025 and will withdraw the ratings once the facility and term loan are repaid as part of the proposed transaction. The transactions are credit negative because they will result in an approximate $370 million (roughly 34%) increase in debt to fund a buyout of certain minority investors. Debt-to-EBITDA leverage increases to approximately 6.7x from 5.1x as a result of the transaction. Moody's nevertheless affirmed the B2 CFR because C.H. Guenther continues to generate good free cash flow and maintain good liquidity. In addition, Moody's projects earnings growth, debt repayment and the earnings from a proposed acquisition funded from cash will reduce debt-to-EBITDA to a low 6x range by the end of 2021. The upgrade of the EUR190 million senior secured term loan due 2025 to B1 from B2 and assignment of the B1 senior secured first lien ratings reflects the increase in the mix of second lien debt in the capital structure. The mix change increases the loss-asorption cushion and relative recovery prospects of the first lien debt. The following ratings/assessments are affected by the action: Ratings Affirmed: Issuer: CHG PPC Parent LLC Corporate Family Rating, Affirmed at B2 Probability of Default Rating, Affirmed at B2-PD Ratings Upgraded: Issuer: CHG PPC Parent LLC GTD Senior Secured Term Loan (Euro denominated), Upgraded to B1 (LGD3) from B2 (LGD3) New Assignments: Issuer: CHG PPC Parent LLC GTD Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3) GTD Senior Secured 1st Lien Multi-Currency Revolving Credit Facility, Assigned B1 (LGD3) Outlook Actions: Issuer: CHG PPC Parent LLC Outlook, Remains Stable RATINGS RATIONALE C. H. Guenther's B2 CFR reflects its high, but manageable financial leverage, acquisitive growth strategy, and low organic sales growth. The credit profile is supported by good product and geographic diversity, stable product demand, low earnings and cash flow volatility, and good liquidity. C.H. Guenther was negatively affected by the coronavirus pandemic, as the company generates 70% of its sales through food service channels, both quick-serve and casual dining restaurants. The company was able to partially offset the weakness in its food service channel through growth in its retail business and cost reductions. Revenue and earnings are rebounding because food service volume is recovering and Moody's projects mid-to-low single digit revenue and earnings growth over the next 12 months. Moody's projects C.H. Guenther will generate approximately $70 million of free cash flow in fiscal March 2022 and somewhat lower free cash flow in a $50 million range in fiscal 2023 because capacity expansions will increase capital spending. Moody's expects financial policies to be aggressive under investment fund ownership, as evidenced by the incremental debt being used to help fund the proposed equity transaction. Moody's expects C.H. Guenther to operate with good liquidity based on $172 million of cash as of June 2021, prior to the use of a substantial portion of the existing cash balance for a pending acquisition of three manufacturing facilities, approximately $50-70 million in free cash flow in Fiscal 2022 and Fiscal 2023, full availability on an undrawn $250 million first lien revolver, and no meaningful maturities through 2024 aside from approximately $9.1 million of required annual term loan amortization. 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 regard the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. Notwithstanding, C.H. Guenther and many other packaged food 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 C.H. Guenther's financial strategies, which Moody's views as aggressive given its high financial leverage, private equity ownership and focus on growth through acquisitions that can lead to increased debt and integration risks. The company is moderately exposed to environmental risks that include land, water, raw materials, and energy usage as well as packaging and waste. C.H. Guenther also relies on agricultural products that utilize water and fertilizers, and are subject to volatility and disruptions related to weather, seasonality and land preservation. Rising costs to meet environmental standards and consumer preferences would likely be at least partially passed on to consumers, but could be significant. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook incorporates Moody's expectation that C.H. Guenther will successfully integrate its recent acquisition of three manufacturing facilities and that pro-forma financial leverage will decline to a low 6.0x range in the next 12 to 18 months. Furthermore, Moody's assumes in the outlook that C.H. Guenther will organically grow its revenues and EBITDA, continue to expand the company through acquisitions, and generate comfortably positive free cash flow of at least $45 million. The ratings could be upgraded if there is a meaningful increase in scale, the company successfully manages acquisition led growth and debt/EBITDA approaches 5.0x. The ratings could be downgraded if profitability declines significantly, the company encounters integration challenges following an acquisition, liquidity deteriorates, or debt/EBITDA is sustained above 6.5x. The ratings could also be downgrade if free cash flow sustainably deteriorates. The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020. CHG PPC Parent LLC is the owner of San Antonio, TX based C.H. Guenther & Son. The company produces a broad set of grain-based and seasoning products, including artisan breads, buns, rolls, biscuits, dough, desserts, gravy mixes, spices, frozen appetizers, and frozen snacks. C.H. Guenther & Son is indirectly owned by investors led by the private capital firm Pritzker Private Capital. CONWAY COURT: Gets Interim Cash Collateral Access Thru Nov 30 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts has authorized Conway Court 1 LLC and affiliates to use cash collateral on an interim basis through November 30, 2021. The Debtors are authorized to expend funds in the amounts consistent with the budget. On an ongoing basis, the Debtors are directed to deposit all rental income received and make expense payments from the established DIP Account. By the 21st day of each month, the Debtors will file a reconciliation of budgeted to actual receipts and disbursements for the previous month. U.S. Bank National Association, as Trustee for Velocity Commercial Capital Loan Trust 2018-2 is granted replacement liens and security interests in the same types and kinds of the Debtors' property arising, acquired or created on or after October 21, 2021 in which the Bank holds pre-petition liens and security interests and such replacement liens and security interests will extend to the proceeds and products of such post-petition property purchased or acquired with cash collateral. The Bank will have a superpriority claim pursuant to Bankruptcy Code section 507(b) to the extent of the use of cash collateral and any other diminution in value of the Bank's collateral on and after the Petition Date that is not replaced by this replacement lien and security interest. The liens, mortgages and security interests granted to the Bank in the post-petition collateral pursuant to the Order will be deemed effective, valid and perfected, ex post facto to the Petition Date. A hearing regarding authority for continued use of cash collateral is scheduled for November 30 at 11 a.m. and will be held telephonically. A copy of the order is available at https://bit.ly/3BVkb85 from PacerMonitor.com. About Conway Court Lincoln, Mass.-based Conway Court 1, LLC filed a petition for Chapter 11 protection (Bankr. D. Mass. Case No. 21-11533) on Oct. 21, 2021, listing up to $10 million in assets and up to $1 million in liabilities. Lou Makrigiannis, manager, signed the petition. Judge Frank J. Bailey oversees the case. The Debtor tapped Michael Van Dam, Esq., at Van Dam Law, LLP as legal counsel. CPESAZ LIQUIDATING: Hawkins, Scott Represent CPES Claimants ----------------------------------------------------------- In the Chapter 11 cases of CPESAZ Liquidating, Inc., f/k/a Community Provider of Enrichment Services, Inc., the law firms of Hawkins Parnell & Young LLP and Scott McNutt submitted a verified statement under Rule 2019 of the Federal Rules of Bankruptcy Procedure, to disclose that they are representing Bob Bennetti, Linki Peddy, Linda Mariano, Chip Foust, and in excess of 92 other CPES Employee Stock Ownership Plan and Trust Participants. In late April, 2020, almost immediately upon learning of the April 24, 2020, filing of the first two Petitions herein, the four named Individual CPES ESOP Participants contacted Hawkins Parnell out of surprise that this proceeding was filed and the fear – now realized – that their retirement accounts would be wasted by these proceedings. Many other CPES ESOP participants had been in contact with the four named Participants and, as of counsel's initial appearance herein on June 6, 2020 [ECF No. 169], approximately forty more participants had expressed their concerns and retained Counsel. That number grew. Counsel have formal written engagement agreements with 94 individual CPES ESOP participants. The four named Individual CPES ESOP Participants executed engagement agreements with Hawkins Parnell. All of the other participants each reviewed those engagement agreements, including the applicable conflict of interest and arbitration provisions, and the Addendum attached thereto. 89 of the 92 previously unnamed other Individual CPES ESOP participants executed an Addendum authorizing their retention of counsel. Two of the three participants who did not return their executed Addendum nonetheless authorized in writing the timely filing of their proof of claim on or about September 30, 2020; the other previously unnamed participant authorized the filing of a declaration in support of the Individual CPES ESOP Participants' Motion for Appointment of a Chapter 11 Trustee or, in the Alternative, to Convert to Chapter 7. On or about September 30, 2020, Counsel filed 94 proofs of claim in the main proceeding. Each proof of claim included (i) the name of the claimant, (ii) the amount of their individual claim based upon their then-latest received CPES ESOP participant statement as of December 31, 2018, (iii) their assertion of class claims on behalf of the CPES ESOP, and (iv) a copy of their CPES ESOP participant statement, which includes their address. While the claims themselves have been sealed from public view, this information is known to Faegre Drinker, the Debtors, and now the Liquidating Trustee. These proofs of claim include the named Individual CPES ESOP Participants. A complete list of the Individual CPES ESOP Participants is included in the accompanying chart. Under the terms of engagement, the Individual CPES ESOP Participants have cumulatively paid about $10,000 in advance to be applied to a varying contingency or success fee of amounts that counsel is able to recover for the CPES ESOP apart from any amounts either otherwise set forth in the proofs of claim, as unsecured creditors, or as part of the residual estate in this proceeding. Counsel is not otherwise being paid for monitoring this proceeding, the filings made and positions taken herein to protect the CPES ESOP Participants, and have not sought compensation via the filing of administrative expense claims herein. Counsel have not otherwise been compensated for the costs incurred herein or with respect to the appeal herein. Counsel will provide a representative copy of their engagement agreement and the addendum to this Court in camera if necessary. The nature and amount of each disclosable economic interest held in relation to the Debtors by each Individual CPES ESOP Participant is based upon their 100% vested interest in the CPES ESOP, as of December 31, 2018, and is set forth in their respective Individual CPES ESOP Participant statements. This information also is included in the accompanying chart. As noted in the accompanying chart, Counsel also have updated the addresses for certain of the participants, based upon the information Counsel received as of September 30, 2020. Aleu Aleu 730 W. Vogel, Apt. 207 Phoenix, AZ 85021 * Number of Shares: 349.29556 * Case/Proof of Claim No.: CPES 110; NLS 263 Almira Caen 14625 S Mountain Pkwy. Apt. 1046 Phoenix, AZ 85044 * Number of Shares: 681.49880 * Case/Proof of Claim No.: CPES 98; NLS 217 Ann Marie Johnson 2311 E. Madelyn Circle Tucson, AZ 85712 * Number of Shares: 2,819.56570 * Case/Proof of Claim No.: CPES 109; NLS 270 Annette Carr 520 N. Desert Strav. Tucson, AZ 85711 * Number of Shares: 5,236.87578 * Case/Proof of Claim No.: CPES 107; NLS 229 Anthony Cameron 2902 E. Drachman Street Tucson, AZ 85716 * Number of Shares: 444.51629 * Case/Proof of Claim No.: CPES 105; NLS 225 Antonio Stetler 1323 W. 10th Pl. Tempe, AZ 85281 * Number of Shares: 4,175.43617 * Case/Proof of Claim No.: CPES 102; NLS 227 Araceli C. Ramirez de Perez 14320 N. 19th Ave., Apt. 207 Phoenix, AZ 85023 * Number of Shares: 4,493.61650 * Case/Proof of Claim No.: CPES 83; NLS 220 Arvis Barnes 1917 W. Hemingway Lane Anthem, AZ 85086 * Number of Shares: 1,185.29720 * Case/Proof of Claim No.: CPES 88; NLS 223 Ashia Gilmore 9999 W. Missouri Avenue, #235 Glendale, AZ 85305 * Number of Shares: 785.60323 * Case/Proof of Claim No.: CPES 91; NLS 215 Barbara Condon 317 W. Nopal Place Chandler, AZ 85225 * Number of Shares: 864.05104 * Case/Proof of Claim No.: CPES 93; NLS 219 Barbara Crow 502 S. Mariposa St. Payson, AZ 85541 * Number of Shares: 2,182.21807 * Case/Proof of Claim No.: CPES 94; NLS 214 Beatrice Ortiz 2435 W. Gaby Rd. Phoenix, AZ 85041 * Number of Shares: 4,558.42127 * Case/Proof of Claim No.: CPES 97; NLS 216 Counsel for Robert Bennetti, Linda Mariano, Linki Peddy, and Charles Foust, Jr., and in excess of 92 Other CPES Employee Stock Ownership Plan and Trust Participants can be reached at: HAWKINS PARNELL & YOUNG LLP David R. Johanson, Esq. Douglas A. Rubel, Esq. 1776 Second Street Napa, CA 94559 Telephone: (707) 299-2470 Facsimile: (707) 581-1704 E-mail: djohanson@hpylaw.com drubel@hpylaw.com - and - Scott McNutt, Esq. 324 Warren Road San Mateo, CA 94402 Telephone: 415-760-5601 E-mail: smcnutt@ML-SF.com A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/3BGZCMM About Community Provider of Enrichment Services Community Provider of Enrichment Services, Inc. -- https://www.cpes.com/ -- which conducts business under the name CPES, is a community human services and healthcare organization based in Tucson, Ariz. It offers a full range of community-based behavioral health services, substance abuse treatment, foster care, and intellectual and developmental disability support with locations throughout Arizona and California. CPES and its affiliate, Novelles Developmental Services, Inc., sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Lead Case No. 20-10554) on April 24, 2020. On Aug. 11, 2020, another affiliate, CPES California, Inc., filed a Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-15456). At the time of the filing, CPES reported $1 million to $10 million in both assets and liabilities while Novelles Developmental Services disclosed assets of $100,000 to $500,000 and liabilities of the same range. CPES California disclosed assets of $1 million to $10 million and liabilities of $100,001 to $500,000. Judge Deborah J. Saltzman oversees the cases. The Debtors tapped Faegre Drinker Biddle & Reath LLP as their legal counsel and CohnReznick Capital Market Securities, LLC as their investment banker. Timothy J. Stacy is the patient care ombudsman appointed in the Debtors' Chapter 11 cases. He is represented by Resnik Hayes Moradi, LLP. CRC INVESTMENTS: Wins Cash Collateral Access Thru Dec 31 -------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of North Carolina, Winston Salem Division, has authorized CRC Investments, LLC to use cash collateral on an interim basis for the period through including December 31, 2021, in the amounts and for the purposes set forth in the interim budget, to pay on-going costs of operating the business and insuring, preserving, repairing and protecting all its tangible assets. Judge Lena Mansori James ruled that secured parties (i) Portfolio Holdings IV-NC, LLC; (ii) the Internal Revenue Service; and (iii) the U.S. Small Business Administration are granted a perfected replacement lien in all post-petition assets of the Debtor to the same extent and priority as existed prepetition for the diminution in value of the Secured Parties' collateral occasioned by the Debtors' use of Cash Collateral. The Debtor is also required to pay all applicable insurance premiums, taxes, and other governmental charges as they come due and make all tax deposits and file all applicable tax returns on a timely basis, as a form of adequate protection. Portfolio, through its acquisition of a Bank of America loan, holds a note and deed of trust against the Debtor's real property located at 85 Pine Crest Lane, Tryon, in Polk County, North Carolina. Portfolio asserts a security interest in rents pursuant to its deed of trust. The Debtor owes taxes, penalties, and interest to the IRS which is now covered with a secured lien by the IRS. In connection with its business operations, the Debtor obtained an EIDL (Economic Injury Disaster Loan) from SBA, secured by a lien upon the Debtor's personal property and fixtures. As of the Petition Date, the IRS was owed approximately $509,757; the SBA was owed approximately $126,500; and Portfolio was owed approximately $1,100,000. Notwithstanding any suspension or termination of the right to use cash collateral, the Court ruled that the Debtor will be permitted to carve out from cash collateral or any replacement collateral and use an aggregate amount necessary to pay all permitted trailing expenses. Permitted trailing expenses are, on the termination date, the costs of operating and preserving the estate, including allowed administrative fees, costs, or expenses, to the extent incurred postpetition and prior to such termination date but in the aggregate amount not to exceed 110% of the aggregate amounts set forth in the budget through such termination date. In addition to budgeted amounts, permitted trailing expenses will include court costs and quarterly Chapter 11 fees as allowed by the Court. A copy of the fifth interim order and the Debtor's November-December 2021 budget is available at https://bit.ly/3CLlqYS from PacerMonitor.com at no charge. The budget provided for $57,566 in total income and $56,692 in total expenses. A further hearing on the motion will be held at 1:30 p.m. (Eastern) on December 21, 2021, in the Courtroom located at 601 W. 4th Street, Winston Salem, North Carolina. About CRC Investments CRC Investments, LLC, d/b/a 1906 Pine Crest Inn and Restaurant, filed a petition under Subchapter V of Chapter 11 (Bankr. M.D. N.C. Case No. 21-80172) on May 6, 2021, estimating between $1,000,000 and $10 million in assets and liabilities. The petition was signed by Carl Ray Caudie, Jr., general manager. Judge Lena Mansori James oversees the case. Joshua H. Bennett, Esq., at Bennett Guthrie PLLC, represents the Debtor as counsel. CREATD INC: Gets $7.8M from Stock Offering, Warrants Exercise ------------------------------------------------------------- Creatd, Inc. provided an update on its unaudited balance sheet, recent funding, and other financial information. Last week, the Company announced the close of its registered direct offering of 850,000 shares, priced at the market under Nasdaq rules and yielding over $3.4 million in net proceeds to the Company. In addition to the financing, the Company recently brought in $4.4 million in cash through the exercise of warrants. In total, the Company last week received over $7.8 in cash proceeds, significantly strengthening its balance sheet. Between October 22 and Oct. 29, 2021, the Company saw the exercise of approximately 875,000 warrants into shares of common stock at an exercise price of $4.50, as well as approximately $1.1 million in debt conversions at a price of $5.00 per share; with these conversions, the Company has now fully eliminated all debt remaining from its May 2021 convertible note offering. After factoring in the above transactions, Creatd now has approximately 16.3 million shares issued and outstanding. Additionally, there currently remain approximately 3 million outstanding privately-held warrants, the majority of which may be exercised at a price of $4.50, and 2.5 million publicly traded warrants having exercise prices of $4.50. Creatd is pleased to report that it has now paid off nearly all remaining debt on its balance sheet, with the exception of a $660,000 note related to the acquisition of Seller's Choice and approximately $200,000 in an outstanding PPP loan. As of today, the Company has settled most of its outstanding payables including legal, accounting, and technology development fees. The Company also has a credit in the amount of approximately $500,000 with its development partner, Thinkmill. Additionally, the Company allocated $1.8 million to fully pay down its existing balance with third party marketing platforms, leaving Creatd the ability to draw down on up to $3 million in available credit with its long-standing social media partners. Commented Creatd founder and co-CEO, Jeremy Frommer, "Having made progress on all of the above payables, as well as closed our recent financing, our company now has in excess of $5 million in cash plus the aforementioned vendor credits to support our strategic growth plans. Having considerably fortified our balance sheet and reduced our debt by 56% to $1.1 million since the end of third quarter, we are well-positioned to execute across all four of Creatd's pillars." Frommer continued, "While we progress toward our 100,000 Vocal+ member milestone, we have been able to significantly reduce our dependence on third party social media marketing platforms. As a result, we saw a 57% reduction in marketing costs between the second and third quarters. For the fourth quarter of 2021, we expect marketing costs to remain under $2 million; outside of marketing costs, we expect operating expenses as a whole to stay consistent with previous quarterly levels. "We estimate third quarter net revenues of approximately $1.2 million, representing a 24% increase from the second quarter of 2021 and our fourth consecutive quarter of double-digit growth. In addition, we currently project between $1.6 and $1.8 million in revenues for the fourth quarter, a 30% to 50% quarter-over-quarter growth rate." Explained Creatd co-CEO, Laurie Weisberg, "Our third and fourth quarter 2021 revenue expectations factor in the supply chain challenges that have disrupted e-commerce on a global scale. With those disruptions in mind, we still expect to see Creatd Ventures' e-commerce businesses continue to ramp up and begin materially impacting revenues in Q1 2022. With our third quarter numbers expected to be released on November 15, we look forward to sharing a more in depth understanding of the Creatd Partners' agency business and its growth, particularly since the acquisition of the WHE Agency." About Creatd Inc. Headquartered in Fort Lee, NJ, Creatd, Inc. -- https://creatd.com -- is a creator-first technology company and the parent company of the Vocal platform. Its mission is to empower creators, entrepreneurs, and brands through technology and partnership. The Company accomplishes this through Creatd's three main business pillars: Vocal Ventures, Creatd Partners, and its newest initiative, Recreatd. Creatd, Inc reported a net loss of $24.21 million for the year ended Dec. 31, 2020, compared to a net loss of $8.04 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $6.61 million in total assets, $7.06 million in total liabilities, and a total stockholders' deficit of $452,831. Somerset, New Jersey-based Rosenberg Rich Baker Berman, P.A., the Company's auditor since 2018, issued a "going concern" qualification in its report dated March 30, 2021, citing that the Company had a significant accumulated deficit, and has incurred significant net losses and negative operating cash flows. These factors raise substantial doubt about the Company's ability to continue as a going concern for a period of one year from the issuance of the financial statements. CYBER LITIGATION: Court Clarifies Decision on Bar Date Notice ------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware issued an amended memorandum opinion dated October 28, 2021, relating to the disallowance of the claim filed by Hansen Networks. According to the Court, following the issuance of the original Memorandum Opinion dated October 21, 2021, the Court was apprised of a provision of Federal Rule of Bankruptcy Procedure 9036, as amended in 2019, that relates to the matters addressed in the opinion. While that Rule is not applicable to circumstances of this case, to avoid introducing any confusion regarding the application of the Rule in the cases to which it is directed, the Court issued the Amended Memorandum Opinion, a full-text copy of which is available at https://tinyurl.com/2c9rc7x6 from Leagle.com. The Debtor moved to disallow the claim filed by Hansen Networks, which the Debtor scheduled as its largest unsecured creditor, on the ground that the proof of claim was filed after the bar date and should thus be disallowed as untimely. The parties have stipulated that the official bar date notice, as approved by the Court, was sent to the wrong address. An evidentiary hearing established that the bar date notice was sent by mail to David Hansen, the principal of Hansen Networks, but at an address where Mr. Hansen was no longer residing at the time the notice was sent. The evidentiary record also makes clear, however, that the bar date notice was sent by email to an email account that Mr. Hansen actively used. The Court held that the Debtor's objection to Hansen Networks' claim on timeliness grounds will be overruled, without prejudice to the rights of the debtor or any other party-in-interest to object to the claim on other grounds. About NS8 Inc. Las Vegas-based NS8 Inc. -- https://www.ns8.com -- is a developer of a comprehensive fraud prevention platform that combines behavioral analytics, real-time scoring, and global monitoring to help businesses minimize risk. NS8 sought Chapter 11 protection (Bankr. D. Del. Case No. 20-12702) on October 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. Judge Craig T. Goldblatt replaced the Honorable Christopher S. Sontchi as 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 selling substantially all of its assets to Codium Software LLC in December 2020. DCP MIDSTREAM: Fitch Rates Proposed Sr. Unsec. Notes 'BB+' ---------------------------------------------------------- Fitch Ratings has assigned a 'BB+'/'RR4' rating to DCP Midstream Operating LP's (DCP Operating) proposed senior unsecured notes, which are fully and unconditionally guaranteed by its parent company, DCP Midstream, LP (DCP). The guarantee by DCP will rank equally in right of payment to all of DCP's existing and future senior unsecured indebtedness. Fitch expects proceeds from the offering will be used predominantly to repay borrowings under DCP Operating's revolving credit facility. Fitch currently rates DCP and DCP Midstream Operating, LP's Long-Term Issuer Default Rating (IDR) 'BB+' and senior unsecured debt 'BB+'/'RR4'. The ratings have a Positive Outlook, reflecting Fitch's expectation for DCP's leverage (measured as total debt with equity credit to operating EBITDA) to decline below 4.5x by YE 2021. Other key triggers for an upgrade include the use of hedging to reduce DCP's commodity price exposure and management's capital allocation plans. KEY RATING DRIVERS Scale and Scope of Operations: DCP's ratings reflect the size and scale and diversity of its asset base. DCP is a large producer of NGLs and processor of natural gas. The partnership has a robust operating presence in most of the key production regions within the U.S., specifically within the DJ Basin and Permian Basin and spanning both the Midland and Delaware Basins. DCP has a diverse set of largely investment-grade producers with no material customer concentration. The size and breadth of DCP's operations allow it to offer customers end-to-end gathering, processing, storage and transportation solutions, giving it a competitive advantage within the regions where they have significant scale. Excess capacity on several of DCP's systems provide opportunities for volume growth without excess growth capex investment. Volumetric and Commodity Price Exposure: DCP's ratings reflect its exposure to volumetric and commodity price risks associated with the domestic production and demand for natural gas and NGLs. Approximately 60% of DCP's gross margin is provided from the logistics and marketing (L&M) segment, which generally provides fee-based cash flows with exposure to volumetric-risk. Gathering and processing (G&P, approximately 40% of gross margin) contracts are largely backed by dedicated acreage and are a mix of non-commodity sensitive fee-based contracts and commodity sensitive percent-of-proceeds (POP) and percent-of-liquids (POL) contracts. YTD DCP has benefitted from its unhedged commodity-price exposure, and improving demand and commodity prices have accelerated producer well completions in the DJ Basin and Permian Basin. As of 3Q21 approximately 75% of gross margin is fee-based and DCP has hedged 13% of the remaining margin. The company has taken advantage of favorable natural gas prices and added hedges that reduce its sensitivity to a large drop in natural gas prices. Fitch expects over 80% of DCP's gross margin to be fee-based or hedged in 2022. Its hedging program contributes to a steady cash flow profile but also exposes it to longer-term hedge roll-over and commodity price risks Declining Leverage: Fitch expects leverage to decline to 4.4x by YE 2021 and fall closer to 4.2x by YE 2022. DCP is performing better than Fitch expected, benefitting from stronger than expected commodity prices, low operating costs, and remaining disciplined regarding capital allocation. Management has been vocal about improving leverage to around 4.0x by YE 2021 and closer to 3.5x by YE 2022 (DCP's leverage metric includes 100% equity credit on the preferred units and junior subordinated notes vs. Fitch's 50% equity credit treatment) to provide DCP with the flexibility to be a consolidator in the midstream space. Fitch's forecast does not include any significant acquisitions. Any increase in distributions, change in capital allocation or material acquisitions may change the cadence of deleveraging. Capital Allocation: Fitch has concerns over future capital allocation plans given the strong FCF profile as volumes increase and NGL pricing is high. While DCP's system is largely built out, future capex is limited to smaller growth projects. The pace of debt reduction may be affected if management decides to return cash to shareholders by increasing the distribution or instituting a share repurchase program or undertaking a debt financed acquisition. Supportive Ownership: Fitch rates DCP on a stand-alone basis, with no explicit notching from its parent companies' ratings; however, the ratings reflect that its owners have been and are likely to remain supportive of its operating and credit profile. DCP's ultimate owners of its general partner, Enbridge, Inc. (ENB; BBB+/Stable) and Phillips 66 (PSX; not rated) have in the past exhibited a willingness to forgo dividends. This support was most recently demonstrated by the approval of the March 2020 distribution cut. Parent Subsidiary Linkage: Fitch considers the consolidated credit profile of DCP and DCP Operating under its "Parent and Subsidiary Linkage Criteria" for the ratings of both entities. DCP is the parent of DCP Operating, and DCP Operating is the only source of cash flow for DCP. The only obligations at DCP are the series A, B, and C preferred equity units. DCP Operating exhibits a stronger credit profile as the operating subsidiary where the assets are located and cash flow is generated. In addition, Fitch believes the legal and operational ties between the two entities is strong. DCP Operating's senior notes are unconditionally guaranteed by DCP. DERIVATION SUMMARY DCP's ratings are reflective of its favorable size, scale, geographic and business line diversity within the NGL production and transportation and natural gas G&P space. DCP has greater exposure to commodity prices than other midstream peers, with approximately 75% of gross margin supported by fixed-fee contracts. This commodity price exposure has been partially mitigated in the near term through DCP's use of hedges for its NGL, natural gas and crude oil price exposure, pushing the percentage of gross margin, either fixed-fee or hedged, up to 88% as of 3Q21. This helps DCP's cash flow stability but exposes it to longer-term hedge roll-over and commodity price risks. DCP is smaller in terms of EBITDA generation but more geographically diversified than NGL focused midstream peer Targa Resources Corp. (BB+/Stable). DCP's assets span across several U.S. regions in multiple basins with significant footprints in the DJ Basin, Delaware and Midland Basins in the Permian, and SCOOP/STACK in the Midcontinent region, with volume growth expected to come from the DJ and Permian assets. Targa's operations are focused in the Permian Basin. Targa's gross commodity price exposure is similar to that of DCP as Targa's gross margin is approximately 85% supported by fixed-fee or fee-floor contracts and hedges. Fitch expects DCP's leverage to be around 4.4x by YE 2021 and between 4.2x-4.5x by YE 2022. Targa's near-term leverage should remain higher in the range of 4.6x-4.8x through 2023. DCP's management has been vocal about continuing to deleverage, targeting their bank leverage ratio (100% equity credit to preferred units and junior subordinated notes which differs from Fitch's 50% equity credit treatment) calculation of 4.0x as of YE 2021 and closer to 3.5x by YE 2022. ONEOK Inc (BBB/Stable) is significantly larger in terms of size and scale. ONEOK's NGL transportation network is larger than that of DCP, comparable basin diversification. DCP generates less than half the EBITDA than ONEOK. DCP's leverage is expected to be comparable with ONEOK's leverage expected to be between 4.4x-4.8x in 2021. ONEOK's limited commodity exposure and larger size and scale account for the two-notch rating difference. KEY ASSUMPTIONS -- Base case WTI oil price deck $52/ bbl in 2022 and $50/ bbl in 2023 and beyond and Henry Hub natural gas price of $2.75/mcf in 2022 and $2.45/mcf in 2023 and long-term. Fitch expects ethane to be influenced from the natural gas price deck and the other NGL hydrocarbon movements to be influenced from our WTI oil price deck; -- Maintenance capital in the range of $45 million to $85 million in 2021. Growth spending of between $25 million and $75 million in 2021 and growing incrementally in 2022; -- Fitch's forecast does not assume any significant acquisitions; -- No equity issuance or change in the dividend policy over the forecast period; -- Upcoming debt maturities repaid using FCF and revolver borrowings where necessary. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- A demonstrated ability to maintain the percentage of fixed-fee or hedged gross margin at or above 70% while maintaining leverage (total debt with equity credit/operating EBITDA) below 4.5x could lead to a positive rating action. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Leverage expected above 5.5x on a sustained basis and may result in at least a one-notch downgrade; -- A significant decline in fixed-fee or hedged commodity leading to gross margin less than 60% fixed fee or hedged without an appropriate significant adjustment in capital structure, specifically a reduction in leverage, would likely lead to at least a one-notch downgrade; -- A significant change in the ownership support structure from GP owners ENB and PSX to the consolidated entity particularly with regard to the GP position on commodity price exposure, distribution policies and capital structure at DCP, the operating partnership. 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: As of Sept. 30, 2021, DCP had total liquidity of approximately $849 million, which includes $846 million undrawn on it $1.4 billion senior unsecured revolving credit facility after accounting for $2 million in LOC. Cash on the balance sheet was $3 million. DCP had $350 million of outstanding borrowings on the $350 million accounts receivable securitization facility. Maturities are manageable as DCP may repay the $350 million of senior notes due April 2022 early during the par call period on Jan. 1, 2022. The next maturity is $500 million of senior notes due in 2023. DCP's revolver is not due until December 2024. DCP's senior unsecured revolving credit facility has a leverage covenant that requires DCP's consolidated leverage ratio not to exceed 5.0x for each quarter. The leverage ratio would be stepped up to 5.5x for three quarters following any qualified acquisition. For covenant calculation purposes, DCP's preferred equity and junior subordinated notes are given 100% equity treatment (vs. Fitch's 50% equity treatment.) ISSUER PROFILE DCP Midstream, LP is a master limited partnership that owns and operates a diversified portfolio of midstream energy assets through its wholly owned subsidiary DCP Midstream Operating, LP. DCP is a large producer and marketer of natural gas liquids, and processor of natural gas. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch applies 50% equity credit to DCP's junior subordinated notes and to its existing preferred equity in Fitch's forecasts. Fitch typically adjusts master limited partnership EBITDA to exclude equity interest in earnings from nonconsolidated affiliates but includes cash distributions from nonconsolidated affiliates. 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. DCP MIDSTREAM: Moody's Gives Ba1 Rating on New $400MM Senior Notes ------------------------------------------------------------------ Moody's Investors Service assigned a Ba1 rating to DCP Midstream Operating LP's (DCP Midstream Operating) proposed $400 million senior notes offering. DCP Midstream, LP's (DCP) existing ratings, including the Ba1 Corporate Family Rating, Ba1-PD Probability of Default Rating, Ba3 ratings on preferred units and SGL-2 Speculative Grade Liquidity (SGL) rating are unchanged. Additionally, DCP Midstream Operating's existing Ba1 ratings on the senior unsecured notes and the Ba2 rating on the junior subordinated notes are unchanged. The rating outlook is stable. DCP will use the net proceeds from the offering for repayment of indebtedness under the revolving credit facility, which had $552 million outstanding as of September 30, 2021, and for general partnership purposes. The company also has $350 million of notes maturing in April 2022. "DCP's proposed issuance will improve its liquidity and will not materially affect its leverage," stated James Wilkins, Moody's Vice President. "The company has the ability to repay revolver borrowings or apply the proceeds towards repayment of its next debt maturity, $350 million of notes due in April 2022." Assignments: Issuer: DCP Midstream Operating LP Gtd Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD3) RATINGS RATIONALE The proposed notes, which are senior unsecured obligations of DCP Midstream Operating LP and guaranteed by its parent, DCP, are rated at the same level as the Ba1 CFR since the senior unsecured debt (notes and revolving credit facility) make up the majority of the capital structure. All of the senior notes and the obligations under the revolver rank pari passu. DCP's Ba1 CFR reflects improving oil and gas industry fundamentals that will support free cash flow generation and financial policies supportive of lower leverage. Moody's expects the company's free cash flow generation to grow, benefiting from robust oil and natural gas prices and growing US economic activity that will incentivize exploration and production companies to increase production. DCP has relatively stable cash flow associated with fee-based businesses, meaningful scale in the US gathering and processing sector and basin diversification. Cash flow stability benefits from a combination of fee-based and hedged revenue that accounts for a large majority of the gross margin and long-term contractual arrangements with minimum volume commitments or life of lease or acreage dedications. The rating is tempered by inherent commodity price risk as well as MLP model risks with high payouts and the reliance on debt and equity markets when funding large growth projects. DCP enjoys economies of scale as a large processor of natural gas and natural gas liquids (NGLs) with integrated gathering and processing as well as logistics assets that transport and process hydrocarbons from the wellhead to markets. It has a diversified portfolio with critical mass in three key areas -- the DJ Basin, Midcontinent region and Permian Basin -- that offers growth opportunities and helps offset regulatory risk in Colorado. The rating also considers the support that the parents -- Phillips 66 (A3 negative) and Enbridge Inc. (Baa1 stable) -- have historically provided. DCP has good liquidity as indicated by its SGL-2 Speculative Grade Liquidity Rating. Its liquidity is supported by funds from operations and $846 million of availability (before the repayment of debt with the proceeds of the proposed offering, net of $2 million of letters of credit and $552 million of borrowings as of September 30, 2021) under its $1.4 billion revolving credit facility that matures December 9, 2024. The revolver has a maximum leverage (net debt/EBITDA) covenant (5.0x; debt/EBITDA is adjusted for partial year EBITDA for capital projects and acquisitions). Moody's expects DCP will remain in compliance with its financial covenant at least through 2022. The company also borrows under an accounts receivable securitization facility that had $965 million of receivables that secured $350 million of borrowings as of September 30, 2021. In June 2021, DCP drew on the revolver to repay $500 million of notes due September 2021. The company will partially repay the revolver borrowings with its proposed notes issuance. The next debt maturities will be $350 million of notes due April 2022 and $500 million of notes due March 2023. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be upgraded if DCP's EBITDA continues to grow, debt to EBITDA remains below 4.0x on a sustained basis and distribution coverage remains above 1.3x. When calculating credit metrics for purposes of assessing the potential of a ratings upgrade, a portion of DCP's subordinated debt and preferred equity will be included in Moody's adjusted debt. The CFR could be downgraded if leverage exceeds 4.5x or it does not maintain a distribution coverage ratio greater than 1x. The principal methodology used in this rating was Midstream Energy published in December 2018. DCP Midstream, LP, headquartered in Denver, Colorado, is a publicly traded, gathering and processing MLP. The DCP Midstream, LP common LP units are owned by the public (43.5%) and the balance of the common units and General Partner interest is owned by DCP Midstream, LLC, a 50%/50% joint venture between Phillips 66 and Enbridge Inc. DCP MIDSTREAM: S&P Assigns 'BB+' Rating on Senior Unsecured Notes ----------------------------------------------------------------- S&P Global Ratings rated DCP Midstream Operating L.P.'s announced senior unsecured notes 'BB+', in line with its existing notes, because the issuance will not add incremental debt and credit metrics will not be materially affected. The recover rating is '3' which indicates its expectation for meaningful (50%-70%; rounded estimate: 55%) recovery in the event of payment default. DCP intends to use the notes to repay revolver borrowings. The 'BB+' issuer credit rating and stable outlook are unchanged. S&P's expectation that the company will remain cash flow positive and maintain a conservative financial policy supports the rating. Although the company should deleverage over time, S&P forecasts S&P Global Ratings-adjusted leverage will remain above 4x for the next few years. DLVAM1302 NORTH SHORE: Seeks Cash Collateral Access --------------------------------------------------- DLVAM1302 North Shore, LLC asks the U.S. Bankruptcy Court for the Middle District of Florida, Tampa Division, for authority to use cash collateral retroactive to November 1, 2021 in accordance with the budget and provide adequate protection. The Debtor requires the use of cash collateral to fund its operating expenses and costs of administration in the Chapter 11 case. HMC Assets LLC, solely in its capacity as Separate Trustee of Civic Holdings III Trust, may hold a lien on rents generated by the Debtor's real property located at 302 N. Shore Drive, Anna Maria, Florida 34216 by virtue of an "assignments of rents" clause in HMC's loan documents. The Debtor reserves the right to challenge the validity, priority and extent of the HMC's lien against the Debtor's assets. The Debtor presently owes HMC approximately $1,231,452. The Debtor estimates that the claim of HMC is secured by $1,866,500 in assets. The Secured Creditor Assets include $100 in cash and accounts receivables which the Debtor expects to collect. As adequate protection for the use of cash collateral, the Debtor offers HMC: a. Post-petition replacement liens on the Secured Creditor Assets to the same extent, validity, and priority as existed pre-petition; b. The right to inspect the Secured Creditor Assets on 48 hours notice, provided that said inspection does not interfere with the operations of the Debtor; and c. Copies of monthly financial documents generated in the ordinary course of business and other information as HMC reasonably requests with respect to the Debtor's operations. A copy of the order is available at https://bit.ly/31tWCqx from PacerMonitor.com. About DLVAM1302 North Shore Anna Maria, Fla.-based DLVAM1302 North Shore, LLC filed a petition for Chapter 11 protection (Bankr. M.D. Fla. Case No. 21-05371) on Oct. 20, 2021, disclosing $1,988,681 in total assets and $1,585,279 in total liabilities. Floyd Calhoun, manager, signed the petition. The Debtor tapped Buddy D. Ford, P.A. as legal counsel. DRIVEN BRANDS: S&P Assigns 'B+' ICR, Outlook Stable --------------------------------------------------- S&P Global Ratings assigned its 'B+' issuer credit rating to the issuer, North Carolina-based automotive services provider Driven Holdings Inc., a core entity to the publicly traded parent entity Driven Brands Holdings Inc. At the same time, S&P assigned its 'BB-' issue-level and '2' recovery ratings to the proposed term loan B. S&P said, "The stable outlook reflects our expectations that Driven will benefit from its good market position and diversification in its addressable markets to drive performance growth while participating in industry consolidation. "Our ratings reflect Driven Brands' high leverage and integration risks we associate with its acquisitive strategy, offset by its good record of execution as well as its significant scale and diversification." Driven Brands has rapidly expanded its presence in the fragmented automotive services market over the past five years while using significant amounts of leverage to fund its acquisitive strategy. The company is poised to, in our opinion, continue its rapid growth through acquisitions and organic expansion. Driven's record of execution has been good, allowing the company to become a significant competitor in each of its addressable markets. The company has demonstrated the ability to leverage its scale for technological investment, effective site development, better buying and in building relationships with large customers such as insurance companies in the collision repair space. Still, inherent risks are associated with large acquisitions to extract synergies and operate assets well, especially when funded through incremental debt. A competitive industry dynamic with relatively stable demand trends. Driven had a long history of relatively stable same-store sales trends in the low- to mid-single-digit-percent range, benefiting from the large U.S. car parc (vehicles in operations or about 280 million automobiles), the largely nondiscretionary nature of its offering and good diversification. In 2020, trends reversed with a 6% same-store sales decline as pandemic disruption dramatically affected results, particularly in the second quarter. The business proved resilient, however, with only modest declines in the second half of 2020 and a significant rebound starting in 2021, which was up about 17% through the third quarter. S&P said, "We believe the performance demonstrates the essential nature of Driven's business offerings and its relatively good market position as a larger player versus independent operators. We also believe performance trends will continue to find support from the aging of the U.S. car parc, around 12 years." The company operates under brands such as Meineke (maintenance segment) and Maaco (auto body repair) in the U.S. S&P said, "While its brands have some resonance with customers, we believe the competitive landscape will remain intense. Competitors include smaller regional players that may have loyal customers, dealer-affiliated services, and other large, well-capitalized players in sectors (such as Mister Car Wash Holdings Inc. in the car wash business or Monro in maintenance). We think competition depends on numerous factors including price, convenience, brand awareness, and quality of services provided." Evolving technology and updated service models will likely favor larger competitors like Driven Brands. S&P said, "We believe Driven is well positioned to adapt to the evolving needs of the increasingly complex automotive services industry given technological enhancements in vehicles. Over time, do-it-yourself service of automobiles is likely to become more challenging as automobile specifications become more specialized and technologically advanced. Also, general consumer demands continue to evolve toward more sophisticated or convenient service offerings. For instance, Driven's Take 5 oil change service concept has benefited from its unique, in-car model, which plays into this overall convenience trend. In addition, Driven recently launched unlimited car wash offerings and subscription models position it to capitalize on the evolving industry trends. "We think continued innovation and good execution will be important to take share organically in the industry. Longer term, the company is subject to potential change in individual car ownership rates and other business model or technological innovations that may reduce demand for automotive services. However, we also believe any substantial impact from these risks, if they materialize, are relatively distant because of the large existing car parc and slow turnover of vehicles." A diversified leader in a highly fragmented space with benefits from its franchise model. The company's maintenance, paint/repair/collision and platform services segments are each well diversified across North America. The car wash segment is concentrated in the U.S. southeast domestically given the population dynamics but also has a sizable presence across Europe following the large acquisition of U.K.-based International Car Wash Group in 2020. This geographic diversification is a credit strength, in S&P's view. S&P thinks Driven benefits from its highly franchised model, which provides high free cash flow conversion and reduces both capital expenditure needs and operating fluctuations associated with operating businesses. About 80% of the company's stores are franchised. Franchisee penetration varies across businesses with the bulk of company-owned units in the maintenance (more than 500 units) and car wash (close to 300 units) segments. The company has a sizable pipeline of franchisee agreements in place that should facilitate future growth to build royalty cash flow. Private equity sponsor still has considerable ownership of public company. The company went public in early 2021 and is now pre-funding likely future acquisitions with the proposed term loan issuance, as Driven continues its effort to roll up participants in the auto services markets. While publicly traded, the company remains majority-owned by a financial sponsor, Roark Capital, which still owns more than 60% of shares. S&P said, "We accordingly exclude Driven's balance sheet cash position from our adjusted credit metrics. Sponsor ownership notwithstanding, we view Driven's board as predominantly independent with six board members out of nine autonomous of Roark. In addition, we expect that the sponsor will gradually sell down its position over time in our base-case expectations. If Roark were to increase its equity stake or take a more active role to influence governance structure, strategy, and financial policy, we would likely view this as a credit negative." S&P said, "The stable outlook on Driven Brands reflects our expectation that operating income will continue to improve with economic conditions supporting growth in automotive maintenance in addition to new stores and tuck-in acquisitions. We also project the company will maintain relatively stable credit metrics including adjusted leverage in the 7x area and interest coverage in the mid-2x area over the next 12 months. "We could lower our rating on Driven Brands if credit metrics deteriorate, including adjusted interest coverage less than 2x and adjusted leverage approaching mid-8x or more. This scenario could occur if the company pursues a large, debt-financed acquisition or it experiences operational setbacks." This could include: -- Operating performance weakens, possibly because of heightened competition and a sharp, sustained decline in car maintenance spending, or a significant increase in operating costs. -- A sustained weakness at both company-operated and franchised operations with the later leading to franchisees requiring financial support, or -- An inability to adequately integrate a meaningfully large acquisition. S&P could raise its rating on Driven if it executed on its operating strategies with minimal integration issues and maintained a consistent financial policy. This scenario could include: -- A successful expansion of operations while increasing its market share and diversifying its geographic footprint and earnings base. -- The financial sponsor reduces its ownership position to less than 40%, leading us to reassess S&P's financial policy modifier. DRIVEN HOLDINGS: Moody's Assigns B2 CFR & Rates New Term Loan B2 ---------------------------------------------------------------- Moody's Investors Service has assigned Driven Holdings, LLC a B2 corporate family rating and a B2-PD probability of default rating. Moody's has also assigned B2 ratings to Driven Holdings' proposed $500 million senior secured term loan due 2028 and existing $300 million revolving credit facility expiring 2026. The speculative grade liquidity rating is SGL-1. The outlook is stable. Proceeds from the issuance will be used for general corporate purposes, including funding future acquisitions. Moody's ratings and outlook are subject to receipt and review of final documentation. "The ratings assignment reflects Driven Holdings' strong business profile including its significant scale, strong geographic and brand diversity, and well-recognized automotive repair and maintenance brand names along with its solid operating performance and cash flow which we believe provides it with the ability to support higher leverage than is typical for its B2 corporate family rating," stated Stefan Kahandaliyanage, Moody's Vice President Senior Analyst. The B2 CFR also reflects governance considerations particularly Driven Holdings' very high leverage and its private equity majority ownership. Assignments: Issuer: Driven Holdings, LLC Corporate Family Rating, Assigned B2 Probability of Default Rating, Assigned B2-PD Speculative Grade Liquidity Rating, Assigned SGL-1 Gtd Senior Secured Term Loan B, Assigned B2 (LGD4) Gtd Senior Secured Revolving Credit Facility, Assigned B2 (LGD4) Outlook Actions: Issuer: Driven Holdings, LLC Outlook, Assigned Stable RATINGS RATIONALE Driven Holdings' B2 CFR reflects the benefits of its significant system-wide revenue scale, market position as one of the largest automotive service operators with over 4,300 locations, and multiple brands across a wide range of industry segments including paint, collision, glass, oil change, regular maintenance, car wash, and parts supply. The B2 CFR is also supported by the national brand recognition of portfolio companies including Meineke and Maaco. Positive consideration is also given to Driven Brands solid free cash flow given the relatively low working capital and capex requirements of its largely franchised based business model. Over 80% of Driven Brands' locations are franchised which generates franchise fees and recurring royalty revenue (typically around 4.5% of gross store revenues for an initial 15 year term) with limited capital spending as these investments are borne by the franchisees. However, Driven Holdings is constrained by its very high leverage, integration and financing risks associated with acquisitions which is a core growth strategy for the company, and industry challenges associated with staffing, supply chain and product inflation which could negatively impact store revenues and profitability. Proforma leverage for the $500 million term loan issuance as measured by Moody's adjusted debt-to-EBITDA is approximately 7.6x. Assuming a level of future acquisition EBITDA based on proceeds from the term loan issuance combined with a portion of cash on hand and prior acquisition multiples, pro forma leverage is closer to 6.6x. Moody's adjusted debt calculation includes standard adjustments for operating leases and does not net cash on the balance sheet. The B2 rating on the term loan also reflects Driven Holdings' restricted group that is highly reliant on the steady distribution of the residuals and SPV management fees from the whole business securitization (WBS) entities to support its operations and cash flows. Other than the car wash assets, Automotive Training Institute, and certain company-owned store assets which, together, are not included in the WBS, the WBS has priority claim to substantially all revenue-generating assets of Driven Brands including current and future intellectual property for each brand, royalties, all existing and future franchise and development agreements, profits from certain maintenance and paint, collision & glass company-owned locations and related store assets, profits from certain business in Canada, and hard parts and accessories distribution margin in the US. For the LTM period ending Q3 2021, the residual distribution from the WBS was approximately $237 million while the SPV management fees were approximately $56 million. As of Q3 2021, under the WBS, there is about $260 million of debt issuance capacity available implied by the senior leverage ratio cushion. The rating is also constrained by governance considerations, specifically the potential for aggressive financial policy actions taken by the company's private equity majority owner which may include debt-funded dividend distributions and further debt-funded acquisitions. The stable outlook reflects Moody's expectation for modestly growing revenue and earnings as consumer car travel behavior normalizes, resulting in a moderate decline in leverage. The outlook also reflects Driven Brands' very good liquidity over the next 12-18 months. As proposed, the $500 million senior secured term loan due 2028 and $300 million RCF expiring 2026 are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following: Incremental debt capacity up to the greater of $250.0 million and 100% of EBITDA for the most recent Test Period as determined on a Pro Forma basis, plus unlimited amounts so long as the Net First Lien Leverage Ratio will be no greater than 3.00x for pari passu debt (with "no worse" tests in connection with an acquisition or other investment). Amounts for customary bridge loans and other customary Term A Loans and other loans in an amount of up to the greater of $300 million or 100% of EBITDA may be incurred with an earlier maturity date than the initial term loans. The credit agreement permits the transfer of assets to unrestricted subsidiaries, up to the carve-out capacities, subject to "blocker" provisions which prevent unrestricted subsidiaries from owning, or holding any exclusive licenses of, any Material Intellectual Property (except in the case of any Securitization Entity in connection with or in contemplation of a Permitted Securitization Financing). Subsidiary Guarantors must continue to provide guarantees whether or not they are wholly-owned subsidiaries, eliminating the risk that guarantees will be released because they cease to be wholly-owned to the extent the subsidiary becomes non-wholly owned as a result of a transaction that is not a bona fide transaction with an unaffiliated third party and not for the purpose of circumventing the security and guarantee requirements of the Loan Documents. The credit agreement provides some limitations on up-tiering transactions. The proposed terms and the final terms of the credit agreement may be materially different. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded with successful integration of expected acquisitions, sustained organic improvement in operating performance, and a more moderate financial policy that results in sustained strengthening of credit metrics with debt to EBITDA approaching 5.25 times and EBIT to interest of well over 2.0 times. A higher rating would also require very good liquidity. The ratings could be downgraded in the event that the integration of planned acquisitions takes longer than expected and/or synergies are not substantially realized or operating performance flags to where debt to EBITDA remains above 6.75 times or if EBIT to interest falls below 1.5 times or free cash flow to debt declines below 4% on a sustained basis. The ratings could also be downgraded if Driven Holdings pursues another acquisition debt raise or debt-financed distribution to shareholders prior to credit metrics improving. A deterioration in liquidity or the inability to generate positive free cash flow could also result in a downgrade. Driven Holdings, LLC, is the restricted group borrower subsidiary of Charlotte, North Carolina-based Driven Brands Holdings Inc. (Driven Brands). Driven Brands is a large, publicly-traded automotive services company (NASDAQ: DRVN) operating in North America and Europe, catering to a range of consumer and commercial automotive needs, including paint, collision, glass, oil change, regular maintenance, car wash, and parts supply. Annual revenues are approximately $1.4 billion while systemwide sales generated by over 4,300 mostly-franchised locations is approximately $4 billion. Driven Brands is majority-owned and controlled by affiliates of Roark Capital Group, a private equity firm. The principal methodology used in these ratings was Retail Industry published in May 2018. EAGLE HOSPITALITY: Court Okays Bankruptcy Plan for Creditor Vote ---------------------------------------------------------------- Alex Wolf of Bloomberg Law reports that the bankruptcy court has approved Eagle Hospitality's bankruptcy plan for creditor vote. Eagle Hospitality Real Estate Investment Trust's bankrupt U.S. units won court approval to solicit votes on a creditor-backed plan to liquidate, following sales of its hotels. EHT US1 Inc. and 26 other Eagle subsidiaries, whose plan disclosures were approved Thursday, November 4, 2021, temporarily beat an objection from the U.S. Trustee's Office over proposed liability releases for a creditor, Bank of America. The company put forward a Chapter 11 plan following sales of 14 of its 15 hotel properties for about $482 million. Under the proposed plan, secured lenders agreed to limit their claims in the bankruptcy to $380.5 million. About Eagle Hospitality Group Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality stapled group comprising Eagle Hospitality Real Estate Investment Trust ("Eagle H-REIT") and Eagle Hospitality Business Trust. Based in Singapore, Eagle H-REIT is established with the principal investment strategy of investing on a long-term basis, in a diversified portfolio of income-producing real estate which is used primarily for hospitality and/or hospitality-related purposes, as well as real estate-related assets in connection with the foregoing, with an initial focus on the United States. EHT US1, Inc., and 26 affiliates, including 15 LLC entities that each owns hotels in the U.S., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-10036) on Jan. 18, 2021. EHT US1, Inc., estimated $500 million to $1 billion in assets and liabilities as of the bankruptcy filing. The Debtors tapped PAUL HASTINGS LLP as bankruptcy counsel; FTI CONSULTING, INC., as restructuring advisor; and MOELIS & COMPANY LLC, as investment banker. COLE SCHOTZ P.C. is the Delaware counsel. RAJAH & TANN SINGAPORE LLP is Singapore Law counsel, and WALKERS is Cayman Law counsel. DONLIN, RECANO & COMPANY, INC., is the claims agent. EDISON INT'L: Fitch Assigns BB Rating on Preferred Stock Series B ----------------------------------------------------------------- Fitch Ratings has assigned a 'BB' instrument rating to Edison International's (EIX) Fixed Rate Reset Cumulative Perpetual Preferred Stock Series B ($1000 Liquidation Preference). The securities receive 50% equity credit under Fitch's "Corporate Hybrids and Notching" criteria. Proceeds from the issuance of the preferred securities will be used to repay commercial paper borrowings and for general corporate purposes. EIX's Issuer Default Rating is 'BBB-'/Stable. The credit metrics of EIX and its core operating utility subsidiary, Southern California Edison Company (SCE; BBB/Stable) have been pressured by costs associated with the 2017/2018 wildfire and mudslide events, among other things. EIX recently revised its best estimate of costs associated with the events to $7.5 billion from $6.2 billion, reflecting recent experience settling claims and settlement of the California Public Utility Commission (CPUC) Safety Enforcement Division's (SED) investigation. Key credit concerns for EIX include pressure on credit metrics driven by continued escalation of wildfire liabilities and premature depletion of the Assembly Bill (AB) 1054 wildfire fund. KEY RATING DRIVERS Wildfire Expense Reserve Increased: In 3Q 2021, EIX booked a $1.3 billion charge to reflect an increase in the company's best estimate of exposure to the wildfire and mudslide events of 2017/2018, bringing the total estimated costs to approximate $7.5 billon. The charge reflects EIX's recent experience settling 2017/2018 wildfire claims. Also included in the 3Q 2021 charge is an agreement resolving the California Public Utility Commission (CPUC) Safety Enforcement Division's (SED) investigation of the 2017/2018 wildfire and mudslide events. Under the terms of the agreement, EIX agrees to $175 million of fines, penalties and other costs and will not to seek recovery of $375 million of third-party liabilities. Uncertain Cost Recovery Prospects: Fitch believes the timing and ultimate recovery of costs associated with the 2017/2018 wildfires and mudslides in SCE's service territory is uncertain. Accordingly, Fitch's forecast assumes no recovery of third-party liabilities incurred by EIX under inverse condemnation from 2017/2018 wildfire and mudslides. Settlement of pending claims by SCE, among other considerations, is a key gating item to filing for cost recovery with the CPUC. Fitch believes SCE has settled the large majority of claims, is working expeditiously to resolve remaining third-party wildfire and mudslide liabilities, a key gating item to filing with the CPUC for cost recovery. Completion of the cost recovery process and the timing and amount potential cost recovery is, in Fitch's view, subject to a high degree of risk. Wildfire Risk Challenges Creditworthiness: EIX's and SCE's ratings and Rating Outlooks consider the credit impact from past and potential catastrophic wildfires sparked by utility equipment and related third-party liabilities. AB 1054 was enacted July 2019, in response to the catastrophic firestorms of 2017 and 2018. Fitch believes the wildfire insurance fund created by AB 1054 is credit supportive and will effectively address liquidity risk associated with the mismatch in the timing of when claims are paid by the California investor-owned utilities (IOU) under inverse condemnation and ultimately recovered in rates. Fitch expects the wildfire fund to function as designed, insulating SCE from the financial impact of eligible wildfire claims under inverse condemnation in the event of large future wildfires sparked by the utility's equipment. A continuing pattern of utility-sparked wildfires and related liabilities of the size and scale witnessed in 2017/2018 leading to sooner-than-expected exhaustion of the AB 1054 wildfire fund would likely lead to future adverse credit rating actions. Conversely, significant moderation in utility-related catastrophic wildfire activity in California and associated liabilities would support future potential constructive credit rating actions. Fitch believes this year's Dixie Fire, which occurred in Pacific Gas and Electric Company's service territory, is of sufficient magnitude to potentially result in eligible claims against the fund in the next few years if the fire is determined to have been sparked by the utility's equipment and inverse condemnation is invoked. Credit Metrics Pressured: EIX's and SCE's credit metrics have been pressured by significant unrecovered liabilities associated with 2017/2018 wildfires, the cost of participating in the AB 1054 wildfire fund, including contributions to the fund, large capex, and no equity return on $1.6 billion of wildfire related capex. Elevated capex reflects higher wildfire mitigation spend and investment in grid modernization to accommodate greater penetration of distributed resources in support of California's greenhouse gas reduction goals. EIX's FFO leverage was 6.3x in 2020 and is projected by Fitch to remain at or above the negative rating sensitivity of 5.5x in 2021 and 2022 before improving to approximately 5.0x in 2023 and 2024. EIX Debt: Fitch believes EIX's consolidated balance-sheet debt is manageable, totaling $30.3 billion as of Sept. 30, 2021, including holding company and utility preferred and preference securities of approximately $3.1 billion. EIX parent-only debt and preferred was $4.8 billion at the end of 3Q 2021. Parent-only EIX debt has increased sharply from approximately $400 million at YE 2013, but remains at the low-end of the range of parent-only debt for large utility holding companies. Higher EIX debt is due to funding requirements at SCE for capex, catastrophic wildfire costs and payments to creditors of former subsidiary Edison Mission Energy under its bankruptcy court-approved reorganization plan. EIX's parent-only debt and preferred securities represent approximately 16% of EIX's consolidated balance sheet debt and preferred and preference securities as of Sept. 30, 2021. Parent-Subsidiary Rating Linkage: EIX subsidiary SCE accounts for virtually all of EIX's consolidated earnings and cash flows. As such, Fitch applies a weaker parent-stronger subsidiary approach in rating SCE and EIX, reflecting EIX's dependence on cash flows from SCE to meet its obligations. SCE's IDR is the same as EIX's, reflecting moderate rating linkage due to robust strategic and operational linkage. IDR notching also considers structural subordination of EIX debt relative to SCE and the utility's dependence on capital from its corporate parent to balance its regulatory capital structure. ESG Considerations: Fitch recently revised EIX's and SCE's Environmental Social and Governance (ESG) Relevance Scores (RS) to '4' from '5' for Exposure to Environmental Impacts. The ESG RS revision reflects Fitch's assessment of wildfire risks to creditworthiness as being manageable within EIX's and SCE's current rating category. The revision considers efforts underway at EIX to enhance resilience and mitigate financial effects associated with firestorm activity in California. Post -2018 wildfires in SCE's service territory have been meaningfully smaller and more manageable and access to the AB 1054 wildfire fund provides a significant financial buffer to absorb future wildfire liabilities. DERIVATION SUMMARY EIX compares favorably with peer utility holding company PG&E Corp. (PCG; BB/Stable) and is similarly positioned to Cleco Corporate Holdings (Cleco; BBB-/Stable) and Puget Energy Inc. (PE; BBB-/Stable). Both EIX's and PCG's business risk profiles are seriously challenged by outsized wildfire-related liabilities with significantly more devastating effect for PCG. Post-2018 wildfires in SCE's service territory have been smaller and more manageable than the 2017/2018 wildfires. EIX, PCG, Cleco and PE are single utility-holding companies operating in parts of California (PCG & EIX), Washington (PE) and Louisiana (Cleco). EIX and PCG are significantly greater in size and scale than PE or Cleco and parent-only debt is significantly lower -- approximately 10% to 15% for EIX and PCG versus 30% for PE and 50% for Cleco. Virtually all of EIX's, PCG's and PE's consolidated EBITDA is provided by regulated operations and approximately 75% for Cleco. Fitch estimates FFO leverage will approximate 5x-6x in 2022 for EIX, Cleco and PE and 5x for PCG. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- No rate recovery of 2017-2018 wildfire liabilities; -- SCE pays approximately $7.5 billion of total wildfire-related third-party liabilities; -- No equity return on the first $1.6 billion of wildfire mitigation plan capex; -- Capex of more than approximately $17 billion 2021-2023; -- Balanced funding of SCE's capex program. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Consistent progress reducing firestorm risk in the intermediate-to-long term and FFO leverage of 5.0x or better on a sustained basis; -- Consecutive years of more manageable utility-triggered wildfire activity consistent with pre-2017/2018 levels or better with ongoing reduction of public safety power shut-offs and improvement in their execution; -- Successful implementation of A.B. 1054, with regard to resiliency initiatives, durability of the wildfire insurance fund and CPUC interpretation of prudence standards; -- Better than expected regulatory outcomes with respect to timeliness and substance. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Significant parent-only debt issuance; -- A downgrade of SCE; -- FFO leverage of greater than 5.5x on a sustained basis. -- Continuing catastrophic wildfire activity leading to depletion of the wildfire fund more quickly than expected and resulting exposure to incremental wildfire liabilities; -- Execution risk associated with A.B. 1054, including safety certification issuance, implementation of the wildfire insurance fund or unexpectedly large prudence disallowance by the CPUC; -- Ineffective implementation of wildfire mitigation plans or poor operating response to wildfires; -- Poor wildfire mitigation plan PSPS execution, communication and management; -- Adverse political, legislative or regulatory developments. 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: Fitch believes EIX has ample consolidated liquidity. EIX has negotiated $4.9 billion of consolidated revolving credit facilities (RCFs) composed of a $1.5 billion revolver at the corporate parent and a $3.4 billion revolver at SCE. As of Sept. 30, 2021, $420 million was drawn under EIX's $1.5 billion revolver, and SCE had no outstanding borrowings and letters of credit of $246 million under the utility's $3.4 billion revolving credit agreement. In April 2021, SCE and EIX amended their revolving credit facilities extending the termination dates to May 2025 from May 2024 and increasing the commitment amount at the utility by $350 million to $3.4 billion. As of Sept. 30, 2021, EIX had consolidated cash and cash equivalents of $484 million ($40 million of which was parent-only) and consolidated, borrowing capacity available of approximately $4.2 billion under credit facilities at EIX and SCE. Like most utilities, SCE is expected to be FCF negative based on Fitch's assumptions and its large capex program. Negative FCF is a function of high capex driven by spending to mitigate catastrophic wildfire activity and meet California's greenhouse gas reduction goals, which are among the most aggressive in the nation. Fitch expects cash shortfalls to be funded with a balanced mix of debt and equity. EIX and SCE have access to debt capital markets and Fitch believes debt maturities are manageable. ISSUER PROFILE Holding company EIX's core utility, SCE, is one of the largest investor-owned electric utilities in the U.S. with total assets of $71 billion as of 2Q 2021. SCE provides electricity services to 15 million people through 5 million customer accounts across a 50,000 square-mile service territory in Central, Southern and Coastal California. ESG CONSIDERATIONS Edison International has an ESG Relevance Score of '4' for Exposure to Environmental Impacts due to exposure to wildfires and related third-party liabilities, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Fitch recently revised EIX's ESG RS to '4' from '5' for Exposure to Environmental Impacts. The revision reflects Fitch's assessment of wildfire risks to creditworthiness as being manageable within EIX's current rating category. Edison International has an ESG Relevance Score of '4' for Exposure to Social Impacts due to exposure to wildfires and their adverse impact on SCE's customer base, 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. EDISON INTERNATIONAL: S&P Rates Perpetual Preferred Stock B 'BB+' ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating to Edison International's fixed-rate reset cumulative perpetual preferred stock Series B. The company intends to use the net proceeds from this issuance either to repay its outstanding commercial paper borrowings or for general corporate purposes. S&P said, "We rate the securities two notches below our 'BBB' long-term issuer credit rating on Edison International to reflect their subordination and the company's ability to defer dividends on the instruments, as defined in our criteria for hybrid securities. The dividend payments are deferrable, which fulfills the deferability element. The instruments are also subordinated to all of Edison International's existing and future senior debt obligations, thereby satisfying the condition for subordination. We assess the securities as having intermediate (50%) equity content through March 15, 2027. "We consider the effective maturity date to be March 15, 2047. At this date, the securities' cumulative step-up terms exceed 26 basis points, without a replacement capital covenant, which--in our view--represents a material incentive to redeem the security. Under our criteria, investment-grade hybrids that receive intermediate equity content require 20 years of residual time until the effective maturity date. As such, we limit the duration of our intermediate equity content treatment through March 15, 2027." EHT US1 INC: Claims Will be Paid from Sale Proceeds --------------------------------------------------- Eagle Hospitality Real Estate Investment Trust, a debtor affiliate of EHT US1, Inc. and the other Liquidating Debtors, the Committee, and the Prepetition Agent submitted a First Amended Joint Plan of Liquidation dated November 1, 2021. The Liquidating Debtors, the Committee, and the Prepetition Agent are the proponents of the Plans within the meaning of Section 1129 of the Bankruptcy Code. For the avoidance of doubt, none of the Liquidating Debtors are being substantively consolidated under the Plans. The Plans shall be implemented in accordance with the Plan Settlement. The Plans contemplate the appointment of a Liquidating Trustee to implement the Plans and make Distributions in accordance with their terms. The wind-down of the Singapore Debtors shall be handled by the REIT Trustee. Except as otherwise provided by order of the Bankruptcy Court, Distributions will occur at various times on and after the Effective Date. Class 5 consists of Other General Unsecured Claims against such Debtor Propco. Each Holder of an Allowed Other General Unsecured Claim against a Debtor Propco shall receive (i) its pro rata share of the Guaranteed Other GUC Distribution and (ii) Liquidating Trust Interests (Propco) which entitle such Holder to receive on account of its Allowed and unpaid Other General Unsecured Claim, its pro rata share of the Other GUC Trust Distribution until such Allowed Other General Unsecured Claim is paid in full (including any postpetition interest to the extent entitled thereto under applicable law), in each case subject to the Plan Settlement. Holders of Allowed Other General Unsecured Claims against the Debtor Propcos shall receive Liquidating Trust Interests (Propco) evidencing the right to receive any such Distributions that cannot be made as of the Effective Date. To the extent necessary to effectuate Distributions, Holders of Other General Unsecured Claims are the beneficiaries of the Plan Settlement Allocation. lass 5 is Impaired under each Debtor Propco Plan. Class 8 consists of Prepetition Lender Claims against each Debtor Non-Propco to the extent such Prepetition Lender Claims are not Secured Prepetition Lender Non-Propco Claims. The Prepetition Lender Claims against each Debtor Non-Propco shall be Allowed in each Plan, on a joint and several basis against each Debtor Non Propco, in an aggregate amount of no less than $380,513,355.00. After payment in full of all A/P/S Claims and Secured Prepetition Lender Non-Propco Claims, any remaining Cash at each Debtor Non-Propco shall be distributed on a pro rata basis to the Prepetition Agent (on account of the Prepetition Lender Claims) until the Prepetition Lender Claims are paid in full. Such pro rata share shall be a fraction where the numerator shall be the aggregate amount of Prepetition Lender Claims and the denominator the sum of the aggregate amount of Prepetition Lender Claims and all Allowed Other General Unsecured Claims against such Debtor Non-Propco. Holders of Prepetition Lender Claims shall receive Liquidating Trust Interests (Non-Propco) evidencing the right to receive any such Distributions that cannot be made as of the Effective Date. Class 9 consists of Other General Unsecured Claims against such Debtor Non-Propco. After payment in full of all A/P/S Claims and Secured Prepetition Lender Non-Propco Claims, any remaining Cash at each Debtor Non-Propco shall be distributed on a pro rata basis to the Prepetition Agent (on account of the Prepetition Lender Claims) and Holders of Allowed Other General Unsecured Claims until such Allowed Other General Unsecured Claim are paid in full. Such pro rata share shall be a fraction where the numerator shall be the amount of the Allowed Other General Unsecured Claim and the denominator the sum of the aggregate amount of Prepetition Lender Claims and all Allowed Other General Unsecured Claims against such Debtor Non-Propco. On the Effective Date, the Holders of the EH REIT Equity Interests shall be entitled to receive contingent Liquidating Trust Interests (Non-Propco) and shall be entitled to a Distribution only if all Holders of Allowed Claims against EH REIT have been paid in full. Allocation of Sale Proceeds With respect to each Debtor Propco, the portion of the proceeds from the Sale Transaction shall be deemed allocated to such Debtor Propco based on its Gross Sale Proceeds Percentage. Any other Liquidating Trust Propco Assets which are allocable to the Debtor Propcos generally shall be deemed allocated according to the same formula. Plan Settlement The Plans incorporate a global settlement (the "Plan Settlement"), which reflects a good faith compromise and settlement of numerous inter-Debtor, Debtor-creditor, and intercreditor issues, including issues regarding substantive consolidation, the allocation of sale proceeds among the Liquidating Debtors, the validity and enforceability of Intercompany Claims, the allocation of Administrative Expense Claims, funding of the wind-down of the Singapore Debtors, and the treatment of Claims held by Entities that do not have contractual privity with the Liquidating Debtors. As part of the Plan Settlement, the Prepetition Lender Claims are also being Allowed in each Plan, on a joint and several basis against each Liquidating Debtor, in an aggregate amount of no less than $380,513,355, and the exercise of the Lender Setoff Rights are being approved in each of the Plans. As a condition to the Plan Settlement, the Guaranteed Prepetition Agent Distribution and the Guaranteed Other GUC Distribution shall be paid on the Effective Date, which must occur on or before December 31, 2021. The Plan Settlement is designed to achieve a reasonable economic settlement of disputed Claims against the Liquidating Debtors and an efficient resolution of the Chapter 11 Cases. The entry of the Confirmation Order shall constitute the Bankruptcy Court's approval of the Plan Settlement, and the Bankruptcy Court's findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtors, their Estates, their creditors, and other parties-in-interest, and are fair, equitable, and within the range of reasonableness. "Liquidating Trust Propco Assets" means (a) all property of the Debtor Propco Estates including the Sale Transaction Proceeds and Debtor Propco Causes of Action and (b) funds held in non-Restricted Bank Accounts of the Liquidating Debtors (other than the Singapore Debtors' accounts at DBS Bank) as presented on page 1 of Schedule 1-A: Bank Reconciliation of Debtors' Monthly Operating Reports on the Effective Date, including (i) the Sompo America Insurance Company "Working Fund" (Account *82EO) account in the Debtor Name- Eagle Hospitality Real Estate Investment Trust, and (ii) the net proceeds from the sale of real property owned by Non-Debtor Affiliate 14315 Midway Road Addison LLC ("Non-Debtor Dallas") to which any Liquidating Debtor is entitled (x) in an amount sufficient to repay the postpetition Intercompany Claims of the Debtor Propco Estates against Non-Debtor Dallas, and (y) with respect to any such remaining net sale proceeds thereafter, the next $750,000 to be distributed to the Prepetition Agent on account of the Prepetition Lender Claims, and any such remaining net sale proceeds thereafter to be included in Liquidating Trust Propco Assets. A full-text copy of the First Amended Plan of Liquidation dated November 01, 2021, is available at https://bit.ly/3GQWqln from Donlin, Recano & Company, Inc., claims agent. Co-Counsel to the Debtors: PAUL HASTINGS LLP Luc A. Despins, Esq. G. Alexander Bongartz, Esq. Shlomo Maza, Esq. 200 Park Avenue New York, New York 10166 Telephone: (212) 318-6000 Facsimile: (212) 319-4090 E-mail: lucdespins@paulhastings.com alexbongartz@paulhastings.com shlomomaza@paulhastings.com COLE SCHOTZ P.C. Seth Van Aalten, Esq. G. David Dean, Esq. 500 Delaware Avenue, Suite 1410 Wilmington, Delaware 19801 Telephone: (302) 652-3131 Facsimile: (302) 574-2103 E-mail: svanaalten@coleschotz.com ddean@coleschotz.com About Eagle Hospitality Group Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality stapled group comprising Eagle Hospitality Real Estate Investment Trust and Eagle Hospitality Business Trust. Based in Singapore, Eagle H-REIT is established with the principal investment strategy of investing on a long-term basis in a diversified portfolio of income-producing real estate, which is used primarily for hospitality or hospitality-related purposes as well as real estate-related assets in connection with the foregoing, with an initial focus on the United States. EHT US1, Inc. and 26 affiliates, including 15 LLC entities that each owns hotels in the U.S., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-10036) on Jan. 18, 2021. EHT US1 estimated $500 million to $1 billion in assets and liabilities as of the bankruptcy filing. The Debtors tapped Paul Hastings LLP and Cole Schotz P.C. as their bankruptcy counsel, FTI Consulting Inc. as restructuring advisor, and Moelis & Company LLC as an investment banker. Rajah & Tann Singapore LLP and Walkers serve as Singapore Law counsel and Cayman Law counsel, respectively. Donlin, Recano & Company, Inc. is the claims agent. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors on Feb. 4, 2021. The committee tapped Kramer Levin Naftalis & Frankel, LLP as bankruptcy counsel, Morris James LLP as Delaware counsel, and Province, LLC as financial advisor. LVM Law Chambers LLC serves as the Debtor's Singapore law conflicts counsel. David M. Klauder, Esq., is the fee examiner appointed in the Debtors' Chapter 11 cases. Thomas D. Bielli, Esq., at Bielli & Klauder, LLC, is the fee examiner's legal counsel. EHT US1: EHT Asset Denied Further Extension to File Appeal Notice ----------------------------------------------------------------- The United States Bankruptcy Court for the District of Delaware denied the Amended Motion to Extend Time for Filing Notice of Appeal filed by EHT Asset Management, LLC, Taylor Woods, and Howard Wu. EHT Asset et al. are defendants in the adversary proceeding captioned Urban Commons Queensway, LLC, Plaintiff, Appellee, v. EHT Asset Management, LLC, Taylor Woods, Howard Wu, Defendants, Appellants, Adv. Pro. No. 21-50476 (CSS)(Bankr. D. Del.). They sought an extension of the time for filing a notice of appeal of the Court's Order Granting Summary Judgment Pursuant to Federal Rule of Civil Procedure 56 and Federal Rule of Bankruptcy Procedure 7056, entered on September 14, 2021. On July 2, 2021, the Defendants' former counsel filed its motion for leave to withdraw as counsel to the "Urban Commons Parties," including the Defendants. Rather than responding to the Summary Judgment Motion on its merits, on July 12, 2021, the deadline for Defendants to submit a response, the Defendants filed a motion for extension of time, seeking an extension to file any opposition to the Summary Judgment Motion until Defendants had retained substitute counsel. On August 12, 2021, the Court held a hearing on the Withdrawal Motion. No replacement counsel or other representative of the Defendants appeared at the hearing. The Court granted the Withdrawal Motion on the record at the hearing and stated that the Defendants would be given no further adjournments of deadlines in these cases on account of not having counsel. The Court pointed out that the Plaintiff will be prejudiced by the requested extension of time. Over 16 months have passed since the Defendants received the PPP loan amount and have refused to return such amounts to the Plaintiff. Additionally, it reopens litigation that has been decided by the Court and begins an appellate process for which no arguments were raised in this Court (as the Defendants failed to file any response to the Summary Judgment Motion). Furthermore, the Defendants have raised no argument regarding their success on the merits, which is prejudicial to the Plaintiff. At most they have asserted a bald assertion of set-off, the Court said. The time and resources needed to fight against amorphous allegations would be incredibly prejudicial (in delay and expense) to the Plaintiff, the Court held. Failure to find or replace counsel is not a sufficient reason for the Defendants' delay, the Court noted. When a "pro se litigant fails to comply with an easily understood court-imposed deadline, there is no basis for treating that party more generously than a represented litigant," the Court added. As a result, the Defendants' neglect, if any, was not excusable, the Court concluded. A full-text copy of the Memorandum Order dated October 28, 2021, is available at https://tinyurl.com/3c84fsyt from Leagle.com. About Eagle Hospitality Group Eagle Hospitality Trust -- https://eagleht.com/ -- is a hospitality stapled group comprising Eagle Hospitality Real Estate Investment Trust and Eagle Hospitality Business Trust. Based in Singapore, Eagle H-REIT is established with the principal investment strategy of investing on a long-term basis in a diversified portfolio of income-producing real estate, which is used primarily for hospitality or hospitality-related purposes as well as real estate-related assets in connection with the foregoing, with an initial focus on the United States. EHT US1, Inc. and 26 affiliates, including 15 LLC entities that each owns hotels in the U.S., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-10036) on Jan. 18, 2021. EHT US1 estimated $500 million to $1 billion in assets and liabilities as of the bankruptcy filing. The Debtors tapped Paul Hastings LLP and Cole Schotz P.C. as their bankruptcy counsel, FTI Consulting Inc. as restructuring advisor, and Moelis & Company LLC as an investment banker. Rajah & Tann Singapore LLP and Walkers serve as Singapore Law counsel and Cayman Law counsel, respectively. Donlin, Recano & Company, Inc. is the claims agent. The U.S. Trustee for Region 3 appointed an official committee of unsecured creditors on Feb. 4, 2021. The committee tapped Kramer Levin Naftalis & Frankel, LLP as bankruptcy counsel, Morris James LLP as Delaware counsel, and Province, LLC as financial advisor. LVM Law Chambers LLC serves as the Debtor's Singapore law conflicts counsel. David M. Klauder, Esq., is the fee examiner appointed in the Debtors' Chapter 11 cases. Thomas D. Bielli, Esq., at Bielli & Klauder, LLC, is the fee examiner's legal counsel. EMPIRE RESORTS: Fitch Assigns Final 'B+' LT IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has assigned Empire Resorts, Inc. a final 'B+' Long-Term Issuer Default Rating (IDR) following the closing of its new senior secured notes and HoldCo loan. Fitch has also assigned a 'BB+'/'RR1' rating to Empire's senior secured notes. The Rating Outlook is Stable. The IDR reflects an improved standalone credit profile (SCP) pro forma for the recapitalization. Empires 'b-' SCP is supported by improved financial flexibility and modestly positive forecast FCF generation, offset by its geographic concentration and high leverage. The two-notch uplift from the SCP reflects the moderate linkage to stronger parent, Genting Malaysia (GENM; BBB/Negative). The Stable Outlook reflects the property's recent healthy operating performance and regional gaming's broader solid recovery. Empire completed a recapitalization that included $300 million of senior secured notes, a new $75 million HoldCo loan, and a $150 million preferred equity investment by GENM. KEY RATING DRIVERS Leverage High but Manageable: Fitch forecasts standalone gross rent-adjusted leverage to approach 6x by 2022 (around 7x including HoldCo debt), driven by a more conservative proposed capital structure and a strong recovery in U.S. regional gaming from pandemic-related disruptions. The credit profile should continue to modestly delever through 2024, as FCF generation can support a small level of debt paydown at the HoldCo level. EBITDAR margins have improved sequentially since early 2021, supported by management's privatization cost saving measures, increased win-per-unit-per-day (WUD), and regional gaming's strong recovery. Transaction Improves Financial Flexibility: The note issuance and preferred equity investment eliminated near-term refinancing risk and funded two debt service reserve accounts. In addition, FCF generation will turn positive in 2022 and provide some additional financial flexibility in the context of Empire's 'b-' SCP. Empire has low maintenance capex needs, given the property's age, and development capex related to the Orange County (OC) slots-only property will not impact Empire's liquidity profile, as it will be primarily funded from outside the restricted group. Fitch expects FCF to be allocated toward HoldCo debt repayment and increasing liquidity. Lack of Diversification: Empire operates a single property, Resorts World Catskills (RWC), in a competitive market that could be subject to new supply in the medium term. Single-site casino operators are typically rated on the low end of speculative grade, though some can achieve higher ratings if they are in well-protected, monopolistic type regulatory environments and have very low leverage. Empire could become more diversified with its second slots-only casino license slated for the nearby Orange County, NY (OC, to open during 2022). However, given the geographic proximity of OC the ratings benefit from opening the additional casino will be somewhat limited. Competitive Pressure Tempers Potential: RWC is located approximately 90 miles from New York City, and the immediate area around the casino is remote relative to the size of resort. RWC competes with Atlantic City, NJ, eastern Pennsylvania, New York City area slots-only properties and Connecticut tribal casinos for New York metro area customers. The competitive landscape makes significant, long-term growth in gaming revenues unlikely. Additionally, New York State can consider incremental downstate full-scale licenses beginning 2023, which could, in turn, increase political momentum to try and expand gaming in New Jersey again. Genting Relationship Positive: Fitch views Empire's association with Genting Malaysia (BBB/Negative) positively and believes it warrants a two-notch uplift from the 'b-' SCP under Fitch's "Parent and Subsidiary Rating Linkage Criteria." The bottoms-up approach focusing on the SCP differs from other Genting-owned entities that are equalized with the parent's rating. This is primarily due to Genting not wholly-owning Empire Resorts, as Kien Huat (the investment vehicle of the Lim family that controls Genting) owns 51% and controls Empire. In addition, Fitch views RWC as having less strategic value than other wholly owned Genting properties, which are generally large-scale flagship assets that generate materially greater cash flow. However, RWC does have strategic value, given Genting's reputational risk with global gaming regulators. The property is managed by the same team as Resorts World New York and shares the same brand. The two-notch uplift is also reinforced by demonstrated financial support from both Kien Huat and Genting, mainly through preferred equity investments, to ensure the prior capital structure's debt was serviced during initial operating weakness and to recapitalize the entity at a more conservative level than previously contemplated. DERIVATION SUMMARY Empire's SCP is consistent with most other single-site casino operators, which are typically on the lower end of speculative grade. The SCP reflects Empire's geographic concentration in a competitive environment subject to new supply risk in the medium term. The SCP also reflects high adjusted leverage, though more manageable under the new capital structure, and a weaker FCF profile than its regional gaming peers. Fitch treats the HoldCo debt as debt of the rated entity, due to potential enforcement of a share pledge triggering a Change of Control at the rated entity level. Pro forma for the recapitalization, liquidity and refinancing risk are no longer be material concerns, which partially drove Empire's previous lower SCP. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Fitch's assumptions build off a normalized, run-rate net revenue of about $310 million for RWC, supported by managements post-privatization initiatives and the recovery in U.S. regional gaming. This level of revenue is achieved during fiscal 2022, with fiscal 2021 lower given the lingering pandemic disruption in 1H21 (though this began abating during 2Q21). Total revenue increases toward $400 million in 2023, which includes the first year of operations of the Orange County slots-only property (Fitch assumes about 20% cannibalization to RWC); -- EBITDAR is $40 million in 2021, though margins reach 20% in the back half of 2021. EBITDAR margins increase toward low-20% by 2022 thanks to a large number of cost savings associated with taking Empire private, as well as a rationalization of the labor pool post-pandemic; -- Rent is roughly $20 million per year and increases slightly after Orange County property opens; -- Maintenance capex is minimal given RWC's age. Capex related to the OC license is funded outside of the restricted group; -- FCF is allocated toward paying down the HoldCo note and building additional financial flexibility; -- Fitch does not include any potential benefits from online sports betting at this time. RECOVERY ASSUMPTIONS The recovery analysis assumes that Empire Resorts would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim and there is no revolver in the capital structure. Going-concern EBITDA of roughly $40 million is less than Fitch's 2022 estimates, which incorporates some degree of operating stress that would cause a default scenario from sustained negative FCF. This level of EBITDA is representative of margins in the mid-teens, given New York's high gaming taxes and the competitive nature of Empire's addressable market. Since Resorts World Catskills opened in 2018, there is limited historical performance to analyze. This EBITDA is slightly higher than the previous going-concern EBITDA used in mid-2020 given the now realized cost-cutting from management's initiatives and incremental reduction in VLT gaming taxes for RWC. Fitch applies a 6.0x EV/EBITDA multiple, which reflects the intense competitive environment, limited track record of operations, fixed rent costs, and less established player database relative to larger, regional peers. This is balanced by the property's younger age and quality, having opened in 2018. Typically Fitch will assign 5.5x-7.0x multiples to regional gaming companies depending on diversification, competitive environment, asset quality, and existence of meaningful leases. Fitch also includes roughly $70 million in additional value for the OC slot-only casino license. Since the property is not yet built, Fitch values the license under a conservative set of assumptions as follows: 1,200 slots; $180 win per unit per day (WUD, conservative relative to Fitch's base case); 15% EBITDA margins, 6.0x EV/EBITDA multiple. The WUD assumptions are characteristic of a regional casino in a saturated market and are below Fitch's base case assumptions for the OC property. The margin assumption takes into account the high gaming tax associated with slot-only licenses. Fitch forecasts a post-reorganization enterprise value of roughly $315 million, after the deduction of expected administrative claims of 10%. This results in a 91%-100% recovery band for the senior secured notes, which equates to +3 notching from the IDR to 'BB+'. Given the structural subordination of the HoldCo debt, it does not impact the recovery analysis of the Empire senior secured notes. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Geographic diversification away from greater New York City; -- Reductions in adjusted debt/EBITDAR toward 5.0x (includes HoldCo debt); -- FCF margin exceeding 10%; -- An increase in rating linkage with Genting Malaysia. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Adjusted debt/EBITDAR sustaining above 7.0x (includes HoldCo debt); -- FCF margin approaching 0%; -- A decrease in rating linkage with Genting Malaysia; -- A material reduction in financial flexibility. 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 Empire has roughly $90 million in cash following the secured note issuance, which includes roughly $50 million in two debt service reserve accounts. This is sufficient in the context of marginally positive and growing EBITDA generation and minimal maintenance capex needs. The high initial excess cash balances offset the lack of a revolving credit facility. Fitch forecasts FCF to be marginally negative in 2021 and become slightly positive thereafter. Some growth capex remains associated with the golf course in 2022, though this is manageable. Capex related to the OC project will be incurred outside of the restricted group. Fitch assumes management allocates FCF toward paydown of the HoldCo loan (within the limits of final documentation's restricted payment carve-outs) and build additional financial flexibility as it works toward its target of being in a net cash position. There are no maturities until 2024. ISSUER PROFILE Empire Resorts, Inc. owns and operates Resorts World Catskills (RWC), a full-scale casino located roughly 90 miles outside New York City. The company is in the process of relocating its prior video gaming machine (VGM, aka slots) license from Monticello, NY to Orange County, NY. SUMMARY OF FINANCIAL ADJUSTMENTS -- Fitch adds back non-recurring items to EBITDA. Fitch also includes HoldCo debt in its leverage calculation as it is considered debt of the rated entity per Fitch's criteria. ESG CONSIDERATIONS The highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. ENDO INTERNATIONAL: Bankruptcy Filing One of Contingency Plans -------------------------------------------------------------- Endo International PLC says that bankruptcy is among its contingency plans due to opioids, and that thousands of legal claims tied to opioids may cast doubt on its solvency, the company said in its Nov. 5 Form 10-Q filing with the SEC. The Company said, "We have not been able to settle most of the opioid claims made against us and, as a result, we are exploring a wide array of potential actions as part of our contingency planning. These actions could include a bankruptcy filing which, if it were to occur, would subject us to additional risks and uncertainties that could adversely affect our business prospects and ability to continue as a going concern." Since 2014, multiple U.S. states as well as other governmental persons or entities and private plaintiffs in the U.S. and Canada have filed suit against the Company and/or certain of its subsidiaries, as well as various other manufacturers, distributors, pharmacies and/or others, asserting claims relating to defendants’ alleged sales, marketing and/or distribution practices with respect to prescription opioid medications, including certain of our products. As of Oct. 28, 2021, filed cases in the U.S. include, but are not limited to, 20 cases filed by or on behalf of states; 2,920 cases filed by counties, cities, Native American tribes and/or other government-related persons or entities; approximately 310 cases filed by hospitals, health systems, unions, health and welfare funds or other third-party payers and approximately 190 cases filed by individuals, including but not limited to legal guardians of children born with neonatal abstinence syndrome. Certain of the U.S. cases have been filed as putative class actions; to date, however, no court has certified a litigation class. The Canadian cases include an action filed by British Columbia on behalf of a proposed class of all federal, provincial and territorial governments and agencies in Canada that paid healthcare, pharmaceutical and treatment costs related to opioids; an action filed in Alberta by the City of Grand Prairie, Alberta, and The Corporation of the City of Brantford, Ontario, on behalf of a proposed class of all local or municipal governments in Canada; an action filed in Saskatchewan by the Peter Ballantyne Cree Nation and the Lac La Ronge Indian Band, on behalf of a proposed class of all First Nations communities and local or municipal governments in Canada; and three additional putative class actions, filed in Ontario, Quebec and British Columbia, seeking relief on behalf of Canadian residents who were prescribed and/or consumed opioid medications. "[W]e and other manufacturers of prescription opioid medications have been, and will likely continue to be, subject to negative publicity and press, which could harm our brand and the demand for our products. Certain other manufacturers of prescription opioid medications have publicly commenced, or announced their intention to commence, cases to seek the protections under Chapter 11 of the Bankruptcy Code to address the claims being asserted against such manufacturers in these opioid lawsuits and others may do so or take similar measures in the future. We cannot assure you how any such decisions will impact our company." About Endo International PLC Endo (NASDAQ: ENDP) is an Ireland-domiciled specialty pharmaceutical company. Endo International plc was incorporated in Ireland in 2013 as a private limited company and re-registered effective Feb. 18, 2014 as a public limited company. Endo International plc is a holding company that conducts business through its operating subsidiaries. As of June 30, 2021, the Company had $9.20 billion in total assets, $1.41 billion in total current liabilities, $22.93 million in deferred income taxes, $8.05 billion in long-term debt, $32.87 million in operating lease liabilities (less current portion), $305.46 million in other liabilities, and a total shareholders' deficit of $617.04 million. * * * As reported by the TCR on Sept. 6, 2021, S&P Global Ratings lowered its long-term issuer credit rating on Endo International PLC to 'CCC+' from 'B-' and removed the rating from CreditWatch, where S&P placed it with negative implications on Aug. 25, 2021. The outlook is negative. S&P said the negative outlook reflects the potential for an event of default within the next 12 months stemming from opioid-related litigation or the possibility of a distressed exchange. EXPRESS GRAIN: Taps Dennis Gerrard of CR3 Partners as CRO --------------------------------------------------------- Express Grain Terminals, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Mississippi to employ Dennis Gerrard, a partner at CR3 Partners, LLC, as its chief restructuring officer. The CRO's services include: a. providing the Debtor temporary employees to assist with the restructuring efforts and completion of bankruptcy-related reporting requirements; b. establishing a communication protocol with stakeholders; c. assisting in the preparation and review of financial projections and cash flow budgets, including implementing cash conservation strategies, tactics and processes where appropriate and feasible; d. assisting in the preparation and review of reports or filings as required by the court or the Office of the U.S. Trustee, including schedules of assets and liabilities, statements of financial affairs and monthly operating reports; e. assisting in the preparation of a plan of reorganization and related documents; f. assisting the Debtor and its legal counsel with the preparation for hearings, testimony, creditor meetings, and creation of supporting exhibits and motions; g. assisting the Debtors and its legal counsel in developing litigation strategy and related analysis; h. identifying liquidity needs, including determining potential debtor-in-possession funding requirements; i. assisting with evaluating executory agreements as necessary; and j. performing other necessary restructuring advisory services. The firm's hourly rates are as follows: Partners $725 to $850 per hour Directors $495 to $675 per hour Managers $425 to $495 per hour Associates $350 per hour CR3 Partners will also be reimbursed for out-of-pocket expenses incurred. Mr. Gerrard 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: Dennis Gerrard CR3 Partners, LLC 13355 Noel Road, Suite 2005 Dallas, TX 75240 Tel: (800) 728-7176 About Express Grain Terminals Express Grain Terminals, LLC, a Greenwood, Mississippi-based producer of soy products such as oil and biodiesel, filed a petition for Chapter 11 protection (Bankr. N.D. Miss. Case No. 21- 11832) on Sept. 29, 2021, listing up to $50 million in assets and up to $100 million in liabilities. John Coleman, member, signed the petition. Judge Selene D. Maddox oversees the case. The Debtor tapped Craig M. Geno, Esq., at The Law Offices of Craig M. Geno, PLLC as its legal counsel and CR3 Partners, LLC as its restructuring advisor. Dennis Gerrard, a partner at CR3 Partners, serves as the Debtor's chief restructuring officer. FENDER MUSICAL: Moody's Rates New $375MM Secured Term Loan B 'B2' ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Fender Musical Instruments Corporation's new $375 million senior secured term loan B due 2028. Fender's B1 Corporate Family Rating and B1-PD Probability of Default Rating were affirmed. The rating outlook is stable. Proceeds from the new term loan, along with about $59 million of balance sheet cash, will be used to fund the purchase of PreSonusAudio Electronics, Inc. (PreSonus) and refinance the company's existing debt in full. Fender will also replace its existing $85 million asset-based revolver (not-rated) with a new $100 million senior secured asset-based revolver (not-rated). The existing $85 million ABL is currently undrawn and is expected the new $100 million ABL will not be drawn at the time the transaction closes. No rating action was taken on Fender's existing term loan. Moody's expects to withdraw the B2 rating on this term loan due 2025 once the transaction closes. PreSonus is a designer and manufacturer of audio-recording and live-sound software, hardware and related accessories used for recording, sound reinforcement, broadcast, sound design and internet audio. The company has about $100 million in revenue compared to Fender's annual revenue of about $900 million. "Moody's has a favorable view of Fender's acquisition of PreSonus, an established company with highly related product offerings," stated Keith Foley, a Senior Vice President at Moody's. "The acquisition is also consistent with the company's digital growth plans and continuing industry trend towards home recording," added Foley. PreSonus' earnings increased meaningfully during the pandemic because of higher sales with individuals spending more time at home, as well as good cost efficiency. There is some risk that sales and earnings will slip as consumers return to more out-of-home activities, but Moody's believes the company's solid market position and good product quality will allow it to capitalize on the longer-term home recording trend. Although absolute debt increases as result of the transaction, Fender's debt-to-EBITDA is expected to remain below Moody's downgrade factor of 4.0x. Debt-to-EBITDA for the latest 12-month period ended 7/4/2021 was 2.6x, and will increase to an estimated 3.6x on a pro forma basis for the PreSonus acquisition. The refinancing will also push out Fender's debt maturity profile. The new credit facilities are considered covenant-lite in nature and have similar terms to Fender's existing credit facilities. The asset-based loan collateral consists of a first priority lien on the company's accounts receivable and inventory and a second priority lien on fixed assets and intangibles. The term loan has a first lien on PP&E, intangibles and substantially all other assets, except the asset-based loan collateral, and a second lien on the asset-based loan collateral. The following ratings/assessments are affected by the action: New Assignments: Issuer: Fender Musical Instruments Corporation Senior Secured Bank Credit Facility, Assigned B2 (LGD4) Ratings Affirmed: Issuer: Fender Musical Instruments Corporation Corporate Family Rating, Affirmed at B1 Probability of Default Rating, Affirmed at B1-PD Outlook Actions: Issuer: Fender Musical Instruments Corporation Outlook, Remains Stable RATINGS RATIONALE Fender's B1 Corporate Family Rating reflects the company's strong brand awareness. The Fender name is supported by the long-standing reputation and quality of its guitars and product innovation. This provides strong brand name recognition and significant barriers to entry for guitars, its flagship product. Fender is also one of the largest musical instrument companies in the world. Approximately half of the company's net sales are generated outside of North America, with about a third coming from Europe and remainder of approximate 15% coming from Asia. Fender's financial policy reflects use of moderate financial leverage to provide flexibility given its high sensitivity to economic downturns and periodic use of debt to finance acquisitions. In addition to the uncertainty caused by the coronavirus pandemic, key credit risks include the nonessential, highly discretionary nature of consumer spending on musical instruments, Fender's relatively narrow product focus, and significant customer concentration. Guitar Center, Inc. the largest private retailer of music products in the United States represents about 17% of Fender's net sales. 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 Moody's 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. Moody's expects Fender will continue to maintain a modest financial policy in terms of leverage and dividends. Debt-to-EBITDA has consistently remained below 4.0x and Moody's projects leverage will remain below 4.0x over the next year. Additionally, the company has not paid dividends following a $100 million debt financed dividend that occurred at the end of fiscal 2018. The company also repaid $50 million that was borrowed on the term loan as a precautionary measure to bolster liquidity at the start of the pandemic. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects increasing customer demand across all of Fender's product lines as individuals pursue leisure activities close to home. As a result, Moody's expect the company to generate at least $40 million of positive free cash flow and maintain moderate leverage and very good liquidity. A ratings upgrade is unlikely given the continuing volatility related to the coronavirus. An upgrade would require a high degree of confidence on Moody's part that consumer demand for musical instrument products is sustained at currently high levels, and that Fender continue to demonstrate the ability and willingness to generate strong positive free cash flow, maintain good liquidity, and continue to operate with a debt/EBITDA level at below 3.0x. Ratings could be downgraded if Moody's anticipates earnings will decline or liquidity will deteriorate because of actions to contain the spread of the virus or reductions in discretionary consumer spending. Separate from general operating conditions, Fenders ratings could be downgraded if debt-to-EBITDA is sustained above 4.0x or the company decides to pursue a more aggressive financial policy for any reason. As proposed, the new first lien credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following: incremental debt capacity up to the sum of the greater of $115 million and 75% of pro forma trailing four quarter consolidated EBITDA, plus unlimited amounts subject to a senior secured leverage no greater than 4.0x (if pari passu secured). No portion of the incremental may be incurred with an earlier maturity than the initial term loan. 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. The credit agreement provides some limitations on up-tiering transactions, including the requirement that all affected lenders must consent to the reduction of any of the voting percentages, modification to the pro rata sharing provisions and payment waterfall, and the release of all or substantially all of the collateral or guarantors. The proposed terms and the final terms of the credit agreement may be materially different. The principal methodology used in these ratings was Consumer Durables published in September 2021. Fender develops, manufactures, and distributes musical instruments to wholesale and retail outlets throughout the world. The company's product portfolio includes fretted instruments (comprised of electric, acoustic, and bass guitars and ukuleles), guitar amplifiers, audio systems, guitar pedals, other guitar accessories, and digital applications centered around musical education. Portfolio of brands include Fender, Squier, Bigsby, Jackson, and Charvel. The company also is a licensee of the Gretsch and Eddie Van Halen brands. Fender is majority owned by Servco Pacific Capital. The company generated $842 million of net sales for the latest 12-month period ended 7/4/2021. FORTRESS INVESTMENT: Fitch Affirms 'BB' LT IDR, Outlook Stable -------------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Ratings (IDRs) of Foundation Holdco LP, the parent company and successor to Fortress Investment Group LLC, and its rated subsidiaries (collectively Fortress) at 'BB'. Fitch has also affirmed Fortress' Short-Term IDRs at 'B' and FinCo I LLC's senior secured debt rating at 'BB'. The Rating Outlook is Stable. The rating actions have been taken as part of a periodic peer review of the alternative investment manager (IM) industry, which is comprised of 11 publicly rated global firms. KEY RATING DRIVERS IDRs AND SENIOR DEBT The rating affirmations reflect Fortress' established position as a global alternative IM, experienced management, stable cash flow generation, moderate management fee exposure to net asset value (NAV) movements, improving operating margins and declining leverage. Rating constraints include elevated leverage, albeit declining, limited revenue diversity relative to more highly rated peers, investment concentrations, historical underperformance in certain funds and business segments and a fully secured funding profile. Rating constraints for alternative IMs include key person risk, which is institutionalized throughout many limited partnership agreements; reputational risk, which can impact the company's ability to raise future funds; and legal and regulatory risk. At June 30, 2021, Fortress had $53.9 billion in assets under management (AUM), up 18.3% from 2Q20. Credit private equity (PE) funds represented the largest segment, accounting for 65.3% of Fortress' AUM and 42.2% of management fees over the TTM ended June 30, 2021. Fortress' traditional PE AUM represented just 2.6% of AUM at 2Q21. Fortress' increased focus on credit funds has resulted in lower AUM diversity relative to alternative IM peers. Fortress raised $11.9 billion of capital during 2020, representing its strongest fundraising year. Capital raising slowed in 2021, with $3.1 billion raised in 1H21. Fortress had approximately $19.3 billion of dry powder at 2Q21. While investing this amount of capital could take some time, Fortress' pace of deployment has increased since the onset of the coronavirus pandemic. Fortress' fee-related EBITDA (FEBITDA) margin for the TTM ended June 30, 2021 was 30.5%, which was up from 24.7% for the TTM ended June 30, 2020 and at the low end of Fitch's 'a' category benchmark range of 30%-50% for alternative IMs. Since Fortress does not report all incentive income compensation separately, which Fitch adds back to FEBITDA, Fitch believes Fitch-calculated FEBITDA for Fortress is understated. Management fees in 1H21 increased 12.3%, yoy, largely driven by an increase in fee-generating AUM (FAUM) in credit PE funds and an increase in NAV in credit hedge funds. Fitch believes there is good forward visibility into Fortress' management fees as around 69% of Fortress' AUM at 2Q21 was in permanent equity or fund structures that mature in five or more years. Incentive income increased 90.7% in 1H21, yoy, driven largely by incentive income from credit hedge funds. Fortress had $2.1 billion of undistributed incentive income, net of intrinsic clawback but gross of compensation under employee profit sharing arrangements, the realization of which would contribute to additional cash flow generation. However, realized incentive income can be volatile. Fortress' leverage (debt-to-FEBITDA) was 6.5x on a TTM basis at June 30, 2021, which is down from 9.9x a year ago but above Fitch's 'bb' benchmark range of 4.0x-6.0x for alternative IMs. Since Fortress does not report all incentive income compensation separately, Fitch also assesses leverage by assuming a 35% FEBITDA margin (based on historical margins). On this basis, adjusted leverage was 5.7x for the TTM ended June 30, 2021, down from 7.0x a year ago. Fitch believes leverage could continue to decline over the outlook horizon given management fee growth and the potential for additional debt prepayments. FEBITDA divided by interest expense was 4.3x on a TTM basis through 2Q21 and 5.0x assuming a 35% FEBITDA margin. Fitch expects Fortress' interest coverage ratio to remain within or above the 'bb' category benchmark range of 2.0x-4.0x. Fortress' liquidity was adequate at 2Q21, with $483.7 million of cash and $88.1 of availability under its revolving loan facility and no near-term debt maturities. Fortress had remaining capital commitments that can be drawn by the funds on demand of $291.7 million at 2Q21, of which $158.0 million is related to funds that are still in their investment or commitment period. Fortress has not paid any distributions to SoftBank Group Corp. (SBG) since 2018, which Fitch believes is consistent with the company's focus on reducing leverage; however, the long-term distribution policy is unclear. The Stable Outlook reflects Fitch's expectations that Fortress will maintain adjusted leverage below 6.0x, solid FEBITDA margins and sufficient liquidity to meet debt service requirements and co-investment commitments to funds. The Outlook also reflects Fitch's belief that Fortress will continue to grow/retain FAUM through the raising of new and expansion of existing fund strategies and continued capital deployment. A Long-Term IDR of 'BB' corresponds to a Short-Term IDR of 'B' according to Fitch's "Non-Bank Financial Institutions Rating Criteria" dated Feb. 28, 2020. The secured debt rating is equalized with the Long-Term IDR, reflecting Fitch's expectation of average recovery prospects for the debt class in a stress scenario. SUBSIDIARY AND AFFILIATED COMPANIES Rated subsidiaries of Foundation Holdco LP include FinCo I LLC, which indirectly owns Fortress Investment Group LLC and is the issuer of the secured term loan. Rated subsidiaries also include FIG Parent, LLC and FinCo I Intermediate HoldCo LLC, which, along with Foundation Holdco LP, serve as joint and several guarantors of the secured term loan and are shell holding companies above Fortress Investment Group LLC. The IDRs of each entity are equalized with those of Foundation Holdco LP. RATING SENSITIVITIES IDRs AND SENIOR DEBT Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Adjusted leverage approaching 5.0x, continued FAUM growth, increased FAUM and revenue diversity, enhanced funding flexibility through access to unsecured debt and/or more diversified funding sources, and maintenance of solid liquidity levels. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A sustained increase in adjusted leverage above 6.0x, a material decline in the FEBITDA margin, a decline in interest coverage below 2.0x and a weaker liquidity profile; -- Deterioration in the credit profile of SBG combined with inadequate limitations on SBG's ability to extract liquidity from Fortress to the detriment of its debt holders, could also pressure Fortress' ratings, although this is not anticipated under the firm's current distribution policy. The Short-Term IDR is primarily sensitive to the Long-Term IDR and would be expected to move in tandem. At higher rating levels for the Long-Term IDR, the Short-Term IDR would also become sensitive to Fitch's assessment of Fortress' funding, liquidity and coverage. The secured debt rating is equalized with the Long-Term IDR and would be expected to move in tandem. SUBSIDIARY AND AFFILIATED COMPANIES The IDRs of FIG Parent, LLC, FinCo I LLC, FinCo I Intermediate HoldCo LLC and Fortress Investment Group LLC are equalized with the IDRs of Foundation Holdco LP and are, therefore, expected to move in tandem. 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. 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. FROZEN FOODS: Seeks Cash Collateral Access Thru Nov. 19 ------------------------------------------------------- Frozen Foods Partners, LLC, d/b/a Gourmet Express, LLC, d/b/a Gourmet Express asks the U.S. Bankruptcy Court for the Southern District of New York for authority to use cash collateral and provide adequate protection to secured creditor Iron Horse Credit LLC. The Debtor requires the immediate use of Cash Collateral to avoid immediate and irreparable harm to the Debtor, its estate and creditors. Immediately upon filing of the petition, the Debtor, through its proposed counsel, communicated with the Lender's counsel in order to begin discussions and negotiations concerning the consensual use of the Cash Collateral. It is the Debtor's expectation that they will negotiate and work together to enter into a mutually acceptable stipulation or consent Order which will be submitted to the Court for its consideration on or before, or promptly following, the hearing date in connection with the Motion. The Debtor's proposed budget which it intends to memorialize in a stipulation seeks the Debtor's use of the Cash Collateral through November 19, 2021. The Debtor leases more than 300,000 square feet of space used as its food manufacturing plant located at 600 Greene Dr., Greenville, Kentucky 42345, of which less than 50,000 square feet is presently in active use by the Debtor. On December 16, 2019, the Debtor entered into a Cash and Security Agreement with the Lender, pursuant to which the Lender extended a revolving $1,750,000 inventory loan to the Debtor. The Agreement provided for a contract rate of 13.8% and a default rate 27.6%. The debt incurred by the Debtor was to mature 24 months following closing on the transaction. By letter dated September 30, 2021, the Lender claimed that the termination of Juan Carlos Pena as chief executive officer was an event of default and preserved its rights, but did not immediately demand payment of any the Debtor's obligations. On October 19, 2021 the Lender transmitted a letter to the Debtor in which the Lender demanded repayment of $2,224,429 as a consequence of Mr. Pena's termination. On October 21, 2021, the Lender transmitted a letter to the Debtor in which it asserted a further default arising from the non-payment of the amount demanded in its October 19th correspondence. On October 23, 2021, the Lender provided notice to the Debtor of its intention to dispose of its collateral on or after November 2, 2021, without specifying which collateral would be liquidated and where the sale would take place. That proceeding has been stayed by the Debtor's filing. The Debtor believes the aggregate amount due the Lender is approximately $1,500,000 and that the value of the Lender's collateral far exceeds the amount due it by either the Debtor's calculations or the amount demanded in its letter of October 19, 2021. During the first half 2020 sales for the Debtor reached a record of about $17,500,000. The Debtor was profitable for that half as the COVID-19 outbreak helped drive increased sales for quality frozen foods. For the second half of 2020 sales decreased to about $14,500,000, with a noticeable decrease in sales and profit towards the end of the year when prior management significantly changed the recipe of several of the core products to cut costs by replacing the "use as you like" sauce in each bag with a one-size "pellet." The sales for the 2020 year closed at $31,785,830, resulting in a net loss of $510,863. During the first half of 2021 sales dropped precipitously to $10,552,149 primarily due to the recipe change, the loss of a co-packer for several SKU’s made off-site, and the Debtor absorbing price increases across its supply chain since inception without passing them onto its customers through increases in the prices for which its goods are sold, which collectively resulted in a loss for the half-year of $1,949,028. Cash flow challenges starting in the third quarter of 2021 caused the Board of Managers to contact several turnaround experts. In August 2021 the Board of Managers was introduced to Jeff Lichtenstein and Mike Goose of Next In Natural, a boutique food management company for an assessment of the business challenges. Since the termination of Carlos Pena, First Industrial has seized approximately $230,000 of the Debtor’s $250,000 security deposit to satisfy the Debtor's rent arrears, transmitted purported termination and eviction notices, and appeared at the Kentucky premises with other creditors. As adequate protection for the Debtor's use of cash collateral, the Debtor proposes to grant the Lender a replacement lien against and security interest in all assets of the Debtor (excluding Chapter 5 causes of action and recoveries, if any), to the extent that such liens existed immediately prior to the Filing Date and for any diminution in value. Such replacement lien provides the Lender with adequate protection. To the extent such post-petition collateral consists of the proceeds of PACA obligations, the Replacement Liens will be subordinate to such trust obligations. The Debtor further submits that based upon the value of its assets, there is substantial equity in such assets over and above secured liens. Accordingly, the Debtor submits that the Lender is adequately protected. The Debtor, however, reserves all rights with respect hereto, and to present evidence in support thereof, as it relates to the necessity to provide alternate forms, if any, of adequate protection to the Lender. A copy of the motion and the Debtor's budget is available at https://bit.ly/3mNllhE from PacerMonitor.com. The budget provided for total expenses, on a weekly basis, as follows: $270,682 for the week starting November 1, 2021; $170,846 for the week starting November 8, 2021; and $135,200 for the week starting November 15, 2021. About Frozen Foods Partners, LLC Frozen Foods Partners, LLC is a Delaware limited liability company, which was established in 2015. Frozen Foods is a consumer products company engaged in the production, distribution and marketing of frozen skillet meals under multiple consumer brands. It offers a diversified portfolio of frozen products including meal kits, skillet meals, combination of proteins, sauces, pastas and vegetables, Asian and Mediterranean cuisines, as well as authentic Latin specialties. Its products offer a quality dining solution for working families and young adults. Its brands include Gourmet Dining, Rosetto, La Sabrosa, and Tru Earth, which can presently be found in many retailers, including Associated Grocers and SuperValu, as well as private label brands. Frozen Foods sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-11897) on November 1, 2021. In the petition signed by Jeffrey Lichtenstein as chief executive officer, the debtor disclosed up to $10 million in both assets and liabilities. Judge Martin Glenn oversees the case. Adam P. Wofse, Esq., at Lamonica Herbst and Maniscalco, LLP, is the Debtor's counsel. GLAUKOM LLC: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Glaukom, LLC 6344 South 900 East Salt Lake City, UT 84121 Business Description: Glaukom, LLC is an ophthalmology practice located in Salt Lake City. The Company's services range from LASIK, cataract surgery, glaucoma management and surgery, to comprehensive, routine, and diabetic eye exams. Chapter 11 Petition Date: November 5, 2021 Court: United States Bankruptcy Court District of Utah Case No.: 21-24757 Judge: Hon. Joel T. Marker Debtor's Counsel: Andres Diaz, Esq. DIAZ & LARSEN 757 East South Temple, Suite 201 Salt Lake City, UT 84102 Tel: (801) 596-1661 Fax: (801) 359-6803 Email: courtmail@adexpresslaw.com Total Assets as of Dec. 31, 2020: $547,603 Total Liabilities as of Dec. 31, 2020: $1,015,696 Estimated Liabilities: $1 million to $10 million The petition was signed by Gregory A. Christiansen as manager. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/M57IESY/Glaukom_LLC__utbke-21-24757__0001.0.pdf?mcid=tGE4TAMA GTT COMMUNICATIONS: Unsecureds Will Get 100% in Prepackaged Plan ---------------------------------------------------------------- GTT Communications, Inc. and Its Debtor Affiliates filed with the U.S. Bankruptcy Court for the Southern District of New York a Disclosure Statement regarding the Joint Prepackaged Chapter 11 Plan of Reorganization dated October 31, 2021. The Plan implements a pre-packaged restructuring agreed to by and among the Debtors and the Debtors' major stakeholders—including Holders of more than 84% in amount of the 2018 Credit Facility Claims and Holders of more than 76% in amount of the Senior Notes Claims. On September 16, 2021, the Company consummated the I Squared Infrastructure Sale and prepaid approximately $1.673 billion in funded debt. Prior to the consummation of the I Squared Infrastructure Sale, the Company had approximately $3.695 billion in principal amount of funded debt. As of the date of this Disclosure Statement, the Company has approximately $2.015 billion in principal amount of funded debt. Through a combination of the distribution of proceeds from the I Squared Infrastructure Sale and the balance sheet deleveraging contemplated by the Plan, the Company will reduce its funded debt burden from approximately $2.015 billion to a projected $929 million as of the Effective Date of the Plan. The anticipated benefits of the Plan include, without limitation the following: * conversion of approximately $1.440 billion in aggregate principal amount of 2018 Credit Facility Claims to a combination of (i) 88% of the New Equity Interests, subject to dilution by the Management Incentive Plan and New Equity Interests issuable upon exercise of the Noteholder Warrants and/or the Equityholder Warrants (the "Secured Claims New Equity Interests"), (ii) a new senior secured term loan facility (the "New GTT Term Loan Facility") and (iii) certain Cash distributions; * conversion of approximately $575 million in aggregate principal amount, plus accrued and unpaid interest as of the Petition Date, of the Senior Notes Claims to (i) 12% of the New Equity Interests, subject to dilution by the Management Incentive Plan and New Equity Interests issuable upon exercise of the Noteholder Warrants and/or Equityholder Warrants (the "Noteholder New Equity Interests") and (ii) warrants exercisable for 30% of the New Equity Interests, which will have a 5 year term and an initial aggregate exercise price based on an equity value of the Reorganized Parent that, as of the Effective Date, provides for payment in full of the Allowed amount of the aggregate 2018 Credit Facility Claims that are to be distributed to Holders of Senior Notes Claims on account of such Claims pursuant to and in accordance with the Plan and the Noteholder Warrant Agreement (the "Noteholder Warrants"); * payment in full, in Cash, of General Unsecured Claims in the ordinary course of business; * distribution of the warrants exercisable for 4.9% of the New Equity Interests, which will have a 5 year term and an initial aggregate exercise price based on a $2.8 billion enterprise value of the Reorganized Parent (in each case, subject to dilution and on terms and conditions more fully set forth in the Equityholder Warrant Term Sheet and applicable definitive documentation) that are to be distributed to Holders of Existing GTT Equity Interests on account of such Existing GTT Equity Interests pursuant to and in accordance with the Plan and the Equityholder Warrant Agreement (the "Equityholder Warrants"); * the Debtors' prompt emergence from chapter 11; and * access to capital in the form of (i) the New GTT Term Loan Facility in the aggregate principal amount of approximately $854 million and (ii) a new cash flow or asset-based revolving credit facility of up to $75 million in the aggregate on terms acceptable to the Required Consenting Creditors ("Exit Revolving Credit Facility"). The Plan provides for a comprehensive restructuring of the prepetition obligations, preserves the going-concern value of the Debtors' businesses, maximizes creditor and interest holder recoveries, and protects the jobs of the Debtors' invaluable employees. To evidence their support of the Debtors' restructuring, the Debtors and their key stakeholders executed the Restructuring Support Agreement. The Plan provides for the treatment of Claims against, and Interests in, the Debtors through, among other things: (a) the issuance of the New Equity Interests; (b) the issuance of the Noteholder Warrants and the Equityholder Warrants; (c) the incurrence of the New GTT Term Loan Facility and (d) Cash distributions, as applicable. As more fully described in the Plan: * Each Holder of an Allowed Other Secured Claim will receive (a) payment in full in Cash, payable on the later of the Effective Date and the date that is 10 Business Days after the date on which such Claim becomes an Allowed Claim, in each case, or as soon as reasonably practicable thereafter, (b) reinstatement of such Holder's Allowed Claim, or (c) such other treatment so as to render such Holder's Allowed Claim Unimpaired; * Each Holder of an Allowed 2018 Credit Facility Claim will receive (a) its pro rata share of and interest in the following: (i) the New GTT Term Loan Facility, (ii) the Secured Claims New Equity Interests, (iii) the Noteholder New Common Equity Investment Cash (if any), (iv) any Excess Cash, and (v) the I Squared Deferred Consideration and (b) Cash in an amount equal to all accrued but unpaid prepetition interest and, pursuant to the Cash Collateral Orders, postpetition interest with respect to such 2018 Credit Facility Claim at the applicable default interest rate under the Credit Agreement from the Petition Date through and including the Effective Date; * Each Holder of an Allowed Senior Notes Claim will receive its Pro Rata share of (a) the Noteholder New Equity Interests, (b) the Noteholder Warrants and (c) the right to participate in the Noteholder New Common Equity Investment; * Each Holder of an Allowed General Unsecured Claims will receive (a) satisfaction of its General Unsecured Claim in full in the ordinary course of business in accordance with the terms and conditions of the particular transaction and/or agreement giving rise to such Allowed General Unsecured Claim or (b) payment in full in Cash on the date such General Unsecured Claim becomes payable as if the Chapter 11 Cases had not been commenced; provided, that notwithstanding anything in the Plan to the contrary claims for rejection damages in connection with any rejected non-residential real property lease; * Intercompany Interests will, at the option of the Debtors (with the consent of the Required Consenting Creditors, which consent shall not be unreasonably withheld) or the Reorganized Debtors, as applicable, be adjusted, Reinstated, or canceled and released without any distribution; and * Each Holder of an Allowed Existing GTT Equity Interest will receive its Pro Rata share of the Equityholder Warrants. Class 5 consists of General Unsecured Claims. Each Holder thereof shall receive (a) satisfaction of its General Unsecured Claim in full in the ordinary course of business in accordance with the terms and conditions of the particular transaction and/or agreement giving rise to such Allowed General Unsecured Claim or (b) payment in full in Cash on the date such General Unsecured Claim becomes payable as if the Chapter 11 Cases had not been commenced. This Class will receive a distribution of 100% of their allowed claims. The Debtors shall fund distributions under the Plan with: (a) Cash on hand, including Cash from operations, remaining Retained Cash Proceeds, Excess Cash and Noteholder New Common Equity Investment Cash (if any); (b) if applicable, the proceeds of the Exit Revolving Credit Facility; (c) the New Equity Interests; (d) the Noteholder Warrants; (e) the Equityholder Warrants; (f) the New GTT Term Loans; (g) the I Squared Deferred Consideration and (h) Subscription Rights in connection with the Noteholder New Common Equity Investment. Cash payments to be made pursuant to the Plan will be made by the Debtors or the Reorganized Debtors, as applicable. The Reorganized Debtors will be entitled to transfer funds between and among themselves as they determine to be necessary or appropriate to enable the Reorganized Debtors to make the payments and distributions required by the Plan. Except as set forth in the Plan or in this Disclosure Statement, and to the extent consistent with any applicable limitations set forth in any applicable post Effective Date agreement (including the New GTT Financing Documentation and New Corporate Governance Documents), any changes in intercompany account balances resulting from such transfers will be accounted for and settled in accordance with the Debtors' historical intercompany account settlement practices and will not violate the terms of the Plan. From and after the Effective Date, the Reorganized Debtors, subject to any applicable limitations set forth in any post Effective Date agreement (including the New GTT Financing Documentation and New Corporate Governance Documents), shall have the right and authority without further order of the Bankruptcy Court to raise additional capital and obtain additional financing as the Boards of Directors of the applicable Reorganized Debtors deem appropriate. A full-text copy of the Disclosure Statement dated October 31, 2021, is available at https://bit.ly/3bKpeO8 from PacerMonitor.com at no charge. Proposed Counsel to the Debtors: AKIN GUMP STRAUSS HAUER & FELD LLP One Bryant Park New York, New York 10036 Telephone: (212) 872-1000 Facsimile: (212) 872-1002 Ira S. Dizengoff Philip C. Dublin David H. Botter Naomi Moss About GTT Communications Headquartered in McLean, Virginia, GTT Communications, Inc. -- http://www.gtt.net/-- owns and operates a global Tier 1 internet network and provides a comprehensive suite of cloud networking services. GTT connects people across organizations, around the world, and to every application in the cloud. GTT Communications, Inc., and its affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 21-11880) on Oct. 31, 2021, to implement a prepackaged Chapter 11 plan. GTT had total assets of $2.8 billion and total debt of $4.1 billion as of June 30, 2201. As of the Petition Date, the Debtors had prepetition funded indebtedness totaling $2.015 billion. The Debtors tapped Akin Gump Strauss Hauer & Feld LLP as counsel; TRS Advisors as investment banker; and Alvarez & Marsal, LLC as restructuring advisor. Prime Clerk, LLC, is the claims agent. GULF COAST HEALTH: Law Firm of Russel Represent Utility Companies ----------------------------------------------------------------- Pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure, the Law Firm of Russell R. Johnson III, PLC submitted a verified statement to disclose that it is representing the utility companies provided notice that it is/they are representing these creditors in the Chapter 11 cases of Gulf Coast Health Care, LLC. The names and addresses of the Utilities represented by the Firm are: a. Florida Power & Light Company Gulf Power Company Attn: Joseph Ianno, Esq. Law Department 700 Universe Blvd. Juno Beach, FL 33408 b. TECO Peoples Gas System Attn: Barbara Taulton FRP, CAP Florida Registered Paralegal Tampa Electric Company 702 N. Franklin Street Tampa, FL 33602 The nature and the amount of claims of the Utilities, and the times of acquisition thereof are as follows: a. The following Utilities may have unsecured claims against certain Debtors arising from prepetition utility usage: Florida Power & Light Company, Gulf Power Company and TECO Peoples Gas System. b. Florida Power & Light Company and Gulf Power Company each held prepetition deposits that wholly or partially secured prepetition debt with certain Debtors. c. Florida Power & Light Company, Gulf Power Company and TECO Peoples Gas System each hold one or more surety bonds that fully or partially secures prepetition debt with certain Debtors. d. For more information regarding the claims and interests of the Utilities in these jointly-administered cases, refer to the Objection of Certain Utility Companies To the Motion of Debtors For Entry of Interim and Final Orders (I) Approving Debtors' Proposed Form of Adequate Assurance of Payment; (II) Establishing Procedures For Resolving Objections By Utility Companies; and (III) Prohibiting Utility Companies From Altering, Refusing, or Discontinuing Service filed in the above-captioned, jointly-administered, bankruptcy cases. The Law Firm of Russell R. Johnson III, PLC was retained to represent the foregoing Utilities in October 2021. The circumstances and terms and conditions of employment of the Firm by the Companies is protected by the attorney-client privilege and attorney work product doctrine. The Firm can be reached at: LAW FIRM OF RUSSELL R. JOHNSON III, PLC 2258 Wheatlands Drive Manakin-Sabot, VA 23103 Telephone: (804) 749-8861 Facsimile: (804) 749-8862 E-mail: russell@russelljohnsonlawfirm.com A copy of the Rule 2019 filing is available at https://bit.ly/3q8OJ45 at no extra charge. About Gulf Coast Health Care Gulf Coast Health Care is a licensed operator of 28 skilled nursing facilities comprising nearly 3,350 licensed beds across Florida, Georgia, and Mississippi. It provides short-term rehabilitation, comprehensive post-acute skilled care, long-term care, assisted living, and therapy services in each of their Facilities. Gulf Coast Health Care, LLC, and 61 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11336) on Oct. 14, 2021. In the petition signed by Benjamin M. Jones as chief restructuring officer, Gulf Coast Health Care estimated assets of between $10 million and $50 million and estimated liabilities of between $100 million to $500 million. The cases are handled by Honorable Judge Karen B. Owens. McDermott Will & Emery LLP is the Debtors' counsel, and Ankura Consulting Group LLC is the financial advisor. Epiq is the claims agent. GULF COAST: Asks Court to Transfer Control of 24 Nursing Homes -------------------------------------------------------------- Gulf Coast Health Care filed a motion with the Delaware Bankruptcy Court for permission to offload its operational obligations for 24 of its facilities to a third party to help the company's Chapter 11 case wind down. In a motion seeking approval for adoption of a management and operations transfer agreement for the 24 nursing homes leased from Omega Healthcare Investors Inc. , Gulf Coast said the transfer would allow it to relieve itself of operating costs and bring in a new manager that would preserve patient care standards for its 2,200 residents. The Debtors operate 28 skilled nursing facilities in the Southeastern United States. The Debtors do not own the underlying real property at the Facilities, but rather lease the Facilities from two primary landlords: (i) 24 facilities (the "Omega Facilities") are leased from certain affiliates and subsidiaries of Omega Healthcare Investors, Inc.; and (ii) four facilities (the "Blue Mountain Facilities") are leased from certain affiliates and subsidiaries of Eagle Arc Partners LLC (f/k/a Blue Mountain Holdings). Following negotiations with certain of the Debtors' key stakeholders, including the Omega Landlords and the Debtors' senior secured lender, New Ark Capital, LLC, the Debtors reached agreement on a Restructuring Support Agreement (the "RSA"), by and among the Debtors, OHI Asset Funding (DE), LLC (the "DIP Lender"), the Omega Landlords (together with the DIP Lender, the "Omega Entities"), New Ark, direct and indirect equity holders of the Debtors (the "Equity Sponsors"), and certain affiliated entities that provide services to the Debtors (the "Service Providers"). In the Debtors' view, the restructuring transactions memorialized in the RSA represent not only the best but the only available and viable option to an effective restructuring, which can be implemented quickly to minimize administrative costs and which will safeguard the health and safety of the Debtors' residents. At the same time, these transactions also provide a means for a controlled and orderly winddown of the Debtors' operations and a mechanism to provide recoveries to unsecured creditors -- stakeholders that would not be entitled to any recovery absent the agreements among the RSA Parties set forth in the RSA. Because of the substantial operating shortfalls at the Debtors' Facilities and the need to prioritize resident care, the Debtors must transition the Omega Facilities as expeditiously as possible. In order to implement this transition quickly, in light of the various regulatory waiting periods for licensure, the Debtors and the Omega Landlords have identified NSPRMC II, LLC, to serve as an interim manager (the "New Manager") under certain Management and Operations Transfer Agreements (collectively, the "MOTA"). New Manager will then either (i) elect to become the new operator for some or all of the Omega Facilities or (ii) select one or more new, licensed operators (collectively, "New Operator") and subsequently assign the MOTA to New Operator on the date that New Operator has obtained all requisite approval and licenses to operate the applicable Facility (the "License Transfer Date"). Under the MOTA, the operating expenses of the Omega Facilities will no longer be borne by the Debtors as of December 1, 2021 (the anticipated "Management Transfer Date") but rather by New Manager, which will allow the Debtors to focus their efforts on reaching a similar resolution with the Blue Mountain Landlords, and otherwise winding down their affairs through the Plan. The Debtors believe that the value of the Assets being transferred under the MOTA is de minimis, due to the fact that substantially all of the personal property utilized in the day-to-day operations of the Omega Facilities does not actually belong to the Debtors. The de minimus value pales in comparison to the value that the Debtors' estates will receive through the RSA, the DIP Financing, and the assumption of significant repayment obligations that the Debtors currently owe under the Medicare Accelerated and Advance Payment Program (i.e., the MAAP Liabilities, as discussed below), which will become an obligation of New Operator following the License Transfer Date. The Debtors' only valuable assets -- accounts receivable generated prior to the Management Transfer Date -- will be retained as excluded assets under the MOTA and will be collected by the Debtors in the ordinary course of business. About Gulf Coast Health Care Gulf Coast Health Care is a licensed operator of 28 skilled nursing facilities comprising nearly 3,350 licensed beds across Florida, Georgia, and Mississippi. It provides short-term rehabilitation, comprehensive post-acute skilled care, long-term care, assisted living, and therapy services in each of their Facilities. Gulf Coast Health Care, LLC, and 61 affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11336) on Oct. 14, 2021. In the petition signed by Benjamin M. Jones as chief restructuring officer, Gulf Coast Health Care estimated assets of between $10 million and $50 million and estimated liabilities of between $100 million to $500 million. The cases are handled by Honorable Judge Karen B. Owens. McDermott Will & Emery LLP is the Debtors' counsel, and Ankura Consulting Group LLC is the financial advisor. Epiq is the claims agent. GVS TEXAS: Reaches Deal to Duck Appointment of Ch.11 Trustee ------------------------------------------------------------ Daniel Gill of Bloomberg Law reports that GVS Texas Holdings I LLC, a bankrupt self-storage operator, defeated the government's attempt to name an independent trustee to oversee its Chapter 11 case, after agreeing to keep its former CEO away from management. The agreement -- struck among GVS Texas, its principal lenders, and the former CEO Natin Paul -- will allow the Austin-based company to maintain control of its bankruptcy case. It also resolves the conflicts of interest and management problems that spurred the U.S. Trustee's bid to appoint a trustee in the case or convert it to Chapter 7, according to the U.S. Bankruptcy Court for the Northern District of Texas. About GVS Texas Holdings I GVS Texas Holdings I, LLC and its affiliates are primarily engaged in renting and leasing a wide array of properties functioning principally as self-storage and parking facilities in 64 locations in Texas, Colorado, Illinois, Indiana, Mississippi, Missouri, Nevada, New York, Ohio, and Tennessee. Six of the properties are in the Dallas-Fort Worth Metroplex, with an additional 28 located elsewhere in the State of Texas. The properties are managed by Great Value Storage, LLC, that maintains and manages the facilities. GVS Texas Holdings I, LLC, et al. are directly or indirectly owned by Natin Paul, as the principal shareholder of corporate parent GVS Portfolio I C, LLC. Great Value Storage LLC (the "Property Manager") maintains, manages, and operates GVS Texas Holdings I, LLC, et al.'s self-storage and parking facilities. The Property Manager, which is also owned by Paul, was placed into receivership by a Texas state court on Sept. 8, 2021. GVS Texas Holdings I and several affiliates, including GVS Portfolio I C, LLC, sought Chapter 11 protection (Bankr. N.D. Tex. Lead Case No. 21-31121) on June 17, 2021. In its petition, GVS Texas Holdings I listed assets and liabilities of $100 million to $500 million each. The parent entity, GVS Portfolio I C, LLC, filed a voluntary Chapter 11 petition June 23, 2021. The petitions were signed by Robert D. Albergotti, authorized party. Great Value Storage, LLC, is a non-debtor operating affiliate. Judge Michelle V. Larson oversees the case. The Debtors tapped Thomas R. Califano, Esq., at Sidley Austin LLP, as general bankruptcy counsel. HARMAN PRESS: Has Deal on Cash Collateral Access Thru Jan 2022 -------------------------------------------------------------- The Harman Press, Inc. and the U.S. Small Business Administration advised the U.S. Bankruptcy Court for the Central District of California, San Fernando Valley Division, that they have reached an agreement regarding the Debtor's use of cash collateral and now desire to memorialize the terms of this agreement into an agreed order. Pre-petition, on December 21, 2020, the Debtor executed a U.S. Small Business Administration Note, pursuant to which the Debtor obtained a loan in the amount of $150,000. The terms of the Note require the Debtor to pay principal and interest payments of $731 every month beginning 12 months from the date of the Note over the 30 year term of the SBA Loan. The SBA Loan has an annual rate of interest of 3.75% and may be prepaid at any time without notice of penalty. Pursuant to the SBA Loan Authorization and Agreement executed on December 21, 2020, the Debtor is required to "use all the proceeds of this Loan solely as working capital to alleviate economic injury caused by disaster occurring in the month of January 31, 2020 and continuing thereafter and to pay Uniform Commercial Code Lien filing fees and a third-party UCC handling charge of $100 which will be deducted from the Loan amount." As evidenced by a Security Agreement executed on December 21, 2020 and a validly recorded UCC-1 filing on January 4, 2021as Filing Number U210000125914, the SBA Loan is secured by all tangible and intangible personal property. The parties agree that any and all of the Personal Property Collateral constitutes the cash collateral of the SBA. The SBA consents to the Debtor's use of Cash Collateral. Other than the Debtor's use of Cash Collateral, the Debtor represents to the SBA that it will make no additional or unauthorized use of the Cash Collateral retroactive from the SBA Loan date until entry of an Order Confirming the Debtor's Plan of Reorganization or January 31, 2022, whichever occurs earlier, for ordinary and necessary expenses. As adequate protection, the SBA will receive a replacement lien to the extent that the automatic stay, pursuant to 11 U.S.C. section 362, as well as use, sale, lease or grant results in a decrease in the value of the SBA's interest in the Personal Property Collateral on a post-petition basis. The replacement lien is valid, perfected and enforceable and will not be subject to dispute, avoidance, or subordination, and this replacement lien need not be subject to additional recording. The SBA is authorized to file a certified copy of the cash collateral order and any other necessary and related documents to further perfect its lien. Any diminution in the value of SBA's collateral pursuant to the SBA Loan over the life of the proceeding will entitle the SBA a super-priority claim. SBA's claim under the SBA Loan will be allowed as a secured claim in the amount of $150,000 plus all ongoing accrued interest. These events constitute an "Event of Default:" (a) the failure to maintain property insurance; (b) the conversion of the Debtor's Bankruptcy Case to any other chapter; or (c) the dismissal of the Debtor's bankruptcy case. A copy of the motion and the Debtor's budget for October 2021 to March 2021 is available for free at https://bit.ly/3GSi8FD from PacerMonitor.com. The Debtor projects $1,110,000 in total revenue and $601,320 in total operating expenses. About The Harman Press Inc. The Harman Press Inc. is a commercial printing shop in North Hollywood, CA. The Harman Press' clients include the entertainment industry, healthcare industry, and national businesses. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-11544) on September 20, 2021. In the petition signed by Philip Goldner, president, the Debtor disclosed $1,747,990 in assets and $1,973,146 in liabilities. Judge Maureen Tighe oversees the case. Thomas B. Ure, Esq. at Ure Law Firm is the Debtor's counsel. HEALTHCARE ROYALTY: Fitch Withdraws Ratings ------------------------------------------- Fitch Ratings will withdraw the ratings of Healthcare Royalty, Inc. and its indirect, wholly-owned subsidiary, HCRX Investments Holdco, L.P. (together HRI) following the company's decision to cancel its plans to raise new equity and debt capital. Fitch currently rates HRI as follows: Healthcare Royalty, Inc. -- Long-Term Issuer Default Rating (IDR) at 'BB'. HCRX Investments Holdco L.P. -- Long-Term IDR at 'BB'; -- Senior secured credit facilities at 'BBB-(EXP)'/'RR1'; -- Senior unsecured notes at 'BB(EXP)'/'RR4'. Fitch is withdrawing the ratings of HRI as the company is undergoing a reorganization. Accordingly, Fitch will no longer provide ratings or analytical coverage for HRI. Prior to the withdrawal, Fitch did not take any other rating actions given the lack of information about the reorganization at this point. KEY RATING DRIVERS Key Rating Drivers are not applicable because the ratings are being withdrawn. RATING SENSITIVITIES Rating sensitivities are not applicable as the ratings are being withdrawn. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. ISSUER PROFILE HRI is a leading mid-market royalty acquisition company. The company's investment focus is on growth assets and emerging companies seeking to drive innovation in the biopharmaceutical industry. ESG CONSIDERATIONS ESG Considerations are not applicable as the ratings are being withdrawn. HELIUS MEDICAL: Receives PoNS Market Authorization in Australia --------------------------------------------------------------- Helius Medical Technologies, Inc. has received market authorization from the Australian Therapeutic Goods Administration (TGA) for the sale of PoNS as a Class IIa medical device. The Company's representative in Australia is working with the TGA to finalize the exact scope of the authorization, which is expected to cover the use of PoNS to improve balance and gait when used as an adjunct to a therapeutic exercise program. "We are thrilled that we will be able to introduce this groundbreaking therapy for patients in Australia needing to improve their balance and gait," said Dane C. Andreeff, president and chief executive officer of Helius. "This marks the third country in which PoNS is authorized and further validates the effectiveness of our innovative PoNS therapy. We will begin evaluating the pathway toward commercialization in Australia once the scope of the authorization is finalized." About Helius Medical Helius Medical Technologies -- http://www.heliusmedical.com-- is a neurotech company focused on neurological wellness. Its purpose is to develop, license or acquire non-invasive technologies targeted at reducing symptoms of neurological disease or trauma. Helius Medical reported a net loss of $14.13 million for the year ended Dec. 31, 2020, compared to a net loss of $9.78 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $10.72 million in total assets, $2.35 million in total liabilities, and $8.37 million in total stockholders' equity. Philadelphia, Pennsylvania-based BDO USA, LLP issued a "going concern" qualification in its report dated March 10, 2021, citing that the Company has incurred substantial net losses since its inception, has an accumulated deficit of $118.9 million as of Dec. 31, 2020 and the Company expects to incur further net losses in the development of its business. These conditions raise substantial doubt about its ability to continue as a going concern. HOOT THE DOG: Wins Permission to Use Cash Collateral ---------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida has authorized Hoot The Dog, LLC and Hoot The Dog Five, LLC to use cash collateral until further Court order. The Debtors may use the cash collateral to pay their current and necessary expenses, as set forth in the budgets, as well as the amounts expressly authorized by the Court. The Court said it is not making any determination as to the nature of the relationship between the Debtors and any creditors, including those that objected to the Motions to Use Cash Collateral and appeared at the Hearing. Specifically, Fox Capital Group, Inc., Panthers Capital, LLC, BMF Advance, LLC and EBF Holdings, LLC all assert that they purchased and certain receipts from the Debtors, that such receipts are not property of the bankruptcy estate and that, as a result, cannot be used as cash collateral by the Debtors. Fox Capital, Panthers Capital, BMF Advance and EBF Holdings reserve all rights with respect to the issue. Each creditor with interest in the cash collateral shall have perfected postpetition lien against the cash collateral to the same extent and with the same validity and priority as each creditor's prepetition lien. The Debtor will make monthly adequate protection payments beginning on November 15, 2021, and on or before the 15th of every month thereafter until the effective date of an order confirming a chapter 11 plan or as otherwise ordered by the Court, as agreed upon with creditors as follows: Monthly Adequate Name of Creditor Protection Payment ---------------- ------------------ East Harbor $13,145.52 BMF Advance, LLC $7,782.59 Panthers Capital, LLC $3,313.87 Fox Capital Group $2,914.75 Bridge Capital Ventures $10,104.98 EBF Holdings, LLC $2,738.29 Hoot The Dog, LLC's budget for the period from November 24 to December 21, 2021, provided for $108,059 in total cost of sales, and $292,684.22 in total controllable expenses. Hoot The Dog Five, LLC's budget for the same period provided for $33,805 in cost of sales, and $87,278.22 in total controllable expenses. A copy of the order is available for free at https://bit.ly/3c2pmJf from PacerMonitor.com. About Hoot The Dog, LLC Hoot The Dog, LLC is part of the restaurants industry. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 21-04799) on September 20, 2021. In the petition signed by Jay Thomas, managing member, the Debtor disclosed up to $50,000 in assets and up to $10 million in liabilities. Judge Caryl E. Delano oversees the case. Jake C. Blanchard, Esq., at Blanchard Law, P.A. is the Debtor's counsel. HORIZON GLOBAL: Incurs $2.8 Million Net Loss in Third Quarter ------------------------------------------------------------- Horizon Global Corporation filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $2.77 million on $196.54 million of net sales for the three months ended Sept. 30, 2021, compared to net income of $1.59 million on $201.63 million of net sales for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $16.96 million on $617.85 million of net sales compared to a net loss of $32.16 million on $485.37 million of net sales for the same period during the prior year. As of Sept. 30, 2021, the Company had $468.33 million in total assets, $494.26 million in total liabilities, and a total shareholders' deficit of $25.93 million. "When we launched our turnaround plan in late 2019, we set out to build a strong global organization that would not waver regardless of the external business climate," stated Terry Gohl, Horizon Global's president and chief executive officer. "Our Q3 2021 performance is evidence that we achieved this objective. Despite significant and unprecedented macroeconomic headwinds relating to material costs and supply chain constraints, we did not bend. Instead, we rose to the occasion and rapidly identified and deployed targeted actions, including commercial price recovery, manufacturing rebalancing and operational cost mitigation, to partially offset the impact of industry-wide headwinds. At the same time, we never lost sight of our long-term strategic plan and accelerated the execution of operational improvement initiatives to support the business in Q3 2021 and beyond." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001637655/000163765521000160/hzn-20210930.htm About Horizon Global Horizon Global -- http://www.horizonglobal.com-- is a designer, manufacturer, and distributor of a wide variety of custom-engineered towing, trailering, cargo management and other related accessory products in North America, Australia and Europe. The Company serves OEMs, retailers, dealer networks and the end consumer. Horizon Global reported a net loss attributable to the Company of $36.56 million for the 12 months ended Dec. 31, 2020, compared to net income attributable to the company of $80.75 million for the 12 months ended Dec. 31, 2019. As of March 31, 2021, the Company had $468.15 million in total assets, $492.41 million in total liabilities, and a total shareholders' deficit of $24.26 million. HOYA MIDCO: S&P Raises ICR to 'B', on Merger with Horizon ---------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on U.S.-based Hoya Midco LLC (doing business as [dba] Vivid Seats) to 'B' from 'B-' and removed all of its ratings from CreditWatch, where S&P placed them with positive implications on April 23, 2021. In addition, S&P raised its issue-level rating on the company's senior secured term loan due 2024 to 'B' from 'B-' and revised its recovery rating to '3' from '4'. S&P's '3' recovery rating indicates its expectation for meaningful (50%-70%, rounded estimate: 65%) recovery in the event of a default. The upgrade reflects substantially reduced debt levels following the completion of Vivid Seats' merger with Horizon Acquisition Corp. Vivid Seats used substantially all of the proceeds from its SPAC merger, approximately $770 million, to pay down term loans, redeem the company's senior preferred equity, and pay related fees and expenses, substantially reducing its debt. S&P said, "Pro forma for the transaction, we expect Vivid Seats will have $458 million outstanding on its senior secured term loan and approximately $450 million of cash on the balance sheet. The company's leverage as of June 30, 2021, remains very high because the company generated negative EBITDA over the past 12 months, but run-rate leverage-based second quarter results were approximately 3.7x pro forma for the SPAC transaction and debt paydown. We expect the company's leverage to be approximately 5.5x-6x by year-end 2021 and for the company to reduce leverage toward the 5x area in 2022. While the company does not currently have any liabilities relating to its tax receivable agreement with its sponsor and we have not currently incorporated a liability in our measure of adjusted debt through 2023, we expect any potential liability could slow deleveraging for the company." S&P said, "We expect a recovery in ticketing volumes, driven by pent-up demand for live entertainment, will help the Vivid Seats increase its revenue and earnings.Vivid Seats' ticketing volume has begun to recover as the global vaccination effort progresses and restrictions on live events are mostly lifted and as consumers begin to feel more comfortable in traditional venues for entertainment. We estimate that the company's marketplace gross order value (GOV) in the second quarter was meaningfully higher than the comparable quarter in 2019 as Vivid Seats benefitted from significant pent-up demand for concerts, sporting events, and theater shows. We expect demand for live entertainment will continue to support elevated GOV and net revenue over the next several months and that volumes will remain modestly above prepandemic levels throughout the end of the year despite lingering consumer apprehensions regarding large gatherings. We expect Vivid Seats' GOV and net revenue will remain approximately 10%-15% above prepandemic levels through the end of 2021. "Absent a return of pandemic-related restrictions on large gatherings, we expect that ticket sales associated with sporting events and theater shows will return to just under prepandemic levels in 2022 as restrictions continue to ease and major sports leagues and theater productions that were disrupted throughout 2020 return to normal schedules. However, we expect ticket volumes associated with concerts to be 5%-10% above prepandemic levels. Our understanding is that a good portion of concerts since the start of the pandemic either remain postponed or have been rescheduled to future dates. As a result, Vivid Seats will benefit from an outsized number of shows booked in the latter half of this year and in 2022 that will support higher marketplace GOV. In addition, we believe that average order size will remain elevated through 2022, supported by pent-up demand and excess savings. "The positive outlook reflects the potential for an upgrade if Vivid Seats is able to maintain solid operating performance, increase revenue above 2019 levels in 2022, and reduce adjusted gross leverage below 5x in 2022 (including any potential tax receivable agreement related liabilities) while maintaining FOCF to debt in the high-single-digit area. "We could raise our rating on Vivid Seats if we came to believe that Vivid Seats would be able to sustain S&P Global Ratings-adjusted debt to EBITDA comfortably below our 5x upgrade threshold and maintain FOCF to debt in the mid-to-high single-digit area. To raise the rating, we would also need to gain more clarity on the company's financial policy, ownership profile, and incremental leverage from its tax receivable liability. "We could revise our outlook to stable if we expected leverage to remain in the 5x-6x range for a prolonged period due to a combination of a slower ramp-up in revenue and EBITDA growth in 2022 or significant tax receivable liabilities that caused an increase in the company's leverage. A downgrade is unlikely over the next 12 months and would result from a combination of operating challenges stemming from virus variants causing further government restrictions or shutdowns and an aggressive financial policy such that the company used its cash and placed incremental debt to fund high-priced acquisitions that caused leverage to remain above 6x for a prolonged period." HRNI HOLDINGS: Fitch Assigns FirstTime 'B(EXP)' LongTerm IDR ------------------------------------------------------------ Fitch Ratings has assigned HRNI Holdings, LLC (HRNI, fka Spectacle Gary Holdings, LLC) an expected Long-Term Issuer Default Rating (IDR) of 'B(EXP)'. Fitch has also assigned an expected 'B+(EXP)/RR3 rating to HRNI's announced $415 million senior secured term loan B. The Rating Outlook is Stable. The final IDR and instrument ratings are contingent on completion of HRNI's recapitalization and receipt of final documents conforming materially to preliminary documentation reviewed. HRNI's IDR reflects its 'b-' Standalone Credit Profile (SCP) with a one-notch uplift related to its relationship with Seminole Hard Rock Entertainment, Inc. (BBB-/Stable) and Seminole Hard Rock International, LLC (BBB-/Stable); collectively SHRE. HRNI's SCP reflects its single-site nature and conservative gross leverage. However, Fitch expects gross leverage to increase in the medium-term to around 5.0x-5.5x due to multiple competitive openings in the Chicagoland market. The rating considers Fitch's expected cannibalization to HRNI's cash flow. The one-notch uplift to the IDR from HRNI's SCP is pursuant to Fitch's Exposure Draft: Parent and Subsidiary Linkage Rating Criteria and reflects the entity's linkage to SHRE, which Fitch considers to be a stronger parent. SHRE indirectly owns 76% of HRNI. KEY RATING DRIVERS Moderate Leverage to Increase: Fitch calculates pro forma gross leverage (total debt/EBITDA) of 4.4x, which should decline towards 4.0x by 2022. This is strong in the context of the SCP, but will increase in the medium-term due to cannibalization from competitive openings in the Chicagoland market. Fitch expects strong FCF for HRNI's single-site property in the near-term due to good EBITDA generation, manageable interest expense, and minimal required maintenance capex,. This should help near-term delevering. Competitive Pressure: HRNI will be subject to multiple new competitive properties, including a casino in Chicago's south suburban area estimated by 2024 and in downtown Chicago estimated by 2026. The state is considering proposals for both sites, with multiple well-capitalized operators vying for the licenses. The additional supply will affect existing properties in Chicagoland, including HRNI, given the close proximity to Gary, Indiana. Fitch expects the south suburban and downtown licenses to negatively impact HRNI's cash flow and leverage, although this should be manageable. Fitch forecasts a high-teen percentage revenue decline in 2024 following the opening of the south suburban casino, regardless of which proposal is selected for the license. Fitch's base case does not forecast this casino to meaningfully expand the total addressable gaming market due to Chicagoland's existing casinos and video lottery terminals. Pro forma leverage is likely to exceed 5.0x, assuming a roughly 50% flow-through to EBITDA, which is more consistent with a 'b-' SCP for the standalone property. Longer-Term Risk from Downtown License: Fitch looks through this competitive opening to evaluate the long-term credit risk for HRNI, due to the likely impact it will have on the marketplace and on HRNI's metrics. Similarly to the south suburban license, Fitch's base case does not contemplate meaningful growth to the overall addressable market and assumes significant cannibalization from all Chicagoland casinos. Fitch forecasts HRNI's leverage to remain in the 5.0x-5.5x range, assuming a 10%-15% revenue cannibalization for HRNI and similar flowthrough as the south suburban competitive opening. Lack of Diversification: HRNI operates a single property in a competitive market that is subject to new supply risk, limiting rating upside as future cash flow generation will be challenged. Most single-site operators are rated in the single 'B' category unless there are unique end-market dynamics. These include monopolistic positions, being a clear market leader, or having a conservative balance sheet. HRNI's geographic concentration offsets decent pro forma leverage and credit metrics. Good Initial Performance: The property opened in May 2021 and has taken incremental market share away from nearby competitors in addition to the legacy Majestic Star share. HRNI has mid-teen percentage market share in Indiana and a similar share in the broader Chicagoland market. Hard Rock is the newest property opening in nearly a decade and has benefited from its proximity to the highway, brand recognition, and favorable regional gaming trends. Current win-per-day metrics are trending above area averages, at over $400 and $3,000 for slots and tables, respectively. Solid Chicagoland Performance: Regional gaming performance has been strong in 2021, with most markets recovering to 2019 revenue levels. This is largely due to pent-up demand, a lack of reliance on fly-in visitation, and strong consumer discretionary spend. Regional gaming has been a bright spot in overall leisure and entertainment spend, and Fitch forecasts growth over 2019 levels through to 2022. The Chicagoland area has also performed well, with annualized revenue slightly above full-year 2019, trending towards $2.0 billion in GGR for the entire market. SHRE Relationship Positive: Fitch believes HRNI's association with SHRE warrants a one-notch uplift from HRNI's SCP due to management and brand overlap. Fitch considers SHRE as a stronger parent based on its underlying SCP, which is consistent with 'b'. SHRE's 'BBB'- IDR is attributed to the guarantee of its debt by Seminole Tribe of Florida (STOF, BBB/Stable). However, Fitch believes SHRE has weak legal and strategic incentives to support HRNI, as there is no downstream guarantee and HRNI make a low financial contribution relative to SHRE's broader complex. Our assessment of moderate operational incentives recognizes that HRNI shares common executive management with SHRE, is part of SHRE's broader 'Unity' player rewards program, and that its property is part of SHRE's regional gaming expansion aspirations. SHRE owns 76% of HRNI and controls a majority of its board of directors. SHRE has also supported the entity through equity injections in 2021 when it took majority control following the prior majority owner's (Spectacle Entertainment Group) licensing issues with state regulators. DERIVATION SUMMARY HRNI's SCP is consistent with most other single-site gaming operators, including Empire Resorts Inc. (B+(EXP)/Stable, SCP: b-) and Enterprise Development Authority (EDA, B+/Negative). HRNI has similar end-market dynamics as the two peers, including competitive operating environments with new supply risk, single-site properties, and similar cash flow generation. HRNI's leverage and profitability is weaker than its similar Hard Rock branded peer in Sacramento, EDA, especially given the pending casino openings in Chicagoland through 2026. HRNI is considered weaker than its larger, more geographically diversified regional gaming peers, including Bally's Corporation (B+/Stable), Great Canadian Gaming Corporation (B+/Stable), and MGM Resorts International (BB-/Rating Watch Negative). These peers have similar-to-slightly higher leverage profiles, but much stronger FCF generation and are well diversified. KEY ASSUMPTIONS -- Slot and table win-per-day remaining stable through 2022, slightly above the Chicagoland average. GGR to rise by low single digits in 2022 and 2023, supported by solid initial performance and Chicagoland already experiencing a full recovery above pre-pandemic levels. -- A competitive south suburban Chicago casino opens in 2024, negatively impacting HRNI. Fitch expects 19% cannibalization to revenue with a roughly 50% flowthrough to EBITDA. -- A second competitive casino opens in 2026 in downtown Chicago. Fitch expects an additional 15% decline in gaming revenue, and a similar flowthrough. -- EBITDA margin to decline over the long-term from the strong initial performance due to competitive openings, expiration of tax holidays, and increasing management fees. -- Deleveraging ahead of the competitive openings to be driven through amortization (5% a year) and some degree of voluntary debt paydown (potentially through an excess cash flow sweep), but Fitch expects leverage to rise from 2024 due to cannibalization. -- Capex limited to maintenance beyond 2021. -- No shareholder distributions or acquisitions. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes HRNI would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim and full draw on the $35 million revolver. Going-concern EBITDA of $55 million reflects a sustainable level of operating performance following a restructuring scenario stemming from severe competitive pressures due to new competitive openings. Though Fitch already expects some level of cannibalization in its base case, Fitch's recovery scenario envisions a greater degree of cannibalization and outsized impact to gaming metric performance. Going-concern EBITDA assumes a level of win-per-unit-per-day of slots and tables of $300 and $2,000, respectively, which is well below the current average in the Chicagoland market and below where the casino is trending; about $430 and $3,000. Fitch expects non-gaming revenues to remain around 10% of total property revenue. Fitch applies a 6.0x enterprise value/EBITDA multiple, which reflects the competitiveness of the Chicagoland market and new supply risk, and the property's limited operating record. It also reflects the single-site limitations of the credit. The 6.0x multiple is in line with comparable regional gaming peers. The quality of the property and healthy initial performance help to offset these concerns. Fitch forecasts a post-reorganization enterprise value of roughly $330 million. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Greater degree of confidence that gross debt/EBITDA will remain below 5.0x and the FCF margin will exceed 10% amid the competitive pressures in the greater Chicago area; -- An increase in rating linkage with SHRE; -- Geographic diversification away from the Chicagoland market. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Gross debt/EBITDA sustaining above 7.0x; -- FCF approaching breakeven; -- Decrease rating linkage with SHRE or weakening of SHRE's SCP. 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 Pro forma for the recapitalization, liquidity will be adequate between operational cash and $25 million in availability on its $35 million revolver. Cash flow generation is sufficient to cover debt service and a small amount of maintenance capex annually. Fitch expects FCF margins to be in the mid-teen range in 2022 and 2023, prior to the competitive openings, and to fall to a single-digit percent longer term. HRNI is in the process of refinancing its existing debt with a new secured capital structure, in the form of a $35 million super senior secured revolver due 2026 ($10 million drawn at close) and a $415 million senior secured term loan B due 2028. Spectacle Gary Holdings, LLC will change its name to HRNI Holdings, LLC at transaction close. ISSUER PROFILE HRNI is the owner and operator of Hard Rock Casino Northern Indiana. SHRE indirectly owns 76% of HRNI and is, in turn, fully owned by STOF. 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. HUDSON PACIFIC: S&P Assigns 'BB' Rating on New Preferred Stock -------------------------------------------------------------- S&P Global Ratings assigned its 'BB' issue-level rating to Hudson Pacific Properties Inc.'s (HPP's) proposed preferred stock. The company intends to use the net proceeds from this issuance to repay the outstanding borrowings under its revolving credit facility, which stood at $300 million as of Sept. 30, 2021. The preferred stock will rank pari passu with all of HPP's future preferred share issuances. S&P said, "As is the standard for our ratings on the preferred stock issued by investment-grade issuers, we rate the company's preferred stock two notches below our issuer credit rating to reflect the securities' subordination risk and the risk of a partial or untimely payment. Although we treat this preferred stock offering akin to debt in our leverage calculations, we view this issuance as leverage neutral because management intends to use the proceeds to refinance outstanding debt. "We believe that HPP's high quality portfolio will support a favorable operating performance, with increasing net operating income (NOI) supported by positive rent spreads despite some modest occupancy pressure. Under our base-case forecast, we assume the company's S&P Global Ratings-adjusted debt to EBITDA trends back to the mid- to high-7x area, upon the accretion of a full year of EBITDA from its recent acquisitions, and remains in that range over the following couple of years." As of Sept. 30, 2020, HPP's operating performance was in line with our expectations. The company's same-property cash NOI was up 12.8% for the quarter and 6.7% year-to-date. At the same time, its same-property office occupancy declined slightly to 90.4% while its rent spreads rose by 5.1% during the quarter. INFINERA CORP: Incurs $53.8 Million Net Loss in Third Quarter ------------------------------------------------------------- Infinera Corporation filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $53.79 million on $355.81 million of total revenue for the three months ended Sept. 25, 2021, compared to a net loss of $35.90 million on $340.21 million of total revenue for the three months ended Sept. 26, 2020. For the nine months ended Sept. 25, 2021, the Company reported a net loss of $137.71 million on $1.02 billion of total revenue compared to a net loss of $196.80 million on $1 billion of total revenue for the nine months ended Sept. 26, 2020. As of Sept. 25, 2021, the Company had $1.53 billion in total assets, $520.19 million in total current liabilities, $468.84 million in long-term debt, $20.94 million in long-term accrued warranty, $30.05 million in long-term deferred revenue, $3.13 million in long-term deferred tax liability, $65.29 million in long-term operating lease liabilities, $84.76 million in other long-term liabilities, and $340.27 million in total stockholders' equity. Infinera CEO David Heard said, "Q3 was a strong quarter for us, with revenue coming in ahead of the mid-point of our outlook range and both non-GAAP gross margin and operating margin exceeding the high-end of our outlook range. We delivered these results against a challenging supply chain environment and ended the quarter with record backlog." "The demand drivers fueling our business are robust and we remain focused on executing our strategy with an enhanced leadership team. Having refreshed our portfolio, we are ramping our ICE6 products and achieving greater market traction. Based on this foundation, I remain confident in our ability to deliver on our financial goals for 2021 and our longer-term target business model." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1138639/000113863921000199/infn-20210925.htm About Infinera Corp. Headquartered in Sunnyvale, Calif., Infinera Corp. -- www.infinera.com -- is a global supplier of innovative networking solutions that enable carriers, cloud operators, governments, and enterprises to scale network bandwidth, accelerate service innovation, and automate network operations. The Infinera end-to-end packet-optical portfolio delivers industry-leading economics and performance in long-haul, submarine, data center interconnect, and metro transport applications. Infinera reported a net loss of $206.72 million for the year ended Dec. 26, 2020, compared to a net loss of $386.62 million for the year ended Dec. 28, 2019. As of March 27, 2021, the Company had $1.57 billion in total assets, $505.93 million in total current liabilities, $453.43 million in long-term debt, $1.96 million in long-term financing obligations, $19.94 million in long-term accrued warranty, $28.96 million in long-term deferred revenue, $3.68 million in long-term deferred tax liability, $72.91 million in long-term operating lease liabilities, $86.79 million in other long-term liabilities, and $393.35 million in total stockholders' equity. ION GEOPHYSICAL: Posts $440K Net Loss in Third Quarter ------------------------------------------------------ Ion Geophysical Corporation filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $440,000 on $44.39 million of total net revenues for the three months ended Sept. 30, 2021, compared to a net loss of $16.41 million on $16.23 million of total net revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $31.22 million on $78.14 million of total net revenues compared to a net loss of $23.92 million on $95.38 million of total net revenues for the same period during the prior year. As of Sept. 30, 2021, the Company had $190.91 million in total assets, $256.07 million in total liabilities, and a total deficit of $65.17 million. "Our third quarter results improved considerably, largely due to the successful execution of our 3D strategy," said Chris Usher, ION's president and CEO. "Even in a challenging environment, our multi-client market share increased by approximately 50% primarily by launching new 3D programs. Through exposure to larger scale 3D earnings potential, we delivered a 125% sequential increase in revenue and $22 million of Adjusted EBITDA. Our team successfully completed the second, much larger phase of Mid North Sea High and launched a third extension that is expected to conclude mid-November. In addition, we experienced strong sales of our newly reimaged 3D Picanha data offshore Brazil. "In Operations Optimization, revenues continued improving during the third quarter. Our diversification strategy into ports and offshore logistics is gaining momentum with an increasing pipeline. We submitted our first multi-million-dollar country-scale digitalization proposals for the climate-smart digital infrastructure we are promoting with US government support for maritime detection, port management and illegal fishing. Regarding platform development, two new valuable, client-driven Marlin SmartPort modules were launched that drive automation and efficiency and we received a grant to advance port decarbonization. "We continue diligent efforts to strengthen our financial position and right size the business. Our strategic alternatives process with Tudor Pickering, Holt & Co. is ongoing as we evaluate all options to improve liquidity and address our balance sheet. Our team has made great progress towards the approximately $16 million of annualized savings identified, executing nearly $9 million in short-term savings while progressing the remaining longer-term initiatives. Although some savings will be realized in the fourth quarter, we expect the majority of the short-term savings will take effect starting in early 2022." "While the seismic market recovery remains uncertain, we expect momentum to continue into the fourth quarter due to conversion of existing backlog and a robust sales pipeline. In addition, demand for our offshore data and digitalization technologies is growing, empowering clients to operate more efficiently and sustainably. Our team continues to improve efficiency while focusing on strategic initiatives that have the potential to transform the business, and we're seeing significant traction and customer validation in both the 3D new acquisition multi-client opportunities and large-scale maritime digitalization solutions." At quarter close, the Company's total liquidity of $35.0 million consisted of $24.1 million of cash (including net revolver borrowings of $19.4 million) and $10.9 million of remaining available borrowing capacity under the revolving credit facility, an increase compared to $32.8 million as of June 30, 2021. Whilst the strategic alternatives process continues, and total liquidity improved, the combination of weak first half revenues along with the near-term debt and other obligations has not ameliorated the going concern disclosed last quarter. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/866609/000143774921025105/io20210930_10q.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.S. CATES: Wins Cash Collateral Access Thru Jan 2022 ----------------------------------------------------- The U.S. Bankruptcy Court for the District of Minnesota has approved the stipulation between by J.S. Cates Construction, Inc. and its lender, CorTrust Bank, N.A., authorizing the Debtor to use of cash collateral in accordance with the budget, through January 31, 2022. The Debtor is authorized to continue to perform and be bound by the Stipulation as extended thereby. The Debtor is authorized to continue perform its obligations in accordance with the terms of the Stipulation. The Stipulation will continue to be obligations of the Debtor and its estate upon entry of the Cash Collateral Order through the duration of its authorization. As adequate protection for any use or diminution in the value of CorTrust's interests in the Prepetition Collateral, and the Debtor's use of Cash Collateral, the Debtor is authorized to grant to CorTrust effective as of the Petition Date, valid and perfected replacement liens and security interests on all post-petition assets of the Debtor -- excluding causes of action arising under Chapter 5 of the Bankruptcy Code and the Debtor's 2020 Ford Super-Duty F-350 -- and all products and proceeds thereof. The replacement liens will be to the same extent, dignity, and priority as CorTrust held in its prepetition collateral and only to the extent of any actual diminution in value of CorTrust's interest in pre-petition collateral. As additional adequate protection, the Debtor is authorized to grant to CorTrust effective as of the Petition Date, a replacement lien on the Debtor's real property in secondary position to the CorTrust's mortgage to the extent of the diminution in value of CorTrust's interest in prepetition collateral not otherwise protected by replacement liens granted in the Adequate Protection Collateral. As additional adequate protection, the Debtor is authorized and agrees to make monthly cash payments to CorTrust in the amount of $3,000. The replacement security interests of CorTrust granted pursuant to the terms of the Stipulation will not have priority over valid, perfected, enforceable and non-avoidable security interests. The Court says all terms and requirements of the Stipulation and the Final Order Authorizing Use of Cash Collateral and Granting Adequate Protection Through August 20, 2021, filed as ECF No. 37, remain in full force and effect and continue to apply to the Debtor's use of cash collateral during the Extension Period. A copy of the order is available at https://bit.ly/31zEUSG from PacerMonitor.com. About J.S. Cates Construction J.S. Cates Construction, Inc., f/d/b/a J.S. Cates Companies, filed a Chapter 11 petition (Bankr. D. Minn. Case No. 21-40881) on May 17, 2021 in the U.S. Bankruptcy Court for the District of Minnesota. In the petition signed by Jeffrey S. Cates, president and CEO, the Debtor disclosed $1,153,474 in total assets and $1,767,454 in estimated liabilities. Judge Kathleen H. Sanberg is assigned to the case. Larkin Hoffman Daly & Lindgren Ltd is the Debtor's counsel. JOHNSON & JOHNSON: Seeks to Revive Strategy to Resolve Powder Suits ------------------------------------------------------------------- Steven Church of Bloomberg News reports that Johnson & Johnson is seeking to revive its strategy for resolving tens of thousands of lawsuits alleging its baby powder caused ovarian cancer and other health problems in women. The company ended a two-day trial in Charlotte, North Carolina, on Friday, November 5, 2021, to decide whether to temporarily halt 38,000 lawsuits aimed at J&J and about 250 retailers and insurance companies. The judge said he would announce his ruling next week when J&J's bankrupt unit returns to court. Stopping the suits is a key part of J&J's strategy to pay at least $2 billion to end all current and future baby poweder claims. "The prosecution of the Debtor Talc Claims against the Protected Parties, including J&J, is automatically stayed because it would liquidate indemnification claims against the Debtor outside of chapter 11, effectively seek to collect on claims against the Debtor, deplete available insurance coverage and eliminate the protections of the automatic stay. The objectors do not challenge that actions against non-debtors are automatically stayed if the "unusual circumstances" identified in Robins are present; they instead rely on cases that simply found that in those situations the unusual circumstances did not exist. Because the Debtor is the real party in interest with respect to all the types of new claims described by the objectors, the automatic stay is applicable here," LTL Management said in a Nov. 3 court filing. About Johnson & Johnson Johnson & Johnson (J&J) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. J&J is the world's largest and most broadly based healthcare company. Johnson & Johnson is headquartered in New Brunswick, New Jersey, the consumer division being located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in 60 countries and products sold in over 175 countries. Johnson & Johnson had worldwide sales of $82.6 billion during calendar year 2020. About LTL Management LTL Management LLC is a newly formed subsidiary of Johnson & Johnson. LTL was formed to manage and defend thousands of talc-related claims and to oversee the operations of its subsidiary, Royalty A&M. Royalty A&M owns a portfolio of royalty revenue streams, including royalty revenue streams based on third-party sales of LACTAID, MYLANTA /MYLICON and ROGAINE products. LTL Management LLC filed a Chapter 11 petition (Bankr. W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The Hon. J. Craig Whitley is the case judge. The Debtor tapped JONES DAY as counsel, RAYBURN COOPER & DURHAM, P.A., as co-counsel; BATES WHITE, LLC, as financial consultant; and ALIXPARTNERS, LLP, as restructuring advisor. KING & SPALDING LLP and SHOOK, HARDY & BACON L.L.P., serve as special counsel, and McCARTER & ENGLISH, LLP is the litigation consultant. EPIQ CORPORATE RESTRUCTURING, LLC, is the claims agent. The Debtor was estimated to have $1 billion to $10 billion in assets and liabilities as of the bankruptcy filing. JONES SODA: Board OKs Chastain as Beverage Division President, COO ------------------------------------------------------------------ Jones Soda's Board of Directors ratified the appointment of Eric Chastain, the Company's chief operating officer, as the president and chief operating officer of the Company's beverage division, to be effective as of Nov. 8, 2021. In connection with such appointment, Mr. Chastain's annual base salary will be increased from $165,000 to $200,000. In addition, on Nov. 2, 2021, the Board approved a cash bonus in the amount of $15,000 payable to Joe Culp, the Company's controller, principal financial officer and principal accounting officer. About Jones Soda Headquartered in Seattle, WA, Jones Soda Co. -- www.jonessoda.com -- develops, produces, markets and distributes premium beverages primarily in the United States and Canada through its network of independent distributors and directly to its national and regional retail accounts. The Company also sells products in select international markets. The Company's products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, "up and down the street" in independent accounts such as delicatessens, sandwich shops and burger restaurants, as well as through its national accounts with several large retailers. Jones Soda reported a net loss of $3 million for the year ended Dec. 31, 2020, compared to a net loss of $2.78 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $8.21 million in total assets, $3.72 million in total liabilities, and $4.49 million in total shareholders' equity. Seattle, Washington-based BDO USA, LLP, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 24, 2021, citing that the Company has suffered recurring losses from operations and has negative cash flows from operating activities that raise substantial doubt about its ability to continue as a going concern. JONES SODA: Incurs $59K Net Loss in Third Quarter ------------------------------------------------- Jones Soda Co. reported a net loss of $59,000 on $4.57 million of revenue for the three months ended Sept. 30, 2021, compared to a net loss of $450,000 on $3.54 million of revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $469,000 on $11.88 million of revenue compared to a net loss of $2.08 million on $9.43 million of revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $11.05 million in total assets, $5.14 million in total liabilities, and $5.91 million in total stockholders' equity. At Sept. 30, 2021, cash and cash equivalents totaled $5.9 million compared to $3.1 million at June 30, 2021, and $4.6 million at December 31, 2020. Apart from the outstanding convertible debt instruments, the Company did not have any substantial debt and continues to actively evaluate a new line of credit. Management Commentary "We had another strong quarter as we experienced revenue growth across all channels and continued momentum in our core bottled soda business," said Mark Murray, president and CEO of Jones Soda. "National awareness of Jones continued to grow during the quarter as our marketing initiatives garnered significant interest from both consumers and the media. First, our augmented reality (AR) label series we launched this summer has been a great success. As a follow up, we just rolled out a new series that features Zoltar, the widely recognized fortune teller character. Second, the highly anticipated return of Turkey & Gravy as a Special Release flavor has generated a lot of buzz among fans and media across the U.S. and Canada. Unique labels and flavors remain a signature point of differentiation, and we continue to look for new and innovative ways to engage with consumers. "As recently announced, we took a significant step towards launching our planned cannabis business line by signing a definitive arrangement agreement with Pinestar. We are excited about our plans to launch a portfolio that will include not only cannabis-infused beverages, but also edibles, vapes and pre-rolls. We continue to believe that we are well-positioned as a nationally recognized brand to capitalize on the opportunities in this space and we are happy to have our first-ever Chief Marketing Officer, Bohb Blair, being a steward of the launch. We expect to launch our portfolio in the first quarter of 2022, and we look forward to sharing more details upon the close of the deal. "Looking ahead, we believe we are well-positioned to continue executing against our turnaround plan with momentum for the Jones brand building across the U.S. and Canada. While we remain confident in our growth trajectory, we are not immune to the supply-chain and commodity headwinds that businesses around the world are facing. Our team continues to work closely with our supply-chain and raw materials partners in an effort to manage these challenges and meet customer demand. By taking these actions, we expect to report strong results for the last quarter of 2021 and exceed our internal objectives for the year." A full-text copy of the press release is available for free at: https://www.sec.gov/Archives/edgar/data/0001083522/000117184321007563/exh_991.htm About Jones Soda Headquartered in Seattle, WA, Jones Soda Co. -- www.jonessoda.com -- develops, produces, markets and distributes premium beverages primarily in the United States and Canada through its network of independent distributors and directly to its national and regional retail accounts. The Company also sells products in select international markets. The Company's products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, "up and down the street" in independent accounts such as delicatessens, sandwich shops and burger restaurants, as well as through its national accounts with several large retailers. Jones Soda reported a net loss of $3 million for the year ended Dec. 31, 2020, compared to a net loss of $2.78 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $8.21 million in total assets, $3.72 million in total liabilities, and $4.49 million in total shareholders' equity. Seattle, Washington-based BDO USA, LLP, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 24, 2021, citing that the Company has suffered recurring losses from operations and has negative cash flows from operating activities that raise substantial doubt about its ability to continue as a going concern. KADMON HOLDINGS: Stockholders Approve Merger Deal With Sanofi Unit ------------------------------------------------------------------ Kadmon Holdings, Inc. held a special meeting of its stockholders on Nov. 5, 2021, at which the stockholders: (1) approved the merger of the company with and into a wholly owned indirect subsidiary of Sanofi, a societe anonyme ("Parent"), pursuant to the Agreement and Plan of Merger, dated as of Sept. 7, 2021, by and among company, Sanofi and Latour Merger Sub, Inc., a Delaware corporation and indirect wholly owned subsidiary of Sanofi; and (2) approved the adjournment of the special meeting, if necessary and for a minimum period of time reasonable under the circumstances, to ensure that any necessary supplement or amendment to the proxy statement is provided to Kadmon stockholders a reasonable amount of time in advance of the special meeting or to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve Proposal 1. Kadmon expects to consummate the merger on Nov. 9, 2021. About Kadmon Holdings Based in New York, Kadmon Holdings, Inc. -- http://www.kadmon.com -- is a clinical-stage biopharmaceutical company that discovers, develops and delivers transformative therapies for unmet medical needs. The Company's clinical pipeline includes treatments for immune and fibrotic diseases as well as immuno-oncology therapies. Kadmon reported a net loss attributable to common stockholders of $111.03 million for the year ended Dec. 31, 2020, compared to a net loss attributable to common stockholders of $63.43 million for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $304.26 million in total assets, $290.25 million in total liabilities, and $14.01 million in total stockholders' equity. KOPIN CORPORATION: Incurs $2.1 Million Net Loss in Third Quarter ---------------------------------------------------------------- Kopin Corporation reported a net loss of $2.13 million on $10.88 million of revenues for the three months ended Sept. 25, 2021, compared to a net loss of $968,769 on $9.51 million of revenues for the three months ended Sept. 26, 2020. For the nine months ended Sept. 25, 2021, the Company reported a net loss of $10.16 million on $32.47 million of revenues compared to a net loss of $5.77 million on $26.21 million of revenues for the nine months ended Sept. 26, 2020. As of Sept. 25, 2021, the Company had $58.95 million in total assets, $13.70 million in total current liabilities, $1.57 million in other long term liabilities, $812,351 in operating lease liabilities, and $42.86 million in total stockholders' equity. Management Commentary "We had strong third quarter results, with revenues increasing 14% year over year, reflecting growing demand across our key markets, including defense, industrial and consumer," said Dr. John C.C. Fan, CEO of Kopin. "This quarter was our 9th straight quarter of year-on-year growth. Revenues were again driven largely by our defense production programs and our customer-funded development programs. In particular, our third quarter customer-funded R&D revenue increased approximately 60% year over year, primarily driven by accelerating interest in our next generation of displays and our design and manufacturing expertise in rugged 'higher-level-assemblies' which are sub-systems that include our displays, optics, electronics and ruggedized housings." "On our second quarter results of operations call on August 3, 2021, we announced that we reduced shipments of our product for the FWS-I thermal weapon sight program while we worked with our customer to develop better processes for increased production rates. I am pleased to report that the process enhancements have been successfully implemented and we expect to have our highest shipping rate of products for the FWS-I program in the fourth quarter of 2021. As a reminder, the FWS-I thermal sight system uses a high-precision video 'see-through' AR optical module using our CyberDisplay LCDs and our custom-designed Pancake optics." Dr. Fan continued, "Other successes in the third quarter also included the receipt of a previously reported $1.1 million order to provide eyepieces for the Joint Effects Targeting System (JETS), one of the two low rate initial production programs we reported in the second quarter of 2021, which will be delivered through 2022. Our third quarter enterprise product revenues increased 65% over the same quarter last year on the strength of sales into the 3D Automated Optical Inspection (AOI) market. During the third quarter of 2021 we announced a $3.2 million order from JUTZE Intelligence Technology (JUTZE) for our Spatial Light Modulators (SLMs) for JUTZE's 3D AOI and 3D Solder Paste Inspection (3D SPI) equipment. We also continued to make progress in commercializing our organic light emitting diode display (OLED) technologies with additional orders for our OLED." "We are also on track with our defense customer-funded development programs. We previously announced two development programs entered low-rate initial production during the second quarter of 2021 and we expect another defense development program to enter low-rate initial production during the fourth quarter of 2021. In addition, we have a robust pipeline of defense programs in development which we expect will fuel our defense revenues in the coming years," said Dr. Fan. "In the third quarter of 2021, like most companies, we faced many supply chain related challenges. To this point we have not experienced any material negative effects from gaps in material availability, however we continue to closely monitor and manage new challenges." "In short, our business is strong as we actively innovate and advance our technology roadmap, paving the path for future growth in AR/VR/MR applications. We believe we are the world's only provider of LCD, LCOS, OLED and micro-LED microdisplays on silicon. The current market trends indicate exciting and growing opportunities especially in the Metaverse VR platform. Kopin was a pioneer and has been focusing on this radical transformation for many years as it progresses from defense, to enterprise, and now into consumer applications. We believe we are well positioned to capitalize on these opportunities. We are looking forward to the coming CES in January 2022, where we plan to exhibit our recent exciting developments," concluded Dr. Fan. A full-text copy of the press release is available for free at: https://www.sec.gov/Archives/edgar/data/771266/000115752321001303/a52519669_ex991.htm About Kopin Kopin Corporation -- http://www.kopin.com-- is a developer and provider of innovative display and optical technologies sold as critical components and subassemblies for military, industrial and consumer products. Kopin's technology portfolio includes ultra-small Active Matrix Liquid Crystal displays (AMLCD), Liquid Crystal on Silicon (LCOS) displays and Organic Light Emitting Diode (OLED) displays, a variety of optics, and low-power ASICs. Kopin reported a net loss of $4.53 million for the year ended Dec. 26, 2020, compared to a net loss of $29.37 million for the year ended Dec. 28, 2019. As of June 26, 2021, the Company had $57.82 million in total assets, $16.08 million in total current liabilities, $277,846 in noncurrent contract liabilities and asset retirement obligations, $488,392 in operating lease liabilities (net of current portion), $1.33 million in other long-term obligations, and $39.64 million in total stockholders' equity. L'INC D'ALINE: Unsecured Creditors to Get $172K in 5 Years ---------------------------------------------------------- L'Inc D'Aline Corporation filed with the U.S. Bankruptcy Court for the Central District of California a Chapter 11 Plan of Reorganization and a Disclosure Statement on Nov. 1, 2021. The Debtor's property in Stanton, California, is the Debtor's primary asset. The asset is well managed and is generating positive cash flow. On or about Sept. 15, 2021, the Debtor had an appraisal done for the Property by Retail Petroleum Consultants LLC. Pursuant to the appraisal report completed by Retail Petroleum Consultants LLC on an "as is" market value of the subject's leased fee real estate based on the market conditions as of Sept. 1, 2021, the Property has an estimated fair market value of $3,260,000. Secured Creditor Ennerdale Corporation Defined Benefit Plan & Trust, for the benefit of Alan Reay, and Ennerdale Corporation 401K, for the benefit of Alan Reay (collectively, hereinafter, known as "Ennerdale") hold the first and second deeds of trust on the Property for a total scheduled claim amount of $1,923,845. On December 30, 2020, Poppy Bank, the original holder of the first and second deeds of trust for the Property, assigned its interest to Ennerdale pursuant to a Loan Purchase Agreement, dated as of Dec. 17, 2020. The Property is further encumbered by property taxes owed to the Orange County Treasurer and Tax Collector, and other lienholders such DSXW Holdings, Inc., Vendor Services Center, Financial Pacific Leasing, Inc., Tesoro Refining & Marketing Company, LLC, and Lien Solutions. These secured scheduled claims, including Ennerdale's claims, total to approximately $3,369,462.23. Debtor's unsecured priority obligations consist of the Franchise Tax Board with an estimated scheduled claim of $17,000.00. Debtor's unsecured non-priority claim consists of Southern California Edison with an estimated scheduled claim of $17,000.00, which is marked as contingent, unliquidated and disputed. Debtor's Principal, Zaal John Haddadin, does not hold any pre petition claim or any postpetition administrative claim against the estate. This is a reorganizing plan that provides for payment to holders of allowed claims over time. The timing of plan payments to particular creditor groups will depend upon their classification under the Plan. Class 2 consists of General Unsecured Claims. The Debtor estimates that there are approximately $2,462,880.35 in general unsecured debts. General unsecured claims classified in Class 2 will receive a total of approximately 6.97% of their claims in two payments per each year over five-year period of the Plan, and approximately 7.38% with the proposed new value contribution. The Debtor proposes to make the first installment to General Unsecured Creditors for Year #1 in month 6 and months 12; for years 2-5, in month 6 and month 12 for each of these four years. Total amount the general unsecured creditors will receive is approximately $171,680. Each year the Debtor will pay a total sum of $34, 336 in two installments of $17,168 each for 5 years. Management of the Reorganized Debtor will remain with its President, Zaal John Haddadin. Mr. Haddadin, as the President and CEO of the Debtor, handles the maintenance of the Property and the collection of the rental income. The Debtor will fund the Plan from the continued operation of its business. A full-text copy of the Disclosure Statement dated November 01, 2021, is available at https://bit.ly/2ZXWmPG from PacerMonitor.com at no charge. Attorney for Debtor: Michael Jay Berger, Esq. Law Offices of Michael Jay Berger 9454 Wilshire Blvd., 6th Floor Beverly Hills, CA 90212-2929 Telephone: (310) 271-6223 Facsimile: (310) 271-9805 Email: michael.berger@bankruptcypower.com About L'Inc D'Aline L'Inc D'Aline Corporation is the owner of the real property located at 7470 Cerritos Avenue, Stanton, California 90680. The property is improved with a gas station and convenience store. L'Inc D'Aline sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-11906) on Aug. 3, 2021. In the petition signed by CEO Zaal John Haddadin, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Scott C. Clarkson oversees the case. Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger, is the Debtor's legal counsel. LATAM AIRLINES: Aires Settles Dispute With Regional One, Dash ------------------------------------------------------------- LATAM Airlines Group S.A. and certain of its affiliated debtors filed a motion seeking approval for Aerovias de Integracion Regional S.A. ("Aires") to enter into a settlement with Regional One, Inc. and Dash 224, LLC to resolve a claims dispute and a decade-long commercial disagreement, which has resulted in two litigations in two countries. On Dec. 16, 2020, Regional One filed Claim No. 1996 against Aires and Claim No. 2361 against LATAM Parent. Also on Dec. 16, 2020, Dash filed Claim No. 1997 against Aires and Claim No. 2009 against LATAM Parent. Each of the Chapter 11 Claims assert that Aires is liable in the amount of $28,000,000 based on a potential finding of damages by the Florida Court against Aires in the Consolidated Action. Aires and two claimants, Regional One and Dash successfully resolved their ongoing disputes at a mediation that took place pursuant to the ADR Procedures approved by the Bankruptcy Court. Under the terms of the Settlement Agreement, the approval of which the Debtors' seek in this Motion, Dash will have an allowed claim against Aires in an amount significantly less than its proof of claim, and the Parties will each dismiss pending litigations against one another in Colombia and Florida, among other releases. According to a 39-page motion seeking approval of the settlement, the Debtors believe that it is reasonable to enter into the Settlement Agreement. Aires will reduce the size of its claims pool by almost $20 million in asserted liabilities and avoid the need to set aside reserved funds related to the disputed claims as part of its reorganization plan. Further, although the Debtors believe that they would prevail if the underlying litigation in Florida was decided in a jury trial, settlement avoids the additional costs of such proceedings and the risk of an unpredictable adverse judgment that could far exceed the size of the settlement amount. The terms of the Settlement Agreement are as follows: * Subject to approval from the Bankruptcy Court, Aires agrees that Dash shall have a valid allowed prepetition general unsecured claim against Aires in the amount of $9,550,000 (the "Allowed Claim"). * Within 20 days of entry of the Proposed Order, Dash and Regional One will take action to cause the dismissal, with prejudice, of the Consolidated Litigation against Aires. * Following entry of the Settlement Order and within 20 business days of dismissal of the Consolidated Litigation against Aires, Aires will take action to cause the dismissal, with prejudice, of Regional One and Dash from the Colombian Action. * The Parties agree to a mutual release of any claims arising out of or in connection with the Aircraft, the Lease, the Letter Agreement, or the Aircraft Litigations. * Each Party shall bear its own attorneys' fees and costs arising out of or relating to the Aircraft Litigations and the Settlement Agreement. 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. LATAM AIRLINES: Kramer Levin 2nd Update on Parent Claimants ----------------------------------------------------------- In the Chapter 11 cases of LATAM Airlines Group S.A., et al., the law firm of Kramer Levin Naftalis & Frankel LLP submitted a second verified statement under Rule 2019 of the Federal Rules of Bankruptcy Procedure, to disclose an updated list of members of the Parent Ad Hoc Claimant Group. As of Oct. 27, 2021, members of the Parent Ad Hoc Claimant Group and their disclosable economic interests are: Aurelius Capital Management, LP 535 Madison Avenue, 31st Floor New York, NY 10022 * Holder of approximately $84,866,520.00 of Claims against LATAM, $41,668,985.00 in other Claims against subsidiary Debtors, and 780,837 of local shares of common stock. Barclays Bank PLC 745 Seventh Avenue New York, NY 10019 * Holder of approximately $18,000,000 of Claims against LATAM, $35,714,000 of 2024 Notes, and $17,992,000 of 2026 Notes. Citigroup Financial Products, Inc. 388 Greenwich Street Tower Building New York, NY 10013 * Holder of approximately $37,909,707.00 of Claims against LATAM, $1,727,000.00 of 2024 Notes, $17,700,000.00 of 2026 Notes, $24,750,000 of the Revolving Credit Facility,6 $59,181,001.00 in other Claims against subsidiary Debtors, and $317,716.00 in administrative expense claims. Cross Ocean Partners Management LP 20 Horseneck Lane Greenwich, CT 06830 * Holder of approximately $28,072,319.42 of Claims against LATAM, $7,826,129.37 in other Claims against subsidiary Debtors, $26,558,675.15 of the Bradesco Loan,7 and $66,156,500.48 of the Banco do Brasil Loan. Deutsche Bank Securities Inc. One Columbus Circle 7th Floor New York, New York 10019 * Holder of approximately $58,633,291.00 of Claims against LATAM and $40,000,000.00 in other Claims against subsidiary Debtors. Grosvenor Capital Management, L.P. 900 North Michigan Avenue Suite 1100 Chicago, IL 60611 * Holder of approximately $30,594,543.54 of Claims against LATAM, $23,769,000.00 of 2024 Notes, and $17,180,000.00 of 2026 Notes. Monarch Alternative Capital LP 535 Madison Avenue New York, NY 10022 * Holder of approximately $148,964,158.96 of Claims against LATAM, $30,438,000 of 2024 Notes, and $78,127,000 of 2026 Notes. Olympus Peak Asset Management LP 745 Fifth Avenue Suite 1604 New York, NY 10151 * Holder of approximately $211,139,238.00 of Claims against LATAM, $16,000,000 of 2024 Notes, $5,000,000 of 2026 Notes, $23,857,515.83 of other Claims against subsidiary Debtors, and $532,250.11 of administrative expense claims. P. Schoenfeld Asset Management L.P. 1350 Avenue of the Americas 21st Floor New York, NY 10019 * Holder of approximately $15,500,001.00 of Claims against LATAM, $9,100,000.00 of 2024 Notes, and $21,250,000.00 of 2026 Notes. Sculptor Capital LP 9 West 57th Street 39th Floor New York, NY 10019 * Holder of a 50% interest in Sajama Investments LLC, $38,621,000 of 2024 Notes, $46,375,000 of 2026 Notes, and $28,058.09 of 2015-1B EETCs. Silver Point Capital, L.P. Two Greenwich Plaza Greenwich, CT 06830 * Holder of approximately $93,558,448.14 in filed, face amounts of Claims against LATAM, $29,265,000 of 2024 Notes, $55,041,000 of 2026 Notes, and $34,737,991 of the Spare Engine Facility. Sixth Street Partners, LLC 345 California Street San Francisco, CA 94104 * Holder of $1,127,999,998.00 of Claims against LATAM, a 50% interest in Sajama Investments, LLC, $58,052,000 of 2024 Notes, $72,470,000 of 2026 Notes, and $23,847.19 of 2015-1B EETCs. Strategic Value Partners 100 West Putnam Avenue Greenwich, CT 06830 * Holder of $1,130,969,987.53 of Claims against LATAM and certain related claims filed against Debtor subsidiaries. Third Point LLC 55 Hudson Yards New York, NY 10001 * Holder of approximately $95,040,000 of Claims against LATAM, $9,500,000 of 2024 Notes and $25,000,000 of 2026 Notes. Varde Partners, Inc. 901 Marquette Avenue South Suite 3300 Minneapolis, MN 55402 * Holder of approximately $106,505,276.00 of Claims against LATAM, $70,575,000.00 of 2024 Notes, and $64,269,000.00 of 2026 Notes. On or about June 9, 2021, the Parent Ad Hoc Claimant Group retained Kramer Levin to represent it in connection with the above-captioned Chapter 11 Cases. Each member of the Parent Ad Hoc Claimant Group has consented to Kramer Levin's representation. Kramer Levin reserves the right to amend or supplement this Statement. Counsel to the Parent Ad Hoc Claimant Group can be reached at: KRAMER LEVIN NAFTALIS & FRANKEL LLP Kenneth H. Eckstein, Esq. Douglas H. Mannal, Esq. Rachael L. Ringer, Esq. Douglas Buckley, Esq. 1177 Avenue of the Americas New York, NY 10036 Telephone: (212) 715-9100 Facsimile: (212) 715-8000 E-mail: keckstein@kramerlevin.com dmannal@kramerlevin.com rringer@kramerlevin.com dbuckley@kramerlevin.com A copy of the Rule 2019 filing, downloaded from PacerMonitor.com, is available at https://bit.ly/3k8k82J 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. LEGENDARY FIELD: Bankr. Court OKs Settlement of Class Claims ------------------------------------------------------------ The Alliance of American Football ("AAF") was formed in 2018 as a new professional football league with teams located in eight cities around the United States. Initially, Ebersol Sports Media Group, LLC ("ESMG") directly or indirectly owned 100% of the interest in each of the entities that comprised the AAF. In early 2018, AAF arranged more than $200 million in financing through stock sales, convertible debt, and a convertible credit line. By late 2018, however, AAF received only sporadic funding by the line of credit investor. In February 2019, Thomas Dundon committed additional funding to the AAF in exchange for full control of ESMG's board of directors and AAF's business decisions. After hiring players, hosting pre-season training camps, and playing eight out of ten first season football games, AAF suspended its operations on April 2, 2019. On April 10, 2019, Colton Schmidt and Reggie Northrup filed a Putative Class Action Complaint for Damages against AAF, Dundon and Charles Ebersol in the Superior Court of the State of California, County of San Francisco. On April 17, 2019, co-defendants AAF Players, LLC; AAF Properties, LLC; Legendary Field Exhibitions, LLC; and Ebersol Sports Media Group, Inc. -- AAF Defendants -- each filed a Chapter 7 bankruptcy case in the United States Bankruptcy Court for the Western District of Texas, San Antonio Division. After a hearing on July 3, 2019, the Court substantively consolidated all of the AAF Defendants' bankruptcy cases into one lead case numbered 19-50900-cag. Post-petition, the Lead Plaintiffs' Putative Class Action Complaint for Damages was removed to the United States District Court for the Northern District of California and transferred to the United States District Court for the Western District of Texas. On July 23, 2019, the Texas Western District Court referred Lead Plaintiffs' lawsuit against AAF, Dundon, and Ebersol to the United States Bankruptcy Court for the Western District of Texas, San Antonio Division, which is styled as Adv No. 19-05053-cag. The AAF Adversary asserts these claims: * Against the Chapter 7 Bankruptcy Estate: breach of contract, breach of implied covenant of good faith and fair dealing, promissory estoppel, California Business and Professions Code Section 17200 et seq., fraud, and promissory fraud. * Against Ebersol: promissory estoppel, fraud, and promissory fraud. * Against Dundon: fraud and promissory fraud. The Lead Plaintiffs also filed a putative proof of claim in the bankruptcy case (Claim No. 214), seeking more than $673 million in actual and exemplary damages based on theories in contract, quasi-contract, common law, and statutory tort actions. Additionally, the Putative Class Claim includes breach of contract claims for players' wages under the Standard Player Agreement, which the Lead Plaintiffs contend are entitled to priority under Section 507(a)(4) of the Bankruptcy Code. The Bankruptcy Court issued an order dated October 26, 2021, granting the application to approve the compromise and settlement agreement among the trustee of the Chapter 7 cases of Legendary Field Exhibitions and its debtor-affiliates, the Lead Plaintiffs, and Ebersol. Based on the evidence and argument, the Court finds that awarding each member of the Settlement Players Class a general unsecured claim for $180,000 representing the second and third-year base compensation -- a claim that would be subordinated to any claim properly held by Dundon, DCP, and any other unsecured creditor -- is a reasonable outcome. The Trustee, according to the Court, has sufficiently demonstrated he exercised sound business judgment in negotiating the terms of the Settlement. For example, the Trustee testified at the hearing on this Application that "there is $3.9 million in the Estate now, and it is unlikely the Players will ever see the money for their subordinated unsecured claim." The Trustee was able to negotiate on behalf of the Estate "an assignment of any of Plaintiffs' claims against Charles Ebersol and of all claims under the [SPAs]" in exchange for a subordinated unsecured claim. The Court concludes this portion of the settlement is "fair and equitable" and "in the best interests of the estate." The Court finds credible the Trustee's belief that failure to settle the Settlement Players Class' claims against Ebersol and the Estate would "almost certainly deplete available Estate funds and make it impossible for the Debtors' Estate to bring any additional claims it may have." The Declaration of Randolph N. Osherow in Support of Application to Approve Settlement Compromise Under Rule 9019 states that "the settlement on the terms proposed likely represents the only chance that the Estate will have to settle with the Plaintiffs in this litigation, or to prevent defense costs from consuming most of what remains in the Estate." The Declaration of Brian S. Engel in Support of Application to Approve Compromise Under Rule 9019 declares, "if the Estate was required to remain in litigation, higher priority administrative claims stemming from defense costs would likely consume a large portion, if not all of the remaining current Estate funds, which are just less than $4 million." The Estate has limited funds to pay creditors, and protracted litigation would "create administrative claims that would substantially reduce, and maybe even consume the remaining Estate." Therefore, the Court is satisfied that factor two in Am. Can. Co. v. Herpel (In re Jackson Brewing Co.), is met. The Court defers to the Trustee's business judgment as to the claim against Ebersol. The Court acknowledges the Trustee's representation that failure to settle the Settlement Players Class' claims against Ebersol and the Estate would "almost certainly deplete available Estate funds and make it impossible for the Debtors' Estate to bring any additional claims it may have." The Court also concludes the settlement is in the best interest of creditors because -- as stated by the Trustee -- "the settlement on the terms proposed likely represents the only chance that the Estate will have to settle with the Plaintiffs in this litigation, or to prevent defense costs from consuming most of what remains in the Estate." Therefore, the Court concludes that the third factor in Jackson Brewing Co. is satisfied. A full-text copy of the decision is available at https://tinyurl.com/2j99np74 from Leagle.com. The Chapter 7 cases are N RE: LEGENDARY FIELD EXHIBITIONS, LLC, AAF PLAYERS, LLC; AAF PROPERTIES, LLC; EBERSOL SPORTS MEDIA GROUP, INC.; LFE 2, LLC; WE ARE REALTIME, LLC., Chapter 7, Debtors, Jointly Administered Under Case No. 19-50900-cag, Case No. 19-50902-cag., 19-50903-cag, 19-50904-cag, 19-50905-cag, 19-50906-cag (Bankr. W.D. Tex.). LTL MANAGEMENT: Talc Committee Approved Over Venue Concerns ----------------------------------------------------------- Vince Sullivan of Law360 reports that a North Carolina bankruptcy judge approved the appointment of an 11-member committee of talc claimants in the Chapter 11 case of Johnson & Johnson subsidiary LTL Management LLC Thursday, November 4, 2021, saying he would entertain proposed additions or changes to the group after dealing with a venue transfer motion next week. During a hearing in Charlotte, U.S. Bankruptcy Judge J. Craig Whitley said he was adopting the committee as proposed by the U.S. bankruptcy administrator because the claimants need to get to work on coordinating their efforts in the case. About LTL Management LTL Management LLC is a newly formed subsidiary of Johnson & Johnson (J&J) to manage and defend thousands of talc-related claims and oversee the operations of its subsidiary, Royalty A&M, which owns a portfolio of royalty revenue streams,including royalty revenue streams based on third-party sales of LACTAID, MYLANTA/MYLICON and ROGAINE products. J&J is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. It is the world's largest and most broadly based healthcare company. LTL Management filed a Chapter 11 petition (Bankr. W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The Debtor was estimated to have $1 billion to $10 billion in assets and liabilities as of the bankruptcy filing. The Hon. J. Craig Whitley is the case judge. The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A. as bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon LLP as special counsel; McCarter & English, LLP as litigation consultant; Bates White, LLC as financial consultant; and AlixPartners, LLP as restructuring advisor. Epiq Corporate Restructuring, LLC is the claims agent. About Johnson & Johnson Johnson & Johnson (J&J) is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. J&J is the world's largest and most broadly based healthcare company. Johnson & Johnson is headquartered in New Brunswick, New Jersey, the consumer division being located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in 60 countries and products sold in over 175 countries. Johnson & Johnson had worldwide sales of $82.6 billion during calendar year 2020. MALLINCKRODT PLC: Can Use Chapter 11 to Duck Acthar Royalties ------------------------------------------------------------- Rick Archer of Law360 reports that a bankruptcy judge in Delaware Thursday, November 4, 2021, ruled drugmaker Mallinckrodt can use Chapter 11 to escape royalty payments for the sale of its Acthar Gel medication as the confirmation hearing for the company's restructuring plan continued. At a virtual hearing, U.S. Bankruptcy Judge Martin Glenn found the Bankruptcy Code allowed Mallinckrodt to reject one royalty agreement and discharge its payment obligations under another as part of its Chapter 11 case. Mallinckrodt and its affiliates filed for Chapter 11 in 2020, with a restructuring support agreement to cut $1 billion worth of debt from the $5.3 billion case. About Mallinckrodt PLC Mallinckrodt -- http://www.mallinckrodt.com/-- is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt plc disclosed $9,584,626,122 in assets and $8,647,811,427 in liabilities as of Sept. 25, 2020. Judge John T. Dorsey oversees the cases. The Debtors tapped Latham & Watkins LLP and Richards, Layton & Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim Securities LLC as investment banker; and AlixPartners LLP as restructuring advisor. Prime Clerk, LLC, is the claims agent. The official committee of unsecured creditors retained Cooley LLP as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon Advisers LLC as its financial advisor. On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an official committee of opioid related claimants. The OCC tapped Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz as Delaware co-counsel, Province Inc. as financial advisor, and Jefferies LLC as investment banker. A confirmation trial for the Debtors' First Amended Joint Plan of Reorganization is set to begin Nov. 1, 2021. The Confirmation Hearing will be bifurcated into two phases. Phase 1 will commence the week of Nov. 1. The Confirmation Hearing will continue with Phase 2 on or around the week of Nov. 15, when the Acthar Administrative Claims Hearing proceedings concludes. MALLINCKRODT PLC: Cleared by Court on $94 Mil. Ch.11 Bond Penalty ----------------------------------------------------------------- Rick Archer, writing for Law360, reports that a Delaware bankruptcy judge on Friday, November 5, 2021, found Mallinckrodt does not owe a $94 million payment to noteholders, saying the creditors should not get a "windfall" simply as a result of the drugmaker's Chapter 11 filing. At a virtual hearing, U.S. Bankruptcy Judge Martin Glenn said the Bankruptcy Code allows Mallinckrodt to reinstate its first-lien notes in its Chapter 11 plan without allowing the bondholders to "extract a penalty and collect a windfall" under the bonds' default provisions. About Mallinckrodt PLC Mallinckrodt -- http://www.mallinckrodt.com/-- is a global business consisting of multiple wholly-owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. The company's Specialty Brands reportable segment's areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics; and gastrointestinal products. Its Specialty Generics reportable segment includes specialty generic drugs and active pharmaceutical ingredients. On Oct. 12, 2020, Mallinckrodt plc and certain of its affiliates sought Chapter 11 protection in Delaware (Bankr. D. Del. Lead Case No. 20-12522) to seek approval of a restructuring that would reduce total debt by $1.3 billion and resolve opioid-related claims against them. Mallinckrodt plc disclosed $9,584,626,122 in assets and $8,647,811,427 in liabilities as of Sept. 25, 2020. Judge John T. Dorsey oversees the cases. The Debtors tapped Latham & Watkins LLP and Richards, Layton & Finger P.A. as their bankruptcy counsel; Arthur Cox and Wachtell, Lipton, Rosen & Katz as corporate and finance counsel; Ropes & Gray LLP as litigation counsel; Torys LLP as CCAA counsel; Guggenheim Securities LLC as investment banker; and AlixPartners LLP as restructuring advisor. Prime Clerk, LLC, is the claims agent. The official committee of unsecured creditors retained Cooley LLP as its legal counsel, Robinson & Cole LLP as co-counsel, and Dundon Advisers LLC as its financial advisor. On Oct. 27, 2020, the U.S. Trustee for Region 3 appointed an official committee of opioid related claimants. The OCC tapped Akin Gump Strauss Hauer & Feld LLP as its lead counsel, Cole Schotz as Delaware co-counsel, Province Inc. as financial advisor, and Jefferies LLC as investment banker. A confirmation trial for the Debtors' First Amended Joint Plan of Reorganization is set to begin Nov. 1, 2021. The Confirmation Hearing will be bifurcated into two phases. Phase 1 will commence the week of Nov. 1. 2021. The Confirmation Hearing will continue with Phase 2 on or around the week of Nov. 15, when the Acthar Administrative Claims Hearing proceedings concludes. MARA DAY: Files Emergency Bid to Use Cash Collateral ---------------------------------------------------- Mara Day Spa, LLC asks the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for authority to use cash collateral and provide adequate protection. The Debtor must use Cash Collateral to maintain operations, pay utilities, and cover other overhead expenses required for the maximization of the value of the Debtor's assets through the bankruptcy process for the benefit of its estate and creditors. The Reorganization Case is intended to provide MDS a forum for the orderly and efficient reorganization of its assets and satisfaction of outstanding obligations, including working to refinance or restructure its debts. MDS believes this process will be in the best interests of its creditors and estate. These parties have asserted or may assert secured claims to MDS's deposit accounts and cash: a. Allergan, Inc., located at 5 Giralda Farms, Madison, NJ 07940. The Debtor does not know of any current indebtedness to Allergan. b. C.T. Corporation System as representative of Ascentium Capital, located at 330 N. Brand Blvd., Ste. 700, ATTN: SPRS, Glendale, CA 91203. The Debtor does not know of any prepetition indebtedness to CTC or Ascentium Capital. c. McKesson Corp., located at 4345 Southpoint Blvd., Jacksonville, FL 32216. The Debtor anticipates McKesson would allege a security interest in the Cash Collateral pertaining to trade receivables with MDS. Debtor estimates that as of the Petition Date, $5,215.26 is alleged owed to McKesson. d. U.S. Small Business Administration, located at 10737 Gateway West, #300, El Paso, TX 79935. The Debtor anticipates SBA would assert a security interest in the Cash Collateral pertaining to an "EIDL" grant, of which $159,900 is alleged owed to SBA as of the Petition Date; e. Secured Lender Solutions as representative of unknown creditor, located at P.O. Box 2576, Springfield, IL 62708 and/or 266 Harristown Road, Ste. 304, Glen Rock, NJ 07452; and f. H Melton Ventures, LLC, c/o Marilyn Garner, Chapter 7 Trustee, located at 2001 E. Lamar Blvd., Suite 200, Arlington, TX 76006. The Debtor anticipates HMV would allege a security interest pertaining to an Agreed Judgment against the Debtor. The Debtor anticipates HMV would allege a balance of approximately $150,000 owed thereunder as of the Petition Date. The Prepetition Indebtedness was identified following the Debtor's review of UCC Financing Statements filed with the Texas Secretary of State and a review of the Debtor's own records for deposit account control agreements. The identified Secured Creditors assert that their respective indebtedness is secured by liens on certain of the Debtor's assets as identified by the respective Secured Creditors' Loans. As adequate protection for the use of Cash Collateral, the Debtor requests that the Court grant the Secured Creditors a general plus priority and continuing lien upon and security interest in and to all of the Debtor's right, title, and interests in, to, and against the Secured Creditors' collateral, acquired by the Debtor after the Petition Date. Such replacement liens will be granted only to the extent necessary to replenish the diminution in value as of the Petition Date of the Secured Creditors' perfected pre-petition liens and security interest and will not exceed the amount, priority, validity, perfection or enforceability of the Secured Creditors' lien position and rights as of the Petition Date. The Debtor requests immediate authorization to use Cash Collateral for operating purposes as set forth in the Budget, with a 15% variance. A copy of the motion is available at https://bit.ly/3bKnioR from PacerMonitor.com. About Mara Day Spa, LLC Mara Day Spa, LLC is a health and beauty spa founded in 2017 that operates in the Dallas, Texas area, providing customers with skincare products, treatments, injectables, and various other services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 21-31928) on October 27, 2021. In the petition signed by Ledimara Pinney, president, the Debtor disclosed up to $50 million in assets and up to $10 million in liabilities. Mark A. Castillo, Esq., at Curtis | Castillo PC is the Debtor's counsel. MENUCHA ENTERPRISES: Unsecureds Will Get 22.9% of Claims in Plan ---------------------------------------------------------------- Menucha Enterprise LLC filed with the U.S. Bankruptcy Court for the District of Colorado an Amended Plan of Reorganization dated October 29, 2021. Menucha's case is jointly administered with the case of Bezh Services, LLC, but the cases are not substantively consolidated. They are two separate cases in Chapter 11 of the Bankruptcy Code. Bezh moved to dismiss its case by Motion filed contemporaneously with the filing of this Plan, which Motion is pending. Menucha and Bezh are both Colorado limited liability companies that own and manage residential real property. Their principal, Aharon Sirota, established Menucha in 2016 and began to acquire rental properties. Menucha's primary lender, Cost Fund I, LLC ("Cost Fund"), provided an acquisition loan for each property but one. Bezh and Menucha financed each but one property acquisition with Cost Fund, which charged non-default interest at 14% per annum. Until Covid-19 hit the United States, Bezh and Menucha remained current on their payments to Cost Fund. Covid-19 changed everything as many tenants lost their jobs and were unable to pay rent, and the State of Colorado prohibited Bezh and Menucha from evicting tenants. As a result, Menucha and Bezh defaulted on their loans to Cost Fund, and these loans provided for default interest at the rate of 24% per annum. Cost Fund eventually initiated foreclosure proceedings against a number of the Menucha and Bezh properties and even sought appointment of a receiver in relation to the Bezh properties. Thus, on February 17, 2021 and March 9, 2021, Bezh and Menucha, respectively, filed voluntary petitions for relief under Chapter 11, Subchapter V, of the Bankruptcy Code. Seven properties have since been sold in this bankruptcy case – four belonging to Bezh and three belonging to Menucha. Additionally, there is a sale order in place regarding another property - (12285 East 50th Avenue, Denver, CO 80239 – a Menucha property – though Menucha is unsure if that deal will ultimately close. Menucha will continue to seek to sell properties to maximize the value to Cost Fund while the properties remain in the bankruptcy estate. Class I consists of those unsecured creditors of the Menucha. Class I shall be paid upon the sale of the real property located at 1304 S. Parker Road, #155, Denver, Colorado. Based on Menucha projections, Menucha estimates that the total amount available for payment of Class I Claims will be $117,700.00. Based on the information available to Menucha, non insider claims in Class I are estimated at $514,091.58. Based on the estimated distributions, Class I Claimants are anticipated to receive 22.9% of their allowed claims. Notwithstanding anything to the contrary herein, Mr. Sirota shall not receive any distribution on account of any Allowed Class I Claim unless and until any other Class I Claims are paid in full. Class J includes the Interest in Menucha held by its preconfirmation member. Class J is unimpaired by this Plan. On the Effective Date of the Plan, Class J shall retain its Interest in Menucha which he owned prior to the Confirmation Date, subject to the terms of the Plan. Menucha's Plan is premised upon the sale of the property located at 1304 S. Parker Road, #155, Denver, Colorado, which property is entirely unencumbered. Considering the current residential real estate market in the Denver area, selling the property should not be difficult. The Plan provides for the property to be sold within one year of the Effective Date, which is feasible. That property will produce sufficient funds to cover ongoing expenses and administrative expense claims, as well as make a distribution to general unsecured creditors. Menucha has used its best efforts to prepare accurate projections. Menucha has based payments to I Unsecured Creditors on net proceeds of the sale of 1304 S. Parker Road, #155, Denver, Colorado. Upon the sale of that property, the projections reflect that payment to the unsecured creditors is feasible. Menucha estimates its creditors would receive approximately a 16% distribution in a Chapter 7, which increases to 19% in non-insider debt is excluded. In contrast, Menucha's Plan provides that unsecured creditors will receive approximately 22.9% of their allowed claims. A full-text copy of the Amended Plan of Reorganization dated October 29, 2021, is available at https://bit.ly/3BLhXs5 from PacerMonitor.com at no charge. Attorneys for Menucha Enterprises: Jeffrey S. Brinen, #20565 Jonathan M. Dickey, #46981 Kutner Brinen Dickey Riley, P.C. 1660 Lincoln St., Suite 1720 Denver, CO 80264 Telephone: 303- 832-2400 Email: jsb@kutnerlaw.com About Menucha Enterprise Menucha Enterprise LLC is a Denver-based company primarily engaged in renting and leasing real estate properties. Menucha Enterprise filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 21-11106) on March 9, 2021. Aharon Sirota, managing member, signed the petition. In the petition, the Debtor disclosed assets of between $1 million and $10 million and liabilities of the same range. Judge Thomas B. McNamara oversees the case. The Law Offices of Kevin S. Neiman, PC represents the Debtor as legal counsel. METHODIST UNIVERSITY: S&P Rates 2021 Revenue Refunding Bonds 'BB' ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB' long-term rating to Methodist University, N.C.'s series 2021 revenue refunding bonds. At the same time, S&P Global Ratings affirmed its 'BB' long-term rating on Methodist's 2012 revenue bonds. The outlook is stable. Where possible, S&P has reported fiscal 2021 financial data sourced from draft financial statements, and it does not expect material changes to these figures when the university's audit is finalized. MU is issuing $27.4 million of series 2021 bonds to refund its outstanding debt: the 2012 fixed-rate revenue bonds and the 2014 variable-rate direct-placement bonds. MU will also use cash to eliminate the swap associated with the 2014 debt. The transaction will bring total pro forma debt to approximately $27.8 million and will result in net present value savings. "We assessed MU's enterprise profile as vulnerable, characterized by decent selectivity, improved retention, and a unique military-focused niche due to its access to Fort Bragg, one of the nation's largest army bases," said S&P Global Ratings credit analyst Megan Kearns. We believe this is offset by a small student body, with five consecutive years of declines in application numbers and a cumulative enrollment decline of over 15% since fall 2017. "We assessed MU's financial profile as adequate, with a strengthened balance sheet and rapidly amortizing debt service schedule, which will no longer include variable-rate debt," Ms. Kearns added. This is offset by our opinion that the university has limited financial flexibility and high student dependence. S&P believes these credit factors, combined, lead to an indicative stand-alone credit profile of 'bb' and a final rating of 'BB'. S&P said, "The stable outlook reflects our opinion of the university's enrollment growth in fall 2021 and improved balance sheet, which provides cushion at the current rating. Additionally, MU has implemented careful control over expenses in recent years, including the stabilization of its discount rate in fiscal 2021. Supported by remaining federal funds, the university is likely to generate at least break-even operations in fiscal 2022. "We could consider a positive rating action if the university continues to stabilize or improve its enrollment levels and demand profile. In particular, we would view improved selectivity positively. Additionally, we would expect the university to return to break-even or positive operations without the support of federal relief funds while maintaining or improving financial resources. "We could consider a negative rating action if the university's enrollment experiences additional material declines accompanied by significant reductions in net tuition revenue and operating margins that drive financial resources below those of the current rating. We could also consider a negative rating action if the university were to issue additional debt without commensurate growth in financial resources." MID ATLANTIC PRINTERS: Taps Magee Goldstein Lasky as Legal Counsel ------------------------------------------------------------------ Mid Atlantic Printers, Ltd. seeks approval from the U.S. Bankruptcy Court for the Western District of Virginia to employ Magee Goldstein Lasky & Sayers, P.C. to serve as legal counsel in its Chapter 11 case. The firm's services include: a. advising the Debtor with respect to its powers and duties in the continued management and operation of its business and properties; b. advising and consulting on the conduct of the bankruptcy case, including all of the legal and administrative requirements of operating in Chapter 11; c. attending meetings and negotiating with representatives of creditors and other parties-in-interest; d. taking all necessary action to protect and preserve the Debtor's estate, including prosecuting actions on the Debtor's behalf, defending any actions commenced against the Debtor, and representing the Debtor's interests in negotiations concerning all litigation in which it is involved, including objections to claims filed against the estate; e. preparing legal papers; f. representing the Debtor in connection with obtaining post-petition financing, if necessary; g. advising the Debtor in connection with any potential sale of assets; h. appearing before the court; i. taking any necessary action to negotiate, prepare and obtain approval of a Chapter 11 plan and documents related thereto; and j. performing all other necessary legal services, including (i) analyzing the Debtor's leases and contracts and the assumption, rejection or assignment thereof, (ii) analyzing the validity of liens against the Debtor; and (iii) advising the Debtor on corporate and litigation matters. The firm's hourly rates are as follows: Attorneys $250 to $400 per hour Paralegals/paraprofessionals $100 per hour Magee will be paid a retainer in the amount of $15,000 and reimbursed for out-of-pocket expenses incurred. Andrew Goldstein, Esq., a partner at Magee, 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: Andrew S. Goldstein, Esq. Magee Goldstein Lasky & Sayers, P.C. P.O. Box 404 Roanoke, VA 24003-0404 Tel: (540) 343-9800 Fax: (540) 343-9898 Email: agoldstein@mglspc.com About Mid Atlantic Printers Ltd. Mid Atlantic Printers, Ltd. is a full service commercial sheet fed printer, with two production facilities and multiple sales offices. The Altavista, Va.-based company offers commercial printing services. Mid Atlantic Printers filed a petition for Chapter 11 protection (Bankr. W.D. Va. Case No. 21-61173) on Oct. 27, 2021, listing up to $10 million in assets and up to $1 million in liabilities. Nancy Edwards, president of Mid Atlantic Printers, signed the petition. Andrew S. Goldstein, Esq., at Magee Goldstein Lasky & Sayers, P.C. serves as the Debtor's legal counsel. MIKEN OIL: Unsecureds Will Get 40% of Claims in 60 Months --------------------------------------------------------- Miken Oil, Inc. filed with the U.S. Bankruptcy Court for the Eastern District of Texas a Second Amended Plan of Reorganization dated November 1, 2021. The Debtor filed this case on March 26, 2021 with the goal of returning to complete operations and proposing a repayment plan for its creditors. The Debtor's business depends on the price of oil. It is anticipated that after confirmation, the Debtor will continue in business. Based upon the projections of Disposable Income, the Debtor believes it can service the debt to the Creditors. The Debtor is currently owned 100% by Mike Tate. After confirmation Mr. Tate will remain the president and sole owner. Mr. Tate will receive a salary of $127,494.96 per annum. Class 7 consists of Allowed General Unsecured Claims in the amount of $1,600,000.00. The holders of Allowed Unsecured Claims shall share pro rata in the Reorganized Debtor's Disposable Income and in the assets of the Litigation Trust. * The Reorganized Debtor shall pay to the trustee an initial payment of $25,000.00 on or before October 1, 2021. Thereafter, the Reorganized Debtor shall make monthly payments to the Trustee of $12,500.00 each (the "Plan Payment"), beginning on December 1, 2021 and continuing regularly and monthly thereafter on the first day of each succeeding calendar month for a total of 60 months. $12,500.00 is the Debtor's average projection of its average Disposable Income at the time of Confirmation. * On the Effective Date, the Reorganized Debtor shall also pay to the Litigation Trustee as an initial fund for the Litigation Trust the sum of $10,000.00. * Based upon the Debtor's current schedules the Class 7 creditors will receive approximately 40% of their Allowed Claims under this Plan, however, this amount may change depending on the outcome of any objections to, or motions to estimate the amount of claims. * The Class 7 creditors are impaired. Class 10 (Current Owners) are not impaired under the Plan and will receive no payments under th Plan; however, he will be allowed to retain his ownership in the Debtor. Debtor anticipates the continued operations of the business to fund the Plan. Moreover, payments to Class 7 Creditors holding Allowed Unsecured Claims shall also be made from the Litigation Trust. A full-text copy of the Second Amended Plan dated November 01, 2021, is available at https://bit.ly/3H5Fat1 from PacerMonitor.com at no charge. Proposed Attorney for the Debtor: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, TX 75251 Telephone: (972) 991-5591 Facsimile: (972) 991-5788 Email: eric@ealpc.com About Miken Oil Inc. Miken Oil, Inc.'s business consists of the ownership and operation of an oil services company. It sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Tex. Case No. 21-60115) on March 26, 2021. In the petition signed by Mike Tate, president, the Debtor disclosed up to $50,000 in assets and $1 million to $10 million in liabilities. Eric A. Liepins, Esq., is the Debtor's legal counsel. MIND TECHNOLOGY: Hikes 9.00% Series A Preferred Stock Exchange Cap ------------------------------------------------------------------ MIND Technology, Inc. filed a Third Certificate of Amendment of Certificate of Designations, Preferences and Rights of 9.00% Series A Cumulative Preferred Stock with the Secretary of State of the State of Delaware to increase the Exchange Cap, as defined in the Certificate of Designations, to 49,851,150 shares of common stock, such Exchange Cap representing a cap of 25 shares of common stock per authorized share of the Company's authorized 9.00% Series A Cumulative Preferred Stock, par value $1.00 per share, with the rights, preferences, privileges, qualifications, restrictions and limitations set forth in the Certificate of Designations filed as Exhibit 3.5 to the Company's Current Report on Form 8-K, filed with the SEC on Aug. 7, 2020, as amended by the Second Certificate of Amendment to the Certificate of Designations filed as Exhibit 3.5 to the Company's Registration Statement on Form S-1 (File No. 333-260486) filed with the SEC on Oct. 25, 2021. About Mind Technology Mind Technology, Inc. -- http://mind-technology.com-- provides technology and solutions for exploration, survey and defense applications in oceanographic, hydrographic, defense, seismic and security industries. Headquartered in The Woodlands, Texas, MIND Technology has a global presence with key operating locations in the United States, Singapore, Malaysia and the United Kingdom. Its Klein and Seamap units design, manufacture and sell specialized, high performance sonar and seismic equipment. Mind Technology reported a net loss of $20.31 million for the year ended Jan. 31, 2021, compared to a net loss of $11.29 million for the year ended Jan. 31, 2020. As of April 30, 2021, the Company had $35.52 million in total assets, $8.95 million in total liabilities, and $26.57 million in total stockholders' equity. Houston, Texas-based Moss Adams LLP, the Company's auditor since 2017, issued a "going concern" qualification in its report dated April 16, 2021, citing that "The Company has a history of losses and has had negative cash flows from operating activities in the last two years. The Company may not have access to sources of capital that were available in prior periods. In addition, the COVID-19 pandemic and the decline in oil prices during fiscal 2021 caused a disruption to the Company's business and delays in some orders. Currently management's forecasts and related assumptions support their assertion that they have the ability to meet their obligations as they become due through the management of expenditures and, if necessary, accessing additional funding from the at-the-market program or other equity financing. Should there be constraints on the ability to access capital under the at-the-market program or other equity financing, the Company has asserted that it can manage cash outflows to meet the obligations through reductions in capital expenditures and other operating expenditures." MKS GROUP: Eggspectation Franchisee Seeks Chapter 11 ---------------------------------------------------- Jack Jacobs of Richmond BizSense reports that the local franchise of Eggspectation, a Maryland-based breakfast chain, filed for Chapter 11 bankruptcy protection, a little more than a year after it opened at the south Richmond mall. The filing was spurred by a dispute between the local franchisee and Eggspectation's franchisor company, though it's unclear exactly where the two parties don't see eye to eye. The local franchise entity is MKS Group LLC. "We have certain disagreements with our franchisor but we hope to resolve them in a business-like manner in the near future," John Barrett of Virginia Beach-based Allegiant Law, who's representing MKS, said in an email Thursday, November 4, 2021. The bankruptcy filing lists a disputed debt owed to the franchisor of $65,000. Chapter 11 allows a company to remain in business and keep creditors at bay while reorganizing its finances. Barrett said the Stony Point Eggspectation location continues to operate as usual as it seeks to reorganize. "We are open for business right now and will continue to operate into the future," he said. Barrett said the plan is to try to settle the matter without the need for a court decision. The Chapter 11 filing lists MKS as having an estimated $1 million to $10 million in assets and an estimated $100,000 to $500,000 in liabilities. It is managed by Vishal Patel, who is also its CEO. The Eggspectation chain launched in Canada in 1993. It has more than a dozen locations in Canada as well as a Middle East presence. Most of its seven U.S. locations are in the D.C. area, with an eighth U.S. location to open in Maryland, per the company website. The Stony Point location opened about a year ago. The mall was recently listed for sale. About MKS Group MKS Group, LLC, a franchisee of Maryland-based breakfast chain Eggspectation, sought Chapter 11 protection (Bankr. E.D. Va. Case No. 21-33288) on November 2, 2021. In the petition signed by Vishal Patel as manager & CEO, MKS Group LLC estimated assets of between $1 million and $10 million and estimated liabilities of between $100,000 and $500,000. John M. Barrett, Esq., of ALLEGIANT LAW, P.C., is the Debtor's counsel. NASHEF LLC: Wins Cash Collateral Access Thru Nov 18 --------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts authorized Nashef LLC to continue using cash collateral through November 18, 2021, the date of the next cash collateral hearing. The Debtor is permitted to use cash collateral on the same terms and conditions as set forth in the Tenth Order Authorizing the Use of Cash Collateral through the hearing date. The November 18 hearing will be conducted by telephone at 1:30 p.m. As previously reported by the Troubled Company Reporter, the Debtor was permitted to use cash collateral during the specified period, pursuant to the budget, or as expressly agreed to in writing by the Secured Parties and the U.S. Trustee. Hometown Bank; Harvard Funding LLC; the Internal Revenue Service; the Massachusetts Department of Unemployment Assistance; and the Massachusetts Department of Revenue are granted a continuing postpetition replacement lien and security interest in all postpetition property of the estate, of the same type against which they held validly perfected liens and security interest as of the Petition Date. The Replacement Liens will maintain the same priority, validity and enforceability as the liens on the Collateral, and will be recognized to the extent of any diminution in the value of the collateral resulting from the use of cash collateral pursuant to the Tenth Order. A copy of the Order is available for free at https://bit.ly/3mXi3J7 from PacerMonitor.com. About Nashef LLC Nashef LLC, a privately held company in Fitchburg, Massaschusetts. Nashef LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No. 20-40199) on Feb. 6, 2020. In the petition signed by Eyad Nashef, manager, the Debtor disclosed $170 in assets and $1,559,000 in liabilities. Judge Christopher J. Panos oversees the case. The Debtor is represented by James P. Ehrhard, Esq. at Ehrhard & Associates, P.C. NATURE COAST: Wins Cash Collateral Access Thru March 2022 --------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida, Jacksonville Division, has authorized Nature Coast Emergency Medical Foundation, Inc. to use cash collateral on an interim basis through March 31, 2021, and provide adequate protection to entities that may have an interest. The Debtor is permitted to continue to use Cash Collateral retroactively to the Petition Date going forward to pay: (i) amounts expressly authorized by the Court, including payments to the United States Trustee for quarterly fees; (ii) the current and necessary expenses set forth in the Budget; and, (iii) that a variance of expense line items of up to 10% per month and cumulatively per month of up to 10% be permitted without the need for further order of the Court. SouthState Bank and Citrus County, Florida, may approve a variance of more than 10% without further order of the Court. As adequate protection of SouthState and Citrus' respective interests in the Cash Collateral, they are granted a replacement lien in any Cash Collateral acquired by the Debtors subsequent to the Petition Date, to the same extent, priority and validity of their respective liens in such Cash Collateral as of the Petition Date, without the need to file or execute any document as may otherwise be required under applicable non-bankruptcy law. A copy of the order is available at https://bit.ly/3q9kyda from PacerMonitor.com. About Nature Coast Emergency Medical Foundation, Inc. Nature Coast Emergency Medical Foundation, Inc. --https://naturecoastems.org/ -- is Citrus County's exclusive, not-for-profit (501(c)3), Advanced Life Support 9-1-1 emergency responder and medical transportation provider. The organization was established on Oct. 1, 2000. It sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 21-02357) on October 2, 2021. In the petition signed by Mary Hedges, president, the Debtor disclosed $7,016,218 in total assets and $4,730,723 in total liabilities. Judge Roberta A. Colton oversees the case. David S. Jennis, Esq., at David Jennis, PA d/b/a Jennis Morse Etlinger is the Debtor's counsel. NEP/NCP HOLDCO: Moody's Rates New $210MM 1st Lien Loan Add-on 'B3' ------------------------------------------------------------------ Moody's Investors Service assigned a B3 rating to NEP/NCP Holdco, Inc.'s (NEP) proposed $210 million add-on issuance to its senior secured first lien term loan due 2025. NEP's existing ratings, including the B3 corporate family rating, and stable outlook are unchanged. NEP plans to use the proceeds from the add-on term loan to repay all of the outstanding revolver balance, fund the previously announced Bright Group acquisition (around $36 million) and pay transaction fees and expenses. Moody's views the add-on issuance as credit positive because it will improve the company's liquidity without meaningfully increasing its leverage or interest expense. Approximately $164 million of the $210 million add-on (nearly 80% of the proceeds) will be used to repay the revolver borrowing. Thus, incremental net debt to the balance sheet will be small relative to roughly $2 billion of debt currently outstanding. Assignments: Issuer: NEP/NCP Holdco, Inc Senior Secured 1st Lien Term Loan, Assigned B3 (LGD3) RATINGS RATIONALE NEP's B3 CFR reflects the company's highly levered capital structure and highly capital-intensive business model that restrains free cash flow. The company has a moderately aggressive acquisition strategy which may prevent sustained deleveraging. Moody's expects NEP's adjusted Debt/EBITDA to be high, in the 6x - 6.5x range over the next 12-18 months, despite earnings growth. The capital intensity of NEP's business combined with significant interest expense leaves it with limited, and historically negative, free cash flows and weak interest coverage. Given the sponsor ownership, the potential for future leveraging events are high, and this further constrains the rating. Nevertheless, NEP's ratings are supported by its strong global position in the niche video production industry and a diversified blue-chip customer base with long-standing relationships and low customer concentration. NEP's fleet of mobile broadcast trucks and engineering expertise provide for a strong value proposition to its customers and lends tangible asset value, supporting the rating. Furthermore, NEP facilitates the viewing of live events, a service Moody's considers key to content producers and content distributors. This positions the company well regardless of how the consumption and delivery of media evolves and therefore supports sustainability of earnings. Following the proposed term loan add-on issuance, Moody's expect NEP to maintain good liquidity over the next 12-18 months. The proposed add-on issuance will enable the company to pay off the revolver balance in full and will meaningfully reduce reliance on the revolver over the coming year. Proforma for the incremental term loan issuance, NEP will have full availability on its $250 revolver due October 2023 and balance sheet cash of about $31 million. Moody's expects that NEP may use revolver borrowing periodically to bridge the timing of its quarterly cash flows, but will maintain comfortable availability over the next 12-18 months. Moody's anticipates that NEP's earnings growth will lead to free cash flows of around $20 million in the coming year, a notable improvement after years of negative free cash flows. NEP voluntarily exited its bank covenant waiver ahead of expiration. Moody's anticipates that NEP will maintain adequate cushion under its net debt financial covenant requirement over the next 12-18 months. The B3 instrument ratings on the first lien credit facility (revolver, US term loans, including the proposed add-on, and Euro term loan) reflects the probability of default of the company as reflected in its B3-PD probability of default rating, an average expected family recovery rate of 50%, and the instrument' ranking in the capital structure. The credit facility's B3 rating reflects its larger relative size and senior position ahead of the second lien term loan and other unsecured claims including payables and leases. The stable rating outlook reflects Moody's expectations for organic earnings growth in high single digit percent range and smooth integration of recent acquisitions. It also reflects Moody's expectation that NEP will maintain good liquidity and will proactively address the October 2023 revolver maturity. The stable outlook incorporates tolerance for continued tuck-in acquisitions or continued high capex spend in line with the historic pattern, provided these are managed in a credit friendly manner. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING A downgrade could occur if NEP's EBITDA growth does not keep pace with incremental debt raises, liquidity deteriorates, or if financial policies become more aggressive. Negative free cash flows and Moody's adjusted Debt/EBITDA above 7.5x may result in a downgrade. An upgrade would require profitable growth leading to free cash flow-to-debt sustained in the mid-single digit percentages and Debt/EBITDA sustained below 6x (both Moody's adjusted). Maintaining good liquidity and committing to a more balanced financial policy will also be needed for an upgrade. The principal methodology used in this rating was Business and Consumer Service Industry published in October 2016. Based in Pittsburgh, PA, NEP/NCP Holdco, Inc provides outsourced media services necessary for the delivery of live broadcast of sports and entertainment events to television and cable networks, television content providers, and sports and entertainment producers. The company is owned primarily by affiliates of the Carlyle Group. NEP/NCP HOLDCO: S&P Rates New $210MM Incremental Term Loan 'B' -------------------------------------------------------------- S&P Global Ratings assigned its 'B' rating to NEP/NCP Holdco Inc.'s proposed $210 million incremental term loan. S&P expects NEP to use the net proceeds to fund its acquisition of the Bright Group, pay down the outstanding balance on its revolving credit facility, and for general corporate purposes. S&P views the transaction to be largely leverage neutral while improving the company's liquidity availability. S&P's 'B-/Stable' issuer credit rating and outlook reflects its view that adjusted leverage will decline to the mid-6.0x area by the end of 2022 driven by the recovery of live events globally and the company's continued organic growth. Issue Ratings - Recovery Analysis Key analytical factors -- S&P's simulated default scenario contemplates a default in 2023 due to increased industry competition in the mobile broadcast TV business, operational execution challenges, loss of TV network clients, or an increase in capital spending needed to keep up with technological innovations. -- S&P said, "In a default scenario, we believe the company's lenders would aim to maximize recoveries and pursue reorganization instead of liquidation. Although the company's revenue and EBITDA could decline, we believe the market for its services would continue. We also believe the company's competitive position in many of its markets would maintain value during bankruptcy proceedings." -- S&P's analysis incorporates the presence of a collateral allocation mechanism between the company's European first-lien term loan and its U.S. first-lien credit facility. Simulated default assumptions -- Simulated year of default: 2023 -- EBITDA at emergence: $287 million -- EBITDA multiple: 6x -- The revolving credit facility is 85% drawn at default -- Obligor/nonobligor split: 50%/33%/17% Simplified waterfall -- Net emergence enterprise value (after 5% administrative costs): About $1.64 billion -- First-lien debt claims: $2.24 billion --Recovery expectation: 70%-90% (rounded estimate: 70%) -- Second-lien debt claims: $251 million --Recovery expectation: 0%-10% (rounded estimate: 5%) All debt amounts include six months of prepetition interest. NEUTRAL POSTURE: Wins Cash Collateral Access -------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Victoria Division, has authorized Neutral Posture, Inc. to use cash collateral on an interim basis in accordance with the budget. The Debtor requires the use of cash collateral to pay operating expenses and obtain goods, services, or equipment needed to carry on its business. The Debtor says substantially all of one or more of the Debtor's assets appear to be subject to the pre-petition liens of Chase Bank, including liens on Cash Collateral. However, this is subject to the Debtor's investigation of lien perfection and claims and the Debtor's position that the cash it held as of the Petition Date is not perfected. Authority to use Cash Collateral under will terminate on the earlier of (a) the effective date of a confirmed plan of reorganization, (b) the expiration of the time period reflected in the Interim Budget, (c) any default by the Debtor in any provision of the Order or the budget, (d) an order dismissing this bankruptcy case or converting the case to a case under chapter 7 of the Bankruptcy Code, or (e) the failure of the Debtor to maintain insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses. As adequate protection to the extent of any diminution in value of Chase's collateral, Chase is granted, from and after the Petition Date, a security interest in the Debtor's postpetition assets with the same nature, extent, priority, and validity as the pre-petition security interests held by Chase. As additional adequate protection to the extent of any diminution in value of Chase’s collateral, Chase is granted, from and after the Petition Date, replacement liens and security interests in all assets of the Debtor, including cash, accounts, accounts receivable, equipment, general intangibles, chattel paper, furniture, fixtures, and inventory acquired by the Debtor after the Petition Date. As additional adequate protection to the extent of any diminution in value of Chase's collateral, Chase is granted a superpriority administrative expense claim, which will have priority under sections 503(b) and 507(b) of the Bankruptcy Code. The forms of adequate protection will be subordinate only to (i) all accrued and unpaid fees and expenses incurred by the Debtor's professionals and allowed by the Court in an amount not to exceed the amounts set forth in the budget, (ii) statutory U.S. Trustee or Court fees, and (iii) all reasonable fees and expenses up to $10,000 incurred by the Subchapter V Trustee appointed in the case. A final hearing on the matter is scheduled for December 1 at 10 a.m. A copy of the order and the Debtor's November 2021 budget is available at https://bit.ly/3BNH7Gp from PacerMonitor.com. The Debtor projects $200,500 in gross profit and $835,575 in total expenses for the month. About Neutral Posture, Inc. Neutral Posture, Inc. is involved in the business of manufacturing of ergonomic chairs and related items for the office. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-60086) on November 1, 2021. In the petition signed by Rebecca E. Boenigk, president and chief executive officer, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Christopher Lopez oversees the case. Tom A. Howley, Esq., at Howley Law, PLLC is the Debtor's counsel. NEW HOPE: S&P Places 2016B Bonds 'B' Rating on Watch Negative ------------------------------------------------------------- S&P Global Ratings placed the following ratings on CreditWatch with negative implications: -- New Hope Cultural Education Facilities Finance Corp., Texas' series 2017A-1 and A-2 (class I) bonds, rated 'B+'; series 2017B (class II) bonds, rated 'B'; and series 2017C (class III, $2.7 million outstanding) rated 'B-', issued for 4-K Housing Inc. (Stoney Brook Project); and --New Hope Cultural Education Finance Corp., Texas' series 2016A bonds, rated 'BB-'; series 2016B bonds, rated 'B'; and series 2016C bonds, rated 'B-', issued for Cardinal Bay Inc. (Village on the Park/Carriage Inn Project). "The negative CreditWatch placements of these projects reflects S&P Global Ratings' inability to obtain information from TEC regarding its management policies, cash flow, and ability and willingness to pay upcoming debt service payments on Jan. 1, 2022," said S&P Global Ratings credit analyst Raymond Kim. S&P Global Ratings requires timely information of satisfactory quality to maintain its ratings in accordance with its policies. S&P views TEC's lack of timely and sufficient information as an elevated governance risk within our environmental, social, and governance (ESG) factors, due to our view of the borrower's weak transparency practices. S&P said, "Our ratings on Bexar County Housing Finance Corp., Texas' series 2011A (class I) senior housing revenue bonds and series 2011B subordinate (class II) bonds, issued for Canton II Inc. (Inn at Los Patios apartments project), another project affiliated with TEC, remain at 'CCC' and on CreditWatch with negative implications. We placed those ratings on CreditWatch with negative implications on Oct. 29, 2021, due to management's failure to properly fund its debt service accounts. " Failure to receive the requested information from TEC regarding 4-K Housing, Cardinal Bay, and Canton II within 30 days will likely result in our withdrawal of the ratings. NOISE SOLUTIONS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Noise Solutions [USA], Inc. 420 Vine Avenue Sharon, PA 16146 Business Description: Noise Solutions [USA], Inc. is a provider of engineered industrial noise suppression for the energy sector. Chapter 11 Petition Date: November 5, 2021 Court: United States Bankruptcy Court Western District of Pennsylvania Case No.: 21-10616 Debtor's Counsel: Donald R. Calaiaro, Esq. CALAIARO VALENCIK 938 Penn Avenue, 5th Fl. Suite 501 Pittsburgh, PA 15222 Tel: 412-232-0930 Fax: 412-232-3858 E-mail: dcalaiaro@c-vlaw.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Scott K. MacDonald as president/CEO. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/HULMISQ/Noise_Solutions_USA_Inc__pawbke-21-10616__0001.0.pdf?mcid=tGE4TAMA NORCROSS LODGING: Wins Cash Collateral Access Thru Dec 10 --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana, Indianapolis Division, has authorized Norcross Lodging Associates, LLP to use cash collateral on an interim basis in accordance with the budget, with a 10% variance. The Debtor requires the use of cash collateral to prevent the immediate and irreparable harm to the Debtor, its property, and the property of the bankruptcy estate that would otherwise result if the Debtor was prevented from obtaining such relief. The Debtor executed a Replacement Promissory Note, with an effective date of October 1, 2014, in the original principal amount of $1,500,000, in favor of The National Republic Bank of Chicago, and the Debtor executed a Deed to Secure Debt, Security Agreement and Assignment of Rents, Assignment of Rents and Leases, and other documents pertaining to the loan evidenced by the Note. SG Peachtree Comers Hospitality Holdings, LLC asserts that it is the holder of the Loan Documents. The Debtor performed a preliminary investigation and analysis of the Loan Documents and the related UCC filings and based upon the preliminary investigation believes that PCH holds valid, enforceable, and non-avoidable liens, and security interests in all of the property owned by the Debtor, including among other things, the Hotel, real property on which the Hotel is located, rents, revenues, income, escrows, receipts, accounts, issues, and profits. Further, the Debtor's cash and cash equivalents (cash and accounts receivable) and all proceeds thereof securing the Debtor's obligations to PCH, among other things, constitute cash collateral. PCH asserts that it has a valid, enforceable, non-avoidable, first priority perfected security interest in the Cash Collateral. The Debtor does not dispute this assertion, but reserves the right to investigate and object if appropriate. PCH asserts that the balance of the indebtedness owed to PCH by the Debtor under the Loan Documents as of the Petition Date is approximately $1,393,117.31 in principal and accrued interest. The Debtor does not dispute this assertion, but reserves the right to investigate and object if appropriate. In addition to PCH, the U.S. Small Business Administration may assert a security interest in the Debtor's Cash Collateral. The Debtor has agreed to provide adequate protection to PCI I and the SBA: a. The Debtor will maintain the combined value of cash on hand or on deposit in the amount of $24,265,94 during the period of interim cash use, which is the cumulative value of said Cash Collateral as of the Petition Date; b. PCH and the SBA assert security interests in the property that constitutes Cash Collateral, and PCH and/or the SBA may be properly perfected. It is also possible that the Debtor has a basis to challenge the interests asserted by PCH and/or the SBA. Accordingly, until such time as the parties agree or the Court determines the relative rights of PCH and the SBA in the Cash Collateral, the Debtor will grant PCH and the SBA replacement liens in cash collateral of the Debtor in the total aggregate amount of $24,265.94 to the same extent and priority as their properly perfected, prepetition security interests; c. During the period of interim cash use, the Debtor will only use Cash Collateral consistent with the Budget for the operation, maintenance, and preservation of the Hotel and the Debtor's personal property; and d. The Debtor will maintain the insurance currently in place on the Hotel and the Debtor's personal property. The Debtor has further agreed to provide additional adequate protection to PCH as follows: on the 15lh of each month (or the next business day thereafter) during the period of interim cash use, the Debtor will make a payment to PCH in the amount of S4.600.00, provided that such payment does not cause the amount of the Debtor's cash on hand or on deposit to fall below $24,265,94. If any proposed PCH Adequate Protection Payment does cause the amount of the Debtor's cash on hand or on deposit to fall below $24,265,94, then the Debtor will immediately issue payment to PCH with any cash above S24,265.94 and will pay any deficiency (i.e., the difference between $4,600 and the amount paid by the Debtor) at the next scheduled date for payment of a PCH Adequate Protection Payment in addition to the next PCH Adequate Protection Payment. The replacement liens granted to PCH and the SBA will be valid, enforceable, and properly perfected to the same extent and priority as the prepetition liens of PCH and the SBA in the same property. The Debtor's authorization to use Cash Collateral will immediately terminate on the earlier to occur of: (a) the date on which PCH provides, via facsimile and electronic mail, written notice to the Debtor's counsel of the occurrence of an Event of Default and the expiration of a three business day cure period, if such default can be cured; and (b) 11:59 p.m. on December 10, 2021, unless otherwise agreed by PCH and the Debtor in writing. The final hearing on the matter is scheduled for December 8 at 10 a.m. A copy of the order and the Debtor's 14-week budget through January 30, 2022 is available at https://bit.ly/3bJH3gk from PacerMonitor.com. The budget provided for $191,718 in total revenue and $102,540 in total expenses for the period. About Norcross Lodging Associates, LLP dba Norcross Inn & Suites Norcross Lodging Associates, LLP owns and operates an unflagged, suburban hotel known as the Norcross Inn & Suites, built in 1989 on two acres of land in Peachtree Corners, Gwinnett County, Georgia. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 21-04856-JJG-11) on October 27, 2021. In the petition signed by Mohan P. Hari, managing partner, the Debtor disclosed up to $10 million in assets and liabilities. Judge Jeffrey J. Graham oversees the case. Andrew Kight, Esq., at Jacobson Hile Kight LLC is the Debtor's counsel. PATH MEDICAL: Committee Taps Greenberg Traurig as Legal Counsel --------------------------------------------------------------- The official committee of unsecured creditors of Path Medical Center Holdings, Inc. and Path Medical, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ Greenberg Traurig, P.A. as legal counsel. The firm's services include: (a) advising the committee with respect to its rights, duties and powers in the Debtors' Chapter 11 cases; (b) assisting the committee in its consultations with the Debtors relative to the administration of the cases; (c) assisting with the committee's investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and of the operation of the Debtors' business and any other matters relevant to the cases; (d) assisting the committee in its analysis of and negotiations with the Debtors or any third-party concerning matters related to, among other things, the terms of a sale, plan of reorganization or liquidation, or other conclusion of the cases; (e) assisting the committee in requesting the appointment of a trustee or examiner, should such action become necessary; (f) assisting the committee as to its communications to the general creditor body regarding significant matters in the cases; (g) representing the committee at all hearings and other proceedings; (h) reviewing and analyzing all applications, orders, statements of operations and bankruptcy schedules filed with the court and advising the committee as to their propriety; (i) assisting the committee in preparing legal papers; and (j) performing other necessary legal services. The firm's hourly rates are as follows: John Hutton $925 per hour Ari Newman $750 per hour Associates/paralegals $200 to $650 per hour Greenberg Traurig will also be reimbursed for out-of-pocket expenses incurred. John Hutton, Esq., a partner at Greenberg Traurig, 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: John Hutton, Esq. Greenberg Traurig, P.A. 333 S.E. 2nd Avenue, Suite 4400 Miami, FL 33131 Office: (305) 579-0500 Direct: (305) 579-0788 Email: huttonj@gtlaw.com About Path Medical Path Medical Center Holdings, Inc. and Path Medical, LLC filed their voluntary petitions for Chapter 11 protection (Bankr. S.D. Fla. Lead Case No. 21-18339) on Aug. 28, 2021. Manual Fernandez, chief executive officer, signed the petitions. At the time of filing, Path Medical Center listed $220,060 in assets and $76,988,419 in liabilities while Path Medical listed $30,047,477 in assets and $86,494,715 in liabilities. Judge Scott M. Grossman oversees the cases. The Debtors tapped Edelboim Lieberman Revah Oshinsky PLLC as bankruptcy counsel, Foley & Lardner, LLP as special counsel, and Davis Goldman, PLLC as litigation counsel. KapilaMukamal, LLP, Keefe McCullough Co, LLP CPAs and SSG Advisors, LLC serve as the Debtors' financial advisor, ESOP auditor and investment banker, respectively. The U.S. Trustee for Region 21 appointed an official committee of unsecured creditors in the Debtors' Chapter 11 cases on Sept. 28, 2021. Greenberg Traurig, P.A. and Province, LLC serve as the committee's legal counsel and financial advisor, respectively. PECF USS III: Revised Financing No Impact on Moody's B3 CFR ----------------------------------------------------------- Moody's Investors Service said PECF USS Intermediate Holding III Corporation's (dba "United Site Services" or "USS") announced plan to cancel its previously-announced $550 million senior secured notes due 2028, reduce its proposed senior unsecured notes due 2029 by $200 million to $550 million from $750 million and upsize the proposed senior secured term loan due 2028 by $750 million, increasing it to $2.0 billion from $1.25 billion, increases the proportion of the secured debt relative to total debt, thereby putting downward pressure on the senior secured rating. However, since the change to the debt capital structure is leverage neutral, the ratings, including the B3 corporate family rating ("CFR"), B3-PD probability of default rating ("PDR"), B2 rating on the upsized $2.1 billion first lien credit facility (including $100 million revolving credit facility) and Caa2 rating on the downsized $550 million eight-year senior unsecured notes, as well as the stable outlook, are unchanged at this time. The B2 rating assigned to the cancelled secured notes will be withdrawn. Headquartered in Westborough, MA and controlled by affiliates of Platinum Equity, LLC, USS is a provider of portable sanitation units, temporary fencing, storage containers and temporary electric equipment serving the construction, commercial and industrial, special event, government agency and other end markets. The company generated revenue of around $1.0 billion for the 12 months ended June 30, 2021. PLAYA HOTELS: Incurs $12.4 Million Net Loss in Third Quarter ------------------------------------------------------------ Playa Hotels & Resorts N.V. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $12.37 million on $151.29 million of total revenue for the three months ended Sept. 30, 2021, compared to a net loss of $78.60 million on $28.74 million of total revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $89.88 million on $357.84 million of total revenue compared to a net loss of $188.62 million on $206.95 million of total revenue for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $2.02 billion in total assets, $1.39 billion in total liabilities, and $623.95 million in total shareholders' equity. As of Sept. 30, 2021, the Company held $231.5 million in cash and cash equivalents, excluding $24.6 million of restricted cash. Total interest-bearing debt was $1,147.7 million, comprised of the Company's Senior Secured Term Loan due 2024 and Property Loan due 2025. Effective March 29, 2018, the Company entered into two interest rate swaps to fix LIBOR at 2.85% on $800.0 million of its variable rate Term Loan. As of Sept. 30, 2021, there was no balance outstanding on the Company's $85.0 million Revolving Credit Facility. Management Commentary Bruce D. Wardinski, chairman and CEO of Playa Hotels & Resorts, commented, "Continued robust demand and our focus on providing best-in-class service led to an acceleration in average daily rate growth during the third quarter. Importantly, we maintained our expense discipline, allowing the rate gains to flow through nicely to the bottom line despite higher expense inflation. Our booked position for the fourth quarter and the high season, combined with expected increases in flight capacity into our destinations, bode well for the sustainability of our pricing gains in the coming months. The fundamental improvement in the third quarter was broad based, with each of our segments seeing sequential improvement in occupancy and absolute Net Package ADR. Our Net Package ADR gains resulted in Owned Resort EBITDA Margins nearing or exceeding historical third quarter margins at significantly lower occupancy levels in each of our segments. Using our results in Mexico as a proxy of our profit potential as flight capacity continues to ramp, I am optimistic for the next leg of the recovery in our Caribbean markets. Looking ahead, booking momentum has accelerated thus far in the fourth quarter. As of mid-October, our revenue on the books for the fourth quarter of 2021 is nearly 25% above fourth quarter 2019 levels for our owned and managed resorts, with ADRs driving nearly all of the gains. Our first quarter 2022 revenue on the books is approximately 40% above first quarter 2020 levels at the same point in time in the fourth quarter of 2019 for our owned and managed resorts, with ADRs driving approximately half of the gains and continuing to build." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1692412/000169241221000092/plya-20210930.htm About Playa Hotels & Resorts Playa Hotels & Resorts is an owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations in Mexico and the Caribbean. As of Sept. 30, 2021, Playa owned and/or managed a total portfolio consisting of 22 resorts (8,366 rooms) located in Mexico, Jamaica, and the Dominican Republic. In Mexico, Playa owns and manages Hyatt Zilara Cancun, Hyatt Ziva Cancun, Panama Jack Resorts Cancun, Panama Jack Resorts Playa del Carmen, Hilton Playa del Carmen All-Inclusive Resort, Hyatt Ziva Puerto Vallarta, and Hyatt Ziva Los Cabos. In Jamaica, Playa owns and manages Hyatt Zilara Rose Hall, Hyatt Ziva Rose Hall, Hilton Rose Hall Resort & Spa, Jewel Grande Montego Bay Resort & Spa and Jewel Paradise Cove Beach Resort & Spa. In the Dominican Republic, Playa owns and manages the Hilton La Romana All-Inclusive Family Resort, the Hilton La Romana All-Inclusive Adult Resort, Hyatt Zilara Cap Cana and Hyatt Ziva Cap Cana. Playa owns two resorts in the Dominican Republic that are managed by a third-party and manages five resorts on behalf of third-party owners. Playa reported a net loss of $262.37 million for the year ended Dec. 31, 2020, compared to a net loss of $4.36 million for the year ended Dec. 31, 2019. * * * As reported by the TCR on Sept. 21, 2021, S&P Global Ratings revised its outlook on Playa Hotels & Resorts N.V. to positive from negative and affirmed its 'CCC+' issuer credit rating. At the same time, S&P affirmed its 'CCC+' issue-level rating on the company's secured debt. S&P said, "The positive outlook reflects our expectation that Playa will maintain adequate liquidity. In addition, it indicates that we could raise our rating on the company if the significant recent improvement in travel volumes to Mexico and the Caribbean is sustained and its package average daily rates (ADRs), which are currently significantly elevated relative to 2019 levels, do not moderate materially. Specifically, we could raise our rating if Playa increases its revenue and EBITDA such that it sustains EBITDA coverage of interest expense of more than 1.5x, which would indicate it is able to sustain its capital structure over the long term." PWM PROPERTY: Wins Cash Collateral Access Thru Dec 3 ---------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has authorized PWM Property Management LLC and affiliates to, among other things, use cash collateral on an interim basis and provide adequate protection. The Debtors have an immediate need to use Cash Collateral to, among other things, fund the orderly continuation of their respective business, maintain the confidence of their respective customers and vendors, pay their respective operating expenses, and preserve their respective going-concern value, consistent with their respective Interim Budget. The "Park Avenue Cash Collateral" will be deemed to include, without limitation, all of the "cash collateral" of Debtor 245 Park Avenue Property LLC as Park Avenue Owner, within the meaning of section 363 of the Bankruptcy Code, in which Wilmington Trust, National Association -- as Trustee for the holders of 245 Park Avenue Trust 2017-245P, Commercial Mortgage Pass-Through Certificates, Series 2017-245P, on behalf of itself and the holders of the related "Companion Loans" (in that capacity, the Prepetition Park Avenue Secured Party) -- has valid, perfected security interest, liens, or mortgages, regardless of whether such security interests, liens, or mortgages existed as of the Petition Date or arise thereafter. The "West Madison Cash Collateral" will be deemed to include, without limitation, all of the "cash collateral" of the Debtor 181 West Madison Property LLC as West Madison Owner, within the meaning of section 363 of the Bankruptcy Code, in which Wells Fargo Bank, National Association -- as Trustee for the holders of J.P. Morgan Chase Commercial Mortgage Securities Trust 2020-LOOP, Commercial Mortgage Pass-Through Certificates, Series 2020-LOOP, on behalf of itself and the holders of the related "Companion Loans" -- has valid, perfected security interest, liens, or mortgages, regardless of whether such security interests, liens, or mortgages existed as of the Petition Date or arise thereafter. Debtor 245 Park Avenue Property is authorized to use the Park Avenue Cash Collateral in accordance with the Park Avenue Interim Budget; and Debtor 181 West Madison Property is authorized to use the West Madison Cash Collateral in accordance with the West Madison Interim Budget, in each case during the period from the Petition Date through and including the occurrence of the Termination Date. As adequate protection for the Park Avenue Owner's use of the Park Avenue Cash Collateral, the Prepetition Park Avenue Secured Party is granted, solely to the extent of the postpetition diminution in value of the Prepetition Park Avenue Secured Party's interest in the Park Avenue Cash Collateral resulting from the use, sale or lease by the Park Avenue Owner of the Park Avenue Cash Collateral and the imposition or enforcement of the automatic stay pursuant to section 362(a) of the Bankruptcy Code: a. valid and perfected replacement security interests in and liens upon the Park Avenue Owner's assets and properties; and b. a superpriority administrative claim against the Park Avenue Owner’s estate, as and to the extent provided in section 507(b) of the Bankruptcy Code. As additional adequate protection of the Prepetition Park Avenue Secured Party's respective interests: a. The Park Avenue Owner will maintain the going concern value of the Prepetition Park Avenue Secured Party's collateral by using the Park Avenue Cash Collateral only (i) to pay the ordinary, reasonable, and necessary costs and expenses of owning, operating, maintaining, preserving, and protecting 245 Park Avenue; (ii) to pay the debt service (to the extent expressly provided for in the Park Avenue Interim Budget) on, and to fund the reserves required to be funded and the fees and ancillary expenses required to be paid under or in connection with, and in accordance with the loan documents for, the mortgage loan that is secured by 245 Park Avenue, in each case, solely to the extent that such reserves, fees, and ancillary expenses are expressly provided for in the Park Avenue Interim Budget; and (iii) to administer the Park Avenue Owner's chapter 11 case; b. The Park Avenue Owner will use the Park Avenue Cash Collateral in accordance with the interim budget, with a 20% variance. c. The Park Avenue Owner will provide the Park Avenue Servicer with (i) an updated rolling 13-week cash flow forecast in respect of the Park Avenue Owner. As adequate protection for the West Madison Owner's use of the West Madison Cash Collateral, the Prepetition West Madison Secured Party is granted, solely to the extent of the postpetition diminution in value of the Prepetition West Madison Secured Party's interest in the West Madison Cash Collateral resulting from the use, sale or lease by the West Madison Owner of the West Madison Cash Collateral and the imposition or enforcement of the automatic stay pursuant to section 362(a) of the Bankruptcy Code: a. valid and perfected replacement security interests in and liens upon the West Madison Owner's assets and properties; and b. a superpriority administrative claim against the West Madison Owner's estate. The Park Avenue Owner's and the West Madison Owner's respective rights to use Cash Collateral will terminate on the earlier to occur of: (x) 11:59 p.m., New York City time, on December 3, 2021, unless a Final Order or further Interim Order is entered extending the Park Avenue Owner's and the West Madison Owner's respective rights to use Cash Collateral; and (y) the date upon which the Court issues an order following notice and a hearing providing for the termination of the further use of Cash Collateral due to the failure by the Park Avenue Owner or the West Madison Owner to comply with the materials terms, covenants, and conditions of the Interim Order. The Final Hearing on the Motion is scheduled for December 2 at 2 p.m. A copy of the order is available at https://bit.ly/3014dfm from PacerMonitor.com. About PWM Property Management PWM Property Management LLC, et al., are primarily engaged in renting and leasing real estate properties. They own two premium office buildings, namely 245 Park Avenue in New York City, a prominent commercial real estate assets in Manhattan's prestigious Park Avenue office corridor, and 181 West Madison Street in Chicago, Illinois. On Oct. 31, 2021, PWM Property Management LLC and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11445). PWM estimated assets and liabilities of $1 billion to $10 billion as of the bankruptcy filing. The cases are pending before the Honorable Judge Mary F. Walrath and are being jointly administered for procedural purposes under Case No. 21-11445. The Debtors tapped White & Case LLP as restructuring counsel; Young Conaway Stargatt & Taylor, LLP as local counsel; and M3 Advisory Partners, LP as restructuring advisor. Omni Agent Solutions is the claims agent. QUALITY REHABILITATION: Gets OK to Hire Shippen Pope as Accountant ------------------------------------------------------------------ Quality Rehabilitation Network, Inc. received approval from the U.S. Bankruptcy Court for the District of Arizona to employ Shippen Pope and Associates, PLLC as accountant. The firm's services include: a. reviewing monthly accounting and making required adjustments; b. preparing and filing the required monthly and quarterly tax reporting forms; and c. preparing and filing the Debtor's federal and state income tax returns due during the pendency of its Chapter 11 case. The firm will be paid at hourly rates ranging from $60 to $170 and will be reimbursed for out-of-pocket expenses incurred. Alejandra Galvan, a partner at Shippen, 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: Alejandra J. Galvan Shippen Pope and Associates, PLLC 200 E 16th St. Suite 200 Yuma, AZ 85364 Tel: (928) 726-9470 About Quality Rehabilitation Network Yuma, Ariz.-based Quality Rehabilitation Network, Inc. filed a petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 21-07539) on Oct. 6, 2021, listing up to $500,000 in assets and up to $10 million in liabilities. Carl Malmquist, president, signed the petition. Judge Brenda Moody Whinery oversees the case. The Debtor tapped Thomas H. Allen, Esq., at Allen Barnes & Jones, PLC as legal counsel, and Shippen Pope and Associates, PLLC as accountant. R & R INDUSTRIES: Unsecureds to be Paid in Full in 60 Months ------------------------------------------------------------ R & R Industries, Inc., submitted an Amended Plan of Reorganization under Subchapter V dated November 1, 2021. R&R is a Florida S corporation which was incorporated in 1964. R&R specializes in the installation of roofing, sheet metal and gutter systems for commercial, industrial and residential properties, and has been serving the Daytona Beach area for over 55 years. There have been a variety of events occurring since the Petition Date that effect the Debtor's ability to successfully reorganize, including challenges that have been successfully resolved. For example, at the time of the Petition Date, business pressures resulting from the Pandemic heightened building material and supply shortages, which in turn, created a cash flow crunch on the Debtor as job schedules were slowed and, in some instances, halted. The short-term challenge was worsened by the need for operating cash to purchase supplies that were available. Accordingly, the Debtor necessarily sought, and with Court approval, obtained, a post-petition loan in the amount of $1 million, to fuel operations and bridge the gap through the Pandemic and this reorganization. A further positive development during this case was the acquisition of a significant new project known as John Knox Village, in which the Debtor was retained to repair extensive hail damage to a local retirement community. The amount of the claim being repaired is in excess of $10 million and the Debtor is expected to net in excess of $1.5 million from this job. As result of ongoing and continuing new business; the John Knox Village job; and the postpetition loan to bridge the gap, the Debtor is confident about its ability to fund the Plan, with all allowed claims to be paid at 100% of the claim amounts. The Plan will treat claims as follows: * Class 4 consists of the Secured Claim of the SBA for an Economic Injury Disaster Loan. This Claim is secured by a lien on all assets of the Debtor. The Class 3 Secured Claim is estimated as of the Petition Date as being $499,900 and will be paid in full. This Class is Unimpaired. * Class 5 consists of the Secured Claim of TVT Capital. This claim is secured by accounts receivable of the Debtor, according to the Proof of Claim filed by this creditor. The Debtor does not concede that TVT Capital's claim is secured or that it should be allowed, but for purposes of the Plan, the Class 5 claim is estimated to be $316,500 and if allowed, it will be paid in full. This Claim is Impaired. * Class 6 consists of consists of the Secured Claim of TVT 2.0 Capital. This claim is secured by accounts receivable of the Debtor, according to the Proof of Claim filed by this creditor. The Debtor does not concede that TVT Capital's claim is secured or that it should be allowed, but for purposes of the Plan, the Class 6 claim is estimated to be $296,747 and if allowed, it will be paid in full. This Claim is Impaired. * Class 7 consists of the Secured Claim of Ford Motor Credit. This Claim is secured by a lien on the Debtor's 2019 Ford F250 truck. The Class 7 Secured Claim is estimated as of the Petition Date at $40,000.00, less payments made pre-confirmation, and will be paid in full on contract terms. This Class is Unimpaired. * Class 8 consists of the Allowed Unsecured Claims against the Debtor, which are estimated to total $500,000, which will be paid in full in 60 equal monthly installments beginning on the Effective Date. * Class 11 consists of any and all membership interests and warrants currently issued or authorized in the Debtor. This Class is Unimpaired. Holders of a Class 11 interests shall retain their full equity interest in the same amounts, percentages, manner and structure as existed on the Petition Date. The Plan contemplates that the Reorganized Debtor will continue to operate the Debtor's business. Except as explicitly set forth in this Plan, all cash in excess of operating expenses generated from operation until the Effective Date will be used for Plan Payments or Plan implementation, cash on hand as of Confirmation shall be available for Administrative Expenses. A full-text copy of the Amended Plan of Reorganization dated November 01, 2021, is available at https://bit.ly/3GVLwuy from PacerMonitor.com at no charge. Attorneys for the Debtor: Scott W. Spradley Law Offices of Scott W. Spradley, P.A. 109 South 5th Street P.O. Box 1 Flagler Beach, FL 32136 Tel: 386/693-4935 Fax: 386/693-4937 E-mail: scott@flaglerbeachlaw.com About R & R Industries R & R Industries, a Florida S corporation formed in 1964, specializes in the installation of roofing, heating, air conditioning and ventilation systems for commercial, industrial and residential properties. Located at 500 Carswell Avenue, in Daytona Beach, Florida, R&R has been serving the Daytona Beach area for over 55 years. The Debtor filed a petition under Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. M.D.Fla. Case No. 01050) on March 11, 2021 in the U.S. Bankruptcy Court for the Middle District of Florida. In the petition, Larry T. Beasley II, president, the Debtor estimated between $1 million and $10 million in both assets and liabilities. Law Offices of Scott W. Spradley, P.A., is the Debtor's attorney. Judge Lori V. Vaughan oversees the case. R. INVESTMENTS: Updates Unsecured Claims Pay Details; Amends Plan ----------------------------------------------------------------- R. Investments, RLLP, submitted a Disclosure Statement in support of Amended Chapter 11 Plan of Reorganization. The Debtor works to garner and maintain existing investor relationships, identify potential real estate investment opportunities in MDUs and the hotel industry, and to attract capital to invest in real estate assets that meet acceptable criteria set by Debtor. Acquisition of an asset requires careful planning to determine the necessary steps required to rehabilitate and transform the assets into a stable investment property that will generate high returns to equity investors. Substantially all of Debtor's prepetition revenues are generated through the acquisition fees and management fees of the MDUs and Hotels. Acquisition fees, ranging from 1–2% of project cost, were not charged by Debtor historically, but are now part of the business model going forward. Acquisition fees will be paid as a part of closing costs of the MDUs and Hotels. On January 7, 2021, Debtor received a flat acquisition fee of $150,000.00 in connection with a Hotel in Tampa, Florida. Furthermore, Debtor expects to collect a monthly asset management fee, which will be approximately 3% of projected monthly rent at stabilization (full occupancy of MDU). Like the acquisition fee, monthly asset management fees were not historically charged by Debtor. Debtor also has a reasonable expectation to the Employee Retention Tax Credit under the CARES Act, which was passed in 2020 to encourage businesses to keep employees on payrolls. The refundable tax credit is 50% of up to $10,000.00 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. Debtor and Non-Debtor Affiliates collectively filed $794,961.25 in tax credits, although that number has since been reduced to $600,979 ($39,254 for Debtor and $561,724 for Non-Debtor Affiliates) after their accountant made certain payroll adjustments. To date, RC and RT have received $279,551 in tax credits. The Plan provides for the reorganization of Debtor's business and affairs through the creation of RI-2 NewCo. The DS Secured Claim shall be paid by the issuance of a promissory note by RI-2 NewCo and which will be paid in full with 10% interest over three years. DS's prepetition Liens against Debtor's Assets, existing as of the Petition Date, shall be unaltered by the Plan. Each Holder of an Allowed Unsecured Claim shall receive one Class A Unit in RI-2 NewCo in exchange for each $5,000.00 of their Allowed Unsecured Claim carried through to the second decimal point. Holders of Class A Units shall receive 125% of their Allowed Unsecured Claims until paid in full. For illustrative purposes only, a Holder of an Allowed Unsecured Claim in the amount of $13,250.00 shall have 2.65 Class A Units in RI-2 NewCo. Once that Holder of 2.65 Class A Units in RI-2 NewCo receives periodic Distributions, totaling $16,562.50, such Holder will be considered to be paid in full, and its Class A Units shall be cancelled. Holders of Interests shall receive Class B Units in RI-2 NewCo. Debtor anticipates that all creditors' Allowed Claims will be paid in full under the terms of the Plan. RI-2 NewCo shall own all of the membership interests in RI-2 SubCo. RI-2 SubCo shall own: (a) all of Debtor's Prepetition Real Estate Assets, free and clear of all liens, claims, encumbrances, and interests, unless as expressly otherwise provided for in this Plan; (b) all of the membership interests in any future special purpose entities that acquire and own distressed real property consisting of multifamily and/or hospitality ("Distressed Properties"); (c) all of Debtors personal property; and (d) all of Steffens' and Perrin's right, title, and interest in, and to, all of Non-Debtor Affiliates. RI-2 SubCo may also own all of R Tek's owners' right, title, and interest in, and to, R-Tek if (i) the Plan is confirmed as substantially drafted, or (ii) Hale consents to such consolidation if the Plan is not confirmed as substantially drafted. Class 3 Allowed Unsecured Claims On the Effective Date, each Holder of an Allowed Unsecured Claim shall receive in exchange for their Unsecured Claim one non-voting Class A unit in RI-2 NewCo for every $5,000.00 of their Allowed Unsecured Claim carried through to the second decimal point (each a "Class A Unit"). For illustrative purposes only, a Holder of an Allowed Unsecured Claim in the amount of $13,250.00 shall have 2.65 Class A Units in RI-2 NewCo. Once that Holder of 2.65 Class A Units in RI-2 NewCo receives periodic Distributions, as provide for in the Plan, totaling $16,562.50, such Holder will be considered to be paid in full, and its Class A Units shall be cancelled. RI-2 NewCo shall make periodic distributions of 70% of operating cash flow, which is revenue less operating expenses, which includes payment on account of any post-Confirmation debts less scheduled or discretionary payments made to DS ("Free Cash Flows") of RI-2 NewCo's business. The remaining 30% of the Free Cash Flows of RI-2 NewCo's business shall be distributed as compensation to RI-2 NewCo's management. All Distributions provided under the Plan shall be distributable pro rata to Holders of Class A Units until the Holder of such units has received Distributions totaling 125% of such Holder's Allowed Unsecured Claim. When a Holder of Class A Units has received Distributions totaling 125% of their Allowed Unsecured Claim such Class A Units shall be cancelled. No Distributions will be made to Holders of Class A Units until the DS Secured Claim is paid in full as provided for under this Plan. As additional treatment for Holders of Allowed General Unsecured Claims, Debtor shall distribute the proceeds of Avoidance Actions, net of expenses including attorneys' fees and costs, pro rata among those Holders of Class A Units if such proceeds are received. On the Effective Date, Reorganized Debtor shall create RI-2 NewCo and all Holders of Allowed Unsecured Claims shall automatically be members of RI-2 NewCo, in accordance with the terms of the RI-2 NewCo Operating Agreement. The principle purpose of RI-2 NewCo shall be to own all of the membership interests in RI-2 SubCo. RI-2 SubCo shall own: (a) all of Debtor's Prepetition Real Estate Assets, free and clear of all liens, claims, encumbrances, and interests, unless as expressly otherwise provided for in this Plan; (b) all of the membership interests in any future special purpose entities that acquire and own distressed real property consisting of Distressed Properties; (c) all of Debtor's personal property; and (d) all of Steffens' and Perrin's right, title, and interest in, and to, all of Non Debtor Affiliates. RI-2 SubCo may also own all of R Tek's owners' right, title, and interest in, and to, R-Tek if (i) the Plan is confirmed as substantially drafted, or (ii) Hale consents to such consolidation if the Plan is not confirmed as substantially drafted. It is the intent of Debtor to bring ownership of NonDebtor Affiliates under the umbrella of Debtor. Copies of the RI-2 NewCo Operating Agreement and RI-2 SubCo Operating Agreement. A full-text copy of the Disclosure Statement dated October 31, 2021, is available at https://bit.ly/3o6vbLk from PacerMonitor.com at no charge. Counsel for Debtor: MOYE WHITE LLP Timothy M. Swanson Patrick R. Akers 1400 16th Street, 6th Floor Denver, Colorado 80202 Tel: (303) 292-2900 Fax: (303) 292-4510 E-mail: tim.swanson@moyewhite.com patrick.akers@moyewhite.com About R. Investments R. Investments, RLLP sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Colo. Case No. 21-11011) on March 4, 2021. William Travis Steffens, chief executive officer, signed the petition. At the time of the filing, the Debtor was estimated to have $500,000 to $1 million in assets and $10 million to $50 million in liabilities. Judge Elizabeth E. Brown oversees the case. The Debtor tapped Moye White, LLP as bankruptcy counsel and the Law Offices of Silver & Brown as special counsel. R.R. DONNELLEY: Moody's Puts B2 CFR Under Review for Downgrade -------------------------------------------------------------- Moody's Investors Service placed R.R. Donnelley & Sons Company's ("RRD") B2 corporate family rating, B2-PD probability of default rating, B1 ratings on its senior secured term loan B and senior secured notes, and B3 ratings on its senior unsecured notes and debentures under review for downgrade. The outlook has changed to rating under review from stable. The review follows RRD's announcement[1] it has entered into a definitive agreement to be acquired by Atlas Holdings LLC ("Atlas") in an all-cash transaction with a total enterprise value of approximately $2.1 billion. "The review for downgrade was prompted by the possibility that RRD's credit profile will weaken should the transaction close, as well as the uncertainty around RRD's future capital structure and credit metrics post-acquisition", said Aziz Al Sammarai, Moody's Analyst. On Review for Downgrade: Issuer: R.R. Donnelley & Sons Company Corporate Family Rating, Placed on Review for Downgrade, currently B2 Probability of Default Rating, Placed on Review for Downgrade, currently B2-PD Senior Secured Bank Credit Facility, Placed on Review for Downgrade, currently B1 (LGD3) Senior Secured Regular Bond/Debenture, Placed on Review for Downgrade, currently B1 (LGD3) Senior Unsecured Regular Bond/Debenture, Placed on Review for Downgrade, currently B3 (LGD5) Outlook Actions: Issuer: R.R. Donnelley & Sons Company Outlook, Changed To Rating Under Review From Stable Issuer: R.R. Donnelley & Sons Company Speculative Grade Liquidity Rating, Remains Unchanged at SGL-2 RATINGS RATIONALE/ FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The review will focus on the amount of acquisition debt financing taken to fund the transaction, post-closing credit metrics, RRD's future capital structure, business and financial strategy under the new ownership, and the company's ability to maintain good liquidity. The review will also incorporate future governance considerations for RRD as a private company. The change of ownership would be a credit negative if Atlas decides to pursue a more aggressive financial policy. The transaction is expected to close in H1 of 2022 and remains subject to customary closing conditions, including approval by RRD's shareholders and receipt of regulatory approvals. The principal methodology used in these ratings was Media published in June 2021. Headquartered in Chicago, Illinois, RRD is the leader in the North American commercial printing industry. Revenue for the year ended September 30, 2021 was $4.9 billion. RONNY'S A-LA-CARTE: Amends Executory Contract Provisions -------------------------------------------------------- Ronny's A-La-Carte, Inc., submitted the First Modification to Plan of Reorganization. Debtor modifies the Plan in accordance with §§ 1125 and 1127 of Chapter 11 of Title 11 of the United States Code. The changes do not materially or adversely affect the rights of any parties in interest which have not had notice and an opportunity to be heard with regard thereto. The Plan, and specifically Article 10, Section 10.1, Provisions Regarding Executory Contracts, is amended to provide that: * Any unexpired leases or executory contracts which are not assumed under the Plan or are the subject of a pending motion to assume as of the Effective Date shall be deemed rejected pursuant to Section 365 of the Bankruptcy Code on the Effective Date. Under the terms of the Plan, a proof of claim for damages arising from such rejection must be filed in compliance with the Bankruptcy Rules on or before sixty (60) days after the Confirmation Date. Any claims which are not timely filed will be disallowed and discharged. * Debtor will assume the following contracts on the Effective Date of the Plan (each an "Assumed Contract" and collectively the "Assumed Contracts"): Pillow Perfect, Inc.; Penske Truck Leasing Co., L.P.; and CIT Technology Fin Serv Inc. * Debtor will also assume all executory contracts regarding utility services and insurance. Like in the prior iteration of the Plan, Debtor will pay Allowed Unsecured Claims a pro-rata share of the following monthly distributions commencing on the 28th day of the 1st month following the Effective Date and continuing on the 28th day of each subsequent month through and including the 36th month. The source of funds for the payments pursuant to the Plan is Debtor's operations or other income. Debtor will continue its prepetition business and use this income to pay creditors under the Plan. A full-text copy of the First Modification to Plan of Reorganization dated October 29, 2021, is available at https://bit.ly/2YftAK0 from PacerMonitor.com at no charge. Attorneys for Debtor: Nathan T. Juster, Esq. Jones & Walden, LLC 699 Piedmont Avenue, NE Atlanta, GA 30308 Tel: (404) 564-9300 About Ronny's A-La-Carte Inc. Ronnys A-La-Carte, Inc., an Atlanta, Ga.-based merchant wholesaler of grocery and related products, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 21-55239) on July 13, 2021. Ronny Shiflet, chief executive officer, signed the petition. At the time of the filing, the Debtor disclosed assets of between $100,000 and $500,000 and liabilities of between $1 million and $10 million. Judge Paul Baisier oversees the case. Jones & Walden, LLC is the Debtor's legal counsel. RUBY PIPELINE: S&P Lowers ICR to 'CC' On Near-Term Default Risk --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Ruby Pipeline LLC to 'CC' from 'CCC' and its issue-level rating on the company's senior unsecured notes to 'CCC-' from 'CCC+'. The '2' recovery rating is unchanged, indicating its expectation for substantial recovery (70%-90%; rounded estimate 85%) in the event of a payment default. S&P said, "The negative outlook reflects our expectation that we view default to be a virtual certainty, unless Ruby receives support from its indirect owners, KMI and PPL. "We view default as a near-term certainty given Ruby's projected liquidity position and unsustainable capital structure. "Under our base-case scenario, we view Ruby's default as a virtual certainty given the company's insufficient liquidity relative to its approaching debt maturity, and its unsustainable capital structure. In addition, we are not assuming further support from the company's indirect owners. "We expect Ruby will have a material liquidity deficit given the $475 million outstanding due April 1, 2022, relative to its liquidity's sources, which include S&P Global Ratings' forecast funds from operations (FFO) of about $40 million over the next six months and cash on the balance sheet of about $52 million as of June. 30, 2021. "In addition, we view refinancing for the full amount as unlikely given Ruby's unsustainable capital structure. Similar to our previous expectations, we project leverage of about 8.0x in 2022, up from about 3.8x in 2021." This is largely spurred by the expiry of about 65% of the company's contracts in July 2021, not sufficiently offset by meaningful short-term contract activity, despite a higher-than-historical differential between Opal, Wyo., to Malin, Ore. Ruby could engage in a distressed exchange or a restructuring. The limited refinancing options, constrained liquidity, and approaching debt maturity increase the likelihood that Ruby will engage in transactions with its bondholders that we could characterize as distressed based on the terms and conditions agreed upon. This could be viewed as selective default and would result in a further downgrade. S&P said, "The negative outlook reflects our view that default is a virtual certainty, without additional support from Ruby's indirect owners, KMI and PPL. We could lower our ICR on Ruby to 'D' or 'SD' if the company defaults or announces an exchange that we view as distressed. "We could lower our rating if Ruby defaults or announces an exchange that we view as distressed. "We do not expect a positive rating action over the next six months given our assessment of the capital structure as unsustainable and liquidity as weak. However, we could take a positive rating action if Ruby has a refinancing strategy in place for the notes and if it stabilizes its liquidity position, which could be achieved if the indirect owners were to provide additional support." S&S HOLDINGS: Moody's Hikes CFR to B2, Outlook Remains Stable ------------------------------------------------------------- Moody's Investors Service upgraded S&S Holdings, LLC's corporate family rating from B3 to B2 and probability of default rating from B3-PD to B2-PD. Moody's also affirmed S&S' B2 senior secured first lien term loan rating, which includes a proposed $150 million add-on, and Caa1 senior secured second lien term loan rating. The outlook remains stable. The proceeds from the add-on are expected be used along with balance sheet cash to fund an acquisition. The CFR upgrade reflects S&S' stronger than expected operating performance which has led to deleveraging through EBITDA growth. Following the LBO, pro forma Moody's adjusted debt/EBITDA was greater than 7x for the LTM period ending November 30, 2020. Pro forma for the proposed debt add-on and acquired company EBITDA, Moody's adjusted debt/EBITDA is approximately 5x for the LTM period ending September 30, 2021. The affirmation of the B2 senior secured first lien term loan rating and Caa1 second lien term loan rating reflects the proposed $50 million increase in the size of S&S's asset based revolving credit facility to $275 million which places additional debt ahead of the term loan facilities in the capital structure. Upgrades: Issuer: S&S Holdings, LLC Corporate Family Rating, Upgraded to B2 from B3 Probability of Default Rating, Upgraded to B2-PD from B3-PD Affirmations: Issuer: S&S Holdings, LLC Senior Secured First Lien Term Loan, Affirmed B2 (LGD3) Senior Secured Second Lien Term Loan, Affirmed Caa1 (LGD5) Outlook Actions: Issuer: S&S Holdings, LLC Outlook, Remains Stable RATINGS RATIONALE S&S' B2 CFR is constrained by its private equity ownership, moderately high leverage and high supplier concentration. The credit profile is also constrained by the company's exposure to the cyclicality of the apparel industry and the competitive nature of the apparel distribution industry. The B2 CFR is supported by S&S' strong and growing market position in a niche category, low customer concentration and broad geographic footprint in the United States and Canada which allows its product to reach the vast majority of the US in 1 to 2 business days. The credit profile is also supported by the company's good interest coverage, good liquidity and asset lite business model. S&S' good liquidity reflects $40 million of balance sheet cash at transaction close and full availability on its $225 million asset-based lending (ABL) revolving credit facility which is expected to be upsized to $275 million and undrawn at close. Free cash flow has been strong in 2021 and is expected to continue in 2022. The stable outlook reflects the expectation of good liquidity and the expectation for continued sales growth and sustained profit margins but that financial policy risks under its private equity ownership will likely result in leverage remaining moderately high. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if S&S' liquidity, operating performance or vendor relationships deteriorate. Quantitatively, the ratings could be downgraded if debt/EBITDA is maintained above 5.5x or EBITA/interest expense declines below 2x. The ratings could be upgraded if the company maintains financial strategies that support solid credit metrics and if revenues and earnings improve materially while maintaining good liquidity. Quantitatively, the ratings could be upgraded if the company maintains debt/EBITDA below 4.5x and EBITA/interest expense above 2.75x. Headquartered in Bolingbrook, Illinois, S&S is a distributor of blank apparel from retail brands to imprintable apparel customers. Revenue for the LTM period ending September 30, 2021 was approximately $1.7 billion. The company is majority owned by Clayton, Dubilier & Rice. The principal methodology used in these ratings was Distribution & Supply Chain Services Industry published in June 2018. S&S HOLDINGS: S&P Upgrades ICR to 'B' on Continued Deleveraging --------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on S&S Holdings LLC (d/b/a S&S Activewear) to 'B' from 'B-'. S&P also raised its issue-level rating on its first-lien debt and second-lien debt to 'B' and 'CCC+' from 'B-' and 'CCC', respectively. The recovery ratings remain unchanged. S&P said, "The stable outlook reflects our expectation that the company will successfully integrate its recent acquisition and use its improved scale and deeper penetration in its markets to strengthen its EBITDA margins to the low-11% range and sustain its debt to EBITDA comfortably below 6x. "The upgrade reflects our expectation for prudent risk management and leverage staying well-below 6x during the next 12 months. As of the last 12 months (LTM) ended Sept. 30, 2021, adjusted leverage declined to 5.2x, from 6.3x in the LTM ended June 30, 2021. S&S's current revenue and EBITDA growth should translate into S&P Global Ratings-adjusted debt to EBITDA notably below our previous 6x upside trigger on Dec. 31, 2021. We project FOCF generation of about $110 million-$118 million, supported by solid EBITDA margins for its industry, and return to normalized capital expenditure levels." S&S's sales grew more than 30% in the third quarter (ended Sept. 30, 2021), with strong demand mainly driven by the alleviation of pandemic restrictions and resumption of corporate, team' sports and live events, as well as strength in consumer demand and continued market share gains. In addition, the mix shift to higher-margin products and price increases that were implemented in 2020 provided an additional boost to the company's topline. These factors translated into over 400 basis points (bps) in reported EBITDA margin expansion in the third quarter 2021 to about 12%, up from 7.6% during that same time in 2020. Despite the challenging macroeconomic environment, a key differentiator from competitors stems from S&S's value-added services such as personalized marketing and brand management and its integrated technology and analytics platform, which allowed the company to support higher sales volumes and efficiently onboard new brands. In addition, specific productivity and pricing actions allowed the company to offset most of the cost inflation expected this year. S&P said, "We believe the company will continue its consolidation strategy for at least the next few years or so to increase its scale and geographic diversity in the highly fragmented wholesale blank apparel industry. S&S has completed four acquisitions (including TSC Apparel) since 2010, allowing it to expand its geographic footprint outside of the U.S. Although we have not modeled any material debt-funded acquisitions into our base-case forecast, we expect the company to continue demonstrating a disciplined acquisition strategy to increase its scale and further consolidate its industry. Therefore, we anticipate that S&S will maintain adjusted leverage above 5x longer term to fund its growth strategy. Moreover, the company's sponsors will likely seek a return on their investment with the potential to extract returns in the form of debt-financed dividends. That said, the use of balance sheet cash to partially fund the TSC Apparel purchase demonstrates some acquisition financing discipline. Over the next year, we are forecasting credit metrics to remain commensurate with a 'B' rating. "The company's proposed acquisition of TSC Apparel, which will enhance the company's scale, capabilities, and end-market diversification should help improve overall profitability. S&S made previous technology and distribution center investments, allowing it to integrate new acquisitions successfully. We view the TSC Apparel acquisition favorably as the company will likely see scale benefits and product- and customer-mix enhancements. Moreover, there is an opportunity to use its operational capabilities to uplift TSC margins in line with those of S&S. TSC is a national distributor of imprintable apparel and accessories, serving a highly diverse customer base across a nationwide network of seven distribution centers. The company has three distinct business units, which will allow S&S to expand its service offering to include decoration capabilities and private brands offerings while deepening its penetration in some of its end-markets such as the collegiate and corporate accounts space. Over the next year, we anticipate that S&S will realize synergies from the acquisition, including consolidating its distribution centers which will translate into lower selling, general and administrative (SG&A) costs, warehouse, and logistics advantages, as well as corporate costs savings. "However, negative tailwinds related to COVID-19 business disruptions remain a constraint. We believe S&S faces heightened operating risks, such as supply chain disruptions, which could hinder its ability to source enough inventory to fulfill its growing demand; margin pressures resulting from labor capacity issues; container inflation; and higher freight costs. Given our expectation of solid revenue growth in 2021 and 2022, we estimate the company will look to build up its inventory levels in 2022. So far this year, the supply chain disruptions have been a significant hurdle to companies purchasing enough inventory to meet demand. Up to now, S&S has shown resiliency throughout the pandemic. However, its ability to source enough inventory and dispatch parcels within its sales fulfillment timeline depends on many factors outside the company's control. Although, we note that these challenges are felt amongst most of its peers within the distribution industry. "The stable outlook reflects our expectation the company will successfully integrate its recent acquisition and use its improved scale and deeper penetration in its markets to strengthen its EBITDA margins to the low-11% area and sustain its debt to EBITDA comfortably below 6x." S&P could lower the rating if leverage approached 6.5x or it no longer believed the company would generate meaningful free cash flow. This could happen if: -- Cost savings were insufficient to offset higher input cost inflation, leading to significant EBITDA margin erosion compared with our expectations; -- There is a shift toward a more aggressive financial policy such as a large debt-funded acquisition or dividend. Although unlikely over the next 12 months, S&P could raise its rating on S&S if it believed the company would sustain leverage below 5x over several years along with: -- Achieving sustained organic growth by continuing to expand its distribution and marketing capabilities, and diversifying its revenue base; -- The realization of planned pricing and productivity initiatives to offset cost inflation, resulting in sustained EBITDA margin; and -- Demonstrated conservative financial policies by not making large, debt-financed dividends or acquisitions. SCULPTOR CAPITAL: Fitch Withdraws Ratings ----------------------------------------- Fitch Ratings has upgraded Sculptor Capital Management, Inc. and its related entities' (collectively, Sculptor) Long-Term Issuer Default Ratings (IDR) to 'BB' from 'B+'. The Rating Outlook is Stable. The rating actions have been taken as part of a periodic peer review of the alternative investment manager (IM) industry, which is comprised of 11 publicly rated global firms. Concurrently, Fitch has withdrawn the ratings for Sculptor for commercial reasons. KEY RATING DRIVERS IDR The ratings upgrade reflects the significant improvement in leverage, interest coverage and profitability metrics for Scupltor in the past year. Sculptor's assets under management (AUM) have continued to expand, which has resulted in improved management fees and fee-related EBITDA (FEBITDA), allowing the firm to pay down outstanding debt. The ratings are also supported by Sculptor's long-term performance track record and franchise, particularly in its core multi-strategy hedge fund business and continued expansion into credit and real estate products, which have committed capital structures and generate more consistent fee revenue. Key rating constraints include the business model's sensitivity to market risk due to the still meaningful amount of net asset value-based management fees, weaker FEBITDA margins relative to peers, and less diversified AUM relative to higher-rated alternative IMs. Reduced investor appetite for hedge funds as an asset class has pressured fund flows for the hedge fund industry as a whole. AUM and management fees rebounded over the past two years driven by net inflows into the master fund and other higher fee strategies. Sculptor had seen significant declines in AUM and management fees during 2016-2017 as the firm moved through a leadership transition and legal challenges. Outflows in the master fund had been offset by inflows into real estate and Institutional Credit Strategies, however, management fees had continued to decline given the adverse impact on the blended fee rate. With the firm's legal issues now resolved, Fitch believes the fundraising outlook for the master fund and the platform as a whole is strong given consistent fund performance. Sculptor's FEBITDA margin was 17.7% for the TTM ended June 30, 2021, which, though much improved from 9.0% in 2020, remains well below Sculptor's longer-term historical range of 35% to 45%, but within Fitch's 'bb' category benchmark range of 10%-20%. In its analysis of Sculptor, Fitch uses FEBITDA as a proxy for cash flow, which consists of management fees, less compensation expenses (including salary and a minimum level of bonus assumed to be the higher of 25% of management fees or management guidance), less operating expenses, plus depreciation and amortization. The calculation excludes incentive income and incentive-related compensation, which is approximated based on company disclosures. Sculptor's leverage was 1.9x for the TTM ended June 30, 2021, down significantly from 13.6x at YE 2020. The November 2020 recapitalization transaction with Delaware Life Insurance Company reduced outstanding debt to $320 million from $415.5 million, including the accrued preferred dividends, by capturing available prepayment discounts of $62.3 million and by partially drawing down on existing cash reserves. Since then, Sculptor has repaid an additional $225 million of debt, reducing outstanding borrowings substantially, which, along with the improvements in profitability and FEBITDA, led to the deleveraging. Interest coverage was 2.9x for the TTM ended June 30, 2021; up from 1.4x in 2020 given the improvement in FEBITDA. Fitch expects interest coverage to improve further prospectively, given reduced interest expenses on lower outstanding debt. Sculptor's liquidity profile remains strong with $385 million in unrestricted cash and equivalents and long-term U.S. Government obligations as of Sept. 30, 2021, which puts the company in a negative net debt position. Sculptor also has availability under its $25.0 million revolving credit facility, which acts as a contingent liquidity source. The Stable Rating Outlook reflects Fitch's view that the deleveraging and improved liquidity profile positions Sculptor well to absorb any future performance volatility and the resultant impacts on flows, AUM and FEBITDA. SUBSIDIARIES AND AFFILIATED COMPANIES Sculptor is a publicly traded holding company, and its primary assets are ownership interests in the operating group entities (Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP), which earn management and incentive fees and are directly held through one intermediate holding company. Sculptor conducts substantially all of its business through the operating group entities. The IDRs assigned to Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP are equalized with the ratings assigned to Sculptor, reflecting the joint and several guarantees among the entities. Sculptor Capital LP serves as the debt-issuing entity for Sculptor's secured debt and benefits from joint and several guarantees from the management and incentive-fee generating operating group entities. RATING SENSITIVITIES Rating sensitivities are no longer relevant as the ratings are being withdrawn. 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. 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. SENIOR HEALTHCARE: Unsecureds Will Get 49.2% of Claims in Plan -------------------------------------------------------------- Senior Healthcare, Inc., filed with the U.S. Bankruptcy Court for the District of Maryland a Disclosure Statement in support of Plan of Reorganization dated November 1, 2021. The Debtor is an corporation organized and operating in the state of Maryland. It was formed on September 8, 1997, as a C Corporation for the express purpose of owning and operating an 8- bed assisted living facility in Silver Spring, Maryland (the "Facility"). Since its inception, Rajendra B. Shrestha has worked full time on behalf of the Company. He received $140,000 in compensation paid by the Debtor during the two years prior to the commencement of the Debtor's bankruptcy case, but has received no compensation since the filing of the Debtor's petition. By June of 2019, the Debtor received default notices from on Merchant loans eventually a notice of Foreclosure from Goldsmith Equity Group in August 2019. The Debtor attempted to resolve the financial issues and bring the loans current but was unable to do so. In early 2020, the COVID-19 outbreak further complicating its efforts, as the Debtor was unable to bring in new tenants due to quarantine requirements. In order to stay a pending foreclosure sale of its Facility, the Debtor sought protection under Chapter 11 of the federal bankruptcy code on August 2, 2021. The Plan will treat claims as follows: * Class II consists of the Secured Claim of the C Store, Inc. secured by first and second deeds of trust against the Facility in the aggregate sum of $468,000.00, plus post-petition interest at the rate of 12% per annum. Upon confirmation of the Chapter 11 Plan, the entire balance of the notes secured by the deeds of trust, including all pre-petition and post-petition arrears due on the both loans shall be aggregated into a new promissory note, secured by a first deed of trust against the Facility. Such an amortization will require monthly installment payments of an estimated $3,210 for the initial 24 months, and an estimated $4,814 per month for the second 24 month period. Payments on the new promissory note shall commence on the Effective Date and the entire unpaid balance of the new promissory note will come due and payable one month after the four year anniversary of the Effective Date. C Store, Inc. shall retain a first position lien against the Facility until its Claim is paid in full. * Class III consists of Allowed Unsecured Claims. The Debtor estimates that the balance of all general unsecured claims is $132,000. This Class shall share, pro-rata, in a total distribution of $65,000 paid in 10 semi-annual payments commencing of the third monthly anniversary of the Effective Date and continuing every 6 months thereafter. The Debtor estimates that this will result in a distribution of approximately 49.2% of Allowed Claims in this Class. * Class IV consists of Interests of Shareholders. At the time of the commencement of this case, Shreshta owned 100% of the issued and outstanding shares of the Debtor. Since the commencement of this case, Shreshta has paid the full year of premiums due on the Debtor's property insurance and liability insurance in the total sum of $6,798. That sum shall constitute an equity contribution to the Debtor in return for the retention of its stock interest. The Debtor shall fund payments under the Plan from cash on hand as of the Effective Datea nd cash flow from the Debtor's operations. A full-text copy of the Disclosure Statement dated November 01, 2021, is available at https://bit.ly/3CVhRzC from PacerMonitor.com at no charge. Counsel for Debtor-in-Possession: COHEN, BALDINGER & GREENFELD, LLC Steven H. Greenfeld 2600 Tower Oaks Boulevard Suite 290 Rockville, MD 20852 (301) 881-8300 Steveng@cohenbaldinger.com 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: Ex-CEO Shmidman Gets Jo's Jeans Brand -------------------------------------------------------- WHP Global, the brand management company founded by former Sequential Brands Group Chief Executive Officer Yehuda Shmidman, has bought Sequential Brands' Joe's Jeans brand, joining other industry peers in snapping up the piecemeal assets of the bankrupt Sequential Brands Group. Bloomberg recounts that Mr. Shmidman was hired as the CEO of Sequential Brands in 2012, and stepped down in 2017 as the company struggled to digest its $353 million acquisition of Martha Stewart Living. Centric Brands LLC and WHP Global announced Nov. 5, 2021, they have signed a definitive agreement and received court approval to purchase the Joe's Jeans brand, which will be subject to customary closing conditions. As part of the agreement, WHP will own the worldwide intellectual property in all global territories other than China and Centric will continue to operate Joe's Jeans under a long-term exclusive license for their core categories and geographies across retail, wholesale, and e-commerce channels. Founded in 2001, Joe's Jeans has redefined premium denim with its inherently LA sensibility and distinctive point-of-view. Joe's Jeans offers denim, apparel, and accessories and is available at premium department stores in the United States, at specialty boutiques globally, 10 Joe's Jeans stores, and at the digital flagship http://www.joesjeans.com/ "We have significantly invested in Joe's Jeans throughout our years of operation and have established the brand as one of the leading premium denim resources," said Jason Rabin, Chief Executive Officer of Centric Brands. "Celebrating its 20th year, we look forward to partnering with WHP Global to further develop the brand and new avenues to grow the business." Centric Brands is a global lifestyle brand collective that designs, sources, markets, and sells high-quality products in the kids, men's and women's apparel, accessories, beauty, and entertainment categories. The company's portfolio includes over 100 owned and licensed iconic brands collectively generating approximately $2.5 billion in annual global sales. "The acquisition of Joe's Jeans in partnership with Centric is a win for WHP Global as it expands our growing fashion vertical which already includes ANNE KLEIN and JOSEPH ABBOUD," stated Yehuda Shmidman, Chairman and Chief Executive Officer at WHP Global. "Together with Centric, we will look to build upon the core business and expand around the world to new geographies." WHP Global is a leading New York based brand acquisition and management firm backed by equity capital from funds managed by Oaktree Capital Management, L.P. and leverage financing provided by BlackRock. Following the close of the transaction, WHP's portfolio -- including Joe's Jeans, William Rast, Toys "R" Us, Babies "R" Us, Anne Klein, Joseph Abboud, and Lotto -- will collectively generate approximately $4 billion in annual global retail sales. About Centric Brands LLC Centric Brands LLC is a leading lifestyle brand collective that designs, sources, markets, and sells high-quality products in the kids, men's and women's apparel, accessories, beauty, and entertainment categories. The Company's portfolio includes licenses for more than 100 iconic brands, including Calvin Klein, Tommy Hilfiger, Nautica, Spyder, and Under Armour in the kid's category; Joe’s Jeans, Buffalo, Herve Leger, and Izod in the men's and women's apparel category; Kate Spade, Michael Kors, All Saints, Frye, Timberland, Kenneth Cole, and Jessica Simpson in the accessories category; and in the entertainment category, Disney, Marvel, Nickelodeon, and Warner Brothers among many others. The Company also owns and operates brands such as Zac Posen, Hudson, Robert Graham, Avirex, and Taste Beauty and operates a joint venture brand, Favorite Daughter, with Sara and Erin Foster. The Company's products are sold primarily in North America through leading mass-market retailers, specialty and department stores, and online. Centric Brands LLC has unparalleled expertise in product design, development and sourcing, retail and digital commerce, marketing, and brand building. The Company is headquartered in New York City, with U.S. offices in Los Angeles and Greensboro, and international offices in London, Toronto, and Montreal. On the Web: http://www.centricbrands.com/ About WHP Global WHP Global is a leading New York based firm that acquires global consumer brands and invests in high-growth distribution channels including digital commerce platforms and global expansion. WHP owns ANNE KLEIN, JOSEPH ABBOUD, LOTTO and a controlling interest in TOYS "R" US, BABIES "R" US, Geoffrey the Giraffe and more than 20 additional consumer brands in the toy and baby categories. In addition, WHP signed a definitive agreement to acquire JOE'S JEANS and WILLIAM RAST. The company also owns WHP+ (www.whp-plus.com), a turnkey direct to consumer digital e-commerce platform for brands, with full in-house operations including technology, data analytics, logistics, creative and digital marketing. On the Web: http://www.whp-global.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: Jessica Simpson Wins OK to Buy Back Brand ------------------------------------------------------------ Eliza Ronalds-Hannon of Bloomberg News reports that Jessica Simpson's company, With You Inc., won court approval for its bid to pay Sequential Brands Group Inc. $65 million for the majority share of the singer-turned-fashion entrepreneur's brand, according to court documents. Under a purchase agreement with bankrupt Sequential, which has been the majority owner of the brand, Simpson agreed to pay $65 million as the stalking horse bidder Simpson's company owned a minority stake. 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. SILVER LAKES RESORT: Taps Porter & Lasiewicz as Accountant ---------------------------------------------------------- Silver Lakes Resort Lodge Interval Owner's Association seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Porter & Lasiewicz CPAs as its accountant. The firm will assist the Debtor as a non-profit association in determining the capital gains tax liability of the timeshare interest sold by its members. The firm will be paid an hourly fee of $325 and a retainer of $3,250. It will also receive reimbursement for out-of-pocket expenses incurred. Gary Porter, a partner at Porter & Lasiewicz, 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: Gary Porter Porter & Lasiewicz CPAs 980 Enchanted Way, Suite 104 Simi Valley, CA 93065 Tel: (805) 433-6022 Email: gporter@pl.cpa About Silver Lakes Resort Lodge Interval Owner's Association Silver Lakes Resort Lodge Interval Owners Association -- https://www.innatsilverlakes.com/ -- is an association of owners of The Inn at Silver Lakes, a resort in Southern California that is affiliated with RCI and Interval International. Silver Lakes Resort Lodge Interval Owners Association sought protection under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 19-16352) on July 20, 2019, listing as much as $10 million in both assets and liabilities. Judge Mark S. Wallace oversees the case. Teresa A. Blasberg, Esq., at Blasberg & Associates and Porter & Lasiewicz CPAs are the Debtor's legal counsel and accountant, respectively. SOUTHWESTERN ENERGY: Fitch Alters Outlook on 'BB' LT IDR to Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Southwestern Energy Company's Long-Term Issuer Default Rating (IDR) at 'BB'. In addition, Fitch has affirmed Southwestern's senior secured revolver at 'BBB-'/'RR1' and senior unsecured notes at 'BB'/'RR4'. The Rating Outlook has been revised to Stable from Positive. Southwestern's ratings are supported by its production scale, expectation of material FCF generation at current Strip prices, manageable debt maturity profile, solid hedging program and ample liquidity. This is partially offset by the need to integrate a large acquisition and increasing differentials in the Appalachian basin. The Outlook revision to Stable reflects Fitch's belief that the GEP acquisition, while accretive on current Strip pricing, is not as accretive on lower price scenarios due to the amount of debt in the transaction. KEY RATING DRIVERS GEP Haynesville Acquisition: Southwestern has entered into a definitive agreement to buy GEP Haynesville for $1.85 billion. The transaction would add 700 million cubic feet per day (mmcf/d) of production, making Southwestern one of the largest natural gas producers in North America. The acquisition will be financed by $1.325 billion of cash, which Fitch believes will be funded by debt, and $525 million of Southwestern common shares. Fitch believes the acquisition is credit accretive at current Strip prices, but not as accretive at prices similar to pre-2021 levels. Southwestern's overall natural gas differential is expected to reduce given its increased footprint in the Haynesville. The increased scale in this area should also result in operational efficiencies and provide for marketing synergies. Extended Debt Maturity Schedule: Fitch believes Southwestern has a manageable maturity schedule with approximately $700 million due in 2025. FCF is expected to reduce borrowings under the revolver ($665 million as of Sept. 30, 2021), which is due in 2024. Fitch does not expect the GEP transaction to have a material increase in near-term debt obligations. FCF Pivot: Fitch expects Southwestern to generate material FCF under its base case natural gas prices ($2.90 in 2021 and $2.45 over the long-term). FCF projections under current Strip pricing are significantly higher and could result in faster debt reduction. Fitch expects near-term FCF will be applied to debt reduction, as management has lowered its debt/EBITDA target to 1.0x-1.5x. Achieving Scale Benefits: Southwestern's acquisition strategy is an attempt to reap the benefits of scale, which includes operating and cost synergies. The company has a strong footprint in Appalachia, with 789,000 net acres and net production of 3.0 billion cubic feet equivalent per day (bcfe/d). Pro forma for the GEP transaction, the Haynesville footprint would include 269,000 net acres and net production of 1.7 bcfe/d. Combined, Southwestern would be one of the largest natural gas producers in North America. Fitch believes the Appalachian acreage continues to deliver favorable operational results and believes development spending in its liquids-weighted region combined with the recovery in NGL pricing should help support netbacks. Widening differentials and takeaway capacity remain long-term concerns for Appalachian operators. Netbacks in Appalachia are typically lower than operators in the Haynesville. Hedges Provide Near-Term Support: Pro forma for the transaction, Southwestern is expected to hedge consistent with management's existing risk management strategy to protect against the additional debt incurred in the transaction. GEP has existing hedge positions for approximately 35% of its 2022 production. Based on Southwestern's historical hedging strategy, Fitch believes that management may opportunistically add more hedges. DERIVATION SUMMARY Pro-forma for the Indigo and GEP transactions, Southwestern remains one of the largest U.S. natural gas E&P companies at approximately 4.7 Bcfe/d, larger than CNX Resources (CNX; BB/Positive), but below EQT Corporation (EQT; BB+/Stable) at 5.5 bcfe/d pro forma for its Alta Resources acquisition. Fitch estimates 2022 debt/EBITDA at 2.0x, which is lower than CNX (2.6x) and EQT (2.4x) based on Fitch's current price deck. Southwestern's liquidity as of June 30, 2021 was weaker than CNX and EQT, although this is offset by expectations of positive FCF and lack of material near-term maturities. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- WTI oil price of $60.00/bbl in 2021, $52.00/bbl in 2022, $50.00/bbl in 2023 and in the long term; -- Henry Hub natural gas price of $2.90/mcf in 2021 and $2.45 in the long term; -- Production of 3.4 Bcfe/d in 2021, 4.8 Bcfe/d in 2022 and flat over the long term; -- Liquids mix of 12% in 2022 and throughout the forecast; -- Capex above $1.1 billion in 2021 and $1.9 billion in 2022; -- No material M&A activity or shareholder activity. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Generation of material FCF with proceeds used to reduce debt and progress to management's leverage targets; -- Mid-cycle debt/EBITDA below 2.0x or FFO-Adjusted Leverage below 2.5x on a sustained basis; -- Operational execution of Appalachian and Haynesville development plans; -- Successful integration of the GEP acquisitions; -- Demonstrated commitment to stated financial policy. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Mid-cycle debt/EBITDA above 2.5x or FFO-Adjusted Leverage above 3.0x on a sustained basis; -- Operational and financial plan that fails to execute on Appalachian and Haynesville development and support FCF neutrality; -- Weakening in differential trends and the unit cost profile. 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: Southwestern's liquidity consists of $2 million of cash on hand and a $2.0 billion secured credit facility with availability of $1.2 billion after $665 million drawn $159 million in letters of credit as of Sept. 30, 2021. The borrowing base and elected commitments were re-determined at $2.0 billion in October 2021. The revolver matures in April 2024. Financial covenants under the credit facility include a minimum current ratio (including unused commitments under the credit agreement) of 1.0x and a maximum total net leverage ratio of no greater than 4.00x after June 30, 2020. As of Sept. 30, 2021, Southwestern was in compliance with all of its covenants. The next material bond maturity is in 2025 of approximately $700 million. Fitch anticipates FCF will be used to reduce outstanding revolver borrowings in the near term. ISSUER PROFILE Southwestern Energy Company is an independent energy company engaged in exploration and development of, principally, natural gas. E&P operations are primarily comprised of Northeast Appalachia in Pennsylvania, Southwest Appalachia in West Virginia and the Haynesville Basin in Louisiana. 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. SOUTHWESTERN ENERGY: S&P Places 'BB' ICR on CreditWatch Positive ---------------------------------------------------------------- S&P Global Ratings placed its ratings, including the 'BB' issuer credit rating, on Spring, Texas-based independent E&P company Southwestern on CreditWatch with positive implications following the announcement that it plans to acquire GEP Haynesville for approximately $1.85 billion in cash and stock. S&P said, "We expect to raise the issuer credit and senior unsecured ratings one notch to 'BB+' if the acquisition closes as expected. "The GEP acquisition further strengthens Southwestern's position in the Haynesville, boosting its total proved reserves to approximately 20.9 trillion cubic feet equivalent and we expect production to increase to approximately 4.7 billion cubic feet (bcf) equivalent per day. This transaction positions Southwestern as the largest producer in the Haynesville with 1.7 bcf/d of net production, and as one of the largest natural gas producers in the U.S. Additionally, this transaction increases the company's geographic diversity with two core operating basins in the Haynesville and Marcellus shales and makes it the largest dual-basin natural gas operator. Southwestern expects about 65% of its daily production will be marketed to demand centers along the Gulf Coast, which typically receives higher prices than in Appalachia, and should help to improve margins and cash flow. "We expect Southwestern to maintain conservative financial policies that lead to significant free cash flow generation. "While this transaction will increase total debt levels, we expect Southwestern to generate meaningful free cash flow over the next two years, which it will use to pay down debt and improve leverage. We estimate Southwestern will generate approximately $475 million in free cash flow in 2021 and more meaningful free cash flow in 2022, which we expect to go toward debt reduction. Southwestern is targeting $3.0 billion-$3.5 billion of total debt and debt to EBITDA of 1x-1.5x before initiating shareholder returns. We expect Southwestern to remain focused on strengthening its balance sheet to provide greater cushion in the event of natural gas price swings and resulting cash flow volatility. "The positive CreditWatch reflects the likelihood that we will raise the issuer credit and senior unsecured ratings one notch to 'BB+' upon the close of the acquisition if there are no material changes to our assumptions. We expect to resolve the CreditWatch listing around the close of the transaction, expected in the fourth quarter of 2021." STERICYCLE INC: Fitch Affirms 'BB' LongTerm IDR, Outlook Stable --------------------------------------------------------------- Fitch Ratings has affirmed Stericycle, Inc.'s (SRCL) Long-term Issuer Default Rating (IDR) at 'BB'. The Rating Outlook is Stable. Fitch has also affirmed SRCL's senior unsecured notes at 'BB'/'RR4'. The ratings for SRCL incorporate the company's solid market position, generally stable demand characteristics of waste management and good FCF generation. SRCL is the top servicer of medical waste and document shredding in the U.S., two industries with consistent waste production fundamentals, outside of COVID disruptions. These strengths are primarily weighed against its high leverage and execution risks as it looks to transform its business and implement a large-scale enterprise resource planning (ERP) system. KEY RATING DRIVERS Execution Risks in Focus: The implementation of SRCL's ERP system within the North American secure information destruction segment in 3Q 2021 experienced challenges that led to a step-down in EBITDA margins and a yoy decline in segment organic revenue. The company aims to roll out the platform across the regulated waste and compliance services segment in 2022, and Fitch sees a high degree of risk that similar challenges will persist. The challenges are likely to be near-term in nature, however; severe disruptions that extend the implementation timeline, higher costs or lower revenues are a lingering concern. Weaker Near-Term Profitability: The ratings consider Fitch's near-term expectations that EBITDA margins will decline to around 18% in 2021, from 19% in 2020, and will remain around 18% through 2022. The expectation considers the incremental ERP system costs, risk of continue implementation challenges, and unfavorable effects of cost inflation. Fitch anticipates FCF margins around the mid-single digits over the next couple years but continues to watch cash costs items such as ERP implementation, legal settlements, and backed up capex spend that could pressure or add volatility to FCF. Steady Near-Term Leverage: Fitch expects adjusted debt/EBITDAR to remain around the low-4.0x range in 2021 and 2022, similar to 4.3x at FYE2020. The expectation assumes continued margin pressures, which are moderated by SRCL's focus on debt repayment. Traditional debt/EBITDA is expected to be around the mid-3x in 2021. The expectation places SRCL's leverage profile as higher than the larger solid waste peers yet within its thresholds for the 'BB' rating. Developing Financial Policies: SRCL's new management team has remained committed to deleveraging, utilizing FCF and divestiture proceeds. As the company moves closer to its target leverage level, new capital deployment priorities are on the horizon. While Fitch does not anticipate a deviation from its leverage range, a shift over time to aggressively pursue M&A or capital returns could pressure financial flexibility. Established Market Position: SRCL holds the top or a leading market position in main end markets, including medical waste and paper shredding services. Its competitive position is supported by its broad network of complementary services, regulatory know-how and established reputation. Despite its leading position, competition is often local, where small competitors may compete on price. Core Business Cyclicality: SRCL generally benefits from recurring demand dynamics associated with the routine and scheduled services for medical waste collection and document shredding. While the secure information destruction segment experienced a deep downturn in 2020 due to closed office spaces, the business is not expected to be particularly sensitive to normal business cycles. It has lengthy contract durations of around 3-5 years for the majority of its customers. It has also divested of more volatile business such as environmental solutions and the recall business in 2020 as well as implemented risk-sharing surcharges to soften swings in recycled paper prices. DERIVATION SUMMARY Fitch compares SRCL to the large municipal solid waste firms Waste Management (WM; BBB+), Waste Connections (WCN; BBB+) and Republic Services (RSG; BBB). Fitch views SRCL's business profile as relatively weaker than these peers due to the concentration in end markets, higher risk of competitive pressures, and remaining execution risks. Fitch expects adjusted debt/EBITDAR in the low-4.0x range versus debt/EBITDA of about 3.0x for RSG and the mid-to-high 2.0x for WM and WCN. Fitch also believes SRCL's FCF margin will range in the mid-single digits over the next few years, a similar level to WM and WCN and well below WCN's of over 10%. KEY ASSUMPTIONS -- Flat overall growth in 2021 with mid-single digit organic growth more than offset by divestitures; -- Low-single digit in 2022 with mid-single digit secure information destruction revenue, moderated by fairly flat RWCS revenue which Fitch assumes will face some headwinds from lower COVID-related revenue and challenges implementing the ERP system; -- EBITDA margins decline to around 18% for FY2021, from about 19% 9Mo YTD, and remain fairly steady in 2022 while it faces higher costs associated with the ERP system as well as persistent cost inflation; -- Capital expenditures are around $120 million in 2021 then step ups, assuming postponed spending returns in 2022; -- SRCL remains dedicated to reaching its net leverage target of under 3.0x. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Strong business transformation performance, deleveraging divestitures and/or a dedicated financial policy leads to maintaining Adj. debt/ EBITDAR sustained below 4.25x; -- FCF margin sustainably above the mid-single digits; -- Good indications of strong execution against ERP implementation and other key initiatives that leads to a higher confidence in future performance. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Beyond the near term, continued margin pressures or a less conservative financial policy leads to maintaining Adj. debt/EBITDAR above 5.0x; -- EBITDA and/or FCF margin sustained below the mid-teens and below the mid-single digits, respectively; -- Substantial strategic changes under the new leadership team lead to a deterioration in its credit profile. 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 As of Sept. 30, 2021, SRCL's liquidity was approximately $651 million and consisted of $38 million of cash and $752 million of availability under its $1.2 billion revolving credit facility, after considering borrowings and letters of credit. The $600 million of senior unsecured notes due 2024 matures first. Fitch has capitalized operating leases at 8x reflecting the high proportion of leased assets utilized in SRCL's service network. The multiple is based on the high proportion of operations in the U.S. and Canada and Fitch's conservative assumption that leased assets have long economic lives. The approach is intended to adjust for differences in financing decisions between SRCL and other waste companies that typically have a relatively low proportion of leased assets within their network ISSUER PROFILE Stericycle is a leading provider of regulated medical waste and document shredding services. It operates a network of collection, processing and recycling assets across the U.S. and certain international regions. It primarily services medical and commercial end markets. SUMMARY OF FINANCIAL ADJUSTMENTS Fitch has made no material adjustments that are not disclosed within the company's filings. 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. T2 BIOSYSTEMS: Issues Going-Concern Warning ------------------------------------------- T2 Biosystems, Inc., warned in a recent filing with the U.S. Securities and Exchange Commission that substantial doubt exists about the Company's ability to continue as a going concern for a period of at least the next 12 months. At September 30, 2021, the Company had cash, cash equivalents, marketable securities and restricted cash of $43.6 million, an accumulated deficit of $460.1 million, stockholders' deficit of $2.5 million, and has experienced cash outflows from operating activities over the past years. The future success of the Company is dependent on its ability to successfully commercialize its products, obtain regulatory clearance for and successfully launch its future product candidates, obtain additional capital and ultimately attain profitable operations. Historically, the Company has funded its operations primarily through its August 2014 initial public offering, its December 2015 public offering, its September 2016 private investment in public equity ("PIPE") financing, its September 2017 public offering, its June 2018 public offering, its July 2019 establishment of an Equity Distribution Agreement and Equity Purchase Agreement, its March 2021 establishment of an Equity Distribution Agreement, private placements of redeemable convertible preferred stock and through debt financing arrangements. The Company said the COVID-19 pandemic has impacted and may continue to impact operations. The Company has established protocols for continued manufacturing, distribution and servicing of its products with safe social distancing and personal protective equipment measures and for remote work for certain employees not essential to on-site operations. To date these measures have been mostly successful but may not continue to function should the pandemic escalate and impact personnel. The Company has a significant development contract with the Biomedical Advanced Research and Development Authority and should BARDA reduce, cancel or not grant additional milestone projects, the Company's ability to continue its future product development may be impacted. The ability of the Company's shipping carriers to deliver products to customers may be disrupted. The Company has reviewed its suppliers and quantities of key materials and believes that it has sufficient stocks and alternate sources of critical materials including personal protective equipment should the supply chains become disrupted, although raw materials and plastics for the manufacturing of reagents and consumables are in high demand, and interruptions in supply are difficult to predict. At the onset of the pandemic, the Company believed the pandemic's impact on its sales would affect the recoverability of the value of T2-owned instruments and components. In early 2020, the COVID-19 pandemic also caused the Company to reassess its build plan and evaluate its inventories accordingly, which resulted in an additional charge to cost of product revenue for excess inventories. The Company also disclosed that since FDA authorization was obtained to market the T2Dx Instrument, T2Candida Panel, and T2Bacteria Panel, and EUA was issued for the T2SARS-CoV-2 Panel, it has incurred significant commercialization expenses related to product sales, marketing, manufacturing and distribution. The Company may seek to fund its operations through public equity, private equity or debt financings, as well as other sources. However, the Company may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms, or at all. The Company's failure to raise capital or enter into such other arrangements if and when needed would have a negative impact on the Company's business, results of operations, financial condition and the Company's ability to develop and commercialize T2Dx, T2Candida, T2Bacteria, T2SARS-CoV-2, and other product candidates. While the Company believes that its cash, cash equivalents, marketable securities and restricted cash of $43.6 million at September 30, 2021 will be sufficient to fund its current operating plan at least one year from issuance of these financial statements, certain elements of our operating plan cannot be considered probable. The future receipt of potential funding from Co-Development partners and other resources cannot be considered probable at this time because none of the plans are entirely within the Company's control. The Company also noted that the Term Loan Agreement with CRG Servicing LLC has certain covenants which require the Company to achieve certain annual revenue targets, whereby the Company is required to pay double the amount of any shortfall as an acceleration of principal payments, and maintain a minimum cash balance of $5.0 million. In June 2021, the Company achieved the revenue target for the 24-month period ended December 31, 2021. While management believes the Company can continue as a going concern for at least one year from issuance of these financial statements, there can be no assurances that it will continue to be in compliance with the cash covenant in future periods without additional funding. The Company intends to continue to evaluate options to refinance the Term Loan Agreement, which becomes due on December 30, 2022. There can be no assurances that the Company will be able to refinance on terms favorable or at all. The amounts involved in any such transactions, individually or in the aggregate, may be material. The Company further noted that its stock has been trading under $1.00. Should the Company's stock continue to trade under $1.00 through November 8, 2021, the Company is at risk of receiving a letter from The Nasdaq Stock Market LLC, as that would be the 30th consecutive business day on which the Company's common stock will have closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Global Market under Nasdaq Listing Rule 5450(a)(1). Under Nasdaq rules, the Company has 180 days to regain compliance by increasing the stock price to over $1.00. Remediation plans could include requesting a reverse stock split of shareholders. "These conditions raise substantial doubt regarding the Company's ability to continue as a going concern for a period of one year after the date that the financial statements are issued," the Company said. "Management's plans to alleviate the conditions that raise substantial doubt include raising additional funding, earning payments pursuant to the Company's Co-Development agreements, delaying certain research projects and capital expenditures and eliminating certain future operating expenses in order to fund operations at reduced levels for the Company to continue as a going concern for a period of 12 months from the date the financial statements are issued. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources or adequately reduce expenditures, while reasonably possible, is less than probable." T2 Biosystems, Inc. and its subsidiary have operations based in Lexington, Massachusetts. The Company is an in vitro diagnostics company that has developed an innovative and proprietary technology platform that offers a rapid, sensitive and simple alternative to existing diagnostic methodologies. T2 Biosystems $70 million in total assets against $72.4 million in total liabilities as of September 30, 2021. For the quarterly period ended September 30, 2021, T2 Biosystems posted a net loss of $13.9 million compared to a net loss of $11.2 million for the same period in 2020. TELIGENT INC: Unsecured Creditors Balk at Steep Roll-Up of Ares --------------------------------------------------------------- Teligent Inc.'s unsecured creditors are opposing the Debtor's bid to secure financing from existing lenders led by Ares Capital due to the proposed roll-up of existing debt. Teligent scored some cash from its existing lenders -- affiliates of Ares -- on the condition that older debt be elevated in the capital stack. "On the eve of bankruptcy, the Secured Lenders -- likely understanding what was to come -- created a liquidity crisis with the Debtors by forcing the Debtors to repay them $10 million. Now, only a few weeks later, the Debtors come to this Court asking for extraordinary relief to not only fix the liquidity problems the Secured Lenders created, but to actually reward their machinations by putting more money in their pockets and improving their pre-petition position. Specifically, the proposed DIP facility includes, among other draconian terms, separate roll-ups of the First Lien Lenders' and Second Lien Lenders' prepetition debt totaling $42.7 million, liens on avoidance actions and other previously unencumbered assets, and impossibly tight sale milestones -- all in return for only $12 million in "new" money, $10 million of which the First Lien Lenders took from the Debtors right before the filing. For many reasons, the Court should reject the invitation to grant the Secured Lenders the extraordinary relief sought here that would harm the Debtors, their estates, and all of their other creditors," the Official Committee of Unsecured Creditors said in its objection to the Debtors' motion seeking approval of the financing. According to the Creditors Committee, although the DIP Motion did not disclose the amount of accrued interest included in the proposed roll-up of the Second Lien Lenders' claims, the Debtors have told the Committee that it is more than $8.3 million. The Debtors are therefore proposing to roll-up more than $26.3 million of the Second Lien Lenders' prepetition debt, in addition to the First Lien Lenders' entire $16.4 million prepetition claim. "The proposed roll-ups are unfair and unreasonable. The Debtors cite no case and the Committee has been unable to find one where a Court approved a roll-up, much less two, in a liquidating chapter 11 where the debtor has ceased its core-business operations (here, the manufacturing of pharmaceutical products) and was running a sale process for the benefit of secured creditors. And there is no basis for making this case the first of its kind. Under the DIP proposal, in return for $12 million (only $2 million of which is truly new money), the Debtors are required to roll-up at least $42.7 million of prepetition debt—nearly quadruple the amount of "new" money the Secured Lenders are providing. And if one takes into account that the lenders are simply relending the $10 million they took on the eve of bankruptcy, the roll-up is 21.3 times the value of the DIP Financing. None of the cases the Debtors cite in the DIP Motion approved a roll-up ratio so skewed," the Committee tells the Court. About Teligent Inc. Teligent, Inc., a specialty generic pharmaceutical company, develops, manufactures, markets, and sells generic topical, branded generic, and generic injectable pharmaceutical products in the United States and Canada. The company was formerly known as IGI Laboratories, Inc. and changed its name to Teligent, Inc. in October 2015. Teligent, Inc. was founded in 1977 and is based in Buena, N.J. Teligent and three affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11332) on Oct. 14, 2021. The cases are handled by Judge Brendan Linehan Shannon. As of Aug. 31, 2021, Teligent had total assets of $85 million and total debt of $135.8 million. The Debtors tapped Young Conaway Stargatt & Taylor, LLP and K&L Gates, LLP as legal counsel; Raymond James & Associates, Inc., as investment banker; PharmaBioSource Realty, LLC as real estate consultant; and Portage Point Partners, LLC as restructuring advisor. Vladimir Kasparov of Portage Point Partners serves as the Debtors' chief restructuring officer. Epiq Corporate Restructuring, LLC is the claims and noticing agent and administrative advisor. TWO'S COMPANY: Taps Business Consultants as Accountant ------------------------------------------------------ Two's Company Restaurant & Lounge, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Wisconsin to employ Business Consultants as accountant. The firm's services include payroll services, tax preparation, cash flow analysis and projections, and the preparation of reports, balance statements profit and loss statements. The firm will be paid $200 per month for routine accounting and payroll services, and $100 per hour for additional services. Jeffrey Brown, a partner at Business Consultants, 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. About Two's Company Restaurant & Lounge Two's Company Restaurant & Lounge, LLC filed a petition for Chapter 11 protection (Bankr. W.D. Wisc. Case No. 21-12177) on Oct. 22, 2021, listing up to $500,000 in assets and up to $1 million in liabilities. The Debtor is represented by Goyke & Tillisch, LLP. UNITI GROUP: Posts $43.7 Million Net Income in Third Quarter ------------------------------------------------------------ Uniti Group Inc. reported net income of $43.68 million on $266.75 million of total revenues for the three months ended Sept. 30, 2021, compared to net income of $7.46 million on $258.77 million of total revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported net income of $88.82 million on $807.51 million of total revenues compared to a net loss of $671.14 million on $791.75 million of total revenues for the same period during the prior year. As of Sept. 30, 2021, the Company had $4.78 billion in total assets, $6.90 billion in total liabilities, and a total shareholders' deficit of $2.12 billion. At quarter-end, the Company had approximately $450 million of unrestricted cash and cash equivalents, and undrawn borrowing availability under its revolving credit agreement. The Company's leverage ratio at quarter-end was 5.76x based on Net Debt to Annualized Adjusted EBITDA. On Nov. 4, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.15 per common share, payable on Jan. 3, 2022, to stockholders of record on Dec. 17, 2021. "Uniti continues to perform exceptionally well as evidenced by the second consecutive quarter of consolidated bookings of approximately $1.0 million in monthly recurring revenue, representing an increase of 90% from consolidated bookings in the third quarter of 2020. We continue to emphasize driving high margin recurring revenue while managing our capital intensity and industry leading monthly churn levels of 0.3%," commented Kenny Gunderman, president and chief executive officer. Mr. Gunderman continued, "Given these trends along with lower than expected operational costs, and the impact of our recent unsecured notes issuance, we are revising the mid-point of our full year 2021 outlook ranges." A full-text copy of the press release is available for free at: https://www.sec.gov/Archives/edgar/data/0001620280/000156459021054258/unit-ex991_26.htm About Uniti Headquartered in Little Rock, Arkansas, Uniti -- http://www.uniti.com-- is an internally managed real estate investment trust. It is engaged in the acquisition and construction of mission critical communications infrastructure, and is a provider of wireless infrastructure solutions for the communications industry. As of September 30, 2021, Uniti owns approximately 126,000 fiber route miles, 7.5 million fiber strand miles, and other communications real estate throughout the United States. Uniti Group reported a net loss of $718.81 million for the year ended Dec. 31, 2020, compared to net income of $10.91 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $4.75 billion in total assets, $6.88 billion in total liabilities, and a total shareholders' deficit of $2.13 billion. * * * In March 2020, S&P Global Ratings placed all ratings on U.S. telecom REIT Uniti Group Inc., including the 'CCC-' issuer credit rating, on CreditWatch with positive implications. The CreditWatch placement follows the company's announcement it reached an agreement in principle with its largest tenant Windstream Holdings Inc. to resolve all legal claims it asserted against Uniti in the context of Windstream's bankruptcy proceedings. URBAN ONE: Posts $13.9 Million Net Income in Third Quarter ---------------------------------------------------------- Urban One, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing consolidated net income attributable to common stockholders of $13.88 million on $111.46 million of net revenue for the three months ended Sept. 30, 2021, compared to a consolidated net loss attributable to common stockholders of $12.77 million on $91.91 million of net revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported consolidated net income attributable to common stockholders of $31.75 million on $310.50 million of net revenue compared to a consolidated net loss attributable to common stockholders of $34.54 million on $262.80 million of net revenue for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $1.24 billion in total assets, $972.37 million in total liabilities, $17.02 million in redeemable noncontrolling interests, and $248.15 million in total stockholders' equity. Alfred C. Liggins, III, Urban One's CEO and president stated, "We had another very strong quarter, driven by double-digit advertising revenue growth in core radio, digital and Cable TV. Our digital and national syndication businesses are benefiting from continued high demand from major advertisers for our audience on a national level, and our core radio business, excluding political, increased by approximately 35% year over year. Our diversified mix of assets has helped us rebound to Adjusted EBITDA levels that exceed those of 2019, and I now feel comfortable increasing full year guidance to in the $140 - $145 million range, up from the mid $130s. Our Richmond, Virginia, One Casino and Resort project was narrowly defeated in the city referendum on November 2nd, which was both unexpected and disappointing given the substantial economic benefits we believe the project would have brought to the city. We are considering our next steps and will continue to pursue similar opportunities." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001041657/000155837021014535/uone-20210930x10q.htm About Urban One Headquartered in Silver Spring, Maryland, Urban One, Inc. (together with its subsidiaries) -- www.urban1.com -- is an urban-oriented, multi-media company that primarily targets African-American and urban consumers. The Company's core business is its radio broadcasting franchise which is the largest radio broadcasting operation that primarily targets African-American and urban listeners. As of Sept. 30, 2021, the Company owned and/or operated 63 independently formatted, revenue producing broadcast stations (including 54 FM or AM stations, 7 HD stations, and the 2 low power television stations it operates) branded under the tradename "Radio One" in 13 urban markets in the United States. Through its controlling interest in Reach Media, Inc. (blackamericaweb.com), the Company also operates syndicated programming including the Rickey Smiley Morning Show, the Russ Parr Morning Show and the DL Hughley Show. Urban One received notice from The Nasdaq Stock Market, Inc. that as a result of the resignation of Geoffrey Armstrong as a director of the Company effective Nov. 23, 2020 the Company was no longer in compliance with Nasdaq's audit committee requirements as set forth in Nasdaq Marketplace Rule 5605 since Mr. Armstrong had been a member of the audit committee. Urban One reported a consolidated net loss attributable to common stockholders of $8.11 million for the year ended Dec. 31, 2020. As of March 31, 2021, the Company had $1.17 billion in total assets, $957.19 million in total liabilities, $12.74 million in redeemable noncontrolling interests, and $198.83 million in total stockholders' equity. VINE ENERGY: Moody's Hikes Rating on Senior Unsecured Notes to B1 ----------------------------------------------------------------- Moody's Investors Service upgraded Vine Energy Holdings LLC's (VEH) senior unsecured notes rating to B1 from B3 following the completion[1] of Chesapeake Energy Corporation's (Chesapeake) acquisition of Vine Energy Inc. (VEI), the parent company of VEH. Concurrently, Moody's withdrew VEH's B2 Corporate Family Rating and its B2-PD Probability of Default Rating. Following the consummation of the merger, Chesapeake legally assumed VEH's senior unsecured notes. This rating action concludes the review of VEH's ratings initiated on August 11, 2021. Upgrade: Issuer: Vine Energy Holdings LLC Senior Unsecured Regular Bond/Debenture, Upgraded to B1 (LGD4) from B3 (LGD4) Withdrawals: Issuer: Vine Energy Holdings LLC Corporate Family Rating, Withdrawn from B2 Probability of Default Rating, Withdrawn from B2-PD Speculative Grade Liquidity Rating, Withdrawn from SGL-2 Outlook Actions: Issuer: Vine Energy Holdings LLC Outlook, Stable From Rating Under Review RATINGS RATIONALE Through the execution of supplemental indentures, Chesapeake has legally assumed VEH's senior unsecured notes due 2029 and provided subsidiary guarantees making the VEH senior notes pari passu with Chesapeake's outstanding senior notes. As a result the VEH senior notes were upgraded to B1 from B3 , the same rating as Chesapeake's senior notes. Chesapeake repaid all of VEH's other debts outstanding, and therefore VEH's CFR and PDR were withdrawn. Chesapeake's Ba3 Corporate Family Rating (CFR) reflects its large, low-cost natural gas positions in the Marcellus and Haynesville shale plays, low financial leverage following its restructuring and the ability to generate significant free cash flow at most points in the natural gas price cycle. The acquisition of Vine boosts Chesapeake's scale in its Haynesville operations and provides opportunities for transportation and operating efficiencies, further strengthening the company's position in that basin and solidifying its operations there as a second major asset underpinning its strategic shift to a natural gas focus. The moderately leveraging acquisition of Vine, while positive for Chesapeake's credit profile, does not affect its ratings. Chesapeake's oilier South Texas, Brazos Valley and Powder River assets provide attractive oil optionality in an environment in which oil prices are sustainably greater than $60/bbl. Moody's has historically viewed Chesapeake's financial policy as aggressive, though many of the actions it took in recent years were necessitated by its then burdensome debt load. Chesapeake's senior notes are rated B1, one notch beneath the company's Ba3 CFR, reflecting the notes' junior priority claim on assets to borrowings under the revolving credit facility and the large size of the secured revolver, relative to the notes. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Chesapeake's ratings could be upgraded if the company can achieve production growth while maintaining a Leveraged Full-Cycle Ratio above 1.5x. Ratings could be downgraded if Leveraged Full-Cycle Ratio falls below 1x, RCF/debt falls toward 30%, or if the company returns to materially outspending cash flow. The principal methodology used in these ratings was Independent Exploration and Production published in August 2021. Vine Energy Holdings LLC is a wholly owned subsidiary of Cheseapeake Energy Corporation. Chesapeake is based in Oklahoma City, Oklahoma and is a large independent exploration and production (E&P) company operating in several onshore US basins. W.R. GRACE: Moody's Assigns B1 Rating to Senior Secured Notes ------------------------------------------------------------- Moody's Investors Service has assigned a B1 rating to W.R. Grace Holdings LLC's (Grace) 5.625% senior secured notes due 2024 and 4.875% senior secured notes due 2027 following the completion of the exchange offer for the 5.625% senior unsecured notes due 2024 and 4.875% senior unsecured notes due 2027. W.R. Grace Holdings LLC's B2 Corporate Family Rating B2-PD Probability of Default Rating, B1 rating on the first lien senior secured term loan due 2028, B1 rating on the senior secured revolving credit facility maturing 2026 and B3 rating on the senior unsecured notes due 2029 remain unchanged. The outlook is stable. The ratings on W.R. Grace & Co.-Conn., including the Ba3 CFR, Ba3-PD and B1 ratings for the negligible amount of the remaining, unexchanged senior unsecured notes have been withdrawn as the first lien debt has been repaid following the completion of the merger. "The rating assigned to the secured notes reflects the conclusion of the exchange offer and their improved position in the capital structure as they now share the collateral package with the first lien credit facilities," said Domenick R. Fumai, Moody's Vice President and lead analyst for W.R. Grace Holdings LLC. Assignments: Issuer: W.R. Grace Holdings LLC Senior Secured Regular Bond/Debenture, Assigned B1 (LGD3) RATINGS RATIONALE Grace's B2 rating is constrained by Moody's expectations that although leverage will decline from current levels, it will remain elevated. The rating further incorporates Moody's view that Grace will maintain an aggressive financial policy under its new owners, which includes a willingness to incur debt to fund strategic acquisitions and prioritize shareholder-friendly activities. The rating factors modest business diversity with a significant emphasis on catalysts, though Moody's believes the acquisition of Fine Chemistry Services and strategic tuck-in acquisitions in Material Technologies will further reduce its dependence on catalysts. The B2 rating is supported by strong market positions in several key end markets, including the leader in the global refining catalysts and polyolefin catalyst industries, specialty silica gels, and independent polypropylene licensing technologies. Grace's rating is further underpinned by significant R&D capabilities and favorable industry prospects due to increased global environmental regulations and policies, a focus on sustainability initiatives, as well as positive demographic trends. Grace's business profile also benefits from high barriers to entry, a good operating track record with attractive EBITDA margins, and the ability to generate free cash flow through economic cycles compared to a number of comparably rated peers in the chemical industry. The rating also considers the company's good liquidity position. Grace has a good liquidity profile to support operations in the near term, including approximately $312 million of balance sheet cash and roughly $392 million of availability under its $450 million revolving credit facility as of June 30, 2021. Moody's does expect Grace to maintain more moderate cash balances going forward, though this is partially mitigated by expectations that the proposed $450 million revolving credit facility will remain largely undrawn. The debt capital structure is comprised of a first lien term loan, first lien senior secured revolving credit facility, 5.625% senior secured notes due 2024, 4.875% senior secured notes due 2027 and 5.625% senior unsecured notes due 2029. The B1 ratings on the first lien term loan, revolving credit facility and senior secured notes, one notch above the B2 CFR, reflect a first lien position on substantially all assets and priority ranking in the event of default. The B3 rating on the senior unsecured notes, one notch below the CFR, indicates their subordination as a result of the significant amount of first lien debt in the capital structure. ESG CONSIDERATIONS Moody's has factored environmental, social and governance risks in Moody's assessment of W.R. Grace's credit profile. Similar to many specialty chemical companies, Grace has high environmental risk. Grace's estimated liability related to legacy environmental response costs totaled approximately $109 million as of December 31, 2020. On the other hand, social risks are considered low to average. Grace has made significant investments including research and development of products such as catalysts that are beneficial to reducing emissions. A growing percentage of the company's sales are tied to sustainability objectives and are positive for both environmental and social causes. Grace is also focusing on incorporating sustainability into their own operations, with strategic initiatives to lower greenhouse gas emissions by 22%, reduce water consumption by 10% and waste by 5% from a 2019 baseline by 2030. Governance risks are above average as Grace will become a private company with a lack of a majority of independent board members, will not be required to file public financial statements and will be controlled by new owners that have an aggressive financial policy. The stable outlook assumes that Grace will successfully de-lever over the next 2-3 years as profitability recovers and the Fine Chemistry Services acquisition is efficiently integrated contributing to additional revenue and EBITDA. Moody's also expects Grace to maintain a good liquidity position during the rating horizon. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS An upgrade is unlikely at this time, but Moody's could upgrade the rating with expectations for adjusted financial leverage sustained near 5.5x (Debt/EBITDA), retained cash flow-to-debt sustained above 15% (RCF/Debt) and more balanced financial policies that include gross debt reduction and a commitment from its owners to a more conservative financial policy. An upgrade would also assume a reduction in event risk such that the size of future acquisitions would not raise pro forma leverage meaningfully above 5.0x for a sustained period. Moody's could downgrade the rating with expectations for adjusted financial leverage sustained above 6.5x, or retained cash flow-to-debt sustained below 10%, a significant deterioration in the company's liquidity position, or another large debt-financed acquisition or dividend to shareholders. The principal methodology used in these ratings was Chemical Industry published in March 2019. Headquartered in Columbia, MD, W.R. Grace Holdings LLC is the parent of W.R. Grace & Co., a manufacturer of specialty chemicals and materials operating and/or selling in over 60 countries. The company has two reporting segments: Catalysts Technologies and Materials Technologies. Catalysts Technologies is a globally diversified business that includes refining, polyolefin and chemicals catalysts. Materials Technologies includes specialty materials such as silica-based and silica-alumina-based materials used in consumer/pharmaceutical, chemical processes and coatings applications. On April 26, 2021 W.R. Grace agreed to be acquired by Standard Industries Holdings Inc. for $7.0 billion. Grace generated approximately $1.73 billion of sales for the year ended December 31, 2020. YUNHONG CTI: Closes Redemption of Equity Interest in Flexo ---------------------------------------------------------- As previously reported by Yunhong CTI Ltd. in its Current Report on Form 8-K dated Aug. 5, 2021, on July 30, 2021, the company entered into an agreement whereby it agreed to the redemption of all of its equity interests in Flexo Universal S DE RL DE CV, a Mexican corporation, in a transaction whereby the buyer Kingman Distributions, S.A. DE C.V, a Mexican corporation would become the majority owner of Flexo. The transaction closed on Oct. 28, 2021. At closing, Flexo purchased and redeemed all of the company's equity interests in Flexo in return for a purchase price of $500,000, of which $100,000 was paid at the closing of the transaction, and the remainder will be paid in installments over 12 months following the closing date. The installment obligations are secured by a pledge of the assets of Flexo, as well as by guaranties provided by Kingman and Pablo Gortazar, an individual with an ownership interest in Flexo, pursuant to a Guaranty and Security Agreement entered into among Yunhong, Kingman, Flexo and Mr. Gortazar at the closing. About Yunhong CTI Lake Barrington, Illinois-based Yunhong CTI Ltd. -- www.ctiindustries.com -- develops, produces, distributes and sells a number of consumer products throughout the United States and in over 30 other countries, and it produces film products for commercial and industrial uses in the United States. Many of the Company's products utilize flexible films and, for a number of years, it has been a leading developer of innovative products which employ flexible films including novelty balloons, pouches and films for commercial packaging applications. Yunhong CTI reported a net loss of $4.25 million for the 12 months ended Dec. 31, 2020, compared to a net loss of $8.07 million for the 12 months ended Dec. 31, 2019. As of June 30, 2021, the Company had $24.48 million in total assets, $18.22 million in total liabilities, and $6.26 million in total shareholders' equity. New York, NY-based RBSM LLP, the Company's auditor since 2019, issued a "going concern" qualification in its report dated April 15, 2021, citing that the Company has suffered recurring losses from operations and will require additional capital to continue as a going concern. In addition, the Company is in violation of certain covenants agreed to with PNC Bank which if not resolved could result in PNC Bank initiating liquidation proceedings. This raises substantial doubt about the Company's ability to continue as a going concern. [*] Commercial Chapter 11 Filings Up 21.1% in October 2021 ---------------------------------------------------------- Epiq, a global leader in legal services, released its October 2021 bankruptcy filing statistics from its AACER bankruptcy information services business. October new filings for all chapters increased 1.8% to 31,471, up from 30,920 in September 2021. Total individual Chapter 13 filings were up 8.6% over September, with 10,764 new filings compared to 9,909 filings in September 2021. Total individual Chapter 7 filings were down 1.9% over September, with 18,874 new filings compared to 19,942 in the prior month. "Although October had one less business day than September, October 2021 filings were up 1.8% month-over-month. However, new filings remain significantly lower than the comparable pre-COVID number of 67,878 for all chapter new filings in October 2019," said Chris Kruse, senior vice president of Epiq AACER. Chapter 13 individual filings increased for the fifth consecutive month, growing 33% since May 2021 when 8,079 new cases were filed. However, these filing rates remain 55% below the comparable 23,688 pre-COVID new filings in October 2019. The five states leading the October individual Chapter 13 new filings include Georgia, Alabama, Florida, Tennessee, and Illinois. Total Commercial Chapter 11 filings in October increased by 21.1% with a total of 293, compared to 242 new filings in September 2021. As a subset of the total new Chapter 11 commercial filings, Chapter 11 Subchapter V filings were up 16.7% with 84 new filings, compared to 72 new filings in September 2021. About Epiq AACER Epiq AACER is your partner for bankruptcy information and compliance. Its AACER bankruptcy information services platform is built with superior data, technology and expertise to create insight and mitigate risk for businesses impacted by bankruptcies. It offers free bankruptcy statistics and monthly email updates for both commercial and non-commercial consumer bankruptcy filings for Chapter 7, Chapter 11 and Chapter 13 cases. About Epiq Epiq, a global technology-enabled services leader to the legal services industry and corporations, takes on large-scale, increasingly complex tasks for corporate counsel, law firms, and business professionals with efficiency, clarity, and confidence. Clients rely on Epiq to streamline the administration of business operations, class action and mass tort, court reporting, eDiscovery, regulatory, compliance, restructuring, and bankruptcy matters. Epiq subject-matter experts and technologies create efficiency through expertise and deliver confidence to high-performing clients around the world. Learn more at https://www.epiqglobal.com. [^] BOND PRICING: For the Week of November 1 to 5, 2021 ------------------------------------------------------- Company Ticker Coupon Bid Price Maturity ------- ------ ------ --------- -------- BPZ Resources Inc BPZR 6.500 3.017 3/1/2049 Basic Energy Services Inc BASX 10.750 7.250 10/15/2023 Basic Energy Services Inc BASX 10.750 15.125 10/15/2023 Buffalo Thunder Development Authority BUFLO 11.000 50.000 12/9/2022 Carlson Travel Inc CARLTV 11.500 3.022 12/15/2026 Carlson Travel Inc CARLTV 11.500 34.500 12/15/2026 Endo Finance LLC ENDP 5.750 92.875 1/15/2022 Endo Finance LLC ENDP 5.750 94.095 1/15/2022 Energy Conversion Devices ENER 3.000 7.875 6/15/2013 Energy Future Competitive Holdings Co LLC TXU 0.943 0.072 1/30/2037 Flexential Intermediate Corp PEAKTE 11.250 108.625 8/1/2024 Flexential Intermediate Corp PEAKTE 11.250 108.375 8/1/2024 GNC Holdings Inc GNC 1.500 1.250 8/15/2020 GTT Communications Inc GTTN 7.875 11.064 12/31/2024 GTT Communications Inc GTTN 7.875 10.250 12/31/2024 Goodman Networks Inc GOODNT 8.000 38.000 5/11/2022 MAI Holdings Inc MAIHLD 9.500 19.090 6/1/2023 MAI Holdings Inc MAIHLD 9.500 19.125 6/1/2023 MAI Holdings Inc MAIHLD 9.500 19.090 6/1/2023 MBIA Insurance Corp MBI 11.384 11.500 1/15/2033 MBIA Insurance Corp MBI 11.384 10.202 1/15/2033 MF Global Holdings Ltd MF 9.000 15.625 6/20/2038 MF Global Holdings Ltd MF 6.750 15.625 8/8/2016 Nine Energy Service Inc NINE 8.750 53.615 11/1/2023 Nine Energy Service Inc NINE 8.750 52.931 11/1/2023 Nine Energy Service Inc NINE 8.750 52.931 11/1/2023 OMX Timber Finance Investments II LLC OMX 5.540 0.829 1/29/2020 Renco Metals Inc RENCO 11.500 24.875 7/1/2003 Revlon Consumer Products Corp REV 6.250 44.753 8/1/2024 Riverbed Technology Inc RVBD 8.875 67.500 3/1/2023 Riverbed Technology Inc RVBD 8.875 67.500 3/1/2023 Rolta LLC RLTAIN 10.750 1.121 5/16/2018 Sears Holdings Corp SHLD 6.625 0.955 10/15/2018 Sears Holdings Corp SHLD 6.625 1.613 10/15/2018 Sears Roebuck Acceptance SHLD 7.500 1.160 10/15/2027 Sears Roebuck Acceptance SHLD 6.750 1.096 1/15/2028 Sears Roebuck Acceptance SHLD 7.000 1.091 6/1/2032 Sears Roebuck Acceptance SHLD 6.500 1.086 12/1/2028 Sempra Texas Holdings TXU 5.550 13.500 11/15/2014 Talen Energy Supply LLC TLN 4.600 97.184 12/15/2021 TerraVia Holdings Inc TVIA 5.000 4.644 10/1/2019 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. On Thursdays, the TCR delivers a list of recently filed Chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. The Sunday TCR delivers securitization rating news from the week then-ending. TCR subscribers have free access to our on-line news archive. Point your Web browser to http://TCRresources.bankrupt.com/and use the e-mail address to which your TCR is delivered to login. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Jhonas Dampog, Marites Claro, Joy Agravante, Rousel Elaine Tumanda, Valerie Udtuhan, Howard C. Tolentino, Carmel Paderog, Meriam Fernandez, Joel Anthony G. Lopez, Cecil R. Villacampa, Sheryl Joy P. Olano, Psyche A. Castillon, Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and Peter A. Chapman, Editors. Copyright 2021. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $975 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Peter A. Chapman at 215-945-7000. *** End of Transmission ***