/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/211119.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, November 19, 2021, Vol. 25, No. 322 Headlines 340 BISCAYNE: Dec. 3 Plan & Disclosure Hearing Set 6446MB LLC: Taps Rosenberg, Cummings & Edwards as Special Counsel ABRAXAS PETROLEUM: Incurs $1.25 Million Net Loss in Third Quarter AFFILIATED PHYSICIANS: Appointment of Creditors' Committee Sought ALAMO BORDEN: Seeks Court Approval to Hire Bankruptcy Counsel ALLIED UNIVERSAL: Fitch Withdraws 'B' Issuer Default Rating ALPHA LATAM: Court Okays $149.5 Mil. Ch.11 Sale to CFG Partners AYTU BIOPHARMA: Incurs $27.9 Million Net Loss in First Quarter BCT DEALS: Seeks to Hire Michael Jay Berger as Bankruptcy Counsel BETTEROADS ASPHALT: Court Tosses Suit vs Jorge Diaz BIOSTAGE INC: Incurs $849K Net Loss in Third Quarter BLUE DOLPHIN: Incurs $2.9 Million Net Loss in Third Quarter BLUE JAY: Seeks Approval to Hire Gino Pulito as Special Counsel BOY SCOUTS: Abusing Bankruptcy System, Says Professor BOY SCOUTS: Accuses Pachulski Atty of Helping Taint Ch. 11 Vote BROWN JORDAN: S&P Places 'CCC+' ICR on CreditWatch Negative CALI RESTAURANT: Seeks to Hire Buddy D. Ford as Legal Counsel CALLAWAY GOLF: S&P Affirms 'B' ICR, Alters Outlook to Stable CAMDEN DIOCESE: Rebuffs Victims' Hiding Funds Claims CLEAR THE AIR: Combined Plan & Disclosures Confirmed by Judge COCRYSTAL PHARMA: Incurs $3.9 Million Net Loss in Third Quarter CURO GROUP: Moody's Affirms 'B3' CFR, Outlook Remains Stable CURO GROUP: S&P Lowers Senior Secured Notes Rating to 'CCC+ CYPRESS CREEK: Voluntary Chapter 11 Case Summary DEYO TRANSPORTATION: Unsecured Creditors to Recover 3% in 5 Years DIGI INTERNATIONAL: Moody's Assigns B2 Corp. Family Rating DIGI INTERNATIONAL: S&P Assigns 'B' ICR on Ventus Acquisition DITECH HOLDING: McChristian Claims vs Breckenridge Dismissed DURRIDGE COMPANY: Unsecured Claims Under $15K to Recover 23% EAGLE HOSPITALITY: Judge Mulls Jail for Chapter 11 Fraudsters EAGLEFORD RECYCLING: Seeks Approval to Hire Bankruptcy Counsel EHT US1 INC: Dist. Court Adopts Briefing Schedule in H. Wu Appeals ENTRUST ENERGY: Files Amendment to Disclosure Statement EXELA TECHNOLOGIES: Sets $105 Mil. SPV to Purchase Subsidiary Debt FIRSTCASH INC: Moody's Cuts CFR to Ba2 & Alters Outlook to Stable GROUPE SOLMAX: $100MM Term Loan Add-on No Impact on Moody's B2 CFR GVS TEXAS: Seeks to Hire Harney Partners as Financial Advisor HEMANI HOSPITALITY: Seeks to Tap Tucker Arensberg as Legal Counsel HERTZ CORP: Moody's Ups CFR to B2 & Rates New Unsecured Notes Caa1 HERTZ GLOBAL: S&P Upgrades ICR to 'BB-', Outlook Stable HHH FARMS: Fannin's Alter Ego Claims Remanded to Trial Court HILMORE LLC: Non-Insider Unsecureds to Be Paid in Full in Plan HUB INTERNATIONAL: Moody's Rates New $650MM Sr. Secured Notes 'B2' HUB INTERNATIONAL: S&P Rates $550MM Senior Unsecured Notes 'CCC+' IMPRIVATA INC: Fitch Affirms 'B+' LT IDR, Outlook Stable INTEGRATED DENTAL: Court OKs Sale of Implants, Dismisses Case INTELSAT SA: Plan to Halve Debt Faces Creditor Challenges INTERNATIONAL LAND: Incurs $642K Net Loss in Third Quarter J&J ROBINSON: Seeks to Tap Galles Properties as Real Estate Broker JAGUAR HEALTH: Incurs $12.2 Million Net Loss in Third Quarter KNB HOLDINGS: S&P Cuts ICR to 'CCC' on Deteriorating Liquidity LCAV ENTERPRISES: Court Confirms Amended Chapter 11 Plan LEDGE LLC: Case Summary & 2 Unsecured Creditors LEWISBERRY PARTNERS: Jan. 13, 2022 Plan Confirmation Hearing Set LIFETIME BRANDS: S&P Upgrades ICR to 'B+', Outlook Stable LIQUIDMETAL TECHNOLOGIES: Incurs $1.4-Mil. Net Loss in 3rd Quarter LOVE FAMILY: Taps Stichter, Riedel, Blain & Postler as Counsel LTL MANAGEMENT: Talc Claimants' Committee Taps Special Counsel MADDOX FOUNDRY: To Seek Plan Confirmation on Jan. 12 MALLINCKRODT PLC: Denies Manipulating Acthar Market MAPLE MANAGEMENT: Unsecureds be Paid in Full on or Before 4 Years MIDTOWN CAMPUS: To Seek Plan Confirmation on Dec. 20 MUSCLE MAKER: Incurs $433K Net Loss in Third Quarter MUSCLEPHARM CORP: Incurs $3.9 Million Net Loss in Third Quarter NETSMART LLC: S&P Alters Outlook to Positive, Affirms 'B-' ICR NEUTRAL POSTURE: Seeks to Hire Howley Law as Legal Counsel NEW ORLEANS ARCHDIOCESE: Will Pay Over $1Mil. for False FEMA Claims NIDA ALSHAIKH: Seeks Approval to Hire Accunet Pro as Accountant NITROCRETE LLC: Case Summary & 20 Largest Unsecured Creditors NUVERRA ENVIRONMENTAL: Incurs $7.2-Mil. Net Loss in Third Quarter ONEWEB GLOBAL: Paid Around $50M Investors' Fees for Bankruptcy Deal ORGANIC EVOLUTION: Seeks to Tap Behar, Gutt & Glazer as Counsel PALACE THEATER: Unsecured Creditors to Recover 100% in Plan PARKERVISION INC: Incurs $2.1 Million Net Loss in Third Quarter PERKY JERKY: Taps Wadsworth Garber Warner Conrardy as Counsel PINNEY INC: Updates Plan to Include AFC Unsecured Claim Pay Details POLAR POWER: Posts $942K Net Income in Third Quarter PROFESSIONAL DIVERSITY: Posts $81K Net Loss in Third Quarter PSS INDUSTRIAL: S&P Downgrades ICR to 'CCC-' on Limited Liquidity PURDUE PHARMA: Suit vs Insurers Stays in Bankruptcy Court PURDUE PHARMA: Urge Appeals Judge to Affirm Opioid Deal PWM PROPERTY: Lenders Say They Are Hostages in Chapter 11 PWM PROPERTY: NYC Tower Owner Asks Ch.11 Order for Doc Access QUANTUM VALVE: Trustee Taps Lain Faulkner & Co as Financial Advisor QUANTUM VALVE: Trustee Taps McDermott Will & Emery as Legal Counsel R. INVESTMENTS: Unsecureds to Get 125% of Allowed Claims in Plan REMARK HOLDINGS: Posts $72.75 Million Net Income in Third Quarter RIOT BLOCKCHAIN: Incurs $15.3 Million Net Loss in Third Quarter RIOT BLOCKCHAIN: Registers 7.9M Shares Under 2019 Incentive Plan RIVERBED PARENT: S&P Downgrades ICR to 'D' on Chapter 11 Filing RIVERBED TECHNOLOGY: Hopes 2nd Default Will End Financial Woes RIVERSTREET VENTURES: Plan Disclosures Inadequate, UST Says SARATOGA AND NORTH: Unsecureds Will Recover 5%-7% of Their Claims SCENIC 30A: Unsecured Claims Unimpaired in Plan SEIN DIVINE: Plan and Disclosure Statement Due Dec. 10 SG MCINTOSH: Business Income & $58K Contribution to Fund Plan SHURWEST LLC: Gets Approval to Hire Michael Carmel as Mediator SOUND HOUSING: Trustee Gets OK to Hire Richard Ginnis as Accountant STANTON GLENN: Taps Gamma Law Firm as Special Regulatory Counsel STATERA BIOPHARMA: Incurs $12.7 Million Net Loss in Third Quarter SUSGLOBAL ENERGY: Incurs $1.4 Million Net Loss in Third Quarter TAURIGA SCIENCES: Incurs $1.7 Million Net Loss in Second Quarter TBS INTERNATIONAL: 2d Cir. Affirms Dismissal of "Meimaris" Suit TENET HEALTHCARE: Fitch Rates First Lien Secured Notes 'B+' TG SERENITY: Unsecureds Will Recover 9% to 23.1% in Plan TOPGOLF INTERNATIONAL: S&P Affirms 'B-' Issuer Credit Rating TOWN SPORTS: SDNY Judge Dismisses Namorato Suit UNITED AIRLINES: Moody's Affirms Ba2 CFR, Outlook Remains Negative VALLEY HOSPICE: Gets OK to Hire Thomas G. Luikens as Legal Counsel VENTURE GLOBAL: Moody's Rates New $750MM Sr. Secured Notes 'Ba3' VENTURE GLOBAL: S&P Assigns 'BB' Rating on New 12-Year Sr. Notes VESTA ENERGY: S&P Upgrades ICR to 'CCC+', Off Watch Positive VPR BRANDS: Incurs $48,414 Net Loss in Third Quarter WALDEMAR LLC: Voluntary Chapter 11 Case Summary WATTSTOCK LLC: May Continue Business or Liquidate in 2-Option Plan WATTSTOCK LLC: Seeks to Tap Meadows Collier as Special Tax Counsel WILLIAM THOMAS JR: TDOT Bid to Dissolve Injunction OK'd WMG ACQUISITION: Moody's Affirms Ba3 CFR & Rates $535MM Notes Ba3 WMG ACQUISITION: S&P Rates New $535MM Senior Secured Notes 'BB+' WOODBRIDGE HOSPITALITY: Court Approves Disclosure Statement XENIA HOTELS: S&P Alters Outlook to Stable, Affirms 'B-' ICR Z REAL ESTATE: Seeks to Tap Richard Rodgers as Special Counsel ZAYAT STABLES: Trustee Says Ahmed's Brother Must Produce Info [^] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace ********* 340 BISCAYNE: Dec. 3 Plan & Disclosure Hearing Set -------------------------------------------------- 340 Biscayne Owner, LLC, filed with the U.S. Bankruptcy Court for the Southern District of Florida a motion seeking conditional approval of the Disclosure Statement. On Nov. 15, 2021, Judge Laurel M. Isicoff conditionally approved the Disclosure Statement and ordered that: * Dec. 3, 2021 at 9:30 a.m. at the United States Bankruptcy Court, 301 N. Miami Avenue, Courtroom 8, Miami, Florida 33128 is the hearing on final approval of the Disclosure Statement and confirmation of the Plan (the "Confirmation Hearing"). * Nov. 24, 2021 at 4:00 P.M. is fixed as the last day to file any written objections to the Disclosure Statement. * Nov. 24, 2021 at 4:00 P.M. is fixed as the last day to file any written objections to confirmation of the Plan. A copy of the order dated Nov. 15, 2021, is available at https://bit.ly/3kKZwOw from PacerMonitor.com at no charge. Counsel for Debtor 340 Biscayne Owner: PARDO JACKSON GAINSBURG, PL 200 Southeast 1st Street, Suite 700 Miami, Florida 33131 Telephone: (305) 358-1001 Facsimile: (305) 358-2001 E-mail: LJackson@pardojackson.com LLovell@pardojackson.com Linda Worton Jackson Linsey Marie Lovell About 340 Biscayne Owner 340 Biscayne Owner LLC is part of the hotels & motels industry. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-17203) on July 26, 2021. In the petition signed by Cristiane Bomeny, manager, the Debtor disclosed up to $500 million in assets and up to $50 million in liabilities. Judge Laurel M. Isicoff oversees the case. Linda Jackson, Esq., at Pardo Jackson Gainsburg, PL is the Debtor's Counsel. 6446MB LLC: Taps Rosenberg, Cummings & Edwards as Special Counsel ----------------------------------------------------------------- 6446MB, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to hire Rosenberg, Cummings & Edwards, PLLC as its special counsel. The firm will handle the litigation against creditors, Sully Holdings IV, LLC and LAS OLAS CAF Carlos, LLC, and non-creditor Carlos Flores. The firm received a retainer in the amount of $5,000. Casey R. Cummings, Esq., at Rosenberg, Cummings, & Edwards, disclosed in a court filing that she and her firm are disinterested persons within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Casey R. Cummings, Esq. Rosenberg, Cummings, & Edwards PLLC 802 NE 20th Ave. Fort Lauderdale, FL 33304 Phone: +1 954-769-1344 Email: Casey@RosenbergCummings.com About 6446MB LLC Miami Beach, Fla.-based 6446MB, LLC filed its voluntary petition for Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-18777) on Sept. 10, 2021, listing as much as $10 million in both assets and liabilities. Judge Laurel M. Isicoff presides over the case. Joel M. Aresty, P.A. and Rosenberg, Cummings, & Edwards, PLLC serve as the Debtor's bankruptcy counsel and special counsel, respectively. ABRAXAS PETROLEUM: Incurs $1.25 Million Net Loss in Third Quarter ----------------------------------------------------------------- Abraxas Petroleum Corporation filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $1.25 million on $20.87 million of total revenue for the three months ended Sept. 30, 2021, compared to a net loss of $73.62 million on $12.60 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 $38.94 million on $55.98 million of total revenue compared to a net loss of $115.43 million on $30.31 million of total revenue for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $134.33 million in total assets, $245.46 million in total liabilities, and a total stockholders' deficit of $111.13 million. Abraxas stated, "Our present level of indebtedness and the recent commodity price environment present challenges to our ability to comply with certain covenants in our credit facilities, and under applicable auditing standards, the independent accountants' opinion on our financial statements for the year ended December 31, 2020 contains an explanatory paragraph regarding the Company's ability to continue as a "going concern." At December 31, 2020, we had a total of $95.0 million outstanding under our First Lien Credit Facility, $112.7 million under our Second Lien Credit Facility, and total indebtedness of $220.5 million including a $10.0 million exit fee. As of September 30, 2021, we had a total of $81.7 million outstanding under our First Lien Credit Facility, $137.1 million under our Second Lien Credit Facility, including a $10.0 million exit fee, and total indebtedness of $221.4 million. Additionally, we have a liability of approximately $9.2 million related to the termination of our hedging agreements. If interest expense increases as a result of higher interest rates or increased borrowings, more cash flow from operations would be used to meet debt service requirements." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/867665/000143774921026660/axas20210930_10q.htm About Abraxas San Antonio, TX-based Abraxas Petroleum Corporation -- www.abraxaspetroleum.com -- is an independent energy company primarily engaged in the acquisition, exploration, development and production of oil and gas. Abraxas reported a net loss of $184.52 million for the year ended Dec. 31, 2020, compared to a net loss of $65 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $135.68 million in total assets, $245.84 million in total liabilities, and a total stockholders' deficit of $110.16 million. San Antonio, Texas-based ADKF, P.C., the Company's auditor since 2020, issued a "going concern" qualification in its report dated May 6, 2021, citing that the Company has not satisfied certain covenants under its first lien credit facility as of Dec. 31, 2020 which represents an event of default. Additionally, the company does not anticipate maintaining compliance with all of its credit facilities over the next twelve months. These matters raise substantial doubt about the Company's ability to continue as a "going concern." AFFILIATED PHYSICIANS: Appointment of Creditors' Committee Sought ----------------------------------------------------------------- Nissenbaum Law Group, LLC and Gary Nissenbaum, Esq., ask the U.S. Bankruptcy Court to direct the appointment of an official committee that will represent unsecured creditors in the Chapter 11 case of Affiliated Physicians and Employers Master Trust. The creditors did not file a brief supporting their motion, saying it is not necessary "as no novel issues of law are presented." Judge Michael Kaplan of the U.S. Bankruptcy Court for the District of New Jersey will hold a hearing to consider the motion on Dec. 9 at 10:00 a.m. The creditors are represented by: Melinda D. Middlebrooks, Esq. Middlebrooks Shapiro, P.C. 841 Mountain Avenue, First Floor Springfield, NJ 07081 Tel: (973) 218-6877 Fax: (973) 218-6878 Email: middlebrooks@middlebrooksshapiro.com About Affiliated Physicians and Employers Master Trust Affiliated Physicians and Employers Master Trust (doing business as Members Health Plan NJ) sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 21-14286) on May 24, 2021. Lawrence Downs, chairman of Affiliated Physicians, signed the petition. In the petition, the Debtor disclosed total assets of $6,303,036 and total liabilities of $1,726,938. Judge Michael B. Kaplan oversees the case. Genova Burns, LLC serves as the Debtor's legal counsel and Withumsmith + Brown, PC as its accountant. Concord Management Resources, LLC, is the administrative service manager. ALAMO BORDEN: Seeks Court Approval to Hire Bankruptcy Counsel ------------------------------------------------------------- Alamo Borden County 1, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to hire Bonds Ellis Eppich Schafer Jones, LLP to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) rendering bankruptcy-related legal advice to the Debtor; (b) assisting in the preparation of reports, bankruptcy schedules, statement of financial affairs and legal papers; (c) assisting the Debtor in the negotiation and formulation of a Chapter 11 plan and the preparation of a disclosure statement; (d) assisting the Debtor in preserving and protecting the value of the Debtor's estate; and (e) performing all other legal services for the Debtor. The firm's hourly rates are as follows: Joshua N. Eppich Partner $500 per hour Matthew D. Stayton Partner $405 per hour Andrew B. Russell Of Counsel $350 per hour J. Robertson Clarke Associate $325 per hour C. Josh Osborne Associate $325 per hour Bryan C. Assink Associate $275 per hour Paul H. Farmer Associate $275 per hour Paralegals $100 per hour As disclosed in court filings, Bonds Ellis is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Joshua N. Eppich, Esq. Bonds Ellis Eppich Schafer Jones, LLP 420 Throckmorton Street, Suite 1000 Fort Worth, TX 76102 Tel: 817-405-6900 Email: Joshua@bondsellis.com About Alamo Borden County 1 LLC Alamo Borden County 1, LLC is part of the oil and gas extraction industry. The company is based in Arlington, Texas. Alamo Borden County 1 filed its voluntary petition for Chapter 11 protection (Bankr. N.D. Texas Case No. 21-42440) on Oct. 15, 2021, listing as much as $10 million in both assets and liabilities. Shu Rau, chief executive officer, signed the petition. Judge Mark X. Mullin oversees the case. Joshua N. Eppich, Esq., at Bonds Ellis Eppich Schafer Jones, LLP represents the Debtor as legal counsel. ALLIED UNIVERSAL: Fitch Withdraws 'B' Issuer Default Rating ----------------------------------------------------------- Fitch Ratings has affirmed Allied Universal Holdco LLC's (AU) Long-Term Issuer Default Rating (IDR) at 'B'. The Rating Outlook is Stable. Fitch has also affirmed existing instrument ratings, and assigned ratings on new debt issued to fund its acquisition of G4S. Fitch has chosen to withdraw the ratings of Allied Universal Holdco, LLC for commercial reasons. KEY RATING DRIVERS Acquisition Drives Leverage, Enhances Scale: The transformative G4S acquisition doubles AU's annual revenue to approximately $18 billion and establishes a clear global leader in security services. G4S adds an additional 86 countries with significant presences in Europe and the UK (17% of pro forma revenue), APAC (6%), South America (4%), and Middle East & Africa (collectively 5%). AU will remain predominantly North American, with the region accounting for 67% of pro forma revenue and approximately 70% of operating profit. In addition to manned guarding, G4S brings exposure to a small-cash-in transit business (the bulk of which was sold to Brink's in February 2020), as well as several new technology capabilities. Potential Integration Challenges: AU expects integration efforts to take up to two years, generating synergies of $155 million (comprised of $31 million G4S corporate costs, and $124 million of North American duplication & redundancies). Fitch believes this synergy target is achievable, noting AU has frequently achieved or beaten its own synergy targets for previous acquisitions. Outside of North America, Fitch expects local G4S management to largely remain in place, which lessens integration risk. The G4S acquisition also brings potential for greater headline risk, which may present dimensions of ESG risk for AU. Resilient Pandemic Performance: The pandemic had minimal effect on AU, as demand for security services at healthcare providers, state and local governments and financial institutions have more than offset declines in other areas. Overall, management reports continued organic revenue growth (+4% in 2020) and grew headcount throughout the year. Enhanced Diversification: AU services a variety of blue chip clients including 320 of the Fortune 500. The company is also diversified geographically across the United States, with no particular region making up more than 20% of revenues. Diversity extends globally, with 33% of pro forma revenue generated in 86 new countries spread across several regions. National clients represent approximately 23% of total U.S. revenues with a 98% retention rate. The company's top five clients account for less than 5% of revenue. AU is also well diversified by end market, the largest being Major Corporates & Industrials (21%), Government (13%), Financial Institutions (9%), and Retail & Malls (7%). Continuing Operating Performance Improvements: AU has grown over the past 10 years, while simultaneously improving margins. Annual organic growth has ranged from 3% to 7%, driven by rate increases and new client wins. The company has largely institutionalized its integration efforts, resulting in more efficient synergy realization and helping drive overall margin improvement. Elevated Leverage: Ongoing M&A activity has been primarily financed with debt. Fitch-defined pro forma total leverage (total debt with equity credit/operating EBITDA) reduced from 7.0x at Dec. 31, 2018 to 6.1x at Dec. 31, 2020, driven by operational and margin improvements across the platform. Fitch expects the G4S acquisition will temporarily push leverage to 6.9x at closing, before partial realization of synergies delevers the company back to 6.4x at YE 2021. Pro forma adjustments include annualized operating results and related synergies for midyear acquisitions. Fitch expects the company to continue focusing on small, tuck-in acquisitions as part of its efforts to consolidate this fragmented industry. Recession Resistant Industry: The security services industry is relatively recession resistant, given the critical and non-discretionary importance of asset protection. The industry experienced growth rates of 9% in 2008, 2% in 2009 and -1% in 2010, returning to low single digit growth in 2011. Fitch believes the biggest risk during a recession is more due to the loss of business when client's go under than a client cutting back on contracted services. Recessions can also have positive cost effects, as rising unemployment can reduce pressure on wages, overtime, and turnover. Potential Cost Pressure: The fragmented industry structure typically results in contract pricing pressure, although these pressures alleviated during the 2020-2021 pandemic. Pre-pandemic, employee costs increased due to low unemployment and minimum wage growth in several states. Pay rates generally exceed minimum wage given their focus on hiring and retaining qualified security personnel. Additional cost concerns involve mandatory paid leave, unionization, and higher unemployment which may not get passed on to clients. M&A Risk: There are few remaining large U.S. acquisitions, which may drive up multiples large security service providers look to M&A to supplement organic growth. Future acquisitions are expected to focus on broadening electronic security offerings, and expanding to new or existing markets and verticals through tuck-ins with specific market focuses. DERIVATION SUMMARY AU's ratings reflect the company's position as the largest U.S. security service provider and its expanded global coverage, which affords the company access to larger security contracts not generally available to smaller competitors, as well as its substantial geographic and customer diversification. This industry is relatively recession resistant as exhibited with its overall performance during the pandemic and the 2008-2009 downturn. AU's ratings are constrained by the company's high leverage due to debt-financed M&A activity, as well as the degree of integration risks that result from the transformative G4S acquisition. Although the company is significantly larger than Garda World Security Corporation (B+/Stable), it has less business line diversification, lower EBITDA margins and higher leverage. KEY ASSUMPTIONS -- Revenue growth of 5% from 2021 onwards reflects core organic growth of 3% in North America, 2% in the rest of the world, combined with the impact of continued M&A. -- Yearly M&A spend is forecast at $200 million, at a 4.5x EBITDA multiple and a 10% EBITDA margin. This accounts for approximately $410 million-$460 million in annual revenue. Funding for these acquisitions is primarily through FCF. -- Acquisitions in 2021 are as follows: $8.3 billion purchase price for G4S, net $1.6 billion acquired cash; and $357 million for acquisitions, which closed during Q1. -- Margin improvement driven by acquisition synergies and costs reduction efforts expected to be realized by 2021-2022. Fitch expects half of the synergy benefit to be realized in the first year, with the remaining portion over 2022-2023. Outer year improvements are driven from implementation of AU's best practices across G4S' platform globally. Synergies are expected to generate a $250 million cash cost, which is realized in 2021. -- Allowing for a substantial working capital effect in 2021 due to the G4S acquisition, FCF normalizes around $600 million annually in 2022 and thereafter. -- Leverage falls to 5.0x by 2024. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes Allied Universal would be reorganized as a going-concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach Allied Universal's GC EBITDA assumption is based on Fitch's projected 2020 EBITDA, which includes a full year of the G4S transaction as well as adjustments for a portion of synergies identified by the company. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation. Outstanding debt at bankruptcy is based on the following: The company issued new debt to fund the G4S acquisition, including approximately $1.8 billion in USD and EUR senior secured term loans, approximately $3.2 billion in senior secured notes, and approximately $1.3 billion in senior unsecured notes. Fitch typically assumes ABL facilities are 75% drawn at bankruptcy due to the deterioration of the underlying accounts receivables base prior to the bankruptcy filing. Although Allied Universal's ABL revolver is secured by a first-lien on all working capital assets and a second-lien on remaining assets, availability is governed by a borrowing base of a percentage of eligible receivables. AU upsized its ABL to $1.0 billion in connection with the G4S transaction. Fitch typically assumes revolvers are fully drawn when companies are under duress. The company added a EUR300 million revolver to its existing $300 million revolver in connection with the G4S transaction. Fitch's recovery analysis contemplates insolvency resulting from a significant loss of contracts from increased competitive pressure due to a breakdown in the industry's oligopolistic structure. Under this scenario, one of the other large competitors becomes aggressive regarding pricing leading to a 15% drop in revenues. Based on an EBITDA margin of 7.5%, Fitch-calculated EBITDA would fall to $1.45 billion. An EV multiple of 7x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considered the following factors: The G4S transaction was conducted at an 11x multiple. According to industry information, most of the large transactions announced over the past 15 years have indicated average purchase price values in the 8x-9x EBITDA range, while smaller acquisitions tend to have mid- to high single digit multiples. Wendel acquired AlliedBarton for approximately 12x EBITDA; Allied Universal acquired USSA for approximately 11x; and CDPQ recent investment in Allied Universal was made at approximately 11x. Given that the pure-play contract manned security industry is comprised of private companies, there are no public multiples available. The 'BB-' rating and 'RR2' Recovery Rating on the first-lien secured debt are based on Fitch's recovery analysis under a GC scenario, which indicates strong recovery prospects in the 71% to 90% range. The 'CCC+' rating and 'RR6' Recovery Rating on the unsecured debt indicates poor recovery prospects in the 0% to 10% range. RATING SENSITIVITIES Not applicable given today's ratings withdrawal. 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: Pro forma for the transaction, liquidity of $2.3 billion (comprised of $713 million cash, plus availability under the ABL and revolvers) is adequate for the rating category. ISSUER PROFILE Allied Universal Holdco LLC is a leading global provider of manned guarding, training and consulting expertise. ALPHA LATAM: Court Okays $149.5 Mil. Ch.11 Sale to CFG Partners --------------------------------------------------------------- Jeff Montgomery of Law360 reports that Latin American payday lender Alpha Latam Management LLC secured bankruptcy court approval in Delaware Tuesday, Nov. 16, 2021, for a $149.5 million sale of its Colombian assets to an affiliate of Puerto Rico-headquartered CFG Partners, topping a stalking horse offer by $16.5 million. U.S. Bankruptcy Judge J. Kate Stickles approved the deal during a teleconference hearing without objections being raised. The winning offer included an agreement to keep the company's Colombian headquarters in Bogota open, a provision that Alpha Latam said would preserve 45 jobs in that city and avoid the complications and expense of rejecting the operation. About Alpha Latam Management Wilmington, Del.-based Alpha Latam Management, LLC and its affiliates operate a specialty finance business that offers consumer and small business lending services to underserved communities in Mexico and Colombia. Alpha Latam Management and certain of its affiliates sought Chapter 11 protection (Bankr. D. Del. Case No. 21-11109) on August 1, 2021, disclosing assets of between $100 million and $500 million and liabilities of between $500 million and $1 billion. Judge J. Kate Stickles oversees the cases. The Debtors tapped Richards, Layton & Finger, P.A. and White & Case, LLP as legal counsel; Rothschild & Co US Inc. and Rothschild & Co Mexico S.A. de C.V. as investment bankers; and AlixPartners, LLP as financial advisor. Prime Clerk, LLC is the claims and noticing agent and administrative advisor. On Aug. 11, 2021, Alpha Holding, S.A. de C.V. and AlphaCredit Capital, S.A. de C.V. SOFOM, ENR commenced in Mexico City a jointly administered voluntarily filed proceeding pursuant to the Ley de Concursos Mercantiles. Through this proceeding, the Mexican Debtors intend to pursue a controlled restructuring and possible sale of their assets. AYTU BIOPHARMA: Incurs $27.9 Million Net Loss in First Quarter -------------------------------------------------------------- Aytu Biopharma, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $27.85 million on $21.90 million of net product revenue for the three months ended Sept. 30, 2021, compared to a net loss of $4.31 million on $13.52 million of net product revenue for the three months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $227.73 million in total assets, $116.23 million in total liabilities, and $111.50 million in total stockholders' equity. "We posted a very strong quarter with net revenues of $21.9 million and two of our commercial products, Poly-Vi-Flor and Adzenys XR-ODT, hitting all-time highs in prescription performance. We have begun delivering on our projection that fiscal 2022 will be a year of substantial progress, as we continued to realize the economic benefits of our merger synergy plan following the Neos Therapeutics acquisition, organically grew our commercial prescription and consumer health product revenues and advanced our late-stage development pipeline toward key milestones," commented Josh Disbrow, chief executive officer of Aytu BioPharma. "Regarding AR101, we expect to begin our pivotal study in early 2022, are seeking Orphan Drug Designation from the FDA and EMA, and have already begun collaborating with our newly formed scientific advisory board. We are also nearing the start of our sham-controlled study of Healight at a leading academic center in Barcelona, Spain and expect to have data in the first half of calendar year 2022. With the establishment of key fundamentals across our business, we are excited about the future as we continue building a leading specialty pharmaceutical company." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1385818/000155837021015996/aytu-20210930x10q.htm About Aytu BioPharma Englewood, Colorado-based Aytu BioPharma, Inc., formerly known as Aytu BioScience, Inc. -- http://www.aytubio.com-- is a specialty pharmaceutical company with a growing commercial portfolio of prescription therapeutics and consumer health products. The company's primary prescription products treat attention deficit hyperactivity disorder (ADHD) and other common pediatric conditions. Aytu markets ADHD products Adzenys XR-ODT (amphetamine) extended-release orally disintegrating tablets, Cotempla XR-ODT (methylphenidate) extended-release orally disintegrating tablets, and Adzenys-ER (amphetamine) extended-release oral suspension. Aytu Biopharma reported a net loss of $58.29 million for the year ended June 30, 2021, compared to a net loss of $13.62 million for the year ended June 30, 2020. BCT DEALS: Seeks to Hire Michael Jay Berger as Bankruptcy Counsel ----------------------------------------------------------------- BCT Deals, Inc. seeks approval from the U.S. Bankruptcy Court for the Central District of California to hire the Law Offices of Michael Jay Berger to handle its Chapter 11 case. The hourly rates of the firm's attorneys and staff are as follows: Michael Jay Berger $595 per hour Sofya Davtyan $525 per hour Debra Reed $435 per hour Carolyn M. Afari $435 per hour Samuel Boyamian $350 per hour Gary Badin $275 per hour Senior Paralegals and Law Clerks $225 per hour Bankruptcy Paralegals $200 per hour The firm received a retainer of $20,000 from the Debtor. It will also receive reimbursement for out-of-pocket expenses incurred. Michael Jay Berger, Esq., 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 may be reached at: Michael Jay Berger, Esq. Law Offices of Michael Jay Berger 9454 Wilshire Boulevard, 6th Floor Beverly Hills, CA 90212-2929 Tel: (310) 271-6223 Fax: (310) 271-9805 Email: michael.berger@bankruptcypower.com About BCT Deals Inc. BCT Deals, Inc. is a Compton, Calif.-based company that conducts business under the name Best Costumes & Toy Deals. BCT Deals filed its voluntary petition for Chapter 11 protection (Bankr. C.D. Calif. Case No. 21-18156) on Oct. 12, 2021, listing as much as $10 million in both assets and liabilities. Michael J. Ward, president of BCT Deals, signed the petition. Judge Ernest M. Robles oversees the case. Michael Jay Berger, Esq., at the Law Offices of Michael Jay Berger represents the Debtor as legal counsel. BETTEROADS ASPHALT: Court Tosses Suit vs Jorge Diaz --------------------------------------------------- In the adversary proceeding captioned ARTURO FRANCISCO DIAZ IRIZARRY, Plaintiff, v. JORGE LUIS DIAZ IRIZARRY; BETTEROADS ASPHALT, LLC, Defendants, Adv. Proc. No. 20-00139 (ESL)(Bankr. D.P.R., December 10, 2020), the Plaintiff seeks to obtain a declaratory judgment and equitable relief to enforce shareholder rights in Betteroads and compel the Defendant, as the controlling shareholder, to cease and desist his unilateral corporate governance in violation of state corporation laws, which exclude the Plaintiff as a shareholder. The Plaintiff alleges that Defendant has failed to manage and operate the property of the corporation as would a diligent trustee under 28 U.S.C. Section 959, because he has failed to comply with the requirement of the Law of Corporations of Puerto Rico as it pertains to its governance and respect the rights of shareholders. On February 8, 2021, the Defendant filed a Motion to Dismiss Complaint, arguing that the court lacks subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6) because: (i) the Plaintiff fails to state with specificity the particular facts and the claims asserted for this court to find that it has subject matter jurisdiction; (ii) there is no "arising under" jurisdiction to entertain Plaintiff's claims which are based on state corporate law and probate law and not by a statutory provision of the Bankruptcy Code; (iii) there is no jurisdiction "arising in" this bankruptcy proceeding because the Plaintiff's claims stem from the potential legal rights that Plaintiff could have over the Debtor's shares and stocks which are part of the Decedents' estates and are under the control of their Executor in Probate state court; (iv) the claims asserted in the Complaint are not "related to" the underlying bankruptcy case because the outcome of these have no conceivable effect on the bankruptcy estate and/or the administration of the bankruptcy estate; and (v) the probate exception is applicable in the instant case, given that the Plaintiff in the Complaint is requesting the Bankruptcy Court to determine the ownership of stocks that form part of two probate estates pertaining to the jurisdiction of the state probate court. In the alternative, the Defendant argues that the Complaint should be dismissed pursuant to Fed. R. Civ. P. 12(b)(7) and 19 for failure to join the Probate Executor and the rest of the heirs of the Probate Estates as indispensable parties. According to the Court, the Plaintiff's claims must "arise under," "arise in," or "relate to" a cause under the Bankruptcy Code to fall within section 1334's jurisdictional scope. The Plaintiff in his Opposition to Codefendant's Motion to Dismiss contends that the Court has "related to" jurisdiction to entertain his claims under 28 U.S.C. Section 157(c)(1) in this civil proceeding because these are "related matters" associated to the Bankruptcy Debtor and its members. The Plaintiff argues the Court has jurisdiction under the "related to" jurisdictional scope under 28 U.S.C. Section 1334(b) based mainly upon the following: (i) "[w]hile the instant proceeding will not have a monetary effect on the estate, its outcome if the Court grants Plaintiff's relief for involvement in the bankruptcy's administration and voting for the Plan, could conceivably have an effect on the way the estate is currently being administered arbitrarily by the Defendant, which could even affect the relations with creditors for the better and the effectiveness of a Plan of Reorganization of Debtor company. Hence, the case is definitely related to the bankruptcy case because the outcome of this proceeding will certainly have an impact upon the way the Debtor in Possession is being administered and reorganized through the singular commands of Defendant Jorge Diaz, and could even affect the Plan for reorganization in the context of how it will be conceived, designed and voted upon by the Board of Directors for ultimate approval by the Court;" and (ii) "[t]he shareholder's 'control rights' that Plaintiff seeks to enforce through this Court and that will affect the management of the debtor are more than related to the bankruptcy, as they include the rights to hold meetings of Debtor, to see the books of the Debtor, to vote for and select a board of directors of Debtor, to oust any inadequate management, and to vote on, or participate in, certain corporate actions for the chapter 11 reorganization, such as to be allowed to participate in the plan confirmation process by voting for or against the plan, and/or any asset sales of the estate that could affect members' ownership. Under corporate law, Plaintiff as shareholder of Debtor must be allowed to vote to approve any sale of assets from the estate, if any, within the reorganization outside the usual course of business." The Court finds the Plaintiff's arguments regarding jurisdiction under a "related to" civil proceeding pursuant to section 1334(b) unsubstantiated. The Plaintiff's "related to" claim, the Court explains, does not fall under the first category that involves causes of action owned by the Debtor. The Plaintiff's "related to" claim falls under the second category which are namely lawsuits between third parties that "in the absence of bankruptcy, could have been brought in a district court or a state court." The Court finds the Plaintiff's claims fail the test in Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3rd Cir. 1984) because the claims are all moot because the same are based upon the Plaintiff's participation as a shareholder (or his "shareholder control rights") in the manner in which the Debtor is being administered and this having an impact on the plan of reorganization, the sale of assets and the plan confirmation and the Debtor's reorganization thereafter. In addition, the potential outcome of this proceeding will not have a monetary effect on the bankruptcy estate nor could it alter positively or negatively the Reorganized Debtor's "rights, liabilities, options, or freedom of action" in any manner that would impact the handling and administration of the bankruptcy estate, the Court said. The Court also noted that the Plaintiff's claims are moot because on April 28, 2021, the Debtor executed the Settlement and Release Agreement which incorporated the Asset Purchase Agreement with Puerto Rico Asphalt, LLC. This Settlement Agreement provided for Plaintiff and his counsels to be notified of the consequences of the approval of the settlement. Thereafter, on May 17, 2021, the Court entered the Bankruptcy Rule 9019 Order approving the Settlement Agreement. On June 9, 2021, during the confirmation hearing, the Court entered the Confirmation Order that provides for a discharge of claims pursuant to Article III, Subsection A. The confirmation Order provides an injunction in favor of the Reorganized Debtor that enjoins parties from continuing claims asserted in purported claims or interest on the Debtor. Moreover, all equity interest on the Debtor which existed upon filing up to the confirmation were extinguished and ceased to exist. Lastly, the Court clarifies that the Plaintiff in his Response to Betteroads' Motion to Dismiss and in the Alternative a Finding of Mootness, to Concede Dismissal conditions his arguments to whether the Court adjudicates a priori that Plaintiff's cause of action against Betteroads has been mooted based on the treatment of extinction of his equity interest by the confirmed Plan, despite the confirmed Amended Plan not being completed or substantially consummated. This conditioned argument, the Court says, is premature because its basis is predicated on an event that has not occurred, and this would put the Court in the unwarranted position of providing an advisory opinion. The Court notes that Plaintiff does not seek an adjudication from this Court that he is a shareholder of the Debtor because said titleship is an undisputable fact. However, Betteroads disagrees with the Plaintiff's allegation as to his titleship (ownership) of the Debtor's shares. The Plaintiff has admitted that he accepted the inheritance under the benefit of inventory. Betteroads argues that no division or distribution has been performed, and thus, the Plaintiff is not the holder of any equity of the debtor prior to confirmation because the equity of the Debtor is part of the probate estate and at this juncture, the Plaintiff cannot assert any ownership claims. Accordingly, the Court found it has no subject matter jurisdiction over Plaintiff's claims against Defendants Jorge Diaz and Betteroads. Therefore, the Defendant Jorge Diaz's Motion to Dismiss is granted. A full-text copy of the Opinion and Order dated November 8, 2021, is available at https://tinyurl.com/jd2z38yh from Leagle.com. About Betteroads Asphalt and Betterecycling Corp Betteroads Asphalt LLC produces warm mix asphalt, which is used in airports, highways, neighborhoods, and environmental projects. Betterecycling Corporation produces gasoline, kerosene, distillate fuel oils, residual fuel oils, and lubricants. Both companies are based in San Juan, P.R. On June 9, 2017, creditors commenced involuntary bankruptcy petitions under Chapter 11 of the Bankruptcy Code against Betteroads Asphalt LLC (Bankr. D.P.R. Case No. 17-04156) and Betterecycling Corporation (Bankr. D.P.R. Case No. 17-04157). On Oct. 11, 2019, the Court entered the "order for relief" after finding that the involuntary petitions were not filed for an improper bankruptcy purpose or with bad faith. Judge Enrique S. Lamoutte oversees the cases. The Debtors are represented by Lugo Mender Group, LLC. BIOSTAGE INC: Incurs $849K Net Loss in Third Quarter ---------------------------------------------------- Biostage, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $849,000 on zero revenue for the three months ended Sept. 30, 2021, compared to a net loss of $660,000 on zero revenue for the three months ended Sept. 30, 2020. The $0.1 million quarter-over-quarter increase in net loss was due primarily to $0.4 million decrease in grant income for qualified expenditures from its SBIR grant offset, in part, by a $0.3 million decrease in research and development costs. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $2.11 million on zero revenue compared to a net loss of $3.84 million on zero revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $2.56 million in total assets, $518,000 in total liabilities, and $2.04 million in total stockholders' equity. As of Sept. 30, 2021, the Company had operating cash on-hand of $2.0 million, an increase of $1.5 million from the prior year. During the nine-month period ended Sept. 30, 2021, the Company used net cash in operations of $1.6 million, which was offset, in total, by $2.6 million of proceeds from private placement transactions that resulted in the issuance of 1,300,000 shares of its common stock and warrants to existing investors. The Company expects that its operating cash on-hand as of Sept. 30, 2021 of $2.0 million will enable it to fund its operating expenses and capital expenditure requirements into the second quarter of 2022. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1563665/000141057821000281/tmb-20210930x10q.htm About Biostage Holliston, Massachusetts-based Biostage, Inc. -- www.biostage.com -- is a biotechnology company developing bioengineered organ implants based on the Company's novel Cellframe and Cellspan technology. The Company's technology is comprised of a biocompatible scaffold that is seeded with the recipient's own cells. The Company believes that this technology may prove to be effective for treating patients across a number of life-threatening medical indications who currently have unmet medical needs. The Company is currently developing its technology to treat life-threatening conditions of the esophagus, bronchus or trachea with the objective of dramatically improving the treatment paradigm for those patients. Since inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and acquiring operating assets. Biostage reported a net loss of $4.86 million for the year ended Dec. 31, 2020, compared to a net loss of $8.33 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $1.12 million in total assets, $387,000 in total liabilities, and $728,000 in total stockholders' equity. Boston, Massachusetts-based RSM US LLP, the Company's auditor since 2018, issued a "going concern" qualification in its report dated April 13, 2021, citing that the Company has suffered recurring losses from operations, has an accumulated deficit, uses cash flows in operations, and will require additional financing to continue to fund operations. This raises substantial doubt about the Company's ability to continue as a going concern. BLUE DOLPHIN: Incurs $2.9 Million Net Loss in Third Quarter ----------------------------------------------------------- Blue Dolphin Energy Company filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $2.93 million on $80.39 million of total revenue from operations for the three months Sept. 30, 2021, compared to a net loss of $4.65 million on $42.93 million of total revenue from operations for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $10.20 million on $209.24 million of total revenue from operations compared to a net loss of $12.24 million on $123.40 million of total revenue from operations for the same period during the prior year. As of Sept. 30, 2021, the Company had $66.10 million in total assets, $87.08 million in total liabilities, and a total stockholders' deficit of $20.99 million. The Company stated, "Our ability to continue as a going concern depends on sustained positive operating margins and working capital to sustain operations, purchase of crude oil and condensate, and payments on long-term debt. If we cannot achieve these goals, we may cease operating or seek bankruptcy protection. These adverse market actions could lead to holders of our common stock losing their investment in its entirety." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/793306/000165495421012228/bdco_10q.htm About Blue Dolphin Headquartered in Houston, Texas, Blue Dolphin Energy Company -- http://www.blue-dolphin-energy.com-- is an independent downstream energy company operating in the Gulf Coast region of the United States. The Company's subsidiaries operate a light sweet-crude, 15,000-bpd crude distillation tower with approximately 1.2 million bbls of petroleum storage tank capacity in Nixon, Texas. Blue Dolphin was formed in 1986 as a Delaware corporation and is traded on the OTCQX under the ticker symbol "BDCO." Blue Dolphin reported a net loss of $14.46 million for the 12 months ended Dec. 31, 2020, compared to net income of $7.36 million for the 12 months ended Dec. 31, 2019. As of June 30, 2021, the Company had $65.08 million in total assets, $83.14 million in total liabilities, and a total stockholders' deficit of $18.06 million. Sterling Heights, Michigan-based UHY LLP, the Company's auditor since 2002, issued a "going concern" qualification in its report dated March 31, 2021, citing that the Company is in default under secured and related party loan agreements and has a net working capital deficiency. These conditions raise substantial doubt about the Company's ability to continue as a going concern. BLUE JAY: Seeks Approval to Hire Gino Pulito as Special Counsel --------------------------------------------------------------- Blue Jay Communications, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of Ohio to employ Gino Pulito, Esq., an attorney at Pulito and Associates, LLC, as its special counsel. The professional services Mr. Pulito will render include: (a) preparing pleadings and services; (b) conducting examinations or depositions of witnesses; (c) participating in meetings or litigation in other courts and producing related documents. The attorney currently charges $200 per hour, an amount below his normal hourly rate. Mr. Pulito disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Pulito can be reached through: Gino Pulito, Esq. Pulito and Associates, LLC 230 Third Street, Suite 200 Elyria, OH 44035 Telephone: (440) 322-1125 About Blue Jay Communications Blue Jay Communications, Inc. installs telecommunication and network infrastructure throughout the Midwest with a particular concentration in northern Ohio, southern Michigan, and Illinois. It currently has offices in Cleveland, Marion, Toledo, and Youngstown, Ohio, and St. Charles, Illinois. It serves major telecommunications companies as its clients. Blue Jay Communications filed a petition for Chapter 11 protection (Bankr. N.D. Ohio Case No. 21-31915) on Nov. 9, 2021, disclosing $5,145,458 in assets and $7,618,110 in liabilities. John F. Houlihan, president, signed the petition. Judge Mary Ann Whipple oversees the case. The Debtor tapped Frederic P. Schwieg, Esq. at Frederic P Schwieg Attorney at Law as bankruptcy counsel and Gino Pulito, Esq., at Pulito and Associates, LLC as special counsel. BOY SCOUTS: Abusing Bankruptcy System, Says Professor ----------------------------------------------------- Allowing the Boy Scouts of America to utilize the bankruptcy system runs roughshod over victims; rights in alleged sexual abuse cases, says Adam J. Levitin, professor at Georgetown University Law Center. He says it's time for Congress to restrict the benefits of bankruptcy to only those individuals and businesses that actually file for bankruptcy. Adam J. Levitin wrote an article published by Bloomberg Law, titled "The Boy Scouts of America is abusing the bankruptcy system": When "Michael" (not his real name) was between 17- and 19-years-old, he was allegedly repeatedly raped by a pair of uniformed, on-duty Louisville, Ky., policemen, including in their police car. Michael was with the policemen because he was a member of a Boy Scout troop sponsored by the Louisville Police Department. The Louisville police would sometimes take Scout troop members like Michael with them on ride-alongs outside of formal Scouting events, and that is when the rapes allegedly occurred. The police officers involved were convicted of various lesser sex crimes against Michael and others. The city of Louisville, however, was poised to escape liability for the criminal actions of its on-duty officers, without going to trial or even paying a single cent of its own money, simply because the Boy Scouts of America filed for bankruptcy in February 2020. All of the claims involving seven lawsuits filed against the Boy Scouts and the city were resolved through a settlement reached Oct. 29, according to a release from the Louisville-Jefferson County Metro Government. Under the settlement, Louisville itself will not pay anything; only its insurers will. Meanwhile, an estimated 40,000 other sex abuse defendants that sponsored Scout troops. All of them are attempting to piggyback on the Boy Scouts' bankruptcy to evade their own liability—from 1976 forward—for the sexual abuse of Scouts, without paying a penny of their own money or having to face a jury. This is wrong. An Abuse of Bankruptcy Discharge The basic idea of bankruptcy is that an insolvent company surrenders its assets, which are used to pay creditors in an orderly fashion under court supervision. Abuse survivors are creditors, even if their cases against the Boy Scouts have not been resolved. To the extent that creditors are not paid, the debts are discharged, meaning they are no longer collectible. The bankruptcy discharge is supposed to be available only for parties that file for bankruptcy. Yet the Boy Scouts are proposing a settlement through their bankruptcy plan that would give independent, well-heeled, sex abuse defendants, including municipalities, community organizations, schools, and churches, the benefits of a bankruptcy discharge, without having to go through the bankruptcy process that would make their assets available to compensate abuse survivors. Under the plan proposed by the Boy Scouts, all of its troop sponsors—entirely independent non-bankrupt entities—will receive releases for their sex abuse liability. The releases even go so far as to erase any liability for abuse that occurred while the children were in the custody of outside organizations, as in the case of Michael. In exchange for the releases, the troop sponsors will have to sign over their right to insurance coverage under shared policies paid for by the Boy Scouts to a trust to compensate survivors—but that's all. The troop sponsors will not themselves pay anything for their releases, even though individual abuse claimants will get less than 25 cents on the dollar on their claims—and in many cases far less—under the Boy Scouts’ plan. Critically, bankruptcy law is clear that if the plan is approved by the bankruptcy court, it will bind all creditors, including abuse survivors, even if they object. Appalling Bankruptcy Plan Is Not New The releases of non-debtors under the Boy Scouts' appalling bankruptcy plan is hardly unique. While bankruptcy courts would not historically approve releases of non-debtors, that has changed, and now wealthy tort defendants now regularly piggyback on others’ bankruptcy cases. This is how the billionaire Sackler family sloughed off its opioid liability in the Purdue Pharma bankruptcy. It's how Catholic parishes shielded their assets in diocesan sex abuse bankruptcies. It's how the U.S. Olympic Committee is hoping to use USA Gymnastics' bankruptcy to limit its liability for Larry Nasser's sexual abuse of Olympic gymnasts. And it's how Johnson & Johnson, one of the world’s richest companies, is seeking to evade its liability for toxic talc products in the bankruptcy of one of its subsidiaries. Mass tort cases are always difficult, but their resolution does not require running roughshod over victims’ right to hold accountable those with responsibility for their harms. The Boy Scouts, for example, are perfectly able to continue their mission without the court extinguishing the liability of myriad non-debtor troop sponsors. The troop sponsors'’ own liability for abuse would certainly remain an issue, but that would be the problem of individual troop sponsors, and there's a solution readily at hand for them if they are truly insolvent: they can file for bankruptcy themselves and make all of their assets available for their creditors. Allowing deep-pocketed troop sponsors to evade liability for decades of sexual abuse of boys and young men by riding the coattails of the Boy Scout's bankruptcy is a misuse of the bankruptcy system and should not be allowed. The Boy Scouts of America have asked the court to approve a $1.6 billion trust fund to settle the more than 80,000 sexual abuse claims. The court will hold a hearing on the proposal in late January 2021. The benefits of bankruptcy relief should be available only for those individuals and businesses that actually file for bankruptcy. It’s an abuse of the bankruptcy system for well-heeled defendants to get releases from their own liability by free-riding on the bankruptcies of other entities. The House Judiciary Committee Nov. 3, 2021 approved the Nondebtor Release Prohibition Act, a bill that would end this abuse of the bankruptcy system. It's time for Congress to pass this legislation and ensure that bankruptcy relief is available for honest but unfortunate debtors and not for free-riders who would grift the process. About Boy Scouts of America The Boy Scouts of America -- https://www.scouting.org/ -- is a federally chartered non-profit corporation under title 36 of the United States Code. Founded in 1910 and chartered by an act of Congress in 1916, the BSA's mission is to train youth in responsible citizenship, character development, and self-reliance through participation in a wide range of outdoor activities, educational programs, and, at older age levels, career-oriented programs in partnership with community organizations. Its national headquarters is located in Irving, Texas. The Boy Scouts of America and affiliate Delaware BSA, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on Feb. 18, 2020, to deal with sexual abuse claims. Boy Scouts of America was estimated to have $1 billion to $10 billion in assets and at least $500 million in liabilities as of the bankruptcy filing. The Debtors have tapped Sidley Austin LLP as their bankruptcy counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel, and Alvarez & Marsal North America, LLC as financial advisor. Omni Agent Solutions is the claims agent. The U.S. Trustee for Region 3 appointed a tort claimants' committee and an unsecured creditors' committee on March 5, 2020. The tort claimants' committee is represented by Pachulski Stang Ziehl & Jones, LLP, while the unsecured creditors' committee is represented by Kramer Levin Naftalis & Frankel, LLP. BOY SCOUTS: Accuses Pachulski Atty of Helping Taint Ch. 11 Vote --------------------------------------------------------------- Leslie Pappas of Law360 reports that the Boy Scouts of America on Wednesday accused a tort committee attorney from Pachulski Stang Ziehl & Jones LLP of actively collaborating on an inflammatory letter to sexual abuse survivors that raised concerns last week from a Delaware bankruptcy judge that a Chapter 11 vote could be tainted. The Boy Scouts told U.S. Bankruptcy Judge Laurie Selber Silverstein that it had "disturbing" evidence John W. Lucas of Pachulski Stang reviewed and edited a "derogatory if not defamatory" letter sent from attorney Timothy D. Kosnoff of Kosnoff Law PLLC to survivors earlier this November 2021, contrary to earlier representations by the firm. About Boy Scouts of America The Boy Scouts of America -- https://www.scouting.org/ -- is a federally chartered non-profit corporation under title 36 of the United States Code. Founded in 1910 and chartered by an act of Congress in 1916, the BSA's mission is to train youth in responsible citizenship, character development, and self-reliance through participation in a wide range of outdoor activities, educational programs, and, at older age levels, career-oriented programs in partnership with community organizations. Its national headquarters is located in Irving, Texas. The Boy Scouts of America and affiliate Delaware BSA, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on Feb. 18, 2020, to deal with sexual abuse claims. Boy Scouts of America was estimated to have $1 billion to $10 billion in assets and at least $500 million in liabilities as of the bankruptcy filing. The Debtors have tapped Sidley Austin LLP as their bankruptcy counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel, and Alvarez & Marsal North America, LLC as financial advisor. Omni Agent Solutions is the claims agent. The U.S. Trustee for Region 3 appointed a tort claimants' committee and an unsecured creditors' committee on March 5, 2020. The tort claimants' committee is represented by Pachulski Stang Ziehl & Jones, LLP, while the unsecured creditors' committee is represented by Kramer Levin Naftalis & Frankel, LLP. BROWN JORDAN: S&P Places 'CCC+' ICR on CreditWatch Negative ----------------------------------------------------------- S&P Global Ratings placed all of the ratings on U.S.-based Brown Jordan Inc., including the 'CCC+' issuer credit rating, on CreditWatch with negative implications, meaning that S&P could either lower or affirm the ratings following the completion of its review. S&P said, "The CreditWatch negative placement reflects the heightened probability that we could lower the ratings if Brown Jordan does not cure its covenant violation and receives an amendment to reset its covenants or refinances its debt to prevent further potential covenant violations. Under its current credit facilities, Brown Jordan has 10 business days to cure the covenant violation, which could include the right to issue common equity for cash to address the EBITDA shortfall to remain in compliance with the covenant. We believe that its financial sponsor, Littlejohn & Co. would likely support the company as necessary." The company failed to comply with its maximum net leverage covenant of 9x for the quarter ended Oct. 2, 2021, which steps down aggressively thereafter, and had covenant leverage of 11.5x. The covenant steps down rapidly each quarter, to 8.25x in December 2021, 6.75x in March 2022, 5x in June 2022, 4.5x in September 2022, and 4.25x in December 2022. Under the term loan, the company is also subject to a minimum liquidity covenant of $25 million until it maintains a net leverage ratio that is less than 5.5x. The company was in compliance with this covenant as of the end of the third quarter. As of Oct. 2, 2021, the company had about $26 million available on its $35 million asset-based lending (ABL) revolving credit facility and cash of about $15.5 million, for total liquidity of $41.5 million. The company is no longer subject to a minimum EBITDA covenant, which rolled off for the third quarter of 2021. The ABL is subject to a fixed-charge coverage test of 1x if excess availability falls below $5 million. Brown Jordan did not trigger this covenant during the quarter. In addition, failure to extend the maturities on its debt facilities poses further liquidity pressure. The company's $35 million ABL facility expires on Oct. 30, 2022, and its $165 million term loan matures on Jan. 31, 2023. Under current terms, the ABL maturity will be automatically extended to the earlier of Jan. 29, 2026 and the date that is 91 days before the term loan's extended maturity date. Failure to address the covenants and upcoming maturities could result in a downgrade to 'CCC' or lower, indicating a greater likelihood of a payment default or debt restructuring within the next year. While revenue is recovering from 2020 lows, operating profits remain weak. Revenue for the nine months through Oct. 2, 2021 grew 15.2% compared with same period in 2020. However, adjusted EBITDA for the nine months ended Oct. 2 2021 fell about 22% compared to the same prior year period due to higher costs and ongoing supply chain challenges, along with unfavorable mix. The company continues to see stronger order demand in the residential and outdoor commercial segments. However, the hospitality segment remains well below pre-pandemic levels. In addition, profitability suffered in the second quarter due to raw material shipment and freight delays. As a result, S&P lease-adjusted leverage remained at unsustainable levels at about 15.6x for the 12 months ended Oct. 2, 2021, compared with about 7.9x during the same period the previous year. S&P said, "Pre-pandemic, the company's leverage was about 5x for the fiscal year ended Dec. 31, 2019. EBITDA cash interest coverage was also weak at about 1x for the 12 months ended Oct. 2, 2021 and we believe free operating cash flow generation for the year will be minimal to slightly negative. The company's backlog has risen, but supply chain constraints, along with substantial inflation, will likely delay recovery of the company's profitability. We expect the company to implement price increases to mitigate these inflationary pressures, but we believe we will not likely see a meaningful recovery in profits until at least mid-2022." S&P said, "We will seek to resolve the CreditWatch listing upon the company's announcement of a solution for its capital structure. To resolve the CreditWatch listing, we will monitor the amendment or refinancing process and review the new terms. We will also review the company's liquidity position and expected operating results over the near term." The inability to secure an refinancing or an amendment or equity infusion with reasonable terms and to address the upcoming maturities to improve the company's liquidity would likely result in a downgrade. CALI RESTAURANT: Seeks to Hire Buddy D. Ford as Legal Counsel ------------------------------------------------------------- Cali Restaurant and Bakery, Inc. seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Buddy D. Ford, PA as bankruptcy counsel. The firm's services include: (a) advising the Debtor with regard to its powers and duties in the continued operation of the business and management of the property of the estate; (b) preparing and filing schedules of assets and liabilities, statement of affairs, and other documents required by the court; (c) representing the Debtor at the Section 341 creditors' meeting; (d) advising the Debtor with respect to its responsibilities in complying with the United States Trustee's Operating Guidelines and Reporting Requirements and with the rules of the court; (e) preparing legal papers; (f) protecting the interest of the Debtor in all matters pending before the court; (g) representing the Debtor in negotiation with its creditors in the preparation of a Chapter 11 plan; and (h) performing all other legal services. The hourly rates of the firm's attorneys and staff are as follows: Buddy D. Ford $425 per hour Senior Associate Attorneys $375 per hour Junior Associate Attorneys $300 per hour Senior Paralegals $150 per hour Junior Paralegals $100 per hour In addition, the firm will be reimbursed for expenses incurred. Prior to the petition date, Mariano Cardona, manager of Cali Restaurant and Bakery, paid an advance fee of $10,000 on behalf of the Debtor. As disclosed in court filings, Buddy D. Ford does not represent interests adverse to the Debtor or the estate in the matters upon which it is to be engaged. The firm can be reached through: Buddy D. Ford, Esq. Buddy D. Ford, PA 9301 West Hillsborough Avenue Tampa, FL 33615-3008 Telephone: (813) 877-4669 Email: Buddy@tampaesq.com About Cali Restaurant and Bakery Cali Restaurant and Bakery Inc. sought Chapter 11 protection (Bankr. M.D. Fla. Case No. 21-05778) on Nov., 10, 2021, listing under $1 million in both assets and liabilities. Mariano Cardona, manager, signed the petition. Buddy D. Ford, PA serves as the Debtor's legal counsel. CALLAWAY GOLF: S&P Affirms 'B' ICR, Alters Outlook to Stable ------------------------------------------------------------ S&P Global Ratings revised the outlook to stable from negative on U.S.-based golf equipment, apparel, and entertainment company Callaway Golf Co. and International Inc. At the same time, S&P affirmed its 'B' issuer credit rating on Callaway and its 'B-' issuer credit rating on Topgolf. S&P said, "The stable outlook reflects our forecast for continued revenue and EBITDA growth due to healthy demand for golf equipment and apparel, as well as revenue from new venues and good cost control at Topgolf. We forecast consolidated lease-adjusted leverage in the high-4x area through 2022. "The rating affirmation and outlook revision to stable primarily reflects lower leverage due to significantly higher profitability at Topgolf than we previously expected. Callaway completed its acquisition of Topgolf in March 2021, and since that time Topgolf has significantly outperformed our expectations. Topgolf returned to pre-pandemic levels of same-venue sales quicker than we forecast. But more importantly, the company meaningfully improved its margins compared to pre-pandemic. The margin improvement came from better operating efficiency through actions such as simplifying food and beverage menus, reducing the number of managerial positions required to run venues, and operating leverage from a higher number of open venues that helped absorb selling, general, and administrative (SG&A) costs. We expect some incremental spending on labor will need to return to get to ideal staffing levels, but believe these margins are largely sustainable." In addition to accelerating its deleveraging path, the better cash generation from higher profitability also reduces the amount of cash that Callaway will have to contribute to fund Topgolf's venue expansion plans. Robust demand for golf equipment is also contributing to rapid deleveraging. Callaway recovered rapidly from the early days of the pandemic when coronavirus-related stay-at-home orders temporarily shut down most golf courses, retailers, and manufacturing facilities. Following the initial shutdowns, the consumer desire for socially distanced outdoor activities drove a remarkable increase in golf participation and equipment sales. While the outsized growth rates have begun to moderate compared to 2020, demand remains robust. Callaway's golf equipment sales for the first nine months of 2021 were nearly 30% higher than the same period in 2019, with third-quarter sales still up more than 35% from 2019. According to the National Golf Foundation's (NGF) summer 2021 survey of golf product attitudes and usage: "When comparing 2021 purchase interest to historical norms and to last year, they remain healthy and suggest the Spring of 2022 will see continued demand close to recent levels in most product categories, while nothing suggests demand will spike or grow." However, the NGF notes risks to golf club demand in 2022, including a decline in consumer confidence potentially caused by the emergence of other coronavirus variants, and the lengthening of golf club purchase cycles. It is also unclear how committed the new golfers that recently entered the sport will be once other entertainment options become more readily available to consumers after the pandemic subsides. S&P said, "In our view, the industry's ability to retain these new consumers over the longer term will primarily depend on the desirability and value of the sport compared with other entertainment options. Nevertheless, we expect the surge in participation to be a tailwind for the golf industry over the next few years and anticipate both Callaway and Topgolf will likely benefit from the rise in golf participation." Callaway's customers, such as Dicks Sporting Goods, also appear optimistic on golf demand. Further, channel inventories are currently low, so manufacturers like Callaway will benefit in the near term from sell-in to replenish inventory even if demand wanes more than expected. Callaway has improved margin despite supply chain and inflation challenges. Like most other manufacturers, Callaway is experiencing rapid inflation in commodity, transportation, labor, and other input costs. So far it has been able to overcome the higher costs through volume gains and price increases. Its Vietnam facilities were shut down following the emergence of the Delta variant in late summer but have since reopened and the company believes it will not experience any meaningful disruptions to its early 2022 product launches. S&P expects continued inflation in certain areas through at least the first half of 2022, but it forecasts the company will be able to continue to offset much of this pressure through further price increases and higher volumes. Topgolf stand-alone continues to rely on funding from Callaway and its REIT partners to grow. S&P said, "At more than 65 open venues, Topgolf has reached a size where aggregate venue profits are more than enough to offset corporate SG&A costs and pre-opening costs for new venues, such that it is now generating significant reported EBITDA: we forecast over $150 million (excluding stock-based compensation) in 2021. Its stand-alone adjusted leverage is still high at about 7.5x because of very high lease obligations, but it has come down considerably from about 9x as of the prior quarter and double-digits before that. We forecast leverage will remain in the 7x area through 2022. While we believe Topgolf would generate positive free cash flow if it stopped building new venues, its aggressive growth plans incorporating at least 10 new venues per year requires total capital expenditures in the range of $300 million to $450 million per year. A large portion of this spending is reimbursed by Topgolf's REIT partners, but the remaining $200 million to $225 million of capex per year must be funded by its internally generated operating cash flows, revolver borrowings, and contributions from parent Callaway. We believe the consolidated company could generate positive free cash flow including venue growth capex in 2023, and Topgolf stand-alone could reach positive free cash flow as early as 2024. However, this is a fairly long time horizon. We expect variability in the business' potential operating results depending upon Topgolf's performance after the pandemic, the status of U.S. economic activity and employment, and changes in consumer preferences over time." Although Topgolf has a first-mover advantage in creating a unique golf experience, it faces significant competition from alternative out-of-home entertainment options, among other substitutes for consumers' discretionary leisure and entertainment spending. Its customers may choose lower-priced or alternative venues to socialize that do not involve golfing, eating, or drinking. Economic pressure could amplify this risk if consumers limit their spending on discretionary leisure activities. Topgolf's harvest case mitigates some of the downside risk. If Topgolf does not reach its goal of becoming self-funding by 2024, it may be difficult to maintain the current pace of investment without pressuring Callaway's free cash flow. S&P's rating on Callaway relies on its ability to mitigate this risk and the risk of an economic slowdown by enacting Topgolf's harvest case, which includes halting future venue development before breaking ground and reducing other discretionary capex, allowing Topgolf to harvest the cash flows from its existing venues. Although it would take 9 to 12 months to work through the near-term spending commitments on its partially built venues, the elimination of growth capital spending and pre-opening expenses beyond this inflection point would likely enable Topgolf to generate positive free cash flow and EBITDA well above its fixed charges. S&P said, "We believe Topgolf is strategically important to the combined entity and anticipate Callaway will likely support Topgolf under most foreseeable circumstances. Former Topgolf shareholders own a significant share of the combined entity as a result of the merger and have three board seats, thus they can exert significant influence. Callaway has also made it clear that Topgolf is an important part of the company's strategy to create an unrivaled golf and entertainment business. The company believes the combination enhances the growth prospects of both entities. Callaway's willingness to fund the merger with $1.7 billion of its stock and plan to commit significant cash to fund development at Topgolf further demonstrate this commitment. As such, we believe Callaway would provide extraordinary support to Topgolf under most foreseeable circumstances. Still, Callaway is not providing guarantees to Topgolf's debt, which raises some doubts about the extent of Callaway's support in the event Topgolf encounters significant credit stress. "The stable outlook reflects our forecast for continued revenue and EBITDA growth due to good demand for golf equipment and apparel, as well as revenue from new venues and good cost control at Topgolf. We forecast consolidated lease-adjusted leverage in the high-4x area through 2022. "We could consider higher ratings if we believe Callaway will sustain consolidated lease-adjusted leverage below 5x, incorporating some cushion for potential economic volatility, and we have better visibility into the company generating positive free cash flow after growth capex." This would most likely occur if: -- Topgolf continues to perform well and proves that recent margin improvements are sustainable; -- Callaway is able to manage costs through any significant pullback in golf equipment demand such that leverage does not increase materially; -- The company continues to offset most of the high input and labor cost inflation with price increases or productivity initiatives; or -- The company repays funded debt with excess cash. -- Higher ratings would also require S&P to believe that Callaway and its board were committed to maintaining leverage below 5x, including spikes for future acquisitions. S&P could consider lower ratings if leverage returns to and is sustained above 7x, or if free cash flow becomes significantly more negative. This could result from a combination of: -- A substantial decline in demand for golf equipment; -- Supply chain and inflation pressure that the company is not able to offset through price increases or productivity initiatives; -- Market share losses due to unsuccessful product launches or changing consumer preferences; or -- Lower Topgolf visitation as the pandemic subsides and more entertainment alternatives return, and the company is unable to preserve current margins. CAMDEN DIOCESE: Rebuffs Victims' Hiding Funds Claims ---------------------------------------------------- Alex Wolf of Bloomberg Law reports that the Diocese of Camden in New Jersey rejected charges that it's hiding assets in its bankruptcy to avoid sufficiently compensating clergy abuse victims, responding to fend off a possible court motion for contempt. The diocese has been forthright about its finances since it filed Chapter 11 last 2020, it said in a letter to the U.S. Bankruptcy Court for the District of New Jersey on Tuesday. The Catholic church district added that it remains committed to providing creditors with up-to-date information on its investments and bank accounts. About The Diocese of Camden The Diocese of Camden, New Jersey is a non-profit religious corporation organized pursuant to Title 16 of the Revised Statutes of New Jersey. It is the secular legal embodiment of the Roman Catholic Diocese of Camden, a juridic person recognized under Canon Law. The Diocese of Camden sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020. Reverend Robert E. Hughes, vicar general and vice president, signed the petition. In the petition, the Debtor disclosed total assets of $53,575,365 and liabilities of $25,727,209. Judge Jerrold N. Poslusny Jr. oversees the case. The Debtor tapped McManimon, Scotland & Baumann, LLC as its bankruptcy counsel, Eisneramper, LLP, as financial advisor, Cooper Levenson P.A. and Duane Morris LLP as special counsel. Prime Clerk LLC is the Debtor's claims and noticing agent and administrative advisor. The U.S. Trustee for Regions 3 and 9 appointed an official committee of unsecured trade creditors in the Debtor's Chapter 11 case. The committee is represented by Porzio, Bromberg & Newman, P.C. CLEAR THE AIR: Combined Plan & Disclosures Confirmed by Judge ------------------------------------------------------------- Judge Eduardo V. Rodriguez has entered an order confirming the Combined Plan and Disclosure Statement filed by Debtor Clear the Air, LLC. Two objections to confirmation were filed by Ally Financial and Brazoria County. Additionally, the Texas Comptroller of Public Accounts ("Comptroller") and Texas Workforce Commission ("TWC") raised objections to certain provisions of the Plan. CTA HVAC. LLC ("CTA") has paid Ally Financial in full and thus the Debtor believes the Objection is now moot. The objections raised by Brazoria County, Comptroller and TWC have been resolved by agreement as provided for in this Order. Pursuant to an agreement with Brazoria County, the Debtor has agreed to include the following language in the Plan: * Brazoria County's Amended Claim No. 11 for $1,751.79 (the "Tax Claim") will be paid-in-full with interest at 12% in 30 monthly installments starting on the first of the month following the Effective Date. The total amount of interest due shall be calculated as of the original date of delinquency beginning in February 2020 and continue until the taxes are paid in full. * Brazoria County shall retain their statutory lien securing their pre-petition and post-petition tax debts until such time as the tax debt is paid in full. Should the Debtor fail to make any payments to Brazoria County as required in this Plan, Brazoria County shall provide notice of that default by sending written notice by certified mail to Debtor and Debtor's attorney advising of that default, and providing the Debtor with a period of 15 days to cure the default. In the event that the default is not cured within 15 days, Brazoria County may, without further order of this Court or notice to the Debtor, pursue all of their rights and remedies available to them under the Texas Property Tax Code to collect the full amount of all taxes, penalties and interest owed. The Debtor shall be entitled to no more than 2 Notices of Default. In the event of a 3rd default, Brazoria County may pursue all rights and remedies available to it under the Texas Property Tax Code in state district court without further order of this court or further notice to the Debtor. In the event of a default in the payment of post-petition taxes, the Debtor shall be required to pay all penalties and interest imposed under applicable non-bankruptcy law to cure the default. * Pursuant to the Asset Purchase Agreement between the Debtor and CTA HVAC, LLC ("CTA"), CTA assumes full personal liability for the tax debts owed to Brazoria County. CTA agrees to notify Brazoria County, through their attorney, of the location of the business personal property subject to the Tax Claim, in the event it is moved out of Brazoria County. Pursuant to an agreement with the Comptroller and TWC, the Debtor has agreed to include the following in the Plan: * Notwithstanding anything else to the contrary in the Plan or this Confirmation Order, these provisions will govern the treatment of the claims of the Comptroller of Public Accounts (the "Comptroller") and the Texas Workforce Commission (the "TWC"): (1) nothing provided in the Plan or this Confirmation Order shall affect or impair any statutory or common law setoff rights of the Comptroller or the TWC in accordance with 11 U.S.C. § 553; (2) nothing provided in the Plan or this Confirmation Order shall affect or impair any rights of the Comptroller or the TWC to pursue any non-debtor third parties for tax debts or claims; (3) nothing provided in the Plan or this Confirmation Order shall be construed to preclude the payment of interest on the Comptroller's or the TWC's administrative expense tax claims, if any; (4) to the extent that interest is payable with respect to any administrative expense, priority or secured tax claim of the Comptroller or the TWC, the interest rate shall be the statutory interest rate, currently 4.25% per annum; and (5) the Comptroller and/or the TWC are not required to file a motion or application for payment of administrative expense claims; the Comptroller’s and/or the TWC's administrative expense claims are allowed upon filing, subject to objection on substantive grounds. * A failure by the Debtor, Reorganized Debtor, CTA or any of their successor in interest, to make a plan payment to an agency of the State of Texas shall be an Event of Default. If the Debtor fails to cure an Event of Default as to an agency of the State of Texas within 5 days after service of a written notice of default, then that agency may (a) enforce the entire amount of its claim; (b) exercise any and all rights and remedies available under applicable non-bankruptcy law; and (c) seek such relief as may be appropriate in this court. The Debtor can receive up to 3 notices of default, however, the third default cannot be cured. A copy of the Plan Confirmation Order dated Nov. 15, 2021, is available at https://bit.ly/30Fyf9p from PacerMonitor.com at no charge. About Clear the Air Clear the Air LLC was formed on Jan. 4, 2006 by Jason Stom. Mr. Stom is a second-generation HVAC professional having learned the industry from his father. Clear the Air experienced rapid growth and profit by focusing heavily on the customer experience in the residential and light commercial market. It offered service, maintenance, retrofit installations of air conditioning and heating equipment. Clear the Air sought Chapter 11 protection (Bankr. S.D. Tex. Case No. 19-32939) on May 29, 2019, in Houston. The Debtor disclosed total assets of $54,315 against total liabilities of $2,501,091 as of the bankruptcy filing. The Hon. Eduardo V. Rodriguez is the case judge. SMITH & CERASUOLO, LLP, led by name partner Gary F. Cerasuolo, is serving as the Debtor's counsel. COCRYSTAL PHARMA: Incurs $3.9 Million Net Loss in Third Quarter --------------------------------------------------------------- Cocrystal Pharma, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $3.94 million on zero revenue for the three months ended Sept. 30, 2021, compared to a net loss of $2.67 million on $489,000 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 $10.50 million on zero revenue compared to a net loss of $8.16 million on $1.50 million of revenues for the same period during the prior year. As of Sept. 30, 2021, the Company had $82.60 million in total assets, $1.59 million in total liabilities, and $81.01 million in total stockholders' equity. The Company reported unrestricted cash of $61.6 million as of Sept. 30, 2021 compared with $33.0 million as of Dec. 31, 2020. The Company reported working capital of $61.2 million as of Sept. 30, 2021. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1412486/000149315221028338/form10-q.htm About Cocrystal Pharma Headquartered in Creek Parkway Bothell, WA, Cocrystal Pharma, Inc. -- http://www.cocrystalpharma.com-- is a clinical stage biotechnology company discovering and developing novel antiviral therapeutics that target the replication machinery of influenza viruses, hepatitis C viruses, noroviruses, and coronaviruses. Cocrystal Pharma reported a net loss of $9.65 million for the year ended Dec. 31, 2020, compared to a net loss of $48.17 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $87.42 million in total assets, $2.67 million in total liabilities, and $84.75 million in total stockholders' equity. CURO GROUP: Moody's Affirms 'B3' CFR, Outlook Remains Stable ------------------------------------------------------------ Moody's Investors Service has affirmed Curo Group Holdings Corp.'s B3 corporate family rating and B3 senior secured rating. Curo's outlook remains stable. The rating action follows Curo's announcement of its agreement to acquire Heights Finance Corporation (Heights) for a total consideration of $360 million. Heights is a US non-bank subprime consumer lender. Affirmations: Issuer: Curo Group Holdings Corp. Corporate Family Rating, Affirmed B3 Senior Secured Regular Bond/Debenture, Affirmed B3 Outlook Actions: Issuer: Curo Group Holdings Corp. Outlook, Remains Stable RATINGS RATIONALE The ratings' affirmations reflect Moody's view that the acquisition will not significantly affect Curo's financial profile. Curo's ratings reflect the firm's strong historical profitability, and few substantial debt maturities before 2028, while nonetheless incorporating high regulatory risk inherent in the firm's high-cost consumer loan products and its negative tangible common equity, which exposes creditors to high potential losses. Moody's said the acquisition will be funded in part with a $225 million add-on to Curo's senior secured notes, and this issuance will result in temporarily elevated leverage, as measured by recourse debt to EBITDA. There are also operational risks associated with the acquisition integration. Curo's leverage has been elevated in the last few quarters due to lower revenues stemming from attrition in the company's US instalment loan portfolio, which was largely driven by increased prepayments related to government assistance programs to consumers in response to the coronavirus pandemic. However, Moody's assessed that the credit risks associated with the acquisition are offset by its potential strategic benefits, and the improving operating environment that is benefitting Curo's core businesses. Heights has approximately $440 million in receivables, and roughly half of this portfolio consists of subprime installment loans with annual percentage rates (APRs) below 36%, the threshold at which some states have imposed stricter controls on the rates lenders are able to charge for loan products. In recent years, Curo has withdrawn from certain states that have imposed restrictions on lenders that charge rates above 36%. Along with the firm's recent initiatives to expand its Canadian product offerings, the Heights acquisition should allow the firm to reduce its reliance on such products with a higher exposure to regulatory and legal disruption. The B3 rating on Curo's senior secured notes reflects the volume and priority of these notes within the firm's overall capital structure. Curo's outlook is stable, reflecting Moody's expectation that it will maintain or continue to improve its financial performance, including maintaining solid profitability over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Curo's ratings could be upgraded if it improves its capitalization through earnings retention, while maintaining consistently strong earnings, sufficient liquidity, and recourse debt to EBITBA consistently below 3.0x. The ratings could also be upgraded if the firm is able to execute on its strategy to reduce reliance on earnings derived from products highly exposed to regulatory risks, namely its US high-cost subprime installment loans. Curo's ratings could be downgraded if its earnings are expected to deteriorate materially compared to historical results. The ratings could also be downgraded if the company incurs substantial amounts of additional debt to pursue organic growth or another acquisition. The ratings could also be downgraded in the event of an adverse regulatory development that would have a significant adverse impact on the company's operations. The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. CURO GROUP: S&P Lowers Senior Secured Notes Rating to 'CCC+ ----------------------------------------------------------- S&P Global Ratings lowered its issue rating on Curo Group Holdings Corp.'s senior secured notes to 'CCC+' from 'B-'. The recovery rating is '5', indicating its expectation of modest recovery (10%-30%, rounded estimate: 25%) in a simulated default scenario. S&P also affirmed its 'B-' long-term issuer credit rating on the company. The outlook remains stable. Curo Group Holdings Corp. is acquiring Heights Finance Corp. for $360 million. Curo is adding on $225 million of debt to its senior secured notes to help fund the acquisition. S&P said, "Our issuer credit rating affirmation and stable outlook reflect our view that Curo's liquidity and EBITDA interest coverage will remain sustainable over the next 12 months, despite very high debt to EBITDA. The company's EBITDA interest coverage was 1.9x for the 12 months ended Sept. 30, 2021, and we project it will remain slightly under 2x over the next 12 months. Post-acquisition, we expect Curo to maintain more than $50 million of unrestricted cash on balance sheet, along with ample capacity on its non-recourse financing facilities to support its liquidity. "Debt to EBITDA was 6.6x as of Sept. 30, 2021, and we project it will rise further. We expect leverage to increase to and remain over 7x post-acquisition over the next 12 months. The acquisition of Heights added $225 million of senior secured notes and about $340 million of Heights revolver, and we expect future drawdowns on the Flexiti special-purpose entity (SPE) facility and securitization of Flexiti loans for funding new business to increase debt further. Curo's EBITDA was hurt by lower U.S. loan originations and efforts to ramp up Flexiti's scale, as shown by how EBITDA for the 12 months ended Sept. 30, 2021, was $187 million, compared with $250 million a year ago. While we expect EBITDA to begin recovering in 2022 as origination volumes recover and Flexiti's profitability improves, S&P believes significant risks remain. Integration risks with Flexiti and Heights are material; the expansion of Flexiti's scale resulted in elevated corporate expenses in 2021, generating negative EBITDA for Curo's Canada Point of Sale channel. Additionally, the end of government stimulus programs could increase portfolio charge-offs and delinquencies, weakening credit performance. S&P said, "The downgrade of Curo's senior secured notes reflects our lower recovery expectations in a simulated default scenario. Our recovery expectations of the notes were already at 30% as of our July report (Curo Group Holdings Corp. 'B-' Rating Affirmed; Outlook Remains Stable; Proposed Senior Secured Notes Rated 'B-', July 13, 2021). We lowered our recovery expectations because of the proposed $225 million of add-on debt. See the "Recovery Analysis" section for more information. "The Heights acquisition will help de-risk Curo's U.S. loan portfolio, but regulatory risk remains significant. We believe the acquisition of Heights should help Curo enter the under-36% APR consumer loan market, allowing the company to move back into states that recently adopted regulatory rate caps for consumer loans. However, Curo still has significant exposure to payday and high-cost installment loans in the U.S. "The stable outlook reflects our view that over the next 12 months, Curo will maintain EBITDA interest coverage slightly under 2x and leverage significantly above 5x debt to EBITDA. "We could lower the ratings if EBITDA interest coverage approaches 1x, the company meaningfully erodes its cushion relative to covenants, or regulatory changes create doubts about the company's ability to continue as a going concern. "An upgrade is unlikely over the next 12 months. Over the longer term, we could raise the ratings if the company maintains debt to EBITDA below 5x and EBITDA interest coverage above 3x. An upgrade would also depend on credit performance remaining stable and no material regulatory rules or findings." CYPRESS CREEK: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Cypress Creek Emergency Medical Services Association 7111 Five Forks Dr. Spring, TX 77379 Case No.: 21-33733 Business Description: Cypress Creek Emergency Medical Services Association is an emergency medical service provider in North Harris County, within greater Houston, Texas. Chapter 11 Petition Date: November 18, 2021 Court: United States Bankruptcy Court Southern District of Texas Judge: Hon. Christopher M. Lopez Debtor's Counsel: Annie Catmull, Esq. O'CONNORWESLER PLLC 4400 Post Oak Place, Ste. 2360 Houston, TX 77027 Tel: 281-814-5977 Email: aecatmull@o-w-law.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Wren Nealy, Jr., chief executive officer. 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/KOSWPMY/Cypress_Creek_Emergency_Medical__txsbke-21-33733__0001.0.pdf?mcid=tGE4TAMA DEYO TRANSPORTATION: Unsecured Creditors to Recover 3% in 5 Years ----------------------------------------------------------------- Deyo Transportation Services, LLC, filed with the U.S. Bankruptcy Court for the Western District of Texas a Plan of Reorganization dated November 15, 2021. The Debtor manages and operates a trucking and transportation business. This Plan proposes to pay creditors from future income by continuing operations and reorganizing its current debts. The Debtor filed this case on August 16, 2021 to save the business from aggressive collection efforts by merchant cash advance lenders and to reorganize itself and its debts. Debtor anticipates having cash available to fund the plan and pay the creditors pursuant to the proposed plan. It is anticipated that after confirmation, the Debtor will continue operating its business. Based upon the projections, the Debtor believes it can service the debt to the creditors. Class 3 Claimant Secured Claims (These claims are impaired). * 3-1 Stearns Bank filed a secured claim (Claim No. 6) in the amount of $31,650.96. Debtor will pay the secured portion of the claim of $24,520.86 at 5.25% interest per annum in monthly installments and the claim will be paid in full in 60 equal monthly payments. The payments will be $465.54 per month with the first monthly payment being due and payable 30 days after the effective date, unless this date falls on a weekend or federal holiday, in which case the payment will be due on the next business day. The remaining unsecured amount of the claim of $7,130.10 will be treated as a general unsecured claim. * 3-2 Stearns Bank filed a secured claim (Claim No. 7) in the amount of $43,423.00. This claim is secured by two pieces of equipment: a 2006 Stephens Dry Bulk Trailer VIN #4097 and a 2007 Trail King Dry Bulk Trailer VIN #7775. Debtor communicated its willingness to surrender this equipment to Stearns Bank. The Debtor will pay any deficiency balance, after the collateral is sold, as a general unsecured claim. If any deficiency claim exists, Crestmark Vendor Finance shall amend its proof of claim that will inform Debtor of the deficiency amount that shall be paid in full over 60 months at 0% interest. * 3-3 Amur Equipment Finance, Inc. filed a secured claim (Claim No. 11) in the amount of $12,480.44. Debtor will pay the secured portion of the claim of $11,620.80 at 5.25% interest per annum in monthly installments and the claim will be paid in full in 60 equal monthly payments. The payments will be $220.63 per month with the first monthly payment being due and payable 30 days after the effective date, unless this date falls on a weekend or federal holiday, in which case the payment will be due on the next business day. The unsecured amount of the claim of $859.64 will be treated as a general unsecured claim. * 3-4 Crestmark Vendor Finance filed a secured claim (Claim No. 13) in the amount of $18,793.35. This claim is secured by a 2015 Gallegos Trailer. Debtor indicated on its schedules that it would like to surrender the collateral. The Debtor will pay any deficiency balance, after the collateral is sold, as a general unsecured claim. If any deficiency claim exists, Crestmark Vendor Finance shall amend its proof of claim that will inform Debtor of the deficiency amount that shall be paid in full over 60 months at 0% interest. Payments will begin within 30 days after the filing of an amended proof of claim, unless this date falls on a weekend or federal holiday, in which case the payment will be due on the next business day. * 3-5 Pawnee Leasing Corporation did not file a proof of claim. Debtor indicated on its schedules that it would like to surrender the collateral. This Court entered an Agreed Order terminating the stay as to the 2015 EXAI Trailer and authorized Pawnee to foreclose its security interest on the Equipment without further order. After the collateral is sold, if any deficiency balance exists, the Debtor will treat such deficiency as an unsecured claim. Pawnee shall amend its proof of claim to account for such deficiency balance, and the Debtor will pay the claim in full over 60 months at 0% interest. Payments will begin within 30 days after the filing of an amended proof of claim, unless this date falls on a weekend or federal holiday, in which case the payment will be due on the next business day. Class 4 consists of the Secured Claim of Simmons Bank (This claim is impaired). Simmons Bank filed Claim 5-1 in connection to a secured claim on a 2012 Peterbilt 587 (the "Subject Collateral"). Debtor will pay the full claim of $12,243.16, as reflected in Claim 5-1 at 5.25% interest per annum in monthly installments and the claim will be paid, in full, in 36 equal monthly payments. The payments will be $368.32 per month with the first monthly payment being due and payable 30 days after the effective date, unless this date falls on a weekend or federal holiday, in which case the payment will be due on the next business day. Prior to filing of the Chapter 11 Plan, Simmons Bank and the Debtor agreed to adequate protection payments in the amount of $405.34 per month. Class 5 consists of the Allowed Unsecured Claims (These claims are impaired). All allowed unsecured creditors shall receive a pro rata distribution at zero percent per annum over the next 5 years. Nothing prevents Debtor from making monthly or quarterly distributions, so as long as 1/5 of the annual distributions to the general allowed unsecured creditors are paid by each yearly anniversary of the confirmation date of the plan. Debtor will distribute approximately $4,926.75, subject to change based on deficiency balances from the surrender of multiple pieces of equipment, to the general allowed unsecured creditor pool over the 5 year term of the plan. The Debtor's Allowed Unsecured Claimants will receive 3% of their allowed claims under this plan. Class 6 Equity Interest Holders (Current Owners) (These claims are not impaired) and shall be satisfied as follows: The current owners will receive their regular annual salary and they will be allowed to retain their ownership in the Debtor. Debtor anticipates the continued operations of the business to fund the Plan. A full-text copy of the Plan of Reorganization dated Nov. 15, 2021, is available at https://bit.ly/3oFmIP9 from PacerMonitor.com at no charge. About Deyo Transportation Services Deyo Transportation Services, LLC filed a petition for Chapter 11 protection (Bankr. W.D. Texas Case No. 21-70126) on Aug. 16, 2021, listing as much as $500,000 in both assets and liabilities. Judge Tony M. Davis oversees the case. Robert Chamless Lane, Esq., at The Lane Law Firm, LLC, represents the Debtor as legal counsel. DIGI INTERNATIONAL: Moody's Assigns B2 Corp. Family Rating ---------------------------------------------------------- Moody's Investors Service assigned a first-time B2 Corporate Family Rating to Digi International Inc. In addition, Moody's assigned a B2 rating to Digi's proposed Term Loan B and Revolving Credit Facility, B2-PD probability of default (PDR) rating and a speculative grade liquidity rating (SGL) of SGL-1. The net proceeds of the new facilities will be used to fund the acquisition of Ventus Global Networks Solutions and refinance existing debt. The outlook is stable. Assignments: Issuer: Digi International Inc. Corporate Family Rating, Assigned B2 Probability of Default Rating, Assigned B2-PD Speculative Grade Liquidity Rating, Assigned SGL-1 Senior Secured 1st Lien Revolving Credit Facility, Assigned B2 (LGD3) Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3) Outlook Actions: Issuer: Digi International Inc. Outlook, Assigned Stable RATINGS RATIONALE Digi's B2 CFR reflects the company's relatively small scale in its core Internet of Things (IoT) products and services businesses, and moderate pro forma financial leverage of just over 5.1x (Moody's adjusted). In 2020 and through the first half of 2021, Digi has been negatively impacted by the COVID-19 pandemic in all of its business segments, and more recently by lingering product availability constraints due to the global semiconductor chip shortage, which has resulted in slower than previously anticipated revenue growth. The ratings are supported by Digi's solid position as a key provider of IoT and embedded wireless networking devices for a large variety of industries and government agencies. Digi benefits from solid and consistent cash flow generation with very high retention rates among its diverse customer base, given the core connectivity products and services it provides to its clients. Moody's expects strong EBITDA growth in the next 12-18 months, aided by the Ventus acquisition, gradual product restoration through the supply chain and ongoing recovery from COVID-19. The SGL-1 reflects Moody's expectation that Digi will maintain very good liquidity for the next 12-15 months. The company has about $152 million of cash and short-term investments as of September 30, 2021 ($90 Million pro forma for refinancing). Moody's expects Digi to generate at least $50 million in free cash flow in through end of fiscal 2022 (September). The company will have a new $35 million revolving credit facility, which Moody's expects to remain undrawn. Based on draft term sheets, there will be no financial covenants on the company's term loan B and a springing net first lien leverage ratio of 5.25x on the company's revolving credit facility at 30% utilization. The stable outlook reflects Moody's expectation of revenue growth in all of its segments and solid free cash flow generation over the next 12-18 months. The stable outlook accommodates a moderate level of acquisitions which may be funded with debt. As a provider of critical endpoint and networking communications products and services, Digi contends with growing cybersecurity risks that may threaten its and customers' systems and materially disrupt business operations. This may expose Digi to reputational risk and potential financial damages that could have a meaningfully negative impact on its credit profile. Digi is a public company led by a diverse board of directors, with independent directors holding five of six slots. Moody's governance assessment also reflects the risk of activism, acquisitions, and changes in financial policy. The majority of senior management leadership joined the company over the past 7 years and has been successful in increasing the company's product offering, sales and free cash flow generation. Moody's also anticipates that Digi will continue to maintain its historically conservative financial policies. The B2 rating for Digi's first lien senior secured credit facilities reflects the company's B2-PD PDR and an average recovery at default. The instrument rating is consistent with the CFR as the company's pro forma debt structure is almost entirely comprised of this single class of debt. As proposed, the new credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following: Incremental debt capacity up to the greater of $75 million and 100% of Consolidated EBITDA, plus unlimited amounts subject to 3.75x consolidated first lien net leverage ratio (if pari passu secured). No portion of the incremental may be incurred with an earlier maturity than the initial term loans. The credit agreement does not permit the designation of unrestricted subsidiaries, preventing collateral "leakage" to unrestricted subsidiaries. Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees, subject to materiality limitations requiring subsidiaries exceeding 10% of current assets or EBITDA in the aggregate to provide guarantees whether or not wholly-owned. Up-tiering transactions are permitted subject to protective provisions requiring the consent of all lenders to contractually subordinate the obligations or the liens to any other indebtedness or lien on the collateral. 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 if Digi maintains its profitability while significantly growing its scale, sustain adjusted leverage below 4x, and preserves a strong liquidity profile. The ratings could be downgraded if Digi's operating performance or liquidity weakens, such that adjusted leverage is sustained above 6x, free cash flow to debt is maintained significantly below 10% or financial governance concerns increase. The principal methodology used in these ratings was Diversified Technology published in August 2018. Headquartered in Hopkins, Minnesota, Digi is a key provider of IoT and embedded wireless networking products, services, and solutions. The IoT Products & Services segment comprises cellular routers, embedded systems, radio frequency (RF) products, and infrastructure management solutions. The IoT Solutions segment, including a range of sensors and software applications, are sold across several verticals with a range of applications (e.g. temperature monitoring). The company reported approximately $309 million for the year ended September 30, 2021. DIGI INTERNATIONAL: S&P Assigns 'B' ICR on Ventus Acquisition ------------------------------------------------------------- S&P Global Ratings assigned its 'B' issuer credit rating to U.S.-based internet-of-things (IoT) technology company Digi International Inc. S&P said, "We also assigned our 'B' issue-level and '3' recovery ratings to the company's $350 million senior secured term loan B due 2028. The '3' recovery rating indicates our expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in the event of a payment default." Digi International has raised $385 million of secured debt financing to support its acquisition of Ventus Global Network Solutions (not rated) for $348 million. S&P said, "The ratings on Digi International reflect our expectation for high leverage following its acquisition of Ventus Global Network Solutions but solid business prospects because of growth opportunities in IoT connectivity. We expect the transaction to result in elevated adjusted leverage of about 4.9x in 2022, although we believe the company has good prospects to reduce leverage to the low-4x area by year-end 2023 on the back of earnings growth. Although not incorporated into our base-case forecast, we believe Digi could use excess cash flow for debt repayment." Alternatively, Digi could pursue additional debt-financed acquisitions or adopt a more aggressive financial policy that would constrain leverage improvement. The ratings also reflect Digi's small scale in a highly competitive and fragmented IoT market with low barriers to entry, potential revenue volatility from the sale of hardware products (which account for about 70% of pro forma revenue), modest percentage of recurring revenue, and possible integration missteps arising from its acquisition of Ventus. Partial mitigating factors include favorable growth prospects supported by positive secular tailwinds in IoT, high customer switching costs and historically low churn, good customer diversity, and a capital expenditure (capex)-light business model that contributes to solid free operating cash flow (FOCF). The acquisition of Ventus, a provider of managed network-as-a-service (MNaaS) and custom network hardware solutions, could improve Digi's overall business risk profile. Ventus has wide reach, serving over 475 customers globally with longstanding relationships and low churn. S&P said, "We view the acquisition favorably because it increases Digi's product and end-market diversification, doubles its recurring revenue base, and enhances the company's margin profile. Although our favorable view is somewhat tempered by uncertainty around whether Digi possesses the organizational capabilities to successfully integrate Ventus—the company's largest acquisition to date." Digi currently serves over 35,000 customers in various industries including food service, healthcare, transportation, energy, agriculture/heavy machinery, industrial, and retail across its IoT products and services and IoT solutions businesses. The Ventus acquisition expands Digi's IoT solutions business into financial services, gaming/lottery, and digital signage. S&P said, "We believe these customer additions could open up new cross-selling opportunities for Digi. The acquisition also adds meaningful recurring revenue from Ventus' multiyear contracts of three to 10 years. Monthly recurring revenue from MNaaS, connectivity, and hardware fees accounted for about 90% of Ventus' revenue for the 12 months ended June 30, 2021. Pro forma for the acquisition, we estimate that Digi's recurring revenue will be 23% of total revenue compared to 12% previously, which helps offset the volatility associated with its hardware business. Although cost synergies are limited, we expect Digi's S&P Global Ratings-adjusted EBITDA margins to improve to the low-20 percent area from the mid-teen percent area due to Ventus' higher-margin MNaaS revenue." Notwithstanding favorable growth trends in IoT, Digi has limited scale and faces intense competition. Digi's products and services support the integration of IoT technology and should benefit from the longer-term growth in IoT applications and connected devices. Additionally, demand for MNaaS is rising due to increasing demand for network management (as more enterprises shift to the cloud), security needs, and regulatory requirements. S&P also expect that 5G will drive demand for cellular wide-area-networks. Despite these growth opportunities, the market is highly competitive and fragmented and Digi faces intense competition from multiple vendors in each of its product or service categories. In its IoT products and services business, Digi competes with companies such as Sierra Wireless, Cradlepoint (subsidiary of Ericsson), Lantronix, Cisco, and CalAmp in the cellular IoT gateway and router market. Cisco and Ericsson in particular benefit from greater scale, product innovation, and financial flexibility. Digi also competes with smaller players with specialized solutions, such as Omnitracs. Digi typically prices its products and services at a premium and relies on its ability to provide technologically advanced, secure and reliable products and services to remain competitive. While Digi's hardware and software businesses are run separately, Ventus' hardware and software offerings are more integrated, which simplifies customer engagements and allows it to be a one-stop provider. S&P believes this will be an important differentiator as Digi scales its IoT solutions business. Supply chain constraints add uncertainty to Digi's near-term operating and financial performance. Current supply and freight constraints are impacting Digi's ability to meet customer demand and increasing costs for its product components, labor, and transportation. While Digi is optimistic that the supply chain issues could ease in the second half of 2022, there is a high degree of uncertainty as to when normalcy will return. In the meantime, these conditions could lead to lower revenue from customer deferrals and pressure on margins and cash flow due to higher costs. That said, Digi's sizeable cash balance and solid liquidity position provides some cushion against prolonged supply constraints and inflationary pressures. The stable outlook reflects S&P Global Ratings' expectation that healthy top-line growth and margin expansion from higher service revenue and improved scale, should enable solid EBITDA growth such that leverage will be in the high-4x area over the next year. S&P said, "We could consider raising the rating if the company profitably grows its market share, leading to higher revenue and EBITDA, such that leverage is sustained below 4.5x. This would occur if the company successfully integrates Ventus and capitalizes on favorable trends in IoT. However, even under that scenario, an upgrade would be contingent on the company maintaining a financial policy that allows it to sustain leverage comfortably below 4.5x. "We could lower the rating on Digi if increased competition, integration missteps, or supply chain issues lead to lower sales, elevated pricing pressure, margin compression, or higher customer churn such that its EBITDA declines and leverage rises above 6x for a prolonged period. We could also downgrade the company if it pursues a more aggressive financial policy, including debt-financed acquisitions, share repurchases, or dividends to its owners." DITECH HOLDING: McChristian Claims vs Breckenridge Dismissed ------------------------------------------------------------ Michael McChristian sued Green Tree Credit LLC, Ditech Holding Corporation Mortgage, LLC, and Breckenridge Property Fund 2016, LLC, to unwind the nonjudicial Foreclosure Sale of the premises located at 11118 Ironwood Road, San Diego, California. Green Tree is the assignee of the Deed of Trust to the Property that secured payment of a $326,000 loan that the Plaintiff obtained to purchase the Property. Ditech is Green Tree's parent company. Breckenridge is not a debtor; it purchased the Property at the Foreclosure Sale. In May 2019, the Plaintiff commenced this adversary proceeding. In June 2019, he recorded a Notice of Pendency of Action against the Property. The Complaint contains nine causes of action, each of which names Ditech and/or Green Tree as defendants. The Ditech Defendants jointly filed their own Rule 12(b)(6) motion to dismiss the Complaint. On October 29, 2021, the Court granted the motion and dismissed the Ditech Defendants from the Complaint with prejudice. In the four counts that also name Breckenridge as a defendant, the Plaintiff seeks equitable relief that, if granted, would result in setting aside the Foreclosure Sale and restoring Plaintiff with title to the Property. The matters before the Court are (i) Breckenridge's motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the Breckenridge Claims, with prejudice, and (ii) Breckenridge's motion to expunge the Lis Pendens. As support for the Rule 12(b)(6) Motion, Breckenridge says the Court lacks subject matter jurisdiction over the Breckenridge Claims because they do not fall within the Court's core jurisdiction. It also argues that the Court should dismiss each of those claims because the Plaintiff has not and cannot state claims for relief thereunder, and in any event, because those claims are barred by application of the doctrines of collateral and judicial estoppel, and because it is a bona fide purchaser of the Property that took title to the Property free and clear of any competing interests. Breckenridge asserts that the Court should grant the Motion to Expunge and expunge the Lis Pendens because the Plaintiff cannot establish the validity of any "real property claim" asserted against Breckenridge. It also asserts that the Court should award it its fees and costs incurred in bringing the Motion to Expunge. The Plaintiff filed a single response to both motions. In the Opposition, the Plaintiff failed to address the Motion to Expunge and most of the arguments made by Breckenridge in support of the Rule 12(b)(6) Motion. The United States Bankruptcy Court for the Southern District of New York dismissed each of the Breckenridge Claims because the Plaintiff fails to state a claim upon which relief can be granted. The Court dismissed the Breckenridge Claims without leave to replead because as a matter of law, the Plaintiff cannot plead claims for relief against Breckenridge under Counts 1, 7, 8 and 9, and because, in any event, the Breckenridge Claims are barred by application of the doctrine of collateral estoppel and Breckenridge is a bona fide purchaser that took the Property free and clear of any competing interests. Accordingly, the Court (i) granted the Rule 12(b)(6) Motion and dismissed the Breckenridge Claims with prejudice and (ii) granted the Motion to Expunge and expunges the Lis Pendens. The Court awarded Breckenridge $900 for its fees and costs incurred in prosecuting the Motion to Expunge. The adversary proceeding is styled Michael McChristian, Plaintiff, v. Ditech Holding Corporation, Green Tree Credit LLC, and Breckenridge Prop Fund 2016 LLC, Defendants, Adversary Case No. 19-01137 (JLG)(Bankr. S.D.N.Y.). A full-text copy of the Memorandum Decision and Order dated November 9, 2021, is available at shorturl.at/hqEG5 from Leagle.com. By: Seth P. Cox, Esq., Redondo Beach, CA, WEDGEWOOD Attorneys for Breckenridge Property Fund 2016, LLC By: Joseph C. La Costa, Esq., Joseph C. La Costa, Attorney at Law, San Diego, CA, Attorneys for Michael McChristian About Ditech Holding Corporation Ditech Holding Corporation and its subsidiaries -- http://www.ditechholding.com/-- are independent servicer and originator of mortgage loans. Based in Fort Washington, Pennsylvania, the Debtors have approximately 3,300 employees and service a diverse loan portfolio. Ditech Holding and certain of its subsidiaries, including Ditech Financial LLC and Reverse Mortgage Solutions, Inc., filed voluntary Chapter 11 petitions (Bankr. S.D.N.Y. Lead Case No. 19 10412) on Feb. 11, 2019, after reaching terms with lenders of a Chapter 11 plan that will reduce debt by $800 million. The Debtors tapped Weil, Gotshal & Manges LLP as legal counsel, Houlihan Lokey as investment banker and AlixPartners LLP as financial advisor. Epiq Bankruptcy Solutions LLC served as claims and noticing agent. Kirkland & Ellis LLP and FTI Consulting Inc. served as the consenting term lenders' legal counsel and financial advisor, respectively. The U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in the Debtors' cases on Feb. 27, 2019. The creditors' committee tapped Pachulski Stang Ziehl & Jones LLP as its legal counsel and Goldin Associates, LLC, as its financial advisor. On May 2, 2019, the U.S. trustee appointed an official committee of consumer creditors. The consumers committee tapped Quinn Emanuel Urquhart & Sullivan, LLP, as counsel and TRS Advisors LLC, as financial advisor. On Sept. 26, 2019, the Bankruptcy Court confirmed Ditech's Chapter 11 bankruptcy plan, which became effective four days later. DURRIDGE COMPANY: Unsecured Claims Under $15K to Recover 23% ------------------------------------------------------------ Durridge Company Inc., formerly known as Sensory Acquisition Co., filed with the U.S. Bankruptcy Court for the District of Massachusetts a First Modified Chapter 11 Plan of Reorganization for Small Business dated November 15, 2021. The Debtor is a Delaware corporation organized on or about April 11, 2016 under the name of Sensory Acquisition Company. The name was changed on that date to Durridge Company Inc. and registered to do business in Massachusetts. The location of the principal office is 900 Technology Park, Billerica, Massachusetts 01821. The Debtor seeks to reorganize through this Plan by restructuring its debt obligations so that the Reorganized Debtor will achieve sufficient cash flow from business operations to satisfy operational expenses and payment obligations under the Plan. The Debtor has determined that its successful reorganization, combined with the market recovering from the COVID-19 crisis and release of the new product in or about the fourth quarter of 2021 will enable the Reorganized Debtor's ability to meet its obligations under the Plan. The Debtor generally anticipates that business operations after the Confirmation Date will return to operation and revenues will continue their recovery to pre- Covid -19 crisis levels provided, however, that nothing in the Plan shall prohibit the Reorganized Debtor from altering its business model in the future as it seeks to enhance its revenues and profitability. On October 7, 2021, the Decision and Order entered in connection with confirmation of the Original Plan. The Decision and Order required the Debtor to modify the Original Plan to provide that either: (a) all of the projected disposable income of the Debtor to be received during the period beginning on the date that the first payment is due under the plan and ending 5 years later will be applied to make payments under the plan; or (b) the value of property to be distributed under the plan in such 5-year period is not less than the projected disposable income of the Debtor. The Court required the Debtor to file a plan modification or amended plan that comports with the Order within 21 days. The treatment of the claimants under the plan is fair and equitable as (a) the plan provides for (i) the secured claimants' retention of their liens and receipt of deferred cash payments equal to the sum of $75,000.00 as determined by the Decision and Order; and (b) the plan provides for the contribution all of the debtor's "projected disposable income" to making plan payments for 5 years. Class 3 consists of the claims of vendors and trade supplier and other general unsecured creditors holding claims in sums of $15,000.00 or less. There are 10 creditors holding Class 3 claims which claims total the sum of approximately $64,612.00. In full and final satisfaction of their claim, the Class 3 claimants shall be paid their pro rata share of $15,000.00 in cash on the entry of a Final Confirmation Order. The Original Plan provided, that in the alternative, any Class 3 claimant may elect to "opt -out" of Class 3 and be treated in Class 4. To elect to be a holder of a Class 4 Claim, the creditor making the election required to do so not later than ten days prior to the hearing on Confirmation by submitting a Convenience Class Election ballot to counsel to the Debtor. No Class 3 claimant elected to opt out. Accordingly, the Class 3 claimants will receive a onetime dividend distribution of approximately 23% of the Allowed Claim. Class 4 General Unsecured Claims in excess of $15,000.00 (non insider) including Undersecured/Unsecured Claim of Smith Air, Inc. Class 4 consists of the general unsecured creditors of Durridge holding claims in excess of $15,000.00 including the undersecured/unsecured claim of Smith Air, Inc. in the sum of $1,184,141.20 and any Class 3 Claimant who elects to be treated as a Class 4 claimant. Each holder of the Allowed Class 4 Claim shall receive payment equal to a pro rata share of the cash distribution from the Debtor's Disposable Income, for a period of 5 years commencing on the Effective Date and payable quarterly thereafter. The Class 4 claimants shall be paid their pro rata share of $125,000.00 payable in 20 installments of $6,250.00. The Original Plan provided, that in the alternative, any Class 4 claimant may elect to "opt-out" of Class 4 and be treated in Class 3. Together with the Original Plan, the Debtor provided a General Unsecured Class 4 "Opt-Out" Election Ballot to all general unsecured claim holders holding claims of $15,000.00 or more including to Smith Air. No creditor in Class 4 elected to opt out of Class 4. Class 5 consists of General Unsecured Creditor Claims - Contingent. Prior to the Petition Date, the Debtor was the recipient of two grants under the SBA Payment Protection Program, having executed a Payment Protection Program Note on May 1, 2020 in the sum of $157,800.00 and on February 9, 2021 in the sum of $162,200.00 (collectively, the "PPP Loans"). During the course of the proceedings, the claims were forgiven in accordance with Section 1106 of the CARES Act and there are no Class 5 claimants. Class 6 General Unsecured Creditors - Insiders Claimant. Class 6 consists of the general unsecured claims held by Sensory Perspective Ltd., who is the 49% shareholder of the Debtor. The Class 6 claimant is owed the sum of approximately $428,299.70 based upon the Debtors books and records. The Class 6 claimants shall be subordinated to the claims of General Unsecured Creditors and shall receive nothing under the Plan. Class 7 consists of all Equity Interest holder in the Debtor. At the time of the filing, there were 11 shareholders. Upon confirmation, the equity security holders shall hold shares in the Reorganized Debtor in the same proportions as existed on the Petition Date. There shall be no dividends paid to Class 7 claimants until satisfaction of payments due under the Plan. This Plan will be funded with available cash or working capital and cash flow from ongoing business operations. The Debtor will continue to operate in ordinary course of business. The Plan provides for the submission of all or such portion of the future earnings of the Debtor as is necessary for the execution of the Plan. The Debtor believes that its five-year forecast is a reasonable reflection of its past performance with proper adjustments made to reflect the anticipated release of the new product. A full-text copy of the First Modified Plan of Reorganization dated Nov. 15, 2021, is available at https://bit.ly/30Af7sM from PacerMonitor.com at no charge. About Durridge Company Inc. Durridge Company Inc. is a Delaware corporation organized on April 11, 2016 under the name of Sensory Acquisition Company. The name was changed on that date to Durridge Company Inc. and is registered to do business in Massachusetts. The location of the principal office is 900 Technology Park, Billerica, Massachusetts 01821. Durridge is a provider of professional radon detection equipment and provides services including radon detection solutions for businesses, universities, and governments worldwide. Durridge also provides a wide range of accessories for their proprietary technology known as RAD7, as well as software for performing sophisticated radon data analysis, and expert calibration and maintenance services. Durridge sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 21-40187) on March 15, 2021. In the petition signed by Wendell Clough, president, the Debtor disclosed $354,112 in assets and $2,182,277 in liabilities. The Honorable Christopher J. Panos is the case judge. Nina M. Parker, Esq., at Parker & Associates LLC represents the Debtor as counsel. EAGLE HOSPITALITY: Judge Mulls Jail for Chapter 11 Fraudsters ------------------------------------------------------------- Jeff Montgomery of Law360 reports that the judge is mulling jail for Chapter 11 fraudsters. Warning that jailing is an option, a Delaware bankruptcy judge on Monday, November 15, 2021, found two key figures in a 15-hotel bankruptcy in contempt of an order to return $2.4 million in federal pandemic aid funds diverted from a hotel in Long Beach, California, with a sanctions hearing slated for Friday, November 12, 2021. Judge Christopher S. Sontchi bluntly labeled Taylor Woods and Howard Wu "fraudsters" in the order and said there was no question that the court had the power to jail the pair for civil contempt of the court's past order to return federal Paycheck 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. EAGLEFORD RECYCLING: Seeks Approval to Hire Bankruptcy Counsel -------------------------------------------------------------- Eagleford Recycling Services, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Johnson, Pope, Bokor, Ruppel & Burns, LLP to serve as legal counsel in its Chapter 11 case. Michael Markham, Esq., the primary attorney in this engagement, will be billed at his hourly rate of $450. In addition, the firm will be reimbursed for expenses incurred. Mr. Markham disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Michael C. Markham, Esq. Johnson, Pope, Bokor, Ruppel & Burns, LLP 401 E. Jackson St., Suite 3100 Tampa, FL 33602 Telephone: (813) 225-2500 Facsimile: (813) 223-7118 Email: Mikem@jpfirm.com About Eagleford Recycling Services Eagleford Recycling Services, LLC filed its voluntary petition for Chapter 11 protection (Bankr. M.D. Fla. Case No. 21-05810) on Nov. 12, 2021, listing up to $10 million in assets and up to $1 million in liabilities. Stephen J. Ostermann, manager, signed the petition. Michael C. Markham, Esq., at Johnson, Pope, Bokor, Ruppel & Burns, LLP serves as the Debtor's legal counsel. EHT US1 INC: Dist. Court Adopts Briefing Schedule in H. Wu Appeals ------------------------------------------------------------------ The United States District Court for the District of Delaware issued an Order dated November 9, 2021, adopting the Chief Magistrate's Recommendation on the briefing schedule purposed by the parties in the appellate cases captioned HOWARD WU, et al., Appellants, v. EHT US1, INC., et al., Appellees. HOWARD WU, et al., Appellants, v. EHT US1 INC., et al., Appellees. HOWARD WU, et al., Appellants, v. EHT US1, INC., et al. and BANK OF AMERICA, Appellees, C.A. Nos. 21-1413 (MN), Nos. 21-1414 (MN), 21-1415 (MN)(D. Del.). The schedule: * Appellants' Single Consolidated Opening Brief - December 9, 2021 * Appellees to each file a single consolidated Answering Brief - no later than the first business day that is 45 days after Appellants filed their opening brief * Appellants' Single Consolidated Reply Brief - No later than the first business day that is 21 days after Appellees file their answering brief. A full-text copy of the Order is available at https://tinyurl.com/4umsjjab 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. ENTRUST ENERGY: Files Amendment to Disclosure Statement ------------------------------------------------------- Entrust Energy, Inc., f/k/a Retail OPCO of Texas, Inc., and its affiliates who are also debtors in these jointly administered cases (collectively, the "Debtors") submitted an Amended Disclosure Statement for Chapter 11 Plan of Liquidation dated November 11, 2021. The Bankruptcy Court has scheduled the Confirmation Hearing for Dec. 20, 2021, at 10:00 a.m. Dec. 13, 2021 at 11:59 p.m. is the deadline to deliver ballots to be counted as votes. The overall purpose of the Plan is to liquidate the Debtors' assets and liabilities in a manner designed to maximize recoveries to all creditors. The Debtors believe the Plan is reasonably calculated to lead to the best possible outcome for all creditors in the shortest amount of time and is preferable to all other alternatives. The purpose of the Plan is to provide for the equitable distribution of the Debtors' Cash as well as any proceeds received in connection with the prosecution and/or settlement of the Causes of Action. The Debtors have no assets of material value other than the Remaining Assets. On March 10, 2021, the Debtors closed on a sale of approximately 91,000 commercial and residential RCEs, among other assets, including certain systems and intellectual property to Rhythm Ops, LLC, for $3.160 million ("Rhythm Sale"). Following the Rhythm Sale closing, sixteen of the Debtors' employees were hired as fulltime employees or consultants with Rhythm, eliminating the need to include such employees in a future reduction-in-force. Following the Rhythm Sale, the Debtors still had approximately 13,000 customers (or approximately 90,000 RCEs) and continued efforts to find a purchaser for its remaining customer relationships. Following the sales of the RECs, the FF&E, and the vehicles, the Debtors only material assets are Cash on hand, outstanding receivables (including intercompany receivables), and the Causes of Action (collectively, the "Remaining Assets"). The Debtors anticipate the total administrative claims and priority claims as of the Effective Date are between approximately $8,000,000 and $13,000,000 which is largely dependent upon the resolution of outstanding sales and use and general receipts taxes following collections of outstanding customer receivables. These claims could fluctuate considerably depending primarily on the priority tax claims related to collections on receivables. Currently, a significant share of the filed tax claims is based on collection of the undiscounted face amount of the Debtors' outstanding receivables, which in certain instances, for index or variable-rate customers, were more than 20 times greater than the monthly bills prior to Winter Storm Uri. The Debtors' receivables are still being collected, but the Debtors do not anticipate receiving 100% of the face value of the outstanding receivables and, as a result, expect the amount of Allowed Priority Tax Claims to be greatly reduced. Total outstanding filed and scheduled third-party unsecured claims against the Debtors total approximately $410,000,000. The Debtors expect the total amount of these claims to be reduced as the Debtors begin their claims review and pursue any appropriate objections. The Plan is being proposed as a joint plan of liquidation of the Debtors for administrative purposes only and constitutes a separate chapter 11 plan of liquidation for each Debtor. The Plan is not premised upon the substantive consolidation of the Debtors with respect to the Classes of Claims or Equity Interests set forth in the Plan. The Liquidating Trustee shall be responsible for segregating each Debtors' portion the Liquidating Trust Assets. On or before the Effective Date, the Liquidating Trust Agreement shall be executed by the Debtors and Liquidating Trustee, and all other necessary steps shall be taken to establish the Liquidating Trust. A full-text copy of the Amended Disclosure Statement dated Nov. 11, 2021, is available at https://bit.ly/3kEwfVy from BMC Group, Inc., claims agent. Attorney to the Debtors: Elizabeth A. Green, Esq. Jimmy D. Parrish, Esq. Suite 2300 200 South Orange Avenue Orlando, FL 32801-3432 Telephone: (407) 649-4000 Facsimile: (407) 841-0168 E-mail: egreen@bakerlaw.com E-mail: jparrish@bakerlaw.com - and - Jorian L. Rose, Esq 45 Rockefeller Plaza New York, New York Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Email: jrose@bakerlaw.com About Entrust Energy Houston, Texas-based Entrust Energy, Inc. generates, transmits and distributes electrical energy to homes and businesses. Entrust Energy and 14 of its affiliates sought Chapter 11 bankruptcy protection (Bankr. S.D. Texas Lead Case No. 21-31070) on March 30, 2021. At the time of the filing, Entrust Energy disclosed total assets of between $100 million and $500 million and total liabilities of between $50 million and $100 million. Judge Marvin Isgur oversees the cases. The Debtors tapped Baker & Hostetler, LLP and Alvarez & Marsal North America, LLC as their legal counsel and financial advisor, respectively. BMC Group, Inc., is the claims noticing and solicitation agent. The U.S. Trustee for Region 7 appointed an official committee of unsecured creditors in the Debtors' Chapter 11 cases on April 28, 2021. McDermott Will & Emery, LLP and FTI Consulting, Inc., serve as the committee's legal counsel and financial advisor, respectively. EXELA TECHNOLOGIES: Sets $105 Mil. SPV to Purchase Subsidiary Debt ------------------------------------------------------------------ Susanne Barton, writing for Bloomberg News, reports that Exela Technologies says that it established GP 2XCV, LLC, an indirect wholly owned subsidiary, to deploy up to $105 million to repurchase debt. B. Riley Commercial Capital will provide up to $75m of debt financing to GP 2XCV, LLC alongside equity contributions by Exela of up to $30m, Exela said in a statement The SPV will purchase first-priority senior secured notes due 2023, and/or term loans under the first lien credit agreement, dated as of July 12, 2017, issued by Exela Intermediate LLC and Exela Finance Inc. About Exela Technologies Exela Technologies is a business process automation (BPA) company, leveraging a global footprint and proprietary technology to provide digital transformation solutions enhancing quality, productivity, and end-user experience. With decades of experience operating mission-critical processes, Exela serves a growing roster of more than 4,000 customers throughout 50 countries, including over 60% of the Fortune 100. With foundational technologies spanning information management, workflow automation, and integrated communications, Exela's software and services include multi-industry department solution suites addressing finance and accounting, human capital management, and legal management, as well as industry-specific solutions for banking, healthcare, insurance, and public sectors. Exela reported a net loss of $178.53 million in 2020, a net loss of $509.12 million in 2019, and a net loss of $169.81 million in 2018. As of June 30, 2021, the Company had $1.09 billion in total assets, $2.03 billion in total liabilities, and a total stockholders' deficit of $943.27 million. * * * As reported by the TCR on July 20, 2021, S&P Global Ratings affirmed its 'CCC-' issuer credit rating on Exela Technologies Inc, Texas-based business process automation company. S&P said, "The negative outlook reflects that we expect Exela to undertake a distressed debt exchange (which we would view as tantamount to a default). This is based on the company's recent equity capital raise, high debt service costs, and stated intention to use the equity proceeds to reduce its debt, which is currently trading at discounted levels. FIRSTCASH INC: Moody's Cuts CFR to Ba2 & Alters Outlook to Stable ----------------------------------------------------------------- Moody's Investors Service has downgraded to Ba2 from Ba1 FirstCash Inc.'s corporate family rating and long-term senior unsecured rating. FirstCash's outlook was changed to stable from ratings under review. The rating action concludes the review for downgrade initiated on November 1, 2021, following FirstCash's announcement that it plans to acquire lease-to-own and retail finance provider American First Finance, Inc. (AFF). Downgrades: Issuer: FirstCash Inc. Corporate Family Rating, Downgraded to Ba2 from Ba1 Senior Unsecured Regular Bond/Debenture, Downgraded to Ba2 from Ba1 Outlook Actions: Issuer: FirstCash Inc. Outlook, Changed To Stable From Rating Under Review RATINGS RATIONALE The downgrade of FirstCash's ratings reflects Moody's assessment that the company's capitalization, as measured by tangible common equity to tangible managed assets (TCE/TMA), will meaningfully deteriorate as result of its planned $1.17 billion acquisition of AFF. The stock and debt-financed transaction will generate a substantial amount of goodwill and other intangible assets and weaken this key ratio. FirstCash expects to complete the acquisition in the fourth quarter of 2021 or early first quarter 2022, subject to receipt of regulatory and antitrust approvals. While the planned AFF acquisition represents a shift in strategic policy for FirstCash, Moody's believes that in due course there are likely to be synergistic benefits for the combined entity, including cross-selling of products and services and the retail sales of returned, leased merchandise through FirstCash's network of retail pawn stores. The rating action also considered the uncertain credit negative implications of the Consumer Financial Protection Bureau's (CFPB) 12 November announcement that it had filed a lawsuit against FirstCash Inc. and its subsidiary, Cash America West, Inc., alleging that the two companies violated the Military Lending Act (MLA) by charging active duty servicemembers and their dependents higher than the allowable 36% annual percentage rate on pawn loans. The CFPB also alleges in the lawsuit that FirstCash violated a 2013 CFPB order against its predecessor company prohibiting MLA violations. The CFPB is seeking an injunction, redress for affected borrowers, and a civil money penalty. FirstCash has stated that it believes the CFPB's allegations are without merit and that it does not believe that an adverse outcome of this matter would have a material adverse impact on its financial condition or its business. FirstCash's stable outlook reflects Moody's expectation that its historically strong profitability will persist and it will gradually increase its capital levels and decrease leverage, without a material weakening of its liquidity profile over the next 12-18 months. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's said the ratings could be upgraded if FirstCash successfully integrates AFF and the business combination achieves and maintains capitalization, as measured by TCE/TMA of 18% or higher, without a material weakening of its profitability or liquidity. Failure to close the acquisition could also lead to an upgrade, if FirstCash's capitalization is maintained at its existing level. Moody's said FirstCash's ratings could be downgraded if the company's financial performance materially deteriorates; for example, if profitability weakens whereby net income to average assets remains below 4% for an extended period of time, or if the company's liquidity position materially weakens. The ratings also could be downgraded in the event that regulatory action or litigation materially restricts the company's financial profile or business activities, or harms its franchise and reputation. The principal methodology used in these ratings was Finance Companies Methodology published in November 2019. GROUPE SOLMAX: $100MM Term Loan Add-on No Impact on Moody's B2 CFR ------------------------------------------------------------------ Moody's Investors Service said Solmax's US$100 million term loan add-on to its existing B2 rated US$535 million term loan due 2028 is credit positive. The proceeds will be used to fully the fund the acquisition of Propex (unrated), a provider of geosynthetics largely to the transportation sector. The transaction is credit positive because the acquisition adds a new product line and production facility, and is leverage neutral. There is no impact to Solmax's ratings, including the B2 Corporate Family Rating, and the rating outlook remains stable. Solmax has been highly acquisitive over the last three years, with the company only gaining significant size in 2018 by merging with Texas-based GSE Environmental (unrated). In mid-2021 Solmax doubled EBITDA by merging with Royal Ten Cate's (RTC, unrated) geotextiles business, increasing pro-forma EBITDA to over $100 million. The acquisition of Propex is relatively smaller than its previous two acquisitions, but it does come relatively quickly after the RTC merger, potentially complicating integration efforts. Propex brings Solmax a specialization in non-woven geotextile products that largely serve the transportation industry. The US Infrastructure bill will increase capital spending on aging road infrastructure potentially increasing demand for these products. Propex also brings a manufacturing plant in the US state of Georgia, and a new product line modestly diversifying Solmax's geosynthetics business. Groupe Solmax Inc. (Solmax) is a manufacturer of geosynthetic products that are large sheets of plastics used to protect and fortify in various end markets. The company is privately owned by Fonds de Solidarite des Travailleurs Du Quebec, CDP Investissements Inc. (wholly owned by Caisse de depot et placement du Quebec), and indirectly the founder, with all three having equal ownership. The company's head office is in Varennes, Quebec, Canada. GVS TEXAS: Seeks to Hire Harney Partners as Financial Advisor ------------------------------------------------------------- GVS Texas Holdings I, LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ HMP Advisory Holdings, LLC, doing business as Harney Partners, as financial advisor. The firm's services include: (a) providing the Debtors with a chief administrative officer; (b) assisting the Debtors with general matters related to their Chapter 11 proceedings; (c) assisting the Debtors with cash management; (d) reviewing previously filed documents and investigating and analyzing both pre-bankruptcy and post-petition financial activities of the Debtors; (e) assisting in the preparation of future monthly operating reports; (f) assisting in the preparation of information requests and discovery, if necessary; (g) analyzing financial performance and condition of the Debtors; (h) assisting in the evaluation and reconciliation of creditor claims; and (g) other services as may be agreed upon between Harney Partners and the Debtors. The hourly rates of Harney Partners' professionals are as follows: William R. Patterson, Chief Administrative Officer $600 per hour Gregory S. Milligan, Administrative Manager $600 per hour Erik White, Administrative Director $500 per hour Davis Jackson, Administrative Associate $350 per hour Additional Personnel $80 - $600 per hour In addition, the firm will seek reimbursement for expenses incurred. Harney Partners requires a retainer of $50,000. William Patterson, the executive vice president at Harney Partners, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: William R. Patterson HMP Advisory Holdings, LLC P.O. Box 90099 Austin, TX 78709 Telephone: (512) 892-0803 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 Texas. The properties are managed by Great Value Storage, LLC. GVS Texas Holdings I and its affiliates sought Chapter 11 protection (Bankr. N. D. Texas Lead Case No. 21-31121) on June 17, 2021. The parent entity, GVS Portfolio I C, LLC, filed a voluntary Chapter 11 petition (Bankr. N. D. Texas Case No. 21-31164) on June 23, 2021. GVS Portfolio's case is jointly administered with that of GVS Texas Holdings I. Judge Michelle V. Larson oversees the cases. In its petition, GVS Texas Holdings I listed disclosed $100 million to $500 million in both assets and liabilities. The Debtors tapped Sidley Austin, LLP as bankruptcy counsel and Houlihan Lokey Capital, Inc. as investment banker. HMP Advisory Holdings, LLC, doing business as Harney Partners, is the Debtors' financial advisor. HEMANI HOSPITALITY: Seeks to Tap Tucker Arensberg as Legal Counsel ------------------------------------------------------------------ Hemani Hospitality, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Pennsylvania to employ Tucker Arensberg, PC as its legal counsel. The firm's services include: (a) advising the Debtor regarding its powers and duties in the continued management and operation of its business and properties; (b) preparing and filing legal papers; (c) attending meetings and negotiating with representatives of creditors and other parties-in-interest; (d) taking all necessary actions to protect and preserve the Debtor's estate; (e) negotiating and preparing a plan of reorganization, disclosure statement and all related agreements or documents, and taking any necessary action to obtain confirmation of such plan; (f) representing the Debtor in connection with cash collateral or post-petition financing; (g) advising the Debtor in connection with any potential sale of its assets; (h) appearing before the bankruptcy court, any appellate courts, and the Office of the U.S. Trustee; (i) consulting with the Debtor regarding non-bankruptcy disciplines of law; and (j) performing all other necessary legal services for the Debtor in connection with its Chapter 11 case. Prior to the petition date, Tucker Arensberg was paid $58,219.67 for legal services rendered to the Debtor, which includes a retainer of $30,000. Additionally, Tucker Arensberg has been promised a supplemental retainer of $20,000 to be paid after the petition date by Mayur Khatiwala and Krishnan Khatiwala, two of the owners of the Debtor. The hourly rates of the firm's attorneys and staff are as follows: Beverly Weiss Manne $540 per hour Michael Shiner $525 per hour Shareholders $350 – $700 per hour Associates $225 – $350 per hour Paralegals $125 – $200 per hour In addition, the firm will seek reimbursement for expenses incurred. Michael Shiner, Esq., a shareholder of Tucker Arensberg, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Beverly Weiss Manne, Esq. Michael A. Shiner, Esq. Maribeth Thomas, Esq. Tucker Arensberg, P.C. 1500 One PPG Place Pittsburgh, PA 15222 Telephone: (412) 566-1212 Facsimile: (412) 594-5619 Email: bmanne@tuckerlaw.com mshiner@tuckerlaw.com mthomas@tuckerlaw.com About Hemani Hospitality Hemani Hospitality, LLC is a New Jersey limited liability company formed in 2005. It owns and operates the Baymont by Wyndham Hotel in Chambersburg, Pa. Hemani Hospitality filed its voluntary petition for Chapter 11 protection (Bankr. M.D. Pa. Case No. 21-02416) on Nov. 11, 2021, listing as much as $10 million in both assets and liabilities. Niranjan Khatiwala, managing member, signed the petition. Beverly Weiss Manne, Esq., at Tucker Arensberg, PC is the Debtor's legal counsel. HERTZ CORP: Moody's Ups CFR to B2 & Rates New Unsecured Notes Caa1 ------------------------------------------------------------------ Moody's Investors Service upgraded the ratings of The Hertz Corporation, including the corporate family rating to B2 from B3, the probability of default rating to B2-PDR from B3-PDR, and the senior secured rating to Ba3 from B2. Moody's also assigned a Caa1 to the new senior unsecured notes that Hertz plans to issue to fund the repurchase of preferred stock issued by Hertz Global Holdings, Inc., which indirectly owns The Hertz Corporation. The rating outlook remains stable. The Speculative Grade Liquidity rating is unchanged at SGL-3. The ratings upgrade reflects Moody's view that Hertz is emerging from bankruptcy proceedings stronger than previously anticipated, with earnings boosted in the near-term by an industry fleet size that lags the recovery in rental demand. Upgrades: Issuer: Hertz Corporation (The) Corporate Family Rating, Upgraded to B2 from B3 Probability of Default Rating, Upgraded to B2-PD from B3-PD Senior Secured Revolving Credit Facility, Upgraded to Ba3 (LGD2) from B2 (LGD3) Senior Secured Term Loan B, Upgraded to Ba3 (LGD2) from B2 (LGD3) Senior Secured Term Loan C, Upgraded to Ba3 (LGD2) from B2 (LGD3) Assignments: Issuer: Hertz Corporation (The) Senior Unsecured Regular Bond/Debenture, Assigned Caa1 (LGD5) Outlook Actions: Issuer: Hertz Corporation (The) Outlook, Remains Stable RATINGS RATIONALE The ratings for Hertz reflect the structural cost reductions that the company achieved while operating in bankruptcy, which, together with revenue enhancing initiatives, will likely result in better financial performance than prior to bankruptcy. In addition, Moody's expects that financial leverage will be around 4 times on a sustained basis, lower than Moody's prior expectations, and less than 4 times in the next 12 months as Hertz continues to benefit from very favorable industry conditions. Hertz' ability to increase the revenue that it generates per vehicle per day will be one of the most critical factors in achieving a sustained improvement in its pre-tax income margin. However, the possibility of future imbalances between industry fleet levels and customer demand could weigh on the company's ability to generate more revenues from its fleet, given the competitive nature of the industry. Moody's considers Hertz' recent agreement with online sales platform Carvana favorable because it adds a distribution channel for used vehicles and at a price per vehicle that should exceed wholesale dispositions. The Ba3 senior secured rating considers the upgrade of the corporate family rating to B2, as well as the change in Hertz' liability structure in connection with the planned issuance of a substantial amount of senior unsecured notes. Conversely, the Caa1 senior unsecured rating incorporates the relatively high amount of secured debt in the liability structure. The stable outlook reflects Moody's expectation that Hertz will continue generating robust earnings over the next 12 months, as car rental demand strengthens further, the industry fleet size remains constrained and prices for used vehicles remain well above historical levels. Moody's expects that liquidity will be adequate (SGL-3). Hertz had $2.7 billion of unrestricted cash as of September 30, and available capacity under its revolving credit facility was $1.1 billion. Hertz used $300 million of cash to repurchase shares at the time of the listing of its common stock, however. Moreover, funding requirements to grow Hertz' fleet are very substantial while the available capacity under Hertz' vehicle financing arrangements was $0.8 billion. Moody's expects Hertz to maintain ample headroom over the next 12 months under the first lien leverage ratio test that became effective as of September 30. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded with evidence of a consistent track record following emergence of bankruptcy that Hertz is executing its strategy successfully, including a disciplined approach to fleet size, maintaining fleet utilization above 75 percent, and a sustained improvement in financial performance. Metrics that would reflect this improvement include pre-tax income as a percent of sales approaching 5%; EBITA/average assets of more than 5%; and debt/EBITDA less than 4.5 times. Good liquidity that comfortably covers seasonal fleet expansion is also an upgrade requirement. The ratings could be downgraded if Hertz is unable to manage its fleet size such that utilization weakens to less than 70%, if revenue per vehicle per day does not exceed pre-pandemic levels, if Hertz' ability to dispose of used vehicles becomes constrained, or if there is a steep drop in used vehicle prices that could require Hertz to increase collateral under its vehicle financing programs. Metrics that would contribute to a rating downgrade include pre-tax income as a percent of sales below 2.5%, EBITA/average assets of less than 2.5%, or debt/EBITDA sustained above 5.5 times. The ratings could also be downgraded if evidence emerges that Hertz' pursues policies that favor the interest of its controlling shareholders. The principal methodology used in these ratings was Equipment and Transportation Rental Industry published in April 2017. The Hertz Corporation is one of the world's leading car rental companies, operating under the Hertz, Dollar and Thrifty brands. Revenue for the last 12 months ended September 2021 was $6.6 billion. HERTZ GLOBAL: S&P Upgrades ICR to 'BB-', Outlook Stable ------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on car renter Hertz Global Holdings Inc. to 'BB-' from 'B'. The outlook is stable. S&P said, "We raised our issue-level rating on the senior secured credit facility of its major operating subsidiary, The Hertz Corp., to 'BB+' from 'B+'. We revised the recovery rating to '1', which indicates our expectation for very high recovery (90%-100%, rounded estimate: 90%) in the event of a payment default. We also raised our issue-level rating on The Hertz Corp.'s senior secured term loan C to 'BB+' from 'BB-'. The recovery rating on this debt is unchanged at '1', which indicates our expectation for very high recovery (90%-100%, rounded estimate: 95%) in the event of a payment default. "In addition, we assigned an issue-level rating of 'B' to The Hertz Corp.'s proposed senior unsecured notes, with a recovery rating of '6', which indicates our expectation for negligible recovery (0%-10%, rounded estimate: 5%) in the event of a payment default. "The stable outlook on Hertz reflects our expectation that it will continue to improve its operating performance well into 2022. We expect the volume of airline traffic to continue to recover over this period as the COVID-19 vaccinations become more widespread. In addition, we anticipate the company will continue to benefit from the substantial cost reductions and strong used-car prices that have reduced its depreciation expense. With the proposed tender of the PIK preferred stock and continued strong operating performance, we expect the company's credit metrics to improve substantially and surpass 2019 levels." Hertz has continued to benefit, after its June 30, 2021, emergence from Chapter 11 bankruptcy protection, from a strong car rental environment. Hertz (the parent of the Hertz, Dollar, and Thrifty car rental brands) filed for Chapter 11 bankruptcy protection on May 22, 2020--the height of the COVID-19 pandemic. At that time, airline traffic (Hertz generates the majority of its revenues at airports) declined dramatically, but has since recovered to close to pre-COVID-19 levels on domestic U.S. routes as vaccinations have become widespread. In addition, international passengers have begun to return to the U.S. as the U.S. government has eased travel restrictions. Before the bankruptcy filing, Hertz also suffered when it was forced to sell excess vehicles in a weak used-car market. However, the market for used cars began to recover in mid-summer 2020 and prices for used cars have since then reached historically high levels and remained there due to a shortage of vehicles. Car renters depreciate their vehicles based on residual values that they set upon their acquisition. When used-car prices are high, such as now, this reduces depreciation expense upon sale of the vehicle. When prices are low, as they were in 2020, this increases depreciation expense and generates insufficient proceeds to pay off the asset-backed (ABS) debt that Hertz uses to finance its vehicles. This is what happened to Hertz in May 2020 and was the major reason for its Chapter 11 filing. Currently, demand is strong and there is a shortage of new vehicles due to the computer chip shortage that has caused new-vehicle production to lag demand. The vehicle shortage, coupled with strong demand, has resulted in a substantial increase in rental rates, a trend we expect to continue well into 2022. In the third quarter of 2021, the company's daily revenue per day in the Americas rose by 45% compared to the same period in 2019 and the company generated net income of $605 million compared to a loss of $41 million in that quarter. S&P said, "We now expect Hertz's credit metrics to improve significantly in 2021, with continued gains thereafter. Hertz has announced the tender of its $1.5 billion 9% PIK preferred shares with proceeds from the proposed issuance of lower coupon unsecured notes and cash. We had treated the preferred shares as debt in our credit metrics. However, with the lower interest expense and our expectation of a continuation of the car rental industry's (including Hertz's) strong revenue environment and lower vehicle expense due to the strong used-car market, partly offset by high prices on new vehicles, well into 2022, we now expect a substantial improvement in Hertz's credit metrics. We expect EBIT interest coverage of close to 3x in 2021 and around 5x in 2022, compared with 1x in 2019. We also expect funds from operations (FFO) to debt of about 20% in 2021, with a modest improvement in 2022 (above the 18% it achieved in 2019). Although the company announced in late October that it had reached an agreement to acquire 100,000 Teslas by the end of 2022, up to 50,000 of which it would rent to Uber drivers, and that it had reached an agreement to dispose of some of its vehicles through online car seller Carvana, we think it is too early to determine any impact from these agreements on Hertz's revenues, cash flow, and credit metrics. "We are maintaining our assessment of Hertz's liquidity as adequate. Over the next 12 months, we expect the company's sources of liquidity to comprise around $2.3 billion of unrestricted cash, availability under its various facilities, and FFO of at least $3 billion. Uses include debt maturities of around $560 million and net capital spending for new vehicles of around $4 billion. "Although we expect the company's liquidity sources to be around 1.8x its uses over the next 12 months, we do not believe that Hertz meets qualitative conditions for a higher assessment. As evidenced by the recent COVID-19 outbreak, leading to its bankruptcy, we believe the company would not have the likely ability to absorb high-impact, low-probability events without refinancing. "The stable outlook on Hertz reflects our expectation that its improved operating performance will continue well into 2022. We expect airline traffic to continue to recover over this period as vaccinations become more widespread. In addition, we anticipate the company will continue to benefit from the substantial cost reductions and strong used-car prices that have reduced its depreciation expense. With the proposed tender of the PIK preferred stock and continued strong operating performance, we expect the company's credit metrics to improve substantially and surpass 2019 levels. We expect EBIT interest coverage of close to 3x in 2021 and around 5x in 2022 compared with 1x in 2019. We also expect FFO to debt of about 20% in 2021, with a modest improvement in 2022 (close to the 18% level of 2019). However, we do not assume that these very strong credit measures will persist indefinitely, and our rating has room for some amount of normalization in industry conditions. The outlook also assumes the continued ownership and financial policies of its financial sponsors. "We could lower our rating on Hertz over the next year if its debt to capital increased to more than 90% due to a very aggressive financial policy from its financial sponsors, which resulted in a reassessment of its financial risk profile to highly leveraged. Alternatively, we could lower ratings if EBIT interest declined to below 1.3x and FFO to debt declined to below 12% for a sustained period. This could occur because of weaker-than-expected operating performance over a sustained period. "We could upgrade Hertz over the next year if the company is no longer controlled by financial sponsors and it maintained its EBIT interest coverage of at least 1.3x and its FFO to debt of at least 20%. This could follow a more-than-expected significant recovery in airline travel, resulting in higher-than-expected demand and pricing." HHH FARMS: Fannin's Alter Ego Claims Remanded to Trial Court ------------------------------------------------------------ Disputes arose involving four agriculture-related loans to Hartwell Farms, LLC, which were guaranteed by Waymon Scott Hartwell. Two of the loans were made by Fannin Bank, and two were made by American Bank. The Hartwell Parties defaulted on Fannin's loans but paid off the American Bank loans with proceeds from the sale of their wheat crop. Fannin sued the Hartwell Parties to recover on its loans to them, and the Hartwell Parties asserted several counterclaims against Fannin. Fannin also sued American to recover the sale proceeds that it argued were covered by a perfected first lien security interest in H. Farms's crops. The trial court granted Fannin's motion for summary judgment on its claims against the Hartwell Parties and on the Hartwell Parties' claims against Fannin. The trial court also granted American's motion for summary judgment against Fannin relating to ownership of the crop proceeds. The Hartwell Parties appeal the summary judgment in favor of Fannin, and Fannin appeals the summary judgment in favor of American. The Court of Appeals of Texas, Sixth District, Texarkana, reversed in part and affirmed in part Fannin's summary judgment against the Hartwell Parties on Fannin's claims for relief. Specifically, the Court of Appeals reversed the trial court's judgment on Fannin's alter ego and sham claims and remanded those claims to the trial court for resolution by the fact-finder. The Court of Appeals also affirmed Fannin's summary judgment on the Hartwell Parties' counterclaims against Fannin. Further, the appeals court reversed American's summary judgment against Fannin. Fannin argues that Hartwell's conduct in transferring the assets of H. Farms to HHH after he executed Notes One and Two on behalf of H. Farms, thereby rendering H. Farms a shell established "dishonesty of purpose or intent to deceive" as a matter of law. To prove entitlement to pierce HHH's corporate veil, Fannin was required to show, as a matter of law, that Hartwell (1) used H. Farms and HHH with "dishonesty of purpose or intent to deceive" and (2) did so for his direct personal benefit. In (1) considering the evidence in the light most favorable to the Hartwell Parties, (2) indulging all reasonable inferences in favor of the Hartwell Parties, and (3) resolving any doubts in their favor, the Court said it cannot conclude that each of these elements was conclusively established as a matter of law. "The . . . bas[is] for disregarding the corporate fiction involve[s] questions of fact." Moreover, "[i]ntent is a fact question uniquely within the realm of the trier of fact because it so depends upon the credibility of the witnesses and the weight to be given to their testimony." Accordingly, the Court of Appeals concluded that summary judgment on corporate veil piercing was not proper on this record. The Court of Appeals also found that HHH was not a party to Note One and therefore would, in any event, lack consumer status. Because guarantors are not consumers under the DPTA, Hartwell was likewise not a consumer under the DTPA. The Court, therefore, further concluded that the trial court's summary judgment in favor of Fannin on the Hartwell Parties' DTPA claim was proper. A full-text copy of the Opinion decided on November 12, 2021, is available at https://tinyurl.com/469n3rkm from Leagle.com. The appeals case is HHH FARMS, L.L.C., HARTWELL FARMS, LLC, AND WAYMON SCOTT HARTWELL, Appellants, v. FANNIN BANK, Appellee, No. 06-20-00068-CV (Tex. App.). About HHH Farms LLC HHH Farms, LLC is engaged in crop farming and is a small business debtor as defined in 11 U.S.C. Section 101(51D). HHH Farms sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No. 17-41795) on Aug. 20, 2017. In the petition signed by Scott Hartwell, president, the Debtor estimated assets of less than $50,000 and liabilities of $1 million to $10 million. Judge Brenda T. Rhoades presides over the case. HILMORE LLC: Non-Insider Unsecureds to Be Paid in Full in Plan -------------------------------------------------------------- Hilmore LLC submitted a Second Amended Disclosure Statement. Pursuant to Appraisal Report prepared by SunWest Appraisals, the Debtor believes the Hilgard Property has a fair market value of approximately $4.175 million. This is a reorganizing Plan, meaning the Debtor will restructure its financial affairs and retain its Property following confirmation, making payments to its creditors from new cash contributed to the bankruptcy estate. The following is a summary description of the fundamental terms of the Plan. The Plan provides that allowed claims shall be paid as follows: * The secured claim of Los Angeles County Treasurer and Tax Collector shall be paid monthly interest payments at the rate of 18% per annum and the balance of the secured claim will be paid in full on the first day of the 24th month following the Effective Date; * The arrears of Bank of America, N.A. shall be paid in equal monthly installments over 10 years with interest at the rate of 6% interest per annum; * The secured claim of Strategic shall be paid (i) $150,000.00 on the Effective Date which shall be applied to the secured claim; (ii) $10,000.00 for Strategic's attorneys' fees; and (iii) monthly interest-only payments in the amount of $4,184.43 commencing on the first day of the first month following the Effective Date; and (iv) the balance of the claim shall be all due and payable on the first day of the 60th month following the Effective Date1; * General unsecured creditors who are not insiders shall be paid in full on the Effective Date; and * General unsecured creditors who are insiders will not be paid any distribution by the Debtor under the Plan. The Debtor estimates that there is a total of approximately $4,114 of Class 5 general unsecured claims. Allowed Class 5 claimants will be paid in full in one lump sum payment on the first day of the first full month following the Effective Date. The payment date will be on Feb. 1, 2022 and the total payout is $4,114. The foregoing treatment of Class 5 claims will be in full settlement and satisfaction of all obligations of the Debtor to holders of Class 5 claims. Class 5 is unimpaired. The Plan will be funded from the Debtor's cash on hand on the Effective Date and ongoing capital contributions by each of the Javidzad Sons. The hearing where the Bankruptcy Court will determine whether or not to confirm the Plan will take place on January 12, 2022, at 2:00 p.m., before the Honorable Sheri Bluebond, United States Bankruptcy Judge for the Central District of California, in Courtroom 1539 of the United States Bankruptcy Court, Central District of California, Los Angeles Division, located at 255 E. Temple Street, Los Angeles, California 92701. The objections to the confirmation of the Plan must filed and served by December 30, 2021. The ballot must be received by 5:00 p.m., PST, on December 30, 2021 or it will not be counted. General Bankruptcy Counsel for the Debtor: Daniel J. Weintraub James R. Selth Crystle J. Lindsey WEINTRAUB & SELTH, APC 11766 Wilshire Boulevard, Suite 1170 Los Angeles, CA 90025 Telephone: (310) 207-1494 Facsimile: (310) 442-0660 Email: crystle@wsrlaw.net A copy of the Disclosure Statement dated Nov. 10, 2021, is available at https://bit.ly/3Hfu0Sp from PacerMonitor.com. About Hilmore LLC Hilmore LLC, a single asset real estate debtor (as defined in 11 U.S.C. Section 101(51B)), filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 21-12755) on April 5, 2021. Shahrokh Javidzad, manager, signed the petition. At the time of the filing, the Debtor had between $1 million and $10 million in both assets and liabilities. Judge Sheri Bluebond presides over the case. Weintraub & Selth APC represents the Debtor. HUB INTERNATIONAL: Moody's Rates New $650MM Sr. Secured Notes 'B2' ------------------------------------------------------------------ Moody's Investors Service has assigned a B2 rating to $650 million of seven-year senior secured notes, and a Caa2 rating to $550 million of eight-year senior unsecured notes being issued by Hub International Limited (together with its subsidiaries, Hub). Hub will use proceeds from these offerings, together with proceeds of a previously announced offering, plus cash on hand to fund a large dividend to shareholders, make acquisitions, and pay related fees and expenses. The rating outlook for Hub is unchanged at stable. RATINGS RATIONALE According to Moody's, Hub's ratings reflect its solid market position in North American insurance brokerage, good diversification across products and geographic areas in the US and Canada, and consistently strong EBITDA margins. Hub has generated good organic growth averaging in the mid-single digits and has achieved strong EBITDA margins in the low 30s (per Moody's calculations) over the past few years. These strengths are tempered by the company's high financial leverage and limited fixed charge coverage. The company also faces potential liabilities from errors and omissions, a risk inherent in professional services. Hub has grown through acquisitions, which gives rise to integration risk, although the company has a favorable track record in absorbing small and mid-sized brokers. Hub has generated strong performance over the last 12 months, achieving organic revenue growth in the mid-single digits overall, with 10% organic growth during the third quarter of 2021. EBITDA margins have also improved over this time frame due to organic growth, along with expense savings. Hub has made 65 acquisitions over the 12 months through September 2021. Giving effect to the proposed transaction, Moody's estimates that Hub's pro forma debt-to-EBITDA ratio will be approximately 8x, with (EBITDA - capex) interest coverage around 2.5x, and a free-cash-flow-to-debt ratio in the mid-single digits. These metrics incorporate Moody's accounting adjustments for operating leases, deferred earnout obligations and run-rate earnings from completed acquisitions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade of Hub's ratings include: (i) debt-to-EBITDA ratio below 7x, (ii) (EBITDA - capex) coverage of interest consistently exceeding 2x, and (iii) free-cash-flow-to-debt ratio exceeding 5%. Factors that could lead to a rating downgrade include: (i) debt-to-EBITDA ratio above 8x, (ii) (EBITDA - capex) coverage of interest below 1.2x, or (iii) free-cash-flow-to-debt ratio below 2%. Moody's has assigned the following ratings: $650 million seven-year senior secured notes at B2 (LGD3); $550 million eight-year senior unsecured notes at Caa2 (LGD5). The rating outlook for Hub is unchanged at stable. The principal methodology used in these ratings was Insurance Brokers and Service Companies published in June 2018. Based in Chicago, Hub ranks among the top ten of North American insurance brokers, providing property and casualty, life and health, employee benefits, investment and risk management products and services through offices located in the US, Canada and Puerto Rico. The company generated total adjusted revenue of $3.1 billion in the 12 months through September 2021. HUB INTERNATIONAL: S&P Rates $550MM Senior Unsecured Notes 'CCC+' ----------------------------------------------------------------- S&P Global Ratings assigned debt ratings to HUB International Ltd.'s proposed new note offerings, consisting of $650 million senior secured notes maturing 2028 ('B') and $550 million senior unsecured notes maturing 2029 ('CCC+'). The recovery rating is '3' for the senior secured notes, indicating its expectation for meaningful (50%) recovery of principle in the event of default. The recovery rating is '6' for the senior unsecured notes, indicating its expectation for negligible (5%) recovery of principle in the event of a default. S&P said, "We expect the company to use the proceeds to pay a shareholder dividend and fund acquisitions. The ratings on HUB (including our 'B' issuer rating, 'B' first-lien credit facility debt ratings, and 'CCC+' unsecured debt rating) are unaffected by these new issuances. Our 'B' issuer credit ratings on HUB continue to reflect its fair business risk profile and highly leveraged financial risk profile assessments. "For the 12 months ended Sep 30, 2021, the company reported total revenues of $3.1 billion with adjusted EBITDA of $1.2 billion (about 39% margin) per our calculations. We have updated our forecast for reported revenue to exceed $3.1 billion in 2021 and $3.5 billion for 2022. "We expect key credit measures to be in line with our pro forma run-rate expectations for financial leverage (6.8x-7.3x) and EBITDA interest coverage (2.5x-3.0x) through 2022." IMPRIVATA INC: Fitch Affirms 'B+' LT IDR, Outlook Stable -------------------------------------------------------- Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) of 'B+' for Imprivata, Inc. The Rating Outlook is Stable. Fitch has also affirmed the 'BB'/'RR2' rating for Imprivata's $40 million secured revolving credit facility (RCF) and $745 million first-lien secured term loan. The ratings and Stable Outlook are supported by Imprivata's strong market position within identity governance and multi-factor authentication (MFA) for health care providers as well as secular growth trends for data security and access management within a complex regulatory environment. At the IT security industry level, Fitch believes the heightened awareness of IT security risks arising from high profile security breaches in recent years provides support for the secular growth of the industry. KEY RATING DRIVERS Sizeable and Growing Market Opportunity: Digitization of care delivery, proliferation of health care systems and devices, pivoting to telehealth, increased cybersecurity threats, HIPAA requirements and increased regulation of licensed prescribers are all driving the demand for identity governance, MFA and endpoint security. Additionally, awareness of cyber security is accelerating, given the breach of 32 million patient records in the first half of 2019 alone. Finally, Imprivata has strong market share amongst U.S. hospitals that deploy a digital identity solution, with significant greenfield opportunities as only a third of U.S. based hospital systems have adopted an SSO solution thus far. Diversified Customer Base with High Retention Rates: Imprivata serves over 3,000 customers including 400 non-health care customers, with over eight million providers on its platform across 39 geographies. No customer accounts for more than 10% of revenues. Additionally, over 50% of the company's revenue stream is recurring, and it enjoys a high-90s gross customer retention rate amongst its health care customers and has a strong track record of expanding its share of wallet over time. While licenses renew annually, they are secured under longer-term multi-year agreements providing strong revenue visibility. Strong Use Case Supports Long-Term Growth: Imprivata's solutions are purpose-built for the health care industry, in compliance with regulatory requirements, and integrated with hospitals legacy on-prem solutions and with the largest electronic health record (EHR) providers and diagnostic systems. Estimates suggest that the implementation of virtual desktop access and a single sign-on solution saves roughly 10,300 to 13,250 hours annually across a hospital system, driving efficiencies and improved margins for the providers. The efficacy of Imprivata's solutions is reflected in its expanding share-of-wallet with its customers. Additionally, Imprivata's solutions minimize liability arising from unauthorized access and inadequate license authentication and reimbursement losses due to poor patient verification. Attractive Margin and FCF Profile: Despite Imprivata's limited scale, its margin profile is in line with best in class software peers. Imprivata's EBITDA margin profile also compares favorably to its horizontal peers like Okta and Sailpoint. Minimal capex and working capital requirements result in FCF margins in the high teens, despite the interest burden. Niche Player with Limited Scale: While Imprivata occupies a leading market position within the health care vertical, its ratings are limited by its scale and lack of end-market diversification. Imprivata's purpose-built software product has gained some traction in non-health care settings, but it competes with horizontal peers like Okta and SailPoint, which have much larger scale, sizeable installed base and more established cloud offerings. Moderate Financial Leverage: Fitch estimates gross leverage to be near 4.6x in fiscal 2022. Given the scale and the private equity ownership of the company, Fitch believes the company is likely to optimize ROE through acquisitions to accelerate growth or dividends to the owners with financial leverage remaining at moderate levels. DERIVATION SUMMARY Imprivata's industry expertise, revenue scale, profitability and leverage profile are consistent with the 'B' rating category. The company has a smaller revenue scale as a result of its narrow end-market focus relative to its larger and more diversified horizontal peers like Okta and Sailpoint. Imprivata also competes with Identity Automation, which is vertically focused on the health care segment, albeit smaller in scale and with a narrower service offering. Imprivata has market leading EBITDA and FCF margins, well in excess of its larger peers, demonstrating its superior value proposition. Imprivata's operating profile benefits from its deep integration with other health care IT providers, its comprehensive product offering, as well as the growing cyber security threats faced by the health care industry. KEY ASSUMPTIONS Fitch's key assumptions within its rating case for the issuer include: -- Organic revenue growth in the low-single digits; -- EBITDA margins expected to sustain above 40%; -- Normalized FCF in the mid-teens; -- Aggregate $250 million acquisition through 2024; -- No dividend payment to shareholders through 2024. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes a going concern EBITDA that is in line with pro forma LTM Sept. 30, 2021 EBITDA. Fitch applies a 6.5x multiple to arrive at an enterprise value (EV) of $661 million. The multiple is higher than the median Telecom, Media and Technology EV multiple but is in line with other similar companies that exhibit strong FCF characteristics. In Fitch's Bankruptcy Enterprise Values and Creditor Recoveries case studies, Fitch noted nine past reorganizations in the Technology sector with recovery multiples ranging from 2.6x to 10.8x. Of these companies, only three were in the software sector: Allen Systems Group, Inc.; Avaya, Inc.; and Aspect Software Parent, Inc., which received recovery multiples of 8.4x, 8.1x and 5.5x, respectively. The 6.5x multiple reflects the niche nature of Imprivata's offering, its strong FCF profile and highly recurring revenue base. Median trading multiples for the sector are in the double-digit range. -- Fitch assumes a fully drawn revolver in its recovery analysis since credit revolvers are tapped as companies are under distress. Fitch assumes a full draw on Imprivata's $40 million revolver; -- Fitch estimates strong recovery prospects for the senior secured credit facilities and rates them 'BB'/'RR2', or two notches above Imprivata's 'B+' IDR. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: Upward rating momentum is unlikely given the company's narrow product focus and limited scale. However, Fitch would consider a positive rating action in the event that the company expands product offerings to improve its market position within the larger IT security industry while maintaining credit metrics that are consistent with the rating category including the following: -- Fitch's expectation of gross leverage (total debt with equity credit/operating EBITDA) sustaining below 4.0x; -- (Cash flow from operations [CFO] - capex)/total debt with equity credit ratio sustaining near 10%; -- End-market or product diversification. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Fitch's expectation of gross leverage sustaining above 5.5x; -- (CFO - capex)/total debt with equity credit ratio sustaining below 7.5%; -- FFO interest coverage ratio sustained below 2.5x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Fitch projects that Imprivata's liquidity will be adequate, supported by its FCF generation and an undrawn $40 million RCF as of September 2021 and by readily available cash and cash equivalents. Fitch expects Imprivata's cash flow to be supported by normalized EBTIDA margins in the low- to mid-40% range. Debt Structure: Imprivata has $745 million of secured first-lien debt due 2027. Given the recurring revenue nature of the business and adequate liquidity, Fitch believes Imprivata will be able to make its required debt payments. ISSUER PROFILE Imprivata, Inc. is a provider of digital identity solutions to the health care industry, enabling providers to securely access multiple health care applications through a secure single sign on application. Across its multiple products, Imprivata provides access management, mobile provisioning, authentication, identity governance, and patient identification solutions, directly integrating with partners across the technology and health care ecosystem. Imprivata distinguishes itself from other IGA vendors as it is purpose built for the health care vertical, is HIPAA compliant and offers solutions that integrate seamlessly with leading EHR providers. 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. INTEGRATED DENTAL: Court OKs Sale of Implants, Dismisses Case ------------------------------------------------------------- By Order dated December 7, 2020, the United States Bankruptcy Court for the District of New Jersey approved the sale of substantially all of Integrated Dental Systems, LLC's assets to Biotech Dental LLC for $3.2 million subject to adjustment. The proceeds of the sale were used to satisfy the senior secured claim of ConnectOne Bank in the amount of approximately $2.1 million. From the remaining sale proceeds, approximately $194,000 was paid to the Debtor's investment banker and a $300,000 escrow was set up for the payment of legal fees. According to the Debtor, the balance of the sale proceeds, which was approximately $277,000, was used to pay ordinary course operating expenses. Apparently, the Debtor neglected to pay a junior secured claim of $150,000 held by the U.S. Small Business Administration from the closing proceeds which were disbursed. The Debtor's counsel was made aware of this oversight in a phone call with the SBA's counsel on March 1, 2021. The SBA, upset by the Debtor's nonpayment of its claim from the sale proceeds, threatened to seek relief from the Court. Also, the Debtor's Chief Executive Officer, Carey Lyons, had an interest in getting the SBA paid because he had personally guaranteed the Debtor's note to the SBA. The Debtor had a problem and needed a solution. The Debtor had one potential remaining asset that it could use to satisfy the SBA's demand for payment. The Debtor had commenced an adversary proceeding in the fall of 2020 against MegaGen Implant Co. Ltd. based on, among other things, MegaGen's alleged unfair competition and tortious interference with the Debtor's business. The parties were in settlement negotiations when the Debtor was contacted at the beginning of March 2021 regarding its nonpayment of its SBA debt. As a result of its settlement negotiations with MegaGen, the Debtor knew it would he receiving 5,000 units of dental implants from MegaGen. Significantly, the Debtor did not file its motion for approval of its settlement with MegaGen until May 18, 2021, and the Court did not issue its Order approving the settlement until June 9, 2021. In addition, MegaGen did not deliver the 5,000 dental implants to the Debtor until mid-August. Nevertheless, the Debtor and its counsel came up with the following plan: (i) the dental implants would he sold to Biotech for $150,000; (ii) Biotech would pre-pay the purchase price; and (iii) Debtor would immediately turnover the $150,000 pre-payment by Biotech to the SBA. According to the Debtor, Biotech agreed to this plan with the understanding that its pre-payment to Debtor of $150,000 would be at risk if the Court did not approve the sale of implants to Biotech. On March 23, 2021, Biotech pre-paid the $150,000 purchase price for the dental implants and, the next day, the Debtor satisfied its debt to the SBA. All of this happened nearly three months before the MegaGen settlement was approved by the Court and nearly five months before MegaGen delivered the dental implants to the Debtor. In addition, the Debtor did not file its motion seeking Court approval of its sale of dental implants to Biotech until August 6, 2021. The Court approved the Debtor's $3.2 million sale to Biotech knowing that two of the Debtor's principals, Carey Lyons and David Singh, who is the Debtor's Chief Financial Officer, had received or would receive equity and/or officer positions at Biotech. Apparently, these close relationships between the Debtor's principals and Biotech enabled the Debtor to convince Biotech to pre-pay the $150,000 for the dental implants and allow the Debtor to use the funds to satisfy the SBA note before the transaction was approved by the Court. The Court found that there is no doubt that the sale of the dental implants to Biotech is a transaction outside the ordinary course of business that requires prior court approval. The transaction between the Debtor and Biotech, as a practical matter, already occurred and the Debtor is seeking court approval after the fact. What is also disturbing to the Court is that, when the Debtor sought approval of its settlement with MegaGen and, again, when it sought approval of its sale of implants to Biotech, the Debtor did not disclose that: (i) the dental implants had been pre-sold to Biotech for $150,000; and (ii) the Debtor had already used the proceeds from Biotech for the implants to pay the SBA's claim. Furthermore, these integral facts, which the Debtor knew from mid-March 2021, were not disclosed by the Debtor until nearly the conclusion of the hearing on the Debtor's motion to sell the implants on September 14, 2021. With these circumstances in mind, the Court considers whether it should overlook the Debtor's failure to follow basic bankruptcy procedures, approve the sale of the implants to Biotech (after the fact), and allow the Debtor to dismiss this Chapter 11 case. In the alternative, the Court could grant the request by the United States Trustee to convert this case to Chapter 7. Until being advised of the pre-payment deal between the Debtor and Biotech, the Court was prepared to approve the sale and dismiss the case. However, the last-minute disclosure of this arrangement was disappointing and troubling, the Court said. "It is difficult to understand why the Debtor and its counsel did not seek prompt Court approval of the solution to their mistaken non-payment of the SBA loan. This Court hears emergent applications to address unique and unanticipated problems confronted by debtors on a routine basis. Also, the Debtor had at least three opportunities to disclose its proposed solution to the SBA loan issue in filings with the Court and the Debtor failed to do so. Instead, the Debtor gave the Court and the parties the impression that the implants received in the MegaGen settlement would be sold to satisfy the claims of creditors when the reality was that the implants had been pre-sold to Biotech and the proceeds from the sale had already been used to satisfy the SBA's loan," the Court said. Despite the problematic conduct of the Debtor and its counsel, the Court still believes approval of the sale and dismissal of the case is the right result. Among other things, (i) Biotech is probably the only logical buyer for the dental implants, (ii) according to the Debtor, the implants are being sold to Biotech at a price that is $10 per unit higher than the market price; (iii) based on allegations of patent infringement by Biomet 3i, LLC and Zimmer Dental Inc., the implants are worth approximately 15% less than initially estimated; and (iv) there are no remaining assets available for a Chapter 7 Trustee to fund an investigation or create a distribution to the remaining creditors of this estate. The Court does not believe, and no party has suggested, that any additional assets can be liquidated by a Chapter 7 Trustee for the benefit of the estate. Accordingly, the Court said it will approve the sale as well as the dismissal of the Debtor's case. The consequences for the Debtor's non-disclosure of significant events in its motion papers and failure to follow basic bankruptcy procedures will be discussed at the hearing on final approval of its counsel's fees. According to the Debtor's counsel, it has over $284,000 in fees and expenses that it is not "likely" to recover. The Court might consider this financial loss to be enough of a negative consequence under the circumstances. However, the Court shall not make this decision until counsel's final fee application hearing. Based on this, the Court said it will (i) grant the Debtor's motions to approve the sale of the dental implants to Biotech and establish procedures for dismissal of the case, and (ii) deny the United States Trustee's request to convert the case to Chapter 7. The Debtor's counsel is directed to appear at the hearing on its final fee application prepared to address whether its fees should be reduced based on the non-disclosures and failure to follow bankruptcy procedure as discussed above. Consistent with this decision, the Debtor's counsel is directed to submit proposed orders approving the sale to Biotech and the dismissal procedures. Finally, the Court notes that, in connection with dismissal of the case, it is not inclined to authorize the Debtor to abandon its books and records. If the Debtor believes it is entitled to such relief, it can file supplemental pleadings setting forth its argument, the Court said. A full-text copy of the Letter Decision dated November 9, 2021, is available at https://tinyurl.com/3n49fejd from Leagle.com. About Dental Systems Integrated Dental Systems, LLC is an integrated dental systems established to provide dentists with a full suite of tooth replacement systems, and supporting products, educational resources, and clinical support. Integrated Dental sought Chapter 11 protection (Bankr. D.N.J. Case No. 20-21423) on Oct. 7, 2020. In the petition signed by Carey Lyons, CEO, the Debtor had total assets of $7,041,242 and $11,572,479 in total debt. The Debtor tapped S. Jason Teele, Esq., at Sills Cummis & Gross P.C., as counsel. INTELSAT SA: Plan to Halve Debt Faces Creditor Challenges --------------------------------------------------------- Alex Wolf of Bloomberg News reports that Intelsat SA's bankruptcy plan to halve $15 billion debt gets creditor pushback. Intelsat SA is facing challenges to its Chapter 11 plan from competitor SES Americom Inc. and a group of bondholders over their concerns that other creditors are getting more favorable treatment at their expense. Intelsat’s complex debt restructuring plan would reduce the satellite operator's $15 billion debt load to about $7 billion. But it is the product of unfair deals, the objectors said in separate court filings Monday, November 15, 2021. The convertible noteholders, which purchased bonds Intelsat SA issued in 2018, said the bankrupt parent ignored its duties and responsibilities to its bondholders and equity holders. About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. It is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A. and its debtor-affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 20-32299) on May 13, 2020. The petitions were signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. At the time of the filing, the Debtors disclosed total assets of $11,651,558,000 and total liabilities of $16,805,844,000 as of April 1, 2020. Judge Keith L. Phillips oversees the cases. The Debtors tapped Kirkland & Ellis LLP and Kutak Rock LLP as legal counsel; Alvarez & Marsal North America, LLC as restructuring advisor; PJT Partners LP as financial advisor & investment banker; Deloitte LLP as tax advisor; and Deloitte Financial Advisory Services LLP as fresh start accounting services provider. Stretto is the claims and noticing agent. The U.S. Trustee for Region 4 appointed an official committee of unsecured creditors on May 27, 2020. The committee tapped Milbank LLP and Hunton Andrews Kurth LLP as legal counsel; FTI Consulting, Inc. as financial advisor; Moelis & Company LLC as investment banker; Bonn Steichen & Partners as special counsel; and Prime Clerk LLC as information agent. INTERNATIONAL LAND: Incurs $642K Net Loss in Third Quarter ---------------------------------------------------------- International Land Alliance, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $642,057 on $8,340 of net revenues for the three months ended Sept. 30, 2021, compared to a net loss of $678,970 on $14,076 of 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 $3.61 million on $25,899 of net revenues compared to a net loss of $1.99 million on $39,908 of net revenues for the same period a year ago. As of Sept. 30, 2021, the Company had $6.16 million in total assets, $4.07 million in total liabilities, $293,500 in preferred stock series B, and $1.80 million in total stockholders' equity. International Land stated, "Management evaluated all relevant conditions and events that are reasonably known or reasonably knowable, in the aggregate, as of the date the consolidated financial statements were available to be issued and determined that substantial doubt exists about the Company's ability to continue as a going concern. During the nine months ended September 30, 2021, the Company entered into securities purchase agreements with institutional and accredited investors for the issuance of an aggregate of 3,000,000 shares of common stock with an equivalent number of warrants for net proceeds of approximately $1.7 million. As of September 30, 2021, the Company used portion of the net proceeds to repay its promissory notes for approximately $0.8 million and used approximately $0.3 million in operations. Management anticipates using the remaining net proceeds for construction at its current projects, sales and marketing, and general working capital purposes. The Company has faced significant liquidity shortages as shown in the accompanying consolidated financial statements. As of September 30, 2021, the Company's current liabilities exceeded its current assets by $1.4 million. The Company has recorded a net loss of approximately $3.6 million for the nine months ended September 30, 2021 and has an accumulated deficit of $13.2 million as of September 30, 2021. Net cash used in operating activities for the nine months ended September 30, 2021, was approximately $0.7 million. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management anticipates that the Company's capital resources will significantly improve if its projects gain wider market recognition and acceptance resulting in increased revenue from sales. The Company's ability to continue as a going concern is dependent on the Company's ability to generate revenues and raise further capital." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001657214/000149315221028583/form10-q.htm About Land International International Land Alliance, Inc. -- https://ila.company -- is an international land investment and development firm based in San Diego, California. The Company is focused on acquiring attractive raw land primarily in Northern Baja California, often within driving distance from Southern California. The Company's principal activities are purchasing properties, obtaining zoning and other entitlements required to subdivide the properties into residential and commercial building lots, securing financing for the purchase of the lots, improving the properties' infrastructure and amenities, and selling the lots to homebuyers, retirees, investors and commercial developers. International Land reported a net loss of $2.67 million for the year ended Dec. 31, 2020, compared to a net loss of $1.59 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $2.64 million in total assets, $4.02 million in total liabilities, $293,500 in preferred stock series B, and a total stockholders' deficit of $1.66 million. Irvine, California-based Haskell & White LLP, the Company's auditor since 2019, issued a "going concern" qualification in its report dated April 2, 2021, citing that the Company has experienced recurring losses from operations, has limited financial resources to repay its debt obligations, will require substantial new capital to execute its business plans, and the real estate industry in which it operates faces significant uncertainty due to the COVID-19 pandemic, which raise substantial doubt about its ability to continue as a going concern. J&J ROBINSON: Seeks to Tap Galles Properties as Real Estate Broker ------------------------------------------------------------------ J&J Robinson Ventures, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ Galles Properties as its real estate broker. The Debtor needs the assistance of a broker to market its real property located at 4081A Terry Robinson Road, Pagosa Springs, Colo. Galles will receive a commission of 5 percent. If another broker participates in the sale of the property, the firm will be entitled to a 5.5 percent commission and will pay the other broker 2.75 percent of such commission. As disclosed in court filings, Galles is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached at: Galles Properties 414 Pagosa St. Pagosa Springs, CO 81147 Telephone: (970) 264-1250 Facsimile: (970) 264-1255 About J&J Robinson Ventures J&J Robinson Ventures is a Corsicana, Texas-based company primarily engaged in renting and leasing real estate properties. J&J Robinson Ventures filed its voluntary petition for Chapter 11 protection (Bankr. N.D. Tex. Case No. 21-31826) on Oct. 5, 2021, listing as much as $10 million in both assets and liabilities. Judge Stacey G. Jernigan oversees the case. Melissa S. Hayward, Esq., at Hayward PLLC represents the Debtor as legal counsel. JAGUAR HEALTH: Incurs $12.2 Million Net Loss in Third Quarter ------------------------------------------------------------- Jaguar Health, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $12.19 million on $630,000 of product revenue for the three months ended Sept. 30, 2021, compared to a net loss of $7.87 million on $2.77 million of product revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $38.28 million on $2.26 million of product revenue compared to a net loss of $25.04 million on $6.81 million of product revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $59.26 million in total assets, $37.70 million in total liabilities, and $21.55 million in total stockholders' equity. "The Company, since its inception, has incurred recurring operating losses and negative cash flows from operations and has an accumulated deficit of $205.2 million as of September 30, 2021. The Company expects to incur substantial losses and negative cash flows in future periods. Further, the Company's future operations, including the operations of substantially owned Italian subsidiary, Napo EU S.p.A., which include the satisfaction of current obligations, are dependent on the success of the Company's ongoing development and commercialization efforts, as well as securing additional financing and generating positive cash flows from operations. There is no assurance that the Company will have adequate cash balances to maintain its operations," Jaguar said. "Although the Company plans to refinance its operations and cash flow needs through equity and/or debt financing, collaboration arrangements with either entities, license royalty agreements, as well as revenue from future product sales, the Company does not believe its current cash balances are sufficient to funds its operating plan through one year from the issuance of these unaudited condensed consolidated financial statements. The Company has an immediate need to raise cash. There can be no assurance that additional funding will be available to the Company on acceptable terms, or on a timely basis, if at all, or that the Company will generate sufficient cash from operations to adequately fund operating needs. If the Company is unable to obtain an adequate level of financing needed for the long-term development and commercialization of our products, the Company will need to curtail planned activities and reduce costs. Doing so will likely have an adverse effect on our ability to execute our business plan; accordingly, there is substantial doubt about the ability of the Company to continue in existence as a going concern. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties," Jaguar further said. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001585608/000155837021016117/jagx-20210930x10q.htm About Jaguar Health Jaguar Health, Inc. -- http://www.jaguar.health-- is a commercial stage pharmaceuticals company focused on developing novel, sustainably derived gastrointestinal products on a global basis. The Company's wholly owned subsidiary, Napo Pharmaceuticals, Inc., focuses on developing and commercializing proprietary human gastrointestinal pharmaceuticals for the global marketplace from plants used traditionally in rainforest areas. Its Mytesi (crofelemer) product is approved by the U.S. FDA for the symptomatic relief of noninfectious diarrhea in adults with HIV/AIDS on antiretroviral therapy. Jaguar Health reported a net loss and comprehensive loss of $33.81 million for the year ended Dec. 31, 2020, compared to a net loss and comprehensive loss of $38.54 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $69.54 million in total assets, $37.75 million in total liabilities, and $31.79 million in total stockholders' equity. KNB HOLDINGS: S&P Cuts ICR to 'CCC' on Deteriorating Liquidity -------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on U.S.-based KNB Holdings Corp. to 'CCC' from 'CCC+'. At the same time, S&P lowered its issue-level ratings on the company's first-lien term loan to 'CCC' from 'CCC+'. The recovery rating remains '4', indicating its expectation for average (30%-50%; rounded estimate: 35%) recovery in the event of a default. The negative outlook reflects the risk of a default, absent a substantial improvement in operating performance, additional liquidity infusion or support from the company's financial sponsor, or a debt restructuring. S&P said, "The downgrade reflects our expectation for unsustainable leverage and weak cash flow due to continued high freight costs and supply chain constraints. During the third quarter ended Sept. 25, 2021, the company's revenue declined 10.5% compared with 2020, when comparable revenue grew by double digits as stores re-opened. Compared with the third quarter of 2019, comparable revenue increased 5.6%. We believe demand for home décor products remains robust, but due to the company's limited scale, it is unable to effectively manage and absorb the rising costs. Adjusted EBITDA during the quarter dropped to about breakeven from over $10 million in 2020. Gross profits declined substantially due to sharply higher freight costs and supply chain disruptions due to the shortage of containers. The company increased pricing to address inflationary pressures, which we expect to take hold during the fourth quarter of 2021 into early 2022. However, we do not believe that pricing actions alone could substantially improve EBITDA and cash flow to support the company's capital structure. The company's working capital build rose dramatically, leading to a roughly $50 million cash use, primarily because of higher inventory levels and less favorable accounts payable days. As a result, cash flow from operations through the first nine months of 2021 was substantially negative, and S&P forecasts continued negative cash flow into the first half of 2022. It is uncertain how much and how quickly the company can unwind the working capital use. Management increased inventory levels to address longer lead times and for seasonal build up ahead of the Chinese New Year holiday in 2022. S&P said, "We estimate leverage was about 15x for the 12 months ended Sept. 25, 2021, and we do not forecast it improving to a sustainable level for at least the next year. We also believe the company's declining EBITDA over time will pressure interest coverage, resulting in a higher likelihood of a payment default or debt restructuring within the next 12 months." Liquidity is weak despite the company's revolving credit facility maturity extension. During the summer, the company extended its revolver maturity to 2024 from 2022. However, as of Sept. 25, 2021, it had only $23.5 million available on its $75 million asset-based lending (ABL) facility and only $4.2 million of cash on its balance sheet. The company also had $20 million available on its $65 million accounts receivable factoring line. S&P believes the company's liquidity is weak because its ratio of sources to uses is less than 1x due to its limited cash, cash flow generation, and ABL availability relative to its high working capital use and debt service levels. The negative outlook reflects the risk that the company could default on its obligations or need to restructure its debt during the next year if it does not unwind its working capital use and its gross margin continues to deteriorate because of higher freight and supply chain costs. S&P could lower the ratings if it believes the risk of the company defaulting within 12 months has risen. This could happen if S&P believes: -- KNB's liquidity position deteriorates due to declining demand for home goods; -- Cash flows drop due to weaker orders or higher costs that could result in a near-term required debt payment miss; or -- Weakened operating profitability which increases the risk of a covenant breach in the event it is triggered. S&P could raise the ratings if it believes: -- The company can generate stronger earnings and free cash flow such that we believe the risk of default within 12 months would be reduced, resulting in leverage sustained below the double-digit area and improved liquidity; and -- EBITDA interest coverage remains above 1x through sustained improved operating performance. LCAV ENTERPRISES: Court Confirms Amended Chapter 11 Plan -------------------------------------------------------- The United States Bankruptcy Court for the Western District of New York on November 9, 2021, issued a decision and order confirming the amended plan of reorganization filed by LCAV Enterprises, LLC. In connection with the confirmation of the Plan, the Court has considered the evidence presented as well as the record of this case, including: (i) the testimony of the Debtor's counsel regarding voting and tabulation of ballots cast in connection with LCAV Enterprises, LLC's Amended Plan of Reorganization and (ii) all other evidence proffered and presented at the Confirmation Hearing. The Court, having considered that all classes of creditors that were required to vote on the Plan have accepted the Plan, and, other than the NYS Dept. of Taxation and Finance, no objections to the Plan have been filed. The resolution of the NYS Objection to Confirmation was resolved in a stipulation as memorialized on the record at the Confirmation Hearing. A full-text copy of the decision is available at shorturl.at/ipDJZ from Leagle.com. The bankruptcy case is In re LCAV ENTERPRISES, LLC, Proceedings Under Subchapter V Chapter 11, Debtor, Case No. 21-20137-PRW (Bankr. W.D.N.Y.). LEDGE LLC: Case Summary & 2 Unsecured Creditors ----------------------------------------------- Debtor: The Ledge, LLC 13919 N. May Avenue, Suite B219 Oklahoma City, OK 73134-5004 Business Description: The Ledge, LLC is a Single Asset Real Estate Debtor (as defined in 11 U.S.C. Section 101(51B)). Chapter 11 Petition Date: November 18, 2021 Court: United States Bankruptcy Court Western District of Oklahoma Case No.: 21-13058 Debtor's Counsel: O. Clifton Gooding, Esq. THE GOODING LAW Firm, P.C. 204 N. Robinson Avenue, Suite 1235 Oklahoma City, OK 73102 Tel: (405) 948-1978 Fax: (405) 948-0864 Email: cgooding@goodingfirm.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Justin Lee Schovanec, managing member of Left Frame, LLC. A full-text copy of the petition containing, among other items, a list of the Debtor's two unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/ZI6C4HQ/The_Ledge_LLC__okwbke-21-13058__0001.0.pdf?mcid=tGE4TAMA LEWISBERRY PARTNERS: Jan. 13, 2022 Plan Confirmation Hearing Set ---------------------------------------------------------------- Lewisberry Partners LLC filed with the U.S. Bankruptcy Court for the Eastern District of Pennsylvania a Motion for Approval of Disclosure Statement, Plan Voting Materials and Plan Voting Procedures ("the Motion"). On Nov. 15, 2021, Judge Eric L. Frank approved the Disclosure Statement and ordered that: * Dec. 22, 2021, at 5:00 p.m. is fixed as the deadline by which ballots must be received in order to be considered as acceptances or rejections of the Plan. * Dec. 29, 2021, is fixed as the date by which the Debtor shall file the Report of Plan Voting. * Jan. 5, 2022, is fixed as the deadline for filing and serving written objections to the confirmation of the Plan. * Jan. 13, 2022, at 10:00 a.m., is fixed as the date and time for the hearing on confirmation of the Plan, to be held by video conference. A copy of the order dated Nov. 15, 2021, is available at https://bit.ly/30yz04a from PacerMonitor.com at no charge. Counsel for the Debtor: Michael D. Vagnoni, Esquire Edmond M. George, Esquire OBERMAYER REBMANN MAXWELL &HIPPEL LLP Centre Square West 1500 Market Street, Suite 3400 Philadelphia, PA 19102 Telephone: 215.665.3140 Facsimile: 215.665.3165 E-mail: Edmond.george@obermayer.com About Lewisberry Partners Lewisberry Partners, LLC, a Phoenixville, Pa.-based company engaged in renting and leasing real estate properties, sought Chapter 11 protection (Bankr. E.D. Pa. Case No. 21-10327) on Feb. 9, 2021, listing as much as $10 million in both assets and liabilities. Judge Eric L. Frank oversees the case. Edmond M. George, Esq., at Obermayer Rebmann Maxwell & Hippel, LLP, is the Debtor's legal counsel. LIFETIME BRANDS: S&P Upgrades ICR to 'B+', Outlook Stable --------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on U.S.-based Lifetime Brands Inc. to 'B+' from 'B', reflecting improved credit metrics and its belief that demand trends will remain supportive. S&P said, "At the same time, we raised our issue-level rating on its senior secured debt to 'B+' from 'B'. The recovery rating remains '3', indicating our expectation for meaningful recovery (50%-70%; rounded recovery: 50%) in the event of a payment default. "The stable outlook reflects our expectation that the company's operating performance will continue to improve, keeping leverage below 5x in the next 12 months. "We raised the ratings because of improved operating performance and stronger credit metrics. Lifetime's sales continued to climb, reaching $607 million for the nine months ended Sept. 30, 2021. That is up 16.8% from $520 million for the nine months ended Sept. 30, 2020. Sales were $508 million for the nine months ended Sept. 30, 2019. Demand for kitchen accessories and supplies remained strong due to dining at home trends, and improved food service trends. Additionally, the company also improved profitability, increasing EBITDA margins to 13.3% for the 12 months ended Sept. 30, 2021, from 12.2% for the 12 months ended Dec. 31, 2020, through stronger channel and product mix as well as price increases to offset inflation. This reduced leverage to 3.3x for the 12 months ended Sept. 30, 2021, from 4.5x for the 12 months ended Dec. 31, 2020. We expect leverage in the low-3x area at fiscal year-end 2021 as the company continues to expand its food service business, improves long-term operating efficiency, and enacts pricing. "Favorable demand trends and new business lines and products will drive top-line growth. We expect sales growth to continue despite food service reopening. We expect some consumers to continue dining at home, which will drive about 15% sales growth in fiscal 2021. Thereafter, we expect that as trends normalize, Lifetime will leverage its more streamlined U.K. distribution center, new products in adjacencies, and the new Mikasa food service business to drive mid-single-digit percent top-line growth in fiscal 2022. The company hired new country managers and enhanced drop-ship capabilities to better capitalize on growth. Within food service, Lifetime is targeting the front-of-house segment, in which it has minimal presence, through its Mikasa brand. The company identified this as a total addressable market of $2 billion and expects $100 million in incremental revenues over the next five years. "We expect pricing and operating efficiency initiatives to drive margin expansion despite inflationary and supply chain pressures. Lifetime has largely offset this with increased pricing and stronger operating efficiency for wage inflation, though margins were affected in Europe by heightened shipping costs due to the British exit from the European Union and a shortage of drivers. We expect margin expansion to 12%-13% in fiscal 2021 from about 12% in fiscal 2020, driven by stronger channel and product mix and higher prices. Lifetime will use additional incremental capital expenditure (capex) of about $12 million in fiscal 2023 to open a new distribution center, which should drive run-rate savings annually of $6 million-$9.5 million. To achieve this we expect the company to begin building additional distribution capacity. Despite stronger profitability in fiscal 2021, we expect higher investment in inventories to ensure sufficient stock amid supply chain disruptions to result in free cash flow generation in excess of $20 million in fiscal 2021, increasing to over $30 million in fiscal 2022 as working capital unwinds. "We expect leverage sustained below 5x over the longer term. While Lifetime has been acquisitive over its history, we expect such pro forma leverage including acquisitions. We believe the company would acquire targets that supplement revenue and margin expansion, particularly smaller, high-growth players that can be consolidated onto Lifetime's platform. Therefore, we expect leverage to rise occasionally to about 5x for acquisitions, but to fall after integration. Lifetime acquired Filament for $295.8 million in fiscal 2018, which pushed sustained leverage above 5x due to integration and restructuring costs. "The stable outlook reflects our expectation for leverage to stay below 5x over the next 12 months." S&P could lower the rating if leverage remains above 5x or free cash flow substantially declines. This could result from: -- A drop in demand due to shifting consumer dining habits or increased consumer price sensitivity resulting in customers trading down; -- The company adopting more aggressive financial policies, including sizable debt-funded acquisitions or share repurchases; and -- Substantial supply chain disruption or inflationary wage pressures that degrade margin the company cannot offset. While unlikely over the next 12 months S&P could raise the rating if Lifetime maintains leverage below 4x over the longer term and significantly improves its business profile. This could happen if: -- The company commits to and demonstrates a more conservative financial policy; -- Operating performance continues to improve from organic revenue growth and margin expansion due to stronger pricing, mix, and cost management; and -- Scale improves substantially through greater international sales or diversification of channel and product mix. LIQUIDMETAL TECHNOLOGIES: Incurs $1.4-Mil. Net Loss in 3rd Quarter ------------------------------------------------------------------ Liquidmetal Technologies, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $1.40 million on $406,000 of total revenue for the three months ended Sept. 30, 2021, compared to a net loss of $777,000 on $327,000 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 $2.72 million on $721,000 of total revenue compared to a net loss of $2.17 million on $431,000 of total revenue for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $37.02 million in total assets, $2.05 million in total liabilities, and $34.97 million in total shareholders' equity. Cash used in operating activities totaled $1,635,000 and $1,785,000 for the nine months ended Sept. 30, 2021 and 2020, respectively. The cash was primarily used to fund operating expenses related to our business and product development efforts. Cash provided by investing activities totaled $5,354,000 and used in investing activities totaled $12,320,000 for the nine months ended Sept. 30, 2021 and 2020, respectively. Investing inflows primarily consist of proceeds from the sale of debt securities. Investing outflows primarily consist of purchases of debt securities and capital expenditures for additional building improvements. Cash provided by financing activities totaled $0 and $0 for the nine months ended Sept. 30, 2021 and 2020, respectively. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1141240/000143774921026711/lqmt20210930_10q.htm About Liquidmetal Technologies Lake Forest, California-based Liquidmetal Technologies, Inc. -- http://www.liquidmetal.com-- is a materials technology company that develops and commercializes products made from amorphous alloys. The Company's family of alloys consists of a variety of bulk alloys and composites that utilize the advantages offered by amorphous alloys technology. The Company designs, develops and sells products and custom parts from bulk amorphous alloys to customers in a wide range of industries. The Company also partners with third-party manufacturers and licensees to develop and commercialize Liquidmetal alloy products. Liquidmetal reported a net loss of $2.64 million for the year ended Dec. 31, 2020, compared to a net loss of $7.43 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $37.63 million in total assets, $1.44 million in total liabilities, and $36.19 million in total shareholders' equity. LOVE FAMILY: Taps Stichter, Riedel, Blain & Postler as Counsel -------------------------------------------------------------- The Love Family Trust, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Stichter, Riedel, Blain & Postler, PA as its legal counsel. The firm's services include: (a) advising the Debtor regarding its powers and duties in the continued operation of its business and management of its property; (b) preparing legal papers; (c) appearing before the bankruptcy court and the Office of the U.S. Trustee; (d) assisting with and participating in negotiations with creditors and other parties-in-interest in formulating a plan of reorganization, drafting such a plan, and taking necessary legal steps to confirm such a plan; (e) representing the Debtor in all adversary proceedings, contested matters, and matters involving administration of its Chapter 11 case; (f) representing the Debtor in negotiations with potential financing sources, and preparing contracts, security instruments, and other documents necessary to obtain financing; and (g) performing all other legal services. The firm received the aggregate sum of $11,738 on account of pre-bankruptcy services and as a retainer for post-petition services. The hourly rates charged by the firm's attorneys and paralegals are as follows: Partners $325 - $550 per hour Associates $300 - $375 per hour Paralegals $200 per hour Mark Robens, Esq., an attorney at Stichter, Riedel, Blain & Postler, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Mark F. Robens, Esq. Stichter Riedel Blain & Postler, PA 110 East Madison Street, Suite 200 Tampa, FL 33602 Telephone: (813) 229-0144 Email: mrobens@srbp.com About The Love Family Trust The Love Family Trust, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 21-05639) on Nov. 1, 2021, listing as much as $10 million in both assets and liabilities. Daniel Delpiano, manager, signed the petition. Mark F. Robens, Esq., at Stichter Riedel Blain & Postler, PA serves as the Debtor's legal counsel. LTL MANAGEMENT: Talc Claimants' Committee Taps Special Counsel -------------------------------------------------------------- The official committee of talc claimants appointed in LTL Management, LLC's Chapter 11 case seeks approval from the U.S. Bankruptcy Court for the Western District of North Carolina to employ Massey & Gail, LLP as special counsel. The firm's services include: (a) providing recommendations and input for legal strategies, tactics, and positions to be taken by the committee; (b) whether the committee is the movant or respondent, handling specific motions for various relief filed in the bankruptcy court to avoid duplication with other committee counsel; (c) participating as a committee presenter in bankruptcy hearings on specific topics for significant motions; (d) participating as part of the committee's negotiating team against Johnson & Johnson; and (e) providing legal assistance in connection with talc claims valuation and estimation. The hourly rates of Massey & Gail's attorneys and staff are as follows: Partners $820 - $1,250 per hour Counsel $840 - $890 per hour Associates $495 - $740 per hour Paralegals $250 - $330 per hour In addition, the firm will seek reimbursement for expenses incurred. Jonathan Massey, Esq., a founding partner at Massey & Gail, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Jonathan S. Massey, Esq. Massey & Gail LLP 1000 Maine Avenue SW, Suite 450 Washington, DC 20024 Telephone: (202) 652-4511 Facsimile: (312) 379-0467 Email: jmassey@masseygail.com About LTL Management LTL Management LLC is a subsidiary of Johnson & Johnson (J&J), which was formed to manage and defend thousands of talc-related claims and oversee the operations of 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 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. U.S. Bankruptcy Administrator Shelley Abel formed an official committee of talc claimants in the Debtor's Chapter 11 case. The committee tapped Otterbourg, P.C., Brown Rudnick, LLP and Bailey & Glasser, LLP as bankruptcy counsel. Massey & Gail, LLP and Parkins Lee & Rubio, LLP serve as the committee's special counsel. About Johnson & Johnson Johnson & Johnson 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. 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. The corporation had worldwide sales of $82.6 billion during calendar year 2020. MADDOX FOUNDRY: To Seek Plan Confirmation on Jan. 12 ---------------------------------------------------- Judge Karen K. Specie has entered an order conditionally approving the Disclosure Statement of Maddox Foundry & Machine Works, LLC. On Jan. 12, 2022 at 1:30 p.m., Eastern Time, via Video Zoom Conference the Court will conduct a hearing to consider and rule on final approval of the Disclosure Statement and confirmation of the Plan. No later than 7 days before the Confirmation Hearing, parties must file and serve written objections to the Disclosure Statement or confirmation of the Plan. No later than 7 days before the Confirmation Hearing, creditors and other parties in interest shall provide written acceptances or rejections of the Plan to the Plan Proponent. No later than 3 days before the Confirmation Hearing, the Debtor will file a ballot tabulation in accordance with this Court's Local Rules. About Maddox Foundry Maddox Foundry & Machine Works, LLC, is a company that operates a foundry machine shop. It emerged from a prior bankruptcy in 2017. In February of 2019, Chase Hope took over control of the Debtor from his parents, Fletcher and Mary Hope through the Debtor's parent company, Green Health Science, LLC. By April 2019, the Debtor started to experience financial issues. The Debtor experienced cash-flow issues and was unable to service its seven-figure obligations to the McGurn Entities. Maddox Foundry & Machine Works sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Fla. Case No. 20-10211) on Oct. 7, 2020. At the time of the filing, the Debtor disclosed assets of $500,000 and liabilities of $4.495 million. Judge Karen K. Specie oversees the case. Seldon J. Childers, Esq., at ChildersLaw, LLC, serves as the Debtor's legal counsel and Dawn Moesser, ASA, of ICS Asset Management Services, Inc., is the Debtor's appraiser. MALLINCKRODT PLC: Denies Manipulating Acthar Market --------------------------------------------------- Rick Archer of Law360 reports that Mallinckrodt closed its defense against claims it inflated the price of its Acthar gel on Wednesday, Nov. 17, 2021, with witnesses saying that the drugmaker didn't suppress a competing product and that the speaking fees it paid to doctors didn't increase sales. At a virtual hearing before a Delaware bankruptcy judge, Mallinckrodt presented its last witnesses in its defense against arguments it owes health insurers Attestor Limited and Humana Inc. a priority Chapter 11 claim for increased Acthar prices caused by keeping a competing drug off the market and paying speaker's fees to doctors. Mallinckrodt said it had no advantage over Acthar alternatives. 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 was set to begin Nov. 1, 2021. The Confirmation Hearing is slated to have two phases. Phase 1 commenced the week of Nov. 1. Phase 2 will begin on or around the week of Nov. 15, when the Acthar Administrative Claims Hearing proceedings conclude. MAPLE MANAGEMENT: Unsecureds be Paid in Full on or Before 4 Years ----------------------------------------------------------------- Maple Management, LLC, submitted a Second Amended Chapter 11 Plan of Reorganization. Through this Plan, the Debtor proposes to pay its creditors on their respective allowed claims in full from proceeds from the Debtor's accounts receivable generated through services performed and materials provided to the debtor's existing and future customers (the "Sources"). The term of the Plan shall not exceed a period of 5 years. The Class V Claims are represented by the claims of General Unsecured Creditors other than the Classes I, II, III, IV, VI creditors and the Class VII interest holder. Through this Plan of Reorganization, the Debtor proposed to pay in full to this class of creditors on or before 4 years from the Effective Date from the Sources. Class V is impaired. Attorney for the Debtor: Ariel Weissberg, Esq. Weissberg and Associates, Ltd. 564 W. Randolph, Second Floor Chicago, Illinois 60061 Tel: (312) 663-0004 Fax: (312) 663-1514 Email: ariel@weissberglaw.com A copy of the Disclosure Statement dated November 10, 2021, is available at https://bit.ly/3qs9ojT from PacerMonitor.com. About Maple Management Maple Management, LLC, owns and operates a construction-related business that installs elevators, ramps and lifts for the disabled, elderly and infirm at their primary residences. Maple Management operates from the real property commonly known as 245 W Roosevelt Rd Ste 77, West Chicago, IL 60185-4838. Maple rents this premises. Its principal is James Mecha. Maple sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 21-02059) on Feb. 17, 2021. In the petition signed by Mecha, the Debtor disclosed up to $50,000 in assets and up to $1 million in liabilities. Judge Janet S. Baer oversees the case. Ariel Weissberg, Esq., at Weissberg and Associates, Ltd. is the Debtor's counsel. MIDTOWN CAMPUS: To Seek Plan Confirmation on Dec. 20 ---------------------------------------------------- Judge Robert A. Mark has entered an order approving the Second Amended Disclosure Statement for Second Amended Chapter 11 Plan of Reorganization of Midtown Campus Properties, LLC. The Court will convene a hearing to consider confirmation of the Plan on Dec. 20, 2021 at 9:30 a.m. in United States Bankruptcy Court, C. Clyde Atkins United States Courthouse, 301 N. Miami Avenue, Courtroom 4, Miami, FL 33128. The last day for filing and serving objections to confirmation of the Plan will be on Dec. 6, 2021. The last day for filing a ballot accepting or rejecting the Plan will be on Dec. 6, 2021. Counsel to the Debtors: Paul J. Battista, Esq. Genovese Joblove & Battista, P.A. 100 SE 2nd Street, 44th Floor Miami, Florida 33131 Tel: (305) 349-2300 E-mail: pbattista@gjb-law.com About Midtown Campus Properties Midtown Campus Properties, LLC, is a single asset real estate that owns the Midtown Apartments. The Midtown Apartments is a 310-unit student housing apartment complex currently under construction at 104 NW 17th St in Gainesville, Florida, just across from the University of Florida. It consists of a six-story main building, a parking garage for resident and public use, and a commercial retail space. Each unit includes a full-size kitchen, carpet, tile, and hardwood floors and be fully furnished. It is located near several Midtown bars and restaurants frequented by students, and just a couple of minutes' walk from Ben Hill Griffin Stadium. Midtown Campus Properties sought Chapter 11 protection (Bankr. S.D. Fla. Case No. 20-15173) on May 8, 2020. The Debtor was estimated to have $50 million to $100 million in assets and liabilities as of the bankruptcy filing. The Honorable Robert A. Mark is the presiding judge. The Debtor tapped Genovese Joblove & Battista, P.A., as bankruptcy counsel; and The Bosch Group, Inc., as construction consultants. No creditors' committee has been appointed in this case. In addition, no trustee or examiner has been appointed. MUSCLE MAKER: Incurs $433K Net Loss in Third Quarter ---------------------------------------------------- Muscle Maker, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $432,630 on $3.35 million of total revenues for the three months ended Sept. 30, 2021, compared to a net loss of $662,080 on $1.15 million of total revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $5.27 million on $7.37 million of total revenues compared to a net loss of $7.66 million on $3.40 million of total revenues for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $18.36 million in total assets, $5.20 million in total liabilities, and $13.17 million in total stockholders' equity. Michael Roper, CEO of Muscle Maker, Inc, commented, "The recently posted 3rd Quarter net loss narrowed to ($433K) which is the best performing quarter since our IPO. As the impact of Covid falls further into the rear-view mirror and the restaurant industry continues to recover, we are starting to see a positive impact to our portfolio of "healthier for you" brands - Muscle Maker Grill, Superfit Foods and Pokemoto. Not only have we experienced a significant top line revenue increase, we are also seeing our operating metrics improve year over year as the new entities are integrated into the overall Muscle Maker Inc portfolio of companies." Roper continued, "We are very excited to finally be able to fully execute against our growth strategy. We had our IPO in February 2020 and immediately rolled into full Covid lockdowns and quarantines. As everyone knows, the restaurant industry was hit hard by these restrictions. While we are not fully removed from Covid and its impact, we have been able to focus more on our growth strategy." "Over the last seven months, Muscle Maker Inc has made multiple growth-oriented announcements, including: acquisition of Superfit Foods, acquisition of Pokemoto, opening four new locations on the Northern Virginia Community College campuses, launching our Pokemoto franchising strategy which has already resulted in five franchise agreements signed, partnered with Franserve the world's largest franchising consulting firm and signing a 40-unit development deal in Saudi Arabia." "Our growth plan focuses on strategic acquisitions and franchising. Our team has extensive franchise experience in sales, real estate and operations and we will leverage this experience to focus in on our growth strategy. Pokemoto, a healthier for you Hawaiian poke bowl brand is trending in the food segment. The concept boasts low build out and labor costs, ease of operations, small footprints and is highly favorable with both the Millennial and Gen Z demographics. All of the aforementioned plus the vast gamut of experience of our management team makes us believe we have a winning combination that should drive franchise growth." The recent acquisitions and openings bring the current total open store count of all entities to 42 corporately owned and franchised locations. The Company has signed leases, development and franchise agreements that represent an additional 47 locations, which, if fully executed upon, will more than double the size of the current store count. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1701756/000149315221028586/form10-q.htm About Muscle Maker Headquartered in League City, Texas, Muscle Maker is a fast casual restaurant concept that specializes in preparing healthy-inspired, high-quality, fresh, made-to-order lean, protein-based meals featuring chicken, seafood, pasta, hamburgers, wraps and flat breads. In addition, the Company features freshly prepared entree salads and an appealing selection of sides, protein shakes and fruit smoothies. Muscle Maker reported a net loss of $10.10 million for the year ended Dec. 31, 2020, compared to a net loss of $28.39 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $9.34 million in total assets, $5.26 million in total liabilities, and $4.08 million in total stockholders' equity. Melville, NY-based Marcum LLP, the Company's auditor since 2016, issued a "going concern" qualification in its report dated April 15, 2021, citing that the Company has incurred significant losses and net cash used in operations and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. MUSCLEPHARM CORP: Incurs $3.9 Million Net Loss in Third Quarter --------------------------------------------------------------- MusclePharm Corporation filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $3.93 million on $11.97 million of net revenue for the three months ended Sept. 30, 2021, compared to net income of $678,000 on $16.09 million of net revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $6.09 million on $40 million of net revenue compared to net income of $365,000 on $49.31 million of net revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $11.31 million in total assets, $41.12 million in total liabilities, and a total stockholders' deficit of $29.81 million. Mr. Ryan Drexler, the chairman of the Board of Directors and chief executive officer, stated, "Sales and margins in the third quarter were impacted by supply chain shortages which were mitigated by our continued focus on operating expense reduction. We are excited to launch a new and improved formula that delivers improved taste and mixability to consumers of two of our top selling products, Combat 100% Whey and Combat Protein Powder, to begin shipping this month. This new product formulation, along with the continued production of the MP Energy drink line, is expected to drive sequential revenue growth in the fourth quarter of 2021. Also, as mentioned on our second quarter earnings call, we brought on T.J. Dillashaw for marketing and business development and have already seen a significant impact on our business through the formation of marketing partnerships that will support our expected fourth quarter revenue growth." Mr. Drexler continued, "In addition, our recent $7.0 million senior secured notes offering has us well positioned to capture market share in the functional energy drink segment, and we believe we can grow the business to $30.0 million in annual sales starting in 2023." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1415684/000149315221029042/form10-q.htm About MusclePharm Headquartered in Denver, Colorado, MusclePharm Corporation (OTCQB:MSLP) -- http://www.musclepharm.comand http://www.musclepharmcorp.com-- is a lifestyle company that develops, manufactures, markets and distributes branded nutritional supplements. The Company offers a broad range of performance powders, capsules, tablets, gels and on-the-go ready to eat snacks that satisfy the needs of enthusiasts and professionals alike. MusclePharm reported net income of $3.18 million for the year ended Dec. 31, 2020, compared to a net loss of $18.93 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $9.95 million in total assets, $34.27 million in total liabilities, and a total stockholders' deficit of $24.32 million. Los Angeles, California-based SingerLewak LLP issued a "going concern" qualification in its report dated March 29, 2021, citing that the Company has suffered recurring losses from operations, has an accumulated deficit and its total liabilities exceed its total assets. This raises substantial doubt about the Company's ability to continue as a going concern. NETSMART LLC: S&P Alters Outlook to Positive, Affirms 'B-' ICR -------------------------------------------------------------- S&P Global Ratings revised its outlook to positive from stable and affirmed its ratings, including the 'B-' issuer credit rating on Netsmart LLC. S&P said, "Our positive outlook reflects our belief that the company's strong operating performance in markets with underlying growth will continue to produce solid cash flow, with free operating cash flow to debt exceeding 3%, and for leverage to remain at or below 7.5x. "We expect adjusted leverage to remain near 7x and cash flow to remain strong in the near term, driven by debt-financed acquisitions. Netsmart continues to accelerate its shift away from legacy software licensing to a subscription-as-a-service (SaaS) model. About 80% of total revenue is now recurring, allowing for much higher revenue visibility. Clients continue to adopt the CareFabric platform and add new solutions, and recent large contract wins such as Kindred and Aveanna Healthcare have further bolster growth. We expect some pressure in the first half of 2022 from the migration to SaaS from license sales as well as some marketing and travel costs deferred or forgone in 2020 and 2021. Performance in the second half will more represent the positive outlook, including our expectations for strong cash flow." Netsmart has expanded organically and through small tuck-in acquisitions, allowing the company to enter new adjacent markets. Its two acquired Texas-based companies in July 2021 from Briggs Healthcare Co., SimpleLTC and Selman-Holman & Associates, expanded offerings in predictive analytics and operational strategic advisory services. This followed the January acquisition of Geriatric Practice Management Corp., a SaaS technology and services company supporting medical practices that provide medical care to geriatric patients who often reside in skilled nursing facilities. S&P expects Netsmart to continue the tuck-in acquisition strategy, adding functionalities and strengthening its position in certain high-growth markets, keeping adjusted leverage near 7x in 2022. Cash flow generation remains stable, driven by increasing recurring service revenue. Netsmart has limited scale in the health care information technology (IT) market, with a broad focus in the expanding post-acute health care market. It provides health care software and technology focusing on the human services and post-acute-care segments, including behavioral health, home care, long-term acute care, rehab, senior living, and social services. It operates in a highly fragmented market with many small and niche competitors, which provides growth opportunities through acquisitions. In some markets, many providers do not yet have commercial electronic health records (EHR), allowing for ample white space and organic growth opportunities. S&P expects significant growth in these markets over the coming years. The behavioral and substance-use markets will expand, and the Centers for Medicare and Medicaid Services and commercial payers continue to provide incentives for patients to seek care, including personal care, outside high-cost settings. S&P said, "Our positive outlook reflects our belief that Netsmart's strong operating performance in markets with underlying growth will continue to produce solid cash flow, with free operating cash flow to debt exceeding 3%, and leverage remaining at or below 7.5x. "The transition to the SaaS model, which provides more stability and visibility in the business, supports our view that the most likely downside scenario would be the adoption of a more aggressive financial policy, such as a large debt-funded acquisition or dividend that would substantially reduce cash flow and increase leverage. "We could raise our rating if the company achieves our base-case expectations of about $45 million reported free cash flow in 2021 and $50 million in 2022, keeping FOCF to debt comfortably above 3.5%." Netsmart, headquartered in Overland Park, Kan., provides health care software and technology focusing on the health and human services and post-acute care segments. The company is owned jointly by private equity owners--GI Partners and Allscripts. Netsmart serves more than 35,000 client organizations in all 50 U.S. states. Netsmart's offerings include EHR platform, IT cloud and hosting, revenue cycle management, and SaaS software. The company leverages the common platform to integrate post-acute care and offer expanded solutions to the installed base. NEUTRAL POSTURE: Seeks to Hire Howley Law as Legal Counsel ---------------------------------------------------------- Neutral Posture, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ Howley Law, PLLC as its legal counsel. The firm's services include: (a) advising the Debtor regarding its rights, duties and powers; (b) assisting the Debtor in consultations relative to the administration of this Subchapter V case; (c) assisting the Debtor in analyzing the claims of creditors and in negotiating with such creditors; (d) assisting the Debtor in the analysis of and negotiations with any third-party concerning matters relating to, among other things, the Subchapter V plan of reorganization; (e) representing the Debtor at hearings and other proceedings; (f) reviewing and analyzing all applications, motions, orders, statements of financial affairs and bankruptcy schedules filed with the court; (g) assisting the Debtor in preparing pleadings and applications in furtherance of the Debtor's interests and objectives in the context of its Subchapter V case; and (h) performing other necessary legal services. Howley Law received a pre-bankruptcy retainer of $65,675.59 from the Debtor. The hourly rates of Howley Law's attorneys and staff are as follows: Tom A. Howley, Partner $600 per hour Eric Terry, Of Counsel $600 per hour Roland G. Rodriguez, Paralegal $200 per hour In addition, the firm will be reimbursed for expenses incurred. Tom Howley, Esq., owner and member of Howley Law, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Tom A. Howley, Esq. Howley Law PLLC Pennzoil Place, South Tower 711 Louisiana Street, Suite 1850 Houston, TX 77002 Telephone: (713) 333-9125 Email: tom@howley-law.com About Neutral Posture Neutral Posture, Inc., a Bryan, Texas-based manufacturer of ergonomic chairs and related office items, filed a petition for Chapter 11 protection (Bankr. S.D. Texas Case No. 21-60086) on Nov. 1, 2021, listing as much as $10 million in both assets and liabilities. Rebecca E. Boenigk, president and chief executive officer, signed the petition. Judge Christopher M. Lopez oversees the case. Tom A. Howley, Esq., at Howley Law, PLLC is the Debtor's legal counsel. NEW ORLEANS ARCHDIOCESE: Will Pay Over $1Mil. for False FEMA Claims ------------------------------------------------------------------- KALB.com reports that the Archdiocese of New Orleans has agreed to pay more than $1 million after knowingly submitting false claims to FEMA for damages incurred during Hurricane Katrina. The settlement will resolve allegations that, from 2007 to 2013, the archdiocese knowingly signed fraudulent documents for FEMA funding and lied about damage descriptions and repair estimates. The U.S. Attorney's Office says damage to a nonexistent central air conditioning unit is among the false claims. A "whistleblower" lawsuit was filed in 2016 against AECOM, a multinational engineering firm; Xavier University of Louisiana; Dillard University; the Archdiocese of New Orleans; and Randall Krause, an AECOM employee who compiled the damage claims. The whistleblower and former project manager for AECOM, Robert Romero, says the church collected $46 million more than it should have. Romero also accused his co-worker Krause of helping clients pocket more money. The archdiocese vehemently denied the allegations. On Oct. 26, 2021, the archdiocese agreed to pay $1.05 million to the U.S. Department of Justice over the next two years. The archdiocese filed for Chapter 11 bankruptcy after being hit with numerous sex abuse lawsuits. Last June, Xavier University agreed to pay $12 million after being accused of accepting FEMA money for damage to a basement and a concrete gym foundation that do not exist. Dillard was also accused of collecting $15 million it didn't deserve for damage to buildings. About The Roman Catholic Church of the Archdiocese of New Orleans The Roman Catholic Church of the Archdiocese of New Orleans is a non-profit religious corporation incorporated under the laws of the State of Louisiana. For more information, visit https://www.nolacatholic.org/ Created as a diocese in 1793, and established as an archdiocese in 1850, the Archdiocese of New Orleans has educated hundreds of thousands in its schools, provided religious services to its churches and provided charitable assistance to individuals in need, including those affected by hurricanes, floods, natural disasters, war, civil unrest, plagues, epidemics, and illness. Currently, the archdiocese's geographic footprint occupies over 4,200 square Miles in southeast Louisiana and includes eight civil parishes -- Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist, St. Tammany, and Washington. The Roman Catholic Church for the Archdiocese of New Orleans sought Chapter 11 protection (Bankr. E.D. La. Case No. 20-10846) on May 1, 2020. The archdiocese was estimated to have $100 million to $500 million in assets and liabilities as of the bankruptcy filing. Judge Meredith S. Grabill oversees the case. Jones Walker, LLP and Blank Rome, LLP serve as the archdiocese's bankruptcy counsel and special counsel, respectively. Donlin, Recano & Company, Inc., is the claims agent. The U.S. Trustee for Region 5 appointed an official committee of unsecured creditors on May 20, 2020. The committee is represented by the law firms of Pachulski Stang Ziehl & Jones, LLP and Locke Lord, LLP. Berkeley Research Group, LLC, is the committee's financial advisor. NIDA ALSHAIKH: Seeks Approval to Hire Accunet Pro as Accountant --------------------------------------------------------------- Nida Alshaikh DDS, PC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Michigan to employ Accunet Pro, Inc. as its accountant. The firm's services include: (a) preparing and filing the Debtor's 2020 federal and state tax returns; and (b) assisting the Debtor with monthly bookkeeping and payroll. The firm will be billed a flat fee of $2,325 for the preparation of 2020 federal and state tax returns and related services. Ihad Ayyash, an accountant and sole shareholder of Accunet Pro, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Ihad Ayyash Accunet Pro, Inc. 4710 Woodworth Dearborn, MI 48126 Telephone: (313) 717-2006 About Nida Alshaikh DDS Nida Alshaikh DDS, PC, owner of a dental clinic in Westland, Mich., filed a petition for Chapter 11 protection (Bankr. E.D. Mich. Case No. 21-47459) on Sept. 17, 2021, listing up to $50,000 in assets and up to $10 million in liabilities. Nida Alshaikh, owner, signed the petition. Judge Lisa S. Gretchko oversees the case. The Debtor tapped Schafer and Weiner PLLC as legal counsel, Calderone Advisory Group LLC as financial advisor, and Accunet Pro Inc. as accountant. NITROCRETE LLC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Five affiliates that concurrently filed voluntary petitions seeking relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- NITROcrete, LLC 21-15739 2580 E. Harmony Road Suite 301 Fort Collins, CO 80528 Nitro Holdings, LLC 21-15740 2580 E. Harmony Road Suite 301 Fort Collins, CO 80528 NITROcrete IP, LLC 21-15741 2580 E. Harmony Road Suite 301 Fort Collins, CO 80528 NITROcrete Equipment, LLC 21-15742 2580 E. Harmony Road Suite 301 Fort Collins, CO 80528 NITROcrete Holdings, LLC 21-15743 2580 E. Harmony Road Suite 301 Fort Collins, CO 80528 Business Description: NITROcrete offers liquid nitrogen solution for concrete temperature control. Chapter 11 Petition Date: November 18, 2021 Court: United States Bankruptcy Court District of Colorado Judge: Hon. Kimberley H. Tyson Debtors' Counsel: Matthew T. Faga, Esq. MARKUS WILLIAMS YOUNG & HUNSICKER LLC 1775 Sherman Street, Suite 1950 Denver, CO 80203 Tel: 303-830-0800 Email: MFaga@markuswilliams.com NITROcrete, LLC's Estimated Assets: $1 million to $10 million NITROcrete, LLC's Estimated Liabilities: $10 million to $10 million Nitro Holdings, LLC's Estimated Assets: $10 million to $10 million Nitro Holdings, LLC's Estimated Liabilities: $10 million to $10 million NITROcrete IP's Estimated Assets: $1 million to $10 million NITROcrete IP's Estimated Liabilities: $1 million to $10 million NITROcrete Equipment's Estimated Assets: $1 million to $10 million NITROcrete Equipment's Estimated Liabilities: $10 million to $50 million NITROcrete Holdings' Estimated Assets: $100,000 to $500,000 NITROcrete Holdings' Estimated Liabilities: $1 million to $10 million The petitions were signed by Stephen De Bever as CEO. Full-text copies of the petitions containing, among other items, lists of the Debtors' largest unsecured creditors are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/FTFEYSA/NITROcrete_LLC__cobke-21-15739__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/X3Z65UQ/Nitro_Holdings_LLC__cobke-21-15740__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/G5JTIPQ/NITROcrete_IP_LLC__cobke-21-15741__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/HDYNNNY/NITROcrete_Equipment_LLC__cobke-21-15742__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/HVYWWTA/NITROcrete_Holdings_LLC__cobke-21-15743__0001.0.pdf?mcid=tGE4TAMA List of Nitro Holdings's 17 Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Daniel Schauer $51,498 S86 W27550 Lakeview Lane Mukwonago, WI 53149 2. Drew R. Nelson Trust No. 2 $2,426,507 Justin Gerber, Trustee 3641 Laduke Street Bozeman, MT 59718 Email: jgerber2002@gmail.com 3. Drew R. Nelson Trust No. 2 $154,986 Justin Gerber, Trustee 3641 Laduke Street Bozeman, MT 59718 Email: jgerber2002@gmail.com 4. Kathleen M. Johnston $53,922 7900 Eagle Ranch Road Fort Collins, CO 80528 Email: kwalton@nitrocrete.com 5. Mark E. Nelson Trust No. 2 $1,348,059 Justin Gerber, Trustee 3641 Laduke Street Bozeman, MT 59718 Email: dnelson@nitrocrete.com 6. Michael R. Schauer 1 $26,961 1554 Quail Hollow Drive Fort Collins, CO 80525 Email: mschauer@nitrocrete.com 7. Michael R. Schauer 2 $26,947 1554 Quail Hollow Drive Fort Collins, CO 80525 Email: mschauer@nitrocrete.com 8. NDTCO as custodian FBO $107,242 Thomas Schauer IR 1039 Nightingale Drive, Unit 6 Fort Collins, CO 80525 Email: schauer.tj@gmail.com 9. Ogletree Deakins $1,224 P.O. Box 89 Columbia, SC 29202 10. Rita Burns $51,498 2545 N. Murray Avenue Milwaukee, WI 53211 11. RMS US LLP $1,260 5155 Paysphere Circle Chicago, IL 60674 12. Sandy Gabriel Carrero $80,966 10788 Lemon Lake Blvd. Orlando, FL 32836 13. Tad M. Johnson $431,708 S74W12936 Courtland Lane Muskego, WI 53150 14. Thomas Schauer $53,922 1070 W. Century Drive Louisville, CO 80027 Email: schauer.tj@gmail.com 15. Thomas Schauer $53,607 1070 W. Century Drive Louisville, CO 80027 Email: schauer.tj@gmail.com 16. Thomas Schauer $51,676 1070 W. Century Drive Louisville, CO 80027 Email: schauer.tj@gmail.com 17. TN Family LLC $539,224 Mark Nelson, Manager 6325 Ridgewood Dr. Fort Collins, CO 80524 Email: mnelson@nitrocrete.com NUVERRA ENVIRONMENTAL: Incurs $7.2-Mil. Net Loss in Third Quarter ----------------------------------------------------------------- Nuverra Environmental Solutions, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $7.17 million on $24.79 million of total revenue for the three months ended Sept. 30, 2021, compared to a net loss of $7.13 million on $23.80 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 $18.63 million on $73.23 million of total revenue compared to a net loss of $36.95 million on $86.20 million of total revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $169.31 million in total assets, $55.02 million in total liabilities, and $114.29 million in total shareholders' equity. The Company continues to incur operating losses, and it anticipates losses to continue into the near future. There has been a significant decline in oil and natural gas production activities, which has negatively impacted its customers' demand for its services, as well as rising costs which has resulted in uncertainty surrounding the potential impact on its cash flows, results of operations and financial condition. "Due to high costs and uncertainty of our customers increasing their production activities there is substantial doubt as to the Company's ability to continue as a going concern within one year after the date that these financial statements are issued. In order to mitigate these conditions, the Company has undertaken various initiatives that include reducing our costs, increasing of our pricing and services and leaving areas that are not profitable," Nuverra said. "Our consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern," the Company said. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1403853/000140385321000064/nes-20210930.htm About Nuverra Nuverra Environmental Solutions, Inc. provides water logistics and oilfield services to customers focused on the development and ongoing production of oil and natural gas from shale formations in the United States. Its services include the delivery, collection, and disposal of solid and liquid materials that are used in and generated by the drilling, completion, and ongoing production of shale oil and natural gas. The Company provides a suite of solutions to customers who demand safety, environmental compliance and accountability from their service providers. Nuverra Environmental reported a net loss of $44.14 million for the year ended Dec. 31, 2020, compared to a net loss of $54.94 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $174.53 million in total assets, $53.52 million in total liabilities, and $121.01 million in total shareholders' equity. ONEWEB GLOBAL: Paid Around $50M Investors' Fees for Bankruptcy Deal ------------------------------------------------------------------- Jules Menten of California News Times reports that OneWeb Global has paid around $50 million worth of investors' fees for bankruptcy deal. OneWeb paid to $49.3 million to bankers, lawyers and other advisors acting on behalf of former shareholders as part of a $1 billion transaction between the UK government and India's Bharti Global rescued a satellite internet company from bankruptcy last 2020. The disclosure was made on an audited account published on Tuesday. The sale agreement "required the company to bear the cost of selling the former shareholder of One Web Communications," the account said. No advisor was appointed, but Guggenheim Partners, an investment bank in New York, and Milbank, a US law firm, advised investors on the deal, according to people familiar with the situation. Shareholders disclosed in the bankruptcy filing include Airbus, Hughes Network Systems, EchoStar's subsidiaries, Intelsat, Qualcomm, Virgin Group and Softbank. The annual report also revealed that OneWeb suffered an operating loss of $58.3 million in the 12 months to the end of March. There was no comparison with the previous year. Since the $ 1 billion bailout by the UK and Balti, the company has secured $2.7 billion in funding from investors, including: Eutelsat, European satellite operator, Hanwha, Korean conglomerate, and even Softbank. In recent funding rounds, OneWeb is estimated to be worth over $ 3 billion. About OneWeb Global Limited Founded in 2012, OneWeb Global Limited is a global communications company developing a low-Earth orbit satellite constellation system and associated ground infrastructure, including terrestrial gateways and end-user terminals, capable of delivering communication services for use by consumers, businesses, governmental entities, and institutions, including schools, hospitals, and other end-users whether on the ground, in the air, or at sea. OneWeb's business consists of the development of the OneWeb System, which has included the development of small-next generation satellites that have been mass-produced through a joint venture and the development of specialized connections between the satellite system and the internet and other communications networks through the SNPs. For more information, visit https://www.oneweb.world/ OneWeb Global Limited and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 20-22437) on March 27, 2020. At the time of the filing, Debtors disclosed assets of between $1 billion and $10 billion and liabilities of the same range. Judge Robert D. Drain oversees the cases. The Debtors tapped Milbank LLP as counsel; Guggenheim Securities, LLC as investment banker; FTI Consulting, Inc. as financial advisor; Grant Thornton LLP as tax consultant; and Dixon Hughes Goodman LLP as tax consulting and compliance services provider. Omni Agent Solutions is the claims, noticing and solicitation agent. ORGANIC EVOLUTION: Seeks to Tap Behar, Gutt & Glazer as Counsel --------------------------------------------------------------- Organic Evolution, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to employ the law firm of Behar, Gutt & Glazer, PA as its legal counsel. The firm's services include: (a) advising the Debtor regarding its powers and duties in the continued management of its business operations; (b) advising the Debtor regarding its responsibilities in complying with the United States Trustee's Operating Guidelines and Reporting Requirements and with the rules of the court; (c) preparing legal papers; and (d) assisting the Debtor in the preparation of a Chapter 11 reorganization plan. The hourly rates of the firm's attorneys and staff are as follows: Partners $425 per hour Associates $375 per hour In addition, the firm will seek reimbursement for expenses incurred. Brian Behar, Esq., a member of Behar, Gutt & Glazer, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brian S. Behar, Esq. Behar, Gutt & Glazer, PA DCOTA, Suite A-350 1855 Griffin Road Fort Lauderdale, FL 33004 Telephone: (305) 931-3771 Email: bsb@bgglaw.com About Organic Evolution Organic Evolution, a Delray Beach, Fla.-based company that offers computer peripheral equipment, filed its voluntary petition for Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-20036) on Oct. 19, 2021, listing up to $50,000 in assets and up to $10 million in liabilities. Richard Logis, president, signed the petition. Judge Erik P. Kimball oversees the case. Brian S. Behar, Esq., at Behar, Gutt & Glazer, PA serves as the Debtor's legal counsel. PALACE THEATER: Unsecured Creditors to Recover 100% in Plan ----------------------------------------------------------- Palace Theater, LLC, filed with the U.S. Bankruptcy Court for the Western District of Wisconsin a Plan of Reorganization dated Nov. 15, 2021. The Palace Theater was intended at its inception to be a first class regional dinner theater and event center. Both the Debtor and 94 North Productions, LLC are owned 61% by Anthony Tomaska and 39% by Lundgren Partners (owned by Brent Coan and Mark Wilford). The Plan Proponent's financial projections show that the Debtor will have projected disposable income sufficient to pay all claims in full. PostPetition the Debtor and its related affiliate 94 North Productions, LLC entered into an allocation agreement confirming that all 94 North Productions, LLC income and related expenses would be transferred on receipt to the Debtor. This allocation of income and expenses agreement addresses concerns raised by Kramer Brothers. The final payment is expected to be paid 60 months from the Effective Date. This Plan of Reorganization proposes to pay creditors of Palace Theater, LLC from cash flow of operations of the Palace Theater. As a consequence of the assumption of the obligations of 94 North Productions, LLC along with its assets, all creditors, many common, will also be paid in full. 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. The Plan will treat claims as follows: * Class 2 consists of the claim of Kraemer Brothers Construction with an approximate balance of $5,571,000 which is fully secured by real estate mortgage on the real estate owned by the Debtor. The claim of Kraemer Brothers Construction shall be amortized over 25 years at an interest rate of 4.25% per annum and payment shall commence, monthly, 30 days from the Effective Date in the approximate amount of $30,170 per month, which payment shall continue for a period of 7 years, after which time the entire principal balance plus any accrued interest shall become due and payable in full and shall be paid off through a refinancing by the Debtor at that time. * Class 3 consists of the claim of Bank of Wisconsin Dells, guaranteed by the Small Business Administration, with an approximate balance of $203,173. The claim of the Bank of Wisconsin Dells, which holds a guaranty by the Small Business Administration and is secured by the personal property of the Debtor (including the personal property transferred to the Debtor by 94 North Productions, LLC) as of the date of the filing of the petition, shall be repaid, together with interest at a rate of 4.25% per annum, in equal monthly payments for 36 months in the approximate amount of $6,335 per month until paid in full. * Class 4 consists of the claim of Sauk County for past due real estate taxes, which are first and paramount liens on the real estate owned by the Debtor, in the approximate amount of $405,578. The claim of Sauk County for past due real estate taxes, which are a first and paramount lien on the real estate, shall be paid in 60 equal installments with interest at 4.25% per annum commencing 30 days from the Effective Date until paid in full. All post-petition accrued taxes shall be paid when due, including taxes for the entire year of 2021. * Class 5 consists of all nonpriority unsecured claims. These claims total approximately $175,000. Non-priority unsecured creditors' claims, as allowed, shall be paid in full in a lump-sum 60 days from the Effective Date from cash on hand. * Class 6 consists of the claim of Lundgren Partners in the approximate amount of $5,382,770. Lundgren Partners advances to the Debtor, including advances for signage (which ostensibly was a lease with a one-dollar buyout and thus a disguised installment sale) shall be repaid without interest from excess cash flow after payments to all classes, monthly. * Class 7 consists of the equity interests in the Debtor (and the former 94 North Productions, LLC, which has an identical ownership structure). Anthony Tomaska holds 61% of the member interests and Lundgren Partners holds 39% of the member interests. Existing equity shall retain its interests in the Debtor upon confirmation in the same proportion held on a pre-petition basis. The Plan will be implemented by the Debtor continuing its operations and devoting its future income to the Plan. It is required to pay its debts as restructured. A full-text copy of the Plan of Reorganization dated Nov. 15, 2021, is available at https://bit.ly/3qPUofN from PacerMonitor.com at no charge. Counsel for the Debtor: Virginia E. George Paul G. Swanson, Esq. Steinhilber Swanson LLP 107 Church Avenue Oshkosh, WI 54901 Telephone: (920) 235-6690 Facsimile: (920) 426-5530 Email: pswanson@steinhilberswanson.com About Palace Theater Wisconsin-based Palace Theater, LLC is a privately held company in the performing arts business. The Palace Theater is a theatre destination, producing classic broadway productions, children's theatre shows, comedy and concerts, with both original artists and tribute concerts. Palace Theater filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wis. Case No. 21-11714) on Aug. 16, 2021, disclosing total assets of $9,086,225 and total liabilities of $6,449,452. Anthony J. Tomaska, managing member, signed the petition. The Debtor tapped Steinhilber Swanson, LLP as legal counsel and Martin J. Cowie as accountant. PARKERVISION INC: Incurs $2.1 Million Net Loss in Third Quarter --------------------------------------------------------------- Parkervision, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $2.10 million on $144,000 of licensing revenue for the three months ended Sept. 30, 2021, compared to a net loss of $1.67 million on zero revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $8.98 million on $144,000 of licensing revenue compared to a net loss of $13.17 million on zero revenue for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $3.40 million in total assets, $46.87 million in total liabilities, and a total shareholders' deficit of $43.47 million. The Company has incurred significant losses from operations and negative operating cash flows in every year since inception, largely as a result of its significant investments in developing and protecting its intellectual property, and has utilized the proceeds from sales of debt and equity securities and contingent funding arrangements with third-parties to fund its operations, including the cost of litigation. Parkervision stated, "We used cash for operations of approximately $6.9 million and $4.2 million for the nine months ended September 30, 2021 and 2020, respectively. The increase in cash used for operations from 2020 to 2021 is primarily due to the use of approximately $4.1 million in cash for the reduction of accounts payables and accrued expenses during the nine months ended September 30, 2021, as compared to a $1.3 million increase in accounts payable and accrued expenses during the nine months ended September 30, 2020. This increase in use of cash is somewhat offset by a reduction in cash-based operating costs from 2020 to 2021. For the nine months ended September 30, 2021, we received aggregate net proceeds from the sale of debt and equity securities, including the exercise of outstanding options and warrants, of approximately $6.1 million compared to approximately $5.5 million in proceeds received for the nine months ended September 30, 2020. We repaid approximately $0.07 million and $1.3 million, respectively in debt obligations during the nine months ended September 30, 2021 and 2020. Patent enforcement litigation is costly and time-consuming and the outcome is difficult to predict. We expect to continue to invest in the support of our patent enforcement and licensing programs. All proceeds from litigation during the nine months ended September 30, 2021, were used to pay out-of-pocket legal expenses incurred by our counsel. Furthermore, we expect that revenue generated from patent enforcement actions and/or technology licenses in the remainder of 2021, if any, after deduction of payment obligations to third-party litigation funders, legal counsel, and other investors, will not be sufficient to cover our operating expenses. Therefore, our current capital resources are not sufficient to meet our short-term liquidity needs and we will be required to seek additional capital. Our ability to meet both our short-term and long-term liquidity needs, including our debt repayment obligations, is dependent upon (i) our ability to successfully negotiate licensing agreements and/or settlements relating to the use of our technologies by others in excess of our contingent payment obligations to third-party litigation funders, legal counsel, and other investors; (ii) our ability to control operating costs, and (iii) our ability to raise additional capital from the sale of debt or equity securities or other financing arrangements. Failure to generate sufficient revenues, raise additional capital through debt or equity financings or contingent fee arrangements, and/or reduce operating costs will have a material adverse effect on our ability to meet our long-term liquidity needs and our ability to achieve our intended long-term business objectives." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0000914139/000091413921000032/prkr-20210930x10q.htm About Parkervision Headquartered in Jacksonville, Florida, ParkerVision, Inc. (http://www.parkervision.com)has designed and developed proprietary radio-frequency (RF) technologies that enable advanced wireless solutions for current and next generation wireless communication products. ParkerVision is engaged in a number of patent enforcement actions in the U.S. to protect patented rights that it believes are broadly infringed by others. Parkervision reported a net loss of $19.58 million for the year ended Dec. 31, 2020, compared to a net loss of $9.45 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $4.21 million in total assets, $47.15 million in total liabilities, and a total shareholders' deficit of $42.95 million. Fort Lauderdale, Florida-based MSL, P.A., the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 31, 2021, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. PERKY JERKY: Taps Wadsworth Garber Warner Conrardy as Counsel ------------------------------------------------------------- Perky Jerky, LLC received approval from the U.S. Bankruptcy Court for the District of Colorado to employ Wadsworth Garber Warner Conrardy, PC as its legal counsel. The firm's services include: (a) advising the Debtor regarding its powers and duties; (b) assisting the Debtor in the development of a plan of reorganization under Chapter 11; (c) preparing and filing petitions, pleadings, reports, and actions which may be required under Chapter 11; (d) taking necessary actions to enjoin and stay until final decree continuation of pending proceedings and to enjoin and stay until final decree commencement of lien foreclosure proceedings; and (e) performing all other legal services for the Debtor. The firm received a retainer from the Debtor in the amount of $10,264.50. The hourly rates of the firm's attorneys and staff are as follows: David V. Wadsworth $435 per hour Aaron A. Garber $425 per hour David J. Warner $325 per hour Aaron J. Conrardy $325 per hour Lindsay S. Riley $235 per hour Neil A. Camera $200 per hour Paralegals $115 per hour Aaron Garber, Esq., a partner at Wadsworth Garber Warner Conrardy, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Aaron A. Garber, Esq. Wadsworth Garber Warner Conrardy, PC 2580 West Main Street, Suite 200 Littleton, CO 80120 Telephone: (303) 296-1999 Facsimile: (303) 296-7600 Email: agarber@wgwc-law.com About Perky Jerky Perky Jerky, LLC, a meat provider specializing in turkey, beef, and pork based in Denver, Colo., filed its voluntary petition for Chapter 11 protection (Bankr. D. Colo. Case No. 21-15685) on Nov. 15, 2021, listing $1,934,044 in total assets and $15,753,488 in total liabilities. Brian Levin, chief executive officer, signed the petition. Judge Joseph G. Rosania Jr. oversees the case. Aaron A. Garber, Esq., at Wadsworth Garber Warner Conrardy, PC serves as the Debtor's legal counsel. PINNEY INC: Updates Plan to Include AFC Unsecured Claim Pay Details ------------------------------------------------------------------- Pinney Inc. submitted an Amended Plan of Reorganization dated November 15, 2021. The Debtor's Amended Plan of Reorganization proposes to pay creditors of Pinney Inc Auto from future income, sales of vehicles and operating the business. Debtor's value for all assets according to its filed schedules is $27,038.83. As of the Petition Date, the Debtor owed NextGear Capital ("Nextgear") $77,927.22, Floorplan Xpress $60,000.00 and Automotive Finance Corporation ("AFC") $139,135.07. NextGear, Floorplan Express and AFC each have a security separate security interest in all of Debtor's assets and properties wherever located, including all equipment, vehicles, vehicle parts and inventory then owned or thereafter. The Debtor has determined that AFC's lien is senior. In addition, prepetition the Debtor borrowed $22,500 under the SBA Paycheck Protection Program as well as an SBA smallbusiness loan of $16,688.00. It is anticipated the Debtor's secured creditors (AFC) would receive approximately $11,000 if the Debtor's prepetition secured assets (but not including proceeds) were fully liquidated. Postpetition the Debtor sold the two vehicles it owned as of the Petition Date (without either a court order or the permission of its secured lenders) and used the proceeds in the operation of its business. Ryan Gunther, an independent third party, has agreed to purchase the equipment and other assets listed on Debtor's schedules A/B line 41 for $10,000. The Debtor believes that the proposed sale to Ryan Gunther is for fair market value. But the Debtor also needs to account to AFC for its unauthorized use of AFC's cash collateral when it sold two of the vehicles it owned as of the Petition Date, with a scheduled net book value of $7,900 and $5,300, and used the proceeds, except $3,000 which remains on hand, in its business operations. And the Debtor has determined that AFC's security interest in the automobiles and Debtor's other prepetition assets extends to the proceeds, products, offspring or profits of the property acquired after the commencement of the case. The Debtor is authorized to sell assets to Gunther for $10,000 pursuant to the Bill of Sale, and then immediately enter into a lease of the sold assets back from Gunther, pursuant to the proposed lease. The sale will be free and clear of all liens except that of AFC. 11 U.S.C. Sec. 363(f). Class 1 consists of the Secured Claim of Automotive Finance Corporation ("AFC"), Claim No. 6. AFC, as described in Claim No. 6 filed 4/01/2021 has a claim the total amount of $123,335.66. Because Debtor sold the two vehicles listed in the schedules at a total value of $13,200 and used all but $3,000 in the operations of its business, the Debtor currently has personal property valued at $11,800 in the schedules plus $3,000 in proceeds from the sale of the vehicles. The Debtor will pay AFC $12,500.00 within 3 business days of the later of the order confirming the plan or the closing of the sale and leaseback with Gunther. The lien securing AFC's lien will be released after the Debtor pays AFC $17,500. Class 2 consists of Unsecured Claim of AFC. The balance of AFC's claim, after the Debtor pays AFC $17,500 and AFC releases its lien. This claim will be paid pro rata. This class is impaired. Class 3 consists of Unsecured Claim of Nextgear Claim No.7. Nextgear, as described in Claim No 7 filed on 04/05/2021 in the total amount of $80,100.98. At the time of the filing of this claim, it was fully secured as described in its claim. However, since Debtor anticipates that there will be no assets to attach to, this claim will be treated as unsecured. This claim will be paid pro rata. Class 4 Unsecured Claim of Floorplan Xpress Claim No.9. Floorplan Xpress as described in Claim No 9 filed on 04/08/2021 in the total amount of $21,016.22 At the time of the filing of this claim, it was fully secured as described in its claim. However, since Debtor anticipates that there will be no assets to attach to, this claim will be treated as unsecured. This claim will be paid pro rata. Class 5 consists of Creditors with allowed, unsecured, non-priority claims of more than $2,000. All creditors with allowed, unsecured, non priority claims of equal or more than $2,000 allowed that do not choose treatment under Class 5. To date, $9,212.37 is the total amount of claims for this class. This claim will be paid pro rata. Class 6 consists of Creditors with allowed, unsecured, non-priority claims of $2,000 or less. All creditors with allowed, unsecured, non priority claims of less than $2,000 allowed, including any creditor holding a claim of more than $2,000 that elects treatment under Class 5. This claim will be paid pro rata. The major source of the Debtor's income is from selling vehicles. The Plan is predicated upon income as set forth in the projections. Debtor believes the projections are reasonable. Additionally, it is anticipated that the Debtor will sell any number of the vehicles over the course of the next one to five years and will take the proceeds and use that to significantly pay down the debts. The Debtor also receives income from fixing and servicing vehicles. The Debtor terminated its one W-2 employee, who was a service technician. Debtor is in the process of hiring a new technician and that technician will be a W-2 employee. All other employees are Form 1099 employees. A full-text copy of the Amended Plan of Reorganization dated Nov. 15, 2021, is available at https://bit.ly/3CjPVnO from PacerMonitor.com at no charge. Debtor's Counsel: David C. Smith, Esq. Law Offices of David C. Smith, PLLC Tacoma, WA 98402 Tel: (253)272-4777 Fax: (253)461-8888 Email: david@davidsmithlaw.com About Pinney Inc. Pinney Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 21-40300) on Feb. 22, 2021, disclosing total assets of up to $50,000 and total liabilities of up to $500,000. The Law Offices Of David Smith, PLLC, represents the Debtor as legal counsel. POLAR POWER: Posts $942K Net Income in Third Quarter ---------------------------------------------------- Polar Power, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing net income of $942,000 on $4.14 million of net sales for the three months ended Sept. 30, 2021, compared to a net loss of $4.72 million on $2.50 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 $1.83 million on $12.27 million of net sales compared to a net loss of $7.22 million on $6.49 million of net sales for the same period a year ago. As of Sept. 30, 2021, the Company had $26.99 million in total assets, $4.15 million in total liabilities, and $22.84 million in total stockholders' equity. Management Commentary Arthur D. Sams, chairman, president, chief executive officer and secretary, stated, "We continue to see increasing demand for our DC power systems primarily by our telecommunications customers. We also continue to work on diversifying our customer base and are selling into non-telecommunication markets and applications at an increasing rate. During 2021, we believe the increase in demand of our DC power systems to telecommunications markets is due to the expansion of 5G networks and the normalization in business activities due to a decrease in COVID-19 related shutdowns and restrictions. The implementation of 5G networks by Tier-1 telecommunication customers currently have significantly higher power requirements at cell sites than the previous 4G networks. In addition, use of 5G technology in IoT, video streaming, and data analytics applications requires cell sites to be operational 100% of the time which, in turn, increases the demand for reliable power backup systems. During 2021, we invested in the development of backup power systems with increased power utilizing larger engines and alternators along with improved emission control systems. We believe increased power usage of 5G networks enhances market opportunities for our higher efficiency DC power systems as compared to traditional AC power systems. We also believe being an approved supplier for the three largest Tier-1 telecommunication providers in the U.S. provides us with additional growth opportunities during the current rapid 5G expansion in the largest urban centers in the U.S. Advance Mobility applications require power to charge batteries and appliances within a vehicle. Our DC power systems are smaller in size, lighter in weight, and operate with greater efficiency than AC power systems, making our product ideal for these applications. Our advance mobility sales for this year to date is $4.2 million, which includes product shipped and orders that have been received from customers and included in our backlog. In June 2021, we received a $3.0 million order for DC power systems from a single customer in the U.S. for use to charge stored batteries within a commercial vehicle while providing energy to operate appliances installed in the vehicle. At September 30, 2021, 28% of our backlog of $11.5 million represented products being used in advanced mobility applications in commercial vehicles. Over the last ten years, we supplied our mobile DC generators to many automotive manufactures in support of their field testing of electric vehicles. Polar is transitioning this mobile charger to the roadside service application. Our DC mobile EV charging systems offer convenience, faster charging, and lower cost than towing an EV on a flatbed to the nearest charging station. We have shipped our DC generators to extend range for specialty hybrid electric vehicles. Our DC mobile EV charging systems provide direct charging to an electric vehicle's battery. We are presently concluding the development of natural gas and propane fueled combined heat and power (CHP) generators that are used for fast EV charging, peak power shaving on grid, and off grid power generation. Many homes that are not able to support fast charging using the electric grid; this product solves for this limitation. We believe we can compete with the electric utility rates for home and office EV charging by using natural gas and making use of surplus heat from the generator for space heating, heating pools, and hot water. Military sales are growing and adding to our customer diversification. Backlog orders from military customers represented 4% of our backlog for the period ended September 30, 2021. The military's increasing use of robotics, drones, and digitization in the field is driving the demand for battery charging with DC generators. We believe increased sales to military customers provides us long-term visibility on product demand while helping us understand future commercial uses of our technologies. Military sales are advantageous because of their long-term contracts, and they provide funding to cover the cost of product development. Presently we are in the process of EPA certification on a larger Toyota engine (model 4Y) for our 20 to 30 kW DC generators. These systems offer significantly lower greenhouse gas emissions while also lowering maintenance and fuel costs over the use of diesel fueled engines. In addition to EV fast charging these larger DC generator models will enhance our product line for solar hybrid power systems, which integrate solar energy storage with natural gas/LPG powered generators. We also developed DC power systems for medium to large solar PV applications to provide energy service for irrigation, refrigerated storage of meat and produce, and micro grid. By combining the energy of solar PV and propane or natural gas, our DC power systems can provide constant energy 24 hours a day without using expensive energy storage. Propane or natural gas fueled DC power systems are connected in parallel with the solar array (also a DC energy source) greatly simplifying the means of combining multiple energy sources. This process is more efficient and lowers both the CAPEX and OPEX of the Solar systems by eliminating battery storage and / or connection to the grid. Currently, the most popular technologies used in these applications are either grid power, diesel only, or a combination of grid and solar with a large battery bank. Our proposed technology is more environmentally friendly and lowers the cost of food processing. Currently, we have sold a limited number of our DC power systems that are undergoing field trials. We expect that opportunities in the bad-grid (i.e., areas where wireless towers are connected to an electrical grid that loses power more than eight hours), and off-grid (i.e., areas where wireless towers are not connected to an electrical grid) market applications, which include telecommunications towers, commercial and residential backup power, electric vehicle charging, "mini-grid" and various other power applications, will help to expand the market for our natural gas/LPG (propane) product lines domestically and internationally. We plan to develop new configurations of DC power system, battery storage and solar products to optimize the match between our solutions and various application needs. We compete with traditional sources of power based on performance and we are not always the lowest priced from a capital expenditure standpoint, but we believe that we are among the lowest from an operational expenditure standpoint. We believe that our customers recognize the long-term value of our products, including higher performance, lower operating costs, better reliability, lighter weight, smaller packages and lower maintenance. We have what we believe to be the most versatile and efficient DC power systems on the market for both back-up and prime power applications. We believe that the solar, wind, and distributed energy generation, or DEG, market is here to stay and that the industry trends are converging towards our DC technology and power solutions. We are excited about these diverse market opportunities and plan to concentrate on markets that provide the greatest returns for us and our shareholders." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1622345/000149315221028611/form10-q.htm About Polar Power Headquartered in Gardena, California, Polar Power, Inc. designs, manufactures and sells direct current, or DC, power generators, renewable energy and cooling systems for applications primarily in the telecommunications market and, to a lesser extent, in other markets, including military, electric vehicle charging and residential and commercial power. Polar Power reported a net loss of $10.87 million for the year ended Dec. 31, 2020, compared to a net loss of $4.04 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $28.21 million in total assets, $6.31 million in total liabilities, and $21.90 million in total stockholders' equity. PROFESSIONAL DIVERSITY: Posts $81K Net Loss in Third Quarter ------------------------------------------------------------ Professional Diversity Network, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss attributable to the company of $80,562 on $1.68 million of total revenues for the three months ended Sept. 30, 2021, compared to a net loss attributable to the company of $941,687 on $1.31 million of total revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss attributable to the company of $1.49 million on $4.63 million of total revenues compared to a net loss attributable to the company of $4.27 million on $3.24 million of total revenues for the same period during the prior year. As of Sept. 30, 2021, the Company had $9.80 million in total assets, $5.45 million in total liabilities, and $4.35 million in total stockholders' equity. As of Sept. 30, 2021, cash balances were $4.1 million. The Company raised gross proceeds of approximately $3.5 million from the issuance of common stock during the three months ended Sept. 30, 2021. The Company raised gross proceeds of approximately $1.8 million from the issuance of common stock during the three months ended Sept. 30, 2020. "Our PDN Network continues to show stability with its third consecutive strong quarter of fiscal 2021. We believe that there is still room for additional corporate and political awareness in terms of greater investment in diversity recruitment and inclusion initiatives, and in turn society as a whole, which continue to benefit the Company. We remain committed to strengthening the financial position of the Company through investing in our operating segments to drive organic growth, synergetic acquisitions, as evident by acquisition of RemoteMore USA, and timely equity transactions, as evident by the multiple common stock transactions the Company entered into in the quarter," said Adam He, CEO of Professional Diversity Network, Inc. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1546296/000149315221028768/form10-q.htm About Professional Diversity Headquartered in Chicago, Illinois, Professional Diversity Network, Inc. -- https://www.prodivnet.com -- is a global developer and operator of online and in-person networks that provides access to networking, training, educational and employment opportunities for diverse professionals. Through an online platform and its relationship recruitment affinity groups, the Company provides its employer clients a means to identify and acquire diverse talent and assist them with their efforts to recruit diverse employees. Its mission is to utilize the collective strength of its affiliate companies, members, partners and unique proprietary platform to be the standard in business diversity recruiting, networking and professional development for women, minorities, veterans, LGBT and disabled persons globally. Professional Diversity reported a net loss of $4.35 million for the year ended Dec. 31, 2020, compared to a net loss of $3.84 million for the year ended Dec. 31, 2019. As of March 31, 2021, the Company had $6.04 million in total assets, $5.07 million in total liabilities, and $964,228 in total stockholders' equity. Wilmington, DE-based Ciro E. Adams, CPA, LLC, the Company's auditor since 2018, issued a "going concern" qualification in its report dated April 9, 2021, citing that the Company has a significant working capital deficiency, has incurred significant losses, and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. PSS INDUSTRIAL: S&P Downgrades ICR to 'CCC-' on Limited Liquidity ----------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Houston-based specialty product distributor PSS Industrial Group Corp. (PSSI) to 'CCC-' from 'CCC+' and its issue-level rating on its senior secured first-lien term loan and revolver to 'CCC-' from 'CCC+'. The negative outlook on PSSI reflects S&P's view that a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated significantly favorable changes in the issuer's circumstances. PSSI's revenue remains suppressed due to delayed customer spending. While the company's revenue increased by 19% quarter over quarter in the third quarter of 2021, its revenue was still 55% below its results in the third quarter of 2019. This is because its Midstream segment is facing continued regulatory delays on major projects, while it Downstream segment has been limited due to delays in its maintenance, repair, and overhaul (MRO) and turnaround work. Maintenance work typically peaks in the third quarter; however, given the currently high commodity prices and demand, exploration and production (E&P) companies have been reluctant to shut down for maintenance work and their minimal throughput over the past 18 months is allowing them to delay maintenance. S&P considers the spring turnaround season as the next optimal window for MRO work, which would benefit PSSI. PSSI's expanding pipes, valves, and fittings (PVF) business has provided a material boost to its Upstream segment. An uptick in drilling activity has improved the prospects in the company's Upstream segment; however, a large part of this improvement is due to its new PVF business, which it launched in June 2021. The company entered this market largely through a fixed asset purchase. Leveraging its existing customer relationships, PSSI continues to gain traction in the PVF market and has reported attractive double-digit percent expansions in its monthly revenue. The demand for its PVF products can be highly volatile due to the cyclical nature of its end markets. Nonetheless, PSSI is keeping its costs down by leveraging its current infrastructure and targeting customers in the municipal, general construction, and oil and gas spaces. The company has been able to take market share from its small regional competitors due to its reputation and size, which has provided it with increased business diversity. S&P said, "We expect PSSI's S&P Global Ratings-adjusted leverage to remain above 10x through 2022 despite management's cost-savings initiatives and the growing PVF business. While we expect the PVF subsegment to be a material contributor to PSSI's revenue in 2022, we project the recovery in its other segments will remain challenged. Additionally, despite management's efforts to effectively execute cost-savings initiatives (such as reducing its workforce, closing offices, and rightsizing its facilities), we expect the company's EBITDA margins to be pressured (in the mid- to high-single-digit percent area) due, in part, to the shift in its product mix toward the lower-margin Upstream segment and PVF business, which will cause it to face free cash flow deficits into 2022. Because of these factors, we forecast PSSI's leverage will remain above 10x through 2022." PSSI's liquidity position and covenant headroom will remain challenges through 2022. The company's first-lien facility includes a 1.15x minimum debt service coverage ratio covenant. On Nov. 14, 2020, the company obtained a waiver suspending this covenant through the second quarter of 2022. In the interim, and pursuant to the waiver, PSSI is required to maintain $20 million of minimum liquidity through 2021, which steps down to $17.5 million for the first quarter of 2022. S&P believes the company may require an extension of the waiver if its business continues to recover more slowly than it expects. The negative outlook on PSSI reflects view that a default, distressed exchange, or redemption appears to be inevitable within six months, absent unanticipated significantly favorable changes in the issuer's circumstances. S&P could lower its rating on PSSI in the case of: -- A payment default; or -- A debt restructuring including a distressed exchange. S&P could raise its rating on PSSI if the demand for its services meaningfully increases and its liquidity profile improves. In such a scenario: -- S&P would no longer anticipate a near-term liquidity shortfall or debt restructuring; or -- S&P would expect the company to be covenant compliant over the subsequent year. PURDUE PHARMA: Suit vs Insurers Stays in Bankruptcy Court --------------------------------------------------------- The United States District Court for the Southern District of New York denied without prejudice the motion that seeks to withdraw to the District Court an automatically referred adversary proceeding by Purdue Pharma L.P. et al. against a group of insurers currently pending in the Bankruptcy Court. The Purdue entities subject to personal injury claims, together with the Official Committee of Unsecured Creditors and the Ad Hoc Committee of Governmental and Other Contingent Litigation Claimants in the Chapter 11 Cases, commenced the adversary proceeding on January 29, 2021. The Plaintiffs allege they hold insurance policies with each defendant, and the policies were entered into before they filed for bankruptcy protection. The plaintiffs seek a declaratory judgment as to the scope of their coverage under these policies. The Plaintiffs contend their insurance policies obligate defendants to indemnify them for, among other things, the personal injury claims over the sale of opioids, and estimate the policy limits exceed $3.3 billion. On March 22, 2021, defendants Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company, and Liberty Insurance Corporation moved to withdraw the reference of the adversary proceeding from the Bankruptcy Court. The District Court disagrees with the Plaintiffs' assertion that the lawsuit is a core proceeding under 11 U.S.C. Sections 157(b)(2)(A), and finds the adversary proceeding is non-core, based on: 1. the insurance policies pre-dating the bankruptcy filing, 2. the "nature of the proceeding" being non-core, and 3. the adversary proceeding not affecting a core bankruptcy function. Liberty Mutual also contends the motion to withdraw the reference must be granted because the Bankruptcy Court will be unable to conduct a jury trial. The District Court disagrees, but concludes the motion should be denied without prejudice to renewal. The argument about the Bankruptcy Court's inability to conduct a jury trial is "premature, because the prospect of a trial is purely speculative at this juncture," the District Court said. Although Liberty Mutual has made a jury demand, the prospect of a jury trial does not require withdrawal of the reference from the Bankruptcy Court at this stage of the case. Further, declaratory judgment actions involving insurance policies are routinely resolved on summary judgment, in which case a jury trial would be unnecessary. Accordingly, the District Court denied the motion to withdraw the reference without prejudice to renewal if and when the adversary proceeding is trial ready. The adversary proceeding is PURDUE PHARMA L.P.; PURDUE PHARMA INC.; PURDUE PHARMA MANUFACTURING L.P.; PURDUE PHARMACEUTICALS L.P.; PURDUE TRANSDERMAL TECHNOLOGIES L.P.; PURDUE PHARMACEUTICAL PRODUCTS L.P.; PURDUE PHARMA OF PUERTO RICO; RHODES PHARMACEUTICALS L.P.; RHODES TECHNOLOGIES; and AVRIO HEALTH L.P., Plaintiffs, v. AIG SPECIALTY INSURANCE COMPANY f/k/a AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY; ALLIED WORLD ASSURANCE COMPANY, LTD.; AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY; AMERICAN INTERNATIONAL REINSURANCE COMPANY f/k/a STARR EXCESS LIABILITY INSURANCE INTERNATIONAL LIMITED; ARCH REINSURANCE LTD., CERTAIN MEMBER COMPANIES OF THE INTERNATIONAL UNDERWRITING ASSOCIATION OF LONDON SUBSCRIBING TO POLICY NO. 823/KE0002108; CHUBB BERMUDA INSURANCE LTD. f/k/a ACE BERMUDA INSURANCE LTD.; EVANSTON INSURANCE COMPANY; GULF UNDERWRITERS INSURANCE COMPANY; HDI GLOBAL SE f/k/a GERLING-KONZERN GENERAL INSURANCE COMPANY; IRONSHORE SPECIALTY INSURANCE COMPANY f/k/a TIG SPECIALTY INSURANCE COMPANY; LIBERTY INSURANCE CORPORATION; LIBERTY MUTUAL FIRE INSURANCE COMPANY; LIBERTY MUTUAL INSURANCE EUROPE SE f/k/a LIBERTY INTERNATIONAL INSURANCE COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; NAVIGATORS SPECIALTY INSURANCE COMPANY; NORTH AMERICAN ELITE INSURANCE COMPANY; ST. PAUL FIRE AND MARINE INSURANCE COMPANY; STEADFAST INSURANCE COMPANY; SWISS RE INTERNATIONAL S.E. f/k/a SR INTERNATIONAL BUSINESS INSURANCE COMPANY also f/k/a ZURICH REINSURANCE (LONDON) LIMITED; TENECOM LIMITED f/k/a WINTERTHUR SWISS INSURANCE COMPANY; XL BERMUDA LTD. f/k/a XL INSURANCE COMPANY, LTD., XL INSURANCE AMERICA, INC.; NEW HAMPSHIRE INSURANCE COMPANY; DARAG INSURANCE UK LIMITED; QBE UK LIMITED; ZURICH SPECIALTIES LONDON LIMITED; SR INTERNATIONAL BUSINESS COMPANY SE; and LIBERTY MUTUAL INSURANCE COMPANY, Defendants, No. 21 CV 2674 (VB)(S.D.N.Y.). A full-text copy of the Opinion and Order dated November 8, 2021, is available at https://tinyurl.com/kzsbpf94 from Leagle.com. About Purdue Pharma Purdue Pharma L.P. and its subsidiaries -- http://www.purduepharma.com/-- develop and provide prescription medicines and consumer products that meet the evolving needs of healthcare professionals, patients, consumers and caregivers. Purdue's subsidiaries include Adlon Therapeutics L.P., focused on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and related disorders; Avrio Health L.P., a consumer health products company that champions an improved quality of life for people in the United States through the reimagining of innovative product solutions; Imbrium Therapeutics L.P., established to further advance the emerging portfolio and develop the pipeline in the areas of CNS, non-opioid pain medicines, and select oncology through internal research, strategic collaborations and partnerships; and Greenfield Bioventures L.P., an investment vehicle focused on value-inflection in early stages of clinical development. Opioid makers in the U.S. are facing pressure from a crackdown on the addictive drug in the wake of the opioid crisis and as state attorneys general file lawsuits against manufacturers. More than 2,000 states, counties, municipalities and Native American governments have sued Purdue Pharma and other pharmaceutical companies for their role in the opioid crisis in the U.S., which has contributed to the more than 700,000 drug overdose deaths in the U.S. since 1999. OxyContin, Purdue Pharma's most prominent pain medication, has been the target of over 2,600 civil actions pending in various state and federal courts and other fora across the United States and its territories. On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-23649), after reaching terms of a preliminary agreement for settling the massive opioid litigation. The Debtors' consolidated balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets and $562 million in liabilities. U.S. Bankruptcy Judge Robert Drain oversees the cases. The Debtors tapped Davis Polk & Wardwell, LLP and Dechert, LLP as legal counsel; PJT Partners as investment banker; AlixPartners as financial advisor; and Grant Thornton, LLP as tax structuring consultant. Prime Clerk LLC is the claims agent. Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the official committee of unsecured creditors appointed in the Debtors' bankruptcy cases. David M. Klauder, Esq., is the fee examiner appointed in the Debtors' cases. The fee examiner is represented by Bielli & Klauder, LLC. * * * U.S. Bankruptcy Judge Robert Drain in early September 2021 approved a plan to turn Purdue into a new company (Knoa Pharma LLC) no longer owned by members of the Sackler family, with its profits going to fight the opioid epidemic. The Sackler family agreed to pay $4.3 billion over nine years to the states and private plaintiffs and in exchange for a lifetime legal immunity. The deal resolves some 3,000 lawsuits filed by state and local governments, Native American tribes, unions, hospitals and others who claimed the company's marketing of prescription opioids helped spark and continue an overdose epidemic. Separate appeals to approval of the Plan have already been filed by the U.S. Bankruptcy Trustee, California, Connecticut, the District of Columbia, Maryland, Rhode Island and Washington state, plus some Canadian local governments and other Canadian entities. Purdue filed its Chapter 11 Plan on March 15, 2021. A twelfth amended Chapter 11 plan was filed on September 2, 2021, which was confirmed on September 17. Purdue divides the claims against it into several categories, one of which it calls "PI Claims," consisting of claims "for alleged opioid-related personal injury." The plan provides for the creation of the "PI Trust," which will administer all PI Claims. The trust will be funded with an initial distribution of $300 million on the effective date of the Chapter 11 plan, followed by a distribution of $200 million in 2024, and distributions of $100 million in 2025 and 2026. In sum, "[t]he PI Trust will receive at least $700 million in value, and may receive an additional $50 million depending on the amount of proceeds received on account of certain of Purdue's insurance policies." The plan further provides that Purdue's ability to recover from its insurers will be vested in a "Master Disbursement Trust." To the extent any proceeds are recovered from Purdue's insurers with respect to the PI Claims, up to $450 million of those proceeds will be channeled from the MDT to the PI Trust. However, the PI Trust will be funded regardless of whether anything is recovered from Purdue's insurers. Instead, "[d]istributions to the PI Trust are subject to prepayment on a rolling basis as insurance proceeds from certain of Purdue's insurance policies are received by the MDT and paid forward to the PI Trust." PURDUE PHARMA: Urge Appeals Judge to Affirm Opioid Deal ------------------------------------------------------- Overturning Purdue Pharma LP's sweeping opioid settlement would be "tragic" and result in "a massive destruction of value," lawyers for the OxyContin maker said in new court documents urging an appeals judge to uphold the deal, according to a report by Bloomberg News. According to the Bloomberg report, Purdue, certain members of the Sackler family, an official group of creditors and a large group of personal injury victims on Monday all submitted legal briefs in support of the deal, opposing appeal efforts by a U.S. Justice Department unit and a handful of U.S. states. The deal would dedicate billions of dollars to the abatement of the opioid crisis. About Purdue Pharma LP Purdue Pharma L.P. and its subsidiaries -- http://www.purduepharma.com/-- develop and provide prescription medicines and consumer products that meet the evolving needs of healthcare professionals, patients, consumers and caregivers. Purdue's subsidiaries include Adlon Therapeutics L.P., focused on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and related disorders; Avrio Health L.P., a consumer health products company that champions an improved quality of life for people in the United States through the reimagining of innovative product solutions; Imbrium Therapeutics L.P., established to further advance the emerging portfolio and develop the pipeline in the areas of CNS, non-opioid pain medicines, and select oncology through internal research, strategic collaborations and partnerships; and Greenfield Bioventures L.P., an investment vehicle focused on value-inflection in early stages of clinical development. Opioid makers in the U.S. are facing pressure from a crackdown on the addictive drug in the wake of the opioid crisis and as state attorneys general file lawsuits against manufacturers. More than 2,000 states, counties, municipalities and Native American governments have sued Purdue Pharma and other pharmaceutical companies for their role in the opioid crisis in the U.S., which has contributed to the more than 700,000 drug overdose deaths in the U.S. since 1999. OxyContin, Purdue Pharma's most prominent pain medication, has been the target of over 2,600 civil actions pending in various state and federal courts and other fora across the United States and its territories. On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-23649), after reaching terms of a preliminary agreement for settling the massive opioid litigation. The Debtors' consolidated balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets and $562 million in liabilities. U.S. Bankruptcy Judge Robert Drain oversees the cases. The Debtors tapped Davis Polk & Wardwell, LLP and Dechert, LLP as legal counsel; PJT Partners as investment banker; AlixPartners as financial advisor; and Grant Thornton, LLP as tax structuring consultant. Prime Clerk LLC is the claims agent. Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the official committee of unsecured creditors appointed in the Debtors' bankruptcy cases. David M. Klauder, Esq., is the fee examiner appointed in the Debtors' cases. The fee examiner is represented by Bielli & Klauder, LLC. * * * U.S. Bankruptcy Judge Robert Drain in early September 2021 approved a plan to turn Purdue into a new company (Knoa Pharma LLC) no longer owned by members of the Sackler family, with its profits going to fight the opioid epidemic. The Sackler family agreed to pay $4.3 billion over nine years to the states and private plaintiffs and in exchange for a lifetime legal immunity. The deal resolves some 3,000 lawsuits filed by state and local governments, Native American tribes, unions, hospitals and others who claimed the company's marketing of prescription opioids helped spark and continue an overdose epidemic. Separate appeals to approval of the Plan have already been filed by the U.S. Bankruptcy Trustee, California, Connecticut, the District of Columbia, Maryland, Rhode Island and Washington state, plus some Canadian local governments and other Canadian entities. PWM PROPERTY: Lenders Say They Are Hostages in Chapter 11 --------------------------------------------------------- Leslie Pappas of Law360 reports that the largest mezzanine lender to a bankrupt midtown New York City office tower echoed calls to dismiss its investor-owners' Chapter 11 case, telling a Delaware bankruptcy court Tuesday, November 16, 2021, that secured lenders are "hostages caught in the middle of a contentious battle" between the building's equity owner and long-term business partner. Seoul, Korea-based investment company Meritz Alternative Investment Management filed a joinder Tuesday to a motion filed last week by another of the tower's investors, 245 Park Member LLC, which asserted that debtor PWM Property Management LLC didn't have authority to file a Chapter 11 case. 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. PWM PROPERTY: NYC Tower Owner Asks Ch.11 Order for Doc Access ------------------------------------------------------------- Jeff Montgomery, writing for Law360, reports that the owners of a bankrupt, prominently positioned midtown New York City office tower sought court-ordered access Monday to the venture's books and records, alleging denials and improper delays by its allegedly conflicted property manager. PWM Property Management LLC, which sought Chapter 11 protection for the 44-floor 245 Park Avenue building and its $2. 2 billion in debt on Nov. 1, 2021 accused property manager S. L. Green Management Corp. of wrongly imposing "inappropriate restrictions" on the documents, potentially impeding the bankruptcy case for its own interests. In its initial Chapter 11 declaration, PWM said SLG owns $160 million in equity in the Park Avenue property. 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. QUANTUM VALVE: Trustee Taps Lain Faulkner & Co as Financial Advisor ------------------------------------------------------------------- Jason Rae, the Chapter 11 trustee for Quantum Valve and Oilfield Solutions, LLC, seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to hire Lain, Faulkner & Co., P.C. to serve as his accountant and financial advisor. The firm's services include: a. assisting the trustee in gathering the Debtor's financial information and in analyzing its financial position, assets, and liabilities; b. assisting the trustee in connection with any potential disposition of the Debtor's assets; c. assisting the trustee in the examination of the Debtor's bankruptcy schedules and proofs of claim filed against the Debtor; d. assisting the trustee in analyzing potential avoidance actions; e. assisting the trustee in the resolution of tax matters; f. assisting the trustee in the analysis of financial data necessary to obtain confirmation of a plan of reorganization or liquidation or consummation of a settlement; g. assisting the trustee in the preparation of the required monthly operating reports; h. testifying at any hearings or trials; and i. performing all other accounting and financial advisory services. The firm's hourly rates are as follows: Brian Crisp, Director $395 per hour Misty Parker, Professional $275 per hour Aniza Rowe, Professional $255 per hour As disclosed in court filings, the members of Lain, Faulkner & Co. are "disinterested persons" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brian Crisp Lain, Faulkner & Co., PC 400 North St. Paul Street, Suite 600 Dallas, TX 75201 Phone: +1 214-720-1929 About Quantum Valve and Oilfield Solutions Quantum Valve and Oilfield Solutions, LLC, a Fort Worth, Texas-based company that provides support activities for the mining industry, filed a petition for Chapter 11 protection (Bankr. E.D. Texas Case No. 21-40994) on July 12, 2021. In the petition signed by John Luke Reed, chief executive officer, the Debtor disclosed up to $50 million in both assets and liabilities. Judge Brenda T. Rhoades oversees the case. Christopher J. Moser, Esq., at Quilling, Selander, Lownds, Winslett and Moser, PC is the Debtor's legal counsel. On Aug. 10, 2021, the U.S. Trustee for Region 6 appointed an official committee of unsecured creditors in the Debtor's case. The committee is represented by Okin Adams, LLP. Jason Rae is the Chapter 11 trustee appointed in the Debtor's case. The trustee tapped McDermott Will & Emery, LLP as his legal counsel and Lain, Faulkner & Co., PC as his accountant and financial advisor. QUANTUM VALVE: Trustee Taps McDermott Will & Emery as Legal Counsel ------------------------------------------------------------------- Jason Rae, the Chapter 11 trustee for Quantum Valve and Oilfield Solutions, LLC, seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to hire McDermott Will & Emery, LLP as his bankruptcy counsel. The firm's services include: a. giving advice to the trustee with respect to his powers and duties in the continued operation of the Debtor's business; b. assisting in the identification of assets and liabilities of the Debtor's estate; c. assisting the trustee in formulating a plan of reorganization or liquidation and taking necessary legal steps in order to confirm the plan; d. preparing and filing reports, adversary proceedings and legal documents; e. appearing in court; f. analyzing claims and competing property interests, and negotiating with creditors and parties-in-interest; g. advising the trustee in connection with any potential sale of assets; and h. performing all other necessary legal services. The firm's standard hourly rates are as follows: Marcus A. Helt, Partner $1,080 per hour Jack A. Haake, Associate $750 per hour Darren D. Yang, Associate $655 per hour Cathy Greer, paralegal $410 per hour As disclosed in court filings, McDermott is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Marcus A. Helt, Esq. Jack A. Haake, Esq. McDermott Will & Emery, LLP 2501 North Harwood Street, Suite 1900 Dallas, TX 75201 Telephone: (972) 232-3100 Fax: (972) 528-5765 Email: mhelt@mwe.com jhaake@mwe.com About Quantum Valve and Oilfield Solutions Quantum Valve and Oilfield Solutions, LLC, a Fort Worth, Texas-based company that provides support activities for the mining industry, filed a petition for Chapter 11 protection (Bankr. E.D. Texas Case No. 21-40994) on July 12, 2021. In the petition signed by John Luke Reed, chief executive officer, the Debtor disclosed up to $50 million in both assets and liabilities. Judge Brenda T. Rhoades oversees the case. Christopher J. Moser, Esq., at Quilling, Selander, Lownds, Winslett and Moser, PC is the Debtor's legal counsel. On Aug. 10, 2021, the U.S. Trustee for Region 6 appointed an official committee of unsecured creditors in the Debtor's case. The committee is represented by Okin Adams, LLP. Jason Rae is the Chapter 11 trustee appointed in the Debtor's case. The trustee tapped McDermott Will & Emery, LLP as his legal counsel and Lain, Faulkner & Co., PC as his accountant and financial advisor. R. INVESTMENTS: Unsecureds to Get 125% of Allowed Claims in Plan ---------------------------------------------------------------- Judge Elizabeth E. Brown has entered an order approving the Disclosure Statement of R. Investments, RLLP. A preliminary, non-evidentiary hearing for consideration of confirmation of the Plan and such objections are set for Monday, Dec. 20, 2021, at 10:00 a.m. before the undersigned Judge in the United States Bankruptcy Court for the District of Colorado, Courtroom F; United States Custom House, 721 19th St., Denver, Colorado. On or before December 15, 2021, any objection to confirmation of the Plan shall be filed with the Court and a copy served on the Debtor's counsel. The ballots accepting or rejecting the Plan must be submitted by the holders of all claims or interests on or before December 15, 2021 to Debtor's counsel. R. Investments, RLLP submitted an Amended Disclosure Statement. Debtor believes that the Plan is fair and equitable, maximizes the value of Debtor's Estate, and provides the greatest likelihood for recovery to all creditors. Under the Plan, all Holders of Allowed Unsecured Claims shall receive equity interests in a NewCo and will receive distributions totaling 125% of their Allowed Unsecured Claims until they are paid in full. In the absence of this Plan, Debtor's secured lender, DS VI, LLC, would be entitled to foreclose its security interest in all of Debtor's assets and still not likely be paid in full. Accordingly, Debtor believes that approval of the Plan is in the best interests of the Estate as it provides the best recovery possible to all creditors, and urges acceptance and approval of the Plan by all creditors. The Plan provides for the reorganization of Debtor's business and affairs through the creation of RI-2 NewCo. As set forth in greater detail in the Plan, 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. The DS Unsecured Claim will be treated the same as all other Allowed Unsecured Claims. 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, as provided 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. 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. The Plan effectively brings all of Debtor and Non-Debtor Affiliate's business operations under a single roof. RI-2 NewCo shall be a real estate investment business, and identify no less than three Distressed Properties for acquisition each year by RI-2 SubCo through special purpose entities. Steffens shall be the manager and person in control of RI-2 NewCo and RI-2 SubCo. For illustration purposes only, parties in interest should consult the Entity Formation Schematic. Lastly, Reorganized Debtor shall exist for a limited purpose which is to wind up Debtor's affairs and to help effectuate the terms of the Plan. Such actions will include, but are not limited to, objecting to claims, prosecuting Causes of Action, and filing necessary reports with the Bankruptcy Court. Reorganized Debtor shall have all of the rights, powers, and standing of a debtor in possession under section 1107 of the Bankruptcy Code, and such other rights, powers, and duties incident to causing performance of Reorganized Debtor's obligations under the Plan as may be necessary. 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. As stated below, 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. Class 3 is impaired. Reorganized Debtor will implement and consummate the Plan through the means contemplated by sections 1123(a)(5)(A)-(C), (E) and/or (J), 1123(b)(3)(A) and (B), 1123(b)(5)-(6), and 1142 of the Bankruptcy Code. Counsel for Debtor: MOYE WHITE LLP Timothy M. Swanson (47267) Patrick R. Akers (54803) 1400 16th Street, 6th Floor Denver, Colorado 80202 (303) 292-2900 (303) 292-4510 (facsimile) tim.swanson@moyewhite.com patrick.akers@moyewhite.com A copy of the Order dated Nov. 10, 2021, is available at https://bit.ly/30dpiDB from PacerMonitor.com. A copy of the Disclosure Statement dated Nov. 10, 2021, is available at https://bit.ly/3n4bEM1 from PacerMonitor.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. REMARK HOLDINGS: Posts $72.75 Million Net Income in Third Quarter ----------------------------------------------------------------- Remark Holdings, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing net income of $72.75 million on $1.23 million of revenue for the three months ended Sept. 30, 2021, compared to net income of $4.41 million on $2.65 million of revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported net income of $65.72 million on $9.66 million of revenue compared to a net loss of $7.83 million on $5.38 million of revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $93.08 million in total assets, $24.38 million in total liabilities, and $68.70 million in total stockholders' equity. At Sept. 30, 2021, cash balance totaled $3.1 million, compared to a cash balance of $0.9 million at Dec. 31, 2020. The predominant contributors to the change were proceeds of $5.5 million from the equity offering in September 2021 and from stock option exercises, $4.8 million from a short-term debt issuance and $2.3 million proceeds from the Sharecare transaction, which were partially offset by $10.1 million of cash used in operations. "Our third quarter was highlighted by the continued advancement of our AI software and platforms. Our computer vision software was once again named one of the best in the world, and we delivered on a new platform for AI-driven safety in schools," noted Kai-Shing Tao, chairman and chief executive officer of Remark Holdings. "Despite stringent, periodic citywide lockdowns associated with COVID-19 in China and a major U.S. customer slowing its product rollout due to technical difficulties, we have been able to achieve revenue through the first nine months of 2021 of $9.7 million, nearly matching full year 2020 revenue of $10.1 million. Finally, our long-term vision in large total addressable markets was manifested in the third quarter as we recognized a $78.9 million gain on our $1.0 million investment in Sharecare, providing us the building block to meet the capital requirements necessary to meet current demand while allowing us to continue to invest in areas that will assure future growth." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1368365/000136836521000081/mark-20210930.htm About Remark Holdings Remark Holdings, Inc. (NASDAQ: MARK) -- http://www.remarkholdings.com-- delivers an integrated suite of AI solutions that enable businesses and organizations to solve problems, reduce risk and deliver positive outcomes. The company's easy-to-install AI products are being rolled out in a wide range of applications within the retail, financial, public safety and workplace arenas. The company also owns and operates digital media properties that deliver relevant, dynamic content and ecommerce solutions. The company is headquartered in Las Vegas, Nevada, with additional operations in Los Angeles, California and in Beijing, Shanghai, Chengdu and Hangzhou, China. Remark Holdings reported a net loss of $13.68 million for the year ended Dec. 31, 2020, compared to a net loss of $25.61 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $13.73 million in total assets, $28.94 million in total liabilities, and a total stockholders' deficit of $15.21 million. Los Angeles, California-based Weinberg & Company, the Company's auditor since 2020, issued a "going concern" qualification in its report dated March 31, 2021, citing that the Company has suffered recurring losses from operations and negative cash flows from operating activities and has a negative working capital and a stockholders' deficit that raise substantial doubt about its ability to continue as a going concern. RIOT BLOCKCHAIN: Incurs $15.3 Million Net Loss in Third Quarter --------------------------------------------------------------- Riot Blockchain, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $15.34 million on $64.81 million of total revenue for the three months ended Sept. 30, 2021, compared to a net loss of $1.72 million on $2.46 million of total revenue for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported net income of $11.52 million on $122.35 million of total revenue compared to a net loss of $16.58 million on $6.79 million of total revenue for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $954.41 million in total assets, $184.09 million in total liabilities, and $770.32 million in total stockholders' equity. At Sept. 30, 2021, the Company had approximate balances of cash and cash equivalents of $57.9 million, working capital of $153.5 million, and an accumulated deficit of $218.4 million. To date, the Company has, in large part, relied on equity financings to fund its operations. The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least the next one-year from the date these financial statements are issued. During the nine months ended Sept. 30, 2021, the Company paid approximately $103.2 million as deposits primarily for miners and as of Sept. 30, 2021, reclassified $46.7 million to property and equipment in connection with the receipt of 18,603 miners received at the Coinmint Facility or the Whinstone Facility. "We are extremely pleased to report another quarter of record financial results," said Jason Les, CEO of Riot. "These results demonstrate the continuous financial and operational improvements that management is focused on delivering for shareholders. Riot's technology-focused, vertically integrated strategy significantly de-risks the Company's future growth plans. Additionally, it enhances future capital efficiencies as technological improvements, such as industrial-scale immersion technologies, are systematically incorporated into future hash rate deployments. With these strengths of Riot at play, the future financial opportunities for the Company are exciting." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1167419/000107997321001156/riot10qq3-0921.htm About Riot Blockchain Headquartered in Castle Rock, Colorado, Riot Blockchain -- http://www.RiotBlockchain.com-- specializes in cryptocurrency mining with a focus on bitcoin. The Company is expanding and upgrading its mining operations by securing the most energy efficient miners currently available. Riot is headquartered in Castle Rock, Colorado, and the Company's mining facility operates out of upstate New York, under a co-location hosting agreement with Coinmint. Riot Blockchain reported a net loss of $12.67 million for the year ended Dec. 31, 2020, compared to a net loss of $20.30 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $906.37 million in total assets, $192.21 million in total liabilities, and $714.16 million in total stockholders' equity. RIOT BLOCKCHAIN: Registers 7.9M Shares Under 2019 Incentive Plan ---------------------------------------------------------------- Riot Blockchain, Inc. filed with the Securities and Exchange Commission a Form S-8 registration statement to register 7,900,000 shares of common stock that are reserved for issuance under the Riot Blockchain, Inc. 2019 Equity Incentive Plan, as amended. A full-text copy of the prospectus is available for free at: https://www.sec.gov/Archives/edgar/data/1167419/000107997321001159/riot_s8-111521.htm About Riot Blockchain Headquartered in Castle Rock, Colorado, Riot Blockchain -- http://www.RiotBlockchain.com-- specializes in cryptocurrency mining with a focus on bitcoin. The Company is expanding and upgrading its mining operations by securing the most energy efficient miners currently available. Riot is headquartered in Castle Rock, Colorado, and the Company's mining facility operates out of upstate New York, under a co-location hosting agreement with Coinmint. Riot Blockchain reported a net loss of $12.67 million for the year ended Dec. 31, 2020, compared to a net loss of $20.30 million for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $954.41 million in total assets, $184.09 million in total liabilities, and $770.31 million in total stockholders' equity. RIVERBED PARENT: S&P Downgrades ICR to 'D' on Chapter 11 Filing --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Riverbed Parent Inc. to 'D' from 'CC'. At the same time, S&P lowered all of its ratings on the company's debt to 'D'. The downgrade follows Riverbed's Chapter 11 bankruptcy filing. Riverbed Parent Inc. filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware on Nov. 17. The filing is part of Riverbed's plan to implement the previously announced restructuring support agreement entered into with its equity sponsors and an ad hoc group of lenders that hold a super-majority of its funded secured debt. In connection with the filing, Riverbed has filed several customary motions with the court seeking authorization to support its operations through the bankruptcy process. S&P understands that Riverbed expects all of its secured lenders to vote in favor of the prepackaged financial restructuring plan and that it could complete this prepackaged financial restructuring plan and emerge from Chapter 11 proceedings by mid-December. RIVERBED TECHNOLOGY: Hopes 2nd Default Will End Financial Woes -------------------------------------------------------------- Jeremy Hill of Bloomberg News reports that Riverbed Technology Inc. is hoping its second default in a year will be the one to end its financial woes. The Thoma Bravo-backed IT company's Chapter 11 filing Monday comes after it completed an "amend-and-extend" refinancing in late 2020, court papers show. In a sign of how little distress remains in the marketplace, the bankruptcy marks the biggest institutional loan market default since Seadrill's October 2020 distressed debt exchange, Eric Rosenthal of Fitch said in a note. The move brings the institutional leveraged loan default rate to 0.6%, on track for the lowest year-end level since 2011. About Riverbed Technology Headquartered in San Francisco, California, Riverbed Technology, Inc. is a leading provider of Wide Area Network (WAN) Optimization and performance monitoring products and services. Riverbed's 30,000+ customers include 99% of the Fortune 100. Riverbed was acquired by private equity funds Thoma Bravo and Teachers' Private Capital in April 2015. Revenues were $713 million for the 12 months ended Sept. 30, 2020. Riverbed Technology Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11503) on Nov. 16, 2021. In the petition signed by Dan Smoot as president and chief executive officer, Riverbed Technology estimated $1 billion to $10 billion in assets and debt as of the bankruptcy filing. KIRKLAND & ELLIS LLP is the Debtors' general bankruptcy counsel. PACHULSKI STANG ZIEHL & JONES LLP is the local bankruptcy counsel. ALIXPARTNERS, LLC, is the restructuring advisor; and GLC ADVISORS & CO., LLC AND GLCA SECURITIES, LLC, is the financial advisor and investment banker. BANKRUPTCY MANAGEMENT SOLUTIONS, INC., D/B/A STRETTO, is the claims agent. RIVERSTREET VENTURES: Plan Disclosures Inadequate, UST Says ----------------------------------------------------------- David W. Asbach, Acting United States Trustee for Region 5, objects to the Disclosure Statement of Riverstreet Ventures, LLC. According to the U.S. Trustee, the Disclosure contains insufficient information regarding the proposed Bridge Loan for creditors to make an informed choice as to when and how they will be paid. A term sheet for the proposed loan with Real Estate Commerical [sic.] Lending LLC is attached, and provides for a loan amount of $5,000,000, at 4.5% + LIBOR rate, repayable in 24 months. The Disclosure provides no other information concerning the lender or its ability to close the loan, any impediments to closing, or any risk factors associated with the loan. The Disclosure provides no information on how the Debtor will repay the Bridge Loan at the end of the 24-month period. Without information regarding the proposed Bridge Loan, the Disclosure is deficient. The U.S. Trustee further points out that the Disclosure Statement anticipates that construction of the apartment complex will occur; however, it provides no estimate of construction costs, a time frame for construction of the apartment complex or who will be the builder. The Disclosure also provides that cash generated by the business will be used to fund operations and the plan payments to Class 5 Investors. The Debtors have not included a pro forma analysis to the Disclosure or Plan. Without such information, creditors cannot determine when or how much they can expect to be paid under the Plan. Moreover, the U.S. Trustee points out that the Disclosure provides that Class 6 Equity Interests shall receive payments identical to what is provided for Class 5 Investors. The Disclosure fails to provide how Class 6 Equity Interests are treated under the Plan. About Riverstreet Ventures Metairie, La.-based Riverstreet Ventures, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. La. Case No. 21-10818) on June 23, 2021, disclosing total assets of up to $10 million and total liabilities of up to $50 million. Philip J. Spiegelman, president, signed the petition. Judge Meredith S. Grabill oversees the case. Simon Peragine Smith & Redfearn, LLP and Middleburg Riddle Group serve as the Debtor's bankruptcy counsel and special counsel, respectively. SARATOGA AND NORTH: Unsecureds Will Recover 5%-7% of Their Claims ----------------------------------------------------------------- Judge Thomas B. McNamara has entered an order approving the Disclosure Statement of Saratoga and North Creek Railway, LLC. A hearing for consideration of confirmation of the Plan and such objections is set for Friday, Dec. 17, 2021, at 9:30 a.m. before the undersigned Judge in the United States Bankruptcy Court for the District of Colorado, Courtroom E, U.S. Custom House, 721 19th Street, Denver, Colorado. On or before Dec. 10, 2021, any objection to confirmation of the Plan shall be filed with the Court and a copy thereof served on Debtor's counsel. Dec. 10, 2021, will be fixed as the last day for filing written acceptances or rejections of the Plan. That ballots accepting or rejecting the Plan must be submitted by the holders of all claims or interests entitled to vote on the Plan on or before 5:00 p.m. on Dec. 10, 2021. No later than Dec. 14, 2021, the Debtor will file a Summary Report of the Ballots received reflecting all votes by class, number of claims and amount of claim. Sale Plan Saratoga and North Creek Railway submitted a Second Amended Disclosure Statement. The Plan provides for the orderly sale of all the Debtor's assets. The Plan will be implemented by the appointment of the Plan Administrator, who will be charged with the orderly sale of all assets of the Debtor vested in the Reorganized Debtor, and distributing the proceeds of those assets to creditors of the Debtor based on the amounts of their respective allowed claims. The Debtor anticipates that following the sale of the assets, the Reorganized Debtor will have at least $1,370,000 ($700,000 in sale proceeds plus accumulated cash of $970,000 less $300,000 to Big Shoulders) to distribute pursuant to the Plan. Class 3 - Unsecured Creditors totaling $5,000,000 to $7,295,836 and will recover 5% to 7% of their claims. The total payment is $345,726,08. After deducting Big Shoulders' claim of $7,661,533 and the priority claims, the total amount of unsecured claims filed equals $7,295,836. The Debtor's initial review of the claims register suggests that after the claims allowance process set forth in the Plan, the total amount of Allowed Claims will be closer to $5,000.000. Class 3 is impaired. Saratoga and North Creek Railway is represented by: Jennifer Salisbury MARKUS WILLIAMS YOUNG & HUNSICKER LLC 1775 Sherman Street, Suite 1950 Denver, Colorado 80203 Tel: (303) 830-0800 Fax: (303) 830-0809 E-mail: jsalisbury@markuswilliams.com A copy of the Order dated Nov. 10, 2021, is available at https://bit.ly/2YE9qJU from PacerMonitor.com. A copy of the Disclosure Statement dated Nov. 10, 2021, is available at https://bit.ly/3wGRmeB from PacerMonitor.com. About Saratoga and North Creek Railway Saratoga and North Creek Railway, LLC, a privately held company in the rail transportation industry, filed a voluntary Chapter 11 (Bankr. D. Col. Case No. 20-12313) on March 30, 2020. In the petition signed by William A. Brandt, Jr., Chapter 11 trustee of San Luis & Rio Grande Railroad, Inc., Debtor was estimated to have $1 million to $10 million in both assets and liabilities. Judge Thomas B. Mcnamara oversees the case. The Debtor tapped Markus Williams Young & Hunsicker LLC as its legal counsel, and Development Specialists, Inc. as its accountant. SCENIC 30A: Unsecured Claims Unimpaired in Plan ----------------------------------------------- Scenic 30A Investments, LLC, submitted a Combined Disclosure Statement and Chapter 11 Plan of Reorganization. Class 1 consists of the All General Unsecured Creditors. In full satisfaction of Class 1 Claims, the Debtor will pay 100% to Allowed General Unsecured Creditors on the Effective Date of the Plan. The DIP believes no such claims exists and no claims have been filed. Class 1 is unimpaired. The Debtor will continue its operations which will cover the required new debt service payments and has enough cash on hand to pay administrative claim holders upon the Effective Date of the Plan. Attorneys for the Debtor: Jason A. Burgess Law Offices of Jason A. Burgess 1855 Mayport Road Atlantic Beach, Florida 32233 Phone: (904) 372-4791 A copy of the Disclosure Statement dated November 10, 2021, is available at https://bit.ly/3kqnXRd from PacerMonitor.com. About Scenic 30A Investments LLC Scenic 30A Investments, LLC, a Florida limited liability company, filed a voluntary petition for Chapter 11 protection (Bankr. M.D. Fla. Case No. 21-02060) on Aug. 24, 2021, listing up to $100,000 in assets and up to $1 million in liabilities. Judge Roberta A Colton oversees the case. The Law Offices of Jason A. Burgess, LLC represents the Debtor as legal counsel. SEIN DIVINE: Plan and Disclosure Statement Due Dec. 10 ------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of North Carolina entered an order extending the time within which the Sein Divine, LLC, must file its Plan and Disclosure Statement through and including Friday, December 10, 2021. About Sein Divine Sein Divine, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D.N.C. Case No. 21-30468) on Aug 12, 2021, listing as much as $1 million in both assets and liabilities. Judge J. Craig Whitley oversees the case. Essex Richards, P.A., serves as the Debtor's legal counsel. SG MCINTOSH: Business Income & $58K Contribution to Fund Plan ------------------------------------------------------------- SG McIntosh, LLC filed with the U.S. Bankruptcy Court for the Western District of Missouri a Subchapter V Plan dated November 15, 2021. SG McIntosh LLC was formed on September 23, 2019 by its sole member and manager, Scott McIntosh. On the same day, SG McIntosh, LLC entered into an agreement with McFarland Fitness, LLC for the sale of two 9Round Franchises, with a location at 9758 N. Ash Ave., Kansas City, MO 65157 (the "Liberty location") and 10203 N Oak Trafficway, Kansas City, MO 64155 (the "New Mark location"). Litigation by landlords drove the Debtor into the bankruptcy. The first suit, filed by New Mark Delaware LLC, Penn Park New Mark LLC, and Metcalf 91 New Mark LLC (collectively, "New Mark") was filed June 25th in the Circuit Court of Clay County, Missouri and concerned the New Mark location. The second case was filed by Star Development Corporation concerning the Liberty location. In order to ensure the business remains viable and can reorganize, the Debtor's principal, Scott McIntosh, will propose to make a large capital contribution in lieu of seeking Debtor-in-Possession financing. The approximate contribution would be $58,000 with an expected funding date of March 31, 2022. This amount will be distributed to creditors with no pre-payment penalty. Class 3 consists of the secured claim of the Acme Company, with collateral consisting of a general business security agreement in the Debtor's assets. Acme failed to file a proof of claim, its debt was listed by the Debtor in its schedules and amended schedules as "unknown" and after the claim of the SBA, there is no equity to which the lien of Acme would attach. Accordingly, the Debtor proposes to treat the entirety of the Acme liability as unsecured and pay Acme with other unsecured creditors. Class 4 consists of the secured claim for Yes Lender. With collateral consisting of a general business security agreement in the Debtor's assets. Yes Lender's lien was properly perfected by a UCC financing statement filed with the Missouri Secretary of State on January 7, 2021. Yes Lender has failed to file a proof of claim. The Debtor's principal, Scott McIntosh, has paid this debt in full to satisfy his personal liability on the obligation. Accordingly, Yes Lender shall receive no payment through this plan. Class 5 consists of the priority tax claim for the Internal Revenue Service, the priority tax claim for the City of Kansas City, Missouri and the four priority tax claims of the Missouri Department of Revenue. These claims consist of income tax liabilities from 2019 onward and are based in part upon unfiled returns or returns not yet received. These creditors will be paid their priority debt at their contract rate of interest in the following way: all priority tax claims will be paid in full in 60 months, at the tax authority's rate of interest. Class 6 consists of 7 general unsecured claims for various creditors. The Debtor shall file all timely requests for forgiveness of its PPP loan through US Bank and will therefore seek to have that claim amended or withdrawn. Remaining unsecured debts shall be paid as follows: * Class 6 Creditors shall receive total payments of $0 per month for the 5 years of the plan. Additionally, the Debtor proposes to pay all disposable income received in the 5 years of the plan, less any payments to the creditors in Classes 1-5 above and Claim 7, to pay to Class 6 Creditors. Class 7 consists of the lease with New Mark for the New Mark (North Oak) location. This claim is for a long-term lease for the Debtor's only remaining location and Debtor intend that this continue. This claim will be paid at $2,158.33 per month plus water costs of approximately $30 per month ongoing plus the following cure of arrearage. The Debtor shall make direct payments monthly to creditors per the provisions from its income and any contributions from the Debtor's principal. All of the projected disposable income of the debtor to be received in the 3-year period, or such longer period not to exceed 5 years as the court may fix, beginning on the date that the first payment is due under the plan will be applied to make payments under the plan. A full-text copy of the Subchapter V Plan dated Nov. 15, 2021, is available at https://bit.ly/3HxUNJV from PacerMonitor.com at no charge. Attorney for the Debtor: Ryan A. Blay 15095 W. 116th St. Olathe, KS 66062 Tel: (913) 422-0909 Fax: (913) 428-8549 E-mail: bankruptcy@wagonergroup.com blay@wagonergroup.com About SG McIntosh LLC SG McIntosh, LLC filed a petition for Chapter 11 protection (Bankr. W.D. Mo. Case No. 21-40986) on Aug. 6, 2021, listing up to $100,000 in assets and up to $500,000 in liabilities. Judge Brian T. Fenimore oversees the case. Wagoner Bankruptcy Group, P.C., doing business as WM Law, PC, serves as the Debtor's legal counsel. SHURWEST LLC: Gets Approval to Hire Michael Carmel as Mediator -------------------------------------------------------------- Shurwest, LLC received approval from the U.S. Bankruptcy Court for the District of Arizona to employ Michael Carmel, Esq., an attorney practicing in Ariz., as mediator. The Debtor needs the assistance of a mediator for issues and claims that have arisen in its Chapter 11 case. The Debtor has committed to advance a $15,000 retainer for legal mediation services rendered through and including Nov. 18, 2021. Mr. Carmel's hourly rate is $675, plus reasonable expenses. Mr. Carmel disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Michael W. Carmel, Esq. 80 E. Columbus Ave. Phoenix, AZ 85012 Telephone: (602) 264-4965 About Shurwest LLC Shurwest, LLC, a Scottsdale, Ariz.-based company that specializes in fixed indexed annuities and life insurance, filed its voluntary petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 21-06723) on Aug. 31, 2021, listing as much as $10 million in both assets and liabilities. James Maschek, president, signed the petition. Judge Daniel P. Collins oversees the case. The Debtor tapped Isaac D. Rothschild, Esq., at Mesch Clark Rothschild as bankruptcy counsel and Wyche, PA as special counsel. SOUND HOUSING: Trustee Gets OK to Hire Richard Ginnis as Accountant ------------------------------------------------------------------- Stuart Heath, the Chapter 11 trustee for Sound Housing LLC, received approval from the U.S. Bankruptcy Court for the Western District of Washington to hire Richard Ginnis, a certified public accountant practicing in Seattle, Wash. The trustee has selected Mr. Ginnis to assist him in addressing tax and accounting-related issues in connection with the administration of the Debtor's bankruptcy estate. Mr. Ginnis' hourly rate is $220. In court papers, Mr. Ginnis disclosed that he does not represent any interest adverse to the estate. Mr. Ginnis can be reached at: Richard N Ginnis, CPA 202 N 85th St. Seattle, WA 98103 Phone: +1 206-783-6588 About Sound Housing LLC Kirkland, Wash.-based Sound Housing, LLC filed a petition for Chapter 11 protection (Bankr. W.D. Wash. Case No. 21-10341) on Feb. 19, 2021, listing as much as $10 million in both assets and liabilities. Judge Marc Barreca presides over the case. Jacob D DeGraaff, Esq., at Henry & DeGraaff, P.S., is the Debtor's legal counsel. On Sept. 24, 2021, Stuart Heath was appointed Chapter 11 trustee in the Debtor's case. Manish Borde, Esq., at Borde Law, PLLC and Richard Ginnis, CPA serve as the trustee's legal counsel and accountant, respectively. STANTON GLENN: Taps Gamma Law Firm as Special Regulatory Counsel ---------------------------------------------------------------- Stanton Glenn Limited Partnership seeks approval from the U.S. Bankruptcy Court for the District of Columbia to employ Gamma Law Firm, PLLC as its special regulatory counsel in connection with its obligations under a consent judgment order in a settled cause of action in the District of Columbia initiated prior to its Chapter 11 filing. Brian Donnelly, Esq., the firm's attorney who will be providing the services, will charge $500 per hour. Mr. Donnelly disclosed in a court filing that he and his firm do not represent interests adverse to the Debtor or its estate. The firm can be reached through: Brian P. Donnelly, Esq. Gamma Law Firm PLLC 11111 Santa Monica Boulevard, Suite 500 Los Angeles, CA 90025 Tel: +1 (415) 901-0510 Fax: +1 (415) 901-0512 Email: info@gammalaw.com About Stanton Glenn Limited Partnership Stanton Glenn Limited Partnership filed its voluntary petition for Chapter 11 protection (Bankr. D. Colo. 21-00261) on Oct. 29, 2021, listing $40,503,154 in assets and $27,655,693 in liabilities. Joseph Kisha, president, signed the petition. Judge Elizabeth L. Gunn presides over the case. Marc E. Albert, Esq., at Stinson LLP and Gamma Law Firm, PLLC serve as the Debtor's bankruptcy counsel and special regulatory counsel, respectively. STATERA BIOPHARMA: Incurs $12.7 Million Net Loss in Third Quarter ----------------------------------------------------------------- Statera Biopharma, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $12.73 million on $236,519 of revenues for the three months ended Sept. 30, 2021, compared to a net loss of $5.68 million on zero revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported a net loss of $24.63 million on $236,519 of revenues compared to a net loss of $7.86 million on zero revenues for the nine months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $98.04 million in total assets, $23.84 million in total liabilities, and $74.19 million in total stockholders' equity. "We are pleased with our operational progress to integrate the portfolio and advance our clinical programs as we prepare to initiate several clinical trials during 2022, including a pivotal Phase 3 trial for our lead drug candidate, STAT-201, in pediatric Crohn's disease, as well as studies of the TLR5 agonist Entolimod as a treatment for anemia and neutropenia in cancer patients, broaden the STAT-205 program to post-acute COVID-19 and study STAT-401 in pancreatic cancer," said Michael K. Handley, chief executive officer of Statera Biopharma. "We also expect to further strengthen our cash position to support funding the continued advancement of the Company's clinical-stage pipeline and drive Statera Biopharma toward multiple value infection points. We may also raise additional funding to capitalize on what we believe are myriad internal and external opportunities in the field of immune modulation and bring hope to patients and their families." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1318641/000143774921026749/cbli20210930_10q.htm About Statera Statera Biopharma, Inc. (formerly known as Cytocom, Inc. and Cleveland Biolabs) is a clinical-stage biopharmaceutical company developing novel immunotherapies targeting autoimmune, neutropenia/anemia, emerging viruses and cancers based on a proprietary platform designed to rebalance the body's immune system and restore homeostasis. Cleveland Biolabs reported a net loss of $2.44 million for the year ended Dec. 31, 2020, compared to a net loss of $2.69 million for the year ended Dec. 31, 2019. As of June 30, 2021, the Company had $13.83 million in total assets, $300,623 in total liabilities, and $13.53 million in total stockholders' equity. SUSGLOBAL ENERGY: Incurs $1.4 Million Net Loss in Third Quarter --------------------------------------------------------------- SusGlobal Energy Corp. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $1.42 million on $204,796 of revenue for the three months ended Sept. 30, 2021, compared to a net loss of $429,046 on $439,507 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 $2.52 million on $610,088 of revenue compared to a net loss of $1.51 million on $1.17 million of revenue for the same period during the prior year. As of Sept. 30, 2021, the Company had $8.96 million in total assets, $13.57 million in total liabilities, and a total stockholders' deficit of $4.61 million. Significant losses from operations have been incurred since inception and there is an accumulated deficit of $15,993,098 as at Sept. 30, 2021 (Dec. 31, 2020 -$13,468,794). SusGlobal stated, "Continuation as a going concern is dependent upon generating significant new revenue and generating external capital and securing debt to satisfy its creditors' demands and to achieve profitable operations while maintaining current fixed expense levels. To pay current liabilities and to fund any future operations, the Company requires significant new funds, which the Company may not be able to obtain. In addition to the funds required to liquidate the $11,592,938 in current debt obligations and other current liabilities, the Company estimates that approximately $17,500,000 must be raised to fund capital requirements and general corporate expenses for the next 12 months. In the normal course of business, we are exposed to market risks, including changes in interest rates, certain commodity prices and Canadian currency rates. The Company does not use derivatives to manage these risks." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/0001652539/000106299321010943/form10q.htm About SusGlobal Headquartered in Toronto, Ontario, Canada, SusGlobal Energy Corp. -- www.susglobalenergy.com -- is a renewables company focused on acquiring, developing and monetizing a global portfolio of proprietary technologies in the waste to energy and regenerative products application. SusGlobal Energy reported a net loss of $2.01 million for the year ended Dec. 31, 2020, compared to a net loss of $2.89 million for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $5.76 million in total assets, $10.52 million in total liabilities, and a total stockholders' deficiency of $4.76 million. Toronto, Canada-based MNP LLP, the Company's auditor since 2020, issued a "going concern" qualification in its report dated April 15, 2021, citing that the Company has experienced operating losses since inception and expects to incur further losses in the development of its business. These conditions, along with other matters, raise substantial doubt about Company's ability to continue as a going concern. TAURIGA SCIENCES: Incurs $1.7 Million Net Loss in Second Quarter ---------------------------------------------------------------- Tauriga Sciences, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $1.74 million on $107,346 of net revenue for the three months ended Sept. 30, 2021, compared to a net loss of $642,869 on $75,360 of net revenue for the three months ended Sept. 30, 2020. For the six months ended Sept. 30, 2021, the Company reported a net loss of $2.57 million on $140,713 of net revenue compared to a net loss of $1.59 million on $140,164 of net revenue for the six months ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had $1.98 million in total assets, $2 million in total liabilities, and a total stockholders' deficit of $27,318. At Sept. 30, 2021, the Company had cash of $28,698 and 1,035,511 of securities compared to March 31, 2021 of $49,826 and $1,334,425 of trading securities. The Company has historically met its cash needs through a combination of proceeds from private placements of its securities, loans and convertible notes. The Company's cash requirements are generally for purchases of inventory as well as selling, general and administrative activities. The Company believes that its cash balance is not sufficient to finance its cash requirements for expected operational activities, capital improvements, and partial repayment of debt through the next 12 months. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1142790/000149315221028657/form10-q.htm About Tauriga Tauriga Sciences, Inc. -- www.taurigum.com -- is a diversified life sciences company, engaged in several major business activities and initiatives. The company manufactures and distributes several proprietary retail products and product lines, mainly focused on the Cannabidiol and Cannabigerol Edibles market segment. Tauriga reported a net loss of $3.63 million for the year ended March 31, 2021, a net loss of $ $3.03 million for the year ended March 31, 2020, and a net loss of $1.10 million for the year ended March 31, 2019. As of June 30, 2021, the Company had $2.76 million in total assets, $1.50 million in total liabilities, and $1.25 million in total stockholders' equity. Lakewood, Co-based BF Borgers CPA PC, the Company's auditor since 2019, issued a "going concern" qualification in its report dated June 29, 2021, citing that the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. TBS INTERNATIONAL: 2d Cir. Affirms Dismissal of "Meimaris" Suit --------------------------------------------------------------- Plaintiff-Appellant Helen Meimaris, in her individual capacity and as executrix and legal representative of the Estate of her late husband, Captain Alkiviades Meimaris, appeals from the September 25, 2019 judgment and order of the United States District Court for the Southern District of New York dismissing the third amended complaint (TAC) against Joseph E. Royce, Tulio Prieto, Lawrence Blatte, TBS Shipping Services, and Guardian Navigation, pursuant to Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure. Meimaris brought various claims under New York law against the defendants alleging that the defendants fraudulently deprived Captain Meimaris of his ownership interests in TBS Commercial Group, a privately held shipping company, and TBS Shipping International, its publicly traded affiliate, in connection with the latter company's Chapter 11 bankruptcy reorganization. On appeal, Meimaris challenges the dismissal of the TAC, arguing, inter alia, that the district court incorrectly concluded that: (1) Meimaris lacked standing to sue in her individual capacity; (2) the fifth cause of action ("Claim Five") charged only a previously dismissed defendant; (3) the remaining claims were time-barred under New York's applicable statute of limitations for fraud; and (4) granting Meimaris leave to amend the TAC would be futile. The United States Court of Appeals for the Second Circuit affirmed. As to standing, the Second Circuit pointed out that the allegations in the complaint do not demonstrate Meimaris has any individual interests that were infringed upon by the defendants. The TAC contains no allegations that Meimaris had any personal stake or any other business interests in TBS Commercial or TBS International, or that the defendants owed her any fiduciary duties that could have been breached. Instead, all of the interests allegedly infringed upon by the defendants belonged to Captain Meimaris: Captain Meimaris was the sole holder of the shares at issue in each company, the only person allegedly denied a corporate business opportunity, the individual allegedly prevented from joining in the reorganization plan, and the only party allegedly forced out of TBS Commercial. As such, the TAC does not allege any facts demonstrating that Meimaris has a personal stake in the controversy. As to Claim Five, the Second Circuit noted that it is plain from the structure of Claim Five, and the allegations contained therein, that it is asserted only against Leroux. In addition to the claim's caption in the TAC, which mentions only Leroux and no other defendants, the actions detailed in the claim are exclusively attributed to Leroux. Other defendants are mentioned only twice: first, in a statement that Leroux knew about Royce and Blatte's other alleged misconduct, and second, in a conclusory statement that "Mr. Leroux and the other Defendants committed statutory fraud and common law fraud." Such allegations are insufficient to put the defendants (other than Leroux) on fair notice that claims were being asserted against them. Accordingly, the Second Circuit agreed with the district court that Claim Five should be construed as pertaining solely to Leroux, who is no longer a defendant in this case. The Second Circuit further concluded that the district court properly dismissed the Estate's claims as time-barred. Meimaris filed her action on May 21, 2018, asserting several causes of action based on various instances of alleged misconduct that occurred between 2008 and 2012. Any claims alleging misconduct in connection with the reorganization plan were necessarily complete, and thus began accruing, by either the date the plan was approved by the bankruptcy court (March 29, 2012) or, at the latest, by the date the plan went into effect (April 12, 2012), the Second Circuit said. The appeals case is captioned Helen Meimaris, as Executrix and Legal Representative of the Estate of Alkiviades Meimaris, Plaintiff-Appellant, The Estate of Alkiviades Meimaris, Helen Meimaris as Executrix of the Estate of Alkiviades Meimaris, Plaintiffs, v. Joseph E. Royce, Tulio Prieto, Lawrence A. Blatte, TBS Shipping Services Inc., Guardian Navigation, Defendants-Appellees, No. 19-3339-cv (2d Cir.). A full-text copy of the Summary Order dated November 8, 2021, is available at https://tinyurl.com/325cua6n from Leagle.com. ALKISTIS MEIMARIS, Meimaris Law Group LLC, New York, NY, for Plaintiff-Appellant. ADAM RODRIGUEZ, Esq. -- arodriguez@bpslaw.com -- William P. Harrington, Esq. -- wpharrington@bpslaw.com -- on the brief), Bleakley Platt & Schmidt, LLP, White Plains, NY, FOR DEFENDANTS-APPELLEES LAWRENCE BLATTE & JOSEPH ROYCE. NOAH S. CZARNY, Esq. -- czarny@sewkis.com -- Mark D. Kotwick, Esq. -- kotwick@sewkis.com -- on the brief), Seward & Kissel LLP, New York, NY, FOR DEFENDANT-APPELLEE TBS SHIPPING SERVICES, INC. & GUARDIAN NAVIGATION. AARON M. BARHAM, Esq. -- abarham@fkblaw.com -- (A. Michael Furman, Esq. -- mfurman@fkblaw.com -- on the brief), Furman Kornfeld & Brennan LLP, New York, NY; Tulio R. Prieto, (James P. Rau on the brief), Cardillo & Corbett, New York, NY, FOR DEFENDANT-APPELLEE TULIO PRIETO. About TBS International TBS International plc, TBS Shipping Services Inc. and its various subsidiaries and affiliates -- http://www.tbsship.com/-- filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-22224) on Feb. 6, 2012. TBS provides ocean transportation services that offer worldwide shipping solutions to a diverse client base of industrial shippers in more than 20 countries to over 300 customers. Through a 41-vessel fleet of multipurpose tweendeckers and handysize and handymax dry bulk carriers, TBS, in conjunction with a network of affiliated service companies, offers (a) liner, parcel and bulk transportation services and (b) time charter services. TBS's global headquarters, located in Yonkers, New York, oversees all major corporate and operational decision-making, including in connection with drydocking of vessels and other capital expenditures, fleet positioning, and cargo arrangements with third parties, including major vendors and customers. As of the Petition Date, TBS has roughly 140 employees worldwide, the vast majority of whom work in the corporate headquarters. For the year ended Dec. 31, 2011, TBS's consolidated net revenue was roughly $369.7 million. Its consolidated debt is roughly $220 million. TBS filed together with the petition its Joint Prepackaged Plan of Reorganization dated Jan. 31, 2012. Judge Robert D. Drain presides over the case. Michael A. Rosenthal, Esq., and Matthew K. Kelsey, Esq., at Gibson, Dunn & Crutcher LLP, serve as the Debtors' counsel. The Debtors' investment banker is Lazard Freres & Co. LLC, the financial advisor is AlixPartners LLP. Cardillo & Corbett serves as special maritime and corporate counsel, Garden City Group serves as administrative agent and Gibson, Dunn & Crutcher as counsel. The petition was signed by Ferdinand V. Lepere, executive vice president and chief financial officer. TBS disclosed US$143 million in assets and US$220 million in debt. No official committee was appointed by the Office of the United States Trustee. The Plan of Reorganization of TBS International plc and certain of its subsidiaries became effective on April 12, 2012. TENET HEALTHCARE: Fitch Rates First Lien Secured Notes 'B+' ----------------------------------------------------------- Fitch Ratings has assigned a 'B+'/'RR3' rating to the first lien senior secured notes being issued by Tenet Healthcare Corp. Tenet's Long-Term Issuer Default Rating (IDR) is 'B'/Positive Outlook. The ratings reflect the issuer's solid competitive position as a healthcare provider and the durability of its operational and financial results amid the pandemic. The Positive Outlook reflects Tenet reducing gross debt by $1.1 billion in 3Q21 via disposition proceeds, and Fitch's expectation that leverage should improve further via growth in operating EBITDA. KEY RATING DRIVERS Hospitals Drive Operating Outlook: Tenet is one of the largest for-profit operators of acute care hospitals in the U.S., which at present, contribute approximately 80% and 50% of consolidated revenues and EBITDA, respectively. Tenet is also a leading operator of ambulatory surgery centers (ASCs) through its ownership of United Surgical Partners International (USPI). USPI provides setting diversification, which Fitch expects will continue to benefit from secular tailwinds. Tenet's goal is to increase USPI's EBITDA to 50% and decrease the hospital segment to 35% in 2023. Fitch expects Tenet will use a combination of acquisitions and de novo openings in USPI, hospital dispositions and the relative growth rates for each segment to make progress against its goal. Between Tenet's most recent ASC acquisition announcement and the one announced in late 2020, Tenet will have spent $2.6 billion on ASCs over approximately the past year. Pandemic Having Manageable Impact: Fitch expects healthcare providers like Tenet will continue to be negatively impacted by the pandemic (i.e. lower volumes, higher operating expenses) through at least 2021. While volumes have not fully rebounded to pre-pandemic levels, they have rebounded sharply from the 2Q20 lows, and stabilized at levels where Tenet can support its current capitalization and rating. Lower volumes have been offset in part by some favorable rate changes from government payors, higher acuity mix and Tenet's efforts to manage operating expenses. Business Improvements Clouded by Pandemic: Prior to the pandemic, Tenet made progress against its objectives to improve operations, rationalize its hospital footprint by exiting non-core assets and markets and grow USPI. Fitch expects operating EBITDA margins will rebound in 2021 above 14%, which is slightly above pre-pandemic levels and up from around 12% in 2016, and improve further as the higher margin USPI segment's contributions become larger than the hospital segment. Continued margin improvement may be challenged by inflationary pressures on labor both in terms of wage increases and use of more expensive sources such as traveling nurses. Fitch expects Tenet will continue to focus on growing USPI through both capital expenditures and acquisitions, which follows Tenet's increased ownership stake to 95% from around 50%. Despite pre-pandemic improvements in margins, Tenet's profitability continues to lag its closest industry peers, which supports Fitch's view that sustainably higher margins for Tenet are achievable but not explicitly assumed in Fitch's forecasts. Improving Leverage: Fitch expects gross leverage (after adjusting for cash distributions to non-controlling interests [NCI] and the recent repayment of $1.1 billion of debt) will sustain around 5.5x through the rating horizon, which is around the positive rating sensitivity. The degree to which leverage improves further will be a function of the still dynamic operating environment amid the pandemic and the company's capital allocation decisions including the potential spin-off of its Conifer segment. DERIVATION SUMMARY Tenet's 'B' Long-Term IDR reflects higher leverage relative to its closest hospital industry peers HCA Healthcare Inc. (HCA; BB+/Stable) and Universal Health Services Inc. (UHS; BB+/Stable). Tenet's operating and FCF margins also lag these industry peers; however, Tenet has recently made progress in closing the gap through cost-cutting measures and the divestiture of lower margin hospitals. Tenet has a stronger operating profile than similarly-rated peer Prime Healthcare Services, Inc. (B) and lower-rated peer Community Health Systems (CHS; B-), which have lower and higher leverage than Tenet, respectively. Similar to HCA and UHS, Tenet's operations are primarily located in urban or large suburban markets that have relatively favorable organic growth prospects. KEY ASSUMPTIONS -- Revenues and operating EBITDA rebound in 2021 and grow by 2%- 5% thereafter with some margin improvement as the EBITDA mix shifts towards USPI; -- The most recent ASC acquisition is assumed to be unconsolidated through the forecast period and incorporated into EBITDA as a cash distribution to Tenet from unconsolidated entities and thus not reflected in the top-line growth above; -- Operating cashflows negatively affected through 2022 as certain benefits from the CARES Act are unwound (e.g. Medicare Advance Payments, deferred payroll taxes); -- Capex approximating 3%-4% of revenues per year and $400 million of acquisitions per year to accelerate USPI's growth; -- No meaningful changes to gross debt or equity issuances/repurchases beyond completed and announced transactions; -- Fitch has not explicitly assumed the potential Conifer spin- off, or the acquisition of the remaining interest in USPI. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- An expectation of debt/EBITDA after associate and minority dividends sustained below 5.5x; -- An expectation for FCF margin sustained above 2%. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Debt/EBITDA after associate and minority dividends sustained above 7.0x; -- An expectation for consistently break-even to negative FCF margin. 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 Liquidity Profile Solid: Tenet's sources of liquidity include $2.3 billion of cash at Sept. 30, 2021 and an undrawn $1.9 billion ABL facility that matures in September 2024. Tenet's debt agreements do not include financial maintenance covenants aside from a 1.5x fixed-charge coverage ratio test in the bank agreement that is only in effect during a liquidity event, defined as whenever available ABL capacity is less than $100 million. The next significant debt maturity is $1.9 billion of unsecured notes maturing in June 2023. Fitch estimates the company has approximately $1.1 billion of remaining repayments of Medicare advanced payments. Debt Notching Considerations: The 'BB'/'RR1' and 'B+'/'RR3' ratings for Tenet's ABL facility and the senior secured first-lien notes reflect Fitch's expectation of recovery for the ABL facility in the 91% to 100% range and recovery for the first lien secured notes in the 51%-70% range under a bankruptcy scenario. The 'B'/'RR4' rating on the senior secured second-lien notes and senior unsecured notes reflect Fitch's expectations of recovery of outstanding principal in the 31%-50% range. Fitch estimates an enterprise value (EV) on a going-concern basis of $9 billion for Tenet, after a deduction of 10% for administrative claims. The EV assumption is based on post-reorganization EBITDA after dividends to associates and minorities of $1.4 billion and a 7.0x multiple. Fitch does not believe the pandemic has changed the longer-term valuation prospects for the hospital industry. Tenet's post-reorganization EBITDA and multiple assumptions are unchanged from the last ratings review. The analysis assumes $1.9 billion of ABL borrowings and approximately $100 million of mortgages will recover first, approximately $9.1 billion of first-lien borrowings pro forma for the debt issuance, $1.5 billion of second-lien borrowings and $4.7 billion of unsecured borrowings. The post-reorganization EBITDA estimate is approximately 28% lower than Fitch's 2020 EBITDA for Tenet excluding grant income and considers the attributes of the acute care hospital sector and includes the following: a high proportion of revenue (30%-40%) generated by government payors, exposing hospital companies to unforeseen regulatory changes; the legal obligation of hospital providers to treat uninsured patients, resulting in a high financial burden for uncompensated care, and the highly regulated nature of the hospital industry. The 7.0x multiple employed for Tenet reflects a history of acquisition multiples for large acute care hospital companies with similar business profiles as Tenet in the range of 7.0x-10.0x since 2006 and trading multiples (EV/EBITDA) of Tenet's peer group (HCA, UHS and CHS), which have fluctuated between approximately 6.5x and 9.5x since 2011. Based on the definitions of Tenet's secured debt agreements, Fitch believes that the group of hospital operating subsidiaries that guarantee the secured debt excludes any non-wholly owned and non-domestic subsidiaries, and therefore, does not encompass part of the value of the Conifer and ambulatory care segments. The hospital operations segment contributes about 50% of consolidated EBITDA (53% pre-pandemic and 47% for 2021 guidance, which reflects 2020 ASC acquisitions), and Fitch uses this value as a proxy to determine the rough value of the secured debt collateral of $4.5 billion. Fitch assumes this amount is completely consumed by the ABL facility and the first-lien lenders, leaving $4.5 billion of residual value to be distributed on a pro rata basis to the remaining first-lien claims and the second-lien secured and unsecured claims. Tenet's debt instrument ratings are sensitive to relative debt levels, given the significance of the assets outside of the collateral pool. Upsized issuances could have rating implications for all debt levels depending on the use of proceeds given each instrument's recoveries are towards the low-end of their respective Recovery Rating range. Continued divestments of general acute hospitals and investments in ambulatory care could result in a narrowing of the notching between the secured and unsecured debt and/or rating actions. The ABL facility is assumed to be fully recovered before the other secured debt in the capital structure. The ABL facility is secured by a first-priority lien on the patient accounts receivable of all of the borrower's wholly owned hospital subsidiaries, while the first- and second-lien secured notes are secured by the capital stock of the operating subsidiaries, making the notes structurally subordinate to the ABL facility with respect to the accounts receivable collateral. Fitch assumes that Tenet would draw the full amount available on the ABL facility in a bankruptcy scenario, and includes that amount in the claims waterfall. ISSUER PROFILE Tenet Healthcare is a publicly traded healthcare provider that focuses on general acute care hospitals and ambulatory surgery centers located in the United States. ESG CONSIDERATIONS Tenet has an ESG Relevance Score of '4' for Exposure to Social Impacts due to societal and regulatory pressures to constrain growth in healthcare spending in the U.S. This dynamic has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. TG SERENITY: Unsecureds Will Recover 9% to 23.1% in Plan -------------------------------------------------------- TG Serenity Wellness, LLC, submitted a Third Amended Chapter 11, Subchapter V Plan. The source of payments will come primarily from the operation of the Reorganized Debtor's business. Additional funding may be provided through Grant Funds, Second PPP Loan Funds, some other loan or capital infusion. The Plan will treat the claims as follows: * Class 4 - OnDeck Unsecured Claim totaling approximately $81,355.88. Payment on allowed claim from Projected Disposable Income over 60 months (pro rata with other allowed unsecured claims). Creditor will recover estimated 9% - 23.1% of claim. Class 4 is impaired. * Class 5 - Kalamata Unsecured Claim totaling approximately $122,000. Payment in full on Kalamata's Claim has been made per agreement prior to confirmation of the Plan. Kalamata will receive no further distributions. Creditor will recover 16.4% of their claims. Class 5 is unimpaired. * Class 6 - Other General Unsecured Claims totaling approximately $225,000 to $705,000. Payment from Disposable Income of business over sixty 60 months. Creditors will recover estimated 9% - 23.1% of their claims. Class 6 is impaired. Counsel for the Debtor: Dennis J. Shaffer WHITEFORD TAYLOR & PRESTON, LLP Seven Saint Paul Street, 15th Floor Baltimore, Maryland 21202-1636 Tel: (410) 347-9437 Fax: (410) 223-4337 E-mail: dshaffer@wtplaw.com A copy of the Plan dated November 10, 2021, is available at https://bit.ly/3HdGGcl from PacerMonitor.com. About TG Serenity Wellness, LLC TG Serenity Wellness, LLC, an Owings Mills, Md.-based corporation, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No. 20-18801) on Sept. 28, 2020. TG Serenity Wellness president Tyrone Stephenson signed the petition. At the time of the filing, the Debtor had estimated assets of between $500,001 and $1 million and liabilities of the same range. Judge Nancy V. Alquist oversees the case. Whiteford, Taylor & Preston, LLP is the Debtor's legal counsel. TOPGOLF INTERNATIONAL: S&P Affirms 'B-' Issuer Credit Rating ------------------------------------------------------------ S&P Global Ratings revised the outlook to stable from negative. At the same time, S&P affirmed its 'B-' issuer credit rating on U.S.-based golf entertainment company Topgolf International Inc. The stable outlook reflects S&P's forecast for continued revenue and EBITDA growth due to new venue openings, continued high walk-in demand, a recovery in corporate events, and good cost control. S&P said, "The rating affirmation and outlook revision to stable primarily reflects lower leverage due to significantly higher profitability at Topgolf than we previously expected. Callaway completed its acquisition of Topgolf in March 2021, and since that time Topgolf has significantly outperformed our expectations. Topgolf returned to pre-pandemic levels of same-venue sales quicker than we forecast. But more importantly, the company meaningfully improved its margins compared to pre-pandemic. The margin improvement came from better-operating efficiency through actions such as simplifying food and beverage menus, reducing the number of managerial positions required to run venues, and operating leverage from a higher number of open venues that helped absorb selling, general, and administrative (SG&A) costs. We expect some incremental spending on labor will need to return to get to ideal staffing levels, but believe these margins are largely sustainable. In addition to accelerating its deleveraging path, the better cash generation from higher profitability also reduces the amount of cash that Callaway will have to contribute to fund Topgolf's venue expansion plans. "Topgolf stand-alone continues to rely on funding from Callaway and its REIT partners to grow. At more than 65 open venues, Topgolf has reached a size where aggregate venue profits are more than enough to offset corporate SG&A costs and pre-opening costs for new venues, such that it is now generating significant reported EBITDA: we forecast over $150 million (excluding stock-based compensation) in 2021. Its stand-alone leverage is still high at about 7.5x because of very high lease obligations, but it has come down considerably from about 9x as of the prior quarter and double-digits before that. We forecast leverage will remain in the 7x area through 2022. While we believe Topgolf would generate positive free cash flow if it stopped building new venues, its aggressive growth plans incorporating at least 10 new venues per year requires capital expenditures in the range of $300 million to $450 million per year. A large portion of this spending is reimbursed by Topgolf's REIT partners, but the remaining $200 million to $225 million per year must be funded by its internally generated operating cash flows, revolver borrowings, and contributions from parent Callaway. "We believe the consolidated company could generate positive free cash flow including venue growth capex in 2023, and Topgolf stand-alone could reach positive free cash flow as early as 2024. However, this is a fairly long time horizon. We expect variability in the business' potential operating results depending upon Topgolf's performance after the pandemic, the status of U.S. economic activity and employment, and changes in consumer preferences over time. Although Topgolf has a first-mover advantage in creating a unique golf experience, it faces significant competition from alternative out-of-home entertainment options, among other substitutes for consumers' discretionary leisure and entertainment spending. Its customers may choose lower-priced or alternative venues to socialize that do not involve golfing, eating, or drinking. Economic pressure could amplify this risk if consumers limit their spending on discretionary leisure activities. "Topgolf's harvest case mitigates some of the downside risk. If Topgolf does not reach its goal of becoming self-funding by 2024, it may be difficult to maintain the current pace of investment without pressuring Callaway's free cash flow. Our rating on Callaway relies on its ability to mitigate this risk and the risk of an economic slowdown by enacting Topgolf's harvest case, which includes halting future venue development before breaking ground and reducing other discretionary capex, allowing Topgolf to harvest the cash flows from its existing venues. Although it would take 9 to 12 months to work through the near-term spending commitments on its partially built venues, the elimination of growth capital spending and pre-opening expenses beyond this inflection point would likely enable Topgolf to generate positive free cash flow and EBITDA well above its fixed charges. "We believe Topgolf is strategically important to the combined entity and anticipate Callaway will likely support Topgolf under most foreseeable circumstances. Former Topgolf shareholders own a significant share of the combined entity as a result of the the merger and have three board seats, thus they can exert significant influence. Callaway has also made it clear that Topgolf is an important part of the company's strategy to create an unrivaled golf and entertainment business. The company believes the combination enhances the growth prospects of both entities. Callaway's willingness to fund the merger with $1.7 billion of its stock and plan to commit significant cash to fund development at Topgolf further demonstrate this commitment. As such, we believe Callaway would provide extraordinary support to Topgolf under most foreseeable circumstances. Still, Callaway is not providing guarantees to Topgolf's debt, which raises some doubts about the extent of Callaway's support in the event Topgolf encounters significant credit stress. "The stable outlook reflects our forecast for continued revenue and EBITDA growth due to new venue openings, continued high walk-in demand, a recovery in corporate events, and good cost control. "We could lower our ratings on Topgolf if it increases its EBITDA at a slower pace than we expect such that we no longer see a clear path for it to generate positive free cash flow on a stand-alone basis over the intermediate term. In our view, this would impair the group's credit profile because it would require cash infusions from Callaway that it may not be able to sustain." S&P believes this could occur if: -- Its group and corporate event bookings remain depressed even after the pandemic subsides; -- The rise in walk-in traffic at the company's venues does not sustain its recent momentum as the economy more fully re-opens and its venues face stronger than expected competition from various other forms of leisure, travel, and entertainment; -- The company is not able to sufficiently control its costs as it expands and inflation worsens; or -- Callaway faces operating headwinds that impair its cash flow generation and ability to provide funding for Topgolf's venue development. S&P could raise its ratings on Topgolf if it continues to reduce leverage and it has better visibility into the company generating positive free cash flow on a standalone basis after growth capex. This could occur if: -- The company continues to successfully open new venues; -- Demand remains strong after the pandemic; -- It manages the inflationary environment well and proves that the recent margin improvement is sustainable; and -- It repays debt with excess cash flow. In addition, S&P could raise its rating on Topgolf if it raises its group credit profile on Callaway or if it reassesses its view of Topgolf's strategic importance to Callaway. TOWN SPORTS: SDNY Judge Dismisses Namorato Suit ----------------------------------------------- Back in December 2020, the United States District Court for the Southern District of New York entered an order recognizing that the action styled MARY NAMORATO, ANNA MOLLY, FARIN GREBER, JUDITH SOSA, JAY CLARKE and LARRY KERNAN, Plaintiffs, v. TOWN SPORTS INTERNATIONAL, LLC and TOWN SPORTS INTERNATIONAL HOLDINGS, INC. d/b/a NEW YORK SPORTS CLUBS, Defendants, No. 20-CV-2580 (VSB)(S.D.N.Y.), was stayed pursuant to 11 U.S.C. Section 362(a), in view of the voluntary petitions under Chapter 11 of the Bankruptcy Code filed by Town Sports International, LLC, and Town Sports International Holdings, Inc., d/b/a New York Sports Clubs. The bankruptcy cases were commenced in the United States Bankruptcy Court for the District of Delaware. In the December 20, 2020 order, the New York Court directed the parties to file a joint letter no later than February 3, 2021 informing the Court as to the status of the Bankruptcy Actions and whether Namorato et al. action could proceed. The parties filed a joint letter on February 10, 2021, and on February 11, 2021, the Court entered an order requiring another joint status update by no later than April 8, 2021. Since then, the parties have provided the Court with no status updates as required by my orders. The Court has now entered three orders prompting the parties to file the required status updates. The most recent such order cautioned the parties that failure to provide an update by "November 5, 2021 . . . likely will result in dismissal of this action pursuant to Federal Rule of Civil Procedure 41(b)." Accordingly, the Court ordered that this action is dismissed pursuant to Federal Rule of Procedure 41(b). A full-text copy of the Order dated November 8, 2021, is available at https://tinyurl.com/um27dc from Leagle.com. About Town Sports Town Sports International, LLC and its subsidiaries are owners and operators of fitness clubs in the United States, particularly in the Northeast and Mid-Atlantic regions. As of Dec. 31, 2019, the Company operated 186 fitness clubs under various brand names, collectively serving approximately 605,000 members. Town Sports owns and operates brands such as New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs, Lucille Roberts and Total Woman. Town Sports and several of its affiliates filed for bankruptcy protection (Bankr. D. Del. Lead Case No. 20-12168) on Sept. 14, 2020. The petitions were signed by Patrick Walsh, chief executive officer. The Debtors were estimated to have $500 million to $1 billion in consolidated assets and consolidated liabilities. The Hon. Christopher S. Sontchi presides over the cases. Young Conaway Stargatt & Taylor, LLP, and Kirkland & Ellis LLP have been tapped as bankruptcy counsel to the Debtors. Houlihan Lokey, Inc., serves as financial advisor and investment banker to the Debtors, and Epiq Corporate Restructuring LLC acts as claims and noticing agent to the Debtors. Judge Sontchi confirmed the Debtors' Second Amended Plan in an order dated December 18, 2020. UNITED AIRLINES: Moody's Affirms Ba2 CFR, Outlook Remains Negative ------------------------------------------------------------------ Moody's Investors Service affirmed its corporate debt ratings of United Airlines Holdings, Inc. ("Parent") and United Airlines, Inc. ("United"), including the Ba2 corporate family rating, Ba2-PD probability of default rating, the Ba1 senior secured and the Ba3 senior unsecured ratings. Moody's also affirmed the Baa3 rating assigned to the senior secured debt obligations of wholly-owned subsidiary, Mileage Plus Holdings, LLC ("MPH"). Moody's upgraded the company's speculative grade liquidity rating to SGL-1 from SGL-2. The outlook remains negative. The affirmation of the Ba2 CFR reflects Moody's belief that the potential for credit metrics to strengthen to levels supportive of the Ba2 rating by the end of 2023 remains intact, notwithstanding the capital intensity of the company's United Next strategy. The affirmation also reflects the company's very good liquidity, with $19.2 billion of cash at September 30, 2021. The negative outlook reflects the still uncertain pace of recovery in international travel demand, which could slow the recovery of operating profits and cash flow relative to Moody's expectations, given the company's relatively larger exposure to international travel. The negative outlook also reflects the execution and market risk inherent in the company's United Next plan announced in June 2021. United Next contemplates higher capacity growth in the international network in upcoming years and an emphasis on increasing the penetration of premium customers and revenues. United will significantly increase the size of premium cabins across its mainline aircraft fleet and replace regional jets with larger, mainline narrowbody aircraft models, primarily through 2026. Capital expenditures will aggregate $12 to $13 billion through 2023. The ability to restore annual operating cash flow to at least 2019's $6.9 billion during this period will dictate the company's free cash flow profile over the next 24 months. Moody's expects modest negative free cash flow of up to $500 million in each of the next two years. Moody's also took several rating actions on United's enhanced equipment trust certificates ("EETCs"). Moody's downgraded each of the six Class AA tranches, affirmed the ratings on eight of the 11 Class A tranches and two of the six Class B tranches. Moody's downgraded three Class A and four Class B tranches. The downgrades of the EETC ratings considered the increases in Moody's estimates of loan-to-value and thus declines in the equity cushions for the selected tranches. Affirmations: Issuer: United Airlines Holdings, Inc. Corporate Family Rating, Affirmed Ba2 Probability of Default Rating, Affirmed Ba2-PD Senior Unsecured Shelf, Affirmed (P)Ba3 Gtd. Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD5) Issuer: United Airlines, Inc. Gtd. Senior Secured Bank Credit Facility, Affirmed Ba1 to (LGD2) from (LGD3) Gtd. Senior Secured Regular Bond/Debenture, Affirmed Ba1 to (LGD2) from (LGD3) Senior Secured Enhanced Equipment Trust Ser. 2020-1 Cl A due Apr 15, 2029, Affirmed A3 Senior Secured Enhanced Equipment Trust Ser. 2018-1 Cl A due Sep 1, 2031, Affirmed Baa1 Senior Secured Enhanced Equipment Trust Ser. CAL 2012-1 Cl A due Apr 11, 2024, Affirmed Baa2 Senior Secured Enhanced Equipment Trust Ser. CAL 2012-2 Cl A due Apr 29, 2026, Affirmed Baa2 Senior Secured Enhanced Equipment Trust Ser. 2019-2 Cl A due Nov 1, 2029, Affirmed Baa1 Senior Secured Enhanced Equipment Trust Ser. 2020-1 Cl B due Jul 15, 2027, Affirmed Baa2 Senior Secured Enhanced Equipment Trust Ser. 2015-1 Cl A due Jun 1, 2029, Affirmed Baa1 Senior Secured Enhanced Equipment Trust Ser. 2019-1 Cl A due Feb 25, 2033, Affirmed Baa1 Senior Secured Equipment Trust Ser. CAL 2007-1 Cl B due Apr 19, 2022, Affirmed Ba1 Senior Secured Equipment Trust Ser. CAL 2007-1 Cl A due Apr 19, 2022, Affirmed Baa3 Issuer: Mileage Plus Holdings, LLC Senior Secured Term Loan, Affirmed Baa3 Gtd. Senior Secured Regular Bond/Debenture, Affirmed Baa3 Issuer: CLEVELAND (CITY OF) OH Senior Unsecured Revenue Bonds, Affirmed Ba3 (LGD5) Issuer: Denver (City & County of) CO Senior Unsecured Revenue Bonds, Affirmed Ba3 (LGD5) Issuer: Hawaii Department of Transportation Senior Unsecured Revenue Bonds, Affirmed Ba3 (LGD5) Issuer: Houston (City of) TX Senior Unsecured Revenue Bonds, Affirmed Ba3 (LGD5) Issuer: NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY Senior Unsecured Revenue Bonds, Affirmed Ba3 (LGD5) Upgrades: Issuer: United Airlines Holdings, Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Downgrades: Issuer: United Air Lines, Inc. Senior Secured Pass-Through Ser. UAL 2007-1 Cl A due Jul 2, 2022, Downgraded to Ba2 from Ba1 Issuer: United Airlines, Inc. Senior Secured Enhanced Equipment Trust Ser. 2018-1 Cl B due Sep 1, 2027, Downgraded to Baa3 from Baa2 Senior Secured Enhanced Equipment Trust Ser. 2018-1 Cl AA due Sep 1, 2031, Downgraded to A2 from A1 Senior Secured Enhanced Equipment Trust Ser. 2016-1 Cl AA due Jan 7, 2030, Downgraded to A2 from A1 Senior Secured Enhanced Equipment Trust Ser. 2019-1 Cl AA due Nov 1, 2033, Downgraded to A2 from A1 Senior Secured Enhanced Equipment Trust Ser. 2016-2 Cl AA due Apr 7, 2030, Downgraded to A3 from A1 Senior Secured Enhanced Equipment Trust Ser. 2015-1 Cl AA due Jun 1, 2029, Downgraded to A2 from A1 Senior Secured Enhanced Equipment Trust Ser. 2019-2 Cl AA due Feb 25, 2033, Downgraded to A2 from A1 Senior Secured Enhanced Equipment Trust Ser. 2016-1 Cl B due Jul 7, 2027, Downgraded to Ba1 from Baa2 Senior Secured Enhanced Equipment Trust Ser. 2016-2 Cl B due Apr 7, 2027, Downgraded to Ba1 from Baa2 Senior Secured Enhanced Equipment Trust Ser. 2016-1 Cl A due Jan 7, 2030, Downgraded to Baa2 from Baa1 Senior Secured Enhanced Equipment Trust Ser. 2019-2 Cl B due Nov 1, 2029, Downgraded to Baa3 from Baa2 Senior Secured Enhanced Equipment Trust Ser. 2016-2 Cl A due Apr 7, 2030, Downgraded to Baa2 from Baa1 Outlook Actions: Issuer: United Airlines Holdings, Inc. Outlook, Remains Negative Issuer: United Airlines, Inc. Outlook, Remains Negative Issuer: Mileage Plus Holdings, LLC Outlook, Remains Stable RATINGS RATIONALE The Ba2 CFR reflects United's favorable business profile as the third largest US and global airline based on revenue. Moody's believes United retains the potential to restore its operating and credit profiles through 2023 as the recovery of air travel demand extends to business and international travel in upcoming quarters. If sustained, the reduction in travel restrictions by many countries across the globe will facilitate a strong return of business travel and long-haul international travel, which will support the recovery of United's financial performance. However, COVID-19 outbreaks that lead to a return of higher travel barriers could hinder United's recovery. Other risks include inflationary pressures, including a rise in oil prices and labor costs. United has so far avoided the staffing shortages that have led to large scale flight cancellations by certain peers because it did not furlough flight staff. The SGL-1 reflects the company's very good liquidity. The company had over $19 billion of cash and short-term investments as of September 30, 2021. Moody's projects cash to remain above $12 billion through 2023 while the company funds almost $6 billion of contractual debt repayments and over $12 billion of capital expenditures across 2022 and 2023. The ratings of the EETCs reflect Moody's estimates of the respective loan-to-values of each tranche and the importance of the aircraft collateral to the company's operations. The Baa3 senior secured rating of MPH considers the importance of the Mileage Plus co-brand program to United's franchise, operations and cash flows. Charge card volume and cash flows held up relatively well during the pandemic and their strength will continue, providing comfortable debt service cushion. The Baa3 rating is one notch above the rating assigned to the company's other senior secured obligations, reflecting Moody's view of a lower probability of default given the importance of the program's cash flows and the transaction's structure. The loyalty program financing utilizes bankruptcy remote, special purpose Cayman Island issuers, license and sub-licenses of the program's intellectual property and payment guarantees from United and Parent. Moody's believes that United would quickly affirm the transaction's sub-license of intellectual property should it file for a reorganization under Chapter 11 of the US Bankruptcy Code, in order to maintain timely access to the program's cash flows. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Moody's believes that credit metrics will not substantially improve over the next two years. For example, if Moody's expects debt-to-EBITDA and funds from operations plus interest-to-interest to remain above 4.5x and below 4.0x, respectively, by the end of 2023, ratings could be downgraded. Liquidity -- cash plus revolver availability -- that is sustained below $10 billion could also pressure the ratings. There will be no upwards ratings pressure until after passenger demand, including for business and international long-haul travel, returns to pre-coronavirus levels. Key credit metrics will also need to strengthen, indicated by EBITDA margins above 18%, debt-to-EBITDA of below 3.5x and funds from operations plus interest-to-interest in excess of 6x. Any combination of future changes in the underlying credit quality or ratings of United, Moody's opinion of the importance of particular aircraft to United's network, or in Moody's estimates of aircraft market values which will affect estimates of loan-to-value, can result in changes to EETC ratings. The principal methodology used in rating United Airlines Holdings, Inc. and Mileage Plus Holdings, LLC was Passenger Airlines published in August 2021. United Airlines Holdings, Inc. (NASDAQ: UAL) is the holding company for United Airlines, Inc. United Airlines, Inc. and United Express operated an average of 5,000 flights a day to 362 airports across five continents prior to the coronavirus. Revenue was $43.2 billion in 2019 and $15.3 billion in 2020. The company reported $16.4 billion of revenue for the first nine months of 2021, up from $11.9 billion for the same period in 2020. VALLEY HOSPICE: Gets OK to Hire Thomas G. Luikens as Legal Counsel ------------------------------------------------------------------ Valley Hospice of Arizona Inc. received approval from the U.S. Bankruptcy Court for the District of Arizona to hire Thomas G. Luikens, P.C. to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) giving the Debtor legal advice with respect to its powers and duties in the continued operation of its business and management of estate property; (b) taking necessary action to protect estate property against adverse actions by creditors; (c) preparing legal papers; (d) prosecuting or defending adversary proceedings, which may be filed in the bankruptcy court; and (e) performing all other necessary legal services for the Debtor. The Debtor will pay the firm's attorney, Thomas Luikens, Esq., an hourly fee of $390 and lesser rates for associate attorneys and paralegal staff. Mr. Luikens will also be reimbursed for out-of-pocket expenses incurred. In court papers, Mr. Luikens disclosed that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Thomas G. Luikens, Esq. Thomas G. Luikens, P.C. 2700 N. Third Street, Suite 2005 Phoenix, AZ 85004-4602 Tel: (602) 277-4849 Email: thomas.luikens@azbar.org About Valley Hospice of Arizona Valley Hospice of Arizona Inc., a provider of esteemed hospice care services in Mesa, Ariz., filed its voluntary petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 21-08392) on Nov. 12, 2021, listing as much as $10 million in both assets and liabilities. Christine Muturi Lewis, president and owner, signed the petition. Thomas G. Luikens, Esq., at Thomas G. Luikens, P.C. represents the Debtor as legal counsel. VENTURE GLOBAL: Moody's Rates New $750MM Sr. Secured Notes 'Ba3' ---------------------------------------------------------------- Moody's Investors Service has assigned a Ba3 to Venture Global Calcasieu Pass, LLC's (Calcasieu Pass) planned $750 million senior secured note offering. The rating outlook is positive. The net proceeds from the note offering will be used to prepay outstanding borrowings and reduce commitments by a similar amount under Calcasieu Pass' approximately $3.35 billion senior secured term loan due August 2026. Availability under the senior secured term loan combined with proceeds from an aggregate $2.5 billion note offering completed in July 2021 and approximately $1.8 billion of equity are being used to fund construction of Calcasieu Pass, which is a liquified natural gas (LNG) export facility in Cameron Parish, Louisiana. The nameplate capacity of the export facility is 10 million metric tonnes per annum (MTPA). Calcasieu Pass is indirectly owned by privately-owned Venture Global LNG, Inc. RATINGS RATIONALE Calcasieu Pass' Ba3 rating considers the fixed capacity type payments under 20-year, take-or-pay Sale and Purchase Agreements (SPA) with six separate creditworthy customers on a free on board basis. These fixed payments provide significant and predictable future cash flows upon full commercial operation and compare favorably to anticipated annual operating and financing costs. The weighted average rating of such foundation SPA customers is Baa1 and the contracted volumes under 20-year contracts represent 85% of Calcasieu Pass' nameplate capacity. In aggregate, the fixed fee portion to be paid by these customers is in excess of $850 million annually, and these SPAs provide a mechanism to pass through the commodity risk associated with purchasing natural gas for liquefaction. Calcasieu Pass has also recently contracted 1 MTPA of the remaining nameplate capacity under a three year, take-or-pay SPA, which provides additional supportive revenue. Assuming full operations within management's base parameters relating to cost and timeline and management's ability to operate the natural gas procurement risk associated with a 10 MTPA liquefied natural gas (LNG) export facility, Calcasieu Pass demonstrates investment grade characteristics. The rating, however, is currently constrained by a combination of remaining construction risk and uncertainty around the issuer's ability to successfully maintain and operate the facility, including gas procurement responsibilities. While the earliest effective date of the SPA's is January 2023, the construction schedule was formulated to allow Calcasieu Pass the opportunity to earn pre-commercial revenue through commissioning and operation at various capacity levels prior to full commercial operations. The project's first LNG production is currently anticipated to occur as early as late 2021. Calcasieu Pass' remaining capital spending requirement is estimated at approximately $1.0 billion including interest during construction. Funding sources include remaining availability under the senior secured term loan facility and cash flow earned from the sale of pre-commercial cargoes. Substantial Completion of the facility is currently expected to occur in the second half of 2022. RATING OUTLOOK The positive outlook considers construction progress made to date and an expectation that the first LNG production will be achieved as early as late 2021. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING Successful achievement of first LNG production, combined with a demonstrated ability to successfully operate the first 4 MTPA of capacity, procure natural gas feedstock, and increase the project's available cash with pre-commercial cash flow would be positive considerations that support a more favorable view of Calcasieu Pass' credit profile. Material cost overruns that reduce Calcasieu Pass' available contingency or delays in completion schedule, especially as it relates to meeting the Date Certain COD requirement under the Credit Agreement, would likely trigger rating pressure. The principal methodology used in this rating was Generic Project Finance Methodology published in June 2021. VENTURE GLOBAL: S&P Assigns 'BB' Rating on New 12-Year Sr. Notes ---------------------------------------------------------------- S&P Global Ratings assigned a 'BB' issue-level rating to Venture Global Calcasieu Pass LLC's (VGCP) proposed senior notes with a '2' recovery rating. At the same time, S&P assigned a final 'BB' issue-level rating from preliminary to VGCP's existing $2.5 billion notes. The '2' recovery rating indicates S&P's expectation for substantial (70%-90%; rounded estimate: 80%) recovery for noteholders in the event of a payment default. VGCP is issuing $750 million of 12-year notes, maturing in 2033, to refinance a portion of the outstanding borrowings under its construction loan. S&P said, "Construction on the project is advanced, 91% complete, and on track to deliver within its stated goals. We expect completion to be materially within budget and on schedule for COD in early 2023. We expect the first liquefied natural gas (LNG) in December 2021, just 28 months after construction began. Our rating on the senior secured notes reflects our view of the advanced state of construction under highly experienced contractors and sufficient liquidity to cover construction costs and reasonable delays. This is demonstrated by the de minimis delays and costs resulting from hurricanes and the COVID-19 pandemic. We currently anticipate there will be contingency remaining upon achieving COD in early 2023. Event risk remains due to proximity to the U.S. Gulf Coast; however, management has successfully navigated the impacts of the COVID-19 pandemic and extreme weather events to date, which resulted in minimal disruptions to the project. Completion of the storm surge wall was fundamental to the facility's ability to withstand category 4 Hurricane Laura, which passed directly over the site in 2020. "Our view reflects the use of proven technology and design that will meet contract requirements under normal operating conditions, a highly experienced construction contractor working under fixed and partially reimbursable pricing (fixed price for all subcontractors except a portion of the contract with Kiewit), strong incentive provisions, satisfactory project management, and funding sufficient to cover downside stress. The construction phase analysis is further supported by the significant buffer between the scheduled COD and sunset date under the SPAs. "Final documents are in line with expectations, and we view the special purpose entity (SPE) as separate from its sponsor.We reviewed executed documentation for the $2.5 billion notes issued in August 2021. As a result, we assess the project to be delinked from sponsors and have all customary separateness provisions, covenants, and a cash flow waterfall typical of bankruptcy remote entities evaluated under our project finance methodology. "A strong contractual profile backs cash flow stability. Our view of the project's credit quality primarily reflects its 20-year long-term, take-or-pay liquefaction contracts with highly rated off-takers. VGCP has 8.5 million metric tons per year (MTPA) contracted with Shell, BP, Repsol, PGNIG, Edison, and Galp. Additionally, the project recently signed an intermediate-term three-year, take-or-pay SPA with Unipec for an additional 1 MTPA. As we deem the revenue counterparties replaceable, we took a weighted-average of the counterparty issuer credit ratings or credit estimates based on the proportion of revenue to determine the counterparty dependency assessment of 'bbb+'. During operations, we expect high utilization rate DSCRs that exceed 1.4x in all years based on contracted cash flow. "We expect VGCP to fully deleverage over its 20-year contract tenor with an average DSCR of 1.64x. Construction of the liquefaction facility and pipeline, estimated to cost $7.3 billion, will be funded with proceeds from the $750 million proposed issuance that partly refinances the $3.35 billion construction loan and $555 million revolver which was previously refinanced by VGCP's $2.5 billion notes issued in August 2021. The remaining $1.8 billion of funding needs is covered by equity investments and fully funded at final investment decision (FID). "Our analysis conservatively assumes the remaining 0.5 MTPA of capacity will be contracted in line with existing rates, though we expect VGCP would be able to contract at higher prices in current market conditions. We expect the project to have about $5 billion of adjusted debt on its balance sheet at year-end 2021. Given that VGCP's projected cash flow available for debt service remains largely fixed due to its long-term SPAs, we expect the project to pay down debt through scheduled amortization and maintain strong DSCRs greater than 1.5x throughout the life of the project. "We assign a negative one-notch comparable analysis adjustment to the senior secured notes.VGCP is trying a relatively untested model in the LNG space (individual owner-led procurement and construction contracts as opposed to the typical EPC wrap). It has not yet established a sustained track record of operational performance. Compared to similar, single-site liquefaction facilities--such as Cheniere Corpus Christi Holdings LLC (BBB-/Stable), FLNG Liquefaction 3 LLC (BBB/Stable), FLNG Liquefaction 2 LLC (BBB/Stable), and Sabine Pass Liquefaction LLC (BBB-/Stable)--this project has similarly strong contracts, both in tenor and the fixed nature of revenues. However, VGCP has yet to commence operations and lacks a record of sustained operational success, which compares less favorably to its established peers. VGCP is, however, favorably located on the Gulf Coast to procure gas and sell cargoes. "The stable outlook reflects our view that construction will progress as planned without material delays or cost overruns. We expect construction counterparties to coordinate effectively and Kiewit to manage construction and deliver a complete plant as required under the EPC agreement. We expect substantial completion in the second half of 2022 and a minimum DSCR during operations of 1.51x." Factors that could lead to a downgrade would be a material increase in construction costs, insolvency of a construction counterparty and failure to replace it, or unforeseen delays not reimbursable through liquidated damages. S&P considers these remote possibilities. S&P said, "During the next 6-9 months of construction, an upgrade would require an improvement in our view of construction risk, which is unlikely prior to completion of the project given the nature of the construction management EPC, degrees of risk transfer, static nature of other construction components, and our expectations. A positive rating action as the company enters operations would require a demonstration that the project is past teething or mechanical issues and can operate according to expected technical specifications. We would also expect DSCRs to exceed 1.4x in all years based on contracted cash flow." VESTA ENERGY: S&P Upgrades ICR to 'CCC+', Off Watch Positive ------------------------------------------------------------ S&P Global Ratings raised its long-term issuer credit rating on Vesta Energy Corp. to 'CCC+' from 'CCC' and raised its issue-level rating on the company's senior unsecured notes to 'B-' from 'CCC+'. S&P removed all ratings from CreditWatch, where they had been placed with positive implications on Oct. 14, 2021. At the same time, S&P assigned final issue-level and recovery ratings of 'B' and '1', respectively, to the company's new second-lien senior secured notes due 2026. The stable outlook reflects S&P Global Ratings' expectation that Vesta will generate sufficient internal cash flow to fund its operations over the next 12 months. The successful completion of the exchange offer alleviates near-term refinancing risk. Vesta has announced completion of its exchange offer and indicated that approximately 98.8% of the principal amount of the existing notes (C$200 million, 8.125% notes due July 2023) had been tendered. In S&P's view, the transaction has effectively extended the maturity for its notes outstanding to October 2026, with the modest remaining balance (about C$2.5 million) expected to be repaid in July 2022, when the notes are callable at par. The extension of the credit facility maturity was also contingent on successful completion of the transaction and is now due May 2023. S&P said, "We had viewed this exchange offer as distressed because we believed that Vesta would be unlikely to honor its 2023 debt maturity without a refinancing. That said, we did not consider the exchange as tantamount to default as we believed noteholders were being adequately compensated for the extension in maturity with a higher coupon and enhanced security package. The new second-lien notes have a coupon of 10% through October 2023, stepping up to 11% until October 2024 and 12% thereafter. In addition, the new second-lien secured notes have collateral similar to the credit facility and have priority in the capital structure, ranking above the small amount of remaining unsecured notes. "We project Vesta will generate meaningfully improved cash flows in 2022, which also underpins the upgrade. Commodity prices have rallied this year, with oil prices trading at seven-year highs. Based on our revised pricing assumption of West Texas Intermediate (WTI) at US$60 per barrel for 2022, we project Vesta will generate materially improved cash flows in 2022, with adjusted funds from operations (FFO) of about C$180 million. We assume management will limit capital spending within cash flow generation and estimate free cash flows of C$60 million, which we believe will be used to pay down the credit facility. "Our estimates also incorporate potential for volatility in commodity prices. Given the company's small production base, modest changes in commodity prices and light oil differentials could have a meaningful impact on cash flows and credit measures. For instance, all else equal, if WTI prices averaged US$50 per barrel in 2022, FFO could decline by 20%-25%. That said, the company has hedged about 48% of its oil production in 2022 at US$67.40 and we expect it will continue to layer in additional hedges, limiting downside risk. "The 'CCC+' rating reflects the company's limited scale and reliance on the credit facility to bridge operating shortfalls. We believe Vesta's relatively small production base (about 12,000 barrels of oil equivalent [boe] per day) compromises the company's long-term viability, necessitating continued drilling to sustain and increase production levels. Our ratings also incorporate continued reliance on the credit facility. The company's borrowing base was recently lowered to C$194.2 million from C$225 million and considering about C$150 million is drawn on it, we believe Vesta has limited financial flexibility, relying on external sources and favorable industry conditions to bridge funding gaps. "The stable outlook reflects our expectation that Vesta will continue to benefit from the recent strengthening of hydrocarbon prices, and limit spending within cash flow generation. "We could lower our rating on Vesta if the company generates material negative free cash flows, which in our view would compromise its liquidity position. This would most likely occur if there is a meaningful drop in commodity prices and the company fails to correspondingly reduce capital spending. "We could raise the rating if Vesta is able to meaningfully improve its scale in line with that of higher-rated peers. In this case, we would also expect Vesta to reduce borrowings under its credit facility, thereby bolstering its liquidity position and reducing its reliance on external sources to fund operating shortfalls." VPR BRANDS: Incurs $48,414 Net Loss in Third Quarter ---------------------------------------------------- VPR Brands, LP filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q disclosing a net loss of $48,414 on $1.65 million of revenues for the three months ended Sept. 30, 2021, compared to a net loss of $102,652 on $993,509 of revenues for the three months ended Sept. 30, 2020. For the nine months ended Sept. 30, 2021, the Company reported net income of $114,721 on $4.61 million of revenues compared to a net loss of $574,596 on $2.80 million of revenues for the same period during the prior year. As of Sept. 30, 2021, the Company had $1.23 million in total assets, $3.36 million in total liabilities, and a total partners' deficit of $2.13 million. The Company used cash in operating activities of $238,952 for nine months ended Sept. 30, 2021 as compared to $87,781 of cash used in nine months ended Sept. 30, 2020. Cash used in operations in 2021 resulted from the Company's net income of approximately $114,000, reduced by increases in accounts receivable and vendor deposits, offset by a decrease in inventory and increase in accounts payable. Cash used in operations in 2020 related to the Company's net loss of approximately $575,000, offset by decreases in inventory and accounts receivable levels as well as increase in accounts payable. During the nine months ended Sept. 30, 2021, the Company received $475,004 from the issuance of notes payable to related parties, repaid $534,689 of principal on notes payable to related parties, received $250,000 from the sale of future receivable, repaid $133,562 of principal on notes payable, and received $190,057 of notes payable proceeds under the Paycheck Protection Program and Economic Injury Disaster Loan program. Both the PPP and EIDL are financial programs under the Coronavirus Aid, Relief and Economic Security Act signed into law by the U.S. President on March 27, 2020 to provide economic relief to small businesses adversely impacted by COVID-19. During the nine months ended Sept. 30, 2020, the Company received $655,002 of proceeds from the issuance of notes payable to related parties, received $363,562 of proceeds from notes payable, repaid $661,924 of principal on notes payable to related parties, and repaid $280,055 of principal on notes payable. A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1376231/000089109221007364/vprb10q0921.htm About VPR Brands Headquartered in Ft. Lauderdale, FL, VPR Brands -- http://www.VPRBrands.com-- is company engaged in the electronic cigarette and personal vaporizer business. As of June 30, 2021, the Company had $1.11 million in total assets, $3.19 million in total liabilities, and a total partners' deficit of $2.08 million. Hackensack, New Jersey-based Prager Metis CPA's LLC, the Company's auditor since 2018, issued a "going concern" qualification in its report dated April 15, 2021, citing that the Company incurred a net loss of $563,779 for the year ended Dec. 31, 2020, has an accumulated deficit of $10,342,173 and a working capital deficit of $1,892,210 at Dec. 31, 2020. These factors, among others, raise substantial doubt regarding the Company's ability to continue as a going concern. WALDEMAR LLC: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Waldemar, LLC 5510 Sherwood Road Little Rock, AR 72207 Chapter 11 Petition Date: November 17, 2021 Court: United States Bankruptcy Court Eastern District of Arkansas Case No.: 21-13089 Judge: Hon. Bianca M. Rucker Debtor's Counsel: Reba M. Wingfield, Esq. WINGFIELD & CORRY, P.A. 920 West 2nd Street Suite 101 Little Rock, AR 72201-2125 Tel: (501) 372-5990 E-mail: rmw@wcfirm.net Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Lanette Davis Beard as sole member. The Debtor stated it has no creditors holding unsecured creditors. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/AUPPD3Y/Waldemar_LLC__arebke-21-13089__0001.0.pdf?mcid=tGE4TAMA WATTSTOCK LLC: May Continue Business or Liquidate in 2-Option Plan ------------------------------------------------------------------ WattStock, LLC, filed with the U.S. Bankruptcy Court for the Northern District of Texas a Chapter 11 Subchapter V Plan dated November 15, 2021. WattStock, LLC was organized in 2013 for the purpose of developing an electric transformer leasing business, which has not yet succeeded. In 2018, a new opportunity arose, and WattStock developed a second business line refurbishing used General Electric ("GE") aero-derivative gas turbine power plants. During the Bankruptcy Case, the Debtor has continued to operate its business, including wrapping up pre-Petition projects and sourcing and starting to work on additional new projects. In addition to operations, the Debtor has worked with various creditors and interested parties to ensure successful reorganization and post-emergence operations, as well as initiating discussions regarding a disposition of its assets. The Plan provides 2 alternative paths to confirmation and a successful exit from Chapter 11 for the Debtor: (a) the reorganization of the Debtor leading to a post-confirmation continuation of the business (the "Restructuring Alternative"); or (b) a controlled liquidation of assets via the liquidation alternative (the "Liquidation Alternative"). The Debtor believes that the Restructuring Alternative would yield the highest and best return for creditors and parties-in-interest. However, if the Debtor determines, at any time pre- or post-Confirmation, that despite their best efforts the reorganization will not result in the successful completion of a restructuring, the Liquidation Alternative shall take effect. Under the Restructuring Alternative, pursuant to 11 U.S.C. § 1191, the Debtor shall apply all of the disposable income of the Debtor for a period of 3 years to make payments under the Plan. Pursuant to § 1191(c)(3), the Debtor will be able to make all payments under the Plan or there is a reasonable likelihood that the Debtor will be able to make all payments under the Plan. Under the Liquidation Alternative, the Plan will effectuate an orderly wind-down of the Debtor's business operations, including the conducting of a going-concern or asset sale/controlled liquidation of all assets of the Debtor through the Liquidating Trust; further, all Causes of Action and Avoidance Actions shall transfer to the Liquidating Trust for the benefit of creditors. Class 4 consists of any Secured Claim that is not the SBA Secured Claim and is not a Secured Tax Claim. Each Creditor in Class 4 shall be deemed to be a separate Class under this Plan, but only with respect to any collateral and any Secured Claim. Any deficiency Claim shall otherwise be bifurcated into a Class 5 Claim. No later than 30 days after the Effective Date under the Restructuring Alternative, and no later than 90 days after the Effective Date under the Liquidating Alternative, the Reorganized Debtor or the Liquidating Trust, respectively, shall elect one of the following treatments with respect to each Secured Claim: (i) surrender the underlying collateral to the Creditor and use its reasonable, good faith efforts to do so, in full and final satisfaction of the Secured Claim, but subject to any deficiency Class 5 Unsecured Claim as is otherwise appropriate; or (ii) retain the collateral and cure and reinstate the underlying debt and obligation, thereafter paying the Allowed Secured Claim according to such terms. If no option is elected, but provided that the Secured Claim is scheduled on the Schedules, option (ii) shall be the default on the 31st day after the Effective Date under the Restructuring Alternative, and option (i) shall be the default on the 91st day after the Effective Date under the Liquidation Alternative. Class 5 consists of Unsecured Claims: * Reorganization Alternative: Each Holder of an Allowed Unsecured Claim shall receive, in full and complete satisfaction, settlement, discharge, and release of, and in exchange for, its Allowed Unsecured Claim, its Pro Rata share of the Reorganized Debtor's projected Disposable Income for a period of 3 years. In accordance therewith, the Debtor projects Distributions on account of Allowed Unsecured Claims to be paid on the anniversary of the Effective Date of the Plan for the calendar year then-ended, with the first such payment estimated to take place in January 2023, the second such payment to take place in January 2024, and the third and final such payment to take place in January 2025. * Liquidation Alternative: In full and final satisfaction, settlement, and release of each Unsecured Claim against the Debtor, each Holder of a Class 5 Claim shall be satisfied by a Pro Rata Share of distributions from the Liquidating Trust Assets. Class 5 is impaired under the Plan. Class 6 consists of Equity Interests. Pursuant to § 1191 of the Bankruptcy Code, equity shall be unaffected by the Plan. Means for Plan Implementation Reorganization Alternative: The Reorganized Debtor will continue to operate with the primary purpose of conducting its business. Plan Funding. The Debtor anticipates that all distributions made under the Plan will be funded from future earnings, which will not be less than 100% of the Debtor's Disposable Income for the 3 years following Confirmation. Liquidation Alternative: The Liquidating Trust shall be created upon the election of the Debtor or the Reorganized Debtor to proceed with the Liquidation Alternative; provided, however, that such election may not be made after the first anniversary of the Effective Date of the Plan. A full-text copy of the Subchapter V Plan dated Nov. 15, 2021, is available at https://bit.ly/3cnowH6 from PacerMonitor.com at no charge. Attorneys for the Debtor: MUNSCH HARDT KOPF & HARR, P.C. Davor Rukavina, Esq. Thomas D. Berghman, Esq. 500 N. Akard St., Ste. 3800 Dallas, Texas 75214 E-mail: drukavina@munsch.com tberghman@munsch.com About WattStock LLC Dallas, Texas-based WattStock, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 21 31488) on Aug. 17, 2021, listing as much as $10 million in both assets and liabilities. Patrick Jenevein, manager of WattStock, signed the petition. Judge Stacey G. Jernigan oversees the case. Davor Rukavina, Esq., at Munsch Hardt Kopf and Harr, PC is the Debtor's legal counsel. WATTSTOCK LLC: Seeks to Tap Meadows Collier as Special Tax Counsel ------------------------------------------------------------------ WattStock, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ the law firm of Meadows, Collier, Reed, Cousins, Crouch & Ungerman, LLP as its special tax counsel. The Debtor needs the assistance of a special tax counsel to provide advice regarding alternatives to correct its 2020 tax filings. The hourly rates of Meadows Collier's professionals range from $415 to $950. In addition, the firm will seek reimbursement for expenses incurred. Josh Ungerman, Esq., an attorney at Meadows, Collier, Reed, Cousins, Crouch & Ungerman, disclosed in a court filing that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Josh O. Ungerman, Esq. Meadows, Collier, Reed, Cousins, Crouch & Ungerman, LLP 901 Main Street, Suite 3700 Dallas, TX 75202 Telephone: (214) 744-3700 Facsimile: (214) 747-3732 Email: jungerman@meadowscollier.com About WattStock LLC Dallas, Texas-based WattStock, LLC filed a petition for Chapter 11 protection (Bankr. N.D. Texas Case No. 21-31488) on Aug. 17, 2021, listing as much as $10 million in both assets and liabilities. Patrick Jenevein, manager, signed the petition. Judge Stacey G. Jernigan oversees the case. The Debtor tapped Davor Rukavina, Esq., at Munsch Hardt Kopf and Harr, PC as legal counsel and Meadows, Collier, Reed, Cousins, Crouch & Ungerman, LLP as special tax counsel. WILLIAM THOMAS JR: TDOT Bid to Dissolve Injunction OK'd ------------------------------------------------------- The United States District Court for the Western District of Tennessee, Western Division, issued an Order adopting the report and recommendation filed by U.S. Magistrate Judge Charmiane G. Claxton in the case captioned MICHAEL COLLINS, Chapter 11 Trustee, Plaintiff, v. CLAY BRIGHT, Commissioner of the Tennessee Department of Transportation in his official capacity, Defendant, Case No. 2:13-cv-02987-JPM-cgc (W.D. Tenn.), with respect to the Defendant's Motion to Dissolve the Permanent Injunction on the Crossroads Ford Sign, or, in the Alternative, for Clarification as to the Scope and Extent of the Permanent Injunction in the Event of a Sale of the Crossroads Ford Sign. The Magistrate Judge submits that Defendant's Motion should be granted. On October 6, 2017, the Court issued a Judgment enjoining "the State of Tennessee and its agents . . . from removing or seeking removal of Plaintiff William H. Thomas, Jr.'s Crossroads Ford sign pursuant to the Billboard Regulation and Control Act of 1972, Tennessee Code Annotated Sections 54-21-101, et seq." This Judgment came after the Court's Order Finding Billboard Act an Unconstitutional, Content-Based Regulation of Speech, filed on March 31, 2017, and the Court's Order Denying Motion for Reconsideration and Order Concerning Remedies, filed on September 20, 2017. This Court's constitutionality ruling was then upheld by the Sixth Circuit, in Thomas v. Bright, 937 F.3d 721 (2019), cert. denied, 141 S.Ct. 194 (2020). William H. Thomas, Jr., was the original plaintiff in this action. Mr. Thomas later filed for bankruptcy, and the Court granted a motion to substitute Michael E. Collins, the Chapter 11 Trustee of Mr. Thomas as the plaintiff. Mr. Thomas passed away on February 7, 2021. The Plaintiff contends that "[t]he enactment of the Outdoor Advertising and [sic] Control Act does not moot or establish a basis for the dissolution of the permanent injunction." In Defendant's initial Motion to Dissolve, he states, "The permanent injunction specifically enjoins [the Tennessee Department of Transportation, ("TDOT")] '. . . from removing or seeking removal of Plaintiff Willliam H. Thomas, Jr.'s sign pursuant to the Billboard Regulation and Control Act of 1972 . . .'" The Defendant contends that "the provisions for content-based regulation of speech in the Billboard Act that this court found unconstitutional as applied to non-commercial speech . . . have been amended and replaced by content-neutral provisions in the Outdoor Advertising Control Act of 2020." As a result, Defendant contends that the issues in this case are now moot, and the permanent injunction should be dissolved. In response, the Plaintiff contends that the Outdoor Advertising Control Act does not moot the permanent injunction because "[b]ut for the 1972 Billboard Act, the Crossroads Ford Sign could exist, that is the raison d'etre for the permanent injunction." As a result, the Plaintiff contends that "if TDOT seeks to remove the Crossroads Ford sign as non-conforming under the 2020 Billboard Act, it must provide just compensation to the Bankruptcy Estate under the takings clause of the Constitution." In support of his argument that the change in law fails to moot the injunction, Plaintiff asserts that one of the exceptions to a repeal of a law mooting an injunction "is when a party has a vested right established by the unconstitutionality of the statute." In the Sixth Circuit, permanent injunctions should be dissolved when: [T]hey no longer meet the requirements of equity. The law changes and clarifies itself over time. Neither the doctrine of res judicata or waiver nor a proper respect for previously entered judgments requires that old injunctions remain in effect when the old law on which they were based has changed. Additionally, because there is no controlling Sixth Circuit authority that recognizes the Plaintiff's asserted exception to dissolving an injunction when the law on which it was based has changed, the District Court said it will not create such an exception here. The permanent injunction enjoined removal of the "Crossroads Ford sign pursuant to the Billboard Regulation and Control Act of 1972," and it is undisputed that the portions of that law the Court found unconstitutional are no longer in effect pursuant to the Outdoor Advertising Control Act of 2020. As a result, the permanent injunction, which enjoins TDOT from removing the sign pursuant to a law that has since been replaced, is dissolved as moot. A full-text copy of the Order dated November 9, 2021, is available at https://tinyurl.com/8h7eam5u from Leagle.com. About William H. Thomas, Jr. William H. Thomas, Jr. is a resident of Perdido Key, Florida. He is an attorney licensed to practice in the State of Tennessee and owns various real estate and business interests, including the ownership and operation of various advertising billboards and raw land. William H. Thomas, Jr. sought Chapter 11 protection (Bankr. D. Tenn. Case No. 16-27850) on June 2, 2016. On Jan. 24, 2019, the Court appointed Michael Collins as the Chapter 11 Trustee. WMG ACQUISITION: Moody's Affirms Ba3 CFR & Rates $535MM Notes Ba3 ----------------------------------------------------------------- Moody's Investors Service has affirmed WMG Acquisition Corp.'s ("Acquisition Corp.") Ba3 Corporate Family Rating, Ba3-PD Probability of Default Rating and Ba3 ratings on the existing senior secured term loan facility and senior secured notes. Concurrently, Moody's assigned a Ba3 rating to Acquisition Corp.'s proposed $535 million senior secured 8-year notes and a SGL-1 Speculative Grade Liquidity ("SGL") rating. The rating outlook remains stable. Net proceeds from the new senior secured notes plus cash will be used to finance the aggregate purchase price for three music and music-related acquisitions and/or for general corporate purposes. Acquisition Corp. is an indirect wholly-owned subsidiary of Warner Music Group Corp. ("WMG" or the "company"), which is the ultimate parent and financial reporting entity that produces consolidating financial statements. The new senior secured notes will be pari passu with Acquisition Corp.'s existing senior secured (unrated) revolving credit facility (RCF), senior secured term loan (governed by a separate credit agreement than the RCF) and senior secured notes. The new notes will be guaranteed on a senior secured basis by Acquisition Corp.'s wholly-owned domestic restricted subsidiaries (same guarantors as the credit facilities) and secured by a first priority perfected lien on substantially all domestic property and assets of Acquisition Corp., WMG Holdings Corp. and each subsidiary guarantor. Following is a summary of the rating action: Affirmations: Issuer: WMG Acquisition Corp. Corporate Family Rating, Affirmed at Ba3 Probability of Default Rating, Affirmed at Ba3-PD $1,145 Million Outstanding Senior Secured Term Loan G due 2028, Affirmed at Ba3, Adjusted to (LGD4) from (LGD3) EUR325 Million (roughly $373.6 Million USD equivalent) 2.750% Senior Secured Notes due 2028, Affirmed at Ba3, Adjusted to (LGD4) from (LGD3) $535 Million 3.875% Senior Secured Notes due 2030, Affirmed at Ba3, Adjusted to (LGD4) from (LGD3) $800 Million 3.000% Senior Secured Notes due 2031, Affirmed at Ba3, Adjusted to (LGD4) from (LGD3) EUR445 Million (roughly $511.5 Million USD equivalent) 2.250% Senior Secured Notes due 2031, Affirmed at Ba3, Adjusted to (LGD4) from (LGD3) Assignment: Issuer: WMG Acquisition Corp. $535 Million Senior Secured Notes due 2029, Assigned Ba3 (LGD4) Speculative Grade Liquidity Actions: Issuer: WMG Acquisition Corp. Speculative Grade Liquidity, Assigned SGL-1 Outlook Actions: Issuer: WMG Acquisition Corp. Outlook, Remains Stable The assigned rating is subject to review of final documentation and no material change in the size, terms and conditions of the transaction as advised to Moody's. RATINGS RATIONALE Though WMG's gross debt will increase by $535 million, there is no change to the credit profile due to sufficient financial flexibility and the capacity to absorb additional debt at the current Ba3 CFR. Moody's expects continued strong profit growth driven by robust digital streaming revenue growth, which remained resilient during the pandemic. Inclusive of the full twelve months EBITDA impact from the pending acquisitions that are expected to close shortly and the new convertible note, Moody's estimates pro forma financial leverage will rise to roughly 3.9x total debt to EBITDA compared to 3.5x at FYE September 30, 2021 (metrics are Moody's adjusted). On a total debt to GAAP EBITDA basis, which excludes the full twelve months EBITDA impact from pending acquisitions, Moody's estimates pro forma leverage at around 4x. Notwithstanding the company's solid operating performance, the incremental debt somewhat reduces WMG's financial flexibility until profit expansion and de-leveraging materialize. WMG Acquisition Corp.'s Ba3 CFR benefits from: (i) WMG's position as the world's third largest music company with steady market shares bolstered by its extensive recorded music and music publishing assets, which drive recurring revenue streams that remained fairly resilient during the COVID-19 pandemic; (ii) the global music industry's long-term secular growth fueled by resurgent demand to license WMG's music content, driven chiefly by strong consumer adoption of paid subscription streaming services, social media apps and emerging digital platforms that Moody's expect to continue, especially in overseas markets; (iii) WMG's business model in which only a small percentage of revenue depends on recording artists and songwriters without an established track record, while the bulk of revenue is generated by proven artists or its music library; (iv) investment in new artist and talent development to institutionalize a pipeline of recurring hit songs to help moderate recorded music volatility; (v) an attractive music library with good geographic diversity and monetization characteristics; and (vi) an improving financial leverage profile approaching the 3.5x area (as calculated and adjusted by Moody's). Factors that weigh on the rating include: (i) WMG's historically seasonal recorded music revenue (about 85% of total revenue), albeit increasingly less cyclical in large digital streaming markets, coupled with low visibility into results of upcoming release schedules; and (ii) softness in certain revenue streams affected by the pandemic (i.e., general licensing, performance and mechanical) offset by the recent rebound in artist services and expanded rights. Potential headwinds include the slow transition from physical to digital among a few large countries, secular declines in physical media and digital downloads, and the music industry's revenue challenges that prevent full maximization of content value from user-uploaded videos to WMG's songwriters and rights holders. Recent regulatory developments, however, are expected to help expand royalty payments to rights holders. There is also the potential for increasing competition from Universal Music Group N.V., which recently spun out of its former parent, Vivendi SA. The stable outlook reflects Moody's view that WMG's license revenue model, driven by digital revenue growth, and operating profitability will remain fairly resilient and generate positive free cash flow (FCF). The outlook considers Moody's expectation for continued improvement in recorded music industry fundamentals combined with WMG's position as the world's third largest music content provider. WMG will continue to benefit from global diversification, an enhanced recorded music repertoire, and well-established music publishing assets with long-tail annuity-like cash flows. The company's scale and market position combined with revenue diversification across songs, music genre and license type, will help to offset lingering pandemic-related softness in some revenue streams. Moody's expects that WMG will maintain very good liquidity supported by cash levels of at least $150 million (cash balances totaled $499 million at September 30, 2021), access to the unrated $300 million revolving credit facility maturing April 2025 (undrawn) and FCF generation (i.e., CFO less capex less dividends) in the range of roughly $300-$400 million, which excludes music publishing and catalogue asset purchases. A social impact that Moody's considers in WMG's rating is consumers' increasing shift to on-demand music streaming subscription services (access) from music purchases (ownership). Given that WMG owns the copyrights to highly desirable music content, the streaming providers and emerging digital platforms have no other choice but to license the company's content for their platforms to remain competitive and ensure listeners have access to their favorite songs. This will continue to benefit WMG and support solid revenue and EBITDA growth fundamentals over the next several years. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if WMG exhibits sustained revenue growth in the recorded music business, EBITDA margin expansion, continued decrease in earnings volatility and higher returns on investments. Upward pressure on ratings could also occur if Moody's expects total debt to EBITDA will be sustained below 3.5x (Moody's adjusted) with FCF to debt of at least 7.5% (as calculated and adjusted by Moody's). Ratings could be downgraded if competitive or pricing pressures lead to a decline in revenue or higher operating expenses (e.g., increased artist and repertoire (A&R) investments), EBITDA margin contraction or sizable debt-financed acquisitions increases debt to EBITDA to above 4.5x (Moody's adjusted) for an extended period of time. There would also be downward pressure on ratings if EBITDA or liquidity were to weaken resulting in FCF to debt sustained below 5% (as calculated and adjusted by Moody's). With headquarters in New York, NY, WMG Acquisition Corp. is an indirect wholly-owned subsidiary of Warner Music Group Corp., a publicly traded leading music content provider operating domestically and overseas in more than 70 countries. WMG has a library of over 1 million copyrights from more than 80,000 songwriters and composers across a diverse range of genres. Access Industries, Inc., a privately-held industrial group, acquired WMG for approximately $3.3 billion in July 2011. Revenue totaled $5.3 billion for the fiscal year ended September 30, 2021. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. WMG ACQUISITION: S&P Rates New $535MM Senior Secured Notes 'BB+' ---------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating and '3' recovery rating to WMG Acquisition Corp.'s proposed $535 million senior secured notes due 2029. S&P expects the company to use the net proceeds from these notes to fund three music and music-related acquisitions and for general corporate purposes. S&P's 'BB+' issuer credit rating on Warner Music Group Corp. reflects our view that it will continue to expand its revenue by the high-single digit percent area, in line with the trajectory of the overall music industry, and maintain S&P Global Ratings-adjusted leverage of between 3.0x and 3.5x over the next 12 months. ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- The senior secured debt is secured by a lien on substantially all of the company's assets, those of its guarantors, and a 65% stock pledge by its foreign subsidiaries. -- The entire capital structure is pari passu senior secured debt comprising a $300 million revolver due 2025 (not rated), a $1.145 billion term loan due 2028, EUR325 million notes due 2028, $535 million notes due 2029, $535 million notes due 2030, EUR445 million notes due 2031, and $800 million notes due 2031. Simulated default assumptions -- S&P's simulated default scenario contemplates a default occurring in 2026 due to a disruption in the streaming model related to pricing pressure after reaching full penetration, greater competition in signing new artists, a weak album-release schedule that further stresses WMG's cash flow, and a resurgence in piracy. -- The revolver is 85% drawn at default. -- S&P assumes Warner Music Group would reorganize given its diverse catalog of recorded music and copyrights to a large music library. Simplified waterfall -- EBITDA at emergence: $385 million -- EBITDA multiple: 7x -- Net enterprise value (after 5% administrative costs): $2.6 billion -- Estimated secured first-lien debt: $4.2 billion --Recovery expectations: 50%-70% (rounded estimate: 60%) Note: All debt amounts include six months of prepetition interest. WOODBRIDGE HOSPITALITY: Court Approves Disclosure Statement ----------------------------------------------------------- Judge Brenda K. Martin has entered an order approving the Disclosure Statement explaining the Plan of Reorganization of Woodbridge Hospitality, L.L.C. The hearing to consider the confirmation of the Plan will be held, telephonically, on December 16, 2021 at 10:30 a.m. The last day for filing with the Court and serving written objections to confirmation of the Plan is Monday, Dec. 13, 2021. The ballots accepting or rejecting the Plan must be received by the Debtor on or before 5:00 p.m. (Arizona time) on Monday, Dec. 13, 2021. About Woodbridge Hospitality Woodbridge Hospitality, LLC, owns the Suites on Scottsdale hotel located at 9880 North Scottsdale Road in Scottsdale, Arizona. Woodbridge Hospitality filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Ariz. Case No. 21-04096) on May 26, 2021, disclosing $10 million to $50 million in both assets and liabilities. Judge Paul Sala oversees the case. Sacks Tierney P.A. and R&A CPAs serve as the Debtor's legal counsel and accountant, respectively. Canyon Community Bank, as lender, is represented by Michael McGrath, Esq., at Mesch Clark Rothschild. XENIA HOTELS: S&P Alters Outlook to Stable, Affirms 'B-' ICR ------------------------------------------------------------ S&P Global Ratings revised its rating outlook to stable from negative, and affirmed all ratings on Xenia Hotels & Resorts Inc., including the 'B-' issuer credit rating. The stable outlook reflects S&P's expectation that demand for leisure travel will remain good and recovery in business transient and group bookings will continue in the first half of 2022. This will allow Xenia to continue reducing leverage from very high levels and generate sufficient cash flow to cover fixed charges. The outlook revision to stable reflects its view that Xenia's capital structure is probably sustainable based on its expectation that the company can reduce leverage in 2022 due to continued RevPAR and EBITDA rebound and generate sufficient cash flow to cover fixed charges. In the third quarter of 2021, Xenia met a key threshold for a stable outlook, by generating sufficient EBITDA to cover its fixed charges including interest expense and maintenance capital expenditures. Under S&P's revised base-case assumptions, it believes Xenia can continue to generate sufficient EBITDA to cover fixed charges and redevelopment capex, resulting in modest positive free cash flow in 2022. S&P said, "Our updated leverage forecast is about 10x in 2021 and in the 6.25x-7.5x range in 2022 assuming no acquisitions. Our forecast relies on the combination of reoccurring good demand for summer leisure travel similar to 2021 and sequential recovery in business transient and group bookings. Our updated forecast compares favorably with our previous forecast of 10x-15x in 2021 and 6.5x-8x in 2022. In 2022, we assume Xenia can improve RevPAR to 20%-25% below 2019 levels, and that S&P-adjusted EBITDA margin could recover to the low-20% area. Our assumptions depend on the delta variant subsiding and remote work arrangements providing flexibility for consumers to blend leisure travel with work. In addition, our assumptions rely on an increase in business travel in urban markets. We believe Xenia benefits from its relatively high exposure to the sunbelt region of the U.S. and non-gateway cities, which have outperformed gateway markets according to our analysis of second- and third-quarter 2021 STR Inc. occupancy and RevPAR data. Xenia's geographic exposure, which has experienced greater propensity for leisure and business travel, translated into a faster RevPAR recovery during the summer of 2021 and could continue to do so in the near term compared with most rated lodging REIT peers including Park, RLJ, Host, and Ryman. "If realized, our revised 2022 leverage forecast could result in rating upside, but near-term risk factors constrain the rating. Xenia's leverage recovery relies on the containment of COVID-19 variants and business transient and group demand, particularly among large corporate and group customers. Potential average daily rate competition could emerge if travel in the U.S. normalizes and shifts away from the sunbelt region over the coming quarters. In addition, potential acquisitions could increase leverage to the high end of our 2022 forecast." Xenia has adequate liquidity, which S&P views to be a meaningful risk mitigant. Total liquidity was about $1.04 billion as of Sept. 30, 2021, consisting of balance sheet cash and revolver availability. Xenia was EBITDA and free cash flow positive (at a maintenance level of capital spending) in the third quarter of 2021. S&P expects free cash flow to remain positive over the coming quarters even if Xenia ramps up capital spending because of RevPAR and margin growth. Near-term liquidity uses include hotel-level operating expenses, working capital needs, corporate-level overhead costs, interest expense and debt amortization, and capex. Xenia has amended its credit agreement so that a covenant waiver period extends through March 2022 and a covenant relief period with permitted variations is through June 2023, providing a period during which the company can gradually reduce leverage. In addition, Xenia's current maturity profile extends through 2024, which is manageable. A partly offsetting risk factor is Xenia's acquisitive appetite. Xenia has stated it intends to focus more on acquisitions over the medium term, after having been a net seller recently. Given Xenia's meaningful liquidity, the company's relatively low EBITDA in the near term, and the uncertain amount and timing of any potential acquisitions, acquisitions can have a meaningful impact on S&P's 2022 leverage forecast. The company's business strengths are also meaningful risk mitigants. Xenia has a high-quality, geographically diverse portfolio of hotels, notably in a number of sunbelt states. The company's focus on quality assets and its long-term management contracts with Marriott, Hyatt, and other well-known brands enable it to garner relatively high average daily rates. Offsetting considerations include Xenia's smaller scale compared with rated peers that are lodging REITs, as well as its modestly lower EBITDA margin. In our view, competitors Host, Park, and Ryman own some very large and hard-to-replicate assets in locations that are typically attractive to business and group travelers. While the recovery path for these hotels may be slower than for Xenia's portfolio over the next year or two, these qualities normally represent competitive advantages and barriers to entry for competitors in their respective markets, and may again in future years if business and group travel recovers sufficiently. Similar to other lodging REITs, the company has a mostly un-encumbered asset base that provides the flexibility to monetize individual hotels, even if the timing may be disadvantageous. S&P said, "Leverage could remain very high in 2022 even under our current base-case assumptions for RevPAR recovery, and Xenia may need to pursue solutions to reduce its debt burden over the long-term, including possible equity issuances or additional asset sales. To the extent Xenia uses the proceeds from asset sales to repay debt, we likely would view it as credit-positive as long as the company sells the assets for a higher multiple than its leverage." Xenia has already taken actions to opportunistically sell assets and reduce debt, including four hotel sales in the fourth quarter of 2020, which we view as credit positive. The breadth of Xenia's portfolio and its lower room count per property relative to its peers with larger properties could facilitate potential sales. Other business considerations include: -- The cyclical nature of the lodging industry and the high revenue and earnings volatility associated with hotel ownership. -- Xenia's concentration in luxury and upper upscale segments could lead to greater volatility in its EBITDA over the cycle than for hotel owners focused on the economy or midscale segments. This is because pricing tends to compress during an economic downturn, which has the greatest effect on the luxury segment and the least severe effect on the economy segment. As a result, Xenia is more exposed to EBITDA variability over the cycle than hotel owners in lower-price, select-service segments, and lodging managers and franchisers that do not have an owner's fixed cost burden. -- S&P assumes no additional asset sales in its base-case forecast, partly because the timing and transaction size of noncore asset sales are not easily quantifiable. -- S&P believes Xenia's track record suggests it will reduce its leverage over time. Xenia's measure leverage was in the 3.1x to 4.2x range over the past few years and was 4.1x as of year-end 2019. Based on the track record, it believes Xenia could reduce its leverage to historical levels over the next several years. S&P said, "The stable outlook reflects our expectation that demand for leisure travel will remain good and recovery in business transient and group bookings will continue in the first half of 2022. This will allow Xenia to continue reducing leverage from very high levels and generate sufficient cash flow to cover fixed charges. "If we believe RevPAR, EBITDA, cash flow, and credit measures cannot recover sufficiently, or that equity and hotel transaction markets may not be available for Xenia, we may view its capital structure as unsustainable over the long term and lower the rating as a result. "We could raise our ratings on the company if we believe it can sustain adjusted debt to EBITDA of less than 7.75x and EBITDA coverage of interest expense of more than 2x. Such a scenario would likely entail meaningful containment of COVID-19 infections and continued business and group travel recovery." Z REAL ESTATE: Seeks to Tap Richard Rodgers as Special Counsel -------------------------------------------------------------- Z Real Estate Holdings, LLC seeks approval from the U.S. Bankruptcy Court for the Central District of California to employ Richard Rodgers, Esq., a partner at Shane DiGiuseppe & Rodgers, LLP, as special counsel. The special counsel will represent the Debtor in an adversary proceeding for fraud, breach of fiduciary duty and conversion against brokers and lenders related to this Chapter 11 case. Mr. Rodgers will be compensated at his hourly rate at $400, plus reimbursement of expenses incurred. Mr. Rodgers disclosed in a court filing that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The attorney can be reached at: Richard Rodgers, Esq. Shane DiGiuseppe & Rodgers, LLP 3125 Old Conejo Road Thousand Oaks, CA 9320 Telephone: (805) 230-2525 Facsimile: (805) 230-2530 Email: rar@lawsdr.com About Z Real Estate Holdings Huntington, Calif.-based Z Real Estate Holdings, LLC filed its voluntary petition for Chapter 11 protection (Bankr. C.D. Calif. 21-12171) on March 9, 2021, listing as much as $10 million in both assets and liabilities. Judge Barry Russell oversees the case. Michael R. Totaro, Esq., at Totaro & Shanahan and Shane DiGiuseppe & Rodgers, LLP represent the Debtor as bankruptcy counsel and special counsel, respectively. ZAYAT STABLES: Trustee Says Ahmed's Brother Must Produce Info ------------------------------------------------------------- Daniel Gill of Bloomberg Law reports that a trustee overseeing the Chapter 7 case of Ahmed Zayat, the former owner of Triple Crown winner American Pharoah, urged the bankruptcy court to compel Zayat's brother to comply with subpoenas seeking information on their financial dealings. The trustee's discovery dispute involves allegations that Zayat's brother, Sherif El Zayat, received payments and a security interest in a property from Ahmed Zayat before his Chapter 7 filing. Those actions are improper preferential payments that Ahmed Zayat made right before his bankruptcy, the Chapter 7 trustee said in a court filing Tuesday, November 16, 2021. About Zayat Stables Headquartered in Hackensack, New Jersey, Zayat Stables owned 203 thoroughbred horses. The horses, which are collateral for the bank loan, are worth $37 million, according to an appraisal mentioned in a court paper. Ahmed Zayat said in a court filing that he personally invested $40 million in the business. The Company filed for Chapter 11 bankruptcy protection (Bankr. D.N.J. Case No. 10-13130) on Feb. 3, 2010. The Company estimated $10 million to $50 million in assets and the same range of liabilities as of the bankruptcy filing. The Debtor tapped Cole, Schotz, Meisel, Forman & Leonard, P.A., as bankruptcy counsel. Ahmed A. Zayat, the owner of the Triple Crown-winning horse American Pharoah, filed for personal bankruptcy protection (Bankr. D.N.J. 20-20387) on Sept. 8, 2020, seeking to discharge more than $19 million of debts. He disclosed $1.9 million in assets and $19.4 million in liabilities in the bankruptcy petition. Zayat's stables were listed as insolvent, according to a Bloomberg report. [^] BOOK REVIEW: Bankruptcy and Secured Lending in Cyberspace ------------------------------------------------------------- Author: Warren E. Agin Publisher: Bowne Publishing Co. List price: $225.00 Review by Gail Owens Hoelscher Red Hat Inc. finds itself with a high of 151 5/8 and low of 20 over the last 12 months! Microstrategy Inc. has roller-coasted from a high of 333 to a low of 7 over the same period! Just when the IPO boom is imploding and high-technology companies are running out of cash, Warren Agin comes out with a guide to the legal issues of the cyberage. The word "cyberspace" did not appear in the Merriam-Webster Dictionary until 1986, defined as "the on-line world of computer networks." The word "Internet" showed up that year as well, as "an electronic communications network that connects computer networks and organizational computer facilities around the world." Cyberspace has been leading a kaleidoscopic parade ever since, with the legal profession striding smartly in rhythm. There is no definition for the word "cyberassets" in the current Merriam-Webster. Fortunately, Bankruptcy and Secured Lending in Cyberspace tells us what cyberassets are and lays out in meticulous detail how to address them, not only for troubled technology companies, but for all companies with websites and domain names. Cyberassets are primarily websites and domain names, but also include technology contracts and licenses. There are four types of assets embodied in a website: content, hardware, the Internet connection, and software. The website's content is its fundamental asset and may include databases, text, pictures, and video and sound clips. The value of a website depends largely on the traffic it generates. A domain name provides the mechanism to reach the information provided by a company on its website, or find the products or services the company is selling over the Internet. Examples are Amazon.com, bankrupt.com, and "swiggartagin.com." Determining the value of a domain name is comparable to valuing trademark rights. Domain names can come at a high price! Compaq Computer Corp. paid Alta Vista Technology Inc. more than $3 million for "Altavista.com" when it developed its AltaVista search engine. The subject matter covered in this book falls into three groups: the Internet's effect on the practice of bankruptcy law; the ways substantive bankruptcy law handles the impact of cyberspace on basic concepts and procedures; and issues related to cyberassets as secured lending collateral. The book includes point-by-point treatment of the effect of cyberassets on venue and jurisdiction in bankruptcy proceedings; electronic filing and access to official records and pleadings in bankruptcy cases; using the Internet for communications and noticing in bankruptcy cases; administration of bankruptcy estates with cyberassets; selling bankruptcy estate assets over the Internet; trading in bankruptcy claims over the Internet; and technology contracts and licenses under the bankruptcy codes. The chapters on secured lending detail technology escrow agreements for cyberassets; obtaining and perfecting security interests for cyberassets; enforcing rights against collateral for cyberassets; and bankruptcy concerns for the secured lender with regard to cyberassets. The book concludes with chapters on Y2K and bankruptcy; revisions in the Uniform Commercial Code in the electronic age; and a compendium of bankruptcy and secured lending resources on the Internet. The appendix consists of a comprehensive set of forms for cyberspace-related bankruptcy issues and cyberasset lending transactions. The forms include bankruptcy orders authorizing a domain name sale; forms for electronic filing of documents; bankruptcy motions related to domain names; and security agreements for Web sites. Bankruptcy and Secured Lending in Cyberspace is a well-written, succinct, and comprehensive reference for lending against cyberassets and treating cyberassets in bankruptcy cases. ********* 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. 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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. 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