/raid1/www/Hosts/bankrupt/TCR_Public/220202.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, February 2, 2022, Vol. 26, No. 32
Headlines
AFAB SOLUTIONS: Wins Cash Collateral Access Thru Feb 28
AMADEUS THERAPY: $1.7M Sale to Wedge Management to Fund Plan
AMENTUM GOVERNMENT: Moody's Confirms B2 CFR, Rates $1.3BB Loan B1
AMENTUM HOLDINGS: S&P Affirms 'B' ICR, Outlook Stable
ARCHDIOCESE OF NEW ORLEANS: Taps TMC as Real Estate Consultant
ARCHDIOCESE OF NEW ORLEANS: Taps TMC to Sell New Orleans Properties
AUSTIN HOLDCO: Moody's Affirms B3 CFR on Debt-Funded Distribution
AUSTIN HOLDCO: S&P Affirms 'B' ICR, Outlook Stable
BHCOSMETICS HOLDINGS: Seeks to Hire Riveron Management, Appoint CRO
BHCOSMETICS HOLDINGS: Taps Epiq as Administrative Advisor
BHCOSMETICS HOLDINGS: Taps Hilco as IP Consultant
BHCOSMETICS HOLDINGS: Taps Robert Tormey of Traverse as Controller
BHCOSMETICS HOLDINGS: Taps Young Conaway Stargatt as Legal Counsel
BLUE JAY COMMUNICATIONS: Taps Newpoint as Financial Advisor
BRAZOS ELECTRIC: Summary Judgment Motion Denied in Fight w/ ERCOT
BVM CORAL: Seeks Cash Collateral Access as Payroll Due Feb. 4
BW NHHC HOLDCO: Moody's Cuts CFR to Caa3, First Lien Debt to Caa2
CALAIS REGIONAL HOSPITAL: Ex-Nurse's 2nd Suit Dismissed
CHRISTOPHER & BANKS: Returns as Online, TV Retail Presence
CLEARPOINT NEURO: Michael Bigger Reports 5.2% Equity Stake
CLINTON NURSERIES: Trustee Gets OK to Hire Mediator in Graco Suit
DALTON CRANE: Asset Sale Proceeds to Fund Plan Payments
DIVINIA WATER: Seeks to Hire CFO Solutions, Appoint CRO
DUPONT STREET: Unsecureds to be Paid in Full in Liquidating Plan
ELBA LUCERO: Case Summary & One Unsecured Creditor
ENDO INTERNATIONAL: BlackRock Has 15.8% Equity Stake as of Dec. 31
EXPRESS GRAIN: Wins Cash Collateral Access Thru Feb 25
GAINWELL ACQUISITION: Fitch Affirms 'B' LT IDR, Outlook Stable
GIRARDI & KEESE: Erika Isn't Off the Hook on Embezzlement Case
GOTSPACE DATA: Taps Perez-Kudzma Law Office as Bankruptcy Counsel
HALO BUYER: S&P Downgrades ICR to 'CCC+', Outlook Negative
HAWAIIAN HOLDINGS: Moody's Alters Outlook on B1 CFR to Stable
HIGHLAND CAPITAL: Indemnity Fund Suits Ch. 11 Plan, Says Court
HILLS SF LLC: Gets Court OK to Hire Jordan Law Office as Counsel
HTP INC: Committee Taps Wenokur Riordan as Legal Counsel
I-70 PROPERTIES: Seeks Cash Collateral Access
INTERPACE BIOSCIENCES: Appoints Vijay Aggarwal as Director
J&P FLASH INC: Seeks to Hire Glankler Brown as Bankruptcy Counsel
K.R. CALVERT: Wins Cash Collateral Access Thru Mar 31
LATAM AIRLINES: Creditors' Committee Disagrees Negotiation Process
LEGACY EDUCATION: Ibex Entities Lower Equity Stake to 4%
LEXARIA BIOSCIENCE: Plans to Sell $50M Worth of Securities
LIONS GATE: Fitch Assigns First Time 'B' LT IDR, Outlook Stable
LUCERO LLC: Case Summary & One Unsecured Creditor
MCAFEE CORP: Moody's Assigns B2 Rating to New Senior Secured Notes
MCAFEE CORP: S&P Assigns 'B-' Rating on $1,000MM Sr. Secured Notes
MD AND SD: Gets Court OK to Hire Bach Law Offices as Counsel
METRONET SYSTEMS: S&P Raises First-Lien Debt Rating to 'B'
MOON GROUP INC: Taps Patterson Price as Real Estate Broker
NATURE COAST: Unsecured Creditors to Split $16K over 4 Years
NEKTAR THERAPEUTICS: BlackRock Has 14.5% Equity Stake as of Dec. 31
NEUTRAL POSTURE: Unsecureds Will Get 4% of Claims in 3 Years
NEVADA WINE: Case Summary & Two Unsecured Creditors
NUTRIBAND INC: Expands Product Development Pipeline for AVERSA
OCEAN DEVELOPMENT: Taps Perez-Kudzma Law Office as Counsel
OFFSHORE SPECIALTY: 5th Cir. Flips Ruling in Auction Dispute
PAINT THE WIND: Taps Brokers Realty Group as Real Estate Broker
PHUNWARE INC: Khazanah, Unit Ceased as Shareholders as of Dec. 31
PRINCETON-WINDSOR PEDIATRICS: Gets Cash Collateral Access
PRINCETON-WINDSOR: Unsecureds Will Get 10% of Claims in 60 Months
PURDUE PHARMA: Sackler Family Nears Deal to Raise Opioid Settlement
PURDUE PHARMA: Sacklers Litigation Shield Should Lapse, Say Cities
PURE BIOSCIENCE: Registers Additional 5M Shares Under 2017 Plan
QUICKER LIQUOR: Voluntary Chapter 11 Case Summary
R.R. DONNELLEY: Moody's Rates New $750MM Term Loan B Due 2026 'B1'
R.R. DONNELLEY: S&P Affirms 'B' ICR on Proposed Capital Structure
RAMBUS INC: BlackRock Reports 15.7% Equity Stake
RIVER MILL: Wins Interim Cash Collateral Access
S-TEK 1 LLC: Loses Bid to Strike STIF Claim as Untimely
SAEXPLORATION HOLDINGS: Completes $26-Mil. Recapitalization
SANUWAVE HEALTH: Opaleye Management Reports 6.5% Equity Stake
SCHAEFERS SERVICE: Seeks to Hire Bononi & Company as Accountant
SHOOT THE MOON: Trustee Allowed to Amend Suit vs Secured Lenders
SKY MEDIA: Unsecured Creditors to Split $840 over 4 Years
SMARTER BUILDING: Unsecureds to Get Distributable Cash for 3 Years
SPECTRUM ALLIANCE: Objection to IUOE Pension Claim Overruled
TAMARACK VALLEY: S&P Assigns 'B' Long-Term ICR, Outlook Stable
TEMERITY TRUST: Dist Court OKs Deal to Sell Beverly Hills Property
TENRGYS LLC: To Enter New Loan Facilities with PanAm & TOG
TRIUMPH GROUP: BlackRock Has 15% Equity Stake as of Dec. 31
UNITI GROUP: BlackRock Has 15.1% Equity Stake as of Dec. 31
USA GYMNASTICS: Says Chapter 11 Appeal Delays Plan Deals
VEWD SOFTWARE: Unsecureds to Get Nothing in Debt-for-Equity Plan
VEWD SOFTWARE: Will Resubmit Plan as Judge Questions Fairness
WHITE CAP: Moody's Affirms B2 CFR, Alters Outlook to Stable
ZIFF DAVIS: Moody's Affirms B1 CFR; Outlook Stable
[*] 7 Iconic U.S. Restaurant Chains That Are Currently Shrinking
[*] Martin Glenn Is New N.Y. Southern Bankruptcy Chief Judge
*********
AFAB SOLUTIONS: Wins Cash Collateral Access Thru Feb 28
-------------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Florida,
Jacksonville Division, has authorized Afab Solutions, LLC to use
cash collateral on an interim basis in accordance with the budget
through February 28, 2022, the date of the final hearing.
The Debtor is permitted to use cash collateral to pay amounts
expressly authorized by the Court, including payments to the United
States Trustee for quarterly fees; and the current and necessary
expenses set forth in the budget.
The Court's order provides that the Cash Collateral lenders and
Capital Dude, LLC will have a perfected post-petition lien against
cash collateral to the same extent and with the same validity and
priority as their respective prepetition lien(s), without the need
to file or execute any document as may otherwise be required under
applicable non-bankruptcy law.
Capital Dude, LLC will receive a $1,250 payment due immediately
upon entry of the Order. This payment will be without prejudice or
binding effect to final plan treatment of Capital Dude, LLC.
The February 28 hearing is scheduled for 11 a.m. at Bryan Simpson
United States Courthouse, in Courtroom 4C, 300 North Hogan Street,
4th Floor, Jacksonville, FL 32202.
A copy of the order and the Debtor's budget is available at
https://bit.ly/3J7elVx from PacerMonitor.com.
The Debtor projects $$67,165 in net revenue and $62,433 in total
expenses.
About Afab Solutions, LLC
Afab Solutions, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 3:22-bk-00110-JAB) on
January 18, 2022. In the petition signed by Alexis Rengel, owner,
the Debtor disclosed up to $100,000 in assets and up to $500,000 in
liabilities.
Thomas C. Adam, Esq., at The Adam Law Group P.A. is the Debtor's
counsel.
AMADEUS THERAPY: $1.7M Sale to Wedge Management to Fund Plan
------------------------------------------------------------
Amadeus Therapy, Inc., filed with the U.S. Bankruptcy Court for the
District of Arizona a Disclosure Statement describing Chapter 11
Plan dated Jan. 27, 2022.
Amadeus Therapy was incorporated on December 18, 2015 for the
purpose of holding real estate property and health care. Bridget
O'Brien is the sole shareholder, president, and director. The
Property was purchased at 200 North Dysart Avondale Arizona in
2016, Remodeling was completed and the property was rented.
Debtor filed an application to appoint Charles Hahn and Berkshire
Hathaway HomeService Arizona Properties as real estate agent for
the Estate on December 13, 2021. Mr. Hahn has brought to Debtor
offer from Wedge Management, L.L.C. to purchase the Property for
$1,700,000.00, free and clear of all liens. Debtor had filed its
Section 363 motion for approval of this sale and the hearing is set
for February 3, 2022 at 11:30 a.m. If approved, this sale will pay
secured creditors in full from the sale and pay all allowed
unsecured claims in Debtor's confirmed Plan.
Before the Wedge Management offer came in, Debtor had filed on
December 16, 2021 a Motion for Authority to Obtain Postpetition
Financing on a Secured Basis. This Motion seeks approval of a
$1,000.000.00 loan from Legalist DIP GP, LLC ("DIP Lender").
The hearing to approve this loan has been continued to February 3
at 11:30 a.m. as a status hearing. If the sale to Wedge Management
is approved, Debtor will not need this loan and will withdraw the
Motion. If the Wedge Management sale falls through, Debtor will set
the motion for this loan for a final hearing.
Debtor owns a single asset, the building and land located at 200 N.
Dysart Road in Avondale Arizona. The value of $1,775,000 on
Debtor's Schedule A was derived from the offer price in the offer
to purchase from Agua Fria Union High School District. Based on the
Wedge Management offer, the value is at least $1,770,000.
Class 5 consists of Liquidated unsecured claims. These creditors
are E&B Accounting, Ron Horton, the Small Business Administration
(EIDL loan), and US Development and Construction. Debtor objects to
the proof of claim of Horizon Real Estate Group, Inc. Allowed
claims will be paid in full on the effective date.
Class 6 consists of Vickie L. Simpson/Vickie L. Simpson Living
Trust Claim. This claim in unliquidated, and as explained in the
Disclosure Statement, concerns a potential claim of ownership to
Debtor. Upon the sale of the Property, the net funds after paying
Classes 1-5 will be placed into the Debtor In Possession account.
Debtor and Simpson will then litigate in this case the validity of
any proof of claim filed by Simpson. If Debtor's Objection is
upheld or if no proof of claim is filed, any such claim of Simpson
against Debtor will be discharged and remaining funds will be
disbursed to Debtor's principal, Bridget O'Brien.
The Debtor's Plan will be funded by its sale of the Property to
Wedge Management, L.L.C.
A full-text copy of the Disclosure Statement dated Jan. 27, 2022,
is available at https://bit.ly/34lm5nn from PacerMonitor.com at no
charge.
Attorney for Debtor:
Harold E. Campbell, Esq.
Law Offices of Harold E. Campbell PC
910 West McDowell
Phoenix, AZ 85007
Telephone: (480) 839-4828
Facsimile: (480) 897-1461
Email: heciii@haroldcampbell.com
About Amadeus Therapy
Amadeus Therapy, Inc., is a single asset real estate debtor (as
defined in 11 U.S.C. Section 101(51B)). It owns real properties in
Avondale, Ariz., having a current value of $1.77 million.
Amadeus Therapy filed its voluntary petition for Chapter 11
protection (Bankr. D. Ariz. Case No. 21-08245) on Nov. 4, 2021,
listing $1.775 million in assets and $1.205 million in liabilities.
Bridget O'Brien, president and director, signed the petition. Judge
Brenda K. Martin oversees the case.
Harold E. Campbell, Esq., at the Law Offices of Harold E. Campbell
PC represents the Debtor as bankruptcy counsel.
AMENTUM GOVERNMENT: Moody's Confirms B2 CFR, Rates $1.3BB Loan B1
-----------------------------------------------------------------
Moody's Investors Service confirmed Amentum Government Services
Holdings LLC's B2 corporate family rating and B2-PD probability of
default rating. Moody's also confirmed the company's B1 rating on
the existing first lien senior secured credit facilities.
Concurrently, Moody's assigned a B1 rating to the company's new
$1.3 billion first lien term loan. As a part of this transaction,
the company is also upsizing its revolving credit facility by $100
million to $350 million. Debt proceeds, along with $112 million in
cash and $550 million in second lien term loan (unrated), will be
used to fund the acquisition of PAE Holdings Corporation (PAE) (B2
Ratings under Review). The outlook has been changed to stable from
ratings under review. This concludes the ratings review on Amentum
initiated on October 28, 2021. PAE's ratings will be withdrawn at
transaction close.
"The confirmation of ratings reflects Amentum's enhanced business
profile from increased revenue size, technical capabilities and
greater customer reach through its combination with PAE", said
Shirley Singh, Moody's Vice President and lead analyst for Amentum.
"Leverage is high, with debt/EBITDA at 6.5x, but the company has a
good backlog position and liquidity", adds Singh.
Confirmations:
Issuer: Amentum Government Services Holdings LLC
Corporate Family Rating, Confirmed at B2
Probability of Default Rating, Confirmed at B2-PD
Senior Secured 1st Lien Bank Credit Facility, Confirmed at B1
(LGD3)
Assignments:
Issuer: Amentum Government Services Holdings LLC
Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3)
Outlook Actions:
Issuer: Amentum Government Services Holdings LLC
Outlook, Changed To Stable From Rating Under Review
RATINGS RATIONALE
Amentum's B2 CFR reflects the company's elevated execution risk in
the wake of the PAE acquisition. The company has limited operating
history at its current size, with PAE representing the second
sizeable acquisition undertaken within two years of Amentum being
separated from its former parent AECOM (Ba2 Stable). The ratings
are also constrained by the increase in financial leverage (Moody's
adjusted debt-to-EBITDA) to 6.5x (on a pro forma basis) estimated
at the end of December 2021. The company faces revenue headwinds in
2022 from the conclusion of Afghanistan-based logistics and base
operations work. As a result, Amentum will need to demonstrate
continued success at new contract and recompete wins in order to
resume revenue growth in 2022. The ratings are also constrained by
Amentum's EBITDA margin of 7.7% (Moody's adjusted), which is low
compared to other defense services contractors. This, in part,
reflects Amentum's emphasis on relatively lower risk cost-based
contracts (versus fixed price contracts).
Nonetheless, the significant scale of the combined company with
close to $8.9 billion in revenue and considerable breadth of
technical capabilities supports the ratings. PAE will expand
Amentum's presence with the Department of State (DoS) as a provider
for embassy support services, National Aeronautics and Space
Administration (NASA) and the intelligence community. This enhanced
scale will improve Amentum's bidding position for large federal
contracts with increased cross selling opportunities. Backlog at
above $56 billion represents long enduring platforms with notable
exposure to generally stable operational and maintenance related
defense budgets. With the conclusion of base operations work in
Afghanistan, Amentum's exposure to more volatile funding budgets
will decline.
Liquidity is good, supported by full availability under its $350
million of revolving credit facility and close to $230 million of
cash at transaction close.
The stable outlook reflects Moody's expectation that the PAE
integration will go smoothly, without any material disruption to
cash flows or customers. The outlook also reflects Moody's
expectation that revenue growth will resume in 2022 with good
liquidity, and leverage approaching 6.0x (on Moody's adjusted
basis).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be downgraded if substantial integration challenges
emerge resulting in disruption to cash flows or customer relations.
Disruption to business development that leads to reduced new
contract or recompete wins or another sizeable acquisition that
occurs before PAE is substantially integrated could also pressure
the ratings. Specifically, adjusted debt-to-EBITDA that is
sustained above 7.0x or a weakening of liquidity could prompt a
downgrade.
Ratings could be upgraded with successful integration of PAE and
realized synergies while maintaining EBITDA margin in high single
digits. Adjusted Debt-to EBITDA sustained below 5.5x and good
liquidity could also support a rating upgrade.
Headquartered in Germantown, MD, Amentum provides test and training
range maintenance and operations, equipment maintenance and
sustainment, facilities management, cyber / IT, and environmental
remediation services to the US and other national governments.
Amentum is owned by entities of Lindsay Goldberg and American
Securities. Pro forma for the PAE acquisition, revenue for the last
twelve months ended September 2021 was close to $8.9 billion.
The principal methodology used in these ratings was Aerospace and
Defense published in October 2021.
AMENTUM HOLDINGS: S&P Affirms 'B' ICR, Outlook Stable
-----------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Amentum
Holdings LLC and revised its outlook to stable from negative.
S&P also assigned its 'B' issue-level and '3' recovery ratings to
the company's proposed incremental $1.293 billion first-lien term
loan.
S&P's ratings on the company's existing term loans are unchanged.
The stable outlook reflects S&P's expectation that the company's
debt leverage, which will be elevated due to its acquisition of
PAE, will be in the high-6x area in fiscal-year (FY) 2022 before
improving to mid-6x area in FY 2023.
Amentum is planning to issue an incremental $1.293 billion
first-lien term loan as part of the financing to fund its
acquisition of PAE. The company will also upsize its existing
revolving credit facility and has privately placed an incremental
second-lien term loan.
S&P said, "We expect Amentum's acquisition of PAE to improve the
company's scale and contract diversification, and expand its
capabilities. Amentum will become the second-largest government
services provider by revenue, trailing only Leidos Inc., once it
completes the acquisition of PAE. Although we note that margins
have improved in recent years, we view Amentum as continuing to lag
its largest peers in terms of margin. In addition to resulting in
greater scale, the acquisition adds considerable diversity to
Amentum's backlog. PAE and Amentum have little contract overlap,
and the combination reduces contract and customer concentration. We
believe the acquisition will also enable Amentum to expand its
business within the Intelligence Community by leveraging PAE's
legacy National Security Solutions (NSS) business segment, which
focuses on potentially higher-margin work such as intelligence
solutions, technology services, and information optimization.
"We expect Amentum's credit metrics will temporarily weaken because
of acquisition debt this year and improve in 2023. Amentum's
acquisition of PAE will add incremental debt to its balance sheet.
Pro forma for the transaction, we estimate Amentum's debt to EBITDA
to be in the high-6x area in 2022 before falling to the mid-6x area
in 2023. Despite the initial elevated leverage, we believe
Amentum's consistent margins and modest capital spending will allow
it to generate positive free operating cash flow (FOCF).
Specifically, we expect Amentum to generate a FOCF-to-debt ratio of
5%-9% in 2022 and 2023.
"We believe Amentum will continue pursuing tuck-in acquisitions to
expand its capabilities. We expect the company to explore
opportunities that complement its service offerings in intelligence
and analysis, training, and data analytics. We also believe the
company will pursue targeted acquisitions that provide
opportunities to improve margins. Overall, we believe strategic
acquisitions have potential to enhance credit quality over time.
However, significant acquisitions could also elevate near-term
leverage.
"The stable outlook on Amentum reflects our expectation that the
company's debt leverage, which will be elevated due to its
acquisition of PAE, will be in the high 6x area in FY22 before
improving to mid-6x area in FY23. We expect credit ratios will
continue to improve as earnings increase due to growth in revenues
and reduced operating costs.
"We could lower the rating on Amentum if we believe debt to EBITDA
will be above 7.0x for an extended period. This could be the result
of poor operating performance, possibly because Amentum fails to
achieve cost reductions, or if it pursues additional debt-financed
acquisitions or pays significant dividends.
"We could raise the rating on Amentum if debt to EBITDA decreases
below 5.0x for an extended period and we believe the company's
private equity sponsor is committed to keeping it at this level.
This could be the result of continued operational improvements that
aid its cash inflows, and/or voluntary debt repayments.
"Governance is a moderately negative consideration in our credit
rating analysis of Amentum Holdings LLC, as is the case for most
rated entities owned by private-equity sponsors. We believe the
company'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."
ARCHDIOCESE OF NEW ORLEANS: Taps TMC as Real Estate Consultant
--------------------------------------------------------------
The Roman Catholic Church of the Archdiocese of New Orleans
received approval from the U.S. Bankruptcy Court for the Eastern
District of Louisiana to employ TMC Realty, LLC as its real estate
consultant.
The firm's services include:
a. review of numerous properties owned by the Debtor;
b. creation of a "Property Book" to be organized numerically
with each separate property being separately identified;
c. general assessment of the properties included in the Property
Book, with approximate projected list pricing recommendations;
d. recommendations on strategic assemblages or property
bifurcations as impacted by highest and best use determinations;
e. advisory services on the sequencing of the planned
disposition of the property; and
f. provision of estimated real estate commission structures as
assigned by property.
The firm will be paid a flat fee of $47,500 as consulting fee for
the creation of the Property Book containing up to 80 separate
properties. Fifty percent of the consulting fee will be due and
payable upon execution of a consulting agreement, with the
remaining 50 percent due upon completion of the services.
In case the firm includes more than 80 separate properties in the
Property Book, the Debtor will increase the consulting fee by $750
for each additional property for up to 40 additional properties,
without the need for further court approval.
S. Parkerson McEnery, a partner at TMC Realty, disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
S. Parkerson McEnery
TMC Realty, LLC d/b/a
The McEnery Company
810 Union Street
New Orleans, LA
Tel: (504) 274-2701
Email: parke@mceneryco.com
About The Roman Catholic Church
of the Archdiocese of New Orleans
The Roman Catholic Church of the Archdiocese of New Orleans is a
non-profit religious corporation incorporated under the laws of the
State of Louisiana. For more information, visit
https://www.nolacatholic.org/
Created as a diocese in 1793, and established as an archdiocese in
1850, the Archdiocese of New Orleans has educated hundreds of
thousands in its schools, provided religious services to its
churches and provided charitable assistance to individuals in need,
including those affected by hurricanes, floods, natural disasters,
war, civil unrest, plagues, epidemics, and illness. Currently, the
archdiocese's geographic footprint occupies over 4,200 square Miles
in southeast Louisiana and includes eight civil parishes:
Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John
the Baptist, St. Tammany, and Washington.
The Roman Catholic Church for the Archdiocese of New Orleans sought
Chapter 11 protection (Bankr. E.D. La. Case No. 20-10846) on May 1,
2020. The archdiocese was estimated to have $100 million to $500
million in assets and liabilities as of the bankruptcy filing.
Judge Meredith S. Grabill oversees the case.
Jones Walker, LLP and Blank Rome, LLP serve as the archdiocese's
bankruptcy counsel and special counsel, respectively. Donlin,
Recano & Company, Inc., is the claims agent.
The U.S. Trustee for Region 5 appointed an official committee of
unsecured creditors on May 20, 2020. The committee is represented
by the law firms of Pachulski Stang Ziehl & Jones, LLP and Locke
Lord, LLP. Berkeley Research Group, LLC is the committee's
financial advisor.
ARCHDIOCESE OF NEW ORLEANS: Taps TMC to Sell New Orleans Properties
-------------------------------------------------------------------
The Roman Catholic Church of the Archdiocese of New Orleans
received interim approval from the U.S. Bankruptcy Court for the
Eastern District of Louisiana to employ TMC Realty, LLC as its real
estate broker.
The Debtor requires a real estate broker to market for sale its
real properties located at 1000 Howard Ave., 1025 Oretha Castle
Haley Blvd., and 1032 and 1042 South Rampart St. in New Orleans,
La.
TMC Realty will be paid a commission of 4 percent of the sales
price.
S. Parkerson McEnery, a partner at TMC Realty, disclosed in a court
filing that the firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
S. Parkerson McEnery
TMC Realty, LLC d/b/a
The McEnery Company
810 Union Street
New Orleans, LA
Tel: (504) 274-2701
Email: parke@mceneryco.com
About The Roman Catholic Church
of the Archdiocese of New Orleans
The Roman Catholic Church of the Archdiocese of New Orleans is a
non-profit religious corporation incorporated under the laws of the
State of Louisiana. For more information, visit
https://www.nolacatholic.org/
Created as a diocese in 1793, and established as an archdiocese in
1850, the Archdiocese of New Orleans has educated hundreds of
thousands in its schools, provided religious services to its
churches and provided charitable assistance to individuals in need,
including those affected by hurricanes, floods, natural disasters,
war, civil unrest, plagues, epidemics, and illness. Currently, the
archdiocese's geographic footprint occupies over 4,200 square Miles
in southeast Louisiana and includes eight civil parishes:
Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. John
the Baptist, St. Tammany, and Washington.
The Roman Catholic Church for the Archdiocese of New Orleans sought
Chapter 11 protection (Bankr. E.D. La. Case No. 20-10846) on May 1,
2020. The archdiocese was estimated to have $100 million to $500
million in assets and liabilities as of the bankruptcy filing.
Judge Meredith S. Grabill oversees the case.
Jones Walker, LLP and Blank Rome, LLP serve as the archdiocese's
bankruptcy counsel and special counsel, respectively. Donlin,
Recano & Company, Inc., is the claims agent.
The U.S. Trustee for Region 5 appointed an official committee of
unsecured creditors on May 20, 2020. The committee is represented
by the law firms of Pachulski Stang Ziehl & Jones, LLP and Locke
Lord, LLP. Berkeley Research Group, LLC is the committee's
financial advisor.
AUSTIN HOLDCO: Moody's Affirms B3 CFR on Debt-Funded Distribution
-----------------------------------------------------------------
Moody's Investors Service affirmed Austin Holdco Inc.'s (dba
"Virtusa", "the company") B3 corporate family rating and B3-PD
probability of default rating, pro forma for the proposed
incremental debt issuance and dividend distribution. Moody's also
affirmed the B2 instrument rating on the senior secured first lien
credit facilities, including an upsized $1.2 billion 7-year term
loan and a $125 million 5-year multi-currency revolver, as well as
the Caa2 instrument rating on the upsized $430 million 8-year
senior unsecured notes. The outlook remains stable.
Proceeds from the incremental debt facilities, including a $130
million add-on to the existing senior unsecured notes and a $590
million increase to the senior secured first lien term loan, along
with cash on hand, will be used to finance a $748 million (roughly)
dividend distribution, to repay an existing $13 million revolver
draw and to pay transaction fees. Material changes to the proposed
capital structure could result in updates to the ratings.
Affirmations:
Issuer: Austin HoldCo Inc.
Corporate Family Rating, Affirmed B3
Probability of Default Rating, Affirmed B3-PD
Senior Secured 1st Lien Term Loan, Affirmed B2 (LGD3)
Senior Secured 1st Lien Revolving Credit Facility, Affirmed B2
(LGD3)
Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5)
Outlook Actions:
Issuer: Austin HoldCo Inc.
Outlook, Remains Stable
RATING RATIONALE
Virtusa's corporate family rating is constrained by high financial
leverage and weak free-cash-flow-to-debt metrics, with Moody's
adjusted debt-to-EBITDA expected around 7.1x as of March 2022 (pro
forma for the proposed capital structure). The negative credit
impact from the incremental debt to fund a shareholder dividend is
partially offset by Virtusa's improved operating metrics over the
last twelve months, excluding one-time costs in connection with the
February 2021 leveraged buyout by private equity owner Baring
Private Equity Asia. The company has exceeded Moody's initial
growth expectations and materially improved its profitability, with
EBITDA margin expected in the 15% - 16% range moving forward.
Strong demand for information technology (IT) services supporting
cloud migrations and other digital transformation initiatives
(approximately 69% of revenue as of September 2021) will continue
to provide tailwinds to Virtusa's top line. Profitability has
benefitted from shifting resources to more efficient low-cost
offshore delivery centers, leveraging increased pricing power for
new projects focused on digital technologies, and other cost
reduction initiatives. Further margin improvements are expected to
be limited, however, by the prevalent skilled labor shortage in the
IT services industry, which will continue to pressure wages.
The company competes against larger global firms with deep pockets
and established niche players in a highly competitive IT services
industry. Virtusa's sector expertise and established client
relationships within the financial services, communications, media
and healthcare verticals support its competitive position. The
historical focus on these industries, however, has led to high
customer concentration, partially mitigated by the long-tenured
nature of the relationships and the ever-growing need for new IT
capabilities. While long-term demand for IT services will remain
high, the company is exposed to cyclical delays in IT spending
during periods of economic weakness. The COVID-19 downturn
pressured revenue in fiscal 2021 (ending March 2021), but the
pandemic has also accelerated digital transformation spending,
supporting long-term tailwinds.
The stable outlook reflects the expectation for double-digit
percentage revenue growth in fiscal 2022 (ending March 2022),
moderating to high single-digits in fiscal 2023. EBITDA margins are
expected to stabilize within the 15%-16% range (Moody's adjusted),
after a remarkable improvement over the last twelve months.
Virtusa's strong growth profile will support deleveraging, with
debt/EBITDA trending towards 6.5x over the next 12 months, in the
absence of leveraging transactions.
Liquidity is considered good given the expectation for a pro forma
cash balance around $45 million at close, free cash flow-to-debt in
the 4% - 5% range over the next 12 months, and access to an undrawn
$125 million revolver expiring in 2026. Moody's does not expect the
company will need to rely on revolver borrowings, but the facility
size is considered modest when compared to pro forma annual fixed
charges of roughly $90 million of cash interest expense,
approximately $31 million of capital expenditures, and $12 million
of 1% mandatory debt amortization payments on the first lien term
loan. The term loan has no financial maintenance covenants and the
revolver is subject to a 6.25x first lien net leverage springing
covenant when usage exceeds 35% ($43.75 million) that Moody's
expects would maintain a sufficient compliance cushion should it be
tested.
The B2 ratings assigned to Virtusa's $125 million first lien senior
secured revolving credit facility expiring February 2026 and pro
forma $1.2 billion first lien senior secured term loan due February
2028 are one notch above the company's B3 CFR, reflecting the
priority position in the capital structure and the benefit from the
loss absorption provided by the pro forma $430 million senior
unsecured notes due December 2028. The Caa2 rating on the notes
reflect their contractual subordination to the first lien senior
secured credit facility.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if earnings grow consistently, with
stable EBITDA margins and adjusted debt-to-EBITDA sustained below
6x, while maintaining adequate liquidity. Free cash flow-to-debt of
5% or above would also be required to support an upgrade.
The ratings could be downgraded should liquidity weaken for any
reason, including negative free cash flow expectations or material
reliance on revolver borrowings. Evidence of a weakened competitive
position, such as deteriorating revenue, shrinking margins or the
loss of a major customer would also pressure the rating. The
expectation for adjusted debt-to-EBITDA above 8x on a sustained
basis could also lead to a downgrade.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
Headquartered in Southborough, Massachusetts, Virtusa, is a global
digital engineering and information technology outsourcing services
provider with operations in 19 countries. For the twelve months
ended September 30, 2021, the company reported $1.4 billion in
revenue. The company is privately held by majority owner Baring
Private Equity Asia (BPEA).
AUSTIN HOLDCO: S&P Affirms 'B' ICR, Outlook Stable
--------------------------------------------------
S&P Global Ratings affirmed its 'B' issuer credit rating on Austin
Holdco Inc. (doing business as Virtusa lowered its issue-level
rating on its existing first-lien debt to 'B', and revised its
recovery rating on the debt to '3' due to the materially higher
proportion of first-lien debt in its capital structure. S&P also
assigned its 'B' issue-level rating to the company's proposed
incremental term loan B. The recovery rating is '3'.
S&P's 'CCC+' issue-level rating and '6' recovery rating on the
company's unsecured notes remain unchanged.
The stable outlook reflects S&P's expectation that Virtusa will
reduce its leverage on continued solid revenue and earnings growth
over the next year.
Virtusa, a global provider of digital engineering and information
technology (IT) outsourcing services, plans to raise debt to fund a
shareholder return. This will cause its pro forma S&P Global
Ratings-adjusted leverage to rise to 6.8x for the 12 months ended
Sept. 30, 2021, from 3.9x previously.
S&P said, "The debt-financed dividend will cause the company's
leverage to rise to approximately the same level it maintained
during its leveraged buyout (LBO) in December 2020, though we
expect good business momentum will support its deleveraging.
Virtusa's S&P Global Ratings-adjusted leverage will rise to 6.8x as
of the 12 months ended Sept. 30, 2021, pro forma for its
debt-financed dividend, which is similar to its leverage levels
during its LBO by Baring Private Equity Asia in December 2020.
However, we expect the company's business momentum to support
deleveraging over the next year. Virtusa is on pace to increase its
revenue by the high-teen to low-20% range in fiscal year 2022
(ending March 31), primarily due to its digital transformation
projects with multiple customers across all sectors. We expect the
tailwinds from these digital transformations to continue over the
next few years and note that the company is in a favorable position
to work on such customer engagements given its history in the
space. Virtusa's revenue from its existing customers accounts for
the vast majority of its total revenue, which increases our
confidence that it can successfully win project work from its
existing base. The company's proportion of digital projects has
risen to 69% from 63% during its LBO, which has helped it expand
its margins. Specifically, Virtusa' S&P Global Ratings-adjusted
EBITDA margins were 17.3% for the second quarter of fiscal year
2022, which represents a sequential improvement of 50 basis points
relative to its performance in the previous quarter. Since 2020,
the company has improved its EBITDA margins from the low-teen
percent range supported by its cost-savings initiatives, improving
offshore delivery mix, and increased high-margin digital project
work.
"We expect Virtusa's free cash flow to debt metrics to weaken
because of the increase in its debt, though we expect its metrics
to improve steadily into its next fiscal year as it continues to
expand. For fiscal year 2022, we forecast the company will generate
about $50 million (4% of debt) of free cash flow before improving
to the $90 million-$100 million range (representing a mid-to-high
single digit percent of its debt) in fiscal year 2023.
"The stable outlook on Virtusa reflects our expectation that it
will increase its organic revenue by the high-teen percent range in
fiscal year 2022 (ending March 31) and by the high-single digit
percent range in fiscal 2023 as it benefits from its customers'
rising demand for digital transformation initiatives. We also
expect the company to maintain EBITDA margins near current levels
(in the mid- to high-teen percent range) supported by its cost
discipline, which will be offset by its reinvestments in its
business.
"We could lower our rating on Virtusa if its sales decline due to a
drop in overall IT expenditure or execution missteps that lead to
material contract losses or EBITDA margin compression, causing it
to sustain S&P Global Ratings-adjusted leverage of more than 7x or
free cash flow to debt below the mid-single digit percent area.
Additionally, we could lower our rating if the company issues more
debt to fund further shareholder returns or mergers and
acquisitions such that it sustains leverage exceeding the 7x area.
"We could raise our rating on Virtusa if it demonstrates a
commitment to sustaining S&P Global Ratings-adjusted leverage of
less than 5x after incorporating its potential acquisitions and
shareholder returns. Under such a scenario, we would also expect
the company to increase its revenue by at least the mid- to
high-single-digit percent range while maintaining stable EBITDA
margins."
ESG credit indicators: E-2 S-2 G-3
S&P said, "Environmental and social factors are neutral
considerations in our credit rating analysis of Virtusa. Governance
factors are a moderately negative consideration in our credit
rating analysis of the company, as is the case for most rated
entities owned by private-equity sponsors. This reflects our belief
that Austin Holdco Inc.'s highly leveraged financial risk profile
points to corporate decision-making that prioritizes the interests
of its controlling owners. This also reflects private-equity
sponsors' generally finite holding periods and focus on maximizing
shareholder returns."
BHCOSMETICS HOLDINGS: Seeks to Hire Riveron Management, Appoint CRO
-------------------------------------------------------------------
BHCosmetics Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ
Riveron Management Services, LLC and appoint Spencer Ware as their
chief restructuring officer in connection with their Chapter 11
cases.
Riveron Management's services include:
a. overseeing cash and liquidity management;
b. preparing 13-week cash flows on a weekly basis including
delivery to, and communication with the Debtors' secured lender;
c. providing the secured lender with weekly cash forecast
updates with variance analysis for previous week;
d. supporting the Debtors' disbursements process;
e. developing a strategy for and providing assistance in
negotiations with major vendors;
f. working with the Debtors to develop various financial
projections;
g. developing alternative strategies to assist the Debtors in
negotiations with their stakeholders;
h. reviewing the Debtors' liquidity needs;
i. evaluating the short-term cash flows and financing
requirements of the Debtors as related to Chapter 11 proceedings;
j. assisting management, where appropriate, in communications
and negotiations with other constituents critical to the successful
execution of the Debtors' Chapter 11 proceedings;
k. working with the Debtors, as appropriate, and their retained
investment banking professionals, to assess any offer made pursuant
to the sale procedures;
l. leading the Debtors in these Chapter 11 cases, including
preparation and oversight of the Debtors' financial statements and
schedules, monthly operating reports, and various other pleadings;
m. assisting the Debtors in obtaining court approval for the use
of cash collateral;
n. assisting the Debtors in their sale effort, including the
preparation of a liquidation analysis, historical financial data,
and projections;
o. assisting the Debtors in communications with key
constituents, as requested, including lenders, equity holders,
customers, and other stakeholders;
p. directing access to the Debtors' employees;
q. assisting management, where appropriate, in communications
and negotiations with stakeholders critical to the successful
execution of the Debtors' near-term business plan; and
r. providing other restructuring advisory services.
The hourly rates charged by the firm for its services are as
follows:
Spencer Ware, CRO $775 per hour
Senior Managing Directors $775 to $1,420 per hour
Managing Directors $660 to $1,095 per hour
Directors $510 to $820 per hour
Managers $315 to $650 per hour
Associates $150 to $490 per hour
The firm will also seek reimbursement for out-of-pocket expenses
incurred.
Riveron Management received a pre-bankruptcy retainer of $100,000.
During the 90 days immediately preceding the petition date, the
firm received payments for fees and work-related expenses,
including additional retainer amounts, totaling $1,140,308.87. As
of the petition date, the firm holds $99,870.91 of the retainer.
Mr. Ware, a partner at Riveron, disclosed in a court filing that
his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Spencer Ware
Riveron Management Services, LLC
1000 Wilson Boulevard, Suite 2200
Arlington, VA 22209
Tel: (201) 232-3970
Email: spencer.ware@riveron.com
About BHCosmetics Holdings
Originally launched in 2009, BH Cosmetics is a beauty brand
specializing in high quality, clean, vegan, and cruelty-free
cosmetics and other beauty products. BH Cosmetics sells its
products on its Shopify e-commerce platform directly to consumers
and wholesale to various global retailers.
On Jan. 14, 2022, BHCosmetics Holdings, LLC and three of its
affiliates filed petitions seeking relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10050), to pursue
a sale of the assets.
BHCosmetics Holdings estimated assets and debt of $50 million to
$100 million as of the bankruptcy filing.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as
bankruptcy counsel, Hilco IP Services, LLC as consultant, and
Riveron Management Services, LLC as restructuring advisor. Spencer
M. Ware, a partner at Riveron, serves as the Debtors' chief
restructuring officer.
The Debtors also tapped the services of SB360 Capital Partners,
LLC, which acts as sale and liquidation agents; and Traverse, LLC,
which provides the controller and other accounting personnel. Epiq
Corporate Restructuring, LLC is the claims agent and administrative
advisor.
BHCOSMETICS HOLDINGS: Taps Epiq as Administrative Advisor
---------------------------------------------------------
BHCosmetics Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Epiq
Corporate Restructuring, LLC as administrative advisor.
The firm's services include:
a. assisting in the solicitation, balloting and tabulation of
votes, preparing reports in support of confirmation of a Chapter 11
plan, and processing requests for documents;
b. preparing an official ballot certification and, if necessary,
testifying in support of the ballot tabulation results;
c. assisting in the preparation of the Debtors' schedules of
assets and liabilities and statements of financial affairs, and
gathering data in conjunction therewith;
d. providing a confidential data room, if requested; and
e. managing and coordinating any distributions pursuant to a
Chapter 11 plan.
The firm's hourly rates are as follows:
Clerical/Administrative Support $20 to $45 per hour
IT/Programming $62 to $68 per hour
Case Managers $96 to $132 per hour
Consultants/Directors/Vice President $128 to $152 per hour
Solicitation Consultant $192 per hour
Executive VP, Solicitation $182 per hour
Executives No Charge
Epiq will also seek reimbursement for out-of-pocket expenses
incurred. The firm's retainer fee is $10,000.
Brian Hunt, a partner at Epiq, disclosed in a court filing that his
firm is a "disinterested person" as the term is defined in Section
101(14) of the Bankruptcy Code.
The firm can be reached at:
Brian Hunt
Epiq Corporate Restructuring, LLC
777 Third Avenue
11th and 12th Floors
New York, NY 10017
Phone: +1 212 225 9200
About BHCosmetics Holdings
Originally launched in 2009, BH Cosmetics is a beauty brand
specializing in high quality, clean, vegan, and cruelty-free
cosmetics and other beauty products. BH Cosmetics sells its
products on its Shopify e-commerce platform directly to consumers
and wholesale to various global retailers.
On Jan. 14, 2022, BHCosmetics Holdings, LLC and three of its
affiliates filed petitions seeking relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10050), to pursue
a sale of the assets.
BHCosmetics Holdings estimated assets and debt of $50 million to
$100 million as of the bankruptcy filing.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as
bankruptcy counsel, Hilco IP Services, LLC as consultant, and
Riveron Management Services, LLC as restructuring advisor. Spencer
M. Ware, a partner at Riveron, serves as the Debtors' chief
restructuring officer.
The Debtors also tapped the services of SB360 Capital Partners,
LLC, which acts as sale and liquidation agents; and Traverse, LLC,
which provides the controller and other accounting personnel. Epiq
Corporate Restructuring, LLC is the claims agent and administrative
advisor.
BHCOSMETICS HOLDINGS: Taps Hilco as IP Consultant
-------------------------------------------------
BHCosmetics Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Hilco
IP Services, LLC as intellectual property disposition consultant.
The firm's services include:
a. collecting and securing all of the available information and
other data concerning the Debtors' intellectual property and
related tangible assets;
b. preparing marketing materials designed to inform potential
purchasers of the availability of assets for sale, assignment,
license, or other disposition;
c. developing and executing a sales and marketing program
designed to elicit proposals to acquire the assets from qualified
acquirers with a view toward completing one or more sales,
assignments, licenses or other dispositions of the assets; and
d. assisting the Debtors in connection with the transfer of the
assets to the acquirers who offer the highest or otherwise best
consideration for the assets.
The firm will be paid a commission equal to (i) 10 percent of
aggregate gross proceeds up to and including $5 million; plus (ii)
15 percent of the amount of the aggregate gross proceeds greater
than $5 million, generated from the sale, assignment, license, or
other disposition of the assets.
The firm will also receive reimbursement for out-of-pocket expenses
incurred.
David Peress, a partner at Hilco, disclosed in a court filing that
his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
David Peress
Hilco IP Services, LLC
d/b/a Hilco Streambank
1500 Broadway, Suite 810
New York, NY 10036
Tel: (781) 471-1239
Email: dperess@hilcoglobal.com
About BHCosmetics Holdings
Originally launched in 2009, BH Cosmetics is a beauty brand
specializing in high quality, clean, vegan, and cruelty-free
cosmetics and other beauty products. BH Cosmetics sells its
products on its Shopify e-commerce platform directly to consumers
and wholesale to various global retailers.
On Jan. 14, 2022, BHCosmetics Holdings, LLC and three of its
affiliates filed petitions seeking relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10050), to pursue
a sale of the assets.
BHCosmetics Holdings estimated assets and debt of $50 million to
$100 million as of the bankruptcy filing.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as
bankruptcy counsel, Hilco IP Services, LLC as consultant, and
Riveron Management Services, LLC as restructuring advisor. Spencer
M. Ware, a partner at Riveron, serves as the Debtors' chief
restructuring officer.
The Debtors also tapped the services of SB360 Capital Partners,
LLC, which acts as sale and liquidation agents; and Traverse, LLC,
which provides the controller and other accounting personnel. Epiq
Corporate Restructuring, LLC is the claims agent and administrative
advisor.
BHCOSMETICS HOLDINGS: Taps Robert Tormey of Traverse as Controller
------------------------------------------------------------------
BHCosmetics Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Robert
Tormey, a partner at Traverse, LLC.
Mr. Tormey will provide financial accounting services in his
capacity as controller under the direction of the Debtors'
management personnel. He and his firm will also provide support to
the Debtors' back office processes in connection with financial and
managerial reporting.
The rates charged by Traverse for the services of the controller
and other accounting personnel range from $275 to $425 per hour.
The firm will also seek reimbursement for out-of-pocket expenses
incurred.
Traverse received a retainer in the amount of $38,500.
In court papers, Mr. Tormey disclosed that his firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Robert Tormey
Traverse, LLC
1025 N. Kings Rd.
Los Angeles, CA, 90069
Tel: (310) 809-5064
Fax: (302) 652-4400
Email: albertaltro@traversellc.com
About BHCosmetics Holdings
Originally launched in 2009, BH Cosmetics is a beauty brand
specializing in high quality, clean, vegan, and cruelty-free
cosmetics and other beauty products. BH Cosmetics sells its
products on its Shopify e-commerce platform directly to consumers
and wholesale to various global retailers.
On Jan. 14, 2022, BHCosmetics Holdings, LLC and three of its
affiliates filed petitions seeking relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10050), to pursue
a sale of the assets.
BHCosmetics Holdings estimated assets and debt of $50 million to
$100 million as of the bankruptcy filing.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as
bankruptcy counsel, Hilco IP Services, LLC as consultant, and
Riveron Management Services, LLC as restructuring advisor. Spencer
M. Ware, a partner at Riveron, serves as the Debtors' chief
restructuring officer.
The Debtors also tapped the services of SB360 Capital Partners,
LLC, which acts as sale and liquidation agents; and Traverse, LLC,
which provides the controller and other accounting personnel. Epiq
Corporate Restructuring, LLC is the claims agent and administrative
advisor.
BHCOSMETICS HOLDINGS: Taps Young Conaway Stargatt as Legal Counsel
------------------------------------------------------------------
BHCosmetics Holdings, LLC and its affiliates seek approval from the
U.S. Bankruptcy Court for the District of Delaware to employ Young
Conaway Stargatt & Taylor, LLP to serve as legal counsel in their
Chapter 11 cases.
The firm's services include:
a. providing legal advice with respect to the Debtors' powers
and duties in the management of their properties and the sale of
their assets;
b. preparing legal papers and appearing in court; and
d. performing all other legal services for the Debtors that may
be necessary and proper in these proceedings.
The hourly rates charged by the firm for its services are as
follows:
M. Blake Cleary $1,070 per hour
Allison S. Mielke $600 per hour
S. Alexander Faris $535 per hour
Law clerks $450 per hour
Paralegals $335 per hour
The firm will also seek reimbursement for out-of-pocket expenses
incurred.
As of the petition date, Young Conaway held $135,301.98 as a
retainer.
M. Blake Cleary, Esq., a partner at Young Conaway, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
In accordance with Appendix B-Guidelines for reviewing fee
applications filed by attorneys in larger Chapter 11 cases, Mr.
Cleary also disclosed the following:
i. Young Conaway has not agreed to a variation of its standard
or customary billing arrangements for this engagement;
ii. None of the firm's professionals included in this
engagement have varied their rate based on the geographic location
of the Chapter 11 cases;
iii. Young Conaway was retained by the Debtors pursuant to an
engagement agreement dated Oct. 28, 2021. The billing rates and
material terms of the pre-bankruptcy engagement are the same as the
rates and terms currently proposed; and
iv. The Debtors will consult with Young Conaway for purposes of
approving a prospective budget and staffing plan for the firm's
engagement for the post-petition period prior to a hearing on the
firm's retention. In accordance with the U.S. Trustee Guidelines,
the budget may be amended as necessary to reflect changed or
unanticipated developments.
Young Conaway can be reached at:
M. Blake Cleary, Esq.
Allison S. Mielke, Esq.
S. Alexander Faris, Esq.
Young Conaway Stargatt & Taylor, LLP
1000 North King Street
Wilmington, Delaware 19801
Tel: (302) 571-6600
Fax: (302) 571-1253
Email: mbcleary@ycst.com
AMielke@ycst.com
AFaris@ycst.com
About BHCosmetics Holdings
Originally launched in 2009, BH Cosmetics is a beauty brand
specializing in high quality, clean, vegan, and cruelty-free
cosmetics and other beauty products. BH Cosmetics sells its
products on its Shopify e-commerce platform directly to consumers
and wholesale to various global retailers.
On Jan. 14, 2022, BHCosmetics Holdings, LLC and three of its
affiliates filed petitions seeking relief under Chapter 11 of the
Bankruptcy Code (Bankr. D. Del. Lead Case No. 22-10050), to pursue
a sale of the assets.
BHCosmetics Holdings estimated assets and debt of $50 million to
$100 million as of the bankruptcy filing.
The Debtors tapped Young Conaway Stargatt & Taylor, LLP as
bankruptcy counsel, Hilco IP Services, LLC as consultant, and
Riveron Management Services, LLC as restructuring advisor. Spencer
M. Ware, a partner at Riveron, serves as the Debtors' chief
restructuring officer.
The Debtors also tapped the services of SB360 Capital Partners,
LLC, which acts as sale and liquidation agents; and Traverse, LLC,
which provides the controller and other accounting personnel. Epiq
Corporate Restructuring, LLC is the claims agent and administrative
advisor.
BLUE JAY COMMUNICATIONS: Taps Newpoint as Financial Advisor
-----------------------------------------------------------
Blue Jay Communications, Inc. seeks approval from the U.S.
Bankruptcy Court for the Northern District of Ohio to employ
Newpoint Advisors Corporation as its financial advisor.
The firm's services include assisting the Debtor in preparing
financial projections for its Chapter 11 plan and in securing
investment or financing.
The hourly rates charged by the firm for its services are as
follows:
Matthew Brash $295 per hour
Paul Schapira $290 per hour
Carin Sorvik $275 per hour
Others $125 to $275 per hour
For any funding that the Debtor may obtain, the firm will be paid a
transaction fee of the higher of $50,000 or 2 percent the amount
funded, paid upon the signing of definitive documentation for any
debt or equity that is new, replacement or incremental.
The firm will also receive reimbursement for out-of-pocket expenses
incurred.
Matthew Brash, a senior managing director at Newpoint, disclosed in
a court filing that his firm is a "disinterested person" as the
term is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Matthew Brash
Newpoint Advisors Corporation
1320 Tower Road
Schaumburg, IL 60173
Tel: (800) 306-1250
Email: mbrash@newpointadvisors.us
About Blue Jay Communications
Blue Jay Communications, Inc. installs telecommunication and
network infrastructure throughout the Midwest with a particular
concentration in northern Ohio, southern Michigan, and Illinois. It
currently has offices in Cleveland, Marion, Toledo, and Youngstown,
Ohio, and St. Charles, Ill. The company serves major
telecommunications companies as its clients.
Blue Jay Communications filed a petition for Chapter 11 protection
(Bankr. N.D. Ohio Case No. 21-31915) on Nov. 9, 2021, disclosing
$5,145,458 in assets and $7,618,110 in liabilities. John F.
Houlihan, president, signed the petition.
Judge Mary Ann Whipple oversees the case.
The Debtor tapped Frederic P. Schwieg, Esq. at Frederic P Schwieg
Attorney at Law as bankruptcy counsel and Gino Pulito, Esq., at
Pulito and Associates, LLC as special counsel. Pease & Associates,
LLC and Newpoint Advisors Corporation serve as the Debtor's
accountant and financial advisor, respectively.
BRAZOS ELECTRIC: Summary Judgment Motion Denied in Fight w/ ERCOT
-----------------------------------------------------------------
Vince Sullivan of Law360 reports that a Texas bankruptcy judge
denied motions for summary judgment Monday from bankrupt power
provider Brazos Electric Power Cooperative Inc. and the Electricity
Reliability Council of Texas in their $1.9 billion dispute over
energy charges from a 2021 winter storm, saying there are still
fact questions at issue.
During a hearing in Houston, U.S. Bankruptcy Judge David R. Jones
said neither Brazos nor ERCOT had met their burden to show they
should get early wins in an eight-count adversary complaint brought
by the debtor and arising from a substantial spike in electricity
prices ERCOR charged at the peak of a crippling storm.
Brazos Electric Power Cooperative
Brazos Electric Power Cooperative Inc. is a 3,994-megawatt
transmission and generation cooperative which members' service
territory covers 68 counties from the Texas Panhandle to Houston.
It was organized in 1941 and the first cooperative formed in the
Lone Star state with the primary intent of generating and supplying
electrical power. At present, Brazos Electric is the largest
generation and transmission cooperative in the state and is the
wholesale power supplier for its 16 member-owner distribution
cooperatives and one municipal system.
Brazos Electric filed a voluntary petition for relief under Chapter
11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 21-30725)
on March 1, 2021. At the time of the filing, the Debtor disclosed
assets of between $1 billion and $10 billion and liabilities of the
same range.
Judge David R. Jones oversees the case.
The Debtor tapped Norton Rose Fulbright US, LLP as bankruptcy
counsel, Foley & Lardner LLP and Eversheds Sutherland US LLP as
special counsel, Collet & Associates LLC as investment banker, and
Berkeley Research Group, LLC as financial advisor. Ted B. Lyon &
Associates, The Gallagher Law Firm, West & Associates LLP, Butch
Boyd Law Firm and Boyd Smith Law Firm, PLLC serve as special
litigation counsel. Stretto is the claims and noticing agent.
The U.S. Trustee for Region 7 appointed an official committee of
unsecured creditors in the Debtor's case on March 15, 2021. The
committee is represented by the law firms of Porter Hedges, LLP and
Kramer, Levin, Naftalis & Frankel, LLP. FTI Consulting, Inc. and
Lazard Freres & Co. LLC serve as the committee's financial advisor
and investment banker, respectively.
BVM CORAL: Seeks Cash Collateral Access as Payroll Due Feb. 4
-------------------------------------------------------------
BVM Coral Landing, LLC asks the U.S. Bankruptcy Court for the
Middle District of Florida, Tampa Division, for authority to use
cash collateral on or before February 2, 2022.
The Debtor requests a hearing prior to February 2, since it is
required to pay certain vendors and pay payroll on February 4. No
decision has been posted on the case docket regarding the request
for cash collateral access or the expedited hearing.
The Debtor seeks the Court's authority to utilize its cash
collateral in the regular course of business and in order to pay
its expenses so that it may continue to operate as a going
concern.
The Debtor is indebted to CPU Lending, LLC and US Bank National
Association, in their separate capacities as Bond Trustee and
Master Trustee in the amount of approximately $23,247,892 in
connection with a note, mortgage and security agreement against the
Debtor's real property known as Coral Landing located at 2820 Old
Moultrie Road in St. Augustine. Florida 32086. The mortgage secures
indebtedness as evidenced by obligations issued under the Master
Trust Indenture and Bond Trust Indenture dated as of July 1, 2014.
The indebtedness associated with this mortgage claim is cross
collateralized with the real property owned by the Debtor's
affiliate, BVM The Bridges, LLC, located at 11202 Dewhurst Drive in
Riverview, Florida. It appears that CPIF and US Bank have a lien on
all of the Debtor's personal property including future receivables
by virtue of a UCC-l financing statement recorded on October 6,
2014 in the Florida Secured Transactions Registry.
The Debtor owes St. Johns County Tax collector $34,819 in
connection with real estate taxes for tax year 2021 encumbering the
Debtor's real property located at 2820 Old Moultrie Road in St.
Augustine, Florida. The Debtor also owed the Tax Collector in
connection with tangible personal property taxes for tax year 2021
in the amount of $1,371.
The Debtor owed the Internal Revenue Service which is owed
approximately $805,469 in connection with tax liens recorded on
August 26, 2019 for unpaid 940/941 taxes between the years 2014 and
2017. The tax liens also include an additional $39,791 in
connection with unpaid 6721 tax penalty for tax year 2015 for an
untimely or incorrect information return.
The Debtor estimates that the value of CPIF and US Bank's
collateral consisting of real property, cash, accounts receivable
and personal property is approximately $3,461,515.
CPIF and US Bank are undersecured. The IRS appears to be wholly
unsecured.
The Debtor may be seeking to sell Coral Landing and its affiliate,
The Bridges, pursuant to 11 U.S.C. Sec. 363 and or a confirmed plan
or may proceed with reorganization of the Debtor's finances.
As adequate protection, the Debtor will provide the Secured
Creditors with:
a. A post-petition replacement lien equal in validity and
dignity as it existed pre-petition.
b. Proof of insurance upon request of same.
c. Provide financial information within 15 days after the
close of the calendar month. The financial information required to
be produced by The Bridges includes the following: income statement
and balance sheet which statements will be prepared on a cash
basis.
d. A report showing gross amounts billed.
e. A report showing amounts collected.
f. Invoices posted for each accounting period.
g. Invoices paid for each accounting period.
h. Bank statements for each monthly accounting period.
i. Monthly census summaries.
j. Rent roll.
In addition, the Debtor would propose that all net profits, if any,
after payment of operating expenses and compliance with the Agency
for Health Care Administration's license and regulations, would be
remitted to CPIF.
A copy of the motion and the Debtor's monthly budget is available
at https://bit.ly/3IL77WI from PacerMonitor.com.
The Debtor projects $121,964 in total income and $111,878 in total
liabilities.
About BVM Coral Landing, LLC
BVM Coral Landing, LLC operates a 58-bed/49-unit assisted living
and memory care facility known as Coral Landing located at 2820 Old
Moultrie Road in St. Augustine, Florida since 2014.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00346) on January 28,
2022. In the petition signed by John Bartle, president, the Debtor
disclosed up to $10 million in assets and up to $50 million in
liabilities.
The Honorable Michael G. Williamson has been assigned to the case.
Alberto F. Gomez, Jr., Esq. at Johnson, Pope, Bokor, Ruppel, and
Burns, LLP is the Debtor's counsel.
* * *
Judge Williamson has entered an order consolidating Coral Landing's
case with that of BVM The Bridges, LLC, (Bankr. M.D. Fla. Case No.
22-00345) with The Bridges' as lead case.
BW NHHC HOLDCO: Moody's Cuts CFR to Caa3, First Lien Debt to Caa2
-----------------------------------------------------------------
Moody's Investors Service downgraded the ratings of BW NHHC Holdco,
Inc. (dba Elara Caring) including the Corporate Family Rating to
Caa3 from Caa2 and the Probability of Default Rating to Caa3-PD
from Caa2-PD. Concurrently, Moody's also downgraded the company's
first lien senior secured bank credit facility to Caa2 from Caa1
and affirmed the Ca rating on the second lien senior secured term
loan. The outlook is stable.
The downgrade of the ratings reflects Moody's view that Elara
Caring's capital structure is becoming increasingly unsustainable
and the probability of a default, by way of a distressed exchange
remains high. Moody's forecasts liquidity to further weaken over
the next year as Elara is required to repay up to $23 million in
Medicare advance payments and employer tax deferrals and interest
expense will no longer PIK on the $225 million 1.5 Lien Term Loan
(in 2019, Elara Caring exchanged most of its second lien term loan
for a 1.5 junior lien PIK loan maturing in November 2025).
Additionally, Elara Caring faces near term headwinds with labor
pressures, rising interest costs, and ongoing integration
challenges. Elara continues to face challenges controlling costs
and improving referrals nearly four years after the merger of
Jordan Health and Great Lakes.
The stable outlook reflects Moody's view that the default
probability is high and appropriately captured at the current
rating level.
Downgrades:
Issuer: BW NHHC Holdco, Inc.
Corporate Family Rating, Downgraded to Caa3 from Caa2
Probability of Default Rating, Downgraded to Caa3-PD from Caa2-PD
Gtd Senior Secured 1st Lien Term Loan, Downgraded to Caa2 (LGD3)
from Caa1 (LGD3)
Gtd Senior Secured 1st Lien Revolving Credit Facility, Downgraded
to Caa2 (LGD3) from Caa1 (LGD3)
Affirmations:
Issuer: BW NHHC Holdco, Inc.
Gtd Senior Secured 2nd lien Term Loan, Affirmed Ca (LGD6)
Outlook Actions:
Issuer: BW NHHC Holdco, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
BW NHHC Holdco, Inc.'s (Elara Caring) Caa3 Corporate Family Rating
is constrained by the company's weak liquidity position and very
high financial leverage. Adjusted debt/EBITDA for the last twelve
months ending September 30, 2021 has increased to 15 times partly
due to a slower recovery in the top-line from sales force issues
failing to improve referrals, as well as intensifying labor
pressures. Further, the increasing debt balances due to the PIK
interest will make it increasingly challenging to reduce leverage
over time. The rating is also constrained by the company's high
exposure to Medicare and Medicaid and longer-term risks associated
with changes to the way that the government pays for post-acute and
in-home services.
The rating is supported by a good long-term demand outlook for the
company's services for at-home care. Government and private
insurance companies are increasingly looking for ways to manage
patients in their home, which is the lowest cost care setting.
Further, the industry benefits from very low capital requirements.
The stable outlook reflects Moody's view that the default
probability is high and appropriately captured at the current
rating level.
Moody's views Elara Caring's liquidity as weak over the next 12 to
18 months. The company's cash balance was $56 million as of
September 30, 2021. However, Moody's expects Elara's cash balance
to decline through 2022, as government funds are repaid and
interest costs on the company's debt rise. Further, the company's
$75 million revolving credit facility, which expires in May 2023,
is restricted to a 35% maximum draw. There is currently nothing
outstanding on the revolver as of September 30, 2021. As of
September 30, 2021, the company's first lien net leverage covenant
was 11.2 times, above the 8 times maximum allowed for the quarter
if the revolver had been drawn. The maximum first lien net leverage
will step down to 7 times in Q1 2022 and 6.5 times in Q2 2022 and
thereafter, which will further restrict liquidity in 2022, limiting
capacity available on the revolving credit facility.
Social and governance considerations are material to the rating.
Social risks are primarily associated with the company's exposure
to reimbursement changes. Home health is subject to rising social
and regulatory risk as government and other payors seek ways to
reduce overall healthcare costs in the US. The company is also
exposed to wage inflation, particularly as it must maintain a large
workforce of both skilled and unskilled labor. With respect to
governance risks, Elara Caring exhibits an aggressive financial
policy, with very high financial leverage and private equity
sponsor ownership. The company has had a poor track record of
integration, execution and cash flow management since the merger.
The Company has changed its management team to address some of
these challenges but has not seen much progress in part due to
challenges outside of their control related to the pandemic and
labor pressures.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Ratings could be upgraded if Elara Caring substantially improves
operating performance and materially reduces leverage to a more
sustainable level. The company would need to resolve both its
integration and workforce issues and see top line growth return. A
material improvement in liquidity could also lead to an upgrade.
The ratings could be downgraded if Elara Caring experiences further
operating or cash flow disruption. Material changes to Medicare
and/or Medicaid reimbursement could result in a downgrade. Further
rising likelihood of debt impairment would also lead to a rating
downgrade.
Elara Caring provides skilled home health, personal care and
hospice services, primarily to Medicare and Medicaid patients. The
company has revenue of about $950 million as of September 30, 2021.
The company is privately owned by Blue Wolf Capital Partners LLC
and Kelso & Company.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CALAIS REGIONAL HOSPITAL: Ex-Nurse's 2nd Suit Dismissed
-------------------------------------------------------
Judge Lance E. Walker of the United States District Court for the
District of Maine granted the motion to dismiss the case captioned
DONNA WEBB, Plaintiff, v. CALAIS REGIONAL HOSPITAL, Defendant, No.
1:21-cv-00261-LEW (D. Maine) after determining that the final
judgment in Plaintiff's earlier lawsuit against Calais Regional
Hospital precludes her from bringing this case.
Plaintiff formerly worked as a nurse in the Hospital's obstetrics
unit. In 2014, Plaintiff participated in the delivery of a
stillborn baby at the hospital. The Hospital commenced an
investigation into the events that caused the stillbirth. In the
course of the investigation, the Hospital's legal counsel and risk
management team met with Plaintiff, who informed them of several
concerns that she had with the Hospital's practices which she
believed may have contributed to the stillbirth, as well as other
more general concerns she had regarding hospital practices. Shortly
thereafter, in October 2014, the Hospital placed Plaintiff on
indefinite administrative leave pending the result of its
investigation. In December 2014, the Hospital decided to terminate
Plaintiff's employment, but did not inform Plaintiff of this
decision despite repeated inquiries from Plaintiff and her union
representatives into Plaintiff's employment status. In July 2017,
the Hospital finally informed Plaintiff that she would be
terminated if she did not resign, whereupon Plaintiff elected to
resign.
Plaintiff then filed suit in Maine state court, alleging the
Hospital retaliated against her, in violation of the Maine Human
Rights Act, for engaging in activity protected under the Maine
Whistleblower Protection Act, 6 M.R.S. Section 837 ("MWPA"). The
Hospital removed the case to this court. Judge Walker granted
summary judgment in the Hospital's favor, finding that the Labor
Management Relations Act, 29 U.S.C. Section 185(a) ("LMRA"),
preempted the MWPA because Plaintiff was a union member whose claim
arose out of her employment under a collective bargaining
agreement.
On January 22, 2020, Plaintiff again sued in state court, this time
to recover damages for the Hospital's alleged multi-year
concealment of its decision to terminate her. Plaintiff alleged
that the Hospital's failure to timely inform her of its decision
was fraudulent and that the uncertainty over her employment status
caused her emotional distress. Plaintiff claimed that she had been
unaware of the alleged concealment until the Hospital filed its
motion for summary judgment in the prior case -- Webb I -- which
motion disclosed the timeline of the Hospital's decision to fire
Plaintiff.
Because the Hospital had recently commenced a bankruptcy
proceeding, Plaintiff's action was automatically stayed. On
Plaintiff's request, and with the Hospital's consent, the
bankruptcy court overseeing the Hospital's bankruptcy granted
permission for Plaintiff to pursue her claims against the Hospital
notwithstanding the stay. Subsequently, the bankruptcy court issued
an order which, inter alia, purported to enjoin "all persons and
entities who have held or currently hold claims against" the
Hospital from "commencing or continuing" any action against the
Hospital or enforcing any debt against the Hospital.
The present case continued to progress in state court, albeit
slowly. Plaintiff amended the complaint twice to ensure compliance
with the terms of the bankruptcy court's relief from the automatic
stay. After Plaintiff filed the second amended complaint, the
Hospital removed the case to this court, which has jurisdiction
insofar as the present case relates to the Hospital's bankruptcy
proceeding.
Judge Walker finds that Plaintiff seeks to relitigate the same
dispute that lead to her claims in Webb I: her termination by the
Hospital. Plaintiff now comes before the court with additional
facts and new legal theories as to why she may recover under law,
but the factual nucleus of her case remains the same. For claim
preclusion purposes, the instant case is functionally identical to
Webb I, and Plaintiff's claims must be dismissed, Judge Walker
rules.
Plaintiff argues that because the present case hinges on
allegations not raised in Webb I -- namely, that the Hospital
wrongfully concealed from Plaintiff its decision to terminate her
employment -- claim preclusion does not apply. The determinative
question, though, is not whether Plaintiff did previously raise
claims relating to the Hospital's alleged concealment of its
decision to terminate her, but whether she "could have" done so.
Plaintiff avers that, until she read the Hospital's brief in
support of its motion for summary judgment in Webb I, she was
unaware of the Hospital's multi-year concealment of its decision to
terminate her. But at the point that she became aware of this
crucial fact, Plaintiff still had the opportunity to amend her
complaint in Webb I to include the new allegations that she raises
in the present case, Judge Walker points out. Because Plaintiff
could have brought her present claims in Webb I by moving to amend
her complaint in light of newly discovered information, her attempt
to raise them here is, in effect, an attempt to relitigate the
underlying matter, Judge Walker concludes.
A full-text copy of the decision is available at
https://tinyurl.com/299s6k7m from Leagle.com.
About Calais Regional Hospital
Based in Calais, Maine, Calais Regional Hospital --
https://www.calaishospital.org/ -- operates as a non-profit
organization offering cardiac rehabilitation, emergency, food and
nutrition, home health, inpatient care unit, laboratory, nursing,
radiology, respiratory care and stress testing, surgery, and social
services.
Calais Regional Hospital filed a Chapter 11 petition (Bankr. D.
Maine Case No. 19-10486) on Sept. 17, 2019. At the time of the
filing, the Debtor disclosed assets of between $10 million and $50
million and liabilities of the same range.
Judge Michael A. Fagone oversees the case.
The Debtor tapped Murray Plumb & Murray as its bankruptcy counsel,
Spinglass Management LLC as financial advisor; and Kelly, Remmel &
Zimmerman and Norman Hanson Detroy LLC as special counsel.
CHRISTOPHER & BANKS: Returns as Online, TV Retail Presence
----------------------------------------------------------
Nicole Norfleet of Star Tribune reports that Christopher & Banks
has returned as a retail presence on TV and online after
bankruptcy.
The Minnesota-based women's apparel brand is now operated by iMedia
Brands, which also owns Eden Prairie-based TV and digital shopping
network ShopHQ.
Nearly a year after the Plymouth-based women's clothing chain filed
for bankruptcy, liquidated its 450 stores and then came under the
iMedia umbrella, Christopher & Banks is now the most popular
fashion brand on ShopHQ of Eden Prairie-based iMedia Brands.
"We like to buy or launch brands that we think match our
demographic and that we think we can give an unfair advantage by
putting them on television, by driving the promotional power of
cross-promoting our existing customers to them," said Tim Peterman,
iMedia's chief executive, in an interview with the Star Tribune.
In January 2021, Christopher & Banks filed for Chapter 11
bankruptcy protection and started liquidation sales at its nearly
450 stores across the country. iMedia since then took over the
brand, and a group of 40 merchandising and production staff were
rehired and now work at iMedia's office.
"The agreement they made to take over the brand made perfect sense
to me," said Eric Wold, a senior analyst at B. Riley Securities.
iMedia inked a licensing agreement Hilco Global, which was the
senior lender of the Christopher & Banks business when it filed for
bankruptcy, was advantageous for iMedia in that it didn't have to
take as many risks, Wold said.
In April, a month after it announced it would take over Christopher
& Banks brand operations, iMedia moved Christopher & Banks' digital
business onto its ShopHQ proprietary e-commerce platform and began
filling orders out of a warehouse in Bowling Green, Ky. It also
introduced new Christopher & Banks merchandise.
In May, ShopHQ premiered its first Christopher & Banks television
program. That same month, it reopened its first Christopher & Banks
retail store in the Riverdale Village outdoor shopping mall in Coon
Rapids followed by another store in Branson, Mo. Three other
stores have reopened since then. The brand sent out its first
direct-to-consumer catalog in the fall.
This month, Christopher & Banks launched a digital styling service
so that customers can chat one-on-one with virtual stylists and
shop personalized outfits.
"Our plan was pretty simple," Mr. Peterman said. "We wanted to
drive the growth of the business on digital. That means instead of
having 300 retail stores, we would have a robust TV and digital
business and a complement of retail stores. We have five opened
today and we will probably roll out a few in the fall and we will
do a couple a year."
Christopher & Banks ShopHQ sales tripled from the second to third
quarter and are on pace to double in its fourth quarter, which is
about to end.
The brand is bringing in new customers and helped lift iMedia to
its best new customer growth in a decade, a 65% jump, the company
reported last quarter. The Christopher & Banks segments on ShopHQ
quickly became the most popular of all the fashion shows on the
network.
About Christopher & Banks
Christopher & Banks Corporation (OTC: CBKC) was a Minneapolis-based
specialty retailer featuring exclusively designed privately branded
women's apparel and accessories. As of Jan. 13, 2021, the company
operated stores in 44 states consisting of 315 MPW stores, 76
outlet stores, 31 Christopher & Banks stores, and 28 stores in its
women's plus size clothing division CJ Banks. It also operated the
www.ChristopherandBanks.com eCommerce website.
Christopher & Banks and two affiliates sought Chapter 11 protection
(Bankr. D.N.J. Lead Case No. 21-10269) on Jan. 13, 2021. As of Dec.
14, 2020, Christopher & Banks had $166,396,185 in assets and
$105,639,182 in liabilities.
Judge Andrew B. Altenburg Jr. oversees the cases.
The Debtors tapped Cole Schotz P.C. as their legal counsel, BRG,
LLC as financial advisor, and B. Riley Securities Inc. as
investment banker. Omni Management Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors in the Debtors' Chapter 11 cases. The
committee tapped Pachulski Stang Ziehl & Jones LLP and Kelley Drye
& Warren LLP as its legal counsel, and FTI Consulting, Inc. as its
financial advisor.
CLEARPOINT NEURO: Michael Bigger Reports 5.2% Equity Stake
----------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, these entities and individuals reported beneficial
ownership of shares of common stock of ClearPoint Neuro, Inc. as of
Dec. 31, 2021:
Shares Percent
Beneficially of
Reporting Person Owned Class
---------------- ------------ ------------
Bigger Capital Fund, LP 655,690 2.8%
Bigger Capital Fund GP, LLC 655,690 2.8%
District 2 Capital Fund LP 133,789 Less Than 1%
District 2 Capital LP 133,789 Less Than 1%
District 2 GP LLC 133,789 Less Than 1%
District 2 Holdings LLC 133,789 Less Than 1%
Michael Bigger 1,234,873 5.2%
Patricia Winter 125,000 Less Than 1%
The percentages are based on 23,639,616 shares of Common Stock
outstanding as of Nov. 9, 2021, as represented in the Company's
Form 10-Q for the period ended Sept. 30, 2021.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1285550/000092189522000240/sc13ga110022002_01252022.htm
About ClearPoint Neuro
ClearPoint Neuro formerly MRI Interventions, Inc. --
http://www.clearpointneuro.com-- is a medical device company that
develops and commercializes innovative platforms for performing
minimally invasive surgical procedures in the brain under direct,
intra-procedural magnetic resonance imaging, or MRI, guidance.
Applications of the Company's current product portfolio include
deep-brain stimulation, laser ablation, biopsy, neuro-aspiration,
and delivery of drugs, biologics, and gene therapy to the brain.
Clearpoint Neuro reported a net loss of $6.78 million for the year
ended Dec. 31, 2020, a net loss of $5.54 million for the year ended
Dec. 31, 2019, and a net loss of $6.16 million for the year ended
Dec. 31, 2018. As of Sept. 30, 2021, the Company had $68.70
million in total assets, $24.58 million in total liabilities, and
$44.12 million in total stockholders' equity.
CLINTON NURSERIES: Trustee Gets OK to Hire Mediator in Graco Suit
-----------------------------------------------------------------
Anthony Calascibetta, the Chapter 11 trustee for Clinton Nurseries,
Inc., received approval from the U.S. Bankruptcy Court for the
District of Connecticut to employ Robert White, Esq., an attorney
at Murtha Cullina.
Mr. White will serve as mediator in the pending adversary
proceeding styled CN Trust v. Graco Fertilizer Company (Adv. Pro.
No. 19-03040). The case was filed by the official unsecured
creditors' committee on behalf of Clinton Nurseries' estate to seek
relief for alleged preferential payments received by the
defendant.
Mr. White will charge $300 per hour and will bill each party to the
adversary case 50 percent of the total charges for the case. The
attorney requested a total deposit of $250 from each party in
advance of the mediation.
In court papers, Mr. White disclosed that he is a "disinterested
person" within the meaning of Section 101(14) of the Bankruptcy
Code.
Mr. White can be reached at:
Robert A. White, Esq.
Murtha Cullina
280 Trumbull Street, 12th Floor
Hartford, CT
Tel: (860) 240-6031
Fax: (860) 240-5831
Email: rwhite@murthalaw.com
About Clinton Nurseries
Founded in 1921, Clinton Nurseries, Inc. operates nurseries that
produce ornamental plants and other nursery products. It is based
in Westbrook, Conn.
Clinton Nurseries and its affiliates sought Chapter 11 protection
(Bankr. D. Conn. Lead Case No. 17-31897) on Dec. 18, 2017. At the
time of the filing, Clinton Nurseries listed as much as $50 million
in both assets and liabilities. Judge James J. Tancredi oversees
the cases.
Zeisler & Zeisler, P.C. serves as the Debtors' legal counsel.
Anthony Calascibetta, the Chapter 11 trustee appointed in the
Debtors' cases, is represented by Green & Sklarz, LLC.
DALTON CRANE: Asset Sale Proceeds to Fund Plan Payments
-------------------------------------------------------
Dalton Crane, L.C., filed with the U.S. Bankruptcy Court for the
Southern District of Texas a Disclosure Statement regarding Chapter
11 Plan dated Jan. 27, 2022.
The Debtor is a Texas Limited Liability Company principally
providing cranes and related equipment services in South Texas oil
and gas, industrial and construction worksites. Events leading to
the filing for relief are directly related to the oil and gas
industry and the decline in the oil and gas market in years
preceding the Petition Date, following by reduction in service
industry pricing.
The Debtor has commenced this case in order to fully implement its
restructuring efforts and to deal with current operating
liabilities. The Debtor believes that a sale of its business as a
going concern through a turnkey sales process or through an
equipment auction process presents the best prospects for
maximizing a return of creditors and parties-in-interest.
Prior to the petition date Debtor obtained an equipment appraisal
(the "Appraisal") indicating the FMV of Dalton Equipment to be
$21,569,850.00.
The scheduled amount of secured claims is $13,088,272.69. However,
as of January 24, 2022 only $2,097,253.33 in secured claims were
filed – consisting of 4 of the 15 secured creditors designated
within Class 2 and 3-1-3.11. Based on the Debtor's Schedules and
proofs of claim, General Unsecured Claims, are projected to be
approximately $892,292.49. Only two unsecured claims were filed
prior to January 25, 2022 approximating $350,000.00.
Debtor will pay all allowed secured, administrative and priority
claims in full. Debtor has filed a Motion to Sell Substantially all
Assets Free and Clear of Liens (the "Motion to Sale"), and an
Application to Employ Tiger Capital Group, LLC and Great American
Global Partners, Inc., as Broker/Auctioneer (the "Motion to
Retain").
The Plan provides for a sale of substantially all Debtor's assets
through a turnkey process to enable the conveyance of Debtor's
business as a going concern to a stalking horse or qualified
bidder. Alternatively, if no turnkey sale is consummated within a
reasonable period Debtor will sell substantially all equipment
within an auction process – where under Tiger/Global have
guaranteed that a minimum amount of gross revenue of at least $13.5
million.
Class 4 consists of all Allowed General Unsecured Claims against
Debtor. Each Holder of an Allowed General Unsecured Claim shall
receive its Pro Rata share of Distributions of Class 4 Funds in
accordance with the Plan. Class 3 Funds consist of all cash
proceeds actually received by the Debtor following sale and
liquidation of Debtor's assets, and after satisfaction of all
secured, priority and administrative claims. An initial
Distribution of Class 3 Funds will be made (i) 120 days after the
Sale Date, and (ii) such time as Class 3 Funds exceed $100,000.
Subsequent Distributions will be made following liquidation of
remaining unencumbered assets that are not sold within the Sales
Process. Class 4 is Impaired by the Plan.
Class 4 consists of Equity Interests. The Equity Interests will be
Reinstated as of the Effective Date.
The Reorganized Debtor shall fund payments under the Plan with Cash
on hand, including Cash from operations and from net sales proceeds
following sales of Debtor's assets within a turnkey or auction sale
process or through subsequent sale disposition of any remaining
Debtor's assets.
A full-text copy of the Disclosure Statement dated Jan. 27, 2022,
is available at https://bit.ly/3433vAS from PacerMonitor.com at no
charge.
Counsel for Debtor:
Michael G. Colvard, Esq.
Martin & Drought, P.C.
Weston Centre
112 East Pecan Street, Suite 1616
San Antonio, TX 78205
Tel: (210) 220-1334
Fax: (210) 227-7924
Email: mcolvard@mdtlaw.com
About Dalton Crane
Dalton Crane, L.C. provides crane and related services within the
Texas oil and gas industry, typically at wellhead or drill
locations for oil and gas drilling and operational businesses. Its
activities involve acquisition, renting, operating and disposition
of crane and related assets currently deployed to various oil and
gas operational cites within south Texas.
Dalton Crane filed a petition for Chapter 11 protection (Bankr.
S.D. Texas Case No. 21-33218) on Oct. 1, 2021, listing $22,113,730
in assets and $14,515,457 in liabilities. Joshua Dalton, chief
executive officer and member of Dalton Crane, signed the petition.
Judge Eduardo V. Rodriguez oversees the case.
Michael G. Colvard, Esq., at Martin & Drought, P.C. and Michael S.
Klingle, CPA, PLLC serve as the Debtor's legal counsel and
accountant, respectively.
Signature Financial LLC, as creditor, is represented by Frances
Smith, Esq., at Ross and Smith PC and Morrit Hock and Hamroff LLP.
First State Bank, as secured creditor, is represented by Richard
Chapman, Esq., at Anderson, Smith, Null & Stofer, LLP.
DIVINIA WATER: Seeks to Hire CFO Solutions, Appoint CRO
-------------------------------------------------------
Divinia Water, Inc. seeks approval from the U.S. Bankruptcy Court
for the District of Idaho to employ CFO Solutions L.C. as its
restructuring advisor and appoint Matthew McKinlay as its chief
restructuring officer.
CFO Solutions' services include:
a. preparing financial disclosures;
b. prosecuting and settling avoidance actions;
c. determining, litigating and settling claims and causes of
action;
d. filing tax returns;
e. formulating a Chapter 11 plan of liquidation;
f. making distributions to creditors as authorized by the court;
and
g. performing any other ancillary tasks necessary to operate and
wind down the Debtor's operations.
The hourly rates charged by the firm for its services are as
follows:
Matt McKinlay $295 per hour
Tim Donovan $285 per hour
Associates $60 to $250 per hour
The firm will also receive reimbursement for out-of-pocket expenses
incurred.
Mr. McKinlay, a partner at CFO Solutions, disclosed in a court
filing that his firm is a "disinterested person" as the term is
defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Matthew McKinlay
CFO Solutions, LLC dba Ampleo
13601 W. McMillan Rd. #102 PMB 320
Boise, ID 83713
Tel: (208) 724-2257
About Divinia Water Inc.
Divinia Water, Inc. filed a Chapter 11 bankruptcy petition (Bankr.
D. Idaho Case No. 21-40059) on Jan. 27, 2021, listing up to
$500,000 in assets and up to $1 million in liabilities.
Judge Joseph M. Meier oversees the case.
Brian Rothschild, Esq., at Parsons Behle & Latimer and CFO
Solutions LLC, doing business as Ampleo, serve as the Debtor's
legal counsel and restructuring advisor, respectively. Matthew
McKinlay, a partner at CFO Solutions, is the Debtor's chief
restructuring officer.
DUPONT STREET: Unsecureds to be Paid in Full in Liquidating Plan
----------------------------------------------------------------
DuPont Street Developers, LLC, filed with the U.S. Bankruptcy Court
for the Eastern District of New York a Disclosure Statement for
Plan of Liquidation dated Jan. 27, 2022.
On June 8, 2012, the Debtor entered into a Purchase and Sale
Agreement to purchase the Property. The closing and transfer of
title to the Debtor occurred on May 19, 2014. The Property, located
in Brooklyn, New York, consisted of 10 contiguous tax lots bounded
by DuPont Street, Franklin Street, and Clay Street with the
intention of developing the Property as a mixed-use space.
Having abandoned its efforts to develop the Property, the Debtor on
March 30, 2018, entered into a contract of sale (the "Prepetition
Sale Contract") with DuPont Realty NY LLC ("DuPont Realty"). The
original purchase price under the Prepetition Sale Contract was
$55,000,000, but after subsequent amendments, the purchase price
was ultimately increased to an amount in excess of $57,000,000.
The Plan provides for a transfer of the Property and the Purchased
Assets to the Dupont Lender in satisfaction of the Dupont Lender
Claim and DIP Claim. As part of the Sale, DuPont Lender will
provide sufficient Available Cash to fund distributions under the
Plan and the necessary capital to complete the remediation and
development of the Property.
Dupont Street 3 LLC, an affiliate of Dupont Lender, the Debtor's
primary secured creditor, has acquired nearly all of the General
Unsecured Claims to which a proof of claim has been filed, along
with any other scheduled General Unsecured Claim in this case and
has or will shortly file the necessary forms under Bankruptcy Rule
3001(e). Dupont Street 3 LLC has informed the Debtor that it
intends to waive any distributions under this Plan, if confirmed.
Class 2 consists of the Dupont Lender Claim. The holder of an
Allowed Class 2 Dupont Lender Claim will receive on account of and
in full satisfaction of such Claim on or about the Effective Date
the transfer of the Property free and clear of all liens, claims
and encumbrances (subject to the Dupont Lender's mortgage, which,
at the discretion of the Dupont Lender, may be assigned to a lender
to the Dupont Lender).
Class 4 consists of the DEC Claim in the amount of $81,212.50. The
holder of the DEC Claim shall be paid in full from Available Cash
on or about the Effective Date.
Class 5 consists of all General Unsecured Claims in the total
amount of $8,616,497.00. Each holder of an Allowed Class 5 General
Unsecured Claim will receive from the Available Cash on account of
such claim payment in full of their Allowed Class 5 General
Unsecured Claim, and simple interest at the Federal Judgment Rate
as to Class 5 per annum from the Petition Date, with principal
being paid in full prior to any payments being made on account of
such interest.
Holders of Allowed Class 6 Interests shall continue to retain and
maintain such Interests in the Debtor and the Post-Confirmation
Debtor following Confirmation of the Plan in the same percentages
as existed as of the Petition Date. Such Interests may be cancelled
by the Debtor upon dissolution of the Debtor.
The Property shall be transferred free and clear of all liens,
claims and encumbrances to the Dupont Lender (subject to subject to
the Dupont Lender's mortgage, which, at the discretion of the
Dupont Lender, may be assigned to a lender to the Dupont Lender),
except that the Dupont Lender shall sign any administrative
agreement necessary to become subject to the administrative order
on consent with the DEC that governs the environmental remediation
of the Property, as amended by the DEC as may be necessary to add
the Dupont Lender as a party to the Consent Order as set forth in
the DEC Stipulation.
The Dupont Lender will provide enough Available Cash to enable the
distributions required by this Plan.
Except as set forth elsewhere in this Plan, all payments required
to be made under this Plan shall be made by the Disbursing Agent in
accordance with the terms of this Plan from Available Cash.
A full-text copy of the Disclosure Statement dated Jan. 27, 2022,
is available at https://bit.ly/3oa9kTW from PacerMonitor.com at no
charge.
Attorneys for the Debtor:
Robert M. Sasloff
Robinson Brog Leinwand Greene Genovese & Gluck P.C.
875 Third Avenue
New York, NY 10022
Tel: (212) 603-6300
About Dupont Street Developers
Brooklyn, N.Y.-based Dupont Street Developers, LLC, is engaged in
activities related to real estate. It owns premises at 49-55
Dupont St., Brooklyn, N.Y., having a current value of $57.12
million.
Dupont Street Developers filed for Chapter 11 protection (Bankr.
E.D.N.Y. Case No. 21-40664) on March 17, 2021. Bo Jin Zhu,
manager, signed the petition. In the petition, the Debtor
disclosed $57,125,000 in assets and $58,925,731 in liabilities.
Judge Nancy Hershey Lord oversees the case. Robinson Brog Leinwand
Greene Genovese & Gluck P.C., led by Mitchell A. Greene, Esq., is
the Debtor's legal counsel.
ELBA LUCERO: Case Summary & One Unsecured Creditor
--------------------------------------------------
Debtor: The Elba Lucero Family Trust dated December 12, 1986
and Amended and Restated August 10, 2005
21 Lakewood Circle
San Mateo, CA 94402-3971
Chapter 11 Petition Date: January 31, 2022
Court: United States Bankruptcy Court
Northern District of California
Case No.: 22-30059
Debtor's Counsel: Matthew D. Metzger, Esq.
BELVEDERE LEGAL, PC
1777 Borel Place, Suite 314
San Mateo, CA 94402
Tel: 415-513-5980
Fax: 415-513-5985
Email: info@belvederelegal.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Henry Richard Lucero as successor
co-trustee.
Jason W. Estavillo, Esq., of Law Offices of Jason W. Estavillo,
PC, is listed as the Debtor's only unsecured creditor holding a
claim of $34,421.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/ZW2YPGI/The_Elba_Lucero_Family_Trust_dated__canbke-22-30059__0001.0.pdf?mcid=tGE4TAMA
ENDO INTERNATIONAL: BlackRock Has 15.8% Equity Stake as of Dec. 31
------------------------------------------------------------------
BlackRock, Inc. disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2021, it
beneficially owns 36,827,860 shares of common stock of Endo
International PLC, representing 15.8 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/1364742/000083423722002751/ie00bj3v9050_012722.txt
About Endo International plc
Endo International plc -- www.endo.com -- is a holding company that
conducts business through its operating subsidiaries. The
Company's focus is on pharmaceutical products and it targets areas
where it believes it can build leading positions.
As of Sept. 30, 2021, the Company had $9.24 billion in total
assets, $1.55 billion in total current liabilities, $22.52 million
in deferred income taxes, $8.05 billion in long-term debt (less
current portion), $35.15 million in operating lease liabilities
(less current portion), $274.06 million in other liabilities, and a
total shareholders' deficit of $690.32 million.
* * *
As reported by the TCR on Sept. 6, 2021, S&P Global Ratings lowered
its long-term issuer credit rating on Endo International PLC to
'CCC+' from 'B-' and removed the rating from CreditWatch, where S&P
placed it with negative implications on Aug. 25, 2021. The outlook
is negative. The negative outlook reflects the potential for an
event of default within the next 12 months stemming from
opioid-related litigation or the possibility of a distressed
exchange.
EXPRESS GRAIN: Wins Cash Collateral Access Thru Feb 25
------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Mississippi
has authorized Express Grain Terminals, LLC and its affiliates to,
among other things, use cash collateral on a final basis and
provide adequate protection.
The Debtors assert that an immediate need exists for the Business
Debtors to use cash collateral to continue essential operations,
acquire goods and services, and pay other necessary and essential
business expenses.
Since the beginning of the bankruptcy case on September 29, 2021
until the present, it has been clear to the Court -- even after its
review of all the evidence presented at the most recent hearing on
January 26, 2022 -- that the best path forward for the Business
Debtors is continued operation to maximize the value of the
business and assets with the end goal being a sale of the business
and its assets as a going concern at the highest price possible. In
most of the Court's orders, including six interim cash collateral
orders and in its most recent Memorandum Opinion and Order, the
Court has taken this position based on the evidence presented to
it. For some reason, and it is still lost on the Court, some
parties continue to advocate for the immediate shutdown of
operations in hopes to force a sale of the Business Debtors' assets
either in a chapter 7 liquidation, by the appointment of a chapter
11 trustee, or at the hands of CR3 Partners, LLC and its personnel,
including Dennis Gerrard, the Chief Restructuring Officer.
StoneX Commodity Solutions LLC f/k/a FC Stone Merchant Services
LLC, Macquarie Commodities (USA) Inc., UMB, and several other
interested parties (including production lenders) assert lien
and/or ownership interests in certain pre-petition soybeans and
corn stored by one or more of the Business Debtors. The
Pre-Petition Grain was generally held in common storage and not
segregated by the party asserting ownership and/or lien rights in
such Pre-Petition Grain. Accordingly, the proceeds from the use and
sale of the Pre-Petition Grain may also be considered, at least in
part, cash collateral.
The Business Debtors are also permitted to continue to manage
collection and disbursement of its cash utilizing its Cash
Management System with UMB and continue to centralize their
depository accounts with UMB.
The Business Debtors will continue to maintain a separate DIP
Account at UMB holding the $4,614,293 in sale proceeds from the
sale of soybeans, which were received after the Petition Date.
As adequate protection for the Debtors' use of cash collateral, the
Bank and other Pre-Petition Grain Interest Holders are granted
replacement security interests in, and liens on, all post-Petition
Date acquired property of the Business Debtors and the Business
Debtors' bankruptcy estates to the extent of the validity and
priority of such interests, liens, or security interests, if any.
The amount of each of the Replacement Liens will be up to the
amount of any diminution in value of the respective collateral
positions of such parties from the Petition Date. The priority of
the Replacement Liens will be in the same priority as such parties'
prepetition interests, liens and security interests in similar
property.
To the extent the Replacement Liens prove inadequate, the Bank and
other Pre-Petition Grain Interest Holders are granted an
administrative expense claim under section 503(b) of the Bankruptcy
Code with priority in payment under section 507(b).
The Debtor's authority to use cash collateral and the Pre-Petition
Grain will expire unless extended by further order of the Court or
by express written consent of UMB and the other Pre-Petition Grain
Interest Holders, on the earlier of (i) February 25, 2022; (ii) the
first business day after the date of the final hearing on the
Debtor's use of Cash Collateral and Pre-Petition Grain (and
proceeds therefrom); (iii) the failure of the Debtors to comply
with any provision of the Order; (v) the entry of an order
authorizing, or if there will occur, a conversion or dismissal of
this case under Code section 1112; (v) the entry of an order
appointing a trustee, or appointing an examiner with powers
exceeding those set forth in Code section 1106(b); (vi) the closing
of a sale of all or a substantial portion of the assets of the
Business Debtors; (vii) the cessation of day-to-day operations of
the Business Debtors; (viii) any loss of accreditation or licensing
of the Business Debtors that would materially impede or impair the
Business Debtors' ability to operate as a going concern; (ix) the
termination of the Interim CRO or the failure to obtain an order of
the Court approving the appointment of the Interim CRO on a final
basis within 30 days from the date of entry of the Order; (x) the
failure of the Business Debtors to receive Pre-Petition Beam
Proceeds sufficient to cover the Third Party Proceeds attributable
to the use and/or sale of Pre-Petition Grain; and (xi) any material
provision of the Order for any reason ceases to be enforceable,
valid, or binding upon the Debtors.
A copy of the order and the Debtors' budget through the week ending
February 25, 2022 is available at https://bit.ly/3IPyIGy from
PacerMonitor.com.
The budget provided for $65,170,943 in total receipts and
$49,686,683 in total operating disbursements.
About Express Grains Terminals
Greenwood, Mississippi-based Express Grain Terminals, LLC, produces
soy products such as oil and biodiesel.
Express Grains Terminals sought Chapter 11 protection (Bankr. N.D.
Miss. Case No. 21- 11832) on Sept. 29, 2021. In the petition
signed by John Coleman as member, Express Grains Terminals
estimated assets of between $10 million and $50 million and
estimated liabilities of between $50 million and $100 million.
Judge Selene D. Maddox oversees the case.
The Law Offices of Craig M. Geno, PLLC, is the Debtor's counsel.
UMB Bank, N.A., as lender, is represented by Spencer Fane LLP.
GAINWELL ACQUISITION: Fitch Affirms 'B' LT IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed the Long-Term Issuer Default Rating for
Gainwell Acquisition Corp at 'B' with a Stable Rating Outlook.
Fitch has also affirmed the senior secured first-lien term loan
rating of 'BB-'/'RR2'. Fitch's actions affect approximately $4.2
billion of outstanding debt.
Fitch is evaluating Gainwell following its acquisition of an HMS
Holdings Corp. carve out that comprised the capabilities focused on
the Medicaid market. The transaction, backed by private equity
sponsor, Veritas Capital, valued the carve-out at $2.4 billion and
was financed by an incremental $1.8 billion first-lien term loan
and an incremental $659 million second-lien term loan.
KEY RATING DRIVERS
Beneficial Tailwinds: Fitch expects Gainwell to benefit from strong
secular trends propelling growth in Medicaid expenditures. The
Centers for Medicare and Medicaid Services (CMS) forecasts Medicaid
expenditure growth of 5.6% per annum, approaching $1 trillion with
82 million beneficiaries by 2026, due to long-standing trends in
medical procedure/drug cost inflation and utilization, program
expansions among states, and increased share of the aged and
disabled beneficiaries served.
In addition, CMS estimates $57 billion of improper payments by
Medicaid in 2019 due eligibility and claims processing complexity,
lack of sufficient documentation, shifting regulatory requirements,
fraud and waste. States, suffering from constrained budgets are
strongly incentivized to adopt Gainwell's software and data
offerings in order to contain such costs. Fitch believes the
secular tailwinds provide for a dependable growth trajectory,
benefiting the credit profile.
Leading, Defensible Market Position: Gainwell serves as a primary
MMIS vendor to 29 states and spans 41 states when including
adjacent offerings. The company covers 53 million beneficiaries out
of the 76 million total under Medicaid. Fitch estimates a 27% share
of the approximately $7.5 billion MMIS services market is captured
by the company.
Fitch believes the company's market position is highly defensible,
given the complexity and customization of an MMIS platform, as well
as the considerable risk of disruption to Medicaid services a state
may face in replacing an MMIS provider. The durability of the
company's market position is evidenced by its 100% retention rates
achieved over 10 years.
Low Cyclicality: Fitch expects Gainwell, which has generated
accelerated growth though the pandemic, to continue to exhibit low
cyclicality for the foreseeable future. Fitch believes the company
will exhibit correlation to Medicaid spending and enrollment,
supported by the non-discretionary nature of health expenditures.
In addition, Medicaid enrollment exhibits countercyclicality, which
experiences elevated growth during economic downturns as job losses
increase the pool of eligible beneficiaries, resulting in increased
demand for the company's offerings. Since the onset of the
pandemic, Medicaid roles have grown by 19.4% through July 2021, the
latest available data, as lockdown and other governmental policies
have caused increased poverty rates, which in turn has contributed
to the company's accelerated revenue growth rates. Similarly, Fitch
expects the company will continue to demonstrate a stable credit
profile with little sensitivity to macroeconomic cycles.
Evolving Marketplace: Gainwell faces risks in the evolving MMIS
marketplace. MMIS implementations are overseen by CMS, who released
guidance in 2016 to promote modernization by encouraging states to
construct MMIS as a series of modules with interoperability, rather
than a single platform. Fitch believes these efforts stimulate
increased competition by reducing switching costs and providing
opportunities for new entrants seeking to develop niche solutions,
which may lead to share erosion over time.
In addition, the increased modular nature of MMIS enables
collaboration in procurement and implementation among states, which
may lead to a more competitive marketplace as the number of
addressable clients is effectively reduced. In its most recent
procurement analysis report, the state of Colorado estimated the
cost of design, development and implementation (DDI) at $50
million-$100 million.
Increasingly constrained state budgets encourage the engagement of
organizations such as the National Association of State Procurement
Officers (NASPO), which seek to enable greater collaboration
through efforts such as its ValuePoint program. However, despite
the potential for increased competition, Fitch believes the risk of
lost wallet share is moderated by Gainwell's large installed base
that positions it as an entrenched provider of the core, underlying
platform.
Finally, Fitch notes that future prospects may be affected by
regulatory changes, such as modifications to eligibility
requirements, reimbursement rates, MMIS certification standards,
federal financial participation (FFP) rates, or the implementation
of a work requirement for beneficiaries. However, as current
regulatory trends are constructive, Fitch believes any significant
regulatory risk is likely to be outside of the rating horizon.
High Leverage: Gainwell's acquisition of the HMS carve-out in a
deal valued at $2.4 billion that was financed with incremental term
loans under the existing credit agreements has led to a material
increase in leverage. Fitch forecasts pro forma FY22 leverage of
8.9x near the upper 5.0x-11.5x range for Fitch-rated health care IT
issuers in the 'B' rating category.
Fitch believes actioned cost-reduction efforts at the core Gainwell
business and targeted synergies in the HMS acquisition, will result
in a rapid step-down in leverage to 6.8x in FY 2023, consistent
with initial projections, with minimal further reduction
thereafter. Fitch believes the leverage is supported by the
company's dependable growth prospects, strong market position, low
capital intensity and low cyclicality.
DERIVATION SUMMARY
Gainwell has generated strong recent performance since the close of
the acquisition with top-line pro forma growth of 11% in 1H22, well
in excess of Fitch's initial forecasts as the company has benefited
from accelerated Medicaid enrolment growth, increased breadth of
administrative needs by state Medicaid systems during the pandemic,
new program implementations and momentum in new bookings. As a
result of the underlying trends and bookings execution, Fitch has
increased organic revenue growth forecasts to the mid-teens.
From a profitability perspective, management continues to pursue
its margin expansion strategy and has executed on $96 million of
cost reductions and synergies out of the total target of $172
million. As a result, Gainwell generated Fitch calculated pro forma
EBITDA margins in 1H22 of 28%. Fitch continues to forecast margin
expansion to the mid 30's as the actions taken begin to runrate.
Fitch views the company's trajectory as consistent with the rating
and Fitch's expectations set at the time of initial rating in
February 2021.
Fitch evaluates Gainwell following its acquisition of the HMS
carve-out that consists of the products that address administration
of state Medicaid programs in a transaction backed by private
equity sponsor, Veritas Capital.
Fitch believes the company benefits from favorable tailwinds as the
underlying growth of Medicaid, constrained state budgets,
constructive regulatory environment and long-standing trends in
U.S. healthcare including, an aging demographic, medical
procedure/drug cost inflation and utilization growth are supportive
of adoption of the company's software and services.
The combination with HMS bolstered the company's modular offerings
to generate significant cross-selling opportunities in the existing
client base. Fitch believes growth is further ensured by the
company's leading share, strong client retention rates, high
switching costs and continued Medicaid program expansions among
states.
Finally, similar to the company's experience of accelerated growth
during the pandemic-led downturn, Fitch expects Gainwell to
continue to demonstrate minimal cyclicality and durable resistance
to economic cycles due to the counter cyclical aspects of Medicaid
enrollment. While Fitch views the high visibility into revenue
growth positively, the company faces longer-term risks from an
evolving marketplace and the potential for future regulatory
changes that may increase competition or reduce growth in Medicaid
expenditures and enrollment over time.
The company profitability metrics score mostly in line in respect
of peers with Fitch forecasting EBITDA margin expansion of 500bps
over the ratings horizon to a level moderately above the 32%
average for Fitch-rated healthcare IT peers. Fitch also expects
consistent FCF margins in the low teens over the forecast horizon
due to expanding EBITDA margins and low capital intensity,
resulting in strong FCF conversion. Fitch believes FCF will be
sustainable due the low cyclicality and a supportive regulatory
environment in the medium term.
Despite these favorable characteristics, Fitch forecast FY22
leverage of 8.9x is near the upper 5.0x-11.5x range for Fitch-rated
health care IT issuers in the 'B' rating category. However, Fitch
expects a rapid one-time reduction in leverage to 6.8x in FY 2023
due to achievement of already actioned cost reduction programs in
Gainwell and synergy opportunities from the acquisition of HMS.
While the company clearly benefits from beneficial secular
tailwinds, a leading, defensible market position, and low
cyclicality, Fitch views leverage as the primary determinant of the
'B' rating. No Country Ceiling, parent/subsidiary or operating
environment aspects had an impact on the rating.
KEY RECOVERY RATING ASSUMPTIONS
-- The recovery analysis assumes that Gainwell would be
reorganized as a going-concern in bankruptcy rather than
liquidated;
-- A 10% administrative claim.
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
the increasing modularization of MMIS offerings results in elevated
competition and loss of share for Gainwell, leading to decreased
revenue growth and higher investment into sales and R&D to address
the challenges.
As a result, Fitch expects Gainwell would likely be reorganized
with a similar product strategy and higher than planned levels of
operating expenses as the company reinvests to develop competing
products, ensure customer retention and defend against
competition.
Under this scenario, Fitch believes EBITDA margins would decline
such that the resulting GC EBITDA is approximately 6% below Fitch
forecast FY 2022 pro forma EBITDA.
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 the following factors:
Comparable Reorganizations: In Fitch's "Telecom, Media and
Technology Bankruptcy Enterprise Values and Creditor Recoveries
(2020 Fitch Case Studies)" case study, seven past reorganizations
in the technology sector are noted 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 Gainwell given the mission critical nature of both companies'
offerings.
M&A Multiples: A study of 273 precedent transactions in the
healthcare IT industry during 2015-2020 established median
EV/EBITDA transaction multiples ranging 9x to 18x, depending on the
specific product area. In addition, HMS is being acquired at a
15.5x multiple, excluding synergies.
Fitch evaluated a number of qualitative and quantitative factors
that are likely to influence the GC valuation:
-- 1) Secular trends and regulatory environment are highly
supportive with Medicaid enrollment and expenditure growth
resulting from program expansions, looser eligibility
standards leading to a higher share of the aged and
disabled beneficiaries served, and increased claims
processing complexity. In addition, constrained state
budgets encourage adoption of the company's products that
reduce improper Medicaid spend;
-- 2) Barriers to entry are high relative to software issuers, as
deep domain and regulatory expertise are required to
develop necessary solutions;
-- 3) Gainwell is the leading provider of MMIS with the next
largest commercial competitor covering roughly 95% fewer
beneficiaries;
-- 4) Revenue and cash flow outlook is favorable as long-standing
secular trends are supportive of revenue growth, while
moderate margin expansion and low capital intensity promote
FCF margins in the low teens;
-- 5) Revenue certainty is high as a result of the 92% recurring
revenue profile, typical contract duration of 6 to 10
years, 100% client retention and the countercyclicality of
Medicaid;
-- 6) Operating leverage is durable given a highly variable cost
structure typical of software developers.
Fitch believes these factors reflect a particularly attractive
business model that is likely to generate significant interest,
resulting in a recovery multiple at the high-end of Fitch's range.
The recovery model implies a 'BB' and 'RR1' Recovery Rating for the
company's first-lien senior secured facilities, reflecting Fitch's
belief that lenders should expect to recover 81% or greater in a
restructuring scenario.
KEY ASSUMPTIONS
Fitch's key assumptions within the rating case for the issuer
include:
-- FY 2022 - FY 2023 organic revenue growth of mid-teens, due to
increased Medicaid enrollments, new contract implementations,
and broadened scope of administrative work, followed by mid-
to low-single digit organic growth thereafter, consistent with
Medicaid enrollment forecasts;
-- EBITDA margin expansion of 300bps over the ratings horizon due
to actioned margin improvement initiatives at Gainwell and
partial achievement of synergies at HMS;
-- Capital intensity of 2.5%, consistent with management
forecasts and history;
-- Bolt-on acquisitions of $100 million per annum in FY 2024 and
FY 2025.
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%;
-- Total debt with equity credit/operating EBITDA sustained below
5.5x.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- (Cash flow from operations-capex)/total debt with equity
credit sustained below 5%;
-- Total debt with equity credit/operating EBITDA sustained above
7.5x;
-- Erosion of the company's competitive advantage or market
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 Gainwell to build liquidity rapidly following the
transaction given moderate EBITDA margin expansion, a highly
variable cost structure, low capital intensity, supportive secular
trends and minimal sensitivity to macroeconomic cycles, which will
enable the company to generate consistently strong FCF. As of 2Q22,
liquidity is comprised of nearly $190 million in cash and an
undrawn $400 million revolving credit facility (RCF). Fitch
forecasts steady growth in liquidity to over $700 million by FY23
due to accumulation of FCF of over $300 million per annum after the
transaction and carve-out costs are absorbed and the expectation
for the RCF to remain undrawn.
ISSUER PROFILE
Gainwell supports the administration and operation of government
Medicaid programs through a Medicaid Management Information Systems
(MMIS), which spans functions including, provider enrollment,
pre-authorization, pharmacy drug rebates, recipient eligibility
management, call center, print and mail services, and more.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
Environmental, Social and Corporate Governance (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.
GIRARDI & KEESE: Erika Isn't Off the Hook on Embezzlement Case
--------------------------------------------------------------
Justin Curto of Vulture reports that actress Erika Jayne is not off
the hook in ongoing embezzlement case.
According to the report, the Real Housewives of Beverly Hills cast
member, who's been at the center of an alleged embezzlement plot
involving her estranged husband Tom Girardi, made headlines over
the weekend as she was dismissed from a lawsuit against the both of
them in Illinois. Since then, though, the law firm that sued Jayne
confirmed the suit is set to be refiled in California.
Jay Edelson, CEO of Edelson PC, confirmed to Vulture that the case
against Jayne isn't off. "We voluntarily agreed, with the consent
of her attorneys, to transfer the case to California to avoid
delays over procedural questions," he said. "Our investigatory
team has been hard at work for the past year and we have uncovered
evidence that we believe a jury will find damning." Entertainment
Weekly first reported news of the lawsuit's refiling. Jayne's
attorney did not respond to Vulture's request for comment.
The lawsuit against Jayne, first filed in December 2020, alleges
Jayne and Girardi, a former attorney at Girardi Keese, embezzled $2
million from a settlement for families of victims of the Lion Air
Flight 610 plane crash. Jayne was named due to claims that she was
aware of Girardi's embezzlement, and that he spent the money on
items for her. (She filed for divorce from Girardi in November
2020.)
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It
served clients in California in a variety of legal areas. It was
known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7
trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
An involuntary Chapter 7 petition was also filed against Thomas
Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter 7
trustee can be reached at:
Jason M. Rund
Email: trustee@srlawyers.com
840 Apollo Street, Suite 351
El Segundo, CA 90245
Telephone: (310) 640-1200
GOTSPACE DATA: Taps Perez-Kudzma Law Office as Bankruptcy Counsel
-----------------------------------------------------------------
Gotspace Data Equity Fund, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Massachusetts to employ
Perez-Kudzma Law Office, P.C. to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
a. assisting the Debtor in preparing bankruptcy schedules,
statement of financial affairs and related documents;
b. employing professionals to assist in the reorganization of
the Debtor;
c. filing appropriate plans of reorganizations and disclosure
statements, and defending against any motions to dismiss the case
and for relief from the stay;
d. assisting the Debtor in complying with Chapter 11 reporting
and operations requirements, including filing necessary reports;
and
e. negotiating with creditors for adequate protection and the
use of cash collateral, assumption or rejection of leases and
executory contracts, objection to claims and related issues.
The retainer fee for the firm's services is $2,500.
Carmenelisa Perez-Kudzma, Esq., a partner at Perez-Kudzma Law
Office, disclosed in a court filing that her firm is a
"disinterested person" as the term is defined in Section 101(14) of
the Bankruptcy Code.
The firm can be reached at:
Carmenelisa Perez-Kudzma, Esq.
Perez-Kudzma Law Office, P.C.
35 Main Street, Suite 1
Wayland, MA 01778
Tel: (978) 505-3333
Email: carmenelisa@pklolaw.com
About Gotspace Data Equity Fund
Gotspace Data Equity Fund, LLC sought protection under Chapter 11
of the Bankruptcy Code (Bankr. D. Mass. Case No. 22-10044) on Jan.
14, 2022. Nicholas J. Fiorillo, sole manager, signed the
petition.
At the time of the filing, the Debtor disclosed total assets of
between $10 billion and $50 billion and total liabilities of
between $1 million and $10 million.
Perez-Kudzma Law Office, P.C. is the Debtor's legal counsel.
HALO BUYER: S&P Downgrades ICR to 'CCC+', Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on
Illinois-based provider of promotional products and employee
recognition solutions Halo Buyer Inc. to 'CCC+' from 'B-'. At the
same time, S&P lowered its issue-level rating on the company's
first- and second-lien debt to 'CCC+' and 'CCC-', respectively. The
recovery ratings remain unchanged.
S&P said, "The negative outlook reflects the risk that we could
lower our ratings over the next 12 months if we expect a payment
default. In this scenario, ongoing cash flow deficits result in a
narrow liquidity cushion or difficulties refinancing its revolving
credit facility due June 2023 in a timely manner.
"Our downgrade reflects Halo's continued underperformance leading
to elevated leverage and deteriorating liquidity, factors we expect
could persist into 2022. Halo's gross profit dropped by more than
100 basis points (bps) in the last 12 months (LTM) ended the third
quarter 2021, compared to the same period in 2020. Although the
company's top line is growing mainly from acquisitions and from
organic growth to a lesser extent, its margin profile is shrinking.
Its adjusted EBITDA margins in the LTM ended third quarter
contracted by almost 5% compared to the already-depressed margins
in 2020 at the height of the COVID-19 pandemic. Adjusted leverage
was high at about 9x as of the LTM ended Sept. 30, 2021, above our
previous expectations for S&P Global Ratings-adjusted leverage in
the high-7x to low-8x area."
The pandemic has had a substantial impact on Halo's operating
performance, including significantly reducing demand in the early
stages given the company's reliance on discretionary spending. The
continued supply chain inefficiencies and tight labor market also
increased its costs. In addition, the company experienced
operational difficulties with the rollout of its newly implemented
enterprise resource planning (ERP) system, which affected its
ability to bill clients and further exasperated its cash flow
challenges.
S&P said, "Over the next 12 months, we anticipate that the company
will face similar challenges related to the impact of COVID-19
variants, supply chain disruptions, margin pressures stemming from
the challenging labor market environment, and higher input costs.
This will likely translate into debt to EBITDA above 9x at year-end
2021 and muted performance by year-end 2022, with elevated leverage
and negative free operating cash flow (FOCF) to debt.
"We believe the company's liquidity cushion will remain modest and
leverage elevated throughout 2022, increasing the potential for a
covenant violation. We expect the company to have about $6
million-$8 million in cash on its balance sheet and about $30
million available under its $80 million revolving line of credit at
year-end 2021. Furthermore, we expect that the company will have
ongoing liquidity needs as it pursues its debt-financed growth
strategy." The company has been relying heavily on its revolver,
drawing more than 60% as of third-quarter 2021. The company's
covenant headroom fell below 10% as of the same period despite an
equity infusion from its sponsor and management. As a result, Halo
faces heightened risk of a covenant breach with unexpected
disruptions over the next year given its revolver's 6.75x springing
financial maintenance covenant. Additionally, volatility in the
macroeconomic environment and weaker cash flows will continue to
pressure Halo's credit metrics. And finally, Halo faces elevated
refinancing risk with its heavily drawn revolver maturing in June
2023.
S&P said, "Nevertheless, the company's financial sponsor, The TPG
Group, recently provided $22 million of debt financing to support
Halo's acquisition needs, and we expect ongoing support. We
anticipate that the company's planned acquisitions in the first
quarter of 2022 will also be financed by an equity infusion from
its financial sponsor."
Over the next 12 months, key operating risks include headwinds from
high inflation, a tight labor market, supply chain disruptions, or
other COVID-19-related disruptions.
S&P said, "The negative outlook reflects the risk that we could
lower our ratings over the next 12 months if we expect a payment
default. In this scenario, ongoing cash flow deficits result in a
narrow liquidity cushion or difficulties refinancing its revolving
credit facility due June 2023 in a timely manner.
"We could lower our ratings if a default, distressed exchange, or
redemption appears inevitable within six to 12 months, absent
unanticipated significantly favorable changes."
S&P could revise its outlook to stable or raise its ratings if:
-- Operating performance improves such that profit margins and
liquidity improve significantly;
-- S&P believes the company would sustain leverage below 7x;
-- The company demonstrates that it can refinance its capital
structure in a timely manner;
-- S&P deems the company's liquidity as adequate; and
-- FOCF to debt is sustained in the mid-single-digit area.
E-2, S-2, G-3
ESG factors have an overall negligible influence on S&P's ratings
for Halo. The G-3 indicator reflects governance factors for most
rated entities owned by private-equity sponsors.
HAWAIIAN HOLDINGS: Moody's Alters Outlook on B1 CFR to Stable
-------------------------------------------------------------
Moody's Investors Service affirmed the B1 corporate family and
B1-PD probability of default ratings of Hawaiian Holdings, Inc.
("Hawaiian"). Moody's also affirmed the Ba3 rating assigned to
Hawaiian Airlines, Inc.'s ("Airlines") Series 2013-1 Class A
enhanced equipment trust certificates and the Ba3 rating assigned
to the $1.2 billion of senior secured notes due in January 2026
issued by HawaiianMiles Loyalty, Ltd. ("Notes"). The company's
HawaiianMiles loyalty program and brand secure the Notes, which are
also guaranteed by Hawaiian. The company's speculative grade
liquidity rating is unchanged at SGL-1. The ratings outlook was
changed to stable from negative.
"The ratings affirmations and stable outlook reflect Moody's
expectation that earnings and operating cash flows will continue
their recovery towards 2019 levels through 2023, as Hawaiian
restores service on its international routes," said Moody's Lead
Analyst, Jonathan Root. "Hawaiian's strong liquidity, with $1.7
billion of cash and about $200 million of net debt at the end of
2021 also support the ratings affirmation and stable outlook," said
Root. Moody's projects free cash flow to range between negative $75
million and negative $175 million in 2022 because of headwinds the
company will face, mainly as it awaits relaxation of the travel
restrictions in place in its international destinations. Implicit
in Moody's projections is that once opened, borders around the
world will remain open for air travel.
Affirmations:
Issuer: Hawaiian Holdings, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Issuer: Hawaiian Airlines, Inc.
Gtd. Senior Secured Enhanced Equipment Trust Ser. 2013-1 Class A
due 2026, Affirmed Ba3
Issuer: HawaiianMiles Loyalty, Ltd.
Gtd. Senior Secured Regular Bond/Debenture, Affirmed Ba3 (LGD3)
Outlook Actions:
Issuer: Hawaiian Airlines, Inc.
Outlook, Changed To Stable From Negative
Issuer: Hawaiian Holdings, Inc.
Outlook, Changed To Stable From Negative
Issuer: HawaiianMiles Loyalty, Ltd.
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
The B1 corporate family rating reflects Hawaiian's competitive
positions across its continental US to Hawaii; Japan, South Korea
and a few countries in Oceania to Hawaii and inter-island route
networks. The B1 rating also reflects the company's strong
liquidity and Moody's expectations that there will be a meaningful
recovery of passenger demand in the international operations as the
respective governments lower travel restrictions. The B1 rating
also reflects Moody's expectations that credit metrics will
strengthen over the next 24 months, more so in 2023 than 2022.
Moody's projects operating margin could reach 10% in 2023 and
debt/EBITDA could fall meaningfully below 5x by the end of 2023, if
travel restrictions subside in 2022.
Hawaiian has a record of solid operating performance and a
relatively conservative financial policy, demonstrated by
debt/EBITDA sustained below 2.6x between 2016 and 2019. Moody's
expects Hawaiian to prioritize the restoration of its historical
balance sheet strength; however, the pace of demand recovery and
the willingness to incur premiums to retire debt before maturity
dates will dictate the timing. Premiums for the early redemption of
the Notes may prove to be uneconomic. In this case, Moody's expects
Hawaiian will hold significantly more cash than the about $600
million it held in 2019, helping to de-risk financial leverage
based on gross debt while the Notes remain outstanding.
LOYALTY FINANCING
The Ba3 rating on the Notes reflects the essentiality of the
Hawaiian Airlines' brand and related intellectual property for it
to operate its business and the importance of its loyalty program
to its day-to-day operations and cash flows. This is balanced by
relatively low recovery prospects if the collateral ever needed to
be monetized to pay off the Notes under an Airlines liquidation
scenario. The Notes rating, one notch above the B1 corporate family
rating, reflects Moody's assumption of a lower probability of
default relative to that of the company's other senior secured debt
obligations, which are unrated.
EETCs
The Ba3 rating on the Series 2013-1 Class A EETC reflects Moody's
estimate that there is no equity cushion for the transaction. There
is $195 million outstanding on the obligation, which is secured by
six Airbus A330-200 widebody aircraft, one 2013 and five 2014s.
Moody's estimates the value of these models at about $30 and $32
million apiece, respectively. The pandemic exerted significantly
more pressure on the values of A330-200s versus the larger A330-300
and other widebody aircraft models, given the sustained
interruption of medium to long-haul international travel and the
A33-200's higher per unit operating costs. Nonetheless, the
A330-200 will remain important to Hawaiian's operations over the
transaction's remaining term through January 15, 2026. The one
notch uplift from the corporate family rating reflects the high
probability that the EETC would be affirmed by the airline in the
event of a bankruptcy.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The CFR could be downgraded if borders remained closed such that
there is no recovery of services and passenger volumes in the
company's International network, or if Moody's expects a material
reduction in the company's liquidity. Expectations of
debt-to-EBITDA being sustained above 5x beyond 2023 could also
pressure the ratings. There will be no upwards pressure on the
ratings until after a sustained material recovery of the company's
international network. EBITDA margins approaching 20%, debt/EBITDA
sustained below 4.5x and retained cash flow-to-debt approaching 15%
while the company takes delivery of the 787s in upcoming years
could support a ratings upgrade.
Changes in the EETC ratings can result from any combination of
changes in the underlying credit quality or ratings of the company,
Moody's opinion of the importance of the aircraft collateral to the
company's operations and/or its estimates of current and projected
aircraft market values, which will affect estimates of
loan-to-value.
The principal methodology used in rating Hawaiian Holdings, Inc.
and HawaiianMiles Loyalty, Ltd. was Passenger Airlines published in
August 2021.
Headquartered in Honolulu, Hawaii, Hawaiian Holdings, Inc. is the
holding company parent of Hawaiian Airlines, Inc., Hawaii's biggest
and longest-serving airline. Hawaiian offers nonstop service to
Hawaii from 16 US gateway cities, along with service from Japan,
South Korea, Australia, American Samoa and Tahiti. Hawaiian also
provides approximately 130 jet flights daily between the Hawaiian
Islands. The company reported revenue of $1.6 billion in 2021, down
from $2.8 billion in 2019.
HIGHLAND CAPITAL: Indemnity Fund Suits Ch. 11 Plan, Says Court
--------------------------------------------------------------
Rick Archer of Law360 reports that a Texas federal court has upheld
the creation of a directors and officers indemnity fund in
investment firm Highland Capital Management's Chapter 11 case,
finding it was not a modification of the bankruptcy plan requiring
a new creditor vote.
On Friday, January 28, 2022, U.S. District Court Judge Sidney
Fitzwater found that the Texas bankruptcy court didn't err when it
let the Highland Capital estate set up the fund last summer, saying
it fits within the terms of the Chapter 11 plan the court approved
early last year.
About Highland Capital Management
Highland Capital Management, LP, was founded by James Dondero and
Mark Okada in Dallas in 1993. Highland Capital is the world's
largest non-bank buyer of leveraged loans in 2007. It also manages
collateralized loan obligations. In March 2007, it raised $1
billion to buy distressed loans. Collateralized loan obligations
are created by bundling together loans and repackaging them into
new securities.
Highland Capital Management sought Chapter 11 protection (Bank. D.
Del. Case No. 19-12239) on Oct. 16, 2019. On Dec. 4, 2019, the case
was transferred to the U.S. Bankruptcy Court for the Northern
District of Texas and was assigned a new case number (Bank. N.D.
Texas Case No. 19-34054). Judge Stacey G. Jernigan is the case
judge.
At the time of the filing, Highland had between $100 million and
$500 million in both assets and liabilities.
The Debtor tapped Pachulski Stang Ziehl & Jones LLP as bankruptcy
counsel, Foley & Lardner LLP as special Texas counsel, and Teneo
Capital, LLC as litigation advisor. Kurtzman Carson Consultants,
LLC, is the claims and noticing agent.
The U.S. Trustee for Region 6 appointed a committee of unsecured
creditors on Oct. 29, 2019. The committee tapped Sidley Austin LLP
and Young Conaway Stargatt & Taylor LLP as bankruptcy counsel, and
FTI Consulting, Inc. as financial advisor.
HILLS SF LLC: Gets Court OK to Hire Jordan Law Office as Counsel
----------------------------------------------------------------
The Hills SF, LLC received approval from the U.S. Bankruptcy Court
for the Northern District of California to employ Jordan Law
Office, A.P.C. to serve as legal counsel in its Chapter 11 case.
The firm's services include:
a. providing the Debtor with legal advice regarding its powers
and duties in the continued operation of its affairs;
b. providing assistance to the Debtor to preserve and protect
its assets, arrange for a continuation of the working capital and
other financing, and prepare all necessary legal documents;
c. appearing before the bankruptcy court;
d. negotiating with the Debtor's creditors and taking the
necessary legal steps to confirm and consummate a plan of
reorganization;
e. providing other necessary legal services during the course of
the bankruptcy proceedings.
The firm will be paid at the rate of $375 per hour and reimbursed
for out-of-pocket expenses incurred. The retainer fee is $3,000.
Scott Jordan, Esq., a partner at Jordan Law Office, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Scott Jordan, Esq.
Jordan Law Office, A.P.C.
18 Crow Canyon Ct., Ste. 280
San Ramon, CA 94583
Tel: (925) 913-0275
Fax: (925) 307-7082
Email: sjordan@sjordanlaw.com
About The Hills SF
The Hills SF, LLC filed a Chapter 7 voluntary petition (Bankr. N.D.
Cal. Case No. 21-41385) on Nov. 16, 2021. Pursuant to an order
dated Jan. 11, 2022, the case was converted to a Chapter 11
bankruptcy. Judge Roger L. Efremsky oversees the case.
Scott Jordan, Esq., at Jordan Law Office, A.P.C. is the Debtor's
legal counsel.
HTP INC: Committee Taps Wenokur Riordan as Legal Counsel
--------------------------------------------------------
The official committee of unsecured creditors of HTP, Inc. received
approval from the U.S. Bankruptcy Court for the Western District of
Washington to employ Wenokur Riordan, PLLC as its legal counsel.
The firm's services include:
a. providing legal advice to the committee concerning the
administration of the Debtor's Chapter 11 case, settlement of
litigation and claims, and the terms of a plan of reorganization;
b. advising the committee concerning its duties and powers;
c. assisting the committee in the investigation of the acts,
conduct, assets, liabilities and financial condition of the Debtor,
the operation of the Debtor's business, and validity of claims of
secured creditors;
d. negotiating with the Debtor and other parties in interest and
advising the committee concerning the course of action necessary
for the Debtor to reorganize effectively, including issues related
to a Chapter 11;
e. representing the committee at meetings, hearings and
adversary proceedings; and
f. performing other legal services for the committee.
The hourly rates charged by the firm for its services are as
follows:
Alan Wenokur $485 per hour
Nathan Riordan $485 per hour
Catherine Reny $350 per hour
Alan Wenokur, Esq., a partner at Wenokur Riordan, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Alan J. Wenokur, Esq.
Wenokur Riordan PLLC
600 Stewart Street, Suite 1300
Seattle, WA 98101
Tel: (206) 682-6224
Email: alan@wrlawgroup.com
About HTP Inc.
HTP, Inc.'s assets and operations consist of holding 48% of Hytech,
LLC and pursuing certain litigation against parties that have,
among other things, misappropriated technology and usurped business
opportunities. The company is based in Sammamish, Wash.
HTP filed its voluntary petition for Chapter 11 protection (Bankr.
W.D. Wash. Case No. 21-11611) on Aug. 24, 2021, listing $772
million in total assets and $10.45 million in liabilities. Judge
Timothy W. Dore presides oversees the case.
Bush Kornfeld, LLP and Western Washington Law Group, PLLC serve as
the Debtor's bankruptcy counsel and special counsel, respectively.
The U.S. Trustee for Region 18 appointed an official committee of
unsecured creditors on Sept. 17, 2021. The committee is represented
by Alan J. Wenokur, Esq., at Wenokur Riordan, PLLC.
I-70 PROPERTIES: Seeks Cash Collateral Access
---------------------------------------------
I-70 Properties, LLC asks the U.S Bankruptcy Court for the District
of Kansas for authority to use cash collateral and provide adequate
protection.
The Debtor has an immediate and critical need to use cash
collateral consisting of its rental revenue to the extent of
approximately $53,172 per month in order to continue its monthly
operations, preserve and protect the value of their rental
properties, and to meet its ongoing day to day operating expenses
for the rental business. The Debtor will require use of Cash
Collateral over the next 120 days in order to conduct its
day-to-day operations.
The Debtor has been operating a residential rental business
headquartered in Manhattan, Kansas since 2012, when Connie Seymour
and Roger Seymour, its founders, incorporated their sole
proprietorship and transferred personally owned residential
properties to 1-70 Properties, LLC in exchange for their members'
interests.
In 1986, Roger and Connie purchased their first rental property,
which they still own today. In 1989, the construction company which
Roger worked for relocated from Kansas to Missouri. Unwilling to
relocate his family, Roger and Connie chose not to move with the
company and started their small construction business.
Over time, Roger and Connie purchased additional properties as the
opportunities presented themselves. In 2012, at the advice of their
then attorney and CPA, they formed 1-70 Properties LLC. All of
Roger and Connie's real estate was moved into the LLC at that
time.
In 2018, the owner/manager of LBM Rentals, the professional
property management company hired by 1-70 Properties, LLC,
experienced declining health and retired. Connie and Roger chose to
take over the management of the properties at that time. In 2019,
their CPA's health began to decline, and he sold his business. In
taking over the management of the properties, 1-70 Properties, LLC
engaged additional legal counsel better suited to handle eviction
cases. During the transition from professional management to
internal management, it became evident that several tenants that
needed to be evicted. This caused a temporary drop in income in
2018. I-70 Properties then tightened up its lease documents and
tenant screening process.
In 2020, the global COVID-19 pandemic started. The governor of
Kansas declared an eviction and foreclosure moratorium which
affected 1-70 Properties, LLC's rental properties. Some tenants saw
this as an opportunity to delay rent payments owed, while others
stopped paying completely.
Kaw Valley State Bank told the Debtor's management that COVID-19
and the eviction moratorium were not a valid reason for the Debtor
to not make full payments towards its loans. Due to the eviction
moratorium and subsequent decline in income. The Debtor became
delinquent with Kaw Valley State Bank, its principal lender. During
this same time frame, a second lender reduced the interest rate on
a portion of the Debtor's loans, while the third lender
accommodated the Debtor by requiring payment of interest only. Kaw
Valley State Bank was unwilling to do either. In fact, Kaw Valley
State Bank raised the interest rate to a default interest rate. The
Debtor's management met with Kaw Valley State Bank on a weekly
basis producing leases and income statements, so they would be
informed of the Debtor's situation. During the eviction moratorium,
the bank exercised a lock box on the income.
Kaw Valley State Bank sent a letter demanding the loan be paid in
full. During this time frame, late November 2020, Roger and Connie
both contracted COV1D-19. They were unable to meet with the
Debtor's banker in person due to the symptoms and potential
spreading of the virus. They began looking at alternative financing
after receiving the loan payoff demand letter. Kaw Valley State
Bank filed a foreclosure action against 1-70 Properties LLC,
despite the Kansas Governor's orders, which the Debtor contends
were to prevent this practice from occurring. The foreclosure case
was heard in Riley County District Court in January 2021, case
number 20 CV 187.
The Debtor's management has spoken with two nationally known
realtors who have looked at its portfolio. They believe, based upon
cash flow only, that they could sell the properties to investors
that are looking for a safe investment at a number that exceeds
fair market value presented the Debtor's financial disclosures.
The Debtor's Bankruptcy Schedules reflect $9,069,710 in total
assets and $3,692,929 in total liabilities. The Debtor's financial
performance depends primarily upon rental income generated from the
89 residential units in Pottawatomie, Riley, Dickinson and Geary
Counties, Kansas. The moratorium placed on its ability to evict
non-paying tenants arising from the COVID 19 Pandemic has resulted
in a significant reduction in its monthly rental income.
Many of the Debtor's tenants have made application with the Kansas
Emergency Rental Assistance program to assist them in paying
delinquent rents owed the Debtor resulting from the COVID-19
Pandemic. The Debtor's management projects that it will receive in
the coming months payment from KERA totaling $128,012. These funds
have been coming in as tenants' applications are approved. The
Debtor's management is in weekly contact with the KERA program
representatives. On June 23, 2021, Kaw Valley State Bank, Wamego,
Kansas obtained a judgment against the Debtor in the District Court
of Riley, County, Kansas, and had a sheriffs sale scheduled for
December 14, 2021, to liquidate certain properties of the Debtor
upon which Kaw Valley State Bank had obtained a mortgage
foreclosure judgment. The Debtor's management attempted to
negotiate with Kaw Valley State Bank an extension of time to
finalize a refinance of the Kaw Valley State Bank debt, but to no
avail. The Bankruptcy proceeding was filed to stay the sheriffs
sale.
The Debtor submits Kaw Valley State Bank is adequately protected
for any potential diminution in the value of its prepetition
collateral.
Further, Kaw Valley State Bank is protected by the substantial
equity in the property.
As additional adequate protection, Kaw Valley State Bank will
continue to possess its liens upon any and all its pre-petition
collateral according to the priorities as presently exist. The
value of the real estate securing the claim of Kaw Valley State
Bank is $7,769,683, while the secured claim of Kaw Valley State
Bank is $2,091,820, resulting in an equity cushion of $5,677,863.
The Debtor will also maintain replacement insurance coverage on its
assets.
A copy of the motion is available at https://bit.ly/3gaQPu9 from
PacerMonitor.com.
About I-70 Properties
I-70 Properties, Inc. filed its voluntary petition for relief under
Chapter 11 of the Bankruptcy Code (Bankr. D. Kan. Case No.
21-40768) on Dec. 13, 2021. Connie L. Seymour, managing member,
signed the petition. Its Bankruptcy Schedules reflect $9,069,710 in
total assets and $3,692,929 in total liabilities.
Judge Dale L. Somers oversees the case.
Tom R. Barnes II, Esq., at Stumbo Hanson, LLP and VonFeldt, Bauer &
VonFeldt, CPA serve as the Debtor's counsel and accountant,
respectively.
INTERPACE BIOSCIENCES: Appoints Vijay Aggarwal as Director
----------------------------------------------------------
Interpace Biosciences, Inc. announced that Vijay Aggarwal, Ph.D.,
has been appointed to the Interpace Board of Directors effective
Feb. 1, 2022. Dr. Aggarwal replaces Eric B. Lev, both designees of
Ampersand 2018 Limited Partnership, a Series B Preferred
stockholder of the Company.
Dr. Aggarwal has over 30 years of experience in both pharmaceutical
services and clinical diagnostics. In addition to serving as
managing partner of The Channel Group, Dr. Aggarwal provides
strategic advisory services to companies with operations or
investments in the clinical diagnostics, molecular diagnostic and
anatomic pathology sectors. Dr. Aggarwal has previously served as
CEO of Vaxigenix, a pharmaceutical company developing vaccine
treatments for colorectal cancer, as president and CEO of Aureon
Laboratories, Inc., a predictive pathology company offering
advanced tissue analysis services to practicing physicians and the
pharmaceutical industry, as president of AAI Development Services,
Inc., a global contract research and development services company
serving the pharmaceutical and biotech industries, and as President
of Quest Diagnostic Ventures, where he had responsibility for new
technology, new business models, clinical trials testing, and
direct–to-consumer strategies. Earlier in his career, Dr.
Aggarwal held many positions with SmithKline Beecham Clinical
Laboratories, the clinical laboratory operations of SmithKline
Beecham plc, including direct responsibility for all of SBCL's
U.S.-based laboratories as executive vice president of
Laboratories, responsibility for reimbursement as Vice President of
Managed Care and several General Management assignments.
"We are very excited to welcome Dr. Aggarwal to our Board of
Directors," stated Thomas Burnell, president and CEO of Interpace.
"We believe that with his background and experience he will make a
significant contribution to the anticipated growth of our company
in clinical services as well as pharma services. We would also
like to thank Eric Lev for his service and contributions as a
director in transforming Interpace from a molecular diagnostic
testing and service company into a broader based biosciences
business including biopharma services that has been capitalized
with two well-known private equity firms," continued Mr. Burnell.
The Agreement further provides that in connection with his service
on the Company's Board and committees, Dr. Aggarwal will receive
compensation in accordance with the Company's previously disclosed
non-employee director compensation program set forth in the
Company's proxy statement dated Sept. 27, 2021, including an annual
director's fee of $50,000 payable quarterly in arrears,
representing $40,000 for service as a director and $10,000 for
service as Chair of the Regulatory Compliance Committee. In
addition, on Feb. 1, 2022, Dr. Aggarwal will be granted a stock
option pursuant to the Company's 2019 Equity Incentive Plan to
purchase 28,000 shares of the Company's common stock at the fair
market value on that date. In connection with his appointment and
election to the Board, the Company and Dr. Aggarwal will enter into
the Company's standard form of indemnification agreement.
About Interpace
Headquartered in Parsippany, NJ, Interpace Biosciences f/k/a
Interpace Diagnostics Group, Inc. -- http://www.interpace.com--
offers specialized services along the therapeutic value chain from
early diagnosis and prognostic planning to targeted therapeutic
applications. Clinical services, through Interpace Diagnostics,
provides clinically useful molecular diagnostic tests,
bioinformatics and pathology services for evaluating risk of cancer
by leveraging the latest technology in personalized medicine for
improved patient diagnosis and management. Pharma services, through
Interpace Pharma Solutions, provides pharmacogenomics
testing, genotyping, biorepository and other customized services to
the pharmaceutical and biotech industries.
Interpace Biosciences reported a net loss of $26.45 million for the
year ended Dec. 31, 2020, compared to a net loss of $26.74 million
for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company
had $40.31 million in total assets, $32.42 million in total
liabilities, $46.54 million in preferred stock, and a total
stockholders' deficit of $38.65 million.
Woodbridge, New Jersey-based BDO USA, LLP, the Company's auditor
since 2012, issued a "going concern" qualification in its report
dated April 1, 2021, citing that the Company has suffered operating
losses, has negative operating cash flows and is dependent upon its
ability to generate profitable operations in the future or obtain
additional financing to meet its obligations and repay its
liabilities arising from normal business operations when they come
due. In addition, the Company has been materially impacted by the
outbreak of a novel coronavirus (COVID-19), which was declared a
global pandemic by the World Health Organization in March 2020.
These conditions raise substantial doubt about its ability to
continue as a going concern.
J&P FLASH INC: Seeks to Hire Glankler Brown as Bankruptcy Counsel
-----------------------------------------------------------------
J&P Flash, Inc. seeks approval from the U.S. Bankruptcy Court for
the Western District of Tennessee to employ Glankler Brown, PLLC to
serve as legal counsel in its Chapter 11 case.
The firm's services include:
a. assisting in the preparation of bankruptcy schedules,
statement of affairs and reports;
b. preparing motions and applications;
c. assisting in the formulation and submission to creditors of a
plan of reorganization and motions to approve the sale of assets;
and
d. providing legal advice with respect to the various matters
arising during the course of the Debtor's bankruptcy case.
The hourly rates charged by the firm's attorneys and paralegals are
as follows:
Michael P. Coury, Member $450 per hour
Ricky L. Hutchens, Associate $275 per hour
Jeanie R. Bouck, Paralegal $195 per hour
Glankler Brown will also receive reimbursement for out-of-pocket
expenses incurred.
Michael Coury, Esq., a partner at Glankler Brown, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Michael P. Coury, Esq.
Ricky L. Hutchens, Esq.
Glankler Brown, PLLC
6000 Poplar Avenue, Suite 400
Memphis, TN 38119
Tel: (901) 576-1886
Email: mcoury@glankler.com
rhutchens@glankler.com
About J&P Flash
J&P Flash, Inc., a company in West Memphis, Ariz., sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D.
Tenn. Case No. 21-23968) on Dec. 1, 2021, listing up to $50,000 in
assets and up to $10 million in liabilities. Dwayne Jones, vice
president of J&P Flash, signed the petition.
Judge Denise E. Barnett oversees the case.
Glankler Brown, PLLC serves as the Debtor's legal counsel.
K.R. CALVERT: Wins Cash Collateral Access Thru Mar 31
-----------------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Tennessee,
Nashville Division, has authorized Calvert Health, LLC, an
affiliate of K.R. Calvert Co., LLC to use cash collateral on an
interim basis in accordance with the budget and provide adequate
protection. By consent of both Debtors and to ensure compliance
with the cash collateral order, KRC is also bound by certain
reporting and other obligations, and restrictions.
Calvert Health is permitted to use cash collateral up to a maximum
of 110% of the semi-monthly budgeted amount set forth on the budget
through March 31, 2022.
The Court order held that Calvert Health has demonstrated the
requirement for an immediate use of cash in which Newtek Small
Business Finance, LLC has a first position lien interest to, among
other things, fund interim operating expenses, including, without
limitation, payroll, rent, insurance, fuel, utilities, supplies and
materials, and other customary operating expenses.
There are three creditors with perfected Security Interests in the
cash collateral of Calvert Health, set forth in order of priority
of liens:
a. Newtek Small Business Finance, LLC on November 21, 2017,
filed a UCC-1 financing statement, Instrument No. 427839835, with
the Tennessee Secretary of State, asserting a blanket lien on all
the Debtors' assets. Newtek has a first position lien on the Cash
Collateral of both Calvert Health and KRC. The Newtek lien on cash
collateral is not junior to any other lender or creditor.
b. CHTD Company may also assert a junior lien on Calvert
Health’s cash collateral. On May 11, 2021, CHTD filed a UCC-1
financing statement, Instrument No. 434564303, with the SOS,
asserting a blanket lien on all of Calvert Health's assets.
c. The United States Small Business Administration may also
assert a lien on Calvert Health’s cash collateral. On November
26, 2021, the SBA filed a UCC-1 financing statement, Instrument No.
435678565, with the SOS, asserting a blanket lien on all of Calvert
Health's assets.
As adequate protection for the Debtor's use of cash collateral,
Newtek is granted a first priority, valid, binding, enforceable and
automatically perfected replacement lien and security interest, and
if necessary, adequate protection liens, in Debtor Calvert Health's
cash collateral, and in all collateral as to which Newtek held a
validly perfected lien pre-petition.
As further security and adequate protection for any decrease in the
value of any collateral, Newtek is granted a senior security
interest in all property and assets of each of the Debtors.
The replacement lien and security interest granted will be deemed
automatically perfected upon entry of the Order without the
necessity of Newtek taking possession of any collateral or filing
financing statements or other documents.
As adequate protection payment for the use of cash and the ongoing
diminution in value over the passage of time for continued use of
approximately 47 vehicles subject to Newtek's lien, Newtek will
receive a $22,000 payment per month during the Cash Use Period, on
the schedule as reflected in the Budget. The payments will be
credited to reduce the principal balance of whatever amount
Newtek's secured claim is later determined to be under the
provisions and operation of 11 U.S.C. section 506.
To the extent that the adequate protection provided to Newtek in
the order is insufficient to protect its interests, Newtek is
granted a superpriority administrative expense claim and all other
benefits and protections allowable under 11 U.S.C. section 507(b).
A copy of the order is available at https://bit.ly/35rojSO from
PacerMonitor.com.
About KR Calvert and Calvert Health
KR Calvert Co., LLC and Calvert Health, LLC filed petitions for
Chapter 11 protection (Bankr. M.D. Tenn. Case No. 21-03905 and
21-03906) on Dec. 27, 2021. Klein Calvert and Pamela Calvert,
members, signed the petitions.
At the time of the filing, KR Calvert listed up to $50,000 in
assets and up to $10 million in liabilities while Calvert Health
listed as much as $10 million in both assets and liabilities.
Judge Randal S. Mashburn oversees the cases.
The Debtors tapped Henry E. Hildebrand, IV, Esq., at Dunham
Hildebrand PLLC as legal counsel.
Newtek Small Business Finance, LLC, as secured creditor, is
represented by:
Daniel H. Puryear, Esq.
Puryear Law Group
104 Woodmont Boulevard
Woodmont Center, Suite 201
Nashville, TN 37205
Tel: (615) 630-6601
Fax: (615) 630-6602
Email: dpuryear@puryearlawgroup.com
LATAM AIRLINES: Creditors' Committee Disagrees Negotiation Process
------------------------------------------------------------------
LATAM Airlines Group S.A. and its Debtor Affiliates submitted a
Third Revised Disclosure Statement with respect to the Joint Plan
of Reorganization dated Jan. 27, 2022.
Position of the Creditors' Committee
The Creditors' Committee has grave concerns about the Plan, which
it believes provides insufficient distributions to unsecured
creditors, is the result of a flawed and inappropriate process, and
unlawfully favors the Commitment Creditors and the Backstop
Shareholders at the expense of the Debtors' other similarly
situated impaired unsecured creditors.
The Creditors' Committee believes that each creditor's vote is
important and encourages every creditor to timely cast a vote on
the Plan. The Plan cannot be confirmed unless it is accepted by
impaired creditors that hold both (1) claims totaling at least two
thirds in amount, and (2) a majority in number, of all claims voted
in the impaired class. If the majority in number and two thirds in
amount of claims held by unsecured creditors that actually vote do
not vote for the Plan, the Plan is unlikely to be confirmed by the
Court.
The Creditors' Committee's opposition to the Plan is based on its
belief that the Plan provides insufficient recoveries to LATAM
Parent's general unsecured creditors who will receive less than 20
cents for every dollar of Allowed Class 5 claims they hold based on
the Debtors' assumed plan value and claims estimates, unless they
are eligible to and elect to invest new money and grant the Plan's
releases to the Debtors and related parties.
The Creditors' Committee views the Plan as the result of a flawed
process that has not maximized the value of the Debtors' estates
and which transfers inappropriately high consideration to the
preferred Commitment Creditors in the form of an excessive 20%
backstop fee and a disproportionate allocation of the Plan's new
money share issuance at a discounted price, without a meaningful
market test.
The Creditors' Committee asserts that the Plan entitles Commitment
Creditors to obtain more than 85% of the New Convertible Notes
Class C which, at the Debtors' assumed $14 billion plan value,
effectively allows them to acquire shares in the reorganized
business at a 20.7% discount. In aggregate, the Creditors'
Committee asserts that the cash backstop fees (more than $743
million in cash) and discounts on shares equate to more than $1.587
billion in value which are not available to other general unsecured
creditors of LATAM Parent.
The Plan also affords the Backstop Shareholders and other
shareholders the opportunity to buy more than $1.3 billion of stock
in the reorganized business at a 13.7% discount using an assumed
plan value of $14 billion via the New Convertible Notes Class B and
another $800 million of stock in the reorganized business through
the ERO Rights Offering. The Creditors' Committee believes these
discounts result in the Plan diverting $345 million in value to
current shareholders at the expense of creditors.
The Creditors' Committee's concerns are compounded by what it
believes is the Plan's favorable treatment of the LATAM Parent 2024
Bonds and the LATAM Parent 2026 Bonds upon a purported second
recovery from LATAM Finance Ltd., a special purpose financing
subsidiary that issued such bonds. Thus, the Creditors' Committee
believes that the Plan inappropriately forces general unsecured
creditors to subsidize the Plan's distributions to the holders of
LATAM Parent 2024 Bonds Claims and LATAM Parent 2026 Bonds Claims.
Peuco repaid portions of the LATAM Finance Claim consistent with
the terms and schedule set forth in the indentures governing the NY
Law Bonds. The Creditors' Committee contends that the fact that the
intercompany loan agreements do not have a scheduled payment or
fixed maturity dates, and do not bear interest other than for
overdue amounts, demonstrates insufficient indicia of a genuine
debt obligation of Peuco to LATAM Finance. In the Creditors' view,
if the LATAM Finance Claim is disallowed, the LATAM 2024 Bond
Claims and the LATAM 2026 Bond Claims should rank pari passu with
the general unsecured claims in Class 5.
The treatment of Holders of Allowed Claims in Class 4 comprises and
depends on a combined recovery on account of their Allowed Claims
against both LATAM Parent and LATAM Finance Ltd. If the Court were
to order the substantive consolidation of LATAM Finance, Peuco and
LATAM Parent, or if the Court were to grant LATAM Finance Claim
Objection, the recoveries for Holders of the NY Law Bonds (Class 4
Claims) would be impaired and the recoveries for existing Holders
of Class 5 Claims would be improved.
The Creditors' Committee disagrees with the Debtors'
characterization of their plan negotiation process. The Creditors'
Committee consistently raised its concerns about the Debtors'
process with the Debtors and urged the Debtors to conduct a robust
and thorough marketing process (including to parties not currently
invested in the debt or equity), to include strategic buyers, and
not to pair backstop solicitation with votes on the plan.
The Creditors' Committee believes the Debtors' flawed process is
directly responsible for the excessive returns afforded to the
Commitment Creditors and the Backstop Shareholders under the Plan
and the Plan's many other defects which the Creditors' Committee
maintains violate the confirmation requirements of the Bankruptcy
Code. The Debtors disagree with the Creditors' Committee's
characterization of the plan negotiation process and other
characterizations.
The Creditors' Committee believes that the Debtors did not
seriously consider or engage with Azul with respect to its November
11th letter and related materials, including with respect to the
various aspects which the Debtors believed were lacking. The
Debtors assert that the Azul materials lacked fundamental and
necessary details, any analysis of threshold issues necessary to
consummate a restructuring transaction, any binding indications of
support, or even the most basic terms of a potential
restructuring.
The Amended Disclosure Statement does not alter the proposed
treatment for unsecured creditors:
* Class 5 consists of General Unsecured Claims against LATAM
Parent. Each Holder of an Allowed General Unsecured Claim against
LATAM Parent shall receive in full satisfaction, settlement,
discharge and release of its Allowed Class 5 Claim a distribution
pursuant to Class 5a Treatment, unless such Holder (excluding any
Ineligible Holders) opts into Class 5b Treatment. This Class will
receive a distribution of 16.3 to 19.3% of their allowed claims.
* Class 6 consists of General Unsecured Claims against Debtors
other than LATAM Parent, Piquero Leasing Limited and LATAM Finance
Ltd. Each Holder of an Allowed General Unsecured Claim against a
Debtor other than LATAM Parent, Piquero Leasing Limited or LATAM
Finance shall receive, in full satisfaction, settlement, discharge
and release of its Allowed Class 6 Claim (x) Cash equal to the
amount of such Allowed Class 6 Claim; (y) such other less favorable
treatment as to which the Debtors and the Holder of such Allowed
Class 6 Claim shall have agreed upon in writing or (z) such other
treatment such that the applicable Allowed Class 6 Claim will be
rendered Unimpaired. This Class will receive a distribution of 100%
of their allowed claims.
* Class 7 consists of the General Unsecured Claim against
Piquero Leasing Limited. The Holder of the Allowed General
Unsecured Claim against Piquero shall receive, in full
satisfaction, settlement, discharge and release of such Claim, (x)
the Piquero Consideration or (y) such other less favorable
treatment as to which the Debtors and the Holder of such Allowed
Class 7 Claim shall have agreedupon in writing. This Class will
receive a distribution of 16.3 to 19.3% of their allowed claims.
The Debtors and Reorganized Debtors, as applicable, shall fund
distributions under the Plan with: (i) Cash on hand, including Cash
from operations or asset dispositions; (ii) Cash proceeds from the
subscription of ERO New Common Stock pursuant to the ERO Rights
Offering Procedures, (iii) the New Convertible Notes Class A, (iv)
the New Convertible Notes Class C, (v) the Cash proceeds from the
subscription of the New Convertible Notes, and (vi) the proceeds of
the Exit Financing.
Counsel for the Debtors:
CLEARY GOTTLIEB STEEN & HAMILTON LLP
Richard J. Cooper
Lisa M. Schweitzer
Luke A. Barefoot
Thomas S. Kessler
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
About LATAM Airlines Group
LATAM Airlines Group S.A. -- http://www.latam.com/-- is a
pan-Latin American airline holding company involved in the
transportation of passengers and cargo and operates as one unified
business enterprise. It is the largest passenger airline in South
America.
Before the onset of the COVID-19 pandemic, LATAM offered passenger
transport services to 145 different destinations in 26 countries,
including domestic flights in Argentina, Brazil, Chile, Colombia,
Ecuador and Peru, and international services within Latin America
as well as to Europe, the United States, the Caribbean, Oceania,
Asia and Africa.
LATAM and its 28 affiliates sought Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in
Chile, Peru, Colombia, Ecuador and the United States are part of
the Chapter 11 filing.
The Debtors disclosed $21,087,806,000 in total assets and
$17,958,629,000 in total liabilities as of Dec. 31, 2019.
The Hon. James L. Garrity, Jr., is the case judge.
The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as
bankruptcy counsel, FTI Consulting as restructuring advisor, Lee
Brock Camargo Advogados as local Brazilian litigation counsel, and
Togut, Segal & Segal LLP and Claro & Cia in Chile as special
counsel. The Boston Consulting Group, Inc. and The Boston
Consulting Group UK LLP serve as the Debtors' strategic advisors.
Prime Clerk LLC is the claims agent.
The official committee of unsecured creditors formed in the case
tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters
Jureller Southard & Stevens, LLP as conflicts counsel, UBS
Securities LLC as investment banker, and Conway MacKenzie, LLC as
financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is
the committee's Brazilian counsel.
The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as
counsel.
Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew
Glenn and partner Shai Schmidt, has been retained as counsel to the
Ad Hoc Committee of Shareholders.
LEGACY EDUCATION: Ibex Entities Lower Equity Stake to 4%
--------------------------------------------------------
Ibex Investors LLC, Ibex Microcap Fund LLLP, and Ibex Investment
Holdings LLC disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2021, they
beneficially own 1,344,427 shares of common stock of Legacy
Education Alliance, Inc., representing 4 percent of the shares
outstanding.
Justin B. Borus also reported beneficial ownership of 1,351,234
common shares.
The percentage of beneficial ownership is based on 33,917,697
shares of common stock outstanding as of Dec. 21, 2021, as reported
by the issuer in its Form S-1/A filed on Dec. 23, 2021.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1531964/000110465922008300/tm224610d5_sc13ga.htm
About Legacy Education
Cape Coral, Fla.-based, Legacy Education Alliance, Inc. --
http://www.legacyeducationalliance.com-- is a provider of
practical and value-based educational training on the topics of
personal finance, entrepreneurship, real estate investing
strategies and techniques.
Legacy Education Alliance reported a net income of $16.01 million
for the year ended Dec. 31, 2020, compared to a net income of $9.95
million for the year ended Dec. 31, 2019. As of Sept. 30, 2021,
the Company had $2.17 million in total assets, $23.67 million in
total liabilities, and a total stockholders' deficit of $21.50
million.
MaloneBailey, LLP, in Houston, Texas, the Company's auditor since
2014, issued a "going concern" qualification in its report dated
April 9, 2021, citing that the Company has a net capital deficiency
and an accumulated deficit that raise substantial doubt about its
ability to continue as a going concern.
LEXARIA BIOSCIENCE: Plans to Sell $50M Worth of Securities
----------------------------------------------------------
Lexaria Bioscience Corp. filed a Form S-3 registration statement
with the Securities and Exchange Commission relating to the offer
and sale of up to $50,000,000 in aggregate of common stock,
warrants, rights, and units separately or together in any
combination, in one or more classes or series, in amounts, at
prices and on terms that the Company will determine at the time of
the offering.
The Company's common stock and public warrants are listed on the
Nasdaq Capital Market under the symbols "LEXX" and "LEXXW",
respectively. The last reported sale prices of the Company's
common stock and public warrants on the Nasdaq Capital Market on
Jan. 27, 2022 were $4.17 per share and $1.26 per public warrant,
respectively. The aggregate market value of the Company's
outstanding common stock held by non-affiliates is $22,436,589.09
based on 5,950,998 shares of outstanding common stock, of which
570,521 shares are held by affiliates, and a per share price of
$4.17, which was the closing sale price of its common stock as
quoted on the NASDAQ Capital Market on Jan. 27, 2022. During the
12 calendar month period that ends on, and includes, the date of
this prospectus, the Company has not offered and sold any of its
securities pursuant to General Instruction I.B.6 of Form S-3.
A full-text copy of the prospectus is available for free at:
https://www.sec.gov/Archives/edgar/data/1348362/000164033422000200/lxrp_s3.htm
About Lexaria
Lexaria Bioscience Corp. -- http://www.lexariabioscience.com-- is
a global innovator in drug delivery platforms. Its patented
DehydraTECH drug delivery technology changes the way Active
Pharmaceutical Ingredients enter the bloodstream, promoting
healthier ingestion methods, lower overall dosing, and higher
effectiveness for lipophilic active molecules. DehydraTECH
increases bio-absorption, reduces time of onset, and masks unwanted
tastes for orally administered bioactive molecules, including
cannabinoids, vitamins, non-steroidal anti-inflammatory drugs
(NSAIDs), nicotine, and other molecules. Lexaria has licensed
DehydraTECH to multiple companies in the cannabis industry for use
in cannabinoid beverages, edibles and oral products and to a
world-leading tobacco producer for the development of smokeless,
oral-based nicotine products. Lexaria operates a licensed in-house
research laboratory and holds a robust intellectual property
portfolio with 16 patents granted and over 60 patents pending
worldwide.
Lexaria Bioscience reported a net loss and comprehensive loss of
$4.19 million for the year ended Aug. 31, 2021, a net loss and
comprehensive loss of $4.08 million for the year ended Aug. 31,
2020, and a net loss and comprehensive loss of $4.16 million for
the year ended Aug. 31, 2019. As of Nov. 30, 2021, the Company had
$11.74 million in total assets, $277,328 in total liabilities, and
$11.47 million in total stockholders' equity.
LIONS GATE: Fitch Assigns First Time 'B' LT IDR, Outlook Stable
---------------------------------------------------------------
Fitch has assigned a Long-Term Issuer Default Rating of 'B' with a
Stable Rating Outlook to Lions Gate Entertainment Corp., Lions Gate
Entertainment Inc. and Lions Gate Capital Holdings LLC. In
addition, Fitch has assigned issue level ratings at Lions Gate
Capital Holdings of 'BB'/'RR1' to the first lien senior secured
debt and a rating of 'B-'/'RR5' to the unsecured debt.
The 'B' IDR reflects Lions Gate's scale and leadership in film and
television content production, the strength of the Starz-branded
premium subscription video services, and the value of the Lions
Gate's expansive content library. The ratings also reflect Lions
Gate's elevated Fitch-calculated total leverage, as measured by
total debt with equity credit/Operating EBITDA, inclusive of the
account receivable facility and production loans, of 9.0x as of
Sept. 30, 2021.
KEY RATING DRIVERS
Competitive Positioning: Lions Gate's ratings reflect its scale and
positioning as a content production company, supported by its
library of over 17,000 film titles and television episodes. It also
incorporates the strength of the Starz-branded premium subscription
video services, which had roughly 30 million subscribers as of
Sept. 30, 2021. Lions Gate generated revenues and Fitch-calculated
Operating EBITDA of $3.5 billion and roughly $437 million,
respectively, for the LTM period ended Sept. 30, 2021.
Elevated Leverage: Fitch calculates gross leverage at Lions Gate
for the LTM period ended Sept. 30, 2021 at 9.0x, inclusive of the
non-recourse accounts receivable facility and production loans.
Gross leverage excluding the accounts receivable facility and
production loans was 5.7x. Fitch believes management is committed
to strengthening the balance sheet through free cash flow (FCF)
deployment and expects moderate deleveraging to the mid-single
digits over the rating horizon.
Strength in Content Production: Lions Gate has created valuable IP
including 'The Saw', 'The Hunger Games', 'Twilight', 'Now You See
Met' and 'John Wick' film franchises, as well as other strong
performing individual titles such as 'La La Land', 'Wonder' and
'Knives Out'. Lions Gate also produced a number of top television
series including 'Orange is the New Black' (2013-2019 on Netflix,
co-produced), Mad Men (2007-2015 on AMC, co-produced), Weeds
(2005-2012 on Showtime, co-produced).
The company has guided to a 70% increase in scripted series for the
2022 fiscal year, increasing content spend dramatically in order to
provide content for over-the-top (OTT) services and drive
subscriber growth. Fitch believes this increase in content spend
will result in an increase in subscription revenues as well as a
material decrease in margins to the low double-digit range due to
increased production costs.
Media Networks Stability: Multi-year distribution contracts provide
a level of visibility into the Media Networks segment's operating
performance. With the February 2020 renewal of the Comcast
distribution agreement involving a shift to a la carte, Fitch
expects STARZ's overall subscriber base to remain relatively stable
over the next few years as declines in traditional subscribers from
cord-cutting and cord-shaving will be offset by growth in STARZ OTT
subscribers.
The media networks segment generated $1,560 million in revenues and
$288 million in profit for the fiscal year ending March 31, 2021,
representing an 18% segment profit margin. The increase in original
content and marketing expenditures are likely to weigh on STARZ's
segment profit margin, but Fitch anticipates that Starz' profit
margin for the domestic networks segment will be in the high teens
to low 20% range over the rating horizon.
Valuable Library Assets: Lions Gate's credit profile benefits from
ownership of a large content library. Fitch believes content owners
and creators are among the best-positioned subsectors in the new
entertainment ecosystem due to streaming services' high demand for
content. A sale or partial monetization of the library represents a
possible source of funding in the event of financial distress at
the firm. There is precedent for selling library assets the raise
liquidity, such as when MGM sold its library up to May 9, 1986 as
part of a deal to resolve a heavy debt burden.
Increasing Competition and Secular Challenges: The media landscape
has been impacted by increasing viewership fragmentation owing to
shifting consumer preferences for on-demand and OTT viewing and the
expanding number of offerings from new media players. While demand
for content is increasing, these changes are increasing the risk
profile of premium content production as production costs rise for
all players across the media ecosystem.
DERIVATION SUMMARY
The 'B' ratings and Stable Outlook reflect Lions Gate's, film
library, scale, and leadership in film and television content
production, the Starz-branded premium subscription video services
and the relative stability of the company's media networks
business.
The ratings also weigh Lions Gate's elevated Fitch-calculated total
leverage, as measured as total debt with equity credit to Operating
EBITDA, of 9.0x as of Sept. 30, 2021. The Stable Outlook
incorporates Fitch's opinion that strengthening the balance sheet
is a capital allocation priority over the near-term and that
management will allocate excess free cash flow (FCF) to debt
reduction and explore other capital raising options to more
meaningfully reduce leverage to a level that is more consistent
with the rating category.
Fitch includes the $871.9 million of outstanding production loans
held generally held by SPVs (and secured by all rights to a
specific picture, including copyrights, rights to produce and
distribution rights) in its estimation of total debt which is
consistent with Fitch's corporate rating criteria and Fitch's
belief that these production loans are important financing channel
for Lions Gate and as such, the company is unlikely to let any
specific SPV default on a production loan obligation which could
increase borrowing and collateral requirements for future film
financing.
Per Fitch's criteria on accounts receivables sales, Fitch has also
adjusted total debt to include the $532 million of outstanding
accounts receivables that the company has monetized (off-balance
sheet) as of Sept. 30, 2021. While the accounts receivable sale
transactions are non-recourse to Lions Gate, the program relates to
its recurring business. Lions Gate has utilized accounts
receivables sales as an alternative source of funding (more
efficient from a cost of capital perspective) than relying on other
debt instruments (i.e. revolver) to support operations. As such,
Fitch adjusts Lions Gate's operating metrics to improve
comparability with other issuers while recognizing that the
majority of receivables monetized have multi-year tenors and would
not come back onto Lionsgate's balance sheet should this financing
no longer be available in the future.
The ratings also incorporate the inherent 'hit driven' volatility
of the film and television content business, the company's smaller
relative scale which require it to rely more heavily on
co-financing and co-production arrangements to offset the high
upfront content costs, and the overall rising costs of premium
content production owing to increasing competition from new media
companies (i.e. Netflix, Apple, Amazon).
Recovery Assumptions:
Fitch's recovery analysis for Lions Gate incorporates an
independent third-party valuation of Lions Gates library film and
television library. Fitch believes that in the event of a
bankruptcy Lions gate could monetize its library in order to
generate funds to pay lenders. Fitch believes the growth of
streaming services has created an excess demand for content, and
Lions Gate, which specializes in content production, is
well-positioned to benefit from the current market.
The third-party valuation of Lions Gate's library was competed
using March 31, 2021 year-end data on unsold library rights and was
undertaken by a reputable consulting firm with expertise in this
area. For the purpose of the analysis, the consulting firm relied
on unsold rights forecasts provide by management on a
title-by-title, by-media, and by-territory basis
Fitch applied the estimated Library Valuation to the recovery as
follows: The midpoint valuation from the valuation report was
applied to the recovery value. Fitch stripped out the EBITDA
associated with the company's library from Fitch's estimate of
going concern EBITDA as it would no longer be able to generate
earnings from this division if it was sold. A multiple of 8.0x was
then applied to going-concern to form the estimated enterprise
value of the remaining business. The estimated enterprise value of
the remaining business plus sale proceeds from the library formed
the basis of Fitch's recovery estimate. A 10% administrative fee
was assumed.
In arriving at the 8x multiple Fitch considered recent peer
multiples in the marketplace. MGM, one of Lions Gates closest
competitors, was acquired by Amazon for a multiple of approximately
49x EBITDA. Also, RHI Entertainment, a television content business,
emerged from bankruptcy at a 7.4x multiple of post-emergence EBITDA
in 2011. Given the elevated valuations in the content production
space, Fitch believes that an 8.0x emergence multiple is
reasonable.
Applying the Fitch estimated enterprise value of the business to
the securities and using standard notching criteria, Fitch arrives
at an IDR of 'BB'/'RR1' on the first lien debt and a rating of
'B-'/'RR5' on the unsecured debt.
KEY ASSUMPTIONS
-- Low Double digit revenue growth driven by favorable forecast
year film slate and partial and reopening of theatres over
rating horizon;
-- EBITDA margins fluctuating in low double digits to mid-teens
over rating horizon, driven by film slate and production
expenses;
-- No incremental Debt issuances over rating horizon, debt paid
according to maturities and amortization schedules;
-- No significant M&A or divestitures forecasted over rating
horizon.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- A material asset sale, such as Starz, with the asset sale
proceeds applied to debt repayments;
-- Gross leverage on a sustained basis, defined as total debt
with equity credit/operating EBITDA, below 5.5x;
-- Sustained operating margins in the mid-teens.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Sustained underperformance of Lions Gate's film and production
segments and/or notable churn in Starz's subscriber base;
-- Gross leverage on a sustained basis, defined as total debt
with equity credit/operating EBITDA, above 7.0x without a
credible deleveraging plan;
-- Sustained negative FCF.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
issuers have a best-case rating upgrade scenario (defined as the
99th percentile of rating transitions, measured in a positive
direction) of three notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of four notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are
based on historical performance.
LIQUIDITY AND DEBT STRUCTURE
Substantial Debt Stack:
As of Sept. 30, 2021, debt at the company includes a term loan A
with $204 million maturing in 2023 and $445 maturing in 2026.
Interest on the term loan A accrues at L + 1.75%. The company also
has $850 million in term loan B borrowings, maturing 2025 and
accruing interest at L + 2.25%. The company also has $1 billion in
senior unsecured notes maturing in 2029 and accruing interest at
5.50%. Lions Gate currently has an undrawn, $1.25 billion revolver
maturing in 2026. The revolver was sized at $1.5billion on Sept.
30, 2021, but the company voluntarily reduced the facility by $250
million to its current $1.25 billion level in early October 2021.
Strong Liquidity:
Liquidity at the company on Sept. 30, 2021 consisted of $442.6
million in cash and $1.5 billion in revolver availability. Fitch
believes the company has sufficient liquidity and capacity to
manage term loan amortization and interest payments.
ISSUER PROFILE
Lions Gate is a content production company whose films, television
series, digital products and OTT platforms reach audiences
globally. The company's extensive content library includes over
17,000 films and television shows that are delivered through its
global sales and licensing infrastructure.
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.
LUCERO LLC: Case Summary & One Unsecured Creditor
-------------------------------------------------
Debtor: Lucero LLC
21 Lakewood Circle
San Mateo, CA 94402-3971
Chapter 11 Petition Date: January 31, 2022
Court: United States Bankruptcy Court
Northern District of California
Case No.: 22-30058
Judge: Hon. Dennis Montali
Debtor's Counsel: Matthew D. Metzger, Esq.
BELVEDERE LEGAL, PC
1777 Borel Place, Suite 314
San Mateo, CA 94402
Tel: 415-513-5980
Fax: 415-513-5985
Email: info@belvederelegal.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Henry Richard Lucero as managing
member.
Jason W. Estavillo, Esq. of Law Offices of Jason W. Estavillo,
PC is listed as the Debtor's only unsecured creditor holding a
claim of $34,421.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/F7CCHBQ/Lucero_LLC__canbke-22-30058__0001.0.pdf?mcid=tGE4TAMA
MCAFEE CORP: Moody's Assigns B2 Rating to New Senior Secured Notes
------------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to McAfee Corp.'s
proposed senior secured notes and a Caa2 rating to the company's
proposed senior unsecured notes. The proposed notes along with
previously rated first lien secured term loans (rated B2) and new
equity will be used by private equity firms Permira, Advent and
Crosspoint to acquire McAfee. The transaction is expected to close
in the first half of 2022.
RATINGS RATIONALE
McAfee's B3 Corporate Family Rating ("CFR") reflects the company's
very high initial leverage offset by its leading position in the
consumer endpoint security markets and track record of steady
revenue growth. Debt to EBITDA will be around 10x pro forma for the
acquisition based on trailing September 2021 results (excluding
stranded costs, public company costs, and certain one-time
expenses) and about 9x on a cash EBITDA basis. Moody's expects the
company can de-lever towards 8x over the next two years based on
continued revenue growth unless they pursue debt funded
acquisitions.
While there will likely be some moderation in double digit growth
rates that were temporarily boosted during the pandemic, Moody's
expects solid mid-single digit or higher growth over the next
several years driven by consumer concerns over digital security and
the ongoing shift of consumers to a digital world. Prior to the
pandemic, McAfee was able to grow revenues despite declining PC
sales though bundling of new products and services as well as a
successful multi-channel sales strategy.
The consumer security business is however less "sticky" than
traditional enterprise software and more susceptible to free
alternatives and changes in the popularity of PC's. McAfee competes
with NortonLifeLock, Trend Micro and Kaspersky Lab as well as
numerous freeware or "freemium" competitors. McAfee has often
outpaced subscriber growth and revenue growth at its competitors
partly driven by its diverse multi-channel sales strategy.
Successful marketing and branding strategies as well as constant
development and investment (or acquisitions) in new products are
critical to sustained growth in the consumer security industry.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation of mid-single digit
or higher growth and leverage declining to 8x over the next two
years. The ratings could be upgraded if McAfee sustains leverage
under 7.5x and free cash flow to debt greater than 5%. The ratings
could be downgraded if operating performance deteriorates
significantly, leverage is not on track to decrease below 9x, or
free cash flow is negative on other than a temporary basis.
Liquidity is good based on an estimated cash balance of $250
million and $1 billion undrawn revolver at closing as well as
positive free cash flow over the year post closing.
Similar to most security software providers, McAfee has limited
environmental risk. Social risks are considered low to moderate, in
line with the software sector. Broadly the main credit risks
stemming from social issues are linked to reputational risk, data
security, diversity in the workplace, and access to highly skilled
workers. Given the large reliance on the brand's reputation, high
profile security breaches or improper corporate behavior could
materially impact performance. McAfee is likely benefitting from
work from home trends as a result of the recent pandemic. Moody's
views the impact from COVID-19 as a social risk.
McAfee will be privately held and will not have an independent
Board of Directors. Moody's expects financial policies will be
aggressive under private equity ownership as evidenced by the very
high leverage at closing of the acquisition.
The following ratings were assigned:
Assignments:
Issuer: McAfee Corp.
Senior Secured 1st Lien Global Notes, Assigned B2 (LGD3)
Senior Unsecured Global Notes, Assigned Caa2 (LGD5)
McAfee is a leading provider of consumer security software. The
company is headquartered in San Jose, CA. Revenue for the consumer
business in the last twelve months ended September 25, 2021 was
approximately $1.8 billion ($3.2 billion inclusive of the divested
enterprise business). The company is being acquired by private
equity investors Permira, Advent and Crosspoint.
The principal methodology used in these ratings was Software
Industry published in August 2018.
MCAFEE CORP: S&P Assigns 'B-' Rating on $1,000MM Sr. Secured Notes
------------------------------------------------------------------
S&P Global Ratings assigned its 'B-' issue-level rating and '3'
recovery rating to U.S.-based consumer cybersecurity software
provider McAfee Corp.'s new seven-year, $1,000 million senior
secured notes. S&P also assigned its 'CCC+' issue-level rating and
'5' recovery rating to the company's eight-year $2,320 million
senior unsecured notes. McAfee intends to use proceeds from the
issuance to partially finance its previously announced acquisition
by an investor group. The '3' recovery rating on the secured notes
reflects its expectation for meaningful recovery (50%-70%; rounded
estimate: 65%) in a payment default. The '5' recovery rating on the
unsecured notes reflects S&P's expectation for modest recovery
(10%-30%; rounded estimate: 10%) in a payment default.
S&P said, "Our issuer credit rating on McAfee remains 'B-' with a
stable outlook. Our rating and outlook on McAfee is based on our
forecast of very high financial leverage of over 10x for at least
12 months post-acquisition close despite strong operating
performance." Good profitability, high-single-digit revenue growth,
and rising cash generation will support adequate liquidity and
gradual deleveraging.
ISSUE RATINGS – RECOVERY ANALYSIS
Key analytical factors:
-- S&P values the company on a going-concern basis using a 7x
multiple of its projected distressed EBITDA, reflecting the
company's recurring revenue base and high switching costs.
-- S&P's simulated default scenario considers a default in 2024
resulting from a significant decline in revenue from increasing
competition and a failure to maintain technological leadership.
-- S&P estimates about 40% of McAfee's recovery value would lie in
nonguarantor subsidiaries in a default scenario.
Simulated default assumptions:
-- Emergence EBITDA: About $818 million
-- Valuation multiple: 7x
Simplified waterfall:
-- Gross enterprise value (EV) at default: About $5.7 billion
-- Administrative costs: 5%
-- Net value available to creditors: About $5.4 billion
-- First-lien debt claims: About $7.6 billion
-- Recovery expectations: 50%-70%; rounded estimate: 65%
-- Unsecured debt claims: approximately $2.4 billion
-- Recovery expectations: 10%-30%; rounded estimate: 10%
All debt amounts include six months of prepetition interest. S&P
assumes the revolving credit facility is 85% drawn on the path to
default.
Ratings List
MCAFEE CORP.
Senior Secured B-/Stable/--
NEW RATING
MCAFEE CORP.
Senior Secured
US$1 bil 1st lien notes due 2029 B-
Recovery Rating 3(65%)
Senior Unsecured
US$2.32 bil notes due 2030 CCC+
Recovery Rating 5(10%)
MD AND SD: Gets Court OK to Hire Bach Law Offices as Counsel
------------------------------------------------------------
MD and SD, LLC received approval from the U.S. Bankruptcy Court for
the Northern District of Illinois to employ Bach Law Offices, Inc.
to serve as legal counsel in its Chapter 11 case.
The firm's services include:
a. representing the Debtor in matters concerning negotiation
with creditors;
b. assisting in the preparation of a Chapter 11 plan and
disclosures statement;
c. examining and resolving claims filed against the estate;
d. assisting in the preparation and prosecution of adversary
matters; and
e. representing the Debtor in matters before the bankruptcy
court.
Bach Law Offices will be paid an hourly fee of $425 and a retainer
fee of $5,000. It will also receive reimbursement for
out-of-pocket expenses incurred.
Paul Bach, Esq., a partner at Bach Law Offices, disclosed in a
court filing that his firm is a "disinterested person" as the term
is defined in Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Paul M. Bach, Esq.
Bach Law Offices, Inc.
P.O. Box 1285
Northbrook, IL 60062
Tel: (847) 564-0808
Email: paul@bachoffices.com
About MD and SD
MD and SD, LLC, a company in Des Plaines, Ill., sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ill. Case No.
21-14376) on Dec. 20, 2021, listing as much as $10 million in both
assets and liabilities. Michael A. Difatta, managing member,
signed the petition.
Judge Janet S. Baer oversees the case.
Paul M. Bach, Esq., at Bach Law Offices is the Debtor's legal
counsel.
METRONET SYSTEMS: S&P Raises First-Lien Debt Rating to 'B'
----------------------------------------------------------
S&P Global Ratings raised its issue-level rating on MetroNet
Systems Holdings LLC's first-lien debt to 'B' from 'B-' and revised
the recovery rating to '2' from '3' following an upward revision in
its stressed enterprise valuation to account for contributions from
acquired properties and continued progress in developing markets.
MetroNet has proposed a $95 million add-on to its term loan B due
2028 (total of $866 million outstanding) and an increase of its
revolving credit facility due 2026 to $175 million from $125
million. The '2' recovery rating indicates its expectation of
substantial (70%-90%; rounded estimate: 75%) recovery in the event
of a payment default. Fiber broadband operator MetroNet Holdings
LLC, the Evansville, Ind.-based parent company, plans to use the
proceeds from the add-on to repay $92 million of outstanding
revolver borrowings, pay fees and expenses, with minimal cash to
the balance sheet.
S&P said, "We raised our default valuation of MetroNet to about
$830 million from $615 million, primarily because of the recent
acquisition of Lubbock, Texas-based Vexus Fiber (to be financed
with 100% equity), incremental EBITDA associated with the transfer
of assets to Mature Group HoldCo (MatureCo) from Development Group
Holdco (DevCo) over the past three months, and an increase in
pledged fiber assets at DevCo. As the company demonstrates
subscriber growth, these assets become more valuable than
underpenetrated fiber, in our view. We expect MetroNet to transfer
newer markets to MatureCo once they have reached a certain level of
maturity and profitability, ideally with 30% broadband penetration.
Although this transfer will likely increase our default valuation
over the next 12 months, we only factor in current online
operations at MatureCo and the value of the fiber assets at DevCo
in our default valuation. Therefore, we expect to review our
default valuation of MetroNet at least annually.
"Our 'B-' issuer credit rating and stable outlook on the company
are unaffected. Because the acquisition is being financed solely
with equity, we expect pro forma annualized S&P Global Ratings'
adjusted gross debt to EBITDA will be about 8x, down from about 9x
as of Dec. 31, 2021. In addition, we expect MetroNet will further
reduce its leverage by expanding its earnings over the next six to
12 months as developing markets increase penetration. However, we
believe the company will likely releverage to help fund its
continued expansion as it develops new markets, which will
constrain any longer-term improvement in its leverage such that its
adjusted debt to EBITDA remains above our upgrade trigger of
6.5x."
ISSUE RATINGS--RECOVERY ANALYSIS
Key analytical factors
-- S&P's simulated default scenario contemplates a deterioration
in MetroNet's competitive position, precipitated by intense
competitive pressures from significantly larger and
better-capitalized cable operators such as Comcast Corp. and
Charter Communications Inc. These factors contribute to
significantly lower revenue, profitability, and cash flow levels
for the company. This decline in its operating results leads to a
payment default when the company's liquidity and cash flow are
insufficient to cover its cash interest expenses, mandatory debt
amortization, and maintenance-level capital expenditure
requirements.
-- At default, S&P's recovery analysis assumes an 85% draw on the
revolver, a step-up in MetroNet's credit spreads to accommodate
covenant amendments, and all estimated debt claims include about
six months of accrued but unpaid interest outstanding at the point
of default.
-- S&P assesses the company's recovery prospects on the basis of a
distressed gross recovery value of about $830 million. The overall
valuation reflects the combination of $650 million from MetroNet's
mature assets (based on an emergence EBITDA of about $130 million
and an EBITDA multiple of 5x) and about $180 million from its
development assets (using a discrete asset valuation [DAV] of its
pledged fiber assets at a realization rate of 85%). The $130
million of emergence EBITDA is our estimate of MetroNet's
hypothetical default-level EBITDA for its mature markets. Given
MetroNet's small scale and operations in more competitive markets,
S&P uses an EBITDA multiple of 5x in its default valuation, which
is lower than the multiples of 6x-7x that S&P typically uses for
incumbent cable operators.
Simulated default and valuation assumptions
-- Simulated year of default: 2024
-- EBITDA at emergence: $130 million
-- Implied enterprise valuation multiple: 5x
-- DAV: $180 million
-- Gross enterprise value (EV): $830 million
Simplified waterfall
-- Net EV (after 5% administrative costs): $790 million
-- Valuation split (obligors/nonobligors): 100/0%
-- Estimated net EV available to first-lien debt: $790 million
-- Estimated first-lien debt claims: $1,030 million
--First-lien debt recovery rating: '2' (rounded estimate: 75%)
Note: All debt amounts include six months of prepetition interest.
MOON GROUP INC: Taps Patterson Price as Real Estate Broker
----------------------------------------------------------
Moon Group, Inc. and its affiliates seek approval from the U.S.
Bankruptcy Court for the District of Delaware to employ Patterson
Price Real Estate, LLC to market and sell 536 acres of agricultural
land in Maryland.
The property is owned by Moon Nurseries, Inc. and was used to grow
horticultural crops.
Patterson will be paid a commission of 3 percent of the sales
price.
John Price, a partner at Patterson, disclosed in a court filing
that his firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
John Price
Patterson Price Real Estate, LLC
5 E. Green St.
Middletown, DE 19709
Direct: (302) 378-1979
Office: (302) 378-9550/(800) 336-5263
Fax: (302) 378-1978
Email: ajohnprice@pattersonprice.com
About Moon Group
Moon Group, Inc. and its affiliates filed their voluntary petitions
for Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11140)
on Aug. 12, 2021. John D. Pursell, Jr., chief executive officer,
signed the petitions. In its petition, Moon Group listed up to
$50,000 in assets and up to $50 million in liabilities.
Judge Christopher S. Sontchi oversees the cases.
The Debtors tapped Sullivan Hazeltine Allinson, LLC and Kurtzman
Steady, LLC as bankruptcy counsel; Silverang Rosenzweig & Haltzman,
LLC as special litigation counsel; and SC&H Group, Inc. as
investment banker. Stretto is the claims and noticing agent.
The U.S. Trustee for Region 3 appointed an official committee of
unsecured creditors on Aug. 30, 2021. Lucian Borders Murley, Esq.,
at Saul Ewing Arnstein & Lehr, LLP and Gavin/Solmonese, LLC serve
as the committee's legal counsel and financial advisor,
respectively.
NATURE COAST: Unsecured Creditors to Split $16K over 4 Years
------------------------------------------------------------
Nature Coast Wellness Clinic, LLC, filed with the U.S. Bankruptcy
Court for the Northern District of Florida a Disclosure Statement
with respect to Chapter 11 Plan of Reorganization dated Jan. 27,
2022.
The Debtor is a limited liability company registered in the State
of Florida, and the Debtor operates as an aesthetics clinic that
performs several different elective procedures, including but not
limited to the following: laser hair removal, C-section scar
removal, facials, and liposuction.
The Debtor filed this case in an attempt to reorganize its business
affairs. The impact of the COVID-19 pandemic had a significant
negative impact on the Debtor's business, especially with respect
to the demand for elective procedures. The pandemic's effects led
to the Debtor being unable to fund its continuing obligations to
certain creditors who the Debtor leased and/or purchased medical
equipment from.
During this case, the Debtor has reached a restructuring/settlement
agreement with one of its major secured lenders, which the Debtor
believes will pave the way for a successful reorganization.
Class 1 consists of the Secured Claim of Balboa Capital
Corporation. Allowed Secured Claim Amount is $70,000.00. Balboa is
a secured creditor that is secured by two pieces of equipment (the
"Equipment") owned by the Debtor. Pursuant to the Agreed Order, the
Debtor shall pay the $70,000.00 value in full in 60 monthly
installments, which commenced in November 2021. The terms of the
Agreed Order are hereby incorporated in the Plan. The remainder of
Balboa's claim will be treated as a general unsecured claim.
Class 2 consists of the Secured Claim of Ascentium Capital. Allowed
Secured Claim Amount: $22,000.00. Ascentium is a secured creditor
that is secured by three pieces of equipment owned by the Debtor
(the "Equipment"). The proofs of claim filed by Ascentium reflect
that the total value of the Equipment is $22,000.00 (POC Nos. 5, 6,
and 7). The Debtor will pay the $22,000.00 value of the Equipment
in 48 monthly installments with 6% interest beginning on or before
60 days after the Effective Date. The remainder of Ascentium's
claim(s) will be treated as a general unsecured claim.
Class 3 consists of Unsecured claims. The class of general
unsecured claims shall receive a total dividend of $16,000.00 paid
prorata amongst the creditors in this class. The Debtor shall pay a
total of $1,000.00 each calendar quarter (disbursed pro-rata)
beginning on or before September 30, 2022 and continuing to be due
on or before the last day of each calendar quarter thereafter with
the last payment being due on or before June 30, 2026. Class 3 will
be paid a total of $16,000 distributed pro rata over four years as
set forth in the Plan.
The total claims of each general unsecured creditor in Class 3
include:
* 3M Company: $2,205.90
* Balboa Capital Corporation: $81,702.68
* Ascentium Capital: $392,595.30
* American Academy of Family Physicians: $800.00
* Florida Medical Associates: $450.00
* McKesson Medical Surgical: $782.40
* Quest Diagnostics: $208.19
* Shred It: $400.00
* SteriCycle: $1,161.00
Class 4 consists of Equity interest holder Chukwuma Okoroji. The
equity security holder will waive distributions under the Plan as
additional new value consideration to retain his equity interest.
Debtor shall fund its Plan from the continued operations of its
business.
A full-text copy of the Disclosure Statement dated Jan. 27, 2022,
is available at https://bit.ly/3He2Afj from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Byron Wright III, Esq.
Bruner Wright, P.A.
2810 Remington Green Circle
Tallahassee, FL 32308
Tel: (850) 385-0342
Fax: (850) 270-2441
E-mail: twright@brunerwright.com
About Nature Coast Wellness Clinic
Nature Coast Wellness Clinic, LLC filed a Chapter 11 bankruptcy
petition (Bankr. N.D. Fla. Case No. 21-40250) on Aug. 2, 2021,
listing as much as $500,000 in assets and as much as $1 million in
liabilities. Judge Karen K. Specie oversees the case. Bruner
Wright, P.A. serves as the Debtor's legal counsel.
NEKTAR THERAPEUTICS: BlackRock Has 14.5% Equity Stake as of Dec. 31
-------------------------------------------------------------------
BlackRock, Inc. disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2021, it
beneficially owns 26,671,803 shares of common stock of Nektar
Therapeutics, representing 14.5 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/906709/000083423722002396/us6402681083_012722.txt
About Nektar
Nektar Therapeutics -- http://www.nektar.com-- is a
biopharmaceutical company with a robust, wholly owned R&D pipeline
of investigational medicines in oncology, immunology, and virology
as well as a portfolio of approved partnered medicines. Nektar is
headquartered in San Francisco, California, with additional
operations in Huntsville, Alabama and Hyderabad, India.
For the nine months ended Sept. 30, 2021, the Company reported a
net loss of $378.19 million. Nektar reported a net loss of $444.44
million for the year ended Dec. 31, 2020, compared to a net loss of
$440.67 million for the year ended Dec. 31, 2019. As of Sept. 30,
2021, the Company had $1.28 billion in total assets, $475.70
million in total liabilities, and $801.54 million in total
stockholders' equity.
NEUTRAL POSTURE: Unsecureds Will Get 4% of Claims in 3 Years
------------------------------------------------------------
Neutral Posture, Inc., filed with the U.S. Bankruptcy Court for the
Southern District of Texas a Plan of Reorganization dated Jan. 27,
2022.
On January 1, 1989, the Debtor was started by Rebecca E. Boenigk in
her garage. With an initial investment of $20,000.00, the Debtor
manufactured chairs and served as the sole shareholder. Currently,
the product line includes everything needed for a complete office.
The Debtor has been impacted by the global pandemic caused by
COVID-19. Buying patterns from clients, especially corporations and
government entities, changed significantly as a result of the
pandemic. The Debtor began experiencing a decline in customer
orders in 2020 and this malaise continued until recently
On October 8, 2021, counsel for Chase Bank sent out a notice of
foreclosure related to the real estate owned by the Debtor. Given
the foreclosure notice the Debtor had no option but to invoke the
automatic stay protection of this Court to pursue a successful
reorganization of the business pursuant to 11 U.S. Code, Subchapter
V – Small Business Debtor Reorganization provisions.
The Plan will treat claims as follows:
* Class 2 consists of the Chase Pre-Petition Secured Claim.
The Allowed Class 2 Claim shall be Allowed as a secured claim in
the amount of $3,096,988.30. The Allowed Class 2 Claim shall
continue to be secured by a Lien on the Reorganized Debtor's
property to the same extent, validity and priority as existed
prepetition, and shall remain in full force and effect until the
Allowed Class 2 Claim is paid in full.
* Class 3 consists of T2W, LLC Pre-Petition Secured Claim. The
Allowed Class 3 Claim shall be Allowed as a secured claim in the
amount of $970,773.24. The holder of the Allowed Class 3 Claim
shall receive a Consolidated and Restated Promissory Note
("T2WConsolidated Note"), which shall provide for the payment
terms, with the initial payment to occur on the 60th day after the
Plan Effective Date. The T2W Note shall include 84 monthly
payments, with all unpaid and accrued principal, interest, fees and
costs due and payable at the end of the Term ("Balloon").
* Class 4 consists of SBA Pre-Petition Secured Claim. The
Allowed Class 4 Claim shall be an allowed secured claim in the
amount of $500,000.00 which claim shall be reinstated and paid on
the same terms as existed prepetition. The first payment shall
commence in May, 2022 unless otherwise extended. All prepetition
liens of the SBA shall remain in full force and effect postpetition
until the indebtedness is paid in full.
* Class 5 consists of Unsecured Trade Claims of Creditors.
Holders of Allowed Class 5 Claims shall receive their pro rata
share of the Debtor's monthly disposable income for three years
following the Effective Date. The Debtor will pay approximately
$40,000 to the holders of Class 5 claims over a three-year period.
The total amount of allowed Class 5 Claims is estimated to be
approximately $890,000. Therefore, the projected distribution to
Class 5 Claims is approximately 4%.
* Class 6 consists of Equity Interest Holder. All holders of
equity interests shall retain their interests in the Debtor. Until
all amounts owing to senior classes have been paid as provided by
the terms of the Plan, the Debtor shall not make any dividends,
distributions, or redemption payments to the holders of Class 6
Equity Interests on account of their interest in the Debtor.
The Debtor's sole source of income is from the sale of products
primarily to large retailers, but additional revenue is derived
from direct to customer sales. The Debtor is just starting to turn
the corner here and the forecast is getting better. Customer orders
have increased recently and are trending in the right direction.
Sales for 2021will be lower than 2020 by 13%. Many logistical and
supply chain issues tied to the pandemic still present a
challenge.
This Plan is based upon the distributions to creditor by the
Debtor, at its option, by means of one or more of the following:
(a) cash presently held by the Debtor and cash to be acquired
through the operation of its business including cash generated from
the contracts the Debtor is currently under and those contracts
that the Debtor may win at a later date; and (b) collection of
accounts receivable.
A full-text copy of the Plan of Reorganization dated Jan. 27, 2022,
is available at https://bit.ly/3odoN5N from PacerMonitor.com at no
charge.
Counsel for the Debtor:
Tom A. Howley
Eric B. Terry
Howley Law PLLC
Pennzoil Place, South Tower
711 Louisiana Street, Suite 1850
Houston, TX 77002
Telephone: (713) 333-9125
Email: tom@howley-law.com
eric@howley-law.com
About Neutral Posture
Neutral Posture, Inc. is involved in the business of manufacturing
of ergonomic chairs and related items for the office. The Debtor
sought protection under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D. Tex. Case No. 21-60086) on November 1, 2021. In the
petition signed by Rebecca E. Boenigk, president and chief
executive officer, the Debtor disclosed up to $10 million in both
assets and liabilities.
Judge Christopher Lopez oversees the case.
Tom A. Howley, Esq., at Howley Law, PLLC is the Debtor's counsel.
NEVADA WINE: Case Summary & Two Unsecured Creditors
---------------------------------------------------
Debtor: Nevada Wine Cellars, Inc.
3810 Winery Road
Pahrump, NV 89048
Business Description: Nevada Wine Cellars is part of the beverage
manufacturing industry.
Chapter 11 Petition Date: January 31, 2022
Court: United States Bankruptcy Court
District of Nevada
Case No.: 22-10332
Judge: Hon. Natalie M. Cox
Debtor's Counsel: Matthew C. Zirzow, Esq.
LARSON & ZIRZOW, LLC
850 E. Bonneville Ave.
Las Vegas, NV 89101
Tel: 702-382-1170
Email: mzirzow@lzlawnv.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Kathy Trout as secretary and treasurer.
A full-text copy of the petition containing, among other items, a
list of the Debtor's two unsecured creditors is available for free
at PacerMonitor.com at:
https://www.pacermonitor.com/view/74PS7TY/NEVADA_WINE_CELLARS_INC__nvbke-22-10332__0001.0.pdf?mcid=tGE4TAMA
NUTRIBAND INC: Expands Product Development Pipeline for AVERSA
--------------------------------------------------------------
Nutriband Inc. announced an expanded product development pipeline
for its proprietary AVERSA abuse deterrent transdermal technology.
The AVERSA abuse deterrent technology platform can be applied to
any transdermal patch that has a risk of abuse, misuse or
accidental exposure. It is based on incorporating aversive agents
into the patch that do not contact the drug matrix and are not
delivered to the skin.
Nutriband's lead product is AVERSA Fentanyl which incorporates
abuse deterrent properties into a transdermal fentanyl patch and
was recently determined to have a potential market of $80 - $200
million. Based on a preliminary market assessment, Nutriband has
identified other valuable markets for transdermal products with a
risk of abuse, misuse, diversion or accidental exposure that could
benefit from its AVERSA technology. Currently marketed transdermal
products that have labeled warnings for the risk of abuse include
buprenorphine and methylphenidate and both products have reports of
abuse or misuse. These two products, AVERSA buprenorphine and
AVERSA methylphenidate, will be added to the product development
pipeline with AVERSA Fentanyl.
AVERSA buprenorphine has the potential to be an abuse deterrent
version of transdermal buprenorphine, a partial opioid agonist,
marketed as Butrans or its generics, which is indicated for the
management of pain severe enough to require daily,
around-the-clock, long-term opioid treatment and for which
alternative treatment options are inadequate.
AVERSA methylphenidate has the potential to be an abuse deterrent
version of transdermal methylphenidate, a central nervous system
(CNS) stimulant, marketed as Daytrana, indicated for the treatment
of Attention Deficit Hyperactivity Disorder (ADHD).
"We are excited about the opportunity to expand our AVERSA product
pipeline, as we believe it has the potential to improve the profile
of transdermal products that include labeled warnings for abuse,
misuse, diversion or accidental exposure," said Jeff Patrick,
Pharm.D., chief scientific officer.
"AVERSA is a platform technology that can be deployed in almost any
transdermal product that carries a risk of abuse or misuse. It is
our mission to reduce the risk profile of these drugs while
ensuring availability for patients that need them," said Gareth
Sheridan, CEO.
The recent announcement of a feasibility agreement with Kindeva
Drug Delivery, a world leader in transdermal manufacturing, sets
the development of Nutriband's lead product, AVERSA Fentanyl, in
motion. Nutriband's strategy with the AVERSA platform is to focus
on advancing the technology first for transdermal fentanyl and then
utilizing the technology to reduce the risk of abuse for
transdermal buprenorphine and methylphenidate.
About Nutriband
Nutriband Inc. -- www.nutriband.com -- is primarily engaged in the
development of a portfolio of transdermal pharmaceutical products.
Its lead product under development is an abuse deterrent fentanyl
patch incorporating its AVERSA abuse deterrence technology. AVERSA
technology can be incorporated into any transdermal patch to
prevent the abuse, misuse, diversion, and accidental exposure of
drugs with abuse potential.
Nutriband reported a net loss of $2.93 million for the year ended
Jan. 31, 2021, a net loss of $2.72 million for the year ended
Jan. 31, 2020, and a net loss of $3.33 million for the year ended
Jan. 31, 2019. As of Oct. 31, 2021, the Company had $15.43
million in total assets, $1.11 million in total liabilities, and
$14.32 million in total stockholders' equity.
OCEAN DEVELOPMENT: Taps Perez-Kudzma Law Office as Counsel
----------------------------------------------------------
Ocean Development Partners, LLC seeks approval from the U.S.
Bankruptcy Court for the District of Massachusetts to employ
Perez-Kudzma Law Office, P.C. to serve as legal counsel in its
Chapter 11 case.
The firm's services include:
a. assisting the Debtor in preparing bankruptcy schedules,
statement of financial affairs and related documents;
b. employing professionals to assist in the reorganization of
the Debtor;
c. filing appropriate plans of reorganizations and disclosure
statements, and defending against any motions to dismiss the case
and for relief from the stay;
d. assisting the Debtor in complying with Chapter 11 reporting
and operations requirements, including filing necessary reports;
and
e. negotiating with creditors for adequate protection and the
use of cash collateral, assumption or rejection of leases and
executory contracts, objection to claims and related issues.
The retainer fee for the firm's services is $2,500.
In a court filing, Carmenelisa Perez-Kudzma, Esq., a partner at
Perez-Kudzma Law Office, disclosed that her firm is a
"disinterested person" within the meaning of Section 101(14) of the
Bankruptcy Code.
The firm can be reached at:
Carmenelisa Perez-Kudzma, Esq.
Perez-Kudzma Law Office, P.C
35 Main Street, Suite 1
Wayland, MA 01778
Tel: (978) 505-3333
Email: carmenelisa@pklolaw.com
About Ocean Development Partners
Boston-based Ocean Development Partners, LLC sought protection
under Chapter 11 of the Bankruptcy Code (Bankr. D. Mass. Case No.
22-10043) on Jan. 14, 2022. Nicholas J. Fiorillo, sole manager,
signed the petition.
At the time of the filing, the Debtor disclosed total assets of
between $10 billion and $50 billion and total liabilities of
between $1 million and $10 million.
Perez-Kudzma Law Office, P.C. serves as the Debtor's legal counsel.
OFFSHORE SPECIALTY: 5th Cir. Flips Ruling in Auction Dispute
------------------------------------------------------------
David Weinhoffer and Davie Shoring, Inc., dispute the terms of an
online auction. The United States Court of Appeals for the Fifth
Circuit reviews whether evidence of the terms was properly admitted
and finds that the district court abused its discretion by
improperly admitting evidence and taking judicial notice of the
terms. Thus, the Fifth Circuit reverses the judgment of the
district court and remands the case for further proceedings.
Offshore Specialty Fabricators L.L.C. was subject to a Chapter 11
bankruptcy plan administered by liquidating trustee David
Weinhoffer. OSF contracted with Henderson Auctions to auction off a
large housing module. Henderson advertised and hosted the auction
on its website, but when auction participants clicked on the link
to bid, they were directed to Proxibid, a third-party website,
where they could view the auction's terms and conditions and place
their bids. Among these terms was a term declaring that bidders
would be liable for only 20% of the bid price in the event of a
breach of contract. Instead of using the website, Warren Davie,
Davie Shoring's principal, placed the winning bid of $177,500 on a
phone call with a Henderson employee. After the auction concluded,
Davie Shoring refused to pay for the module when it proved
difficult to remove from storage.
OSF's liquidating trustee sued to recover Davie Shoring's bid of
$177,500. Weinhoffer's breach of sale contract claim was tried in a
bench trial. Davie Shoring argued that the terms of the auction
limited the damages to 20% of the winning bid, here $35,500. Davie
testified he read the auction terms, including the 20% damages
limitation, on Henderson's website before bidding.
At trial, Davie Shoring introduced the auction terms and conditions
in two forms: (1) as an internet printout labeled "Exhibit 41" and
(2) as an archived webpage from a website known as the "Wayback
Machine," an online archive of web pages.
Davie Shoring introduced Exhibit 41 through the testimony of Renita
Martin, Henderson's office manager. However, Martin testified that
Exhibit 41 had not been in Henderson's possession "because the
auction was no longer up on [Henderson's] website." Instead, Martin
searched for the auction terms on Proxibid's website to produce
them in response to the subpoena. Martin explained that even if the
auction page were still live on Henderson's website, the terms and
conditions would only be accessible if one clicked on the link to
Proxibid's separate website.
Weinhoffer objected to Exhibit 41, contending that it was
irrelevant, unauthenticated, and hearsay. The district court ruled
that Martin had properly authenticated Exhibit 41 because, although
she was not its author, her job description indicated that she was
a proper custodian. The district court also ruled that Exhibit 41
was within one of Federal Rule of Evidence 803's hearsay
exceptions.
Davie Shoring's counsel requested that, in addition to admitting
Exhibit 41, the district court take judicial notice of the same
terms in an archived version of the Proxibid webpage, available on
the Wayback Machine. The district court took judicial notice of the
terms and conditions as they appeared in the archived webpage,
explaining that the archived webpage was a "source[] whose accuracy
cannot reasonably be questioned" under Federal Rule of Evidence
201.
The district court relied on Exhibit 41 to determine that the
"Special Terms" provided "plaintiff's sole and exclusive remedy"
for breach, limiting Weinhoffer's recovery to 20% of Davie
Shoring's bid. The district court entered judgment for Weinhoffer
in the amount of $35,500 plus costs. Weinhoffer timely appealed.
The Fifth Circuit holds that Exhibit 41 was not properly
authenticated.
Authentication is a condition precedent to admissibility. The party
offering an exhibit must produce evidence sufficient to support a
finding that the item is what the proponent claims it to be. Where
a website or electronic source is concerned, "testimony by a
witness with direct knowledge of the source, stating that the
exhibit fairly and fully reproduces it, may be enough to
authenticate." Although a witness need not be a document's author
to authenticate it for purposes of Rule 901, the Fifth Circuit has
observed that a witness attempting to authenticate online content
as evidence was unlikely to have the requisite direct knowledge
where that content was created and maintained by a third party.
Martin's testimony is the only way Davie Shoring attempted to
authenticate Exhibit 41. However, Martin had no personal knowledge
of the terms applicable to the auction. Martin had to search a
third party's website to obtain the terms because Henderson did not
have them in its possession. Moreover, Martin's testimony indicates
that she was unfamiliar with Proxibid's website and that she needed
the assistance of a colleague to locate the terms. Thus, Martin's
authentication testimony only amounts to an affirmation of her
memory that Exhibit 41 is what she found on the internet.
Although the standard for authentication is low, Martin had
inadequate direct knowledge to authenticate Exhibit 41, the Fifth
Circuit says. Davie Shoring could have avoided running afoul of
Rule 901 by calling someone with more direct knowledge of
Proxibid's recordkeeping. The district court abused its discretion
by relying on inadmissible evidence when it reduced Weinhoffer's
damages; the Fifth Circuit accordingly reverses the District
Court's ruling.
The appeals case is DAVID WEINHOFFER, as liquidating trustee of
OFFSHORE SPECIALTY FABRICATORS L.L.C., Plaintiff-Appellant, v.
DAVIE SHORING, INCORPORATED, Defendant-Appellee, No. 20-30568 (5th
Cir.).
The Opinion dated January 20, 2022, penned by Circuit Judge Patrick
E. Higginbotham is available at https://tinyurl.com/2p9a23nw from
Leagle.com.
About Offshore Specialty Fabricators
Offshore Specialty Fabricators, LLC sought protection under Chapter
11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 17-35623) on
Oct. 1, 2017. In the petition signed by CEO Tammy Naron, the
Debtor estimated assets of $50 million to $100 million and
estimated liabilities of $10 million to $50 million.
Offshore Specialty Fabricators, LLC -- http://www.osf-llc.com/--
provided decommissioning project management utilizing its heavy
lift derrick barges for the installation and removal of oil and gas
facilities in the Gulf of Mexico. Its facility was located at 115
Menard Rd. in Houma, Louisiana. It had been providing offshore
construction solutions to the international and domestic oil and
gas industry for more than 20 years.
Judge Marvin Isgur presides over the case. The Debtor hired
Diamond McCarthy LLP as counsel, and Koch & Schmidt Law Firm, as
special counsel.
On Oct. 25, 2017, the Office of the U.S. Trustee appointed an
official committee of unsecured creditors.
On Oct. 28, 2018, the Bankruptcy Court issued an Order confirming
the official committee of unsecured creditors' First Amended Plan
of Liquidation under Chapter 11 of the Bankruptcy Code for the
Debtor, and approved David Weinhoffer as the Trustee of the
Liquidating Trust established pursuant to that Plan.
PAINT THE WIND: Taps Brokers Realty Group as Real Estate Broker
---------------------------------------------------------------
Paint the Wind, LLC seeks approval from the U.S. Bankruptcy Court
for the Middle District of Pennsylvania to employ Brokers Realty
Group Limited as real estate broker.
The Debtor requires the services of a real estate broker to market
for sale a 634-acre parcel of land located at 1207 Flohrs Church
Road, Biglerville, Pa.
The firm will be paid a commission of 4 percent of the gross sales
price.
John Rainville, a partner at Brokers Realty Group Limited,
disclosed in a court filing that his firm is a "disinterested
person" as the term is defined in Section 101(14) of the Bankruptcy
Code.
The firm can be reached at:
John A. Rainville
Brokers Realty Group Limited
610 Lowther Road
Lewisberry, PA 17339
Tel: (717) 554-7430
Email: john@brokersrealty.com
About Paint the Wind
Paint the Wind, LLC, a company in Biglerville, Pa., sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Pa.
Case No. 22-00078) on Jan. 19, 2022, listing up to $50 million in
assets and up to $10 million in liabilities. Christine M. Rakoci,
member, signed the petition.
Judge Henry W. Van Eck oversees the case.
Lawrence V. Young, Esq., CGA Law Firm, is the Debtor's legal
counsel.
PHUNWARE INC: Khazanah, Unit Ceased as Shareholders as of Dec. 31
-----------------------------------------------------------------
Khazanah Nasional Berhad and Mount Raya Investments Limited
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 Phunware, Inc.
Each of Khazanah, an investment fund incorporated in Malaysia, and
Mount Raya, a wholly owned subsidiary of Khazanah, may be deemed to
beneficially own, and have sole and shared power to vote or to
direct the vote and sole and shared power to dispose or direct the
disposition, of zero shares, representing 0.0% of the total shares
outstanding.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1665300/000090514822000112/efc22-043_sc13ga.htm
About Phunware
Headquartered in Austin, Texas, Phunware, Inc. --
http://www.phunware.com-- offers a fully integrated software
platform that equips companies with the products, solutions and
services necessary to engage, manage and monetize their mobile
application portfolios globally at scale.
Phunware reported a net loss of $22.20 million for the year ended
Dec. 31, 2020, a net loss of $12.87 million for the year ended
Dec. 31, 2019, and a net loss of $9.80 million for the year ended
Dec. 31, 2018. As of Sept. 30, 2021, the Company had $31.95
million in total assets, $18.93 million in total liabilities, and
$13.03 million in total stockholders' equity.
PRINCETON-WINDSOR PEDIATRICS: Gets Cash Collateral Access
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey in Newark
has authorized Princeton-Windsor Pediatrics, PA to use cash
collateral on an interim basis and provide adequate protection
through March 4, 2022.
At a hearing conducted January 20, 2022, the parties agreed on a
new amount of the Debtor's monthly adequate protection payment, and
the Court directed the parties to submit this consent order
extending the Debtor's authority to use cash collateral through a
rescheduled final hearing date.
Effective February 15, the amount of the adequate protection
payments required for the Debtor's continued use of cash collateral
shall be increased from $2,100 to $3,600.
The final hearing on the matter is scheduled for March 3 at 10
a.m.
A copy of the order is available at https://bit.ly/35rryts from
PacerMonitor.com.
About Princeton-Windsor Pediatrics, PA
Princeton-Windsor Pediatrics, PA operates a pediatric medical
practice located at 88 Princeton-Hightstown Rd, Ste 103, Princeton
Junction, NJ 08550; the location is an office condominium unit.
Princeton-Windsor Pediatrics does not own the real property, but is
the sole occupant; the condominium is owned by WC 88
Princeton-Hightstown LLC.
Princeton-Windsor Pediatrics sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D.N.J. Case No. 21-17501-MBK) on
September 24, 2021. In the petition signed by Catherine M.
Zelinsky, authorized representative, the Debtor disclosed up to $1
million in both assets and liabilities.
Judge Michael B. Kaplan oversees the case.
Brian G. Hannon, Esq., at Norgaard, O'Boyle & Hannon is the
Debtor's counsel.
PRINCETON-WINDSOR: Unsecureds Will Get 10% of Claims in 60 Months
-----------------------------------------------------------------
Princeton-Windsor Pediatrics, P.A., filed with the U.S. Bankruptcy
Court for the District of New Jersey a Small Business First
Modified Plan of Reorganization dated Jan. 27, 2022.
The Debtor is a licensed medical provider engaged in providing
pediatric medical services to its patients. Catherine M. Zelinsky,
M.D. is the sole shareholder in the Debtor. The Debtor maintains
its office and practice at 88 Princeton-Hightstown Road, Ste. 103,
Princeton Junction, NJ. It employs 8 people, including Dr.
Zelinsky.
In March 2020, the Covid-19 pandemic forced the Debtor to reduce
most of its operations for several months. Until Summer 2021, it
operated at reduced capacity, and treated fewer patients, causing
sales to suffer.
The Debtor anticipates that it will enjoy strong sales and income
starting in late 2022, as the administration of COVID-19 vaccines
and relaxation of the restrictions on business operations will
prompt patients to return to pre-pandemic levels.
The Debtor's property is covered by the security interest held by
M&T Bank, which secures M&T's claim based on two loan agreements
for which it asserts that a total of $331,739.31 was due as of the
commencement of the case. The Debtor maintains that the value of
the property securing the claim is less than the amount of the
claim, but has agreed to treat the loan agreements as fully secured
to resolve M&T's objections to confirmation of the first plan
proposed by the Debtor.
The Debtor proposes to pay the M&T's secured claim(s) of
$331,739.31 over a 120-month term, at 5.5% interest, in monthly
installments of $3,600.64 commencing 30 days after the Effective
Date of the Plan.
The Debtor proposes to apply for forgiveness of M&T Bank's claim
for repayment of an unsecured PPP loan under the Small Business
Administration's forgiveness program. If the loan is forgiven, the
Debtor will make no further distribution an account of that claim.
If the loan is not forgiven, the Debtor will treat the claim as an
allowed general unsecured claim.
The Debtor proposes to treat allowed general unsecured claims by
contributing sixty monthly payments of $425.00 to a fund for
distributions on account of such claims; the holders of such claims
will share in the fund pro rata.
Class 3B consists of General Unsecured Claims. Claimants to share
pro rata in the monthly payments of $425.00. Payments will begin
thirty days after Effective Date and will end sixtieth month after
Effective Date. Estimated percentage of claims paid is 10%
(assuming the Class 3A claim is not forgiven by the SBA).
Class 4 consists of Equity Interest Holder Catherine M. Zelinsky,
MD. Debtor will retain all equity interests in the Debtor.
The Debtor will fund the payments required by the plan by
contributing post-confirmation income realized through its
operations. The Debtor expects to have sufficient cash on hand to
make the payments required on the Effective Date.
A full-text copy of the First Modified Plan of Reorganization dated
Jan. 27, 2022, is available at https://bit.ly/3ga4fXi from
PacerMonitor.com at no charge.
Counsel to Debtor:
Norgaard O'Boyle & Hannon
184 Grand Avenue
Englewood, NJ 07631
(201) 871-1333
About Princeton-Windsor Pediatrics
Princeton-Windsor Pediatrics, PA, operates a pediatric medical
practice located at 88 Princeton-Hightstown Rd, Ste 103, Princeton
Junction, NJ 08550; the location is an office condominium unit.
Princeton-Windsor Pediatrics does not own the real property, but is
the sole occupant; the condominium is owned by WC 88
Princeton-Hightstown LLC.
Princeton-Windsor Pediatrics sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D.N.J. Case No. 21-17501) on Sept.
24, 2021. In the petition signed by Catherine M. Zelinsky,
authorized representative, the Debtor disclosed up to $1 million in
both assets and liabilities.
Judge Michael B. Kaplan oversees the case.
Brian G. Hannon, Esq., at Norgaard, O'Boyle & Hannon, is the
Debtor's counsel.
PURDUE PHARMA: Sackler Family Nears Deal to Raise Opioid Settlement
-------------------------------------------------------------------
Tom Hals and Mike Spector of Reuters report members of the Sackler
family who own Purdue Pharma LP are nearing an agreement to boost
their more than $4 billion offer to resolve sprawling opioid
litigation after negotiating with states that had objected to terms
of the OxyContin maker's bankruptcy reorganization, according to a
court filing.
Sackler family members and states objecting to terms of Purdue's
bankruptcy reorganization are "close to an agreement in principle"
to contribute additional cash beyond the $4.325 billion they had
pledged to settle opioid litigation, according to a mediator's
interim report filed on Monday, January 31, 2022.
An agreement involving members of the Sackler family and several
state attorneys general could potentially end a legal challenge
that has prevented Purdue from exiting bankruptcy, and clear the
way for a plan aimed at helping to abate the opioid crisis.
The mediation kicked off in January among Sackler family members
and several states after a U.S. district judge overturned the
original settlement, which was the cornerstone of Purdue's
bankruptcy reorganization plan.
The judge found the reorganization plan improperly shielded Sackler
family members, who had not filed for Chapter 11 themselves, from
opioid litigation.
The mediator, former U.S. Bankruptcy Judge Shelley Chapman, said
any additional contribution from the Sacklers would be solely for
opioid abatement. She asked that talks be extended to Feb. 7, a
request that could be considered at a bankruptcy-court hearing on
Tuesday.
The report described marathon negotiating sessions held on Jan.
25-26 in New York that ran more than 12 hours each day and involved
two unidentified state attorneys general who participated in person
and another who joined by Zoom.
The settlement agreement had been opposed by at least eight state
attorneys general, including Bob Ferguson in Washington state and
William Tong in Connecticut.
Purdue, the maker of the highly addictive OxyContin opioid
painkiller, filed for bankruptcy in 2019 in the face of thousands
of lawsuits accusing it and the Sacklers of fueling the U.S. opioid
epidemic through deceptive marketing. The opioid abuse crisis has
led to nearly 500,000 overdose deaths over two decades, according
to U.S. data.
Sackler family members have denied wrongdoing. Purdue pleaded
guilty in November 2020 to three felonies arising from its handling
of OxyContin.
Several members of the Sackler family testified during Purdue's
bankruptcy trial that their contribution to the settlement was
conditioned on receiving "global peace" from opioid litigation.
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."
PURDUE PHARMA: Sacklers Litigation Shield Should Lapse, Say Cities
------------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that municipalities that sued
Purdue Pharma LP and other opioid manufacturers urged a court to
let the bankruptcy liability shield protecting the Sackler family
members expire on Feb. 1, 2022 as scheduled.
The OxyContin manufacturer has insisted that it needs time and
focus to hammer out negotiations with victims and other parties as
its bankruptcy proceedings continue.
But lifting of the preliminary injunction that protects the
company's founding family members and other related third parties
from opioid-related litigation is "well past time," a nationwide
committee, appointed to represent plaintiffs in multidistrict
litigation stemming from the opioid addiction crisis, told the U.S.
Bankruptcy Court for the Southern District of New York in a filing
Monday.
Judge Robert Drain, who has overseen Purdue's Chapter 11 since it
was filed in 2019, allowed the legal protections to remain in place
during the month of January 2022as the company and the Sackler
family members figured out how to proceed following an appellate
ruling that overturned Drain's approval of the company's bankruptcy
plan.
In the Dec. 16. 2021 appellate decision, U.S. District Judge
Colleen McMahon struck down a settlement, in which the Sackler
family members agreed to contribute $4.5 billion for victim
compensation. McMahon also said the bankruptcy court lacked
authority to grant legal releases to the non-bankrupt entities
without creditors’ consent.
Purdue requested on Jan. 18 that the injunction be extended until
Feb. 17, 2022 saying an extension "is essential to ensuring that
the mediation parties can remain laser-focused on negotiating
towards an acceptable resolution." The company also successfully
fast-tracked an appeal of McMahon’s decision to the U.S. Court of
Appeals for the Second Circuit.
In the lone objection to Purdue's requested extension, the
plaintiffs' executive committee representing over 3,000 local
governments said if the negotiations haven't "borne fruit" by Feb.
1, 2022 "steps must begin to be taken to bring this matter to its
conclusion swiftly, whether through an alternate reorganization
plan or the liquidation of the debtors."
"Creditors who wish to do so at this time must be permitted to move
forward with their suits against the Sacklers, even as the parties
may continue to negotiate a credible Purdue-only confirmation plan
in this Court," said the committee, whose members also sued the
drug's distributors and retailers.
The objection is "misguided" and lacks support from the organized
creditor groups in the Chapter 11 case, Purdue said in an emailed
statement.
"This mediation, if successful, could enhance the value that would
be delivered to the American people for abatement of the opioid
crisis and for victim compensation, as well as provide the swiftest
and most cost effective exit path from Chapter 11," the company
said.
The adversary case is In re Purdue Pharma LP v. Commonwealth of
Mass., Bankr. S.D.N.Y., No. 19-08289, objection filed 1/31/22.
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."
PURE BIOSCIENCE: Registers Additional 5M Shares Under 2017 Plan
---------------------------------------------------------------
Pure Bioscience, Inc. filed a Form S-8 registration statement with
the Securities and Exchange Commission for the purpose of
registering 5,000,000 shares of common stock issuable under the
Company's Amended and Restated 2017 Pure Bioscience Equity
Incentive Plan.
On Jan. 20, 2021, the Company held its annual meeting of
stockholders, at which the Company's stockholders approved the
Amended and Restated 2017 PURE Bioscience Equity Incentive Plan,
which among other changes, increased the aggregate number of shares
that may be issued under the Plan by 5,000,000 shares of its common
stock, par value $0.01 per share, for an aggregate of 10,000,000
shares of common stock.
A full-text copy of the prospectus is available for free at:
https://www.sec.gov/Archives/edgar/data/1006028/000149315222002296/forms-8.htm
About PURE Bioscience Inc.
PURE Bioscience, Inc. -- www.purebio.com -- is focused on
developing and commercializing its proprietary antimicrobial
products primarily in the food safety arena. The Company provides
solutions to combat the health and environmental challenges of
pathogen and hygienic control. Its technology platform is based on
patented, stabilized ionic silver, and its initial products contain
silver dihydrogen citrate, better known as SDC. PURE is
headquartered in Rancho Cucamonga, California (San Bernardino
metropolitan area).
PURE Bioscience reported a net loss of $2.32 million for the year
ended July 31, 2021. As of Oct. 31, 2021, the Company had $3.56
million in total assets, $828,000 in total current liabilities, and
$2.73 million in total stockholders' equity.
Los Angeles, California-based Weinberg and Company, P.A., the
Company's auditor since 2019, issued a "going concern"
qualification in its report dated Oct. 28, 2021, citing that the
Company has suffered recurring losses from operations and negative
cash flows from operating activities that raise substantial doubt
about its ability to continue as a going concern.
QUICKER LIQUOR: Voluntary Chapter 11 Case Summary
-------------------------------------------------
Debtor: Quicker Liquor LLC
3810 Winery Road
Pahrump, NV 89048
Business Description: Quicker Liquor LLC is a privately held
company in the liquor business.
Chapter 11 Petition Date: January 31, 2022
Court: United States Bankruptcy Court
District of Nevada
Case No.: 22-10331
Judge: Hon. Mike K. Nakagawa
Debtor's Counsel: Matthew C. Zirzow, Esq.
LARSON & ZIRZOW, LLC
850 E. Bonneville Ave.
Las Vegas, NV 89101
Tel: 702-382-1170
Email: mzirzow@lzlawnv.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Kathy Trout as secretary/treasurer of
JEH NV Investments, Inc., managing member.
The Debtor stated it has no creditors holding unsecured claims.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/7S67VAQ/QUICKER_LIQUOR_LLC__nvbke-22-10331__0001.0.pdf?mcid=tGE4TAMA
R.R. DONNELLEY: Moody's Rates New $750MM Term Loan B Due 2026 'B1'
------------------------------------------------------------------
Moody's Investors Service assigned a B1 rating to R.R. Donnelley &
Sons Company's (RRD) proposed $750 million term loan B due in 2026.
The company intends to use a portion of the proceeds to partially
finance Chatham Asset Management, LLC's acquisition of RRD. RRD's
B2 corporate family rating, B2-PD probability of default rating, B1
rating on the existing senior secured term loan B and senior
secured notes, and B3 senior unsecured notes rating are unchanged
and remain under review for downgrade. The company's speculative
grade rating remains unchanged at SGL-2. Moody's has also placed
the B1 rating on the proposed incremental term loan B under review
for downgrade. The outlook remains rating under review.
The review was initiated on November 4, 2021 following the
company's definitive agreement with Atlas Holdings LLC (Atlas) to
be acquired for a total enterprise value of $2.1 billion. On
December 14, 2021, RRD entered into a new definitive agreement with
Chatham to be acquired for a total enterprise value of $2.3
billion. At the same time, the company's definitive agreement with
Atlas was terminated. Chatham's acquisition of RRD is expected to
close in Q1 of 2022 and remains subject to customary closing
conditions, including approval by RRD's shareholders and receipt of
regulatory approvals.
The acquisition is expected to be mainly financed using (1) a
portion ($600 million) of the proposed $750 million term loan, (2)
a $215 million drawing under the ABL revolver, and (3) a $96
million new equity contribution from Chatham. Chatham's existing
debt holdings in RRD will be subordinated through a new $1 billion
Payment-In-Kind (PIK) HoldCo note and the remaining debt
outstanding will go through a solicitation for change of control
waiver.
"The review for downgrade reflects an expected material increase in
RRD's leverage to above 6x from 4.4x should Chatham be successful
in acquiring the company" said Aziz Al Sammarai, Moody's analyst.
Assignments:
Issuer: R.R. Donnelley & Sons Company
Senior Secured Bank Credit Facility, Assigned B1; Placed Under
Review for Downgrade
RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR
DOWNGRADE OF THE RATING
The review will also focus on the successful closing of the
acquisition by Chatham, the final capital structure of RRD,
post-closing credit metrics, business and financial strategy under
the new ownership, and the company's ability to maintain good
liquidity. Finally, the review will incorporate future governance
considerations for RRD as a private company.
As expected by Moody's today, the acquisition would likely result
in improved cash flow for RRD given the expected savings benefit
from reduced cash interest (about $25 million). However, RRD's
total adjusted debt will likely increase by about $1 billion
(including the PIK HoldCo notes, which Moody's includes in RRD's
consolidated metrics, and net of repayment of outstanding debt held
by Chatham), which could raise the company's adjusted Debt/EBITDA
in excess of 6x at closing, remaining potentially around 6x by the
end of 2023. That funding plan would likely result in a downgrade
of the company's CFR to B3 from B2 and senior unsecured notes
rating to Caa1 from B3, although it is subject to a review of all
of the factors above at or shortly after closing.
The B1 rating on the proposed secured term loan reflects their
ranking above both the company's unsecured debt and proposed PIK
HoldCo notes, and their junior ranking behind the ABL facility.
The principal methodology used in this rating was Media published
in June 2021.
Headquartered in Chicago, Illinois, R.R. Donnelley Sons & Company
is the leader in the North American commercial printing industry.
Revenue for the year ended September 30, 2021 was $4.9 billion.
R.R. DONNELLEY: S&P Affirms 'B' ICR on Proposed Capital Structure
-----------------------------------------------------------------
S&P Global Ratings assigned its 'B' issue-level ratings on R.R.
Donnelley & Sons Co.'s proposed amended and restated $750 million
first-lien term loan facility. At the same time, S&P is lowering
its issue-level rating on the company's secured notes to 'B' from
'B+'.
S&P is affirming all other existing ratings, including the 'B'
issuer credit rating and 'B-' issue-level rating on the company's
senior unsecured debt.
Chatham Asset Management (CAM) is planning to acquire R.R.
Donnelley & Sons through a combination of debt, equity, and
payment-in-kind (PIK) notes. Pro forma for the transaction S&P
expects total debt (excluding the PIK notes) to remain the same.
CAM currently holds about $818 million of R.R. Donnelley's total
debt across its senior secured and unsecured tranches. As part of
this proposed transaction, CAM will convert this entire amount into
a new tranche of $1,021 million PIK holdco notes. These PIK notes
will bear a fixed interest of 10%, payable semiannually and accrete
as additional principal in lieu of cash payments. The PIK notes
will mature in October 2031—six months after the last rated debt
instrument in R.R. Donnelley's current capital structure matures.
S&P said, "We add theses PIK notes to our debt and include it in
our adjusted leverage calculation. We now forecast adjusted
leverage will be about 6.5x–7.0x in 2022 and 2023. However, in
our view, the PIK notes do not materially change the company's
credit profile, as the cash interest savings will improve R.R.
Donnelley's cash flow metrics, including FOCF to debt, which we
forecast will remain above 5%."
The company is also proposing to amend and restate its existing
first-lien term loan facility ($150 million currently outstanding)
to a new $750 million first-lien term loan facility. It will use
the $600 million in additional term loan proceeds, together with
$96 million new cash equity contribution from CAM, to fund the
purchase of all remaining equity that CAM does not own.
R.R. Donnelley participates in a competitive industry that is
experiencing secular decline. Consumers shifting their media
consumption to digital formats accelerated during the COVID-19
pandemic, and S&P expects the print industry will continue to
suffer from lower volumes, overcapacity, and pricing competition as
the global economy recovers from the pandemic. In addition, the
economic contraction from the pandemic could continue to intensify
competition in the sector as large peers such as Quad/Graphics Inc.
compete in key print categories such as commercial printing
products and services, which are increasingly price sensitive.
Although supply chain management, packaging, and business process
outsourcing service offerings provide the company with some
diversification away from commercial printing, S&P doesn't believe
growth and EBITDA generation in these nonprint-related services
will sufficiently offset the decline in the company's traditional
print products.
Secular pressures would largely offset revenue growth from the
post-COVID-19 economic recovery, but cost-saving measures should
support margin expansion in 2022. R.R. Donnelley's year-to-date
revenue increased about 5% as of Sep 30 2021 compared to the prior
year, due to an increase in new pandemic-related products including
labels, product packaging, and signage as there are stronger
demands for books, cards, and e-commerce sales. S&P said, "We
expect organic revenue to be flat or decline slightly in 2022
because of easier year-over-year comparisons but expect the secular
pressures will mostly offset revenue benefits from an improving
economic environment. We also expect S&P Global Ratings'-adjusted
EBITDA margins to improve in 2022, which we expect will grow about
50 basis points (bps) primarily due to lower restructuring costs
and the company's divestiture of some lower-margin businesses and
cost-saving measures in response to the pandemic. The company
undertook multiple cost-reduction measures, including layoffs and
furloughs, during the shutdowns amid the COVID-19 pandemic. We
expect some of the cost savings to remain permanent. Nevertheless,
due to secular pressures, we believe the company will need to
continue managing its substantial fixed-cost base of printing
plants and warehouses to match volume declines and pricing
pressures."
S&P said, "The stable outlook reflects our expectation that R.R.
Donnelley will continue to generate FOCF to debt of at least 5% on
consistent basis over the next 12 months as the company's operating
performance stabilizes after the pandemic-related economic
slowdown, despite the secular headwinds in the commercial printing
sector. Our outlook also reflects our view that the company will
continue to prioritize debt paydowns with support from free cash
flows and proceeds from asset sales."
S&P could lower its ratings on the company if it expects a
deterioration in cash flow metrics such that FOCF to debt declines
below 5% over the next 12 months. This could potentially occur
under the following scenarios:
-- Secular pressures in the print industry leading to a
faster-than-expected pace of revenue declines, offsetting the
cost-saving measures undertaken; or
-- The company prioritizes debt-financed acquisitions or
shareholder distributions over debt paydowns.
S&P views an upgrade as unlikely over the next 12 months and would
require:
-- Alleviation of secular pressures such that revenue grows in the
low- to mid-single-digit percentage area on a consistent basis, and
EBITDA margins show improving trends;
-- The company pursues material voluntary debt repayments; and
-- FOCF to debt (including the PIK notes) increases to about 10%
on a sustained basis.
ESG credit indicators: To E-2, S-2, G-3; From E-2, S-2, G-2
S&P said, "We revised our governance risk indicator to 'G-3' from
'G-2' to reflect a moderately negative consideration in our credit
rating analysis of R.R. Donnelley, as it is for most rated entities
owned by private-equity sponsors. We believe the company's highly
leveraged financial risk profile points to corporate
decision-making that prioritizes the interests of controlling
owners." This also reflects private-equity sponsors' generally
finite holding periods and focus on maximizing shareholder
returns.
RAMBUS INC: BlackRock Reports 15.7% Equity Stake
------------------------------------------------
BlackRock, Inc. disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2021, it
beneficially owns 17,152,046 shares of common stock of Rambus,
Inc., representing 15.7 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/917273/000083423722002340/us7509171069_012722.txt
About Rambus Inc.
Rambus -- rambus.com -- produces products and innovations that
address the fundamental challenges of accelerating data. The
Company makes chips and IP that enable critical performance
improvements for data center and other growing markets.
Rambus reported a net loss of $43.61 million in 2020, a net loss of
$90.42 million in 2019, and a net loss of $157.96 million in 2018.
As of Sept. 30, 2021, the Company had $1.20 billion in total
assets, $354.82 million in total liabilities, and $847.84 million
in total stockholders' equity.
RIVER MILL: Wins Interim Cash Collateral Access
-----------------------------------------------
The U.S. Bankruptcy Court for the Middle District of Louisiana has
authorized River Mill, LLC to use cash collateral on an interim
basis in an amount not to exceed $2,000 per month for maintenance
and utilities.
The Debtor is permitted to use cash in its bank account and cash
generated by its operations.
The Court says if The First, A National Banking Association
requests support for any payments made by the Debtor, the Debtor
will provide support within three business days of the request. The
Debtor is also directed to pay as adequate protection to the
Secured Creditor of $3,750 per month starting on February 5, 2022.
A final hearing on the matter is scheduled for May 11, 2022 at 1
p.m. via Zoom.
A copy of the order is available at https://bit.ly/3offB0z from
PacerMonitor.com.
About River Mill, L.L.C.
River Mill, L.L.C. filed a Chapter 11 petition (Bankr. M.D. La.
Case No. 21-10485) on October 13, 2021. In the petition signed by
its manager, Michael D. Kimble, the Debtor estimated $1 million to
$10 million in both assets and liabilities. Fishman Haygood,
L.L.P. represents the Debtor as counsel.
The First, A National Banking Association, as secured creditor, is
represented by:
Bartley P. Bourgeois, Esq.
The Cohn Law Firm LLC
10754 Linkwood Court, Suite 1
Baton Rouge, LA 70810
Tel: 225-769-0858
Fax: 225-769-1016
Email: bartley@thecohnlawfirm.com
S-TEK 1 LLC: Loses Bid to Strike STIF Claim as Untimely
-------------------------------------------------------
STIF, LLC, filed an amended Claim 7-2 after the deadline for filing
proofs of claim. The original claim No. 7-1 listed Surv-Tek, Inc.,
as the creditor asserting the claim. Amended Claim 7-2 substitutes
STIF for Surv-Tek, but in other respects is generally the same as
the original Claim 7-2.
S-Tek 1, LLC, requests the United States Bankruptcy Court for the
District of New Mexico to strike amended Claim 7-2 as untimely,
arguing that STIF should not be allowed to amend a claim filed by a
different creditor. STIF counters that an amendment to a proof of
claim to correct the creditor's name is proper and relates back to
the date of the original filing.
Bankruptcy Judge Robert H. Jacobvitz concludes STIF's amended Claim
7-2 relates back to the time Claim 7-1 was filed and therefore is
timely. Accordingly, the Court will deny the Motion to Strike.
The timely filed original Claim 7-1 improperly identified Surv-Tek
as the creditor claiming damages for breach of the Lease. STIF is
the actual claimant for the breach of Lease claim. Russ Hugg and
Robbie Hugg together own 100% of the stock and membership interests
in Surv-Tek and STIF, respectively. STIF therefore bears a relation
of interest to Surv-Tek. The two entities, which have common
ownership, are affiliates.
According to Judge Jacobvitz, Original Claim 7-1 gave S-Tek
adequate notice of the nature, extent, and amount of the claim, as
well as the creditor's intent to hold S-Tek's bankruptcy estate
liable. It should have been obvious to S-Tek that the intent behind
original Claim 7-1 was to assert a claim by STIF, not Surv-Tek, for
breach of the Lease. STIF, not Surv-Tek, is the landlord named in
the Lease attached to original Claim 7-1 and to amended Claim 7-2.
In addition, S-Tek has not demonstrated prejudice from substituting
STIF for Surv-Tek in the amended Claim 7-2, the Court points out.
The original and amended claim amount is the same and is based on
the same alleged breach of the Lease. The narrative summary
attached to the original and amended claim explaining the nature of
the transactions between Surv-Tek and S-Tek whereby S-Tek purchased
Surv-Tek's business, and the attached transaction documents, are
the same. Original Claim 7-1 and amended Claim 7-2 both recite that
the source of the claim is "Breach of Lease Agreement." Both
original Claim 7-1 and amended Claim 7-2 attach a copy of the same
Lease, which clearly identifies STIF as the Landlord and S-Tek as
Tenant. Attached as Exhibit K to both the original Claim 7-1 and
amended Claim 7-2 is a financing statement alleged to perfect the
security interest S-Tek granted to STIF under the Lease to secure
S-Tek's obligations to STIF under the Lease. Although the amended
Claim 7-2 asserts a different interest rate, allowing amendment of
original Claim 7-1 with that difference does not prejudice S-Tek
from objecting to amended Claim 7-2 or from seeking to avoid the
claimed security interest.
Finally, S-Tek's reliance on In re Sharafinski, No. 3:06-CV-787 RM,
2007 WL 541938 (N.D. Ind. Feb. 15, 2007) is unavailing, the
bankruptcy judge holds. The case did not involve amending a proof
of claim to substitute an affiliated entity as the claimant but
instead considered whether a debtor could be substituted in a
bankruptcy case naming the wrong unrelated individual as the debtor
commencing the case. In Sharafinski, an attorney who inadvertently
filed a bankruptcy petition on behalf of the wrong client was not
allowed to substitute the proper client as debtor in the existing
case. The Sharafinski court concluded that the filing of a petition
governs the filing of a bankruptcy case; consequently, because the
petition was not signed by the intended client, no bankruptcy case
had been commenced by the intended client. The Sharafinski court
was also concerned about the potential problems a late amendment to
substitute a different debtor in the case might cause creditors
trying to determine whether and when the automatic stay went into
effect as to the substituted debtor. The issues raised by
substituting a different, unrelated debtor for the individual
commencing a bankruptcy case are not analogous to amending a proof
of claim to name an affiliated entity as the claimant where, as
here, (a) the original claim gave adequate notice to the debtor of
the existence, nature, and amount of the claim, (b) the content of
the amended claim was not materially altered by the amendment, (c)
the same person signed the original Claim 7-1 and amended Claim
7-2, (d) the mistaken identity of the claimant in original Claim
7-1 should have been obvious to S-Tek, and (e) the amendment does
not prejudice S-Tek or creditors.
In summary, amended Claim 7-2 is not a new claim filed in the guise
of an amended claim. STIF will be allowed to substitute itself for
the related creditor named in the original claim, Judge Jacobvitz
concludes.
A full-text copy of the Memorandum Opinion and Order dated January
18, 2022, is available at https://tinyurl.com/ymv6pnf8 from
Leagle.com.
About S-Tek 1
Based in Albuquerque, N.M., S-Tek 1 LLC, also known as SurvTek --
https://www.survtek.com/ -- is a land surveying and consulting firm
providing services to both the private and public sectors
throughout New Mexico.
S-Tek 1 filed a Chapter 11 petition (Bankr. D.N.M. Case No.
20-12241) on Dec. 2, 2020. In its petition, the Debtor disclosed
$355,177 in assets and $2,251,153 in liabilities. Randy Asselin,
managing member, signed the petition. Judge Robert H. Jacobvitz
presides over the case. The Debtor tapped Nephi D. Hardman Attorney
at Law, LLC as its bankruptcy counsel and FPM & Associates, LLC as
its accountant.
Patrick Malloy, III has been appointed as Subchapter V Trustee.
SAEXPLORATION HOLDINGS: Completes $26-Mil. Recapitalization
-----------------------------------------------------------
SAExploration Holdings, Inc., announced Jan. 31, 2022, that it has
completed a $26 million recapitalization transaction whereby new
capital was provided to the Company, and the Company's second out
term loan lenders exchanged debt for shares of the Company's common
stock. In addition, the Company's loan documents were amended to
allow for up to $30 million of additional secured indebtedness to
be used for working capital and general corporate purposes on such
terms as approved by the Company's lenders and Board of Directors.
Following the transaction, the Company's outstanding indebtedness
under its existing capital structure has been reduced to
approximately $20.3 million, with no cash interest due until the
maturity date in December 2023.
CEO Forrest Burkholder commented "This transaction emphasizes our
owners' commitment to, and confidence in, the underlying business.
This recapitalization improves our balance sheet, while providing
the opportunity to draw up to an additional $30MM of working
capital. This will enable the Company to participate in multiple
world class projects that meet our investment criteria. The
Company is well positioned to take advantage of the recovery that
is reaching our industry."
Chairman Ken Tubman joined Burkholder in thanking recently retired
CEO Michael J. Faust for his hard work in the recapitalization
transaction. "Mike's efforts in putting this together is a
retirement gift from him to the Company. We are a renewed
international force with this support from our owners."
About SAExploration Holdings
Based in Houston, Texas, SAExploration Holdings, Inc. and
affiliates are full-service global providers of seismic data
acquisition, logistical support and processing services to their
customers in the oil and natural gas industry that operate through
wholly-owned subsidiaries, branch offices and variable interest
entities in North America, South America, Asia Pacific, West Africa
and the Middle East. For more information, visit
https://www.saexploration.com/
SAExploration Holdings, Inc. and affiliates sought protection under
Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Lead Case No.
20-34306) on August 27, 2020. The petitions were signed by Michael
Faust, chairman, chief executive officer, and president.
At the time of the filing, Debtors had estimated assets of between
$1 million to $10 million and liabilities of between $100 million
to $500 million.
Judge Marvin Isgur oversees the case.
The Debtors have tapped Porter H Edges LLP as their bankruptcy
counsel, Imperial Capital, LLC and Winter Harbor LLC as financial
advisors, and Epiq Corporate Restructuring, LLC as claims,
noticing, solicitation and administrative agent.
SANUWAVE HEALTH: Opaleye Management Reports 6.5% Equity Stake
-------------------------------------------------------------
Opaleye Management Inc. disclosed in an amended Schedule 13G filed
with the Securities and Exchange Commission that as of Dec. 31,
2021, it beneficially owns 31,428,571 shares of common stock of
Sanuwave Health, Inc., representing 6.5 percent based upon
481,619,621 shares of common stock issued and outstanding as of
Jan. 10, 2022 reported by the Issuer on its Form 10-Q filed with
the SEC on Jan. 14, 2022. This calculation does not include the
exercise or conversion of outstanding securities of the Company.
Opaleye Management, with respect to the shares of common stock held
by the Opaleye Fund, a private fund to which Opaleye Management
serves as investment manager. Opaleye Management also serves as a
portfolio manager for a separate managed account and may be deemed
to indirectly beneficially own securities owned by the Managed
Account. The Investment Manager disclaims beneficial ownership of
the shares held by the Managed Account.
A full-text copy of the regulatory filing is available for free
at:
https://www.sec.gov/Archives/edgar/data/1417663/000149315222002257/sc13ga.htm
About SANUWAVE Health
Headquartered in Suwanee, Georgia, SANUWAVE Health, Inc.
(OTCQB:SNWV) -- http://www.SANUWAVE.com-- is a shock wave
technology company using a patented system of noninvasive,
high-energy, acoustic shock waves for regenerative medicine and
other applications. The Company's initial focus is regenerative
medicine utilizing noninvasive, acoustic shock waves to produce a
biological response resulting in the body healing itself through
the repair and regeneration of tissue, musculoskeletal, and
vascular structures.
SANUWAVE reported a net loss of $30.94 million for the year ended
Dec. 31, 2020, compared to a net loss of $10.43 million for the
year ended Dec. 31, 2019. As of June 30, 2021, the Company had
$19.74 million in total assets, $44.99 million in total
liabilities, and a total stockholders' deficit of $25.25 million.
New York, NY-based Marcum LLP, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated Oct. 21,
2021, citing that the Company has violated its debt covenants,
incurred significant losses and needs to raise additional funds to
meet its obligations and sustain its operations. These conditions
raise substantial doubt about the Company's ability to continue as
a going concern.
SCHAEFERS SERVICE: Seeks to Hire Bononi & Company as Accountant
---------------------------------------------------------------
Schaefers Service, Inc. seeks approval from the U.S. Bankruptcy
Court for the Western District of Pennsylvania to employ Bononi &
Company, P.C. to prepare its tax returns.
Bononi & Company will be paid an hourly fee of $200 and a retainer
fee of $5,000. The firm will also receive reimbursement for
out-of-pocket expenses incurred.
Eric Bononi of Bononi & Company disclosed in a court filing that
the firm is a "disinterested person" as the term is defined in
Section 101(14) of the Bankruptcy Code.
The firm can be reached at:
Eric E. Bononi
Bononi & Company, P.C.
20 N. Pennsylvania Ave. Suite 201
Greensburg, PA 15601 15601
Tel: (724) 832-2499
Fax: 724-836-0370
About Schaefers Service
Schaefers Service, Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Pa. Case No.
21-22537) on Nov. 24, 2021, listing as much as $1 million in both
assets and liabilities. Judge Carlota M. Bohm oversees the case.
Edgardo D. Santillan, Esq., at Santillan Law, PC serves as the
Debtor's legal counsel.
SHOOT THE MOON: Trustee Allowed to Amend Suit vs Secured Lenders
----------------------------------------------------------------
In the adversary proceeding captioned JEREMIAH FOSTER, Plaintiff,
v. FIRST INTERSTATE BANK; AMERICAN BANK CENTER; JOHN DOES 1-10,
Defendants Adv. Proc. No. 2:21-ap-02005-WLH (Bankr. D. Mont.), the
bankruptcy trustee sued two of the debtor's secured lenders for
various alleged wrongdoing despite having agreed to a broad release
of those lenders during the Chapter 11 case. The lenders moved to
dismiss on various grounds, including that the release bars the
claims and that the complaint contains no allegations potentially
invalidating the release.
In a Memorandum Opinion dated January 18, 2022, Judge Whitman L.
Holt of the United States Bankruptcy Court for the District of
Montana, agreed with the lenders.
The parties generally agree Montana contract law should be used to
determine the scope and validity of the release. The plain language
of the release encompasses the claims against defendants by
sweeping in all "claims . . . , now known or unknown, . . . of
whatever kind or nature . . . arising from events occurring prior
to and including the date that Approval Order(s) is entered."
According to Judge Holt, the Trustee offers no contrary
interpretation of this expansive language but argues he should be
freed from the terms based on defendants' failure to disclose
information related to potential claims against them during
negotiation of the release. The real question for present purposes,
Judge Holt said, is whether the Trustee alleges facts providing a
facially plausible basis on which the court could invalidate the
release.
The Trustee contends defendants' failure to disclose the
information at issue amounts to fraud thereby rendering the release
invalid. This theory, as alleged in the complaint and amplified in
the Trustee's briefing, rests on the premises defendants failed to
disclose information specifically about the alleged check kiting
when negotiating the release and that the Trustee would not have
agreed to a general release otherwise.
According to Judge Holt, the allegations do not rise to a level
sufficient to support a fraud claim or to invalidate the release.
The thrust of the Trustee's theory, formed from allegations that
defendants did not unilaterally volunteer information, lacks a
legal basis, Judge Holt pointed out. Montana case law demonstrates
that more affirmative conduct than simple nondisclosure is needed
to establish fraudulent concealment. This concept is not unique to
Montana but is part of the general law of contracts. The
distinction between action and inaction is also important in other
regions of the law.
Judge Holt said this tenet reveals the fatal defect of the
operative complaint: it does not allege affirmative acts by either
First Interstate Bank ("FIB") and Prairie Mountain Bank n/k/a
American Bank Center, to mislead, hinder, or otherwise create any
misimpressions. It contains no allegations the Trustee made
inquiries or that defendants provided false responses. It also
contains no allegations that defendants concealed information or
hindered the Trustee's ability to learn of relevant facts
elsewhere. Nor does it contain allegations that anyone acting on
behalf of defendants made any oral representations or warranties
relating to the possible effect of the broad release or to Shoot
the Moon or Kenneth Hatzenbeller, Moon's principal investor
generally. Instead, the alleged facts simply tell a story of
passive nondisclosure -- a failure to volunteer -- which is legally
insufficient to invalidate the release.
The complaint does include a statement that defendants "concealed
their respective involvement and assistance in facilitating the
check-kiting scheme." This bare statement, according to Judge
Holt, is insufficient to state a fraud claim plausible on its face
for multiple reasons. First, the statement does not constitute a
factual allegation entitled to a construction in plaintiff's favor
but is simply a conclusory recital of an element that might support
a fraud theory. Further, the complaint contains no factual details
regarding specific acts of concealment but rests on the allegations
of generalized nondisclosure. Second, the purported concealment
conflicts with other information the Trustee presents as evidence
of his theory. Specifically, the Trustee asks the court to take
notice of an interaction at a Rule 2004 exam where FIB's counsel
asked a Shoot the Moon principal a question regarding check kiting.
As the Trustee points out, this Rule 2004 examination occurred
several months before the parties executed their stipulation.
Further, numerous attorneys attended representing parties
potentially adverse to FIB and certainly opposed to concealment of
any misconduct, including an assistant United States trustee. It
belies common sense and the court's judicial experience that a
party hoping to conceal information would raise the topic on the
record in an adversarial and open forum. Thus, to the extent
relevant at this juncture, the back-and-forth at the Rule 2004
examination only undermines the conclusory statement about
concealment.
Apparently recognizing the general inadequacy of defendants'
alleged inaction, the Trustee argues the complaint establishes
"special circumstances" creating a duty of disclosure due to
defendants' "peculiar knowledge" of material facts about the
check-kiting scheme. The Trustee cites no authority indicating that
this duty arises in the context of adverse parties negotiating a
settlement agreement or release. This absence of authority is
unsurprising because such a duty leads to absurd and untenable
results. A party to pending or potential litigation almost always
has "peculiar knowledge" of the strengths and weaknesses of its
position (some of which may be privileged). The adverse party can
seek to obtain some of that information either informally or
through discovery, but there is no requirement that information not
sought by the adverse party be unilaterally volunteered as part of
the process.
Indeed, Judge Holt continued, a requirement that potentially
harmful information be affirmatively disclosed as a condition to an
effective settlement or release would hamper and discourage
settlement negotiations contrary to public policy. Such a
requirement would also create boundless uncertainty subjecting any
general release to attack months or years down the road, which
again discourages settlement and disrupts the reasonable
expectations of parties protected by general releases or, as here,
an express release of any "unknown" claims. This is especially true
since categorization of facts as relevant, harmful, innocuous, or
material is often a matter of legal opinion about which reasonable
attorneys could disagree. Finally, settlement negotiations and
releases are commonplace and thus cannot categorically provide
"special" circumstances implicating what is intended to be a
limited exception to the default legal rules. In sum, without
on-point Montana authority requiring that settlement counterparties
affirmatively volunteer unrequested information to each other, the
court concludes that such a duty does not and should not exist.
In the bankruptcy context, a chapter 11 trustee must "investigate
the acts, conduct, assets, liabilities, and financial condition of
the debtor." There can be significant consequences if a party
stymies a trustee's investigation, such as by lying to the trustee,
hiding relevant information, or not responding to valid inquiries.
Creditors do not have a duty, however, to simply volunteer
unsolicited information to a bankruptcy trustee, including when
those creditors are negotiating a release with the trustee. If a
trustee needs additional information before agreeing to a complete
release, then he or she can request the information or the release
language can be crafted to accommodate uncertainty. As alleged in
the current complaint, the Trustee negotiated, agreed to, and
convinced the bankruptcy court to approve an extremely broad,
general release of all known and unknown claims without any
misdirection by defendants. The complaint does not allege a
facially plausible basis on which to invalidate this release. As
such, dismissal is appropriate under Rule 12(b)(6), Judge Holt
concluded.
Leave to Amend
The Trustee requests leave to file an amended complaint if the
court grants defendants' Rule 12(b)(6) motions. The court cannot
conclude at this juncture that any amendment would necessarily be
futile, Judge Holt said. Thus, leave to amend is appropriate and
the court grants the request. The Trustee should not replead claims
without curing (to the extent possible consistent with Bankruptcy
Rule 9011(b)) the deficiencies addressed above; any amendment must
include particularized factual allegations regarding defendants'
affirmative conduct relating to the parties' stipulation. The
Trustee must file his amended complaint no later than February 28,
2022, if he decides to amend. If the Trustee does not file an
amended complaint or seek additional time to do so within the time
provided, then, on or after March 1, 2022, defendants may submit
for the court's signature an order dismissing this adversary
proceeding with prejudice.
A full-text copy of the decision is available at
https://tinyurl.com/2ddwubtr from Leagle.com.
About Shoot The Moon
Shoot The Moon, LLC, filed for Chapter 11 bankruptcy protection
(Bankr. D. Mont. Case No. 15-60979) on Oct. 21, 2015. Gary S.
Deschenes, Esq., at Deschenes & Associates, served as the Debtor's
bankruptcy counsel.
Prior to the Petition Date, the Debtor, through approximately 19
separate entities operated 11 Chili's restaurants, 3 On the Border
restaurants, and two Moonshine Grill restaurants in the states of
Idaho, Montana, and Washington.
The Court appointed Jeremiah Foster as Chapter 11 Trustee.
SKY MEDIA: Unsecured Creditors to Split $840 over 4 Years
---------------------------------------------------------
Sky Media Pay, Inc., filed with the U.S. Bankruptcy Court for the
Southern District of Florida a Plan of Reorganization for Small
Business.
The Debtor is an advertising sales agent for television stations,
it began purchasing real estate. The business began and has been
operating since December 2000.
The Plan Proponent's financial projections show that the Debtor
will have projected disposable income of $28,000 monthly. The final
Plan payment is expected to be paid on March 2026.
Non-priority unsecured creditors holding allowed claims will
receive distributions, which the proponent of this Plan has valued
at approximately .02 cents on the dollar. This Plan also provides
for the payment of administrative and priority claims.
The Plan will treat claims as follows:
* Class 2 Secured claim of International Bank, IFB Proof of
Claims 8 and 9. Proof of Claim 8: International Finance Bank, Unit
4811, 32 months in a plan that pays $2847.29 monthly, for a total
of $91,113.28 and afterwards a balloon payment on the balance.
Parties agree to sell for no less than $488,381 up to the POC
secured claim amount minus any payments previously made.
* Proof of Claim 9: International Finance Bank, Unit 4801, 32
months in a plan that pays $8,773.23 for a total of $280,743.36 and
afterwards a balloon payment on balance Parties agree to sell for
no less than $968,284.80 up to the POC secured claim amount minus
any payments previously made.
* Class 2 Secured claim of Imperial Fund LLC, Claim 15.
Imperial Fund, LLC, Unit 4704, 4 years in a plan that pays
$5,500.00 monthly without interest for a total of $264,000.00 and
afterwards a balloon of $506,575.13. Parties agree to sell for no
less than $770,000 up to the POC secured claim amount minus any
payments previously made.
* Class 2 Secured claim of MCI Capital, Claim 16. MCI Capital,
Unit 4712, no contract for lease or sell as of yet. Still, 4 years
in a plan that pays $3,200.00 monthly without interest for a total
of $153,600 and afterwards a balloon of $300,000.00. Parties agree
to sell for no less than $453,600.00 up to the POC secured claim
amount minus any payments previously made.
* Class 2 Secured claim of Epic West Condominium Association,
Claims 11, 12, 13, 14.
-- Epic West Condominium Association, POC 13, Unit 4811,
regular monthly payment of $,1577.07 plus $386.39 monthly towards a
reduced arrears amount of $35,718.46.
-- Epic West Condominium Association, POC 14, Unit 4801,
regular monthly payment of $3,132.60 plus $386.39 monthly towards a
reduced arrears amount of $68,872.80.
-- Epic West Condominium Association, POC 11, Unit 4704,
regular monthly payment of $1,667.95 plus $386.39 monthly towards a
reduced arrears amount of $46,377.48.
-- Epic West Condominium Association, POC 12, Unit 4712,
regular monthly payment of $1,382.55 plus $386.39 monthly towards a
reduced arrears amount of $39,803.07.
* Class 3 – Non-priority unsecured creditors including
Regions Bank, Wells Fargo, Florida Power and Light, Swift
Financial, On Deck Capital and 2 separate claims of American
Express. Class 3 shall share in a total distribution of $840.00
over a period of 4 years. Payments shall be distributed pro rata on
a monthly basis, commencing on the first of the month after the
Effective Date. The pro rata distribution to the Class 3
Claimholders shall be in full satisfaction, settlement, release and
discharge of their respective Allowed Class 3 Claims.
A full-text copy of the Plan of Reorganization dated Jan. 27, 2022,
is available at https://bit.ly/3ocMNWu from PacerMonitor.com at no
charge.
About Sky Media Pay
Sky Media Pay, Inc., is the fee simple owner of four real
properties in Miami, Fla., having a total current value of $2.52
million.
Sky Media Pay filed a voluntary petition for Chapter 11 protection
(Bankr. S.D. Fla. Case No. 21-20444) on Oct. 29, 2021, listing
$2,521,691 in total assets and $4,503,498 in total liabilities.
Paola Angulo, president, signed the petition.
Judge Laurel M. Isicoff oversees the case.
Roshawn Banks, Esq., at The All Law Center, PA, serves as the
Debtor's legal counsel.
SMARTER BUILDING: Unsecureds to Get Distributable Cash for 3 Years
------------------------------------------------------------------
Smarter Building Technologies Alliance, Inc. ("SBT"), Integrated
Advanced Controls, LLC ("IAC"), and Direct Discount Lighting, LLC
("DDL" and collectively with SBT and IAC, the "Debtors") submitted
a Joint Chapter 11 Plan under Subchapter V dated Jan. 27, 2022.
SBT partners with small, medium, and Fortune 500 customers to
design, deploy and support IoT-enabled solutions, systems, devices,
and technologies—including lighting, thermostat, plugs, outlets,
circuits, and other wireless, data-forward control systems. Debtors
IAC and DDL are wholly-owned subsidiaries of SBT. Neither IAC nor
DDL have any employees or operations separate and apart from SBT.
The Debtors, in coordination with their retained counsel, DLA Piper
LLP (US), and financial advisor, Rock Creek Advisors, LLC, have
marketed the Debtors' business and assets extensively in an effort
to consummate a value-maximizing strategic transaction.
As of the date hereof, the Debtors are continuing to discuss
various strategic transactions with interested parties and will
supplement, amend, or otherwise modify the Plan if and when the
Debtors obtain appropriate commitments in respect of an Equity
Investment, Exit Financing, and/or a Sale Transaction, or, in the
alternative, if the Debtors, in their business judgment, determine
that an orderly Wind Down is in the best interests of the Debtors,
their estates, their creditors, and all parties in interest.
The Plan is structured to support either a going-concern
restructuring transaction or an orderly wind-down of the Debtors'
businesses. On the one hand, the Debtors are pursuing a standalone
reorganization to be predicated upon an Equity Investment, Exit
Financing, or combination thereof. The Debtors also continue to
explore financing options from traditional lenders such as banks
and other financial stakeholders.
On the other hand, if, in the Debtors' business judgment, a going
concern transaction is not achievable, the Debtors will commence an
orderly Wind Down of their estates.
The Plan provides for the reorganization or orderly wind down and
satisfaction of the Debtors' liabilities and financial
obligations.
Class 3(a) consists of General Unsecured Claims – Trade Claims.
Class 3(a) is impaired under the Plan. Each Holder of an Allowed
Class 3(a) General Unsecured Claim will, in full and final
satisfaction of such Allowed Claim, for a period of up to 3 years
after the Effective Date, receive one or more Pro Rata
distributions from Distributable Cash (if any), unless such Holder
agrees to a lesser treatment. The allowed unsecured claims total
$1,000,000.
Class 3(b) consists of General Unsecured Claims – Billd Loans.
Class 3(b) is impaired under the Plan. Each Holder of an Allowed
Class 3(b) General Unsecured Claim will, in full and final
satisfaction of such Allowed Claim, for a period of up to 3 years
after the Effective Date, receive one or more Pro Rata
distributions from Distributable Cash (if any), unless such Holder
agrees to a lesser treatment. The allowed unsecured claims total
$950,000.
Class 5 consists of Interest Holders. Class 5 is impaired under the
Plan. On the Effective Date, all Interests in Debtor SBT will be
cancelled. Each Holder of Allowed SBT Interests will receive their
Pro Rata share of the Equity Recovery, if any, in full and final
satisfaction of its Allowed SBT Interest, unless such Holder agrees
to a lesser treatment.
The Plan contemplates the funding of the proposed distributions and
treatment of the Allowed Claims and Allowed Interests through the
use of (i) the Debtors' cash on hand as of the Effective Date, (ii)
net profits from operations, and/or (iii) proceeds derived from one
of the following 3 scenarios:
* Equity Investment/Exit Financing. The Debtors obtain new
money commitments, either via equity capital (an "Equity
Investment") or one or more revolving or term loans ("Exit
Financing"), to be funded in connection with the Debtors'
consummation of the Plan and emergence from chapter 11.
* Sale Transaction. The Debtors enter into a sale transaction
(a "Sale Transaction") whereby a third party purchases the Debtors'
equity or all or substantially all of the Debtors' assets under
sections 363, 365, and 1123 of the Bankruptcy Code. The proceeds of
any such Sale Transaction would be distributed in accordance with
the Bankruptcy Code's waterfall scheme and relative priorities as
between Allowed Claims and Allowed Interests.
* Orderly Wind Down. In the event that the Debtors are unable
to enter into and consummate an Equity Investment, Exit Financing,
or a Sale Transaction, the Debtors intend to commence an orderly
wind down (a "Wind Down") of their estates in a manner which
maximizes the value of the Debtors' assets for the benefit of the
Debtors’ creditors.
A full-text copy of the Joint Chapter 11 Plan dated Jan. 27, 2022,
is available at https://bit.ly/3ucjBTq from Stretto, claims
agent.
Attorneys for Debtors:
Eric Goldberg (Bar No. 157544)
Jonathan Serrano (Bar No. 333225)
DLA Piper LLP (US)
2000 University Avenue
East Palo Alto, CA 94303
Tel: (650) 833-2348
Email: eric.goldberg@us.dlapiper.com
jonathan.serrano@us.dlapiper.com
About Smarter Building
Smarter Building Technologies Alliance, Inc. is a merchant
wholesaler of professional and commercial equipment and supplies in
Long Beach, Calif.
Smarter Building Technologies Alliance and its affiliates filed
voluntary petitions for relief under Chapter 11 of the Bankruptcy
Code (Bankr. C.D. Calif. Lead Case No. 21-18337) on Oct 29, 2021.
Benjamin Buchanan, the chief executive officer, signed the
petitions. In its petition, Smarter Building Technologies Alliance
listed $877,745 in assets and $1,942,876 in liabilities.
Judge Barry Russell presides over the cases.
The Debtors tapped DLA Piper LLP (US) as legal counsel, Rock Creek
Advisors LLC as financial advisor, and John Worden of Cramer and
Associates as accountant. Stretto is the claims and noticing agent.
SPECTRUM ALLIANCE: Objection to IUOE Pension Claim Overruled
------------------------------------------------------------
Miller Coffey Tate LLP, as Plan Administrator for Spectrum
Alliance, LP, objected to the claim filed by the International
Union of Operating Engineers Pension against Spectrum Alliance, LP,
in the amount of $11,200,000, based on a guaranty by the Debtor in
favor of the Pension.
The Plan Administrator asserts the IUOE Pension Claim is subject to
mandatory subordination pursuant to Section 510(b) of the
Bankruptcy Code because it is a claim arising from the purchase of
a security of the Debtor's affiliate, PB Spectrum Partners, LP.
Chief Bankruptcy Judge Magdeline D. Coleman of the United States
Bankruptcy Court for the Eastern District of Pennsylvania overrules
the Claim Objection, saying the IUOE Pension Claim does not arise
from the purchase of a "security" of the Partnership as defined by
Section 101(49)(A) of the Bankruptcy Code, which is a threshold
requirement for subordination under Section 510(b).
Sometime in December 2015 or January 2016, the IUOE Pension made an
investment of $10,000,000 in PB Spectrum Partners under a limited
partnership agreement. Judge Coleman points out that while it is
true the LP Agreement provided the IUOE Pension a guaranteed return
on its Investment -- Quarterly Payments equal to 12% per annum,
with Redemption in four years or less -- and, while it is true that
the Partnership's payment obligations were secured both by the
Pledged Interests and the Guaranty, these facts are not enough to
characterize the Investment as a loan where other indications point
to an equity investment.
Moreover, Judge Coleman notes the IUOE Pension has characterized
the Investment as an equity investment in these bankruptcy
proceedings and in state court. In the Claim, filed in 2017, the
IUOE Pension characterizes the Investment as a "Guaranteed
Investment," rather than a loan, and refers to the Quarterly
Payments as its "Class PE Partner Preferred Return," rather than
interest.
Having found that the Investment did not constitute the purchase of
a security as defined by Section 101(49) of the Bankruptcy Code, it
follows the IUOE Pension Claim, based on the Debtor's Guaranty of
the Partnership's obligations with respect to the Investment, does
not arise from the purchase of a security in the Debtor or its
affiliate under Section 510(b), the Court holds. Therefore,
subordination under that section is not appropriate, Judge Coleman
concludes.
A full-text copy of the Memorandum dated January 21, 2022, is
available at https://tinyurl.com/2ywhamje from Leagle.com.
About Spectrum Alliance LP
Based in North Wales, Pennsylvania, Spectrum Alliance LP sought
protection under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Pa.
Case No. 17-14250) on June 20, 2017. James R. Wrigley, president,
signed the petition.
At the time of the filing, the Debtor estimated its assets and
debts at $50 million to $100 million.
Judge Jean K. FitzSimon presides over the case. Jennifer E.
Cranston, Esq., at Ciardi Ciardi & Astin, P.C., represents the
Debtor as bankruptcy counsel. The Debtor tapped Migelouche LLC, as
financial advisor.
Andrew Vara, acting U.S. trustee for Region 3 has appointed four
creditors to serve on the official committee of unsecured creditors
in the Chapter 11 case of Spectrum Alliance, LP.
TAMARACK VALLEY: S&P Assigns 'B' Long-Term ICR, Outlook Stable
--------------------------------------------------------------
S&P Global Ratings assigned its 'B' long-term issuer credit rating
to Calgary, Alta.-based oil and gas exploration and production
company Tamarack Valley Energy Ltd.
S&P said, "We also assigned our 'B+' issue-level rating to Tamarack
Valley's proposed C$200 million senior unsecured debt, with a '2'
recovery rating, indicating our expectation for substantial
(70%-90%) recovery under our simulated default scenario. We expect
the company will use proceeds to pay down borrowings on its credit
facility.
"The 'B' issuer credit rating reflects our view of the company's
relatively small reserves base, acquisition-fueled production
growth, meaningfully diversified product mix, and midrange
projected profitability.
"Our assessment of the company's financial risk profile
incorporates some expectation of cash flow volatility, due to
potential regional hydrocarbon price fluctuations, or other market
or operational unanticipated events."
The stable outlook reflects S&P Global Ratings' opinion of Tamarack
Valley's improved liquidity profile with the extension of the
company's committed credit facility to December 2023. In addition,
it expects the company will maintain its two-year average funds
from operations (FFO)-to-debt ratio in the 45%-60% range, as it
continues developing its legacy and recently acquired producing
properties.
The company has a relatively small-scale reserve base, but strong
production growth due to its acquisition strategy. Reserves
acquired during 2021 are largely undeveloped, resulting in the
company's proved developed (producing and non-producing) reserve
life index (PD RLI) decreasing to about 3.7 years, based on
reserves and daily average production at the end of September 2021,
from the year-end 2020 PD RLI of 5.3 years. S&P Global Ratings
assesses Tamarack Valley's current PD RLI as weaker than that of
most of its rating peers, but adequate to meet the company's
near-term production targets. Beyond 2023, the company will need to
increase its capital spending above the maintenance levels factored
into its current base-case scenario to bring its PD RLI in line
with that of other 'B' rated North American exploration and
production (E&P) companies.
Product diversification should mitigate commodity price risk. With
2022 daily average production expected to exceed 45,000 barrels of
oil equivalent (boe) per day, Tamarack Valley will be able to
achieve over 80% production growth since year-end 2019, primarily
through large-scale acquisitions. Although the 2021 acquisitions
will increase the heavy oil in its product mix (to about 33% in
2022 from about 18% in 2020), the company's product mix will remain
fairly diversified. Furthermore, with natural gas expected to
account for about 25% of the company's product mix in 2022, the
current strong natural gas price fundamentals should enhance cash
flow generation. Although there is a significant portion of heavy
oil in the product mix (33% of estimated 2022 production), its
inherent price volatility will be tempered by the company's broadly
diversified production base.
Increased balance-sheet leverage due to debt-funded acquisitions.
As Tamarack Valley's recent acquisitions have largely been funded
with debt, the company's reported debt has more than doubled since
year-end 2019. S&P said, "As our base-case scenario does not assume
future acquisitions, our operating cash flow forecasts will fully
fund estimated sustaining capital spending, and generate meaningful
positive discretionary cash flow (DCF). As a result, we expect our
estimated fully adjusted year-end 2021 gross debt of about C$780
million should not increase during our forecast period. Although
not explicitly assumed in our forecast, the company's total debt
could decrease, if projected positive DCF is allocated to debt
reduction. We believe the company will remain acquisitive; however,
we expect Tamarack Valley will continue to acquire producing assets
generating accretive cash flow, which should temper the potential
deterioration of its future cash flow leverage metrics."
Prospective profitability is contingent on the successful
integration of acquired producing assets. S&P said, "Based on the
company's accelerated growth recently, our assessment of Tamarack
Valley's profitability reflects our estimated unit earnings before
interest and taxes (EBIT) and return on capital for our 2021-2023
forecast period. Based on our estimated unhedged US$2 per thousand
cubic feet equivalent and 16% forecast return on capital, we rank
the company's profitability in the midrange of the global E&P peer
group. Our assessment of Tamarack Valley's future profitability
reflects both our recently increased hydrocarbon price assumptions
in the forecast years, and the company's expected total cash
operating costs. We estimate the company's full-year 2021
production and transportation costs at C$10.42 per boe; unit cash
operating costs should decrease in 2022 with the full integration
of the producing assets acquired in 2021. Any deviation from our
base-case operating assumptions could weaken the company's
profitability metrics; however, we expect they should remain in the
midrange of the global peer group ranking, as our projected unit
EBIT and return on capital are comfortably in the midrange
ranking."
S&P said, "The stable outlook reflects S&P Global Ratings' opinion
of Tamarack Valley's improved liquidity profile with the extension
of its committed credit facility to December 2023. In addition, we
expect the company will maintain its two-year average FFO-to-debt
ratio in the 45%-60% range, as it continues developing its legacy
and recently acquired producing properties. We also expect Tamarack
Valley will be able to maintain consistent operating performance
and generate profitability metrics ranked in the midrange of the
North American E&P peer group.
"Assuming its business risk profile does not change, we could lower
the rating, if Tamarack Valley's leverage increased materially
above the projections in our base-case scenario, or if liquidity
deteriorated. Specifically, we would lower the rating to 'B-', if
the company's FFO-to-debt ratio fell to the lower end of the
12%-20% range, and we expected it would not improve during our
12-month outlook period. As there is meaningful cushion in our
average 2022-2023 FFO-to-debt ratio, we believe there is little
likelihood of a downgrade during our 12-month outlook period.
"Tamarack Valley would need to strengthen its business risk profile
to support a 'B+' rating. We believe this could occur, if the
company is able to expand its operational scale, lessening the cash
flow impact of an unanticipated operational or market event in any
of its producing areas. In addition, if Tamarack Valley can
maintain its profitability in the midrange of the E&P peer group
ranking, and continues adhering to its stated leverage targets, S&P
Global Ratings believes its FFO-to-debt ratio should remain within
or above the 30%-45% range, which would also be necessary to
support a 'B+' rating. For an upgrade, we would also expect the
company to materially reduce borrowings on its credit facility."
ESG credit indicators: E-4, S-2, G-2
S&P said, "Environmental factors are negative considerations in our
credit rating analysis of Tamarack Valley. S&P Global Ratings'
perception of heightened industry risk for the global oil and gas
industry, underpinned by the risks inherent in the emerging energy
transition, the industry's deteriorated profitability over the past
decade, and a muted growth outlook have collectively contributed to
weaker credit fundamentals for global oil and gas producers.
Canada's lagging preparedness for the energy transition and the
environmental risks inherent in hydrocarbon production influence
our assessment of Tamarack Valley's business risk profile. The
company has publicly committed to reducing its greenhouse gas (GHG)
emissions, and is targeting an overall 39% reduction of its scope
one and two GHG intensity (relative to 2020 levels) by 2025. When
considering social factors, we believe the company's exposure to
social, health, and safety factors is in line with that of the
broader oil and gas upstream industry. Tamarack Valley's diversity,
equity, and inclusion policies include a commitment to increase the
Indigenous representation in its field and administrative workforce
to 6% of its total employee base by 2025."
TEMERITY TRUST: Dist Court OKs Deal to Sell Beverly Hills Property
------------------------------------------------------------------
Judge Paul A. Engelmayer of the United States District Court for
the Southern District of New York issued a Consent Order of
Interlocutory Sale of the real property located at 9135 Hazen
Drive, Beverly Hills, California as stipulated and agreed among the
United States of America, by the United States Attorney; Temerity
Trust Management, LLC; Cairn Capital Investment Funds ICAV, for its
sub-fund Cairn Capstone Special Opportunities Fund; and William
Sadleir.
The Property will be sold, subject to the approval of the
Bankruptcy Court presiding over the Chapter 11 case of In re
Temerity Trust Management LLC, Case No. 20-15015 (Bankr. C.D.
Cal.), in a commercially reasonable manner.
Temerity and Cairn Capital Investment Funds ICAV, for its sub-fund
Cairn Capstone Special Opportunities Fund, will seek approval from
the Bankruptcy Court (i) of a settlement and (ii) to market and
sell the Subject Property pursuant to 11 U.S.C. Section 363(b)(1).
Cairn will be provided with an allowed claim in the full amount of
Temerity's debt to Cairn, which is secured by its first-priority
liens on the property of the Debtor, including the Subject
Property, set forth in the Deed of Trust, which funds Cairn may
dispose of as it sees fit. For purposes of this Order, Temerity's
debt to Cairn shall be deemed to be not less than $17,724,407 as of
June 23, 2021, plus fees and expenses, and any interest accruing
thereafter. The Cairn Allowed Claim shall be indefeasible and not
be subject to challenge by the Debtor, the estate or any other
party-in-interest on any grounds, including, but not limited to
challenges related to the amount, validity and priority.
The proceeds of the Section 363 Sale (except as a result of a
credit bid complying with the terms of this Consent Order) shall be
deposited into an interest-bearing escrow account acceptable to
Temerity, Cairn and the USAO-SDNY, and shall be distributed within
three business days of closing in the following priority: (1)
first, to pay outstanding real property taxes; (2) second, to pay
all reasonable and documented costs of escrow and sale, including
real estate sales commissions authorized hereunder and applicable
fees triggered by the sale of the Subject Property, including any
fees owed to a stalking horse, and any reasonable credits against
the sale price requested by the buyer(s), in each case subject to
Cairn's approval, which will not be unreasonably withheld; (3)
third, to pay the Cairn Debt; and (4) fourth, to the extent funds
remain after all amounts are paid in items (1)-(3) above, those
funds shall be treated as substitute res for the Subject Property
in the pending criminal action and shall remain in escrow pending
the resolution of the criminal matter and further order of the
Bankruptcy Court, with all claims and defenses applicable to the
Subject Property, including any other action that may be brought by
the Office for forfeiture of the Subject Property or claims by
third parties, to apply instead to the Substitute Res.
As previously reported by The Troubled Company Reporter, the Debtor
acknowledged a criminal asset forfeiture proceeding pending against
the spouse of the Debtor's owner but noted the lis pendens has no
effect on the Debtor's property.
The United States Attorney for the Southern District of New York
recorded a lis pendens with respect to a criminal asset forfeiture
proceeding pending against William Sadleir, the spouse of the
Debtor's owner. The lis pendens identifies the Beverly Hills
Property as subject to the asset forfeiture proceeding against Mr.
Sadleir.
A full-text copy of the order dated January 21, 2022, is available
at https://tinyurl.com/2p949pb4 from Leagle.com.
The case is UNITED STATES OF AMERICA, v. WILLIAM AAM SADLEIR,
Defendant, No. 20 Cr. 320 (PAE)(S.D.N.Y.).
Temerity Trust Management, LLC, Kurt Ramlo -- kr@lnbyg.com --
Levene, Neale, Bender, Yoo & Golubchik L.L.P., Los Angeles, CA,
Attorney for Temerity Trust Management, LLC.
Cairn Capital Investment Funds ICAV, for its sub fund Cairn
Capstone Special Opportunities Fund, Kyle R. Freeny, Esq. --
freenyk@gtlaw.com -- Greenberg Traurig, LLP, Washington, D.C.,
Attorney for Cairn Capital Investment Funds, ICAV.
Matthew Lane Schwartz, Esq. -- mlschwartz@bsfllp.com -- Boies
Schiller, Flexner, LLP, New York, NY, Attorney for Defendant.
About Temerity Trust Management
Temerity Trust Management, LLC, based in Beverly Hills, CA, filed a
Chapter 11 petition (Bankr. C.D. Cal. Case No. 20-15015) on June 1,
2020. In the petition signed by William K. Sadleir, manager, the
Debtor was estimated to have $10 million to $50 million in both
assets and liabilities. The Hon. Barry Russell oversees the case.
Kurt Ramlo, at Levene Neale Bender Yoo & Brill L.L.P., serves as
bankruptcy counsel to the Debtor.
TENRGYS LLC: To Enter New Loan Facilities with PanAm & TOG
----------------------------------------------------------
Tenrgys, LLC and its Debtor Affiliates submitted a Fourth Amended
Disclosure Statement for the Fourth Amended and Restated Joint
Chapter 11 Plan of Reorganization dated Jan. 27, 2022.
Subject to the terms and conditions of the RSA, the Plan is
supported by the Debtors, Tellus Operating Group, LLC ("TOG"),
PanAm19 Holdings, LLC ("PanAm"), and FSEP Investments, Inc.
("FSEP"), as the sole stockholder of FS Energy and Power Fund ("FS
Energy" and together with FSEP, the "Consenting 2013 Loan Lender").
The Debtors urge Holders of Claims or Interests whose votes are
being solicited to accept the Plan.
The Plan provides for the reorganization of the Debtors as a going
concern and will significantly reduce the Reorganized Debtors'
long-term debt and annual interest payments, resulting in a
stronger, de-levered balance sheet for the Reorganized Debtors,
while providing the Debtors and Telpico with additional operational
and investment capital.
The Plan provides for: (a) the equitization of the Allowed 2012 RBL
Facility debt through a combination of a new class of membership
interest (Class C), which will provide certain financial rights in
accordance with the Waterfall and 51% of the voting rights in
Reorganized Tenrgys, and an assignment to PanAm of a 70% membership
interest in Telpico; (b) the partial equitization and restructuring
of the 2013 Loan Claim through a combination of a new class of
membership interests (Class B), which will provide for 5% of the
financial rights in Reorganized Tenrgys and have certain minority
protections as described in the RSA, a 5% equity interest in
Telpico through a 16⅔% membership interest in Newco, with
minority protections in Newco to be agreed, a $20 million cash
payment, and a $20 million second-lien secured takeback term loan;
(c) payment in full of Allowed General Unsecured Claims on the
Effective Date or otherwise in the ordinary course of the Debtors'
business; (d) funding for the development of the Colombian Assets;
(e) two exit facilities providing up to $30 million in new money
investments to be funded on the Effective Date; and (f) the ability
of the Holders of Existing Tenrgys Equity Interests to retain their
membership interests (Class A) in Tenrgys through the financial
rights in accordance with the Waterfall and 49% of the voting
rights in Reorganized Tenrgys, as well as the receipt of a 25%
equity interest in Telpico through an 83⅓% membership interest in
Newco.
The PanAm LOU Claim
On November 24, 2021, PanAm filed a proof of claim asserting an
unsecured damages claim against the Debtors. PanAm filed an
amendment to the PanAm LOU Claim on January 7, 2022 (the "PanAm LOU
Claim"). On December 20, 2021, the Debtors filed a Notice and
Objection to Proof of Claim #6-1 of PanAm19 Holdings, LLC (the
"Debtor’s PanAm LOU Claim Objection"). On December 27, 2021, the
Consenting 2013 Loan Lender filed a Joinder in the Debtors' Notice
and Objection to Proof of Claim #6-1 of PanAm19 Holdings, LLC (the
"Consenting 2013 Loan Lender Joinder"). The Debtors and the
Consenting 2013 Loan Lender deny and dispute the assertions and
arguments in the PanAm LOU Claim, and PanAm denies and disputes the
assertions and arguments in the Debtor's PanAm LOU Claim Objection
and the Consenting 2013 Loan Lender Joinder.
As part of the Plan, the Debtors, the Consenting 2013 Loan Lender,
and PanAm have stipulated and agreed that the PanAm LOU Claim will
be temporarily Allowed for voting purposes under the Plan as an
Unsecured Claim in Class 10 in the amount of $1.00, but on the
Effective Date, the PanAm LOU Claim will be deemed withdrawn with
prejudice, and PanAm will not receive any distribution on account
of the PanAm LOU Claim.
In connection with the Plan, on the Effective Date the Debtors will
also enter into two new exit facilities that will provide the
Reorganized Debtors with the necessary liquidity to operate their
businesses in the future. The two new exit facilities are the
following:
* On the Effective Date, PanAm will provide a working capital
loan (the "New Working Facility") to Reorganized Tenrgys in the
amount of up to $10,000,000.00 on the terms set forth in the RSA,
and such other terms and conditions that are consistent with the
consent rights set forth in the RSA.
* On the Effective Date, PanAm and TOG will provide a new loan
facility in the principal amount of $20,000,000.00 (the "New
Subordinated Term Loan") to Reorganized Tenrgys, on the terms set
forth in the RSA, and such other terms and conditions that are
consistent with the consent rights set forth in the RSA.
Telpico and the Colombian Assets
On the Effective Date, Tenrgys shall assign and transfer or cause
to be assigned and transferred to PanAm 70% of the Telpico
Membership Interests.
The remaining 30% of the Telpico Membership Interests shall be
owned or held by Newco. One sixth (1/6) of the Newco Membership
Interests shall be held by the Consenting 2013 Loan Lender or its
designee and five sixths (5/6) by the Holders of Existing Tenrgys
Equity Interests. To accomplish this, on the Effective Date,
Tenrgys shall assign and transfer the remaining 30% of the Telpico
Membership Interests to Newco, which will also benefit from certain
minority protections under the Telpico LLCA, as further set forth
in the RSA.
Newco's Telpico Membership Interests shall have mutually agreed
upon minority and other governance protections vis-à-vis PanAm's
Telpico Membership Interest, including the minority protections set
forth in the RSA.
Class 4 consists of Unsecured 2013 Loan Claim. The Consenting 2013
Loan Lender shall receive: (i) payment of $20,000,000.00 in Cash;
(ii) the Class B Reorganized Tenrgys Interests; (iii) the Class B
Newco Interests; (iv) payment in Cash of the Consenting 2013 Loan
Lender Restructuring Expenses as set forth in the RSA; and (v) a
new $20 million floating rate secondlien term loan with the terms
and other conditions described in the RSA. The allowed unsecured
2013 loan claims total $122,327,458. This Class will receive a
distribution of 41.5% of their allowed claims.
Class 5 consists of General Unsecured Claims. Each such Holder
shall receive, at the Debtors' option (with the consent of the
Consenting 2013 Loan Lender and PanAm), either: (i) payment in full
in Cash, payable on the later of the Effective Date and the date
that is 10 Business Days after the date on which such General
Unsecured Claim becomes an Allowed General Unsecured Claim, in each
case, or as soon as reasonably practicable thereafter, (ii) such
Holder's Allowed General Unsecured Claim will be Reinstated, or
(iii) such Holder will receive such other treatment so as to render
such Holder's Allowed General Unsecured Claim Unimpaired. The
allowed unsecured claims total $0 to $54,000. This Class will
receive a distribution of 100% of their allowed claims.
Class 10 consists of PanAm LOU Claim. The PanAm LOU Claim shall be
temporarily Allowed for voting purposes as an Unsecured Claim in
the amount of $1.00. On the Effective Date, the PanAm LOU Claim
shall be deemed withdrawn with prejudice. No distribution shall be
made on account of the PanAm LOU Claim. The allowed claims in this
Class total $0 to $54,000. This Class will receive a distribution
of 0% of their allowed claims.
The Debtors shall fund distributions under the Plan with one or
more of the following, subject to appropriate definitive agreements
and documentation: (1) the New Working Facility; (2) the New Second
Lien Term Loan; (3) the New Subordinated Term Loan; (4) the New
Reorganized Tenrgys Membership Interests; (5) the Telpico
Membership Interests; and (6) encumbered and unencumbered Cash on
hand, including Cash from operations of the Debtors.
A full-text copy of the Fourth Amended Disclosure Statement dated
Jan. 27, 2022, is available at https://bit.ly/3g95K85 from
PacerMonitor.com at no charge.
Counsel for the Debtors:
Glenn Gates Taylor
John H. Geary, Jr.
Christopher H. Meredith
Copeland, Cook, Taylor & Bush, P.A.
P.O. Box 6020
Ridgeland, MS 39158
Telephone: (601) 856-7200
Facsimile: (601) 856-7626
E-mail: gtaylor@cctb.com
jgeary@cctb.com
cmeredith@cctb.com
About Tenrgys LLC
Tenrgys, LLC, operates as an oil and gas exploration and production
company. It is headquartered in Ridgeland, Miss.
Tenrgys and its affiliates filed their voluntary petitions for
Chapter 11 protection (Bankr. S.D. Miss. Lead Case No. 21-01515) on
Sept. 17, 2021, listing as much as $500 million in both assets and
liabilities. Richard H. Mills, Jr., manager, signed the
petitions.
Judge Jamie A. Wilson oversees the cases.
Copeland, Cook, Taylor & Bush, P.A., and FTI Consulting, Inc.,
serve as the Debtors' legal counsel and financial advisor,
respectively.
TRIUMPH GROUP: BlackRock Has 15% Equity Stake as of Dec. 31
-----------------------------------------------------------
In an amended Schedule 13G filed with the Securities and Exchange
Commission, BlackRock, Inc. disclosed that as of Dec. 31, 2021, it
beneficially owns 9,694,790 shares of common stock of Triumph Group
Inc., representing 15 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/1021162/000083423722002306/us8968181011_012722.txt
About Triumph
Headquartered in Berwyn, Pennsylvania, Triumph Group, Inc. --
http://www.triumphgroup.com-- designs, engineers, manufactures,
repairs and overhauls a broad portfolio of aerospace and defense
systems, components and structures. The company serves the global
aviation industry, including original equipment manufacturers and
the full spectrum of military and commercial aircraft operators.
Triumph Group reported a net loss of $450.91 million for the year
ended March 31, 2021, a net loss of $29.43 million for the year
ended March 31, 2020, and a net loss of $327.14 million for the
year ended March 31, 2019.
* * *
As reported by the TCR on Aug. 18, 2021, Moody's Investors Service
upgraded its ratings for Triumph Group, Inc., including the
company's corporate family rating to Caa2 from Caa3 and Probability
of Default Rating to Caa2-PD from Caa3-PD. The upgrades reflect
Moody's expectations for stronger operating performance that will
result in a gradual improvement in credit metrics through 2023.
In June 2020, S&P Global Ratings lowered its issuer credit rating
on Triumph Group Inc. to 'CCC+' from 'B-'.
UNITI GROUP: BlackRock Has 15.1% Equity Stake as of Dec. 31
-----------------------------------------------------------
BlackRock, Inc. disclosed in an amended Schedule 13G filed with the
Securities and Exchange Commission that as of Dec. 31, 2021, it
beneficially owns 35,709,974 shares of common stock of Uniti Group
Inc., representing 15.1 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/1364742/000083423722002750/us91325v1089_012722.txt
About Uniti
Headquartered in Little Rock, Arkansas, Uniti --
http://www.uniti.com-- is an internally managed real estate
investment trust. It is engaged in the acquisition and construction
of mission critical communications infrastructure, and is a
provider of wireless infrastructure solutions for the
communications industry. As of September 30, 2021, Uniti owns
approximately 126,000 fiber route miles, 7.5 million fiber strand
miles, and other communications real estate throughout the United
States.
Uniti Group reported a net loss of $718.81 million for the year
ended Dec. 31, 2020, compared to net income of $10.91 million for
the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company
had $4.78 billion in total assets, $6.90 billion in total
liabilities, and a total shareholders' deficit of $2.12 billion.
* * *
In March 2020, S&P Global Ratings placed all ratings on U.S.
telecom REIT Uniti Group Inc., including the 'CCC-' issuer credit
rating, on CreditWatch with positive implications. The CreditWatch
placement follows the company's announcement it reached an
agreement in principle with its largest tenant Windstream Holdings
Inc. to resolve all legal claims it asserted against Uniti in the
context of Windstream's bankruptcy proceedings.
USA GYMNASTICS: Says Chapter 11 Appeal Delays Plan Deals
--------------------------------------------------------
Vince Sullivan of Law360 reports that the national governing body
of competitive gymnastics told an Indiana federal judge Friday,
Jan. 28, 2022, that a pending appeal of the organization's
confirmed Chapter 11 plan is delaying plan payments by its insurers
that will fund a $380 million settlement trust for survivors of
sexual abuse.
In a reply supporting its motion to dismiss the appeal of Liberty
Insurance Underwriters Inc., USA Gymnastics said it has heard from
the insurers providing the majority of the money to be distributed
to more than 500 sexual abuse survivors that the appeal is the
reason the trust hasn't been funded.
About USA Gymnastics
USA Gymnastics -- https://www.usagym.org/ -- is a not-for-profit
organization incorporated in Texas. Based in Indianapolis, Indiana,
USAG's organization encompasses six disciplines: women's
gymnastics, men's gymnastics, trampoline and tumbling, rhythmic
gymnastics, acrobatic gymnastics, and group gymnastics. USAG
provides educational opportunities for coaches and judges, as well
as gymnastics club owners and administrators, and sanctions
approximately 4,000 competitions and events throughout the United
States annually. More than 200,000 athletes, professionals, and
clubs are members of USAG. USAG sets the rules and policies that
govern the sport of gymnastics in the United States, including
selecting and training the United States gymnastics teams for the
Olympics and World Championships. As of the Petition Date, USAG
employs 53 individuals, nearly all of whom work for USAG full
time.
USA Gymnastics sought Chapter 11 protection (Bankr. S.D. Ind. Case
No. 18-09108) on Dec. 5, 2018. USAG estimated $50 million to $100
million in assets and the same range of liabilities as of the
bankruptcy filing.
The Hon. Robyn L. Moberly is the case judge.
USAG tapped JENNER & BLOCK LLP as counsel; ALFERS GC CONSULTING,
LLC and SCRAMBLE SYSTEMS, LLC, as business consulting services
providers; and OMNI Management Group, Inc., as claims agent.
VEWD SOFTWARE: Unsecureds to Get Nothing in Debt-for-Equity Plan
----------------------------------------------------------------
Vewd Software USA, LLC, and its affiliated debtors filed with the
U.S. Bankruptcy Court for the Southern District of New York a
Revised Amended Joint Prepackaged Chapter 11 Plan of Reorganization
dated Jan. 27, 2022.
Class 3 consists of all Prepetition Credit Agreement Claims. On
the Effective Date, the Prepetition Credit Agreement Claims shall
be Allowed, without avoidance, offset, reduction, subordination,
recoupment, or deduction of any kind, in the aggregate principal
amount of not less than $117,962,539.10. Each Holder of an Allowed
Prepetition Credit Agreement Claim shall receive, on the Effective
Date, its Pro Rata share of 100% of the Reorganized Common Stock
(subject to dilution, if any, by the Management Incentive Plan).
Class 4A consists of all General Unsecured Claims. On the
Effective Date, all General Unsecured Claims shall be released,
discharged, and extinguished as of the Effective Date, and Holders
of General Unsecured Claims will not receive any distribution on
account of such General Unsecured Claims. Class 4A is Impaired
under the Plan.
Class 4B consists of all General Unsecured Trade Claims. Except to
the extent that a Holder of an Allowed General Unsecured Trade
Claim agrees to less favorable treatment of its Allowed Claim or
has been paid before the Effective Date, in full and final
satisfaction, compromise, settlement, release, and discharge of and
in exchange for each General Unsecured Trade Claim, (i) the
Reorganized Debtors shall continue to pay or treat each General
Unsecured Trade Claim in the ordinary course of business as if the
Chapter 11 Cases had never been commenced, or (ii) such Holder will
receive such distribution acceptable to the Required Consenting
Lenders as necessary to render such Allowed General Unsecured Trade
Claim Unimpaired. Class 4B is Unimpaired under the Plan.
Class 6A consists of all Vewd USA Interests. On the Effective Date,
all Allowed Vewd USA Interests shall, at the option of the Debtors
(with the consent of the Required Consenting Lenders) or the
Reorganized Debtors, as applicable, either be: Reinstated; or
cancelled, extinguished, and released, as of the Effective Date,
and Holders of Vewd USA Interests will not receive any distribution
on account of such Vewd USA Interests.
Class 6B consists of all Vewd AS Interests. On the Effective Date,
all Vewd AS Interests shall be cancelled, extinguished, and
released, as of the Effective Date, and Holders of Vewd AS
Interests will not receive any distribution on account of such Vewd
AS Interests.
Class 6C consists of all LLH AS Interests. On the Effective Date,
each LLH AS Interest shall be cancelled, extinguished, and
released, as of the Effective Date, and Holders of LLH AS Interests
will not receive any distribution on account of such LLH AS
Interests.
The Debtors shall fund distributions under the Plan, as applicable,
with (1) the issuance of the Reorganized Common Stock; (2) the
borrowings under the Exit Facility; (3) the Preferred Stock
Issuance (if any); and (4) Cash on hand. Each distribution shall be
governed by the terms and conditions set forth in the Plan
applicable to such distribution or issuance and by the terms and
conditions of the instruments or other documents evidencing or
relating to such distribution or issuance, which terms and
conditions shall bind each Entity receiving such distribution or
issuance.
Moore Settlement
Entry of the Confirmation Order shall constitute the Bankruptcy
Court's approval of the Moore Settlement Agreement as the
settlement of all Claims, Interests, Causes of Action, and
controversies between the Moore Parties and the Debtors pursuant to
section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019 in
consideration for the releases granted by the Moore Parties and the
Debtors to each other and other benefits provided under the Plan,
Moore Settlement Agreement, and Moore Consulting Agreement. Upon
the Effective Date, the provisions of the Moore Settlement
Agreement shall constitute a good faith compromise and settlement
of all Claims, Interests, Causes of Action, and controversies
released, settled, compromised, discharged, or otherwise resolved
between the Moore Parties and the Debtors pursuant to the Plan.
Otello Settlement
Entry of the Confirmation Order shall constitute the Bankruptcy
Court's approval of the Otello Settlement Agreement as the
settlement of all Claims, Interests, Causes of Action, and
controversies between Otello and the Debtors pursuant to section
1123 of the Bankruptcy Code and Bankruptcy Rule 9019 in
consideration for the releases granted by Otello and the Debtors to
each other and other benefits provided under the Plan, Otello
Settlement Agreement, and Otello Advisory Services Agreement. Upon
the Effective Date, the provisions of the Otello Settlement
Agreement shall constitute a good faith compromise and settlement
of all Claims, Interests, Causes of Action, and controversies
released, settled, compromised, discharged, or otherwise resolved
between Otello and the Debtors pursuant to the Plan.
A full-text copy of the Revised Amended Joint Prepackaged Plan of
Reorganization dated Jan. 27, 2022, is available at
https://bit.ly/3rgNcsU from Kurtzman Carson Consultants LLC, claims
agent.
Debtors' Counsel:
Gregg M. Galardi, Esq.
Lucas Brown, Esq.
Katharine E. Scott, Esq.
ROPES & GRAY LLP
1211 Avenue of the Americas
New York, New York 10036
Tel: (212) 596-9000
Fax: (212) 596-9090
E-mail: gregg.galardi@ropesgray.com
lucas.brown@ropesgray.com
katharine.scott@ropesgray.com
- and -
Stephen Iacovo, Esq.
191 North Wacker Drive
Chicago, Illinois 60606
Tel: (312) 845-1200
Fax: (312) 596-5500
E-mail: stephen.iacovo@ropesgray.com
About Vewd Software
Vewd Software is engaged in enabling the transition from cable,
broadcast, and satellite television platforms to over-the-top
("OTT") video streaming services. The Company's suite of OTT
solutions enables customers and partners such as Sony, Verizon,
Samsung, and TiVo to seamlessly reach the growing number of
consumers who watch content on connected devices.
Vewd Software USA, LLC, and its affiliates sought Chapter 11
bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 21-12065) on
Dec. 15, 2021. The cases are handled by Judge Michael E. Wiles.
In the petition signed by CEO Aneesh Rajaram, Vewd Software
estimated assets between $1 million to $10 million and liabilities
between $100 million to $500 million.
ROPES & GRAY LLP, led by Gregg M. Galardi, Lucas Brown, Katharine
E. Scott, and Stephen Iacovo, is serving as the Debtors' bankruptcy
counsel. JEFFERIES LLC is the Debtors' investment banker. ERNST &
YOUNG LLP is the Debtors' financial advisor. ADVOKATFIRMAET BAHR
AS is the Debtors' Norwegian counsel. KURTZMAN CARSON CONSULTANTS
LLC is the Debtors' claims agent and administrative advisor.
VEWD SOFTWARE: Will Resubmit Plan as Judge Questions Fairness
-------------------------------------------------------------
Rick Archer of Law360 reports that Vewd Software said on Monday
that it will submit a revised $118 million debt-swap Chapter 11
plan, after a New York bankruptcy judge questioned whether the
plan's shareholder settlements were unfair to its other unsecured
creditors.
At a virtual confirmation hearing, U.S. Bankruptcy Judge Michael
Wiles questioned whether the plan -- which included settlements
with the shareholders whose feud helped drive the company into
Chapter 11 and full payment for trade vendors -- was fair to the
remaining unsecured creditors, while Vewd argued there were no
remaining creditors.
About Vewd Software
Vewd Software is engaged in enabling the transition from cable,
broadcast, and satellite television platforms to over-the-top
("OTT") video streaming services. The Company's suite of OTT
solutions enables customers and partners such as Sony, Verizon,
Samsung, and TiVo to seamlessly reach the growing number of
consumers who watch content on connected devices.
Vewd Software USA, LLC, and its affiliates sought Chapter 11
bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 21-12065) on
Dec. 15, 2021. The cases are handled by Judge Michael E. Wiles.
In the petition signed by CEO Aneesh Rajaram, Vewd Software
estimated assets between $1 million to $10 million and liabilities
between $100 million to $500 million.
ROPES & GRAY LLP, led by Gregg M. Galardi, Lucas Brown, Katharine
E. Scott, and Stephen Iacovo, is serving as the Debtors' bankruptcy
counsel. JEFFERIES LLC is the Debtors' investment banker. ERNST &
YOUNG LLP is the Debtors' financial advisor. ADVOKATFIRMAET BAHR
AS is the Debtors' Norwegian counsel. KURTZMAN CARSON CONSULTANTS
LLC is the Debtors' claims agent and administrative advisor.
WHITE CAP: Moody's Affirms B2 CFR, Alters Outlook to Stable
-----------------------------------------------------------
Moody's Investors Service affirmed White Cap Supply Holdings, LLC's
B2 Corporate Family Rating and B2-PD Probability of Default Rating.
Moody's also affirmed the B2 rating on the company's senior secured
bank credit facility, comprising a revolving credit facility and
term loan, the Caa1 rating on the senior unsecured notes due 2028
and the Caa1 rating on the senior unsecured PIK notes to 2026
issued by White Cap Parent, LLC, parent holding company of White
Cap Supply Holdings, LLC (collectively White Cap). The outlook is
changed to stable from negative.
The affirmation of White Cap's B2 CFR and change in outlook to
stable from negative reflects Moody's expectation that White Cap
will integrate Ram Tool Construction Supply Co. (Ram Tool),
acquired on December 1, 2021, without impacting operations,
generate revenue growth and modestly improve profitability, which
would improve key credit metrics. A good liquidity profile further
supports stabilization of White Cap's ratings.
"White Cap must execute on its growth strategy while integrating
Ram Tool, contending with intense competition and a highly
leveraged capital structure," said Peter Doyle, Vice President at
Moody's. "Another significant debt financed acquisition or dividend
could result in ratings pressure," added Doyle.
The following ratings are affected by the action:
Affirmations:
Issuer: White Cap Supply Holdings, LLC
Corporate Family Rating, Affirmed B2
Probability of Default Rating, Affirmed B2-PD
Senior Secured Bank Credit Facility, Affirmed B2 (LGD4)
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD6)
Issuer: White Cap Parent, LLC
Senior Unsecured Regular Bond/Debenture, Affirmed Caa1 (LGD6)
Outlook Actions:
Issuer: White Cap Supply Holdings, LLC
Outlook, Changed To Stable From Negative
Issuer: White Cap Parent, LLC
Outlook, Changed To Stable From Negative
RATINGS RATIONALE
White Cap's B2 CFR reflects the company's highly leveraged capital
structure. Moody's projects debt-to-EBITDA improving to 5.8x by
year-end 2023 from 7.0x at year-end 2021. Full year earnings from
Ram Tool, which will more than offset the loss of revenue from the
sale of the company's Contractors' Warehouse business in the second
quarter of 2021, higher volumes from organic growth and price
increases compensate for the increasing debt load. Moody's
forecasts free cash flow-to-debt will range from 5% - 7% by late
2023, despite high fixed charges. Debt service requirements,
including cash interest payments and term loan amortization, will
approach $200 million per year, constraining cash flow, reducing
financial flexibility and making voluntary debt payments difficult
to achieve in 2022. At the same time White Cap must continue with
its transformation as a stand-alone entity and the integration of
Ram Tool.
Good operating performance provides a major offset to the company's
highly leveraged debt capital structure. Moody's forecasts EBITDA
margin sustained in the range of 10% - 12%, which is the company's
greatest credit strength, based on revenue approaching $5.6 billion
by late 2023. Moody's also calculates interest coverage, measured
as EBITA-to-interest expense, in excess of 1.5x over the next two
years, which is reasonable relative to the large interest burden.
White Cap has a good liquidity profile characterized by good cash
flow and plenty of revolver availability. These factors in addition
to the company's scale, geographic diversity and end market
dynamics that support growth further enhance White Cap's credit
profile.
The B2 rating on White Cap's senior secured bank credit facility,
the same rating as the Corporate Family Rating, results from its
subordination to company's asset based revolving credit facility
but priority of payment relative to the company's senior unsecured
notes. The bank credit facility comprises a revolving credit
facility and term loan. The revolving credit facility and term loan
are pari passu. Both have a first lien on substantially all
noncurrent assets and a second lien on assets securing the
company's asset based revolving credit facility (ABL priority
collateral). The B2 rating is not impacted by the current
discussions to reduce pricing nor by a moderate increase to the
term loan, which is incorporated in Moody's forward view.
The Caa1 rating on the company's senior unsecured notes due 2028,
two notches below the Corporate Family Rating, results from their
subordination to the company's considerable amount of secured debt.
The Caa1 rating on White Cap Parent, LLC's senior unsecured PIK
toggle notes due 2026, two notches below the Corporate Family
Rating, results from their contractual and structural subordination
to White Cap Supply Holdings, LLC's secured debt. While the rating
is the same as the senior unsecured notes at White Cap Parent, LLC,
the expected loss in a distress scenario is greater on the PIK
toggle notes.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade would be predicated on sustaining debt-to-EBITDA near
4.5x, while preserving its good liquidity profile. A downgrade
could occur should White Cap adopt a more aggressive financial
strategy, particularly with respect to acquisitions or dividends,
or experience a weakening of liquidity. Negative rating pressure
would also result from debt-to-EBITDA remaining above 6.0x or
interest coverage sustained below 1.5x.
The principal methodology used in these ratings was Distribution &
Supply Chain Services Industry published in June 2018.
White Cap Supply Holdings, LLC, headquartered in Norcross, Georgia,
is a leading North American industrial distributor of specialty
construction products. Through their respective affiliates Clayton,
Dubilier & Rice (CD&R) owns 65% of White Cap and The Sterling Group
controls the remaining 35%.
ZIFF DAVIS: Moody's Affirms B1 CFR; Outlook Stable
--------------------------------------------------
Moody's Investors Service affirmed Ziff Davis, Inc.'s B1 corporate
family rating, B1-PD probability of default rating and the Ba3 on
the company's senior notes due 2030. The SGL-1 speculative grade
liquidity rating is unchanged. The outlook is stable.
The affirmation of the ratings follows the completion of the
divestiture of Ziff Davis' e-Fax and cloud businesses into newly
formed entity Consensus Cloud Solutions, Inc. ("Consensus", B2
stable).
Affirmations:
Issuer: Ziff Davis, Inc.
Corporate Family Rating, Affirmed B1
Probability of Default Rating, Affirmed B1-PD
Senior Unsecured Regular Bond/Debenture, Affirmed Ba3 (LGD3)
Outlook Actions:
Issuer: Ziff Davis, Inc.
Outlook, Remains Stable
RATINGS RATIONALE
The affirmation of Ziff Davis' B1 CFR reflects Moody's expectations
that the company's credit metrics will remain strong as evidenced
in the company's financial policy to maintain reported gross
debt/EBITDA at a maximum of 3x on a run-rate basis, allowing for
temporary increases in times of sizeable M&A. Ziff Davis'
operations have a history of good revenue growth, which will be
bolstered by the divestiture as digital fax was growing at 2%
annually.
The B1 rating also takes into account the inherent integration risk
that comes with Ziff Davis' high appetite for M&A. The company has
spent nearly $2.5 billion since 2013 on M&A on over 70 companies.
Around 60% of Ziff Davis' revenue is exposed to digital advertising
demand which, despite strong momentum in terms of demand, does not
offer long term visibility and is prone to volatility through
economic cycles.
Ziff Davis' operations are expected to generate revenue of around
$1.4 billion in 2021 and the company has guided to EBITDA of around
$488 million. The company also retains a 19.9% of Consensus which
it expects to divest over the coming year.
The SGL-1 speculative grade liquidity rating indicates a very good
liquidity profile, supported by ongoing strong free cash flow
generation even post divestiture of the digital fax business.
Moody's expects Ziff Davis to have generated more than $200 million
in free cash flow in 2021. The company retains full access to its
$100 million revolver which is expected to remain undrawn given the
cash balance which stood at $726 million on September 30, 2021 on a
pro-forma basis for the divestiture (excluding the value of the
19.9% Consensus shareholding). The revolver includes two financial
covenants which Moody's expects the company to continue to meet
with ample flexibility.
The instrument ratings reflect the probability of default of the
company, as reflected in the B1-PD Probability of Default Rating,
an average expected family recovery rate of 50% at default, and the
particular instruments' ranking in the capital structure. The Ba3
rating on the $750 million ($667 million outstanding after $83
million were optionally redeemed) of senior unsecured notes due
2030 issued by Ziff Davis, Inc. reflects the fact the notes benefit
from guarantees from all material operating subsidiaries, and rank
ahead of the convertible notes (unrated).
The stable outlook reflects Moody's view that the company will
continue to balance its high M&A appetite with a financial policy
to maintain run-rate leverage (Moody's adjusted) below 3x. Moody's
notes that post divestiture of the e-Fax and Cloud businesses, Ziff
Davis' operations will be solely focused around its digital media
assets, and generate revenue through digital subscriptions and
digital advertising. To reflect this, the company will now be
analyzed under the Media methodology (the Telecommunications
Service Providers industry methodology had been used previously).
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the ratings if leverage (Moody's adjusted)
declined below 2.5x on a sustained basis and free cash flow to debt
(Moody's adjusted) was sustained above 15%.
Moody's could downgrade the ratings if leverage (Moody's adjusted)
was sustained at or above 3.5x or free cash flow to debt (Moody's
adjusted) fell below 10% on sustained basis. Downward ratings
pressure would also ensue should the company's liquidity position
deteriorate.
Based in New York, NY, Ziff Davis, Inc. is a provider of digital
media and web properties providing reviews of technology and gaming
products as well as lifestyle and healthcare articles, related news
and commentary. Revenue is primarily derived from display and video
advertising, performance-based advertising and subscription-based
products.
The principal methodology used in these ratings was Media published
in June 2021.
[*] 7 Iconic U.S. Restaurant Chains That Are Currently Shrinking
----------------------------------------------------------------
Own Duff of Eat This, Not That reports that two years into the
Covid-19 pandemic, many U.S. restaurant chains are continuing to
struggle, faced with declining sales on one hand and rapidly
changing consumer behaviors on the other. Chains that have avoided
bankruptcy thus far have done so at considerable expense, shedding
dozens of restaurants -- and in some cases, hundreds -- in order to
stay afloat.
1. Ruby Tuesday
Ruby Tuesday made it through the pandemic, but just barely. Like
many other fast-casual chains now decades past their prime, Ruby
Tuesday was pushed into bankruptcy, filing for Chapter 11
protection in late 2020. Debt protection was awarded in February
of 2021, but the chain emerged from bankruptcy court a ghost of its
former self, with its restaurant count cut by more than half—from
451 to 209.
2. Boston Market
Boston Market has been in the news recently, following last 2021's
announcement of ambitious expansion plans and the debut of a new,
takeout-friendly restaurant design. But the regional favorite has
been in a nose-dive for the past two decades, following a Chapter
11 bankruptcy filing in 1998.
Since then, Boston Market has passed through the hands of no fewer
than three different parent companies, and has watched its
restaurant count steadily decline, from a high of 1,200 units in
1998, to an all-time low of 326 last 2021.
3. Golden Corral
As recently as 2018, when many other buffet chains were showing
signs of decline, Golden Corral was still cracking the top 100 of
Restaurant Business's annual "Top 500" list, reporting a restaurant
count of 489.
But even America's #1 buffet restaurant couldn't beat the pandemic.
Since 2018, Golden Corral's footprint has shrunk by over 25%, with
most of the losses occurring in the past two years. Last month,
the buffet chain reported a system-wide total of 360 restaurants,
with 80 restaurants lost in pandemic-related closures.
Despite its significantly reduced footprint, Golden Corral is still
plotting a comeback, with plans for a new line of restaurants with
a simplified and -- wait for it -- takeout-friendly store design.
4. Ponderosa Steakhouse and Bonanza Steakhouse
Beloved steakhouses Ponderosa and Bonanza (whose names were
inspired by the '60s Western show, Bonanza) were acquired by FAT
Brands in 2017, following several decades of ownership by
conglomerate Metromedia Restaurant Group and a bankruptcy filing in
2008.
While the sister brands have found a sanctuary of sorts in FAT
Brands, they show no signs of recovering from their years-long
decline. Their current collective restaurant count totals just 23
locations, down from 75 in 2019.
5. Steak 'n Shake
Founded in 1934, Steak 'n Shake is another decades-old fast-food
brand with an uncertain future. Handed off from one parent company
to another, Steak 'n Shake experienced something of a resurgence in
the late 2000s, under the leadership of entrepreneur Sardar
Biglari. Unfortunately, however, that momentum was short-lived,
beginning to peter out by 2016.
In the years since, the company has routinely made headlines with
its erratic finances, announcing a fire sale of hundreds of its
restaurants in 2018, and narrowly avoiding bankruptcy in early
2021. All the while, its store count has been steadily decreasing,
from as many as 423 restaurants in 2008 to just 306 in 2020.
6. Quiznos
One of the biggest stories in declining quick service chains,
Quiznos' store count has shrunk by an incredible 94% in the past 15
years. The sandwich chain peaked in size in 2006, with 5,000 units
to its name. In the time since, it's footprint has (roughly)
halved every five years: it was down to 2,800 units in 2010, 671
units in 2016, and 255 last 2021.
The sandwich brand is hoping to find renewed sales through a
partnership with ghost kitchen company Ghost Kitchen Brands, which
in 2021 announced plans to bring Quiznos into 100 of its stores,
across the U.S. and Canada.
7. Fuddruckers
Despite the liquidation of its parent company Luby's in 2020,
beloved burger chain Fuddruckers is still hobbling along, acquired
for $18.5 million by Black Titan Franchise Systems in late 2021.
But Black Titan will have its work cut out in attempting to
rehabilitate Fuddruckers.
The brand has been in a steady decline since at least 2010, when it
was acquired by Luby's. It's store count has shrunk by about half
in the past decade, from 198 stores in 2010 to just 92 last 2021.
[*] Martin Glenn Is New N.Y. Southern Bankruptcy Chief Judge
------------------------------------------------------------
The Board of Judges of the United States District Court for the
Southern District of New York announced Jan. 31, 2022, that it has
selected Bankruptcy Judge Martin Glenn to serve for a five-year
term as Chief Bankruptcy Judge.
Judge Glenn's Chief Judge appointment is effective as of March 1,
2022. He is replacing Chief Judge for U.S. Bankruptcy Court, Judge
Cecelia G. Morris, who has served two terms as Chief Judge. Judge
Morris will continue her judgeship at the Poughkeepsie courthouse.
Judge Glenn has served on the bench of the Bankruptcy Court since
November 30, 2006.
Prior to his appointment, Judge Glenn practiced law with O'Melveny
& Myers LLP, in Los Angeles and in New York. Judge Glenn was a law
clerk for Hon. Henry J. Friendly, Chief Judge of the U.S. Court of
Appeals for the Second Circuit. He received his B.S. degree from
Cornell University and his J.D. degree from Rutgers Law School. He
is an Adjunct Professor at Columbia Law School and a Contributing
Author of Collier on Bankruptcy.
Judge Glenn is a fellow of the American College of Bankruptcy, a
member of the American Law Institute; International Insolvency
Institute; New York Federal-State Judicial Council; New York City
Bar; and American Bankruptcy Institute. He is a past member of the
Committee on International Judicial Relations of the United States
Judicial Conference, and the Bankruptcy Judges Advisory Group of
the Administrative Office of the U.S. Courts.
"Judge Glenn has distinguished himself in commercial litigation, on
the bankruptcy bench, in this international insolvency community
and in academia," said Chief District Judge Laura Taylor Swain.
"Although succeeding Chief Bankruptcy Judge Morris, who has been an
outstanding leader of the Court over the past ten years, will be no
small task," she continued, "we are confident that the Bankruptcy
Court will flourish and continue its national leadership in complex
domestic and international matters and serve all of its
constituents superbly under Chief Judge Glenn's guidance. We are
delighted that he is embarking on yet another phase of his
distinguished service to the bench and bar."
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., 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.
*** End of Transmission ***