/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/220209.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 9, 2022, Vol. 26, No. 39 Headlines 6200 NE 2ND AVENUE: Wins Cash Collateral Access Thru April 28 AI AQUA: Moody's Affirms B3 CFR, Rates Incremental Term Loan 'B3' ARCHDIOCESE OF NEW ORLEANS: Taps Keegan as Financial Advisor ARCHDIOCESE OF SANTA FE: Victims Oppose Sealing of Records ARIZONA AIRCRAFT: March 14 Plan Confirmation Hearing Set ASP NAPA: S&P Assigns 'B' ICR on Consolidation, Outlook Stable AZALEA TOPCO: S&P Places 'B' ICR on Watch Negative on Forsta Deal BOY SCOUTS: Girl Scouts Cry Unfair Treatment in Plan BOY SCOUTS: U.S. Trustee Objects to Abuse Deal Legal Shield BRAZORIA HYDROCARBON: Cash Flow from Partnership to Fund Plan CALIFORNIA STATEWIDE: Fitch Cuts USD5.7MM Rev. Bonds to 'BB+' CARVANA CO: Spruce House, et al., Hold 5.26% of Class A Shares CLUBHOUSE MEDIA: Extends Maturity of Tiger Trout Note to to Aug. 24 CRESCENT ENERGY: Tack-on Notes Offering No Impact on Moody's B1 CFR DAKOTA TERRITORY: Unsecureds to Get 37% to 100% in Plan DATA AXLE: S&P Lowers ICR to 'CCC' on Debt Refinancing Concerns DIOCESE OF CAMDEN: Unsecureds to be Paid 75% Dividend Over 5 Years DIOCESE OF PHOENIX: Moody's Affirms Ba2 Rating on Revenue Bonds EBONY MEDIA: Trademarks Sold in Bankruptcy Auction ENDLESS POSSIBILITIES: Seeks to Hire Stichter as Bankruptcy Counsel EXPRESS BIODIESEL: Wins May 3 Plan Exclusivity Extension EXPRESS GRAIN: Plan Exclusivity Extended Until May 3 EXPRESS PROCESSING: Plan Exclusivity Extended Until May 3 FISCHERS AUTO: Seeks to Hire Riggi Law Firm as Bankruptcy Counsel FLORIDA HOMESITE: Unsecureds to be Paid in Full With Interest FRANKLIN SQUARE: Moody's Affirms Ba1 CFR; Outlook Remains Negative GABRIEL INVESTMENT: Package Store Permit Row Goes to Texas SC GAMESTOP CORP: Forms Partnership With Immutable X GANNETT CO: Share Repurchase Program No Impact on Moody's B3 CFR GIRARDI & KEESE: EJ Global Suspended by CFTB Amid Bankruptcy Battle GLOBAL TELLINK: Moody's Affirms B3 CFR, Hikes 1st Lien Debt to B1 GREYSTAR REAL: Moody's Ups CFR to Ba3, Alters Outlook to Positive GVS TEXAS: To Seek Plan Confirmation on March 16 HIRECLUB.COM INC: Unsecureds to Get 100% w/ Interest in Plan HOMETOWN RESTORATION: Taps Dwight D. Joyce as Special Counsel ICAHN ENTERPRISES: S&P Affirms 'BB' ICR, Alters Outlook to Stable INNERSCOPE HEARING: GS Capital Forgives $1.1M Convertible Debt INTELSAT SA: Competitor Wants $1.8-Bil. in Ch. 11 Bandwidth Fight IQ FORMULATIONS: Unsecureds to Get At Least 15% in Plan J.F. GRIFFIN: Wins Cash Collateral Access Thru March 31 JOHNSON & JOHNSON: Drops Bid in Blocking Reuters Story JPA NO. 49: Court Okays Ch.11 Bid Plan With New Breakup Fee KETTNER INVESTMENTS: Chapter 11 Releases Too Broad, Says US Trustee KING'S TOWING: Taps Parrish Agency as Accountant KRISJENN RANCH: Amends Plan to Clarify Impact of Adversary Action LATHAM POOL: Moody's Affirms B1 CFR, Rates New First Lien Debt 'B1' LATHAM POOL: S&P Rates New $425MM Secured Credit Facility 'BB-' MAGNATE WORLDWIDE: Moody's Assigns 'B3' CFR; Outlook Stable MAGNATE WORLDWIDE: S&P Assigns 'B' ICR, Outlook Stable MAUI MEADOWS: Seeks to Hire Alan Sears as Accountant MOTELS OF SUGAR: Unsecured Creditors to be Paid in Full in Plan NESV ICE: Gets Interim Cash Collateral Access NORDIC AVIATION: Affiliates Tap Michael Wilson as Special Counsel NORDIC AVIATION: Seeks to Hire Quinn Emanuel as Special Counsel O'CONNOR CONSTRUCTION: Wins Cash Collateral Access Thru Feb 15 OLAPLEX INC: Moody's Assigns B1 CFR; Outlook Stable OSMOSIS HOLDINGS: S&P Affirms 'B' ICR, Outlook Negative PACIFIC THEATRES: Tiger Group to Conduct Online Auction on Feb. 15 PINNEY INC: Projected Disposable Income is $650 a Month PROFESSIONAL TECHNICAL: Wins Cash Collateral Access RCH AUTOPLEX: Case Summary & 20 Largest Unsecured Creditors ROBERT E. SPRINGER: Case Summary & 16 Unsecured Creditors ROBERT J. STROUMPOS: Taps The Lane Law Firm as Bankruptcy Counsel ROSIE'S LLC: Property Sale Proceeds & Rental Income to Fund Plan SENIOR CARE: Gets OK to Hire Valhalla Real Estate as Broker SYSTEM1 INC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable TAPESTRY CHARTER SCHOOL: S&P Affirms 'BB+' Rating on Revenue Bonds TIMBER PHARMACEUTICALS: Hudson Bay, Sander Gerber Own 3.9% Stake TKC HOLDINGS: Moody's Affirms B3 CFR, Hikes Unsecured Notes to Caa1 TKC HOLDINGS: S&P Affirms 'B-' ICR, Outlook Stable VAMCO SHEET: WDF Says Plan Not Confirmable WILLCO XII: Files Amendment to Disclosure Statement YELLOW CORP: Incurs $109.1 Million Net Loss in 2021 ZOHAR III: Unsecured Creditors to Get Nothing in Liquidating Plan [*] 10 Retailers to Watch for Bankruptcy Filing in 2022 ********* 6200 NE 2ND AVENUE: Wins Cash Collateral Access Thru April 28 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida, Miami Division, has authorized 6200 NE 2ND Avenue, LLC and debtor-affiliates to use cash collateral on an interim basis from January 28, 2022, or by April 28, 2022. The Debtor is permitted to use cash collateral to pay the operating expenses and costs of administration incurred as a result of operating the Debtors' business, in accordance with the budget, with a 10% variance. As adequate protection, Chemtov Mortgage Group Corp. is granted a running replacement lien on all cash generated by the Debtors’ Properties from and after the Petition Date. The Debtors will provide periodic monthly payments of $5,000 to Chemtov commencing on February 25 and paid on the 25th of each month thereafter. The Debtors will also maintain all required insurance coverage on all Properties, with the Office of the United States Trustee listed as a certificate holder. A final cash collateral hearing is scheduled for April 14 at 2 p.m. A copy of the order and the Debtors' budget for February to May 2022 is available at https://bit.ly/3gtoH5J from PacerMonitor.com. The Debtors project $23,008 in total income and $22,259 in total expenses for February 2022. About 6200 NE 2nd Avenue, LLC 6200 NE 2nd Avenue, LLC and its affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. Case No. 22-10385) on January 18, 2022. In the petition signed by Mallory Kauderer, manager, the Debtor disclosed up to $50,000 in assets and up to $10 million in liabilities. 6200 NE 2nd Avenue, LLC and its affiliates are Florida limited liability companies which together own 14 parcels of real property in the Little Haiti/Upper East Side neighborhood largely on the Northeast 2nd Avenue corridor of Miami. Each of the Debtors owns at least one Property that currently or historically generated income, but several of the properties are not generating income today, largely as a result of the COVID-19 pandemic and after certain properties were gutted in anticipation of renovation, the failure of an investor to raise and invest sufficient funds to complete the renovations. Judge Robert A. Mark oversees the case. Steven Beiley, Esq. at Aaronson Schantz Beiley P.A. is the Debtor's counsel. AI AQUA: Moody's Affirms B3 CFR, Rates Incremental Term Loan 'B3' ----------------------------------------------------------------- Moody's Investors Service affirmed the ratings of AI Aqua Merger Sub, Inc. ("Culligan" or "the company") including the company's Corporate Family Rating at B3, Probability of Default Rating at B3-PD, and the B3 rating on the company's senior secured first lien credit facilities. At the same time, Moody's assigned a B3 rating to the company's proposed $1,100 million increment first lien term loan due 2028 and $250 delayed draw first lien term loan due 2028. The outlook is stable. Net proceeds from the proposed incremental $1,100 million first lien term loan, along with new common equity contribution from the company's financial sponsors BDT Capital Partners, LLC (BDT), as well as a significant rollover from Waterlogic's existing shareholders will be used to fund the previously announced acquisition of Waterlogic Group Holdings Limited ("Waterlogic", B3 stable). Waterlogic is a global designer, manufacturer, distributor, and service provider of purified drinking water dispensers. At the same time the company intends to increase its first lien revolver due 2026 to $300 million from $225 million. The first lien revolver and proposed $250 million delay draw term loan are expected to be undrawn at close. Culligan's majority owners, BDT and its co-investors will remain majority shareholders of the combined company. Waterlogic's majority owners, Castik Capital, Waterlogic's management and other existing shareholders will maintain a meaningful minority ownership position in Culligan following the close of the transaction. The company expects to complete the Waterlogic acquisition in mid-2022. The ratings affirmations and stable outlook reflect that the planned Waterlogic acquisition will further enhance Culligan's business profile, and that the significant equity component of the purchase price moderates some of the financial risk of the transaction for creditors. Moody's estimates the company's debt/EBITDA leverage pro forma for the transaction will remain below 7.0x. The planned combination will increase Culligan's scale, adding Waterlogic's revenue, which was $368 million in 2020, to Culligan's revenue scale of about $2,000 million, pro forma for acquisitions and based on the company's estimates. Moody's views the planned combination as complementary as it will increase Culligan's exposure in the bottle free cooler (BFC) category and its geographic penetration in key markets such as the UK and Germany, and will expand its product offerings. In addition, Culligan's recurring revenue base will improve given Waterlogic's high recurring revenue base of over 80%. Moody's estimates that pro forma for the proposed Waterlogic acquisition, Culligan's debt/EBITDA leverage is high at around 6.1x for the fiscal year 2021 and including pro forma credit from recent acquisitions and related transaction expenses. However, Culligan's pro forma financial leverage remains within the range Moody's expects for its B3 CFR. The following ratings/assessments are affected by the action: New Assignments: Issuer: AI Aqua Merger Sub, Inc. Senior Secured 1st Lien Term Loan, Assigned B3 (LGD3) Senior Secured 1st Lien Delayed Draw Term Loan, Assigned B3 (LGD3) Ratings Affirmed: Issuer: AI Aqua Merger Sub, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured Bank Credit Facility, Affirmed B3 (LGD3) Outlook Actions: Issuer: AI Aqua Merger Sub, Inc. Outlook, Remains Stable RATINGS RATIONALE Culligan's B3 CFR broadly reflects its high financial leverage with debt/EBITDA estimated at around 6.1x as of fiscal year 2021, pro forma for the Waterlogic acquisition and including pro forma credit from acquisitions and related transaction expenses. The company has a relatively short history of operating at its current scope with revenue increasing about 5x since 2017, and its aggressive growth strategy through acquisitions that pressures free cash flow generation, and results in weak quality of earnings. As the company grows in scale, a reduction in future acquisition related costs relative to the earnings base should support positive free cash flow on an annual basis and debt/EBITDA leverage below 7.0x over the next 12-18 months without significant pro forma adjustments. Culligan's rating also reflects the company's relatively large scale, strong market position, segment diversification, and high level of recurring revenue. The company's good geographic and product diversification helps to somewhat mitigate revenue and earnings volatility. The legacy Culligan, and the Quench and Waterlogic businesses have strong market positions in the residential and office drinking water markets. Culligan's good liquidity reflects Moody's expectations for modestly positive free cash flow on an annual basis and the support provided by its undrawn $300 million revolving credit facility. Governance factors primarily consider the company's aggressive financial policies, including its high financial leverage, and its aggressive growth through acquisition strategy. The company's financial sponsor support through meaningful equity funding of acquisitions helps to somewhat mitigate the integration, leverage and cash flow risks of the transactions, and the rating also reflects Moody's expectation that this financial support will continue. Environmental considerations include that the company's products and services help reduce single use plastics such as plastic water bottles. Social considerations include that the company's products and services have favorable long-term demand because they are aligned with delivery of an essential resource with increasing consumer focus on sustainability including reducing plastic waste. Other favorable demand trends include increased consumer focus on health and wellness including replacing high calory and sugar hydration with clean water, as well as increased focus on drinking water safety and scarcity. The B3 rating assigned to the company's proposed first lien credit facilities including the proposed incremental term loan and delayed draw term loan, same as the B3 CFR, reflects that the first lien facilities represent the preponderance of the debt capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's expectation that the company will continue to profitably grow its revenue scale, and will generate positive free cash flow on an annual basis over the next 12-18 months. The stable outlook also reflects Moody's expectation that the company will continue to execute its acquisition strategy prudently with minimal disruption both operationally and to credit metrics. The ratings could be upgraded if the company sustainably achieves organic revenue and EBITDA growth with a narrowing gap between reported US GAAP and management-adjusted results (particularly EBITDA). A ratings upgrade will also require debt/EBITDA sustained below 6.0x, a track record of positive free cash flow generation, Moody's expectations of financial strategies that support credit metrics at those levels, and at least good liquidity. The ratings could be downgraded if the company's operating results weakened, or it fails to generate positive free cash flow. Ratings could also be downgraded if debt/EBITDA is sustained above 7.5x, financial policies become more aggressive, or if liquidity deteriorates for any reason. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. Headquartered in Rosemont, Illinois, AI Aqua Merger Sub, Inc. (dba Culligan) through its subsidiaries operates as a global producer and distributor of consumer water products and services to household, commercial drinking water, and commercial solutions end-markets. Since 2021, the company is majority owned by BDT Capital Partners, and it does not disclose its financial information. Culligan's revenue for the fiscal year 2021 is estimated at around $2.4 billion, pro forma for acquisitions and including Waterlogic. ARCHDIOCESE OF NEW ORLEANS: Taps Keegan as Financial Advisor ------------------------------------------------------------ The Roman Catholic Church of the Archdiocese of New Orleans seeks approval from the U.S. Bankruptcy Court for the Eastern District of Louisiana to employ Keegan Linscott & Associates, PC as its financial advisor. The firm's services include: a. developing reorganization and liquidation models; b. consulting with respect to the Debtor's accounting systems and procedures; c. analyzing financing and financial alternatives for the Debtor; and d. providing advisory services related to the reorganization f the Debtor. The hourly rates charged by the firm for its services are as follows: Directors $350 per hour Managers $250 per hour Supervisors $195 per hour Staffs $125 per hour The firm will also seek reimbursement for out-of-pocket expenses incurred. Christopher Linscott, a partner at Keegan Linscott & Associates, 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: Christopher G. Linscott Keegan Linscott & Associates, PC 3443 N. Campbell Ave., Suite 115 Tucson, AZ 85719 Tel: (520) 884-0176 Email: clinscott@keeganlinscott.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 SANTA FE: Victims Oppose Sealing of Records ---------------------------------------------------------- Rick Ruggles of Santa Fe New Mexican reports the opposing sides in the Archdiocese of Santa Fe bankruptcy case are battling over whether certain insurance records should be sealed from public view. Insurance coverage for the archdiocese is a key issue in the effort by victims and the church to reach an agreement in the case that involves more than 400 victims of clergy sexual abuse, most of them children. The Chapter 11 bankruptcy case has dragged on for more than three years and insurance coverage is expected to pay a big chunk of the undisclosed amount of money needed to settle. A Santa Fe attorney who represents several victims objected to confidentiality and sealing of records, contending in an interview Monday, February 7, 2022, secrecy is what led to the tragedy of widespread priest abuse of children in the first place. "That's the problem with the church. Everything is secret," said attorney Merit Bennett. "We're here because of secrets that have been kept for years and years." Bennett said the request to seal documents amounts to "going backward in time. It needs to all be transparent." He said priests got away with molesting children for decades in part because they held community members' secrets from the confessional and people were afraid to challenge them. "They were untouchable," Bennett said of the priests who abused children. Besides insurance coverage, the archdiocese has sought donations, sold some properties and held an online auction of small properties that ended Monday. It was the second such auction. The first brought in about $1.4 million, likely a small fraction of the amount needed for a settlement. Thomas Walker, an Albuquerque attorney for the archdiocese, filed the request to seal insurance documents last month. Walker, who didn't return a phone call Monday, wrote in the court filing that agreements between the archdiocese and insurers indicated there would be confidentiality. The information should be "kept confidential to the greatest extent permitted by law," Walker wrote in his filing. He claimed breaching the confidentiality provisions of those agreements could cause them to be "null and void, and invite further expensive and protracted litigation of coverage disputes." U.S. Bankruptcy Judge David T. Thuma has called for a hearing on the matter Feb. 14, 2022 at the U.S. District Courthouse in Albuquerque. Attorneys for the victims said the archdiocese reached such agreements with some insurers in the 1990s because they could see the wave of abuse lawsuits coming. Albuquerque attorney Levi Monagle, whose firm represents 140 victims, wrote in an email "there had already been a significant number of lawsuits filed against the Archdiocese by the mid-90’s, so both the Archdiocese and its carriers certainly knew lawsuits were coming and would continue to come." Monagle said in an interview the archdiocese and its attorneys aren't requesting confidentiality "just for the sake of confidentiality." Victims committee attorney James Stang of Los Angeles said insurance companies are claiming the documents are confidential and unveiling them would impair the archdiocese's rights. Stang filed an objection last week to the archdiocese's request the insurance documents be sealed. Stang wrote in the filing that "the need for transparency is overwhelming and creditors should not be kept in the dark" about what's going on. In that filing, Stang quoted a case from the Southern District of New York in which it was found that limiting “the public's right to access remains an extraordinary measure that is warranted only under rare circumstances." Another case cited by Stang said, "Public access is a foundational attribute" of the federal courts. Archdiocese Vicar General Glenn Jones said in a recent online communication to church members, "The bankruptcy proceedings slog on. … There are more twists and turns in the process than in a bowl of spaghetti." Close to 30 dioceses and Catholic orders have filed for Chapter 11 bankruptcy during the abuse scandal, and most were settled in less than three years. The amounts of money agreed to vary widely. In Los Angeles, 508 victims settled for $660 million in 2007, according to bishop-accountability.org, and in Gallup, close to 60settled for more than $21 million. Stang declined to discuss whether an agreement is near. "We're trying hard," he said. "We're going back to mediation on the 14th of March." Bennett said it would be improper to grant the archdiocese its wish to seal some of the insurance records. "Where's that good, old transparency that we need, especially with these guys?" Bennett asked Monday. "The alarm bells should go off." "Nothing should be under seal with the archdiocese ever again," he added. " … They don't get any more secrets." About the Archdiocese of Santa Fe The Roman Catholic Church of the Archdiocese of Santa Fe -- https://www.archdiosf.org/ -- is an ecclesiastical territory or diocese of the southwestern region of the United States in the state of New Mexico. At present, the Archdiocese of Santa Fe covers an area of 61,142 square miles. There are 93 parish seats and 226 active missions throughout this area. The Archdiocese of Santa Fe sought Chapter 11 protection (Bankr. D.N.M. Case No. 18-13027) on Dec. 3, 2018, to deal with child abuse claims. It reported total assets of $49,184,579 and total liabilities of $3,700,000 as of the bankruptcy filing. Judge David T. Thuma oversees the case. The archdiocese tapped Elsaesser Anderson, Chtd. and Walker & Associates, P.C., as bankruptcy counsel, Stelzner, Winter, Warburton, Flores, Sanchez & Dawes, P.A as special counsel, and REDW LLC as accountant. ARIZONA AIRCRAFT: March 14 Plan Confirmation Hearing Set -------------------------------------------------------- Arizona Aircraft Painting, LLC, filed with the U.S. Bankruptcy Court for the District of Arizona a First Amended Disclosure Statement regarding First Amended Plan of Reorganization. On Feb. 3, 2022, Judge Daniel P. Collins approved the Disclosure Statement and ordered that: * March 14, 2022, at 11:00 a.m. via video conference is the hearing to consider whether to confirm the Plan. * March 7, 2022, is fixed as the last day for any party desiring to object to confirmation of the Plan to file a written objection. * March 7, 2022, is fixed as the last day for any creditor desiring to vote for or against confirmation of the Plan to complete and sign a Ballot. A copy of the order dated Feb. 3, 2022, is available at https://bit.ly/3347w7z from PacerMonitor.com at no charge. About Arizona Aircraft Painting Arizona Aircraft Painting, LLC, specializes in aerospace performance coatings. It also offers design services, interior refurbishment, vortex generators, aircraft cleaning and detailing services, and window replacement services. Arizona Aircraft Painting operates out of a 10,000-square-foot facility in Mesa, Ariz. Arizona Aircraft Painting filed a Chapter 11 petition (Bankr. D. Ariz. Case No. 19-05477) on May 3, 2019, listing up to $10 million in assets and up to $1 million in liabilities. Judge Daniel P. Collins oversees the case. Keery McCue, PLLC, serves as the Debtor's bankruptcy counsel. Wells Fargo Bank, N.A., secured creditor, is represented by its counsel, Engelman Berger, PC. ASP NAPA: S&P Assigns 'B' ICR on Consolidation, Outlook Stable -------------------------------------------------------------- S&P Global Ratings assigned a 'B' issuer credit rating to New York–based ASP NAPA Intermediate Holdings LLC. The outlook is stable. At the same time, S&P withdrew the 'CCC+' issuer credit rating on ASP NAPA Intermediate Holdings Inc. S&P also assigned its 'B' issue-level rating to the proposed $80 million senior secured revolving facility and $610 million first-lien term loan. The recovery rating is '3' (50%-70%, rounded estimate: 55%). S&P said, "The stable outlook reflects our expectation that the company will successfully integrate and consolidate the American Anesthesiology business and will benefit from operating leverage due to improved scale such that it should sustainably maintain EBITDA margin in the 8%-10% range. This includes our expectation for shareholder-friendly activities, which we believe will keep leverage at or above 5x." ASP NAPA is consolidating American Anesthesiology (previously acquired by ASP NAPA in May 2020 from Mednax Inc.) into its existing anesthesia operations and proposing to refinance its existing debt. The proposed refinancing includes a new $610 million first-lien term loan to refinance $555 million in existing debt (includes a $20 million revolving credit facility, $313 million first-lien term loan outstanding on legacy ASP NAPA, and $76 million asset-based loan outstanding on American Anesthesiology), pay $15 million in transaction fees, and infuse some cash onto the balance sheet. The company will also have a new $80 million revolver. ASP NAPA's scale will improve to a level more comparable with its closest peers while the inherent industry-related risks remain. The combined business will generate estimated revenue of $2 billion in 2022, which is comparable with competitors like US Anesthesia Partners (USAP). Although present in 20 states, ASP NAPA's operations will be significantly concentrated in a few states, including New York, New Jersey, states in the mid-south (including Florida, Georgia, North Carolina, Tennessee) Virginia, and the west (California, Nevada, Texas), similar to the concentrated profile of U.S. Anesthesia Partners Holdings, Inc. (USAP), which is heavily focused in Texas, Florida, and Colorado. ASP NAPA has similar payor mix characteristics as USAP generating around 80% revenue from commercial payors. S&P said, "Both companies are about 98% in-network with most of its payors, which we view as favorable given the recent implementation of the new surprise billing legislation. We also view ASP NAPA's hybrid business model--consisting of both M.D.s and certified registered nurse anesthetists (CRNAs) (approximately 2,000 M.D. anesthesiologists and 3,000 CRNAs as of close of transaction) -- as favorable since it helps the company better manage supply/demand dynamics by offering clients with alternatives to meet various clinical, care setting, and manage cost trends." The company's business has largely recovered from the pandemic. Patient volume is slightly above levels from the same period in 2019 after declining about 12% in 2020. In addition, patient acuity is currently higher, contributing to higher revenue per patient. S&P said, "We project low-to-mid-single-digit organic revenue growth, with additional growth from acquisitions in 2023 and beyond, and EBITDA margin in the 8%-9% range. We believe growth will be driven by volume increases as well as commercial rate increases, supplemented by acquisitions. Most of its costs are variable in the form of clinician compensation. Legacy ASP NAPA completed most of the integration (80% costs already incurred in 2021) of American Anesthesiology since the acquisition in May 2020, with the remainder expected to be completed in 2022. In 2022, the company's expenses will suffer from wage inflation, benefits, and other clinician expenses, as well as additional expenses should other COVID-19 variants emerge. We expect EBITDA margin below 8% in 2022, which is lower than legacy ASP NAPA (more than 12% for the 12 trailing months ended Sept. 30, 2021) owing to integration costs and the lower-margin American Anesthesiology business. However, with its established track-record, improved operational leverage, successful integration, and positive impact from RCM integration of two businesses, we expect the EBITDA margin to improve to close to 9% in 2023. "We expect discretionary cash flow to debt of above 5% in 2023, significantly above 2022's, while leverage estimates to remain above 5x. Free cash flow for legacy ASP NAPA for 2021 was largely negative, pressured by integration costs and working capital outflows. While we recognize the combined entity will have larger scale and benefit from operational leverage post-integration, discretionary cash flow generation in 2022 will be pressured by working capital outflows for RCM integration, one-time expenses, wage rate pressure, and potentially other unidentified costs given the unpredictable nature of the COVID-19 pandemic. Nonetheless, we estimate free cash flow to be positive for fiscals 2022 and 2023. Our base case assumes the company will pursue acquisitions or distribute debt-financed dividends to shareholders, keeping adjusted leverage above 5x. "The stable outlook reflects our expectation that the company will successfully integrate American Anesthesiology and will benefit from operating leverage due to increased scale, such that it should increase and subsequently sustain margins of about 8%-10%. Still, given our expectation for shareholder-friendly activities, we expect leverage of at least 5x by the end of 2022. "We could lower our rating if margins declined by about 200 basis points, most likely due to difficulties with integration and working capital management issues. Under this scenario, we would expect leverage to remain above 7x on a sustained basis and discretionary cash flow to debt to decline to under 2% per year. "While unlikely at this time, we could raise our rating if the company reduced leverage below 5x, and we expected it would remain there. We view this as unlikely because it would require the company to prioritize debt repayment overgrowth and shareholder returns." ESG credit indicators scores: E-2 S-2 G-3. S&P said, "Governance is a moderately negative consideration. Our assessment of the company's financial risk profile as highly leveraged reflects corporate decision-making that prioritizes the interests of the controlling owners, in line with our view of the majority of rated entities owned by private-equity sponsors. Our assessment also reflects their generally finite holding periods and a focus on maximizing shareholder returns. Social factors are, on balance, neutral to our ratings analysis for ASP Napa. Although anesthesia services are subject to the risk of surprise billing legislation, ASP NAPA's out-of-network exposure is quite limited, providing some insulation against this risk." AZALEA TOPCO: S&P Places 'B' ICR on Watch Negative on Forsta Deal ----------------------------------------------------------------- S&P Global Ratings placed all of its ratings on Azalea TopCo Inc. (operating as Press Ganey), including its 'B' issuer credit rating, on CreditWatch with negative implications. Press Ganey announced it has signed a definitive agreement to purchase London-based Forsta, a provider of market research software and data visualization tools for enterprises and market research associations (MRAs). It did not disclose the financial terms of the transaction, though S&P believes it could be leveraging given the company's recent history of undertaking debt-financed acquisitions at high multiples. The negative CreditWatch reflects the potential that S&P will lower its rating on Press Ganey due to the possible increase in its leverage from the transaction, which comes on the heels of its $414 million acquisition of SPH Analytics in May 2021. While the company continues to generate high margins, its aggressive acquisition pace and very high leverage (currently over 10x on an S&P Global Ratings-adjusted basis) could further weaken its free cash flow to debt, which was already low (at about 2%) for the 'B' rating. S&P said, "Although Forsta could provide Press Ganey with a new set of non-health care clients and enable it to consolidate its platforms to eliminate the risk of using third-party vendors, we believe it will likely remain acquisitive as it seeks to further expand its offerings. We believe the transaction will also increase the company's execution risk because it has limited experience dealing with clients outside of the health care space and working with subsidiaries located outside of the U.S. "We expect to resolve the CreditWatch negative placement after the company announces how it plans to finance the transaction. We could lower our issuer credit and issue-level ratings on Press Ganey if we forecast it will sustain S&P Global Ratings-adjusted pro forma debt to EBITDA of more than 10x (our downside threshold at the current rating)." BOY SCOUTS: Girl Scouts Cry Unfair Treatment in Plan ---------------------------------------------------- Rick Archer of Law360 reports that the Girl Scouts of America have told a Delaware bankruptcy judge that the Boy Scouts of America's Chapter 11 plan is fatally unfair, saying it's facing at least a 30% haircut on its trademark claims against the Boy Scouts when similar creditors would get paid in full. In a motion filed Friday, February 4, 2022, the Girl Scouts said the Boy Scouts' proposal to pay off nonsexual abuse litigation claims with insurance proceeds would mean a lower payout for the Girl Scouts than other tort claimants because not all the Girl Scouts' claims for trademark infringement damage are covered by the Boy Scouts' policies. About Boy Scouts of America The Boy Scouts of America -- https://www.scouting.org/ -- is a federally chartered non-profit corporation under title 36 of the United States Code. Founded in 1910 and chartered by an act of Congress in 1916, the BSA's mission is to train youth in responsible citizenship, character development, and self-reliance through participation in a wide range of outdoor activities, educational programs, and, at older age levels, career-oriented programs in partnership with community organizations. Its national headquarters is located in Irving, Texas. The Boy Scouts of America and affiliate Delaware BSA, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on Feb. 18, 2020, to deal with sexual abuse claims. Boy Scouts of America was estimated to have $1 billion to $10 billion in assets and at least $500 million in liabilities as of the bankruptcy filing. The Debtors have tapped Sidley Austin LLP as their bankruptcy counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel, and Alvarez & Marsal North America, LLC, as financial advisor. Omni Agent Solutions is the claims agent. The U.S. Trustee for Region 3 appointed a tort claimants' committee and an unsecured creditors' committee on March 5, 2020. The tort claimants' committee is represented by Pachulski Stang Ziehl & Jones, LLP, while the unsecured creditors' committee is represented by Kramer Levin Naftalis & Frankel, LLP. BOY SCOUTS: U.S. Trustee Objects to Abuse Deal Legal Shield ----------------------------------------------------------- Maria Chutchian of Reuters reports that the U.S. Department of Justice's bankruptcy watchdog objected on Monday, February 8. 2022, to the Boy Scouts of America's proposed reorganization plan and underlying $2.7 billion sex-abuse settlement, saying it provides impermissible legal protections to insurers and the bankrupt youth organization's local councils, among others. The U.S. Trustee said in a court filing that the nondebtor releases provided to insurers and others, which have not filed for Chapter 11, in exchange for contributions to the settlement are not authorized by bankruptcy law. "The Plan lacks even a cursory discussion of why the non-debtor releases are necessary," the U.S. Trustee said in Monday's filing, while also noting the releases were so broadly written it was not clear who was covered by them. BSA filed for bankruptcy in February 2020 to resolve allegations by former Scouts spanning decades that they were abused by troop leaders as children. Since then, more than 82,000 abuse claims have been filed in the bankruptcy. The plan aims to resolve all of those claims through the $2.7 billion settlement, which will be funded by insurers, local councils (which are independent legal entities), and BSA itself, among others. Insurers, local councils, committees that represent abuse survivors, current and former BSA officers and employees, and organizations that chartered Scouting units and activities will be among those covered by the nondebtor releases. Anyone who personally committed or was alleged to have committed abuse is not protected. The U.S. Trustee objected to these types of releases in the Chapter 11 case of OxyContin maker Purdue Pharma LP as well. In December, a federal judge overturned a bankruptcy court's approval of those releases for members of the Sackler family that own Purdue. Purdue has appealed that ruling, but it, the Sacklers and several states have also engaged in mediation to reach an amended opioid litigation settlement. BSA has lined up support from 73.57% of the abuse survivors who voted on the plan, but that figure falls shy of the 75% it sought. Under the plan, survivors would receive compensation based on the severity of the abuse they endured, among other factors. The official committee representing abuse survivors in the bankruptcy, which has long opposed the deal, has not yet filed papers laying out its take on the plan. It previously argued that the payouts the plan offers survivors who filed claims are too low. However, a lawyer for BSA said last week that "significant progress" was made to bring in more survivor support. Representatives for BSA did not immediately respond to a request for comment. About Boy Scouts of America The Boy Scouts of America -- https://www.scouting.org/ -- is a federally chartered non-profit corporation under title 36 of the United States Code. Founded in 1910 and chartered by an act of Congress in 1916, the BSA's mission is to train youth in responsible citizenship, character development, and self-reliance through participation in a wide range of outdoor activities, educational programs, and, at older age levels, career-oriented programs in partnership with community organizations. Its national headquarters is located in Irving, Texas. The Boy Scouts of America and affiliate Delaware BSA, LLC, sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on Feb. 18, 2020, to deal with sexual abuse claims. Boy Scouts of America was estimated to have $1 billion to $10 billion in assets and at least $500 million in liabilities as of the bankruptcy filing. The Debtors have tapped Sidley Austin LLP as their bankruptcy counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel, and Alvarez & Marsal North America, LLC, as financial advisor. Omni Agent Solutions is the claims agent. The U.S. Trustee for Region 3 appointed a tort claimants' committee and an unsecured creditors' committee on March 5, 2020. The tort claimants' committee is represented by Pachulski Stang Ziehl & Jones, LLP, while the unsecured creditors' committee is represented by Kramer Levin Naftalis & Frankel, LLP. BRAZORIA HYDROCARBON: Cash Flow from Partnership to Fund Plan ------------------------------------------------------------- Brazoria Hydrocarbon, LLC, submitted an Amended Chapter 11 Plan and a Disclosure Statement. BH will become a minority partner in the Joint Partnership with the funder as noted in the Agreement set out in the Disclosure Statement. BH will maintain 35% interest in the opportunity. Under the terms of the partnership agreement, the distributable cash flow will be utilized to make monthly payments to creditors. BH will use its 35% share of distributable cashflow for creditor repayment. Creditor payments are triggered once the partnership investment loans are paid in full as described in the Agreement. The investment loans are necessary for the opportunity to progress so that distributable cashflow can be achieved which is the only means to service the Chapter 11 debt. Given that the BH leases had expired, there are no other reasonable courses of action for BH to consider that would allow servicing of debt. The use of partnership investment funds will allow the expansion of the opportunity to produce from the existing well, install the pipeline to bring gas to market and grow the opportunity by adding new production wells. The financial projection demonstrates adequate distributable cash flow to support the loans and then return monies owed to creditors. Timing of payments is subject to the producible volumes of hydrocarbons and market conditions (commodity prices). The financial projections are based on production estimates only. Because of previous results, the opportunity is still considered speculative in nature and the estimated hydrocarbon volumes could be less (or more) than projected. The financial projections are based on an "expected case" scenario. Once the 35% distributable cashflow is available to BH, the creditors will take priority over any distributions to BH shareholders. There will be no distributions to BH shareholders until creditors are paid. Under the Plan, Class 4 General Unsecured Claims totaling $833,254 will be paid in full on a pro rata basis in equal monthly payments after the secured creditors are paid in full. Class 4 is impaired. A copy of the Disclosure Statement dated Feb. 2, 2022, is available at https://bit.ly/3GkRPXe from PacerMonitor.com. About Brazoria Hydrocarbon Brazoria Hydrocarbon, LLC, is a private company in Hempstead, Texas, in the hydrocarbon gases business. Brazoria Hydrocarbon sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 19-32170) on April 17, 2019. At the time of the filing, the Debtor had estimated assets of between $1 million and $10 million and liabilities of between $1 million and $10 million. The case has been assigned to Judge Jeffrey P Norman. The Debtor is represented by The Law Office of Margaret M. McClure. No official committee of unsecured creditors has been appointed in the Debtor's case. CALIFORNIA STATEWIDE: Fitch Cuts USD5.7MM Rev. Bonds to 'BB+' ------------------------------------------------------------- Fitch Ratings has downgraded to 'BB+' from 'BBB-' approximately $5.7 million revenue refunding bonds, series 2015A previously issued by the California Statewide Communities Development Authority on behalf of Aldersly and Subsidiary. Fitch has also assigned an Issuer Default Rating (IDR) of 'BB+' to Aldersly. The Rating Outlook is Negative. SECURITY The bonds are secured by a gross revenue pledge and mortgage pledge of the obligated group (OG). There is also a debt service reserve fund. ANALYTICAL CONCLUSION The downgrade to 'BB+' and Negative Outlook reflect Aldersly's urgent need to significantly invest in its plant in order to reverse the recent trend of declining occupancy and weak operations. Aldersly's marketing efforts and occupancy have been challenged by its inability to meet growing demand for larger units and richer amenities. It has deferred these capital investments for several years, resulting in an urgent need to address capex in order remain competitive. Absent upgrades to its physical plant, Fitch believes Aldersly's operations will continue to deteriorate and ultimately erode its liquidity position, which has remained robust at the expense of capital underinvestment. Management plans to address weakening ILU occupancy as part of their master facilities plan (MFP), which began with a recently-opened ALU/memory care project and has been expanded to include a four-phased approach to demolishing and replacing all of its ILUs with larger one-and two-bedroom units. The first phase of this project is expected to commence in 1Q23 and cost approximately $50 million to be funded primarily with debt, the majority of which is expected to be repaid with initial entrance fees. Given the good market response thus far to the new ILUs and the strong socioeconomic indicators of Aldersly's primary market area (PMA), Fitch believes that there is a plausible scenario for Aldersly to rebuild its financial profile over time to levels consistent with its currently robust cash-to-adjusted debt even after incurring additional debt to finance its ILU replacement project. However, there is considerable construction and fill-uprisk associated with Aldersly's MFP, especially given its currently weak revenue defensibility and operating risk. Immediately following the incurrence of the additional debt. Aldersly's leverage metrics will drop precipitously from their currently robust levels to levels more consistent with a lower rating and will remain there, absent significant improvement in operating performance and commensurate growth in entrance fees and other cash flows. The next several years are going to be a period of significant transition for Aldersly, marked by extensive construction, incurrence of debt and transition to a higher refund liability on its ILU contracts, which, although necessary for the long-term viability of the community, could result in operating and financial volatility in the short term. KEY RATING DRIVERS Revenue Defensibility: 'bb' Weak ILU Occupancy, Favorable Market Area Aldersly's ILU occupancy continued to decline in FY21, with average ILU occupancy dropping to 81% from 85% in FY20 and 86% in FY17. Some of this decline is attributable to higher than average turnover due to the coronavirus pandemic, evidenced by ILU occupancy recovering to 84% as of Sept. 30, 2021. However, Fitch believes Aldersly's ILU occupancy remains precarious and poised for additional declines due to Aldersly's continued lack of larger, more desirable apartments for current and prospective residents. Declining ILU occupancy and lack of appealing residential options severely limits Alderlsy's pricing flexibility for its existing units. Aldersly is reporting a good market response to its planned new ILUs, which Fitch believes is evidence of a strong reputation and reflects the favorable socioeconomic characteristics of the community's PMA, Marin County, CA. Operating Risk: 'bb' Weak Operations, High Capital Needs Aldersly's lower census levels have driven very weak operating performance, with five-year average operating ratio of 110.3%, net operating margin (NOM) of negative 14.0% and NOM-adjusted of negative 0.9% from FY17 to FY21. The community showed some improvement in profitability between FY19 and FY20, but this positive trend was mostly driven by government stimulus rather than fundamental changes to operations. Aldersly's operating ratio declined to 124.1% in FY21 from 100.7% in FY20, indicating that its longer-term operational challenges have not yet been addressed. Aldersly's marketing efforts and occupancy have been hampered by its inability to meet growing demand for larger units and richer amenities. Despite these market trends, Aldersly has deferred major capital spending for several years, as indicated by its high average age of plant of 17.9 years. Aldersly recently invested $5.2 million in an ALU/memory care repositioning project that converted 15 of its 30 ALUs to 20 memory care units. Although this project helps Aldersly meet rising demand for memory care services, it does not address the core capital investments that are needed to improve marketability of the ILUs, apart from freeing up capacity to transfer residents and vacate ILUs in preparation for their ultimate replacement. Management recognizes the urgency of addressing weakening ILU occupancy and aims to rectify it as part of their MFP, which began with the assisted living unit (ALU)/memory care project and has been expanded to include a four-phased approach to demolishing and replacing all of its ILUs with larger one-and two-bedroom units. The first phase of the project encompasses a four-story ILU building to be constructed on the footprint of Aldersly's existing Mission Avenue ILU building and is expected to cost about $50 million, to be funded primarily with debt and some fundraising. Construction on the phase I ILUs was expected to begin in 2022, but has been postponed to early 2023 due to delays at the city level review attributable to the coronavirus pandemic. Aldersly currently offers 50% refundable and non-refundable entrance fee contracts for its existing ILUs. For the new ILUs, Aldersly is exploring offering 75% and 90% refundable contracts. Initial entrance fees will be largely dictated by market response to these new contract types, but based on current projections management is expecting initial entrance fees of about $30 million on its phase I ILUs. Aldersly currently has a low debt burden, with five-year average revenue-only MADS coverage of 0.8x, debt-to-net available of 6.8x and MADS averaging 4.7% of annual revenues. However, this has come at the expense of underinvesting in its plant and its capital related metrics are likely to weaken once the community incurs new debt to finance its urgently needed capex. Financial Profile: 'bb' Expectations for Financial Profile Volatility At FYE21, Aldersly had $20.8 million in unrestricted cash and investments (including an approximately $525 thousand DSRF), which provided a robust 362.9% of adjusted debt and 815 days cash on hand (DCOH). Its MADS coverage was similarly robust at 5.3x in FY21. Aldersly was in compliance with all of its bond covenants in FY21. Aldersly's robust leverage metrics drop precipitously to 38.2% pro forma cash-to-adjusted debt factoring in the $50 million of additional debt for the phase I ILU project, without commensurate improvement in operating performance, entrance fees and associated cash flows. While Fitch believes there is a plausible scenario for Aldersly to rebuild its financial profile to levels consistent with a higher financial profile assessment over time, the 'bb' assessment reflects the significant execution risk associated with Aldersly's master facilities plan in light of Fitch's weak revenue defensibility and operating risk assessments, which is likely to result in financial and operating volatility over the next several years. Asymmetric Additional Risk Considerations No asymmetric risks are relevant to the rating. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Given Aldersly's weak business profile attributes, an upgrade is unlikely over the Outlook period. Indications of successful construction and presale activity on the phase I ILUs combined with stabilized occupancy and operations for available ILUs in the existing community would be necessary for Fitch to revise the Outlook to Stable. -- Over time, successful construction and fill of the four phases of the new ILUs, sustained growth in ILU occupancy and significantly improved operations could give the rating positive momentum. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Continued census deterioration for existing units or inability to construct and fill the new ILUs, leading to further declines in operating performance and liquidity; -- Absent improvement in its occupancy and operations, which is not likely in the near term, Aldersly's inability to successfully construct, sell and fill its new ILUs would have negative implications for the rating. The incurrence of additional debt without commensurate increases in liquidity from entrance fees and monthly service fees from the new ILUs that results in sustained leverage metrics of approximately 40% cash-to-adjusted debt would further pressure the rating. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. Credit Profile Aldersly is a type-B (modified fee-for-service) life plan community (LPC) located in San Rafael, CA in Marin County, approximately 20 miles north of San Francisco. The community consists of 40 one-bedroom ILU apartments, 15 ILU studios, 30 ALUs (studio and one-bedroom) and an 18-bed skilled nursing facility (SNF). Aldersly reported total revenues of about $8.8 million in FY21 (YE Sept. 30). Aldersly has been managed by Life Care Services (LCS) since 2004. In 2014, Aldersly created a subsidiary to purchase land for a potential future expansion. Currently, this subsidiary holds $1.7 million in investments in residential real estate, which comprise three adjacent properties that are currently being utilized as rental properties. The subsidiary is part of the obligated group. 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. CARVANA CO: Spruce House, et al., Hold 5.26% of Class A Shares -------------------------------------------------------------- In an amended Schedule 13G filed with the Securities and Exchange Commission, these entities and individuals reported beneficial ownership of 4,500,000 shares of Class A Common Stock, Par Value $0.001 per share, of Carvana Co., as of Jan. 26, 2022, representing 5.26 percent of the shares outstanding: * Spruce House Investment Management LLC * Spruce House Capital LLC * The Spruce House Partnership LLC * The Spruce House Partnership (AI) LP * The Spruce House Partnership (QP) LP Zachary Sternberg reported beneficial ownership of 4,550,000 Class A Shares and Benjamin Stein reported beneficial ownership of 4,542,100 Class A Shares. The percentage is calculated based upon a statement in the Issuer's Quarterly Report on Form 10-Q filed on Nov. 4, 2021 for the quarter ended Sept. 30, 2021 that there were 85,587,265 shares of Class A Common Stock issued and outstanding as of Nov. 1, 2021. A full-text copy of the regulatory filing is available for free at: https://www.sec.gov/Archives/edgar/data/1543170/000149315222003241/formsc13ga.htm About Carvana Founded in 2012 and based in Tempe, Arizona, Carvana Co. -- http://www.carvana.com-- is a holding company that was formed as a Delaware corporation on Nov. 29, 2016. Carvana is an e-commerce platform for buying and selling used cars. The Company owns and operates Carvana.com, which enables consumers to quickly and easily shop vehicles, finance, trade-in or sell the ir current vehicle to Carvana, sign contracts, and schedule as-soon-as-next-day delivery or pickup at one of Carvana's patented, automated Car Vending Machines. Carvana Co. reported a net loss of $462.22 million in 2020, a net loss of $364.64 million in 2019, and a net loss of $254.74 million in 2018. As of Sept. 30, 2021, the Company had $5.36 billion in total assets, $4.65 billion in total liabilities, and $708 million in total stockholders' equity. * * * As reported by the TCR on May 24, 2021, S&P Global Ratings revised its ratings outlook to positive from stable and affirmed its 'CCC+' issuer credit rating on online used-car retailer Carvana Co. "The positive outlook indicates that we could raise the ratings on Carvana if the company continues to make progress in leveraging its scale to improve margins such that it can achieve near breakeven EBITDA while maintaining sufficient liquidity to pay for its cash burn for at least 18 months," S&P said. CLUBHOUSE MEDIA: Extends Maturity of Tiger Trout Note to to Aug. 24 ------------------------------------------------------------------- Clubhouse Media Group, Inc. and Tiger Trout Capital Puerto Rico, LLC entered into Amendment No. 1 to Convertible Promissory Note, dated as of Jan. 25, 2022, pursuant to which the maturity date of the note was extended to Aug. 24, 2022. As previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission on Feb. 8, 2021 by Clubhouse Media Group, Inc., on Jan. 29, 2021, the Company issued to Tiger Trout a convertible promissory note in the aggregate principal amount of $1,540,000 for a purchase price of $1,100,000, reflecting a $440,000 original issue discount. The Tiger Trout Note had a maturity date of Jan. 29, 2022. As consideration for Tiger Trout's agreement to extend the maturity date, the principal amount of the Tiger Trout Note was increased by $388,378, to be a total of $1,928,378. As of Jan. 25, 2022, the indebtedness under the Tiger Trout Note was $2,083,090, comprised of $1,928,378 of principal and $154,712 of accrued interest. Following Jan. 25, 2022, interest will continue to accrue on the principal amount of $1,928,378 at an interest rate of 10%. The parties further agreed that to the extent the indebtedness under the Tiger Trout Note has not been earlier repaid or converted to common stock as set forth therein, in the event that the Company completes a firm commitment underwritten public offering of its common stock that results in the common stock being successfully listed on the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange or the NYSE American prior to the maturity date of the Tiger Trout Note, as amended by the Note Amendment, then, following completion of the initial public offering, the Company will use the proceeds to repay indebtedness under the Tiger Trout Note in full. About Clubhouse Media Las Vegas, Nevada-based Clubhouse Media Group, Inc. operates a global network of professionally run content houses, each of which has its own brand, influencer cohort and production capabilities. The Company offers management, production and deal-making services to its handpicked influencers, a management division for individual influencer clients, and an investment arm for joint ventures and acquisitions for companies in the social media influencer space. Its management team consists of successful entrepreneurs with financial, legal, marketing, and digital content creation expertise. Clubhouse Media reported a net loss of $2.58 million for the year ended Dec. 31, 2020, compared to a net loss of $74,764 for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $1.70 million in total assets, $7.95 million in total liabilities, and $6.25 million in total stockholders' deficit. Spokane, Washington-based Fruci & Associates II, PLLC, the Company's auditor since 2020, issued a "going concern" qualification in its report dated March 15, 2021, citing that the Company has net losses and negative working capital. These factors raise substantial doubt about the Company's ability to continue as a going concern. CRESCENT ENERGY: Tack-on Notes Offering No Impact on Moody's B1 CFR ------------------------------------------------------------------- Moody's Investors Service said that Crescent Energy Finance LLC's proposed senior notes due 2026 (the tack-on notes) will not affect the company's credit ratings or its stable outlook. The tack-on notes are being offered as an addition to the $500 million senior unsecured notes due in 2026 that the company issued in May 2021. The net proceeds will partially repay revolver borrowings, and therefore, the transaction will be debt neutral; however, this will add more term debt to the company's capital structure. Crescent's senior unsecured notes are rated B2, one-notch below the company's B1 Corporate Family Rating (CFR), reflecting the priority ranking of the company's $500 million RBL facility due in May 2025 (unrated). Crescent's B1 CFR benefits from the company's low debt leverage, strong cash margins helped by its significant commodity hedge book and outlook for substantial free cash flow generation. The company owns modest midstream infrastructure and mineral assets which enhance the company's cash margins. The company is constrained by its relatively smaller scale in any of its operating regions, which is unlikely to grow significantly as the company focuses on free cash flow generation to reduce debt. Although a third of the company's reserves are in the Eagle Ford basin, which is oil rich, over 40% of the company's overall production consists of natural gas, which yields lower cash margins than an oil-weighted production base on an equivalent unit of production. A majority of the Company's near term capital spend relates to its operated assets, and although, Crescent has some non-operated assets, the company is able to exercise control over its non-operated capital spend through well by well elections. In December, Independence Energy LLC (Independence) completed the combination with Contango Oil & Gas Company (Contango) in an all-stock transaction to create Crescent Energy Company, parent of Crescent. This transaction is credit positive for Crescent's bondholders as it modestly enhanced the company's scale with only a marginal rise in total debt, and further diversified the company's basin presence and its operated working interest properties. The transaction resulted in Contango becoming a wholly owned subsidiary of Crescent. Independence shareholders now own approximately 75% of the combined company and Contango shareholders own approximately 25%. The stable outlook reflects Crescent's substantial hedge position and Moody's view that Crescent will generate sufficient free cash flow to pay down significant RBL facility borrowings while maintaining production largely flat. A ratings upgrade could be considered if Crescent consistently grows its production and proved developed reserves while generating positive free cash flow and maintaining retained cash flow to debt above 35% and leveraged full cycle ratio above 1.5x. The company must also maintain adequate liquidity. Factors that could lead to a downgrade include declining production, a significant rise in debt or a deterioration of liquidity. Retained cash flow to debt below 25% could also lead to a ratings downgrade. Crescent is a diversified independent exploration & production company with a portfolio of oil, gas, minerals and midstream assets in multiple basins across the Lower 48 states. KKR & Co has operating control of Crescent. DAKOTA TERRITORY: Unsecureds to Get 37% to 100% in Plan ------------------------------------------------------- Dakota Territory Tours A.C.C. submitted an Amended Subchapter V Plan of Reorganization. The Debtor will devote its Net Disposable Income over a five-year period for the repayment of its creditors. The Debtor's Net Disposable Income during the five-year Plan period will be generated from the Debtor's revenue that it earns as a fixed-wing and helicopter operator of local sightseeing tours. There are eight classes of Claims under the Plan. Class 1 consists of Priority Unsecured Claims. Class 2 consists of the secured claim of Zions Credit Corporation. Class 3 consists of the secured claim of the U.S. Small Business Administration. Class 4 consists of the secured claim of Arrow Aviation. Class 5 consists of the alleged secured claim of SOCAA. Class 6 consists of the disputed, contingent, and unliquidated unsecured claim of SOCAA. Class 7 consists of general unsecured claims. Class 8 consists of the Equity Securities of the Debtor. The Plan estimates that Class 1 will be paid in full. Class 2 will receive payment in full over the term of the Plan and will retain its liens until its claim is paid in full. Class 3 will receive regular monthly payments during the term of the Plan at the rate prescribed in the underlying loan documents and will retain its liens during the Plan. Class 4 will be paid in full. Class 5 will receive the full value of its security interest, if and when its claim becomes an Allowed Claim. The Debtor projects that Class 6 will not be Allowed and will receive nothing under the Plan. To the extent it becomes Allowed, it will receive its pro rata share of the Debtor's Net Disposable Income in 20 quarterly payments. Class 7 claims will receive their pro rata share of the Debtor's Net Disposable Income. The Plan projects that Class 7 general unsecured creditors with Allowed Claims will receive payments totaling approximately 40% to 100% of their Allowed Claims depending on whether the Class 6 claim becomes an Allowed Claim. Over the term of the Plan, and in addition to the payments to Holders of Administrative, Priority, and Secured Claims, the Debtor will make 20 quarterly distributions the Holders of Allowed Unsecured Claims from the Debtor's Net Disposable Income. The first quarterly payment to Holders of Allowed Unsecured Claims will begin at the end of the first full quarter after the Effective Date. Under the Plan, Class 6 SOCAA Unsecured Claim totaling $2,932,578. The Debtor does not believe Class 6 Claim will become an Allowed Claim. The Holder of Class 6 Claim will receive its pro rata share of the 20 quarterly distributions from the Debtor's Net Disposable Income, if and when such Claim becomes an Allowed Claim. Payments will be made quarterly starting at the earlier of the end of the first full quarter after the Effective Date or the next distribution date after such claim becomes and Allowed Claim. Class 6 is impaired. Holders of Class 7 General Unsecured Claims will receive its pro rata share of the 20 quarterly distributions from the Debtor's Net Disposable Income. Payments will be made quarterly starting at the end of the first full quarter after the Effective Date or the next distribution date after such claim becomes an Allowed Claim. The holder of a Class 7 General Unsecured Claim will receive approximately between 37% and 100% of its Allowed Claim, depending on whether the Class 6 SOCAA Unsecured Claim becomes an Allowed Claim. Class 7 is impaired. All payments under the Plan will be funded by any and all remaining Cash retained by the Debtor on the Effective Date and the Debtor's post-petition revenue. The Debtor expects to have sufficient cash on hand to make the payments required on the Effective Date. Attorneys for the Debtor: Anthony P. Cali, Esq. Clarissa C. Brady, Esq. STINSON LLP 1850 N. Central Ave., Suite 2100 Phoenix, Arizona 85004-4584 Tel: (602) 279-1600 Fax: (602) 240-6925 E-mail: anthony.cali@stinson.com clarissa.brady@stinson.com A copy of the Plan dated Feb. 2, 2022, is available at https://bit.ly/3AXwPVs from PacerMonitor.com. About Dakota Territory Tours A.C.C. Dakota Territory Tours A.C.C., a company that offers helicopter tours in northern Ariz., filed a voluntary petition for Chapter 11 protection (Bankr. D. Ariz. Case No. 21-05729) on July 26, 2021, listing $1,702,410 in assets and $955,763 in liabilities. Eric Brunner, president of Dakota Territory Tours, signed the petition. Judge Eddward P. Ballinger Jr. oversees the Debtor's Chapter 11 case while Michael W. Carmel is the Subchapter V trustee appointed in the case. The Debtor tapped Stinson, LLP as bankruptcy counsel; Ahwatukee Legal Office, P.C. as special counsel; Sterling Accounting & Tax, LLC as tax preparer; and Alden & Associates, LLC, doing business as Sedona Bookkeeping & Payroll, as bookkeeper. DATA AXLE: S&P Lowers ICR to 'CCC' on Debt Refinancing Concerns --------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating and issue-level ratings on Data Axle Inc. to 'CCC' from 'B-'. The negative outlook reflects the risk that the company will be unable to refinance its first-lien revolving credit facility and term loan prior to their maturity. Data Axle faces debt maturities within the next 12-15 months. The ratings downgrade and negative outlook reflect the increased risk that the company will be unable to refinance its first-lien secured debt prior to its maturity. Data Axle's revolver ($15 million outstanding as of Sept. 30, 2021) is subject to a springing maturity on Jan. 3, 2023, should the company be unable to refinance its $250 million first-lien term loan due April 2023, 90 days prior to its maturity. The company faces execution risks. Data Axle faces execution risks from integrating its acquisitions from 2021 and ensuring it is able to fully realize cost benefits from its restructuring initiatives, which resulted in significant one-time restructuring costs in 2021. Data Axle also experienced operating challenges in 2020 and 2021 due to reduced transactional demand, particularly from retail clients during the peak of the pandemic, the company's pivot away from its YesMail email marketing platform, and search engine optimization challenges following its rebranding to Data Axle that reduced website traffic. These factors hurt the company's EBITDA and caused its leverage to remain elevated at about 15x as of the 12 months ended Sept. 30, 2021. Although the company is seeing mid-single-digit-percentage organic revenue growth in its core services and is well positioned to benefit from the recovery in economic activity from the pandemic, the company faces execution risks. Further, its cash balance and operating cash flow are insufficient to repay its debt maturing over the next 12 months and in S&P's view, it is dependent on favorable business, financial, and economic conditions to refinance its debt and avoid a payment default. Data Axle is sponsor owned and has an aggressive financial policy. Data Axle is financial-sponsor owned and has a history of pursuing debt-funded acquisitions. In 2021, the company sold its Anne Lewis Strategies business and reinvested the proceeds along revolver borrowings to fund acquisitions to support future growth. Once the acquisitions are integrated, the company will benefit from EBITDA growth and lower leverage, although in the near term the company's financial policy increases debt refinancing risks. The negative outlook reflects the risk that the company will be unable to refinance its first-lien debt prior to maturity. S&P could lower our issuer credit rating on Data Axle if it anticipates a payment default or a debt restructuring in the next six months. S&P could raise its rating if the company is able to refinance its first-lien term loan such that S&P views a payment default or distressed exchange as unlikely over the next 12 months. ESG credit indicators: E-2, S-3, G-3 S&P said, "Social factors are a moderately negative consideration in our credit rating analysis of Data Axle. An indirect impact from the COVID-19 pandemic resulted from delayed and canceled contracts and created earnings pressure on its already-leveraged balance sheet. We expect earnings to improve and the impact from the pandemic to subside as the company slowly recovers its earnings. Governance factors are a moderately negative consideration, 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." DIOCESE OF CAMDEN: Unsecureds to be Paid 75% Dividend Over 5 Years ------------------------------------------------------------------ The Diocese of Camden, New Jersey, submitted a Second Amended Disclosure Statement. The Plan classifies claims in various classes, and proposes specific treatment to be provided to all holders of claims in that class. This Section is meant only to provide a summary overview of the treatment of Tort Claims for purposes of convenience. Claimants should read the entirety of this Disclosure Statement, the Plan, and the Tort Committee Statement before making a determination on how to vote on the Plan. The Plan classifies Tort Claims into two classes: Class 5 Tort Claims Other Than Unknown Tort Claims, and Class 6 Unknown Tort Claims. All Tort Claims are classified into Class 5 unless the claim was not filed by the Bar Date (defined herein) and is held by an individual meeting certain criteria such that the individual was not required to file a claim prior to the Bar Date. The Plan proposes to create a Trust to fund payments for Class 5 and Class 6 Claims pursuant to the guidelines in the Plan and Trust Agreement. The Trust will be funded by $50,000,000 in cash from the Debtor and $10,000,000 in cash from the Parishes, Missions, and Schools. As of the date of this Disclosure Statement, 324 non-duplicative Class 5 Claims have been filed, which will share collectively in the funds contributed to the Trust. The Debtor has reached a proposed settlement with its insurers whereby the insurers will contribute $30,000,000 to the Trust for the benefit of holders of Class 5 and Class 6 Claims in exchange for a release of all liability under the Debtor's insurance policies. This settlement has not yet been approved by the Court, and the Tort Committee intends to object to the proposed settlement on the basis that this contribution is inadequate in light of, among other things, the claims held by the Debtor against its insurers and the value of claims in Class 5 and Class 6. The Plan proposes that the Diocese, and all of its affiliated entities and persons including the Parishes, Missions, Schools, DOC Trust, and other foundations and entities, including employees and agents of each, other than accused perpetrators of abuse, and all insurers will be released, and all currently pending and future causes of action against these parties will be forever barred. The Tort Committee asserts that treatment of Tort Claims under the Plan is inadequate, and that the Plan should not be approved. As set forth in the Tort Committee Statement, the Tort Committee recommends that Tort Claimants vote to reject the Plan. Under the Plan, holders of Class 3 General Unsecured Claims will be paid a 75% dividend over 5-years. Class 3 Claimants shall have the option to elect to receive a payment of 50% of their claim within 60 days after the Effective Date in full satisfaction of their respective Claims. Class 3 is impaired. Cash and other assets with a value of $50,000,000 will be paid or transferred, as applicable, to the Trust Account as provided in the Plan and as described herein subject to reversion if any proceeds are not needed to fund the Trust. The Debtor will transfer $20,000,000 to the Trust Account within 2 business days after the Confirmation Order has become a Final Order (the "Initial Debtor Contribution"). The Initial Debtor Contribution will be primarily comprised of funds from the following sources: (i) non-restricted cash accounts held by the Diocese; and/or (ii) a loan of non-restricted cash from DOC Trusts in exchange for a release of all Claims against it and a security interest in all real estate owned by the Diocese. In addition to the loan, DOC Trusts shall waive any Claims against the Diocese asserted in the Chapter 11 Case. The Debtor shall transfer $10,000,000 to the Trust on the first, second, and third anniversaries of the Initial Debtor Contribution (the "Additional Debtor Contributions"). The Additional Debtor Contributions will be primarily comprised of funds from the following sources: (i) non-restricted cash accounts held by the Diocese; and/or (ii) a loan of non-restricted cash from DOC Trusts in exchange for a release of all Claims against it and a security interest in all real estate owned by the Diocese. In addition to the loan, DOC Trusts shall waive any Claims against the Diocese asserted in the Chapter 11 Case. The Trust shall be granted a Lien and security interest on the Revolving Fund to secure the Additional Debtor Contributions. The Parishes assert that the respective trust agreements will need to be amended to effectuate such lien. Counsel to The Diocese of Camden, New Jersey, Chapter 11 Debtor and Debtor-in-Possession: Richard D. Trenk, Esq. Robert S. Roglieri, Esq. TRENK ISABEL P.C. 290 W. Mt. Pleasant Ave., Suite 2350 Livingston, New Jersey 07039 Tel: (973) 533-1000 E-mail: rtrenk@trenkisabel.law rroglieri@trenkisabel.law A copy of the Disclosure Statement dated Feb. 2, 2022, is available at https://bit.ly/3Htax0g from PacerMonitor.com. About The Diocese of Camden The Diocese of Camden, New Jersey is a non-profit religious corporation organized pursuant to Title 16 of the Revised Statutes of New Jersey. It is the secular legal embodiment of the Roman Catholic Diocese of Camden, a juridic person recognized under Canon Law. The Diocese of Camden sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020. Reverend Robert E. Hughes, vicar general and vice president, signed the petition. In the petition, the Debtor disclosed total assets of $53,575,365 and liabilities of $25,727,209. Judge Jerrold N. Poslusny Jr. oversees the case. The Debtor tapped McManimon, Scotland & Baumann, LLC, as its bankruptcy counsel, Eisneramper, LLP, as financial advisor, Cooper Levenson P.A. and Duane Morris LLP as special counsel. Prime Clerk LLC is the Debtor's claims and noticing agent and administrative advisor. The U.S. Trustee for Regions 3 and 9 appointed an official committee of unsecured trade creditors in the Debtor's Chapter 11 case. The committee is represented by Porzio, Bromberg & Newman, P.C. DIOCESE OF PHOENIX: Moody's Affirms Ba2 Rating on Revenue Bonds --------------------------------------------------------------- Moody's Investors Service has affirmed the Ba2 rating on The Roman Catholic Church of The Diocese of Phoenix's (the diocese, AZ) revenue bonds. Total debt, inclusive of internally held bonds, was $25 million as of June 30, 2021. The outlook is stable. RATINGS RATIONALE The affirmation of the Ba2 rating reflects management's ongoing oversight and operating discipline to maintain liquid balances and sustain balanced core operations in the midst of elevated misconduct claims, including heightened legal costs. While the diocese's scope of operations is modest, at $71 million, management has demonstrated its ability to address elevated costs around increased misconduct claims in fiscal years 2020-21 and year-to-date fiscal 2022. In addition, management continues to provide good transparency and oversight of multiple misconduct conduct claims, in addition to ongoing efforts to set aside reserves to address potential claims. The diocese continues to confront core social and business risks in a sector that has seen a substantial trend of preemptive bankruptcy among dioceses outside the state of Arizona, a pattern that shows no correlation to soundness of financial operations, balance sheets, differences in state laws and other nominal fundamental credit strength. While current projections of sexual misconduct claims appear to be manageable and diocese management has expressed no inclination for defensive filing, the full impact and magnitude of claims reflect a significant element of unpredictability. However, uncertainties around timing for receipt of its recent claims, and if and when settlements are made and at what amounts underpins speculative sector conditions. The diocese's litigation risk remains elevated, with some continued uncertainty. Following the State of Arizona's May 2019 legislation extending the statute of limitations for victims of childhood sexual abuse to sue in civil court to age 30, the diocese reported a total of 89 cases filed. The "window" for those over 30 to sue in civil court closed on December 31, 2020. To date, roughly one-third of the cases have been resolved or have decided not to proceed, with the remaining pursuing litigation. A significant portion of the remaining cases are associated with the Boy Scouts of America (BSA) and have been, to date, stayed by the Bankruptcy Court hearing the BSA case. The Ba2 rating incorporates Moody's expectation that, given the recent claim history, the diocese will be able to maintain adequate financial cushion while resolving the remaining claims. The diocese's fiscal 2021 operating results were balanced, though down year-over-year due to higher legal expenses associated with claims payouts and gift allocations to parishes from the recent diocese-wide capital campaign. Strong fiscal 2021 investment returns buoyed cash and investments to provide good spendable cash and investments to expenses of 1.4x and to debt of 4.0x, and 229 monthly days cash on hand. Budgeted fiscal 2022 operations are tracking for similar operating performance. The Diocese of Phoenix is a growing Roman Catholic diocese in the demographically and economically strong Phoenix area. Governance and management have been effective at risk management in recent years, which includes establishment of specific reserves for its self-insured exposures. RATING OUTLOOK The stable outlook reflects Moody's expectation that the level of litigation against the diocese will not exceed the current moderate level, and will decline over time as cases and claims are resolved. The outlook further incorporates the expectation that solid liquidity will continue to provide a buffer against near term misconduct uncertainties, and that operations and MADS coverage will remain at least at the current level. Should downside risks accelerate, the rating or outlook would likely be negatively impacted FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING Mitigation of litigation exposure and demonstrated ability to manage potential escalation of self-insurance claims FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING Increase of sexual misconduct claims and corresponding uninsured settlement amounts, escalating possibilities of reorganization Escalation of downside risks associated with the coronavirus pandemic, including revenue declines as operations of affiliated entities are disrupted LEGAL SECURITY Payments under the bond indenture are a general obligation of the diocese, the broadest pledge available, strengthened by the diocese's Canon Law status, which gives the bishop of the diocese significant input into the governance of all Catholic institutions operating within the territory of the diocese. Under the bond indenture, the diocese also maintains a debt service reserve fund equal to 1.2x the total debt service requirement for the upcoming year. PROFILE The Roman Catholic Church of The Diocese of Phoenix, established in 1969, is one of three dioceses serving the State of Arizona. The geographic area includes Maricopa, Mohave, Yavapai and Coconino Counties (excludes Navajo Indian Reservation) and the Pinal County portion of the Gila River Indian Reservation. The diocese reported 1.1 million members for fiscal year 2021 across 117 parishes and missions, with 65 schools, including 29 preschools, and nearly 15,000 students, though the Pastoral Center for the Diocese of Phoenix is not responsible for direct administration of the parishes and schools. Each of the parishes and other diocesan entities are separately incorporated under civil law. The Pastoral Center's Moody's adjusted operating revenue was $72 million for the fiscal year ending June 30, 2021. METHODOLOGY The principal methodology used in this rating was Nonprofit Organizations (Other Than Healthcare and Higher Education) published in May 2019. EBONY MEDIA: Trademarks Sold in Bankruptcy Auction -------------------------------------------------- James Nani of Bloomberg Law reports that 1145 Holdings LLC, a media company founded by former NBA player Ulysses Lee "Junior" Bridgeman, won the auction to buy the Ebony trademark's use for fashion, cosmetics and personal care with a $1 million bid, following its acquisition of the iconic publication and Jet magazine out of bankruptcy. The assets include certain rights, licensing and interest in trademarks, names, logos and domain names for both "Ebony" and "Ebone," according to a notice filed Friday, February 4, 2022, by the Chapter 7 trustee in the bankruptcy of J Publication Co., the founder of the two leading magazines focusing on African-American interests. About Ebony Media Ebony Media Holdings LLC is the publisher of Black cultural magazines Ebony and Jet. Creditors Parkview Capital Credit Inc. and David M. Abner & Associates, Plum Studio filed involuntary Chapter 7 petitions against Ebony Media Operations, LLC, and Ebony Media Holdings LLC (Bankr. S.D. Tex. Case No. 20-33665 and 20-33667) on July 23, 2020. The court on Sept. 3, 2020, entered an order approving a stipulation signed by the Debtors and the petitioners to an entry of order for relief in the bankruptcy cases and the conversion of the cases to cases under Chapter 11 of the Bankruptcy Code. The Debtors tapped Pendergraft & Simon, LLP as their legal counsel, FTI Capital Advisors, LLC as investment banker, and The Claro Group, LLC as restructuring advisor. Robert Ogle, senior advisor at Claro Group, is the Debtors' chief restructuring officer. ENDLESS POSSIBILITIES: Seeks to Hire Stichter as Bankruptcy Counsel ------------------------------------------------------------------- Endless Possibilities, LLC seeks approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Stichter Riedel Blain & Postler, P.A. to serve as legal counsel in its Chapter 11 case. The firm's services include: a. rendering legal advice with respect to the Debtor's powers and duties in the continued operation of its business and management of its property; b. preparing legal papers; c. appearing before the court and the Office of the U.S. Trustee; d. assisting and participating in negotiations with creditors and other parties in interest in formulating a plan of reorganization, drafting the plan, and taking necessary legal steps to confirm the plan; e. representing the Debtor in all adversary proceedings, contested matters, and matters involving administration of the case; f. performing all other necessary legal services for the Debtor. Stichter will be paid based upon its normal and usual hourly billing rates. It will also receive reimbursement for out-of-pocket expenses incurred. The firm received from Joy Enterprises, Inc., a non-debtor entity, a retainer of $10,000. Scott Stichter, Esq., a partner at Stichter, 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 A. Stichter, Esq. Stichter Riedel Blain & Postler, P.A. 110 East Madison Street, Suite 200 Tampa, FL 33602 Tel: (813) 229-0144 Email: sstichter@srbp.com About Endless Possibilities Endless Possibilities, LLC, doing business as Regymen Fitness, specializes in event planning of themed birthday parties, baby showers, bridal showers, brunches, graduation open houses, weddings, anniversaries, and family reunions. Endless Possibilities sought protection under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 22-00259) on Jan. 21, 2022, disclosing up to $500 in assets and up to $10 million in liabilities. Gretchen Mitchell, managing member, signed the petition. Scott A. Stichter, Esq., at Stichter, Riedl, Blain and Poster, P.A. is the Debtor's legal counsel. EXPRESS BIODIESEL: Wins May 3 Plan Exclusivity Extension -------------------------------------------------------- Judge Selene D. Maddox of the U.S. Bankruptcy Court for the Northern District of Mississippi extended the periods within which Express Biodiesel, LLC has the exclusive right to file its disclosure statement and plan until May 3, 2022, or 14 days after the Court renders its decision in connection with the 557 procedures that are currently pending, whichever is later. The Debtor is also granted a concomitant extension to obtain confirmation of any plan that may be filed. The Debtor was required to file its Disclosure Statement and Plan of Reorganization on or before January 27, 2022. The Debtor and its counsel have diligently attempted to gather the information necessary to complete these documents and file them on time. However, because of the extent of the information involved, they have not been able to do so. In addition, the procedures under 11 U.S.C. 557 have been enacted in the jointly administered case of Express Grain Terminals, LLC, and those procedures are well underway. As of the filing of the Motion, the Court has not yet set the hearing date in connection with those procedures, but it is likely not to be until March or April of 2022. As a result, the filing of any disclosure statement and plan at present is premature, because the Court has not yet had an opportunity to complete the 557 procedures, much less conduct a trial and render a decision in connection with those procedures. Until at least the Court's opinion and decision, the parties will not know the position of various secured creditors, agriculture and crop production lenders, and farmers concerning the proceeds that have been received from the sale of grain. Now with the extension, the Debtor will be able to address the issues needed for their case. A copy of the Debtor's Motion to extend is available at https://bit.ly/3B2o5NN from PacerMonitor.com. A copy of the Court's Extension Order is available at https://bit.ly/3J1aCbP from PacerMonitor.com. About Express Biodiesel, LLC Express Biodiesel, LLC sought Chapter 11 protection (Bankr. N.D. Miss. Case No. 21- 11834) on Sept. 29, 2021. This case is jointly administered with Express Grain Terminals, LLC's case, Case No. 21-11832-SDM. Judge Selene D. Maddox oversees the case. EXPRESS GRAIN: Plan Exclusivity Extended Until May 3 ---------------------------------------------------- At the behest of Express Grain Terminals LLC, Judge Selene D. Maddox of the U.S. Bankruptcy Court for the Northern District of Mississippi extended the Debtor's exclusive periods to file its disclosure statement and plan of reorganization until May 3, 2022, or 14 days after the Court renders its decision in connection with the 557 procedures that are currently pending, whichever is later. The Debtor is also granted a concomitant extension to obtain confirmation of any plan that may be filed. The Debtor was required to file its Disclosure Statement and Plan of Reorganization on or before January 27, 2022. The Debtor and its counsel have diligently attempted to gather the information necessary to complete these documents and file them on time. However, because of the extent of the information involved, they have not been able to do so. In addition, the procedures under 11 U.S.C. 557 have been enacted and those procedures are well underway. As of the filing of the Motion, the Court has not yet set the hearing date in connection with those procedures, but it is likely not to be until March or April of 2022. As a result, the filing of any disclosure statement and plan at present is premature, because the Court has not yet had an opportunity to complete the 557 procedures, much less conduct a trial and render a decision in connection with those procedures. Until at least the Court's opinion and decision, the parties will not know the position of various secured creditors, agriculture and crop production lenders, and farmers concerning the proceeds that have been received from the sale of grain. Now with the extension, the Debtor will be able to address the issues needed for their case. A copy of the Debtor's Motion to extend is available at https://bit.ly/3rkf3IJ from PacerMonitor.com. A copy of the Court's Extension Order is available at https://bit.ly/3olTcyV from PacerMonitor.com 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 a 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 the lender, is represented by Spencer Fane LLP. EXPRESS PROCESSING: Plan Exclusivity Extended Until May 3 --------------------------------------------------------- At the behest of Express Processing, LLC, Judge Selene D. Maddox of the U.S. Bankruptcy Court for the Northern District of Mississippi, extending the period in which the Debtor may file its disclosure statement and plan until May 3, 2022, or 14 days after the Court renders its decision in connection with the 557 procedures that are currently pending, whichever is later. The Debtor is also granted a concomitant extension to obtain confirmation of any plan that may be filed. The Debtor was required to file its Disclosure Statement and Plan of Reorganization on or before January 27, 2022. The Debtor and its counsel have diligently attempted to gather the information necessary to complete these documents and file them on time. However, because of the extent of the information involved, they have not been able to do so. In addition, the procedures under 11 U.S.C. 557 have been enacted in the jointly administered case of Express Grain Terminals, LLC, and those procedures are well underway. As of the filing of the Motion, the Court has not yet set the hearing date in connection with those procedures, but it is likely not to be until March or April of 2022. As a result, the filing of any disclosure statement and plan at present is premature, because the Court has not yet had an opportunity to complete the 557 procedures, much less conduct a trial and render a decision in connection with those procedures. Until at least the Court's opinion and decision, the parties will not know the position of various secured creditors, agriculture and crop production lenders, and farmers concerning the proceeds that have been received from the sale of grain. Now with the extension, the Debtor will be able to address the issues needed for their case. A copy of the Debtor's Motion to extend is available at https://bit.ly/3uleVuz from PacerMonitor.com. A copy of the Court's Extension Order is available at https://bit.ly/3rqrlzy from PacerMonitor.com. About Express Processing, LLC Express Processing, LLC sought Chapter 11 protection (Bankr. N.D. Miss. Case No. 21- 11835) on Sept. 29, 2021. This case is jointly administered with Express Grain Terminals, LLC's case, Case No. 21-11832-SDM. Judge Selene D. Maddox oversees the case. FISCHERS AUTO: Seeks to Hire Riggi Law Firm as Bankruptcy Counsel ----------------------------------------------------------------- Fischers Auto Body, LLC seeks approval from the U.S. Bankruptcy Court for the District of Nevada to employ Riggi Law Firm to serve as legal counsel in its Chapter 11 case. The firm's services include: a. instituting, prosecuting or defending any contested matters arising out of the Debtor's bankruptcy proceeding in which the Debtor may be a party; b. assisting in the recovery and in obtaining necessary court approval to recover and liquidate estate assets, and assisting the Debtor in protecting and preserving those assets; c. assisting in determining the priorities and status of claims and in filing objections thereto if necessary; d. assisting in the preparation of a Chapter 11 plan; and e. performing all other necessary legal services for the Debtor. The hourly rates charged by the firm for its services are as follows: Partners $450 per hour Associates $195 per hour The firm will be paid a retainer in the amount of $5,000 and will be reimbursed for out-of-pocket expenses incurred. David Riggi, Esq., a partner at Riggi Law Firm, 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 A. Riggi, Esq. Riggi Law Firm 5550 Painted Mirage Rd. Suite 320 Las Vegas, NV 89149 Tel: (702) 463-7777 Fax: (888) 306-7157 Email: RiggiLaw@gmail.com About Fischers Auto Body Fischers Auto Body, LLC filed a Chapter 11 bankruptcy petition (Bankr. D. Nev. Case No. 21-10550) on Feb. 5, 2021. Judge August B. Landis oversees the case. David A. Riggi, Esq., at Riggi Law Firm is the Debtor's legal counsel. FLORIDA HOMESITE: Unsecureds to be Paid in Full With Interest ------------------------------------------------------------- Florida Homesite Developers, LLC, submitted a Second Amended Disclosure Statement and Second Amended Plan of Reorganization dated Feb. 3, 2022. Prior to the formation of the Debtor Stone Ridge Development of Sebring, LLC a Florida limited liability company, had acquired 188 lots, some partially completed homes with a partially completed clubhouse and pool. On January 31, 2018, Stoneridge transferred the clubhouse, pool and 161 lots (the "Real Property") to Debtor in order to obtain financing principal amount of $1,937,500.00 from AMBC Capital Group LLC. The Debtor defaulted on its note and mortgage in favor of BB&B and GK. A foreclosure action was filed by both lenders. Debtor filed this case on April 28, 2021 on the eve of a foreclosure sale believing it could sell its property for an amount sufficient to pay all creditors. Debtor failed to notice McKenna or McKenna Realty of the 341 meeting. However, Mr. McKenna participated in the case with counsel prior to the claims bar date by seeking approval of a contract to purchase the Debtor's property. McKenna's claims are late filed. Counsel for McKenna alleges he miscalendared the bar date. McKenna believes Debtor's equity was not properly disbursed because in part capital contributions are inaccurate. On August 30, 2021, post filing, Debtor sold 161 lots to Burgland Investments LLC, a Florida limited liability company for $3,980,000.00. Debtor's secured creditor BB&B Sebring Investments LLC, the successor to AMBC Capital Group LLC and GK were paid in full, and have withdrawn their claims against the Debtor. Debtor received $476,571.44 in proceeds at closing from which the general unsecured creditors will be paid in full as follows: * Dahlgren & Associates $5,468.26 * Aloia Roland Lubell & Morgan PLLC $64,484.00 scheduled as undisputed * E. O Koch Construction $84,000.00 * IRS $924.26 Tim McKenna will be paid any general unsecured claim which is allowed by the Court with interest as determined by the Court. He has filed Claim 4 in the amount of $60,772.86. Class 1 will consist of the Allowed General Unsecured Claims as follows: Dahlgren & Associates ($5,468.26); Aloia Roland Lubell & Morgan PLLC ($64,484.00 scheduled as undisputed); E. O. Koch Construction ($84,000.00); IRS ($924.26); and Tim McKenna Claim 4 ($60,772.86 if allowed by the Court). These claims will be paid in full with interest if the Debtor is legally equitable or contractually obligated to pay interest. The funds required to pay the general unsecured claim of Tim McKenna will be held by the Escrow Agent pending a court order allowing this claim 4. Class 2 will consist of Debtor's manager/ member Valerie Johnson and its members Compass Rose and McKenna Realty. Members of Class 3 will retain their interests in the Debtor. Debtor's plan will not alter the legal, equitable, or contractual rights to Debtor's interest holders. Any proceeds in excess of administrative, priority or general unsecured claims is property of the Debtor entity, and subject to the terms agreed upon in the operating agreement or state law. The members of Class 3 will retain all rights under the operating agreement to determine the treatment of proceeds in excess of claims; including the right to receive or retain on account of such interest the liquidation value of that interest in Debtor's property as of the Effective Date of the plan. Accordingly, the proceeds in excess of claims will be held by a mutually acceptable escrow agent until the interest holders agree to a distribution or distribution is determined and required by a court order which becomes final and non appealable. Debtor sold all of its real property, i.e., 161 lots on August 31, 2021 and received $476,571.44 from which to pay claims. A full-text copy of the Second Amended Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3gw0RpX from PacerMonitor.com at no charge. Attorney for the Debtor: Susan D. Lasky, Esquire 320 SE 18th Street Fort Lauderdale, FL 33316 (954) 400-7474 (954) 206-0628 Fax About Florida Homesite Developers Florida Homesite Developers, LLC, sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-14081) on April 28, 2021. At the time of the filing, the Debtor had between $1 million and $10 million in both assets and liabilities. Judge Mindy A. Mora oversees the case. Susan D. Lasky, Esq., at Sue Lasky, PA, is the Debtor's legal counsel. FRANKLIN SQUARE: Moody's Affirms Ba1 CFR; Outlook Remains Negative ------------------------------------------------------------------ Moody's Investors Service has affirmed Franklin Square Holdings, L.P.'s ("FSH") Corporate Family Rating at Ba1 and Probability of Default at Ba1-PD. The outlook remains negative. Affirmations: Issuer: Franklin Square Holdings, L.P. Corporate Family Rating, Affirmed Ba1 Probability of Default Rating, Affirmed Ba1-PD Issuer: FSJV Holdco, LLC Gtd Senior Secured Revolving Credit Facility, Affirmed Ba1 Gtd Senior Secured Term Loan B, Affirmed Ba1 Outlook Actions: Issuer: Franklin Square Holdings, L.P. Outlook, Remains Negative RATINGS RATIONALE Moody's affirmation of the Ba1 rating reflects expected long-term improvements in FSH's largest investment product, FSK, notably the removal of a total-return lookback feature for the incentive fees it receives, akin to a "high water mark", even though the cost to achieve this term amendment will weigh on revenues for the next several quarters. The rating is also supported by FSH's leading position as a retail alternative investment product distributor, its high asset retention and replacement rate and positive shareholder equity base. Following the acquisition of Chiron, the firm has expanded its product set and strengthened its distribution platform which has contributed to some increased wirehouse penetration. The company's net flows position has improved from a net outflow of $600 million in 2020 to a positive inflow of $1.5 billion for 2021. Together, Moody's expects these changes to improve FSH's credit metrics, including profitability, business diversification and leverage, which still remains elevated post pandemic, over the next several quarters. The negative outlook reflects that several of these changes are still relatively new and while the early signs are positive, they would need to show evidence of being sustained. The company has also made a major investment in its distribution organization. Any deceleration or reversal in these trends which would slow the progress in deleveraging and margin recovery would support resolving the negative outlook in a downgrade. Additionally, elevated market volatility and monetary tightening related to increased inflationary trends may pose some risk to the growth outlook of the firm. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's said factors that could lead to a downgrade include: 1) Debt/EBITDA sustained over 3.5x ; 2) pre-tax income margins below 20% on a consistent basis; 3) a material decline in the pace of net fundraising; and/or 4) implementation of regulations that curtail demand for alternatives in retail channels. The negative outlook indicates that a ratings upgrade is unlikely over the next 12 to 18 months but the factors that could lead to an upgrade include: 1) Debt/EBITDA sustained below 2.5x; 2) a strengthening of the franchise through greater geographic, product, and distribution diversification; and 3) pre-tax margins above 30% on a consistent basis. Founded in 2007, FSH has developed a niche alternative investments offering and distribution capacity focused on private debt and liquid credit strategies for individual investors. As the largest manager of business development company (BDC) assets, FS/KKR Advisor, LLC serves as the investment adviser to a BDC with approximately $18 billion in assets under management as of September 30, 2021. As of September 30, 2021, FSH had approximately $29 billion in AUM. The principal methodology used in these ratings was Asset Managers Methodology published in November 2019. GABRIEL INVESTMENT: Package Store Permit Row Goes to Texas SC ------------------------------------------------------------- What happens to the permit if an exempt corporation is sold to a non-exempt corporation? The United States Court of Appeals for the Fifth Circuit certifies this question to the Supreme Court of Texas after reviewing the appeals case styled In the GABRIEL INVESTMENT GROUP, INCORPORATED, Appellant, v. TEXAS ALCOHOLIC BEVERAGE COMMISSION, Appellee, No. 21-50322 (5th Cir.). Gabriel Investment Group, Inc., sells liquor in 45 package stores throughout South Texas. Though it traces its historical roots to the late 1940s, GIG itself was not incorporated until April 13, 1995. At inception it had 41 shareholders. On April 25, three days before the magic date in TEX. ALCO. BEV. CODE Section 22.16's Grandfather Clause, GIG applied for a package store permit. The Texas Alcoholic Beverage Commission issued GIG the permit a few months later, on August 15. Sometime that December, GIG filed an affidavit with the Commission. In the affidavit, GIG averred that it met the Grandfather Clause's requirements. The Commission marked the affidavit as received on December 22. GIG has since consistently claimed that the Grandfather Clause exempts it from Section 22.16, and the Commission has consistently issued GIG package store permits. So it went until 2019, when GIG filed for Chapter 11 bankruptcy protection. As part of its reorganization plan, GIG explored selling itself to another public corporation. But questions abounded. If GIG sold all or some of its shares to a public corporation, would GIG remain exempt from Section 22.16 under the Grandfather Clause? If so, could GIG continue to grow its collection of package store permits after the sale? GIG sued the Commission to find out, requesting declaratory judgment in its favor. The bankruptcy court, after reviewing dueling motions for summary judgment, concluded that the answer to both questions is no. GIG appeals. According to Circuit Judge Don R. Willett, "[t]he stakes here are very real. The Commission represented below that holding for GIG would eviscerate an 'important consumer protection.' And a transferable license likely has significant economic value. Further, we are not the final arbiters of Texas law. That role belongs to the Supreme Court of Texas. So the bigger question, at least at this point, is whether we should decide GIG's questions." The first factor in deciding whether to certify -- the closeness of the question and the existence of sufficient sources of state law -- weighs in favor of certification, Circuit Judge Willett says. The Fifth Circuit previewed the primary competing arguments of the parties. Both parties have solid textual and structural support for their positions. Likewise, the Commission does not challenge GIG's contention that the disputes in this case are questions of first impression in any court. The second factor -- the degree to which considerations of comity are relevant in light of the particular issue and case to be decided -- similarly weighs in favor of certification, Circuit Judge Willett holds. The Legislature enacted its general ban on public corporations owning or controlling package store permits in 1995, over 26 years ago. According to the parties, only two public corporations -- GIG and Sarro Corp., who is not a party to this case -- qualify for Grandfather Clause treatment. That may not seem like many. But when you factor in that GIG and Sarro could control up to 500 package stores between the two of them, it threatens to blow a Texas-sized hole in the careful balance that the Legislature created. The third factor -- practical limitations on the certification process -- also weighs in favor of certification, according to Circuit Judge Willett. The questions that GIG asks are purely legal. And Circuit Judge Willett says he is untroubled by any potential delay. A full-text copy of the opinion dated January 28, 2022, is available at https://tinyurl.com/5ctpx3yc from Leagle.com. About Gabriel Investment Group Gabriel Investment Group, Inc., founded in 1948, operates a chain of package stores that sell wines, liquors, and beers. As of the Petition Date, Gabriel operates 15 package store locations as Gabriel's Liquor and 30 package store locations as Don's & Ben's Liquor. Gabriel Investment Group sought relief under Chapter 11 of the Bankruptcy Code (Bank. W.D. Tex. Lead Case No. 19-52298) on Sept. 27, 2019 in San Antonio Texas. The other debtor affiliates are Don's & Ben's Inc. (Bankr. W.D. Tex. 19-52299); Gabriel Holdings, LLC (Bankr. W.D. Tex. 19-52300); SA Discount Liquors, Inc. (Bankr. W.D. Tex. 19-52301); and Gabriel GP, Inc. (Bankr. W.D. Tex. 19-52302). In the petitions signed by Inez Cindy Gabriel, president, the Debtors were estimated to have assets at $1 million to $10 million and liabilities within the same range. Judge Ronald B. King oversees the cases. The Debtors tapped Pulman Cappuccio & Pullen, LLP, as legal counsel. The Office of the U.S. Trustee appointed creditors to serve on the official committee of unsecured creditors on Nov. 21, 2019. The committee retained Muller Smeberg, PLLC as counsel. GAMESTOP CORP: Forms Partnership With Immutable X ------------------------------------------------- GameStop Corp. has entered into a partnership with Immutable X Pty Limited. The partnership establishes up to $100 million fund in Immutable X's IMX tokens, which the parties intend to use for grants to creators of non-fungible token (NFT) content and technology. Immutable X will also become a layer-2 partner and platform for GameStop and the company's NFT marketplace that is expected to launch later this year. In addition, the terms provide for Immutable X providing up to approximately $150 million in IMX tokens to GameStop upon the achievement of certain milestones. Creators from gaming studios, web 3.0 and metaverse gaming developers, and elsewhere can request to be a content creator on GameStop's NFT marketplace by visiting https://nft.gamestop.com. About GameStop Grapevine, Texas-based GameStop Corp. is a specialty retailer offering games and entertainment products through its E-Commerce properties and thousands of stores. GameStop reported a net loss of $215.3 million for fiscal year 2020, a net loss of $470.9 million for fiscal year 2019, and a net loss of $673 million for fiscal year 2018. As of Oct. 30, 2021, the Company had $3.76 billion in total assets, $2.01 billion in total liabilities, and $1.75 billion in total stockholders' equity. GANNETT CO: Share Repurchase Program No Impact on Moody's B3 CFR ---------------------------------------------------------------- Moody's Investors Service says that on February 1, 2022, Gannett Co., Inc. (Gannett, B3 stable) announced that its board of directors authorized the repurchase of up to $100 million of the company's common stock. The share repurchase program is credit negative because it will initially increase debt and reduce the amount of cash available for debt repayment. However, the program does not impact the company's rating, including the B3 Corporate Family Rating, or the stable rating outlook at this time. Gannett intends to fund the $100 million in share repurchases with a combination of debt ($50 million term loan add-on funded on February 4) and balance sheet cash. The share repurchase authorization comes before the company reached its own leverage target. As of LTM 9/2021, Gannett's first lien net leverage (company's definition) was 1.6x, well above the company's target of under 1x. Mitigating the shareholder friendly move is the expectation that Gannett will continue to reduce leverage over the next 12-18 months. Moody's estimate that proforma for $100 million in share repurchases, Gannett will end 2022 with gross debt leverage of around 2.8x (including Moody's standard adjustments), about a quarter turn higher than Moody's prior expectation. While slower than originally expected, this is still a notable leverage reduction from Moody's adjusted Debt/EBITDA of 5.3x as of LTM 9/2021. Gannett's substantial balance sheet cash ($141 million as of September 30, 2021) and expectation of free cash flow generation over $150 million in 2022, can sufficiently absorb the currently authorized share repurchases and basic cash needs, including mandatory debt service, capex, working capital and pension contributions. Gannett's B3 CFR reflects the company's revenue pressure because of the secular decline in its advertising and print focused activities, and the company's high leverage. Moody's does not expect the structural pressures on Gannett's print advertising and print circulation to ease in the future as demographics evolve and consumers' tastes continue to gravitate toward digital media. The company is transforming its business model by diversifying revenue sources with growth potential from digital properties to offset the secular decline in traditional print advertising and circulation. Gannett's credit profile benefits from the company's position as the largest owner of daily newspapers in the US and community newspapers in the UK, good free cash flow generation and management's focus on repaying debt. Moody's expects that Gannett will maintain adequate liquidity as it manages its share repurchase program in 2022. Moody's also expects that Gannett will use retained cash flow to reduce debt, bringing leverage below 3x (Moody's adjusted) by the end of 2022. Headquartered in McLean, Virginia, Gannett is the largest owner of daily newspapers in the US and community newspapers in the UK. Gannett is also the owner of national USA Today publication. Gannett generated LTM 9/2021 revenue of $3.25 billion. GIRARDI & KEESE: EJ Global Suspended by CFTB Amid Bankruptcy Battle ------------------------------------------------------------------- Ryan Naumann of Radar Online reports that Real Housewives of Beverly Hills star Erika Jayne's company EJ Global has been suspended by California Franchise Tax Board. According to records obtained by Radar, the business -- which the Bravo star launched in 2008 -- is no longer active due to an "FTP Suspension." A business can be suspended for failing to file a tax return or failing to pay taxes, penalties, fees, or interest. Jayne is now unable to use EJ Global for any business-related matters or use it to sell or transfer any real property. She is also unable to legally close her business without fixing the issues. Attorney Ronald Richards -- who at one point was hired to go after Jayne -- was the first to point out the suspension of social media. He notes the development is recent. On January 21, 2022 Jayne's lawyer Evan C. Borges filed a statement of information about the company listing Jayne as the manager. It appears the suspension was entered into the system after he filed his new paperwork. Radar reached out to Evan for comment on the matter, He told us, "Until recently, all notices to EJ Global LLC went to the offices of GK [Girardi Keese], which are controlled by the GK trustee. As of late January 2022, EJ Global LLC was in good standing with the CA Secretary of State. We did not receive any notice of the new suspension, and we're trying to determine the basis." Borges believes the suspension may be due to failure to pay an $800 annual tax. "If that's the case here, it will be rectified and this will be much ado about nothing," he adds. EJ Global is the company at the center of the $25 million federal lawsuit filed against Jayne. The suit was brought as part of the bankruptcy for the law firm previously owned by Jayne's estranged husband Tom Girardi. Girardi's firm is accused of owing $101 million to various creditors. Financial records reportedly show he spent money from his client's trust accounts on Jayne. Many of his former clients are owed millions and are coming after Jayne for the money since Girardi is without funds and living in a senior living home. In the lawsuit, the trustee presiding over Girardi's bankruptcy accuses the once-respected lawyer of spending his firm's money to pay the bills for EJ Global. Bank records revealed Jayne spent $14 million on her American Express card in the past decade. As part of the bankruptcy battle, the trustee said Jayne had stopped using EJ Global amid the bankruptcy mess and opened a new company Pretty Mess, Inc. Records show that is true and the reality star opened the new company in January 2021 as the legal problems started to mount. Erika Jayne is also dealing with a group of orphans and widows -- who claim to be owed $2 million from Girardi -- recently receiving the green light to go after her personally. Earlier this February 2022, the judge presiding over the bankruptcy also ordered Jayne to turn over a pair of $1.4 million diamond earrings purchased by Girardi. The trustee believes the set was purchased by Girardi with his client's money. The RHOBH star is set to fight. 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 GLOBAL TELLINK: Moody's Affirms B3 CFR, Hikes 1st Lien Debt to B1 ----------------------------------------------------------------- Moody's Investors Service affirmed Global Tel*Link Corporation's (doing business as "Viapath") B3 corporate family rating, B3-PD probability of default rating and the Caa2 rating on the company's second lien senior secured bank facilities. Concurrently, Moody's upgraded the rating on the company's first lien senior secured bank facilities to B1 from B2. The outlook is stable. The company has recently raised an additional $215 million of second lien senior secured bank facilities to fund a dividend payment to parent American Securities. The upgrade of the rating on the first lien credit facility to B1 from B2 reflects the additional debt cushion provided by the new second lien credit facility in a default scenario. Affirmations: Issuer: Global Tel*Link Corporation Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured 2nd Lien Term Loan, Affirmed Caa2 (LGD5) from (LGD6) Upgrades: Issuer: Global Tel*Link Corporation Senior Secured 1st Lien Term Loan, Upgraded to B1 (LGD3) from B2 (LGD3) Senior Secured 1st Lien Revolving Credit Facility, Upgraded to B1 (LGD3) from B2 (LGD3) Outlook Actions: Issuer: Global Tel*Link Corporation Outlook, Remains Stable RATINGS RATIONALE Viapath's B3 CFR reflects (1) the company's niche industry focus, and the strong competitive and regulatory pressures that exist in the mature prison telecommunications market; (2) the company's financial policy, with debt funded dividend expected to continue to occur intermittently and stunt the company's deleveraging trends; (3) the regulatory risk of a highly scrutinized industry, as evidenced again recently in the FCC's reduction of interstate rates. Viapath's B3 CFR also reflects the company's (1) leading market position and its stable base of contracted revenue; (2) high growth in the tablet product more than offsetting pressures in legacy products; (3) good leverage profile with Moody's debt/EBITDA expected to reach 5.5x in 2022 despite negative EBITDA impact from the recent FCC rate cuts. Viapath's market share of prison and jail communication services is approximately 50% based on inmate population. This establishes the company as the clear leading service provider in the inmate telecommunications sector. This said, competition is fierce and contract wins are sometimes challenged in court by competition. Growth at Viapath has been constrained largely due to the maturity of the industry and competition, primarily from Aventiv Technologies, LLC (Aventiv, B3 stable). The industry players, mainly Viapath and Aventiv, (the others being smaller operators), compete on price, commissions, service, and to some extent on type and level of technology offerings. Expansion of the company's non-traditional phone services such as payment services solutions and tablet-based offerings are catalysts for revenue growth. Tablet take up has ramped up materially over the past year, aided by the COVID-19 pandemic which made in person visitations harder. At the end of September 2021, (including contracts where installation is in progress and which may not fully generate revenue until Q1 2023) the company had around 57% of its addressable population signed up to the tablet product vs. 38% in September 2020. Growth in tablet revenue has fueled EBITDA growth and allowed the company to deleverage. The new second lien debt, raised for the dividend payment, means that leverage is likely to increase again to around 5.5x in 2022. The stable outlook reflects Moody's view that Viapath will maintain good liquidity, generate stable free cash flow, maintain existing market share, and sustain leverage below 6.5x. Moody's anticipate that Viapath will have good liquidity over the next 12 months, supported by $50.3 million of balance sheet cash as of September 30, 2021 and Moody's expectation of positive free cash flow of around $25 million in 2022. The company maintains a $40 million revolving line of credit which Moody's do not expect the company to draw on. The company's term loans have no financial covenants, while the revolver is subject to a springing maximum first lien net leverage test set at 6x. The company has no near-term maturities, with the next earliest maturity being the revolving credit facility due November 2023. The instrument ratings reflect the probability of default of the company, as reflected in the B3-PD Probability of Default Rating, an average expected family recovery rate of 50% at default given the mix of 1st lien and 2nd lien secured debt in the capital structure, and the particular instruments' ranking in the capital structure. The B1 rating on the first lien senior secured debt reflects its priority ranking ahead of the Caa2 rated second lien senior secured debt and Moody's expectation that the company will not seek to increase its proportion of first lien debt. The rating on the first lien could be downgraded should the proportion of senior to junior debt increase, even moderately, in the future. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade the ratings if Viapath maintains very good liquidity, steady EBITDA growth, and adopts a financial policy that would see leverage (Moody's adjusted) sustainably maintained below 5.5x. Moody's could downgrade Viapath's ratings if leverage exceeds 6.5x (Moody's adjusted) or should free cash flow weaken materially. Viapath (previously Global Tel*Link Corporation), based in Falls Church, VA, is a leading provider of telecommunications services to incarcerated individuals and administrators in correctional facilities in the US. Viapath is owned and controlled by the private equity firm, American Securities. The firm acquired Viapath in a leveraged buyout transaction in 2011. In the last twelve months to September 30, 2021, the company reported revenue of $811 million and EBTIDA of around $278 million. The principal methodology used in these ratings was Telecommunications Service Providers published in January 2017. GREYSTAR REAL: Moody's Ups CFR to Ba3, Alters Outlook to Positive ----------------------------------------------------------------- Moody's Investors Service has upgraded Greystar Real Estate Partners, LLC's ("Greystar" or "GREP") Corporate Family rating and its senior secured notes to Ba3 from B1. In the same rating action, GREP's Probability of Default rating has been upgraded to Ba3-PD from B1-PD and the rating outlook was revised to positive from stable. The upgrade and the change in rating outlook were due to the strengthening of the firm's credit profile, driven by an increase in scale and profitability while reducing its leverage levels. The change in outlook is also due to the company's pipeline of existing and newly announced transactions with committed equity capital that are expected to further boost GREP's assets under management and its recurring earnings growth in the near to medium term. Upgrades: Issuer: Greystar Real Estate Partners, LLC Corporate Family Rating, Upgraded to Ba3 from B1 Probability of Default Rating, Upgraded to Ba3-PD from B1-PD Senior Secured Notes due 2025, Upgraded to Ba3 (LGD4) from B1 (LGD4) Outlook Actions: Issuer: Greystar Real Estate Partners, LLC Outlook, Changed To Positive From Stable RATINGS RATIONALE Greystar's Ba3 corporate family rating incorporates the firm's status as the largest US property manager and developer of multifamily properties as well as a leading global real estate management firm with $47.5 billion of total assets under management (AUM). After a series of strategic actions over the past several years, the firm's scale and profitability have grown considerably while lowering its leverage levels and diversifying its investment strategies. With an expanding network of institutional partnerships around the world, GREP has proven resilient and adept at sourcing new opportunities and raising significant amounts of new equity capital along with maintaining a large and active development pipeline. Main credit constraints pertain mainly to the short-notice cancellability of its property management contracts and the inherent cash flow volatility of both the investment and development management business segments. Other factors include the considerable concentration risk of property management contracts in the states of California and Texas as well as some foreign currency exposure. Over the last 12-month (LTM) period ended on 30 September 2021, GREP's AUM grew by approximately 28% year-over-year (YOY) to US$47.5 billion with global units under management also increasing by 5.9% to 755,000 units. Greystar is managing $22.2 billion of development projects with an approved pipeline of $9.3 billion. Driven by a combination of more managed assets as well as higher fees generated from property management and development & construction management fees, total consolidated LTM revenues rose by 24% to approximately $3.1 billion with LTM EBITDA (Moody's adjusted) growing by approximately 56% to $254 million. Despite the challenges caused by the COVID-19 pandemic, GREP's EBITA margins expanded approximately 140 bps to 7.1% from year-end 2019. On a Moody's adjusted basis, debt to EBITDA decreased to approximately 2.8x from 4.0x in 2019, and interest coverage ratio rose to 5.4x from 3.5x over the same period, providing cushion against cash flow declines or higher financing expenses. Retained cash flow to net debt more than tripled to approximately 31% by third quarter-end 2021. The company maintains ample liquidity consisting of $243 million of unrestricted cash and cash equivalents and a $50 million undrawn line of credit to cover less than 1% of total debt that is scheduled to mature before December 2025. During 2021, Greystar completed or announced a series of new investments and partnerships that will further boost its managed asset base and fee revenue stream in conjunction with the deals already completed during the year. Notable transactions include two new JVs with Canada's CPP Investment Board with more than $2.0 billion of committed equity to pursue life science real estate development opportunities and single family rentals in the US as well as a partnership with the Abu Dhabi Investment Authority to pursue up to GBP2.2 billion to develop build to rent units in and around the city of London, England. The positive rating outlook reflects Moody's expectation that Greystar will continue with its strategic plans to further grow its scale and profitability while expanding its investment lines and maintaining a low leverage profile with ample financial flexibility. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Upward rating momentum would be predicated on Greystar achieving the following on a sustained basis: 1) total revenues approaching $5.5 billion with LTM adjusted EBITDA approaching $450 million; 2) EBITA margin approaching 8.5%; 3) debt to EBITDA below 2.0x, including operating lease liabilities; 4) continued growth in the diversification of its investment lines, and raising of committed equity capital; 5) retained cash flow to net debt approaching 35%. In light of the positive outlook, downward rating pressure is not anticipated in the near-term but a return to stable rating outlook would be predicated upon the following on a sustained basis: 1) debt to EBITDA rising above 3.5x; 2) interest coverage ratio approaching 4.25x; 3) RCF to net debt declining to 20% and 4) material losses in revenue caused by a significant misstep in its development and construction service and investment management businesses. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. Based in Charleston, South Carolina and with local presence in 215 markets across the globe, Greystar Real Estate Partners, LLC is a privately owned business service company dedicated to the management and development of multifamily rental properties, including conventional apartments buildings, active adult complexes and purpose-built student housing, as well as industrial properties. The company offers a comprehensive suite of property management, development and construction services, and investment management primarily to its institutional investors such as pension funds, private equity groups, and financial institutions. GVS TEXAS: To Seek Plan Confirmation on March 16 ------------------------------------------------ Judge Michelle V. Larson has entered an order approving the Fourth Amended Disclosure Statement of GVS Texas Holdings I, LLC, et al. Dates are established with respect to the solicitation of votes to accept, and voting on, the Plan as well as filing objections to the Plan and confirming the Plan (all times are prevailing Central Time): The Plan supplement deadline will be on March 1, 2022. The opt-out deadline will be on March 8, 2022 at 4:00 p.m. CT. The Plan objection deadline will be on March 8, 2022 at 4:00 p.m. CT. The confirmation materials deadline will be on March 14, 2022. The confirmation hearing date will be on March 16, 2022 at 9:30 a.m. CT. About GVS Texas Holdings I GVS Texas Holdings I, LLC and its affiliates are primarily engaged in renting and leasing a wide array of properties functioning principally as self-storage and parking facilities in 64 locations in Texas, Colorado, Illinois, Indiana, Mississippi, Missouri, Nevada, New York, Ohio, and Tennessee. Six of the properties are in the Dallas-Fort Worth Metroplex, with an additional 28 located elsewhere in Texas. The properties are managed by Great Value Storage, LLC. GVS Texas Holdings I and its affiliates sought Chapter 11 protection (Bankr. N. D. Texas Lead Case No. 21-31121) on June 17, 2021. The parent entity, GVS Portfolio I C, LLC, filed a voluntary Chapter 11 petition (Bankr. N. D. Texas Case No. 21-31164) on June 23, 2021. GVS Portfolio's case is jointly administered with that of GVS Texas Holdings I. Judge Michelle V. Larson oversees the cases. In its petition, GVS Texas Holdings I listed disclosed $100 million to $500 million in both assets and liabilities. The Debtors tapped Sidley Austin, LLP as bankruptcy counsel; Houlihan Lokey Capital, Inc. as investment banker; and HMP Advisory Holdings, LLC, doing business as Harney Partners, as financial advisor. Getzler Henrich & Associates, LLC is the Debtors' accountant. HIRECLUB.COM INC: Unsecureds to Get 100% w/ Interest in Plan ------------------------------------------------------------ HireClub.com, Inc., submitted a Plan of Reorganization. The Plan Proponent's financial projections show that the Debtor will have projected disposable income for the period described in Sec. 1191(c)(2) of $1,417. The final Plan payment is expected to be paid on April 1, 2025. This Plan of Reorganization under chapter 11 of the Bankruptcy Code proposes to pay creditors of HireClub.com, Inc., from specify sources of payment, such as an infusion of capital, loan proceeds, sale of assets, cash flow from operations, or future income. Non-priority unsecured creditors holding allowed claims totaling $51,671 will receive distributions, which the proponent of this Plan has valued at approximately 100 cents on the dollar, with interest payable at 0.45% (2022 federal post-judgment interest rate per 28 U.S.C. Sec. 1961). Under the Plan, holders of Class 2A All priority unsecured claims of subscribing members with prepaid deposits for time on HireClub platform will receive 100% credit for prepetition prepaid time deposits for continued use on online HireClub platform. In the event any member(s) of Class 2A cancels subscription agreement with prepaid time balance remaining, Debtor will refund cash balance to member(s). Said treatment is the same as the pre-petition "status quo" treatment. Class 2A is unimpaired. Under the Plan, holders of Class 3A All non-priority unsecured claims will receive a 100% dividend with interest payable at 0.45% (2022 federal post-judgment interest rate per 28 U.S.C. Sec. 1961). Said claims are impaired due to the 36-month payment term. Class 3A is impaired. The Debtor will retain possession of the property of the estate. For Effective Date payments, at or prior to the confirmation hearing, the Debtor will produce proof of deposit into trust of $45,000 necessary to make Effective Date payments. First, the Debtor will pay all priority unsecured claims and administrative claims in full on the Effective Date. The estate has no secured claims. For administrative priority claims of the Subchapter V Trustee, Mr. Mark Sharf, and Debtor's counsel, Mr. Matthew D. Metzger, Belvedere Legal, PC, the Debtor shall pay said claims in full, on the Effective Date, or, if later, following Court approval, from resources set aside for Effective Date Payments. The amount paid shall not exceed the final amount approved the Court. Second, for ongoing monthly payments, the Debtor will continue to operate the HIreClub.com online platform. The Debtor's disposable income will be the source of plan payments for the duration of the 36 month commitment term of the instant "pot" plan, with payment amounts delineated as follows: For months 1-36, all Class 3A claims shall receive a dividend of 100% of allowed claims with interest payable 0.45% (2022 federal post-judgment interest rate per 28 U.S.C. section 1961). The amount paid to Class 3A shall not exceed $31,095. A copy of the Plan dated Feb. 2, 2022, is available at https://bit.ly/3rsvp2d from PacerMonitor.com. About HireClub.com Inc. HireClub.com, Inc., sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Cal. Case No. 21-30694) on Oct. 11, 2021, listing up to $50,000 in assets and up to $100,000 in liabilities. Judge William J. Lafferty oversees the case. Matthew D. Metzger, Esq., at Belvedere Legal, PC serves as the Debtor's legal counsel. HOMETOWN RESTORATION: Taps Dwight D. Joyce as Special Counsel ------------------------------------------------------------- Hometown Restoration, LLC received approval from the U.S. Bankruptcy Court for the Southern District of New York to employ the Law Offices of Dwight D. Joyce as special litigation counsel. The firm will represent the Debtor in the pending litigation captioned Fire Ground Technologies, LLC and Lawrence Cohen, Individually v. Hometown Restoration, LLC and Thomas A. Keith, Individually, Superior Court of New Jersey, Law Division, Union County, Docket No: UNN-L-2235-20. The hourly rates charged by the firm's attorneys and paralegals are as follows: Dwight D. Joyce, Esq. $495 per hour Associate Attorneys $350 per hour Paralegals $150 per hour The firm will also seek reimbursement for out-of-pocket expenses incurred. Dwight Joyce, Esq., a partner at the Law Offices Of Dwight D. Joyce, 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: Dwight D. Joyce, Esq. Law Offices Of Dwight D. Joyce 2 Joyce Plaza Stony Point, NY 10980 Tel: (845) 429-9323 Email: dwight@dwightjoycelaw.com About Hometown Restoration Hometown Restoration, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 21-22213) on April 15, 2021, listing as much as $10 million in both assets and liabilities. Judge Robert D. Drain oversees the case. Kirby Aisner & Curley, LLP and the Law Offices of Dwight D. Joyce serve as the Debtor's bankruptcy counsel and special litigation counsel, respectively. Klinger & Klinger, LLP is the Debtor's accountant. ICAHN ENTERPRISES: S&P Affirms 'BB' ICR, Alters Outlook to Stable ----------------------------------------------------------------- S&P Global Ratings revised its outlook on Icahn Enterprises L.P. (IEP) to stable from negative. S&P also affirmed its issuer and issue-level credit ratings of 'BB'. The recovery rating on the senior unsecured notes is '3', indicating its expectation for meaningful recovery in the event of default. IEP's indicative gross asset value increased to almost $10 billion as of Sept. 30, 2021, from $8.4 billion at year-end 2020. Holding company debt has remained constant at about $5.8 billion, resulting in a substantial decrease in loan-to-value (LTV), one of the primary metrics for assessing investment holding companies. IEP's investment portfolio value has increased 12% year-to-date through Sept. 30, 2021, as strong performance in the investment fund coupled with a material increase in PSC Metals and Icahn Automotive Group (now three separate line items) drove a $1.5 billion increase. Holding company debt has remained effectively flat at $5.8 billion. Taken together, S&P calculates LTV, one of its primary metrics for assessing leverage, is 45.9% as of Sept. 30, 2021, down from about 60% a year earlier. S&P said, "We think LTV will remain in this range over the rating horizon. That said, we expect quarterly LTV performance to be lumpy. The investment portfolio is likely to be the most volatile component, but with its net short position, we think its performance has most likely held up through the end of January 2022. Strong returns in the energy sector are likely to support IEP's energy exposed companies. Overall, we expect broader market valuations to likely continue to support portfolio valuations. "We don't think IEP will increase gross leverage beyond its current levels. In our view, the company has little need for the cash right now. Historically, the company has rolled its debt. We expect similar actions in the future. "The stable outlook reflects our expectation that IEP will maintain an LTV ratio of 45%-60% without any significant changes to asset quality, portfolio concentration, or liquidity position over the next 12 months. "We could lower the ratings if the company's LTV increases and sustains above 60% during the next 12 months; the portfolio becomes more concentrated; asset quality deteriorates; or portfolio liquidity diminishes. "We do not anticipate raising the ratings during the next 12 months since LTV would need to be kept comfortably below 45% for ratings improvement." INNERSCOPE HEARING: GS Capital Forgives $1.1M Convertible Debt -------------------------------------------------------------- GS Capital Partners, LLC agreed to forgive several convertible promissory notes issued by Innerscope Hearing Technologies, Inc. Specifically, convertible promissory notes in the following principal amounts and executed on the following dates were forgiven in their entirety, including accrued interest: (i) a $165,000 convertible promissory note dated Sept. 20, 2021, (ii) a $330,000 convertible promissory note dated Oct. 13, 2021, (iii) a $266,000 convertible promissory note dated Nov. 9, 2021, (iv) a $212,800 convertible promissory note dated Dec. 21, 2021 and (v) a $158,500 convertible promissory note dated Jan. 13, 2022. In total, convertible debt in the principal amount of $1,132,300 owed by the Company was forgiven by GS Capital Partners, LLC. About InnerScope Headquartered in Roseville, Calif., InnerScope -- http://www.innd.com/-- is a technology driven company with scalable Business to Business ("BTB") and Business to Consumer ("BTC") solutions. The Company offers a BTB SaaS based Patient Management System (PMS) software program, designed to improve operations and communication with patients. InnerScope also offers a Buying Group experience for audiology practice, enabling owners to lower product costs and increase their margins. The Company will compete in the DTC (Direct-to-Consumer) markets with its own line of "Hearables", and "Wearables", including APPs on the iOS and Android markets. The company also has opened five retail hearing device clinics and plans on using management's unique and successful talents on acquiring and opening additional audiological brick and mortar clinics to be owned and operated by the company. InnerScope reported a net loss of $4.58 million for the year ended Dec. 31, 2018, compared to a net loss of $1.91 million for the year ended Dec. 31, 2017. As of Sept. 30, 2019, the Company had $4.22 million in total assets, $8.20 million in total liabilities, and a total stockholders' deficit of $3.98 million. D. Brooks and Associates CPA's, P.A., in Palm Beach Gardens, Fla., the Company's auditor since 2015, issued a "going concern" qualification in its report dated April 16, 2019, citing that the Company has incurred a net loss of $4,585,117 for the year ended Dec. 31, 2018. Additionally, the Company has a working capital deficit of $3,088,957 and an accumulated deficit of $6,372,129 as of Dec. 31, 2018. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. INTELSAT SA: Competitor Wants $1.8-Bil. in Ch. 11 Bandwidth Fight ----------------------------------------------------------------- Vince Sullivan of Law360 reports that a competitor of reorganized debtor Intelsat SA told a Virginia bankruptcy judge that it's entitled to $1.8 billion in damages from a joint project to vacate the companies' space on a satellite communications spectrum, accusing Intelsat of reneging on a contract at the last minute to keep an unfair share of $9.7 billion in payments from wireless carriers. During the opening phase of a trial over the claims of satellite operator SES Americom Inc., SES' attorney said their client and Intelsat had agreed in 2018 to work together to move their operations out of the lower range of the C-band spectrum. About Intelsat S.A. Intelsat S.A. -- http://www.intelsat.com/-- is a publicly held operator of satellite services businesses, which provides a diverse array of communications services to a wide variety of clients, including media companies, telecommunication operators, internet service providers, and data networking service providers. The Company is also a provider of commercial satellite communication services to the U.S. government and other select military organizations and their contractors. The Company's administrative headquarters are in McLean, Virginia, and the Company has extensive operations spanning across the United States, Europe, South America, Africa, the Middle East, and Asia. Intelsat S.A. and its debtor-affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Va. Lead Case No. 20-32299) on May 13, 2020. The petitions were signed by David Tolley, executive vice president, chief financial officer, and co-chief restructuring officer. At the time of the filing, the Debtors disclosed total assets of $11,651,558,000 and total liabilities of $16,805,844,000 as of April 1, 2020. Judge Keith L. Phillips oversees the cases. The Debtors tapped Kirkland & Ellis LLP and Kutak Rock LLP as legal counsel; Alvarez & Marsal North America, LLC as restructuring advisor; PJT Partners LP as financial advisor & investment banker; Deloitte LLP as tax advisor; and Deloitte Financial Advisory Services LLP as fresh start accounting services provider. Stretto is the claims and noticing agent. The Office of the U.S. Trustee appointed a committee of unsecured creditors on May 27, 2020. The committee tapped Milbank LLP and Hunton Andrews Kurth LLP as legal counsel; FTI Consulting, Inc., as financial advisor; Moelis & Company LLC as investment banker; Bonn Steichen & Partners as special counsel; and Prime Clerk LLC as information agent. IQ FORMULATIONS: Unsecureds to Get At Least 15% in Plan ------------------------------------------------------- IQ Formulations, LLC, submitted an Amended Disclosure Statement. The Plan contemplates that funding for the distribution to the secured creditors shall be made by JBJE Vehicles. The distribution to general unsecured creditors holding an allowed claim in this case will be derived from proceeds received by the Debtor from its operations. On account of Class 3 General Unsecured Claims, and in full satisfaction of such claims, upon the Effective Date of the Plan, Cohen will cause a total payment, from personal funds, of $35,000 ("Initial Distribution"), to be shared pro rata, by those creditors holding Allowed General Unsecured Claims of the Class 3. Thereafter, the Debtor will pay to the holders of Allowed General Unsecured Claims, a total combined distribution representing 15% of each holder's Allowed General Unsecured Claim, ("Second Distribution"), such distribution to be paid on a monthly basis, commencing with the first full month after the Order Confirming the Plan becomes final and non-appealable. JBJE Properties guarantees the payment of the Second Distribution. Based on a review of the Debtor's bankruptcy schedules, along with certain orders of the Bankruptcy Court striking and disallowing certain claims, there exists approximately $727,821 in claims in this class. The source of funding for the Second distribution will be derived from funds of the Debtor, and guaranteed by JBJE Properties. The Initial Distribution will be funded by Cohen. The Debtor contemplates that there may be more claim objections filed, which may reduce the total amount of the claims of this class. This class does not include the scheduled claim held by JBJE Properties, in the amount of $454,660, ("JBJE Claim"). JBJE Properties has agreed to waive payment on the JBJE claim, if and only if, the Plan with the Debtor as the proponent is confirmed by the Bankruptcy Court. Class 3 is impaired. Attorneys for the Debtor: Brian S. Behar, Esq. BEHAR, GUTT & GLAZER, P.A. DCOTA, Suite A-350, 1855 Griffin Road Ft. Lauderdale, Florida 33004 Tel: (305) 931-3771 Fax: (305) 931-3774 A copy of the Disclosure Statement dated Feb. 2, 2022, is available at https://bit.ly/3uvmdMt from PacerMonitor.com. About IQ Formulations IQ Formulations, LLC is a Tamarac, Fla.-based company that operates in the dairy product manufacturing industry. It conducts business under the name Metabolic Nutrition. IQ Formulations filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 21-15922) on June 18, 2021. Jay Cohen, chief executive officer and president, signed the petition. At the time of the filing, the Debtor disclosed total assets of up to $50,000 and total liabilities of up to $10 million. Judge Scott M. Grossman presides over the case. Behar, Gutt & Glazer, P.A. serves as the Debtor's legal counsel. J.F. GRIFFIN: Wins Cash Collateral Access Thru March 31 ------------------------------------------------------- Judge Elizabeth D. Katz of the U.S. Bankruptcy Court for the District of Massachusetts authorized J. F. Griffin Publishing, LLC to use cash collateral on a final basis under the same terms and conditions of the previous order through March 31, 2022. A hearing on the Debtor's further access to cash collateral is scheduled for February 31 at 12 p.m. by video conference. A copy of the order is available for free at https://bit.ly/3oy1eom from PacerMonitor.com. About J. F. Griffin Publishing, LLC J. F. Griffin Publishing, LLC is a full-service publisher of informational and educational materials for different media types. Its core services include complete content review, layout and design services, project management, app development, and sale and sponsorship integration. It currently produces 100 titles for state agencies in 30 states, manages more than 90 web properties, and has a mobile app. It has approximately 14 employees, including its managing member, and maintains offices in Williamstown, Massachusetts, and Birmingham, Alabama. Historically, it has averaged approximately $4.6 million a year in gross revenue. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 21-30225) on June 21, 2021. Judge Elizabeth D. Katz oversees the case. Andrea M. O'Connor, Esq., at Fitzgerald Attorneys at Law, PC is the Debtor's counsel. JOHNSON & JOHNSON: Drops Bid in Blocking Reuters Story ------------------------------------------------------ Lauren Berg of Law360 reports that Johnson & Johnson on Sunday, February 6, 2022, dropped its bid -- at least for now -- to block Reuters' reporting that it secretly planned a bankruptcy spinoff for months to limit talc injury losses amid sparring from attorneys for the pharmaceutical giant and talc plaintiffs over the news agency's sources. J&J and its bankrupt talc unit, LTL Management LLC, withdrew their motion in New Jersey bankruptcy court for a temporary restraining order against Reuters after the news agency published the story in question on Friday, February 4, 2022 — but not before attorneys for the official committee of talc claimants slammed J&J's accusations that plaintiffs' attorneys leaked confidential documents to Reuters. About Johnson & Johnson Johnson & Johnson is an American multinational corporation founded in 1886 that develops medical devices, pharmaceuticals, and consumer packaged goods. It is the world's largest and most broadly based healthcare company. Johnson & Johnson is headquartered in New Brunswick, New Jersey, the consumer division being located in Skillman, New Jersey. The corporation includes some 250 subsidiary companies with operations in 60 countries and products sold in over 175 countries. The corporation had worldwide sales of $82.6 billion in 2020. About LTL Management LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J), which was formed to manage and defend thousands of talc-related claims and oversee the operations of Royalty A&M. Royalty A&M owns a portfolio of royalty revenue streams, including royalty revenue streams based on third-party sales of LACTAID, MYLANTA/MYLICON and ROGAINE products. LTL Management filed a petition for Chapter 11 protection (Bankr. W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was transferred to New Jersey (Bankr. D. N.J. Case No. 21-30589) on Nov. 16, 2021. The Hon. Michael B. Kaplan is the case judge. At the time of the filing, the Debtor was estimated to have $1 billion to $10 billion in both assets and liabilities. The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon LLP as special counsel; McCarter & English, LLP as litigation consultant; Bates White, LLC as financial consultant; and AlixPartners, LLP as restructuring advisor. Epiq Corporate Restructuring, LLC, is the claims agent. An official committee of talc claimants was formed in the Debtor's Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S. Trustee for Regions 3 and 9 reconstituted the talc claimants' committee and appointed two separate committees: (i) the official committee of talc claimants I, which represents ovarian cancer claimants, and (ii) the official committee of talc claimants II, which represents mesothelioma claimants. The official committee of talc claimants I tapped Genova Burns LLC, Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its legal counsel. Meanwhile, the official committee of talc claimants II is represented by the law firms of Cooley LLP, Bailey Glasser LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and Sherman Silverstein Kohl Rose & Podolsky P.A. JPA NO. 49: Court Okays Ch.11 Bid Plan With New Breakup Fee ----------------------------------------------------------- Vince Sullivan of Law360 reports that a New York bankruptcy judge found that bid protections in a sale plan proposed by the owners of two aircraft leased to an Asian airline were justified under the circumstances of their Chapter 11 case, saying Friday, Feb. 4, 2022, that a 3.5% breakup fee was higher than normal but nonetheless appropriate. During a video conference hearing, U.S. Bankruptcy Judge David S. Jones said the breakup fee payable to the stalking horse bidder in the case is above the usual 3% ceiling for such payments, but that the case of debtors JPA No. 111 Co. Ltd. and JPA No. 49 Ltd. About JPA No. 111 and JPA No. 49 JPA No. 49 Co., Ltd. and JPA No. 111 Co., Ltd. are special purpose vehicles formed under the laws of Japan. They are direct, wholly owned subsidiaries of JP Lease Products & Services Co. Ltd. JPL offers financial services based on a financial scheme combining the borrowings from financial institutions and funds to manage valuable assets including aircraft, ships, containers for maritime transportation, and solar power generation equipment. JPA No. 49 Co. and JPA No. 111 Co. filed petitions for Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 21-12076) on Dec. 17, 2021, listing up to $500 million in both assets and liabilities. Teiji Ishikawa, representative director, signed the petitions. Judge David S. Jones oversees the cases. The Debtors tapped Togut, Segal & Segal, LLP, as legal counsel. KETTNER INVESTMENTS: Chapter 11 Releases Too Broad, Says US Trustee ------------------------------------------------------------------- Leslie A. Pappas of Law360 reports that the Office of the U.S. Trustee accused cannabis investment firm Kettner Investments LLC of trying to use its Delaware Chapter 11 reorganization to obtain sweeping liability releases for numerous third parties that violate the Bankruptcy Code, including releasing the company from future claims after its bankruptcy. In a multipoint objection filed Friday, February 4, 2022, the U.S. Trustee urged the bankruptcy court to reject the California-based company's proposed Chapter 11 plan because of broad releases for third parties who are not part of the case. "There simply is no necessity for these third-party releases, and no consideration being paid by the released parties. About Kettner Investments Kettner Investments LLC is a marijuana investment firm based in Delaware. Kettner Investments sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 20-12366) on Sept. 16, 2020. At the time of the filing, the Debtor disclosed assets of between $10 million and $50 million and liabilities of the same range. Judge Karen B. Owens oversees the case. Bayard, P.A., serves as the Debtor's legal counsel. Procopio Cory Hargreaves & Savitch LLP, is special counsel. KING'S TOWING: Taps Parrish Agency as Accountant ------------------------------------------------ King's Towing and Recovery, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of Arkansas to employ Parrish Agency, LLC as its accountant. The Debtor requires an accountant to prepare its annual tax returns, periodic tax filings and monthly operating reports; serve as an expert witness at the hearing on confirmation of its Chapter 11 plan; and provide other accounting services. Parrish Agency will be paid $189 per task for the preparation of monthly operating reports and periodic tax filings, and $450 per year for the annual state and federal tax return preparation. The firm will also be reimbursed for out-of-pocket expenses incurred. As disclosed in court filings, Parrish Agency is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached at: Alaric Parrish Parrish Agency LLC 2710 West Commercial Street, Suite A Ozark, AR 72949 Tel: (479) 667-2133 About King's Towing and Recovery King's Towing and Recovery, LLC filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ark. Case No. 21-70549) on April 19, 2021, disclosing as much as $1 million in both assets and liabilities. Judge Bianca M. Rucker oversees the case. The Bond Law Office, led by Stanley V. Bond, Esq., and Parrish Agency, LLC serve as the Debtor's legal counsel and accountant, respectively. KRISJENN RANCH: Amends Plan to Clarify Impact of Adversary Action ----------------------------------------------------------------- KrisJenn Ranch, LLC, KrisJenn Ranch LLC, Series Uvalde Ranch, and KrisJenn Ranch LLC, Series Pipeline Row submitted a Fourth Amended Joint Disclosure Statement to their Fourth Amended Substantively Consolidated Plan of Reorganization dated Feb. 3, 2022. This Fourth Amended Plan of Reorganization proposes to substantively consolidate all three Debtors into KrisJenn Ranch, LLC to pay creditors of the Debtors from the sale of real property and/or pipeline rights. This Plan generally differs from the Third Amended Plan in that it further clarifies the affect of the appeal pending in the adversary regarding rights in the Express Pipeline. The Debtors' adversary filing in case 20-05027 is deemed to be an objection to the claims of DMA Properties, Inc., Longbranch Energy, LP, and Frank Daniel Moore, which was decided by Court Judgment. Debtors contend that the Court's judgment in the 20 05027 adversary resolves all issues regarding the claims of DMA Properties, Inc., Longbranch Energy, LP, and Frank Daniel Moore and have found that none of these parties have a secured interest in any of Debtors' assets except the Bigfoot note. The Debtors reserve the right to have the Bankruptcy Court clarify these issues both in the Confirmation Order and in future proceedings if needed. The Plan proposes to substantially consolidate the assets and liabilities of all three Debtors into KrisJenn Ranch, LLC. The plan shall serve as a motion for the substantive consolidation. The Debtors will continue to manage their financial affairs as they did prior to the bankruptcy filing as a part of their respective Plans of Reorganization. The Debtors will be able to make lump sum or monthly plan payments with money generated by operations and the sale of the Ranch and/or Pipeline. The remaining Ranch proceeds shall be used to pay the Mcleod debt, all unsecured debt and the administrative expenses of the bankruptcy. Debtors plan to either sell the Express Pipeline or locate a capital partner to jointly develop the Express Pipeline. Class 3 is the joint claim of DMA Properties, Inc. ("DMA") and Longbranch Energy, LP ("Longbranch"). * DMA and Longbranch filed one joint claim related to the adversary action claiming an interest in the Express Pipeline and other miscellaneous relief, these claims were all denied through the trial and are subject to an appeal. As a result, these claims are being disallowed in their entirety pursuant to the Court's judgment in case 20-05027 and will not receive any distribution under the Plan. * DMA and Longbranch are currently appealing the Bankruptcy Court's Judgment in the Adversary Proceeding. Those appeals will continue after confirmation and will not be rendered moot by confirmation or substantial consummation of the plan. DMA, Longbranch, and the Reorganized Debtor will be bound by the terms of a final, non-appealable order. The ultimate determination of the appeal shall be binding on DMA, Longbranch, and the Reorganized Debtors, including their successors and assigns. For purposes of clarity, the term "successor and assigns" does not include any person or entity that is not a successor or assign to an ownership interest in DMA, Longbranch, and/or the Reorganized Debtors. * If through the appeals process, DMA and Longbranch are ultimately determined to have an interest in the Express Pipeline, and in the event the Reorganized Debtor sold, transferred, or otherwise disposed of all or part of the Express Pipeline during the pendency of the appeal, the value of the DMA and Longbranch interest in the Express Pipeline, as determined by the Appellate Court or Bankruptcy Court as applicable, shall attached solely to the proceeds or interests obtained or retained by the Reorganized Debtor from the sale or operation of the Express Pipeline. The interest sold, transferred or otherwise disposed of to a third party shall be free and clear of any claims by DMA or Longbranch. Class 4 are the claims of Longbranch Energy, LP ("Longbranch"). * Longbranch filed claims related to the adversary action claiming an interest in the Express Pipeline and other miscellaneous relief, these claims were all denied through the trial and are subject to an appeal. As a result, these claims are being disallowed in their entirety pursuant to the Court's judgment in case 20-05027 and will not receive any distribution under the Plan. * Longbranch is currently appealing the Bankruptcy Court's Judgment in the Adversary Proceeding. This appeal will continue after confirmation and will not be rendered moot by confirmation or substantial consummation of the plan. Longbranch, and the Reorganized Debtor will be bound by the terms of a final, non appealable order. The ultimate determination of the appeal shall be binding on Longbranch, and the Reorganized Debtors, including their successors and assigns. For purposes of clarity, the term "successor and assigns" does not include any person or entity that is not a successor or assign to an ownership interest in DMA, Longbranch, and/or the Reorganized Debtors. * Nothing herein shall be construed to enlarge DMA or Longbranch's procedural or substantive rights in the Express Pipeline as determined in the Adversary. Class 7 claim is the general unsecured claim of insider Larry Wright. This claim was scheduled in Case 20-50805 in the amount of $648,209. Additionally, Larry Wright loaned $129,446 to the Company. Finally, Larry Wright contributed 165 acres of mineral rights valued at $1,000.00 per acre to the settlement with Mcleod oil to all allow the Debtor to retain cash needed to pay administrative expenses. The Class 7 claim shall be subordinated to all other claims in the bankruptcy except equity claims and except in regard to the mineral acres contributed by Larry Wright to the settlement with McCleod. The $165,000 in mineral rights shall be reimbursed to Larry Wright on the Effective Date provided there are sufficient funds to pay all other claims due on the Effective Date, to pay any estimated administrative claims likely to come due until the case is closed, and to pay the Class 5 claims. The remainder of the Class 7 Claim shall be paid in 120 equal monthly installments beginning the 5th year anniversary of the Effective Date with interest at the judgment rate of interest in effect on the Effective Date. The claim is deemed unimpaired and shall not vote on the plan. Debtors have sufficient cash on hand and assets to pay all of its creditors pursuant to the plan. Payments due under the plan shall come from the remaining Uvalde Ranch proceeds, then monetization of the Pipeline ROW, and then sale of the Thunder Rock Holdings. A full-text copy of the Fourth Amended Joint Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3guIwcF from PacerMonitor.com at no charge. Attorney for the Debtors: Ronald J. Smeberg SBN: 24033967 THE SMEBERG LAW FIRM, PLLC 4 Imperial Oaks San Antonio, Texas 78248 Tel: (210) 695-6684 Fax: (210) 598-7357 About KrisJenn Ranch KrisJenn Ranch, LLC, is a Texas limited liability company with two series. The first series is KrisJennRanch, LLC Series Uvalde Ranch and the second is KrisJennRanch, LLC Series Pipeline Row. Series Pipeline owns a pipeline and right of way. Additionally, Series Unvalde owns the KrisJennRanch located at 6048 CR 365, Uvalde, Texas 78801. The Express Pipeline and the Ranch were each encumbered by a $5.9 million loan from Mcleod Oil related to an investment in a pipeline and its right of way. KrisJenn Ranch, LLC, KrisJenn Ranch, LLC Series Uvalde Ranch and KrisJenn Ranch, LLC Series Pipeline Row sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Lead Case No. 20-50805) on April 27, 2020. At the time of the filing, KrisJenn Ranch, LLC disclosed total assets of $16,246,409 and total liabilities of $6,548,315. Judge Ronald B. King oversees the cases. Muller Smeberg PLLC is the Debtors' legal counsel. No creditors' committee has yet been appointed in this case by the United States Trustee. No trustee or examiner has been requested or appointed. LATHAM POOL: Moody's Affirms B1 CFR, Rates New First Lien Debt 'B1' ------------------------------------------------------------------- Moody's Investors Service affirmed Latham Pool Products, Inc.'s ratings including the Corporate Family Rating at B1, Probability of Default Rating at B1-PD, and the B1 rating on the company's existing first lien credit facilties. At the same time, Moody's assigned a B1 rating to the company's proposed senior secured first lien credit facility, consisting of a new $75 million first lien revolver due 2027 and new $350 million first lien term loan due 2029. The company's SGL-2 Speculative Grade Liquidity remains unchanged. The outlook is stable. Latham will use net proceeds from the proposed $350 million first lien term loan to fully repay the company's existing $288 million first lien term loan due 2025, and the remainder will be added to balance sheet cash for general corporate purposes. The company also plans to replace its existing $30 million first lien revolver due 2023 with a new $75 million first lien revolver due 2027. Moody's will withdraw the ratings on the company's existing first lien credit facilities upon the close of the transaction and the repayment of these debt obligations. The ratings affirmations reflect Latham's strong operating results year-to-date and Moody's expectations for debt/EBITDA leverage to remain at around 3.0x over the next 12-18 months. Latham reported strong year-over-year revenue and company-adjusted EBITDA growth of 69% and 70% respectively through the third quarter of fiscal 2021. The strong operating results were driven by continued high consumer demand for the company's pool products, price increases, benefits from strategic partnerships and recent acquisitions. Solid US housing market trends and the company's historically high order backlog should support continued solid revenue and earnings growth in fiscal 2022, and Moody's projects debt/EBITDA leverage at around or below 3.0x over the next 12-18 months. Moody's anticipates consumer discretionary spending will eventually shift back to categories such as travel and entertainment, but given Latham's meaningful backlog, a reduction in new pool demand is unlikely to weaken earnings meaningfully until late 2022 or 2023. Growing penetration of fiberglass pools should also mitigate any volume drop in the overall pool sales market. Latham is likely to use the operating cash flow generated in the interim to fund growth investments including acquisitions that strengthen the asset and earnings base. Such actions provided greater financial flexibility to manage through the volatility in new pool construction. In addition, the proposed refinancing transaction will extend the company's maturity profile and improve its liquidity because of the larger revolving facility and incremental cash to balance sheet. The following ratings/assessments are affected by the action: New Assignments: Issuer: Latham Pool Products, Inc. GTD Senior Secured 1st Lien Term Loan, Assigned B1 (LGD3) GTD Senior Secured 1st Lien Multi Currency Revolving Credit Facility, Assigned B1 (LGD3) Ratings Affirmed: Issuer: Latham Pool Products, Inc. Corporate Family Rating, Affirmed B1 Probability of Default Rating, Affirmed B1-PD Senior Secured Bank Credit Facility, Affirmed B1 (LGD3) Outlook Actions: Issuer: Latham Pool Products, Inc. Outlook, Remains Stable RATINGS RATIONALE Latham's B1 CFR broadly reflects its solid market position in its core pool product segments, particularly in the company's biggest and high margin fiberglass segment, which continues to grow its share of the US market. Demand for pools has been very strong over the past 18 months as consumers are spending more time at home, and discretionary expenditures in summer activities such as travel have been limited. Moody's expects that the healthy backlog of pool construction and a solid US housing market will support continued good consumer demand for the company's products over the next 12-18 months, resulting in debt/EBITDA leverage at around or below 3.0x. The company's SGL-2 liquidity rating reflects its good liquidity supported by Moody's expectations for positive free cash flow of around $50 million over the next 12-18 months, and its access to an undrawn $75 million revolver. Latham's credit profile also reflects its relatively small scale with revenue of around $600 million and its high customer concentration. The company has narrow product focus in the highly discretionary swimming pool and pool equipment categories, and it is exposed to the inherent cyclicality and high seasonality of the residential pool industry due to reliance on discretionary consumer spending and weather. Moody's anticipates consumer demand for pools will eventually moderate, but to a level that supports Latham maintaining debt/EBITDA at or below 3.5x. Governance factors consider that the company remains majority owned and controlled by private equity financial sponsors and the related inherent risks of aggressive financial policies including debt financed acquisitions or shareholder distributions. Event risk exists related to Pamplona's continued exit of its ownership position that could include debt-funded share repurchases. Latham relies on raw materials such as polyvinyl chloride ("PVC") plastic, galvanized steel, fiberglass, aluminum, among others, in its manufacturing process, and it is subject to several environmental and health and safety laws. The company is moderately exposed to carbon transition and waste and pollution risks related to the production and handling of steel and plastics, which could increase input and production costs. However, higher costs can generally be passed on to the consumer. Environmental factors of the pool industry relate to the high consumption of water, chemicals, and energy associated with typical residential pools. Moody's regards the coronavirus outbreak as a social risk under Moody's ESG framework, given the substantial implications for public health and safety. The coronavirus outbreak and the government measures put in place to contain it continue to disrupt economies and credit markets across sectors and regions. Although an economic recovery is underway, its continuation will be closely tied to containment of the virus. As a result, there is uncertainty around Moody's forecasts. Social risk factors also consider the company's exposure to changes in consumer discretionary spending power. The company is exposed to health and safety risks typical in a manufacturing environment. Factors such as responsible sourcing and production should help protect Latham's strong brand image and market position. The B1 rating assigned to the proposed first lien credit facilities is the same as the B1 CFR, reflecting that the first lien facilities represent the preponderance of the company's capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's expectations that the healthy backlog of pool construction and a solid US housing market will support continued good consumer demand for pool products, resulting in Latham maintaining good credit metrics and at least good liquidity over the next 12-18 months. The stable outlook also reflects that there is sufficient cushion within the credit metrics expected at the B1 rating to absorb a potential demand pull back or a material growth investment. The ratings could be upgraded if the company meaningfully increases its revenue scale while further increasing its somewhat less cyclical aftermarket business, demonstrates consistent organic revenue and EBITDA growth, and maintains debt/EBITDA below 2.5x. A ratings upgrade would also require Moody's expectations of financial policies that support the above credit metrics, and maintenance of at least good liquidity. The ratings could be downgraded if the company's operating performance materially deteriorates with consistent organic revenue or profit margin deterioration, if debt/EBITDA is sustained above 3.5x, or if free cash flow/debt is below 7.5%. The rating could also be downgraded if liquidity deteriorates, highlighted by modest free cash flow generation on an annual basis, or increased reliance of the revolver facility. As proposed, the new credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following: Incremental debt capacity up to the greater of $145 million and 100% of pro forma consolidated EBITDA, plus unlimited amounts subject to first lien net leverage ratio not to exceed 4.5x on a pro forma basis (if pari passu). Amounts up the greater of $72.5 million and 50% of pro forma consolidated EBITDA may be incurred with an earlier maturity date than the initial term loans. The credit agreement permits the transfer of assets to unrestricted subsidiaries, up to the carve-out capacities, subject to "blocker" provisions that prevents the transfer of, or exclusively license to an unrestricted subsidiary, any material intellectual property. Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees subject to protective provisions which only permit guarantee releases solely as a result of a guarantor ceasing to be a wholly-owned subsidiary if the primary purpose of such transaction was not to evade the guarantee requirement and the equity interest transfer is to a non-affiliate of the borrower. There are no express protective provisions prohibiting an up-tiering transaction. The above are proposed terms and the final terms of the credit agreement may be materially different. The principal methodology used in these ratings was Consumer Durables published in September 2021. Headquartered in Latham, New York, Latham Pool Products, Inc. is a manufacturer of in-ground residential swimming pools and components in North America, Australia, and New Zealand. Latham reported revenue of around $603.5 million for the last twelve months ending October 2, 2021. The company is majority owned and controlled by financial sponsors Pamplona Capital Management, which collectively own approximately 56% of Latham's shares. LATHAM POOL: S&P Rates New $425MM Secured Credit Facility 'BB-' --------------------------------------------------------------- S&P Global Ratings assigned its 'BB-' issue-level rating and '2' recovery rating to Latham Pool Products Inc.'s proposed $350 million senior secured term loan B due 2029 and $75 million revolving credit facility due 2027. The '2' recovery rating indicates its expectation for substantial (70%-90%; rounded estimate: 85%) recovery in the event of a payment default. The issuer's parent company, residential swimming pool provider Latham Group Inc. (Latham), plans to use the proceeds from the term loan B to repay the remaining $288 million outstanding on its existing term loan due 2025, add $54 million of cash to its balance sheet, and pay related fees and expenses. S&P based its ratings on the preliminary terms of the proposed issuance, thus they are subject to review upon our receipt of the final documentation. S&P said, "All of our existing ratings on the company are unchanged, including our 'B+' issuer credit rating and stable outlook. We will withdraw our ratings on Latham's existing senior secured facility once it is repaid. We estimate the company's leverage for the 12 months ended Oct. 2, 2021, was about 2.1x. Pro forma for the transaction, we anticipate it leverage will rise to about 3.0x. Our ratings reflect Latham's leading share in the faster-growing fiberglass segment of the pool construction market, its product concentration in cyclical new pool installations, and its financial-sponsor ownership, which indicates the potential for a more aggressive financial policy. That said, we acknowledge that the company's current leverage is low relative to that of other financial-sponsor owned businesses. We forecast Latham's leverage will be in the mid-2x area and its funds from operations to debt will be near 30% as of the end of fiscal year 2021." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors Latham's proposed capital structure comprises a $75 million first-lien revolving credit facility maturing in 2027 and a $350 million first-lien term loan maturing in 2029. Simulated default assumptions S&P's simulated default scenario assumes a payment default occurring in 2026 due to a severe economic slowdown that leads to a steep cyclical decline in Latham's revenue and EBITDA. Because of this, the company may resort to funding its cash flow shortfalls with available cash and revolver borrowings. Eventually, its liquidity and capital resources would become strained to the point that it cannot continue to operate without an equity infusion or bankruptcy filing. S&P believes the company would be reorganized rather than liquidated under a default scenario. As such, S&P has valued Latham based upon an enterprise value that recovers materially during our simulated default and subsequent reorganization to gauge its recovery prospects. -- Year of default: 2026 -- EBITDA at emergence: $68 million -- Implied enterprise value multiple: 5.5x Simplified waterfall -- Emergence EBITDA: $68 million -- Multiple: 5.5x -- Gross recovery value: $376 million -- Net recovery value for waterfall after administrative expenses (5%): $357 million -- Obligor/nonobligor valuation split: 80%/20% -- Collateral value available to secured debt: $332 million -- Estimated first-lien debt claims: $415 million --Recovery expectations for senior secured debt: 70%-90% (rounded estimate: 85%) Note: All debt amounts include six months of prepetition interest. MAGNATE WORLDWIDE: Moody's Assigns 'B3' CFR; Outlook Stable ----------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Magnate Worldwide, LLC, including a B3 Corporate Family Rating and B3-PD Probability of Default Rating. Moody's also assigned a B2 rating to each of Magnate's senior secured first lien term loan and delayed draw term loan. The outlook is stable. Proceeds from the senior secured first lien term loan, ABL facility (not rated), and privately placed senior secured second lien term loan (not rated), along with sponsor and rollover equity, will be used to fund the acquisition of the company by private equity firm Littlejohn & Company. Ratings assigned: Issuer: Magnate Worldwide, LLC Corporate Family Rating at B3 Probability of Default Rating at B3-PD Senior secured first lien term loan due 2028 at B2 (LGD3) Senior secured first lien delayed draw term loan due 2028 at B2 (LGD3) Outlook Actions: Issuer: Magnate Worldwide, LLC Outlook, Assigned Stable RATINGS RATIONALE Magnate's B3 Corporate Family Rating is constrained by Moody's expectation for aggressive financial policies and high financial leverage over the next 12-18 months. Moody's anticipates that Magnate will continue to pursue growth through a combination of acquisitions and organic means. The company has made six acquisitions since 2015 and is likely to remain aggressive in an effort to add capabilities given the very fragmented nature of the third-party logistics ("3PL") market. Moody's expects Magnate's adjusted debt/EBITDA to moderate to around 5.6 times by the end of 2022, down from approximately 7.4 times at September 30, 2021 on a pro forma basis. Longer-term, Moody's believes that a normalization of currently attractive freight market rates will cause Magnate's debt/EBITDA to return to around 7 times. The rating is supported by Magnate's good diversity of customers, end-markets, and transportation providers within the 3PL market. The company's top 10 customers account for approximately 25% of Magnate's gross profit with its largest customer representing less than 5% of gross profit. Further, the company's customer base is balanced across a diverse range of end-markets. Magnate provides specialized logistics services for shippers that require customized solutions and higher levels of service than what commoditized logistics companies can provide. Finally, Moody's expects Magnate to operate with good liquidity over the next 12-18 months. The stable outlook reflects Moody's expectation that Magnate will operate with moderate scale and good customer diversity, high financial leverage, and positive free cash flow over the next year. Thereafter, as supply chain constraints ease and freight rates decline, Moody's would expect Magnate's credit metrics to normalize. Moody's views Magnate as facing moderate environmental risk. Being an asset-light logistics provider, the company has limited direct exposure to carbon and air pollution risk. However, its business depends on trucking, rail, air, and ocean carriers, and as such, more stringent emission regulations may have an indirect impact on Magnate. Magnate's social risk is moderate as it relates to the safety of its employees, because it does not operate the mode of transportation. Unlike more asset-intensive logistics companies, Magnate does not operate warehouses or e-commerce fulfillment centers. With respect to governance, Moody's expects Magnate to exhibit aggressive financial policies under its new private equity owners, including debt-funded acquisitions and/or shareholder distributions. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Magnate demonstrates conservative financial policies while sustaining debt/EBITDA below 5.5 times and maintaining its existing operating margin. Maintaining consistently positive free cash flow and achieving greater scale through organic growth could also result in an upgrade. The ratings could be downgraded if Magnate's liquidity erodes or operating performance weakens. A downgrade could also occur if the company pursues large debt funded acquisitions or distributions to shareholders. As proposed, the new first lien credit facility is expected to provide covenant flexibility that if utilized could negatively impact creditors. The facility includes incremental debt capacity up to the greater of $55 million and 100% of consolidated EBITDA, plus unlimited amounts so long as secured net first lien leverage does not exceed 4.50 times. Amounts up to the greater of 100% of closing date EBITDA and 100% of consolidated EBITDA may be incurred with an earlier maturity date than the initial term loans. The credit agreement permits the transfer of assets to unrestricted subsidiaries, up to carve-out capacities, subject to "blocker" provisions which prohibit the transfer of material intellectual property to unrestricted subsidiaries. Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees, provided that a guarantee release shall only be permitted if a subsidiary guarantor ceases to be a wholly-owned subsidiary as a result of a bona fide transaction at fair market value with an unaffiliated third party for a bona fide business purpose. There are no express protective provisions prohibiting an up-tiering transaction. The above are proposed terms and the final terms of the credit agreement may be materially different. Magnate Worldwide is an asset-light 3PL provider that delivers specialized transportation solutions with a focus on customized, service-focused, premium solutions (time-critical, high value) not addressed by lower priced commodity service providers. The company offers domestic and international freight services and services diverse end-markets such as medical devices & equipment, manufacturing, diagnostics, industrials, medical supplies, and electronics. Magnate's pro forma revenue is roughly $700 million. The company is owned by private equity firm Littlejohn & Company. The principal methodology used in these ratings was Surface Transportation and Logistics published in December 2021. MAGNATE WORLDWIDE: S&P Assigns 'B' ICR, Outlook Stable ------------------------------------------------------ S&P Global Ratings assigned its 'B' issuer credit rating to Magnate Worldwide LLC, a third-party logistics provider in the U.S. and internationally. S&P also assigned its 'B' issue-level rating and '3' recovery rating (50%-70%; rounded estimate: 60%) to the first-lien term loan and delayed-draw term loan. The stable outlook reflects S&P's expectation that the company's credit metrics will remain commensurate with the rating over the next year, supported by favorable near-term demand trends and constrained capacity for freight transportation. Magnate Worldwide was acquired by private equity firm Littlejohn & Co. on Dec. 30, 2021. The transaction was financed with a $50 million asset-based lending (ABL) facility ($10 million drawn at close), $260 million first-lien term loan, $95 million second-lien term loan, and $262 million equity contribution. Magnate also has a $40 million first-lien delayed-draw term loan for future acquisitions. S&P said, "We view Magnate as a small participant in the fragmented global third-party logistics industry. Magnate primarily provides domestic freight brokerage services (through its TrumpCard brand) and international freight forwarding (through its Masterpiece brand), including ground, ocean, and air transportation. Rather than owning equipment and providing transportation, freight brokers engage freight providers that will execute the shipment, pay providers, and charge the customer for the cost of transportation plus a premium. Magnate also provides ancillary services, such as customs brokerage and arranging for last-mile delivery and installation. In addition to asset-intensive transportation providers such as container shipping lines and cargo airlines, Magnate also competes against many participants in the third-party logistics industry. These include other freight brokers and larger logistics firms that can provide a broader array of services and more recent market entrants from the technology industry. We believe larger participants could more easily source capacity or subsidize rates given their larger volumes and financial resources. Nonetheless, we note Magnate provides services to several small and medium-sized businesses, and is focused more on transporting specialized freight, such as high-value or time-sensitive items." S&P expects Magnate's operating performance will continue to benefit from the strong market for freight transportation. Since late 2020, demand for freight transportation has remained strong, driven by elevated consumer and business spending. At the same time, capacity has been constrained across transportation modes. The COVID-19 pandemic reduced the number of passenger flights (which typically account for about half of total available cargo capacity globally), which sharply raised air freight pricing. Ocean shipping capacity remains tight amid backlogs and labor and equipment shortages at ports. A continued driver shortage has also contributed to lower overall trucking capacity and higher spot market rates in the U.S. As a freight broker, Magnate's operational results are somewhat tied to the price of transportation. Its gross revenue has benefited in recent months from record freight pricing, and we expect Magnate's revenues to have more than doubled in 2021 (it has not yet reported 2021 year-end financials). S&P said, "Although we do not believe the current pricing environment will last in the long run, Magnate, along with other freight forwarders, should continue to benefit from these trends at least through the first half of 2022, before conditions start to normalize. In terms of profitability, most of Magnate's transportation pricing is spot based, unlike many of its peers that use a portion of fixed-price contracts to price a portion of their businesses. As a result, we don't view its profitability margins as exposed to the volatility typically associated with contract pricing (which usually lags market pricing, leading to margin volatility as prices rise or fall). However, in weaker demand and under more competitive market conditions (when lower volumes coincide with lower spot-market prices), we believe the company's ability to generate higher premiums per shipment (gross profit per shipment) could be somewhat diminished, given its relatively small size. Nevertheless, we believe the company benefits from a largely variable cost structure and its asset-light model, which limits required capital spending." S&P said, "We expect Magnate will continue to pursue opportunistic tuck-in acquisitions.Over the past few years, Magnate has pursued a somewhat acquisitive growth strategy, completing six acquisitions since 2015. They have largely been aimed at expanding the company's market coverage, services, and customer base. We expect Magnate will continue to pursue similar acquisition opportunities. Therefore, we assume the company will use its $40 million delayed-draw term loan and operating cash to finance its acquisitions over the next two years. "We forecast Magnate's credit metrics will decline modestly through 2023 as market conditions normalize but remain commensurate with the rating.We expect Magnate's pricing and gross profit per shipment in 2022 to increase modestly from already high 2021 levels as freight market conditions remain favorable at least through the first half. We believe market conditions will gradually normalize thereafter, somewhat lowering prices and gross profit per shipment in 2023, particularly in the international freight forwarding segment. We expect volumes in 2022 to remain largely in line with 2021 volumes before declining somewhat into 2023. However, we believe they will remain much higher than before the pandemic through our forecast period, supported by continued macroeconomic growth. "We forecast Magnate's revenues to increase in the low-single-digit percent area in 2022 on an organic basis and decline in the high-teen percent area into 2023. At the same time, we also expect expenses related to recent transactions, including Littlejohn's purchase of the company, will decline. Therefore, we forecast debt to EBITDA in the mid-5x area in 2022 (compared with the low-6x area in 2021), increasing somewhat to the low-6x area in 2023. We also expect funds from operations (FFO) to debt to remain in the high-single-digit percent area through our forecast period (compared with the low-teens percent area in 2021). Magnate's 2021 credit metrics are not directly comparable (particularly FFO to debt) because they include debt associated with the Dec. 30, 2021 acquisition but not the associated interest expenses. "Our outlook on Magnate is stable. We believe the company's operating performance will continue to benefit from strong near-term demand and continued constrained capacity for freight transportation at least through the first half of 2022, before market conditions normalize somewhat into 2023. We also expect it to remain acquisitive, using the delayed-draw term loan and operational cash to finance tuck-in acquisitions. We forecast debt to EBITDA in the mid-5x area in 2022 and the low-6x area in 2023. We expect FFO to debt to remain in the high-single-digit percent area through our forecast period." S&P could lower its ratings over the next 12 months if the company's debt to EBITDA increases above 6.5x or FFO to debt declines to the mid-single-digit percent area on a sustained basis. This could occur if: -- Normalization of freight transportation market conditions lowers gross profit per shipment more than we anticipate; -- Volumes decline on weaker demand from increased competition or modal shifts; or -- The company pursues significant debt-financed acquisitions or dividends. Although unlikely over the next year, S&P could raise ratings over the next 12 months if debt to EBITDA declines below 5x and FFO to debt increases above 12% on a sustained basis. S&P would also need to expect management and its financial sponsor would remain supportive of these metrics over the longer term. This could occur if: -- Volumes increase above our current expectations; -- Purchased transportation pricing and margins remain high for longer than S&P expects; or -- The company performs at least as well as S&P anticipates and consistently uses free cash flow to repay debt and deleverage the balance sheet. E-2, S-2, G-3 S&P said, "Governance is a moderately negative factor in our credit rating analysis of Magnate. We view financial sponsor-owned companies with highly leveraged financial risk profiles as demonstrating corporate decision-making that prioritizes controlling owners' interests, typically with finite holding periods and a focus on maximizing shareholder returns." MAUI MEADOWS: Seeks to Hire Alan Sears as Accountant ---------------------------------------------------- Maui Meadows Management, LLC seeks approval from the U.S. Bankruptcy Court for the District of Hawaii to employ Alan Sears, an accountant practicing in Tucson, Ariz. The Debtor requires an accountant to prepare tax filings and provide other accounting services during the pendency of its Chapter 11 case. As disclosed in court filings, Mr. Sears is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Mr. Sears holds office at: Alan Sears 2230 E. Speedway Blvd. Suite 120 Tucson, AZ 85719 Tel: (520) 885-1040 Fax: (520) 795-2686 About Maui Meadows Management Maui Meadows Management, LLC, a company based in Kihei, Hawaii, filed a petition for Chapter 11 protection (Bankr. D. Hawaii Case No. 21-01129) on Dec. 14, 2021, listing as much as $10 million in both assets and liabilities. Steven Michael Warsh, manager, signed the petition. Judge Robert J. Faris oversees the case. Michael J. Collins, Esq., at Cain & Herren, ALC and Alan Sears, a certified public accountant based in Tucson, Ariz., serve as the Debtor's legal counsel and accountant, respectively. MOTELS OF SUGAR: Unsecured Creditors to be Paid in Full in Plan --------------------------------------------------------------- Motels of Sugar Land, LLP, filed with the U.S. Bankruptcy Court for the Southern District of Indiana a Disclosure Statement describing Chapter 11 Plan of Reorganization dated Feb. 3, 2022. Debtor owns a 94 suite Springhill Suites and Hotel by Marriott in Sugarland, Texas that employs 14 people, (the "Hotel"). Motels of Sugarland LLP was formed in 2007 and is wholly owned by Sanjay Patel and his son Hiren Patel. Debtor is filing a Chapter 11 Plan of Reorganization and Disclosure Statement for the reason that operations have stabilized, and the cash flow of the business is sufficient to fund the payments to be made under the Plan. The primary driver of the Debtor's ability to service the debt under the Plan is the regular operation of its hotel business, which has operated profitably since filing this case. The Plan generally pays all creditors in full either in accordance with the terms of the pre-petition agreement between the parties or by other means that result in creditors receiving the full present value of their claims. For that reason, the Plan maintains the existing equity stakes of the owners in the Debtor. The Plan will treat claims as follows: * Class 2 consists of the Jamvati, LLC Allowed Secured Claim. The Jamvati Allowed Secured Claim shall include interest and attorney's fees that have accrued since Jamvati filed its Amended Proof of Claim in the amount of $7,037,716.51, the amount of which shall be tendered by such creditor immediately following confirmation of the Plan. Such amount shall then be amortized over 20 years with interest as provided in the applicable notes referenced in the Jamvati POC with payments commencing on the earlier of the Effective Date or that date which is 30 days following the date of last payment of adequate protection by the Debtor to Jamvati. * Class 3 consists of the Marriott International Inc., Allowed Executory Contract Claim, which claim represents the amounts incurred by the Debtor in the ordinary course of business in performing its obligations under the Franchise Agreement estimated to be less than $10,000. The Debtor shall assume the Franchise Agreement with Marriott and shall continue to perform all obligations and pay all amounts due thereunder to this creditor in the ordinary course of business. Class 3 is impaired. * Class 4 consists of the MHG Allowed Executory Contract Claim, which claim represents amounts earned post-petition under the Management Agreement. This claim shall expressly exclude amounts due to MHG for loans or operating expenses advanced on behalf of the Debtor and shall be limited to payments that do not diminish cash flow needed to make Plan payments. The total amount of such claim shall not exceed $240k as of the date of the filing of this Plan. Subject to these limitations, the Debtor shall assume the Management Agreement and shall perform thereunder except to the extent payments are limited. Class 4 is impaired. * Class 5 consists of the Allowed NonPriority Unsecured Claims of general creditors. Total claims in this class, net of the claims of Emerald Hotel Investments, and First Farmers Bank, which claims have been withdrawn or forgiven, and the claim listed for Marriott International, Inc., which claim has been paid in the ordinary course of business, leaving a total class payment due of $33,571.32. Such remaining amount shall be paid in full, provided however that no creditor in this class shall be allowed to charge a late fee or other penalty, on the Effective Date. Class 5 is impaired. * Class 6 consists of Equity Interests of Existing Owners. All equity interests existing at confirmation shall be retained by the existing owners. The Debtor believes that the projections demonstrate that it can make the distributions required under the Plan and operate as a going concern. A full-text copy of the Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3gtiW82 from PacerMonitor.com at no charge. Attorney for the Debtor: KC Cohen 04310-49 KC Cohen, Lawyer, PC 151 N. Delaware St., Ste. 1106 Indianapolis, IN 46204 317.715.1845 fax 636.8686 kc@esoft-legal.com About Motels of Sugar Land Motels of Sugar Land, LLP owns the 94-suite Springhill Suites and Hotel by Marriott in Sugarland, Texas, that employs 14 people. Motels of Sugar Land sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 21-00371) on Jan. 29, 2021. Motels of Sugar Land President Sanjay Patel signed the petition. In the petition, the Debtor disclosed $6,396,935 in assets and $6,455,893 in liabilities. Judge Robyn L. Moberly oversees the case. KC Cohen, Lawyer, PC is the Debtor's legal counsel. NESV ICE: Gets Interim Cash Collateral Access --------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, has authorized NESV Ice, LLC and affiliates to use cash collateral under the same terms and conditions as the Fourth Interim Order, subject to the budget. As previously reported by the Troubled Company Reporter, SHS ACK, LLC asserts a security interest in Ice's property, including the cash proceeds thereof, and Ice's deposit accounts. A copy of the order is available at https://bit.ly/3ryLgMt from PacerMonitor.com. A copy of the Debtor's budget for January 28 to April 22, 2022 is available at https://bit.ly/3soWfaB from PacerMonitor.com. The budget provided for total cash disbursements, on a weekly basis, as follows: $34,457 for the week ending January 28, 2022; $112,948 for the week ending February 4, 2022; $36,872 for the week ending February 11, 2022; $50,463 for the week ending February 18, 2022; $32,257 for the week ending February 25, 2022; $16,306 for the week ending March 4, 2022; $36,872 for the week ending March 11, 2022; $52,463 for the week ending March 18, 2022; $33,257 for the week ending March 25, 2022; $17,146 for the week ending April 1, 2022; $41,861 for the week ending April 8, 2022; $52,463 for the week ending April 15, 2022; and $37,086 for the week ending April 22, 2022. About NESV Ice, LLC NESV Ice, LLC and affiliates NESV Swim, LLC, NESV Field, LLC, NESV Hotel, LLC, NESV Tennis, LLC, NESV Land, LLC, and NESV Land East, LLC, offer fitness and sports training services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Mass. Case No. 21-11226) on August 26, 2021. The petitions were signed by Stuart Silberberg as manager. Judge Christopher J. Panos oversees the case. William McMahon, Esq., at Downes McMahon LLP is the Debtor's counsel. NORDIC AVIATION: Affiliates Tap Michael Wilson as Special Counsel ----------------------------------------------------------------- Nordic Aviation Capital A/S and four other affiliates of Nordic Aviation Capital Designated Activity Company seek approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Michael Wilson, PLC as special counsel. The firm will assist Jame Donath and Anthony Horton, members of the Debtors' boards of directors, in matters in which a conflict exists between the Debtors and their affiliates, directors or officers. Its services include: (a) advising the directors regarding whether an issue constitutes a conflict matter; (b) conducting investigation and analysis sufficient to advise the directors regarding conflict matters, and; (c) implementing the directions of the directors related to conflict matters. The firm will be paid at the rate of $420 per hour and will be reimbursed for out-of-pocket expenses incurred. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, the firm disclosed the following: Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: No. Question: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? Response: No. Question: If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed post-petition, explain the difference and the reasons for the difference. Response: Not applicable. Question: Has your client approved your prospective budget and staffing plan, and, if so for what budget period? Response: Yes, for the period from January 5 through March 31, 2022. Michael Wilson, Esq., a partner at Michael Wilson PLC, 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 G. Wilson, Esq. Michael Wilson, PLC 12733 Storrow Rd. Henrico, VA 23233 Tel: (804) 614-8301 Email: mike@mgwilsonlaw.com About Nordic Aviation Nordic Aviation Capital is the leading regional aircraft lessor serving almost 70 airlines in approximately 45 countries. Its fleet of 475 aircraft includes ATR 42, ATR 72, De Havilland Dash 8, Mitsubishi CRJ900/1000, Airbus A220 and Embraer E-Jet family aircraft. On Dec. 17, 2021, Nordic Aviation Capital Pte. Ltd., NAC Aviation 17 Limited, NAC Aviation 20 Limited, and Nordic Aviation Capital A/S each filed petitions seeking relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Va.). On Dec. 19, 2021, Nordic Aviation Capital Designated Activity Company and 112 affiliated companies also filed petitions seeking Chapter 11 relief. The lead case is In re Nordic Aviation Capital Designated Activity Company (Bankr. E.D. Va. Lead Case No. 21-33693). Judge Kevin R. Huennekens oversees the cases. The Debtors tapped Kirkland & Ellis and Kutak Rock, LLP as bankruptcy counsels and the law firms of Clifford Chance, LLP, William Fry, LLP and Gorrissen Federspiel as corporate counsels. N.M. Rothschild & Sons Limited, Ernst & Young, LLP and PricewaterhouseCoopers, LLP serve as the Debtors' financial advisor, restructuring advisor and tax advisor, respectively. Epiq Corporate Restructuring, LLC is the claims and noticing agent. NORDIC AVIATION: Seeks to Hire Quinn Emanuel as Special Counsel --------------------------------------------------------------- Nordic Aviation Capital Designated Activity Company seeks approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to employ Quinn Emanuel Urquhart & Sullivan, LLP as special counsel. Quinn will render independent services to the Debtor at the sole direction of Paul Keglevic and Stefan Selig, members of the Debtor's board of directors, in connection with certain matters in which a conflict may exist between the Debtor and its shareholders, affiliates, directors or officers. The hourly rates charged by the firm for its services are as follows: Partners $1,320 to $2,030 per hour Associates $790 to $2,030 per hour Law Clerks/Legal Assistants $455 to $640 per hour Quinn will also seek reimbursement for out-of-pocket expenses incurred. The firm received a retainer in the amount of $150,000. In accordance with Appendix B-Guidelines for reviewing fee applications filed by attorneys in larger Chapter 11 cases, the firm disclosed the following: Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: No. Question: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? Response: No. Question: If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed post-petition, explain the difference and the reasons for the difference. Response: Not applicable. Question: Has your client approved your prospective budget and staffing plan, and, if so for what budget period? Response: Yes, for the period from December 19, 2021 through March 31, 2022. James Tecce, Esq., a partner at Quinn, 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: James C. Tecce, Esq. Quinn Emanuel Urquhart & Sullivan, LLP 51 Madison Avenue, 22nd Floor New York, NY 10010 Tel: (212) 849-7199 Fax: (212) 849-7100 Email: jamestecce@quinnemanuel.com About Nordic Aviation Nordic Aviation Capital is the leading regional aircraft lessor serving almost 70 airlines in approximately 45 countries. Its fleet of 475 aircraft includes ATR 42, ATR 72, De Havilland Dash 8, Mitsubishi CRJ900/1000, Airbus A220 and Embraer E-Jet family aircraft. On Dec. 17, 2021, Nordic Aviation Capital Pte. Ltd., NAC Aviation 17 Limited, NAC Aviation 20 Limited, and Nordic Aviation Capital A/S each filed petitions seeking relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Va.). On Dec. 19, 2021, Nordic Aviation Capital Designated Activity Company and 112 affiliated companies also filed petitions seeking Chapter 11 relief. The lead case is In re Nordic Aviation Capital Designated Activity Company (Bankr. E.D. Va. Lead Case No. 21-33693). Judge Kevin R. Huennekens oversees the cases. The Debtors tapped Kirkland & Ellis and Kutak Rock, LLP as bankruptcy counsels and the law firms of Clifford Chance, LLP, William Fry, LLP and Gorrissen Federspiel as corporate counsels. N.M. Rothschild & Sons Limited, Ernst & Young, LLP and PricewaterhouseCoopers, LLP serve as the Debtors' financial advisor, restructuring advisor and tax advisor, respectively. Epiq Corporate Restructuring, LLC is the claims and noticing agent. O'CONNOR CONSTRUCTION: Wins Cash Collateral Access Thru Feb 15 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, has authorized O'Connor Construction Group, LLC to use cash collateral on an interim basis in accordance with the budget, with a 5% variance and provide adequate protection. The Debtor requires the use of cash collateral to continue post-petition operations. As of the Petition Date, liens or other interests are asserted against the cash collateral of the Debtor by the United States Small Business Administration, Breakout Capital, CIT, and Union Funding Source, Inc. While Union Funding Source, Inc. asserts a security interest in the property it claims it purchased from the Debtor pre-petition, it takes issue with its designation as a creditor due to the nature of its prepetition transaction with the Debtor. It is being called a creditor in the order for the sake of brevity, but does not concede that it is a creditor at this time. The Debtor is directed to maintain money received from operations, accounts receivable collected and cash collateral in a debtor-in-possession operating account for the Debtor. The Debtor's use of cash collateral will terminate on the earliest to occur of: (a) February 15, 2022, unless extended by further Court order on further request of the Debtor or by agreement of the Debtor and the Secured Creditors, (b) the dismissal of the Case or the conversion of the Case to Chapter 7 of the Bankruptcy Code, (c) the appointment or election of a trustee or examiner with expanded powers, provided however, that such trustee or examiner will be provided use of cash collateral for a period of 15 days from the date of the entry of the order approving the appointment of the trustee or examiner in order to provide such trustee time to negotiate with the Secured Creditors continued use of cash collateral by the trustee or examiner and/or to file his own motion, (d) the occurrence of the effective date or consummation date of a plan of reorganization for the Debtor, or (e) the entry of an order of the Court reversing, staying, vacating or otherwise modifying in any material respect the terms of the Order. As adequate protection, the Secured Creditors will receive a replacement lien in post-petition assets of the same character as their respective prepetition collateral and proceeds of post-petition assets of the same character as their respective prepetition collateral. The Adequate Protection Liens will (i) be supplemental to and in addition to the prepetition liens or interests of each respective Interest Holder, (ii) be accorded the same validity and priority as enjoyed by the prepetition liens or interests immediately prior to the Petition Date, (iii) be deemed to have been perfected automatically effective as of the entry of the Order without the necessity of filing of any UCC-1 financing statement, state or federal notice, mortgage or other similar instrument or document in any state or public record or office and without the necessity of taking possession or control of any collateral. A final hearing on the matter is scheduled for February 15 at 1:30 p.m. A copy of the order and the Debtor's budget for the period from January 31 to February 13, 2022 is available at https://bit.ly/3GBvS6e from PacerMonitor.com. The Debtor projects $87,460 in total cash receipts and $97,215 in total cash payments. About O'Connor Construction Group, LLC O'Connor Construction Group, LLC has over 30 years of experience as a commercial/industrial contractor specializing in food storage/processing facilities and provides turnkey design, construction and construction management services for projects nationwide, but focusing primarily in the South/Southwest. O'Connor's primary office is located at 173 County Road 3850, Poolville, Texas 76487 and its workforce currently consists of twenty-four employees. O'Connor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 22-40187-11) on January 28, 2022. In the petition signed by Paul O'Connor, member/manager, the Debtor disclosed up to $10 million in assets and up to $50 million in liabilities. Union Funding Source, Inc., as secured creditor, is represented by: Shanna M. Kaminski, Esq. Kaminski Law, PLLC P.O. Box 725220 Berkley MI 48072 Tel: (248) 462-7111 OLAPLEX INC: Moody's Assigns B1 CFR; Outlook Stable --------------------------------------------------- Moody's Investors Service assigned a first time ratings to Olaplex Inc., including a B1 Corporate Family Rating and a B1-PD Probability of Default Rating. Moody's also assigned B1 ratings to the first lien senior secured credit facility, consisting of a $150 million revolving credit facility expiring 2027 and a $675 million senior secured term loan due 2029. At the same time, Moody's assigned a speculative grade liquidity rating of SGL-1. The rating outlook is stable. "The B1 CFR reflects Olaplex's strong market position and growth prospects in hair care, tested intellectual property protection, and Moody's expectation that private equity sponsor Advent International will continue to reduce their ownership through secondary market transactions without adding leverage to the company," said Moody's Analyst Dawei Ma. "Olaplex's ratings also reflect the company's strong credit metrics, including modest leverage, strong profitability and low capital expenditures, which supports considerable positive free cash flow generation." The following ratings are affected by the action: New Assignments: Issuer: Olaplex, Inc. Corporate Family Rating, Assigned B1 Probability of Default Rating, Assigned B1-PD Speculative Grade Liquidity Rating, Assigned SGL-1 Senior Secured 1st Lien Term Loan, Assigned B1 (LGD4) Senior Secured 1st Lien Revolving Credit Facility, Assigned B1 (LGD4) Outlook Actions: Issuer: Olaplex, Inc. Outlook, Assigned Stable RATINGS RATIONALE Olaplex' B1 CFR reflects the company's strong operating performance, good brand name recognition in niche hair care markets, diversity in distribution channel to both salon and home use, as well as intellectual property protection from various domestic and international patents that expire in roughly 13 years. Olaplex's products focus on repairing the chemical bonds in hair that are damaged by coloring and other treatments, and the efficacy drives good consumer reception and premium price points. The company has very strong credit metrics, including a very high EBITDA margin in excess of 60% and pro forma debt-to-EBITDA financial leverage of 2.2x for the 12-months period ended September 30, 2021. The growth in 2021 was supported by increased brand awareness, salons and Sephora reopening and strong growth in direct-to-consumer sales. Moody's expect earnings growth will remain strong in 2022 supported by the new distribution channel with Ulta and product development capability. The rating is constrained by the company's narrow focus on prestige haircare category with only 11 products. Revenue and earnings are vulnerable to changing customer preferences and competition including from much larger, more diversified, and better capitalized hair care product providers. Olaplex also has supplier concentration risk with one supplier accounting for over 70% of its net sales. Moody's expects the company to maintain moderate leverage as a public company despite continued control by private equity sponsor Advent International through their 77% ownership interest. Advent's exit creates significant potential overhang that could include leveraged repurchases. However, Moody's anticipates the most likely scenario is that Advent will reduce its ownership through secondary market offerings over time without increasing debt in order to maintain moderate leverage and a growth focus. Olaplex's SGL-1 rating reflects Moody's expectation of very good liquidity over the next 12 months. The company's liquidity is supported by $61 million of unrestricted cash at transaction close and a proposed undrawn $150 million revolving credit facility maturing 2027. Moody's also anticipates the company to generate at least $150 million of annual free cash flow. Moody's defines free cash flow as cash flows from operations less capital expenditures and dividends. The cash sufficiently covers annual debt amortization of about $6.8 million on the company's $675 million senior secured first lien term loan maturing in 2029. The company's operating cash flow is seasonal but positive in each quarter, with inventory buildup in its second and third fiscal quarters ahead of the holiday season. Since the company is expected to generate strong cash flow, Moody's does not foresee a need for Olaplex to draw on its revolver for working capital over the next 12 months and expects the company to be able to fund seasonal working capital fluctuations with cash and internally generated cash flows. In terms of Environmental, Social and Governance (ESG) considerations, the most important factor for Olaplex's ratings are governance considerations related to its financial policies. Moody's views Olaplex's financial policies as aggressive given its debt financed dividend recapitalization in 2020 and its private equity ownership. Moody's believes the company's financial discipline is improving following the September 2021 initial public offering. Nevertheless, Advent International retains a significant 77% ownership stake and debt issuance to fund ownership reductions and limit dilution through share repurchases creates event risk. Social considerations impact Olaplex in that the company is largely a prestige hair care company. The company sells products that appeal to customers almost entirely due to "social" consumer preference considerations. To the extent such social customs and mores change, it could have an impact -- positive or negative -- on the company's sales and earnings. The coronavirus outbreak and the government measures put in place to contain it continue to disrupt economies and credit markets across sectors and regions. Although an economic recovery is underway, it is tenuous and its continuation will be closely tied to containment of the virus. As a result, there is uncertainty around Moody's forecasts. Moody's regards the coronavirus outbreak as a social risk under its ESG framework, given the substantial implications for public health and safety. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The stable outlook reflects Moody's view that Olaplex will continue to generate consistent organic revenue growth, maintain its very high EBITDA margin, and produce considerable free cash flow after reinvestment. Moody's also expects the company to maintain its strong credit metrics in the next 12 to 18 months. The ratings could be upgraded if the company continues to improve its scale and product diversity and demonstrates a longer-term track record of profitable growth. Olaplex would also need to maintain low debt-to-EBITDA financial leverage and generate consistently strong free cash flow, as well as significantly reduce its private equity ownership to support an upgrade. The ratings could be downgraded if Olaplex's revenue and EBITDA deteriorate as a result of declining market share, retail distribution or pricing. Debt funded acquisitions, shareholder distributions or an earnings decline that increases debt-to-EBITDA leverage above 3.5x, or a deterioration in its cash flow generation could also lead to a downgrade. As proposed, the new credit facilities are expected to provide covenant flexibility that if utilized could negatively impact creditors. Notable terms include the following: (1) Incremental debt capacity up to the greater of $400 million plus an amount equal to 100% of Consolidated EBITDA, plus an unlimited amount subject to first lien net leverage ratio < or = 3.00x. (2) No portion of the incremental may be incurred with an earlier maturity than the initial term loans. (3) The credit agreement permits the transfer of assets to unrestricted subsidiaries, up to the carve-out capacities, subject to "blocker" provisions which prohibit the transfer of material intellectual property to unrestricted subsidiaries. (4) Non-wholly-owned subsidiaries are not required to provide guarantees; dividends or transfers resulting in partial ownership of subsidiary guarantors could jeopardize guarantees, with "customary" limitations on releases of Excluded Subsidiaries that were wholly owned Restricted Subsidiaries but are no longer wholly owned Restricted Subsidiaries as a result of a non-arm's length transaction or transactions for less than fair market value with an affiliate or related party for no bona fide business purpose limiting such guarantee releases. (5) There are no express protective provisions prohibiting an up-tiering transaction. The proposed terms and the final terms of the credit agreement may be materially different. The principal methodology used in these ratings was Consumer Packaged Goods Methodology published in February 2020. Olaplex, Inc. is a producer of specialty haircare products featuring a proprietary, patented formula to protect and restore damaged hair. The company's products focus on repairing the chemical bonds in hair that are damaged by coloring and other treatments. The company develops, markets, and distributes its products throughout the US and to over 60 countries around the world. Olaplex generated $525 million of revenue for the twelve months ending September 30, 2021. Private equity firm Advent International acquired the company in a leveraged buyout in January 2020 and currently owns approximately 77% of the company. Olaplex's parent company Olaplex Holdings, Inc. began to trade publicly on Nasdaq in September 2021. OSMOSIS HOLDINGS: S&P Affirms 'B' ICR, Outlook Negative ------------------------------------------------------- S&P Global Ratings affirmed its 'B' issuer credit rating on global consumer water treatment and service provider Osmosis Holdings L.P. (doing business as Culligan) and 'B' issue-level ratings on its senior secured credit facilities. The negative outlook reflects the potential for a lower rating if Culligan cannot sustain leverage below 8x and free operating cash flow (FOCF) of at least $50 million. Culligan intends to raise a $1.1 billion incremental first-lien term loan to partly fund its planned acquisition of water dispensing service provider Waterlogic Holdings Ltd. It will also finance it with significant new equity issued to Waterlogic shareholders and existing Culligan investors. Culligan also plans to establish an incremental $250 million delayed-draw term loan and upsize its revolving credit facility to $300 million from $225 million. Both facilities will be undrawn at close. The Waterlogic acquisition strengthens Culligan's position in categories benefiting from positive secular trends, though we believe integration risk is elevated compared to prior acquisitions. Waterlogic provides point-of-use water systems primarily in the U.K., U.S., Europe, and Australia. The company derives a significant portion of revenue from bottle-free coolers, an attractive category because of its high margins and propensity to drive recurring service revenue on an installed base. Its good growth prospects are supported by health and sustainability trends, including reduction of single-use plastic packaging. This move is consistent with Culligan's focus on acquiring accretive businesses with high recurring revenue, complementary footprints, and tangible cost synergy opportunities. The businesses overlap across several geographies, and we expect Culligan should extract duplicative costs within various markets and could realize $75 million in cost synergies by 2024. S&P said, "Notwithstanding our expectation for substantial cost synergies, we believe integration risk is elevated compared to prior acquisitions. We historically have viewed Culligan's acquisitions as entailing limited integration risk because they add revenue to the same fixed-cost base of a service region. However, while the company has had a good track record of achieving synergies on prior acquisitions, this transaction is substantially larger and carries inherently more execution risk. "Notwithstanding the significant equity contribution, Culligan's high debt burden and aggressive financial policies continue to weigh on our ratings. We believe the Waterlogic acquisition will be modestly deleveraging given the large equity component that will fund the transaction. We estimate presynergy leverage at transaction close will be in the low-8x area, including preferred equity as debt (the mid-6x area excluding the preferred). We forecast leverage will improve to the mid-7x area at the end of 2022 and mid-6x area at the end of 2023, as organic growth remains healthy, management executes on cost synergies, and certain nonrecurring costs roll off. Nevertheless, Culligan has been an aggressive acquirer over the last few years and consistently operated with high leverage. We believe the company still has a robust merger and acquisition (M&A) pipeline and its continued pursuit of acquisitions could lead to sustained high acquisition and restructuring charges that pressure EBITDA and cash flow. If these charges remain elevated, it could prevent Culligan from deleveraging in line with our expectations. "FOCF should improve materially in 2022 as the company unwinds its working capital buildup. We estimate FOCF was roughly break-even in fiscal 2021, attributable to ongoing transaction and restructuring charges, residual COVID-19 related costs, and a significant working capital buildup. The working capital buildup was primarily to ensure sufficient inventory to meet demand considering the supply chain constraints plaguing the global economy, particularly in North America. Although we believe the company would have largely met our expectations for FOCF in 2021 if not for its intentional inventory buildup, supply chain conditions will likely remain challenging in the coming quarters. We believe the company will unwind its working capital position by the second half of the year as conditions gradually improve, which should restore its positive free cash generation in 2022 to the extent cash acquisition and restructuring costs are not excessive. We believe the second-half working capital lift and moderating COVID-19 and transaction costs will support pro forma annual FOCF closer to $100 million, and remain fairly confident full-year FOCF on the existing business will exceed $50 million in 2022 (excluding Waterlogic acquisition costs). "The negative outlook reflects Culligan's aggressive acquisition strategy that could continue to pressure FOCF and slow its path to deleveraging. We forecast leverage will improve to the mid-7x area in 2022 from the low-8x area pro forma for the Waterlogic acquisition." S&P could lower the rating if Culligan cannot sustain leverage below 8x and generate consistent FOCF of at least $50 million. This could occur if: -- There are operational missteps integrating Waterlogic and it fails to achieve synergies as expected. -- EBITDA remains depressed by ongoing high transaction and restructuring costs because of continued aggressive M&A activity. S&P could revise the outlook to stable if the company reduces leverage near 7.5x and demonstrates an ongoing ability to generate over $50 million in annual free cash flow. This could occur if: -- The company successfully integrates Waterlogic and realizes synergies as planned. -- Transaction and restructuring costs decline, likely due to a moderation in M&A activity. -- Supply chains conditions improve and the company unwinds excess inventories, supporting stronger FOCF. PACIFIC THEATRES: Tiger Group to Conduct Online Auction on Feb. 15 ------------------------------------------------------------------ Tiger Group is liquidating equipment from well-known U.S. movie chain Pacific Theatres in an online auction that is expected to be of tremendous interest to operators in Saudi Arabia's fast-growing theater sector. Bidding in the timed, online auction opens on February 15, at 10:30 a.m. and closes on February 22, at 10:30 a.m. (PT). Pacific Theatres operated movie houses across the United States before filing for Chapter 7 bankruptcy in the wake of Covid-19 lockdowns. "Tiger is pleased to have been chosen to sell the assets for a premier theater chain that entertained hundreds of thousands of moviegoers over the past 75 years," said Jonathan Holiday, Director of Business Development, Tiger Commercial & Industrial. "It is not often that this type of equipment becomes available on the secondary market." The sale occurs at a time when surviving theater chains are seeing increased traffic, sales and optimism, Holiday added. "While the pandemic had impacted cinemas across the world, they are back again with attendance on the rise," he said. "Whether you own theaters, produce live events or operate a rental firm, this equipment is ready to be utilized." The assets on offer include: -- A state-of-the-art LED cinema screen -- Late-model digital laser and cinema projectors -- Lenses -- Digital cinema amplifiers -- Integrated media blocks -- Cinema servers -- Monitors and processors -- Theater popcorn makers -- Speakers -- Point-of-sale systems The sale features a 2019 Samsung LED screen with audio components. "This is one of just two such LED screens installed in the United States," Holiday noted. "The original purchase price was $700,000." Items up for bid include new and still-in-the-box equipment—such as a Christie Solaria series projector; NEC and Osram arc lamps; Touch Dynamic POS systems; JBL speakers, Doremi Fidelio wireless audio receivers, plus much more. For additional information, email: auctions@tigergroup.com or call (805) 497-4999. For asset photos, descriptions, bidding and other information, visit https://soldtiger.com/sales/by-order-of-united-states-bankruptcy-court-pacific-theaters/#&gid=1&pid=3. About Pacific Theatres Pacific Theatres is an American chain of movie theaters in the Los Angeles metropolitan area of California. Pacific Theatres is owned by The Decurion Corporation which also owns ArcLight Cinemas. Pacific Theatres sought Chapter 7 bankruptcy and to shut down theater chains due to pandemic. Pacific Theatres Exhibition Corp. and Pacific Theatres Entertainment Corporation filed Chapter 7 bankruptcy petitions (Bankr. C.D. Cal. Case No. 21-15007 and 21-15008) on June 18, 2021. The Debtors' attorneys: Erin N Brady Hogan Lovells Us LLP Tel: 310-785-4600 PINNEY INC: Projected Disposable Income is $650 a Month ------------------------------------------------------- Pinney Inc submitted an Amended Plan of Reorganization. Pinney Inc's financial projections shows that the Debtor will have projected disposable income for the proposed 60 months of plan payments of $650.00 a month. The Debtor's Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code proposes to pay creditors of Pinney Inc Auto from future income, sales of vehicles and operating the business. The Plan will treat claims as follows: * Class 2 - Unsecured Claim of AFC. The balance of AFC's claim, after the Debtor pays AFC $17,500 and AFC releases its lien. This claim will be paid pro rata. Class 2 is impaired. * Class 3 - Unsecured Claim of Nextgear, Claim No.7 totaling $80,101. This claim will be paid pro rata. Class 3 is impaired. * Class 4 - Unsecured Claim of Floorplan Xpress, Claim No.9 totaling $21,016. This claim will be paid pro rata. Class 4 is impaired. * Class 5 - Creditors with allowed, unsecured, non-priority claims of more than $2,000 totaling $9,212.37. This claim will be paid pro rata. Class 5 is impaired. * Class 6 - Creditors with allowed, unsecured, non-priority claims of $2,000 or less. All creditors with allowed, unsecured, non-priority claims of less than $2,000 allowed under 11 U.S.C. Sec. 502, including any creditor holding a claim of more than $2,000 that elects treatment under Class 5. This claim will be paid pro rata. Class 6 is impaired. Attorney for the Debtor: David C. Smith, Esq. LAW OFFICES OF DAVID SMITH, PLLC 201 Saint Helens Street Tacoma, WA 98402 Tel: (253) 272-4777 Fax: (253) 461-8888 A copy of the Disclosure Statement dated Feb. 2, 2022, is available at https://bit.ly/3seISJV from PacerMonitor.com. About Pinney Inc. Pinney Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Wash. Case No. 21-40300) on Feb. 22, 2021, disclosing total assets of up to $50,000 and total liabilities of up to $500,000. The Law Offices Of David Smith, PLLC, represents the Debtor as legal counsel. PROFESSIONAL TECHNICAL: Wins Cash Collateral Access --------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, San Francisco Division, has authorized Professional Technica Security Services, Inc. dba Protech Bay Area, to use cash collateral on an interim basis in accordance with the budget. The Debtor requires the use of cash collateral to continue to operate its business and preserve and maximize the value of its estate. The Debtor is directed to operate its business at all times in accordance with the Budget subject to permitted variances . The Debtor's actual disbursements will not exceed budgeted disbursements by more than 10%, calculated on monthly basis; excluding disbursements and expenses relating to professional fees incurred in the Chapter 11 Case which will be paid only upon further Court order. The calculation of the Permitted Variances will extend to any Final Order entered by the Court as to the Motion. In consideration for the use of the cash collateral, the Secured Parties will receive as adequate protection a post-petition replacement lien on all cash collateral generated postpetition. The Debtor will also maintain ordinary monthly payments to City National in the approximate amount of $2,550, as provided in the Budget. A final hearing on the matter is scheduled for March 17, 2022 at 10 a.m. A copy of the order and the debtor's budget from January to June 2022 is available for free at https://bit.ly/335okv3 from PacerMonitor.com. The Debtor projects $3,352,138 in total income and $111,214 in total operating expenses. About Professional Technical Professional Technical Security Services Inc., d/b/a Protech Bay Area, is a company that provides professional security staffing. Professional Technical Security Services Inc. sought Chapter 11 bankruptcy protection (Bankr. N.D. Cal. Case No. 22-30062) on Feb. 1, 2022. In its petition, it listed assets of more than $14 million and liabilities of more than $26 million. Stephen D. Finestone, Esq., at Finestone Hayes LLP is the Debtor's counsel. RCH AUTOPLEX: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: RCH Autoplex, LLC Case No.: 22-30097 Business Description: RCH Autoplex, LLC is engaged in selling automobiles. Chapter 11 Petition Date: February 7, 2022 Court: United States Bankruptcy Court Northern District of Indiana Debtor's Counsel: KC Cohen, Esq. KC COHEN, LAWYER, PC 151 N Delaware St., Ste. 1106 Indianapolis, IN 46204 Tel: 317-715-1845 Email: kc@esoft-legal.com Estimated Assets: $0 to $50,000 Estimated Liabilities: $1 million to $10 million The petition was signed by Christopher Adkins as authorized representative. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/ENDZQCA/RCH_Autoplex_LLC__innbke-22-30097__0001.0.pdf?mcid=tGE4TAMA ROBERT E. SPRINGER: Case Summary & 16 Unsecured Creditors --------------------------------------------------------- Debtor: Robert E. Springer, III, M.D., P. C. 17 Executive Park Dr. NE Ste 100 Atlanta, GA 30329 Chapter 11 Petition Date: February 8, 2022 Court: United States Bankruptcy Court Northern District of Georgia Case No.: 22-51065 Judge: Hon. Barbara Ellis-Monro Debtor's Counsel: Benjamin R. Keck, Esq. ROUNTREE, LEITMAN & KLEIN, LLC Century Plaza I 2987 Clairmont Road, Ste 350 Atlanta, GA 30329 Tel: 404-410-1220 Fax: 404 704-0246 Email: swenger@rlklawfirm.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Robert E. Springer III, chief executive officer. A full-text copy of the petition containing, among other items, a list of the Debtor's 16 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/VZSD6XQ/Robert_E_Springer_III_MD_P_C__ganbke-22-51065__0001.0.pdf?mcid=tGE4TAMA ROBERT J. STROUMPOS: Taps The Lane Law Firm as Bankruptcy Counsel ----------------------------------------------------------------- Robert J. Stroumpos DDS, PC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to employ The Lane Law Firm, PLLC to serve as legal counsel in its Chapter 11 case. The firm's services include: a. assisting the Debtor in the administration of its bankruptcy case; b. assisting the Debtor in analyzing its assets and liabilities, investigating the extent and validity of lien and claims, and participating in and reviewing any proposed asset sales or dispositions; c. attending meetings and negotiating with representatives of secured creditors; d. assisting the Debtor in the preparation, analysis and negotiation of any plan of reorganization and disclosure statement; e. taking all necessary actions to protect and preserve the interests of the Debtor; f. appearing in court and the Office of the U.S. Trustee; and g. performing all other necessary legal services. The hourly rates charged by the firm's attorneys and paraprofessionals are as follows: Robert C. Lane, Esq. $525 per hour Supervising Attorneys $475 per hour Associate Attorneys $350 - $400 per hour Paraprofessionals $125 per hour The firm received from the Debtor a retainer of $27,500 and will receive reimbursement for out-of-pocket expenses incurred. Robert Lane, Esq., a partner at The Lane Law Firm, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Robert C. Lane, Esq. Joshua D. Gordon, Esq. Christopher C. West, Esq. The Lane Law Firm, PLLC 6200 Savoy, Suite 1150 Houston, TX 77036 Tel: (713) 595-8200 Fax: (713) 595-8201 Email: notifications@lanelaw.com Joshua.gordon@lanelaw.com Chris.west@lanelaw.com About Robert J. Stroumpos DDS Robert J. Stroumpos DDS, PC filed a Chapter 11 bankruptcy petition (Bankr. S.D. Texas Case No. 22-80010) on Jan. 25, 2022, listing up to $500,000 in assets and up to $1 million in liabilities. Judge Jeffrey P. Norman oversees the case. The Debtor tapped The Lane Law Firm, PLLC as its legal counsel. ROSIE'S LLC: Property Sale Proceeds & Rental Income to Fund Plan ---------------------------------------------------------------- Rosie's, LLC, filed with the U.S. Bankruptcy Court for District of Colorado a Disclosure Statement in support of Chapter 11 Plan of Reorganization dated Feb. 3, 2022. Debtor is a Colorado limited liability company that is jointly owned 50% each by David Lebsock and Cheryl Lebsock. The Debtor's business is the ownership and leasing of the Real Properties. On August 16, 2021, as a result of the mounting pressure from the Galinn Lawsuit, Intergro Judgment, and BOC Foreclosure Sales, along with the inability to use its Real Properties by virtue of the Receivership Order, the Debtor commenced this Chapter 11 Case when it filed its voluntary petition for relief. In accordance with the terms of the Plan, the Debtor seeks to keep the Monohan Farm, CJ Frank Farm, and Pivonka Ranch so that it may retain the rents and income associated therewith to fund the Creditor Account with 4% of gross revenue. The Debtor will restructure the senior obligations that are secured by Monohan Farm, CJ Frank Farm, and Pivonka Ranch in order to service the debt thereon. Additionally, the Debtor will sell, within 12 months of the Effective Date, both Miller Property and Campbell. The proceeds from the sale will be held in escrow and no distribution to Galinn will occur until a court of competent jurisdiction has entered a Final Order in the Galinn Action. Once the Galinn Action has concluded, the Reorganized Debtor will distribute the funds in the Creditor Account to Holders of Allowed Claims in Classes 5 and 6. The Reorganized Debtor shall have all of the rights, powers and standing of a debtor in possession under section 1107 of the Bankruptcy Code, and such other rights, powers, and duties incident to causing performance of the Reorganized Debtor's obligations under the Plan as may be necessary. The Reorganized Debtor shall have authority to object to claims, prosecute Causes of Action and file necessary reports with the Bankruptcy Court. Class 5 consists of Holders of Allowed Unsecured Guaranty Deficiency Claims, excluding Holders of General Unsecured Claim. Class 5 is impaired. Holders of Allowed Unsecured Guaranty Deficiency Claims shall receive the treatment on the Effective Date in full satisfaction of their Claims. Commencing after all Allowed Administrative Claims are paid in full, on each of March 1, June 1, September 1, and December 1 the Debtor shall deposit 4% of the Debtor's gross revenue actually collected for the preceding 3 months into the Creditor Account. All funds, net of attorneys' fees and costs, recovered by the Debtor or any creditor on account of Avoidance Actions shall be deposited in the Creditor Account. Whether or not the Debtorpursues any Avoidance Actions shall be within its sole discretion. Upon the later of: (i) the fifth anniversary of the Effective Date, or (ii) the resolution of the Galinn Action by a Final Order, the Debtor shall distribute all proceeds in the Creditor Account pro rata among the Holders of Allowed Class 5 Unsecured Guaranty Deficiency Claims and Holders of Allowed Class 6 General Unsecured Claims. The total amount of Class 5 Claims is approximately $3,957,594.73. Class 6 consists of Holders of Allowed Unsecured Claims, excluding Allowed Holders of Unsecured Guaranty Deficiency Claims. Class 6 is impaired. Holders of Allowed Unsecured Claims shall receive the treatment on the Effective Date in full satisfaction of their Claims. Commencing after all Allowed Administrative Claims are paid in full, on each of March 1, June 1, September 1, and December 1 the Debtor shall deposit 4% of the Debtor's gross revenue actually collected for the preceding 3 months into the Creditor Account. All funds, net of attorneys' fees and costs, recovered by the Debtor or any creditor on account of Avoidance Actions shall be deposited in the Creditor Account. Whether or not the Debtor pursues any Avoidance Actions shall be within its sole discretion. Upon the later of: (i) the fifth anniversary of the Effective Date, or (ii) the resolution of the Galinn Action by a Final Order, the Debtor shall distribute all proceeds in the Creditor Account pro rata among the Holders of Allowed Class 5 Unsecured Guaranty Deficiency Claims and Holders of Allowed Class 6 General Unsecured Claims. The total amount of Class 6 Claims is approximately $15,582,961.05. Class 7 consists of Holders of Interests in the Debtor. Class 7 is impaired. On the Effective Date, Holders of Interests shall retain their Interests therein but shall also contribute $25,000.00 into the Creditor Account. Prior to the sale of Miller Property and Campbell, the Debtor shall look to lease each property to generate additional revenue to deposit into the Creditor Account. With respect to the Miller Property, the Debtor believes that it can lease approximately 26.75 of the irrigated acres in the summer of 2022 for $225 per acre for approximately $6,018.75. Regarding Campbell, the Debtor believes that it can lease approximately thirty acres of irrigated agricultural ground in the summer of 2022 for $225 per acre for approximately $6,750. The additional $12,000 plus in rent generated by Miller Property and Campbell would first be used for ordinary expenses of maintaining the properties and then deposited into the Creditor Account subject to the terms of the Plan including any payment of Allowed Professional Fee Claims. The Debtor will use 4% of the gross revenue generated by the Jaeger Lease, Monohan Farm rents, and Pivonka Ranch rents to deposit into the Creditor Account. The Debtor has an understanding with both farmers regarding Monohan Farm and Pivonka Ranch. The rents to be generated from CJ Frank Farm, Pivonka Ranch, and Monohan should total approximately $279,200 in gross rent which will be used to make payments under the Plan. The Debtor further believes that it can generate additional income by entering into grazing leases. Pivonka Ranch can be grazed by seventy-five cow/calf pairs for $55 per pair for a period of six months which will generate an additional $24,750. One hundred and sixty acres of Monohan Farm can be grazed by forty cow/calf pairs for $55 per pair for a period of six months which will generate an additional $13,200. The $37,950 of additional grazing rents will be used to make payments under the Plan. Finally, over the term of the Plan, the Debtor is going to explore sales of portions of Monohan Farm for residential development to third parties. In particular, the Debtor may sell up to eight corner parcels of Monohan Farm (consisting of each about nine acres). The Debtor reasonably expects to receive approximately $100,000 for each corner lot sold. The Debtor may also explore sales of two larger parcels of Monohan Farms (one parcel being seventeen acres and the other parcel being twenty acres). The Debtor reasonably expects to receive approximately $125,000 for each of the larger lots. With these potential property sales the Debtor believes that it could reasonably receive up to $1,050,000 in sale proceeds which would be used to pay down the 59 Investments Secured Claim. A full-text copy of the Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3Jp54s3 from PacerMonitor.com at no charge. Attorneys for the Debtor: Timothy M. Swanson, Esq. Patrick Akers, Esq. Moye White LLP 1400 16th Street 6th Floor Denver, CO 80202-1486 Tel: (303) 292-2900 Fax: (303) 292 4510 Email: Tim.Swanson@moyewhite.com Patrick.Akers@moyewhite.com About Rosie's LLC Rosie's, LLC, a Sterling, Colo.-based company engaged in renting and leasing real estate properties, filed a voluntary petition for Chapter 11 protection (Bankr. D. Colo. Case No. 21-14259) on Aug. 16, 2021, listing as much as $50 million in both assets and liabilities. David W. Lebsock, the Debtor's manager, signed the petition. Moye White, LLP, represents the Debtor as legal counsel. SENIOR CARE: Gets OK to Hire Valhalla Real Estate as Broker ----------------------------------------------------------- Senior Care Living VII, LLC received approval from the U.S. Bankruptcy Court for the Middle District of Florida to employ Matthew Huckin, a real estate broker at Valhalla Real Estate. The Debtor requires a real estate broker to market and sell 4.01 acres of land located at 1080 W. FM 3040, Lewisville, Texas. The broker will be paid a commission of 6 percent of the sales price. Mr. Huckin 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. Mr. Huckin can be reached at: Matthew Huckin Valhalla Real Estate 3605 Caruth Blvd Dallas, TX 75225-5102 Tel: (214) 354-5706 Email: Matthew@valhallarealestate.com About Senior Care Living VII Senior Care Living VII, LLC sought Chapter 11 bankruptcy protection (Bankr. M.D. Fla. Lead Case No. 22-00103) on Jan. 10, 2022, listing up to $50 million in both assets and liabilities. Michael C. Markham, Esq., at Johnson Pope Bokor Ruppel & Burns, LLP is the Debtor's legal counsel. SYSTEM1 INC: S&P Assigns 'B' Issuer Credit Rating, Outlook Stable ----------------------------------------------------------------- S&P Global Ratings assigned a 'B' issuer credit rating to System1 Inc. and its financing subsidiary, Orchid Merger Sub II LLC. In addition, S&P assigned a 'B' issue-level rating and '3' recovery rating to the company's senior secured term loan. S&P said, "The stable outlook reflects our expectation that System1 will benefit from the secular growth trends in digital advertising and successfully combine and integrate Protected.net. We expect S&P Global Ratings-adjusted leverage of about 6x and free operating cash flow (FOCF) to debt of 10%-12% in 2022." U.S.-based digital marketing and customer acquisition services provider System1 Inc. (formerly Trebia Acquisition Corp.) has completed its business combination with antivirus services provider Protected.net. The company issued a $400 million senior secured term loan B that--along with cash from Trebia and management and sponsor equity--was used to finance the transaction, repay outstanding debt at System1, and fund $510 million in shareholder redemptions by existing shareholders of Trebia. S&P said, "Our 'B' rating reflects System1's participation in a highly competitive and fragmented industry with low barriers to entry, significant customer concentration, relatively small scale of operations, and lower EBITDA margins than peers such as Red Ventures Holdco L.P. and Dotdash Meredith Inc. In addition, we believe that the company's pay-for-performance business model creates uncertainty in predicting future operating performance." The company's favorable industry tailwinds and solid cash-flow generation somewhat temper these weaknesses. System1's pay-for-performance business model makes it vulnerable to operating-performance volatility. System1 is a digital marketing, customer acquisition, and antivirus and adblocking subscriptions services provider. The company aggregates data to deliver customers with high purchase intent to its monetization partners (Google, Microsoft, and others) to monetize user traffic through ads. It does so primarily through its portfolio of owned and operated (o&o) digital properties. The company's revenue model is typically a pay-for-performance structure, where it attracts and delivers leads and customers to its monetization partners with the expectation that they are of high quality. The pay-for-performance nature of these contracts poses operating uncertainty. This is because it makes System1 vulnerable to earnings volatility from competition, pricing for traffic acquisition onto its platform, and the quality of leads it delivers to its clients, which can affect its future pricing. In addition, the company's customer relationships are not exclusive, and its monetization partners could reallocate marketing dollars to competitors that offer a compelling alternative. System1 is subject to significant customer concentration risk with Google. Google is System1's largest monetization partner, contributing about 80% of the company's advertising revenue and 67% of total revenue when accounting for the acquisition of Protected.net. S&P views this concentration as a material risk. System1's relationship with Google is primarily governed by two service contracts that expire in 2023, which Google has the right to cancel at any time. However, the company has a long-standing relationship with Google and has repeatedly renewed its contracts, and S&P considers it unlikely that either of these contracts would be terminated or not renewed. However, any renewals with less-favorable rates would pose a risk to System1, as would Google deciding to allocate its marketing spending elsewhere. System1's rated peers tend to work directly with advertisers instead of through Google, which S&P believes gives them a greater flexibility to set contract terms. Despite System1's significant customer concentration with Google, its revenue is relatively well balanced among a number of different industry verticals, including its three largest: privacy/security (22% of revenue), health (18%), and finance (12%). Each vertical is highly dependent on favorable macroeconomic conditions and consumer trends, but declines in one segment could potentially be offset by gains in another. The company has a significant amount of inorganic traffic with limited brand recognition. About 90% of the company's advertising user traffic is either inorganic, paid or generated through its network partners rather than organically. This increases System1's burden to effectively monetize its traffic to remain profitable. The company is concentrated across its largest o&o properties, with info.com and MapQuest contributing about 30% and 22%, respectively, of System1's total 135 million monthly visitors. The quality of traffic and revenue-generating capabilities among its properties is not solely defined by visitor count. However, S&P believes the digital property concentration and significant amount of inorganic traffic show limited brand recognition among the company's portfolio of o&o properties. S&P views the company as subject to disruption from changes in data privacy and technology if it can't adapt. System1 does not rely on third-party cookies. Instead, it uses its large internal database of propriety first-party data, including user search trends and content viewership. These provide a large suite of information that could somewhat offset limitations from changes to data privacy. Any changes to laws or regulations that govern System1 or the flow of information between the company and its partners could affect its ability to obtain meaningful first-party data and affect competitiveness. New and current competitors with different technologies and capabilities can also pose threats to System1 and other internet companies. To avoid losing market share, the company must constantly integrate emerging technology and provide it to its user base. The acquisition of Protected.net will provide System1 with a more stable revenue stream. Protected.net is a subscription-based revenue model that will provide a more predictable revenue stream than the company's other pay-for-performance products. S&P expects Protected.net will contribute about 15%-20% of revenue and EBITDA in 2022. While the business has historically operated at a loss due to the high costs of acquiring new subscribers, it became profitable in 2021 as it increasingly benefited from high renewal rates. S&P expects it will contribute about $20 million-$25 million of EBITDA in 2022. There are minimal costs associated with a user's subscription once on the platform, and the company's increased marketing efforts have led to an uptick in renewals among its user cohorts as well as a rise in new subscribers. Still, Protected.net's subscriber base is significantly smaller than those of larger peers such as NortonLifeLock Inc. and Avast Software s.r.o. The company's more limited size and brand recognition relative to larger peers could make it difficult for Protected.net to gain market share. Any increase in user attrition or slowed pace of new user adoption could compress margins. System1 benefits from favorable industry growth prospects. The company benefits from the ongoing shift to digital customer acquisition from offline acquisition. As more customers make their purchase decisions online, the company has a larger pool of potential activations. S&P views this ongoing change as a critical component to the company's strategy in growing its network partners business (about 5% of revenue), in which it delivers customers and leads directly to advertisers. The company's o&o properties will also benefit from increased online advertising. System1's websites are not brand specific and can provide greater pricing for System1 because the undecided shopper is more valuable to the marketplace and demands a premium for customer conversion. The company has good cash flow generation. S&P expects the company to have healthy cash flow generation, with FOCF to debt of about 10%-12% in 2022, improving to 21%-23% in 2023, benefiting from a modest interest burden and low capital intensity. S&P views this as in line with that of peers such as Taboola.com Ltd. and Red Ventures. Given its track record, S&P expects the company to make small tuck-in acquisitions over the next 12-24 months using cash on the balance sheet. Most recently, System1 announced an agreement in December 2021 to acquire RoadWarrior, which will allow it to add product features to its MapQuest property. The stable outlook reflects S&P's expectation that System1 will benefit from the secular growth trends in digital advertising and successfully combine and integrate Protected.net. S&P expects S&P Global Ratings-adjusted leverage of about 6x and FOCF to debt of 10%-12% in 2022. S&P could lower the rating if System1's FOCF to debt fell below 10% on a sustained basis. This could stem from: -- More intense competition within the open web space leading to significant pricing pressures, major client losses, or both; -- The company renewing its service contract with Google at less-favorable terms, thereby pressuring margins; -- Advertisers shifting more of their marketing budgets toward social and search platforms, affecting the growth of advertising spending on System1's owned and operated properties; or -- The company pursuing a more aggressive financial policy of material debt-financed acquisitions or shareholder distributions. Although unlikely over the next 12 months, S&P could raise the rating if the company: -- Meaningfully increased its scale, diversified customers and end markets, and improved its EBITDA margins; and -- Exhibited a track record of maintaining leverage below 4x. ESG credit indicators: E-2, S-2, G-2 ESG factors have no material influence on our credit rating analysis of System1. TAPESTRY CHARTER SCHOOL: S&P Affirms 'BB+' Rating on Revenue Bonds ------------------------------------------------------------------ S&P Global Ratings revised the outlook to positive from stable and affirmed its 'BB+' long-term rating on Buffalo and Erie County Industrial Land Development Corp., N.Y.'s series 2017A tax-exempt and series 2017B taxable revenue bonds issued for Tapestry Charter School (TCS, or the school). "The outlook revision reflects our view of the school's strengthening of its overall financial profile, including improved operational performance and a healthy cash position for the rating," said S&P Global Ratings credit analyst David Holmes. S&P said, "We view the risks posed by COVID-19 and any emerging coronavirus variants to public health and safety as an elevated social risk for all charter schools under our environmental, social, and governance factors given the potential impact on modes of instruction and state funding, on which charter schools depend to support operations. For TCS, stable enrollment growth and per pupil funding, in our view, mitigate near-term risk. Despite the elevated social risk, the school's environmental and governance risks are in line with our view of the sector as a whole." TIMBER PHARMACEUTICALS: Hudson Bay, Sander Gerber Own 3.9% Stake ---------------------------------------------------------------- Hudson Bay Capital Management LP and Sander Gerber disclosed in an amended Schedule 13G filed with the Securities and Exchange Commission that as of Dec. 31, 2021, they beneficially own 2,574,834 shares of common stock issuable upon exercise of warrants of Timber Pharmaceuticals, Inc., representing 3.88 percent of the shares outstanding. The percentage is calculated based upon 63,796,170 shares of common stock outstanding as of Nov. 10, 2021, as reported in the Timber Pharmaceuticals' Quarterly Report on Form 10-Q for the quarterly period ended Sept. 30, 2021 filed with the SEC on Nov. 15, 2021 and assumes the exercise of the warrants held by Hudson Bay Master Fund Ltd. Mr. Gerber serves as the managing member of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management. A full-text copy of the regulatory filing is available for free at: https://www.sec.gov/Archives/edgar/data/1393825/000139382522000091/tmbr_13ga.htm About Timber Pharmaceuticals Timber Pharmaceuticals, Inc. f/k/a BioPharmX Corporation -- http://www.timberpharma.com-- is a biopharmaceutical company focused on the development and commercialization of treatments for orphan dermatologic diseases. The Company's investigational therapies have proven mechanisms-of-action backed by decades of clinical experience and well-established CMC (chemistry, manufacturing and control) and safety profiles. The Company is initially focused on developing non-systemic treatments for rare dermatologic diseases including congenital ichthyosis (CI), facial angiofibromas (FAs) in tuberous sclerosis complex (TSC), and localized scleroderma. Timber reported a net loss of $15.12 million for the year ended Dec. 31, 2020. For the period from Feb. 26, 2019, through Dec. 31, 2019, the Company reported a net loss of $3.04 million. As of Sept. 30, 2021, the Company had $4.55 million in total assets, $2.59 million in total liabilities, $2.02 million in redeemable series A convertible preferred stock, and a total stockholders' deficit of $51,010. Short Hills, New Jersey-based KPMG LLP, the Company's auditor since 2019, issued a "going concern" qualification in its report dated March 23, 2021, citing that the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. TKC HOLDINGS: Moody's Affirms B3 CFR, Hikes Unsecured Notes to Caa1 ------------------------------------------------------------------- Moody's Investors Service affirmed TKC Holdings, Inc.'s B3 corporate family rating, B3-PD probability of default rating and B1 senior secured ratings. At the same time, Moody's upgraded TKC's senior unsecured rating to Caa1 from Caa2. The outlook remains stable. The rating action follows the announcement of TKC's proposed issuance of a $305 million Holdco PIK facility due 2027 to pay a shareholder distribution. The affirmation of the CFR reflects Moody's forecast for deleveraging toward 7x through 2022 after rising to close to 7.5x pro forma for the new holdco debt (from 6.3x LTM Sep-21). Although the company's increased debt burden is credit negative, TKC will benefit from moderate EBITDA growth while maintaining strong free cash flow and good liquidity. The upgrade of TKC's existing senior unsecured notes reflects increased loss absorption from the issuance of the new lower-ranking, structurally subordinated holdco PIK facility, in accordance with Moody's Loss Given Default for Speculative-Grade Companies methodology. Upgrades: Issuer: TKC Holdings, Inc. Senior Unsecured Regular Bond/Debenture, Upgraded to Caa1 (LGD5) from Caa2 (LGD5) Affirmations: Issuer: TKC Holdings, Inc. Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured 1st Lien Bank Credit Facility, Affirmed B1 (LGD2) Senior Secured 1st Lien Regular Bond/Debenture, Affirmed B1 (LGD2) Outlook Actions: Issuer: TKC Holdings, Inc. Outlook, Remains Stable RATINGS RATIONALE TKC's CFR is constrained by: (1) high leverage (pro-forma 7.5x LTM Sep-21) settling around 7x over the next 12 to 18 months; (2) aggressive financial policies under private equity ownership; and (3) a volume-based business exposed to social risks linked to prison policy reform and an ongoing modest but steady decline in the US incarcerated population. The company benefits from: (1) good revenue visibility supported by multiyear contracts; (2) a strong market position in its commissary and food service businesses, providing competitive advantages in pricing and bidding processes; (3) ongoing outsourcing trend as local and state governments seek operational efficiencies; and (4) good liquidity. TKC has good liquidity. Pro forma for the transaction, sources of cash total about $210 million, compared to uses of about $5 million in mandatory debt amortizations. Sources consist of about $90 million in cash on hand, positive free cash flow of around $70 million and full availability under the $50 million revolving credit facility due 2026. The revolver has a springing covenant based on a maximum net leverage ratio when drawings exceed 35% of total borrowing capacity, with which TKC will remain comfortably in compliance. The company has limited ability to generate alternate liquidity from asset sales. The B1 rating on TKC's senior secured credit facilities ($525 million first lien term loan and $425 million first lien notes, both due May 2028, and $50 million revolver due May 2026) reflects their priority ranking in the capital structure and benefit from loss absorption cushion provided by the company's more junior debt. The Caa1 rating on the $675 million senior unsecured notes due 2029 reflects contractual subordination to the first lien facilities and loss absorption from the structurally subordinated $305 million Holdco PIK facility due 2027. The stable outlook reflects Moody's expectation for moderate EBITDA growth supporting deleveraging towards 7x, while generating positive free cash flow and maintaining good liquidity. TKC has high exposure to social risks tied to an ongoing decline in incarceration rates in the US, prison policy shifts at local, state and federal levels, public pressure to implement criminal justice reform, and negative investor sentiment surrounding the prison industry. Mitigants to these long-term social risks include industry trends such as a transition towards outsourcing prison services, cross-selling opportunities and industry consolidation, which will increase the number of prisoners TKC serves even as overall population declines. The impact of lower prison populations following the COVID-19 outbreak on TKC has been limited due to price adjustments in its food service contracts and resiliency in the commissary business, which has benefited from increased inmate spending limits and greater visibility and utilization amid the pandemic. Governance risks are high, arising from the aggressive track record of TKC's private equity ownership, including debt-funded distributions leading to elevated leverage. Given the long tenor of HIG's holdings (since 2012), releveraging risks remain heightened as shareholders seek to maximize returns before executing an exit strategy. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS TKC's ratings could be upgraded if adjusted debt to EBITDA is sustained below 6x (7.5x pro-forma LTM Sept-21) while adhering to more conservative financial policies. The ratings could be downgraded if adjusted debt to EBITDA is maintained above 8x or if there is a weakening of free cash flow, liquidity or competitive positioning. The ratings could also be pressured by increasingly negative financial policies. TKC is a leading provider of commissary, food service, and related products to the corrections industry across the United States. The company is headquartered in St. Louis, Missouri and generated revenues of approximately $1.7 billion during the LTM as of September 2021. TKC is owned by funds affiliated with H.I.G. Capital. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. TKC HOLDINGS: S&P Affirms 'B-' ICR, Outlook Stable -------------------------------------------------- S&P Global Ratings affirmed all the ratings on St. Louis-based TKC Holdings Inc., including its 'B-' issuer credit rating, 'B' issue-level rating on its first-lien facility, and 'CCC' issue-level rating on the unsecured notes. The borrower of the $305 million senior unsecured PIK toggle term loan is TKC Midco 1 LLC, and the term loan will be structurally subordinated to all liabilities of TKC Midco 1's subsidiaries, including TKC. The facility is unrated. S&P said, "The stable outlook reflects our expectation that TKC's ongoing contract wins and improving productivity will partially offset inflationary pressures and lead to steady earnings, though we expect its credit metrics will remain elevated due to its high debt burden, resulting in leverage in the mid-7x area at year-end 2022." TKC, a provider of commissary, food service, and technology products to the corrections industry, intends to issue a $305 million senior unsecured payment-in-kind (PIK) toggle term loan. The company intends to use the proceeds to fund a dividend to shareholders and finance related fees and expenses. S&P sid, "Despite our expectations for good cash flow generation, we expect adjusted leverage to remain above 7x over the next year. We expect TKC's S&P Global Ratings-adjusted pro forma leverage will remain in the mid-7x area through 2022 (compared to the 6x area expected as of the fiscal year ended Dec. 31, 2021)." Although TKC has limited capital expenditures (capex) and working capital requirements, elevated leverage and related interest costs limit its annual free operating cash flow (FOCF; operating cash flow less capital spending) generation to below 5% of total debt. This hinders TKC's operational flexibility. S&P expects leverage to remain elevated given TKC's financial sponsor ownership and aggressive financial policy. TKC has typically had an aggressive financial policy. In 2017, TKC distributed three debt-funded dividends totaling $640 million. Subsequently, TKC has funded additional dividends with balance sheet cash, including $145 million for the fiscal year ended December 2020. The proposed $288 million dividend is further evidence that TKC's owners will regularly return leverage to above 7x. This is reflected in the terms of the $305 million term loan issued at TKC MidCo 1 LLC, which contains a PIK toggle feature with interest payments accruing at 12.5% cash or 13.5% PIK (13% for the first year). TKC must pay the interest payments in cash, as long as restricted payment capacity remains. TKC's forecast credit measures will likely remain weaker than business services peers with comparable financial risk profiles. S&P believes H.I.G. Capital, TKC's owner, is closer to the end of its hold period given its initial investment in 2015, and could seek to monetize its investment in the near future. Changes in inmate spending patterns resulted in strong EBITDA growth, leading to S&P Global Ratings-adjusted debt to EBITDA falling to the low-6x area in 2021 compared to mid-7x in 2020. The COVID-19 pandemic led to the shutdown of U.S. court systems for part of 2020, which significantly affected prisoner intake and lowered the average daily inmate population. Despite this, TKC's business remained resilient given its tiered pricing structure, which changes based on inmate population, as well as the contractual nature of its offerings, which generally span three to five years. For the nine months ended Sept. 30, 2021, TKC's revenue grew 14.9% year over year, primarily through higher food, commissary, and ancillary product sales as inmate populations rebounded faster than expected from the COVID-19-related declines in 2020. The increase in per-inmate spending in its commissary segment, coupled with its ability to transfer any increases in input costs, has kept margins at 13%-14%. As such, given the proposed debt transaction, S&P expects low- to mid-single-digit revenue growth and stable EBITDA margins to result in leverage in the mid-7x area and FOCF to debt in the low-single-digit percent area by year-end 2022. TKC offers a cost-effective alternative to insourcing, and demand for its services should increase post-pandemic. Through the various products and services it provides, TKC offers a cost-effective alternative to insourcing, and S&P expects demand will continue to increase given state and federal correctional facilities' constant budget pressures. The pandemic has only magnified the importance of tighter cost controls. State and local budgets will be burdened as they emerge from a period in which revenues declined precipitously, and costs spiked. Given the prosecutions backlog created from the temporary shutdown of U.S. court systems in 2020, S&P expects the inmate population to increase as the backlog unwinds and outstanding arrest warrants are executed post-pandemic. S&P said, "The stable outlook reflects our expectation that TKC's ongoing contract wins and improving productivity will partially offset inflationary pressures and lead to steady earnings, though we expect its credit metrics will remain elevated due to its high debt burden, resulting in leverage in the mid-7x area at year-end 2022." S&P could lower its rating on TKC if its customers switch providers, choose to insource, terminate their contracts early, or introduce large penalties stemming from unsatisfactory service or government policy changes. Generally a downgrade could occur if: -- S&P views TKC's capital structure to be unsustainable; -- S&P thinks TKC depends upon favorable business, financial, and economic conditions to meet its financial commitments; or -- S&P considers its liquidity position to be less than adequate. Although unlikely over the next 12 months, S&P could raise its rating on TKC if: -- It reduces its leverage below 7x with a commitment from its financial sponsors to maintain leverage below this threshold; and -- FOCF to debt exceeds 5%. VAMCO SHEET: WDF Says Plan Not Confirmable ------------------------------------------ WDF, Inc., objects to the Disclosure Statement filed by Vamco Sheet Metals, Inc. in this case. WDF submits that the Disclosure Statement fails to provide adequate information under Section 1125(a)(1) because: * The Disclosure Statement does not discuss the Debtor's existing equity structure or the proposed post-confirmation equity structure. * The Disclosure statement does not discuss the Debtor's existing employees and employee compensation or proposed post-confirmation employees and employee compensation. * The Disclosure Statement provides for administrative fees in the amount of $31,000. However, this amount does not include, and there is no reference to, the Debtor's Special Counsel's claims for fees, which have resulted in substantially higher administrative fees in this case. * The Disclosure Statement fails to provide adequate information as to the basis for the Debtor's proposed payments to WDF for 60 equal monthly installments in the amount of $7,910 or how Debtor will be able to make such payments in addition to its monthly expenses. * The Disclosure Statement provides that "all substantive obligations of the Debtor and all personal guarantors, shall be terminated[.]" However, the Disclosure Statement does not identify any guarantors, the nature of any guarantors' obligations, what consideration, if any, is being provided in exchange for any third-party release, or why any third-party release is permissible. WDF also points out that: * The Debtor's proposed Plan violates 11 U.S.C. Sec. 1129(b). While the Disclosure Statement is silent on the Debtor's post-confirmation equity structure, the plan appears to provide that the Debtor's existing equity will retain its interests without providing any new value, let alone the requisite new value to satisfy Section 1129(b)(2)(B)(ii). * The Debtor's proposed Plan cannot satisfy 11 U.S.C. Sec. 1129(a)(10). The Disclosure Statement and proposed Plan both expressly provide that the "Creditor [Bank of America] will not receive any treatment as the debt will be forgiven[]" Therefore, on the face of the Plan, Bank of America's claim, described in the Plan as to be forgiven in its entirety, is not impaired, and Section 1129(a)(10) cannot be satisfied as a matter of law. * The Debtor's proposed Plan cannot satisfy 11 U.S.C. Sec. 1129(a)(11). WDF submits that the Debtor's monthly operating reports and other financial information filed in this case objectively demonstrate that the Debtor has not proposed a plan not likely to be followed by liquidation or the need for further financial reorganization. Despite months of operating reports demonstrating that Debtor is losing money and has a cumulative operating loss on an accrual basis of $457,330.98, the Debtor proposes a Plan that provides no information as to how Debtor will meet its monthly expenses, let alone its expenses plus the proposed plan payments, or why confirmation of the proposed plan would not be followed by a liquidation or further reorganization. The proposed Plan therefore fails to satisfy 11 U.S.C. Sec. 1129(a)(11) and is patently unconfirmable. * The Debtor's proposed Plan includes Non-Debtor Third Party Releases which should not be approved. The Debtor's Plan includes third party releases. The Second Circuit has held that non-debtor releases like the one at issue here are proper only in "rare cases" and that "no case has tolerated non-debtor releases absent the finding of circumstances that may be characterized as unique." The Disclosure Statement does not identify any guarantors, the nature of any guarantors' obligations, what consideration, if any, is being provided in exchange for any third-party release, or why any third-party release is permissible. The third party releases contained in the Debtor's proposed plan should not be permitted. Attorneys for the Creditor WDF, Inc.: Andrew L. Richards, Esq. Adam A. Perlin, Esq. KAUFMAN DOLOWICH & VOLUCK, LLP 135 Crossways Park Drive, Ste. 201 Woodbury, NY 11797 Tel: (516) 681-1100 About Vamco Sheet Metals Vamco Sheet Metals, Inc., is a corporation located at 3990 Rt. 9, Cold Spring, New York 10516. It is a mechanical contractor and a manufacturer of sheet metal products and ductwork. Vamco Sheet Metals filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 21-40385) on Feb. 18, 2021. Joyce Vettorino, president, signed the petition. At the time of the filing, the Debtor disclosed $1,099,467 in total assets and $3,103,368 in total liabilities. Judge Jil Mazer-Marino oversees the case. The Debtor tapped the Law Offices of Alla Kachan, PC, as legal counsel and Terrence O'Connor, PC and Edmond R. Shinn, Esq. LTD. as special counsel. WILLCO XII: Files Amendment to Disclosure Statement --------------------------------------------------- Willco XII Development, LLLP, a Colorado Limited Liability Limited Partnership, submitted an Amended Disclosure Statement for Plan of Reorganization dated Feb. 3, 2022. The market has substantially improved post-petition and as of December 31, 2021, the Debtor had more than $1,000,000 in cash on hand, despite resuming interest only payments on the FirstBank Loan in December of 2020 and making an additional payment on the FirstBank loan of $115,711.22 in October of 2021 pursuant to the Settlement Agreement. In February of 2021, the Debtor's general partner, Spirit Hospitality, LLC, received a Paycheck Protection Program Loan ("PPP Loan") through the Small Business Administration (the "SBA"). All the individuals who work at CSJ are Spirit employees, and the Debtor reimburses Spirit for the payroll expenses associated with these employees by making regular deposits into a dedicated payroll account maintained by Spirit Hospitality II, LLC. In March of 2021, Spirit spent $122,253.13 from the PPP Loan to fund the payroll expenses associated with the Spirit employees who worked at the CSJ. This transaction was listed in the Debtor's March 2021 Monthly Operating Report ("MOR") as a post-petition payable. In April of 2021, Spirit spent $76,008.94, and in May 2021, $45,200.08 for the same purpose. The total amount of money spent by Spirit to defray the Debtor's payroll expenses between March and May, of 2021, was $243,462.15, which was booked as a liability on the Debtor's books as a liability. In July of 2021, the SBA forgave the PPP Loan. To reflect this development, the Debtor's August 2021 MOR removed this liability, which was alternatively referred to in the MOR's as the SBA Loan and transferred it to income. On the Petition Date the Debtor had a cash balance of $551,203.78. By December 31, 2021, the Debtor's cash balance had increased to $1,040,363. Even though the Debtor's business is seasonal, and it enjoys higher revenues in the Spring and Summer, the Debtor continued to modestly build its cash balances in the fourth quarter of 2021. As of September 30, 2021, the Debtor had a cash balance of $1,029,844 compared to a cash balance of $1,040,363 on December 31, 2021. Class 1 consists of the claim of FirstBank. The allowed secured claim of the Class 1 creditor in the principal amount of $6,399,466.79 as of December 31, 2021, shall be paid in accordance with the terms set forth in the parties' Settlement Agreement (the "Settlement Agreement"). FirstBank will receive interest only payments of $27,000 per month through July 31, 2022, and principal and interest payments of $40,000 per month beginning on August 1, 2022. Unpaid interest which accrued pre-petition and during the first 90 days post-petition in the amount of $245,021.23 as of October 15, 2021, was repaid in two equal installments of approximately $122,510.62 in October of 2021, and the balance in January of 2022. Class 8 consists of the claim of Preferred Limited Partners and the General Partner. The Preferred Limited Partners shall retain their aggregate 17.34% shareholder interest in the Debtor following confirmation of Debtor's Plan. Likewise, the General Partner shall retain its 48.02% ownership interest in the Debtor following confirmation of the Debtor's Plan and subject to the provisions of the Debtor's Plan. Neither the Preferred Limited Partners nor the General Partner shall receive any distributions on account of their ownership interests during the 5-year life of the Plan. The Reorganized Debtor will appoint William Albrecht and/or Bryan Swanson to implement the provisions of the Confirmed Plan. Messrs. Albrecht and Swanson will not be compensated for their services in implementing the provisions of the Confirmed Plan. Messrs. Albrecht and Swanson will be employed by Spirit Hospitality, LLC to manage the Debtor's ongoing business and will be paid a salary for such services by Spirit Hospitality, LLC. Spirit Hospitality, LLC shall receive a management fee of 5% of gross revenues. The management fee currently ranges between $12,000 to $14,000 per month. Notwithstanding the risk factors, the Debtor's financial performance on a cash basis has improved post-petition, with a cash buildup of approximately $489,000 as of December 31, 2021. This cash buildup occurred even though the Debtor began making monthly interest only payments to FirstBank 90 days post-petition and made an extraordinary payment to FirstBank $115,711.22 in October of 2021 pursuant to the terms of the Settlement Agreement. The Financial Projections assumes that the average occupancy rate gradually increases over the life of the Plan from 71% to 74%, and average nightly revenue per room increases from $119.35 to $135.77. After accounting for all major payments to be made under the Plan, the Debtor projects positive net cash flow in every year, with an average annual net cash flow of $170,503. Likewise, with respect to its obligation under its Settlement Agreement with FirstBank to refinance the FirstBank mortgage by August 1, 2023, the Debtor believes that considering its improving financial performance and favorable trends in the lodging industry, that it will be able to sell the CSJ or refinance the FirstBank mortgage prior to the August 1, 2023, deadline. The Debtor projects that under its Plan, its general unsecured creditors will realize a return of 100% of its allowed unsecured claim. Similarly, the Debtor estimates that liquidation under Chapter 7 of the Bankruptcy Code would result in sufficient net proceeds to fully satisfy the claims of general unsecured creditors. However, rather than waiting for a Chapter 7 Trustee to sell the CSJ which could take several months, the Debtor is proposing to pay its Class 3 and Class 6 creditors in full within 30 days after the Effective Date of the Plan. In addition, there would be substantial risk to the CSJ if the Debtor entered liquidation, especially if the Chapter 7 trustee could not maintain ongoing business operations sufficient to pay the Debtor's existing mortgage obligations. In the event of a mortgage default and foreclosure there would be substantial risk that unsecured creditors would receive nothing. For this reason, the Debtor believes that its Plan is superior to the alternative of liquidation. A full-text copy of the Amended Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3rvl6ds from PacerMonitor.com at no charge. Counsel for Debtor-in-Possession: GOFF & GOFF, LLC Lance J. Goff, #27301 3015 47th St., Ste. E-1 Boulder, CO 80301 Telephone: (303) 415-9688 Facsimile: (720) 222-5161 E-Mail: lance@goff-law.com About Willco XII Development, LLLP Willco XII Development, LLLP, owns the hotel property at 4851 Thompson Parkway, in Johnstown Colorado, currently identified as the Comfort Inn & Suites in Johnstown. The company is a unit of William G. Albrecht's Spirit Hospitality, LLC. Willco XII Development sought Chapter 11 protection (Bankr. D. Colo. Case No. 20-16307) on Sept. 23, 2020, to stop its lender from foreclosing on the property. The Debtor disclosed $14.2 million in assets and $10.274 million in liabilities as of the bankruptcy filing. The Debtor's property is valued at $13 million and secures a $6.4 million first mortgage to the FirstBank of Colorado and a $3.46 million second mortgage to Wells Fargo. Lance J. Goff represents the Debtor as the counsel. FirstBank, as lender, is represented by Chad Caby, Esq. at LEWIS ROCA ROTGHERBER CHRISTIE LLP. YELLOW CORP: Incurs $109.1 Million Net Loss in 2021 --------------------------------------------------- Yellow Corporation filed with the Securities and Exchange Commission its Annual Report on Form 10-K disclosing a net loss of $109.1 million on $5.12 billion of operating revenue for the year ended Dec. 31, 2021, compared to a net loss of $53.5 million on $4.51 billion of operating revenue for the year ended Dec. 31, 2020. Yellow Corp reported a net loss of $104 million in 2019. As of Dec. 31, 2021, the Company had $2.43 billion in total assets, $824.1 million in total current liabilities, $1.48 billion in long-term debt, $88.2 million in pension and postretirement, $118.9 million in operating lease liabilities, $275.7 million in claims and other liabilities, and a total shareholders' deficit of $363.5 million. Fourth quarter operating revenue was $1.309 billion and operating income was $55.8 million. In comparison, operating revenue in fourth quarter 2020 was $1.165 billion and operating income was $13.7 million. Net loss for fourth quarter 2021 was $44.7 million, or $0.88 per share, compared to net loss of $18.7 million, or $0.37 per share in fourth quarter 2020. Excluding the impact of the Partial Pension Annuitization, fourth quarter 2021 net income was $10.2 million, or $0.20 per share. During the fourth quarter 2021, the Company's qualified non-union pension plans entered into a contract for a group annuity to transfer obligation to pay the remaining retirement benefits of approximately 3,700 plan participants to an insurance company. The transfer included approximately $250 million in both plan obligations and plan assets. As a result of the Partial Pension Annuitization, the Company recorded a non-cash, non-operating settlement loss of $54.9 million, or $1.08 per share, reflecting the accelerated recognition of unamortized losses in these plans from the obligation that was settled. On a non-GAAP basis, the Company generated Adjusted EBITDA of $115.5 million in fourth quarter 2021, a $57.6 million increase compared to $57.9 million in the prior year comparable quarter. Operating revenue for full year 2021 was $5.122 billion and operating income was $103.6 million. This compares to full year 2020 operating revenue of $4.514 billion and operating income of $56.5 million, which included a $45.3 million net gain on property disposals. "In the fourth quarter, we remained focused on the initiatives that led to improving financial performance during the year," said Darren Hawkins, chief executive officer. "We executed our yield strategy to improve profitability of the freight moving through our network. In the fourth quarter year-over-year LTL revenue per hundredweight increased 23.3% contributing to an increase in operating revenue of 12.4%. In addition, we took steps to reduce the use of purchased transportation and it was down to 14.5% of revenue in the fourth quarter. Overall, these efforts led to an operating ratio improvement of 310 basis points in the fourth quarter compared to a year ago. "We also recently completed the conversion of our final operating company to the One Yellow technology platform, as planned and on schedule. This is a significant milestone on the multi-year journey to One Yellow and allows us to continue transforming North America's second largest LTL network. This includes the integration of the linehaul network, to support both regional and long-haul service as well as the optimization of local pickup and delivery operations to eliminate duplicity. When completed, our customers will benefit by interacting with one company for both regional and long-haul shipments leading to improved asset utilization, enhanced network efficiencies and cost savings. "Yellow concluded one of the largest capital expenditure plans in its history this year that included investments in tractors, trailers, technology, box trucks, containers, liftgates and other assets. The high level of reinvestment began in the fourth quarter 2020 and through the end of 2021 approximately 17% of the tractors and 9% of the trailers in the fleet have been upgraded. The newer tractors will run the highest number of miles in the fleet, fully leveraging the environmental benefits. Compared to the tractors that are being replaced, the newer units are approximately 30% more fuel efficient and that is expected to result in a corresponding reduction in CO2 emissions. We ended 2021 in a strong liquidity position and in 2022, we expect capital expenditures to be in the range of $325 million to $400 million. "I am extremely proud of the tremendous effort the Yellow team of more than 30,000 truckers made in 2021. They remain focused on meeting the needs of our customers while making remarkable progress on the transformation to a super-regional carrier. I am excited about the opportunity ahead of us and what the momentum that we carry into 2022 means for our customers, employees and shareholders," concluded Hawkins. A full-text copy of the Form 10-K is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/716006/000095017022000779/yell-20211231.htm#item_15__exhibits__financial_statement_s About Yellow Corporation Yellow Corporation -- www.myyellow.com -- owns a comprehensive logistics and less-than-truckload (LTL) network in North America with local, regional, national, and international capabilities. Through its teams of experienced service professionals, Yellow Corporation offers flexible supply chain solutions, ensuring customers can ship industrial, commercial, and retail goods with confidence. Yellow Corporation, headquartered in Overland Park, Kan., is the holding company for a portfolio of LTL brands including Holland, New Penn, Reddaway, and YRC Freight, as well as the logistics company HNRY Logistics. ZOHAR III: Unsecured Creditors to Get Nothing in Liquidating Plan ----------------------------------------------------------------- Zohar III, Corp., and its Affiliated Debtors filed with the U.S. Bankruptcy Court for the District of Delaware a Disclosure Statement for the Joint Plan of Liquidation. The Plan constitutes a liquidating chapter 11 plan for the Debtors. The Plan provides for the Portfolio Company assets for Zohar II and Zohar III to be transferred to newly-formed entities and for the Portfolio Company and litigation assets nominally held by Zohar I to be transferred to MBIA in accordance with the Zohar I Sale Documents, each of which will be responsible for completing the monetization process under the Settlement Agreement for those assets. In addition, a Litigation Trust will be formed to prosecute and reduce to cash the Debtors' Litigation Assets. The ownership of the newly-formed entities created for Zohar II and Zohar III will be transferred to MBIA in the case of Zohar II and the Holders of Allowed Zohar III A-1 Note Claims in the case of Zohar III, and MBIA and the Holders of the Zohar III A-1 Note Claims will indirectly be the beneficiaries of the Litigation Trust with respect to the Litigation Assets of Zohar II and Zohar III, respectively. The Litigation Assets of Zohar I contributed to the Litigation Trust will be distributed in accordance with the Zohar I Indenture, on the terms detailed in the Plan. Finally, a Wind-Down Administrator will be appointed to complete the wind-down of the Debtors and their corporate existence. Ms. Tilton, in her capacity as the director of the Debtors, commenced the Chapter 11 Cases, with the stated purposes of obtaining an automatic stay of all of the litigation (and other potential litigation) and to implement a process to sell the Debtors' assets under the supervision of the Bankruptcy Court. The Debtors' primary assets are their secured loans to and equity interests in the Portfolio Companies. The primary purposes of the Settlement Agreement were to stay litigation among the Debtors' various stakeholders for a specified period of time, and establish procedures whereby the Independent Director, the CRO, and Ms. Tilton would jointly monetize the Portfolio Companies to maximize the value of the Debtors' assets for the benefit of all stakeholders (the "Monetization Process"). Class 7 consists of Zohar III General Unsecured Claims. The Holders of General Unsecured Claims against Zohar III shall neither receive Distributions nor retain any property under the Plan for or on account of such General Unsecured Claims. Class 12 consists of Zohar II General Unsecured Claims. The Holders of General Unsecured Claims against Zohar II shall neither receive Distributions nor retain any property under the Plan for or on account of such General Unsecured Claims. Class 18 consists of Zohar I General Unsecured Claims. The Holders of General Unsecured Claims against Zohar I shall neither receive Distributions nor retain any property under the Plan for or on account of such General Unsecured Claims. Interests shall be cancelled, released, and extinguished, and Holders of Interests shall neither receive any Distributions nor retain any property under the Plan for or on account of such Interests. For each Debtor, the Plan will be implemented by or through a Wind-Down Company (if applicable), Wind-Down Administrator, Asset Recovery Entity and Asset Recovery Manager, Litigation Trust and Litigation Trustee(s). The post-Effective Date organization of the Asset Recovery Entities. A full-text copy of the Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3GBdoTw from PacerMonitor.com at no charge. Attorneys for the Debtors: Michael R. Nestor, Esq. James L. Patton, Jr. Robert S. Brady Joseph M. Barry Ryan M. Bartley Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 North King Street Wilmington, DE 19801 Tel: 302-571-6600 Fax: 302-571-1253 About Zohar III, Corp. Patriarch Partners, LLC, is a family office/private investment firm founded by diva of distress Lynn Tilton. Since 2000, through affiliated investment funds, Tilton has had ownership in and restructured more than 240 companies with combined revenues in excess of $100 billion, representing more than 675,000 jobs. Zohar III, Corp., and its affiliates are investment funds structured as collateralized loan obligations. Tilton formed collateralized loan funds -- Zohar I, Zohar II, and Zohar III - in 2003 to borrow $2.5 billion to buy distressed companies. Tilton has faced an avalanche of lawsuits, including allegations from the SEC that her Patriarch Partners improperly valued assets in its Zohar debt funds and extracted about $200 million in excess fees from investors. Zohar CDO 2003-1, Zohar CDO 2003-1 Corp., Zohar II 2005-1, Limited, Zohar II 2005-1 Corp., Zohar III, Limited, and Zohar III, Corp. -- Zohar Funds -- sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case Nos. 18-10512 to 18-10517) on March 11, 2018. In the petition signed by Lynn Tilton, director, the Debtors were estimated to have $1 billion to $10 billion in assets and $500 million to $1 billion in liabilities. Young Conaway Stargatt & Taylor, LLP, is the Debtors' bankruptcy counsel. [*] 10 Retailers to Watch for Bankruptcy Filing in 2022 ------------------------------------------------------- The National Law Review reports that the last half of 2021 was virtually a ghost town for filing retail bankruptcies. However, the rise of the Omicron variant has significantly delayed a full return to normal for shopping centers. The good news is that the vaccines work, people are cautiously resuming activities, and the economy is running well. Still, with the end of both COVID-related relief and eviction moratoriums, there are a number of "problem tenants" that may not be able to recover or adapt, forcing them to use the bankruptcy process to stay viable. The following are our top 10 retailers to watch for possible Chapter 11 filing(s) in 2022. (1) AMC - Why Go to the Movies When You Can Stream? According to the Motley Fool, despite the more than $917 million in cash infusion from the investors at the beginning of the year, there are still numerous obstacles for the movie theater company. The rise in streaming services, slow return of consumers to theaters, and a significant portion of their current debt being nonconvertible are all signs that there is a high likelihood of a bankruptcy filing to restructure the debt. Although a filing may not be imminent, could it occur later this year? (2) Pie Five and Pizza Inn - Two for One? Mashed reports Pie Five and Pizza Inn are owned by the same parent company, Rave Restaurant Group. Pie Five has a fast-casual focus, where diners choose their toppings at a counter and watch as their pies are loaded and placed in an oven. Pizza Inn has buffet pizza locations. Both types of restaurants have been hurt significantly in the pandemic. Can they survive? (3) Nine West - Footwear Company Walking into a Chapter 22? The women's footwear company, owned by Premier Brands Group Holdings, previously filed for bankruptcy in 2018. At the time, it reduced debt and sold the Anne Klein trademark. However, according to Business Insider, the pandemic has caused a significant drop in revenue. The company looks poised for a Chapter 22 filing, which is a second Chapter 11 bankruptcy within a few years of the first filing. (4) Mattress Firm - A Chapter 22 Later This Year? The company filed for an IPO in early January. Previously, it had emerged from Chapter 11 in 2018 and now has 2,600 stores. However, according to Barrons, the company is significantly leveraged with total liabilities at roughly $3.5 billion, and net long-term debt was about $1.2 billion. Can the company continue to operate with this many stores without filing for bankruptcy? (5) Barnes and Noble - Can It Survive? The acquisition of Paper Source was meant to create synergies between the two. However, the company is heavily reliant on food concessions and in-store customers. Have buyer habits changed for good due to the pandemic? Forbes still has it on its list of specialty retailers to watch for a Chapter 11 filing. (6) Rite Aid - A Healthier Population Hurts Business.com notes that the U.S. pharmacy chain, with 2,500 stores in 19 states, had a rough go during the pandemic, as fewer people came down with colds or coughs as they sheltered at home. According to Moody's, the company is in danger of default as it holds $1.5 billion in outstanding high-risk debt. (7) Equinox - Another Gym Filing? According to Crain's New York, landlords are pursuing the private health club for more than $6 million in back rent. Bloomberg noted in February 2021 that the company reached a deal that released it from a limited guarantee of SoulCycle's $265 million credit facility with lender HPS Investment Partners. Still, the heavy back rent, multiple locations, and other debt issues make the gym a perfect candidate for a Chapter 11 restructuring. (8) The Children's Place - Losses Keep Piling Up. According to Forbes, the pandemic accelerated apparel filings. One retailer listed at the top of the list for this 2022 is The Children’s Place. The largest children's apparel retailer is on track to close more than 300 stores. Although the company negotiated about $13 million in rent abatements in the fourth quarter 2020 for the COVID-closure period, it may not be enough to avoid a filing. (9) The Gap - Fall Into Bankruptcy? S. News & World Report notes that the company's long-term debt increased from 1.24 billion to 2.21 billion in 2020 due to the pandemic. Further, The Street reported that 350 Gap and Banana Republic stores are being closed through 2023. The company previously closed 217 stores through Oct. 30. Can the company avoid a restructuring to get out of its leases? (10) Capri - According to MSN, the retailer, which operates the Michael Kors, Jimmy Choo, and Versace brands, has about $7.5 billion in assets and $1.1 billion in long-term debt. The Street notes that the company is closing 170 stores through 2022. ********* 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 ***