/raid1/www/Hosts/bankrupt/TCR_Public/220120.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, January 20, 2022, Vol. 26, No. 19
Headlines
1369 EAST FRONT: $155K Irvington Property Sale to 81 Cummings OK'd
1369 EAST FRONT: $195K Sale of Newark Property to 193 Seymor Okayed
1369 EAST FRONT: $235K Sale of Irvington Asset to 127 Delmar OK'd
ALPINE 4 HOLDINGS: To Hold Annual Meeting on March 25
AMERICAN EAGLE: Files Bond-Exchange Plan
ARAMID ENTERTAINMENT: District Court Denies Molner's Appeal
ASCENA RETAIL: Court Overturns Plan Over Liability Releases
ASSUREDPARTNERS INC: S&P Rates Incremental 1st-Lien Term Loan 'B'
ATHENAHEALTH GROUP: Fitch Assigns 'B' LongTerm IDR, Outlook Stable
ATHENAHEALTH GROUP: Moody's Assigns 'B3' CFR, Outlook Stable
ATHENAHEALTH GROUP: S&P Assigns 'B-' ICR on Acquisition by Bain
AUCTION.COM LLC: Moody's Affirms B3 CFR & Cuts 1st Lien Debt to B3
BAUSCH HEALTH: Fitch Assigns BB Rating on Secured Credit Facility
BAUSCH HEALTH: Moody's Rates New Secured Debt Facilities 'Ba3'
BAUSCH HEALTH: S&P Rates New Revolver and Sr. Sec. Term Loan 'BB'
BCPE NORTH 2: Moody's Affirms B3 CFR on Steven Robert Transaction
BCPE NORTH STAR: S&P Affirms 'B-' ICR on Steven Charles Deal
BIRMINGHAM-SOUTHERN COLLEGE: Moody's Cuts Tuition Bonds to Caa2
BOY SCOUTS: Falls Short of $2.7 Billion Abuse Settlement Vote Goal
BRAZOS ELECTRIC: Previews Securitization Plan Prior to ERCOT Trial
BROOKS BROTHERS: To Close Last Full-Line St. Louis Store
CAREVIEW COMMUNICATIONS: HealthCor, et al., Own 37.6% Equity Stake
CBL & ASSOCIATES: D'Iberville Promenade Suit Moved to Bankr. Court
CHANCE W. BRITT: $7.4K Sale of 1985 Chevrolet Silverado Approved
CLH INVESTMENT: Seeks to Hire Wiggam & Geer as Bankruptcy Counsel
CNX RESOURCES: Fitch Raises LT IDR to 'BB+', Outlook Stable
COMMUNITY HEALTH: Sees Q4 Net Operating Revenues of Up to $12.4B
CRESTWOOD HOSPITALITY: Unsecureds to Get Share of Net Revenue
CRYOMASS TECHNOLOGIES: Elects Simon Langelier as Director
DELPHI CORP: Supreme Court Won't Hear Retirees' Pension Plan Suit
DOWNSTREAM DEVELOPMENT: Moody's Withdraws Caa1 Corp. Family Rating
DUEL SPORTS: Taps Law Offices of John A. Foscato as Counsel
DURA-TRAC FLOORING: IRS Says Plan Can't Be Confirmed
EAGLE HOSPITALITY: Goldman, Silvercrest Among Backers
ECOLIFT CORP: Unsecureds to Recover 10% Under Plan
ELITE AEROSPACE: Auction of Substantially All Assets on March 3
ESCADA AMERICA: Hits Chapter 11 Bankruptcy Protection
GH REID: Seeks to Employ Fuqua & Associates as Bankruptcy Counsel
HORIZON SATELLITES: Taps Stresser & Associates as Accountant
INTEGRATED VENTURES: Sabby Volatility, et al., Hold 4.9% Stake
ION GEOPHYSICAL: Sabby Volatility, et al., No Longer Own Shares
JOYFUL CARE: Unsecureds to Get $6K Per Month for 60 Months
LINDA M. ARMELLINO: $780K Sale of Alexandria Property Approved
LTL MANAGEMENT: Urges Court to Reinstate Talc Claimants' Committee
MARRONE BIO: CEO Issues Letter to Shareholders
MILAPKUMAR P. PATEL: $1.2M Sale of Pevely & Bonne Terre Assets OK'd
MILAPKUMAR P. PATEL: $475K Sale of St. Louis Asset to Bhagat OK'd
MOSS OPAL: Seeks to Hire Dundon Advisers as Financial Advisor
NANOMECH INC: Arkansas Court Junks Lenders' Negligence Claims
NEW BETHEL: Taps Verbena Askew Law Firm as Special Counsel
NORDIC AVIATION: Seeks to Employ Kutak Rock as Co-Counsel
NOVAE LLC: Moody's Assigns First Time 'B3' Corporate Family Rating
NOVAE LLC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
NRP LEASE: Auction of Surplus Equipment by Bill Ramsey Approved
PAINT THE WIND: Case Summary & Three Unsecured Creditors
PARTNERS: Crackers Maker Seeks Chapter 11 Bankruptcy
PHYSICIAN PARTNERS: Moody's Assigns First Time 'B2' CFR
PHYSICIAN PARTNERS: S&P Assigns 'B' ICR, Outlook Positive
PLACE FOR VETERANS: March 16 Hearing on Disclosures Set
PORTILLO'S HOLDINGS: Moody's Ups CFR to B2, Outlook Remains Stable
PUERTO RICO: Gets Court Approval to End Five-Year Bankruptcy
PUERTO RICO: Oversight Board Touts Plan Approval
PURDUE PHARMA: Asks 2nd Circ. to Quickly Undo Plan Rejection
QHC FACILITIES: UST Objects to Stand-In for Sick CEO, Wants Trustee
RIVERSTONE RESORT: To Seek Plan Confirmation on March 10
RUSSO REAL ESTATE: $6.45M Private Sale of Arlington Property Okayed
SELINSGROVE INSTITUTIONAL: Taps Cunningham as Bankruptcy Counsel
SEMILEDS CORP: Extends Maturity of $3.2M Loan to January 2023
SMOKINKWR LLC: Seeks to Tap Thomas F. Jones III as Legal Counsel
STATERA BIOPHARMA: Gets $3.75M Proceeds From Sale of Common Shares
SYNIVERSE TECHNOLOGIES: S&P Assigns 'B-' ICR, Outlook Positive
TELIGENT INC: Gets Court Approval for 3 Asset Sales
TIMBER PHARMACEUTICALS: COO Zachary Rome to Step Down in March
TIMBER PHARMACEUTICALS: Empery Asset, et al., Own 4.9% Equity Stake
TOWNSQUARE MEDIA: S&P Alters Outlook to Positive, Affirms 'B' ICR
TOYS "R" US: Directors Face New Fraud Claims Over Bankruptcy
VYCOR MEDICAL: Fountainhead Increases Equity Stake to 59.88%
WATSONVILLE HOSPITAL: Committee Taps Perkins Coie as Legal Counsel
WATSONVILLE HOSPITAL: Panel Taps Sills Cummis & Gross as Co-Counsel
[*] Supreme Court to Decide on Trustee Fees' Constitutionality
[^] Recent Small-Dollar & Individual Chapter 11 Filings
*********
1369 EAST FRONT: $155K Irvington Property Sale to 81 Cummings OK'd
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Judge Stacey L. Meisel of the U.S. Bankruptcy Court for the
District of New Jersey authorized 1369 East Front Street's sale of
the real property commonly known as 81 Cummings St., in Irvington,
New Jersey, to 81 Cummings Street LLC for $155,000.
The sale is free and clear of the lien of Stormfield Capital LLC
the sole secured creditor.
In accordance with DNJ L BR 6004-5, the notice of private sale
included a request to pay the real estate broker may be paid at
closing.
Other closing fees payable by the Debtor may be satisfied from the
proceeds of sale and adjustments to the price as provided for in
the contract of sale may be made at closing.
After paying the costs of sale, $13,9250 shall be paid to
Stormfield Capital the secured creditor at closing.
The Managing member of the Debtor, John Akanbi, shall pay
Stormfield Capital $10,000 towards the short sale deficiency, no
later than two years from the date of the Order. The Secured
Creditor's rights with respect to the remaining deficiency
including the right to take legal action against the guarantor(s)
under the note are preserved if John Akanbi fails to pay $10,000 no
later than two years from the date of the Order.
About 1369 East Front Street
1369 East Front Street sought Chapter 11 protection (Bankr. D.N.J.
Case No. 21-12820) on April 6, 2021.
The Debtor estimated assets in the range of $0 to $50,000 and
$100,001 to $500,000 in debt.
The Debtor tapped Andre L. Kydala, Esq., at Law Firm of Andre L.
Kydala as counsel.
The Petition was signed by John Akanbi, Managing Member.
1369 EAST FRONT: $195K Sale of Newark Property to 193 Seymor Okayed
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Judge Stacey L. Meisel of the U.S. Bankruptcy Court for the
District of New Jersey authorized 1369 East Front Street's sale of
the real property commonly known as 193 Seymor Ave., in Newark, New
Jersey, to 193 Seymor Realty LLC for $195,000.
The sale is free and clear of the lien of Stormfield Capital LLC
the sole secured creditor.
In accordance with DNJ L BR 6004-5, the notice of private sale
included a request to pay the real estate broker may be paid at
closing.
Other closing fees payable by the Debtor may be satisfied from the
proceeds of sale and adjustments to the price as provided for in
the contract of sale may be made at closing.
After paying the costs of sale, $181,300 will be paid to Stormfield
Capital the secured creditor at closing.
The Managing member of the Debtor, John Akanbi, will pay Stormfield
Capital $9,500 towards the short sale deficiency, no later than two
years from the date of the Order. The Secured Creditor's rights
with respect to the remaining deficiency including the right to
take legal action against the guarantor(s) under the note are
preserved if John Akanbi fails to pay $9,500 no later than two
years from the date of the Order.
About 1369 East Front Street
1369 East Front Street sought Chapter 11 protection (Bankr. D.N.J.
Case No. 21-12820) on April 6, 2021.
The Debtor estimated assets in the range of $0 to $50,000 and
$100,001 to $500,000 in debt.
The Debtor tapped Andre L. Kydala, Esq., at Law Firm of Andre L.
Kydala as counsel.
The Petition was signed by John Akanbi, Managing Member.
1369 EAST FRONT: $235K Sale of Irvington Asset to 127 Delmar OK'd
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Judge Stacey L. Meisel of the U.S. Bankruptcy Court for the
District of New Jersey authorized 1369 East Front Street's sale of
the real property commonly known as 127 Delmar Place, Irvington,
New Jersey to 127 Delmar LLC for $235,000.
The sale is free and clear of the lien of Stormfield Capital LLC
the sole secured creditor.
In accordance with DNJ L BR 6004-5, the notice of private sale
included a request to pay the real estate broker may be paid at
closing.
Other closing fees payable by the Debtor may be satisfied from the
proceeds of sale and adjustments to the price as provided for in
the contract of sale may be made at closing.
After paying the costs of sale, $220,900 will be paid to Stormfield
Capital the secured creditor at closing.
The Managing member of the Debtor, John Akanbi, will pay Stormfield
Capital $8,000 towards the short sale deficiency, no later than two
years from the date of the Order. The Secured Creditor's rights
with respect to the remaining deficiency including the right to
take legal action against the guarantor(s) under the note are
preserved if John Akanbi fails to pay $8,000 no later than two
years from the date of the Order.
About 1369 East Front Street
1369 East Front Street sought Chapter 11 protection (Bankr. D.N.J.
Case No. 21-12820) on April 6, 2021.
The Debtor estimated assets in the range of $0 to $50,000 and
$100,001 to $500,000 in debt.
The Debtor tapped Andre L. Kydala, Esq., at Law Firm of Andre L.
Kydala as counsel.
The Petition was signed by John Akanbi, Managing Member.
ALPINE 4 HOLDINGS: To Hold Annual Meeting on March 25
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Kent Wilson, CEO/president/founder of Alpine 4 Holdings, Inc.
issued a letter to shareholders on Jan. 13, 2022.
Dear Shareholders,
I am pleased to announce that our annual shareholder meeting is
scheduled for March 25th, 2022. The company will be issuing its
proxy statement in the coming days, and we look forward to having
you join us for this year's meeting!
I am also pleased to announce that Alpine 4 has been invited to
attend the Context Summit Conference in Miami, Florida, from
January 23rd through the 26th. Alpine 4 looks forward to
showcasing our newly acquired company, ElecJet, and its
revolutionary battery technologies at the event.
https://contextsummits.com
We, as a company, have so many things to share with shareholders
for 2022 and beyond. While I would love to share these things with
you now, I am going to save them for my 2022 CEO letter, which will
come out the first week of February.
This next paragraph is dedicated to our long-term shareholders and
valued stakeholders. Please try to ignore the drama on social
media platforms. They are a horrible place to seek investment
advice, as many commentators on those sites have an agenda, and
those agendas, generally, do not benefit you or the company.
Alpine 4 has had considerable accomplishments in the past eight
years since its founding, as we strive to create positive change in
the world we live in. Unfortunately, the market we operate in
i.e., the stock market, doesn't always reflect those
accomplishments. As shareholders, we are all in this together.
Our current stock price affects the founders of this company as
much as anyone else, as we are the largest shareholders, and all
classes of Alpine 4 stock hold the same value. As fellow
shareholders, we understand the short-term pain felt in the market
though we stay focused on our long-term goals.
Our 2021 accomplishments are clearly visible, and we are as
enthusiastic about the company's future as we have ever been.
While each shareholder has their own investment risk appetite, I
would be remiss if I didn't offer the following: The company is now
projecting revenue in excess of $100 million for 2022 without any
additional acquisitions. In addition, we are making advancements
on many fronts ranging from high-tech graphene-enhanced lithium
batteries to advancements in commercial UAVs with Vayu's G1 and the
ongoing development of the US-2, which we are eager to share with
you at the appropriate time.
In closing, I look forward to seeing all of you at our virtual
shareholder event, and let's have a great 2022!
Best regards,
Kent Wilson
CEO/President/Founder
Alpine 4 Executive Team
About Alpine 4
Alpine 4 Holdings, Inc (formerly Alpine 4 Technologies, Ltd) is a
publicly traded conglomerate that is acquiring businesses that fit
into its disruptive DSF business model of drivers, stabilizers, and
facilitators. As of April 14, 2021, the Company was a holding
company that owned nine operating subsidiaries: ALTIA, LLC; Quality
Circuit Assembly, Inc.; Morris Sheet Metal, Corp; JTD Spiral, Inc.;
Deluxe Sheet Metal, Inc.; Excel Construction Services, LLC;
SPECTRUMebos, Inc.; Impossible Aerospace, Inc.; and Vayu (US),
Inc.
Alpine 4 Holdings reported a net loss of $8.05 million for the year
ended Dec. 31, 2020, compared to a net loss of $3.13 for the year
ended Dec. 31, 2019, and a net loss of $7.91 million for the year
ended Dec. 31, 2018. As of June 30, 2021, the Company had $94.03
million in total assets, $47.12 million in total liabilities, and
$46.91 million in total stockholders' equity.
AMERICAN EAGLE: Files Bond-Exchange Plan
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American Eagle Delaware Holding Company LLC, et al., submitted a
Plan of Reorganization and a Disclosure Statement.
The Debtors currently operate 15 residential senior care facilities
located across the United States, from Colorado, Minnesota,
Wisconsin, and Ohio to Alabama, Tennessee, and Florida. The
Facilities provide residents with multiple opportunities for social
and intellectual engagement and other benefits during retirement
living as well as other necessary healthcare services.
The Debtors have experienced increasing financial distress from
slowed new occupancies and resulting cash flow shortfalls, causing
their inability to comply with their debt service obligations.
This problem was greatly exacerbated by the impact of the COVID-19
pandemic. The Debtors believe that the Plan, which is the result
of extensive, arm's-length negotiations among (i) the Debtors, (ii)
UMB Bank, N.A., as the Trustee for the Series 2018 Bonds, and (iii)
holders of a majority in principal amount of the Series 2018A Bond
Claims (the "Consenting Holders"), provides the Debtors with a
long-term resolution of their financial issues. In particular, the
Debtors, the Trustee, and the Consenting Holders, as applicable,
have agreed to the terms of a Restructuring Support Agreement (the
"Restructuring Support Agreement"), together with a restructuring
of the Debtors' bond obligations that collectively provide for the
Restructuring Transaction.
In general, the Restructuring Transaction provides for:
* The funding of an additional $28,125,000 in new money bond
financing comprised of $10,905,000 of principal amount of new
taxable Series 2022A-1 Bonds and $17,220,000 of principal amount of
new tax-exempt Series 2022A-2 Bonds to fund a Capital Expenditure
Fund (approximately up to $15,230,000, which shall sit within the
Project Account of the Project Fund), an Operating Fund (up to
approximately $6,436,000) to meet the Working Capital Requirement,
Debt Service Reserve Funds for the Series 2022A Bonds and Series
2022B Bonds, and certain capitalized interest and closing costs;
and
* An exchange of the outstanding Series 2018 Bonds for a pro
rata share of the Series 2022 Bonds.
Under the Plan, holders of Class 7 General Unsecured Claims will
receive such Holder's Pro Rata share of the GUC Fund as full
satisfaction of each Holder's Claim. Class 7 is impaired.
The current version of the Plan and Disclosure Statement still has
blanks as to the projected total amount of unsecured claims and
their projected recovery. The Disclosure Statement provides "The
Debtors estimate that the aggregate amount of Allowed General
Unsecured Claims will be approximately $[__]. The Debtors estimate
that the projected recovery of Holders of Allowed Claims in Class 7
will be [_]–[_]."
Among other things, the Plan provides for a reduction in the
Debtors' prepetition outstanding secured indebtedness by
approximately $40 million, to be accomplished pursuant to a
mandatory exchange of the Series 2018 Bonds for certain new Series
2022 Bonds. Also, certain of the Consenting Holders have agreed to
purchase new Series 2022A Bonds, the proceeds of which will be
loaned to the Debtors and used to fund working capital ($6.44
million) and capital expenditures ($15.23 million) over the four
years following the Debtors' emergence from bankruptcy.
The Debtors retained a broker with significant experience in the
marketing and sale of senior living facilities, Blueprint
Healthcare Real Estate Advisors to conduct a broad marketing
process for potential regional and national operators for the
Debtors' Facility known as Vista Lake in Florida. As a result of a
robust prepetition marketing process, the Debtors have identified a
number of potential purchasers for Vista Lake. To maximize the
value of Vista Lake, the Debtors propose to continue the sales
process post-petition as they continue to negotiate with potential
purchasers and develop strategies.
Proposed Counsel to the Debtors:
Shanti M. Katona
POLSINELLI PC
222 Delaware Avenue, Suite 1101
Wilmington, Delaware 19801
Telephone: (302) 252-0920
Facsimile: (302) 252-0921
E-mail: skatona@polsinelli.com
- and -
David E. Gordon
Caryn Wang
POLSINELLI PC
1201 West Peachtree Street NW, Suite 1100
Atlanta, Georgia 30309
Telephone: (404) 253-6000
Facsimile: (404) 253-6060
E-mail: dgordon@polsinelli.com
cewang@polsinelli.com
A copy of the Disclosure Statement dated Jan. 14, 2021, is
available at https://bit.ly/3rqTGV5 from PacerMonitor.com.
About American Eagle
Established in 2018, Eagle Senior Living --
https://www.eagleseniorliving.org/ -- is a non-profit provider of
senior living services across the country, providing care on a
daily basis to approximately 1,000 residents. Eagle Senior Living
and related entities operate 15 residential senior care facilities
located across the United States, from Colorado, Minnesota,
Wisconsin, and Ohio to Alabama, Tennessee, and Florida.
On Jan. 14, 2022, American Eagle Delaware Holding Company LLC and
16 affiliated companies each filed a petition seeking relief under
chapter 11 of the United States Bankruptcy Code (Bankr. D. Del.
Lead Case No. 22-10028), to seek confirmation of its Prepackaged
Plan. The Debtors' cases have been assigned to Judge J. Kate
Stickles.
Eagle Senior Living's parent company American Eagle Lifecare
Corporation and management company Greenbrier Senior Living are not
included in the Chapter 11 filing. Greenbrier Senior Living
continues to manage all of the communities.
American Eagle Delaware Holding estimated assets and debt of $10
million to $50 million as of the bankruptcy filing.
Eagle Senior Living is represented in the Chapter 11 case by
Polsinelli PC as legal counsel and FTI Consulting Inc. as
restructuring and financial advisor. Blueprint Healthcare Real
Estate Advisors, LLC, is the exclusive advisor and broker. Epiq
Corporate Restructuring, LLC, is the claims agent.
ARAMID ENTERTAINMENT: District Court Denies Molner's Appeal
-----------------------------------------------------------
David Molner brought an appeal of the April 30, 2021 Order issued
by Judge David S. Jones of the United States Bankruptcy Court for
the Southern District of New York denying his motion for abstention
and remand of his adversary proceeding, which was originally
commenced in New York state court. On July 19, 2021, Defendants
Reed Smith LLP, James C. McCarroll, James L. Sanders, Francisca
Mok, Jordan W. Siev, and Kurt Gwynne moved to dismiss the appeal
for lack of appellate jurisdiction.
Molner worked for Aramid Entertainment Fund, Limited. In his
adversary proceeding, Molner contends Defendants, among them Reed
Smith LLP, the Fund's counsel, conspired to oust him from the Fund,
just as he was preparing to liquidate the fund. He brought suit
against Defendants in New York state court, alleging they deceived
him into relinquishing control over Aramid and then fraudulently
commenced Chapter 11 proceedings for Aramid so they could usurp
control of the company in bankruptcy and redirect its assets to
themselves. Molner made these allegations in a summons; he did not
file a complaint.
Molner alleged that even as he prepared the liquidation plan, the
Defendants executed an alternative plan to oust him from his
managerial position and "install themselves as the control
persons," filing the Chapter 11 petition without his knowledge, as
a means of "taking control out of [his] hands and into their own."
The Defendants moved for transfer to the bankruptcy court, which
was granted with the court noting significant overlap between
Molner's claims and the issues raised in the bankruptcy proceeding,
and finding it necessary to interpret and enforce the approved
bankruptcy plan and various other orders and agreements arising out
of the bankruptcy proceedings to resolve Molner's claims.
Molner moved the Bankruptcy Court for abstention and remand,
finding that "no matter how he characterizes his claims, Molner's
state-court proceeding in reality 'ar[ose] in' the Aramid
Bankruptcy." Because "arising in" jurisdiction applies, the Court
reasoned, Molner cannot meet the standard for mandatory
abstention.
As to permissive abstention, the Bankruptcy Court found that
because this action is "inextricably intertwined with the Aramid
Bankruptcy and this Court's prior rulings," and because
"bankruptcy-related issues predominate," it would be "inappropriate
to permissively abstain from hearing this action." Thus, the
Bankruptcy Court denied Molner's motion.
Judge Edgardo Ramos of the United States District Court for the
Southern District of New York granted the Defendants' motion and
dismissed the appeal for lack of jurisdiction.
Judge Ramos first finds that the Bankruptcy Court's order denying
abstention is not a final order under 28 U.S.C. Section 158(a)(1).
As the Second Circuit has held, finality analysis under Section
158(a) involves "the same standards of finality that [courts] apply
to an appeal under 28 U.S.C. Section 1291." And, in cases
involving appeals under Section 1291, the Second Circuit
specifically has held that an "order declining to abstain [is] not
a final decision," because it "d[oes] not resolve any of the
substantive issues addressed in the lawsuit." Rather, the
challenged order "merely determined whether the case would be
adjudicated."
Similarly, as another court in the Second District made clear, a
bankruptcy court denying a motion to abstain and remand "is not a
final order under section 158(a)(1)" because "it does not resolve
an entire claim," Judge Ramos further explained.
"That is the case here. In the instant case, the challenged order
is a denial of a motion to abstain and remand. Under Second Circuit
precedent, such an order is non-final and is, therefore, not
appealable as of right," the judge concluded.
A full-text copy of the Opinion & Order dated January 12, 2022, is
available at https://tinyurl.com/3wcxh6f3 from Leagle.com.
The appeals case is In Re: ARAMID ENTERTAINMENT FUND LIMITED DAVID
MOLNER, Appellant, v. REED SMITH LLP, JAMES C McCARROLL, JAMES L.
SANDERS, FRANCISCA MOK, JORDAN W. SIEV, KURT GWYNNE, GEOFFREY
VARGA, JESS SHAKESPEARE, KINETIC PARTNERS, DUFF & PHELPS, LLC,
DAVID BREE, DAVIS SEYMOUR, ROGER HANSON, and DMS GOVERNANCE LTD,
Appellees, No. 21 Civ. 4840 (S.D.N.Y.).
About Aramid Entertainment
Aramid Entertainment Fund Limited engaged in the businesses of
providing short and medium term liquidity to producers and
distributors of film, television and other media and entertainment
content by way of loans and equity investments.
On May 7, 2014, Geoffrey Varga and Jess Shakespeare of Kinetic
Partners (Cayman) Limited were appointed under Cayman law as the
joint voluntary liquidators ("JVLs") of AEF and two affiliates.
On June 13, 2014, the JVLs authorized AEF and two affiliates to
file for Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Lead
Case No. 14-11802) in Manhattan on June 13, 2014.
AEF estimated at least $100 million in assets and between $10
million to $50 million in liabilities.
The Debtors retained (i) Reed Smith LLP as bankruptcy counsel; (ii)
Geoffrey Varga and Jess Shakespeare as Crisis Managers; (iii) Irell
& Manella LLP as special litigation counsel; (iv) Maples and Calder
as special Cayman law counsel; and (v) PKF O'Connor Davies LLP as
financial advisors. The Debtors retained Houlihan Capital Advisors
LLC to provide valuation services.
ASCENA RETAIL: Court Overturns Plan Over Liability Releases
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Daniel Gill of Bloomberg Law reports that the court overturns
Ascena Retail Group's Chapter 11 plan over its liability releases.
Ascena Retail Group Inc.'s Chapter 11 plan was overturned on appeal
after a federal district court judge found the plan's liability
releases for non-bankrupt parties to be a due process violation.
The releases "represent the worst of this all-too-common practice,
as they have no bounds," Judge David J. Novak of the U.S. District
Court for the Eastern District of Virginia said in an opinion
docketed Tuesday, January 18, 2022, in the bankruptcy court.
The Richmond Division of the U.S. Bankruptcy Court for the Eastern
District of Virginia—where Ascena filed Chapter 11—"regularly
approves" such releases, Novak said.
About Ascena Retail Group
Ascena Retail Group, Inc. -- http://www.ascenaretail.com/-- was a
leading specialty retailer for women and girls. It operated a
portfolio of recognizable brands, which included Ann Taylor, LOFT,
Lane Bryant, Catherines, Justice, Lou & Grey, and Cacique.
On July 23, 2020, Ascena Retail Group and its affiliates sought
Chapter 11 protection (Bankr. E.D. Va. Case No. 20-33113). As of
Feb. 1, 2020, Ascena Retail had $13,690,710,379 in assets and
$12,516,261,149 in total liabilities. At the time of filing, it had
approximately 2,800 stores in the United States, Canada, and Puerto
Rico serving more than 12.5 million active customers and employing
nearly 40,000 employees.
The Hon. Kevin R. Huennekens is the case judge.
The Debtors tapped Kirkland & Ellis LLP and Cooley LLP as
bankruptcy counsel, Guggenheim Securities, LLC, as financial
Advisor, and Alvarez and Marsal North America, LLC as restructuring
advisor. Prime Clerk, LLC, is the claims agent.
* * *
In September 2020, FullBeauty Brands Operations, LLC, won an
auction to acquire Ascena's Catherines intellectual property assets
for a base purchase price of $40.8 million and potential upward
adjustment for certain inventory.
In November 2020, Ascena won approval to sell the intellectual
property of its Justice Brand and other Justice brand assets to
Justice Brand Holdings LLC, an entity formed by Bluestar Alliance
LLC (a leading brand management company), for $90 million.
The Company continues to operate its Ann Taylor, LOFT, Lane Bryant,
and Lou & Grey brands as normal through a reduced number of retail
stores and online.
ASSUREDPARTNERS INC: S&P Rates Incremental 1st-Lien Term Loan 'B'
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S&P Global Ratings assigned its 'B' debt rating to Lake Mary,
Fla.-based insurance broker AssuredPartners Inc.'s proposed $500
million incremental first-lien term loan due 2027. S&P also
assigned a '3' recovery rating, indicating its expectation of
meaningful recovery (55%) in the event of payment default to the
term loan.
S&P said, "We also rate the existing first-lien credit facility
'B', with a recovery rating of '3' (55%). Additionally, we rate
AssuredPartners' senior notes due 2025, 2027, and 2029 'CCC+' with
a recovery rating of '6' (0%).
"We expect the new financing to have terms consistent with the
company's existing first-lien term loan and for AssuredPartners to
use the majority of proceeds to fund its mergers and acquisitions
(M&A) pipeline. The company will use the remaining proceeds to pay
down its $75 million revolver balance as well as pay related fees
and expenses. Including this $500 million issuance, pro forma
financial leverage as of the 12 months ended Sept. 30, 2021
(including acquisitions closed beyond period end and acquisitions
under letter of intent) is 7.6x (7.9x including preferred equity
treated as debt), with EBITDA interest coverage above 2.0x.
"AssuredPartners performed well for the 9 months ended Sept. 30,
2021, with organic growth of 5.1%. For the fiscal year ending Dec.
31, 2021, we expect the company to report organic growth of 5%,
fostered by continued insurance pricing momentum, the company's
diversification by geography and business segment, and favorable
new business trends. We also expect the company to report total
revenue growth of approximately 20%, supported by an active M&A
pipeline. 2021 is expected to mark AssuredPartners' most active
year for M&A, with expectations that the company acquired over $125
million of EBITDA and nearly $320 million of revenue. The company
continues to attribute the increased M&A activity to the potential
change in capital gains taxes, which provided incentive for
agencies to sell by year-end 2021. Additionally, S&P Global
Ratings-adjusted margins are expected to remain 33%-34% through
year-end 2021.
"Despite the significant debt in AssuredPartners' capital
structure, we expect pro forma adjusted leverage to remain 7x-8x
(7.5x-8.5x including preferred equity treated as debt) over the
next 12 months. This is below our leverage tolerance level of 8x
(excluding preferred equity treated as debt) on an S&P Global
Ratings-adjusted basis, supported by our expectation that EBITDA
will continue to grow, both organically and through an active M&A
pipeline, throughout 2022."
ATHENAHEALTH GROUP: Fitch Assigns 'B' LongTerm IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned a Long-Term Issuer Default Rating (IDR)
of 'B' with a Stable Outlook to athenahealth Group, Inc. following
the agreement to be acquired by Bain Capital and Hellman & Friedman
in a deal valued at $17 billion. Fitch has also assigned a senior
secured first lien issue rating of 'B+'/'RR3' to the planned term
loan and delayed draw term loan (DDTL) issuances.
Fitch has also withdrawn the 'B+'/'RWN' IDRs of athenahealth, Inc.,
VVC Holding Corp., and athenahealth Intermediate Holdings LLC as
these entities will no longer issue debt under the new structure.
Fitch has also removed the outstanding UCO on athenahealth
Intermediate Holdings LLC related to the updated Parent Subsidiary
Linkage criteria (Dec. 1, 2021).
Fitch Ratings is withdrawing the Ratings of athenahealth, Inc., VVC
Holding Corp., and athenahealth Intermediate Holdings LLC as these
entities will no longer issue debt under the new structure.
Accordingly, Fitch Ratings will no longer provide Ratings or
analytical coverage for athenahealth, Inc., VVC Holding Corp., and
athenahealth Intermediate Holdings LLC.
KEY RATING DRIVERS
Transaction Increases Leverage: On Nov. 22, 2021, athenahealth
announced it had entered into an agreement to be acquired by Bain
Capital and Hellman & Friedman for $17 billion. The transaction,
expected to close in 1Q22, will be financed in part through the
issuance of a $5.75 billion 1L term loan B (Tlb), a $1b DDTL to be
undrawn at close, other unsecured debt, and $2.36b of new preferred
equity that Fitch does not treat as debt of the rated entity under
its Master Corporate Rating Criteria, HoldCo PIK and Shareholder
Loans adjustments.
Fitch estimates FY21 pro forma leverage of 9.2x, near the upper
5.0x-11.5x range for Fitch-rated health care IT issuers in the B
rating category. Fitch does not anticipate voluntary debt
prepayments under the new sponsors and expects deleveraging to be
primarily dependent on top-line growth as solid cost reduction
execution under prior ownership leaves limited opportunity for
further margin expansion, leading to Fitch's forecast for a
moderate decline to 7.4x by FY23.
Continued Growth Momentum: athenahealth continues to exhibit a
strong growth profile after exiting the depth of the U.S.
lockdowns. As medical providers were forced to defer routine
elective and preventive visits during the peak of the pandemic in
Spring 2020, management accelerated sales and marketing efforts.
Providers used this downtime to invest in technology systems,
leading to strong new client growth that has continued into 2021.
In addition, the recovery in medical procedure volumes, along with
catch up on previously deferred procedures, leads to Fitch's
forecast for 16% growth in FY21.
During the peak of the lockdowns, U.S. health care visits declined
50%-60%, moderating to a 25%-35% decline by early May 2020 as the
U.S. reopening proceeded. Management responded to the environment
with the launch of a new telehealth offering and virtual
implementations for onboarding new customers. While telehealth
partially offset volume and revenue declines, in-person visits
quickly recovered to 90% of their pre-pandemic rate by Fall 2020,
allowing the company to limit FY20 revenue declines to 3.5%. Fitch
believes the growth momentum achieved exiting the peak of the
pandemic is reflective of strong competitive positioning and
management execution.
Secular Tailwinds: Fitch expects athenahealth to sustain its
reliable organic growth profile as a result of strong secular
trends in U.S. health care spending. The Centers for Medicare and
Medicaid Services (CMS) forecasts national health expenditure
growth of 5.4% per annum through 2028 due to longstanding trends in
medical procedure/drug cost and utilization growth. athenahealth's
pricing model results in strong correlation with the underlying
secular growth in U.S. health care spending.
Growth prospects are further supported by strong retention rates
resulting from high switching costs that include staff training,
implementation costs, business interruption risks and reduced
productivity when swapping vendors. Fitch believes that the secular
tailwinds and high switching costs produce a dependable growth
trajectory that benefits the credit profile.
Low Cyclicality: Closely related to the underlying health care
expenditure secular growth driver, Fitch expects athenahealth,
which has experienced positive growth in every year since its 2007
IPO, other than during the extraordinary environment experienced in
2020, to continue to exhibit low cyclicality for the foreseeable
future. Fitch believes the company's pricing model ensures strong
correlation to overall U.S. health care spending, which is highly
non-discretionary and has experienced uninterrupted growth since at
least 2000 according to CMS. As a result, Fitch believes
athenahealth will demonstrate a stable credit profile with little
sensitivity to macroeconomic cycles.
Evolving Target Customer Market: athenahealth has typically
targeted smaller, ambulatory practice sizes of less than 20
physicians with particular strength in the less than 10-physician
segment. Smaller providers face pressures as rising regulatory,
operating and legal costs have resulted in increased consolidation,
so that providers can operate at the scale needed to remain
profitable. According to the American Medical Association, the
percentage of physicians working in practices with 10 or fewer
physicians declined to 56.5% in 2018 from 61.4% in 2012,
potentially shrinking the target market.
However, despite this trend, Fitch believes athenahealth has ample
runway for continued growth given a target market of 760,000
ambulatory physicians, many of whom use manual processes, outdated
legacy systems or underscaled software vendors with limited
capabilities. In addition, the consolidation trend is partially
offset by an ongoing shift in the locus of care away from hospitals
and towards ambulatory settings that have proven to generate
improved outcomes at lower cost, resulting in elevated growth for
outpatient care spend relative to inpatient spend.
DERIVATION SUMMARY
Fitch evaluates athenahealth under the pending transaction in which
the company will be acquired by Private Equity sponsors Bain
Capital and Hellman & Friedman for $17 billion from prior owners,
Veritas Capital and Evergreen Coast Capital. Fitch believes
athenahealth is well positioned under new ownership to build on its
history of strong growth and market share gains given leading
product capabilities and competitive positioning.
In addition, Fitch expects continued stability in the credit
profile as athenahealth benefits from a clear, reliable growth path
with a pricing and revenue model that creates close correlation to
the underlying secular growth in U.S. health care expenditures.
Fitch expects the correlation to persist, given strong client
retention rates, high switching costs, robust sales efforts, and a
history of share gains. As a result, Fitch expects athenahealth to
exhibit minimal cyclicality and durable resistance to economic
cycles.
In its analysis relative to peers, Fitch compares athenahealth to
HCIT peers in the B rating category including, revenue cycle
management (RCM) providers nThrive (B-/Stable) and Waystar
(B-/Stable) given similar product categories, ownership structures,
elevated leverage metrics and capital structures. The transaction,
which will lead to a material increase in total debt from the $4.6
billion outstanding currently, leads to Fitch's estimate for FY21
pro forma leverage of 9.2x, near the upper 5.0x-11.5x range for
Fitch-rated all covered health care IT issuers in the B rating
category.
Several factors benefit athenahealth:
(1) rapid growth with a 4-year historical revenue CAGR of 12.5% and
Fitch forecasting future high-single to low double-digit growth,
compared to the mid-single digit growth rates for peers;
(2) as margins are close to optimized in the mid to high 40's for
the noted peer set, athenahealth's topline growth rates result in a
deleveraging pace that is nearly twice the rate of peers;
(3) athenahealth is likely to sustain superior liquidity with
access to a $1b RCF, cash levels that are forecast to reach $700
million by FY23 and coverage ratios approaching 3.0x as compared to
$150 million-200 million RCFs, cash levels below $100 million and
coverage ratios below 2.5x for the peers;
(4) athenahealth is approximately four times the revenue scale,
leaving it less vulnerable to potential deteriorations in capital
markets or macro conditions;
(5) athenahealth maintains a leading competitive position in the
targeted small ambulatory practice niche while nThrive and Waystar
face greater threats from competition as relatively small players
that go to market with a broad-based approach rather than targeting
a niche; and
(6) while athenahealth may pursue bolt-on M&A to enhance
capabilities, the company's strategy is not dependent on
acquisitions as compared to peers, which have relied on
large-scale, debt-funded M&A in pursuit of their growth
strategies.
Across Fitch's HCIT coverage, Fitch believes athenahealth's
favorable long-term prospects, FCF generation capability,
consistent execution, and strong positioning relative to
competitors are indicative of a stronger credit profile than
suggested by leverage alone. As such, Fitch believes athenahealth's
distance to default is further than peers, warranting a notching of
the rating to B.
No Country Ceiling had an impact on the rating. Fitch applied the
updated parent/subsidiary linkage criteria (Dec. 1, 2022) to the
prior rated entities and determined that all rated entities should
be assigned the same IDR; the criteria no longer applies under the
pro forma structure. No operating environment aspects had an impact
on the rating.
Fitch also evaluated the $2,360 million of preferred equity
issuance under its HoldCo PIK and Shareholder Loans adjustments
contained within Fitch's Master Corporate Rating Criteria and
determined that the issuance is not treated as debt of the rated
entity due to the following considerations: 1) the issuer of the
preferred equity, Minerva Holdco, Inc. does not provide a guarantee
to the Borrower, athenahealth Group, Inc., and is outside of the
restricted group; 2) the terms of the preferred equity provide only
for a PIK dividend with no cash-pay option; and 3) the preferred
equity is perpetual and this matures after the rated entity debt.
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that athenahealth would be
reorganized as a going-concern in bankruptcy rather than
liquidated.
-- Fitch has assumed a 10% administrative claim;
-- Fitch has assumed a 2.5% concession payment from the first
lien lenders to holders of the unsecured notes.
Going-Concern (GC) Approach
The GC EBITDA estimate reflects Fitch's view of a sustainable,
post-reorganization EBITDA level upon which Fitch bases the
enterprise valuation (EV). Fitch contemplates a scenario in which
acquisition integration challenges and salesforce disruption impair
growth, margin expansion and thus debt-servicing ability. In
addition, Fitch assumes the DDTL would be drawn in a leverage
neutral transaction that that targets a bolt-on acquisition to
support the product strategy while adding incremental EBITDA as
well. As a result, Fitch expects that athenahealth would likely be
reorganized with reduced debt outstanding, a similar product
strategy and higher than planned levels of operating expenses as
the company reinvests to ensure customer retention and defend
against competition.
Under this scenario, Fitch believes revenue growth would slow
significantly to low to mid-single digits per annum with EBITDA
margins declining such that the resulting going-concern EBITDA is
approximately 16% below Fitch forecast 2021 EBITDA pro forma for
the DDTL issuance and assumed associated transaction.
An EV multiple of 7.0x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice of
this multiple considered a number of factors.
Comparable Reorganizations: In the 13th edition of its "Bankruptcy
Enterprise Values and Creditor Recoveries" case study, Fitch noted
seven past reorganizations in the technology sector, where the
median recovery multiple was 4.9x. Of these companies, only two
were in the software subsector: Allen Systems Group, Inc. and
Aspect Software Parent, Inc., which received recovery multiples of
8.4x and 5.5x, respectively. Fitch believes the Allen Systems
Group, Inc. reorganization is highly supportive of the 7.0x
multiple assumed for athenahealth given the mission critical nature
of both companies' offerings.
M&A Multiples: A study of M&A in the health care IT industry from
2015 to 2020 that included an examination of 42 transactions
involving RCM providers established a median EV/EBITDA transaction
multiple of 15x. The 2019 acquisition of athenahealth was completed
at a transaction multiple in the low teens, not including
synergies, while the newly announced acquisition would represent a
multiple of 21x. More recent comparable M&A such as the buyouts of
Waystar and eSolutions continue to support similarly rich
transaction multiples.
The recovery model implies a 'B+' and 'RR3' Recovery Rating for the
company's first-lien senior secured facilities, reflecting Fitch's
belief that lenders should expect to recover 51%-70% in a
restructuring scenario.
KEY ASSUMPTIONS
Fitch's key assumptions within its rating case for the issuer
include:
-- Transaction: acquisition of athenahealth by Bain and H&F
closes in 1Q22 and is financed by the issuance of a $1b 1L
undrawn RCF, a $5.75 billion 1L TLb, a $1b 1L undrawn DDTL,
other unsecured debt, and $2.36b of new preferred equity;
-- Revenue: growth of mid-teens in 2021 due to new client growth
momentum, recovery in procedure volumes post pandemic,
followed by high single-digit growth thereafter due to
supportive secular tailwinds;
-- Margins: EBITDA margin expansion of 150bps due to remaining
synergy achievement, new cost reduction actions and lapping of
one-time consulting and pandemic-related costs;
-- Capex: capital intensity increasing to 9%-10%.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- (Cash flow from operations -- capex)/total debt with equity
credit sustained above 6.5%;
-- Reduction in debt leading to total debt with equity
credit/operating EBITDA sustained below 5.5x;
-- Revenue growth consistently in excess of Fitch's forecasts;
-- Strengthened competitive positioning and increased scale.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- (Cash flow from operations -- capex)/total debt with equity
credit sustained below 3%;
-- Total debt with equity credit/operating EBITDA sustained above
7.5x;
-- Revenue declines resulting from market share losses or
deterioration in competitive position.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Fitch expects athenahealth to maintain abundant liquidity
throughout the forecast horizon given strong free cash flow
margins, a highly variable cost structure, and moderate liquidity
requirements resulting from a short cash conversion cycle. Pro
forma for the transaction, liquidity is expected to be comprised of
the $1b undrawn RCF and a minimum $100 million readily available
cash balance. Liquidity is further supported by Fitch's forecast
for nearly $550 million in aggregate FCF over 2022-2023. Fitch
forecasts steady growth in liquidity to over $1.6 billion over the
ratings horizon due to accumulation of FCF and the expectation for
the RCF to remain undrawn.
ISSUER PROFILE
athenahealth is a leading provider of cloud based electronic health
care record (EHR) and RCM software and technology enabled solutions
to over 350,000 health care providers.
ESG CONSIDERATIONS
athenahealth, Inc. has an ESG Relevance Score of '4' for Financial
Transparency due to quarterly and annual reporting and discussion
that provide less detail than the average issuer, the absence of an
annual audited report in FY18 as was permitted under the prior
credit agreement, and limited access to management, which has a
negative impact on the credit profile, and is relevant to the
rating[s] in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or the way in which they are being
managed by the entity.
ATHENAHEALTH GROUP: Moody's Assigns 'B3' CFR, Outlook Stable
------------------------------------------------------------
Moody's Investors Service assigned a B3 Corporate Family Rating and
B3-PD Probability of Default Rating to athenahealth Group Inc.
following the acquisition by private equity firms Hellman &
Friedman, Bain Capital and GIC. Concurrently, Moody's assigned a B2
rating to athenahealth's first lien credit facilities consisting of
a $5,750 million term loan B, $1,000 million delayed draw term loan
B and $1,000 million revolver. The outlook is stable.
Net proceeds from the term loan, other unsecured debt, preferred
and common equity will be used to acquire athenahealth for around
$17 billion from Veritas Capital and Evergreen Coast Capital. The
CFR, PDR, and existing debt instruments ratings for the company
under Veritas Capital and Evergreen Coast Capital ownership will be
withdrawn upon full repayment of debt in conjunction with the close
of the transaction.
Assignments:
Issuer: athenahealth Group Inc.
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Term Loan B, Assigned B2 (LGD3)
Senior Secured 1st Lien Delayed Draw Term Loan B, Assigned B2
(LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD3)
Outlook Actions:
Issuer: athenahealth Group Inc.
Outlook, Assigned Stable
RATINGS RATIONALE
athenahealth's B3 CFR reflects the company's extremely high
leverage and aggressive financial policies. Pro forma for the
transaction and planned cost savings, athenahealth's leverage is
estimated at around 10x debt/EBITDA (Moody's adjusted and expensing
software development costs), or if excluding unactioned cost
savings, leverage can be viewed as around 11x. The rating is also
constrained by the highly competitive nature of the electronic
health record (EHR) software market and the rapidly changing
regulatory environment for the healthcare industry and increasing
scrutiny of EHR software.
Governance considerations are credit negative. The company's
private equity ownership, the fragmented nature of the market, and
the presence of delayed draw term loan in the capital structure
indicate that athenahealth is likely to supplement organic growth
with debt-funded acquisitions. Such a financial policy would likely
sustain high leverage. In addition, given the company's sizable
preferred equity, Moody's believes that over time athenahealth will
have incentives to refinance the instrument with debt, further
raising leverage.
Social considerations are also material to the credit. As a
provider of software to the healthcare industry, data breaches or
non-compliance with government regulations could expose
athenahealth to reputational risk, fines, or unfavorable legal
judgements.
athenahealth benefits from its leading market position as a top 3
provider within the EHR market with revenue of around $1.9 billion
in the last twelve months ended September 30, 2021. The mission
critical nature of athenahealth's software and services, as well as
the differentiated product portfolio support longstanding customer
relationships and result in high gross and net retention rates
above 95% and 100%, respectively (for athenaOne product). The
company generates the majority of its revenue by charging a
percentage of payments collected by athenahealth on behalf of its
clients, which combined with strong retention rates provide good
revenue and free cash flow predictability.
Favorable industry trends such as ambulatory market growth, a drive
to efficiently manage the business processes of healthcare
providers and rising healthcare cost, as well athenahealth's
product innovation will buoy the company's revenue and EBITDA
growth. Moody's expects strong revenue growth in the high single to
low teens digit percent range in 2022 and stable margins will allow
athenahealth to reduce its leverage to below 9x in the year
following the close, absent new material acquisitions.
athenahealth's liquidity is considered very good, supported by
expected cash balances of approximately $100 million upon the close
of the transaction, expectations for annualized free cash flow
generation of around $280 - $300 million over the next 12 months,
and an undrawn $1 billion revolver due 2027. The revolver is
expected to have a springing first lien net leverage covenant that
would be triggered at 35% revolver utilization. Moody's expects
that athenahealth will maintain ample cushion under this covenant
for at least the next 12 months.
The stable outlook reflects Moody's expectation for continued
organic revenue and EBITDA growth in the high single to low teens
digit percent range. Expected organic EBITDA growth, driven in part
by cost cutting measures, in conjunction with mandatory debt
repayment should enable the company to de-lever to below 9x in the
year following the close of the transaction and maintain free cash
flow to debt in excess of 3%.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if athenahealth is expected to
maintain a more conservative financial strategy, with leverage
sustained below 7.5x and free cash flow to debt expected to be
above 5%.
The ratings could be downgraded if organic revenue or EBITDA
decline, liquidity weakens materially, or Moody's expects free cash
flow to be negative on other than a temporary basis.
The B2 rating on the first lien credit facilities, one notch above
the B3 CFR, reflects their senior position in the capital
structure, ahead of the proposed $2,500 million other unsecured
debt (unrated).
As proposed, the new first lien credit facilities are expected to
provide covenant flexibility that if utilized could negatively
impact creditors. Notable terms include the following:
Incremental debt capacity up to the sum of the greater of $1,061
million and 100% of consolidated EBITDA, plus unused capacity
reallocated from the general debt basket, plus an unlimited amount
subject to the pro forma consolidated first lien net leverage ratio
of 0.25x above the closing date first lien net leverage ratio (if
pari passu secured). Amounts up to the greater of $1,061 million
and 100% consolidated EBITDA along with any indebtedness incurred
for purposes of consummating a permitted acquisition or similar
permitted investment may be incurred with an earlier maturity date
than the initial term loans.
There are no express "blocker" provisions which prohibit the
transfer of specified assets to unrestricted subsidiaries; such
transfers are permitted subject to carve-out capacity and other
conditions.
Non-wholly-owned subsidiaries are not required to provide
guarantees; dividends or transfers resulting in partial ownership
of subsidiary guarantors could jeopardize guarantees, with no
explicit protective provisions limiting such guarantee releases.
There are no express protective provisions prohibiting an
up-tiering transaction.
The borrower may incur debt in lieu of the available RP
capacities.
The proposed terms and the final terms of the credit agreement may
be materially different.
Headquartered in Watertown, MA, athenahealth Group Inc. is a
leading provider of network-based electronic health records,
revenue cycle management, patient management, care coordination,
and population health software and services to healthcare
providers. The company generated revenues of around $1.9 billion in
the LTM ended September 30, 2021. Following the close of the
transaction, the company will be majority owned by Hellman &
Friedman, Bain Capital and GIC, with minority equity interest held
by Veritas Capital, Evergreen Coast Capital and management.
The principal methodology used in these ratings was Software
Industry published in August 2018.
ATHENAHEALTH GROUP: S&P Assigns 'B-' ICR on Acquisition by Bain
---------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issuer credit rating to
athenahealth Group Inc. S&P also lowered its issuer credit rating
on athenahealth Intermediate Holdings LLC to 'B-' from 'B' and
expect to withdraw that rating and its issue-level rating on the
company's legacy debt at close of transaction because S&P expects
the company will repay all currently outstanding debt.
S&P said, "We assigned our 'B-' issue-level and '3' recovery
ratings to the company's secured debt, indicating our expectation
for meaningful (rounded estimate: 65%) recovery in the event of
payment default.
"The stable outlook reflects our expectation that the company will
maintain leverage above 12x in 2022 and 2023 (above 9x when
discounting the preferred equity), even as the company continues to
increase revenue at a high-single-digit percentage rate, maintain
margins of about 38% (with EBITDA burdened by capitalized software
development costs), and generate FOCF of about $350 million."
Private equity firms Bain Capital and Hellman & Friedman are
acquiring electronic health records and revenue cycle management
(RCM) SaaS software provider athenahealth Group Inc. from Veritas
Capital and Evergreen Coast Capital for about $17 billion.
S&P said, "We expect athenahealth to maintain its strong growth
trajectory in 2022 as it continues to gain share in the ambulatory
space. The company outperformed our expectations in 2021 due to
improved customer volume and continued bookings momentum as well as
successful cost-reduction initiatives. The company continues to
benefit from gaining new customers that are often replacing legacy
software, as well as offering new solutions across the installed
customer base. We expect high-single-digit percentage revenue
growth in 2022 to be driven by underlying collections growth in the
existing customer base, continued growth in new accounts, and the
adoption of new RCM modules by new and existing customers."
athena is the third-largest vendor in the fragmented ambulatory
care solutions market, operating a highly integrated cloud platform
with high revenue predictability. Although certain segments of the
health care information technology (IT) market, such as hospital
electronic health records (EHR) software, are largely saturated,
many health care providers continue to turn to multiple health care
IT software and services providers to meet their clinical and
receivables data needs. Many EHR software providers have not yet
fully developed revenue cycle management capabilities while RCM
providers may not provide their own clinical software, developing
software compatible with Epic or Cerner instead. In addition, while
many RCM companies offer software without services, others burden
their margins with labor-intensive services.
The company's athenaOne cloud platform integrates clinical
solutions with health care payments solutions, also offering RCM
services and other increasingly important solutions in spaces such
as patient engagement. The company is also able to maintain its
high 30% EBITDA margins while providing RCM services, allowing
providers to cut some of their internal RCM departments, thus
increasing customer stickiness. S&P views this integrated clinical
and payments platform with services as a strong competitive
advantage for the company and expect it will allow athena to
monetize the data and offer other high-margin solutions, such as
chronic care management, population health, life sciences and
pharmaceutical solutions, and payer solutions.
S&P said, "While we view this company as a strong player in the
health care IT (HCIT) space, we expect the competitive landscape to
become increasingly fierce. Health systems are increasingly
entering the ambulatory space and physician practices. While they
are not yet forcing their HCIT selections onto the practices they
acquire, we expect they will eventually turn their efforts to
harmonizing all providers in their systems onto one platform,
allowing them to follow episodes of care from start to finish. Some
large software companies that have until now focused on the health
system may expand their solutions into the ambulatory space. In
addition, there are increasingly new traditional and less
traditional entrants into the growing HCIT space, the latest being
the Oracle-Cerner acquisition announced in December 2021. Finally,
over the past several years, EHR and RCM providers have seen a
flurry of mergers and acquisitions, creating larger players with
improved platform features and ability to enter new sites of care.
While we believe athena is well positioned to compete in this
evolving space, it will need to continue investing heavily through
acquisitions as well as software product innovations.
"Even with its strong growth trajectory, we expect leverage to
remain above 12x in 2022 and 2023 (above 9x, except the preferred
equity, which we view as debt-like), and the company to produce
FOCF of above $300 million, excluding transaction fees. The rating
incorporates our expectation that athena will maintain an
aggressive financial policy, including undertaking leveraging
events such as debt-funded acquisitions, due to its
financial-sponsor ownership. We also believe the high interest
expense associated with this debt level will make it harder for it
to compete in an evolving market.
"The stable outlook reflects our expectation that the company will
maintain leverage above 12x in 2022 and 2023 (above 9x when
discounting the preferred equity), even as the company continues to
increase revenue at a high-single-digit rate, maintain margins of
about 38% (with EBITDA burdened by capitalized software development
costs), and generate FOCF of about $350 million.
"We could consider lowering our rating on athena if we deemed
athena's capital structure to be unsustainable due to a significant
deterioration in the company's FOCF. This could occur due to
elevated product investments combined with more intense competitive
pressures, causing a revenue slowdown and weakening EBITDA margins.
It could also reflect significant debt-funded acquisitions and
dividends.
"We could raise the rating if the company continued to generate
revenue and EBITDA growth, maintained EBITDA margins in the mid- to
high-30% area, and sustained adjusted leverage below 10x and if
free cash flow to debt remained above 5%, and we viewed a
subsequent near-term leveraging action (either through a dividend
or an acquisition) to be unlikely."
AUCTION.COM LLC: Moody's Affirms B3 CFR & Cuts 1st Lien Debt to B3
------------------------------------------------------------------
Moody's Investors Service affirmed Auction.com, LLC's B3 corporate
family rating and B3-PD probability of default rating.
Concurrently, Moody's downgraded Auction.com's first lien secured
rating to B3 from B2. The outlook is stable.
`
In the third quarter of 2021, the company raised $300 million of
non-convertible senior preferred equity and $500 million of
convertible junior preferred equity. The proceeds were used to
repay the existing $110 million senior secured second lien term
loan, pay down the fully drawn $45 million revolver, fund a $500
million dividend to existing shareholders, and pay related fees and
expenses. The remaining proceeds were added as cash to the balance
sheet. The first lien secured term loan and revolver will no longer
benefit from the subordinated debt cushion that the second lien
debt provided and, as a consequence, the first lien instrument
ratings are aligned with the B3 CFR.
Governance considerations for this action include private equity
ownership and a financial strategy prioritizing shareholders'
returns as evidenced by the use of proceeds largely being used to
pay a $500 million dividend. These risks are somewhat offset by an
improved liquidity position with cash being added to the balance
sheet and the full paydown of the second lien debt and revolver,
which will lead to a reduction in leverage and lower interest
payments (approximate reduction of $1 million per month).
Affirmations:
Issuer: Auction.com, LLC
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Downgrades:
Issuer: Auction.com, LLC
Senior Secured First Lien Bank Credit Facility, Downgraded to B3
(LGD3) from B2 (LGD3)
Outlook Actions:
Issuer: Auction.com, LLC
Outlook, Remains Stable
RATINGS RATIONALE
In an effort to support homeowners hurt by the coronavirus
outbreak, a series of federal and state programs were introduced
since the onset of the pandemic that included forbearance and
foreclosure relief. The foreclosure moratorium, which expired on
July 31, 2021, and eviction moratoriums, which expired on October
2, 2021, reduced the transaction pipeline moving into Auction.com's
foreclosure auctions stage. Auction.com's revenue, earnings and
cash flows temporarily diminished materially as a result, but
revenues have increased on a monthly basis by 50% in the fourth
quarter of 2021. Despite the foreclosure moratorium expiration,
Moody's expects revenue and earnings pressure to continue until
foreclosure volumes reach pre-pandemic levels again, which the
company expects will be in the third quarter of 2022. Assuming a
gradual volume recovery and return to pre-pandemic levels by the
third quarter of 2022, Moody's expects Debt/EBITDA will decline to
below 8x by FYE2022. (All metrics cited include Moody's standard
adjustments unless noted otherwise. EBITDA and EBITA are also
adjusted to include the expensing of capitalized software costs.)
For FYE2023, Moody's expects that a full year of pre-pandemic
foreclosure volumes further supported by the continued secular
shift of foreclosures to online auctions will result in revenue
greater than FYE2019 levels and leverage declining below 5x.
Auction.com's B3 CFR reflects the company's status as a category
leader in a niche market and its consistent performance despite
ongoing market pressures, balanced by its still high regulatory
risk. Moody's expects that the secular shift of foreclosures to
online auctions and a return to pre-pandemic foreclosure volumes by
the third quarter of 2022 will support profitability and earnings
growth for Auction.com after a period of near-term earnings
pressure. Governance risks that Moody's considers in the company's
credit profile include an aggressive financial strategy that
exposes the company to event risk and a high likelihood of periodic
releveraging to support sponsor returns under private equity
ownership.
Moody's views Auction.com's liquidity as very good, largely
supported by the company's cash on hand ($285 million as of
September 30, 2021) and a lack of funded debt maturities until
2024, but constrained by diminished cash flows that are not
expected to recover to pre-pandemic level until at least late 2022.
The company's cash balances, internally generated cash flow from
the real estate owned ("REO") auction business in combination with
cost savings, are more than sufficient to support possible
operating losses and earnings volatility as foreclosure volumes
recover to pre-pandemic levels. Auction.com's debt service consist
of $4.5 million first lien debt amortization as well as interest
payments.
The company's $45 million revolver, which expires on September 29,
2022, was fully drawn as of September 30, 2021 but was fully repaid
in January 2022. The revolver has a springing maximum first lien
net leverage ratio of 6.75x when the revolver is more than 35%
used. Given the generous EBITDA add-back in the covenant leverage
ratio calculation, Moody's expects the company will have sufficient
cushion over the requirement in the next 12-18 months. Moody's also
anticipates that Auction.com will take the necessary steps to
extend the revolver's maturity ahead of its expiration date.
The B3 rating of the senior secured first lien credit facility,
consisting of a $45 million revolving credit facility expiring
September 2022 and a $433 million term loan B due September 2024,
reflects a PDR of B3-PD and a loss given default ("LGD") of LGD3.
The senior secured first lien rating is in line with the B3 CFR and
reflects its position as the vast majority of debt in the capital
structure. Moody's does not include the $300 million of
non-convertible senior preferred equity and $500 million of
convertible junior preferred equity in the Loss Given Default
assessment or for analytical credit metrics.
The stable outlook reflects Moody's expectation of a rebound in
operating performance in 2022 as foreclosure volumes return to
pre-pandemic levels. The stable outlook also incorporates Moody's
expectation that the company will maintain at least adequate
liquidity, generate break-even to positive cash flow and maintain
strong cash balances over the next 12 months.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Auction.com demonstrates sustained
Debt/EBITDA of under 4.0x (Moody's adjusted) and sustained free
cash flow-to-debt in the mid-single digit percentage range while
maintaining good liquidity. Achieving a greater scale as measured
by revenue and demonstrated ability to sustain profitable growth
through real estate cycles would also be viewed positively for the
ratings.
The ratings could be downgraded if free cash flow is negative for
an extended period of time without supporting liquidity or Moody's
no longer expects a significant rebound in operating performance
and EBITDA to occur this year. A significant market share loss,
debt financed shareholder distributions or acquisitions, or a loss
of a significant customer could also likely lead to a downgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Auction.com, LLC provides asset sale services for the US
residential real estate markets. The company enables auction-based
sales of bank-owned and foreclosure residential properties using
either the company's online transaction site or via live local
auctions in counties throughout the US. The company is
majority-owned by affiliates of Thomas H. Lee Partners L.P. and
co-investors. Revenue for the twelve months ended September 30,
2021 was about $88 million.
BAUSCH HEALTH: Fitch Assigns BB Rating on Secured Credit Facility
-----------------------------------------------------------------
Fitch Ratings has assigned a 'BB'/'RR1' rating to Bausch Health
Companies Inc.'s (BHC) and Bausch Health Americas, Inc.'s (BHA)
secured credit facility. The company intends to use the proceeds
from the issuance of the new term B loans, additional secured debt,
along with proceeds from the Bausch + Lomb (B+L) IPO and from the
repayment of an intercompany note owed by B+L to redeem in full its
outstanding 6.125% senior notes due 2025, refinance all of its
existing term B loans and fund a partial redemption of other
outstanding debt. .
The company's ratings reflect Fitch's view that Bausch Pharma's
business profile and free cash flow generation will weaken but
remain broadly consistent with the 'B' rating, despite the loss of
diversification from the proposed Bausch + Lomb Corporation spinoff
and the pro forma post-spin target for Bausch Pharma net leverage
of 6.5x-6.7x. Execution risk remains for Bausch Pharma to reduce
gross leverage (total debt/EBITDA) below 7x and build headroom
through stabilization of the core business, contributions from R&D
and voluntary debt repayment.
KEY RATING DRIVERS
Outlook Reflects Stressed Leverage: The company's leverage remained
above or around its 7x negative rating sensitivity beginning in
2020, owing to a $1.2 billion legal settlement and operational
challenges from the coronavirus pandemic. The company has reduced
Fitch-calculated leverage to around 6.9x at Sept. 30, 2021, mainly
by debt reduction. While Fitch believes Bausch Pharma will continue
to deleverage post spinoff, its gross leverage could remain
elevated above 7x for an extended period of time if the company
fails to execute.
Coronavirus Headwinds: The pandemic adversely affected Bausch's
operating performance during 2020, particularly in the second
quarter. The company's Ortho Dermatologics, Dentistry and Global
Surgical businesses, which account for roughly 13% of revenues have
been hit the hardest. The company adjusted its operations to
mitigate some of challenges, including manufacturing and marketing.
The operating environment for Bausch has continued to improve
throughout 2021, as the management of the pandemic continued to
improve.
Bausch's ratings reflect its track record in significantly reducing
the absolute level of Fitch-calculated debt outstanding since Jan.
1, 2016 with a combination of internally generated cash flow and
proceeds from asset divestitures. Bausch sold all of its equity
interests in Amoun Pharmaceutical for approximately $740 million
and used the net proceeds to repay debt.
Bausch Spinoff Strategically Constructive: Fitch views planned
spinoff of Bausch's eye care business as strategically sound, given
limited synergies between the branded pharma business and eye care.
The proposed transaction's effect on Bausch's credit profile will
largely depend on the capital structure and financial strategy post
spin. The company is working towards a post-spin pro forma net
leverage profile of the eye care business and the legacy business
of less than 2.5x and approximately 6.5x-6.7x, respectively. The
company originally targeted post-spin proforma gross leverage of
4.0x and 5.5x, respectively.
In addition, the company plans to IPO its medical aesthetics
business in the near future. Even though Bausch's business risk
profile will be negatively affected by less diversification,
greater focus on innovative pharma should improve the company's R&D
pipeline's probability of success. The company intends to focus on
expanding its leadership in its gastroenterology,
aesthetics/dermatology, neurology and international business.
Good Progress in Business Turn-around: Bausch Health's 'B' Issuer
Default Rating (IDR) reflects progress in stabilizing operations
and reducing debt since mid-2016 through the third quarter of 2021.
Throughout the business turn-around, BHC consistently generated
strong FCF relative to the 'B' category rating, pushed its nearest
large debt maturity out until 2025, and loosened restrictive
secured debt covenants through refinancing transactions. The
company's stronger operating profile and consistent cash generation
should enable it to further reduce leverage in the near term once
the headwinds caused by the pandemic have abated.
Intermediate-Term Growth Potential: Bausch Health operates with a
reasonably diverse business model relative to its products,
customers and geographies served. Many of the company's businesses
are comprised of defensible product portfolios, which are capable
of generating durable margins and cash flows. Post the spinoff of
the eye health business, Fitch believes that the expected long-term
growth of the gastrointestinal (GI/Salix) businesses support the
company's operating prospects. Fitch also expects that the
dermatology business will grow in 2022 as BHC successfully
commercializes recently launched products.
Reliance on New Products: The stabilization of Bausch Health's
operating profile has involved an increased focus on developing an
internal research and development pipeline, which Fitch believes is
constructive for the company's credit profile over the long term.
This strategy is not without risk since Bausch Health needs to ramp
up the utilization of recently-approved products through successful
commercialization efforts. These products include Siliq (for the
treatment of moderate-to-severe plaque psoriasis, although with
safety restrictions), Bryhali (plaque psoriasis), Lumify (red eye)
and Vyzulta (glaucoma).
Near-Term Maturities Manageable: Bausch Health consistently
generates significant positive FCF (Sept. 30, 2021 LTM
Fitch-calculated FCF margin of 17.9%) and has satisfied most debt
maturities through 2024. The company has adequate access to the
credit markets providing the flexibility to further refinance
upcoming maturities.
DERIVATION SUMMARY
Bausch Health is significantly larger and more diversified than
specialty pharmaceutical industry peers Mallinckrodt plc and Endo
International plc. While all three manufacture and market specialty
pharmaceuticals and have maturing pharmaceutical products, Bausch
Health's Bausch + Lomb (B+L) business meaningfully decreases
business concentration risk relative to Mallinckrodt and Endo. B+L
offers operational diversification in terms of geographies and
payers. Many of its products are purchased directly by customers
without the requirement of a prescription. Post spin-off, Bausch
will become more similar to its peers regarding diversification.
Bausch Health's rating also reflects gross debt leverage that is
higher than peers. But unlike its peers, BHC does not face
contingent liabilities related to the opioid epidemic. Bausch
accumulated a significant amount of debt through numerous
acquisitions. In addition, Bausch Health had a number of missteps
in the integration process and other operational issues. Management
has been focusing on reducing leverage by applying operating cash
flow and divestiture proceeds to debt reduction and returning the
business to organic growth through internal product development
efforts.
KEY ASSUMPTIONS
-- Low to mid single-digit revenue growth during the forecast
period;
-- EBITDA of $3.4 billion-$3.5 billion in 2021 and roughly $1
billion lower post eyecare spinoff;
-- Annual FCF of at least $900 million throughout the forecast
period;
-- Continued debt reduction utilizing FCF;
-- Leverage declining to below 7.0x by the end of 2023;
-- Eye Care spinoff executed in 2022 with proforma post-spinoff
net leverage of 6.5x-6.7x.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- An expectation of gross debt leverage (total debt/EBITDA)
durably below 6.0x;
-- Bausch Health continues to maintain a stable operating profile
and refrains from pursuing large, leveraging transactions
including acquisitions;
-- Forecasted FCF remains significantly positive.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Gross debt leverage (total debt/EBITDA) durably above 7.0x;
-- FCF significantly and durably deteriorates;
-- Refinancing risk increases and the prospect for meaningful
leverage reduction weakens.
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
Bausch Health had adequate near-term liquidity at Sept. 30, 2021,
including restricted and unrestricted cash on hand of $1.9 billion.
The company will use $1.21 billion of the cash to fund pending
settlement of the U.S. Securities litigation.
The company's amended credit facility includes a $975 million
revolver and matures in 2027. The company's most recent refinancing
activities have satisfied debt maturities through 2022. Bausch
Health consistently generated significantly positive FCF during
2015-2021, despite facing serious operating challenges. Fitch
expects the company to maintain adequate headroom under the debt
agreement financial maintenance covenants during the 2021-2024
forecast period.
Recovery Assumptions
The recovery analysis assumes that Bausch Health would be
considered a going concern in bankruptcy and that the company would
be reorganized rather than liquidated. The analysis is based on the
current company (i.e. not pro forma for the loss of the eye care
business and any resultant change in debt). Fitch estimates a going
concern enterprise value (EV) of $19.2 billion for Bausch Health
and assumes that administrative claims consume 10% of this value in
the recovery analysis.
The going concern EV is based upon estimates of post-reorganization
EBITDA and the assignment of an EBITDA multiple. Fitch's estimate
of Bausch Health's going concern EBITDA of $2.55 billion is roughly
25% lower than the LTM 2019 EBITDA, reflecting a scenario where the
recent stabilization in the base business is reversed, and the
company is not successful in commercializing the R&D pipeline.
Fitch assumes Bausch Health will receive a going concern recovery
multiple of 7.5x EBITDA. This is slightly higher than the 6.0x-7.0x
Fitch typically assigns to specialty pharmaceutical manufacturers,
representing B+L's relatively more durable consumer products focus
and the company's larger scale and broader product portfolio than
peers. The current average forward public market trading multiple
of Bausch Health and the company's closet peers is 9.9x.
Fitch applies a waterfall analysis to the going concern EV based on
the relative claims of the debt in the capital structure, and
assumes that the company would fully draw the revolvers in a
bankruptcy scenario. The senior secured credit facility, including
the term loans and revolver, and senior secured notes ($8.9 billion
in the aggregate pre-refinancing), have outstanding recovery
prospects in a reorganization scenario and are rated 'BB/RR1',
three notches above the IDR. The senior unsecured notes ($14.9
billion in the aggregate pre-refinancing) have an average recovery
and are rated 'B'/'RR4', prior to this current issuance.
ISSUER PROFILE
BHC is a multinational healthcare company headquartered in Laval,
Quebec that develops, manufactures and markets pharmaceutical and
medical products. It has significantly expanded the scope and
geographic reach of its product offering since the initial merger
of Bausch and Biovail in 2009.
ESG CONSIDERATIONS
Bausch Health Companies Inc. has an ESG Relevance Score of '4' for
Exposure to Social Impacts due to pressure to contain healthcare
spending growth, a highly sensitive political environment, and
social pressure to contain costs or restrict pricing. This has a
negative impact on the credit profile and is relevant to the rating
in conjunction with other factors.
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.
BAUSCH HEALTH: Moody's Rates New Secured Debt Facilities 'Ba3'
--------------------------------------------------------------
Moody's Investors Service assigned a Ba3 rating (LGD2) to the new
senior secured term loan and revolving credit facility of Bausch
Health Companies Inc. ("Bausch Health"). There are no changes to
Bausch Health's existing ratings including the B2 Corporate Family
Rating, the B2-PD Probability of Default rating, the Ba2 senior
secured rating, the B3 senior unsecured rating and the SGL-1
Speculative Grade Liquidity Rating. However, at the conclusion of
the financing, which is contingent on the upcoming initial public
offering of subsidiary Bausch + Lomb Corporation ("Bausch + Lomb"),
Moody's anticipates downgrading the ratings on Bausch Health's
senior secured notes to Ba3 from Ba2, consistent with the Ba3
senior secured rating being assigned. The outlook remains unchanged
at negative.
The new senior secured credit facilities are part of several
financing transactions related to the separation of Bausch + Lomb.
The new term loan will be lower than Bausch Health's existing term
loan, reflecting proceeds from Bausch + Lomb's debt raise and IPO.
At the conclusion of the financing, Moody's will withdraw the Ba2
ratings on Bausch Health's existing senior secured term loans due
2025 and revolving credit facility maturing in 2023.
The Ba3 rating on the new secured credit facilities is lower than
the Ba2 rating on Bausch Health's existing credit facilities
because of weaker protection stemming from an anticipated increase
in senior secured leverage, as well as the anticipated release of
guarantees and liens from Bausch + Lomb. In addition, new debt is
being raised at Bausch + Lomb, which will have a senior claim on
the assets of Bausch + Lomb. Considering these factors, the Ba3
rating on the new secured credit facilities reflects a one-notch
negative override to the rating indicated by Moody's Loss Given
Default (LGD) for Speculative-Grade Companies methodology.
Moody's does not anticipate that the capital structure changes will
result in a lower rating on Bausch Health's B3 senior unsecured
notes, all other factors equal.
However, Moody's will continue to assess the impact on the credit
profile as greater details around the Solta IPO and Bausch + Lomb
IPO become available including valuations and the level of the
company's remaining ownership in Solta. In March 2022, a US
district court will begin hearings in the Xifaxan patent challenge
- the outcome of which will also be critical to the company's
credit profile.
Assignments:
Issuer: Bausch Health Companies Inc.
Senior Secured Term Loan, Assigned Ba3 (LGD2)
Senior Secured Multi Currency Revolving Credit Facility, Assigned
Ba3 (LGD2)
RATINGS RATIONALE
Bausch Health's B2 Corporate Family Rating reflects its high
financial leverage with gross debt/EBITDA of about 7x of September
30, 2021 using Moody's calculations. The credit profile is also
constrained by the pending spinoff of the company's global eyecare
business. This transaction will increase business risks of the
remaining company, known as Bausch Pharma, due to reduced scale and
diversity and high leverage initially, with targeted net
debt/EBITDA of 6.5x to 6.7x. The company faces various outstanding
legal investigations and an unresolved patent challenge on Xifaxan
-- its largest product.
These risks are tempered by good progress in an ongoing turnaround
prior to the coronavirus pandemic, and a consistent focus on
deleveraging, which Moody's expects will continue after the
spinoff. The credit profile is supported by good free cash flow,
owing to high margins, modest capital expenditures and an efficient
tax structure. Moody's will continue to gauge the impact on the
credit profile as more details around the Solta and Bausch + Lomb
IPOs are disclosed, and based on the latest operating performance,
risk factors and financial policies.
ESG considerations are material to Bausch Health's credit profile.
Bausch Health's key social risks include a variety of unresolved
legal issues, notwithstanding significant progress to date at
resolving such matters. Other social risks include exposure to
regulatory and legislative efforts aimed at reducing drug pricing.
However, Bausch Health's product and geographic diversification
help mitigate some of that exposure, as well as business lines
outside of branded pharmaceuticals. Among governance
considerations, management has had a consistent debt reduction
strategy, which Moody's envisions continuing following the eyecare
spinoff. In addition, the company has built a steady track record
of generating positive organic growth in recent years.
The outlook is negative, reflecting execution risks associated with
upcoming transactions including the Bausch + Lomb spinoff and the
negative credit impact on the remaining Bausch Pharma business.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to a downgrade include operating setbacks,
large litigation-related cash outflows, or an adverse outcome in
the unresolved Xifaxan patent challenge. Quantitatively, on a total
company basis, gross debt/EBITDA sustained above 7.0x could lead to
a downgrade. After the pending eyecare spinoff, gross debt/EBITDA
sustained above 5.5 times could lead to a downgrade.
Factors that could lead to an upgrade include consistent earnings
growth, successful pipeline execution of new rifaximin
formulations, and significant resolution of outstanding legal
matters including the Xifaxan patent challenge. On a total company
basis, gross debt/EBITDA sustained below 6.0x could support an
upgrade. After the pending eyecare spinoff, gross debt/EBITDA
sustained below 4.0 times could support an upgrade.
Bausch Health Companies Inc. is a global company that develops,
manufactures and markets a range of pharmaceutical, medical device
and over-the-counter products. These are primarily in the
therapeutic areas of eye health, gastroenterology and dermatology.
Revenues for the 12 months ended September 30, 2021 totaled
approximately $8.5 billion.
The principal methodology used in these ratings was Pharmaceuticals
published in November 2021.
BAUSCH HEALTH: S&P Rates New Revolver and Sr. Sec. Term Loan 'BB'
-----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' issue-level rating and '1'
recovery rating to Bausch Health Cos. Inc.'s proposed $975 million
revolving credit facility and $2.5 billion senior secured term
loan. The '1' recovery rating indicates its expectation for very
high (90%-100%; rounded estimate: 95%) recovery in the event of a
payment default. The company plans to use the proceeds from this
offering, a follow-on $1 billion secured debt offering, and the
proceeds from the Bausch + Lomb IPO and related debt financing
(which S&P expects will close in early February) to fully redeem
its 6.125% senior notes due 2025, refinance all of its existing
term loan B facilities, partially redeem its 9.000% senior notes
due 2025, and pay related fees, premiums, and expenses.
S&P said, "Our 'B+' issuer credit rating and negative outlook
reflect the company's net leverage target for Bausch Pharma (the
remaining entity after the proposed spin-off of its eyecare
business) of 6.5x-6.7x at the time of the transaction. In our view,
Bausch Pharma will be a weaker business without the contributions
from its eyecare division. Specifically, the company's high product
concentration and unproven pipeline lead us to believe it will
likely resort to acquisitions in the coming years to diversify its
offerings. Partially offsetting these negative factors are Bausch
Pharma's sizable scale and solid free cash flow generation
ability."
BCPE NORTH 2: Moody's Affirms B3 CFR on Steven Robert Transaction
-----------------------------------------------------------------
Moody's Investors Service affirmed the ratings on BCPE North Star
US Holdco 2 ("Dessert Holdings") including the company's B3
Corporate Family Rating and B3-PD Probability of Default Rating.
Moody's also affirmed the B2 ratings on the company's senior
secured first lien revolver expiring in June 2026 (including
proposed $80 million upsize), senior secured first lien term loan
maturing June 2028 (including proposed $430 million upsize), and
the $75 million senior secured first lien delayed draw term loan.
Moody's additionally affirmed the Caa2 ratings on the company's
senior secured second lien term loan maturing June 2029 (including
proposed $135 million upsize) and the $20 million senior secured
second lien delayed draw term loan. The outlook is stable.
Dessert Holdings plans to issue a $430 million senior secured first
lien term loan and a $135 million second lien term loan to
partially fund the acquisition of Steven Robert Originals, LLC
("Steven Charles"). The remaining financing will come from balance
sheet cash, new cash equity, and a sale lease back transaction.
Concurrent with the transaction, Dessert Holdings is upsizing its
existing revolver to $155 million from $75 million.
Steven Charles is a leading manufacturer in the dessert category
with long-standing partnerships with large retail and foodservice
customers. The company sells products such as cake pops, cakes,
brownies, cookies, cake balls, and cake bars. As a result of the
acquisition, Dessert Holdings will gain new customers as well as
additional manufacturing facilities which will help the company
expand its presence in the dessert category.
The transaction is credit negative because it will increase
leverage and result in cash outflows to fund the integration.
However, Moody's affirmed Dessert Holdings' B3 CFR and maintained
the stable outlook because the company is projected to reduce
leverage over the next 12-to-18 months and the acquisition creates
operational benefits including additional production capacity, new
customer relationships, and bolsters the company's scale. Moody's
believes that there is execution risk related to the integration,
but solid execution would improve the earnings base and free cash
flow within a year or two. Moody's projects Dessert Holdings will
generate $10-30 million of free cash flow in 2022 and leverage will
fall as the company grows earnings through increased store and SKU
count among its existing customer base combined with revenue growth
in its foodservice segment driven by continued volume recovery.
The following ratings/assessments are affected by the action:
Affirmations:
Issuer: BCPE North Star US Holdco 2
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Revolving Credit Facility (including
proposed upsize), Affirmed B2 (LGD3)
Senior Secured 1st Lien Term Loan (including proposed upsize),
Affirmed B2 (LGD3)
Senior Secured 1st Lien Delayed Draw Term Loan, Affirmed B2
(LGD3)
Senior Secured 2nd Lien Term Loan (including proposed upsize),
Affirmed Caa2 (LGD6)
Senior Secured 2nd Lien Delayed Draw Term Loan, Affirmed Caa2
(LGD6)
Outlook Actions
Issuer: BCPE North Star US Holdco 2
Outlook, Remains Stable
RATINGS RATIONALE
Dessert Holdings' B3 Corporate Family Rating reflects the company's
solid EBITDA margins, leading position in narrowly defined bakery
categories, strong customer base with longstanding relationships,
and good liquidity. The company's stable EBITDA margin is primarily
the result of the company's ability to differentiate itself by
offering premium desserts at scale to its in-store bakery and
foodservice customers. Additionally, unlike a lot of its
competitors who were impacted by the coronavirus pandemic and
experienced declining sales in 2020, Dessert Holdings was able to
continue to grow revenues, reporting a 2% growth in Fiscal 2020
sales. The company's strong and diverse customer mix, from food
service channels (US& Canadian) to national retail accounts,
allowed it to be nimbler than its competitors in the face of the
pandemic. Considering Dessert Holdings' mix of in-store bakery and
foodservice customers, Moody's believe the company will continue to
report revenue growth in 2022, having already reported a 21% year
over year improvement in sales in the first nine months of 2021.
Credit concerns include Dessert Holdings small size in terms of
revenue, less than $700 million pro-forma for Fiscal 2021, and high
financial risk. Pro forma debt-to-EBITDA leverage as of September
30, 2021 is in a mid-7x range and Moody's projects that
debt-to-EBITDA will decline to the mid-6x range over the next 12 to
18 months.
Dessert Holdings' high leverage is of particular concern given the
company's small size and relatively narrow product focus. Moody's
also expects an aggressive financial policy under private equity
ownership including acquisition event risk. Combined, these risks
limit the company's overall financial flexibility and ability to
respond to severe pricing and demand pressure should either occur.
Dessert Holdings has good liquidity, which incorporates Moody's
estimate of $13 million of pro-forma cash, approximately $10 - $30
million of annual projected free cash flow in 2022, $131.7 million
of pro-forma availability on the $155 million revolver, two delayed
draw term loans of $75 million and $20 million, and no meaningful
debt maturities through 2025. The cash sources provide ample
resources for the $8.3 million of required annual amortization,
reinvestment needs and potential acquisitions.
The B2 ratings on the senior secured first lien facilities
(revolver, term loan, and delayed draw term loan) is one-notch
higher than Dessert Holdings' B3 Corporate Family Rating. This
one-notch difference acknowledges the loss absorption provided by
the $250 million second lien debt. Conversely, the Caa2 rating on
the second lien term loan and delayed draw term loan, two notches
lower than the Corporate Family Rating, considers the large amount
of debt with a priority lien on the collateral that would weaken
recovery for the second lien debt in the event of a default.
The coronavirus outbreak and the government measures put in place
to contain it continue to disrupt economies and credit markets
across sectors and regions. Although an economic recovery is
underway, it is tenuous, and its continuation will be closely tied
to containment of the virus. As a result, there is uncertainty
around Moody's forecasts. Moody's regard the coronavirus outbreak
as a social risk under its ESG framework, given the substantial
implications for public health and safety. Notwithstanding, Dessert
Holdings and many other packaged food companies are likely to be
more resilient than companies in other sectors, although some
volatility can be expected through 2022 due to uncertain demand
characteristics, channel shifting, and the potential for supply
chain disruptions and difficult comparisons following these
shifts.
Governance risk includes Dessert Holdings' aggressive financial
strategies under private equity ownership including its high
financial leverage and acquisition event risk.
Environmental considerations are not material considerations in the
rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that Dessert
Holdings will continue to grow its organic revenues and EBITDA in a
low to mid-single digit percentage range through continued new
customer growth and retention and generate annual positive free
cash flow of at least $10 million.
An upgrade in the ratings would require consistent organic revenue
growth, stable to improving margins, stronger free cash flow, the
ability to sustain debt-to-EBITDA below 6.0x, and maintenance of
good liquidity. Ratings could be downgraded if operating
performance weakens, the EBITDA margin significantly declines for
any reason, liquidity deteriorates, or debt-to-EBITDA is not
reduced and sustained below 7.0x. Debt-financed acquisitions or
shareholder distributions could also lead to a downgrade.
The principal methodology used in these ratings was Consumer
Packaged Goods Methodology published in February 2020.
BCPE North Star US Holdco 2 ("Dessert Holdings") based in St. Paul,
Minnesota is a leading manufacturer of premium frozen desserts. The
company sells dessert cakes, cheesecakes, brownies, and bars to
retail and foodservice customers across the US and Canada. Dessert
Holdings operate under four brands: The Original Cakerie, Lawler's
Desserts, Atlanta Cheesecake Company, and Steven Charles. The
company is owned and controlled by investment funds associated with
Bain Capital following a June 2020 leverage buyout.
BCPE NORTH STAR: S&P Affirms 'B-' ICR on Steven Charles Deal
------------------------------------------------------------
S&P Global Ratings affirmed our 'B-' issuer credit rating on
U.S.-based manufacturer of premium desserts BCPE North Star
Holdings L.P. (operating as Dessert Holdings [DH]).
U.S.-based manufacturer of premium desserts BCPE North Star
Holdings L.P. is acquiring Steven-Robert Originals LLC (operating
as Steven Charles [SC]).
The company will fund the proposed transaction and related fees
primarily with a $430 million senior secured incremental first-lien
term loan, a $135 million senior secured incremental second-lien
term loan, new common equity from its financial sponsor Bain
Capital, and proceeds from a sale-leaseback transaction. The
incremental facilities are fungible with the company's existing
senior secured facilities.
The affirmation reflects S&P's positive view of the SC acquisition
despite the increase in its near-term leverage.
S&P said, "We estimate DH's S&P Global Ratings-adjusted pro forma
leverage will rise above 8x as of the close of the transaction,
which is up from about 7x as of the completion of its leveraged
buyout (LBO) by Bain Capital in May 2021, due to increased debt to
fund the acquisition. The acquisition will improve the company's
revenue scale, by increasing its pro forma 2021 revenue by roughly
68%, and further diversify its product mix between retail and
foodservice (expected 50/50 split, down from a 70/30 tilt toward
retail prior to the transaction). Specifically, we expect the
purchase to add complimentary products to the portfolio in creating
single serve items such as cake pops, bars, brownies, and cookies.
It adds large quick service (QSR) and retail customers including
Starbucks. However, the acquisition somewhat increases the
company's customer concentration because Starbucks and Dominos will
account for about 25% of its pro forma gross sales. Nonetheless, we
view this risk as being partially offset by DH's long-standing
relationships and contractual exclusivity with these customers."
DH demonstrated a strong operating performance over the last 12
months despite rising inflation and commodity prices.
S&P said, "We expect the company to increase its organic revenue by
roughly 18% in 2021 on resilient performance in both its retail and
foodservice businesses, continued strong consumption trends, and
the successful implementation of its price increases. DH faces
inflationary pressures, largely related to the costs for its raw
materials, packaging, and wages, and expects to fully cover these
higher costs with price increases in the early part of 2022. The
company also uses commodity hedging for roughly 60% of its raw
material inputs, which we expect will help reduce its margin
volatility in 2022. SC experienced high growth in 2021 as well,
largely due to strong performance from Starbucks and Domino's, in
addition to margin expansion from the rationalization of
unprofitable SKUs. We forecast the combined company will increase
its revenue by about 10% in 2022, largely due to its increased SKU
count, new customer wins, and price increases.
"We forecast modest deleveraging over the next 12 months through
EBITDA growth and margin expansion as DH realizes its targeted cost
savings and synergies and continues to ramp up its business with
its new customers.
"We expect the company to deleverage to the mid-7x area by year-end
2022, largely through automation and procurement cost savings, new
customer wins, and the realization of synergies. We forecast DH
will realize a total of roughly $11.6 million of synergies from the
transaction, with the majority coming in 2023 and 2024 as it
invests in new machinery to automate certain processes and
gradually realizes procurement savings by leveraging its scale with
common suppliers and consolidating certain ingredients. We believe
new customer wins will contribute to an increase in the company's
EBITDA over the next 12–24 months as it ramps up its business
with key foodservice customers. For example, SC began selling its
M&M brownie product to a key foodservice customer in the third
quarter of 2021, and we expect it to have a meaningful contribution
in 2022. DH entered into a sale-leaseback agreement in December
2021 that entailed $5.3 million of annual rent expense, which will
partially offset some of the EBITDA improvement, but it provided
proceeds which will help fund the acquisition.
"We expect the company to generate good free operating cash flow
(FOCF) over the next 12–24 months despite the elevated capital
expenditure (capex) needs to support its automation initiatives.
"We forecast increased capex of $20 million-$25 million in 2022 and
roughly $30 million in 2023 because of management's investments in
new machinery at certain facilities, which will result in FOCF
generation of roughly $45 million-$55 million annually in 2022 and
2023. The company has effectively managed its inventory through the
recent disruptions in the global supply chain and we expect only
modest working capital needs over our forecast to fund its high
expected growth rate. Given the proposed debt-funded acquisition,
which comes shortly after the completion of its LBO by Bain Capital
in June 2021, we expect DH will prioritize its free cash flow for
acquisitions and continue to pursue an acquisitive growth
strategy.
"The stable outlook on DH reflects our expectation that its
leverage will improve to the mid-7x area over the next 12 months.
The outlook also incorporates our assumption of a smooth
integration of SC and the successful realization of $11.6 million
in targeted synergies."
S&P could raise its ratings on DH if it sustains leverage of less
than 6.5x, generates consistent healthy free operating cash flow,
and improves its scale and diversity. S&P believes this could occur
if:
-- The company deleverages through the timely realization of its
planned synergies and the benefits from its cost-savings
initiatives;
-- Achieves high single-digit percent organic top-line growth in
both its retail and food service channels;
-- Successfully implements its price increases while managing
through commodity and logistics cost inflation; and
-- Demonstrates a more conservative financial policy with a
commitment from management to maintain leverage at or below these
levels.
S&P could lower its ratings on DH if it expects its capital
structure to become unsustainable, there is a deterioration in its
free operating cash flow, or its liquidity becomes constrained.
This could occur if:
-- The company experiences difficulties with the integration of SC
and fails to realize its targeted synergies;
-- It experiences major manufacturing issues that lead to the loss
of key customers, lower sales, and weaker overhead absorption;
-- It is unable to offset intensified commodity, labor, and
logistics inflation such that its profitability declines;
-- It faces increased competition or customers begin in-sourcing;
-- The demand for its products declines due to a shift in consumer
preferences; or
-- It employs more aggressive financial policies, such as large
debt-financed acquisitions or dividends.
BIRMINGHAM-SOUTHERN COLLEGE: Moody's Cuts Tuition Bonds to Caa2
---------------------------------------------------------------
Moody's Investors Service has downgraded the issuer rating and debt
rating on the Tuition Revenue Bonds of Birmingham-Southern College,
AL to Caa2 from Caa1. The rated revenue bonds were issued through
the Birmingham Private Educational Building Authority, AL. The
outlook remains negative. The college had approximately $33 million
of total debt as of May 31, 2021.
RATINGS RATIONALE
The downgrade reflects sustained enrollment and revenue declines
driving deep operating deficits and extraordinary endowment draws.
Prospects for recovery in the event of default are weakening as the
university's endowment draws have resulted in a reported $17
million endowment deficiency. Management aims to bolster donor
confidence by granting endowed funds an interest in the real
property of the college subordinate to the roughly $20 million of
bank debt. However, this has prospects of more deeply subordinating
the interest of bondholders. Leadership's risk calibration in
continuing to make extraordinary endowment draws while pursuing
donor support for a related foundation informs Moody's opinion of
financial policy and the college's extremely weak ability to fund
investments in programs and facilities. This approach to financial
policy is a key driver of the rating action under Moody's ESG
framework.
The pandemic created revenue headwinds partially offset by federal
relief funding in fiscal 2020 and fiscal 2021, but relief funding
will be much lower in fiscal 2022. Operating revenue fell 8% to $34
million in fiscal 2021 as enrollment declined. A drop in gift
revenue compounded the year-over-year revenue challenges. Monthly
days cash on hand as of fiscal year end was perilously low at 24
days. The weak operating performance and decline in liquidity also
drove covenant violations in the college's bank debt. While the
bank syndicate has provided a waiver, the violation points to the
weak credit profile of the college. Enrollment declined an
additional 7% in fall 2021 to 1,047 full-time equivalent students.
Although management aims to increase both its enrollment and net
tuition revenue, the college's challenged strategic positioning
limits the prospects for material near term gains.
BSC leadership aims to raise over $100 million of endowed funds at
the separately managed BSC Foundation to support the college's
sustainability. Following a prolonged period of declining student
revenue and erosion of the college's financial resources, the
college's survival is highly dependent on rapidly achieving donor
support goals.
The downgrade of the tuition revenue bonds incorporates the issuer
rating and the enhancement provided by the claim on gross tuition
revenue, offset by structural subordination to bank debt and
potentially to underwater endowment funds.
RATING OUTLOOK
The negative outlook incorporates the trends of declining revenue,
weak operating performance and drop in liquidity, with limited
prospects for reversal over the outlook period unless the
university is able to restore donor confidence and improve
philanthropy quickly. The outlook also incorporates the bank debt
covenant violation.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Marked and sustained improvement in operating performance
-- Substantial gain in total cash and investments including
unrestricted liquidity
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Inability to materially increase philanthropic support and
improve operating performance over the next one to two years
-- Additional decline in unrestricted liquidity
-- Substantial increase in financial leverage or acceleration of
bank debt
-- Incremental impairment of recovery value of enterprise assets
including real estate and financial resources
LEGAL SECURITY
Security on the Tuition Revenue Bonds is provided by a pledge on
the college's gross tuition revenues. There is an additional bonds
test requiring that recent pledged tuition revenue be at least 300%
of prospective Maximum Annual Debt Service. There is no debt
service reserve fund requirement.
PROFILE
Birmingham-Southern College is a private liberal arts college with
operating revenue of $34 million in fiscal 2021. Founded in 1856,
the college is affiliated with the United Methodist Church. The
campus is comprised of 192 acres on the west side of Birmingham.
METHODOLOGY
The principal methodology used in these ratings was Higher
Education Methodology published in August 2021.
BOY SCOUTS: Falls Short of $2.7 Billion Abuse Settlement Vote Goal
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Maria Chutchian of Reuters reports that the Boy Scouts of America
remains slightly short of the votes it sought from sex abuse
victims for a $2.7 billion settlement that aims to resolve
accusations spanning decades, but says it is still working to
obtain more support for the deal that would allow it to emerge from
bankruptcy.
BSA, which filed for Chapter 11 in February 2020 facing widespread
accusations that troop leaders sexually abused Scouts, said 73.57%
of victims' votes were in favor of the plan, according to court
papers filed on Tuesday, January 18, 2022.
The count failed to meet the 75% threshold BSA had set as a target
but exceeded the minimum required under bankruptcy law, meaning the
organization could potentially still persuade a judge to approve
the settlement.
That figure represents less than a 0.5% increase from a preliminary
count released earlier this month.
But, thousands of ballots were not counted due to various defects,
according to Tuesday's, January 18, 2022, filing.
Meanwhile, mediation between BSA and opponents of the plan is
ongoing. Survivors can change their votes until a Feb. 22 hearing
on the deal before U.S. Bankruptcy Judge Laurie Selber Silverstein
in Delaware, who must sign off on the deal.
The settlement, which is central to BSA's proposed reorganization
plan, has divided survivors. Those that remain opposed argue that
the offer is far too low.
Local councils, insurers, and organizations that chartered Scouting
units and activities agreed to pay a combined $2.7 billion to
resolve more than 82,000 abuse claims.
BSA said recently that it is likely to be able to pay abuse claims
in full, an assertion some survivors dispute.
"We are actively engaging key parties with the hope of reaching
additional agreements, which could potentially garner additional
support for the Plan in the coming weeks," BSA said in a statement
on Tuesday, January 18, 2022.
A committee representing survivors did not immediately respond to a
request for comment.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC as financial advisor. Omni
Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BRAZOS ELECTRIC: Previews Securitization Plan Prior to ERCOT Trial
------------------------------------------------------------------
Electricity cooperative Brazos Electric Power Cooperative Inc.
provided an overview Tuesday, January 18, 2022, in Texas bankruptcy
court of an intended securitization transaction that will most
likely provide funding for a forthcoming Chapter 11 plan. Its
lawyers said the outcome of a February 2022 trial over a $1.9
billion claim from state grid operator ERCOT will affect the plan's
formulation.
During a status conference, debtor attorney Louis Strubeck of
O'Melveny & Myers LLP said Brazos has been working on a Chapter 11
plan framework for nearly six months, and continuing to work on a
plan. He added that high-level discussions have been done with
parties, and that Brazos is closer to coming up with four or five
options on a potential exit strategy. He added that JPMorgan is
now part of the proposed solution and has held discussions with 12
member coops regarding a potential securitization. The biggest
linchpin is the ERCOT claim, which is set to start for trial on
Feb. 22.
Charles R. Gibbs of McDermott Will & Emery LLP, counsel of Denton
County Electric Cooperative, Inc., d/b/a CoServ Electric, said
CoServe hasn't been included in the plan talks. CoServe is one of
the 16 coop members.
Mark Gilmore of JPMorgan presented to Judge David Jones slides
regarding the intended securitization transaction. He said
JPMorgan has talked to Brazos and 12 coop members regarding an ABS
securitization financing that will provide Brazos funds from a
25-year, low-interest, triple-A bond that will be passed to the
member-coops then surcharged to customers. The process is intended
to provide a lower burden on customers than other conventional
equity and debt financing sources, Mr. Gilmore said.
About Brazos Electric
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Before the severe cold weather that blanketed Texas with
sub-freezing temperatures February 2021, Brazos Electric was in all
respects a financially robust, stable company with a strong "A" to
"A+" credit rating. But Brazos Electric Power Cooperative ended up
in Chapter 11 bankruptcy in Texas after racking up an estimated
$2.1 billion in charges from Electric Reliability Council of Texas
(ERCOT) over seven days of the freeze.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-30725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP and O'Melveny &
Myers LLP as bankruptcy counsel; Foley & Lardner LLP and Eversheds
Sutherland US LLP as special counsel; Collet & Associates LLC as
investment banker; and Berkeley Research Group, LLC as financial
advisor. Ted B. Lyon & Associates, The Gallagher Law Firm, West &
Associates LLP, Butch Boyd Law Firm and Boyd Smith Law Firm, PLLC
serve as special litigation counsel and McKool Smith PC serves as
special conflicts counsel. Stretto is the claims and noticing
agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. and
Lazard Freres & Co. LLC serve as the committee's financial advisor
and investment banker, respectively.
BROOKS BROTHERS: To Close Last Full-Line St. Louis Store
--------------------------------------------------------
Diana Barr of St. Louis Business Journal reports that Brooks
Brothers, the retailer known for its upscale attire, is closing its
last full-line St. Louis-area store, at Plaza Frontenac, later in
January 2022.
The retailer, founded in 1818, opened in Plaza Frontenac in 2018,
after it closed a location at the Saint Louis Galleria. With the
Plaza Frontenac location closed, Brooks Brothers' only local store
will be a Brooks Brothers Factory Store at St. Louis Premium
Outlets in Chesterfield. The nearest full-line Brooks Brothers
store will be in Leawood, Kansas, in suburban Kansas City.
The Plaza Frontenac store's last day in operation will be Jan. 25,
2022 a salesman confirmed by phone. He referred further questions
to the store's manager, who wasn't available Tuesday, January 18,
2022.
Brookfield Properties owns Plaza Frontenac. A spokesperson for the
mall couldn't immediately be reached Tuesday for comment.
Citing declining sales and the economic impact of the pandemic,
Brooks Brothers filed for Chapter 11 bankruptcy in July 2020. It
was acquired in September 2020 for $325 million by New York-based
SPARC Group LLC (Simon Properties Authentic Retail Concepts Group),
a joint venture of licensing firm Authentic Brands Group and mall
operator Simon Property Group.
About Brooks Brothers Group
Brooks Brothers -- https://www.brooksbrothers.com -- is a clothing
retailer with over 1,400 locations in over 45 countries. While
famous for its clothing offerings and related retail services,
Brooks Brothers is known as a lifestyle brand for men, women, and
children, which markets and sells footwear, eyewear, bags, jewelry,
watches, sports articles, games, personal care items, tableware,
fragrances, bedding, linens, food items, beverages, and more.
Brooks Brothers Group, Inc. is the Debtors' ultimate corporate
parent, which directly or indirectly owns each of the other Debtor
entities.
Brooks Brothers Group, Inc. and 12 of its affiliates filed for
Chapter 11 protection (Bankr. D. Del., Lead Case No. 20-11785) on
July 8, 2020. The petitions were signed by Stephen Marotta, chief
restructuring officer. The Debtors were estimated to have assets
and liabilities to total $500 million to $1 billion.
The Honorable Christopher S. Sontchi presides over the cases.
Richards, Layton & Finger, P.A., and Weil, Gotshal & Manges LLP
serve as counsel to the Debtors. PJ Solomon, L.P acts as investment
banker; Ankura Consulting Group LLC as financial advisor; and Prime
Clerk LLC as claims and noticing agent.
On July 21, 2020, the Office of the United States Trustee appointed
the Committee pursuant to section 1102 of the Bankruptcy Code. On
July 24, 2020, and July 27, 2020, respectively, the Committee
selected Akin Gump Strauss Hauer & Feld LLP and Troutman Pepper
Hamilton Sanders LLP as its counsel, and on July 27, 2020, the
Committee selected FTI Consulting, Inc. as its financial advisor.
CAREVIEW COMMUNICATIONS: HealthCor, et al., Own 37.6% Equity Stake
------------------------------------------------------------------
In an amended Schedule 13D filed with the Securities and Exchange
Commission, these entities and individuals reported beneficial
ownership of shares of common stock of CareView Communications,
Inc.
as of Dec. 31, 2021:
Shares Percent
Beneficially of
Reporting Person Owned Class
---------------- ------------ -------
HealthCor Management, L.P. 20,287,663 12.7%
HealthCor Associates, LLC 20,287,663 12.7%
HealthCor Hybrid Offshore Master Fund LP 20,287,663 12.7%
HealthCor Hybrid Offshore GP, LLC 20,287,663 12.7%
HealthCor Group, LLC 20,287,663 12.7%
HealthCor Partners Management, L.P. 22,585,652 13.9%
HealthCor Partners Management GP, LLC 22,585,652 13.9%
HealthCor Partners Fund, L.P. 22,585,652 13.9%
HealthCor Partners L.P. 22,585,652 13.9%
HealthCor Partners GP, LLC 22,585,652 13.9%
Jeffrey C. Lightcap 56,703,150 28.9%
Arthur Cohen 46,859,196 25.2%
Joseph Healey 45,810,712 24.7%
Collectively, the Reporting Persons beneficially own an aggregate
of 83,914,091 shares of Common Stock, representing (i) 12,633,454
shares of Common Stock that may be acquired upon conversion of the
Thirteenth Amendment Notes (including interest paid in kind on Dec.
31, 2021), (ii) 2,302,971 shares of Common Stock that may be
acquired upon conversion of the Twelfth Amendment Notes (including
interest paid in kind through Dec. 31, 2021), (iii) 7,659,596
shares of Common Stock that may be acquired upon conversion of the
Tenth Amendment Notes (including interest paid in kind through Dec.
31, 2021), (iv) 8,032,014 shares of Common Stock that may be
acquired upon conversion of the 2018 Notes (including interest paid
in kind through Dec. 31, 2021), (v) 13,329,493 shares of Common
Stock that may be acquired upon conversion of the 2015 Notes
(including interest paid in kind through Dec. 31, 2021), (vi)
30,977,654 shares of Common Stock that may be acquired upon
conversion of the 2014 Notes (including interest paid in kind
through Dec. 31, 2021), (vii) 4,000,000 shares of Common Stock that
may be acquired upon exercise of the 2014 Warrants, (viii)
1,916,409 shares of Common Stock that may be acquired upon exercise
of the 2015 Warrants, (ix) 1,000,000 shares of Common Stock that
may be acquired upon exercise of the Sixth Amendment Warrants, (x)
62,500 shares of Common Stock that may be acquired upon exercise of
the 2018 Warrants and (xi) 2,000,000 shares of Common Stock that
may be acquired upon exercise of the 2021 Warrants. This aggregate
amount represents approximately 37.6% of the Issuer's outstanding
common stock, based upon 139,380,748 shares outstanding as of Nov.
10, 2021, as reported in the Issuer's most recent Quarterly Report
on Form 10-Q, and gives effect to the conversion of all 2014 Notes,
2015 Notes, 2018 Notes, Tenth Amendment Notes, Twelfth Amendment
Notes and Thirteenth Amendment Notes held by the Reporting Persons
into Common Stock and the exercise of all Warrants held by the
Reporting Persons.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1377149/000110465922000889/tm2136669d1_sc13da.htm
About CareView Communications
CareView Communications, Inc. -- http://www.care-view.com-- is a
provider of products and on-demand application services for the
healthcare industry, specializing in bedside video monitoring,
software tools to improve hospital communications and operations,
and patient education and entertainment packages. Its proprietary,
high-speed data network system is the next generation of patient
care monitoring that allows real-time bedside and point-of-care
video monitoring designed to improve patient safety and overall
hospital costs. The entertainment packages and patient education
enhance the patient's quality of stay. CareView is dedicated to
working with all types of hospitals, nursing homes, adult living
centers and selected outpatient care facilities domestically and
internationally. The Company's corporate offices are located at
405 State Highway 121 Bypass, Suite B-240, Lewisville, TX 75067.
Careview reported a net loss of $11.68 million for the year ended
Dec. 31, 2020, compared to a net loss of $14.14 million for the
year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had
$5.50 million in total assets, $115.59 million in total
liabilities, and a total stockholders' deficit of $110.09 million.
BDO USA, LLP, in Dallas, Texas, the Company's auditor since 2010,
issued a "going concern" qualification in its report dated April 8,
2021, citing that the Company has suffered recurring losses from
operations and has accumulated losses since inception that raise
substantial doubt about its ability to continue as a going concern.
CBL & ASSOCIATES: D'Iberville Promenade Suit Moved to Bankr. Court
------------------------------------------------------------------
In the case captioned D'IBERVILLE PROMENADE, LLC, Plaintiff, v.
CBL-D'IBERVILLE MEMBER, LLC and CBL & ASSOCIATES MANAGEMENT, INC.,
Defendants, Cause No. 1:21CV335-LG-RPM (S.D. Miss.), D'Iberville
Promenade, LLC seeks to remand this matter to the Chancery Court of
Harrison County, Mississippi, claiming the Mississippi District
Court should abstain from exercising jurisdiction. The defendants,
CBL-D'Iberville, LLC and CBL & Associates Management, Inc. argued
the Court should deny the Motion to Remand or, in the alternative,
grant CBL's pending Motion to Change Venue to transfer this case to
the United States Bankruptcy Court for the Southern District of
Texas so that the Texas Bankruptcy Court can determine whether
abstention or remand is appropriate.
Judge Louis Guirola, Jr., of the United States District Court for
the Southern District of Mississippi, Southern Division, determined
the Motion to Change Venue should be granted, finding that the
bankruptcy judge is "in the best position to evaluate the grounds
asserted for abstention." The Court leaves the determination of
whether the case may or should remain in federal court up to the
Texas Bankruptcy Court.
This case will be transferred to the Texas Bankruptcy Court under
Docket No. 4:20-bk-35226 for further consideration.
A full-text copy of the Order dated January 11, 2022, is available
at https://tinyurl.com/5dhjz38v from Leagle.com.
About CBL & Associates Properties
CBL & Associates Properties, Inc. -- http://www.cblproperties.com/
-- is a self-managed, self-administered, fully integrated real
estate investment trust (REIT) that is engaged in the ownership,
development, acquisition, leasing, management and operation of
regional shopping malls, open-air and mixed-use centers, outlet
centers, associated centers, community centers, and office
properties.
CBL's portfolio is comprised of 107 properties totaling 66.7
million square feet across 26 states, including 65 high-quality
enclosed, outlet and open-air retail centers and 8 properties
managed for third parties. It seeks to continuously strengthen its
company and portfolio through active management, aggressive leasing
and profitable reinvestment in its properties.
CBL, CBL & Associates Limited Partnership and four other entities
filed voluntary petitions for reorganization under Chapter 11 of
the U.S. Bankruptcy Code in Houston, Texas, on Nov. 1, 2020 (Bankr.
S.D. Tex. Lead Case No. 20-35226). Another 172 entities sought
bankruptcy protection on November 2, 2020, and CBL/Regency I, LLC
on November 13. Laredo Outlet Shoppes, LLC filed its Chapter 11
petition on May 26, 2021. The cases are jointly administered with
CBL & Associates Properties' case as the lead case.
The Debtors have tapped Weil, Gotshal & Manges LLP as their legal
counsel, Moelis & Company as restructuring advisor and Berkeley
Research Group, LLC, as financial advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
CHANCE W. BRITT: $7.4K Sale of 1985 Chevrolet Silverado Approved
----------------------------------------------------------------
Judge Robert L. Jones of the U.S. Bankruptcy Court for the Northern
District of Texas authorized Chance Wade Britt and Alexa Lynn
Britt's sale of their 1985 Chevrolet Silverado truck, VIN
1GCDC14F3GJ179586, for $7,400, free and clear of liens.
All proceeds paid to the Debtors are to be deposited in their DIP
account.
Chance Wade Britt and Alexa Lynn Britt sought Chapter 11 protection
(Bankr. N.D. Tex. Case No. 21-50153) on Oct. 4, 2021. The Debtors
tapped Max Tarbox, Esq., as counsel.
CLH INVESTMENT: Seeks to Hire Wiggam & Geer as Bankruptcy Counsel
-----------------------------------------------------------------
CLH Investment Company, LLC seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to hire Wiggam & Geer,
LLC to serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) preparing pleadings and applications;
(b) conducting examination;
(c) advising the Debtor of its rights, duties and
obligations;
(d) consulting with and representing the Debtor with respect
to a Chapter 11 plan;
(e) performing legal services incidental and necessary to the
day-to-day operations of the Debtor's business, including, but not
limited to, institution and prosecution of necessary legal
proceedings, and general business and corporate legal assistance;
and
(f) taking all other actions incidental to the proper
preservation and administration of the Debtor's estate and
business.
The firm's hourly rates are as follows:
Attorney $425 per hour
Legal assistants $150 per hour
Will Geer, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Will B. Geer, Esq.
Wiggam & Geer, LLC
50 Hurt Plaza, SE, Suite 1150
Atlanta, Georgia 30303
Tel.: (678) 587-8740
Fax: (404) 287-2767
Email: wgeer@wiggamgeer.com
About CLH Investment
CLH Investment Company, LLC, a company based in Norcross, Ga.,
filed a petition for Chapter 11 protection (Bankr. N.D. Ga. Case
No. 22-50032) on Jan. 3, 2022, listing up to $50,000 in assets and
up to $10 million in liabilities. Ki Hong Han, managing member,
signed the petition.
The Debtor tapped Will B. Geer, Esq., at Wiggam & Geer, LLC as
legal counsel.
CNX RESOURCES: Fitch Raises LT IDR to 'BB+', Outlook Stable
-----------------------------------------------------------
Fitch Ratings has upgraded CNX Resources Corporation's Long-Term
Issuer Default Rating to 'BB+' from 'BB'. The revolving credit
facility was affirmed at 'BBB-'/'RR1' while the senior unsecured
notes were upgraded to 'BB+'/'RR4' from 'BB'/'RR4'. The Rating
Outlook is Stable.
The rating reflects CNX's material generation of FCF and the
expectation that this will continue over the forecast horizon, debt
reduction efforts, robust hedging program, lack of near-term
maturities and material liquidity. Rating concerns include the risk
of operating solely in the Appalachian Basin, where there are
concerns with takeaway constraints and wide differentials, and
concerns about the amount of high-quality inventory in the
company's portfolio.
CNX's hedging strategy is important as it provides greater
certainty to future FCF generation. Fitch believes CNX's emphasis
on further reducing debt, including the potential conversion of
convertible debt to equity, will further enhance the credit.
KEY RATING DRIVERS
Material FCF Generation: CNX has generated positive FCF over the
past seven quarters and Fitch expects the company to generate
material FCF under its Henry Hub natural gas price deck assumptions
over the forecast horizon. FCF is driven by the company's low
operating cost structure, reduced finding and development costs,
strong hedging program that locks in future revenues and modest
production growth. In particular, CNX's strong hedging program
increases certainty in projected cash flow despite the volatility
of natural gas prices. Fitch anticipates FCF will be applied
equally to debt reduction and stock buybacks over the forecasted
horizon.
Low-Cost Operator: CNX is one of the lowest-cost operators in the
Appalachian Basin, driven by relatively lower firm transportation
charges, midstream ownership and investment in water
infrastructure. Transportation, gathering and compression costs are
well-below most competitors, as CNX has kept production growth
goals modest, which allowed the company not to compete for
high-cost, long-term capacity. The company generated fully burdened
cash costs (operating, SG&A, interest) of $1.06/mcf during the
third quarter of 2021. Netbacks should show improvement, as
interest costs decline from expected debt reduction.
Robust Hedging Program: CNX has one of the strongest hedging
positions in the industry, with approximately 90% of expected 2022
gas production hedged at an average of $2.94 per thousand cubic
feet (mcf) with 87% of the basis hedged at $2.43/mcf. For 2023, 73%
of expected 2023 gas production is hedged at an average of
$2.88/mcf with 68% of the basis hedged at $2.30/mcf.
CNX aims to enter corresponding basis hedges with its NYMEX hedges
for all future periods. The company attempts to be fully matched
for the next twelve months of production. The company maintains a
material portion of hedges through 2024. Fitch believes CNX has a
thoughtful hedging program that locks in expected returns and
reduces volatility in cash flows, while extensive basis hedging
protects from potential disruptions in the Appalachian Basin. CNX's
hedge program combined with a low-cost structure allows for capital
allocation flexibility for its future development program.
Production Scale and Inventory: CNX is significantly smaller in
terms of production than other 'BB' rated issuers, such as EQT
Corporation, Southwestern Energy Corporation and Chesapeake Energy.
Fitch believes scale is important in that it can reduce operating
and capital costs per unit and provides ability to enhance
liquidity. CNX's strategy to limit growth, however, allows the
company to avoid costly long-term transportation and gathering
costs and to institute a robust hedging strategy on NYMEX price and
in-basin differentials.
Fitch estimates CNX's reserve to production ratio at 20 years.
There has been questions as to the remaining amount of high-quality
inventory, which could provide for some uncertainty on future cash
flows. Fitch believes that the company's strong credit metrics
provides for opportunities to address these uncertainties over
time.
Single Basin Risk: CNX's operations are primarily in Appalachia,
which exposes the company to significant basis risk due to takeaway
constraints, although differentials have improved as new pipeline
capacity was installed. CNX resisted signing into long-term
takeaway contracts to avoid entering into firm transportation
commitments that could have resulted in expensive long-term
obligations. Instead, the company used hedges to mitigate pricing
risk. CNX was able to move production without entering into
contracts that would make it inflexible to adjust production during
periods of low natural gas prices as it had to meet takeaway
commitments. This strategy could be risky if Appalachia takeaway
capacity ever becomes constrained.
DERIVATION SUMMARY
CNX 3Q21 production profile of 1.7 billion cubic feet equivalent
per day (Bcfe/d) is below its Appalachian peers, including
Southwestern Energy Company (SWN; BB/Stable) at 4.7Bcfe, pro forma
for the GEP acquisition; EQT Corporation (BB+/Stable) at 5.5Bcfe/d
pro forma for the Alta Resources acquisition; Chesapeake Energy
Corporation (BB/Stable) at 2.6 mcfe/d; and Ascent Resources Utica
Holdings (B/Stable) at 2.0 mcfe/d.
Consolidated leverage of 2.2x is slightly better than 'BB'
category-rated peers, such as SWN at 3.1x, and EQT (3.1x) although
Fitch expects the latter issuers to fall below 2.0x as recent
acquisitions are integrated. Fitch-calculated unhedged cash netback
margin as of 3Q 2021 of 71% was the highest of its peers, including
EQT (61%), Southwestern (64%) and Chesapeake (67%) due to the
company's material lower gathering and transportation costs.
CNX hedges approximately 90% of expected 2022 production compared
with Southwestern at roughly 84% and EQT at 65%. CNX also attempts
to match its NYMEX hedge with basis hedges, which provides
significantly more price protection than its peers. Fitch believes
a strong hedge program is important given the volatility of natural
gas prices.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- Base case Henry Hub natural gas price of $3.80/mcf in 2021,
$3.25/mcf in 2022, $2.75/mcf in 2023 and $2.50/mcf in the
long-term;
-- Base case West Texas Intermediate oil prices of $68/bbl in
2021, $67/bbl in 2022, $57/bbl in 2023 and $50/bbl in 2024;
-- Mid-single-digit production growth throughout the forecast;
-- Consolidated capex (including midstream) of $500 million in
2022 and $480 million in 2023;
-- FCF is applied equally to debt reduction and share
repurchases.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Production scale approaching 2.5 bcfe/d and/or proved reserves
approaching 20 tcfe;
-- Increase in diversification of upstream operations;
-- Mid-cycle stand-alone debt/EBITDA approaching 1.5x, or FFO
leverage below 2.0x on a sustained basis.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Inability to replace reserves or a material reduction in net
production;
-- Mid-cycle stand-alone debt/EBITDA above 2.5x, or FFO leverage
below 3.0x on a sustained basis;
-- Material reduction in FCF or reduced credit metrics from
allocation of FCF to shareholder-friendly actions;
-- Deviation from stated financial policy, including material
reduction in hedging;
-- Weakening of unit cost profile or capital returns.
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 Position: CNX has $0.4 million of consolidated
cash on hand and $1.4 billion of borrowing capacity on its revolver
as of Sept. 30, 2021 after consideration for letters of credit. In
October 2021, the borrowing base increased to $2.0 billion from
$1.775 billion while elected commitments are $1.3 billion. The
maturity was extended from April 2024 to October 2026. There is a
maximum net leverage ratio of no greater than 3.5/1.0, which is
based on net debt. CNX must also maintain a minimum current ratio
of no less than 1.0/1.0.
CNXM has its own RCF not guaranteed by CNX. The facility has $600
million in commitments and had $146 million of borrowings
outstanding, leaving availability at $454 million after
consideration for letters of credit, as of Sept. 30, 2021.
Fitch considers CNX's maturity schedule manageable with the next
major maturity being the senior unsecured convertible notes in
2026. Fitch believes there a good chance that these notes could be
converted to equity before the maturity. Excluding the revolver,
the next note maturity is not until 2027. Fitch believes near-term
liquidity should be sufficient given the company's ability to
generate material FCF, which benefits from a high degree of
certainty through the company's hedge program and low-cost
structure.
ISSUER PROFILE
CNX Resources Corporation (NYSE: CNX) is an independent oil and gas
company focused on the exploration, development, production,
gathering, processing and acquisition of natural gas properties
primarily in the Appalachian Basin. The company focuses on
unconventional shale formations, primarily in the Marcellus and
Utica shales.
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.
COMMUNITY HEALTH: Sees Q4 Net Operating Revenues of Up to $12.4B
----------------------------------------------------------------
Community Health Systems, Inc. said it anticipates that its results
in the fourth quarter of 2021 will yield results for the year ended
Dec. 31, 2021 of the following:
* Net operating revenues in the range of $12.355 billion to
$12.375 billion.
* Adjusted EBITDA, further adjusted to exclude the recognition
of pandemic relief funds, in an amount that approximates the
high-end of the Company's Adjusted EBITDA guidance for 2021 (the
low-end of which was $1.780 billion and the high-end of which was
$1.820 billion) as disclosed in the Company's earnings release
dated
Oct. 27, 2021. The assumptions utilized to calculate guidance as
disclosed in the 3Q 2021 Earnings Release excluded the impact of
the recognition of pandemic relief funds from the determination of
such guidance.
* Recognized pandemic relief funds for the year ended Dec. 31,
2021 of approximately $145 million.
The Company also provides certain preliminary guidance for 2022.
The Company anticipates net operating revenues for the year ending
Dec. 31, 2022 to be in the range of $12.600 billion to $13.100
billion. The Company anticipates Adjusted EBITDA for the year
ending Dec. 31, 2022 to be in the range of $1.825 billion to $1.975
billion. This preliminary guidance for 2022 similarly does not
take into account the potential impact of the recognition of
pandemic relief funds and was otherwise determined utilizing a
methodology similar to the methodology used in determining the
Company's guidance for 2021 as reflected in the 3Q 2021 Earnings
Release.
About Community Health Systems Inc.
Community Health Systems, Inc. -- http://www.chs.net-- is publicly
traded hospital company and an operator of general acute care
hospitals in communities across the country. The Company, through
its subsidiaries, owns or leases 83 affiliated hospitals in 16
states with an aggregate of approximately 13,000 licensed beds.
Healthcare services are also provided in more than 1,000 outpatient
sites of care including affiliated physician practices, urgent care
centers, freestanding emergency departments, imaging centers,
cancer centers, and ambulatory surgery centers. The Company's
headquarters are located in Franklin, Tennessee, a suburb south of
Nashville. Shares in Community Health Systems, Inc. are traded on
the New York Stock Exchange under the symbol "CYH."
As of Sept. 30, 2021, the Company had $15.67 billion in total
assets, $16.67 billion in total liabilities, $493 million in
redeemable noncontrolling interests in equity of consolidated
subsidiaries, and a total stockholders' deficit of $1.49 billion.
* * *
As reported by the TCR on Dec. 29, 2020, S&P Global Ratings raised
its issuer credit rating on Community Health Systems Inc. to 'CCC+'
from 'SD' (selective default). S&P said, "The stable outlook
reflects our view that the company has reduced its debt, and
improved its operations and cash flow such that its debt is now
more manageable; however, we believe risks to the long-term
sustainability of the capital structure remain, especially given
ongoing uncertainty stemming from the coronavirus pandemic."
In November 2020, Fitch Ratings affirmed the Long-Term Issuer
Default Ratings (IDR) of Community Health Systems, Inc. (CHS) and
subsidiary CHS/Community Health Systems, Inc. at 'CCC'.
CRESTWOOD HOSPITALITY: Unsecureds to Get Share of Net Revenue
-------------------------------------------------------------
Crestwood Hospitality, L.L.C., submitted a Chapter 11 Plan of
Reorganization and a Disclosure Statement.
The Debtor intends to continue operating its property as a Holiday
Inn Express hotel pursuant to the Franchise Agreement. The Debtor
intends to pay its creditors from (a) Cash-on-Hand as of the
Effective Date, (b) Net Revenues generated from the operation of
the Property for a period of three years from the Effective Date,
(c) the New Value Contribution to the Reorganized Debtor from the
Interest Holders, and (d) with respect to CIT's Allowed Secured
Claim, proceeds from a refinancing or sale of the Property within
three years of the Effective Date. The Interest Holders will
continue to own and manage the Reorganized Debtor, and Ledgestone
will continue to operate and manage the Property under the guidance
and supervision of the Interest Holders pursuant to the terms of
the Ledgestone Management Agreement.
The Debtor has estimated that the value of its Personal Property is
approximately $333,000. The Debtor and CIT have agreed that the
value of the Property and the Personal Property constituting CIT's
collateral is $6.6 million and that CIT's Claim is undersecured.
Not including CIT's Deficiency Claim (approximately $215,558), the
Maxim Claim, the Brycon Claim, the City of Tucson's general
unsecured Claim, the ADOR's general unsecured Claim (approximately
$488,615.28), the SBA's Deficiency Claim (approximately $228,362),
and Canyon Bank's forgivable PPP Claim, the Debtor has scheduled,
and/or creditors have asserted, unsecured claims against the Debtor
in the total amount of approximately $133,000.
Unsecured claims are classified as follows:
* Class 3-A – Allowed Unsecured Claim of Brycon, if any.
Brycon asserts that it has recourse against certain entities
affiliated with the Debtor, including Woodbridge, and that its
claim is secured by certain of those entities' assets. Any recovery
that Brycon receives from such third-party sources shall be applied
as a credit to the amount of Brycon's Allowed Claim against the
Debtor. To the extent that Brycon's Allowed Claim is not paid from
such third-party sources, then Brycon's Allowed Claim, if any, will
be treated pursuant to the treatment of Allowed Unsecured Claims in
Class 3-C. Class 3-A is impaired.
* Class 3-B – Allowed Unsecured Claim of Maxim, if any. Maxim
asserts that it has recourse against certain entities affiliated
with the Debtor, including Legacy, and that its claim is secured by
certain of those entities' assets. Any recovery that Maxim receives
from such third-party sources shall be applied as a credit to the
amount of Maxim's Allowed Claim against the Debtor. To the extent
that Maxim's Allowed Claim is not paid from such third-party
sources, then Maxim's Allowed Claim will be treated pursuant to the
treatment of Allowed Unsecured Claims in Class 3-C. Class 3-B is
impaired.
* Class 3-C – Allowed Unsecured Claims not otherwise
classified in the Plan. Class 3-C consists of all Allowed
Unsecured Claims that are not otherwise classified in the Plan, and
shall include the Allowed Unsecured Deficiency Claims of CIT, the
City of Tucson, and the SBA, Allowed Claims resulting from the
rejection of executory contracts, if any, and any other Allowed
Claim not included in any other Class in the Plan.
Allowed Unsecured Claims in this Class will be treated as follows:
* First, Allowed Unsecured Claims will share, pro rata (with
Brycon's and Maxim's respective Allowed Unsecured Claims, to the
extent that such Claims have not been satisfied from third party
sources), in a distribution of the sum of $75,000 in cash (the
"Unsecured Distribution Amount") paid by the Reorganized Debtor
from the New Value Contribution, on the Effective Date.
* Second, Allowed Unsecured Claims will share, pro rata (with
Brycon's and Maxim's respective Allowed Unsecured Claims, to the
extent that such Claims have not been satisfied from third party
sources), in a total of three (3) annual distributions of 25% of
the Reorganized Debtor's Net Revenues from the operations of the
Property after (a) payments to CIT on account of its Allowed
Secured Claim in Class 2-A, (b) payments to the SBA on account of
its Allowed Secured Claim in Class 2-E, (c) payments to Johnston
and Khan on account of their respective Allowed Secured Claims in
Classes 2-F and 2-G, as set forth above, (d) payment of TPT taxes
to taxing authorities, including any payments to ADOR on account of
its Allowed Priority Claim that are not paid from Cash-on-Hand as
provided in Class 1-B, and (e) payment of real property taxes
relating to the Property (i.e., the Annual Percentage
Distributions). The Annual Percentage Distributions will be made on
each anniversary of the Effective Date for three consecutive
years.
Upon their receipt of (a) their respective pro rata portions of the
Unsecured Distribution Amount and (b) their respective pro rata
portions of the Annual Percentage Distributions over three years,
all Allowed Unsecured Claims in this Class, Class 3-A and Class
3-B, shall be deemed paid, released, and discharged in full. Class
3-C is impaired.
According to the Liquidation Analysis, because CIT is Undersecured,
in the event of a liquidation sale or foreclosure by CIT of the
Debtor's Property, there would likely be no recovery to any other
Creditors of the Debtor’s bankruptcy estate. Rather, all proceeds
from the sale of the Property would be turned over to CIT. On the
other hand, the Plan provides for a capital infusion of the New
Value Contribution from the Interest Holders, and the distribution
of a portion of the Reorganized Debtor's post-Confirmation Net
Revenues, to general Allowed Unsecured Claims which would not be
available in the event of a liquidation. Moreover, under the Plan,
certain other secured creditors -- the SBA, Johnston, and Khan --
will recover their Allowed Secured Claims.
Attorneys for the Debtor:
Randy Nussbaum
Philip R. Rudd
Sierra M. Minder
SACKS TIERNEY P.A.
4250 N. Drinkwater Blvd., 4th Floor
Scottsdale, AZ 85251-3693
Telephone: 480.425.2600
Facsimile: 480.970.4610
E-mail: Randy.Nussbaum@SacksTierney.com
Philip.Rudd@SacksTierney.com
Sierra.Minder@SacksTierney.com
A copy of the Disclosure Statement dated Jan. 14, 2021, is
available at https://bit.ly/3rqSGQy from PacerMonitor.com.
About Crestwood Hospitality
Crestwood Hospitality LLC operates the Holiday Inn Express & Suites
Tucson Mall, an "all suite" hotel built in 2004, pursuant to a
license agreement with Holiday Hospitality Franchising, LLC.
Crestwood owns and continues to operate the Holiday Inn Express at
Tucson Mall located at 620 E. Wetmore Rd., Tucson, Arizona. The
Property was built in 2003 and opened in January 2004 as an "all
suite" hotel. The Property has 105 guest rooms, three corporate
meeting rooms, a business center, outdoor heated pool, fitness
center and other guest amenities.
Crestwood filed a Chapter 11 petition (Bankr. D. Ariz. Case No.
21-03091) on April 23, 2021. In the petition signed by Sukhbinder
Khangura, member and vice president, the Debtor estimated between
$1 million and $10 million in assets, and between $10 million and
$50 million in liabilities.
Judge Brenda Moody Whinery is assigned to the case.
Sacks Tierney P.A., is the Debtor's counsel.
CRYOMASS TECHNOLOGIES: Elects Simon Langelier as Director
---------------------------------------------------------
CryoMass Technologies Inc.'s board of directors has elected Simon
Langelier to be a director of the Company.
Mr. Langelier is currently a director of Imperial Brands PLC, a
British multinational company with a comprehensive portfolio of
traditional and non-combustible tobacco and nicotine products.
Previously, in his 30-year career with Philip Morris International,
Simon Langelier served in several senior positions, including
President Eastern Europe, Middle East & Africa, President Eastern
Asia and President of Next Generation Products & Adjacent
Businesses. He was also managing director in numerous countries in
Europe and Colombia.
Mr. Langelier is currently an Honorary Professorial Fellow at
Lancaster University in the U.K and a member of the Dean's Council
of that university's Management School.
Dr. Delon Human, Chairman of the CryoMass Technologies Board,
noted: "We are delighted to welcome Simon to the Board. He brings
a wealth of experience, including significant consumer business,
financial, regulatory and technology acumen. I have no doubt that
he will be a valuable asset to the board and Company."
About Cryomass
Formerly known as Andina Gold Corp., Cryomass Technologies Inc.'s
business portfolio includes the accounts of Cryomass LLC (formerly
known as General Extract), which is controlled by the Company
through its 100% ownership interest, and CMI, a variable interest
entity for which the Company is deemed to be the primary
beneficiary and therefore is a consolidated entity of Cryomass
Technologies for GAAP purposes.
Andina Gold reported a net loss of $11.82 million for the year
ended Dec. 31, 2020, compared to a net loss of $3.06 million for
the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company
had $13.88 million in total assets, $10.54 million in total
liabilities, and $3.33 million in total shareholders' equity.
Lakewood, CO-based BF Borgers CPA PC, the Company's auditor since
2020, issued a "going concern" qualification in its report dated
March 30, 2021, citing that the Company has suffered recurring
losses from operations that raises substantial doubt about its
ability to continue as a going concern.
DELPHI CORP: Supreme Court Won't Hear Retirees' Pension Plan Suit
-----------------------------------------------------------------
Rick Archer of Law360 reports that the Supreme Court on Tuesday,
January 18, 2022, declined to hear an appeal by Delphi Corp.
retirees contesting the federal Pension Benefit Guaranty Corp.'s
right to shut down Delphi's pension plan after the company's 2005
bankruptcy.
The high court denied certiorari to an appeal by the retirees, who
argued the Sixth Circuit erred in 2020 when it decided the decision
to terminate their pension plan did not require court approval.
The retirees sued PBGC in September 2009, one month after the
agency and Delphi, a car parts company that had entered Chapter 11
in 2005, terminated a pension plan for Delphi's salaried employees.
As reported in the Jan. 7, 2021 edition of the TCR, the United
States Court of Appeals, Sixth Circuit affirmed the decision of the
district court that granted summary judgment in favor of the
Pension Benefit Guaranty Corporation (PBGC). The appellate court
found that PBGC's decision to terminate the Salaried Plan was not
arbitrary and capricious.
Delphi Corporation, an automotive parts supplier and former
subsidiary of General Motors Corporation, was plan administrator
and contributing sponsor of several defined-benefit pension plans.
The Salaried Plan covered approximately 20,000 members of Delphi's
salaried, non-unionized workforce, including the retirees Dennis
Black, Chuck Cunningham, and Ken Hollis.
In 2008, Delphi's first Plan of Reorganization provided that all
Delphi sponsored pension plans would be frozen but would continue
to be reorganized under Delphi. But the 2008 Plan failed when
Delphi's post-emergence investors refused to fund their investment
agreement with Delphi.
on July 22, 2009, PBGC issued a Notice of Determination to Delphi,
notifying Delphi that it had determined that the Salaried Plan
must
be terminated and that PBGC should be appointed as statutory
trustee of the plan. On August 10, 2009, PBGC and Delphi executed
a termination and trusteeship agreement that terminated the
Salaried Plan effective July 31, 2009.
In September 2009, the retirees filed a lawsuit. After protracted
litigation, the district court granted summary judgment in favor of
PBGC. On appeal, The 6th Circuit held that the retirees have not
demonstrated that PBGC's decision to terminate the Salaried Plan
was arbitrary and capricious. The court found that there is
sufficient countervailing evidence to support PBGC's decision to
terminate the Salaried Plan under the criteria found in 29 U.S.C.
Section 1342(a).
The case is DENNIS BLACK; CHARLES CUNNINGHAM; KENNETH HOLLIS;
DELPHI SALARIED RETIREE ASSOCIATION, Plaintiffs-Appellants, v.
PENSION BENEFIT GUARANTY CORPORATION, Defendant-Appellee, No.
19-1419 (6th Cir.).
A full-text copy of the 6th Ciruit's amended opinion dated
December
28, 2020 is available at https://tinyurl.com/y75s5kkf from
Leagle.com.
About Delphi Corp.
Based in Troy, Michigan, Delphi Corporation --
http://www.delphi.com/-- is a global supplier of electronics and
technologies for automotive, commercial vehicle and other market
segments. Delphi operates major technical centers, manufacturing
sites and customer support facilities in 30 countries.
The Company filed for Chapter 11 protection (Bankr. S.D.N.Y. Lead
Case No. 05-44481) on Oct. 8, 2005. Skadden, Arps, Slate, Meagher &
Flom LLP, represented the Debtors in their restructuring efforts.
Latham & Watkins LLP, represented the Official Committee of
Unsecured Creditors. As of June 30, 2008, the Debtors' balance
sheet showed $9.16 billion in assets and $23.7 billion in debt.
The Court confirmed Delphi's plan on Jan. 25, 2008. The Plan was
not consummated after a group led by Appaloosa Management, L.P.,
backed out from their proposal to provide $2.55 billion in equity
financing to Delphi. At the end of July 2009, Delphi obtained
confirmation of a revised plan, build upon a sale of the assets to
a entity formed by some of the lenders who provided $4 billion of
debtor-in-possession financing, and General Motors Company.
On Oct. 6, 2009, Delphi's Chapter 11 plan of reorganization became
effective. A Master Disposition Agreement executed among Delphi
Corporation, Motors Liquidation Company, General Motors Company, GM
Components Holdings LLC, and DIP Holdco 3, LLC, divides Delphi's
business among three separate parties -- DPH Holdings LLC, GM
Components, and DIP Holdco 3.
Delphi emerged from Chapter 11 as DPH Holdings. DPH Holdings is
responsible for the post-Effective Date administration and eventual
closing of the Chapter 11 cases as well as the disposition of
certain retained assets and payment of certain retained liabilities
as provided under the Modified Plan.
Delphi Automotive PLC is a UK-based company formed in May 2011 as a
holding company for US-based automotive parts manufacturer Delphi
Automotive LLP. Delphi Automotive LLP is the successor to the
former Delphi Corporation. At the time of its formation, Delphi
Automotive PLC filed an initial public offering seeking to raise at
least $100 million.
DOWNSTREAM DEVELOPMENT: Moody's Withdraws Caa1 Corp. Family Rating
------------------------------------------------------------------
Moody's Investors Service has withdrawn Downstream Development
Authority's ("DDA" "Downstream") ratings including the Caa1
Corporate Family Rating and the Caa1-PD probability of default
rating. The stable outlook has also been withdrawn. The rating
action follows the full repayment and cancellation of the notes.
Withdrawals:
Issuer: Downstream Development Authority
Corporate Family Rating, Withdrawn, previously rated Caa1
Probability of Default Rating, Withdrawn, previously rated
Caa1-PD
Outlook Actions:
Issuer: Downstream Development Authority
Outlook, Changed To Rating Withdrawn From Stable
RATING RATIONALE
Moody's has withdrawn the ratings because Downstream Development
Authority's debt previously rated by Moody's has been fully repaid
following a refinancing transaction.
DDA is a wholly owned unincorporated instrumentality of the Quapaw
Tribe of Oklahoma, a federally recognized Native American tribe
with approximately 4,900 enrolled members. Downstream owns and
operates the Downstream Casino Resort, a Native American casino
located at the point where the state borders for Kansas, Missouri
and Oklahoma meet -- its casino is in Oklahoma and part of its
parking lot is located in Kansas. Revenue for the 12 months ended
30-Jun-2021 was approximately $190 million.
DUEL SPORTS: Taps Law Offices of John A. Foscato as Counsel
-----------------------------------------------------------
Duel Sports Bar, LLC seeks approval from the U.S. Bankruptcy Court
for the Eastern District of Wisconsin to hire the Law Offices of
John A. Foscato, SC to serve as legal counsel in its Chapter 11
case.
The firm's services include:
(a) preparing bankruptcy schedules and statements;
(b) assisting in preparing the disclosure statement and plan
of reorganization and attendant negotiations and hearings;
(c) preparing and reviewing pleadings, motions and
correspondence;
(d) appearing at and being involved in various proceedings
before the court;
(e) handling case administration tasks and dealing with
procedural issues;
(f) assisting with the commencement of debtor-in-possession
operations, including "Section 341" meeting and monthly reporting
requirements; and
(g) analyzing claims and prosecuting claim objections.
The firm's attorneys and paraprofessionals will be paid at hourly
rates ranging from $120 to $375. The retainer fee is $5,000.
John Foscato, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
John A. Foscato, Esq.
Law Offices of John A. Foscato, SC
110 Packerland Drive Suite D
Green Bay, WI 54303
Tel: 920-432-8801
Email: attyjaf@new.rr.com
About Duel Sports Bar
Duel Sports Bar, LLC filed a petition for Chapter 11 protection
(Bankr. E.D. Wis. Case No. 22-20107) on Jan. 13, 2022, listing up
to $500,000 in assets and up to $100,000 in liabilities. Michael
Cain, managing member, signed the petition.
Judge Katherine M. Perhach oversees the case.
The Debtor tapped the Law Offices of John A. Foscato, SC as legal
counsel.
DURA-TRAC FLOORING: IRS Says Plan Can't Be Confirmed
----------------------------------------------------
The United States of America, on behalf of the Internal Revenue
Service, filed objections to confirmation of Dura-Trac Flooring,
Ltd., Co.'s Chapter 11 Plan of Reorganization.
The IRS points out that the Plan is generally unconfirmable based
on the Debtor's failure to file tax returns:
* The IRS has no record of receiving the debtor's Form 940 for
2019.
* The IRS has no record of receiving a complete Form 941 for tax
period ending December 31, 2020.
The IRS further points out that the Plan does not adequately
provide for the payment of IRS's priority claims. The Plan
provision for priority claims fails to include the prepetition
interest amounts. Furthermore, the Plan provision for Priority
claims is objectionable because priority claims must be paid within
5 years from the petition date with postpetition interest at the
rate in effect on confirmation date (currently 3%).
The IRS asserts that the Plan cannot impermissibly restrict or fail
to provide for remedies upon default. The Plan provides inadequate
remedies in the event of default. This issue must be clarified so
as not to unduly restrict creditors' rights upon default. Should
default occur, the Plan will make this court the government's tax
collector and will impose further delay and expense in the
collection of the tax claims of the Service through a Chapter 7
bankruptcy.
About Dura-Trac Flooring
Dura-Trac Flooring Ltd., a privately held company in the carpet and
flooring business, filed a Chapter 11 petition (Bankr. N.D. W.Va.
Case No. 20-00838) on Nov. 16, 2020. In the petition signed by
Mark Cerasi, managing member, the Debtor was estimated to have $1
million to $10 million in both assets and liabilities. Pierson
Legal Services serves as the Debtor's bankruptcy counsel.
EAGLE HOSPITALITY: Goldman, Silvercrest Among Backers
-----------------------------------------------------
Becky Ysrak of Market Watch reports that Silvercrest Asset
Management, Goldman Sachs Asset Management and American Equity
Investment Life Insurance are among the bondholders backing the
bankruptcy restructuring of Eagle Senior Living.
The nonprofit continuing-care community operator, which has 600
employees at 15 facilities, sought protection from creditors
Friday, January 14, 2022, with a proposed restructuring agreement
in hand.
The three investment firms hold or advise funds with secured bonds
with principal amounts totaling $135.6 million. Eagle Senior Living
owes $252.9 million to creditors, mostly municipal bond holders.
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.
ECOLIFT CORP: Unsecureds to Recover 10% Under Plan
--------------------------------------------------
Ecolift Corporation submitted a Chapter 11 Plan of Reorganization
and a Disclosure Statement.
The Debtor's personal property primarily consists of aircrafts
inventory and equipment.
General unsecured creditors were listed in Debtor's Schedules in
the total amount of $2,944,443. These claims include unsecured
portion of CRIM's claim, professional service providers, and
utilities. The Debtor has reconciled general unsecured claims and
as of this date this amount is $3,035,451. Additional claims are
under analysis.
The Plan will treat unsecured claims as follows:
* Class 5 General Unsecured Non-Priority Claims of Government
Entities. The Debtors scheduled these claims in the total amount of
$179,887, not including amounts owed to the Puerto Rico Port
Authority. The total reconciled amount of non-priority general
unsecured governmental claims filed is $181,041. Any claim under
this class will be paid 10% of its allowed claim in equal monthly
instalments within 60 months from Effective Date. Class 5 is
impaired.
* Class 6 All Other Unsecured Claims including any deficiency
Claims. The Debtor scheduled unsecured claims in the total amount
of $2,310,646 including, pre-petition professional service, and
suppliers. Thereafter, Proofs of Claim have been filed and the
Debtor has reconciled claims in the total amount of $2,400,498.
Any claim under this class will be paid 10% of its allowed claim in
equal monthly installments within 60 months from Effective Date.
Class 6 is impaired.
Funding of the Plan will be from regular income of the Debtor and
sale of assets not necessary for the reorganization, including some
helicopters and airplanes currently in non-finished conditions.
The Debtor, through Mr. Ernesto DiGregorio, is actively marketing
these assets, locally and internationally.
Attorney for the Debtor:
Carmen D. Conde Torres
C. CONDE & ASSOC.
San Jose Street #254, 5th Floor
San Juan, P.R. 00901-1253
Tel: (787) 729-2900
Fax: (787) 729-2203
E-mail: condecarmen@microjuris.com
A copy of the Disclosure Statement dated Jan. 14, 2021, is
available at https://bit.ly/3FxDfv9 from PacerMonitor.com.
About Ecolift Corp.
Ecolift Corp. is a manufacturer of aircraft parts and equipment.
Ecolift Corp. sought Chapter 11 protection (Bankr. D.P.R. Case No.
21-02751) on Sept. 17, 2021. In the petition signed by Ernesto Di
Gregorio as president, Ecolift estimated assets of between $1
million and 10 million and estimated liabilities of between $1
million and $10 million. Carmen D. Conde Torres, Esq., C. CONDE &
ASSOC., is the Debtor's counsel.
ELITE AEROSPACE: Auction of Substantially All Assets on March 3
---------------------------------------------------------------
Judge Theodor C. Albert of the U.S. Bankruptcy Court for the
Central District of California authorized the bidding procedures
proposed by Elite Aerospace Group, Inc. ("EAG") and its
wholly-owned subsidiaries, Elite Aviation Products Inc., Elite
Engineering Services Inc., Elite Metal Manufacturing Inc., and Zach
Halopoff Inc., in connection with the sale of substantially all
their assets to GMX Aerospace & Defense Group, Inc. for $7.8
million, subject to overbid.
GMX will deliver a good faith deposit by a certified or bank check
or wire transfer in an amount equal to $730,000 upon execution of
the APA, which will occur no later than Feb. 16, 2022.
The salient terms of the Bidding Procedures are:
a. Bid Deadline: Feb. 28, 2022, at 4:00 p.m. (PT)
b. Initial Bid: An amount that is at least $7.8 million, which
is the sum of the Purchase Price submitted by GMX (in the amount of
not less than $7.45 million), plus an initial overbid amount of
$50,000 and a Break-Up Fee of $300,000
c. Deposit: $800,000
d. Auction: An auction with respect to a sale of the Assets
will take place on March 3, 2022, at 10:00 a.m. (PT) at the
Debtors' counsel's offices, located at 2818 La Cienega Avenue, Los
Angeles, California 90034, or at such other place and time as the
Debtors will notify reasonably in advance all Qualified Bidders,
including GMX, and the Committee.
e. Bid Increments: $50,000
f. Sale Hearing: March 9, 2022, at 10:00 a.m., or such date
and time immediately thereafter that is convenient to the Court
g. Sale Objection Deadline: Feb. 23, 2022, at 5:00 p.m. (PT)
h. Closing: Five business days after entry of an order
approving the sale of Assets, which order will be entered by March
11, 2022
i. The sale is on "as is, where is," and not be conditioned on
obtaining financing or the outcome of any due diligence by the
Potential Bidder.
The Sale Notice: (a) is approved; and (b) will be served by Feb.
16, 2022, upon the Notice Parties. The Cure Objection Deadline is
Feb. 23, 2022.
The Sale Motion will be filed with the Court and served on the
Notice Parties no later than Feb. 16, 2022.
Notwithstanding the possible applicability of Bankruptcy Rules
6004(h), 7062, 9014 or otherwise, the terms and conditions of the
Order will be immediately effective and enforceable upon its entry.
All time periods set forth in the Order will be calculated in
accordance with Bankruptcy Rule 9006(a).
A hearing on the Motion was held on Jan. 12, 2022, at 10:00 a.m.
About Elite Aerospace Group
Elite Aerospace Group, Inc. is an Irvine, Calif.-based company
that
designs and manufactures aerospace components.
Elite Aerospace Group filed a petition for Chapter 11 protection
(Bankr. C.D. Calif. Lead Case No. 21-12231) on Sept. 13, 2021,
listing as much as $50 million in both assets and liabilities.
Zeeshawn Zia, president, signed the petition. Its subsidiaries
filed their voluntary Chapter 11 petitions on Oct. 5, 2021. Judge
Theodor C. Albert oversees the cases.
The Debtors tapped Levene, Neale, Bender, Yoo & Brill, LLP as
bankruptcy counsel; K&L Gates, LLP and Hart David Carson, LLP as
special counsel; Three Twenty-One Capital Partners, LLC as
investment banker; and Force Ten Partners, LLC as restructuring
advisor. Brian Weiss, a partner at Force Ten Partners, is the
Debtors' chief restructuring officer.
On Oct. 5, 2021, the U.S. Trustee for Region 15 appointed an
official committee of unsecured creditors. The committee tapped
Buchalter, a Professional Corporation, as its bankruptcy counsel.
ESCADA AMERICA: Hits Chapter 11 Bankruptcy Protection
-----------------------------------------------------
Evan Clark of WWD reports that Escada America LLC filed for
bankruptcy in Los Angeles on Tuesday, January 18, 2022, marking the
latest leg in the brand's financial struggles.
The initial filing in federal bankruptcy court gave only the barest
details of the division's situation. The company estimated it owed
$1 million to $10 million to a total of 100 to 199 creditors. It
also listed assets of $1 million to $10 million.
Many of the business' largest debts were for rent and were listed
as disputed. The top three creditors were all due rent and included
717 GFC in New York, which is owed $5.1 million; the Beverly Hills
Wilshire Hotel, $2.5 million, and Samson Management Corp. in
Queens, $1.3 million.
The Mittal family sold the broader Escada business to Beverly
Hills-based private equity firm Regent in late 2019.
But the acquisition quickly ran headlong into the worst of the
pandemic, which brought a massive disruption to fashion and a wave
of bankruptcies.
WWD reported in June 12, 2021 that the brand was struggling with
some of its North American stores taken over by landlords and its
corporate headcount reduced.
In September that year, a division in Germany filed for insolvency
(its second trip to insolvency there, having filed in 2009).
At the time, Escada pinned the filing in Germany on the pandemic.
"We have made great strides to improve our operations and had been
on track to exceed our results from the last fiscal year until
COVID-19 swept across the globe," an internal memo read.
"Unfortunately, the human tragedy and economic plague caused by the
pandemic has acutely affected the luxury fashion and retail
sectors."
A lawyer for Escada America and representatives for Regent could
not immediately be reached on Tuesday, January 18, 2022.
About Escada America
Escada America owns and operates a clothing store in New York.
Escada America sought Chapter 11 bankruptcy protection (Bankr. C.D.
Cal. Case No. 22-10266) on Jan. 18, 2022. In the petition filed by
Kevin Walsh, director of finance, Escada America estimated assets
and liabilities between $1 million and $10 million. The case is
handled by Honorable Judge Sheri Bluebond. John Patrick M. Fritz,
Esq., of LEVENE, NEALE, BENDER, YOO & GOLUBCHIK L.L.P., is the
Debtor's counsel.
GH REID: Seeks to Employ Fuqua & Associates as Bankruptcy Counsel
-----------------------------------------------------------------
G.H. Reid Enterprises, LLC seeks approval from the U.S. Bankruptcy
Court for the Southern District of Texas to hire Fuqua &
Associates, P.C. to serve as legal counsel in its Chapter 11 case.
The firm's services include:
(a) providing the Debtor with legal advice with respect to its
powers and duties in the continued operation of its business and
management of its property;
(b) preparing all pleadings;
(c) negotiating and submitting a potential plan of
reorganization; and
(d) performing all other necessary legal services for the
Debtor.
The firm's hourly rates are as follows:
Richard L. Fuqua, Esq. $600 per hour
Mary Ann Bartee, Esq. $300 per hour
T.J. O'Dowd $105 per hour
Richard Fuqua, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that he is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Richard L. Fuqua, Esq.
Fuqua & Associates, P.C.
8558 Katy Freeway, Suite 119
Houston, TX 77024
Tel: (713) 960-0277
Email: RLFuqua@FuquaLegal.com
About G.H. Reid Enterprises
G.H. Reid Enterprises, LLC filed a petition for Chapter 11
protection (Bankr. S.D. Texas Case No. 22-60001) on Jan. 3, 2022,
listing up to $1 million in assets and liabilities. Albert Ortiz,
managing member, signed the petition.
Judge Christopher M. Lopez oversees the case.
The Debtor tapped Richard L. Fuqua, Esq., at Fuqua & Associates as
legal counsel.
HORIZON SATELLITES: Taps Stresser & Associates as Accountant
------------------------------------------------------------
Horizon Satellites, Inc. seeks approval from the U.S. Bankruptcy
Court for the Northern District of Georgia to hire Stresser &
Associates, P.C. as its accountant.
The firm's services include:
(a) preparing, amending, and filing tax returns for the
Debtor; and
(b) providing other essential accounting duties necessary to
ensure the accuracy of information presented to the court and
parties in interest in the Debtor's Chapter 11 case.
The firm's hourly rates are as follows:
Partner $330 per hour
CPA $250 per hour
Accountant $185 per hour
Wendy Player, the firm's accountant who will be providing the
services, disclosed in a court filing that she is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Wendy S. Player, CPA
Stresser & Associates, P.C.
8505 Dunwoody Place, Building 12
Atlanta, GA 30350
Tel: 901-525-1322
Fax: 901-525-2389
Email: mcoury@glankler.com
About Horizon Satellites
Horizon Satellites, Inc., a company based in Gainesville, Ga.,
filed a petition for Chapter 11 protection (Bankr. N.D. Ga. Case
No. 21-21193) on Nov. 17, 2021, listing up to $50,000 in assets and
up to $10 million in liabilities. Christopher Reynolds, chief
executive
officer, signed the petition.
Judge James R. Sacca oversees the case.
The Debtor tapped Rountree, Leitman & Klein, LLC as legal counsel
and Stresser & Associates, P.C. as accountant.
INTEGRATED VENTURES: Sabby Volatility, et al., Hold 4.9% Stake
--------------------------------------------------------------
Sabby Volatility Warrant Master Fund, Ltd., Sabby Management, LLC,
and Hal Mintz disclosed that as of Dec. 31, 2021, they beneficially
own 10,227,572 shares of common stock of Integrated Ventures, Inc.,
representing 4.99 percent of the shares outstanding. A full-text
copy of the regulatory filing is available for free at:
https://www.sec.gov/Archives/edgar/data/1520118/000153561022000017/intv0122.txt
About Integrated Ventures Inc.
Integrated Ventures Inc. -- www.integratedventuresinc.com --
operates as technology holdings Company with focus on
cryptocurrency sector.
Integrated Ventures reported a net loss of $22.43 million for the
year ended June 30, 2021, compared to a net loss of $1.08 million
for the year ended June 30, 2020. As of Sept. 30, 2021, the
Company had $14.72 million in total assets, $413,933 in total
liabilities, $1.12 million in series C preferred stock, $3 million
in series D preferred stock, and $10.18 million in total
stockholders' equity.
Houston, TX-based M&K CPAS, PLLC, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated Sept.
24, 2021, citing that the Company has suffered net losses from
operations in current and prior periods and has an accumulated
deficiency, which raises substantial doubt about its ability to
continue as a going concern.
ION GEOPHYSICAL: Sabby Volatility, et al., No Longer Own Shares
---------------------------------------------------------------
Sabby Volatility Warrant Master Fund, Ltd., Sabby Management, LLC,
and Hal Mintz disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2021, they
have ceased to beneficially own shares of common stock of Ion
Geophysical Corp. A full-text copy of the regulatory filing is
available for free at:
https://www.sec.gov/Archives/edgar/data/866609/000153561022000012/io0122.txt
About ION
Headquartered in Houston, Texas, ION (NYSE: IO) --
http://www.iongeo.com-- is an innovative, asset light global
technology company that delivers powerful data-driven
decision-making offerings to offshore energy, ports and defense
industries. The Company is entering a fourth industrial revolution
where technology is fundamentally changing how decisions are made.
The Company provides its services and products through two business
segments -- E&P Technology & Services and Operations Optimization.
ION Geophysical reported a net loss of $37.11 million for the year
ended Dec. 31, 2020, compared to a net loss of $47.21 million on
$174.68 million for the year ended Dec. 31, 2019. As of Sept. 30,
2021, the Company had $190.91 million in total assets, $256.07
million in total liabilities, and a total deficit of $65.17
million.
Houston, Texas-based Grant Thornton LLP, the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated Feb. 11, 2021, citing that as of Dec. 31, 2020, the Company
had outstanding $120.6 million aggregate principal amount of its
9.125% Senior Secured Second Priority Notes, which mature on Dec.
15, 2021. The Notes, classified as current liabilities, caused the
Company's current liabilities to exceed its current assets by
$150.9 million and its total liabilities exceeds its total assets
by $71.1 million. These conditions, along with other matters,
raise substantial doubt about the Company's ability to continue as
a going concern.
* * *
As reported by the TCR on Jan. 6, 2022, S&P Global Ratings lowered
its issuer credit rating on U.S.-based marine seismic data company
ION Geophysical Corp. to 'D' from CCC'. S&P said the downgrade
reflects ION Geophysical's missed interest and principal payments
on its 8% senior secured notes due 2025 and its 9.125% unsecured
notes due 2021.
JOYFUL CARE: Unsecureds to Get $6K Per Month for 60 Months
----------------------------------------------------------
Joyful Care Caregiving Services, Inc., filed with the U.S.
Bankruptcy Court for the Central District of California a
Disclosure Statement describing Plan of Reorganization dated Jan.
13, 2022.
Debtor is an elder care service provider. The Debtor incorporated
and began operations in 2012. Debtor began to experience cash flow
issues in 2019, partly due to the effects of the COVID-19
pandemic.
The Debtor has been operating in the ordinary course since the
commencement of the case and has operated at a profit. Debtor is
still litigation the Estes Matter in the Bankruptcy Court and the
outcome of that matter will have an impact on the amounts available
to pay creditors in this case and the pro rate distributions to
unsecured creditors. Debtor will propose a restructuring plan to
pay off creditors through a payment plan approved by the Court.
The source of money earmarked to pay creditors and interest-holders
in this case will come from Debtor's net operating income, which is
projected to be approximately $30,000 per month, for the term of
the Plan.
The amount of disbursement to creditors will be determined based on
the priorities under the Code and the pro rata share of payments
that creditors are entitled to under the Code. Unsecured creditors
will receive $6,211.81 per month from Debtor for the duration of
the Plan which is projected to be 5 years, for a total pay-out of
$372,708.76. At the conclusion of this case, after all plan
payments are made, the remaining balance of amounts owed to
creditors, if any, will be discharged.
General Unsecured Claims consist of $372,708.76 total amount of
allowed claims. Total amount of payments (over time) shall be
$372,708.76 to satisfy claims from Debtor's net operating income.
Monthly payments of $6,211.81 from Debtor's net operating income
for 60 months at $74,541.72 per year. Installment plan payments
from Debtor will be made every 30 days after the effective date,
for a total of 60 months.
The Debtor will continue to operate its elder care services
business in the ordinary course.
A full-text copy of the Disclosure Statement dated Jan. 13, 2022,
is available at https://bit.ly/3Ig58d0 from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Judy L. Khang
Joon M. Khang, Esq.
Khang & Khang LLP
18101 Von Karman Avenue, 3rd Floor
Irvine, CA 92612
Tel: (949) 419-3834
Fax: (949) 385-5868
Email: joon@khanglaw.com
About Joyful Care Caregiving Services
Joyful Care Caregiving Services, Inc. sought protection for relief
under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No.
21-11648) on June 30, 2021, disclosing total assets of up to
$50,000 and total liabilities of up to $500,000. Judge Erithe A.
Smith presides over the case. Khang & Khang, LLP represents the
Debtor as legal counsel.
LINDA M. ARMELLINO: $780K Sale of Alexandria Property Approved
--------------------------------------------------------------
Judge Brian F. Kenney of the U.S. Bankruptcy Court for the Eastern
District of Virginia authorized Linda M. and Michael J. Armellino
to sell the property described as Tax Map ID #074.03-06-29, Lot 29,
Old Town Station, as found in Book 1096, at Page Number 44, in the
Land records of the City of Alexandria, and otherwise known as 409
Old Town Court, in Alexandria, Virginia 22314, to Sophia Setterberg
and Andrew Setterberg for $780,000.
The sale is pursuant to a contract dated Dec. 15, 2021, with
Addendums, which were attached as Exhibit A to the original sale
motion, and including an additional Addendum dated Jan. 4, 2022,
authorizing a $600 credit to the sellers for certain repairs, and
also authorizing reimbursement to the Seller's realtor of $3,000
for a new electrical panel and $1,500 for repairs to the
brickwork.
The proceeds of the sale will be disbursed at settlement in the
following order:
(1) The ordinary and necessary costs of closing and
recondition, including all realtors' fees and commissions as
disclosed in the sales contract, and
(2) Real property taxes owed to the City of Alexandria,
including the secured portion of the City of Alexandria's claim,
Claim 4-1.
Any surplus proceeds of sale after the payments as described are
made will be turned over to the Debtors and placed in their DIP
Account, pending any further order of the Court.
The 14-day stay under Rule 6004(h) is waived.
Upon settlement, the Debtors will promptly prepare and file a
Report of Sale detailing the distribution of the sale proceeds as
described.
Linda M. and Michael J. Armellino sought Chapter 11 protection
(Bankr. E.D. Va. Case No. 20-12475) on Nov. 6, 2020. The Debtors
tapped Richard Hall, Esq., as counsel.
LTL MANAGEMENT: Urges Court to Reinstate Talc Claimants' Committee
------------------------------------------------------------------
LTL Management, LLC has urged the U.S. Bankruptcy Court for the
District of New Jersey to grant its earlier motion to reinstate the
official committee of talc claimants that was initially appointed
in its Chapter 11 case.
In court papers filed in support of its motion, LTL Management
reiterated its argument that the U.S. Trustee overseeing its
bankruptcy case cannot disband a committee officially appointed by
court order.
"The court indisputably has the authority to uphold orders entered
in this case and should do so here in the face of the U.S.
Trustee's effort to unilaterally rescind it," said the company's
attorney, Paul DeFilippo, Esq., at Wollmuth Maher & Deutsch, LLP.
Last week, Andrew Vara, the U.S. Trustee for Region 3, and the two
official talc claimants' committees he created objected to the
motion, saying the Bankruptcy Code does not authorize the court to
disband an official committee appointed by the bankruptcy watchdog
under 11 U.S.C. Section 1102(a)(1).
"The [U.S. Trustee] argues that, following transfer of the case,
the entry of an order appointing a committee in a bankruptcy
administrator district is not binding upon him. The [U.S. Trustee]
provides no case law supporting this argument," Mr. DeFilippo said.
The attorney argued that the New Jersey bankruptcy court only needs
to determine whether it should enforce the order, which approved
the formation of the original talc claimants committee on Nov. 8,
2021.
The Nov. 8 order was issued by the U.S. Bankruptcy Court for the
Western District of North Carolina, the court initially assigned to
oversee LTL Management's case.
In a statement responding to the objections, Arnold & Itkin, LLP
said the U.S. Trustee and the talc claimants' committees did not
dispute that the North Carolina bankruptcy court "had the statutory
authority" to enter the order.
"What they misapprehend is the effect that order has on the [U.S.
Trustee's] ability to, in effect, modify it via issuance of the
U.S. Trustee notice. Despite objectors' protestations to the
contrary, the [U.S. Trustee] did not have the authority to
effectively overrule the North Carolina bankruptcy court's talc
committee appointment order and the [U.S. Trustee's] action in so
doing is a nullity," Arnold & Itkin said.
Arnold & Itkin represents over 7,000 talc personal injury claimants
in LTL's bankruptcy.
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 petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D. N.J. Case No. 21-30589) on
Nov. 16, 2021. The Hon. Michael B. Kaplan is the case judge. At
the time of the filing, the Debtor was estimated to have $1 billion
to $10 billion in both assets and liabilities.
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.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On December 24, 2021, the U.S.
Trustee for Regions 3 and 9 reconstituted the talc claimants'
committee and appointed two separate committees: (i) the official
committee of talc claimants I, which represents ovarian cancer
claimants, and (ii) the official committee of talc claimants II,
which represents mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
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 in 2020.
MARRONE BIO: CEO Issues Letter to Shareholders
----------------------------------------------
Kevin Helash, the chief executive officer of Marrone Bio
Innovations, Inc., issued a letter to the Company's shareholders
announcing certain preliminary financial results for the
fourth-quarter and fiscal year ended Dec. 31, 2021, noting that the
Company expects to report complete fourth-quarter and full year
2021 financial results in March 2022 and that the Company expected
revenue growth and gross margins for the full year 2021 would be in
line with forecasts. A full-text copy of the Letter to
Shareholders is as follows:
Dear Shareholders,
As we begin 2022, I'd like to provide you with a brief update on
how we completed 2021, plus a high-level view of the upcoming
season in the Northern Hemisphere. Despite external headwinds
associated with weather and COVID-related market disruptions in the
first half of the year, 2021 ended on a strong note.
I am pleased to report that fourth quarter 2021 revenues are
estimated to reflect growth in the mid-30% range, as compared with
fourth quarter 2020 revenues. For the second half of 2021,
revenues are estimated to have increased 20+% when compared with
revenues in the second half of 2020. On a full year basis, we
estimate revenue growth in the low double-digit to mid-teens range
for 2021 as compared with 2020, in line with our forecast.
We made positive headway on a number of other key financial metrics
in 2021. We expect that annual gross margins for 2021 will be on
track with our target of the upper 50% range, and full-year
operating expenses will be relatively flat when compared with those
in the prior year. Collectively, these results are expected to
contribute to improvements in Adjusted EBITDA and cash from
operations – two key measures of long-term value creation. We
benefited from the continuing support of warrant holders, who
exercised the fifth and final tranche of their warrants in December
to help fulfill our long-term investment needs. Overall, we remain
in a healthy financial position to execute on our strategy. We
will provide further detail on the fourth quarter and the full-year
results, plus the financial outlook for 2022, when we report
earnings in March.
We were encouraged by orders placed in the latter part of the
quarter, an important indicator of our customers' plans for the
first half of 2022. Our seed treatment solutions were in high
demand, especially in Europe for Takla - our newly launched
bio-nutritional product – and in the United States for BIOSt
Bionematicide – a seed treatment for soybeans and corn.
Distributor orders in the Americas also were particularly strong
for our crop protection products Regalia Biofungicide, Venerate XC
Bioinsecticide and Grandevo WDG Bioinsecticide in specialty crops,
and for Pacesetter, our recently launched crop health solution for
row crops.
We made major strides in advancing key products in our rich
research and development (R&D) pipeline. As announced previously,
we have submitted MBI-306 – our second-generation
bioinsecticide/bionematicide – for regulatory approval in the
United States. We anticipate this product will deliver peak
potential revenue of approximately $100 million per year, with a
product launch targeted for 2023/2024. Additionally, MBI-206
bionematicide has been submitted to Brazilian regulatory
authorities for approval for use in soil and seed treatments.
We also recently announced our acquisition of exclusive rights to
high-performing strains of a microorganism with a novel mode of
action that we believe will accelerate the advancement of our
bioherbicide, MBI-006. This breakthrough product has the potential
to give growers a new, more sustainable option for controlling
grassy and broadleaf weeds – and is particularly important for
weeds that have developed resistance to conventional herbicides –
with a compelling return on investment versus conventional
products. We believe our suite of alternative solutions to weed
control will allow us to make a competitive entry into the $27
billion global herbicide market.
To close, we are optimistic about the upcoming spring season in the
Northern Hemisphere. The western United States has received much
needed rain and snow, which is positive for our specialty crop
customers. Strong commodity prices in the major row crops have
boosted grower income, and our sustainable, cost-effective options
are highly attractive in this environment. This is true not only
in the United States, but also in Europe and Latin America, where
our work to establish a meaningful presence is poised to deliver in
2022.
I am particularly grateful for the dedication of our employees as
we addressed the numerous challenges of 2021 and emerged well
positioned to deliver long-term future success. On behalf of
everyone at Marrone Bio, our thanks for your continued support of
our company and of our commitment to bringing breakthrough
sustainable agricultural solutions to growers around the world. We
remain confident that, going forward, MBI is well positioned to
outpace our peers in the ag biological industry.
All the best,
Kevin Helash
Chief Executive Officer
About Marrone Bio Innovations
Based in Davis, California, Marrone Bio Innovations, Inc. --
http://www.marronebio.com-- discovers, develops and sells
innovative biological products for crop protection, plant health
and waterway systems treatment. The Company's products are sold
through distributors and other commercial partners to growers
around the world for use in integrated pest management and crop
protection systems that improve efficacy and increase yields and
quality while protecting the environment. Its products are often
used in conjunction with or as an alternative to other agricultural
solutions to control pests and enhance plant nutrition and health.
Marrone Bio reported a net loss of $20.17 million for the year
ended Dec. 31, 2020, a net loss of $37.17 million for the year
ended Dec. 31, 2019, and a net loss of $20.21 million for the year
ended Dec. 31, 2018. As of Sept. 30, 2021, the Company had $82.14
million in total assets, $51.51 million in total liabilities, and
$30.63 million in total stockholders' equity.
MILAPKUMAR P. PATEL: $1.2M Sale of Pevely & Bonne Terre Assets OK'd
-------------------------------------------------------------------
Judge Kathy A. Surratt-States of the U.S. Bankruptcy Court for the
Eastern District of Missouri authorized the private sale proposed
by Shri Narayan, LLC, an affiliate of Milapkumar P. Patel, of the
real properties located at 1999 HWY Z, in Pevely, Missouri 63070,
and at 416 Benham St., in Bonne Terre, Missouri 63628, to Compass
Box Holdings, LLC, or its assignee for $1,245,000.
Shri is authorized to sell the Property to Compass at private sale
under the terms as set forth in the Contract for Purchase and Sale
of Commercial Real Estate pursuant to Federal Rule of Bankruptcy
Procedure 6004(f)(1) without further marketing process.
The sale is free and clear of liens, claims, encumbrances and
interests, with any liens and claims attaching only to the sale
proceeds.
Compass will acquire the Property set forth in the Contract on an
"as is, where is" basis without any representations or warranties
from Shri or the Debtor, Milapkumar P. Patel, as to the quality or
fitness of such assets for either their intended or any other
purposes.
The Order is a final order and is enforceable upon entry. To the
extent necessary under Bankruptcy Rules 5003, 9014, 9021 and 9022,
the Court expressly finds that there is no just reason for delay in
the implementation of the Order. In addition, as no unresolved
objections to the Sale Motion remained at the time of the hearing
on the Sale Motion, the Court orders that the 14-day stay imposed
by Bankruptcy Rules 6004(g) and 6006(d) does not apply.
Accordingly, the Order is subject to immediate execution and
fulfillment by Shri and Compass.
After payment of the necessary and customary closing cost, Shri is
authorized to pay the balance of the remaining sale proceeds to
First State Community Bank for application to its debt. First State
Community Bank has a first and prior lien, to all other lien
claimants, on the Property and will receive the sale proceeds
remaining after payment of the necessary and customary closing cost
free and clear of the claims of all others.
Milapkumar P. Patel sought Chapter 11 protection (Bankr. E.D. Mo.
Case No. 21-41571) on April 25, 2021. The Debtor tapped Angela
Redden-Jansen, Esq., as counsel.
MILAPKUMAR P. PATEL: $475K Sale of St. Louis Asset to Bhagat OK'd
-----------------------------------------------------------------
Judge Kathy A. Surratt-States of the U.S. Bankruptcy Court for the
Eastern District of Missouri authorized the private sale proposed
by Breckenridge Hills Fuel, LLC, an affiliate of Milapkumar P.
Patel, of the real property located at 4390 Telegraph Rd., in St.
Louis, Missouri 63129, to Vibul Bhagat or Assignees for $475,000.
Breckenridge is authorized to sell the Property to the Buyer at a
private sale under the terms as set forth in the Special Sale
Contract pursuant to Federal Rule of Bankruptcy Procedure
6004(f)(1) without further marketing process.
The sale is free and clear of liens, claims, encumbrances and
interests, with any liens and claims attaching only to the sale
proceeds.
The Buyer will acquire the Property set forth in the Contract on an
"as is, where is" basis without any representations or warranties
from Breckenridge or Debtor, Milapkumar P. Patel, as to the quality
or fitness of such assets for either their intended or any other
purposes, except that the inground fuel tanks will be removed and
appropriate clearances obtained from the Missouri Department of
Natural Resources related to the removal of the inground fuel tanks
as called for in the Contact.
The Order is a final order and is enforceable upon entry. To the
extent necessary under Bankruptcy Rules 5003, 9014, 9021 and 9022,
the Court expressly finds that there is no just reason for delay in
the implementation of the Order. In addition, as no unresolved
objections to the Sale Motion remained at the time of the hearing
on the Sale Motion, the Court orders that the 14-day stay imposed
by Bankruptcy Rules 6004(g) and 6006(d) does not apply.
Accordingly, the Order is subject to immediate execution and
fulfillment by Breckenridge and the Buyer.
After payment of the necessary and customary closing cost,
Breckenridge is authorized and directed to pay the balance of the
remaining sale proceeds to First State Community Bank for
application to its debt and to be held in escrow for tank removal
as called for in the Contract. First State Community Bank has a
first and prior lien, to all other lien claimants, on the Property
and will receive the sale proceeds remaining after payment of the
necessary and customary closing cost free and clear of the claims
of all others.
Milapkumar P. Patel sought Chapter 11 protection (Bankr. E.D. Mo.
Case No. 21-41571) on April 25, 2021. The Debtor tapped Angela
Redden-Jansen, Esq., as counsel.
MOSS OPAL: Seeks to Hire Dundon Advisers as Financial Advisor
-------------------------------------------------------------
Moss Opal, LLC seeks approval from the U.S. Bankruptcy Court for
the Central District of California to employ Dundon Advisers LLC as
its financial advisor.
The Debtor requires a financial advisor for the valuation of its
primary asset, which is a promissory note.
The hourly rates of the firm's professionals are as follows:
Matthew Dundon, Principal $790
Thomas Short, Senior Associate $450
Matthew Dundon, a principal at Dundon Advisers, disclosed in a
court filing that the firm is a "disinterested person" as defined
in Section 101(14) of the Bankruptcy Code.
The firm can be reached through:
Matthew Dundon
Dundon Advisers LLC
Ten Bank Street, Suite 1100
White Plains, NY 10606
Telephone: (917) 838-1930
Email: md@dundon.com
About Moss Opal LLC
Moss Opal, LLC sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. C.D. Calif. Case No. 21-18689) on Nov. 16, 2021,
listing as much as $1 million in both assets and liabilities. David
Gillette, manager, signed the petition.
Judge Neil W. Bason oversees the case.
The Debtor tapped Kevin Ronk, Esq., at Portillo Ronk Legal Team as
legal counsel and Dundon Advisers, LLC as financial advisor.
NANOMECH INC: Arkansas Court Junks Lenders' Negligence Claims
-------------------------------------------------------------
Judge P.K. Holmes, III, of the United States District Court for the
Western District of Arkansas, Fayetteville Division, denied the
motion to file a second amended complaint filed by the plaintiffs
in the case captioned DANIEL CARROLL and KENT SCHOOL CORPORATION,
Plaintiffs, v. NANOMECH, INC., et al., Defendants, No.
5:21-CV-05150 (W.D. Ark.).
In April 2018, Nanomech entered into a Note Purchase and Security
Agreement, as well as a first amendment with Michaelson Capital
Special Finance Fund II, L.P. Michaelson Capitol provided Nanomech
with $7 million in financing, and the NPA prohibited Nanomech from
issuing stock, options, warrants, or other rights to acquire stock
which may be redeemed before October 1, 2022, without prior written
consent of Michaelson Capital.
In June 2018 Nanomech sought additional capital and, after being
advised by its general counsel that written consent from Michaelson
Capital was not needed, Nanomech issued a promissory note to
Plaintiff Carroll in exchange for $1 million. In August 2018
Nanomech issued a $1 million promissory note to Plaintiff Kent
School, once again without prior approval from Michaelson Capital.
In September 2018 Nanomech issued a second $1 million promissory
note to Plaintiff Kent School. All notes issued by Nanomech to
Plaintiffs contained a choice of law clause which provided "all
actions arising out of or in connection with this Note shall be
governed by and construed in accordance with the laws of the State
of Delaware, without regard to the conflicts of law provisions of
the State of Delaware or of any other state." Shortly after the
second Kent School note was executed, Michaelson Capital notified
Nanomech that Nanomech was in breach of the NPA.
In February 2019 Michaelson Capital filed a breach of contract
lawsuit against Nanomech, and in April 2019 Nanomech filed a
voluntary petition for Chapter 11 bankruptcy. Plaintiffs each filed
proofs of claim in the bankruptcy proceeding.
In June 2019 Michaelson Capital was awarded a judgment of
$8,909,830 for its breach of contract claim against Nanomech. In
March 2020 Nanomech, Michaelson Capital, Nanomech's insurers, and
certain directors and officers of Nanomech entered into a
settlement agreement in the bankruptcy case in which Nanomech,
Nanomech's estate, and Michaelson Capital agreed to a general
release of Nanomech's directors and officers in exchange for a
payment of $1.7 million to Nanomech from Nanomech's insurers.
Nanomech in turn provided $1,680,000 to pay Michaelson Capital's
claims as the senior secured creditor and kept $20,000 for the
benefit of Nanomech's estate.
In March 2019, Plaintiff Carroll filed his first federal lawsuit
alleging breach of contract against Nanomech. Carroll v. Nanomech,
Inc., No. 19-cv-05055 (W.D. Ark July 2, 2019). Plaintiff Carroll
voluntarily dismissed his claim in July 2019 and subsequently filed
the present lawsuit with Plaintiff Kent School alleging Nanomech
was negligent when it omitted and misstated its contractual duties
to Michaelson Capital and issued promissory notes without obtaining
prior written consent from Michaelson Capital, causing damages in
the respective amounts of the promissory notes. Nanomech's pending
motion to dismiss argues the Plaintiffs' claims should be dismissed
under Delaware's economic loss doctrine. Alternatively, Nanomech
posits that under both Arkansas and Delaware law the parties only
had a debtor/creditor relationship and therefore owed no duty to
each other that could sustain a claim for negligence.
The Plaintiffs filed no response to Nanomech's motion to dismiss,
but instead filed a second amended complaint without leave of
Court. Because the Plaintiffs had previously filed an amended
complaint as a matter of course pursuant to Fed. R. Civ. P. 15 and
had not obtained opposing parties' written consent to file the
second amended complaint, the Court ordered the Clerk to amend the
docket text to reflect that the purported second amended complaint
was filed without legal effect. The Plaintiffs then filed a motion
for leave to file a second amended complaint. Nanomech filed a
response in opposition.
Judge Holmes, in his Opinion and Order, denied the Plaintiffs'
motion to file a second amended complaint and granted Nanomech's
motion to dismiss.
The Plaintiffs seek to file an amended complaint dismissing
Defendants Mitchell and Evans, adding Nanomech's insurers as
respondents, and requesting declaratory judgment be entered
regarding certain insurance policies held by Nanomech. Because the
Court finds that the Defendants owed no duty to the Plaintiffs, any
amendment to alter parties or trigger insurance coverage would be
futile, and the Plaintiffs' motion for leave will be denied.
The Defendants argue that due to the choice of law provision in the
notes exchanged between the parties Delaware law should apply to
the Plaintiffs' claims. However, Judge Holmes determined that
because under both Delaware and Arkansas law the Defendants owed no
duty to the Plaintiffs, the Court need not determine which state's
law applies to this action.
To plead a prima facie case of negligence, the plaintiff must
establish (1) defendant owed plaintiff a duty; (2) defendant
breached that duty; (3) defendant's breach caused plaintiff harm;
and (4) damages.
The record clearly demonstrates Nanomech and the Plaintiffs share
only a debtor/creditor relationship. The Plaintiffs provided
Nanomech with money in exchange for promissory notes securing
repayment and brought this action when Nanomech failed to repay.
The Plaintiff's amended complaint states that "[i]t was the duty of
Defendants. . . to use ordinary care for the safety of [the
Plaintiffs'] total investments of $3,000,000.00 in Nanomech."
Under Arkansas law, absent a special relationship, no duty is owed
in a debtor/creditor relationship that could sustain a claim for
negligence, Judge Holmes explained. The same is true under
Delaware law.
The Plaintiffs have not alleged any facts establishing a fiduciary
duty, or other special relationship, between the parties, the judge
explained. Therefore, under both Arkansas and Delaware law, the
Defendants did not owe the Plaintiffs a duty, and the Plaintiffs'
claim for negligence must be dismissed, the Court held.
A full-text copy of the Opinion and Order dated January 10, 2022,
is available at https://tinyurl.com/mewhnkr9 from Leagle.com.
About NanoMech
NanoMech, Inc. is a privately held company focused on patented
platform nanomanufacturing technologies. It was formed in 2002.
NanoMech filed a voluntary Chapter 11 petition (Bankr. D. Del. Case
No. 19-10851) on April 15, 2019. In the petition signed by Benjamin
Waisbren, chief restructuring officer, the Debtor estimated $10
million to $50 million in both assets and liabilities. Judge
Christopher S. Sontchi oversees the case.
The Debtor tapped Winston & Strawn LLP as general bankruptcy
counsel; Gellert Scali Busenkell & Brown, LLC as bankruptcy
co-counsel; and Virtually There LLC as restructuring advisor.
NEW BETHEL: Taps Verbena Askew Law Firm as Special Counsel
----------------------------------------------------------
New Bethel Baptist Church seeks approval from the U.S. Bankruptcy
Court for the Eastern District of Virginia to hire The Verbena
Askew Law Firm to prosecute its claims against the City of
Portsmouth.
The Debtor has agreed to pay an initial retainer fee of $25,000 to
cover the cost of research and filing of the lawsuit, and pay the
balance of the retainer fee on a contingency basis. Verbena Askew
Law Firm will receive 40 percent of the gross amount recovered from
the claims.
The rate charged by the firm's attorneys is $400 per hour. Legal
assistants charge between $90 and $125 per hour.
Verbena Askew, Esq., the firm's attorney who will be providing the
services, disclosed in a court filing that she is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
Verbena M. Askew, Esq.
The Verbena Askew Law Firm
2 Eaton Street Drive, Suite 708
Hampton, VA 23669
Tel: (757) 722-4100
Email: vaskewlawfirm@verizon.net
About New Bethel Baptist Church
New Bethel Baptist Church is an unincorporated religious
association pursuant to the Constitution of the Commonwealth of
Virginia. It is based in Portsmouth, Va.
New Bethel Baptist Church filed a Chapter 11 petition (Bankr. E.D.
Va. Case No. 19-73531) on Sept. 24, 2019, listing $1,449,207 in
assets and $4,034,673 in liabilities. Judge Frank J. Santoro
oversees the case.
The Debtor tapped Joseph T. Liberatore, Esq., at Crowley Liberatore
P.C., as bankruptcy counsel, and The Verbena Askew Law Firm as
special counsel.
NORDIC AVIATION: Seeks to Employ Kutak Rock as Co-Counsel
---------------------------------------------------------
Nordic Aviation Capital Designated Activity Company and its
affiliates seek approval from the U.S. Bankruptcy Court for the
Eastern District of Virginia to hire Kutak Rock, LLP to serve as
co-counsel with Kirkland & Ellis.
The firm's services include:
(a) providing legal advice regarding local rules, practices
and procedures, and providing substantive and strategic advice on
how to accomplish the Debtors' goals in connection with the
prosecution of their Chapter 11 cases, bearing in mind that the
court relies on co-counsel to be involved in all aspects of the
bankruptcy cases;
(b) reviewing, revising or preparing drafts of documents to be
filed with the court;
(c) appearing in court and at any meeting with the U.S.
Trustee and creditors;
(d) performing various services in connection with the
administration of the cases, including, without limitation, (i)
preparing agendas, certificates of no objection, certifications of
counsel, notices of fee applications, motions and hearings, and
hearing binders of documents and pleadings, (ii) monitoring the
docket for filings and coordinating with Kirkland on pending
matters, (iii) preparing and maintaining critical dates memoranda
to monitor pending applications, motions, hearing dates, and other
matters and the deadlines associated therewith, and (iv) handling
inquiries from creditors, contract counterparties and counsel to
parties-in-interest regarding pending matters and the general
status of the cases and coordinating with Kirkland on any necessary
responses;
(e) interacting and communicating with the court's chambers
and clerk's office;
(f) assisting the Debtors and Kirkland in preparing, reviewing
and filing pleadings related to contested matters, executory
contracts and unexpired leases, asset sales, plan and disclosure
statement issues, and claims administration and resolving
objections and other matters relating thereto; and
(g) performing all other services assigned by the Debtors, in
consultation with Kirkland.
The firm's hourly rates are as follows:
Michael A. Condyles, Esq. $675 per hour
Peter J. Barrett, Esq. $615 per hour
Jeremy S. Williams, Esq. $550 per hour
Lynda Wood $195 per hour
Amanda Nugent $160 per hour
The Debtors paid the firm a retainer fee in the amount of $100,000.
Michael Condyles, Esq., the firm's attorney who will be providing
the services, disclosed in a court filing that he is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
Mr. Condyles also disclosed the following in response to the
request for additional information set forth in Paragraph D.1. of
the Appendix B Guidelines:
a. Kutak Rock did not agree to any variations from, or
alternatives to, its standard or customary billing arrangements for
this engagement.
b. None of the professionals from Kutak Rock included in this
engagement have varied or will vary their rate based on the
geographic location of the bankruptcy case.
c. No adjustments were made to either the billing rates or the
material financial terms of Kutak Rock's employment by the Debtors
as a result of the filing of their Chapter 11 cases.
d. Kutak Rock has submitted to the Debtors for approval a
staffing plan and budget for the firm, which covers the period from
the petition date through March 31, 2022.
The firm can be reached at:
Michael A. Condyles, Esq.
Kutak Rock LLP
901 East Byrd Street, Suite 1000
Richmond, VA 23219-4071
Memphis, TN 38119
Phone: (804) 644-1700
Fax: (804) 783-6192
Email: michael.condyles@kutakrock.com
About Nordic Aviation Capital
Nordic Aviation Capital is the leading regional aircraft lessor
serving almost 70 airlines in approximately 45 countries. Its
fleet of 475 aircraft includes ATR 42, ATR 72, De Havilland Dash 8,
Mitsubishi CRJ900/1000, Airbus A220 and Embraer E-Jet family
aircraft.
On Dec. 17, 2021, Nordic Aviation Capital Pte. Ltd., NAC Aviation
17 Limited, NAC Aviation 20 Limited, and Nordic Aviation Capital
A/S each filed petitions seeking relief under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. E.D. Va.). On Dec. 19, 2021, Nordic
Aviation Capital Designated Activity Company and 112 affiliated
companies also filed petitions seeking Chapter 11 relief. The lead
case is In re Nordic Aviation Capital Designated Activity Company
(Bankr. E.D. Va. Lead Case No. 21-33693).
Judge Kevin R. Huennekens oversees the cases.
The Debtors tapped Kirkland & Ellis and Kutak Rock, LLP as
bankruptcy counsels and the law firms of Clifford Chance, LLP,
William Fry, LLP and Gorrissen Federspiel as corporate counsels.
N.M. Rothschild & Sons Limited, Ernst & Young, LLP and
PricewaterhouseCoopers, LLP serve as the Debtors' financial
advisor, restructuring advisor and tax advisor, respectively. Epiq
Corporate Restructuring, LLC is the claims and noticing agent.
NOVAE LLC: Moody's Assigns First Time 'B3' Corporate Family Rating
------------------------------------------------------------------
Moody's Investors Service assigned first-time ratings to Novae LLC
including a B3 corporate family rating and a B3-PD Probability of
Default Rating. In addition, Moody's assigned a B3 rating to
Novae's proposed first lien credit facilities, comprised of a $50
million revolving credit facility, a $350 million senior secured
first lien term loan and a $100 million delayed draw term loan. The
outlook is stable.
Proceeds from the $350 million senior secured term loan will be
used to finance the acquisition of the company by Brightstar
Capital Partners, pre-fund an acquisition and place about $15
million of cash on the balance sheet.
Assignments:
Issuer: Novae LLC
Corporate Family Rating, Assigned B3
Probability of Default Rating, Assigned B3-PD
Senior Secured 1st Lien Term Loan, Assigned B3 (LGD4)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B3
(LGD4)
Delayed Draw Senior Secured 1st Lien Term Loan, Assigned B3
(LGD4)
Rating outlook, Assigned Stable
RATINGS RATIONALE
The ratings reflect Novae's relatively small scale with revenue of
less than $375 million, elevated financial leverage and what
Moody's anticipates will be an aggressive acquisition strategy.
Moody's expects financial leverage of about 5.0x debt-to-EBITDA,
pro forma for its new capital structure for fiscal year-ended
December 31, 2021 (on a Moody's Adjusted basis). Moody's expects
leverage to remain above the 5.0x range over the next few years, as
the company utilizes its $100 million delayed draw to fund
additional acquisitions. The rating is further constrained by the
risk of supply chain and manufacturing delays and, even though the
company sells primarily into the professional sector, there is some
exposure to the volatile consumer end market, as well as rising raw
material costs. Lastly, the company also operates in a fragmented
industry and faces competitive pricing pressures, which could
constrain organic margin expansion.
The rating benefits from the stronger than expected recovery in
professional-grade trailer demand, higher unit pricing associated
with lower inventory availability at both the dealer network and
retail outlets and, a strong backlog that will sustain production
levels through the 1H/2022. Moody's expects the company will
continue to generate positive annual free cash flow through 2022,
benefiting from active industrial and construction end markets,
planned manufacturing capacity expansion to meet demand and
retention of recent price increases.
Liquidity is adequate and is supported by a cash balance of about
$15 million and the new $50 million cash flow revolving credit
facility, which is fully available. Free cash flow is expected to
be minimal in 2022 due to a large capital project as well as
ongoing cash tax distributions, as the company is taxed as a
partnership. The new revolver has a maximum springing first lien
secured leverage ratio of 7x when borrowings exceed 35% of the
committed amount, which is unlikely to be tested in the near term.
Alternate sources of liquidity are limited given that all assets
are pledged to the new senior secured facilities.
In terms of corporate governance, event risk remains high for
aggressive financial policies given private equity ownership and
the company's acquisitive nature. Given the fragmented nature of
the industry, further bolt-on acquisitions are expected and could
increase leverage, if also funded with debt, or weaken liquidity
and pose integration risks.
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 100% of consolidated adjusted EBITDA plus additional
uncapped amounts subject to a 4.5x pro forma first lien net
leverage ratio (if pari passu secured). Amounts up to 100% of
consolidated adjusted EBITDA may be incurred with an earlier
maturity than the initial term loans. The credit agreement permits
the transfer of assets to unrestricted subsidiaries, up to the
carve-out capacities, subject to "blocker" provisions which state
that no restricted subsidiary that owns material intellectual
property may be designated as an unrestricted subsidiary and
transfers of material intellectual property to an unrestricted
subsidiary are not permitted.
The following proposed terms and final terms of the credit
agreement may be materially different. 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 protective provisions which
only permit guarantee releases if 1) the main purpose of such
release was not to evade the guarantee and collateral requirements
of the credit agreement, 2) the transaction is with an unaffiliated
third party and 3) the fair market value of the subsidiary at the
time of the release is treated as an investment by the issuer.
There are some limitations prohibiting an up-tiering transaction,
including affected lender consent to any contractual subordination
of the debt or the liens to other debt unless offered the
opportunity to participate in priming debt on a pro rata basis.
The stable outlook reflects Moody's expectations of solid earnings
growth through 2022, continued pass-through of rising raw material
costs and contributions from acquisitions. The outlook anticipates
that Novae will maintain an adequate liquidity profile, including
positive free cash flow.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded with a sizable increase in the
company's scale, in conjunction with further revenue
diversification and sustained earnings growth that results in
stronger credit metrics, including Moody's expectation of
debt-to-EBITDA approaching 4.0x and sustained positive free cash
flow generation.
The ratings could be downgraded with deteriorating business
conditions, difficulty integrating future acquisitions, or an
especially rapid and/or sizeable acquisition program that could
distract management from core service obligations. The ratings
could also be downgraded if Moody's expects an inability to sustain
debt-to-EBITDA below 6.0x or generate positive free cash flow. A
deterioration of liquidity or shareholder friendly initiatives such
as additional meaningful debt financed acquisitions or dividends
would also lead to downward ratings pressure.
Novae LLC, based in Markle, IN, is a manufacturer of professional
grade trailers and operates 15 manufacturing facilities in Indiana,
Iowa, Pennsylvania, Missouri and Minnesota. The company is
majority-owned by private equity sponsor Brightstar Capital
Partners. Revenue was approximately $360 million for the LTM period
ended September 30, 2021.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
NOVAE LLC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable
---------------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to Novae
LLC, with a stable outlook. At the same time, S&P assigned its 'B'
issue-level and '3' recovery ratings to the company's senior
secured debt.
The stable outlook on Novae reflects S&P's expectation that the
company will continue to generate solid operating performance and
will be able to maintain its adjusted debt-to-EBITDA ratio below
6.5x for the next 12 months.
Novae competes in a highly fragmented market with only a few large
participants, though it maintains a solid market position. As a
U.S.-based trailer manufacturer, Novae participates in a highly
fragmented niche market with few large participants and, by
comparison, the company's scale is relatively small compared to
peers and other rated capital goods companies. Still, Novae
maintains the second leading market position behind the No. 1
player American Trailer World Corp., which S&P believes is due to
its good relationships with its customers and higher-margin product
offerings. Novae's geographic diversity is limited to North
America, primarily within the Midwest and Northeast regions. The
company primarily distributes its professional-grade trailers
through a network of independent dealers (91% of sales), operates
retail locations to sell new and used trailers, services, parts,
accessories, and rentals (8%), and utilizes its own in-house
logistics provider (1%).
The addressable market size of the fragmented open- and
enclosed-trailer industry is limited, at roughly $4.2 billion in
aggregate. Despite its limited size, the trailer industry is
anticipated to continue to grow at a steady clip, led by growth in
U.S. truck registrants, construction spending, and landscaping
services. While there is some diversity in the end-market
breakdown, professional-grade trailers are heavily weighted toward
use in the cyclical construction, oil and gas, and agriculture
sectors. In addition, the company's trailers sold for recreational
use exposes it to changes in discretionary consumer spending.
During periods of economic distress, there is a risk the company's
professional-grade trailer customers could prolong the useful life
of their trailer fleets and curtail their purchases of equipment,
thereby curbing demand.
The company has managed recent inflationary pressures well to
maintain higher margins than its peers. Novae maintains higher
EBITDA margins compared to its competitors. The company achieves
these margins due to its customer-centric approach, including
flexible manufacturing practices and enhanced partnership with its
wholesale dealers. Furthermore, the company has shown the ability
to acquire companies and enhance margins through its operating
system implementation, leadership development, continuous
improvement, and sourcing scale. As a result, EBITDA margins were
about 300 basis points (bps) higher than its largest competitor for
the 12 months ended on Sept. 30, 2021. The company has also
successfully passed along price increases as surcharges to maintain
margin during the recent raw material cost increases. In addition,
the company's relationships with its suppliers provide steady
procurement of key materials relative to its competitors.
Leverage for the company is manageable at around 5x. S&P said, "We
expect the company to maintain leverage of about 5x over the next
12-18 months, which we believe is manageable given the company's
free cash flow profile. The company has maintained strong
performance due to continued strong demand amid low inventory
levels at the dealership level, with dealers continuing to accept
surcharge pricing to offset rising materials cost. Although we
expect the company to utilize its $100 million delayed draw first
lien term loan over the next 6 months for potential acquisitions,
we anticipate the company to acquire companies at a modest multiple
and to supplement acquisition purchase prices with sponsor equity
if needed."
Financial sponsor ownership is a significant financial risk factor.
S&P said, "Our rating incorporates Novae's ownership by Brightstar
Capital Partners. We believe financial sponsors typically follow an
aggressive financial strategy to maximize shareholder returns and
often extract cash or increase the leverage of owned companies over
time, either through acquisitions or dividends to shareholders.
Still, our base-case forecast does not incorporate significant
debt-funded dividends or acquisitions, outside of the use of the
delayed-draw term loan, because we believe the company plans to
implement a moderately conservative financial policy to reduce debt
over the coming years."
The stable outlook on Novae reflects S&P's expectation the company
will continue to generate solid operating performance and will be
able to maintain its adjusted debt-to-EBITDA ratio below 6.5x over
the next 12 months.
S&P could lower its rating on Novae if:
-- The company's adjusted debt leverage increases above 6.5x due
to operating performance weakness with no prospects for
improvement; or
-- The company pursues large debt-financed acquisition or
shareholder returns that causes debt to EBITDA to deteriorate to
the aforementioned level.
Although unlikely over the next 12 months, S&P could raise its
rating on Novae if:
-- S&P expects the company's adjusted debt to EBITDA to remain
consistently below 5x and anticipate its financial policies to
support this improved leverage level over the long term, inclusive
of potential future acquisitions and shareholder returns;
-- The company continues to improve its scale and scope of
operations in line with higher-rated peers; and
-- The company demonstrates stability of profitability.
ESG credit indicators: E-2 S-2 G-3
Governance is a moderately negative consideration, as is the case
for most rated entities owned by private-equity sponsors. S&P
believes Novae LLC's highly leveraged financial risk profile points
to corporate decision-making that prioritizes the interests of the
controlling owners. This also reflects the generally finite holding
periods and a focus on maximizing shareholder returns.
NRP LEASE: Auction of Surplus Equipment by Bill Ramsey Approved
---------------------------------------------------------------
Judge Jerry A. Funk of the U.S. Bankruptcy Court for the Middle
District of Florida authorized NRP Lease Holdings, LLC, and its
debtor-affiliates to sell their surplus equipment listed on Exhibit
A at auction through Bill Ramsey and Associates, free and clear of
all liens and encumbrances.
The auction fee structure described in the Motion and the
accompanying Contract to Auction is approved and Bill Ramsey and
Associates is entitled to deduct its commissions from the auction
sales proceeds without further notice, application or court order.
The net proceeds from the sale of the Surplus Equipment will be
remitted to Live Oak Bank within 14 days of the Debtor's receipt of
same. For purposes of determining "net proceeds," commissions,
taxes, insurance, advertising fees, transportation and other costs
outlined in the Contract to Auction will be deducted from the sales
proceeds.
A hearing on the Motion was held Jan. 11, 2022, following notice as
required by Rules 2002(a)(2), 2002(c)(1) and 6004(0) Federal Rules
of Bankruptcy Procedure. No objections have been filed to the
requested relief.
A copy of the Exhibit A is available at
https://tinyurl.com/2p9fhvvz from PacerMonitor.com free of charge.
About NRP Lease Holdings
NRP Lease Holdings, LLC, and its debtor-affiliates are privately
held companies based in Jacksonville Beach, Florida.
NRP Lease Holdings and its affiliates that have filed voluntary
petitions seeking relief under Chapter 11 of the Bankruptcy Code
(Bankr. M.D. Fla. Lead Case No. 19-04607) on Dec. 5, 2019. The
petition was signed by Henry P. Woodburn III, manager. At the time
of filing, NRP Lease and Adventure Holdings each estimated $50,000
in assets and $1 million to $10 million in liabilities.
Richard R. Thames, Esq. at THAMES MARKEY & HEEKIN, P.A. represents
the Debtors as counsel.
PAINT THE WIND: Case Summary & Three Unsecured Creditors
--------------------------------------------------------
Debtor: Paint the Wind, LLC
d/b/a The Generals Mountain Lodge of Gettysburg
1207 Flohrs Church Road
Biglerville, PA 17307
Chapter 11 Petition Date: January 19, 2022
Court: United States Bankruptcy Court
Middle District of Pennsylvania
Case No.: 22-00078
Judge: Hon. Henry W. Van Eck
Debtor's Counsel: Lawrence V. Young, Esq.
CGA LAW FIRM
135 North George Street
York, PA 17401
Tel: 717-848-4900
Fax: 717-843-9039
Email: lyoung@cgalaw.com
Debtor's
Realtor: John A. Rainville
THE BROKERS REALTY GROUP LIMITED
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Christine M. Rakoci, member.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/74UVS3Y/Paint_the_Wind_LLC__pambke-22-00078__0001.0.pdf?mcid=tGE4TAMA
List of Debtor's Threet Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
1. Johnson Crane Service Trade Debt $17,230
11708 Old Baltimore Pike
Beltsville, MD 20705
2. Office of the U.S. Trustee Outstanding
$38,424
Attn: D. Troy Quarterly
Sellars, AUST Fees From
228 Walnut Street, Prior Chapter
Suite 1190 11 Case
Harrisburg, PA 17101
3. S&R Roofing Trade Debt
$35,000
7210 McClays Mill Road
Newburg, PA 17240
PARTNERS: Crackers Maker Seeks Chapter 11 Bankruptcy
----------------------------------------------------
PARTNERS Crackers, A Tasteful Choice Company, announced it has
filed filed for voluntary Chapter 11 protection in the U.S.
Bankruptcy Court for the Western District of Washington to
restructure its secured financial obligations.
With record sales in 2020 and 2021, and continued growth expected
in 2022 and beyond, PARTNERS leadership took this opportunity to
strengthen the company's long-term sustainability.
"This restructuring is possible because of our company's financial
strength, our outstanding team and our loyal customers," said Cara
Figgins, President of PARTNERS. "We are proud and grateful that
PARTNERS is thriving despite the challenges our industry has faced
during the COVID-19 pandemic."
With a new expanded facility producing about 11 million crackers a
day, nearly 100 employees, four brands, and a wide variety of
products and flavors sold worldwide, PARTNERS is stronger than
ever.
PARTNERS' leadership assured all employees, customers and vendors
that business operations will continue as usual.
"As a second-generation family-owned business, we care deeply about
our people, our community and our product," said Greg Maestretti,
COO of PARTNERS. "We are grateful for the support and partnership
that is the foundation of our continued success."
* * *
Baking Business notes that the company's announcement comes four
months after the passing of the company's founder, Marian Harris.
Ms. Harris developed her own crackers and, realizing how popular
they had become, set off to start a new business selling her
crackers that the company describes as a perfect "partner" for any
food. That's how Partners Crackers was born in 1992.
About Partners Crackers
Partners Crackers is a producer of different varieties of crackers
in Des Moines, Iowa. It claims that All PARTNERS artisan-crafted
snacks, including PARTNERS Crackers, Blue Star Farms, Wisecrackers,
and All-American are made with real, wholesome and honest
ingredients. Partners produces about 11 million crackers each day
at its 150,000 square-foot plant in Des Moines, an expanded
facility to which the company moved in 2017. On the Web:
http://www.partnerscrackers.com/
Partners, A Tasteful Choice Company, sought Chapter 11 bankruptcy
protection (Bankr. W.D. Wash. Case No. 22-10060) on Jan. 13, 2022.
In its petition, the company disclosed assets of $25.98 million and
estimated liabilities of $17.3 million.
The Hon. Timothy W Dore is the case judge.
Bush Kornfeld LLP is the Debtor's counsel.
PHYSICIAN PARTNERS: Moody's Assigns First Time 'B2' CFR
-------------------------------------------------------
Moody's Investors Service assigned first time ratings to Physician
Partners, LLC including a B2 Corporate Family Rating and B2-PD
Probability of Default Rating. At the same time, Moody's assigned
B2 ratings to the company's senior secured first lien credit
facilities, comprised of a $50 million revolving credit facility,
and $600 million first lien term loan. The rating outlook is
stable.
Proceeds from the credit facilities combined with $500 million of
new equity and $1.6 billion of rollover equity will be used to fund
the Kinderhook Industries purchase of Physician Partners, pay
related fees and expenses and for working capital and general
corporate purposes.
The B2 CFR reflects Moody's expectation that Physician Partners
will operate with moderately high financial leverage of roughly
5.0x and significant concentration in Florida. That said, density
in Florida offers members a strong network of physicians that
allows Physician Partners to provide quality care to its members.
The rating also considers Physician Partner's track record of solid
organic growth, seasoned executive team, and favorable industry
dynamics.
In its stable outlook, Moody's expects good near-term growth with
moderately high financial leverage as Physician Partners continues
to expand its operations in Florida and beyond.
ESG factors are material to the ratings assignment. Social risk
considerations include the rising concerns around the access and
affordability of healthcare services. Among governance
considerations, the company may employ an aggressive acquisition
strategy to grow its business.
Assignments:
Issuer: Physician Partners LLC
Corporate Family Rating, Assigned B2
Probability of Default Rating, Assigned B2-PD
Senior Secured 1st Lien Term Loan, Assigned B2 (LGD4)
Senior Secured 1st Lien Revolving Credit Facility, Assigned B2
(LGD4)
Outlook Actions:
Issuer: Physician Partners LLC
Outlook, Assigned Stable
RATINGS RATIONALE
The B2 CFR is constrained by Physician Partners moderately high
financial leverage, with pro forma adjusted debt to EBITDA of
around 5.0 times, and moderate scale. The CFR is also constrained
by the company's significant geographic concentration, given that a
significant majority of its business is generated in Florida.
Density in Florida can be beneficial as it offers members a strong
network of physicians to meet their health requirements, but it
adds to economic risks and the fact that there is increasing
competition for adoption rates of value-based care models in the
United States. Additionally, as Physician Partners grows, an
inherent challenge within the business model is that it requires
the company to aggressively manage the cost of patient care and
other expenses, given that it earns revenues on a capitated basis
from Medicare Advantage plan providers.
The B2 CFR is supported by the company's experienced management
team and long track record of solid organic growth as Physician
Partners uses its affiliation model to drive future growth through
acquisitions of known providers. Physician Partners' business model
aligns incentives by improving patient outcomes, with a higher
quality of care while focused on treating patients with Medicare
Advantage health insurance plans in a cost-effective manner.
Moody's expects enrollment of retirees in Medicare Advantage plans
to continue outstripping that of Medicare fee-for-service plans by
a wide margin. This represents a significant opportunity for good
performing, value-based providers that can offer low costs to
payers.
Moody's anticipates that Physician Partners will maintain very good
liquidity, supported by an undrawn $50 million proposed committed
revolving credit facility and about $150 million of cash pro forma
September 30, 2021. Moody's forecasts that Physician Partners will
generate roughly $50 million in free cash flow in 2022.
The B2 ratings assigned to the proposed senior secured credit
facilities reflect their interest in substantially all assets of
the borrower and the fact that secured debt is the sole financial
debt within the company's capital structure.
ESG considerations are material to Physician Partners ratings.
Physician Partners faces social risks such as the rising concerns
around the access and affordability of healthcare services.
However, Moody's does not consider Physician Partners to face the
same level of social risk as many other healthcare providers, like
hospitals. Given its high percentage of revenue generated from
Medicare Advantage, Physician Partners is exposed to regulatory
changes. From a governance perspective, Moody's expects Physician
Partners financial policies to remain moderately aggressive due to
its private equity ownership.
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 $132m and 100% of
EBITDA, plus an unlimited amount so long as after giving pro forma
effect to the relevant Incremental Facility that is pari passu with
the lien securing the initial credit facilities, the Total Net
First Lien Leverage Ratio does not exceed 3.40x (or if junior
secured, 3.90x Total Secured Net Leverage, or if unsecured either
3.90x Total Net Leverage, or 2.0x minimum Cash Interest Coverage
ratio), or does not increase on a pro forma basis if used to
finance a permitted acquisition or similar investment (or Cash
Interest Coverage Ratio is no lower than 2.00x). Amounts up to the
greater of $66m and 50% of EBITDA may be incurred with an earlier
maturity date than the term loans. There are no express "blocker"
provisions which prohibit the transfer of specified assets to
unrestricted subsidiaries; such transfers are permitted subject to
carve-out capacity and other conditions. Non-wholly-owned
subsidiaries are not required to provide guarantees; dividends or
transfers resulting in partial ownership of subsidiary guarantors
could jeopardize guarantees, with no explicit protective provisions
limiting such guarantee releases. There are no express protective
provisions prohibiting an up-tiering transaction.
The 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 downgraded if Physician Partners' operating
performance deteriorates, or if it experiences material integration
related disruptions. Additionally, the ratings could be downgraded
if Moody's expects debt/EBITDA to be sustained above 5.5 times or
the company's liquidity erodes. Further, debt-funded shareholder
returns or other aggressive financial policies could also result in
a downgrade.
The ratings could be upgraded if Physician Partners achieves
greater diversity by state and customer. Physician Partners will
also need to manage its growth while continuing to generate solid
free cash flow. An upgrade would also be supported by the company
adopting more conservative financial policies and maintaining
debt/EBITDA below 4.0 times.
Physician Partners is a value-based primary care physician group
and managed service organization (MSO) network that services over
124,000 members, with over 520 physicians and 41 owned centers.
Physician Partners is owned by Kinderhook Industries, with LTM
revenue as of September 30, 2021 of approximately $830 million.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
PHYSICIAN PARTNERS: S&P Assigns 'B' ICR, Outlook Positive
---------------------------------------------------------
S&P Global Ratings assigned its 'B' issuer credit rating to
Physician Partners LLC and its 'B' issue-level and '3' recovery
ratings to the company's proposed $600 million first-lien term loan
and $50 million revolving credit facility. The outlook is
positive.
The ratings incorporate S&P's view that Physician Partners operates
on a small scale in a highly fragmented and in a competitive market
with a narrow focus on serving Medicare Advantage patients in
Florida.
The positive outlook reflects S&P's expectation for adjusted debt
to EBITDA upon completion of the transaction to be just under 5x
and decline over the next couple of years driven by strong organic
revenue growth and relatively steady EBITDA margins.
Physician Partners, a Medicare Advantage-focused primary care
service provider based in Tampa, Fla. is planning to refinance its
capital structure.
The company is well-positioned to benefit from the growth in
Medicare Advantage plans and a shift to value-based care models.
Physician Partners specializes in providing primary care services,
which are critical in improving quality care while lowering overall
costs, such as by increasing preventative care and reducing
emergency room visits. The company focuses on Medicare Advantage
patients, which made up about 39% of national Medicare
beneficiaries in 2020. S&P expects the Medicare Advantage market to
grow by 10%-15% annually, due not only to aging demographics in the
U.S. but also to the increasing penetration of managed
care-sponsored Medicare Advantage plans, which provide greater
coverage for Medicare beneficiaries, and the increasing shift to
value-based delivery of care, which lowers costs and maximizes
quality of care. Physician Partners derives a significant portion
of its revenues (about 99%) from value-based contracts, in which it
takes on capitated risk in managing the health care of Medicare
Advantage enrollees for a monthly per enrollee fee. The company
then uses its physician network and technology platform, consisting
of patient health data, patient monitoring, and statistical models,
to manage patients for improved outcomes while lowering costs.
In S&P's view, the company's technology-enabled capabilities to
improve health outcomes and reduce health care costs for payors by
emphasizing prevention and proactive care management is a key
competitive advantage. For instance, Physician Partners' members
have experienced significantly lower rates of emergency room and
inpatient admissions during 2021 when compared to the Medicare
national average. The company also has strong quality metrics,
including health plan quality ratings (based on member experience,
medical care, and plan administration) of 4.5 to 5.0 stars across
its payor partners in 2020. S&P believes this creates substantial
value for payors and should result higher patient retention rates
and referrals.
S&P said, "Physician Partners operates in a competitive market with
limited scale and diversification. Physician Partners competes for
Medicare Advantage members in a highly fragmented and competitive
market that has relatively low barriers to entry in our view.
Incumbents include primary care providers that range in size from
solo practitioners to large group practices and we believe
Physician Partners has a relatively small market share of about
4.6% within the counties it operates in. We believe many
competitors in these markets are aggressively looking to increase
the number of Medicare Advantage members within their networks and
improve their service offering to leverage their operating costs
and build stronger relationships with payors." This competitive
environment could reduce Physician Partners' negotiating power with
payors and make it difficult or costly to attract new patients and
physicians to join its network.
The company generates about 99% of its revenue by providing
value-based care to Medicare Advantage members under capitated
contracts in Florida. This concentration combined with the
company's relatively small scale increases the likelihood of
earnings volatility potentially due to an unexpected change in its
competitive position within one of its local markets or
higher-than-anticipated selling, general, and administrative (SG&A)
costs. The company also has significant payor concentration with
Anthem Inc. comprising about 45% of revenue, making it more
vulnerable to unfavorable changes in contract terms.
S&P said, "We expect adjusted debt to EBITDA to decline well below
5x over the next couple of years. However, downside risks to our
base case constrain the rating. Immediately after closing the
proposed transaction, we expect adjusted debt to EBITDA to be just
under 5x with about $150 million of cash on the balance sheet,
which we do not net against debt in our leverage calculation. We
expect leverage to gradually improve to the mid-4x area at the end
of 2022 and to about 4x by the end of 2023. This assumes mid-teens
percentage annual revenue growth, based on strong organic growth
supplemented by modest acquisitions funded with cash on hand, and
relatively steady adjusted EBITDA margins of 12%-14%. We also
assume the company maintains a cash balance of $100 million to $150
million over the next couple of years that provides some
flexibility for higher-than-assumed costs for acquisitions or
distributions without diminishing our core credit measures. Our
forecast credit measures for Physician Partners are relatively
strong when compared to many other health care service providers
with similar business risk characteristics in the 'B' rating
category. However, we believe there is greater downside risk to our
forecast for the company, at least in the near term, from a
profitability and financial policy perspective that constrains the
rating."
Capitated contracts and COVID-19 contribute to potential earnings
volatility. Almost all of Physician Partners' revenue is generated
from capitated contracts, in that it receives a relatively fixed
payment per member per month from payors and in return manages
certain health care needs of those patients that can fluctuate and
includes third-party medical costs such as hospital care. Given the
company's relatively small scale, an unexpected increase in costs
amongst a group of patients could result in significantly weaker
profitability than we anticipate. The COVID-19 pandemic could also
further exacerbate volatility of profitability. Since the pandemic
began, particularly during the first few months, many patients
delayed nonurgent medical treatments and check-ups. S&P said, "We
believe this contributed to significantly lower medical claims
expenses for Physician Partners and added about 600 basis points to
adjusted EBITDA margins in 2020. We believe this was temporary and
expect adjusted EBITDA margins to be at a more typical level of
12%-14% through 2023. That said, the reduced medical attention its
members received during the pandemic introduces some uncertainty in
our estimated medical claims expenses for the next few years, which
could end up significantly higher than we anticipate."
The ownership structure and limited track record creates a degree
of uncertainty regarding the company's willingness to maintain
leverage below 5x. Upon close of the proposed transaction,
Kinderhook will own about 24% of the company, and the rollover
common equity will be majority-owned by its founding leadership,
including Sidd Pagidipati, Dan Kollefrath, and Rupesh Shah. S&P
said, "We assume the company will deploy all the free operating
cash flow (FOCF) it generates to shareholders and a modest amount
of cash on hand to fund acquisitions, resulting in leverage
declining to about 4x by 2023 through steady growth in EBITDA.
Although Physician Partners operated with near-zero debt since its
inception in 2013 and all its growth has been generated
organically, we believe it's possible the company would pursue a
leveraging transaction such as a partial debt-funded distribution
or acquisition that increases leverage above 5x. Our view stems
from the private equity minority stake in the company and the
founder's limited track record from a financial policy
perspective."
S&P said, "The positive outlook reflects our expectation for
adjusted debt to EBITDA gradually decline to the mid-4x area in
2022 and about 4x in 2023 stemming from strong organic revenue
growth and relatively steady EBITDA margins of 12%-14%.
"We could raise our rating on Physician Partners within the next 12
months if credit measures are in line with or better than we
expect, including adjusted debt to EBITDA well below 5x and
relatively steady adjusted EBITDA margins. In this scenario, we
would also need to believe that there is a lower likelihood that
the company would pursue a partial debt-funded acquisition or
distribution that increases leverage above 5x.
"We could revise our rating on Physician Partners to stable within
the next 12 months if credit measures are trending weaker than we
expect such that adjusted debt to EBITDA is approaching 5x with
poor prospects of improving. We could also revise our outlook to
stable if we believe it is likely the company would pursue a
leveraging transaction such as a partial debt-funded acquisition or
distribution that increases leverage above 5x."
PLACE FOR VETERANS: March 16 Hearing on Disclosures Set
-------------------------------------------------------
Judge Charles M. Walker will convene a hearing on the approval of
the Disclosure Statement of A Place for Veterans, LLC, and Donna
Smith will be held at 11:00 a.m. on March 16, 2022, at U.S
Bankruptcy Court for the Middle District of Tennessee, Via ZOOM.
Feb. 14, 2022, is fixed as the last day for filing and serving
written objections to the Disclosure Statement.
Under the Plan, all assets will be reinstated. 135B Fain
Street will be conveyed to Donna Smith upon confirmation of the
Plan. Secured claims will be paid in installments with 5% annual
interest. Unsecured creditors will receive a total of $500 per
month for a period of no less than 60 months. Unsecured creditors
will receive their pro rata distribution under the Plan and no
less
than 100% of the allowed amount of their claims.
A copy of the Disclosure Statement filed Jan. 11, 2022, is
available at
https://www.pacermonitor.com/view/TZIQSNY/A_PLACE_FOR_VETERANS_LLC__tnmbke-21-03833__0028.0.pdf?mcid=tGE4TAMA
Attorney for the Debtors:
Steven L. Lefkovitz
618 Church Street, Suite 410
Nashville, Tennessee 37219
Tel: (615) 256-8300
Fax: (615) 255-4516
E-mail: slefkovitz@lefkovitz.com
About A Place for Veterans
Donna Smith purchased real property at 135B Fain Street, Nashville,
TN on Feb. 9, 2021. On advice given to Ms. Smith at the closing,
the closing agent may have agreed to transfer the property to a
limited liability company called a A Place for Veterans, LLC.
Unfortunately, the property was transferred, but somehow, the
limited liability company was never filed with the secretary of
state for Tennessee.
Smith's financial difficulties stem from a combination of loss of
income from the Covid-19 pandemic as a foreclosure scheduled for
December 17, 2021 on the real property at 135B Fain Street.
To stop the foreclosure, Donna Smith filed a Chapter 11 petition
(Bankr. M.D. Tenn. Case No. 21-03826) on Dec. 16, 2021. A Place
for Veterans, LLC, sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. M.D. Tenn. Case No. 21-03833) on Dec. 17,
2021.
The Debtors originally filed their cases pro se but later tapped
Steven L. Lefkovitz, Esq., at Lefkovitz & Lefkovitz, PLLC, as legal
counsel.
PORTILLO'S HOLDINGS: Moody's Ups CFR to B2, Outlook Remains Stable
------------------------------------------------------------------
Moody's Investors Service upgraded Portillo's Holdings, LLC.'s
corporate family rating to B2 from B3 and its probability of
default rating to B2-PD from B3-PD. The rating on the company's
senior secured bank credit facility was affirmed at B2. At the same
time, Moody's assigned a speculative grade liquidity rating of
SGL-2. The outlook is stable.
"The upgrade reflects Portillo's improved leverage profile
following the company's decision to use proceeds from its 2021
initial public offering to permanently repay $155 million of its
outstanding debt," stated Pete Trombetta, VP-Senior Analyst.
Moody's estimates that leverage will remain at or around 5.0x.
Moody's considers management's decision to permanently reduce debt
using the IPO proceeds a governance consideration and a key driver
of the upgrade.
Upgrades:
Issuer: Portillo's Holdings, LLC.
Corporate Family Rating, Upgraded to B2 from B3
Probability of Default Rating, Upgraded to B2-PD from B3-PD
Affirmations:
Issuer: Portillo's Holdings, LLC.
Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2
(LGD3)
Assignments:
Issuer: Portillo's Holdings, LLC.
Speculative Grade Liquidity Rating, Assigned SGL-2
Outlook Actions:
Issuer: Portillo's Holdings, LLC.
Outlook, Remains Stable
RATINGS RATIONALE
Portillo's B2 CFR reflects its very small scale and a
geographically concentrated restaurant base consisting of 68 units
primarily within the Chicagoland market. While Portillo's is
expanding outside of this core geography, the concentration exposes
Portillo's to economic downturns in this area of the US. Moody's
expects Portillo's leverage will remain around 5.0x as it uses free
cash flow to expand its store base as opposed to additional debt
reduction. The ratings also considers that the company remains
majority owned by a PE owner with Berkshire Partners LLC owning
just over 60% of Portillo's outstanding shares. The rating is
supported by the company's loyal customer following in its core
market and strong profit margins, which have helped drive revenue
growth, healthy unit economics with average unit volume of about $9
million and cash flow generation. This, in turn, drives Moody's
view that Portillo's can maintain good liquidity and that capital
expenditures, inclusive of new unit growth, can be funded from
internal cash generation.
The stable outlook reflects Moody's expectation that Portillo's
will maintain leverage around 5.0x and maintain good liquidity.
The B2 rating on the first lien bank credit facility, the same as
the corporate family rating, as it makes up a preponderance of the
company's capital structure.
Portillo's has good liquidity reflected by good cash balances of
about $50 million at September 30, 2021 and an undrawn $50 million
revolver. The revolver expires in 2024. Moody's forecasts the
company will generate free cash flow of about $40 million over the
next year after maintenance and new unit growth capital spending.
Portillo's has stated its intentions to grow its store base at a
rate of about 10% per year. The company is subject to a springing
first lien net leverage covenant that Moody's expects will have
adequate cushion if tested. The company owns a majority of its
restaurants but those assets are pledged as a part of the first
lien credit agreement.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgrade if Portillo's was able to sustain
debt/EBITDA near 4.5x with EBIT/interest expense above 2.25x. An
upgrade would also require Portillo's to continue to increase its
scale outside of the Chicagoland market and maintain good
liquidity. Ratings could be downgraded if debt/EBITDA approached
6.0x or EBIT/interest expense deteriorated to below 1.5x.
Portillo's Holdings, LLC., based in Oak Brook, Illinois, operates
68 locations primarily in the Chicagoland area under the Portillo's
Hot Dogs and Barnelli Pasta Bowls banners. Revenue for the last 12
month period ended September 30, 2021 was approximately $515
million. The company is publicly traded on Nasdaq under the ticker
PTLO.
The principal methodology used in these ratings was Restaurants
published in August 2021.
PUERTO RICO: Gets Court Approval to End Five-Year Bankruptcy
------------------------------------------------------------
Maria Chutchian of Reuters reports that the judge overseeing Puerto
Rico's nearly five-year-long debt restructuring process has
approved a debt adjustment plan that is intended to revitalize the
commonwealth's economy and reduce its $135 billion in liabilities.
U.S. District Judge Laura Taylor Swain approved the plan in an
order filed on Tuesday, January 18, 2022, bringing nearly half a
decade of litigation over Puerto Rico's financial standing to a
close and marking a historic moment for the largest-ever U.S.
municipal debt restructuring.
Puerto Rico filed for protection under a bankruptcy-like law, known
as Title III, in May 2017. Its $135 billion in liabilities included
more than $55 billion in underfunded pension obligations. The debt
adjustment plan, proposed by a federally appointed financial
oversight board, incorporates settlements among an array of
creditors and aims to encourage new investments to aid the island's
economy.
The plan reduces $33 billion in bond debt to $7 billion and cuts
overall debt by 80%, according to the board. It also includes
protections that limit how much debt Puerto Rico can take on in the
future.
The case has racked up approximately $1 billion in legal fees.
Swain noted in Tuesday's, January 18, 2022, decision that the plan
has "broad but not universal support," with many public workers and
retirees, among others, taking issue with certain aspects.
The oversight board has said that under the plan, government
retirees are still in line to receive their full pensions at their
current levels. The plan freezes defined-benefit retirement
programs that cover active teachers and judges and replaces them
with defined contribution plans and enrollment in social security.
The board said in a statement on Tuesday, January 18, 2022, that it
welcomed Swain's decision but that the commonwealth "needs to
continue to reform itself to ensure a prosperous future."
Puerto Rico piled up unsustainable levels of debt in the years
leading up to 2017. In 2016, the federal government enacted the
Puerto Rico Oversight, Management and Economic Stability Act, which
created a process for the territory to restructure its debt.
The commonwealth's troubles reached new levels just a few months
after it filed for Title III protection as Hurricane Maria ravaged
the island, killing about 3,000 people. And in 2019, its governor
resigned amid protests over a scandal involving offensive chat
messages and government corruption that rocked the island.
The debt adjustment plan is expected to go into effect by March 15,
2022. The oversight board will remain in place until Puerto Rico
has had four consecutive years of balanced budgets.
The board's executive director, Natalie Jaresko, said on Tuesday
that with the plan approved, she expects a "substantial increase"
in government spending on public services.
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are onboard as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and chair of a committee to review professionals' fees.
PUERTO RICO: Oversight Board Touts Plan Approval
------------------------------------------------
The judge overseeing Puerto Rico's nearly five-year-long debt
restructuring has approved a debt adjustment plan that is intended
to revitalize the commonwealth's economy and reduce its $135
billion in liabilities.
The Financial Oversight and Management Board for Puerto Rico
on Jan. 18, 2022, issued the following statement:
"Today begins a new chapter in Puerto Rico's history. Today,
Puerto Rico can start to move on from fiscal instability and
insolvency into a future of opportunity and growth.
"Ever since Governor Alejandro García Padilla declared Puerto
Rico's debt unpayable in 2015, Puerto Rico's inability to pay its
debt has hampered the economic recovery and affected the lives of
every resident and the success of every business.
"PROMESA opened a path to end this crisis. The law gives Puerto
Rico an opportunity no U.S. state has: a formal process similar to
municipal bankruptcy to restructure its debt to levels it can
afford.
"The Oversight Board filed a Plan of Adjustment with the U.S.
District Court for the District of Puerto Rico that reduces the
debt by 80% and saves Puerto Rico more than $50 billion in debt
service payments.
"Today, Judge Laura Taylor Swain of the U.S. District Court
confirmed the plan. The Oversight Board welcomes Judge Swain’s
decision. We owe Judge Swain a debt of gratitude for her tireless
leadership, her exemplary diligence, and her dedication to a fair
solution to Puerto Rico's debt crisis.
"The Oversight Board would also like to thank Judge Barbara Houser,
Judge Roberta Colton, and their mediation team for their important
role in the process to end Puerto Rico's insolvency. We would
also like to thank the Official Committee of Retired Employees; the
Public Servants United of Puerto Rico (SPU)/American Federation of
State, Country and Municipal Employees (AFSCME) Council 9;
the Official Committee of Unsecured Creditors, and the several
groups representing bondholders who all came together to support
the Plan of Adjustment and help Puerto Rico recover.
"The Oversight Board will determine an effective date for the Plan
of Adjustment, at which Puerto Rico's old debt will be replaced and
creditors, public service union members, and others will receive
the cash payments agreed to under the plan. The Oversight Board
will certify a revised budget for the Puerto Rico government that
will include the new debt payments. The budget will not require
any further reduction in operating costs or revenue increases to
service the significantly reduced and affordable debt.
"Restructuring the debt, however, is only one step towards Puerto
Rico's recovery. Puerto Rico needs to achieve fiscal
responsibility to ensure long-term stability and growth. Puerto
Rico must never fall back into old practices of overspending, and
of underfunding its commitments to retirees, government services,
and the public infrastructure. The Government will need to
redouble its efforts to manage its resources carefully for the
benefit of the people of Puerto Rico, making prudent spending and
investment decisions to meet current needs and reach future goals.
Puerto Rico needs to continue to reform itself to ensure a
prosperous future for and determined by its people. PROMESA paved
the way to that future, and the Oversight Board is proud to be able
to play its part in Puerto Rico's reconstruction, so Puerto Rico
can shine again."
About Puerto Rico
Puerto Rico is a self-governing commonwealth in association with
the United States that's facing a massive bond debt of $70 billion,
a 68% debt-to-GDP ratio and negative economic growth in nine of the
last 10 years.
The Commonwealth of Puerto Rico has sought bankruptcy protection,
aiming to restructure its massive $74 billion debt-load and $49
billion in pension obligations.
The debt restructuring petition was filed by Puerto Rico's
financial oversight board in U.S. District Court in Puerto Rico
(Case No. 17-01578) on May 3, 2017, and was made under Title III of
2016's U.S. Congressional rescue law known as the Puerto Rico
Oversight, Management, and Economic Stability Act ('PROMESA').
The Financial Oversight and Management Board later commenced Title
III cases for the Puerto Rico Sales Tax Financing Corporation
(COFINA) on May 5, 2017, and the Employees Retirement System (ERS)
and the Puerto Rico Highways and Transportation Authority (HTA) on
May 21, 2017. On July 2, 2017, a Title III case was commenced for
the Puerto Rico Electric Power Authority ("PREPA").
U.S. Chief Justice John Roberts has appointed U.S. District Judge
Laura Taylor Swain to oversee the Title III cases. The Honorable
Judith Dein, a United States Magistrate Judge for the District of
Massachusetts, has been designated to preside over matters that may
be referred to her by Judge Swain, including discovery disputes,
and management of other pretrial proceedings.
Joint administration of the Title III cases, under Lead Case No.
17-3283, was granted on June 29, 2017.
The Oversight Board has hired as advisors, Proskauer Rose LLP and
O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic
consultant, Citigroup Global Markets, as municipal investment
banker, and Ernst & Young, as financial advisor.
Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M.
Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at
O'Neill & Borges are onboard as attorneys.
McKinsey & Co. is the Board's strategic consultant, Ernst & Young
is the Board's financial advisor, and Citigroup Global Markets Inc.
is the Board's municipal investment banker.
Prime Clerk LLC is the claims and noticing agent. Prime Clerk
maintains a case web site at
https://cases.primeclerk.com/puertorico
Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA,
and PREPA.
O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico
Fiscal Agency and Financial Advisory Authority (AAFAF), the agency
responsible for negotiations with bondholders.
The Oversight Board named Professor Nancy B. Rapoport as fee
examiner and chair of a committee to review professionals' fees.
PURDUE PHARMA: Asks 2nd Circ. to Quickly Undo Plan Rejection
------------------------------------------------------------
Hailey Konnath of Law360 reports that Purdue Pharma on Tuesday,
January 18, 2022, asked the Second Circuit to overturn a New York
federal judge's decision rejecting the embattled drugmaker's
Chapter 11 bankruptcy plan, arguing that other courts have long
permitted the non-consensual releases of third-party claims of
nondebtors that the judge had flagged.
Purdue said in its filing that all told, 83 decisions have
recognized those releases in unique cases and the district court
had diverged from this "unbroken chain of authority" in ruling
otherwise. The December 2021 decision has upended the foundation
upon which the plan was "painstakingly built" and at a cost of more
than a half-billion dollars, according the filing.
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.
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."
QHC FACILITIES: UST Objects to Stand-In for Sick CEO, Wants Trustee
-------------------------------------------------------------------
The U.S. Trustee in the bankruptcy case of QHC Facilities LLC filed
an objection to a proposal to appoint Gibbins Advisors to stand in
for its ill CEO.
The Debtors initially filed an application to employ Gibbons as
Debtors' Financial and Restructuring Advisor on December 30, 2021.
Following the incapacitation of Debtors' sole shareholder and CEO,
Nancy Voyna, the UST filed motion to appoint a chapter 11 trustee
due to concerns over a lack of corporate governance, the health and
safety of Debtors' residents, and the apparent swift deterioration
of Debtors estates. In response to Ms. Voyna's incapacitation, the
Debtors now seek to modify the application to employ Gibbons as
Financial Advisor to now appoint Ronald Winters, and apparently
other "additional personnel", as the Debtors' CRO.
"When a debtor-in-possession and its management have exhibited an
inability to comply with fiduciary duties, the remedy established
by Congress to supplant management while allowing the case to
remain in chapter 11 is through the appointment of a trustee
pursuant to section 1104(a)," the U.S. Trustee said.
"Thus, the circumstances of Debtors' operation go beyond a quick
sale of Debtors' business as a going concern. The health and
safety of the residents is of paramount importance. These
concerns persist despite Gibbons' engagement as Debtors'
restructuring specialist since October.
"CRO's play a constructive role in many cases. While the UST
respects Gibbons' qualifications as a restructuring professional,
its focus has been to financially position Debtors for a sale
pursuant to section 363. This role cannot and does not fill the
role of a debtor-in-possession, wherein corporate officers
transform into fiduciaries that are bound to act for the
benefit of all stakeholders."
"CRO's generally work with, and have to answer to, a debtor’s
existing corporate fiduciaries because the CRO is independent.
Debtors cannot identify its corporate fiduciaries. Ms. Voyna's
Declarations confess that QHC was highly reliant on Mr. Voyna's
operational and financial management. It is not clear who on
behalf of Debtors’ is authorize d to exercise the standard of
business judgment, let alone sound business judgment, to engage
Gibbons as CRO. It is not clear who Gibbons is expected to answer
to."
About QHC Facilities
QHC Facilities, LLC, based in Clive, Iowa, operates eight skilled
nursing facilities. The facilities include Crestview Acres in
Marion as well as in Tama, Madison, Humboldt, Jackson, Webster and
Polk counties and two assisted living centers. Collectively, the
facilities have a maximum capacity of more than 700 residents. The
company employs roughly 300 full-time and part-time workers.
QHC Facilities and its affiliates filed petitions for Chapter 11
protection (Bankr. S.D. Iowa Lead Case No. 21-01643) on Dec. 29,
2021. The affiliates are QHC Management LLC, QHC Mitchellville LLC,
QHC Crestridge LLC, QHC Humboldt North LLC, QHC Winterset North
LLC, QHC Madison Square LLC, QHC Humboldt South LLC, QHC Villa
Cottages LLC, QHC Fort Dodge Villa LLC, and QHC Crestview Acres
Inc.
The Ccompany claimed $1 million in assets and $26.3 million in
liabilities as of the bankruptcy filing.
Judge Anita L. Shodeen oversees the cases.
Jeffrey D. Goetz, Esq., and Krystal R. Mikkilineni, Esq., at
Bradshaw Fowler Proctor & Fairgrave, PC are the Debtors' bankruptcy
attorneys. Gibbins Advisors, LLC serves as QHC Facilities'financial
advisor.
RIVERSTONE RESORT: To Seek Plan Confirmation on March 10
--------------------------------------------------------
Judge Jeffrey Norman has entered an order conditionally approving
the Disclosure Statement of Riverstone Resort, LLC.
March 10, 2022 at 10:30 a.m., is fixed for the hearing on final
approval of the Disclosure Statement (if a written objection has
been filed) and for the hearing on confirmation of the Plan. The
hearing will be held at the United States Courthouse, 515 Rusk St.,
Courtroom 403, Houston, Texas.
March 2, 2022, is fixed as the last day for filing written
acceptances or rejections of the Disclosure Statement and
confirmation of the Plan.
About Riverstone Resort LLC
Riverstone Resort is the fee simple owner of a real property
located in Sugar Land, Texas, having an appraised value of $9.6
million.
Riverstone Resort filed a petition for Chapter 11 protection
(Bankr. S.D. Tex. Case No. 21-33531) on Oct. 29, 2021, disclosing
$9,620,007 in assets and $2,165,951 in liabilities. Judge Jeffrey
P. Norman oversees the case.
David L. Venable, Esq., a practicing attorney in Houston, Texas,
serves as the Debtor's bankruptcy counsel.
RUSSO REAL ESTATE: $6.45M Private Sale of Arlington Property Okayed
-------------------------------------------------------------------
Judge Edward L. Morris of the U.S. Bankruptcy Court for the
Northern District of Texas authorized the private sale proposed by
Russo Real Estate, LLC, and DeRiso Development, LLC, of the
property described as 7201-7209 S. Cooper Street, the Trinity
Cooper Business Park, in Arlington, Texas, a 3.08-acre tract of
land on Block 1, Lot 1, Lot 2, and Lot 3, of DeRiso Development
Addition, Tarrant County, Texas, to New Dimension Investments I,
LLC, or its assign for $6.45 million.
The sale is free and clear of liens, claims and encumbrances except
statutory tax liens for tax year 2022, which will remain attached
to the Trinity Cooper Property until paid in full, on the same
terms and for the same price set forth in the Motion. Except as
provided therein and to the extent paid at closing, all liens,
claims and encumbrances of secured creditors on the Trinity Cooper
Property, if any, will attach to the proceeds of the sale.
The Purchaser, or its assign, will be considered a bona fine
purchaser for value in connection with the purchase of the Trinity
Cooper Property.
The sale of the Trinity Cooper Property may occur pursuant to the
terms noticed in the Motion referred to, except as provided by the
Order, and that the Debtor is authorized to sell the Trinity Cooper
Property and pay from the proceeds of that sale at closing prorated
taxes for 2022, normal and customary closing costs required by the
contract, including broker's fees, fees and expenses prorated,
escrow fees, recording costs and other normal and customary
reasonable expenses of the title company required to implement the
closing, including the title company's attorney's fees incurred
directly in connection with the sale as contemplated by the
contract between the parties and the ordinary course attorney's
fees incurred by the title company as part of the closing including
document preparation fees, but not including any of the Debtors' or
the Purchaser's attorney’s fees.
The ad valorem taxes on the Trinity Cooper Property for the tax
year 2022 will be prorated to the date of the closing. The ad
valorem tax liens that secure all amounts ultimately owed for tax
year 2022 and after will remain attached to the Trinity Cooper
Property and become the responsibility of the Purchaser.
The Debtor is authorized to sign documentation to complete the sale
in a manner not inconsistent with this Order and the underlying
contract.
At closing the Debtor may pay the commission, in an amount equal to
6% of the Sales Price to be paid to Peyco Southwest Realty Inc.
The provisions of Federal Rule of Bankruptcy Procedure 6004(h) are
waived. The Order is effective upon entry.
In connection with the indebtedness owed to Frost Bank by the
Debtor and the deeds of trust liens of Frost Bank on the Trinity
Cooper Property, after paying the normal and customary closing
costs set forth above, and to the extent that any of the following
has not already been paid as part of the closing pursuant to the
terms of the Order as set forth, the title company and/or closing
agent at the closing will disburse all of the remaining Net
Proceeds at closing to the following secured creditors in the
following priority until all the Net Proceeds have been exhausted:
a. Pay in full to Frost Bank the indebtedness due and owing to
Frost Bank pursuant to the terms of the Frost Bank Loan Documents;
and
b. Any remaining Net Proceeds, if any, will be paid to the
Debtor and held by the Debtor pending further order of the Court.
The Debtor may agree to a modification of the Sales Price only upon
Frost Bank's written approval of any such modification.
About Russo Real Estate LLC and
DeRiso Development LLC
Russo Real Estate LLC, and DeRiso Development, LLC are Arlington,
Texas-based companies engaged in activities related to real
estate.
Russo Real Estate and DeRiso Development filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D.
Texas Lead Case No. 21-40220) on Feb. 1 2021. At the time of the
filing, Russo Real Estate disclosed assets of between $1 million
and $10 million and liabilities of the same range. DeRiso
Development had estimated assets of less than $50,000 and
liabilities of between $1 million and $10 million.
Judge Edward L. Morris oversees the cases.
The Debtors tapped Griffith, Jay & Michel, LLP and Hixson &
Stringham, PLLC as bankruptcy counsel; Curnutt & Hafer, LLP as
special counsel; and PSK CPA as accountant.
SELINSGROVE INSTITUTIONAL: Taps Cunningham as Bankruptcy Counsel
----------------------------------------------------------------
Selinsgrove Institutional Casework, LLC, doing business as Wood
Metal Industries, seeks approval from the U.S. Bankruptcy Court for
the Middle District of Pennsylvania to employ Cunningham,
Chernicoff & Warshawsky, PC 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; and
(c) performing all other legal services for the Debtor.
Pre-petition, the Debtor paid the firm $1,930.
The hourly rates of the firm's attorneys and staff are as follows:
Robert E. Chernicoff $400
Partners $250 - $400
Associate Attorneys $175 - $350
Law Clerk/Paralegal $100
Robert Chernicoff, Esq., a shareholder of Cunningham, Chernicoff &
Warshawsky, 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:
Robert E. Chernicoff, Esq.
Cunningham, Chernicoff & Warshawsky, P.C.
2320 North Second Street
Harrisburg, PA 17106-0457
Telephone: (717) 238-6570
Email: rec@cclawpc.com
About Selinsgrove Institutional Casework
Selinsgrove Institutional Casework, LLC, doing business as
Wood-Metal Industries, is a manufacturer of cabinets and casework
for a variety of applications in education, healthcare and
institutional environments. It offers wide of products like custom
made wood, music and plastic laminate casework in various colors,
thereby enabling clients to choose and enhance the style that
complements their interior design schemes along with performance
and strength.
Selinsgrove Institutional Casework filed its voluntary petition for
relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Pa.
Case No. 22-00021) on Jan. 7, 2022, listing up to $10 million in
both assets and liabilities. Judge Henry W. Van Eck oversees the
case. Robert E. Chernicoff, Esq., at Cunningham, Chernicoff &
Warshawsky, PC serves as the Debtor's legal counsel.
SEMILEDS CORP: Extends Maturity of $3.2M Loan to January 2023
-------------------------------------------------------------
SemiLeds Corporation, on Jan. 8, 2019, entered into loan agreements
with each of its chairman and chief executive officer and largest
shareholder, with aggregate amounts of $1.7 million and $1.5
million, respectively, and an annual interest rate of both 8%. All
proceeds of the loans were exclusively used to return the deposit
to Formosa Epitaxy Incorporation in connection with the cancelled
proposed sale of the Company's headquarters building pursuant to
the agreement dated Dec. 15, 2015. The Company was required to
repay the loans of $1.5 million on Jan. 14, 2021 and $1.7 million
on Jan. 22, 2021, respectively, unless the loans are sooner
accelerated pursuant to the loan agreements.
On Jan. 16, 2021, the maturity date of these loans was extended
with same terms and interest rate for one year to Jan. 15, 2022.
And on Jan. 14, 2022, the maturity date of these loans was extended
with same terms and interest rate for one more year to Jan. 15,
2023.
About SemiLEDs
Headquartered in Miao-Li County, Taiwan, R.O.C., SemiLEDs --
http://www.semileds.com-- develops and manufactures LED chips and
LED components for general lighting applications, including street
lights and commercial, industrial, system and residential lighting,
along with specialty industrial applications such as ultraviolet
(UV) curing, medical/cosmetic, counterfeit detection, horticulture,
architectural lighting and entertainment lighting.
SemiLEDs reported a net loss of $2.86 million for the year ended
Aug. 31, 2021, compared to a net loss of $547,000 for the year
ended Aug. 31, 2020. As of Nov. 30, 2021, the Company had $17.47
million in total assets, $13.32 million in total liabilities, and
$4.15 million in total equity.
Diamond Bar, California-based KCCW Accountancy Corp., the Company's
auditor since 2019, issued a "going concern" qualification in its
report dated Dec. 29, 2021, citing that the Company incurred
recurring losses from operations and has an accumulated deficit,
which raises substantial doubt about its ability to continue as a
going concern.
SMOKINKWR LLC: Seeks to Tap Thomas F. Jones III as Legal Counsel
----------------------------------------------------------------
Smokinkwr, LLC seeks approval from the U.S. Bankruptcy Court for
the Southern District of Texas to employ the Law Firm of Thomas F.
Jones III as its bankruptcy counsel.
The firm's services include:
(a) advising the Debtor regarding its powers and duties in the
continued operation of its businesses and management;
(b) taking all necessary action to protect and preserve the
bankruptcy estate;
(c) preparing legal papers;
(d) assisting in the preparation and filing of the Debtor's
disclosure statement and plan of reorganization and, if necessary,
amendments thereto, at the earliest possible date; and
(e) performing all other legal services in connection with
this Chapter 11 case.
The hourly rates of the firm's attorneys and staff are as follows:
Attorney $335
Paralegal $120
In addition, the firm will seek reimbursement for expenses
incurred.
On December 8, 2021, the firm received a retainer of $6,000 from
the Debtor.
Thomas Jones III, Esq., an attorney at the Law Firm of Thomas F.
Jones III, 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:
Thomas F. Jones III, Esq.
Law Firm of Thomas F. Jones III
1770 St. James Place, Suite 105
Houston, TX 77056-3441
Telephone: (832) 398-6182
Email: tfjonesiii@gmail.com
About Smokinkwr LLC
Smokinkwr LLC, a company based in Conroe, Texas, sought Chapter 11
protection (Bankr. S.D. Texas Case No. 21-33989) on Dec. 14, 2021,
listing up to $10 million in both assets and liabilities. Brian M.
Hubbard, sole member and managing member, signed the petition.
Judge Christopher M. Lopez oversees the case.
The Law Firm of Thomas F. Jones III serves as the Debtor's legal
counsel.
STATERA BIOPHARMA: Gets $3.75M Proceeds From Sale of Common Shares
------------------------------------------------------------------
Statera Biopharma, Inc., on Jan. 12, 2022, closed on the sale of
1,838,235 shares of its common stock for gross proceeds of
$3,750,000 at a price of $2.04 per Share.
As previously disclosed, on July 27, 2021, Statera Biopharma, Inc.
became party to the Amended and Restated Share Purchase Agreement,
dated as of July 27, 2021, by and among GEM Global Yield LLC SCS,
GEM Yield Bahamas Limited and the Company, as successor to Cytocom
Inc. following the Company's merger with Cytocom. Under the GEM
Equity Line Agreement, the Company may elect to issue and sell to
GEM up to $75 million of its common stock, par value $0.005 per
share. The Company previously filed a prospectus supplement, dated
Sept. 9, 2021, to the prospectus dated May 29, 2020 included in the
Company's Registration Statement on Form S-3 (File No. 333-238578),
which was declared effective by the Securities and Exchange
Commission on May 29, 2020, to register the offering of up to $7.5
million aggregate amount of shares of its common stock pursuant to
the GEM Equity Line Agreement.
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, a net loss of $2.69 million for the year ended
Dec. 31, 2019, and a net loss of $3.71 million for the year ended
Dec. 31, 2018, and a net loss of $9.84 million for the year ended
Dec. 31, 2017. 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.
SYNIVERSE TECHNOLOGIES: S&P Assigns 'B-' ICR, Outlook Positive
--------------------------------------------------------------
S&P Global Ratings assigned a 'B-' issuer credit rating and
positive outlook to Syniverse Technologies Corp. based on the
company's reduced debt burden and its expectation for improved
operating and financial performance.
S&P said, "We also assigned a 'B-' issue-level rating and '3'
recovery rating to subsidiary Syniverse Holdings Inc's new $165
million revolving credit facility due in 2027 (undrawn at close)
and $1 billion first-lien term loan due in 2029. The '3' recovery
rating indicates our expectation of meaningful (50%-70%; rounded
estimate: 65%) recovery in the event of a payment default.
U.S.-based global mobile transactions processor Syniverse
Technologies Corp. plans to raise $1.165 billion of financing to
support its reverse merger agreement with M3-Brigade Acquisition II
Corp. (not rated), a special purpose acquisition company (SPAC).
The transaction is valued at $2.85 billion and will result in
Syniverse becoming publicly traded.
"We view Syniverse Holdings Inc. as a core subsidiary of Syniverse
Technologies Corp. and have equalized our ratings on Syniverse
Holdings Inc. with our ratings on Syniverse Technologies Corp.
Therefore, we raised the issuer credit rating on Syniverse Holdings
Inc. one notch to 'B-' from 'CCC+'. We removed the ratings from
CreditWatch, where we placed them with positive implications on
March 2, 2021.
"The positive outlook reflects our view that Syniverse has good
prospects to reduce leverage below 6x over the next 12 months, our
threshold for a higher rating, if international travel is not
further curtailed by the COVID-19 pandemic and it sustains strong
growth in enterprise messaging and long-term evolution (LTE)-based
products.
"The upgrade reflects Syniverse's reduced debt burden as it
transitions to a public company and our expectation for improved
operating and financial performance over the next couple of years.
"We expect its merger with M3-Brigade, a blank check company, to
result in adjusted leverage in the low-6x area by the end of 2022,
declining to the mid-5x area in 2023. In conjunction, Syniverse
will refinance its capital structure, supported by an equity
investment of $500 million (up to $750 million to hedge against
SPAC redemptions) from Twilio Inc. as part of a new strategic
partnership, and about $665 million of funds raised from the SPAC
and private investment in public equity (PIPE) equity investments.
This includes $196 million of convertible preferred stock and $69
million of common stock from Brigade Capital Management and Oak
Hill Advisors. Our adjusted leverage calculation includes the
convertible preferred equity instrument at Syniverse Technologies
Corp. that we treat as debt-like. In total, the M3-Brigade and
Twilio transactions will provide Syniverse up to $1.2 billion of
new equity capital it will use to eliminate about $1 billion, or
roughly half, of outstanding debt. Financing for the transaction
will also include $1.2 billion of new debt. In addition to leverage
reduction, the transaction will enable Syniverse to lower its
interest expense, improve free cash flow, and bolster its liquidity
position, all of which enhances its financial flexibility to
support continued investments in next-generation products,
services, and internal infrastructure. We also assume that, as a
public company, Syniverse will adhere to its more moderate
financial policies, including a net leverage target in the
1.5x-2.5x range. We believe it is highly likely that the
contemplated transaction will close with no significant changes.
However, if the transaction does not close, or terms are materially
different than our assumptions, we could lower the issuer credit
rating to 'CCC+', which is in line with the rating prior to the
announced capital infusions."
Syniverse's operating and financial performance is improving due to
growth in the enterprise segment and more stable trends in the
carrier segment as COVID-19 pandemic-related hurdles subside and
the legacy code division multiple access (CDMA)-service becomes a
smaller portion of the overall business. During the third quarter
of 2021, enterprise revenue doubled from the previous year driven
by strong growth in global messaging. Meanwhile, the revenue
decline in Syniverse's carrier business improved to 4.4% year over
year from a decline of 20% in the third quarter of 2020, driven by
higher roaming volumes (which represents around 75% of total
carrier revenue) and more modest declines in CDMA and other legacy
carrier services. S&P said, "We expect continued strong growth in
the enterprise segment as businesses increasingly utilize
application-to-person (A2P) messaging to engage with customers. We
also expect improving revenue trends in the carrier segment as
pressures from the pandemic and legacy second- and third-generation
roaming portfolios give way to growth from voice over long-term
evolution (VoLTE), 5G, and internet of things devices. These
factors, coupled with improved economies of scale in the enterprise
segment, should drive solid EBITDA growth and organic leverage
reduction over the next couple of years."
The partnership with Twilio could open a new avenue for growth over
the next few years.
In conjunction with the investment, Syniverse will enter into an
exclusive multiyear wholesale agreement with Twilio under which
Twilio will route certain of its North America A2P and 10-digit
long code A2P messaging traffic to Syniverse, subject to Syniverse
having adequate capacity. The agreement is expected to result in
higher messaging volumes than Syniverse currently receives from
Twilio under its existing contract. S&P said, "Further, we think
Twilio could be motivated to route additional messaging traffic
through Syniverse over time because of its approximate 24% pro
forma ownership stake in Syniverse. As such, we believe that higher
messaging volumes could increase its revenue from enterprise
customers over the next couple of years and accelerate its business
transition towards messaging." That said, Syniverse will need to
make investments to increase the capacity of its platforms to
handle larger volumes. In addition, despite the alignment of
economic interests, Twilio will have the option to scale back
traffic routed to Syniverse, establish direct connections with
carriers or seek other alternatives to Syniverse's messaging
services as part of the agreement.
A slow recovery in global travel could weigh on financial results.
Syniverse estimates reductions in roaming volumes due to the
pandemic and associated travel restrictions decreased revenue about
3% during the nine months ended in August 2021, a modest
improvement from an estimated 4% reduction over the same period in
2020. While airline passenger traffic had been improving during the
second half of 2021, international passenger demand was only about
40% of 2019 traffic as of November 2021 according to the
International Air Transport Association (IATA). Further, the
emergence the omicron variant and resumption of restrictions on
international travel is likely to disrupt the positive momentum.
S&P believes reduced airline travel will likely continue to depress
Syniverse's roaming volumes and constrain top-line growth over at
least the next year, if not beyond.
S&P Global Ratings believes the omicron variant is a stark reminder
that the COVID-19 pandemic is far from over. Uncertainty still
surrounds its transmissibility, severity, and the effectiveness of
existing vaccines against it. Early evidence points toward faster
transmissibility, which has led many countries to reimpose social
distancing measures and international travel restrictions. In S&P's
view, the emergence of the omicron variant shows once again that
more coordinated and decisive efforts are needed to vaccinate the
world's population to prevent the emergence of new, more dangerous
variants.
S&P said, "The positive outlook reflects our view that Syniverse
has good prospects to reduce leverage to below 6x over the next 12
months, our threshold for a higher rating, if international travel
is not significantly curtailed by the pandemic and it sustains
strong growth in enterprise messaging and other strategic products
such as LTE-based solutions."
S&P could raise the rating if:
-- Syniverse sustains healthy growth in its enterprise messaging
business and other strategic products such as LTE-based products;
and
-- Improves leverage to below 6x, with prospects for further
improvement over time.
S&P could revise the outlook to stable if:
-- Reduced airline travel lessens Syniverse's roaming volumes and
constrains top line growth; or
-- Its operating performance is substantially weaker than S&P
expects because of slower growth in its strategic services, such as
enterprise messaging and LTE-based products, which limits EBITDA
growth and keeps leverage above our 6x threshold.
S&P could lower the rating if it expected leverage to rise over
time and the company's financial commitments appeared unsustainable
over the long term. S&P could also lower the rating if it believes
the company will face a near-term liquidity crisis.
TELIGENT INC: Gets Court Approval for 3 Asset Sales
---------------------------------------------------
Vince Sullivan of Law360 reports that bankrupt generic
pharmaceutical company Teligent Inc. received court approval
Tuesday, Jan. 18, 2022, in Delaware for three asset sales that
generated more than $87 million in value for the debtor.
During a virtual hearing, Teligent attorney Matthew B. Lunn of
Young Conaway Stargatt & Taylor LLP said the total proceeds of the
sales far outpaced the committed floor bids offered by a trio of
stalking horse bids ahead of an auction last week. The auction
lasted nearly 24 hours and included multiple rounds of bidding for
two asset groups -- Teligent's American new drug applications and
its Canadian assets -- which pumped the prices.
About Teligent Inc.
Teligent, Inc., a specialty generic pharmaceutical company,
develops, manufactures, markets, and sells generic topical, branded
generic, and generic injectable pharmaceutical products in the
United States and Canada. The company was formerly known as IGI
Laboratories, Inc. and changed its name to Teligent, Inc. in
October 2015. Teligent, Inc. was founded in 1977 and is based in
Buena, New Jersey.
Teligent Inc. and three affiliates sought Chapter 11 protection
(Bankr. D. Del. Lead Case No. 21-11332) on Oct. 14, 2021. The cases
are handled by Honorable Judge Brendan Linehan Shanno.
The Debtor disclosed total assets of $85.0 million and total debt
of $135.8 million as of Aug. 31, 2021.
Young Conaway Stargatt & Taylor, LLP and K&L Gates LLP are the
Debtors' attorneys. Portage Point Partners, LLC, is the Debtors'
restructuring advisor. Raymond James & Associates, Inc., is the
Debtors' investment banker. Epiq Corporate Restructuring, LLC, is
the claims agent.
Latham & Watkins LLP, serves as co-counsel to the Prepetition First
Lien Parties and the Senior DIP Parties. Morgan Lewis & Bockius LLP
serves as co-counsel to the DIP Junior Term Loan Parties and
Prepetition Second Lien Parties. Morris, Nichols, Arsht & Tunnell
LLP serves as co-counsel to the DIP Parties and Prepetition Secured
Parties. Jenner & Block LLP serves as co-counsel to the Creditors'
Committee. Osler, Hoskin & Harcourt LLP, serves as Canadian
counsel to both the DIP Junior Term Loan Parties and the Senior DIP
Parties. NautaDutilh Avocats Luxembourg S.a r.l., as Luxembourg
serves as counsel to both the DIP Junior Term Loan Parties and the
Senior DIP Parties. TGS Baltric is the Estonian counsel to both the
DIP Junior Term Loan Parties and the Senior DIP Parties.
TIMBER PHARMACEUTICALS: COO Zachary Rome to Step Down in March
--------------------------------------------------------------
Timber Pharmaceuticals, Inc. disclosed in a Form 8-K filed with the
Securities and Exchange Commission that it received on Jan. 11,
2022, notice from Zachary Rome, chief operating officer, executive
vice president and member of the company's Board of Directors, that
he will step down and resign as an officer of the company effective
March 4, 2022.
Timber Pharmaceuticals said Mr. Rome's resignation is not the
result of any disagreement with the company on any matter relating
to its operations, policies or practices. There are no
disagreements between the company and Mr. Rome regarding Mr. Rome's
resignation. Mr. Rome will continue serving on the Board of
Directors.
About Timber Pharmaceuticals
Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation --
http://www.timberpharma.com-- is a biopharmaceutical company
focused on the development and commercialization of treatments for
orphan dermatologic diseases. The Company's investigational
therapies have proven mechanisms-of-action backed by decades of
clinical experience and well-established CMC (chemistry,
manufacturing and control) and safety profiles. The Company is
initially focused on developing non-systemic treatments for rare
dermatologic diseases including congenital ichthyosis (CI), facial
angiofibromas (FAs) in tuberous sclerosis complex (TSC), and
localized scleroderma.
Timber reported a net loss of $15.12 million for the year ended
Dec. 31, 2020. For the period from Feb. 26, 2019, through Dec. 31,
2019, the Company reported a net loss of $3.04 million. As of
Sept. 30, 2021, the Company had $4.55 million in total assets,
$2.59 million in total liabilities, $2.02 million in redeemable
series A convertible preferred stock, and a total stockholders'
deficit of $51,010.
Short Hills, New Jersey-based KPMG LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 23, 2021, citing that the Company has suffered recurring
losses from operations that raise substantial doubt about its
ability to continue as a going concern.
TIMBER PHARMACEUTICALS: Empery Asset, et al., Own 4.9% Equity Stake
-------------------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, Empery Asset Management, LP, Ryan M. Lane, and Martin
D. Hoe disclosed that as of Dec. 31, 2021, they beneficially own
9,866,540 shares of common stock issuable upon exercise of warrants
of Timber Pharmaceuticals, Inc., representing 4.99 percent of the
shares outstanding.
The percentage is based on 63,796,170 shares of common stock
outstanding as of Nov. 10, 2021 as represented in the company's
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on Nov. 15, 2021, and assumes the exercise of
the company's reported warrants subject to the blockers.
Pursuant to the terms of the reported warrants, the reporting
persons cannot exercise such warrants to the extent they would
beneficially own, after any such exercise, more than 4.99% of the
outstanding shares of common stock (the "Blockers"), and the
percentage for each reporting person gives effect to the blockers.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/0001504167/000090266422000301/p22-0151sc13ga.htm
About Timber Pharmaceuticals
Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation --
http://www.timberpharma.com-- is a biopharmaceutical company
focused on the development and commercialization of treatments for
orphan dermatologic diseases. The Company's investigational
therapies have proven mechanisms-of-action backed by decades of
clinical experience and well-established CMC (chemistry,
manufacturing and control) and safety profiles. The Company is
initially focused on developing non-systemic treatments for rare
dermatologic diseases including congenital ichthyosis (CI), facial
angiofibromas (FAs) in tuberous sclerosis complex (TSC), and
localized scleroderma.
Timber reported a net loss of $15.12 million for the year ended
Dec. 31, 2020. For the period from Feb. 26, 2019, through Dec. 31,
2019, the Company reported a net loss of $3.04 million. As of
Sept. 30, 2021, the Company had $4.55 million in total assets,
$2.59 million in total liabilities, $2.02 million in redeemable
series A convertible preferred stock, and a total stockholders'
deficit of $51,010.
Short Hills, New Jersey-based KPMG LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 23, 2021, citing that the Company has suffered recurring
losses from operations that raise substantial doubt about its
ability to continue as a going concern.
TOWNSQUARE MEDIA: S&P Alters Outlook to Positive, Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on U.S.-based radio
broadcaster and digital marketer Townsquare Media Inc. to positive
from stable and affirmed its 'B' issuer credit rating.
S&P said, "The positive outlook reflects our expectation that the
company's gross leverage is on track to improve below 5.0x by the
end of 2022 from the 5.4x-5.6x range in 2021. This expected
improvement stems from the ongoing recovery in Townsquare's
broadcast advertising revenue, the strong ongoing expansion in its
digital business (with minimal margin dilution), and its strong
political revenue related to the 2022 U.S. midterm elections.
However, we believe the company could face potential earnings
disruptions due to the ongoing pandemic, which may cause it to
sustain leverage of more than 5x in 2022.
"We expect Townsquare's S&P Global Ratings-adjusted leverage will
decline below 5.0x by the end of 2022. The company's S&P Global
Ratings-adjusted gross leverage is currently 4.7x (annualized for
the third quarter of 2021). We expect it will sustain leverage in
the mid- to high-4x area in 2022 supported by its continued EBITDA
growth. Specifically, we project it will increase its EBITDA to
$115 million-$125 million in 2022 from $100 million-$110 million in
2021. We anticipate this expansion will be supported by the
continued recovery in broadcast radio advertising, increased
political advertising revenue from the U.S. midterm elections, and
healthy digital revenue growth. At the same time, we expect
Townsquare to generate between $50 million and $60 million of free
operating cash flow (FOCF) in 2022, which--if it uses it for debt
prepayment--would support further deleveraging. However, our
base-case scenario does not assume any debt repayment in 2022 given
the high required make-whole premium the company would face to do
so. Management's stated policy of reducing its net leverage toward
4x supports our view that it is committed to maintaining leverage
at these lower projected levels."
S&P Global Ratings believes the omicron variant is a stark reminder
that the COVID-19 pandemic is far from over. Uncertainty still
surrounds its transmissibility, severity, and the effectiveness of
existing vaccines against it. Although the company has remained
resilient over the last 12 months and S&P believes the pandemic's
effects on its business will be limited this year, potential
disruptions stemming from the spread of the coronavirus could cause
it to sustain gross leverage of more than 5x in 2022.
S&P said, "We forecast the company's total revenue and EBITDA will
surpass its pre-pandemic 2019 levels by the end of 2022 bolstered
by an increase in its digital revenue. We expect Townsquare's
digital offerings will contribute about half of its total revenue
and EBITDA in 2022. The company generates its digital revenue by
offering marketing solutions catered to small- and mid-size
businesses (SMBs), programmatic advertising solutions, and display
advertising on its portfolio of owned and operated websites. We
anticipate Townsquare will benefit from the ongoing shift to
digital customer acquisition from offline acquisition." As more
customers make their purchase decisions online, the company's pool
of potential activations will increase. Additionally, as its SMB
customers expand their scale, they will need more sophisticated
marketing solutions, such as highly customized messages, search
engine optimization (SEO), and targeted programmatic advertising.
This creates opportunities for Townsquare to both attract new
customers and increase its client retention rates given its
combined digital and broadcast offerings, which will potentially
provide it with cross-selling opportunities. However, the digital
marketing industry is fragmented and features many competitors,
high customer acquisition costs, and a high risk of customer churn
caused by business failures among SMBs. This makes industry
participants' scale and service quality key determinants of their
competitive position. Townsquare has adopted a strategy to target
customers outside large metro areas that may somewhat fall out of
the purview of its larger competitors, which will help it build its
competitive moat. This, along with its broad portfolio of digital
offerings, has helped the company achieve EBITDA margins in its
digital businesses that are comparable with those of its broadcast
business (in the 25%-30% range).
Townsquare's broadcast advertising revenue continues to recover
toward 2019 levels, though the segment will face ongoing structural
pressures. S&P said, "As media consumption habits continue to
fragment, we believe the company will have a limited ability to
offset the declines in radio listening time with ad rate increases
and will become more reliant on its digital offerings to support
its revenue and EBITDA growth. We do not envision that its
broadcast radio advertising revenue will ever fully recover to
pre-pandemic levels. In particular, we expect some incremental
recovery in its broadcast revenue in 2022 as economic conditions
continue to improve, reaching about 85% of its 2019 revenue, but
forecast its broadcast revenue will remain flat to declining by the
low-single-digit percent area beyond 2022 as advertisers continue
to shift toward digital formats. The company's broadcast radio
advertising revenue could also decline due to changes in consumer
behavior stemming from the pandemic because it is largely dependent
on time spent listening in the car, which could decline if
consumers increasingly work from home. While broadcast radio
advertising featured short lead times prior to the pandemic, these
lead times have declined further during the pandemic, which we
believe could be permanent and further reduce the visibility into
Townsquare's future performance."
S&P said, "The positive outlook on Townsquare reflects our
expectation that its gross leverage is on track to improve below
5.0x by the end of 2022 from the 5.4x-5.6x range in 2021. This
expected improvement stems from the ongoing recovery in the
company's broadcast advertising revenue, the strong ongoing
expansion in its digital business (with minimal margin dilution),
and its strong political revenue related to the 2022 U.S. midterm
elections. However, we believe Townsquare could face potential
earnings disruptions due to the ongoing pandemic, which may cause
it to sustain leverage of more than 5x in 2022."
S&P could raise its rating on Townsquare if:
-- It improves its gross leverage below 5x and S&P expects it to
remain there on a sustained basis; and
-- Its EBITDA margins remain above 25% despite its digital
investments.
S&P could revise its outlook on Townsquare to stable if it expects
its gross leverage to remain at or above 5x absent a clear path for
deleveraging. This could occur if:
-- Its digital revenue growth slows due to increased competition;
or
-- Its increased digital investments lead to a deterioration in
its EBITDA margins; or
-- The company engages in large debt-funded shareholder returns or
acquisitions.
ESG credit indicators: E-2 S-2 G-2
TOYS "R" US: Directors Face New Fraud Claims Over Bankruptcy
------------------------------------------------------------
Eliza Ronalds-Hannon and Bill Allison of Bloomberg News report Toys
"R" Us board members and owners are facing new allegations of fraud
and breach of duty over the company's 2017 bankruptcy.
Creditors claim in ongoing litigation that seven company directors
have now said they knew they shouldn't have approved executive
bonuses and onerous bankruptcy loans at the outset of the case that
put the retailer on the fast track to a sudden liquidation six
months later.
The additional debt served to keep Toys "R" Us in business during
its restructuring, but cost it more than $500 million in fees and
interest and came with strict terms or agreements, court documents
show. The costs were borne by business creditors and employees who
continued to work with the company on the promise of a successful
turnaround, but were not paid when it failed to meet the terms of
the debt and went out of business.
Meanwhile, the owners and directors who signed the ill-fated
financing received immediate bonuses of up to $2.8 million as part
of the plan, according to the documents. Creditors allege that the
authorization of those bonds violated federal criminal law.
"Unsubstantiated" claims
A lawyer representing the company's former executives and directors
earlier called the creditors' lawsuit "baseless" and said the group
would "vigorously" defend itself.
The collapse of Toys "R" Us involved a short-sighted bankruptcy
filing in 2017 that triggered a months-long effort to restructure
the company in bankruptcy court before it was finally liquidated
early next year. The company had struggled for a decade with a
crushing debt load from its 2005 leveraged buyout by Bain Capital,
KKR & Co. and Vornado Realty Trust.
The directors revealed in pretrial depositions that they knew the
company couldn't meet the terms of its bankruptcy debt before they
approved, according to documents filed by the Tru Creditor
Litigation Trust, a group of creditors. Financial forecasts that
the directors describe as revised in August 2017, before the
bankruptcy began, showed that the company would breach a liquidity
agreement in January 2018.
The company's breach of that agreement marked the beginning of a
pivot to abandon the restructuring effort and scale back
operations.
Knowing the change was not feasible, the company's owners and
directors should have ordered the liquidation to begin in August
2017 to preserve Toys "R" Us's ability to pay its employees and
creditors in full, creditors say. .
"This was not simply a bad judgment," the trust's attorneys said in
the documents. Rather, "the defendants took the path that favored
their personal interests to the detriment of the company."
About Toys "R" Us
Toys "R" Us, Inc., was an American toy and juvenile-products
retailer founded in 1948 and headquartered in Wayne, New Jersey, in
the New York City metropolitan area. Merchandise was sold in 880
Toys "R" Us and Babies "R" Us stores in the United States, Puerto
Rico and Guam, and in more than 780 international stores and more
than 245 licensed stores in 37 countries and jurisdictions.
Merchandise was also sold at e-commerce sites including Toysrus.com
and Babiesrus.com.
On July 21, 2005, a consortium of Bain Capital Partners LLC,
Kohlberg Kravis Roberts, and Vornado Realty Trust invested $1.3
billion to complete a $6.6 billion leveraged buyout of the
company.
Toys "R" Us became a privately owned entity but still filed with
the U.S. Securities and Exchange Commission as required by its debt
agreements.
Toys "R" Us, Inc., and certain of its U.S. subsidiaries and its
Canadian subsidiary voluntarily filed for relief under Chapter 11
of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. Case No.
17-34665) on Sept. 19, 2017. In addition, the Company's Canadian
subsidiary voluntarily commenced parallel proceedings under the
Companies' Creditors Arrangement Act ("CCAA") in Canada in the
Ontario Superior Court of Justice. The Company's operations outside
of the U.S. and Canada, including its 255 licensed stores and joint
venture partnership in Asia, which are separate entities, were not
part of the Chapter 11 filing and CCAA proceedings.
The Company's consolidated balance sheet showed $6.572 billion in
assets, $7.891 billion in liabilities, and a stockholders' deficit
of $1.319 billion as of April 29, 2017.
Judge Keith L. Phillips presides over the Chapter 11 cases.
In the Chapter 11 cases, Kirkland & Ellis LLP and Kirkland & Ellis
International LLP serve as the Debtors' legal counsel. Kutak Rock
LLP serves as co-counsel. Toys "R" Us employed Alvarez & Marsal
North America, LLC as its restructuring advisor; and Lazard Freres
& Co. LLC as its investment banker. It hired Prime Clerk LLC as
claims and noticing agent. Consensus Advisory Services LLC and
Consensus Securities LLC, serve as sale process investment banker.
A&G Realty Partners, LLC, serves as its real estate advisor.
On Sept. 26, 2017, the U.S. Trustee for Region 4 appointed an
official committee of unsecured creditors. The Committee retained
Kramer Levin Naftalis & Frankel LLP as its legal counsel; Wolcott
Rivers, P.C., as local counsel; FTI Consulting, Inc., as financial
advisor; and Moelis & Company LLC as investment banker.
Grant Thornton is the monitor appointed in the CCAA case.
VYCOR MEDICAL: Fountainhead Increases Equity Stake to 59.88%
------------------------------------------------------------
Fountainhead Capital Management Limited disclosed in an amended
Schedule 13D filed with the Securities and Exchange Commission that
as of Dec. 31, 2021, it beneficially owns 18,733,378 shares of
common stock of Vycor Medical, Inc., representing 59.88 percent of
the shares outstanding.
On Dec. 31, 2021, the company issued to Fountainhead an aggregate
of 535,714 shares of Company Common Stock pursuant to its
Fountainhead Consultancy Agreement. As a result of such issuance,
Fountainhead's previously-reporting holdings of Vycor Common Stock
(including shares which it has the option to acquire within 60 days
of such date) were adjusted to a total of 18,733,378 shares,
comprising ownership of 18,733,378 Vycor Common Shares.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/0001424768/000149315222001391/sc13da.htm
About Vycor Medical
Vycor Medical (OTCQB: VYCO) -- http://www.vycormedical.com-- is
dedicated to providing the medical community with innovative and
superior surgical and therapeutic solutions. The company has a
portfolio of FDA cleared medical solutions that are changing and
improving lives every day. The company operates two business
units: Vycor Medical and NovaVision, both of which adopt a
minimally or non-invasive approach.
As of Sept. 30, 2021, the Company had $1.04 million in total
assets, $3.11 million in total current liabilities, $192,625 in
total long-term liabilities, and a total stockholders' deficiency
of $2.26 million.
Hackensack, New Jersey-based Prager Metis CPAs, LLC, the Company's
auditor since 2018, issued a "going concern" qualification in its
report dated March 31, 2021, citing that the Company has incurred
net losses since inception, including a net loss of $822,482 and
$796,202 for the years ended Dec. 31, 2020 and 2019 respectively,
and has not generated cash flows from its operations. As of Dec.
31, 2020, the Company had working capital deficiency of $593,970,
excluding related party liabilities of $1,682,956. These factors,
among others, raise substantial doubt regarding the Company's
ability to continue as a going concern.
WATSONVILLE HOSPITAL: Committee Taps Perkins Coie as Legal Counsel
------------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 cases of Watsonville Hospital Corporation and its
affiliates seeks approval from the U.S. Bankruptcy Court for the
Northern District of California to employ Perkins Coie, LLP as its
legal counsel.
Perkins Coie will render these legal services:
(a) advise and consult the committee with respect to the
Debtors' administration of these Chapter 11 cases;
(b) attend meetings and negotiate with representatives of the
Debtors, creditors, and other parties-in-interest;
(c) advise the committee in connection with any contemplated
sales of assets, disposition of assets, or business combinations;
(d) advise the committee on matters relating to the
assumption, rejection, or assignment of unexpired leases and
executory contracts;
(e) assist and advise the committee in its examination and
analysis of the conduct of the Debtors' affairs;
(f) assist the committee in the review, analysis, and
negotiation of any financing or funding agreements;
(g) take all necessary actions to promote the interests of the
committee;
(h) analyze, advise, negotiate, and prepare a Chapter 11 plan,
disclosure statement, and related documents and take any necessary
action on the committee's behalf with respect to any proposed
plan;
(i) appear and advance the committee's interests before this
court, potentially appellate courts, and the U.S. Trustee;
(j) prepare legal papers; and
(k) perform all other necessary legal services on behalf of
the committee in these Chapter 11 cases.
Perkins Coie will work closely with Sills Cummis & Gross PC, the
committee's co-counsel, to prevent unnecessary or inefficient
duplication of services.
The hourly rates of Perkins Coie's attorneys and staff are as
follows:
Paul S. Jasper, Senior Counsel $795
Eric E. Walker, Partner $795
David J. Gold, Partner $795
Kathleen Allare, Associate $595
Rachel Leibowitz, Senior Paralegal $270
In addition, the firm will seek reimbursement for expenses
incurred.
Paul Jasper, Esq., a senior counsel at Perkins Coie, 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:
Paul S. Jasper, Esq.
Perkins Coie, LLP
505 Howard Street, Suite 1000
San Francisco, CA 94105
Telephone: (415) 344-7000
Facsimile: (415) 344-7050
Email: PJasper@perkinscoie.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Cal. The hospital, which is the only acute
care facility in the area, provides emergency, cardiac, pediatric,
surgical, pharmaceutical, laboratory, radiological and other
critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsels; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc., doing
business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
On Dec. 22, 2021, the U.S. Trustee for Region 17 appointed an
official committee of unsecured creditors. The committee tapped
Perkins Coie LLP and Sills Cummis & Gross PC as its legal counsels.
WATSONVILLE HOSPITAL: Panel Taps Sills Cummis & Gross as Co-Counsel
-------------------------------------------------------------------
The official committee of unsecured creditors appointed in the
Chapter 11 cases of Watsonville Hospital Corporation and its
affiliates seeks approval from the U.S. Bankruptcy Court for the
Northern District of California to employ Sills Cummis & Gross, PC
to serve as co-counsel with Perkins Coie, LLP.
Sills Cummis & Gross will render these legal services:
(a) advise the committee regarding its rights, powers, and
duties in these Chapter 11 cases;
(b) prepare legal papers;
(c) represent the committee in any and all matters arising in
these cases;
(d) appear at hearings and other proceedings to represent the
interests of the committee;
(e) assist the committee in its investigation and analysis of
the Debtors, their capital structure, and issues arising in or
related to these cases;
(f) represent the committee in all aspects of any sale and
bankruptcy plan confirmation proceedings; and
(g) perform all other necessary legal services for the
committee.
The hourly rates of the firm's attorneys and staff are as follows:
Andrew H. Sherman, Member $925
Boris I. Mankovetskiy, Member $825
Lucas F. Hammonds, Of Counsel $725
Daniel J. Harris, Of Counsel $725
Rachel E. Brennan, Of Counsel $695
Gregory Kopacz, Associate $650
Members $595 - $950
Of Counsels $495 - $750
Associates $350 - $695
Paralegals $235 - $350
In addition, the firm will seek reimbursement for expenses
incurred.
Andrew Sherman, Esq., a member of Sills Cummis & Gross, 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:
Andrew H. Sherman, Esq.
Boris I. Mankovetskiy, Esq.
Sills Cummis & Gross PC
One Riverfront Plaza
Newark, NJ 07102
Telephone: (973) 643-7000
Facsimile: (973) 643-6500
Email: ASherman@sillscummis.com
BMankovetskiy@sillscummis.com
About Watsonville Hospital Corporation
Watsonville Hospital Corporation and its affiliates operate
Watsonville Community Hospital, a 106-bed acute care facility
located in Watsonville, Cal. The hospital, which is the only acute
care facility in the area, provides emergency, cardiac, pediatric,
surgical, pharmaceutical, laboratory, radiological and other
critical services.
Watsonville Hospital Corporation and its affiliates filed petitions
for Chapter 11 protection (Bankr. N.D. Calif. Lead Case No.
21-51477) on Dec. 5, 2021. Jeremy Rosenthal, chief restructuring
officer, signed the petitions. In its petition, Watsonville
Hospital Corporation listed as much as $50 million in both assets
and liabilities.
Judge Elaine M. Hammond oversees the cases.
The Debtors tapped Pachulski Stang Ziehl & Jones, LLP as bankruptcy
counsel; Hooper, Lundy & Bookman, PC and Bartko Zankel Bunzel &
Miller as special counsels; Cowen and Company, LLC as investment
banker; and Force Ten Partners, LLC as restructuring advisor.
Jeremy Rosenthal of Force Ten Partners serves as the Debtors' chief
restructuring officer. Bankruptcy Management Solutions, Inc., doing
business as Stretto, is the Debtors' claims, noticing and
solicitation agent and administrative advisor.
On Dec. 22, 2021, the U.S. Trustee for Region 17 appointed an
official committee of unsecured creditors. The committee tapped
Perkins Coie LLP and Sills Cummis & Gross PC as its legal counsels.
[*] Supreme Court to Decide on Trustee Fees' Constitutionality
--------------------------------------------------------------
Dylan Trache of Nelson Mullins wrote an article on The National Law
Review titled "Supreme Court to Decide Constitutionality of U.S.
Trustee Fees in Chapter 11 Cases."
The Supreme Court of the United States granted certiorari on Jan.
10, 2022 in a case arising out of the Circuit City bankruptcy
regarding certain additional fees imposed on large Chapter 11
debtors. Most Chapter 11 debtors pay quarterly fees to the Office
of the United States Trustee ("UST') pursuant to a schedule set
forth in 28 U.S.C. Sec. 1930(a)(6). The UST is the arm of the
Department of Justice that oversees the administration of
bankruptcy cases in most jurisdictions. However, in two states,
Alabama and North Carolina, the bankruptcy cases are not overseen
by the UST. Rather, bankruptcy cases in these states are overseen
by a bankruptcy administrator, who is part of the judiciary, not
the executive branch.
In 2017, Congress increased the amount that large Chapter 11
debtors were required to pay to the UST, initially requiring them
to pay the lesser of one percent (1%) or $250,000 per quarter on
disbursements over $1,000,000. This increase went effective in
January 2018 and applied to cases filed before that date that were
still pending and any cases filed thereafter. Initially, Congress
did not require bankruptcy courts in Alabama and North Carolina to
impose the additional fees, with the text of the act reading that
such fees “may” be required in those states. Later, this text
was amended to replace "may" with "shall" in an attempt to remedy
the issues giving rise to the current case before the Supreme
Court.
The United States Constitution authorizes Congress to enact
"uniform laws on the subject of Bankruptcies throughout the United
States." The question before the Supreme Court is whether these
bankruptcy fees are subject to and comply with this clause. The
petitioner is the fiduciary appointed under the liquidating plan
confirmed in the Circuit City bankruptcy case who is charged with,
among other things, paying the UST fees at issue in this appeal.
The Circuit City case was pending when the additional fees were
imposed. He argues that the fee system violates the Constitution
for at least two reasons. First because cases in Alabama and North
Carolina were initially exempt from the increased fees and second,
when Alabama and North Carolina cases were eventually included in
the fee regime, it only applied to cases commenced after the
effective date of imposition of such fees thereby creating a
non-uniform system which resulted in unequal treatment because
cases commenced in Alabama and North Carolina before October 2018
as they would never be required to pay the additional fees.
[^] Recent Small-Dollar & Individual Chapter 11 Filings
-------------------------------------------------------
In re Gloria Jansen Burns
Bankr. C.D. Cal. Case No. 22-10014
Chapter 11 Petition filed January 11, 2022
represented by: Reed Olmstead, Esq.
In re Leonard A. Bloom
Bankr. S.D. Cal. Case No. 22-00051
Chapter 11 Petition filed January 11, 2022
represented by: Ahren Tiller, Esq.
In re Greg & Alice, Inc.
Bankr. W.D. La. Case No. 22-10026
Chapter 11 Petition filed January 11, 2022
See
https://www.pacermonitor.com/view/O2BYFAY/Greg__Alice_Inc__lawbke-22-10026__0001.0.pdf?mcid=tGE4TAMA
represented by: L. Laramie Henry, Esq.
L. LARAMIE HENRY
E-mail: laramie@henry-law.com
In re Blackrock International, Inc.
Bankr. W.D. La. Case No. 22-50015
Chapter 11 Petition filed January 11, 2022
See
https://www.pacermonitor.com/view/FHUMQHA/Blackrock_International_Inc__lawbke-22-50015__0001.0.pdf?mcid=tGE4TAMA
represented by: D. Patrick Keating, Esq.
THE KEATING FIRM, APLC
E-mail: rick@dmsfirm.com
In re Quiles Construction, LLC
Bankr. D.N.J. Case No. 22-10243
Chapter 11 Petition filed January 11, 2022
See
https://www.pacermonitor.com/view/65QWOGQ/Quiles_Construction_LLC__njbke-22-10243__0001.0.pdf?mcid=tGE4TAMA
represented by: Peter J. Broege, Esq.
BROEGE NEUMANN FISCHER & SHAVER, L.L.C.
E-mail: pbroege@bnfsbankruptcy.com
In re Felix Kogan
Bankr. E.D.N.Y. Case No. 22-40040
Chapter 11 Petition filed January 11, 2022
represented by: Alla Kachan, Esq.
In re Eva Youboty
Bankr. E.D.N.Y. Case No. 22-40035
Chapter 11 Petition filed January 11, 2022
represented by: Rachel Blumenfeld, Esq.
In re Kirk Bishop
Bankr. E.D.N.Y. Case No. 22-40039
Chapter 11 Petition filed January 11, 2022
represented by: Michael Previto, Esq.
In re Robert Lee Gant
Bankr. M.D. Tenn. Case No. 22-00050
Chapter 11 Petition filed January 11, 2022
represented by: Steven L. Lefkovitz, Esq.
LEFKOVITZ & LEFKOVITZ
E-mail: slefkovitz@lefkovitz.com
In re Ronald Eugene Pryor
Bankr. M.D. Tenn. Case No. 22-00051
Chapter 11 Petition filed January 11, 2022
represented by: Steven L. Lefkovitz, Esq.
LEFKOVITZ & LEFKOVITZ
E-mail: slefkovitz@lefkovitz.com
In re Green Head LLC
Bankr. S.D. Tex. Case No. 22-30105
Chapter 11 Petition filed January 11, 2022
See
https://www.pacermonitor.com/view/A6JGVUA/Green_Head_LLC__txsbke-22-30105__0001.0.pdf?mcid=tGE4TAMA
represented by: Mark A. Platt, Esq.
FROST BROWN TODD LLC
E-mail: mplatt@fbtlaw.com
In re Darrell Derrick Maag
Bankr. C.D. Cal. Case No. 22-10023
Chapter 11 Petition filed January 12, 2022
represented by: Craig Margulies, Esq.
In re Ingrid Aliet Gass
Bankr. C.D. Cal. Case No. 22-10186
Chapter 11 Petition filed January 12, 2022
represented by: Gene Koon, Esq.
In re Bay Place Condominium Association, Inc.
Bankr. S.D. Fla. Case No. 22-10223
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/YGK63DQ/Bay_Place_Condominium_Association__flsbke-22-10223__0001.0.pdf?mcid=tGE4TAMA
represented by: Kris Aungst, Esq.
PARAGON LAW, LLC
E-mail: ka@paragonlaw.miami
In re Teri G. Galardi
Bankr. M.D. Ga. Case No. 22-50035
Chapter 11 Petition filed January 12, 2022
In re Noorjahan Haggerty, Inc.
Bankr. E.D. Mich. Case No. 22-40197
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/6ALJYSY/Noorjahan_Haggerty_Inc__miebke-22-40197__0001.0.pdf?mcid=tGE4TAMA
represented by: Ryan D. Heilman, Esq.
WERNETTE HEILMAN PLLC
E-mail: ryan@wernetteheilman.com
In re Cole Camp Auto Parts LLC
Bankr. W.D. Mo. Case No. 22-20011
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/H75RJTQ/Cole_Camp_Auto_Parts_LLC__mowbke-22-20011__0001.0.pdf?mcid=tGE4TAMA
represented by: Erlene W. Krigel, Esq.
KRIGEL & KRIGEL, PC
In re Taj & Ark, LLC
Bankr. D.N.M. Case No. 22-10022
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/KXLS67I/Taj__Ark_LLC__nmbke-22-10022__0001.0.pdf?mcid=tGE4TAMA
represented by: Joseph Yar, Esq.
LAW OFFICE OF GERALD R. VELARDE
E-mail: joseph@yarlawoffice.com
In re Marq Powder Coating, LLC
Bankr. D. Nev. Case No. 22-50014
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/557OA6I/MARQ_POWDER_COATING_LLC__nvbke-22-50014__0001.0.pdf?mcid=tGE4TAMA
represented by: J. Craig Demetras, Esq.
DEMETRAS LAW
E-mail: jcd@demetraslaw.com
In re WIG1, LLC
Bankr. D. Nev. Case No. 22-10069
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/3UUPLQA/WIG1_LLC__nvbke-22-10069__0001.0.pdf?mcid=tGE4TAMA
represented by: Allison R. Schmidt, Esq.
NEVADA'S LAWYERS
E-mail: allison@nevadaslawyers.com
In re 170 Broadway Realty Corp
Bankr. E.D.N.Y. Case No. 22-40045
Chapter 11 Petition filed January 12, 2022
See
https://www.pacermonitor.com/view/W6M4DQY/170_Broadway_Realty_Corp__nyebke-22-40045__0001.0.pdf?mcid=tGE4TAMA
represented by: Lawrence Morrison, Esq.
MORRISON TENENBAUM PLLC
E-mail: lmorrison@m-t-law.com
In re Bell and Arthur Condominium Association, Inc.
Bankr. N.D. Ill. Case No. 22-00410
Chapter 11 Petition filed January 13, 2022
See
https://www.pacermonitor.com/view/7ZZFAFY/Bell_and_Arthur_Condominium_Association__ilnbke-22-00410__0001.0.pdf?mcid=tGE4TAMA
represented by: William J. Factor, Esq.
FACTORLAW
E-mail: wfactor@wfactorlaw.com
In re David Winton Thompson, IV
Bankr. W.D. Wash. Case No. 22-10063
Chapter 11 Petition filed January 13, 2022
In re Duel Sports Bar, LLC
Bankr. E.D. Wisc. Case No. 22-20107
Chapter 11 Petition filed January 13, 2022
See
https://www.pacermonitor.com/view/PQS2VII/Duel_Sports_Bar_LLC__wiebke-22-20107__0001.0.pdf?mcid=tGE4TAMA
represented by: John A. Foscato, Esq.
LAW OFFICES OF JOHN A. FOSCATO, SC
E-mail: attyjaf@new.rr.com
In re E. Lynn Schoenmann
Bankr. N.D. Cal. Case No. 22-30028
Chapter 11 Petition filed January 14, 2022
represented by: Michael St. James, Esq.
In re David Harold Hollnagel
Bankr. M.D. Fla. Case No. 22-00099
Chapter 11 Petition filed January 14, 2022
represented by: Buddy Ford, Esq.
In re Gregory J. Rauckhorst
Bankr. M.D. Fla. Case No. 22-00165
Chapter 11 Petition filed January 14, 2022
In re Peachtree Medical Products, LLC
Bankr. N.D. Ga. Case No. 22-50374
Chapter 11 Petition filed January 14, 2022
See
https://www.pacermonitor.com/view/N42GICY/Peachtree_Medical_Products_LLC__ganbke-22-50374__0001.0.pdf?mcid=tGE4TAMA
represented by: Jimmy L. Paul, Esq.
CHAMBERLAIN HRDLICKA WHITE WILLIAMS &
AUGHTRY
E-mail: jimmy.paul@chamberlainlaw.com
In re Theresa Marie Allen
Bankr. D. Mass. Case No. 22-30009
Chapter 11 Petition filed January 14, 2022
In re StaySaver Vacation Group LLC
Bankr. M.D. Fla. Case No. 22-00193
Chapter 11 Petition filed January 17, 2022
See
https://www.pacermonitor.com/view/GOHLL6Y/StaySaver_Vacation_Group_LLC__flmbke-22-00193__0001.0.pdf?mcid=tGE4TAMA
represented by: Marshall G. Reissman, Esq.
THE REISSMAN LAW GROUP, P.A.
E-mail: marshall@reissmanlaw.com
In re 46 Eckert Dr, LLC
Bankr. D.N.J. Case No. 22-10369
Chapter 11 Petition filed January 17, 2022
See
https://www.pacermonitor.com/view/QSKSCNA/46_Eckert_Dr_LLC__njbke-22-10369__0001.0.pdf?mcid=tGE4TAMA
represented by: Eugene D. Roth, Esq.
LAW OFFICE OF EUGENE D. ROTH
E-mail: erothesq@gmail.com
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Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2022. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
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