/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/220210.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, February 10, 2022, Vol. 26, No. 40 Headlines A.G. DILLARD: Case Summary & 20 Largest Unsecured Creditors ACADEMY SPORTS: S&P Assigns 'BB-' ICR, Outlook Stable ACTIVA RESOURCES: Hits Chapter 11 Bankruptcy Protection AINOS INC: Inks US$26M Purchase Deal With Majority Shareholder AIX VENTURES: Taps Fortune International as Real Estate Broker ALL DAY ACQUISITIONCO: Moody's Cuts CFR, Sr. Secured Loan to Caa3 AMIGO CONSTRUCTION: Unsecured Creditors to Split $37K over 4 Years AUBURN SCHOOL: Seeks Cash Collateral Access Thru July 31 AUSTIN HOLDCO: Term Loan Upsize No Impact on Moody's B3 CFR AVANTI SOFTWARE: Fitch Affirms 'B' LT IDR, Outlook Stable BLUE JAY: Unsecureds to be Paid in Full in Subchapter V Plan BOY SCOUTS: U.S. Trustee Says Payout Plan Cancels Too Many Claims BOYD GAMING: S&P Upgrades ICR to 'BB-' on Deleveraging BT MCCARTHY 1: Voluntary Chapter 11 Case Summary CAST & CREW: S&P Upgrades ICR to 'B', Outlook Stable CENTURY ALUMINUM: Chief Financial Officer Resigns CHARMING CHARLIE: Closes 2 Stores in Sacramento A Year After Return COMMUNITY HEALTH: Unit Completes $1.5B Offering of Senior Notes COOKE OMEGA: S&P Withdraws 'B' Issuer Credit Rating CRESTWOOD EQUITY: S&P Affirms 'BB-' Rating on Senior Notes CREW ENERGY: S&P Upgrades ICR to 'B-' on Improving Cash Flows CTC HOLDINGS: Moody's Assigns Ba3 CFR, Rates New Term Loan B1 CTC HOLDINGS: S&P Assigns 'B+' ICR, Outlook Stable ECOARK HOLDINGS: Signs Consulting Agreement With Zest Labs CEO ENSIGN DRILLING: Moody's Alters Outlook on Caa1 CFR to Positive ENTRUST ENERGY: Shell Blames Entrust for Power Cutoff HANGER INC: Moody's Alters Outlook on B1 CFR to Positive HBL SNF: Court Extends Time to File Plan by 60 Days HEALTHIER CHOICES: Extends CFO's Employment Until 2025 HS MIDCO: S&P Affirms 'B-' ICR on Security Solutions Acquisitions HS PURCHASER: Moody's Affirms 'B3' CFR; Outlook Remains Stable INDY RAIL: Continued Operations to Fund Plan Payments INTELLIPHARMACEUTICS INT'L: Shareholders Elect Five Directors INTELSAT SA: No Delay For Chapter 11 Bankruptcy Exit ION GEOPHYSICAL: Falls Short of NYSE's Bid Price Requirement JAB ENERGY: Committee Seeks Approval to Hire Financial Advisor JOHNSON & JOHNSON: Sen. Whitehouse Slams Texas 'Two-Step' JPA NO. 111: FitzWalter Loses Bid to Dismiss Chapter 11 Cases LAPEER AVIATION: LAI Unsecureds to Get Share of Income for 5 Years LATAM AIRLINES: Keeps Exclusive Right to Propose Plan LIVEWELL ASSISTED: Hearing Today on Bid to Use Cash Collateral LS GROUP OPCO: Term Loan Upsize No Impact on Moody's B2 CFR MARK E MOON: Prevails in Usury, Late Fees Claims vs Milestone MICROVISION INC: BlackRock Has 6.5% Equity Stake as of Dec. 31 MID ATLANTIC PRINTERS: Expects to Pay Over 50% to Unsecureds MOTELS OF SUGAR: Seeks to Employ Integra Realty as Appraiser MUSCLE MAKER: Receives Noncompliance Notice From Nasdaq NEOVASC INC: Studies Show Neovasc Reducer Demonstrates Cost Savings NEWS CORP: Moody's Affirms Ba1 CFR, Rates New Unsecured Notes Ba1 NEWS CORP: S&P Assigns 'BB+' Rating on New Senior Unsecured Notes NEWSTREAM HOTEL LIT: Taps HREC Investment as Real Estate Broker NOISE SOLUTIONS: Unsecured Creditors Will Get 5% Dividend in Plan NORCROSS LODGING: Wins Cash Collateral Access NORDIC AVIATION: Seeks Approval to Hire Restructuring Advisors OLAPLEX INC: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable ORIGIN AGRITECH: Incurs RMB127.1M Net Loss in FY Ended Sept. 30 OXFORD FINANCE: Fitch Rates USD400MM Unsec. Notes 'BB-' PEDIATRIC ASSOCIATES: Moody's Rates New $100MM Term Loan 'B2' PEDIATRIC ASSOCIATES: S&P Rates New Delayed Draw Term Loan 'B' PETER SZANTO: District Court Affirms Order Allowing IRS Claim PHUNWARE INC: Signs $100M Sales Agreement With H.C. Wainwright PRO-DEMOLITION INC: Gets Cash Collateral Access PUERTO RICO: Court Orders Senate to End PREPA Contract Suit PURDUE PHARMA: Canadian Entities Seek Late Appeal PURDUE PHARMA: States, Sacklers 'Even Closer' to Bigger Opioid Deal REMINGTON OUTDOOR: Gets Bid From LDJ Led by US Postal Chief DeJoy ROYAL ALICE: District Court Won't Revive Suit vs AMAG SAFE FLEET: S&P Rates New $645MM First-Lien Credit Facilities 'B-' SECONDWAVE CORP: Wins Cash Collateral Access SPIRIT AIRLINES: Frontier Merger No Impact on Moody's B1 CFR TACORA RESOURCES: Moody's Cuts CFR to B2, Alters Outlook to Neg. TACORA RESOURCES: S&P Alters Outlook to Negative, Affirms 'B-' ICR TEAM HEALTH: Fitch Places 'CCC+' LT IDR on Watch Positive TEAM HEALTH: Moody's Puts Caa1 CFR Under Review for Upgrade TEAM HEALTH: S&P Alters Outlook to Stable, Affirms 'B-' ICR TECHNICAL COMMUNICATIONS: Incurs $613K Net Loss in First Quarter TELIGENT INC: Lender ACF Slams Unsecureds' Bid to Claw Back Cash TILDEN MARCELLUS: Hits Voluntary Chapter 11 Bankruptcy Protection TITAN INTERNATIONAL: Buys Back $25 Million Restricted Stock TRACER ROOFING: Files Emergency Bid to Use Cash Collateral UBIOME INC: Delaware Court Bars Trustee Toss of Chapter 7 Docs URBAN OAKS: Seeks to Hire Polsinelli PC as Special Counsel VASU CONVENIENCE: Taps Law Offices of Alla Kachan as Legal Counsel VILLAGE ON THE ISLE: Fitch Affirms 'BB+' IDR, Outlook Stable VINO CAFE: Seeks to Employ Maxsen Champion as Bankruptcy Attorney WALKER COUNTY: Seeks to Hire Eaves Law Firm as Special Counsel WARTBURG COLLEGE: Fitch Affirms 'BB-' IDR, Alters Outlook to Pos. WESTBANK HOLDINGS: Wins Cash Collateral Access WHEELS AMERICA: Wins Cash Collateral Access WOK HOLDINGS: Fitch Withdraws All Ratings YELLOW CORP: BlackRock Has 6.3% Equity Stake as of Dec. 31 [*] ATRA Questions Approach vs. Major Mast Tort Bankruptcies [^] Recent Small-Dollar & Individual Chapter 11 Filings ********* A.G. DILLARD: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: A.G. Dillard, Inc. 295 Memory Lane Troy, VA 22974 Business Description: A.G. Dillard, Inc. is an excavating contractor in Troy, Virginia. It provides a wide variety of site construction services, including site remodeling, clearing and demolition, pond repair/conversion, excavating and grading, site concrete, and paving. Chapter 11 Petition Date: February 9, 2022 Court: United States Bankruptcy Court Western District of Virginia Case No.: 22-60115 Debtor's Counsel: Robert S. Westermann, Esq. HIRSCHLER FLEISCHER, P.C. 2100 East Cary Street Richmond, VA 23223 Tel: 804-775-9500 Email: rwestermann@hirschlerlaw.com Estimated Assets: $10 million to $50 million Estimated Liabilities: $10 million to $50 million The petition was signed by Alan G. Dillard, III, as president. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/SAUKKYA/AG_Dillard_Inc__vawbke-22-60115__0001.0.pdf?mcid=tGE4TAMA List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. S.L. Williamson Co., Inc. Construction $879,778 1230 River Road Dispute Charlotteville, VA 22902 Elisabeth Manuel Tel: (434) 293-1207 Email: bmanuel@smithbain.com & ar@slwilliamson.com 2. Fortiline Waterworks Construction $842,411 P.O. Box 744053 Dispute Atlanta, GA 30384-4053 Daniel Jasinski Tel: (804) 743-1980 Email: daniel.jasinski@fortiline.com 3. Shenandoah Valley Construction $568,159 Landscaping Dispute 194 Lee Highway Verona, VA 24482 Tel: (540) 255-9427 Email: jjasvl@shenvalinc.com 4. Fluvanna County Construction $563,000 414 East Jefferson St. Dispute Charlottesville, VA 22902 Kristina M. Hofmann, Esq. Tel: (434) 977-4507 Email: khofmann@fluvannacounty.org 5. Luck Stone Trade Debt $310,755 P.O. Box 22696 New York, NY 10087 Tel: (888) 909-5825 Email: cslayer@luckcompanies.com 6. Batson-Cook Construction Construction $250,000 1900 South Blvd., Ste. 300 Dispute Charlotte, NC 28203 David Hamilton Tel: (704) 790-4040 Email: dhamilton@batson-cook.com 7. Tiger Fuel Company Trade Debt $176,630 P.O. Box 1607 Charlottesville, VA 22902 Jill Strain Tel: (434) 293-6157 Email: taylorca@tigerfuel.com 8. Wilson Ready Mix LLC Trade Debt $145,157 P.O. Box 1347 Harrisonburg, VA 22803 Mark Wilson Tel: (434) 977-2800 Email: mark.wilson@conmatgroup.com 9. Adams Construction Co. Trade Debt $123,555 P.O. Box 12627 Roanoke, VA 24027 Justin E. Simmons, Esq. Tel: (540) 983-7795 Email: jsimmons@woodsrogers.com & ryork@adamspaving.com 10. County of Fluvanna Property Tax $115,707 P.O. Box 299 Palmyra, VA 22969 Linda H. Lenherr Tel: (434) 591-1945 Email: llenherr@fluvannacounty.org 11. Allied Concrete Co. Trade Debt $103,245 P.O. Box 1647 Charlottesville, VA 22902 Tel: (434) 296-7181 Email: dshifflett@alliedconcrete.com 12. Carter Machinery Co. Trade Debt $85,264 P.O. Box 3096 Salem, VA 24153 Donna Ashbrook Tel: (800) 768-4200 Email: donna.ashbrook@cartermachinery.com 13. Boxley Materials Co. Trade Debt $76,698 P.O. Box 745855 Atlanta, GA 30374 Lynn Britton Tel: (540) 777-7644 Email: lynn.britton@boxley.com 14. Preddy Gables, LLC Construction $47,787 5924 Fried Farm Rd. Dispute Crozet, VA 22932 James Walker, Esq. Tel: (804) 403-7123 Email: JWalker@ohaganmeyer.com 15. Winchester Building Trade Debt $44,083 Supply/Winchester Precast P.O. Box 1391 Indiana, PA 15701 Tel: (540) 667-2301 Email: laurnp@wbswinchester.com 16. Meridian Planning Trade Debt $38,565 Group, LLC 440 Premier Circle, Ste. 200 Charlottesvile, VA 22901 Tel: (434) 882-0121 Email: tmiller@meridianwbe.com 17. Ferguson Enterprises, Inc. Trade Debt $32,091 505 Garrett St. Charlottesville, VA 22901 Brittany Miller Tel: (434) 971-7000 Email: brittany.miller@ferguson.com 18. Boxley Ready Mix, LLC Trade Debt $28,431 3830B Blue Ridge Dr. SW Roanoke, VA 24018 Tel: (540) 977-6091 Email: mdillon@boxleyreadymix.com 19. AWP, Inc. d/b/a Area Wide Trade Debt $25,925 Protective P.O. Box 636219 Cincinnati, OH 45263 Tel: (410) 426-4004 Email: mhunt@awptraffic.com 20. Performance Signs, LLC Trade Debt $25,800 18 Commerce Drive Ruckersville, VA 22968 Tel: (434) 985-7446 Email: melissa@performancesigns.com ACADEMY SPORTS: S&P Assigns 'BB-' ICR, Outlook Stable ----------------------------------------------------- S&P Global Ratings assigned its 'BB-' issuer credit rating to U.S.-based outdoor and sports retailer Academy Sports and Outdoor Inc. (Academy, the public parent of New Academy Holding Co. LLC and Academy Ltd.) and raised all other ratings including the issuer credit rating on New Academy Holding Co. to 'BB-' from 'B+'. S&P also raised the issue-level rating to 'BB-' commensurate with the issuer credit rating. S&P is withdrawing the ratings on New Academy Holding Co. LLC following its upgrade. The stable ratings outlook reflects S&P's expectation for adjusted leverage to sustain in the 2x range, while performance normalizes from recent elevated levels. S&P aid, "Our ratings reflect better-than-expected sales and EBITDA generation, contributing to a significant improvement in credit metrics, which we expect the company to sustain despite moderating performance in 2022. Academy's operating performance over the past year benefited from its market position as a value-oriented retailer along with increased customer traffic and demand for sporting goods and outdoor equipment. Sales growth increased 20% for the 12-month period ended Oct. 30, 2021, while S&P Global Ratings' adjusted EBITDA increased more than 80% to more than $950 million. At the same time, adjusted EBITDA margins improved to the high-teens area, as Academy benefitted from sales leverage, relatively lean inventory levels, and cost-containment efforts helped by lower product promotions. As a result, we expect revenue growth approaching 20% for the fiscal year 2021 compared with our previous expectation of high single-digit increases. In addition, we expect a meaningful improvement in EBITDA and credit metrics including leverage in the high-1x to low-2x range for fiscal year end 2021. "Moreover, we expect the company to sustain adjusted leverage in the 2x area over the next 12 months even after projecting a modest slowdown in performance. This includes an expectation for a low single-digit decline in sales and adjusted EBITDA margins falling to the low- to mid-15% range. We forecast revenue and margin trends to moderate in 2022, reflecting our expectations for higher levels of product promotions, increased competition among direct and indirect sports retailers, and cost pressures amplified by commodity and wage inflation. Our performance expectations also consider slowing consumer spending on sporting and outdoor goods with customers likely scrutinizing spending habits and rebalancing funds toward travel and going out as COVID concerns gradually subside. Still, we think company initiatives will help support performance over the next several years. This includes good inventory management and promotional cadence along with in-store and omnichannel investments. We also believe initiatives like regionally-based product assortment, continued merchandise improvement, and new store development will help support business. "We think Academy will maintain a relatively conservative financial policy, supporting the upgrades. Academy has consistently reduced debt since its initial public offering in October 2020, deleveraging by about $800 million in debt. This debt deleveraging and ongoing operating performance growth resulted in an improvement in adjusted credit metrics, including leverage in the mid- to high-1x range recently compared with the low-4x area prior to the initial public offering. Looking ahead, we expect the company to continue to generate healthy cash flow, with meaningful free operating cash flow of more than $400 million. While we expect the company to use most of its excess cash flow for shareholder initiatives, noting the recently announced $500 million share buyback program, we also expect Academy to fund these initiatives using internally generated cash and maintain leverage in the 2x range. We accordingly revise our financial risk profile assessment to intermediate from significant. "Near-term performance volatility and Academy's operating scale remains a risk. We continue to view Academy as a regional sports and outdoor retailer with physical stores primarily in Texas and adjacent southern states. The company positions itself as an everyday low price value player and competes with significantly larger and better-capitalized competitors, companies that include a focus on the mass market or provide specialized sports products. This includes specialized retailers likes Dick's Sporting Goods Inc, (BBB/Stable) and Great Outdoors Group LLC (BB-/Positive) or mass merchants like Walmart Inc. (AA/Stable). We think this puts the company at a potentially long-term disadvantage, as the industry remains prone to product promotions and competitive pricing along with changing customer habits. We also believe sporting goods and related products remain a highly fragmented sector with increasing competition, including both physical retailers and pure-play e-commerce competitors "We also believe Academy and the sports retailing industry may experience more volatile performance over the near term. Following years of relatively modest and stagnant performance, Academy's EBITDA base and cash flow generation expanded significantly during the past two years, partly driven by favorable consumer trends during the pandemic. We estimate adjusted EBITDA will approach $1.2 billion in fiscal 2021, more than double its base of $499 million in 2019. While we expect sports and outdoor goods product categories will continue to see longer-term tailwinds, we also think customers will likely scrutinize spending habits. This will, in our view, result in near-term performance volatility and an overall EBITDA decline of about 15% to a more normalized new base going forward in 2022. "Academy remains largely a physical retailer despite continued investments in omnichannel. We project Academy's digital sales penetration will remain less than 10% of its total sales, which is below that of sports and retail peers such as the 30% at Dick's Sporting Goods Inc.. Moreover, nearly half of its stores are in Texas, significantly more geographically concentrated than peers. While the company further invests in its online capabilities and expands its store base, we continue to view the company as largely a brick-and-mortar, regional retailer operator in a highly competitive space. These factors, in addition to what we consider near-term performance uncertainty, lead us to apply a negative comparative ratings analysis modifier. "The stable ratings outlook reflects our expectation that Academy will remain a regional player in the highly competitive sports and outdoor retailing industry. It also reflects our projection for relatively stable credit protection metrics, including adjusted leverage in the 2x area as performance normalizes in fiscal 2022." S&P could lower the rating on the company if: -- Meaningfully underperforms our base case, potentially due to increased competition, inventory challenges, or an inability to execute on strategic initiatives leading to a significant decline in performance over the next 12 months; and -- It sustains leverage above 3x because of underperformance or a more aggressive financial policy. S&P could raise the rating on Academy if: -- The company maintains good operating performance and profitability while expanding its operating scale, especially online over the next few years; -- Under such a scenario, execution of operating initiatives would result in a record of sales growth and stable or expanding adjusted EBITDA margins; and -- The company maintains a relatively conservative financial policy supporting leverage below 3x. ESG credit indicator: E2, S3, G2 S&P said, "Social factors are a moderately negative consideration in our credit rating analysis of Academy. The company has substantial exposure to firearms and ammunition sales, which add volatility to the company's sales and profitability because of the significant unpredictability and meaningful fluctuations in demand, especially before national elections. In addition, regulators and lawmakers have looked to impose increased restrictions on firearm sales. While no new legislation has been enacted potential changes in the regulatory climate could increase future performance risks." ACTIVA RESOURCES: Hits Chapter 11 Bankruptcy Protection ------------------------------------------------------- Patrick Danner of San Antonio Express News reports that San Antonio-based Activa Resources, which has owns oil and natural gas assets in Texas, Louisiana and Arkansas, filed for Chapter 11 bankruptcy protection Thursday, February 4, 2022. Oil prices hit their highest level in more than seven years last week, but that didn't prevent a San Antonio oil and gas company from seeking bankruptcy protection. Activa Resources, formed in 2003, on Thursday, February 4, 2022, filed a Chapter 11 bankruptcy petition that listed assets and liabilities each in the range of $10 million to $50 million. A related company, Tiva Resources, also filed. The skeletal petitions didn't include detailed financial information. Activa President John Hayes blamed 2020's record-low oil prices for creating major challenges that hamstrung the company last 2022r. Crude oil prices, now around $90 a barrel, fell below zero for the first time in history in the spring of 2020. The low prices, along with tightened credit standards, resulted in a significant reduction in the amount of money Texas Capital Bank would loan Activa, Hayes said in a court filing Friday with the U.S. Bankruptcy Court in San Antonio. Activa owes Texas Capital Bank $10.2 million. On March 31, 2021, Activa and the bank amended a credit agreement that required the company to enter into hedging contracts for the majority of its oil production. At the time, Hayes said, oil was trading at $50 a barrel but many industry experts were forecasting that it would climb to $70 or more. U.S. shale producers have typically been highly active in hedging production to cover capital spending and debt repayments, Bloomberg reported last year. But there’s been less of a need to use hedging for downside protection as cash flows have increased with oil prices on the upswing. Activa protested the bank’s requirement that it enter into the hedges, but was unable to sway the lender, Hayes said. Activa entered into hedges with Minneapolis-based Cargill, which specializes in commodity hedging, at prices ranging from $58 a barrel in May to $54.35 to $56.17 a barrel in August. As part of the amended credit agreement, Activa had to make monthly capital reduction payments of $150,000 and interest payments of about $50,000 a month. "The hedges with Cargill quickly went negative," Hayes said. "The hedge cost Activa more than $70,000 in June 2021 and more than $120,000 per month in both October 2021 and January 2022." The combination of the hedges, monthly capital reduction payments and interest payments exceeded Activa's net cash flow, he said. Its management and board determined in August 2022 hat it was at risk of not paying its operating expenses. That could have resulted in liens placed on Activa's properties, which serve as collateral on bank loan. Activa continued to makes its payments, but at the end of last January 2022, the bank "swept Activa's operating accounts and put a hold on the joint interest account," Hayes said. "This action severely limited the debtors’ ability to continue the normal course of business." At the same time, he said the companies received billings from one of its operators that were more than $200,000 greater than budgeted. The two events created a "liquidity crisis" for the two companies, resulting in the bankruptcies to protect their business as a going concern, he added. A partnership affiliated with CIC Partners, a Dallas-based investment firm, holds a roughly 82 percent stake in Activa. The balance is held by Activa Holdings Corp. Activa owns oil and natural gas assets in Texas, Louisiana and Arkansas that have "solid production and reserve profiles," Hayes said. It has six employees. Its main asset is a working interest in the 16,400-acre OSR-Halliday unit in Leon and Madison counties in East Texas. It has the potential for more than 30 million barrels remaining from primary production to full development, he said. As part of its reorganization, Activa is considering the sale of assets. It also intends to restructure and/or relieve all or part of the $10.2 million bank debt and to resolve the obligations under the hedging agreement. The debtors have asked the court to consolidate the bankruptcy cases. A hearing on the request and other motions is scheduled for Wednesday before Judge Michael M. Parker. About Activa Resources Activa Resources, LLC and Tiva Resources, LLC, are in the oil and gas extraction industry. Activa Resources and Tiva Resources sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Lead Case No. 22-50117) on Feb. 3, 2022. In the petition signed by John Hayes, president, Activa Resources disclosed up to $50 million in both assets and liabilities while Tiva Resources disclosed up to $10 millionn in assets and up to $50 million in liabilities. Bernard R. Given II, Esq., at Loeb and Loeb LLP, is the Debtors' counsel. AINOS INC: Inks US$26M Purchase Deal With Majority Shareholder -------------------------------------------------------------- Ainos, Inc., a Texas corporation, acquired certain intellectual property assets and certain manufacturing, testing, and office equipment from Ainos, Inc., a Cayman Islands corporation, for a total purchase price of US$26 million. The seller is a majority shareholder of the company. As payment of the purchase price, the company issued to the seller a convertible promissory note in the principal amount of US$26 million. As part of the agreement, the company agreed to hire certain employees of the seller who are responsible for research and development of the IP assets or equipment on terms at least equal to the compensation arrangements undertaken by the seller. From and after the closing, the company will have no responsibility, duty or liability with respect to any employee benefit plans of the seller. The principal sum of the convertible note is payable in cash on Jan. 30, 2027, although the company may prepay the convertible note in whole or in part without penalty. The convertible note is non-interest bearing. If not earlier repaid, the convertible note will be converted into shares of common stock, $0.01 par value per share, of the company, or such other securities or property for which the convertible note may become convertible, immediately prior to the closing of any public offering of the company's common stock as result of which the company's common stock will be listed on a U.S. stock exchange. The conversion price, subject to certain adjustments described in Section 2(b) of the convertible note, will be 80% of the initial public offering price of the offering. About Ainos Ainos, Inc., formerly known as Amarillo Biosciences, Inc., is a diversified healthcare company engaged in the research and development and sales and marketing of pharmaceutical and biotech products. The Company is a Texas corporation incorporated in 1984. Amarillo reported a net loss of $1.45 million for the year ended Dec. 31, 2020, compared to a net loss of $1.58 million for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $19.99 million in total assets, $2.86 million in total liabilities, and $17.14 million in total stockholders' equity. Houston, Texas-based PWR CPA, LLP, the Company's auditor since 2020, issued a "going concern" qualification in its report dated March 30, 2021, citing that the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2021 raise substantial doubt about its ability to continue as a going concern. AIX VENTURES: Taps Fortune International as Real Estate Broker -------------------------------------------------------------- AIX Ventures, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Florida to hire Fortune International Realty, Inc. to market and sell its property located at 785 Crandon Blvd., Key Biscayne, Fla. The firm will receive a commission of 6 percent of the purchase price of the property. Douglas Kinsley, the firm's realtor associate who will be providing the services, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Douglas Kinsley Fortune International Realty, Inc. 260 Crandon Blvd., Suite 25 Key Biscayne, FL 33149 Tel.: 305.215.5900 Email: doug@fir.com DougKinsley.com About AIX Ventures AIX Ventures, LLC, a company based in Key Biscayne, Fla., filed a petition for Chapter 11 protection (Bankr. S.D. Fla. Case No. 21-20530) on Nov. 2, 2021, listing up to $10 million in assets and up to $500,000 in liabilities. Guillermo Lopez, manager of AIX Ventures, signed the petition. Judge Robert A. Mark oversees the case. The Debtor tapped Joel M. Aresty P.A. as legal counsel. ALL DAY ACQUISITIONCO: Moody's Cuts CFR, Sr. Secured Loan to Caa3 ----------------------------------------------------------------- Moody's Investors Service downgraded All Day AcquisitionCo, LLC's (dba "24 Hour Fitness") Corporate Family Rating to Caa3 from Caa1 and Probability of Default Rating to Caa3-PD from Caa1-PD. Concurrently, Moody's downgraded the rating on the company's senior secured term loan due 2025 and senior secured delayed draw term loan (DDTL) due 2026 to Caa3 from B3. The outlook remains negative. The downgrade reflects worse than expected performance since the company re-emerged from the Chapter 11 bankruptcy on December 31, 2020. The company's recent effort to meaningfully reduce membership pricing to attract new members and retain existing members reflects the challenges it faces as it recovers from the pandemic. 24 Hour fitness operates in the mid-tier price point segment that has been experiencing intense competition from the high value low price players such as Planet Fitness and smaller local clubs in recent years. The company was experiencing negative membership trends prior to the coronavirus pandemic. The downgrade also reflects Moody's expectation that the company will continue to burn significant cash in 2022, which will require additional funding most likely in the form of incremental debt (similar to what the company did in 2021). Debt load has increased by about $100 million to approximately $340 million at year end 2021 including accrued pay in kind (PIK) interest from $240 million debt when the company exited bankruptcy. Moody's expects debt will increase further in 2022 to fund the operating shortfall and PIK interest. The company's $60 million super priority DDTL (unrated; $62.5 million outstanding including the PIK interest as of September 30, 2021) is due in August 2022. Given the challenge and uncertainty in operating performance and weak liquidity, Moody's does not believe the company can meet the maturity and is dependent on a refinancing of the debt. Moody's views the risk of a distressed exchange event (by Moody's definition) over the next year as high. The company's current equity owners are also lenders of the term loan and the DDTL and have provided funding through incremental debt to support liquidity. The downgrade of the term loan and DDTL additionally reflects a one notch downward override to the Caa2 loss given default model derived outcome. The override reflects Moody's view that the sizable lease obligations would not provide meaningful loss absorption for the term loans in the event of a default since Moody's believes the company intends to maintain the current club base. Moody's took the following rating actions: Issuer: All Day AcquisitionCo LLC Corporate Family Rating, downgraded to Caa3 from Caa1 Probability of Default Rating, downgraded to Caa3-PD from Caa1-PD Senior Secured Term Loan, downgraded to Caa3 (LGD3) from B3 (LDG3) Senior Secured Delayed Draw Term Loan, downgraded to Caa3 (LGD3) from B3 (LDG3) Outlook Actions: Issuer: All Day AcquisitionCo LLC Outlook, remains Negative RATINGS RATIONALE 24 Hour Fitness's Caa3 CFR broadly reflects the high risk of a distressed event over the next 12 months given weak liquidity including negative free cash flow and a $60 million super priority DDTL coming due in August 2022 creating significant refinancing risk. The rating also reflects the continued operating challenges and the uncertainty the company will be able to stem continued membership erosion. Debt burden has increased meaningfully in 2021 and Moody's expects debt will increase further in 2022 due to continued operating cash burn that will require additional funding. Moody's lease adjusted debt-to-EBITDA leverage was high at about 12x for the LTM period ended September 30, 2021, and Moody's expects leverage to decline but remain high over the next year. However, EBITDA was negative excluding Moody's lease adjustment and leverage is unsustainable. The rating also reflects 24 Hour Fitness's geographic concentration in California (about 60% of clubs) and the growing competition from technology-based fitness services that are not tied to a facility. Furthermore, the rating is constrained by the highly fragmented and competitive nature of the fitness club industry with relatively low barrier to entry, high attrition rates, 24 Hour Fitness's positioning in the industry's more pressured mid-tier price point, as well as exposure to cyclical shifts in consumer discretionary spending. The rating is supported by the company's well-recognized brand name as well as the longer-term positive fundamentals for the fitness industry such as the increased awareness of the importance of health and wellness. Moody's regards the coronavirus outbreak as a social risk under Moody's ESG framework, given the substantial implications for public health and safety. Although an economic recovery is underway, and its continuation will be closely tied to containment of the virus, there is uncertainty around Moody's forecasts. Fitness clubs have sensitive customer data including information related to health, workout schedules, and credit cards. Protecting data security is thus important to attracting and retaining customers, and increases operating costs. Rising labor costs are also an issue. Demographic and societal trends toward health and wellness are positive social factors supporting demand growth. Governance risk pertaining to the post the chapter 11 reorganization ownership where the company is owned by a group of lenders with top three lenders having the majority control. Moody's expects an aggressive financial policy, but the owners are focused on an operational turnaround and would consider providing additional funds to support the company depending on the reasons for the liquidity needs. Moody's views environmental risks as low, but the company must meet environmental regulations when locating and constructing new clubs. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The negative outlook reflects the high risk of a distressed exchange event (by Moody's definition) over the next year with its $60 million super priority DDTL coming due in August 2022. The negative outlook also reflects Moody's expectation for weak liquidity with the debt load expected to continue to increase in 2022 in order to fund a cash burn due to challenging operating performance. Ratings could be upgraded if operating performance improves and credit metrics strengthen including renewed membership growth without impairing earnings. A material improvement in liquidity including proactively addressing maturities is also necessary for an upgrade. The ratings could be downgraded if operating performance remains weak, the potential for a distressed exchange or other default increases, or estimated recovery values weaken. The principal methodology used in these ratings was Business and Consumer Service published in November 2021. Headquartered in Carlsbad, California, All Day AcquisitionCo, LLC. is an operator of fitness centers in the US. Post the chapter 11 bankruptcy, the company operates about 286 clubs predominantly in California. LTM as of September 30, 2021 revenue was about $583 million. Following the December 31, 2020 emergence from chapter 11 reorganization, the company is owned by the lender group with Sculptor and Monarch collectively owning a slight 51% majority. AMIGO CONSTRUCTION: Unsecured Creditors to Split $37K over 4 Years ------------------------------------------------------------------ Amigo Construction, LLC, filed with the U.S. Bankruptcy Court for the District of Nevada a Plan of Reorganization for Small Business dated Feb. 3, 2022. Amigo Construction, LLC is a construction company which provides underground trenching services to third party vendors for the installation of fiber-optic cables. The Debtor is owned and operated by three of its members, Carlos Castillo, Maria M. Celis, and Homero Meraz-Marquez (collectively, the "Managers"). The Debtor filed for bankruptcy primarily as a result of it falling behind on various secured loan payments owed to its various lenders for both its equipment and other financing, which resulted in its secured creditors attempting to collect their collateral. The Debtor has also experienced significant negative repercussions from the COVID-19 global pandemic in early 2020. The Plan Proponent's financial projections show that the Debtor will have projected disposable income of $36,795.84 over the next 4 years. The final Plan payment is expected to be paid by May 2026. This Plan of Reorganization proposes to pay creditors of the Debtor from cash flow from operations, future income and infusions of capital, as needed. Non-priority unsecured creditors holding Allowed claims will receive distributions, which the proponent of this Plan has valued at less than $0.05 cents on the dollar. This Plan also provides for the payment of administrative and priority claims. Class 10 consists of Non-Priority General Unsecured Creditors. Each holder of an Allowed general unsecured, non-priority claim shall receive its pro rata share of share of the total sum of Debtor's disposable income in the total amount of $37,000.00, or such greater amount as the Court may require at the confirmation hearing on the Plan, with such payments being made in four equal installments on or prior to the 15th day of the month in the 12th, 24th, 36th, and 48th months of the Plan. Class 10 is impaired and thus is entitled to vote on the Plan. Class 11 consists of Equity security holders of the Debtor. Except to the extent that the Holders of Class 11 Equity Interests agree to less favorable treatment, they shall retain their Equity Interests, subject to the terms and conditions of this Plan. Class 11 is unimpaired and thus is deemed to accept the Plan. This Plan will be funded through cash flow generated from operations. Funding shortfalls may also be addressed by Mr. Castillo reducing his salary, which is included in the projections as a cost of operations, on as needed and interest-free basis. A full-text copy of the Plan of Reorganization dated Feb. 3, 2022, is available at https://bit.ly/3gzp7Hv from PacerMonitor.com at no charge. Attorneys for Debtor: Matthew C. Zirzow, Esq. Zachariah Larson, Esq. Larson & Zirzow, LLC 850 E. Bonneville Ave. Las Vegas, NV 89101 Telephone: (702) 382-1170 Facsimile: (702) 382-1169 Email: mzirzow@lzlawnv.com zlarson@lzlawnv.com About Amigo Construction Amigo Construction, LLC, provides services to several telecommunication companies like Verizon, Cox, and Mears to establish new lines or renew existing underground lines utilized for the Internet. It also provides asphalt paving and striping, commercial concrete foundations and residential concrete construction. Amigo Construction sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Nev. Case No. 21-15242) on Nov. 5, 2021, listing up to $500,000 in assets and up to $1 million in liabilities. Judge Natalie M. Cox oversees the case. Matthew C. Zirzow, Esq., and Zachariah Larson, Esq., at Larson & Zirzow, LLC, serve as the Debtor's bankruptcy attorneys. AUBURN SCHOOL: Seeks Cash Collateral Access Thru July 31 -------------------------------------------------------- Auburn School LLC and School Place LLC ask the U.S. Bankruptcy Court for the District of Massachusetts for authority to use cash collateral on a final basis and provide adequate protection. The Debtors require continued access to cash collateral for a period through July 31, 2022, in order to implement and close a sale all of the Debtors' assets pursuant to section 363 of the Bankruptcy Code. The Debtors' propose use of cash collateral will be in conformance with a monthly budget. The Debtors believe the amounts set forth in the cash collateral budget are necessary to allow the Debtors to continue to maintain the real property while they are marketed for immediate sale. U.S. Bank National Association asserts an interest in the Debtors' cash collateral. As adequate protection, the Prepetition Secured Lender will have valid, perfected, and enforceable replacement liens and security interests in (i) all assets of the Debtors existing on or after the Petition Date and (ii) all other assets of the Debtors that were not subject to the prepetition liens of any kind or nature. As additional adequate protection, solely to the extent of any diminution in the value of the collateral, the Prepetition Secured Lender will have a superpriority, administrative expense claim pursuant to section 507(b) of the Bankruptcy Code, subject to a carve-out. The carve-out consists of the sum of (i) all statutory fees required to be paid by the Debtors to the United States Trustee under 28 U.S.C. section 1930(a); and (ii) professional fees and expenses of attorneys employed by the Debtors pursuant to the section 327 of the Bankruptcy Code to the extent reflected in the Cash Collateral Budget, subject to Cash Management Procedures described under MLBR Appendix 6, and allowed by the Court. The Debtors' assets consist of condominium units which were held as income producing property for years up to and through the Petition Date. As a result of COVID-19, certain tenants who were college/graduate students stopped paying rent or abandoned the property. This loss of income caused a lack of funds to support the [large] debt service. The Debtors attempted to refinance with a lower interest rate but was unsuccessful. The bankruptcy was filed on the eve of foreclosure. A copy of the motion and the Debtors' budget from November 2021 to July 2022 is available for free at https://bit.ly/3ozwbIW from PacerMonitor.com. Auburn School projects $5,000 in total income and $1,900 in total expenses for February 2022. School Place projects $10,500 in total income and $1,900 in total expenses for February 2022. About Auburn School and School Place Auburn School, LLC and School Place, LLC filed voluntary petitions for Chapter 11 protection (Bankr. D. Mass. Case Nos. 21-11620 and 21-11621) on Nov. 7, 2021, listing up to $1 million to $10 million in both assets and liabilities. Lou G. Makrigiannis, manager, signed the petitions. Judge Frank J. Bailey oversees the cases. Michael Van Dam, Esq., at Van Dam Law LLP serves as the Debtors' legal counsel. AUSTIN HOLDCO: Term Loan Upsize No Impact on Moody's B3 CFR ----------------------------------------------------------- Moody's Investors Service said Austin Holdco Inc.'s (dba "Virtusa" or "the company") B3 corporate family rating, B3-PD probability of default rating, B2 first lien senior secured instrument rating and Caa2 senior unsecured instrument rating are not impacted by the increase of first lien term loan and decrease of unsecured notes in the capital structure. The decrease in incremental unsecured notes will be replaced with an equal amount of additional first lien term loan debt. The total pro forma amount of debt in the capital structure and total closing leverage remains unchanged. Pro forma debt to EBITDA is expected around 7.1x as of March 2022. Moody's expects the company can de-lever toward 6.5x over the next 12 months, absent further debt funded transactions. Headquartered in Southborough, Massachusetts, Virtusa, is a global digital engineering and information technology outsourcing services provider with operations in 19 countries. For the twelve months ended September 30, 2021, the company reported $1.4 billion in revenue. The company is privately held by majority owner Baring Private Equity Asia (BPEA). AVANTI SOFTWARE: Fitch Affirms 'B' LT IDR, Outlook Stable --------------------------------------------------------- Fitch Ratings has affirmed Ivanti Software, Inc.'s Long-Term Issuer Default Rating (IDR) at 'B'. The Rating Outlook is Stable. Fitch has also affirmed Ivanti's $175 million secured revolver and the $2.2 billion first lien term loan at 'BB-'/'RR2' and $545 million second-lien term loan at 'CCC+'/'RR6'. The ratings are supported by the secular growth trends for remote working security and endpoint management. Since the acquisition of MobileIron, Paulse Secure, Cherwell, and RiskSense, Ivanti has executed on cost optimization plan and on track to achieve previously established target profitability in 2022. Fitch expects Ivanti's leverage to remain in the 6.0x-7.0x range over the rating horizon, with EBITDA growth offset by incremental debt incurrence for acquisitions and shareholder returns. Ivanti's industry position, revenue scale, and leverage profile are consistent with the 'B' rating category. KEY RATING DRIVERS Highly Recurring and Diversified Revenues: On a pro forma basis, the company has a strong base of recurring revenues, representing approximately 80% of total revenues with net retention rates near 100%. The company has over 50,000 customers and no meaningful end-market concentration. Fitch believes the company's continued transition and adoption towards a subscription-based model is a credit positive, as the high levels of recurring revenue and retention rates provide more visibility and consistency regarding the company's future revenue and cash flow streams. Secular Tailwinds Across Business Segments: The proliferation of "Bring Your Own Devices (BYOD)" combined with the demand for remote working meaningfully increased cyber security concerns. The digital transformation of customers' technology infrastructure has created strong demand across each of Ivanti's product offerings. Fitch expects these industry trends to support Ivanti's near- to medium-term growth in the mid-single-digits. Highly Fragmented and Competitive Marketplace: Ivanti operates in highly fragmented markets across each of its products. As a result, Fitch expects Ivanti will be exposed to intense competition, including from market leaders like Microsoft, Citrix, and VMWare, who are larger, have greater financial flexibility and the ability to bundle and up-sell their customers at very competitive price points. In the IT Service Management (ITSM) and Enterprise Service Management (ESM) segment, Ivanti competes with peers such as ServiceNow in the enterprise segment, and GoTo Group in the middle market, both of which have strong cloud-native offerings. Ivanti's Cherwell remains the primary alternative to ServiceNow, as they are the most replaced IT Service Management tool (ITSM). Strong FCF Characteristics: Ivanti's management has mostly executed on a sizeable cost optimization program resulting in EBITDA margins approaching 40% range, in line with Ivanti's at-scale software peers. Fitch expects the company to generate FCF margins in the mid-teens from fiscal 2022 onwards upon the completion of the rationalization and integration of the recently acquired entities. Leverage to Remain Elevated: Fitch expects gross leverage to remain above 6.5x in 2022, which is in line with Ivanti's peers in the 'B' rating category. Fitch expects leverage to remain above 6.0x over the rating horizon as the company makes ongoing investments in technologies and products to keep pace with the fast-moving industry, limiting its ability to delever primarily from EBITDA growth. Private Equity ownership will also limit deleveraging as sponsors look to optimize ROE through acquisitions and shareholder returns. DERIVATION SUMMARY Ivanti primarily operate in three end-markets, namely unified endpoint management and security, remote access and ITSM/ESM. The broader market for endpoint security and remote working has been growing, supported by the proliferation of access points into secure networks, greater awareness around security breaches and the increasing complexity of IT networks and applications. Ivanti is well-positioned for its rating, given its sizeable base of recurring revenues, strong profitability and FCF margins. Ivanti's EBITDA margins and FCF margins are in line with its larger and better-capitalized peers like IBM, VMWare, GoTo Group and Citrix. Additionally, Fitch expects Ivanti's leverage to remain higher than the aforementioned peers, and in excess of 6x range over the rating horizon. The ratings also reflect Fitch's expectation that despite strong secular demand for UEM and endpoint security, Ivanti's growth will be tempered by the highly competitive landscape in its end-markets, especially against larger software peers who also offer a comprehensive solution. KEY ASSUMPTIONS Fitch's key assumptions within the rating case for the issuer include: -- Organic revenue growth in the low single digit range over the rating horizon, reflecting the mix in revenues shifting from perpetual license to subscription revenues as well as the unwinding of the pandemic revenue benefits. -- EBITDA margins are expected to stabilize above 40%, reflecting the full impact of the planned cost savings. KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that Ivanti would be reorganized as a going-concern in bankruptcy rather than liquidated. In estimating a distressed EV for Ivanti, Fitch assumes a combination of customer churn and margin compression on lower revenue scale in a distressed scenario to result in approximately 15% revenue decline leading to a going concern EBITDA that is approximately 25% lower relative to 2021 pro forma adjusted EBITDA. As Ivanti business model depends on the ability to provide robust IT security, customer churn could rise in times of distress. Fitch applies a 6.5x multiple and a 10% administrative claim to arrive at an adjusted EV of $1.72 billion. The multiple is higher than the median Telecom, Media and Technology EV multiple but is in line with the Fitch employed multiple for other 'B'-rated software companies. In the 21st edition of Fitch's Bankruptcy Enterprise Values and Creditor Recoveries case studies, Fitch noted nine past reorganizations in the Technology sector with recovery multiples ranging from 2.6x to 10.8x. Of these companies, only three were in the Software sector: Allen Systems Group, Inc.; Avaya, Inc.; and Aspect Software Parent, Inc., which received recovery multiples of 8.4x and 5.5x, respectively. Median M&A multiples for the sector are in the 9.0x range. The 6.5x multiple is supported by Ivanti's scale, strong margins, highly recurring revenues and strong FCF profile. Fitch assumes a fully drawn revolver in its recovery analysis since credit revolvers are tapped as companies are under distress. Fitch assumes a fully drawn on Ivanti's $175 million revolver. Fitch estimates strong recovery prospects for the first lien credit facilities and rates them 'BB-'/'RR2', or two notches above Ivanti's 'B' IDR. Fitch estimates limited recovery prospects for the second lien term loan and rates it 'CCC+'/'RR6', two notches below Ivanti's IDR. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Expectation of gross leverage (total debt with equity credit/operating EBITDA) sustaining below 5.5x; -- Cash flow leverage, defined as (CFO-capex)/Total debt, sustained above 8.0%; -- FFO interest coverage sustaining above 3.0x. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Expectation of gross leverage (total debt with equity credit/operating EBITDA) sustaining above 7.0x; -- Cash flow leverage, defined as (CFO-capex)/Total debt, sustained below 5.0%; -- FFO Interest Coverage sustained below 1.5x. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Liquidity: Fitch believes Ivanti has a strong liquidity profile with approximately $86 million of cash at 3Q 2021 and forecasted FCF generation. The company's $175 million undrawn revolving credit facility further strengthens the company's liquidity. Debt Structure: Ivanti's debt structure is comprised of a $175 million revolving credit facility, 1st lien term loan debt of $2.2 billion, and a 2nd lien $545 million term loan. The revolver, 1st lien term loan, and 2nd lien term loan has a maturity of 2025, 2027, and 2028, respectively. The company has a favorable maturity schedule, with no major payments due until maturity of each respective term loan. 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. ISSUER PROFILE Ivanti Inc. is a provider of mid-market focused, enterprise-grade intelligent IT management solutions, specifically Zero Trust Security, Unified Endpoint Management (UEM), and Enterprise Service Management (ESM) solutions. BLUE JAY: Unsecureds to be Paid in Full in Subchapter V Plan ------------------------------------------------------------ Blue Jay Communications, Inc., filed with the U.S. Bankruptcy Court for the Northern District of Ohio a Plan of Reorganization under Subchapter V dated Feb. 7, 2022. Blue Jay Communications is an installer of commercial telecommunication and network infrastructure throughout the Midwest with a particular concentration in northern Ohio, Wisconsin, southern Michigan, and Illinois. The COVID epidemic severely impacted the Debtor's revenue and even though the Debtor received assistance during this period in the form of PPP loans, the Debtor began to experience a rapid increase in orders from its customers addressing their own back log of work that was postponed due to the COVID 19 pandemic. The attempts of certain MCA Lenders to seize the Debtor's accounts receivable led to the filing of this bankruptcy case. The Debtor's financial projections show that the Debtor will have total projected disposable income for the 5-year period of $6,607,733. The final Plan payment is expected to be paid 60 months after the Distribution Date of this Plan or when all Claims have been Allowed. This Plan of Reorganization under chapter 11 of the Bankruptcy Code proposes to pay creditors of the Debtor from the future actual disposable income of the Reorganized Debtor. Creditors holding Allowed Claims in Classes 1, 3, 7 and 8 will receive distributions which the Debtor has estimated to be approximately 100 cents on the dollar during the term of this Plan. Classes 2, 4, 5 and 6 will also receive 100% of their Allowed Claims over the term of their remaining agreements with the Debtor. This Plan provides for full payment of administrative expenses and priority claims. Class 7 consists of the Allowed Unsecured Claims of Creditors that are owed less than $1,000.00 as of the Petition Date. The Debtor estimates that there are 35 holders of Allowed Unsecured Claims who have a total of $16,269.59 in Allowed Claims in this class. Allowed Claims in this class will be paid by the Reorganized Debtor in full in cash on the Distribution Date. Class 8 consists of the Allowed Claims of Creditors other those in Classes 1, 2, 3, 4, 5, 6, or 7. The Debtor estimates that are 64 holders of Allowed Unsecured Claims who have approximately $1,300,000.00 in Allowed Claims in this class as of the Petition Date. Allowed Claims in this class will receive a quarterly pro rata distribution from the Reorganized Debtor projected to commence on the first business day after 12 months from the Distribution Date and each calendar quarter until paid in full or the Plan reaches 5 years from the Distribution Date, but after and subject to the payment of Administrative Expenses and Priority Tax Claims, but pro-rata with the Unsecured portions of those Allowed Claims as provided in the Class treatments. No interest shall accrue on any Claims in this Class. Class 9 consists of the Allowed Unsecured Claims of John Houlihan other than equity claims. These claims total $294,712.34. Mr. Houlihan's unsecured claims will be paid in full once all allowed claims in Classes 3, 6 and 7 have been paid in full, and so long as all payments due to Classes 2, 4 and 5 are current. Class 10 consists of the outstanding stock issued by the Debtor, all of which is owned by John Houlihan. Confirmation of this Plan shall cause all prepetition stock issued by the Debtor to be revested in and retained Mr. Houlihan as of the Petition Date and shall subject to and based upon the terms and conditions as they existed on the Petition Date including under any Articles of Incorporation, By-Laws, and other duly executed corporate documents. The Plan will be implemented and funded through the future business operations of the Reorganized Debtor. As a part of its reorganization, the Debtor does not contemplate the sale of any assets, however assets may be sold to the extent that it is later determined they are no longer of value to the Reorganized Debtor's business operation or their useful life for the Reorganized Debtor has expired. A full-text copy of the Plan of Reorganization dated Feb. 7, 2022, is available at https://bit.ly/34Jp7Ce from PacerMonitor.com at no charge. About Blue Jay Communications Blue Jay Communications, Inc. installs telecommunication and network infrastructure throughout the Midwest with a particular concentration in northern Ohio, southern Michigan, and Illinois. It currently has offices in Cleveland, Marion, Toledo, and Youngstown, Ohio, and St. Charles, Ill. The company serves major telecommunications companies as its clients. Blue Jay Communications filed a petition for Chapter 11 protection (Bankr. N.D. Ohio Case No. 21-31915) on Nov. 9, 2021, disclosing $5,145,458 in assets and $7,618,110 in liabilities. John F. Houlihan, president, signed the petition. Judge Mary Ann Whipple oversees the case. The Debtor tapped Frederic P. Schwieg, Esq. at Frederic P Schwieg Attorney at Law as bankruptcy counsel and Gino Pulito, Esq., at Pulito and Associates, LLC as special counsel. Pease & Associates, LLC and Newpoint Advisors Corporation serve as the Debtor's accountant and financial advisor, respectively. BOY SCOUTS: U.S. Trustee Says Payout Plan Cancels Too Many Claims ----------------------------------------------------------------- Steven Church of Bloomberg News reports that lawyers for the U.S. Trustee argued in court papers that a bankruptcy exit plan that would end sexual abuse lawsuits against the Boy Scouts and affiliated groups should be changed because it releases too many entities from liability. So-called third party releases aren't allowed under the U.S. Bankruptcy Code, the bankruptcy watchdog, which is an arm of the U.S. Justice Department, said in court papers filed Monday, February 7, 2022. The U.S. Trustee has opposed such measures in other cases as well. Third party releases allow companies and individuals that aren’t in bankruptcy to pay money as part of another entity's Chapter 11 case. 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. BOYD GAMING: S&P Upgrades ICR to 'BB-' on Deleveraging ------------------------------------------------------ S&P Global Ratings raised its issuer credit rating on U.S. regional gaming operator Boyd Gaming Corp. to 'BB-' from 'B+'. The outlook is positive. S&P said, "We also revised our recovery rating on the company's senior unsecured debt to '4' from '5' because of debt repayment and because we raised our issue-level rating on this debt by two notches which we removed from credit watch positive where it was placed on May 25, 2021. "The positive outlook reflects the possibility of an upgrade over the next 12 months if we expect that Boyd will sustain sufficient leverage cushion relative to our 4x upgrade threshold to absorb potential operating volatility and leveraging transactions. "We expect Boyd to maintain adjusted leverage in the low- to mid-3x area over the next 12 months. Boyd's operating performance has outperformed our expectations over the last few quarters as revenue recovered at a faster pace to 2019 levels than we previously anticipated, particularly in its Las Vegas locals and Midwest and South segments. Boyd also achieved higher EBITDAR margins and property level EBITDAR relative to 2019. Local and regional gaming operators have so far sustained considerable improvements in margins despite the return of a more normal competitive environment, including the resumption of operations of alternative entertainment options and the elimination of many pandemic operating restrictions, which has resulted in casino operators becoming more comfortable with the existing competitive environment. "Boyd's strong operating performance also allowed the company to reduce debt balances by approximately $800 million in 2021, further improving leverage. We believe Boyd's substantial leverage improvement in 2021 will allow it capacity to withstand some margin moderation in 2022, while still sustaining leverage in the low- to mid-3x area (absent possible incremental investment or acquisition spending). We forecast Boyd's EBITDA will decline by 10%-15% year-over-year in 2022, but remain 25%-35% above 2019 levels. This is because Boyd has demonstrated consistent margin performance over the last 18 months, resulting in EBITDAR growing significantly in 2021 despite revenues remaining largely flat to 2019. "Notwithstanding, we believe that some of the factors supporting its good revenue growth in 2021, including government stimulus funds, a lack of travel and leisure alternatives, and consumers finding leisure activities, including gaming, closer to home will wane in 2022, as consumers deplete accumulated savings and resume broader travel and leisure activities. Additionally, although we expect local and regional gaming operators to sustain some of the cost improvements implemented during the pandemic, we believe expenses, particularly marketing and some labor, will increase in 2022 because of inflationary pressures and the need to stay competitive. Specifically, we believe casinos will need to increase marketing and service levels, including the resumption of amenities, to attract customers and remain competitive as more travel and leisure alternatives are available to consumers. "Boyd lacks a track record of operating with the lower financial leverage we forecast in our base case. Boyd has recently begun articulating a more conservative financial policy with respect to leverage, indicating that it intends to maintain its long-term leverage around 2.5x, compared to its 4x-5x policy range prior to the pandemic. (Our adjustments, principally leases, add around 0.25x-0.5x to Boyd's measure of leverage.) We believe its desire to operate at lower leverage stems from some uncertainty around the long-term sustainability of its strong operating results coming out of the pandemic and its ability to use recently improved cash flow to significantly reduce leverage. Nevertheless, its track record of operating at such low leverage is limited and we believe there may not be a firm policy commitment to sustain such low leverage, especially if acquisition or investment opportunities present themselves. "Notwithstanding, the company has materially reduced leverage over the past 18 months by expanding its EBITDA base and reducing debt using its free cash flow. We estimate Boyd ended 2021 with S&P Global Ratings-adjusted leverage in the high-2x area. Although we expect leverage to weaken in 2022 because of our forecasted EBITDA decline, we now forecast leverage in the low– to mid-3x area, reflecting sustained improvement in credit metrics relative to our previous forecast that leverage could improve below 5x in 2022. Furthermore, we project healthy annual free operating cash flow (FOCF) of $400 million to $500 million, which should provide the company sufficient flexibility to complete recently announced shareholder returns without adding additional leverage. Boyd has indicated its intention to return $500 million to shareholders in 2022, through availability under its share repurchase program and the resumption of quarterly dividends at a significantly higher rate compared to pre-pandemic. Additionally, Boyd has announced its intention to continue to invest in its business and resumed a number of capex initiatives which it had placed on hold as a result of the uncertainty related to pandemic. It also plans to expand and invest in its regional icasino business, Stardust. S&P said, "We believe Boyd will fund these growth initiatives and dividends using internally generated cash. We also believe Boyd will remain opportunistic in pursuing additional investment or acquisition opportunities. Although our base-case forecast does not assume the company makes any material leveraging acquisitions, we believe our forecasted leverage in the low- to mid-3x area provides the company good cushion relative to our 5x downgrade threshold at the 'BB-' rating and moderate cushion relative to our 4x upgrade threshold, which supports the positive rating outlook." Boyd's concentration in local and regional gaming markets has supported its strong recovery. Boyd's portfolio of casinos is heavily weighted toward local and regional gaming markets. It generates more than 90% of its total revenue and property level EBITDAR from its Midwest and South properties and its Las Vegas locals segment. Regional and local gaming markets recovered faster because they cater to customers who live in the area and can drive to the properties. These casinos benefitted from customers staying closer to home and limited other entertainment and travel options. Additionally, Boyd implemented cost cuts during the pandemic in 2020 that it has been able to sustain thus far, reporting more than 1,000-basis-point improvements in its two most important markets. While S&P believes incremental costs may creep back as operations normalize, a large proportion of the cost reductions are likely permanent. S&P said, "In our revised base-case scenario, we assume that revenues in 2022 are flat to 2019 and 2021 levels and that a full resumption of travel and other entertainment options and waning stimulus benefits will lead to some softness in its local markets. Sequential improvement in its smallest reporting segment, downtown Las Vegas, which represents less than 10% of its revenue and property-level EBITDAR, will only modestly offset regional softness. Boyd's downtown Las Vegas segment remains depressed from 2019 levels given that the majority of its downtown casinos depend on fly-in visitation to Las Vegas from Hawaii. We expect visitation to downtown Las Vegas to continue to recover in 2022, supporting improvement in revenue closer to 2019 levels. "The positive outlook reflects the possibility that we could raise our ratings in the next 12 months if we believe that Boyd will sustain sufficient leverage cushion relative to our 4x upgrade threshold to absorb potential operating volatility and leveraging transactions. "We could raise the rating on Boyd in the next 12 months if we see a longer track record of financial policy discipline in line with its recently communicated leverage target, increasing our certainty that it would sustain debt to EBITDA comfortably below 4x, and we expect that as the operating environment normalizes the company will retain the significant cost savings it experienced through 2021. "We could revise the outlook to stable if we no longer believe the company could maintain adjusted leverage below 4x." This scenario would likely occur if: -- The company underperforms our base case, potentially due to greater margin moderation than we currently forecast because of inflationary pressures and/or a revenue decline because consumers pull back on gaming spending; or -- Boyd pursues a material leveraging acquisition or becomes more aggressive with shareholder returns. ESG credit indicators: E-2, S-3, G-2 BT MCCARTHY 1: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: BT McCarthy 1, Inc. 5853 Washington, St. Naples, FL 34109 Business Description: BT McCarthy 1 is part of the "Other Specialty Trade Contractors" industry. Chapter 11 Petition Date: February 9, 2022 Court: United States Bankruptcy Court Middle District of Florida Case No.: 22-00125 Debtor's Counsel: Joseph A. Pack, Esq. PACK LAW 51 NE 24th St., Suite 108 Miami, FL 33137 Tel: (305) 916-4500 Email: joe@packlaw.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Marc Darby as president. The Debtor failed to include in the petition a list of its 20 largest unsecured creditors. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/YZXPMSY/BT_McCarthy_1_Inc__flmbke-22-00125__0001.0.pdf?mcid=tGE4TAMA CAST & CREW: S&P Upgrades ICR to 'B', Outlook Stable ---------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Burbank, Calif.–based Cast & Crew LLC to 'B' from 'B-'. At the same time, S&P affirmed its 'B' issue-level rating on its existing first-lien credit facility, and revised its recovery rating on the first-lien facility to '3' from '2' to reflect the increase in the amount of the incremental term loan debt in its capital structure, which results in reduced recovery prospect for the first-lien lenders despite its revised, higher enterprise valuation. The stable outlook reflects S&P's expectation that Cast & Crew's leverage will improve to the 6x area or lower over the next 12 months, and that the company will generate strong positive cash flow, which will enable it to maintain adequate liquidity to meet its operating and working capital needs. S&P said, "We expect Cast & Crew to strongly expand its revenue due to the high demand for content across film, television, and digital streaming producers. The company's payroll management business primarily generates revenue through handling fees and fees related to providing workers compensation insurance, which is calculated as a percentage of the total wages paid by its customers. We expect entertainment industry production spending to continue to rise at a rapid rate and anticipate Cast & Crew's gross wages processed in 2022 will be more than 50% higher than its pre-pandemic levels in 2019. "Given the company's strong market position, we believe it will continue to benefit from tailwinds in its growing entertainment industry payroll market niche. The demand for content from digital streaming platforms remains a key growth category because the crowded direct-to-consumer streaming market values original and high-budget content as an important competitive differentiator. This benefits Cast & Crew because it provides payroll and digital services to most of these players, including Netflix, Hulu, Amazon Prime Video, and Disney+. We view the company's operating niche as defensible given the complex industry-specific accounting and production payroll servicing requirements, the integration of its technology into its customers' workflow systems, and its long-tenured client relationships. "The company's acquisition of Backstage will provide it with a subscription revenue-generating platform that links creative supply (talent, filmmakers, crew) with creative demand (brands, ad agencies, casting directors). We believe the integration risks related to this transaction are low and expect Backstage will benefit from the same content creation tailwinds fueling the improvement in Cast & Crew's core business. We also believe the acquisition will provide the company with an opportunity to create a digital end-to-end talent acquisition and payment platform. "We forecast the company's revenue and cash flow will expand over the coming quarters and leverage will decrease to about 6x by the end of fiscal year 2022. We expect a continued strong operating performance and EBITDA contributions from its recent acquisitions will lead Cast & Crew to report adjusted EBITDA of about $275 million for fiscal year 2022. While the company has primarily used debt to fund prior acquisitions, it will largely finance the current acquisition with an equity contribution from Backstage's financial sponsor, which will limit the negative effects on its credit metrics. "Our ratings on Cast & Crew are constrained by its high leverage and ownership by a financial sponsor. Our assessment of the company incorporates our view of the financial policies of most financial sponsor-owned companies, which focus on generating investment returns over short time horizons (less than five years) and typically operate with high debt levels. Thus, while we expect Cast & Crew to increase its EBITDA and improve its cash flow generation over the next two to three years, we believe further debt-funded acquisitions or distributions will likely preclude any significant deleveraging. "The stable outlook on Cast & Crew reflects our expectation that its leverage will improve to the 6x area or lower over the next 12 months as it generates strong positive cash flow, enabling it to maintain adequate liquidity to meet its operating and working capital needs." S&P could consider taking a negative rating action on Cast & Crew if it demonstrates a weaker-than-expected operating performance or increases its leverage due to acquisitions or distributions such that: -- It sustains S&P Global Ratings-adjusted leverage of more than 7.0x; -- It maintains EBITDA margins below the mid-40% area; and -- Its free operating cash flow (FOCF) to debt declines and remains below 5%. S&P said, "Although unlikely given Cast & Crew's financial-sponsor ownership and history of debt-financed acquisitions, we could consider an upgrade if it establishes a strong operating track record while maintaining a conservative financial policy such that we expect its S&P Global Ratings-adjusted leverage to decline below 5x on a sustained basis." ESG credit indicators: E-2 S-3 G-3 S&P said, "Social factors are a moderately negative consideration in our analysis of Cast & Crew LLC. This reflects the mission-critical importance of its human resources and payroll services to its clients and their employees. In addition, there are high inherent risks and adverse consequences (reputational damage, legal or regulatory fines, or operational disruptions) if it fails to protect sensitive information or its critical infrastructure and applications. Governance is a moderately negative consideration in our analysis, 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 its controlling owners. This also reflects private-equity sponsors' generally finite holding periods and focus on maximizing shareholder returns." CENTURY ALUMINUM: Chief Financial Officer Resigns ------------------------------------------------- Craig Conti, chief financial officer of Century Aluminum Company, will be leaving the company in order to be closer to family and pursue other opportunities, effective March 1, 2022. Mr. Conti joined the company in July 2018 as CFO and executive vice president. Jesse Gary, the company's president and chief executive officer commented, "On behalf of everyone at Century, I would like to thank Craig for his valuable contributions to Century's success over the past few years. We wish him all the best in his future endeavors." Following Mr. Conti's departure, Michelle Harrison, the company's senior vice president, finance and treasurer, will assume the responsibilities of principal financial officer while the company conducts a search, both internally and externally, for a successor. About Century Aluminum Company Century Aluminum Company -- http://www.centuryaluminum.com-- is a global producer of primary aluminum and operates aluminum reduction facilities, or "smelters," in the United States and Iceland. Century Aluminum reported a net loss of $123.3 million for the year ended Dec. 31, 2020, a net loss of $80.8 million for the year ended Dec. 31, 2019, and a net loss of $66.2 million for the year ended Dec. 31, 2018. As of Sept. 30, 2021, the Company had $1.49 billion in total assets, $515.5 million in total current liabilities, $653.5 million in total noncurrent liabilities, and $320.2 million in total shareholders' equity. CHARMING CHARLIE: Closes 2 Stores in Sacramento A Year After Return ------------------------------------------------------------------- Sonya Scrich of Sacramento Business Journal reports that accessories retailer Charming Charlie is closing its two local stores, less than a year after reentering the Sacramento area. Signs at a Charming Charlie store in Folsom's Palladio at Broadstone confirm the location's upcoming closure. The retailer is also closing its store in Fountains at Roseville, said Paul Bollinger, executive vice president of Fountains owner Inter-Cal Real Estate Corp. Those stores reopened last year, as the company pursued a new future. Houston-based Charming Charlie filed for bankruptcy in 2019, its second Chapter 11 filing in less than two years, the Houston Business Journal reported at the time. Charming Charlie then closed all its stores, including local sites in Laguna Crossroads in Elk Grove, Fountains at Roseville and Folsom's Palladio. After the Chapter 11 filing, Houston-based CJS Group LP — led by Charming Charlie founder and original CEO Charlie Chanaratsopon — bought the brand and its intellectual property through a bankruptcy auction in September 2019, the Houston Business Journal reported. The company went on to sell products online and in brick-and-mortar stores. Last year, Charming Charlie reopened in spaces it previously occupied in Folsom's Palladio and Fountains at Roseville. It filled 7,000 square feet in Roseville, and about 6,995 square feet in Folsom. Charming Charlie sells clothing, jewelry and other accessories. Company representatives could not immediately be reached for comment. About Charming Charlie Holdings Charming Charlie -- http://www.CharmingCharlie.com/-- is a Houston-based specialty retailer focused on fashion jewelry, handbags, apparel, gifts and beauty products. The Company currently operates more than 375 stores in the United States and Canada. Charming Charlie Holdings Inc. and its affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 17-12906) on Dec. 11, 2017. Charming Charlie estimated assets of $50 million to $100 million and debt of $100 million to $500 million. Kirkland & Ellis LLP is serving as the Company's legal counsel, AlixPartners LLP is serving as its restructuring advisor, and Guggenheim Securities, LLC is serving as its investment banker. Klehr Harrison Harvey Branzburg LLP is the Company's local counsel. Rust Consulting/OMNI Bankruptcy is the claims and noticing agent. Joele Frank, Wilkinson Brimmer Katcher is the Company's communications consultant. A&G Realty Partners, LLC's the Company's real estate advisors. Hilco Merchant Resources LLC is the Company's exclusive agent. COMMUNITY HEALTH: Unit Completes $1.5B Offering of Senior Notes --------------------------------------------------------------- CHS/Community Health Systems, Inc. (the "Issuer"), a direct, wholly owned subsidiary of Community Health Systems, Inc., completed its previously announced offering of $1,535,000,000 aggregate principal amount of its 5.250% Senior Secured Notes due 2030. The terms of the Notes are governed by an indenture, dated as of Feb. 4, 2022, among the Issuer, the Company, the subsidiary guarantors party thereto, Regions Bank, as trustee, and Credit Suisse AG, as collateral agent. The Notes bear interest at a rate of 5.250% per year payable semi-annually in arrears on May 15 and November 15 of each year, commencing on Nov. 15, 2022. The Notes are unconditionally guaranteed on a senior-priority secured basis by the Company and each of the Issuer's current and future domestic subsidiaries that provide guarantees under the Issuer's ABL facility, any capital market debt securities of the Issuer (including the Issuer's outstanding senior notes) and certain other long-term debt of the Issuer and the guarantors. The Notes and the guarantees are secured by (i) first-priority liens on the collateral that also secures on a first-priority basis the Issuer's existing senior-priority secured notes and (ii) second-priority liens on the collateral that secures on a first-priority basis the ABL Facility (and also secures on a second-priority basis the Existing Senior-Priority Secured Notes), in each case subject to permitted liens described in the Indenture. The Notes are subject to the terms of three intercreditor agreements: (1) the intercreditor agreement which governs the relative rights of the secured parties in respect of the ABL Facility, the Existing Senior-Priority Secured Notes, the Issuer's existing junior-priority secured notes and the Notes, (2) the intercreditor agreement which governs the relative rights of the secured parties in respect of the Existing Senior-Priority Secured Notes, the Existing Junior-Priority Secured Notes and the Notes and (3) the intercreditor agreement which governs the relative rights of holders of the Notes, holders of the Existing Senior-Priority Secured Notes and holders of any future obligations secured on a pari passu basis with the Notes. Each of the Intercreditor Agreements restrict the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes. At any time prior to May 15, 2025, the Issuer may redeem some or all of the Notes at a price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date plus a "make-whole" premium, as described in the Indenture. On or after May 15, 2025, the Issuer may redeem some or all of the Notes at any time and from time to time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to May 15, 2025, the Issuer may redeem up to 40% of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at the redemption price set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to May 15, 2025, but not more than once during each twelve-month period commencing on Feb. 4, 2022, the Issuer may redeem up to 10% of the original aggregate principal amount of the Notes at a price equal to 103% of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. If the Company or the Issuer experiences a Change of Control (as defined in the Indenture), the Issuer is required to offer to repurchase the Notes at 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The Indenture contains covenants that, among other things, limit the Issuer's ability and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, incur restrictions on the ability of the Issuer's restricted subsidiaries that are not guarantors to pay dividends or make certain other payments, create or incur certain liens, sell assets and subsidiary stock, impair the security interests, transfer all or substantially all of the Issuer's assets or enter into merger or consolidation transactions, and enter into transactions with affiliates. The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in the Indenture, failure to pay certain other indebtedness, failure to pay certain final judgments, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes issued pursuant to the Indenture and certain events of bankruptcy or insolvency. As previously announced, on Jan. 20, 2022, the Issuer caused to be issued to holders of the 6.625% Senior Secured Notes due 2025 a notice of conditional redemption to redeem on Feb. 4, 2022 all of the 2025 Notes then outstanding at a redemption price equal to 100% of the principal amount of the 2025 Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date, plus a "make-whole" premium as described in the indenture governing the 2025 Notes. On Feb. 4, 2022, the Issuer redeemed all outstanding 2025 Notes using the proceeds from the Notes Offering. About Community Health Systems Inc. Community Health Systems, Inc. -- http://www.chs.net-- is a publicly traded hospital company and an operator of general acute care hospitals in communities across the country. As of Dec. 31, 2020, the Company owned or leased 89 hospitals with an aggregate of 14,110 licensed beds, comprised of 87 general acute care hospitals and two stand-alone rehabilitation or psychiatric hospitals. These hospitals are geographically diversified across 16 states, with the majority of its hospitals located in regional networks or in close geographic proximity to one or more of its other hospitals. As of Sept. 30, 2021, the Company had $15.67 billion in total assets, $16.67 billion in total liabilities, $493 million in redeemable noncontrolling interests in equity of consolidated subsidiaries, and a total stockholders' deficit of $1.49 billion. * * * As reported by the TCR on Dec. 29, 2020, S&P Global Ratings raised its issuer credit rating on Community Health Systems Inc. to 'CCC+' from 'SD' (selective default). S&P said, "The stable outlook reflects our view that the company has reduced its debt, and improved its operations and cash flow such that its debt is now more manageable; however, we believe risks to the long-term sustainability of the capital structure remain, especially given ongoing uncertainty stemming from the coronavirus pandemic." In November 2020, Fitch Ratings affirmed the Long-Term Issuer Default Ratings (IDR) of Community Health Systems, Inc. (CHS) and subsidiary CHS/Community Health Systems, Inc. at 'CCC'. COOKE OMEGA: S&P Withdraws 'B' Issuer Credit Rating --------------------------------------------------- S&P Global Ratings has withdrawn its 'B' issuer credit rating (ICR) on Cooke Omega Investments Inc. at the company's request following the full redemption of Cooke Omega's US$330 million senior secured notes on Feb. 7, 2022 . CRESTWOOD EQUITY: S&P Affirms 'BB-' Rating on Senior Notes ---------------------------------------------------------- S&P Global Ratings affirmed its 'BB-' issue-level rating on the Crestwood Equity Partners L.P.'s (CEQP) senior notes, including the notes it assumed from Oasis Midstream Partners L.P. (OMP), and its 'B-' issue-level rating on its preferred stock. S&P's '4' recovery rating remains unchanged, indicating its expectation for average (30%-50%; rounded estimate: 45%) recovery in the event of a payment default. The positive outlook reflects S&P's view that the OMP acquisition will materially increase the scale of CEQP's operations and footprint while reducing its leverage to about 4x in 2022. On Feb. 1, 2022, CEQP, a Houston-based master limited partnership (MLP), completed its merger with OMP. As part of the transaction, CEQP assumed $450 million of OMP's senior notes due 2029 and increased its revolving credit facility's commitment to $1.50 billion from $1.25 billion. CEQP is a publicly traded MLP that owns and operates energy infrastructure assets located in the Bakken, Delaware, Marcellus, Powder River, and Barnett basins. With about $3 billion of net fixed assets and historical EBITDA of $570 million-$600 million (before the acquisition of OMP), the partnership focuses on natural gas and crude oil gathering and processing (80% of expected 2021 EBITDA), storage and transportation (8%), and marketing, supply, and logistics (12%). ESG credit indicators: E-3 S-2 G-2 S&P said, "Environmental factors are a moderately negative consideration in our credit rating analysis of CEQP, which operates natural gas and crude gathering and processing, storage, transportation, and marketing businesses. This is due to the increasing environmental regulations targeting greenhouse gas (GHG) emissions facing the broader midstream energy sector. Over the longer term, the company may face the risk of declining volumes due to reduced drilling activity or demand stemming from the transition to renewable energy sources." CREW ENERGY: S&P Upgrades ICR to 'B-' on Improving Cash Flows ------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on Calgary-based oil and gas exploration and production (E&P) company Crew Energy Inc. to 'B-' from 'CCC+'. At the same time, S&P raised its issue-level rating on the company's senior unsecured notes to 'B' from 'B-'. The '2' recovery rating is unchanged. S&P forecasts improving credit measures over the next two years supported by its favorable view of commodity prices. Natural gas prices have remained on an upward trajectory since early 2021, with both Henry Hub and AECO prices benefitting from strong demand, a robust liquefied natural gas (LNG) export market, and reduced associated gas production in the U.S. S&P said, "Based on our favorable near-term view, we forecast improving cash flows and improved credit measures over the next two years. Specifically, we project adjusted FFO to debt to average about 50% in 2022 and 2023. The improvement in credit measures is also supported by our expectation for higher production and our assumption that the company will use excess cash to repay drawings under the credit facility." S&P said, "Although credit measures have strengthened, our estimates also incorporate potential for volatility in the rating. We estimate all else equal, a decline of US$1 per million Btu (mmBtu) in AECO and a drop of US$10 per barrel in crude oil prices from S&P Global Ratings' 2022 pricing assumptions could result in adjusted FFO declining by about 30% with adjusted FFO-to-debt deteriorating to the low 30% area from our current expectation of 55%." Nevertheless, the company has hedged 46% of its 2022 gas production at an average price of C$3.26 per thousand cubic feet, which should limit near-term downside risk in a weak commodity price environment. The upgrade also reflects our expectation for positive free cash flow generation and improving liquidity. The company executed a major drilling program during 2021 with a capital investment of approximately C$175 million, drilling 26 wells and completing 24 wells. Spending in 2022 is expected to be more moderate (about C$95 million) and will focus on completing the seven wells in the condensate-rich area in West Septimus, and drilling and completing five wells in Groundbirch. Following completion of these wells, S&P expects average production will rise to 32,000 barrels of oil equivalent (boe) per day in 2022, a 10,000 boe per day increase from 2020. The production growth will help the company to better capitalize on existing infrastructure, which can currently accommodate about 40,000 boe per day of production, and further improve unit operating costs. S&P said, "Based on the improved prices and higher production estimates, we expect the company will generate meaningful positive free cash flows in the range of C$85 million to C$90 million in 2022. We assume Crew will use the excess cash flow largely to repay amounts outstanding under the credit facility. The C$150 million credit facility was 47% drawn at Dec. 31, 2021, and we expect it to be undrawn by year-end. Although we do not expect it, the company also has the option to further dispose of working interests in its infrastructure assets for C$37.5 million, which could provide incremental liquidity. In our view, the improved liquidity position and stronger credit measures, combined with hedges in place, provide sufficient cushion for the company to maintain the rating even if near-term hydrocarbon prices weaken. Furthermore, we believe that given supportive capital market access, Crew should be able to refinance its C$300 million of senior unsecured notes well in advance of the March 2024 maturity. "We believe the company's scale of production limits upside to the business risk assessment and credit rating. "In our opinion, with average daily production of about 32,000 boe/day, Crew's operational scale is materially below that of 'B' rated E&P peers. Our assessment of Crew's business risk profile reflects its smaller production scale, limited product diversity (80% of estimated 2021 production is natural gas), and low proved developed reserves ratio (about 40%) compared with those of 'B' rated peers." Partially mitigating this are the company's operations in the Montney, a well-established play in North America. The company also has some degree of market diversification, servicing different hubs, including Chicago and AECO. While exposure to AECO is higher in 2022 (about 60%) primarily because of the hedges put in place during 2021, we believe exposure to U.S. hubs is likely to increase in 2023 and beyond. Crew has also continued to focus on cost reduction by improving well efficiencies and unit costs are expected to decline by 25% in 2022 from 2020 as production expands. However, the profitability profile for gas-focused producers remains weaker than for producers with a crude oil-focused product mix. Based on S&P's five-year profitability assessment, it expects Crew's profitability, which it measures using the company's unhedged unit EBIT, will remain in the bottom quartile of our rated E&P peer group. S&P said, "The stable outlook reflects our view that the company will generate strong credit measures in the next two years supported by favorable natural gas prices and increased production. Specifically, we project the company will generate an adjusted FFO-to-debt ratio averaging 50% over the next two years. The outlook also reflects our expectation that Crew will maintain sufficient liquidity over the next year by limiting spending well within cash flow generation and using excess cash to reduce borrowings under the credit facility. We also expect Crew will refinance its March 2024 debt maturity before it becomes a current obligation. "We could lower the rating if availability under the credit facility deteriorates meaningfully or if credit measures weaken more than our expectation, specifically the adjusted FFO-to-debt ratio declining below 12%. We could envision this scenario if commodity prices fall significantly and management fails to correspondingly reduce capital spending, resulting in material negative free cash flows. "We could raise our ratings on Crew if it improves its scale of production and proved developed reserves ratio to closely align with those of higher-rated peers. In our view, this would help mitigate the impact of unanticipated commodity price volatility on cash flow generation. In this scenario, we would also expect the company to maintain an FFO-to-debt ratio above 45% and have sufficient liquidity." ESG credit indicators: E-4, S-2, G-2 S&P said, "Environmental factors are a negative consideration in our credit rating analysis of Crew. Although Crew is mostly exposed to natural gas production, risks from accelerating energy transition, declining profitability, adoption of renewable energy sources, and environmental risks inherent in hydrocarbon production are reflected in our rating. The company is investing in technologies to reduce emissions and targets reducing its scope 1 greenhouse gas emissions intensity by 20% by 2025 relative to its 2019 baseline. While we expect operating and full-cycle costs associated with meeting environmental standards to increase, we do not expect them to have a rating impact." CTC HOLDINGS: Moody's Assigns Ba3 CFR, Rates New Term Loan B1 ------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to CTC Holdings, L.P.'s proposed senior secured term loan. Moody's also assigned to CTC a Ba3 corporate family rating. CTC's outlook is stable. Assignments: Issuer: CTC Holdings, L.P. Corporate Family Rating, Assigned Ba3 Senior Secured Term Loan, Assigned B1 Outlook Actions: Issuer: CTC Holdings, L.P. Outlook, Assigned Stable RATINGS RATIONALE Moody's said CTC expects to borrow about $300 million and intends to use the net proceeds for trading capital and general corporate purposes. Moody's said the Ba3 CFR reflects CTC's profitable track record and competency as an options market maker, its liquid balance sheet and its growing levels of capital. The CFR also reflects the firm's sustained oversight from a highly engaged ownership and leadership team and culture centered around risk management, with a strong track record navigating various challenging operating environments. Nonetheless, Moody's said there is an inherently high level of operational and market risk in CTC's relatively narrow principal trading and market making activities, that could result in rapid and severe losses and a deterioration in liquidity and funding in the event of a severe risk management failure. Such operational and market risks have historically been successfully mitigated by CTC's generally short-lived trade positions in liquid exchange-traded securities, prudent hedging of exposure to directional price movements, and robust framework of risk monitoring, position limits and multi-layered approach to technology risk controls. However, there is a risk that the adherence to an extremely strong and effective controls and risk management culture could become somewhat diluted with ongoing growth and expansion of the firm's operations. The ratings also incorporate CTC's relatively narrow concentration and specialization in options trading. While the company has demonstrated scale, competence and ability to succeed within options market making, Moody's considers the limited diversification into other product classes as a constraint to its credit profile, especially compared to peers that have extensive trading capabilities spanning multiple asset classes and product lines. In addition, Moody's noted that CTC's gradual expansion into lower-frequency, longer duration trading strategies (holding positions for days to weeks) complements its traditional higher-frequency market making activities and provides a competitive benefit. However, the increased capital intensity of longer-lived strategies could pose greater risks for the firm's creditors if not properly managed. CTC's core options market making business results in a high level of balance sheet leverage as measured by tangible assets / tangible equity due to the grossing-up of long and short trading positions in closely related positions in the same underlying symbol. However, Moody's noted that the absolute level of reported balance sheet leverage somewhat overstates the market risk associated with adverse market movements or declining asset values. As part of its market making activities, CTC's aims to hedge exposure to directional price moves of the underlying assets with offsetting long and short options positions within the same underlying symbol. CTC's balance sheet intensive trading approach also creates reliance on prime broker relationships. Moody's expects that CTC's term loan issuance will lead to a modest increase in balance sheet leverage, but believes this increase is offset by the benefits of adding more stable long-term funding to its balance sheet. CTC has generally grown its equity capital base through earnings retention and capital contributions from its members. However, Moody's observed that CTC's partnership structure has resulted in sizeable capital distributions in excess of net income during some prior periods. Nonetheless, Moody's said that CTC's capital base has expanded over the past two years, commensurate with the firm's growth, and that it believes CTC will maintain a capital distribution policy focused on earnings retention (net of required tax distributions to members). Moody's said that the proposed B1 senior secured term loan was issued by CTC Holdings, L.P., which is the holding company of the corporate family, and accordingly this rating is one notch below the firm's Ba3 CFR because obligations at the holding company are structurally inferior to those of CTC's operating companies, where the preponderance of the group's liabilities reside. Governance is highly relevant for CTC, as it is to all firms operating in the financial services industry. Corporate governance weaknesses can lead to a deterioration in a company's credit quality, while governance strengths can benefit its credit profile. Governance risks are largely internal rather than externally driven. Generally, Moody's consider that the company's deliberative partnership-like culture, with key executives and employees maintaining a high level of involvement in control and management oversight, provides an effective governance framework. Nonetheless, corporate governance remains a key credit consideration and requires ongoing monitoring. CTC's stable outlook is based on Moody's expectation that the firm will continue to generate solid profits and cash flows, sustain its healthy liquidity profile, and that its leaders will continue to place a high emphasis on maintaining an effective risk management and controls framework. The stable outlook also reflects Moody's expectation that the increase in debt will not lead to an increase in risk appetite. CTC is an electronic proprietary trading firm that specializes in using internally developed automated trading algorithms to make markets in options on a variety of underlying asset classes and securities. CTC is headquartered in Chicago and has over 500 employees principally located in Chicago, New York, London, and Hong Kong. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS CTC's ratings could be upgraded should it sustainably improve the quality and diversity of its profitability and cash flows from the development of lower-risk ancillary business activities; grow its equity capital relative to its level of assets; and reduce reliance or change to more favorable terms in key prime brokerage relationships. CTC's ratings could be downgraded if it were to suffer from a sustained reduction in profitability from market or regulatory changes or experience a substantial trading loss or risk control failure. CTC's ratings could also be downgraded if there were a significant reduction in equity capital or inability to increase capital alongside asset growth either through an unfavorable distribution policy or reduced profitability. Any adverse changes in corporate culture or management quality or shift towards a more aggressive risk appetite could also result in a downgrade. The principal methodology used in these ratings was Securities Industry Market Makers Methodology published in November 2019. CTC HOLDINGS: S&P Assigns 'B+' ICR, Outlook Stable -------------------------------------------------- S&P Global Ratings assigned its 'B+' issuer credit rating to CTC Holdings L.P. The outlook is stable. S&P also assigned a 'B+' issue rating to CTC's planned $300 million senior secured term loan B. The ratings reflect the firm's successful options market making business with strong market share in several options products. S&P sid, "We view negatively the firm's reliance on short-term prime brokerage funding and limited sources of contingent liquidity. Although we expect the S&P Global Ratings risk-adjusted capital (RAC) ratio to remain between 5%-7%, we believe that increases in volatility, though generally positive for earnings, could put pressure on our leverage metrics." CTC Holdings is a Chicago-based nonoperating holding company that, through its regulated subsidiaries, principally trades electronically a large volume of diverse options products across asset classes, including index, equities, fixed income, currency, and commodities. CTC maintains strong market share across most of the products it trades in within options and futures in the U.S. It continues to expand its trading of other products beyond options market making into other asset classes and strategies. CTC does not self-clear and does all its trading through prime brokers and other clearing firms, some of which also provide financing. CTC tries to balance using technology to trade a large volume of securities relative to its capital, including low-latency market making and algorithmic strategies, with using seasoned traders to drive better performance. The company also trades medium frequency strategies, which span minutes to hours, and low frequency strategies, which range from days to a few weeks. Both medium and low frequency strategies typically employ hedges, so while the duration of trade may span minutes to a few weeks, the majority of the risk is hedged at trade inception. S&P said, "We expect the firm's S&P Global Ratings RAC ratio to remain between 5% and 7%. We view partners' capital as common equity given limitations on partner redemptions. We expect retention of earnings to grow equity in line with the growth of the business. The firm typically generates good risk-adjusted returns, albeit with more volatility than most peers. While the company is generally more profitable in times of increased volatility, which drives trading volume across most of its products, increased volatility also boosts value-at-risk (VaR), which lowers our RAC ratio. This was the case in 2018 and 2020, when the company was highly profitable. "The stable outlook on CTC Holdings reflects S&P Global Ratings' expectation that CTC's balance sheet, exposure, and margin requirements may be volatile, but the firm will maintain good operating performance and a RAC ratio above 5%." S&P could lower its ratings over the next 12 months if: -- S&P expects the RAC ratio to fall consistently below 5%; or -- The firm's liquidity was to deteriorate, for example such that margin required to be posted to prime brokers to total net trading capital would be consistently above 65%. Over the same time horizon, S&P could raises its ratings if it expects: -- CTC to maintain its RAC ratio comfortably above 7% while maintaining liquidity and adding further to business diversity. ECOARK HOLDINGS: Signs Consulting Agreement With Zest Labs CEO -------------------------------------------------------------- Ecoark Holdings, Inc. entered into a consulting agreement with Peter Mehring, chief executive officer of Zest Labs, Inc., a wholly owned subsidiary of the company. The term will take effect on Feb. 14, 2022 and terminate on Feb. 14, 2023. On Feb. 2, 2021, Mr. Mehring, who also serves as president and director of Ecoark, notified the company that he intends to resign from the Board of Directors and from his other positions with the company and Zest effective Feb. 11, 2022. There were no disagreements between Mr. Mehring and the company relating to his service as a director or officer. Mr. Mehring is leaving the company because he has entered into an agreement to work for a leading Internet services provider based in the Silicon Valley. Mr. Mehring has agreed to provide consulting services relating to Zest's intellectual property. Pursuant to the consulting agreement, Mr. Mehring will assist in transitional activities related to his resignation as the chief executive officer of Zest and will advise both companies on any current intellectual property litigation, and matters related to Zest's intellectual property. Moreover, Ecoark agreed to pay Mr. Mehring a monthly retainer of $16,666.66 per month to be paid on the last day of each month. Upon the execution of the consulting agreement, Mr. Mehring will have the expiration date on any stock awards by the company extended for a period of one year from the last effective date of the consulting agreement. The consultant will also have any unvested stock awards continue to vest during the term according to the vesting schedule set forth in the stock award agreements. About Ecoark Holdings Rogers, Arkansas-based Ecoark Holdings, Inc., founded in 2011, is a diversified holding company. Through its wholly-owned subsidiaries, the Company has operations in three areas: (i) oil and gas, including exploration, production and drilling operations and transportation services, (ii) post-harvest shelf-life and freshness food management technology, and (iii) financial services including consulting, fund administration and asset management. Ecoark Holdings reported a net loss of $20.89 million for the year ended March 31, 2021, a net loss of $12.14 million for the year ended March 31, 2020, and a net loss of $13.65 million for the year ended March 31, 2019. As of Sept. 30, 2021, the Company had $45.50 million in total assets, $21.73 million in total liabilities, and $23.77 million in total stockholders' equity. ENSIGN DRILLING: Moody's Alters Outlook on Caa1 CFR to Positive --------------------------------------------------------------- Moody's Investors Service affirmed all of Ensign Drilling Inc.'s ratings, including its Caa1 Corporate Family Rating, its Caa1-PD Probability of Default Rating, and it's Caa2 senior unsecured rating. At the same time, the outlook was changed to positive from negative. The speculative grade liquidity (SGL) rating remains unchanged at SGL-4. "The change in Ensign's outlook to positive is supported by favorable industry conditions Moody's expect for drilling rig operators in 2022" said Jonathan Reid, Moody's analyst. Affirmations: Issuer: Ensign Drilling Inc. Corporate Family Rating, Affirmed Caa1 Probability of Default Rating, Affirmed Caa1-PD Senior Unsecured Regular Bond/Debenture, Affirmed Caa2 (LGD5) Outlook Actions: Issuer: Ensign Drilling Inc. Outlook, Changed To Positive From Negative RATINGS RATIONALE Ensign's Caa1 CFR is challenged by: 1) a track record of aggressive financial policies; and 2) weak liquidity. The company is supported by: 1) increasing oil and gas drilling activity that will lead to improved credit metrics and enable Ensign to generate positive free cash flow in 2022; 2) broad North American diversification in multiple basins and broad international exposure with a significant number of rigs in Australia, the Middle East and Latin America; and 3) a high quality drilling rig fleet. The positive outlook reflects Moody's expectation that the company will use a large portion of the free cash flow it generates in 2022 to reduce drawings on its revolver, which should improve its liquidity profile. Ensign's ESG Credit Impact Score (CIS) is very highly negative at CIS-5. The company is negatively impacted on its current rating by its highly negative G issuer profile score, primarily due to the company's aggressive financial policies including distressed exchanges and refinancing risk. Potential carbon transition, and demographic & societal trend risk factors may also lead to greater future negative credit impact over time, but there is limited credit impact to date. Beyond carbon transition and demographic & societal trends, other environmental and social risks have the potential to cause future credit profile deterioration. Ensign's liquidity is weak (SGL-4) because the company has minimal cash on hand, no unused revolver availability on its C$900 million revolving credit facility due in November 2023, and seasonality in the company's cash flow. Moody's expects that favorable drilling industry conditions will enable the company to generate around C$100 million of free cash flow over the next four quarters. If Ensign is able to refinance its unsecured notes due in April 2024, the revolver maturity automatically extends to November 2024. Ensign should be able to comply with its financial covenants over the next four quarters, however compliance is tight. Alternative sources of liquidity are limited principally to the sale of Ensign's existing drilling rigs and completion and well service rigs, which are largely encumbered, and market conditions are unfavorable for such asset sales. Ensign's senior unsecured notes are rated Caa2, one notch below the Caa1 CFR, reflecting the C$900 million revolving credit facility that ranks above the unsecured notes in the company's capital structure. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Ensign generates sequential improvements in EBITDA in an improving industry environment and if the company materially reduced the drawings on its credit facility leading to an improved liquidity profile. The ratings could be downgraded if Ensign's liquidity profile deteriorated. Ensign Energy Services Inc. is a public Calgary, Alberta-based provider of land drilling rigs and well servicing. The company owns a fleet of 306 land drilling rigs globally out of which 136 rigs are in Canada, 122 in the United States and 48 at various international locations. The principal methodology used in these ratings was Oilfield Services published in August 2021. ENTRUST ENERGY: Shell Blames Entrust for Power Cutoff ----------------------------------------------------- Rick Archer of Law360 reports that electricity provider Shell is asking a Texas bankruptcy court to dismiss a suit from power retailer Entrust Energy accusing it of sending Entrust into Chapter 11 by breaching a supply agreement in the face of a catastrophic storm, saying Entrust was the first to breach the contract. In a filing Monday, February 7, 2022, a pair of Shell entities argued that they can't be blamed for cutting their electric supply to Entrust before Texas was hit with storm-induced rolling blackouts in February 2021, saying Entrust had breached its contractual duty to lock in sufficient electricity to meet expected demands. About Entrust Energy Houston, Texas-based Entrust Energy, Inc. generates, transmits and distributes electrical energy to homes and businesses. Entrust Energy and 14 of its affiliates sought Chapter 11 bankruptcy protection (Bankr. S.D. Texas Lead Case No. 21-31070) on March 30, 2021. At the time of the filing, Entrust Energy disclosed total assets of between $100 million and $500 million and total liabilities of between $50 million and $100 million. Judge Marvin Isgur oversees the cases. The Debtors tapped Baker & Hostetler, LLP and Alvarez & Marsal North America, LLC as their legal counsel and financial advisor, respectively. BMC Group, Inc., is the claims noticing and solicitation agent. The U.S. Trustee for Region 7 appointed an official committee of unsecured creditors in the Debtors' Chapter 11 cases on April 28, 2021. McDermott Will & Emery, LLP and FTI Consulting, Inc., serve as the committee's legal counsel and financial advisor, respectively. HANGER INC: Moody's Alters Outlook on B1 CFR to Positive -------------------------------------------------------- Moody's Investors Service affirmed Hanger, Inc.'s B1 Corporate Family Rating, B1-PD Probability of Default Rating, and B1 ratings of the company's senior secured first lien revolving credit facility and term loan. The Speculative Grade Liquidity Rating was upgraded to SGL-1 from SGL-2. The ratings outlook was changed to positive from stable. The change in outlook to positive reflects Moody's view that leverage and credit metrics have improved and will continue to benefit from the growing demand for Hanger's products and services. Moody's forecasts debt/EBITDA to be around 4.1x for FYE 2021, and that leverage will improve below 4.0x by the end of 2022 partially due to deferred appointments as well as positive changes in reimbursement, with a 5.1% rate increase implemented by CMS for 2022. Future growth will come from Hanger acquiring existing clinics in strategic locations or new office openings as the company continues to gain market share. Profitability and interest coverage have also rebounded from the pandemic and have returned to 2019 levels. Additionally, risks stemming from Hanger's former internal control issues have subsided. The ratings affirmation reflects that while leverage has improved from the height of the Covid-19 pandemic, it has not been sustained below 4.0x. Hanger has been focused on resolving its former internal control issues, and managing volatility through the pandemic. Moody's expects the company to continue growing the business while maintaining balanced capital allocations. The upgrade in the Speculative Grade Liquidity Rating from SGL-2 to SGL-1 reflects Hanger's improved liquidity profile with $76 million of cash on the balance sheet as of September 30, 2021, full availability on its $135 million revolving credit facility and forecasted positive cash flow generation of roughly $50 million in 2022. Affirmations: Issuer: Hanger, Inc. Corporate Family Rating, Affirmed at B1 Probability of Default Rating, Affirmed at B1-PD Gtd Senior secured first lien revolving credit facility expiring 2026, Affirmed at B1 (LGD3) Gtd Senior secured first lien term loan B due 2025, Affirmed at B1 (LGD3) Upgrades: Issuer: Hanger, Inc. Speculative Grade Liquidity Rating, Upgraded to SGL-1 from SGL-2 Outlook Actions: Issuer: Hanger, Inc. Outlook, Changed To Positive From Stable RATING RATIONALE The B1 Corporate Family Rating reflects Hanger's highly specialized nature of operations, as well as its moderate financial leverage. Moody's forecasts Hanger's adjusted debt to EBITDA to improve to below 4.0x by the end of 2022 due in part to a 5.1% reimbursement rate increase from CMS. Despite positive rate increases for 2022, concentration of revenue from the government remains a risk, with 50% of total revenue derived from Medicare and Medicaid. Hanger benefits from its scale and national footprint relative to competitors, with about 875 patient care clinics and satellite locations where it provides customized orthotics and prosthetics to patients. Moody's expects that Hanger will maintain its market leading position and will gain from the favorable demand outlook for the industry. The rating further reflects the steady, non-cyclical demand of Hanger's businesses and the strong recurring nature of its revenues. The Speculative Grade Liquidity Rating of SGL-1 reflects very good overall liquidity that Moody's believes will be supported by Hanger's $76 million of cash on the balance sheet as of September 30, 2021, full availability on its $135 million revolving credit facility and forecasted positive cash flow generation of roughly $50 million in 2022. The positive outlook reflects Moody's expectation that Hanger will be able to de-lever below 4.0 by the end of 2022 and will further benefit from positive growth drivers impacting the industry. The ratings on the debt instruments are affirmed at the B1, the same as the Corporate Family Rating as the instruments constitute the vast majority of liabilities in the capital structure. The term loan and revolver benefit from upstream guarantees from Hanger's existing and future material domestic subsidiaries. ESG considerations are material to Hanger's credit profile. Moody's views Hanger's social risk considerations positively as Hanger provides products that improve the quality of life for amputees. That said, like other healthcare providers, Hanger faces some social risks given the rising concerns around the access and affordability of healthcare services. From a governance standpoint, Hanger had previously experienced weaknesses related to its financial reporting and internal controls. However, the company has made significant investments to strengthen internal controls and continues to implement policies and procedures that will help ensure the timeliness and accuracy of financial reporting going forward. Moody's no longer views internal controls as an ongoing concern. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Hanger materially increases its scale with debt to EBITDA sustained below 4.0x times. For an upgrade to be considered, Hanger will also need to improve profitability and demonstrate prudent financial policies and balanced capital allocations. Ratings could be downgraded if operating performance weakens, or if the company's adjusted debt to EBITDA is sustained above 5.0 times. The ratings could also be downgraded if liquidity weakens. Hanger, Inc., headquartered in Austin, TX, is the leading provider of orthotic and prosthetic patient care services in the US. The company owns and operates about 875 patient care clinics and satellite locations in 48 states and the District of Columbia, with over 1,600 clinicians. The company generated approximately $1.1 billion in annual revenue for the twelve months ended September 30, 2021. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. HBL SNF: Court Extends Time to File Plan by 60 Days --------------------------------------------------- Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York granting HBL SNF, LLC, d/b/a Epic Rehabilitation and Nursing at White Plains' motion seeking to extend the time to file a Subchapter V plan of reorganization. The Debtor seeks an additional 90 days until May 2, 2022, to file its plan in the Subchapter V case. The ongoing dispute between the Debtor and its landlord, White Plains Healthcare Properties I, LLC, concerning the Debtor's lease is one of the main reasons that the Debtor filed this bankruptcy. That litigation has now been removed to the Bankruptcy Court, discovery has been conducted, and the Landlord's motion for summary judgment on the lease issue is scheduled to be heard on March 24, 2022. The Debtor contends that resolution of this litigation is critical to the Debtor's ability to successfully reorganize as the Debtor intends to assume the lease in this bankruptcy, if possible. Thus, the argument goes, that Debtor cannot file a meaningful plan of reorganization until a final determination is made with regards to the termination of the lease. Judge Lane finds that the Debtor has satisfied its burden to show that an extension is appropriate. All parties agree that the status of the Debtor's lease with the Landlord is a threshold issue that must be resolved before any reorganization can occur. The parties differed as to whether discovery would be needed before deciding the merits of the lease issue and about how long such discovery should take. After hearing the parties' views on these questions, the Court entered a schedule for prompt litigation of the complex questions about the lease, with a short period of time for discovery and a briefing schedule culminating in a hearing in March 2022. Given that the Court determined the litigation schedule, it is hard to see how the Debtor could be blamed for unduly delaying adjudication of the lease issue. Judge Lane notes that an extension does not unduly prejudice any party, including the Landlord. The lease litigation was, in fact, filed by the Landlord and thus the Landlord can hardly complain that all parties are taking time in the bankruptcy case to resolve it. While the Landlord would like the schedule for the litigation to be different, the Court has made its ruling as to what an appropriate schedule should be. And to the extent the Landlord's objection reflects a view that an inordinate amount of time has already elapsed in this case, the Court disagrees. This case was filed on November 1, 2021, and a first day hearing was held shortly thereafter. The issue requiring the most time and attention in the case thus far has been the litigation over the Debtor's motion for DIP financing. But the contested issue in that motion was who should receive the rents, a point of contention between Security Benefit Corporation and the Landlord. As the Debtor's counsel explained at the final hearing on that motion, the Debtor simply needed to know who to pay as between Security Benefit and the Landlord. As that litigation pit the Landlord against Security Benefit -- rather than the Debtor -- the Court cannot conclude the Debtor unduly delayed the case to litigate an issue on which the Debtor was essentially agnostic. While the Court overrules the Landlord's objection, the Court will grant the Debtor's Extension Motion only for a period of 60 days, rather than the requested 90 days. This result is consistent with the posture of the case, Judge Lane says. A 60-day extension will push the deadline past the summary judgment hearing on the lease issue, at which time the parties and the Court can assess the status of the case and rule on any further extension request, if necessary. Indeed, this incremental "wait and see" approach is sometimes used by bankruptcy courts when confronted with contested requests for an extension of a debtor's exclusivity period under Section 1121(d) in a tradition Chapter 11 case. This approach is also consistent with the Debtor's decision to opt to file its petition under Subchapter V -- and its faster timetable -- rather than proceeding as a traditional Chapter 11 debtor, Judge Lane holds. "But to be clear, the Court's ruling today reflects these practical considerations, and is not a finding that the Debtor has unduly delayed proceedings. As such, the Court's ruling today is without prejudice to a further application by the Debtor for an additional extension, if appropriate," Judge Lane concludes. Judge Lane also grants Security Benefit's Motion for Stay Relief. Security Benefit and the Landlord entered into a number of agreements beginning in 2017 regarding the construction, financing, and lease of the facility where the Debtor operates. Security Benefit alleges that the Landlord has defaulted under these agreements. Based on that alleged default, Security Benefit now seeks permission to pursue its remedies against the Landlord in state court and requests a ruling from this Court that the automatic stay does not prevent Security Benefit from doing so. Security Benefit argues that the automatic stay does not apply to actions against the Landlord because it is not the Debtor and because Security Benefit does not intend to seek any relief against the Debtor in state court. To the extent that the Court concludes the automatic stay does apply to the legal proceedings contemplated by Security Benefit, Security Benefit seeks alternative relief in the form of lifting the stay so that Security Benefit can pursue its remedies against the Landlord. Notably, the Debtor has not opposed Security Benefit's Motion for Stay Relief. But the Landlord has. The Landlord argues that any action taken by Security Benefit against the Landlord will directly impact the Debtor's property and ability to reorganize. More specifically, the Landlord contends that lifting the stay will impact a purchase option that the Debtor has under its lease with the Landlord. The Landlord also argues that Security Benefit is not entitled to stay relief under applicable law. The Landlord argues that, at a minimum, the stay should not be lifted until the lease termination issue is determined in the adversary proceeding. The parties' arguments on the Stay Relief Motion must be understood in the context of their dispute about the rent, Judge Lane points out. The Debtor planned to pay the rent to Security Benefit, based on language in the relevant agreements that provides for an assignment of rents to Security Benefit. The Landlord disagreed, arguing that it was still entitled to receive the rent because Security Benefit had not taken sufficient affirmative steps to make the assignment effective. Notably, the discussion of affirmative steps centered around whether or not there was a pending foreclosure proceeding in state court by Security Benefit against the Landlord and if Security Benefit had taken steps to appoint a receiver to collect the rents. Ultimately, the Court ruled that Security Benefit had not taken sufficient affirmative steps to affect a successful assignment of rent such that Security Benefit was entitled to the rent. The Court noted, however, that the ruling was without prejudice to a further application by Security Benefit if there were changed circumstances. By filing this Motion for Stay Relief, Security Benefit is essentially asking for permission to take such affirmative steps now and change the circumstances for any future request. Even if the automatic stay somehow would bar the foreclosure action contemplated by Security Benefit, this Court concludes that Security Benefit meets the standard for stay relief under Section 362(d)(1) and the applicable factors in Sonnax Indus., Inc. v. Tri Component Prods. Corp. (In re Sonnax Indus., Inc.), 907 F.2d 1280, 1286 (2d Cir. 1990). As to the first factor, Security Benefit's contemplated litigation against the Landlord would allow Security Benefit to resolve its dispute with the Landlord. As to the second factor, this litigation will not interfere with the bankruptcy case as Security Benefit will not name the Debtor as a party in that litigation, nor will it seek to terminate the Debtor's lease. The prepetition Subordination, Non-Disturbance and Attornment Agreement ("SNDA") entered between the three parties provides that the Debtor's lease would not be affected by the contemplated foreclosure action to be filed by Security Benefit against the Landlord. As to the fourth factor, the state courts have the expertise to handle this type of foreclosure proceeding and, in fact, are the courts that traditionally handle such disputes. As for the sixth factor, this litigation will primarily involve third parties, namely Security Benefit and the Landlord. As to the tenth factor, judicial economy weighs in favor of granting stay relief because the state court is an appropriate forum for the foreclosure to be litigated. Indeed, the contemplated state court action is the most expeditious and economical way to resolve the dispute between these two non-debtors. As to the twelfth factor, a consideration of the harms and the benefits weighs in favor of lifting the stay because the Debtor will not be affected by the litigation, and Security Benefit is harmed by its current inability to exercise its remedies against the Landlord. A full-text copy of the Memorandum of Decision dated February 1, 2022, is available at https://tinyurl.com/8xwvr4j2 from Leagle.com. KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP, By: Tracy L. Klestadt, Esq. -- tklestadt@klestadt.com -- Christopher J. Reilly, Esq. -- creilly@klestadt.com -- Stephanie R. Sweeney, Esq. -- ssweeney@klestadt.com -- Counsel for the Debtor, New York, NY. BINDER & SCHWARTZ LLP, By: Eric B. Fisher, Esq. -- efisher@binderschwartz.com -- Lindsay A. Bush, Esq. -- lbush@binderschwartz.com -- Counsel for the Landlord, New York, NY. DLA PIPER LLP (US), By: Rachel Nanes, Esq. -- rachel.nanes@dlapiper.com -- (admitted pro hac vice). Counsel to Security Benefit, Miami, FL. About HBL SNF, LLC HBL SNF, LLC d/b/a Epic Rehabilitation and Nursing at White Plains is a 160-bedroom skilled nursing and rehabilitation facility located at 120 Church Street, White Plains, New York, which opened in late 2019. HBL SNF provides an array of healthcare services, including neurological, respiratory, orthopedic, occupational, psychiatric, and many other medical and rehabilitative services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Court (Bankr. S.D.N.Y. Case No. 21-22623) on November 1, 2021. In the petition signed by CEO Lizer Jozefovic, the Debtor disclosed $9,131,311 in total assets and $20,128,876 in total liabilities. Judge Sean H. Lane oversees the case. Klestadt Winters Jureller Southard and Stevens, LLP is the Debtor's counsel. CNH Finance Fund I, L.P, as lender, is represented by Alissa M. Nann, Esq., at Foley & Lardner LLP. HEALTHIER CHOICES: Extends CFO's Employment Until 2025 ------------------------------------------------------ Healthier Choices Management Corp. entered into a second amended and restated employment agreement with its chief financial officer, John Ollet. Pursuant to the amendment, Mr. Ollet will continue to be employed as the company's chief financial officer through Feb. 14, 2025. Mr. Ollet will receive a base salary of $300,000 for 2022 and his salary will increase 10% in each subsequent calendar year. About Healthier Choices Headquartered in Hollywood, Florida, Healthier Choices Management Corp. -- http://www.healthiercmc.com-- is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. Healthier Choices reported a net loss of $3.72 million for the year ended Dec. 31, 2020, a net loss of $2.80 million for the year ended Dec. 31, 2019, and a net loss of $13.16 million for the year ended Dec. 31, 2018. As of Sept. 30, 2021, the Company had $36.61 million in total assets, $4.91 million in total liabilities, and $31.70 million in total stockholders' equity. HS MIDCO: S&P Affirms 'B-' ICR on Security Solutions Acquisitions ----------------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issuer credit rating on security and infrastructure software provider HS Midco Inc. (doing business as HelpSystems). At the same time, S&P affirmed its 'B-' issue-level rating on the company's revolving credit facility and first-lien term loan (including the new $555 million fungible first-lien term loan). S&P's '3' recovery rating remains unchanged. HelpSystems has announced its acquisition of three security solutions companies currently under exclusivity. The company will fund these transactions with a $555 million fungible first-lien term loan, a $170 million pre-placed fungible second-lien term loan (private placement, not rated), and $395 million of preferred equity. HelpSystems' financial-sponsor owners have remained very aggressive with its capital structure, leading to sustained high leverage. Since TA Associates and Charlesbank acquired the majority of the company's equity in November 2019, it has been acquisitive as it seeks to transition toward being a security solutions company and away from its past as an IBM automation software company. Specifically, HelpSystems has completed 12 debt-funded acquisitions since November 2019, all of which involved security solutions companies. This has caused the company to sustain high leverage because its cybersecurity acquisition targets generally have low reported EBITDA, which leads to higher purchase multiples. HelpSystems has also used preferred equity to help fund the last five transactions. S&P said, "We treat the company's preferred equity as debt for analytical purposes because it is callable and the payment-in-kind margin is high, which leads us to believe there is an incentive for its redemption (possibly using the proceeds from the new debt), potentially in the third year when it first becomes first callable. The holders can also force a change in control in 2031, which would trigger a mandatory redemption." S&P said, "The stable outlook reflects that, while HelpSystems' leverage will be very high following these transactions, we have confidence in HelpSystems' business and strategy focused on growing cybersecurity market. We believe that it can integrate acquisitions to grow its scale and achieve synergies while keeping its business operations stable through these acquisitions. We expect HelpSystems' strong recurring revenue, unadjusted FOCF generation of over $60 million, above-average EBITDA margins, and greater than $100 million of liquidity will enable it to deleverage and maintain a sustainable capital structure over the next couple of years. "We could downgrade HelpSystems over the next 12 months if it underperforms its cost-savings plan due to problems related to the integration of its acquisitions, weak customer demand due to competitive pressures, or macroeconomic headwinds from COVID-19 such that its FOCF is approaching breakeven after debt service. We could also downgrade the company if it engages in further debt-funded acquisitions or shareholder returns that increase its leverage. "While unlikely over the next 12 months, we could upgrade HelpSystems if it sustains leverage of below 7x after incorporating its debt-funded acquisitions or shareholder returns. However, we believe that its financial-sponsor owners would rather use its capital structure to fund acquisitions that improve its scale." ESG credit indicators: E-2 S-2 G-3 S&P said, "Governance factors are a moderately negative consideration in our credit rating analysis of HelpSystems, as is the case for most rated entities owned by private-equity sponsors. We believe the company's highly leveraged financial risk profile points to corporate decision-making that prioritizes the interests of its controlling owners. This also reflects private-equity owners' generally finite holding periods and focus on maximizing shareholder returns." HS PURCHASER: Moody's Affirms 'B3' CFR; Outlook Remains Stable -------------------------------------------------------------- Moody's Investors Service affirmed HS Purchaser, LLC's ("HelpSystems") B3 Corporate Family Rating and B3-PD Probability of Default Rating. Moody's also affirmed the B2 ratings on the company's first lien bank credit facilities which will be upsized by $555 million. The outlook remains stable. The affirmations follow HelpSystems' planned acquisition of three cybersecurity and data security software businesses for approximately $1,095 million. The proceeds from the $555 million incremental first lien issuance, along with a $170 million incremental second lien term loan (unrated), and incremental $395 million of PIK preferred equity into the business by its private equity sponsors and its co-investors will be used to fund the acquisitions and pay associated fees and expenses. The affirmation of HelpSystems' ratings reflects the company's strong track record of profitably integrating acquired businesses and gradually reducing leverage. Moody's expects the acquisition targets will bolster HelpSystems' security product portfolio, supplement revenue growth and provide opportunities for cost rationalization over the next 12-18 months. However, two of the larger acquisitions come with some risks as the businesses being acquired have reported flat to declining revenues over the last few years. The acquisitions bring complementary cyber security tools and provide adjacencies to HelpSystems' broad portfolio of security offerings. Two of the three targets provide managed detection and response (MDR), security configuration management (SCM) and file integrity management (FIM) solutions. The third target provides security awareness training and phishing simulation. Affirmations: Issuer: HS Purchaser, LLC Corporate Family Rating, Affirmed B3 Probability of Default Rating, Affirmed B3-PD Senior Secured Bank Credit Facility, Affirmed B2 (LGD3) Outlook Actions: Issuer: HS Purchaser, LLC Outlook, Remains Stable RATINGS RATIONALE The B3 CFR reflects HelpSystems' highly leveraged capital structure following the incremental issuance and its moderate operating scale with pro forma revenues around $800 million, and acquisition driven growth strategy which can result in leverage remaining persistently high. These challenges are offset to some degree by the company's highly recurring subscription and maintenance revenue streams which drive consistent EBITDA and free cash flow ("FCF") generation. Moody's adjusted pro forma 2021 Debt to EBITDA leverage, with run rate adjustments for acquisition synergies and one time transaction costs, is around 8.5x but is closer to 11x before those adjustments. HelpSystems is expected to generate FCF to gross debt in the low single digit percent range over the next 12-18 months. HelpSystems' very strong customer retention rates lend visibility into the company's revenue streams, of which approximately 84% were derived from high-margin, recurring maintenance support and subscription contracts as of 2021. Though the company is smaller in scale than some of its larger competitors in the security and IT operations management (ITOM) software tools markets, HelpSystems has maintained a strong niche position serving users of the IBMi computing platform as well as hybrid and distributed IT environments. While the IBMi market is expected to be flat to modestly down over time, HelpSystems has continued to expand into the cybersecurity market across environments and products. The company also continues to develop its ITOM products and expand into international markets. Governance risks and financial policies are key considerations given its private-equity ownership and heightened acquisition activity. Moody's expects HelpSystems will remain active and pursue tuck-in acquisitions to support its strategic growth plan. Moody's also anticipates that under private equity ownership, the company will maintain an aggressive financial strategy as evidenced by numerous debt-funded acquisition and shareholder return activities. Moreover, given the existence of preferred shares in the capital structure, Moody's believe that the company may opt to issue debt in the future to redeem the preferred shares in order to reduce equity dilution. HelpSystems' liquidity is considered good, supported by expectations for annual FCF generation around $50 million, access to a $60 million undrawn revolving credit facility, and an expected cash balance of about $58 million at the close of the transaction. The stable outlook reflects Moody's expectation that HelpSystems will reduce cash adjusted leverage below 8x over the next 12-18 months and will generate FCF to debt in the low to mid-single digit percent range. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if debt reduction, combined with sustained earnings growth leads to a material improvement in HelpSystem's credit metrics such that debt to EBITDA is sustained below 6.5x and FCF to debt levels were sustained above 5%. Ratings could be downgraded if HelpSystems' cash adjusted leverage exceeds 8x on other than a temporary basis or if FCF to debt were expected to be negative as a result of competitive pressures, market declines, debt financed M&A or shareholder return activity. HelpSystems, based in Eden Prairie, Minnesota is a horizontal application and infrastructure software solutions provider for both distributed and IBMi computing environments. The company is majority owned by funds affiliated with TA Associates and Harvest Partners, with minority stakes held by funds affiliated with HGGC and Charlesbank and HelpSystems' management team. The principal methodology used in these ratings was Software Industry published in August 2018. INDY RAIL: Continued Operations to Fund Plan Payments ----------------------------------------------------- Indy Rail Connection, Inc., filed with the U.S. Bankruptcy Court for the Southern District of Indiana a Combined Small Business Chapter 11 Plan of Reorganization and Disclosure Statement dated Feb. 3, 2022. The Debtor was formed by its principal Steve Patton in May, 2000, to operate a railcar and related equipment recovery and sales business. Based on the relationship with its primary customer, the Debtor came into the case with work to do but very little accounts receivable. Since it is essentially a broker of deals with very little overhead the Debtor had sufficient working capital to execute the work it had and has operated profitably post-petition. Going forward operations will leverage the existing relationship with the customer which is reliable and appears to support a reorganization plan. Cash generated by ongoing operations shall first be used to fund administrative expenses, including professional and case Trustee fees and expenses. The Plan pays priority claims in accordance with the treatment allowed under the Code. After satisfaction of these claims, general unsecured creditors shall be paid pro rata out of all remaining Plan payments. The Plan shall last for 35 months following the first payment made under it, which is due within 30 days of the date the Confirmation Order becomes a Final Order. Class 2 Secured Claims Including Deficiency Claims of Under Secured Creditors. IRS is the primary secured creditor under the Plan and its secured and priority claims are paid in full as indicated in the Projection. IRS shall release its liens upon receipt of such payment. Huntington Bank has a claim that is secured by the hard assets of the Debtor listed with a value of $4,415. The Debtor agreed to pay adequate protection to Huntington Bank in the amount of $5,000 to fully satisfy the Huntington Bank secured claim, which payment shall continue under the Plan until paid in full. Huntington shall release its liens upon receipt of such payment. Class 3 consists of Allowed General Unsecured Claims which claims shall receive a pro rata payment Plan up to the full amount of the allowed claim of such creditor. Such claims shall be allowed, settled, compromised, satisfied and paid by an annual distribution of 100% of the net profits of the Debtor for the preceding year calculated in accordance with generally accepted accounting principles for the term of the Plan and net of taxes paid under superior classes, commencing one year after the Effective Date. In order for creditors and the Subchapter V Trustee to monitor the progress of the Debtor toward such payment the Debtor shall submit a profit and loss statement 12 quarters following confirmation of the Plan to the Subchapter V Trustee. Class 3 is impaired and is entitled to vote on the Plan. Class 4 consists of the Equity Interests, which interests shall be retained by existing shareholders. Debtor shall continue to operate its business in accordance with the projection of income, expense and cash flow, and shall pay its net after tax cash profit to satisfy creditor claims. A full-text copy of the Combined Plan and Disclosure Statement dated Feb. 3, 2022, is available at https://bit.ly/3LchjK1 from PacerMonitor.com at no charge. Attorney for the Debtor: KC Cohen, Esq. KC Cohen, Lawyer, PC 151 N. Delaware St., Ste. 1106 Indianapolis, IN 46204-2573 Telephone: (317) 715-1845 Email: kc@smallbusiness11.com Indy Rail Connection Inc. Indy Rail Connection, Inc. operates a business that offers the railroad industry safe and responsive mobile dismantling and component inspection services. It is related to Patton Mobile Dismantling, which is owned and controlled by Steve Patton. Indy Rail Connection filed a petition for Chapter 11 protection (Bankr. S.D. Ind. Case No. 21-05022-JMC-11) on Nov. 5, 2021, listing up to $50,000 in assets and up to $1 million in liabilities. Steven H. Patton, president of Indy Rail Connection, signed the petition. Judge James M. Carr oversees the case. KC Cohen, Esq., at KC Cohen, Lawyer, PC is the Debtor's legal counsel. INTELLIPHARMACEUTICS INT'L: Shareholders Elect Five Directors ------------------------------------------------------------- Intellipharmaceutics International Inc. reported, as required by TSX rules, that the five nominees, each of whom was an incumbent director of the Company identified in the Management Information Circular dated Dec. 21, 2021, were elected as directors of the Company at the annual meeting of shareholders of the Company held on Feb. 4, 2022. The newly elected directors are: * Dr. Isa Odidi * Dr. Amina Odidi * Bahadur Madhani * Norman Betts * Shawn Graham The five nominees were elected as directors of the Company to serve until the next annual meeting of shareholders or until their successors are elected or appointed. MNP LLP was reappointed auditor of the Company until the next annual meeting of shareholders and the directors were authorized to fix the remuneration to be paid to the auditor. As proposed in the Circular, the shareholders ratified the special resolution to approve all the unallocated options, rights and entitlements under the Company's stock option plan as more particularly described in the Management Proxy Circular for the meeting. About Intellipharmaceutics Intellipharmaceutics International Inc. is a pharmaceutical company specializing in the research, development and manufacture of novel and generic controlled-release and targeted-release oral solid dosage drugs. The Company's patented Hypermatrix technology is a multidimensional controlled-release drug delivery platform that can be applied to a wide range of existing and new pharmaceuticals. Intellipharmaceutics has developed several drug delivery systems based on this technology platform, with a pipeline of products (some of which have received FDA approval) in various stages of development. The Company has ANDA and NDA 505(b)(2) drug product candidates in its development pipeline. These include the Company's abuse-deterrent oxycodone hydrochloride extended release formulation ("Oxycodone ER") based on its proprietary nPODDDS novel Point Of Divergence Drug Delivery System (for which an NDA has been filed with the FDA), and Regabatin XR (pregabalin extended-release capsules). Intellipharmaceutics reported a net loss and comprehensive loss of $3.39 million for the year ended Nov. 30, 2020, compared to a net loss and comprehensive loss of $8.08 million for the year ended November 30, 2019. As of Aug. 31, 2021, the Company had $3.46 million in total assets, $9.62 million in total liabilities, and a shareholders' deficiency of $6.17 million. Toronto, Canada-based MNP LLP, the Company's auditor since 2016, issued a "going concern" qualification in its report dated Feb. 28, 2021, citing that the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. INTELSAT SA: No Delay For Chapter 11 Bankruptcy Exit ---------------------------------------------------- Advanced Television reports that the trial between SES and Intelsat over how the FCC's C-band 'incentive payments' are being distributed opens on February 7th. The court has set aside up to two weeks for the hearings before Intelsat's Chapter 11 bankruptcy judge Keith Phillips. However, in the first week of February 2022 the judge delayed an element of the trial dispute revolving around a witness requested by Intelsat (Mr James Murray) who would be arguing that any damages claim by SES be reduced. The judge ruled that Murray's evidence can be delayed in order to be deposed by SES and for SES to themselves draw a new witness who would challenge the Murray evidence. Despite this delay -- and SES insiders say they no timetable yet for the delayed hearing -- which in any event will finally depend on the availability of court time and the parties themselves. SES, and other experts following the overall cases do not anticipate the further legal maneuvers delaying Intelsat's exit from bankruptcy. February 8, 2022 will see Intelsat hold a virtual Extraordinary General Meeting in Luxembourg where it will call on shareholders to vote to support and "Approve the sale and transfer of the entire issued share capital of Intelsat Holdings SA ("Holdings"), being an indirect subsidiary of the Company, by Intelsat Investment Holdings Sàrl ("Investment Holdings"), being a direct wholly-owned subsidiary of the Company, to Intelsat Emergence SA, a joint stock company (societe anonyme) ("New Topco"). Existing directors will resign, and new directors appointed. Fifty-seven quadrillion new shares will be issued (57,229,268,495,000,000). 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. ION GEOPHYSICAL: Falls Short of NYSE's Bid Price Requirement ------------------------------------------------------------ ION Geophysical Corporation received notice on Jan. 31, 2022 from the New York Stock Exchange that the price of its common stock fell below the NYSE's continued listing standards. The NYSE requires the average closing price of a listed company's common stock remain above $1.00 per share over a consecutive 30 trading-day period. As of Jan. 28, 2022, the 30 trading-day period average closing price of the Company's common stock was $0.94 per share. In accordance with NYSE rules, the Company must notify the NYSE within 10 business days of receipt of the notification with its intent to cure the deficiency. The Company has six months to regain compliance with the NYSE continued listing requirements. During the six-month period, the Company's common stock will continue to be listed and traded on the NYSE, subject to compliance with other continued listing standards. The deficiency does not affect the Company's ongoing business operations or its SEC reporting requirements. About ION Geophysical Corp. Headquartered in Houston, Texas, ION (NYSE: IO) -- http://www.iongeo.com/-- is an innovative, asset light global technology company that delivers powerful data-driven decision-making offerings to offshore energy, ports and defense industries. The Company is entering a fourth industrial revolution where technology is fundamentally changing how decisions are made. The Company provides its services and products through two business segments -- E&P Technology & Services and Operations Optimization. ION Geophysical reported a net loss of $37.11 million for the year ended Dec. 31, 2020, compared to a net loss of $47.21 million for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $190.91 million in total assets, $256.07 million in total liabilities, and a total deficit of $65.17 million. Houston, Texas-based Grant Thornton LLP, the Company's auditor since 2014, issued a "going concern" qualification in its report dated Feb. 11, 2021, citing that as of Dec. 31, 2020, the Company had outstanding $120.6 million aggregate principal amount of its 9.125% Senior Secured Second Priority Notes, which mature on Dec. 15, 2021. The Notes, classified as current liabilities, caused the Company's current liabilities to exceed its current assets by $150.9 million and its total liabilities exceed its total assets by $71.1 million. These conditions, along with other matters, raise substantial doubt about the Company's ability to continue as a going concern. * * * As reported by the TCR on Jan. 6, 2022, S&P Global Ratings lowered its issuer credit rating on U.S.-based marine seismic data company ION Geophysical Corp. to 'D' from CCC'. S&P said the downgrade reflects ION Geophysical's missed interest and principal payments on its 8% senior secured notes due 2025 and its 9.125% unsecured notes due 2021. JAB ENERGY: Committee Seeks Approval to Hire Financial Advisor -------------------------------------------------------------- The official committee of unsecured creditors of JAB Energy Solutions II, LLC seeks approval from the U.S. Bankruptcy Court for the District of Delaware to hire Matthews, Cutrer and Lindsay, P.A. as its financial advisor. The firm's services include: (a) assisting in the review of financial-related disclosures required by the court, including schedules of assets and liabilities, statement of financial affairs and monthly operating reports; (b) assisting in the preparation of analyses required to assess any proposed amendments to debtor-in-possession financing or use of cash collateral; (c) assisting in the assessment and monitoring of the Debtor's short-term cash flow, liquidity, and collection efforts on accounts receivable; (d) assisting in the review of the Debtor's analysis of assets and their disposition or liquidation; (e) assisting in the review of the Debtor's cost/benefit analysis with respect to the potential affirmation or rejection of various executory contracts and leases; (f) assisting in the review of the claims reconciliation and estimation process; (g) assisting in the review of other financial information prepared by the Debtor; (h) attending meetings and assisting the committee in discussions with the Debtor and other parties in interest; (i) assisting in the review or preparation of information and analysis necessary for the confirmation of a Chapter 11 plan and related disclosure statement; (j) assisting in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; (k) assisting in the prosecution of committee responses or objections to the Debtor's motions, including attendance at depositions and provision of expert reports and testimony on case issues; and (l) providing other general business consulting advice or assistance as the committee or its legal counsel may deem necessary. The firm will be paid a fixed fee of $5,000. H. Kenneth Lefoldt, Jr., the firm's accountant who will be providing the services, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: H. Kenneth Lefoldt, Jr., CPA Matthews, Cutrer and Lindsay, P.A. 1020 Highland Colony Parkway, Suite 500 Ridgeland, MS 39157 Tel.:(601) 898-8875 Email: mcl@mclcpa.net About JAB Energy Solutions II JAB Energy Solutions II, LLC -- http://jabenergysolutions.com/-- is an EPIC (Engineering, Procurement, Installation & Commissioning) specialist providing comprehensive project management services for decommissioning, abandonment, construction and installation of offshore and onshore oil and gas facilities, platforms and pipelines. Based in Houston, with offices in Lake Charles, La., JAB Energy Solutions serves major and independent energy companies worldwide. JAB Energy Solutions filed a petition for Chapter 11 protection (Bankr. D. Del. Case No. 21-11226) on Sept. 7, 2021, listing as much as $50 million in both assets and liabilities. Judge Craig T. Goldblatt oversees the case. The Debtor tapped Pachulski Stang Ziehl & Jones, LLP as legal counsel and Traverse, LLC as restructuring advisor. Albert Altro, the founder of Traverse, serves as the Debtor's chief restructuring officer. The U.S. Trustee for Region 3 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. The committee tapped Lugenbuhl, Wheaton, Peck, Rankin & Hubbard and Joyce, LLC as legal counsel and Matthews, Cutrer and Lindsay, P.A. as financial advisor. JOHNSON & JOHNSON: Sen. Whitehouse Slams Texas 'Two-Step' --------------------------------------------------------- James Nani of Bloomberg Law reports that Sen. Sheldon Whitehouse (D-R.I.) plans to pursue bankruptcy law changes to rein in a corporate bankruptcy strategy used by Johnson & Johnson that he called an abuse of Chapter 11. Senator Whitehouse, who chairs the Senate Judiciary Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights, slammed the technique known as the "Texas two-step" during a hearing Tuesday, calling it a "blot" on the legal system. The legal strategy, based on Texas law, allows corporations to split off a subsidiary in a "reverse merger," transfer mass tort or other liabilities to that subsidiary, and then place the unit into bankruptcy. About LTL Management LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J), which was formed to manage and defend thousands of talc-related claims and oversee the operations of Royalty A&M. Royalty A&M owns a portfolio of royalty revenue streams, including royalty revenue streams based on third-party sales of LACTAID, MYLANTA/MYLICON and ROGAINE products. LTL Management filed a petition for Chapter 11 protection (Bankr. W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was transferred to New Jersey (Bankr. D. N.J. Case No. 21-30589) on Nov. 16, 2021. The Hon. Michael B. Kaplan is the case judge. At the time of the filing, the Debtor was estimated to have $1 billion to $10 billion in both assets and liabilities. The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon LLP as special counsel; McCarter & English, LLP as litigation consultant; Bates White, LLC as financial consultant; and AlixPartners, LLP as restructuring advisor. Epiq Corporate Restructuring, LLC, is the claims agent. An official committee of talc claimants was formed in the Debtor's Chapter 11 case on Nov. 9, 2021. On 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. 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. JPA NO. 111: FitzWalter Loses Bid to Dismiss Chapter 11 Cases ------------------------------------------------------------- FitzWalter Capital Partners (Financial Trading) Limited filed a motion to dismiss the jointly administered, single-debtor bankruptcy cases of JPA No. 111 Co., Ltd., and JPA No. 49 Co., Ltd. Each Debtor is wholly-owned and controlled by the same parent, JP Lease Products & Services Co. Ltd., a Japanese company. Each Debtor purchased and owned one Airbus A350-941 aircraft, which each Debtor indirectly leased (through an intermediate lessee-lessor entity) to Vietnam Airlines. Each Debtor's cash flow sharply decreased along with the collapse of air travel during the COVID-19 pandemic. In December 2021, FitzWalter, which had only recently acquired substantial amounts of JPA debt and assumed the role of "Security Agent" under the relevant financing agreements, began seeking foreclosure remedies in England as to JPA's contractual entitlements known as "Lease Assets"; FitzWalter has not commenced foreclosure proceedings against the airplanes themselves. Upon discovering FitzWalter's foreclosure attempt, the Debtors filed Chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the Southern District of New York. FitzWalter's Motion asserts three grounds for dismissal: 1. Each Debtor lacks any legally meaningful ties to the United States and therefore may not be a debtor in a U.S. bankruptcy proceeding under 11 U.S.C. Section 109; 2. The petitions were filed in bad faith as improper efforts to forestall legitimate and contractually specified foreclosure remedies available to FitzWalter, warranting dismissal pursuant to 11 U.S.C. Section 1112(b); and 3. Alternatively, the Court should abstain under 11 U.S.C. Section 305(a)(1). The Debtors oppose, supported by their parent JPL and by two holders of secured debt. They argue that FitzWalter is engaging in value-destructive enforcement efforts that will fail to compensate or satisfy the entitlements of other holders of debt, unsecured creditors, and equity holders, notwithstanding that a full-payment outcome can be achieved by selling Debtors' assets under the auspices of the Debtors' Chapter 11 cases. Bankruptcy Judge David S. Jones denies the Motion, finding that each Debtor satisfies the eligibility requirements of section 109 because each owns "property" in the United States in the form of an interest in a retainer deposit held in the bank account of the Debtors' counsel. And, having considered substantial briefing, written evidence, and testimony during an all-day evidentiary hearing conducted on January 26, the Court concludes the Debtors are in good faith using Chapter 11 processes to attempt to maximize creditor (and potentially equity holder) recoveries through a contemplated Section 363 sale to an already-identified stalking horse bidder, subject to higher and better offers, in the face of an unwanted effort by FitzWalter to pursue a fast-track foreclosure and sale of a subset of each Debtor's assets that the Debtors and supporting parties believe is unlikely to maximize recoveries of all creditors and parties in interest. According to Judge Jones, FitzWalter rightly emphasizes that many of the so-called C-TC factors that courts use to assess whether a filing was made in bad faith point in favor of dismissal, but the overall circumstances here do not demonstrate a bad-faith effort to improperly delay and frustrate the legitimate expectations of a secured creditor. A full-text copy of the Memorandum of Decision and Order dated February 1, 2022, is available at https://tinyurl.com/429rmwcu from Leagle.com. QUINN EMANUEL URQUHART & SULLIVAN, LLP, Eric Winston, Esq. -- ericwinston@quinnemanuel.com -- Justin Griffin, Esq. -- justingriffin@quinnemanuel.com -- New York, NY, Counsel for FitzWalter Capital Partners (Financial Trading) Limited. TOGUT, SEGAL & SEGAL LLP, Kyle J. Ortiz, Esq. , Jared Borriello, Esq. -- jborriello@teamtogut.com -- John McClain, Esq. -- jmcclain@teamtogut.com -- New York, NY, Counsel for Debtors. VEDDER PRICE, Michael J. Edelman, Esq. -- mjedelman@vedderprice.com -- New York, NY, Counsel for JP Lease Products and Services Company Limited. SQUIRE PATTON BOGGS (US) LLP, Christopher J. Giaimo, Esq. -- christopher.giaimo@squirepb.com -- Washington, DC, Counsel for Mizuho Leasing. CLIFFORD CHANCE US LLP, Robert Johnson, Esq. , New York, NY, Counsel for Sumitomo Mitsui Trust Bank, Limited. About JPA No. 111 and JPA No. 49 Tokyo-based JPA No. 111 Co., Ltd., and its subsidiary JPA No. 49 Co., Ltd., filed a Chapter 11 Petition (Bankr. S.D.N.Y., Case No. 21-12075) on December 17, 2021. The Debtors are special purpose vehicles wholly owned by JP Lease Products & Services Co. Ltd., which 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, which is a direct wholly owned subsidiary of JIA. JIA, in turn, creates and sells unique financial instruments to investors that consist of small and medium enterprises in Japan through a network of financial institutions, including banks and securities companies, and tax and accounting firms. The case is assigned to Hon. David S. Jones. The Debtor's counsel is Kyle J. Ortiz, Esq., Bryan M. Kotliar, Esq., Amy M. Oden, Esq., and Amanda C. Glaubach, Esq., at Togut, Segal & Segal LLP, in New York. The Debtors had estimated liabilities of $100 million to $500 million. The petition was signed by Teiji Ishikawa, representative director. LAPEER AVIATION: LAI Unsecureds to Get Share of Income for 5 Years ------------------------------------------------------------------ Lapeer Aviation, Inc., and with its related debtor entity CG Acquisitions, L.L.C. filed with the U.s. Bankruptcy Court for the Eastern District of Michigan a Plan of Reorganization under Subchapter V dated Feb. 3, 2022. Since 1997, LAI has operated an FBO at the D95 airport in Mayfield Township, Michigan. All of the shares of LAI were purchased by CG on or about June 22, 2018. Since that date, the current member of CG Gene Kopczyk has been involved with FBO operations. On Dec. 26, 2018, Creditor Carl Jennings filed a lawsuit against LAI alleging that LAI owed him certain sums as a result of an alleged contract which allegedly existed prior to the acquisition of the LAI shares by CG. The attorney fees associated with the various state court cases which Debtors were a party to and the effects of the interference of Mr. Jennings and other parties ultimately overwhelmed the Debtors, causing them to become insolvent. As a result, the Debtors filed petitions for relief under Chapter 11 of the United States Bankruptcy Code. The Plan Proponent's financial projections show that the Debtors will have projected disposable income of $154,207.00 for LAI. The final Plan payment is expected to be paid on or about March 31, 2027. This Plan proposes to pay Creditors of the Debtor LAI from the Debtors' cash flow from operations and future income. The Plan also provides for the structured dismissal of the case filed by CG. The Plan will treat claims as follows: * Class I shall consist of the holders of Allowed Unsecured Claims against LAI. Each Holder of Class I Claims shall receive a Pro Rata distribution attributable to its Allowed General Unsecured Claim based on quarterly payments each year by the Debtor from the Debtor's Projected Disposable Income for a period of 5 years. The first payment shall be the first day of the month at the beginning of the second calendar quarter after the Effective Date. Such payments shall continue to be made quarterly on the first day of each calendar quarter thereafter for a period of 5 years from the first payment. Each quarterly payment shall total $7,710.00, to be divided Pro Rata. * Class II shall consist of the Cure Claim of Mayfield Township against LAI, to the extent that one exists. Debtors intend to assume all of the executory contracts with Mayfield Township. Debtors do not believe that any Cure Claim exists. To the extent that a Cure Claim filed by Mayfield Township is allowed, Debtors will first offset the amounts owed to Debtors by Mayfield Township. Debtors will then pay the entire remaining balance of the allowed Cure Claim in 12 equal monthly installments commencing 60 days after the Effective Date. * Class III consists of the Claim of CG against LAI. CG will not receive any distribution. * Class IV consists of the Claims of Interest in LAI. Holders of Allowed Interests shall retain their Allowed Interests in the Debtor and Reorganized Debtor. There is no distribution on account of Allowed Interests. For the avoidance of doubt, neither Christopher Lewis nor Carl Jennings holds an Allowed Interest in Debtor LAI. Accordingly, Christopher Lewis and Carl Jennings have no interest in Debtor and shall have no interest in the Reorganized Debtor. * Class V shall consist of all General Unsecured Creditors of CG. There shall be no distribution to Class V, as there are no funds available for distribution. * Class VII consists of any Claims of Interest in CG held by Christopher Lewis. This is a Disputed Claim of Interest. The Court has determined that Christopher Lewis has no interest in CG. Accordingly, Christopher Lewis has no interest in Debtor and shall have no interest in the Reorganized Debtor. * Class VIII consists of any Claims of Interest in CG held by Carl Jennings. This is a Disputed Claim of Interest. The Disputed Claim of Interest held by Carl Jennings shall be extinguished as follows. Gene Kopczyk shall pay to Debtor LAI the sum of $15,000.00 as an equity infusion. Debtor LAI shall cause this $15,000.00 to be immediately deposited in the Client Trust Account of Winegarden, Haley, Lindholm, Tucker and Himelhoch P.L.C. These funds shall be held in the Client Trust Account, where they shall bear no interest, until the claims of Debtors against Carl Jennings are fully resolved. The Reorganized Debtor LAI will retain control of and be responsible for all of Debtor's activities pursuant to this Plan after the Effective Date. Funding for the administration of the bankruptcy estates and of this Plan and for the actions necessary shall come from funds on hand. A full-text copy of the Plan of Reorganization dated Feb. 3, 2022, is available at https://bit.ly/3HxN8uJ from PacerMonitor.com at no charge. Counsel for the Debtor: John R. Tucker, Esq. Winegarden, Haley, Lindholm, Tucker & Himelhoch, PLC 9460 S. Saginaw Road, Suite A Grand Blanc, MI 48439 Telephone: (810) 579-3600 Email: jtucker@winegarden-law.com About Lapeer Aviation Lapeer Aviation, Inc. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Mich. Case No. 21-31500) on Nov. 5, 2021, listing under $1 million in both assets and liabilities. Gene Kopczyk, president, signed the petition. Judge Joel D. Applebaum oversees the case. Winegarden, Haley, Lindholm, Tucker & Himelhoch, PLC, serves as the Debtor's legal counsel. LATAM AIRLINES: Keeps Exclusive Right to Propose Plan ----------------------------------------------------- Jeremy Hill of Bloomberg News reports that U.S. Bankruptcy Judge James Garrity on Tuesday said Latam Airlines Group SA will keep the exclusive right to pursue a restructuring plan of its choosing, overruling a key group of low-ranking creditors who wanted to open the process to competing proposals. Under U.S. bankruptcy rules, companies in Chapter 11 protection have the sole right to craft and formally propose turnaround plans unless a judge strips them of that right. Lawyers for Latam Airlines' official committee of unsecured creditors asked Judge Garrity to take that right from the Chilean carrier. LATAM Airlines has proposed a Plan of Reorganization that contemplates, among other things, the issuance of new common stock, representing approximately US$800 million. This stock will be offered to all of the airline's shareholders. Delta, Qatar, the Cueto Group, and the Eblen Group have agreed to backstop up to US$400 million of new common stock. Evercore has agreed to backstop the remaining US$400 million and will be paid a 20% back-stop fee. Evercore will also backstop $3.269 billion from the New Convertible Notes Class C offered to unsecured creditors. The Creditors' Committee has raised objections to the Plan and votes solicitation process. About LATAM Airlines Group LATAM Airlines Group S.A. -- http://www.latam.com/-- is a pan-Latin American airline holding company involved in the transportation of passengers and cargo and operates as one unified business enterprise. It is the largest passenger airline in South America. Before the onset of the COVID-19 pandemic, LATAM offered passenger transport services to 145 different destinations in 26 countries, including domestic flights in Argentina, Brazil, Chile, Colombia, Ecuador and Peru, and international services within Latin America as well as to Europe, the United States, the Caribbean, Oceania, Asia and Africa. LATAM and its 28 affiliates sought Chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 20-11254) on May 25, 2020. Affiliates in Chile, Peru, Colombia, Ecuador and the United States are part of the Chapter 11 filing. The Debtors disclosed $21,087,806,000 in total assets and $17,958,629,000 in total liabilities as of Dec. 31, 2019. The Hon. James L. Garrity, Jr., is the case judge. The Debtors tapped Cleary Gottlieb Steen & Hamilton LLP as bankruptcy counsel, FTI Consulting as restructuring advisor, Lee Brock Camargo Advogados as local Brazilian litigation counsel, and Togut, Segal & Segal LLP and Claro & Cia in Chile as special counsel. The Boston Consulting Group, Inc. and The Boston Consulting Group UK LLP serve as the Debtors' strategic advisors. Prime Clerk LLC is the claims agent. The official committee of unsecured creditors formed in the case tapped Dechert LLP as its bankruptcy counsel, Klestadt Winters Jureller Southard & Stevens, LLP, as conflicts counsel, UBS Securities LLC as investment banker, and Conway MacKenzie, LLC, as financial advisor. Ferro Castro Neves Daltro & Gomide Advogados is the committee's Brazilian counsel. The Ad Hoc Group of LATAM Bondholders tapped White & Case LLP as counsel. Glenn Agre Bergman & Fuentes, LLP, led by managing partner Andrew Glenn and partner Shai Schmidt, has been retained as counsel to the Ad Hoc Committee of Shareholders. LIVEWELL ASSISTED: Hearing Today on Bid to Use Cash Collateral -------------------------------------------------------------- Livewell Assisted Living, Inc. asks the U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, for authority to use cash collateral to pay its ordinary operating expenses. The lienholders of the Debtor's cash collateral are the U.S. Small Business Administration, Itria Ventures, Forward Financing, Vox Funding, Delta Bridge Funding, Wynwood Capital Group, United Fund USA, Seabrook Funding, EBF Holdings, CFG Merchant Funding, and Green Grass Capital. The Debtor uses a service from Intuit Quickbooks that collects revenue from the Debtor's residents and makes necessary bill payments from those funds. Prior to the bankruptcy filing, one or more Secured Creditors issued levies against those funds based on their perfected security interests. The Debtor believes Quickbooks is currently holding over $100,000 in estate funds. These funds are cash collateral and the release of the funds, irrespective of the Secured Creditors demands or perfected security interest, part of the relief requested by the Motion. The Debtor proposes adequate protection to the Secured Creditors in the form of replacement liens in after-acquired revenue to the same extent as they had prior to the bankruptcy. At the Debtor's behest, the Court will consider approval of the request at a hearing on February 10, 2022 at 11 a.m. A copy of the motion is available at https://bit.ly/3uHiwDv from PacerMonitor.com. About Livewell Assisted Living, Inc. Livewell Assisted Living, Inc. is part of the continuing care retirement communities industry. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. N.C. Case No. 22-00264) on February 7, 2022. In the petition signed by Justin Beckett, president, the Debtor disclosed up to $500,000 in assets and up to $10 million in liabilities. Travis Sasser, Esq. at Sasser Law Firm is the Debtor's counsel. LS GROUP OPCO: Term Loan Upsize No Impact on Moody's B2 CFR ----------------------------------------------------------- Moody's Investors Service stated that LS Group OpCo Acquisition LLC's ("LS Group" dba Les Schwab) increase in its senior secured term loan B to finance a $300 million dividend to shareholders is a credit negative but will not currently impact the company's ratings or outlook. This includes the company's B2 corporate family rating, B2-PD probability of default rating and B2 senior secured term loan rating. The outlook is stable. Proceeds from the proposed upsize of the senior secured term loan B to $1.86 billion from $1.560 billion will be used to fund a $300 million dividend to shareholders. Pro forma for the additional debt Moody's adjusted debt/EBITDA for the LTM period ending September 30, 2021 will increase to 6.0x from from about 5.1 times. Moody's views this debt financed dividend as a more aggressive financial policy which favors shareholders then original anticipated particularly as it has quickly followed the company's $200 million dividend to shareholders in December 2021 out of existing cash balances. However, ratings are not effected as leverage will still remain below the company's downgrade trigger of debt to EBITDA of above 6.25 times. In addition, the ratings continue to reflect LS Group's strong brand awareness in its core markets, a somewhat diversified earnings stream that includes "under-the-car" products and services, strong earnings growth to date and good liquidity. However, the ratings are constrained by the company's more aggressive financial policy towards shareholders, high leverage, modest scale, geographic concentration and high reliance on a relatively narrow product line related to replacement tires. LS Group is a tire retailer and service center operator with 495 total locations across 10 states. Annual revenues are around $2.15 billion. LS Group is owned by Meritage Group. MARK E MOON: Prevails in Usury, Late Fees Claims vs Milestone ------------------------------------------------------------- On June 23, 2015, Mark E. Moon and Lori Moon entered into a hard money loan agreement with Milestone Financial, LLC, secured by the Moons' residence. At that time, Milestone did not have either a real estate broker license or a mortgage loan originator license and had been warned by the State of California about its lack of appropriate licenses. The Moons were represented by licensed real estate broker Marc Fournier. One of the loan documents signed by the Moons was a certification the loan was a business or investment purpose loan, meaning the protection found in the Truth in Lending Act or other California laws meant to protect residential home loan borrowers would not apply. The Original Loan was for $759,000 with an interest rate of 11.3%, a default interest rate of 17.3% plus late fees, and interest-only payments of over $7,000 per month until the balance came due in July 2017. The Moons signed the Promissory Note. Paragraph 2, titled "Payments," makes clear that the Original Loan is payable in full on the Maturity Date, and will include the entire principal, unpaid interest, and any other costs at that time. Paragraph 4(a), titled "Late Charges; Default Rate" states that should the Moons fail to make a monthly payment within 10 days of the due date, a late charge equal to 10% of the monthly payment will be assessed as a late charge, and "it is extremely difficult and impractical to ascertain the extent of such damages and that the Late Charge represents a fair and reasonable estimate, considering all of the circumstances on the date of the Execution of this Note, of the costs the Holder will incur by reason of such late payment." Paragraph 4(b) reiterates the difficulty of ascertaining the damages associated with the loss of timely payments as the reason for the default interest rate set by the Promissory Note. Nowhere in Paragraph 4 is there any language regarding a late charge on the balloon payment itself. Paragraph 14, titled "Usury", contains a usury savings clause that limits the interest charged to the applicable statutory rate in the event that a court holds the amount of interest charged "is in excess of applicable law." The Moons began to struggle with payments almost immediately. At some points, Milestone advanced the taxes and insurance on the residence. About one year after the making of the Original Loan, on August 26, 2016, the Moons and Milestone entered into an agreement titled "Settlement Agreement, Indemnity, and First Amendment to Promissory Note Secured by Deed of Trust." The Extension supplemented and amended the Original Loan. It did not replace it. Milestone still did not have its own real estate broker or loan originator license, and this time the Moons were not represented by Mr. Fournier or any licensed real estate broker in the making of the Extension. The Extension states that the unpaid principal balance of the loan is $902,525.34 in no fewer than three parts of the document. The Extension extended the Maturity Date of the loan to July 2019, slightly lowered the initial interest rate to 11.05% and increased the monthly payments and default interest rate. Paragraph 8 of the Extension, titled "Late Charges," stated: "Should any payment due hereunder not be received on or before the TENTH (10th) day after its due date (the 'Grace Period'), Borrower shall immediately pay to Lender, without notice or demand by Lender, a late charge calculated at TEN PERCENT (10.00%) of any payment then due, including the final (balloon) payment." The charge on the final balloon payment was a new addition to the Extension, not part of the Original Loan. Within the same paragraph, the basis for these late charges was made clear: "Borrower agrees that Lender will incur administrative costs and other damages not compensated by payment of interest as a result of any payment not being made when due and acknowledges that calculation of actual damages is extremely difficult and impracticable and that the foregoing amount is a reasonable estimate of those damages." After executing the Extension, the Moons promptly began missing loan payments, though some payments were tendered at various times. In March 2019, the Moons sought to refinance their residence with a different lender and requested a payoff amount from Milestone. Milestone provided a payoff quote of $1,288,792.28, which included what was initially called a "prepayment penalty" of $115,615.06. In later filings Milestone notes the phrase "prepayment penalty" was in error, and the amount represents a late charge on the principal balance in accordance with the Extension. The payoff was much higher than what the Moons had anticipated, and they were ultimately unable to refinance the loan. On November 18, 2019, the Moons filed a complaint in San Mateo superior court against Milestone, William R. Stuart; Bear Bruin Ventures, Inc.; and Evergreen Escrow, Inc. On February 14, 2020, the Moons filed an Amended Complaint against the same Defendants. The Amended Complaint seeks damages against the Defendants on four counts of alleged wrongdoing: 1. Declaratory Relief to determine the rights and obligations of the Moons under the Extension; 2. Breach of Contract against Milestone; 3. Fraud against Stuart, Milestone, and Bear Bruin; 4. Intentional Interference with a Contract by Milestone and Evergreen. Judge Dennis Montali of the United States Bankruptcy Court for the Northern District of California has determined that the Moons should prevail on their claims regarding usury and late fees but fail on their claim regarding the acceleration penalty. Judge Montali also determines that Milestone should prevail as to the first claim for declaratory relief and the Moons' belated claim for interference with an economic advantage. As to the breach of contract, intentional interference with a contract, and fraud claims, disputes of material fact remain to be resolved, and summary judgment must be denied. Judge Montali explains the Extension modified the Original Loan in some ways, including by extending the Maturity Date. It also lowered the interest rate slightly, but not below the maximum permitted by usury law if not eligible for an exemption. The Extension must be considered a forbearance even if the parties neglected to call it by its name, Judge Montali says. The judge points out there that there are only two instances of forbearance mentioned in Cal. Civ. Code Section 1916.1: in connection with a sale and in connection with a past sale in which the broker acted as such. Neither applies here, Judge Montali points out. The statute "provides a restricted definition of the term "arranged" in relation to a forbearance." Judge Montali explains that the statute painstakingly sets forth the instances in which a forbearance negotiated by a real estate broker would be exempt under usury law: when that broker was previously involved in arranging the original loan and that loan was in connection with a sale, lease, or other transaction, or when that broker had previously arranged for the sale, lease or other transaction for compensation. Conspicuously absent from those instances is a scenario in which a forbearance is arranged on a simple loan of money secured by real estate, with no other sale, lease, or other transaction involved. Judge Montali says the court cannot create an exemption here to save Milestone. Mr. Fournier, the licensed real estate broker involved in the making of the initial loan, was not involved in the Extension. While Milestone belatedly attempts to argue that Carolyn Stuart, one of Milestone's owners, was a licensed broker involved in the creation of the Extension, this assertion is contradicted by Milestone's own prior documents, which show absolutely no involvement by Ms. Stuart in the making of the Extension, Judge Montali notes. No licensed real estate broker was involved in the making of the Extension. However, whether a real estate broker (including Ms. Stuart) was involved in the making of the Extension is ultimately an immaterial fact, because the Extension is a forbearance of a type which falls outside of California's carefully crafted usury exemptions, Judge Montali holds. A full-text copy of the Memorandum Decision dated January 31, 2022, is available at https://tinyurl.com/4z7s9ytp from Leagle.com. The bankruptcy case is MARK E. MOON, Chapter 11, Debtor, Bankruptcy Case No. 20-30711-DM (Bankr. N.D. Calif.). The adversary proceeding is In re E. MARK MOON and LORI MOON, Plaintiffs, v. MILESTONE FINANCIAL, LLC, et al., Defendants, Adversary Case No. 20-03117-DM (Bankr. N.D. Calif.). MICROVISION INC: BlackRock Has 6.5% Equity Stake as of Dec. 31 -------------------------------------------------------------- In a Schedule 13G filed with the Securities and Exchange Commission, BlackRock, Inc. disclosed that as of Dec. 31, 2021, it beneficially owns 10,689,064 shares of common stock of Microvision, Inc., representing 6.5 percent of the shares outstanding. A full-text copy of the regulatory filing is available for free at: https://www.sec.gov/Archives/edgar/data/65770/000083423722007128/us5949603048_020422.txt About MicroVision MicroVision -- http://www.microvision.com-- is a pioneering company in MEMS based laser beam scanning technology that integrates MEMS, lasers, optics, hardware, algorithms and machine learning software into its proprietary technology to address existing and emerging markets. The Company's integrated approach uses its proprietary technology to provide solutions for automotive lidar sensors, augmented reality micro-display engines, interactive display modules and consumer lidar modules. MicroVision reported a net loss of $13.63 million for the year ended Dec. 31, 2020, a net loss of $26.48 million for the year ended Dec. 31, 2019, and a net loss of $27.25 million for the year ended Dec. 31, 2018. As of Sept. 30, 2021, the Company had $134.07 million in total assets, $11.72 million in total liabilities, and $122.35 million in total shareholders' equity. MID ATLANTIC PRINTERS: Expects to Pay Over 50% to Unsecureds ------------------------------------------------------------ Mid Atlantic Printers, Ltd., submitted a First Amended Plan of Reorganization dated Feb. 3, 2022. As of the date of this Plan, the Debtor is current with its post petition tax filings and payroll tax deposits. The Debtor is also current with its post-petition obligations. It appears that the Debtor is operating profitably and will be able to fund its Plan of Reorganization. Class 7 consists of Virginia Department of Taxation Priority Claim. Virginia Department of Taxation has a priority claim against the Debtor, resulting from unpaid pre-petition payroll taxes in the approximate amount of $85,000.00. Commencing on the Effective Date, the Debtor will make monthly payments to Virginia Department of Taxation in an amount sufficient to pay its priority claim in full over 5 years with 4 percent interest. If the Virginia Department of Taxation allowed claim is $85,000.00, the monthly payment will be $1,565.00. Class 8 consists of Town of Altavista Secured and Priority Claim. The Town of Altavista has secured and priority claim against the Debtor resulting from real and personal property taxes in the amount of $40,104.00 pursuant to its proof of claim. Commencing on the Effective Date, the Debtor will make monthly payments to the Town of Altavista sufficient to pay its secured and priority claims in full over 5 years with 4 percent interest. If the secured and priority claims of the Town of Altavista are allowed at $40,104.00 the monthly payment to the Class 8 creditor will be $739.00. Class 9 consists of General Unsecured Claims. As a result of a review of its chapter 11 schedules and the claims that have been filed in this case as of the claims bar date of January 5, 2022, the Debtor estimates its general unsecured claims to be approximately $500,000.00. On a quarterly basis commencing June 1, 2022, and for a period of 5 years following or the date that all class 9 claims are paid in full, whichever is sooner, the Debtor will commit all of its disposable income to the Mid Atlantic Printers Reorganization Fund, to be held initially by Debtor's counsel, and ultimately, as designated by the Debtor. From the Mid Atlantic Printers Reorganization Fund, the Debtor will make quarterly pro-rata distributions to allowed General Unsecured Claims. The Debtor will fund its obligation to the Mid Atlantic Printer Reorganization Fund with its aggregate disposal income within 30 days from the end of each quarter. Thus the first payment will be due October 30, 2022, 30 days from the end of the quarter that ends September 30, 2022. If the Debtor's revenue and expenses projections are accurate, Class 9 creditors can expect to receive over 50% of their claims, even without a recovery from the insurance claim or preference claims. The Debtor will continue its operations as a commercial printer servicing its customers in the ordinary course of business. Rob Poindexter will continue in his role as Chief Operating Office of the Debtor. His salary will be increased by $2,500.00 per month, recognizing his greatly expanded role as he continues to serve as plant manager, and now oversees all operations and financial aspects of the company as chief operating officer. A full-text copy of the First Amended Plan of Reorganization dated Feb. 3, 2022, is available at https://bit.ly/3GxLOqr from PacerMonitor.com at no charge. Counsel for the Debtor: Andrew S. Goldstein, Esq. Magee Goldstein Lasky & Sayers, P.C. P.O. Box 404 Roanoke, VA 24003-0404 Tel: (540) 343-9800 Fax: (540) 343-9898 Email: agoldstein@mglspc.com About Mid Atlantic Printers Ltd. Mid Atlantic Printers, Ltd. is a full service commercial sheet fed printer, with two production facilities and multiple sales offices. The Altavista, Va.-based company offers commercial printing services. Mid Atlantic Printers filed a petition for Chapter 11 protection (Bankr. W.D. Va. Case No. 21-61173) on Oct. 27, 2021, listing up to $10 million in assets and up to $1 million in liabilities. Nancy Edwards, president of Mid Atlantic Printers, signed the petition. Andrew S. Goldstein, Esq., at Magee Goldstein Lasky & Sayers, P.C., serves as the Debtor's legal counsel. MOTELS OF SUGAR: Seeks to Employ Integra Realty as Appraiser ------------------------------------------------------------ Motels of Sugar Land, LLP seeks approval from the U.S. Bankruptcy Court for the Southern District of Indiana to hire Integra Realty Resources to appraise its 94-suite Springhill Suites and Hotel by Marriott located in Sugarland, Texas. The firm will be paid a flat fee of $5,200 with a pre-payment of 50 percent or $2,600 and a final payment of $2,600 upon completion of the appraisal services. The hourly fee for live testimony is $350. As disclosed in a court filing, Integra is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm holds office at: Integra Realty Resources 4981 N, Franklin Rd., Indianapolis, IN 46226 Tel: (212) 575-2935 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, disclosing $6,396,935 in assets and $6,455,893 in liabilities. Motels of Sugar Land President Sanjay Patel signed the petition. Judge Robyn L. Moberly oversees the case. KC Cohen, Lawyer, PC is the Debtor's legal counsel. MUSCLE MAKER: Receives Noncompliance Notice From Nasdaq ------------------------------------------------------- Muscle Maker, Inc. received notice from The Nasdaq Stock Market on Feb. 1, 2022, that the closing bid price for the Company's common stock had been below $1.00 per share for the previous 30 consecutive business days, and that the Company is therefore not in compliance with the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2). Nasdaq's notice has no immediate effect on the listing or trading of the Company's common stock on The Nasdaq Capital Market. The notice indicates that the Company will have 180 calendar days, until Aug. 1, 2022, to regain compliance with this requirement. The Company can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of its common stock is at least $1.00 per share for a minimum of 10 consecutive business days during the 180-day compliance period. If the Company does not regain compliance during the initial compliance period, it may be eligible for additional time of 180 calendar days to regain compliance. To qualify, the Company will be required to meet the continued listing requirement for market value of the Company's publicly held shares and all other Nasdaq initial listing standards, except the bid price requirement, and will need to provide written notice to Nasdaq of its intention to cure the deficiency during the second compliance period. If the Company is not eligible or it appears to Nasdaq that the Company will not be able to cure the deficiency during the second compliance period, Nasdaq will provide written notice to the Company that the Company's common stock will be subject to delisting. In the event of such notification, the Company may appeal Nasdaq's determination to delist its securities, but there can be no assurance that Nasdaq would grant the Company's request for continued listing. The Company intends to actively monitor the minimum bid price of its common stock and may, as appropriate, consider available options to regain compliance with the Rule. There can be no assurance that the Company will be able to regain compliance with the Rule or will otherwise be in compliance with other Nasdaq listing criteria. About Muscle Maker Headquartered in League City, Texas, Muscle Maker is a fast casual restaurant concept that specializes in preparing healthy-inspired, high-quality, fresh, made-to-order lean, protein-based meals featuring chicken, seafood, pasta, hamburgers, wraps and flat breads. In addition, the Company features entree salads and an appealing selection of sides, protein shakes and fruit smoothies. Muscle Maker reported a net loss of $10.10 million for the year ended Dec. 31, 2020, compared to a net loss of $28.39 million for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $18.36 million in total assets, $5.20 million in total liabilities, and $13.17 million in total stockholders' equity. Melville, NY-based Marcum LLP, the Company's auditor since 2016, issued a "going concern" qualification in its report dated April 15, 2021, citing that the Company has incurred significant losses and net cash used in operations and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. NEOVASC INC: Studies Show Neovasc Reducer Demonstrates Cost Savings ------------------------------------------------------------------- Neovasc, Inc. announced the publication of cost-effectiveness studies supporting the use of the Neovasc Reducer. The two analyses, authored by Americo Cicchetti, Graduate School of Health Economics and Management (ALTEMS) at the Catholic University of Sacro Cuore, Rome, included a budget impact analysis and a cost-utility analysis. The evaluations, both of which were positive for the Reducer therapy, considered direct healthcare costs from the perspective of the National Health Service in Italy. The budget impact analysis examined a five-year timeframe, while the cost-utility analysis utilized a "lifetime" horizon. Quality of life measures * The budget impact analysis and cost-utility model each demonstrated that the Reducer therapy can lead to an increase in the quality of life in patients with refractory angina. Cost effectiveness measures * In the cost-utility analysis, the Reducer therapy received the best possible outcome, a dominance profile, meaning the intervention is not just cost-effective, but cost-saving for the healthcare system. * In the budget impact analysis, the higher initial costs due an initial ramp in Reducer implants are adequately compensated in the short term by the better clinical outcomes, with consequent savings for the National Health Service in Italy starting in year four. The authors highlight the growing number of patients suffering from persistent and disabling symptoms of angina - in part due to the advances in pharmacological and interventional fields that have prolonged the survival of patients. Dr. Fabrizio Oliva, director of Cardiology and Interventional Cardiology, Niguarda Hospital, Milan, and President-elect of the Italian National Association of Hospital Cardiologists, commented, "We see patients with refractory angina frequently. A therapy that improves quality of life and is less costly to implement is highly unusual and should be highlighted. The data are particularly relevant in the context of strong budget constraints in many countries - a constraint that has been exacerbated by the COVID pandemic." "The data from the ALTEMS analyses are particularly relevant because patients with refractory angina have limited treatment options, and they tend to place a hefty financial burden on healthcare systems," commented Fred Colen, president and chief executive officer of Neovasc. "The new Italian publication builds upon our previously reported cost-effectiveness data and recent reimbursement wins in the United Kingdom, France, Germany, and the United States and it demonstrates fantastic progress against our objectives." About Neovasc Inc. Neovasc -- www.neovasc.com -- is a specialty medical device company that develops, manufactures and markets products for the rapidly growing cardiovascular marketplace. The Company develops minimally invasive transcatheter mitral valve replacement technologies, and minimally invasive devices for the treatment of refractory angina. Its products include the Neovasc Reducer, for the treatment of refractory angina, which is not currently commercially available in the United States (2 U.S. patients have been treated under Compassionate Use) and has been commercially available in Europe since 2015, and Tiara, for the transcatheter treatment of mitral valve disease, which is currently under clinical investigation in the United States, Canada, Israel and Europe. Neovasc reported a net loss of $28.69 million for the year ended Dec. 31, 2020, compared to a net loss of $35.13 million for the year ended Dec. 31, 2019. As of Dec. 31, 2020, the Company had $17.88 million in total assets, $15.90 million in total liabilities, and $1.98 million in total equity. Grant Thornton, LLP, in Vancouver, Canada, the Company's auditor since 2002, issued a "going concern" qualification in its report dated March 10, 2021, citing that the Company incurred a comprehensive loss of $30.2 million during the year ended Dec. 31, 2020. These conditions, along with other matters, raise substantial doubt about the Company's ability to continue as a going concern as at Dec. 31, 2020. NEWS CORP: Moody's Affirms Ba1 CFR, Rates New Unsecured Notes Ba1 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba1 rating to News Corporation's ("News Corp or the Company") proposed 10-year, $500 million senior unsecured notes due 2032 and affirmed the Ba1 Corporate Family Rating and Ba1-PD Probability of Default Rating. The rating on the existing senior unsecured notes due 2029 was upgraded to Ba1 from Ba2. The Speculative Grade Liquidity Rating was maintained at SGL-1 and the outlook was revised to positive from stable. The proceeds of the new notes will be used to partially fund the $1.45 billion purchase of the OPIS and Base Chemicals businesses from S&P Global Inc. (A3 Stable) and pay transaction fees and expenses. The acquisitions are expected to close by March 1. News Corp's acquisition of S&P's OPIS and Base Chemicals businesses is credit positive. Moody's expects the financing mix to include a substantial portion of cash such that pro forma adjusted leverage remains below 3.0x. Despite the leveraging event, Moody's believes these are strong assets with a very high mix of recurring and digital revenue that generate strong EBITDA margins. The outlook was changed to positive from stable driven by a very strong improvement in operating results during a very challenging period over the last several years, improving free cash flows and a steady track record of conservative leverage and very good liquidity. The company continues to invest in its stronger segments (Dow Jones, Book Publishing, and Digital Real Estate Services), while lowering exposure to advertising and growing its recurring base of subscription revenue. The company has steadily grown digital subscribers across most segments including the Dow Jones, Subscription Video Services, and News Media. Earnings are being driven, in part, by new and transformative news content licensing agreements and permanent and material cost savings initiatives. Assignments: Issuer: News Corporation Senior Unsecured Regular Bond/Debenture, Assigned Ba1 (LGD4) Affirmations: Issuer: News Corporation Corporate Family Rating, Affirmed Ba1 Probability of Default Rating, Affirmed Ba1-PD Upgrades: Issuer: News Corporation Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1 (LGD4) from Ba2 (LGD4) Outlook Actions: Issuer: News Corporation Outlook, Changed To Positive From Stable RATINGS RATIONALE News Corp's Ba1 CFR is supported by a long and steady history of conservative leverage targets (Moody's adjusted leverage to remain below 3x), and very good liquidity. The Company also benefits from its large scale, strong geographic diversification and leading market positions across 5 business segments including the Dow Jones, Digital Real Estate Services, Subscription Video Services, News Media and Book Publishing. The Company also owns and operates some of the world's leading brands with significant value including the Wall Street Journal, HarperCollins, and Realtor.com. Moody's believes the Company is committed to transforming the business mix, with a patient and disciplined growth strategy, investing organically and through M&A into growing digital and recurring business models, selling non-performing and non-core assets, and carefully managing cost structures. The credit profile is constrained by a short history of strong free cash flows, due in part to weaker EBITDA margins in the mid-teens percent range. The company also has multiple segments exposed to unfavorable secular trends including news and video. The Company's video business, Foxtel, is losing broadcast TV subscribers at a high rate and News Media is significantly exposed to the advertising market which is under pressure. The company's financial policy also tolerates debt-funded M&A which has increased leverage, as well as material shareholder distributions in the form of both share repurchases and dividends which are material calls on cash flows. News Corp is exposed to governance risk, including the closely held nature of the organization (the Murdoch Family Trust and Rupert Murdoch collectively control 39.1% through Class B shares). Potential changes in leadership and a history of activist investors pose risks. The positive outlook reflects Moody's expectation that debt, revenue, and EBITDA will average approximately $4 billion, $9 billion, and $1.3-$1.6 billion, respectively, over the next 12-18 months. Moody's project EBITDA margins to rise to the high-teens percent, producing free cash flows that will rise to over $600 million, after capex (averaging 5%-6% of revenue), borrowing costs (averaging near 4%), and dividends (approximately $160 million). Moody's expect a material portion of free cash flow to be used for share repurchases. Moody's expect leverage to be 2.5x-3.0x, and free cash flow to debt to rise to at least 15%. Moody's expect liquidity to remain very good. Note: all figures are Moody's adjusted, and normalized, over the next 12-18 months unless otherwise noted: Moody's material adjustments include treating lease obligations and unfunded pension obligations as debt, as well as adjustment to proportionally deconsolidate non-controlling interests, including those at Foxtel and REA Group. Moody's estimates these adjustments add at least 1.0x turn of leverage to management's adjustment ratios. News Corp's speculative grade liquidity is very good (SGL-1). The liquidity profile is supported by significant cash sources (including cash and cash flows), significant back-up liquidity with approximately $750 million in undrawn revolving credit facilities (excluding subsidiary facilities), and substantial alternate liquidity. The unsecured notes are rated Ba1 (LGD4), equal to the CFR reflecting the preponderance of senior unsecured debt at the parent, with a smaller proportion of senior obligations including trade payables, lease rejection claims and unfunded pension obligations at the operating subsidiaries. The new notes will be an obligation of the parent company, and not guaranteed by operating subsidiaries. The notes will rank equally in right of payment with all existing and future senior debt, including the existing revolving credit facility and existing unsecured notes, and rank senior to all existing and future subordinated debt. The notes will be subordinate to all existing and future secured debt and structurally subordinate to all existing and future liabilities of each the Company's operating subsidiaries. The notes will be non-callable for 5 years and are subject to repayment upon a change in control. The instrument rating reflects the probability of default of the company, as reflected in the Ba1-PD Probability of Default Rating, and an average expected family recovery rate of 50% at default with the mixed priority of claims. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Factors that could lead to an upgrade: Maintenance of conservative financial policies targets, modest leverage and very good liquidity Sustained growth in digital assets, supported by profitable execution of transformation strategy Track record of strong free cash flow generation, with free cash flow to debt (Moody's adjusted and normalized) of at least 10% expected Factors that could lead to a downgrade Gross Debt/EBITDA (Moody's adjusted and normalized) is sustained above 3.0x, or FCF/gross debt (Moody's adjusted and normalized) is sustained below mid-single digit percent Moody's would also consider a negative rating action if the financial strategy or policy turned more aggressive, or operating performance weakened considerably such that the company's market or financial position implied a weaker credit profile. The principal methodology used in these ratings was Media published in June 2021. News Corporation (Nasdaq: NWS, NWSA; ASX: NWS, NWSLV) is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. The company comprises businesses across a range of media, including: Dow Jones, digital real estate services, subscription video services in Australia, news media and book publishing. Headquartered in New York, News Corp operates primarily in the United States, Australia, and the United Kingdom, and its content and other products and services are distributed and consumed worldwide. Revenues for the last twelve months (LTM) ended September 30, 2021 was approximately $9.7 billion (as reported). NEWS CORP: S&P Assigns 'BB+' Rating on New Senior Unsecured Notes ----------------------------------------------------------------- S&P Global Ratings assigned its 'BB+' issue-level rating and '3' recovery rating to News Corp.'s proposed senior unsecured notes. The '3' recovery rating indicates its expectation for meaningful (50%-70%; rounded estimate: 65%) recovery of principal in the event of a payment default. News Corp plans to use the net proceeds from these notes, along with cash on the balance sheet, to fund its acquisitions of OPIS and Base Chemicals. S&P said, "In our view, the acquisitions will modestly diversify News Corp.'s business mix, expanding its Dow Jones Professional Information Business (PIB) offerings into energy, chemicals, metals and mining pricing, news, and analytics. It will also modestly increase the company's EBITDA margins without materially affecting its credit quality. Pro forma for the acquisitions and debt offering, News Corp.'s S&P Global Ratings-adjusted leverage will modestly increase from 1.6x to about 2.3x as of Dec. 31, 2021, which remains below our 2.5x downgrade threshold for the current 'BB+' rating. We expect leverage to decline to about 2x by the end of fiscal 2022, which ends June 30, 2022, due to strong operating performance and EBITDA growth." The stable outlook reflects S&P's expectation that News Corp. will exhibit steady operating performance with improving EBITDA margins while pursuing modest acquisitions and share repurchases that will likely keep leverage at about 1.5x-2x over the next 12 months. NEWSTREAM HOTEL LIT: Taps HREC Investment as Real Estate Broker --------------------------------------------------------------- Newstream Hotel Partners-LIT, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to hire HREC Investment Advisors to market and sell Four Points Hotel by Sheraton, a full-service hotel in Little Rock, Ark. The firm will receive 2.85 percent commission of the gross sales price of the property. Patrick Culligan, principal at HREC, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Patrick Culligan HREC Investment Advisors 222 2nd Avenue South, Suite 1700 Nashville, TN 38201 Tel: 615-347-2138 Email: pculligan@hrec.com About Newstream Hotel Partners-Lit Newstream Hotel Partners-LIT, LLC filed a Chapter 11 petition (Bankr. E.D. Texas Case No. 21-40561) on April 16, 2021, listing up to $10 million in assets and up to $50 million in liabilities. Judge Brenda T. Rhoades oversees the case. Spencer Fane, LLP represents the Debtor as legal counsel. UC Four Points Little Rock Holder LLC, as prepetition secured lender, is represented by: Mark Stromberg, Esq. Stromberg Stock, PLLC 8350 N Central Expy, Ste 1225 Dallas, TX 75206 Tel: (972) 458-5353 Fax: (972) 861-5339 Email: mark@stromberstock.com Marriott International Inc., as franchisor, is represented by: Michael T. Driscoll, Esq. SheppardMullin 30 Rockefeller Plaza New York, NY 10112-0015 Tel: 212-653-8700 Email: MDriscoll@sheppardmullin.com NOISE SOLUTIONS: Unsecured Creditors Will Get 5% Dividend in Plan ----------------------------------------------------------------- Noise Solutions USA, Inc., filed with the U.S. Bankruptcy Court for the Western District of Pennsylvania a Small Business Chapter 11 Plan of Reorganization dated Feb. 3, 2022. The Debtor is a full-service company that provides engineered industrial noise suppression for buildings in the energy sector. The Debtor provides services all across North America. Shenango Valley Enterprise Zone Corp. filed a Confessed Judgment action in the Court of Common Pleas of Mercer County, Pennsylvania at Case No. 2021-02089. The Debtor filed a Petition to Strike and/or Open the Confessed Judgment. However, the Petition was denied. There was a sheriff sale scheduled for November 8, 2021. The bankruptcy stayed the sheriff sale. The Debtor intends to fund the Plan through its continued business operations. The Debtor is bidding on work contracts that would bring significant income into the Bankruptcy Estate. As it continues to perform those obligations, its income will increase. The Debtor is actively searching for new contracts to perform. The Plan proposes to pay administrative claims in full unless otherwise agreed to. The Debtor estimates approximately 5% will be paid on account of general unsecured claim pursuant to the Plan. Class 8 consists of General Unsecured Claims. The creditors in this Class must have had a claim against the Debtor as of November 5, 2021. The total amount scheduled for this Class is approximately $604,510. This Class will be Impaired. The Creditors in this Class will be paid a fixed sum of $188,000, which will be approximately a dividend of 5% of the Allowed Claims. This will be paid in fixed monthly payments of $3,133 paid to the Disbursing Agent. Distributions to this Class will be made on a quarterly basis. Each creditor will receive a pro rata distribution of all funds distributed to the Class. This Class will not be entitled to interest on their claims. The claims in this Class are not entitled to post-petition interest, attorney's fees, or costs. Class 9 consists of the Equity Interests in the Debtor. The equity ownership in the Debtor shall be retained. The equity owners shall retain full voting and management rights over the Debtor after Confirmation of the Plan. The plan will be implemented by the Debtor. The Debtor will fund the plan from its disposable income and make payments over the life of the plan. The Debtor will continue to operate its business and perform its service contracts. The Debtor will continue to search for new service contracts to perform. The Debtor is funding this plan with their income and dedication all disposable income over a 5-year period to this Plan. Disposable income is defined by Section 1191(d) of the Bankruptcy Code as the income that is received by the debtor and that is not reasonably necessary to be expended – (1) for the maintenance or support of the debtor or a dependent of the debtor or a domestic support obligation that first becomes payable after the date of the filing of the petition; or (2) for the payment of expenditures necessary for the continuation, preservation, or operation of the business of the debtor. A full-text copy of the Small Business Plan of Reorganization dated Feb. 3, 2022, is available at https://bit.ly/3336zMN from PacerMonitor.com at no charge. Counsel to the Debtor: Donald R. Calaiaro, Esq. Calaiaro Valencik 938 Penn Avenue, Suite 501 Pittsburgh, PA 15222-3708 Phone: (412) 232-0930 Email: dcalaiaro@c-vlaw.com About Noise Solutions Noise Solutions (USA), Inc., is a Sharon, Pa.-based provider of engineered industrial noise suppression for the energy sector. Noise Solutions filed its voluntary petition for Chapter 11 protection (Bankr. W.D. Pa. Case No. 21-10616) on Nov. 5, 2021, listing up to $50,000 in assets and up to $10 million in liabilities. Scott K. MacDonald, president and chief executive officer, signed the petition. Donald R. Calaiaro, Esq., a Calaiaro Valencik represents the Debtor as legal counsel. NORCROSS LODGING: Wins Cash Collateral Access --------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana, Indianapolis Division, has authorized Norcross Lodging Associates, LLP to use cash collateral on a final basis in accordance with the budget, with a 10% variance. The Debtor requires the use of cash collateral to maintain its business and avoid serious and irreparable harm to the estate and the Debtor's creditors. SG Peachtree Comers Hospitality Holdings, LLC asserts is the Debtor's senior secured lender. PCH timely filed Claim #5 on January 5, 2022 asserting that the balance of the indebtedness owed to PCH by the Debtor under the Loan Documents as of the Petition Date is $1,442,691 in principal, accrued interest, late charges, and attorneys' fees and costs. The Debtor stipulates and concedes that PCH has a valid, enforceable, unavoidable, first priority, properly perfected security interest and lien in the Property, including, but not limited to, the Cash Collateral, but subject to the purchase money security interest of Alliance Laundry System LLC in certain equipment. The Debtor and PCH agree that if the Debtor disputes the amount of the PCH Claim, it will file a claim objection within 45 days of the entry of the Order. The Debtor will use its Cash Collateral consistent, and in compliance, with the budget, and subsequent monthly budgets submitted to PCH, the U.S. Trustee, and the Subchapter V Trustee for the operation, maintenance, and preservation of the Hotel and the Debtor's personal property. The Debtor will continue to provide the Adequate Protection Provisions during the period of cash use. In addition to the Adequate Protection Provisions, the Debtor has agreed to provide adequate protection to PCH as follows: on or before February 15, and on the 15 of each calendar month (or the next business day thereafter) thereafter during the period of cash use, the Debtor will make a payment to PCH in the amount of $10,107. In addition, PCH will have a valid, enforceable, properly perfected first priority post-petition replacement lien in all assets of the Debtor to secure PCH for any diminution in value of the Debtor's Cash Collateral. The Debtor's authorization to use Cash Collateral will immediately terminate on the earlier to occur of: (i) the date on which PCH provides, via facsimile and electronic mail, written notice to the Debtor's counsel of the occurrence of an Event of Default; (ii) the date the bankruptcy case is dismissed or converted to a chapter 7 case; (iii) the date a trustee is appointed over the Debtor pursuant to 11 U.S.C. section 1104; (iv) the date that the automatic stay of section 362 of the Bankruptcy Code is lifted as to allow a third party to proceed against any substantial asset of the Debtor; or (v) the date a material adverse change shall occur in the condition or prospects, financial or otherwise of the Debtor after the date of the Final Order that results in a legitimate question as to whether PCH is adequately protected. A copy of the order and the Debtor's budget for the period from February 2 to March 16, 2022 is available at https://bit.ly/34tgvQj from PacerMonitor.com. The budget provided for $141,214 in total revenue and $56,467 in total expenses for the period. About Norcross Lodging Associates, LLP dba Norcross Inn & Suites Norcross Lodging Associates, LLP owns and operates an unflagged, suburban hotel known as the Norcross Inn & Suites, built in 1989 on two acres of land in Peachtree Corners, Gwinnett County, Georgia. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 21-04856-JJG-11) on October 27, 2021. In the petition signed by Mohan P. Hari, managing partner, the Debtor disclosed up to $10 million in assets and liabilities. Judge Jeffrey J. Graham oversees the case. Andrew Kight, Esq., at Jacobson Hile Kight LLC is the Debtor's counsel. NORDIC AVIATION: Seeks Approval to Hire Restructuring Advisors -------------------------------------------------------------- Nordic Aviation Capital Designated Activity Company and its affiliates seek approval from the U.S. Bankruptcy Court for the Eastern District of Virginia to hire Ireland-based Ernst & Young Business Consultants and three other member firms of Ernst & Young Global Limited as restructuring advisors and tax services providers. The three other firms are Ernst & Young LLP, a member firm of EYGL in the United States; EY Godkendt Revisionspartnerselskab, a member firm in Denmark; and Ernst & Young LLP, a member firm in the United Kingdom. The hourly rates charged by the firms for their services are as follows: * Ernst & Young U.S. Partner/Principal/ US$895 - US$1100 per hour Executive Director Senior Director/Senior Manager US$775 - US$895 per hour Director/Manager US$650 - US$775 per hour Associate/Senior Associate US$290 - US$650 per hour * Ernst & Young U.K. Partner GBP920 per hour Director GBP724 per hour Assistant Director GBP648 per hour Manager GBP520 per hour Senior Executive GBP408 per hour Executive GBP332 per hour Analyst GBP156 per hour Business Trainee GBP100 per hour * Ernst & Young Business Consultants Partner EURO768 per hour Director EURO704 per hour Assistant Director EURO568 per hour Manager EURO492 per hour Senior Executive EURO384 per hour Executive EURO316 per hour Analyst EURO152 per hour Business Trainee EURO84 per hour * EY Godkendt Partner EURO768 per hour Director EURO704 per hour Senior Manager EURO568 per hour Manager EURO492 per hour Senior Consultant EURO384 per hour Consultant EURO316 per hour Business Trainee/Admin EURO84 per hour During the 90 days prior to their Chapter 11 filing, the Debtors paid US$2,656,050 to Ernst & Young U.S. for services performed and expenses incurred; EUR3,587,009 to Ernst & Young Business Consultants; and EUR10,700 to EY Godkendt. Briana Richards, principal at Ernst & Young, disclosed in a court filing that she is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firms can be reached at: Briana Richards Ernst & Young LLP US One Manhattan West New York, NY 10001 Tel: 212-773-3000 -- and -- Andrew Dolliver Ernst & Young LLP U.K. Bedford House 16 Bedford Street Belfast BT2 7DT Tel: +44 28 9044 3500 Fax: +44 28 9044 3501 -- and -- Alan O'Brien Ernst & Young Business Consultants Harcourt Centre Harcourt Street Dublin 2 D02 YA40 Ireland Tel: + 353 1 475 0555 Fax: + 353 1 475 0599 -- and -- Henrik Morthensen EY Godkendt Revisionspartnerselskab P.O. Box 330 8100 Aarhus C Denmark Tel: +45 73 23 30 00 Fax: +45 72 29 30 30 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. OLAPLEX INC: S&P Assigns 'B+' Issuer Credit Rating, Outlook Stable ------------------------------------------------------------------ S&P Global Ratings assigned its 'B+' issuer credit rating to U.S.-based premium hair care provider Olaplex Inc. and its 'BB-' issue-level rating to the proposed senior secured term loan B. The recovery rating on the term loan B facility is '2', indicating its expectation of substantial (70%-90%; rounded estimate: 70%) recovery in the event of a payment default. The stable outlook reflects S&P's expectation that Olaplex will continue to grow at a rapid pace supported by higher brand awareness, international expansion, new product launches, and e-commerce growth. S&P said, "Our ratings on Olaplex reflect its small scale, narrow business and product focus, and heavy reliance on a key proprietary active ingredient. Olaplex is narrowly focused in the premium specialty hair care sector and has a minimal share of the global hair care market. The company relies on a key, patent-protected active ingredient (bis-aminopropyl diglycol dimaleate, or bisamino) for much of its success. The company's concentrated cash flows are derived by providing premium hair care products to professional hair salons, specialty retailers, and direct to consumers (DTC). Olaplex's products protect, strengthen, and rebuild disulfide bonds in hair before, during, and after chemical services in salon and at home. We understand no prestige hair care peers have a patented technology similar to Olaplex's products. "While we believe the category has satisfactory growth and stability over the years, the lack of product diversity could damage the company's cash flows should unanticipated developments arise. This could include rivals developing effective competing products, including large multinational personal care companies and small, nimble companies. While it could be difficult to replicate Olaplex's extraordinarily high, patent-protected, intellectual property-driven profit margins, we believe the prospects of realizing returns even close to Olaplex's could entice rivals to invest heavily in the space. The company's successful litigation against L'Oreal S.A. demonstrates the desire by rivals to expand in this high-margin subcategory. We believe the multinational company was found to have infringed upon Olaplex's maleic acid formulation, including developing competing products presumably based on the technology. "We assume Olaplex will continue to have ready access to the inputs that make up the key active ingredients--primarily bisamino--that underpin its success, and at prices that are comparable to recent history." The ratings also reflect the company's majority ownership by a financial sponsor, notwithstanding its low leverage at close. Olaplex's financial policies are largely shaped by financial sponsor owner Advent International Corp., which owns about 77% of the company's stock following the IPO in September 2021. Pro forma S&P Global Ratings' adjusted debt outstanding following this transaction is approximately $908 million including $233 million tax receivable agreement (TRA) liability, which we treat as 100% debt. Under the TRA, Olaplex will pay its pre-IPO stockholders 85% of net tax benefits related to pre-IPO tax assets. S&P said, "We recognize the risk that the TRA obligation could increase over time. We also recognize there is a risk of accelerated payments under the TRA in certain circumstances including change of control, which could strain liquidity. Moreover, the company could have to pay the TRA obligation before realizing the anticipated tax benefits." S&P said, "While we estimate S&P Global Ratings' pro forma adjusted leverage will be around 2.4x at close and the company's solid profit and cash flow generating capacity should enable steady organic deleveraging, shareholder friendly policies could elevate leverage above our base-case scenario and lead to adjusted leverage over 4x for extended periods. At this point, we do not expect management to aggressively pursue acquisitions because of the company's significant organic growth opportunities. We assume Advent will sell down its shares in secondary market offerings. "We forecast that Olaplex's revenues will continue to grow, albeit at a lower rate, supported by new geographic expansions, new product launches, and e-commerce expansion. The company's portfolio of premium, high-quality products commands substantial pricing power. All its products are infused with bisamino, on which Olaplex has patent protection for roughly the next 13 years. This substantial pricing power--coupled with Olaplex's low-cost, asset-light, outsourced business model--translates into very high adjusted EBITDA margins and free cash flow approaching $200 million. We expect double-digit percent revenue growth in 2022 and 2023 as the company continues to expand distribution in the core professional salons, specialty retail, and direct-to-consumer (DTC) channels. We forecast EBITDA margins will remain high but will decline by 300-500 basis points because we expect increased investments in innovation, sales, marketing, and personnel costs to support Olaplex's local and international expansion plans. "We believe the company is an effective competitor, but would need to expand its current customer base and diversify into international markets to achieve the next phase of growth. "Olaplex has a limited operating history of successfully managing a small but fast-expanding sales base. Its very modest staffing--which we believe consists of about 90 employees--could expose it to operational missteps if it cannot effectively manage its very high prospective growth plans, overlaid onto its entirely outsourced business model." All of the company's manufacturing is outsourced globally, limiting its fixed-overhead costs, and allows the company to run a lean model. However, this model typically presents risks, including potential lack of control and oversight over the supply chain, in addition to operating challenges at suppliers that could cause disruptions. It's possible Olaplex may need to increase its cost base significantly if it wants to continue to achieve impressive growth rates on a standalone basis. Moreover, a prolonged downturn could reduce consumer spending on discretionary hair care products, especially premium-priced items such as those marketed by Olaplex. S&P said, "The stable outlook reflects our expectation that Olaplex will continue to generate strong sales and EBITDA growth driven by increasing consumer awareness of its brands' benefits and ongoing expansion in the DTC and brick-and-mortar channels. We expect adjusted leverage will be sustained below 5x." S&P could lower the rating over the next 12 months if adjusted leverage deteriorates and is sustained above 5x, possibly because: -- Operating performance materially underperforms our expectation because of product misses, weak adoption, or unsuccessful attempts to expand into new regions; -- The company adopts more aggressive financial policies, including debt-financed dividend or large acquisitions; -- The TRA liability significantly increases or TRA payments accelerate to an unsustainable level; or S&P unfavorably reassess its view of business risk, which could occur due to intensifying competition from existing or new entrants into the premium hair care space, damaging the company's very high cash flow and profit margins. While unlikely over the next 12 months, S&P could raise its rating if: -- The company demonstrates its ability to grow organically while maintaining its strong margins; -- It gradually increases its scale, while diversifying and expanding the portfolio; and -- S&P expects Advent to relinquish control over several years, and the company demonstrates financial policies that lead it to believe it will maintain adjusted leverage below 4x. ESG credit indicators: E-2, S-2, G-2 S&P said, "ESG factors have had no material influence on our credit rating analysis of Olaplex. Our governance score reflects important minority ownership following the IPO and over one-third of the board consisting of professional independent members." ORIGIN AGRITECH: Incurs RMB127.1M Net Loss in FY Ended Sept. 30 --------------------------------------------------------------- Origin Agritech Limited filed with the Securities and Exchange Commission its Annual Report on Form 20-F disclosing a net loss of RMB127.08 million on RMB46.43 million of revenues for the year ended Sept. 30, 2021, compared to a net loss of RMB102.84 million on RMB52.51 million of revenue for the year ended Sept. 30, 2020. As of Sept. 30, 2021, the Company had RMB119.04 million in total assets, RMB304.64 million in total liabilities, and a total deficit of RMB185.60 million. Lakewood, Colorado-based B F Borgers CPA PC, the Company's auditor since 2020, issued a "going concern" qualification in its report dated Feb. 4, 2022, citing that the Company incurred recurring losses from operations, has net current liabilities and an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. A full-text copy of the Form 20-F is available for free at: https://www.sec.gov/ix?doc=/Archives/edgar/data/1321851/000141057822000076/seed-20210930x20f.htm About Origin Agritech Headquartered in Beijing, China, Origin Agritech Limited, along with its subsidiaries, is focused on agricultural biotechnology and an agricultural oriented e-commerce platform, operating in the PRC. The Company's seed research and development activities specialize in crop seed breeding and genetic improvement. The e-commerce activities will focus on delivering agricultural products to farmers in China via online and mobile ordering and tracking the source of the agricultural products via blockchain technologies. OXFORD FINANCE: Fitch Rates USD400MM Unsec. Notes 'BB-' ------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to the $400 million of 6.375% five-year unsecured notes co-issued by Oxford Finance LLC and its debt-issuing subsidiary Oxford Finance Co-Issuer II Inc. Proceeds are expected to be used to repay existing unsecured debt and for general corporate purposes. The assignment of the final ratings follows the receipt of documents conforming to information already received. The final ratings are the same as the expected rating assigned to the unsecured notes on Jan. 24, 2022. KEY RATING DRIVERS The senior unsecured debt rating is one notch below the Long-Term Issuer Default Rating (IDR), given the high balance sheet encumbrance and the largely secured funding profile, which indicates weaker recovery prospects under a stress scenario. Oxford's ratings reflect its solid franchise in the health care/life sciences sectors, focus on senior lending, which has led to strong asset quality performance historically, relatively consistent operating performance through market cycles, adequate liquidity profile and experienced management team. Rating constraints include higher leverage compared to business development company (BDC) peers, a largely secured funding profile, which reduces funding flexibility, and the potential liquidity and leverage impact from meaningful draws on portfolio company revolver commitments. Constraints also include a highly competitive underwriting conditions in the middle market, within life sciences and health care specifically, and a modest degree of key person risk associated with J. Alden Philbrick, who founded Oxford in 1987 and has since served as President and CEO. Leverage is expected to remain relatively stable following the $400 million unsecured note issuance, as a portion of the proceeds will be used to repay $300 million of unsecured debt. Oxford's leverage is higher than rated BDCs, but relatively consistent with commercial lending peers, and is within Fitch's 'bbb' category benchmark range of 0.75x-4.0x for finance and leasing companies with an operating environment score of 'bbb'. Oxford's funding profile is largely secured, but is relatively diversified. At Sept. 30, 2021, the company had seven different revolving lending facilities from over a dozen banks, in addition to four securitizations, an asset-backed notes agreement and $300 million of unsecured notes. Pro forma for the $400 million unsecured issuance, unsecured debt would represent 18% of total debt, which is below BDCs and within Fitch's 'b and below' funding, liquidity and coverage benchmark range of less than 20% for finance and leasing companies with an operating environment score of 'bbb'. Fitch does not expect a material change in the company's funding mix over the Outlook horizon, which will continue to constrain the ratings. The Stable Outlook reflects Fitch's expectation that, over the Outlook horizon, Oxford will retain underwriting discipline, given the competitive market conditions, demonstrate sound credit performance, manage leverage within the targeted range and maintain sufficient liquidity to fund potential draws on unfunded commitments. SUBSIDIARY RATINGS Oxford Finance Co-Issuer II Inc.'s Long-Term IDR and unsecured debt rating are equalized with its parent, as it is a wholly owned finance subsidiary of Oxford. RATING SENSITIVITIES The unsecured debt rating is expected to move in tandem with the Long-Term IDR. However, a material increase in the proportion of unsecured funding or the creation of a sufficient unencumbered asset pool, which alters Fitch's view of the recovery prospects for the debt class, could result in the unsecured debt rating being equalized with the IDR. Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Increased portfolio diversification by sector and issuer, a sustained reduction in leverage below 3.0x, improved funding flexibility, as evidenced by unsecured debt approaching 30% of total debt, and strong and differentiated credit performance of recent vintages; -- Any ratings upgrade would be contingent on the maintenance of consistent operating performance and a sufficient liquidity profile. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- A sustained increase in leverage above the targeted range, material deterioration in asset quality, an inability to maintain sufficient liquidity to fund operating expenses and revolver draws, a change in the perceived risk profile of the portfolio, and/or damage to the firm's franchise which negatively impacts its access to deal flow and industry relationships; -- Additionally, any change in the funding mix, such as a sustained decline in the proportion of unsecured funding, could lead to an adverse rating action. SUBSIDIARY RATINGS Oxford Finance Co-Issuer II Inc.'s Long-Term IDR and unsecured debt rating are linked to the parent and expected to move in tandem. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. ESG CONSIDERATIONS Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. PEDIATRIC ASSOCIATES: Moody's Rates New $100MM Term Loan 'B2' ------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Pediatric Associates Holding Company, LLC's new $100 million Delayed Draw Term Loan (DDTL). There is no change to the B2 Corporate Family Rating, B2-PD Probability of Default Rating, and B2 ratings to the first lien senior secured credit facilities. The outlook remains unchanged at stable. Pediatric Associates plans to upsize its $600 million Term Loan to $660 million and issue a new $100 million Delayed Draw Term Loan. Proceeds will be used to repay draws on the revolving credit facility, add cash to the balance sheet, finance acquisitions and investments, and pay related fees and expenses. The B2 rating assigned to the proposed DDTL reflect their senior secured interest in substantially all assets of the borrowers and absence of junior capital in the company's proposed capital structure. Assignments: Issuer: Pediatric Associates Holding Company, LLC Senior Secured 1st Lien Delayed Draw Term Loan, Assigned B2 (LGD3) RATINGS RATIONALE The B2 CFR reflects Pediatric Associates' moderately high financial leverage, with Moody's-adjusted debt/EBITDA around 4.5 times pro forma for the proposed transaction. The rating is also constrained by the company's modest scale and significant concentration in two states, Florida and Texas. Further, Moody's believes Pediatric Associates will continue to actively expand through acquisitions that Moody's expects will be funded with a mix of excess cash and additional financial debt. As a result, Moody's expects adjusted debt/EBITDA will remain in a range of 4.0-5.0x over the next 12-18 months. The rating is supported by Pediatric Associates' solid position in the highly fragmented pediatric care market which offers solid growth prospects and good profitability. Despite some exposure to direct government reimbursement (about 50% of revenue is from Managed Medicaid), the rating also incorporates commercial payor diversification, predictable revenue from capitation contracts with commercial payors, and a seasoned executive team. Pediatric Associates will maintain good liquidity over the next 12-18 months, with no near-term debt maturities. Liquidity will be supported by the new 5-year revolving credit facility that provides for borrowings of $100 million, which Moody's expect will be undrawn. This facility has a springing First Lien Net Leverage Covenant of 7.0x when 35% drawn. Moody's expects the company to make minimal draws on this facility over the next 12 months. Alternative sources of liquidity are limited as substantially all assets are pledged. There is no financial covenant on the term loans. In its stable outlook, Moody's expects that Pediatric Associates will operate with a leverage between 4.0-5.0x over the next 12-18 months and will prudently manage its expansion and cash. Moody's considers Pediatric Associates to face social risks such as the rising concerns around the access and affordability of healthcare services. However, Moody's does not consider Pediatric Associates to face the same level of social risk as many other healthcare providers, like hospitals. Given its high percentage of revenue generated from Managed Medicaid, Pediatric Associates is also exposed to regulatory changes and state budget challenges. Among governance considerations, the company is likely to employ high financial leverage and active acquisition strategy to grow its business. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING The ratings could be downgraded if Pediatric Associates' operating performance deteriorates, liquidity weakens, or if the company experiences material integration related disruptions. Additionally, the ratings could be downgraded if Moody's expects debt/EBITDA to be sustained above 5.5 times. Further, debt-funded shareholder returns or other aggressive financial policies could also result in a downgrade. The ratings could be upgraded if Pediatric Associates demonstrates a track record of positive free cash flow, and effectively manages its growth with prudent financial policies. Increased scale and diversification would also support an upgrade. Further, the ratings could be upgraded if adjusted debt to EBITDA is sustained below 4.0 times. Pediatric Associates Holding Company, LLC ("Pediatrics Associates") is the largest pediatric practice management company in the highly fragmented U.S. pediatric market. The company employs over 750 clinicians seeing over 3 million annual visits across 6 states (180 locations). Pediatric Associates offers primary and specialty care, laboratory, diagnostic and care management services, as well as 24/7 telehealth access. Pediatric Associates reported revenue of $492 million in the last twelve months ended September 30, 2021. The principal methodology used in this rating was Business and Consumer Services published in November 2021. PEDIATRIC ASSOCIATES: S&P Rates New Delayed Draw Term Loan 'B' -------------------------------------------------------------- S&P Global Ratings assigned its 'B' issue-level rating and '3' recovery rating to Pediatric Associates Holding Co. LLC's proposed $100 million delayed draw term loan. The '3' recovery rating indicates its expectation for meaningful recovery (50%-70%; rounded estimate: 50%) in the event of a hypothetical default. The company is also proposing a $60 million add-on to its first-lien term loan. S&P's 'B' issuer credit and issue-level ratings on the company's existing first-lien debt remain unchanged. The recovery rating remains '3'. S&P said, "We expect Pediatric Associates to use $39 million of proceeds from the add-on to pay for specific acquisitions and $10 million to repay amounts drawn on the revolver. We expect the company to use the $100 million delayed draw term loan for future acquisitions to support the company's acquisition-driven growth strategy. "The incremental debt proposed is consistent with our assumptions of about $100 million of acquisition spend per year within the company's debt capacity for the current 'B' rating. "The ratings on Pediatric Associates continue to reflect the company's modest scale in a highly fragmented and competitive market for primary care services for children, with substantial geographic and payor concentration (54% of revenue from Medicaid). Moreover, we expect its exposure to value-based care contracts may add to volatility of its profitability. The rating also reflects our expectation for adjusted leverage to generally remain between 5x and 7.5x." PETER SZANTO: District Court Affirms Order Allowing IRS Claim ------------------------------------------------------------- Peter Szanto appeals from the Bankruptcy Court's order overruling his objection to the proof of claim by the United States Department of the Treasury, Internal Revenue Services, and order denying his motion for reconsideration. On November 10, 2016, the IRS submitted Proof of Claim 3-1 in the bankruptcy proceedings, claiming it was owed $74,746 by Appellant for tax years 2007, 2009, and 2010. This claim was amended approximately 20 times, after Appellant made routine payments. At some point, the IRS filed Proof of Claim 3-21, which apparently asserted that Appellant owed the IRS $65,662. On September 5, 9, and 13, 2019, Appellant filed objections to Proof of Claim 3-21. Appellant argued that the tax liabilities for tax years 2007, 2009, and 2010 had been paid in full. The United States responded to the objection, noting the IRS had amended its Proof of Claim on September 12, 2019, and submitted Proof of Claim 3-22. That Proof of Claim removed the 2010 tax liability and reduced the requested amount to $24,937, for tax years 2007 and 2009. The United States also contended that Appellant's objection should be denied for lack of evidence that the 2007 and 2009 tax liabilities were paid in full. IRS Proof of Claim 3-22 asserted a priority claim of $2,960 based on tax and interest on tax for the 2009 tax year (assessed on November 28, 2016) and unsecured general claims totaling $21,977, comprised of (1) tax, interests on tax, penalties, and interest on penalties for 2009 and (2) interest, penalties, and interest on penalties for 2007. There was no tax due for the 2007 tax year. The Bankruptcy Court held a hearing on November 5, 2019. The Bankruptcy Court overruled Appellant's objection on all grounds except whether the 2007 and 2009 tax liabilities had been paid in full. The Bankruptcy Court allowed Appellant 28 days to provide supplemental evidence as to payment of those debts. On December 3, 2019, Appellant filed his response. On March 5, 2020, the Bankruptcy Court held an evidentiary hearing on Appellant's objection and took the matter under advisement. On March 19, 2020, the Bankruptcy Court held a hearing and issued an oral ruling on the record, overruling Appellant's remaining objection. The Bankruptcy Court found that the IRS claim was properly filed and is prima facie evidence of the validity and the amount of the claim, and that Appellant had not presented adequate evidence to rebut the claim's validity. The Bankruptcy Court subsequently entered a written order on March 31, 2020 overruling Appellant's objection. Appellant then filed a motion for new trial, which the Bankruptcy Court construed as a motion for reconsideration under Bankruptcy Rule 3008. On April 20, 2020, the Bankruptcy Court denied the motion for reconsideration. On May 5, 2020, Appellant timely appealed the Bankruptcy Court's order overruling Appellant's objection and order denying his motion for reconsideration. Judge Michael H. Simon of the United States District Court for the District of Oregon holds that the Bankruptcy Court did not err in overruling the objection and allowing the Proof of Claim, and denying the motion for reconsideration. The Court affirms the Bankruptcy Court's decisions. The Court finds that Appellant has not met his burden to show that the Bankruptcy Court erred in its evaluation of the 2007 tax year. The Bankruptcy Court did not err in concluding that Appellant did not present adequate reliable evidence to overcome the prima facie evidence of the validity and amount of the IRS Claim. The Court thus upholds the Bankruptcy Court's rulings pertaining to the 2007 tax year. The Court finds no support for Appellant's allegation that the misspelling of his wife's name was intentional and malicious or renders the IRS's evidence unreliable. Nor does the printing of only the first four letters of the names in the tax transcripts render the IRS's materials unreliable, Judge Simon points out. Philip Kushner, an IRS employee, testified that the misspelling is a typographical error, and that he pulled the IRS transcripts using Appellant and his wife's social security numbers and did not have the ability to change taxpayers' names. He testified that personal identifiable information, including full names, may be partially or completely redacted on a transcript. Given Kushner's experience at the IRS, as well as his logical and plausible testimony, the Court agrees with Kushner and the Bankruptcy Court that the IRS' misspelling of Mrs. Szanto's first name was a typographical error and was not malicious or intentional. The Court finds that the IRS also did not maliciously or intentionally redact either Appellant or his wife's names, did not spoliate evidence, and there is no reason to find the evidence unreliable. Therefore, the Bankruptcy Court did not err in rejecting Appellant's arguments on these issues. Considering Appellant's arguments for reconsideration and the Bankruptcy Court's decision, the Court finds that the Bankruptcy Court did not abuse its discretion in denying Appellant's motion for reconsideration. The Bankruptcy Court applied the correct legal standard and its application of that standard to the facts was not illogical, implausible, or without support in inferences that may be drawn from the facts in the record. Accordingly, the Court affirms in part and remands in part the decision of the Bankruptcy Court. The Bankruptcy Court's decision is affirmed, except the Court remands to the Bankruptcy Court the issue of whether the IRS may claim an additional deficiency of $1,497 for tax year 2009. A full-text copy of the Opinion and Order dated January 31, 2022, is available at https://tinyurl.com/2mf7w9sx from Leagle.com. Peter Szanto, Appellant Pro Se. David A. Hubbert , Acting Assistant Attorney General and Boris Kukso , Trial Attorney, Tax Division, U.S. DEPARTMENT OF JUSTICE, Washington, D.C. Of Attorneys for Defendant. Peter Szanto filed a Chapter 11 petition (Bankr. D. Nev. Case No. 13-51261) on June 25, 2013. PHUNWARE INC: Signs $100M Sales Agreement With H.C. Wainwright -------------------------------------------------------------- Phunware, Inc. entered into an At Market Issuance Sales Agreement with H.C. Wainwright & Co., LLC on Jan. 31, 2022, pursuant to which the Company may offer and sell, from time to time, shares of the Company's common stock, par value $0.0001 per share, for aggregate gross proceeds of up to $100,000,000, through or to Wainwright, as agent or principal. Sales of shares of common stock under the Sales Agreement will be made pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-262461) and a related prospectus, as supplemented by a prospectus supplement, filed with the Securities and Exchange Commission. The Company is not obligated to sell any shares of common stock under the Sales Agreement. Each time the Company wishes to issue and sell shares of common stock under the Sales Agreement, the Company will notify Wainwright of the number of shares to be issued, the dates on which such sales are anticipated to be made, any limitation on the number of shares to be sold in any one day and any minimum price below which sales may not be made. Once the Company has so instructed Wainwright, unless Wainwright declines to accept the terms of such notice, Wainwright has agreed to use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of The Nasdaq Stock Market LLC to sell such shares up to the amount specified on such terms. Under the terms of the Sales Agreement, Wainwright may sell shares by any method that is deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Wainwright's obligations to sell shares under the Sales Agreement are subject to satisfaction of certain conditions, including customary closing conditions for transactions of this nature. The Company will pay Wainwright a commission of up to 3.0% of the gross proceeds of the sale price per share for shares of its common stock sold through or to Wainwright pursuant to the Sales Agreement. The Company has agreed to provide Wainwright with customary indemnification and contribution rights and to reimburse Wainwright for certain specified expenses. The offering of shares of common stock pursuant to the Sales Agreement will terminate upon the earlier of (i) the sale of all shares of common stock subject to the Sales Agreement and (ii) the termination of the Sales Agreement as permitted therein. The Company and Wainwright may each terminate the Sales Agreement at any time upon five days' prior written notice. As previously disclosed on April 7, 2021, the Company entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc., as sales agent, pursuant to which the Company could offer and sell, from time to time, through B. Riley shares of its common stock, par value $0.0001 per share. On Feb. 4, 2022, the Company delivered written notice to B. Riley that it had elected to terminate the April 2021 ATM Sales Agreement effective as of Feb. 9, 2022, five days after delivery of the notice. The Company will not incur any material early termination penalties in connection with the termination of the April 2021 ATM Sales Agreement. About Phunware Headquartered in Austin, Texas, Phunware, Inc. -- http://www.phunware.com-- offers a fully integrated software platform that equips companies with the products, solutions and services necessary to engage, manage and monetize their mobile application portfolios globally at scale. Phunware reported a net loss of $22.20 million for the year ended Dec. 31, 2020, a net loss of $12.87 million for the year ended Dec. 31, 2019, and a net loss of $9.80 million for the year ended Dec. 31, 2018. As of Sept. 30, 2021, the Company had $31.95 million in total assets, $18.93 million in total liabilities, and $13.03 million in total stockholders' equity. PRO-DEMOLITION INC: Gets Cash Collateral Access ----------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida, Orlando Division, has authorized Pro-Demolition, Inc. to use cash collateral nunc pro tunc to petition date on an interim basis. The Debtor is authorized to use cash collateral to pay: (a) amounts expressly authorized by the Court; (b) the current and necessary expenses set forth in the budget, plus an amount not to exceed 10% for each line item; and (c) such additional amounts as may be expressly approved in writing by Small Business Administration. The authorization will continue six weeks, consistent with the attached budget, however, the parties may jointly agree to extend the authorization by submitting an agreed order reflecting such extension. As adequate protection, the SBA will have replacement lien on its post-petition cash collateral to the same extent and with the same validity and priority as their prepetition lien, without the need to file or execute any documents as may otherwise be required under applicable non-bankruptcy law. A continued hearing on the matter is scheduled for March 10 at 3 p.m. A copy of the order is available at https://bit.ly/3rA6pWT from PacerMonitor.com. About Pro-Demolition, Inc. Pro-Demolition, Inc. is a demolition company doing business since 1999. The Debtor engages in building structure demolition, land clearing, tree removal, and excavation, for residential and commercial properties. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M. D. Fla. Case No. 22-00267) on January 26, 2022. In the petition signed by Mickey Grosman, president, the Debtor disclosed up to $10 million in both assets and liabilities. Judge Lori V. Vaughan oversees the case. Justin M. Luna, Esq., at Latham Luna Eden and Beaudine LLP is the Debtor's counsel. PUERTO RICO: Court Orders Senate to End PREPA Contract Suit ----------------------------------------------------------- Rick Archer of Law360 reports that a federal judge has ordered Puerto Rico's Senate to withdraw a suit seeking to invalidate the Puerto Rico Electric Power Authority's (PREPA) power grid management contract, saying the action violates the bankruptcy stay protecting the utility from litigation. In an order issued Monday, February 7, 2022, afternoon, U.S. District Court Judge Laura Taylor Swain said the Senate's suit seeking a ruling that PREPA's grid contract violated Puerto Rican law is an attempt to exercise control over the utility's property in violation of the Bankruptcy Code and must come to an end. In 2017, PREPA filed for bankruptcy under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. About Puerto Rico Puerto Rico is a self-governing commonwealth in association with the United States that's facing a massive bond debt of $70 billion, a 68% debt-to-GDP ratio and negative economic growth in nine of the last 10 years. The Commonwealth of Puerto Rico has sought bankruptcy protection, aiming to restructure its massive $74 billion debt-load and $49 billion in pension obligations. The debt restructuring petition was filed by Puerto Rico's financial oversight board in U.S. District Court in Puerto Rico (Case No. 17-01578) on May 3, 2017, and was made under Title III of 2016's U.S. Congressional rescue law known as the Puerto Rico Oversight, Management, and Economic Stability Act ('PROMESA'). The Financial Oversight and Management Board later commenced Title III cases for the Puerto Rico Sales Tax Financing Corporation (COFINA) on May 5, 2017, and the Employees Retirement System (ERS) and the Puerto Rico Highways and Transportation Authority (HTA) on May 21, 2017. On July 2, 2017, a Title III case was commenced for the Puerto Rico Electric Power Authority ("PREPA"). U.S. Chief Justice John Roberts has appointed U.S. District Judge Laura Taylor Swain to oversee the Title III cases. The Honorable Judith Dein, a United States Magistrate Judge for the District of Massachusetts, has been designated to preside over matters that may be referred to her by Judge Swain, including discovery disputes, and management of other pretrial proceedings. Joint administration of the Title III cases, under Lead Case No. 17-3283, was granted on June 29, 2017. The Oversight Board has hired as advisors, Proskauer Rose LLP and O'Neill & Borges LLC as legal counsel, McKinsey & Co. as strategic consultant, Citigroup Global Markets, as municipal investment banker, and Ernst & Young, as financial advisor. Martin J. Bienenstock, Esq., Scott K. Rutsky, Esq., and Philip M. Abelson, Esq., of Proskauer Rose; and Hermann D. Bauer, Esq., at O'Neill & Borges are on-board as attorneys. McKinsey & Co. is the Board's strategic consultant, Ernst & Young is the Board's financial advisor, and Citigroup Global Markets Inc. is the Board's municipal investment banker. Prime Clerk LLC is the claims and noticing agent. Prime Clerk maintains a case web site at https://cases.primeclerk.com/puertorico Epiq Bankruptcy Solutions LLC is the service agent for ERS, HTA, and PREPA. O'Melveny & Myers LLP is counsel to the Commonwealth's Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF), the agency responsible for negotiations with bondholders. The Oversight Board named Professor Nancy B. Rapoport as fee examiner and to chair a committee to review professionals' fees. PURDUE PHARMA: Canadian Entities Seek Late Appeal ------------------------------------------------- Bonnie Eslinger of Law360 reports that Canadian entities are seeking permission to file a late appeal to a New York federal court ruling that vacated Purdue Pharma's Chapter 11 plan, saying Tuesday, February 8, 2022, there are unresolved issues related to their claims that won't be covered by the drugmaker's challenge in the Second Circuit. The group members, including First Nations people and Canadian municipalities, were among appellants who challenged the bankruptcy court's confirmation of the multibillion-dollar plan because it provides releases to members of the Sackler family who had been involved in the management of Purdue while the company was aggressively marketing the controversial opioid medication OxyContin. About Purdue Pharma LP Purdue Pharma L.P. and its subsidiaries -- http://www.purduepharma.com/-- develop and provide prescription medicines and consumer products that meet the evolving needs of healthcare professionals, patients, consumers and caregivers. Purdue's subsidiaries include Adlon Therapeutics L.P., focused on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and related disorders; Avrio Health L.P., a consumer health products company that champions an improved quality of life for people in the United States through the reimagining of innovative product solutions; Imbrium Therapeutics L.P., established to further advance the emerging portfolio and develop the pipeline in the areas of CNS, non-opioid pain medicines, and select oncology through internal research, strategic collaborations and partnerships; and Greenfield Bioventures L.P., an investment vehicle focused on value-inflection in early stages of clinical development. Opioid makers in the U.S. are facing pressure from a crackdown on the addictive drug in the wake of the opioid crisis and as state attorneys general file lawsuits against manufacturers. More than 2,000 states, counties, municipalities and Native American governments have sued Purdue Pharma and other pharmaceutical companies for their role in the opioid crisis in the U.S., which has contributed to the more than 700,000 drug overdose deaths in the U.S. since 1999. OxyContin, Purdue Pharma's most prominent pain medication, has been the target of over 2,600 civil actions pending in various state and federal courts and other fora across the United States and its territories. On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-23649), after reaching terms of a preliminary agreement for settling the massive opioid litigation. The Debtors' consolidated balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets and $562 million in liabilities. U.S. Bankruptcy Judge Robert Drain oversees the cases. The Debtors tapped Davis Polk & Wardwell, LLP and Dechert, LLP as legal counsel; PJT Partners as investment banker; AlixPartners as financial advisor; and Grant Thornton, LLP as tax structuring consultant. Prime Clerk LLC is the claims agent. Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the official committee of unsecured creditors appointed in the Debtors' bankruptcy cases. David M. Klauder, Esq., is the fee examiner appointed in the Debtors' cases. The fee examiner is represented by Bielli & Klauder, LLC. * * * U.S. Bankruptcy Judge Robert Drain in early September 2021 approved a plan to turn Purdue into a new company (Knoa Pharma LLC) no longer owned by members of the Sackler family, with its profits going to fight the opioid epidemic. The Sackler family agreed to pay $4.3 billion over nine years to the states and private plaintiffs and in exchange for a lifetime legal immunity. The deal resolves some 3,000 lawsuits filed by state and local governments, Native American tribes, unions, hospitals and others who claimed the company's marketing of prescription opioids helped spark and continue an overdose epidemic. Separate appeals to approval of the Plan have already been filed by the U.S. Bankruptcy Trustee, California, Connecticut, the District of Columbia, Maryland, Rhode Island and Washington state, plus some Canadian local governments and other Canadian entities. Purdue filed its Chapter 11 Plan on March 15, 2021. A 12th amended Chapter 11 plan was filed on Sept. 2, 2021, which was confirmed on Sept. 17. Purdue divides the claims against it into several categories, one of which it calls "PI Claims," consisting of claims "for alleged opioid-related personal injury." The plan provides for the creation of the "PI Trust," which will administer all PI Claims. The trust will be funded with an initial distribution of $300 million on the effective date of the Chapter 11 plan, followed by a distribution of $200 million in 2024, and distributions of $100 million in 2025 and 2026. In sum, "[t]he PI Trust will receive at least $700 million in value, and may receive an additional $50 million depending on the amount of proceeds received on account of certain of Purdue's insurance policies." The Plan further provides that Purdue's ability to recover from its insurers will be vested in a "Master Disbursement Trust." To the extent any proceeds are recovered from Purdue's insurers with respect to the PI Claims, up to $450 million of those proceeds will be channeled from the MDT to the PI Trust. However, the PI Trust will be funded regardless of whether anything is recovered from Purdue's insurers. Instead, "[d]istributions to the PI Trust are subject to prepayment on a rolling basis as insurance proceeds from certain of Purdue's insurance policies are received by the MDT and paid forward to the PI Trust." PURDUE PHARMA: States, Sacklers 'Even Closer' to Bigger Opioid Deal ------------------------------------------------------------------- Jeremy Hill, writing for Bloomberg News, reports that members of the billionaire Sackler family that own Purdue Pharma LP are "even closer" to a deal that would increase their contribution to the OxyContin maker's embattled opioid settlement, a court-appointed mediator said in a report Tuesday, February 8, 2022. The family and a handful of state attorneys general who have been fighting Purdue's opioid settlement are closing in on a deal that would provide new money on top of the $4.325 billion the company's owners already pledged as well as "certain material non-economic terms," U.S. Bankruptcy Judge Shelley Chapman, who is overseeing the talks, said in her report. About Purdue Pharma LP Purdue Pharma L.P. and its subsidiaries -- http://www.purduepharma.com/-- develop and provide prescription medicines and consumer products that meet the evolving needs of healthcare professionals, patients, consumers and caregivers. Purdue's subsidiaries include Adlon Therapeutics L.P., focused on treatment for Attention-Deficit/Hyperactivity Disorder (ADHD) and related disorders; Avrio Health L.P., a consumer health products company that champions an improved quality of life for people in the United States through the reimagining of innovative product solutions; Imbrium Therapeutics L.P., established to further advance the emerging portfolio and develop the pipeline in the areas of CNS, non-opioid pain medicines, and select oncology through internal research, strategic collaborations and partnerships; and Greenfield Bioventures L.P., an investment vehicle focused on value-inflection in early stages of clinical development. Opioid makers in the U.S. are facing pressure from a crackdown on the addictive drug in the wake of the opioid crisis and as state attorneys general file lawsuits against manufacturers. More than 2,000 states, counties, municipalities and Native American governments have sued Purdue Pharma and other pharmaceutical companies for their role in the opioid crisis in the U.S., which has contributed to the more than 700,000 drug overdose deaths in the U.S. since 1999. OxyContin, Purdue Pharma's most prominent pain medication, has been the target of over 2,600 civil actions pending in various state and federal courts and other fora across the United States and its territories. On Sept. 15 and 16, 2019, Purdue Pharma L.P. and 23 affiliated debtors each filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 19-23649), after reaching terms of a preliminary agreement for settling the massive opioid litigation. The Debtors' consolidated balance sheet as of Aug. 31, 2019, showed $1.972 billion in assets and $562 million in liabilities. U.S. Bankruptcy Judge Robert Drain oversees the cases. The Debtors tapped Davis Polk & Wardwell, LLP and Dechert, LLP as legal counsel; PJT Partners as investment banker; AlixPartners as financial advisor; and Grant Thornton, LLP as tax structuring consultant. Prime Clerk LLC is the claims agent. Akin Gump Strauss Hauer & Feld LLP and Bayard, P.A., represent the official committee of unsecured creditors appointed in the Debtors' bankruptcy cases. David M. Klauder, Esq., is the fee examiner appointed in the Debtors' cases. The fee examiner is represented by Bielli & Klauder, LLC. * * * U.S. Bankruptcy Judge Robert Drain in early September 2021 approved a plan to turn Purdue into a new company (Knoa Pharma LLC) no longer owned by members of the Sackler family, with its profits going to fight the opioid epidemic. The Sackler family agreed to pay $4.3 billion over nine years to the states and private plaintiffs and in exchange for a lifetime legal immunity. The deal resolves some 3,000 lawsuits filed by state and local governments, Native American tribes, unions, hospitals and others who claimed the company's marketing of prescription opioids helped spark and continue an overdose epidemic. Separate appeals to approval of the Plan have already been filed by the U.S. Bankruptcy Trustee, California, Connecticut, the District of Columbia, Maryland, Rhode Island and Washington state, plus some Canadian local governments and other Canadian entities. Purdue filed its Chapter 11 Plan on March 15, 2021. A 12th amended Chapter 11 plan was filed on Sept. 2, 2021, which was confirmed on Sept. 17. Purdue divides the claims against it into several categories, one of which it calls "PI Claims," consisting of claims "for alleged opioid-related personal injury." The plan provides for the creation of the "PI Trust," which will administer all PI Claims. The trust will be funded with an initial distribution of $300 million on the effective date of the Chapter 11 plan, followed by a distribution of $200 million in 2024, and distributions of $100 million in 2025 and 2026. In sum, "[t]he PI Trust will receive at least $700 million in value, and may receive an additional $50 million depending on the amount of proceeds received on account of certain of Purdue's insurance policies." The Plan further provides that Purdue's ability to recover from its insurers will be vested in a "Master Disbursement Trust." To the extent any proceeds are recovered from Purdue's insurers with respect to the PI Claims, up to $450 million of those proceeds will be channeled from the MDT to the PI Trust. However, the PI Trust will be funded regardless of whether anything is recovered from Purdue's insurers. Instead, "[d]istributions to the PI Trust are subject to prepayment on a rolling basis as insurance proceeds from certain of Purdue's insurance policies are received by the MDT and paid forward to the PI Trust." REMINGTON OUTDOOR: Gets Bid From LDJ Led by US Postal Chief DeJoy ----------------------------------------------------------------- James Nani of Bloomberg Law reports that Remington Outdoor Co. receives bid from company, LDJ Global Strategies, led by U.S. Postal chief Louis DeJoy. A real estate investment business led by U.S. Postmaster General Louis DeJoy is aiming to buy a Remington Outdoor Co. Inc. facility in North Carolina for $875,000. Remington designated DeJoy's company, LDJ Global Strategies LLC, as the stalking horse bidder in an upcoming bankruptcy auction for the 200-year-old gun maker's corporate office facility in Madison, N.C., according to a court notice filed Monday. The auction follows bankruptcy court approval of Remington's plan to liquidate and dissolve following the sale of most of its assets. About Remington Outdoor Remington Outdoor Company, Inc. and its affiliates are manufacturers of firearms, ammunition and related products for commercial, military, and law enforcement customers throughout the world. They operate seven manufacturing facilities located across the United States. The companies' principal headquarters are located in Huntsville, Alabama. Remington Outdoor Company and its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Ala. Lead Case No. 20-81688) on July 27, 2020. At the time of the filing, Remington disclosed assets of between $100 million and $500 million and liabilities of the same range. Judge Clifton R. Jessup Jr. oversees the cases. The Debtors have tapped O'Melveny & Myers LLP as their bankruptcy counsel, Burr & Forman LLP as local counsel, M-III Advisory Partners LP as financial advisor, Ducera Partners LLC as investment banker, and Prime Clerk LLC as notice, claims and balloting agent. The U.S. Bankruptcy Administrator for the Northern District of Alabama appointed a committee of unsecured creditors on Aug. 6, 2020. The committee is represented by Fox Rothschild, LLP and Baker Donelson Bearman Caldwell & Berkowitz, PC. ROYAL ALICE: District Court Won't Revive Suit vs AMAG ----------------------------------------------------- A month after Royal Alice Properties filed a voluntary petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code, it instituted an adversary proceeding against AMAG, Inc., seeking a determination of the validity, extent, and priority of AMAG's lien on properties owned by the debtor. Both the debtor and AMAG filed cross-motions for summary judgment. On September 4, 2020, while the adversary proceeding was pending, the bankruptcy court ordered the appointment of a Chapter 11 trustee. Following the appointment of a trustee, Susan Hoffman filed a motion to intervene in her individual capacity as the sole member of the debtor LLC. Hoffman is the debtor's sole equity security holder. On November 25, 2020, the bankruptcy court granted AMAG's motion for summary judgment, denied debtor's motion for summary judgment, and entered a judgment dismissing debtor's complaint for declaratory relief. Following dismissal of the case, the bankruptcy court struck the hearing it had set for December 2, 2020 on Hoffman's motion for intervention. In December 2020, the trustee's counsel informed Hoffman's attorneys (pre-trustee counsel to the debtor), pre-trustee management, and Hoffman that the trustee would not appeal the bankruptcy court's decision, and that only the trustee had authority to institute an appeal on behalf of the debtor. On December 9, 2020, the United States District Court for the Eastern District of Louisiana received a notice of appeal, purportedly filed on behalf of the debtor, challenging the bankruptcy court's grant of appellee's motion for summary judgment. Although the notice of appeal stated that the party appealing was "Royal Alice Properties, LLC," it was actually Hoffman who instituted the appeal, through her attorneys who had served as pre-trustee counsel to the debtor. In addition to filing the notice of appeal on behalf of the debtor, Hoffman also filed a motion to intervene in the appeal. On September 7, 2021, the District Court granted AMAG's motion to dismiss, holding that, because Hoffman filed the notice of appeal on behalf of the corporate debtor, without authorization from the trustee, the appeal was invalid. Given the dismissal of the appeal, the District Court additionally held Hoffman's motion to intervene was moot, and that even if it was not moot, it was untimely under Bankruptcy Rule 8013(g). The Debtor and Hoffman now move for rehearing of the Court's September 7, 2021 Order and Reasons, asserting that the Court erred in dismissing the appeal and denying Hoffman's motion for intervention. District Judge Sarah S. Vance now denies the motion to reconsider. Despite the petitioners' assertions to the contrary, and even construing the notice of appeal broadly, the Court does not find the dismissal of Hoffman's initial intervention was part of the petitioners' appeal. According to Judge Vance, the petitioners do not explain why Hoffman moved to intervene a second time in this case, if the dismissal of her original intervention attempt was already pending the District Court's appellate review. That the petitioners affirmatively sought intervention before the District Court significantly undermines their assertion that they intended to include the issue of intervention in their notice of appeal, the judge points out. Judge Vance concludes the petitioners have failed to show that the Court "would have reached a different result had it been aware of its mistaken use of facts or law." Accordingly, the Court denies the petitioners' rehearing request regarding the scope of their notice of appeal. A full-text copy of the Order and Reasons dated January 31, 2022, is available at https://tinyurl.com/y7vv29aa from Leagle.com. The case is ROYAL ALICE PROPERTIES, LLC, Appellants, v. AMAG, INC., Appellees. SECTION "R" (3), Civil Action No. 20-3346 (E.D. La.). About Royal Alice Properties Royal Alice Properties, LLC, owns, manages and rents the building and real estate located on the 900 block of Royal Street in the French Quarter, New Orleans, Louisiana. The condominium units are located at 906, 910-12 Royal St. New Orleans, LA 70116. Royal Alice Properties sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. La. Case No. 19-12337) on Aug. 29, 2019. In the petition signed by Susan Hoffman, member/manager, the Debtor was estimated $1 million to $10 million in both assets and liabilities. The case is assigned to Judge Meredith S. Grabill. Leo D. Congeni, Esq., at Congeni Law Firm, LLC, represents the Debtor. Dwayne M. Murray has been appointed as Chapter 11 Trustee. He retained Louis M. Phillips, Esq., at Kelly Hart & Pitre as counsel. SAFE FLEET: S&P Rates New $645MM First-Lien Credit Facilities 'B-' ------------------------------------------------------------------ S&P Global Ratings assigned its 'B-' issue-level rating and '3' recovery rating to Safe Fleet Holdings LLC's proposed $595 million first-lien term loan and $50 million revolving credit facility (undrawn at close). The company plans to use the proceeds from the proposed first-lien term loan to repay its existing first-lien term loans (which had a total of $563 million outstanding as of the end of 2021) and will use the balance to fund a small tuck-in acquisition and pay related transaction fees and expenses. Safe Fleet's performance was generally in line with our expectations in 2021 as the demand in its end markets rebounded from pandemic-related declines during 2020. S&P said, "The company has experienced some gross margin pressure due to supply chain challenges and cost inflation in recent quarters, though we believe that continued price increases and healthy demand in its municipal, industrial, and commercial end markets will support a moderate level of EBITDA growth in 2022. We also expect Safe Fleet's working capital flows to stabilize over the next 12 months, which will support continued positive free operating cash flow (FOCF) for 2022 and S&P Global Ratings-adjusted debt to EBITDA in the high-6.0x area. Therefore, our 'B-' issuer credit rating and stable outlook are unchanged." ISSUE RATINGS--RECOVERY ANALYSIS Key analytical factors -- S&P said, "Our simulated default scenario contemplates a default occurring in 2024 stemming from a protracted weak U.S. economy that reduces the demand for Safe Fleet's products and significantly lowers its revenue and profit. We believe these factors would also likely impair the company's cash flow and erode its liquidity, eventually leading to a payment default." -- S&P assumes the company would seek covenant amendments on its path to default, resulting in higher interest costs, and anticipate it would draw on 85% of its revolving credit facility. -- S&P projects the company will generate approximately $76 million of EBITDA when it emerges from bankruptcy. Simulated default assumptions -- Simulated year of default: 2024 -- EBITDA at emergence: $76 million -- EBITDA multiple: 5x Simplified waterfall -- Adjusted net enterprise value (after 5% administrative costs and priority claims): $359 million -- Valuation split (obligors/nonobligors): 85%/15% -- Collateral value available to first-lien debt: $359 million -- Secured first-lien debt claims: $647 million --Recovery expectations: 50%-70% (rounded estimate: 55%) -- Secured second-lien debt claims: $173 million --Recovery expectations: 0%-10% (rounded estimate: 0%) SECONDWAVE CORP: Wins Cash Collateral Access -------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington, Tacoma Division, has authorized Secondwave Corporation to use cash collateral on an interim basis in the form of post-petition income. The Court says the Debtor requested use of cash collateral in the form of post-petition payment of an amount of $100 per month in cash on the tenth of each month. The ordered payment will include the time period between the date of filing until the current month. A copy of the order is available at https://bit.ly/3B95teX from PacerMonitor.com. About Secondwave Corporation Secondwave Corporation is a Washington family-owned and operated for-profit corporation. Founded in 2011 serving over 100 charities, its primary business is recycling old cell phones through an online recycling program. To date, Secondwave has recycled over 150,000 devices. The old, damaged phones are recycled in the USA and newer phones are refurbished and resold; then Secondwave sells the phones on the wholesale market with prices ranging from $0.25 for scrap phones to over $150.00 for new phones. A portion of the proceeds is then given to a charity of the customer's choice. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Wash. Case No. 21-41320) on August 9, 2021. In the petition signed by Ryan Rubel, president, the Debtor disclosed up to $500,000 in assets and up tp $1 million in liabilities. David C. Smith at Law Offices of David Smith, PLLC is the Debtor's counsel. SPIRIT AIRLINES: Frontier Merger No Impact on Moody's B1 CFR ------------------------------------------------------------ Moody's Investors Service said that the planned merger between Spirit Airlines and a subsidiary of Frontier Group Holdings, Inc, the parent company of Frontier Airlines, Inc., is credit positive but does not affect Spirit Airlines' B1 corporate family rating or the positive rating outlook. The combination is subject to regulatory reviews among other closing conditions. The companies expect the merger could close by the end of 2022. Spirit Airlines, Inc., headquartered in Miramar, Florida, is a leading low-cost US airline providing service to destinations throughout the US, Latin America and the Caribbean. Revenue was $3.2 billion in 2021 and $3.8 billion in 2019. The company's fleet numbered 173 aircraft at December 31, 2021. TACORA RESOURCES: Moody's Cuts CFR to B2, Alters Outlook to Neg. ---------------------------------------------------------------- Moody's Investors Service downgraded to Canadian iron ore producer Tacora Resources Inc.'s corporate family rating to B2 from B1, its probability of default rating to B2-PD from B1-PD and its senior secured notes rating to B2 from B1. The outlook was changed to negative from stable. "The downgrade of Tacora's ratings and negative outlook reflects higher leverage with the additional debt raise and execution risk in the company achieving increased production and consequently an improved cost profile following a material underperformance in 2021" said Jamie Koutsoukis, Moody's analyst. Downgrades: Issuer: Tacora Resources Inc. Corporate Family Rating, Downgraded to B2 from B1 Probability of Default Rating, Downgraded to B2-PD from B1-PD Senior Secured Regular Bond/Debenture, Downgraded to B2 (LGD3) from B1 (LGD3) Outlook Actions: Issuer: Tacora Resources Inc. Outlook, Changed To Negative From Stable RATINGS RATIONALE Tacora's credit profile (B2 corporate family rating) is constrained by 1) execution risk in ramping production to 6 million tonnes per year from 3.1 million tonnes in 2021 and reducing high operating costs (total delivered cost of $119/tonne for 65.6% ore in Q4 2021) 2) a concentration of cash flows from one metal (iron ore), which has volatile pricing, 3) a single mine site with a small production relative to the major iron ore miners globally, and 4) ) limited track record of management operating the Scully mine with operations having been restarted in 2018 and performance falling well below expectations in 2021. The company benefits from 1) high grade iron ore (65.6% Fe) produced at the Scully Mine, 2) the mine's location in Labrador Canada, an established iron ore mining region with access to infrastructure including rail, and 3) expected maintenance of low leverage and adequate liquidity. Tacora's $50 million Senior Secured Notes Add-On will be used to provide liquidity and fund capital expenditures. Tacora's operational performance in 2021 was well below expectations, with annual production remaining flat at 3.1 million tonnes for the year compared to an expected 4.6 million tonnes. The lower production combined with hedges that were well below spot prices for the year resulted in the company consuming over $85 million of cash during the year. . Pro forma for the transaction, Tacora has adequate liquidity over the next twelve months. Sources total about $167 million, which includes a proforma cash balance of about $80 million at Q4/21 and Moody's expectation of free cash flow of about $90 million. Uses consist of about $8.5 million in mandatory debt payments. The company does not have a credit facility in place and no financial covenants. The negative outlook reflects Tacora's execution risk to increasing its production towards 6 million tonnes per year. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be downgraded if Tacora is unable to increase its production or experiences operating challenges at its mine, leading to negative cash flow generation. The rating could also be downgraded if the company's liquidity weakens, or the company's sustained adjusted debt/EBITDA is above 3x. The ratings could be upgraded if the company is able to increase its scale and reduces its cost position towards $40/tonne. An upgrade would also require debt to EBITDA be maintained below 1.5x (2.1x expected for fiscal 2022) and the company generates sustained positive free cash flow. The principal methodology used in these ratings was Mining published in October 2021. Headquartered in Montreal, Quebec, Tacora Resources Inc. has one operating mine in Canada, the Scully Mine in Wabush, Newfoundland and Labrador. Revenues for the twelve months ended December 2021 were approximately $674 million TACORA RESOURCES: S&P Alters Outlook to Negative, Affirms 'B-' ICR ------------------------------------------------------------------ S&P Global Ratings revised its outlook on Tacora Resources Inc. to negative from stable, and affirmed all of its ratings on the company, including the 'B-' issuer credit rating and 'B' issue-level rating. The negative outlook reflects the risk that Tacora's liquidity could become materially constrained this year if lower iron ore prices or expansion-related delays and costs lead to a free cash flow deficit. Tacora faces near-term liquidity risk mainly related to iron ore price volatility following unexpected cash outflows in 2021. S&P said, "We believe Tacora has limited financial flexibility to absorb lower-than-expected iron ore prices or higher costs in advance of its planned expansion. The company's liquidity position is modest (just under US$35 million) and materially below our previous assumptions following weaker-than-expected operating results in 2021. In addition, Tacora will now incur near-term costs to address unexpected mining inefficiencies that have derailed the expected increase in its iron ore production. The company's planned US$50 million add-on to its US$175 million secured notes will provide a near-term buffer to its cash position. However, we believe Tacora's liquidity is highly sensitive to lower-than-expected iron ore prices, which have been extremely volatile over the past 12 months, and/or a material increase in costs associated with its expansion initiatives." Expanded production should alleviate liquidity pressures associated with iron ore price volatility and cost headwinds, but progress needs to be established. S&P said, "We estimate Tacora will have sufficient cash to complete investments required to expand its production output this year, and this accounts for our affirmation of the ratings. The company is expected to report iron ore production in the low-3 million metric-ton area in 2021, which is well below our previous estimate of 4.6 million metric tons per year (mtpy)." It plans to implement several projects that should address bottlenecks that stalled its production, leading to annualized iron ore output of 6 mtpy by the early second half of 2022. The execution risks associated with the projects appear modest (such as, new screens and the use of well-established technology) and the financial commitment (about US$20 million in first-half 2022) is manageable. The increase in output is necessary to reduce the company's high-cost structure and relatively high breakeven price required for free cash flow generation. However, the planned increase in output is significant and expected over a short time frame. We assume the company's pro forma cash position (about US$80 million) is sensitive to these investments in tandem with a relatively modest drop in iron ore prices from current levels. The benchmark iron ore price (62% Fe) is currently about US$140/mt (and the company receives a premium for its higher-quality ore) but was US$85/mt less than three months ago. S&P said, "Based on our benchmark price assumption of US$110/mt this year, and without the anticipated improvement in its production and unit costs, we believe the company would generate negative free cash flow. In the meantime, we believe the lingering effects of the COVID-19 pandemic on productivity and supply chain-related issues, along with weaker-than-expected prices, are key risks." The negative outlook reflects the risk that Tacora's liquidity could become materially constrained this year in the event that lower iron ore prices or expansion-related delays and costs lead to a material flow deficit. S&P assumes a year-over-year drop in iron ore prices in 2022 from average levels in 2021, which, in its view, increases the need for Tacora to complete its expansion. S&P said, "We could downgrade Tacora within the next 12 months if we view the company's capital structure as unsustainable due to significantly weaker liquidity and limited access to capital. In our view, this could occur from a meaningful drop in iron ore prices and/or operational issues related to the Scully mine expansion that result in materially higher costs and delays. "We could revise the outlook to stable within the next six-to-12 months if we believe the company's liquidity position will stabilize close to pro forma levels and improve thereafter. In our view, this would likely require the company to achieve materially higher iron ore output and a corresponding reduction in unit costs, with no significant decrease in iron ore prices or excess capital requirements." ESG credit indicators: E-4, S-3, G-3 S&P said, "Environmental factors are a negative consideration and social factors are a moderately negative consideration in our credit rating analysis of Tacora. The company's exposure to environmental factors is more negative than that of the broader mining industry. The company is a smaller-scale producer of iron ore, a key input in blast furnace steel production, with reliance on one mine and limited reporting on sustainability factors (although it derives its energy from hydroelectricity). Governance factors are a moderately negative consideration, as is the case for most rated entities owned by private-equity sponsors. We believe the company's highly leveraged financial risk profile points to corporate decision making that prioritizes the interests of the controlling owners. This also reflects the generally finite holding periods and a focus on maximizing shareholder returns." TEAM HEALTH: Fitch Places 'CCC+' LT IDR on Watch Positive --------------------------------------------------------- Fitch Ratings has placed the ratings of Team Health Holdings, Inc. (TMH), including the Long-Term Issuer Default Rating (IDR) of 'CCC+', on Rating Watch Positive upon its proposed debt repayment and maturity extension. Should the transaction be completed, Fitch will assess the degree to which leverage improves and debt maturities are extended and could upgrade the ratings by one notch with the IDR to 'B-'. Fitch understands TMH will seek to extend the maturity of its term loan B to 2027 from 2024 and repay no more than $300 million of principal at par in exchange for a higher interest spread. The transaction accelerates the positive momentum that underpinned the Positive Outlook assigned at the most recent committee. Pro forma for the transaction assuming full participation, Fitch expects TMH will have reduced leverage (gross debt to operating EBITDA) to around 8.0x, be able to generate durably positive FCF, will have extended the maturity of a significant portion of its debt to 2027 and no financial covenants to default on. KEY RATING DRIVERS Leading Position in Staffing Market: TMH is one of only a handful of national providers of outsourced healthcare staffing, providing scale and scope for contracting with consolidating acute care hospital systems and commercial health insurers. Leading scale affords opportunities to grow the number of and size of contracted relationships, both organic and inorganic in nature. Nearly all of TMH's revenues are sourced from contracted physician and other healthcare services. However, Fitch assumes growth will be constrained, in part but not in whole, by their concentration in the emergency department (ED) staffing services where patient volumes have been soft across the physician staffing industry since 2017 because of ongoing secular headwinds to volumes of lower acuity ED visits, including scrutiny by health insurers, more competition from alternative settings like urgent care clinics, and increased cost sharing for patients with high deductible health insurance plans. Coronavirus Impact Normalizing: Pandemic-related business disruption (i.e. depressed volumes of elective healthcare procedures and ED patient visits) are showing signs of stabilization. Revenues before federal grant monies are expected to grow yoy in 2021 but remain below the pre-pandemic run-rate. Fitch assumes volumes will be more durable going forward than they were in 2020 as fewer restrictions are imposed on healthcare providers and restoration in daily activities are the catalyst for more normalized emergency volumes. Nonetheless, Fitch's forecasts assume TMH's revenues will not exceed pre-pandemic levels until 2023, reflecting both lower volumes and the dispute with UnitedHealth. Labor Headwinds Threaten Margins: Fitch assumes improvements in operating margins will stabilize around pre-pandemic levels after being severely impacted in 2020 by the need to maintain staffing readiness in the ED despite lower patient volumes, which is characteristic of the physician staffing business model. After rebounding in 2021, Fitch has assumed 40bps of margin compression in 2022 to reflect labor shortages and inflationary pressures for healthcare providers generally, these items could cause more significant margin compression given staffing companies' cost structure. Were that to be the case, Fitch believes TMH would still generate positive FCF but leverage would be elevated compared to the Ratings Case forecast. Uncertainties Diminishing: The downside risk to TMH's long-term profitability and cashflows posed by the dispute with a large, commercial payor (UnitedHealth) and Surprise Billing legislation became clearer over the past year and appear manageable. TMH is now out-of-network with UnitedHealth after the insurer unilaterally reduced its reimbursement rates and both parties entered into litigation. Fitch does not assume the dispute will be resolved during the forecast period and thus assumes no changes to payor mix, reduction in litigation expenses or one-time cash inflows/outflows related to settlements. Regarding surprise billing, TMH has publicly stated that it does not balance bill and thus the No Surprises Act should not have a material direct impact on TMH's billings. Persistently High Leverage Ahead of Maturities: Fitch assumes TMH's leverage (gross debt to operating EBITDA) will normalize around 8.0x after an assumed $300 million debt repayment in 2022. Leverage could improve further should TMH outperform Fitch's expectations as Fitch doesn't assume any voluntary debt repayment beyond what is offered in the proposed transaction. Fitch views leverage to be high but manageable ahead of the revolving credit facility maturity (currently undrawn) in 2023, the PIK loan due 2024, the unsecured notes due 2025 and the term loans due 2027 (assuming 100% participation in the amend and extend transaction). Decent FCF Generation: Cash generation is expected to be decent for the current rating category, with FFO fixed charge coverage sustained above 2.0x through the forecast period and $130 million to $170 million of FCF per year before acquisitions. Low working capital and capital spending requirements and the expectation of no dividend payments to the private equity owner in the near-term support this relatively strong FCF. DERIVATION SUMMARY TMH's 'CCC+' rating reflects the company's high financial leverage, secular headwinds to growth in ED patient volumes, and lingering challenges integrating a large acquisition in the post-acute care segment that dates back to 2015. TMH's credit profile benefits from good depth and competitive scale relative to peers Mednax (not rated) and Envision Healthcare Corp. (not rated) in service lines where physician staffing companies have a large presence, including emergency medicine and anesthesia. The financial profiles of TMH and some of its peers reflect private equity investment in the physician staffing segment. TMH is owned by Blackstone following a 2017 leveraged buyout, and Envision was purchased by KKR & Co. in 2018. Fitch believes TMH's credit profile benefits from more consistent and stable FCF generation than healthcare providers generally due to lower capex and working capital requirements in the physician staffing segment. This better FCF generation supports an expectation that the company has the ability to reduce leverage through debt pay down without compromising investment in the business. In addition to the ability to reduce leverage, the rating also reflects Fitch's view that the company and the private equity owner have the willingness to use the aforementioned FCF to reduce debt before they need to refinance the capital stack. KEY ASSUMPTIONS -- Revenues grow in the low-single digits per year through 2024 and surpass pre-pandemic levels in 2023; -- EBITDA margins rebound in 2021 between 8%-9%, compress modestly in 2022 and are generally stable thereafter; -- No material changes to operating cashflows from the dispute with UnitedHealth; -- Acquisitions averaging $100 million per year starting 2022; no shareholder returns and no debt repayments beyond required term loan amortization and the amounts as part of this transaction. RATING SENSITIVITIES Rating Sensitivities for the current 'CCC+' IDR include: Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Gross debt to EBITDA after dividends to associates and minorities sustained below 8.0x; -- FFO fixed charge coverage sustained above 1.5x; -- Profit margin stabilization due to effective cost management strategies to address soft organic operating trends; -- At least break-even FCF generation. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- FFO fixed charge coverage sustained below 1.0x; -- FCF deficit that requires incremental debt funding; -- Violation of the debt agreement financial maintenance covenant and unable to secure relief from lenders; -- Unable to refinance revolving credit facility due in 2023 or secure alternative sources of liquidity. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Adequate Sources of Liquidity: Sources of liquidity include $512 million of unrestricted cash and an undrawn revolver of $287 million (net of $12.9 million outstanding letter of credits) as of Dec. 31, 2021. TMH has historically generated positive FCF, supported by low working capital and capex requirements. Fitch expects TMH to post flat to positive FCF in 2021 and forecasts $130 million to $170 million of FCF per year for the 2022-2024 period. Debt Maturities: Pro forma for the maximum $300 million debt repayment in 2022, the nearest debt maturity will be the revolving credit facility in 2023, the PIK loan in 2024, the unsecured notes mature in 2025 and the remaining term loans in 2027. Term loan amortization is about $29 million per year. Non-participating amounts of the term loan would remain due in 2024. Debt Instrument Notching: The 'B'/'RR2' ratings for TMH's senior secured revolver and senior secured term loan reflect Fitch's expectation of recovery of outstanding principal in the 71%-90% range under a bankruptcy scenario. The 'CCC-'/'RR6' rating on the senior unsecured notes reflect Fitch's expectation of recovery in the 0%-10% range. The recovery assumed for the senior unsecured notes is due to a concession payment by the senior secured creditors. Fitch estimates an enterprise value (EV) on a going concern basis of $2.4 billion for TMH, after a deduction of 10% for administrative claims. The EV assumption is based on post-reorganization EBITDA after dividends to associates and minorities of $374 million and a 7x multiple. The post-reorganization EBITDA estimate is 6% lower than Fitch calculated 2019 EBITDA for TMH, which is pre-pandemic. The primary drivers of this estimate are negative implications of commercial payor contract disputes and assumed ongoing deterioration in the profitability of the hospitalist business. To date, Fitch does not believe that the coronavirus pandemic has changed the longer-term valuation prospects for the healthcare services industry and TMH's going-concern EBITDA and multiple assumptions are unchanged from the last ratings review. The 7x multiple used for TMH reflects a stressed multiple versus the approximately 11x EBITDA Blackstone paid for the company in 2017. More recently, KKR paid about 10x EBITDA for TMH's staffing industry peer, Envision Healthcare Corp. The 7x multiple is closely aligned with historical observations of healthcare industry bankruptcy emergence multiples. In a recent study, Fitch determined that the historical median exit multiple for healthcare and pharmaceutical industry bankruptcies was around 6.5x. The recovery analysis assumes the $300 million revolver is fully drawn and includes this amount in the senior secured claims. Senior secured claims of $3.1 billion also include approximately $216 million of private term loans that rank pari passu with the term loan B maturing 2024, including to-be-accrued PIK interest. ESG CONSIDERATIONS Team Health has an ESG Relevance Score of '4' for Exposure to Social Impacts due to societal and regulatory pressures to constrain growth in healthcare spending in the U.S. This dynamic has a negative impact on the credit profile and is relevant to the rating in conjunction with other factors. Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. ISSUER PROFILE Team Health Holdings, Inc. is a U.S.-based national healthcare outsourcing company that supports more than 2,700 civilian and military hospitals, clinics, and physician groups in 46 states by providing staffing, administrative and consulting services. TMH was taken private in an LBO sponsored by Blackstone in February 2017. TEAM HEALTH: Moody's Puts Caa1 CFR Under Review for Upgrade ----------------------------------------------------------- Moody's Investors Service placed the ratings of Team Health Holdings, Inc. under review for upgrade. The ratings placed under review include the Caa1 Corporate Family rating, Caa1-PD Probability of Default Rating, the B3 ratings on the company's senior secured revolver and term loan, and the Caa3 rating on the senior unsecured term loan. At the same time, Moody's assigned a B3 rating (under review for upgrade) to the proposed amended portion of term loan B maturing in 2027. The outlook was revised to rating under review from stable. The rating action follows the company's announcement of its plan to amend and extend the maturity of its term loan B which is currently due in 2024. The outstanding amount under the company's term loan B (including $144 million private term loan) was approximately $2.76 billion at the end of December 2021. Team Health will attempt to extend the maturities of the entire outstanding debt under its term loan B. Debt investors who participate in this "amend and extend" proposal will be eligible for up to $300 million in partial debt pay down, proportionate to individual investors' participation amount. This "amend and extend" refinancing proposal will materialize only if >50% of existing term loan B lenders agree to participate. Moody's review of Team Health's ratings will focus on (i) whether or not the "amend and extend" proposal materializes; (ii) the dollar amount of debt that would have its maturity extended to 2027 (if the proposal materializes); and (iii) the dollar amount of total debt reduction because of the company's partial pay down. The review will also consider projected leverage, interest coverage and cash flow metrics after Moody's has full clarity on (i), (ii) and ((iii) above. If the company addresses the event risk associated with a large amount of debt maturing in 2024 and maintains leverage below 8 times (Moody's adjusted basis), the company's ratings could be upgraded. On Review for Upgrade: Issuer: Team Health Holdings, Inc. Corporate Family Rating, placed on review for upgrade, currently Caa1 Probability of Default Rating, placed on review for upgrade, currently Caa1-PD Senior secured revolving credit facility expiring 2023, placed on review for upgrade, currently B3 (LGD3) Senior Secured Term Loan due 2024, placed on review for upgrade, currently B3 (LGD3) Senior Unsecured Notes due 2025, placed on review for upgrade, currently Caa3 (LGD6) Rating Assigned Issuer: Team Health Holdings, Inc. Proposed senior secured term loan due 2027, assigned B3 (LGD3) and placed on review for upgrade Outlook Actions: Issuer: Team Health Holdings, Inc. Outlook changed to rating under review from stable RATINGS RATIONALE Notwithstanding the rating review, Team Health's Caa1 CFR reflects the company's very high leverage and challenging operating environment. The operating challenges include less than full recovery of business volumes after the onset of COVID-19 pandemic, reimbursement risk from one of the largest commercial insurers and the company's exposure to an unfavorable shift in payor mix. Team Health's credit profile is supported by its large scale and strong competitive position in the highly fragmented physician staffing industry. Moody's estimates that the company's leverage was approximately 8.0 times at the end of September 2021. If the company extends the maturity of the entire term loan B (and pays down $300 million in debt), Moody's expects that Team Health's debt/EBITDA will decline to the low-to-mid 7.0 times range in the next 12 months. Team Health's liquidity is good. In the absence of factors like COVID-related shutdowns, loss of negotiating power against out-of-network commercial insurers, sudden and unfavorable shift in payor mix and labor issues in the healthcare industry, the company has the capacity to generate $100- $120 million in free cash flow in the next 12 months. At the end of September 2021, Team Health had about $287 million availability under its $300 million revolver. Social and governance considerations are material to the rating, given the substantial implications for public health and safety. Team Health was materially impacted by the coronavirus outbreak, but the company's business volumes have largely recovered. As a provider of emergency medicine physician staffing, Team Health faces high social risk. The No Surprises Act, which became effective in January 2022 takes the patient out of the provider/payor dispute. The impact on Team Health's revenue will depend on the percentage of out-of-network patients, specific billing and collections practices, as well as arbitration process. In recent years, the company has tried to resolve its disputes with commercial insurers through negotiations. However, when negotiations did not work, the company has pursued active litigation strategy in parallel with negotiations. The company's financial policies are expected to remain aggressive reflecting its ownership by a private equity investor (Blackstone Group). FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS The ratings could be upgraded if Team Health addresses the event risk associated with a large amount of debt maturing in 2024 and maintains leverage below 8 times. Additionally, improved clarity and positive outcome in relation to contract negotiations with UnitedHealth could also support a rating upgrade. The ratings could be downgraded if the company's liquidity deteriorates, free cash flow becomes negative or if Moody's anticipates a rising risk of default. Team Health is a provider of physician staffing and administrative services to hospitals and other healthcare providers in the U.S. The company is affiliated with more than 15,000 healthcare professionals who provide emergency medicine, hospital medicine, anesthesia, urgent care, pediatric staffing and management services. The company also provides a full range of healthcare management services to military treatment facilities. Net revenues are approximately $4.6 billion. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. TEAM HEALTH: S&P Alters Outlook to Stable, Affirms 'B-' ICR ----------------------------------------------------------- S&P Global Ratings revised the outlook to stable from negative and affirmed its ratings on U.S.-based physician staffing provider Team Health Holdings Inc., including the 'B-' issuer credit rating. S&P also assigned its 'B-' issue-level and '3' recovery ratings to the company's proposed senior secured term loan B facility. S&P said, "The stable outlook reflects our expectation that better industry conditions are sustainable and patient volumes will continue recovering, resulting in relatively steady EBITDA margins. We expect adjusted FOCF to debt of 3%-4% and adjusted debt to EBITDA of 8x-10x over the next few years. "Team Health's operating results in 2021 were better than we had expected, owing to a recovery in patient volumes and cost optimization efforts. Emergency medicine patient volumes were volatile throughout 2021, but considerably improved from the trough reached in 2020 during the first few months of the pandemic when patient volumes declined 20%-25% from 2019 levels. The company took prudent measures to optimize its cost structure during that period, which we believe helped uplift adjusted EBITDA margins as volumes recovered through 2021. We believe the omicron variant hurt patient volumes during fourth-quarter 2021, but was more manageable for the company than prior variants, and that we are past the peak in case counts within the U.S. We estimate patient volumes are currently about 5% below pre-pandemic levels and that they and revenue should fully recover to 2019 levels by 2023. "The company optimized its cost structure when volumes were depressed in 2020 and through 2021, which we believe significantly benefitted operating leverage when volumes recovered. As a result, we estimate adjusted EBITDA margin was about 10% in 2021 (about 9% without federal stimulus funding from the CARES Act), which is trending higher than the 6%-8% we had estimated in our June 2021 review. We assume the company's adjusted EBITDA margins will modestly contract in 2022 because some of its cost-cutting over the past few quarters was temporary, and that physician compensation will likely increase, at least in the near term. Hence, we expect adjusted EBITDA margins to be about 8% in 2022, with modest improvement in 2023. "The company plans to refinance its existing term loan B, effectively extending its debt maturity profile and reducing refinancing risk. FOCF and liquidity improved in 2021. We believe the company finished 2021 with just over $500 million of cash on hand, which will facilitate repayment of up to $300 million of debt included in its proposed refinancing plan. As a result, we expect the transaction will reduce leverage by up to 0.7x, reduce scheduled annual debt amortization by about $3 million, and extend the company's debt maturity profile. The proposed $2.335 billion term loan B facility will mature in February 2027 (three years later than the existing debt) and contain a 90-day springing maturity to its unsecured notes, which mature in 2025. These positives are somewhat offset by our expectation that the proposed debt will carry a higher interest rate than its existing debt. Incorporating the proposed refinancing and our assumptions that patient volumes will modestly increase with relatively steady adjusted EBITDA margins, we expect adjusted FOCF to debt of 3%-4% and adjusted debt to EBITDA of 8x-10x over the next few years." The new surprise billing legislation is actually a credit positive for Team Health. Congress passed the "No Surprises Act" on Dec. 22, 2020 (with strong bipartisan support), and it went into effect at the beginning of 2022. The legislation aims to protect patients from surprise bills for most emergency and nonemergency health care services delivered by out-of-network providers. Surprise bills arise when a patient seeks care from an in-network provider, but unexpectedly or unknowingly encounters an out-of-network provider as part of their care--hence, it's a surprise when the out-of-network provider balance bills the patient. Balance billing occurs when the provider bills the patient for the difference between the provider's charge and the amount covered by the patient's insurance plan. In-network providers accept the insurance amount as payment; it's typically the out-of-network provider that balance bills. Under the new legislation, providers such as Team Health must resolve any payment disputes with the payor and not balance bill the patient. Providers that relied heavily on out-of-network balance billing will likely face significant headwinds from the new legislation, due to the measures to protect consumers against surprise expenses that can very high. However, S&P believes Team Health's out-of-network business is a relatively small percentage of its total business, and that it does not balance bill. Instead, it negotiates directly with payors to recover underpayments for out-of-network services. S&P said, "We consider the new legislation an overall positive development for Team Health because it includes an arbitration process that could help resolve payment disputes more quickly. Previously, health care providers had to settle disputes in court, at high legal costs, against very powerful payors including UnitedHealthcare. The legislation allows Team Health to bundle claims against payors in arbitration, and the losing party in most states must pay for arbitration. We believe Team Health has a track record of receiving favorable outcomes following arbitration, particularly in Texas, which has had a similar process since 2020. We also assume that the company's legal costs will likely decline under the new framework." Team Health is one of the largest incumbents in the highly fragmented and competitive physician staffing industry, and faces rate pressure from large payors. Team Health is the second-largest participant in the narrow health care physician staffing industry, with significant market positions in the emergency medicine (about 60% of net revenue in 2020), hospitalist (about 17% of net revenues), and anesthesiology (about 12% of net revenues) staffing segments. The industry is highly fragmented and competitive, with low barriers to entry. S&P said, "Longer term, we expect low-single-digit percent organic revenue growth as new contract wins and a modest increase in rates are largely offset by emergency department volumes under existing contracts that should be flat to down 1% per year. Our longer-term outlook on emergency department volumes reflects our view that barriers to entry within the industry are low and there are many alternatives to emergency departments for lower acuity care, including telehealth (which benefited from a flood of first-time users during the pandemic), and the growing popularity of urgent care sites and multicare facilities." All payors will continue to seek ways to reduce emergency room utilization. S&P said, "In our view, reimbursement risk has been and remains significant from all payors as the industry continues to try and avoid very expensive emergency room care. We believe the pricing power of these government payors, combined with the desire to reduce health care costs, should somewhat constrain long-term revenue growth and profit margin expansion for Team Health." Large and powerful private third-party payors such as UnitedHealthcare will also continue to pressure emergency room utilization and payment rates. Moreover, these payors could exclude physicians and hospitals managed by Team Health from their networks. This could make Team Health's services more expensive for patients within that network and potentially result in a loss in market share to competing in-network service providers. S&P said, "The stable outlook reflects our view that patient volumes should continue to recover over the next couple of years, working capital requirements will normalize, and the company will generate adjusted EBITDA margins of about 8%. Under this scenario, we expect adjusted debt to EBITDA of 8x-10x, adjusted FOCF to debt of 3%-4%, and adjusted EBITDA interest coverage of about 2x. "We could lower our rating on the company within the next 12 months if we consider its capital structure unsustainable over the long term. Under this scenario, we believe adjusted FOCF to debt would likely be below 1.5% for a prolonged period. This could occur if higher costs result in weaker-than-expected EBITDA margins or if patient volumes are lower than we anticipate, potentially due to the spread of a new COVID-19 variant, increased competition, or a contract loss. This could also occur if liquidity significantly deteriorates, and we believe the company's sources of liquidity are insufficient to cover its fixed charges. "We could raise our rating on the company within the next 12 months if we expect adjusted debt to EBITDA to remain below 7.5x and adjusted FOCF to debt to remain above 4%. In this scenario, we would also believe that the company has adequate liquidity with a manageable debt maturity profile. This could occur if patient volumes continue to increase, and we expect adjusted EBITDA margin to remain about 10%." ESG credit indicators: E-2, S-3, G-3 S&P said, "Our ESG credit indicators are unchanged as a result of this rating action. Social factors are a moderately negative consideration in our credit rating analysis of Team Health. As one of the largest players in the physician staffing industry, Team Health generates a portion of its revenue from out-of-network services. In our view, this could result in significant patient bills that may be disputed and undergo lengthy negotiation with powerful payers. Governance factors are a moderately negative consideration in our credit rating analysis. 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 the generally finite holding periods and a focus on maximizing shareholder returns." TECHNICAL COMMUNICATIONS: Incurs $613K Net Loss in First Quarter ---------------------------------------------------------------- Technical Communications Corporation reported a net loss of $(613,000), or $(0.33) per share, on revenue of $423,000 for the quarter ended Dec. 25, 2021, compared to a net loss of $(342,000), or $(0.19) per share, on revenue of $167,000 for the quarter ended Dec. 26, 2020. As of Dec. 25, 2021, the Company had $1.83 million in total assets, $2.08 million in total liabilities, and a total stockholders' deficit of $256,000. Carl H. Guild Jr., president and CEO of Technical Communications Corporation, commented, "As TCC has reported previously, the international COVID impact has significantly delayed progress in capturing several new business opportunities we have had in process. Notwithstanding, we are now beginning to see, in certain program areas, a resumption of the communications and field testing necessary to complete the procurement processes. We expect that this recovery trend will continue and positively affect other program opportunities and allow us to begin recovery in the near future." About Technical Communications Concord, Massachusetts-based Technical Communications Corporation -- http://www.tccsecure.com-- specializes in secure communications systems and customized solutions to protect highly sensitive voice, data and video transmitted over a wide range of networks, serving government entities, military agencies, and corporate enterprises. Stowe & Degon LLC, in Westborough, Massachusetts, the Company's auditor since 2019, issued a "going concern" qualification in its report dated Dec. 22, 2021, citing that the Company has an accumulated deficit, has suffered significant net losses and negative cash flows from operations and has limited working capital that raises substantial doubt about its ability to continue as a going concern. TELIGENT INC: Lender ACF Slams Unsecureds' Bid to Claw Back Cash ---------------------------------------------------------------- Jeannie O'Sullivan of Law360 reports that a lender for bankrupt generic pharmaceutical company Teligent Inc. slammed a bid by unsecured creditors for derivative standing to claw back a $10 million reserve fund, insisting the debtor didn't incur any harm by satisfying the lending agreement. In a filing Monday, February 7, 2022, ACF FinCo I LP told a Delaware bankruptcy judge to reject the motion by the official committee of unsecured creditors because Teligent's own refusal to pursue claims against lenders speaks for itself. The committee wants standing to accuse ACF and other Teligent lenders of improper maneuvers to pad their own coffers as the debtor's insolvency loomed. About Teligent Inc. Teligent, Inc., a specialty generic pharmaceutical company, develops, manufactures, markets, and sells generic topical, branded generic, and generic injectable pharmaceutical products in the United States and Canada. The company was formerly known as IGI Laboratories, Inc. and changed its name to Teligent, Inc. in October 2015. Teligent, Inc. was founded in 1977 and is based in Buena, New Jersey. Teligent Inc. and three affiliates sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 21-11332) on Oct. 14, 2021. The cases are handled by Honorable Judge Brendan Linehan Shanno. The Debtor disclosed total assets of $85.0 million and total debt of $135.8 million as of Aug. 31, 2021. Young Conaway Stargatt & Taylor, LLP and K&L Gates LLP are the Debtors' attorneys. Portage Point Partners, LLC, is the Debtors' restructuring advisor. Raymond James & Associates, Inc., is the Debtors' investment banker. Epiq Corporate Restructuring, LLC, is the claims agent. Latham & Watkins LLP, serves as co-counsel to the Prepetition First Lien Parties and the Senior DIP Parties. Morgan Lewis & Bockius LLP serves as co-counsel to the DIP Junior Term Loan Parties and Prepetition Second Lien Parties. Morris, Nichols, Arsht & Tunnell LLP serves as co-counsel to the DIP Parties and Prepetition Secured Parties. Jenner & Block LLP serves as co-counsel to the Creditors' Committee. Osler, Hoskin & Harcourt LLP, serves as Canadian counsel to both the DIP Junior Term Loan Parties and the Senior DIP Parties. NautaDutilh Avocats Luxembourg S.a r.l., as Luxembourg serves as counsel to both the DIP Junior Term Loan Parties and the Senior DIP Parties. TGS Baltric is the Estonian counsel to both the DIP Junior Term Loan Parties and the Senior DIP Parties. TILDEN MARCELLUS: Hits Voluntary Chapter 11 Bankruptcy Protection ----------------------------------------------------------------- Tilden Marcellus has filed for voluntary Chapter 11 bankruptcy protection. Marcellus Drilling News reports that Tilden Marcellus LLC, a Canonsburg, Pa.-based oil and gas company, filed for chapter 11 protection last Friday, February 4, 2022, in the Bankruptcy Court for the Western District of Pennsylvania. Tilden is a “sister company” to Rockdale Marcellus. Rockdale went through bankruptcy last year, resulting in the sale of substantially all of its assets (in Pennsylvania) to Repsol for $220 million in cash. Tilden, while tightly related to Rockdale, has its own assets separate from Rockdale (less than $50 million). About Tilden Marcellus Tilden Marcellus, LLC is a Texas limited liability oil and gas production company which owns and previously operated certain working interests in more than 27,000 net leasehold acres within Potter County and Tioga County, Pennsylvania, with over 50 wells previously in production. Tilden Marcellus sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Penn. Case No. 22-20212) on Feb. 4, 2022. In the petition signed by Jeffrey T. Varsalone, chief restructuring officer, the Debtor disclosed up to $50 million in both assets and liabilities. Judge Gregory L. Taddonio oversees the case. Beverly Weiss Manne, Esq. at Tucker Arensberg PC serves as the debtor's local counsel. Morris, Nichols, Arsht and Tunnel LLP is the Debtor's bankrupcy counsel. Epiq Corporate Restructuring LLC serves as the notice, claims and balloting agent and administrative advisor. White Oak Global Advisors, LLC, as the DIP Agent and the Prepetition Agent, is represented by: Daren S. Klein, Esq. David Schiff, Esq. Jarett Erickson, Esq. Davis Polk & Wardwell LLP 450 Lexington Avenue New York, NY 10017 Email: darren.klein@davispolk.com david.schiff@davispolk.com jarret.erickson@davispolk.com - and - Mike Proctor, Esq. Bowles Rice LLP 1800 Main Street, Suite 200 Canonsburg, PA 15317 Email: mproctor@bowlesrice.com TITAN INTERNATIONAL: Buys Back $25 Million Restricted Stock ----------------------------------------------------------- Titan International, Inc. entered into a stock purchase agreement with Russian Direct Investment Fund equity holders on Feb. 1, 2022, to buy back shares of restricted common stock it issued to an RDIF affiliate in a private placement for the previously agreed amount of $25 million. The transaction was completed on Feb. 1, 2022. On Feb. 11, 2019, Titan entered into a definitive agreement with an affiliate of the Russian Direct Investment Fund relating to the previously announced settlement put option that was exercised by the RDIF affiliate. Under the terms of the Agreement, in full satisfaction of the settlement put option that was exercised by the RDIF affiliate, the Company paid $25 million in cash to the RDIF affiliate at the closing of the transaction on Feb. 22, 2019, and agreed, subject to the completion of regulatory approval, to issue 4,032,259 shares of restricted Titan common stock to the RDIF affiliate in a private placement. In December 2020, in connection with its liquidation, the RDIF affiliate transferred its right to receive the Titan Restricted Stock to its equity holders. The regulatory approval was received in November 2021 and on Dec. 17, 2021, the Company issued the Titan Restricted Stock to the RDIF equity holders. Based on the terms of the Agreement, the Company retained the right to buy back the Titan Restricted Stock from the RDIF equity holders for $25 million until Feb. 12, 2022. About Titan Titan International, Inc. -- http://www.titan-intl.com-- is a global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products. Headquartered in Quincy, Illinois, the Company globally produces a broad range of products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving or construction, and consumer markets. Titan International reported a net loss of $65.08 million for the year ended Dec. 31, 2020, compared to a net loss of $51.52 million for the year ended Dec. 31, 2019. As of Sept. 30, 2021, the Company had $1.14 billion in total assets, $944.67 million in total liabilities, $25 million in redeemable noncontrolling interest, and $174.59 million in total equity. TRACER ROOFING: Files Emergency Bid to Use Cash Collateral ---------------------------------------------------------- Tracer Roofing LLC asks the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, for authority to, among other things, use cash collateral and provide adequate protection to the prepetition lenders. The Debtor seeks permission to use cash and other receipts generated in the ordinary course of the Debtor's business to satisfy ongoing expenses. Funding each of these expenditures is necessary to preserve and maintain the value of the Debtor's assets for the benefit of all parties in interest. The Debtor commenced the Chapter 11 case to preserve and maximize the Debtor's remaining assets and business value for the benefit of its stakeholders in the face of impending liquidity shortfall and significant industry headwinds caused, in part, by the adverse impacts of the COVID-19 pandemic. Not only were the Debtor's projects shuttered to comply with months-long state and local government shutdown orders, but the construction industry faced unprecedented labor and material shortages. Additionally, material suppliers did not honor lock-in pricing due to alleged Force Majeure. As such, material costs exceeded all bids on jobs, leaving the Debtor with a severe monetary deficit. These factors drove up the cost of projects, which became increasingly problematic for existing construction contracts that had been based on pre-pandemic cost estimates. Following the onset of the pandemic, the Debtor applied for and received a $150,000 loan from the Small Business Administration for which the SBA asserts a senior secured claim. On June 15, 2020, the SBA filed a UCC Financing Statement to secure the EIDL Loan. The Debtor began to face significant financial challenges in the summer and fall of 2021, which necessitated entering into certain agreements with parties to simply keep the business operating. Even with the funds received from the MCA Companies, the Debtor was unable to pay for operating expenses as well as the substantial monthly payments required by a certain Promissory Note with ABC Supply Co., Inc. to resolve certain amounts owed to ABC for materials provided to the Debtor. By the winter of 2021, the Debtor was also not able to maintain the daily withdrawals taken by the MCA Companies. This led to serious liquidity issues and concerns that the Debtor would not be able to make its payroll obligations. The Debtor disputes the amount and nature of the claims asserted by the MCA Companies. While the MCA Companies have asserted that they purchased future receivables, the Debtor contends that they are truly loans subject to interest rates exceeding the amount permitted under state law and are therefore usurious and void. As adequate protection, the Debtor proposes to grant the lenders replacement liens in and to all property presently securing the Lenders' claims, together with any post-petition proceeds thereof, to the extent of Lenders' actual prepetition interest in cash collateral. The Replacement Liens will not attach to causes of action or rights or recovery under Chapter 5 of the Bankruptcy Code, or the proceeds of such claims. In the event that the Replacement Liens are insufficient to protect the interests of the Lenders from the Debtor's use of cash collateral or from a diminution in value of the Assets, the Lenders' claims will have priority to the extent that the adequate protection for the Debtor's use of the collateral and cash collateral proves to be inadequate. The Super-Priority Claim and the Replacement Liens will be subject and subordinate to (a) professional fees and expenses of professionals employed by the Debtor; (b) up to $25,000 with respect to the Debtor's professionals and allowed by the Court at any time, whether by interim order, procedural order or otherwise; (c) other requirements expressly set forth in the Interim Order and the Final Order, (d) if the case is converted to a case under Chapter 7, the fees payable to a chapter 7 trustee or his or her professionals that are allowed by the Court; (e) the fees payable to the United States Trustee pursuant to 18 U.S.C. section 1930 with any interest due thereon pursuant to 31 U.S.C. section 3717 and any fees due and owing the Clerk of the Court. A copy of the motion is available for free at https://bit.ly/3rDoeUE from PacerMonitor.com. About Tracer Roofing LLC Tracer Roofing LLC r operated a construction business focused on residential and commercial roofing, re-roofing, and roof repair solutions. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 22-30314) on February 3, 2022. In the petition signed by Nicole Carpenter, managing member, the Debtor disclosed up to $1 million in assets and up to $50 million in liabilities. James C. Vandermark, Esq. and Heidi J. Sorvino, Esq. at White and Williams LLP represent the debtor as counsel. UBIOME INC: Delaware Court Bars Trustee Toss of Chapter 7 Docs -------------------------------------------------------------- Jeff Montgomery of Law360 reports that a Delaware bankruptcy judge rejected on Tuesday, February 8, 2022, a Chapter 7 trustee's proposal to abandon electronic documents related to defunct fecal testing service uBiome Inc.'s liquidation or to shift storage costs to individuals fighting the trustee's $25 million damages suit. U.S. Bankruptcy Judge Laurie Selber Silverstein, ruling during a teleconference hearing, said the motion was premature and potentially unsupportable given the potential need by the suit's defendants to assess the records while preparing for the adversarial suit. About uBiome Inc. uBiome, Inc. -- https://ubiome.com/ -- is a microbial genomics company founded in 2012. uBiome combines its patented proprietary precision sequencing with machine learning and artificial intelligence to develop wellness products, clinical tests, and therapeutic targets. uBiome has filed for over 250 patents on its technology, which includes sample preparation, computational analysis, molecular techniques, as well as diagnostic and therapeutic applications. uBiome and its non-debtor foreign affiliates currently employ approximately 100 individuals, of which 35 are located in the United States, 37 in Chile, and 28 in Argentina. On Sept. 4, 2019, uBiome, Inc., sought Chapter 11 protection (Bankr. D. Del. Case No. 19-11938). The Debtor was estimated to have assets of $50 million to $100 million and liabilities of $10 million to $50 million as of the bankruptcy filing. The Hon. Laurie Selber Silverstein is the case judge. The Debtor tapped Young, Conaway, Stargatt & Taylor, LLP as counsel; Goldin Associates, LLC, as restructuring advisor; and GLC Advisors & Co., LLC and GCLA Securities LLC as investment banker. Donlin Recano & Company, Inc., is the claims agent. In October 2019, the Bankruptcy Court converted the Chapter 11 bankruptcy case to a Chapter 7 liquidation. URBAN OAKS: Seeks to Hire Polsinelli PC as Special Counsel ---------------------------------------------------------- Urban Oaks Builders, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Polsinelli, PC to defend it in a lawsuit involving a construction project in Denver, Colo. The lawsuit was initiated by Manko Window Systems, Inc., a supplier, to recover amounts it claims it is owed on the project and named All Star Glass, LLC and Granite RE, Inc. as defendants. All Star Glass asserts third-party claims against Urban Oaks Builders in the lawsuit captioned, Manko Window Systems, Inc. v. All Star Glass, LLC, Granite RE, Inc., City and County of Denver, District Court Case No. 2020cv33578. The hourly rates charged by Polsinelli for its services are as follows: Steven G. Wright $710 per hour William R. Meyer $545 per hour The firm received a retainer fee from the Debtor in the amount of $5,000. William Meyer, Esq., shareholder of Polsinelli, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: William R. Meyer, Esq. Polsinelli PC 1401 Lawrence Street, Suite 2300 Denver, CO 80202 Direct: 720-931-8156 Fax: 303-572-7883 Email: wmeyer@polsinelli.com About Urban Oaks Builders Houston-based Urban Oaks Builders, LLC is a privately held company that provides residential building construction services. Urban Oaks Builders sought protection under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Texas Case No. 18-34892) on Aug. 31, 2018, disclosing $10 million to $50 million in assets and $50 million to $100 million in liabilities. Todd Hagood, vice-president of Urban Oaks Builders, signed the petition. Judge Marvin Isgur oversees the case. The Debtor tapped Okin Adams, LLP as bankruptcy counsel; Baker Botts, LLP and Polsinelli, PC as special counsels; and Stout Risius Ross, LLC as financial advisor. VASU CONVENIENCE: Taps Law Offices of Alla Kachan as Legal Counsel ------------------------------------------------------------------ Vasu Convenience, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to hire the Law Offices of Alla Kachan, P.C. to serve as legal counsel in its Chapter 11 case. The firm's services include: (a) assisting the Debtor in administering the case; (b) making such motions or taking such action as may be appropriate or necessary under the Bankruptcy Code; (c) representing the Debtor in prosecuting adversary proceedings to collect assets of the estate and such other actions as the Debtor deems appropriate; (d) taking such steps as may be necessary for the Debtor to marshal and protect the estate's assets; (e) negotiating with creditors in formulating a plan of reorganization for the Debtor; (f) drafting and prosecuting the confirmation of the Debtor's plan of reorganization; and (g) rendering such additional services as the Debtor may require in the case. The firm's hourly rates are as follows: Attorney $475 per hour Paraprofessionals $250 per hour The Debtor paid the firm a retainer fee in the amount of $15,000. Alla Kachan, Esq., member of the firm, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Alla Kachan, Esq. Law Offices of Alla Kachan, P.C. 2799 Coney Island Avenue, Suite 202 Brooklyn, NY 11235 Tel: (718) 513-3145 Email: alla@kachanlaw.com About Vasu Convenience Vasu Convenience, Inc. filed a petition for Chapter 11 protection (Bankr. E.D. N.Y. Case No. 21-43023) on Dec. 3, 2021, listing up to $100,000 in assets and up to $500,000 in liabilities. Jigar A. Patel, president, signed the petition. Judge Nancy Hershey Lord oversees the case. The Debtor tapped Law Offices of Alla Kachan, P.C. and Wisdom Professional Services Inc. as its legal counsel and accountant, respectively. VILLAGE ON THE ISLE: Fitch Affirms 'BB+' IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has assigned Village on the Isle (VOTI) a 'BB+' Issuer Default Rating (IDR) and has affirmed the 'BB+' rating on approximately $90 million in revenue improvement bonds series 2016, 2017A issued by Sarasota County Health Facilities Authority, and approximately $20 million series 2019 issued by Venice (FL) on behalf of VOTI. The Rating Outlook is Stable. SECURITY The bonds are secured by a pledge of gross revenues, a security interest in obligated group facilities, and debt service reserve funds. ANALYTICAL CONCLUSION VOTI has maintained solid independent living (IL) occupancy over the past several years and throughout the pandemic due to its attractive campus. The closest competition offering Lifecare contracts and a full continuum of care is approximately 11 miles away. However, cost management metrics have been weak for the past several years. These pressures were increased by the pandemic and robust capex spending. The 'BB+' rating reflects Fitch's expectation that VOTI will maintain a stable but thin financial profile. KEY RATING DRIVERS Revenue Defensibility: 'bbb' Stable Demand in a Stable Market VOTI is located in a stable service area. Demand is also sustained by a healthy real estate market, with growing median home values in the Sarasota area. Entrance fees are in line with PMA pricing trends and rate increases occur regularly. VOTI enjoys a preferable location, amenities and incentives while facing little meaningful competition. However, IL demand has been midrange with occupancy averaging 90% over the past four years. Demand softened across the continuum during the pandemic and is incrementally improving. As of November of 2021, occupancy was 89% in the ILUs, 86% in the ALUs, 84% in MC and 88% in SNF. Operating Risk: 'bb' Weak Profitability, Robust Capital Spending VOTI's operating performance is consistent with a weak assessment for a Type-B service provider. VOTI offers both lifecare and fee-for-service contracts. As of this report most of VOTI's residents have Type B contracts. VOTI's operating ratio, net operating margin (NOM) and net operating margin-adjusted (NOMA) averaged 102.4%, 0.8%, and 29.3% over the past five years. While there has been some fluctuation from year to year, indicating continued cost management pressure. These pressures are associated with ongoing renovations, and in the recent years, with the stress associated with the pandemic. Fitch's weak assessment is further supported by soft capital related metrics. On average over the past five years, revenue-only MADS coverage averaged 0.2x, debt to net available has averaged 11.4x and MADS has averaged 29.8% of revenue. Management actively invests in maintaining and expanding the campus with capital expenditures averaging over 650% of depreciation over the past several years. The average age of plant is favorably low at approximately 6.5 years. Financial Profile: 'bb' Weak Financial Profile Given VOTI's midrange revenue defensibility and weak operating risk assessments, Fitch expects it will maintain a financial profile that is consistent with the 'bb' assessment throughout the economic and financial volatility assumed in Fitch's stress case scenario. MADS coverage has been consistent with the weak assessment, averaging1.5x over the past five years. VOTI's balance sheet has been stable, albeit limited with unrestricted cash and investments at $30 million in 2020, or 34% cash-to-adjusted debt at year-end 2020. Unrestricted cash represented 438 days cash on hand (DCOH) in 2020, which is neutral to the assessment of VOTI's financial profile Asymmetric Additional Risk Considerations No asymmetric risk considerations were relevant to the rating determination. RATING SENSITIVITIES Factor that could, individually or collectively, lead to positive rating action/upgrade: -- Over the longer term, improvement in liquidity metrics such that cash to adjusted debt levels stabilize at 90% or greater, could support a higher rating. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Stabilization of ILU occupancy below 88%; -- Deterioration of liquidity such that cash to adjusted debt stabilizes at 25% or lower; -- Operating ratios consistently above 105%. 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. VOTI operates a life plan community located in Venice, FL approximately 75 miles south of Tampa on Florida's Gulf Coast. With the recent additions, the community now consists of 247 ILUs, 48 ALUs and 16 Memory Care units, and 64 licensed skilled nursing beds at the new Health Center. Eight of the 64 SNF beds are leased to a hospice agency. VOTI offers several contract types; Type-B contracts with either a 10% discount on AL and SNF services (Traditional), or unlimited assisted living services and 30 free days of skilled nursing each year for temporary care in a fully-amortizing Type-B contract plan (Enhanced Living). The Traditional contract option was not offered between 2019 and early 2021, but has recently been reinstated. In January 2019, VOTI began offering a Life Care Contract which is a fully-amortizing Type A contract where residents receive unlimited ALU and Health Center care access. As of this report, most of VOTI's resident contracts are Type-B. Refunds are not subject to resale requirements but VOTI has limited exposure to refundable contracts. In fiscal 2020, VOTI had total revenues of approximately $29 million. 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. VINO CAFE: Seeks to Employ Maxsen Champion as Bankruptcy Attorney ----------------------------------------------------------------- Vino Cafe LLP seeks approval from the U.S. Bankruptcy Court for the Northern District of New York to hire Maxsen Champion, Esq., a practicing attorney in Fayetteville, N.Y., to handle its Chapter 11 case. The services to be provided by the attorney include: (a) giving Debtor legal advice with respect to its powers and duties in the continued operation of its business and in the management of its property; (b) taking necessary action to avoid liens and remove restraints against the Debtor's property, and such other actions to remove any encumbrances or licenses which are avoidable and which were placed against the property prior to the Debtor's Chapter 11 filing and at a time when the Debtor was insolvent; (c) taking necessary action to enjoin and stay until final decree any attempts by secured creditors to enforce liens upon the property of the Debtor in which the Debtor has substantial equity; (d) representing the Debtor in any proceedings, which may be instituted by creditors or other parties during the course of the proceeding; (e) preparing legal papers; and (f) performing all other legal services for the Debtor. The Debtor will pay the attorney an hourly fee of $300 while her paralegals will be paid $100 per hour. The Debtor paid Ms. Champion a retainer fee in the amount of $3,283. Ms. Champion disclosed in a court filing that she is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Ms. Champion can be reached at: Maxsen D. Champion, Esq. 8578 East Genesee Street Fayetteville, NY 13066 Tel: (315) 664-2550 Email: max2040@live.com About Vino Cafe Vino Cafe, LLP filed a petition for Chapter 11 protection (Bankr. N.D. N.Y. Case No. 22-60041) on Jan. 27, 2022, listing up to $50,000 in assets and up to $500,000 in liabilities. Deana B. Siegfried, controlling member, signed the petition. Judge Diane Davis oversees the case. The Debtor tapped Maxsen D. Champion, Esq., a practicing attorney in Fayetteville, N.Y., to handle its Chapter 11 case. WALKER COUNTY: Seeks to Hire Eaves Law Firm as Special Counsel -------------------------------------------------------------- Walker County Hospital Corporation seeks approval from the U.S. Bankruptcy Court for the Southern District of Texas to hire Eaves Law Firm as special counsel. The Debtor requires legal assistance to pursue claims against potential defendants who have engaged in the fraudulent marketing and sale of highly addictive, opiate-derived painkillers. The claims total more than $1.3 million. Eaves Law Firm will be paid legal fees on a contingency basis of 33 percent of the cash value of any recoveries obtained from any defendants of claims settled prior to a judgment being rendered against such defendants or 40 percent if the recoveries were obtained through a judgment against such defendants. John Eaves, Esq., owner of Eaves Law Firm, disclosed in a court filing that he is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. In accordance with the U.S. Trustee Fee Guidelines, Mr. Eaves disclosed the following: a. Eaves Law Firm has not agreed to a variation of its standard or customary billing arrangements in connection with its engagement as special counsel. b. No Eaves Law Firm professional included in the engagement has varied his rate based on the geographic location of the Debtor's Chapter 11 case. c. The material terms of Eaves Law Firm's pre-bankruptcy engagement are the same as the proposed terms governing retention of the firm. d. The Debtor has approved or will be approving a prospective budget and staffing plan for Eaves Law Firm's engagement for the post-petition period as appropriate. In accordance with the U.S. Trustee Guidelines, the budget may be amended as necessary to reflect changed or unanticipated developments. Eaves Law Firm can be reached at: John Eaves, Esq. Eaves Law Firm 101 North State St. Jackson, MS 39201 Phone: (601) 355-7961 Fax: (601) 355-0530 About Walker County Hospital Corp. Walker County Hospital Corporation, doing business as Huntsville Memorial Hospital -- https://www.huntsvillememorial.com/ -- operates a community hospital located in Huntsville, Texas. It is the sole member of its non-debtor affiliate, HMH Physician Organization. Founded in 1927, the Facility provides health care services to the residents of Walker County and its surrounding communities. Walker County Hospital Corporation sought Chapter 11 protection (Bankr. S.D. Texas Case No. 19-36300) on November 11, 2019, in Houston. At the time of filing, the Debtor listed as much as $50 million in both assets and liabilities. Steven Smith, chief executive officer, signed the petition. The Honorable David R. Jones is the case judge. The Debtor tapped Waller Lansden Dortch & Davis, LLP and Morgan Lewis as bankruptcy counsels; Healthcare Management Partners, LLC as financial and restructuring advisor; Bharat Capital, LLC as financial consultant; and Epiq Corporate Restructuring, LLC as notice and claims agent. The Office of the U.S. Trustee appointed an official committee of unsecured creditors on Nov. 23, 2019. The committee tapped Arent Fox LLP as legal counsel, Gray Reed & McGraw LLP as local counsel, and FTI Consulting, Inc. as financial advisor. WARTBURG COLLEGE: Fitch Affirms 'BB-' IDR, Alters Outlook to Pos. ----------------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Rating (IDR) for Wartburg College, Iowa and the rating on approximately $75 million of private college facility revenue refunding bonds, series 2015, issued by the Iowa Higher Education Loan Authority on behalf of Wartburg College at 'BB-'. The Rating Outlook is revised to Positive from Stable. SECURITY The series 2015 bonds are a general obligation of the college, secured by a lien on revenues of the college and a mortgage on the core campus. Additionally, the bonds are supported by a debt service reserve fund equal to maximum annual debt service (MADS). ANALYTICAL CONCLUSION The IDR and bond rating of 'BB-' reflect Fitch's expectation that FTE enrollment will stabilize, remaining above 1,500 in the near term, and near-term capital plans will be primarily donor and state funded. The college's enrollment remains challenged given its position in a very competitive state and region; management continues plans to enhance its recruitment efforts and develop new programs. Reasonable capital plans are expected to be primarily donor funded over the next few years, while steady amortization of outstanding debt is expected to improve leverage. The Positive Outlook reflects the expectation that the college's leverage position will remain consistent with the current level through plausible economic stresses, while continuing to sustain healthy cash flow margins in line with historical levels. KEY RATING DRIVERS Revenue Defensibility: 'bb' Competition and Price Sensitivity Constrain Enrollment Growth The 'bb' Revenue Defensibility assessment reflects relatively stable enrollment constrained by Wartburg's uncompetitive demand reflected in acceptance rates above 70%, matriculation rates materially below 20% and retention falling below 75%. The college operates in a highly price sensitive market which further constrains revenue growth, though net tuition and fees have increased yoy. Strong competition from the surrounding public and private colleges and universities challenges the draw both in-state and regionally out of state. To improve its competitive positioning, Wartburg has added a Masters in Leadership, discontinued low enrollment programs, expanded online capabilities and started a number of extracurricular programs. Wartburg draws approximately 72% of its students from in-state with a majority of the out-of-state draw coming from the contiguous states (Illinois, Minnesota, Wisconsin, Nebraska, and Missouri). The college maintains an endowment draw of 5% of market value based on a rolling 36-month average, which Fitch considers sustainable. Management reports no planned increases in the draw rate. Operating Risk: 'a' Strong Cash Flow Margins Countered by High Lifecycle Investment Needs Strong cost management demonstrated by five years of healthy cash flow margins above 15%, as calculated by Fitch (approximately 18.3% in fiscal 2021 excluding federal stimulus), is countered by a rising average age of plant and high lifecycle investment needs which constrains the operating risk assessment to 'a'. The college has an $11 million residence hall renovation project in the near term that will be primarily donor funded, in addition to a $2 million state historic tax credit. Fitch expects the college to continue its successful fundraising for capital and annual giving for operating support ($2.4 million to $2.5 million per year, historically). Financial Profile: 'bb' Growing Available Funds with Neutral Liquidity Although the improvement in Wartburg's AF/adjusted debt to 80% in fiscal 2021 might indicate a stronger financial profile assessment, it is constrained at 'bb' reflecting only one year of improved leverage ratios (AF increased from $35.9 million in 2020 to $62.6 million in 2021). Continued ability to sustain available funds to adjusted debt ratios at or near 80% could lead to a financial profile assessment of 'bbb'. The college received a $4.3 million PPP loan that was forgiven in 2021 but which will not be recognized until 2028. Wartburg maintains sufficient liquidity and debt service coverage to exceed its covenants. Fitch's calculation of debt service coverage has exceeded the college's covenant of 1.10x for the past five fiscal years (about 2.7x in fiscal 2021 inclusive of federal stimulus). The college's calculation of liquidity, total cash and investments (including restricted cash) to total long-term debt, has risen year over year and has consistently remained above the 50% covenant (180.7% in fiscal 2021). Wartburg's adjusted debt at fiscal year-end 2021 was approximately $78 million; $74 million was fixed rate debt with a debt-equivalent $4.2 million from operating leases (5x annual lease expense). Fitch expects the college's debt burden to moderate over time, with slightly ascending debt service through MADS in 2029. Fitch does not view the college as having any additional debt capacity at the current rating at this time. The college's available funds (AF; cash and unrestricted investments) remain vulnerable to investment market fluctuations and economic stress. Asymmetric Additional Risk Considerations No asymmetric risk considerations affected the rating. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: -- Steady growth in net tuition and fees, supported by sustained enrollment growth and steady to improving demand indicators; -- Positive GAAP operating margins which sustain cash flow margins above 15%: -- Sustained debt leverage with AF/adjusted debt in excess of 80%. Factors that could, individually or collectively, lead to negative rating action/downgrade: -- Issuance of additional debt without commensurate additional growth in available funds; -- A sustained decline in net tuition and fee revenues; -- A weakening of operating performance demonstrated by a material drop in cash flow margins to below 12% or to a level where debt service coverage approaches the 1.1x covenant. 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 Wartburg College, established in 1852 as a liberal arts college of the Evangelical Lutheran Church in America, is located in Waverly, IA and serves predominantly in-state undergraduate students. The college occupies a 118-acre campus with current headcount enrollment of 1,537 students. Coronavirus Impacts Wartburg shifted to a fully remote learning model in March 2020 through May 2020. The college received a total of $6.5 million in federal stimulus funds related to the pandemic ($3.5 million institutional), as well as approximately $4.3 million in the form of a PPP loan. The college did not offer housing and dining refunds in spring 2020, as campus remained open, but provided emergency aid to students. Fall 2020 courses resumed in a mix of in-person, remote and hybrid structures with hybrid learning as the predominant model with a slight decline in on-campus housing occupancy. Starting in fall 2021, Wartburg returned to fully in-person learning, encouraging vaccination, and providing testing, quarantine space and contact tracing. 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. WESTBANK HOLDINGS: Wins Cash Collateral Access ---------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana has authorized Westbank Holdings, LLC and affiliates to use the cash collateral of Federal National Mortgage Association d/b/a Fannie Mae on an interim basis in accordance with the budget, with a 10% variance. The Court says if the Debtors' use of cash collateral exceeds the Permitted Variances (on a weekly basis) without the prior consent of Fannie Mae, the Debtors' right to use cash collateral will terminate three business days following receipt by Debtors' counsel of a written notice of such default from Fannie Mae's counsel. Thereafter, the Debtors will have the right to seek court authority to use cash collateral on an expedited basis. To the extent an emergency expenditure is needed to protect the health, safety and welfare, the Debtors will notify Fannie Mae prior to making any expenditures. The notification will include: (i) the reason for the expenditure; (ii) the cost of the expenditure; and, (iii) the proposed scope of work. Fannie Mae will have 48 hours to respond to the request. As adequate protection, the Court grants Fannie Mae a claim in the amount of any post-petition diminution in the value of the Fannie Mae's security interest in the assets of the Debtors. To secure the Adequate Protection Claim, Fannie Mae is granted replacement security interests in and liens upon all post-petition personal property of the Debtors and its estate and all proceeds and products of that personal property, and post-petition accounts and cash to the extent that Fannie Mae prepetition possessed a valid and perfected security interest and lien in any such accounts and/or cash. The respective Adequate Protection Liens granted to Fannie Mae will be subject only to valid, perfected, enforceable, and unavoidable liens and security interests granted by the respective Debtors or operation of law to any person or entity that were superior in priority to the prepetition security interests and liens held by Fannie Mae and only to the extent such prepetition liens are not otherwise subject to avoidance or subordination. The Debtors will: (a) continue to keep the collateral fully insured against all loss, peril and hazard; and (b) pay any and all post-petition taxes, assessments and governmental charges with respect to the collateral that serves as security for the Fannie Mae debt that are billed after the Petition Date. A final hearing on the matter is scheduled for February 14, 2022 at 3:30 p.m. A copy of the order and the Debtors' budget from January 27 to February 16, 2022 is available for free at https://bit.ly/3HEe8J4 from PacerMonitor.com. The budget provided for total disbursements, on a weekly basis, as follows: $50,414 for the week ending February 2, 2022; $6,418 for the week ending February 9, 2022; $9,919 for the week ending February 16, 2022. About Liberty Park Apartments Westbank Holdings, LLC, et al.., are limited liability companies that operate five low-income apartment complexes in New Orleans. The complexes are owned and operated by Joshua Bruno. Westbank Holdings, LLC, Cypress Park Apartments II, LLC, Liberty Park Apartments, LLC, and Forest Park Apartments, LLC, sought Chapter 11 protection (Bankr. E.D. La. Case Nos. 22-10082 to 22-10086) on Jan. 27, 2022. In the petition signed by Joshua Bruno as manager, Liberty Park Apartments estimated assets between $500,000 and $1 million and estimated liabilities between $1 million and $10 million. The cases are handled by Honorable Judge Meredith S. Grabill. Frederick L. Bunol, Esq., of The Derbes Law Firm, LLC, is the Debtors' counsel. WHEELS AMERICA: Wins Cash Collateral Access ------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California has authorized Wheels American San Francisco, LLC to use the cash collateral of the U.S. Small Business Administration on a final basis. The SBA, on account of an EIDL loan, is granted a replacement lien against all of the Debtor’s post-petition assets. The Replacement Lien will be perfected and enforceable without the need for the SBA or the Debtor to take any further action, but it will be subject to further Court orders. PlainsCapital Bank holds a UCC-1 lien, but the Debtor asserts that nothing is owed with respect to it. Without ruling on that issue, PlainsCapital Bank is granted a replacement lien against all of the Debtor's post-petition assets. The Replacement Lien will be perfected and enforceable without the need for PlainsCapital Bank or the Debtor to take any further action, but it will be subject to further Orders of the Court. The Replacement Liens will have the same nature, extent, validity and priority as the prepetition liens. The Court says the Debtor may freely sell its inventory and collect accounts receivables and use the proceeds thereof in the ordinary course of its business, without further accounting therefor. A copy of the final order is available for free at https://bit.ly/3Jivfk3 from PacerMonitor.com. About Wheels America San Francisco Wheels America San Francisco, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Calif. Case No. 21-41479) on Dec. 11, 2021, disclosing $665,210 in assets and $1,254,346 in liabilities. Robert Stretch, member, signed the petition. Judge Roger L. Efremsky oversees the case. Michael St. James, Esq., at St. James Law, PC serves as the Debtor's legal counsel. WOK HOLDINGS: Fitch Withdraws All Ratings ----------------------------------------- Fitch Ratings has upgraded the Long-Term Issuer Default Rating (IDR) of Wok Holdings, Inc., operator of the P.F. Chang's (PFC) restaurant chain, to 'B-' with a Stable Outlook and simultaneously withdrawn the ratings. The rating on the company's first lien credit facility has also been upgraded to 'B-'/'RR4' and withdrawn. Wok's rating reflects the company's leading market position in the full-service Asian category as well as its negative FCF, small scale relative to other large casual chain dining concepts, and the secular challenges within the casual dining segment. The upgrade reflects the company's improved margin performance despite the negative topline impact from the pandemic, driven by cost cuts and operational improvements, which has resulted in leverage improving to the mid-6x area. Fitch has withdrawn Wok's ratings for commercial reasons. Fitch reserves the right in its sole discretion to withdraw or maintain any rating at any time for any reason it deems sufficient. KEY RATING DRIVERS Leading Asian Dining Market Share: P.F. Chang's generated pre-pandemic revenue of approximately $900 million in 2019 over 200 company operated stores in 39 states across the United States and 89 franchise locations in more than 25 countries. The company's menu offering has evolved to increase the consumer appeal to a broader demographic by expanding menu options from Chinese into other Asian cuisines with brand messaging focused on fresh ingredients that are "made from scratch". Heading into the pandemic, P.F. Chang's demonstrated relatively good system health supported by average unit volumes on par or higher than peers and same-restaurant sales (SRS) performance in line with the casual dining segment which, in the years heading into the pandemic, had experienced low-single-digit secular declines related to guest traffic volumes. Pivot to Off-Premise Mitigates Pandemic Impact: PFC's operations were severely impacted by the pandemic as shelter-in-place mandates, restrictions on on-premise dining capacity, and consumer fear of the virus sharply curtailed dine-in traffic to the company's restaurants resulting in revenue declining 24% to $688 million in 2020. Initiatives introduced before the pandemic to improve the company's off-premise capabilities proved timely, contributing to a 78% increase in off-premise sales in 2020, partially offsetting a 52% decline in on-premise dining and increasing off-premise sales as a percent of total revenue to over 50% from around 23% in 2019. Revenue has continued to rebound with 3Q21 SRS up nearly 10% compared to 2019 levels as the vaccine rollout and resulting decline in positivity rate improved consumer mobility contributing to a return to on-premise dining. While the recent rise in COVID cases due to the Omicron variant likely slowed traffic by the end of 4Q21, Fitch expects the impact to be temporary as case rates have since resumed their decline. Leverage, Liquidity Improved: Fitch calculates adjusted leverage (capitalizing rents at 8x) of 10.4x for 2020 due to EBITDA declining to $34 million from $58 million in 2019 and an increase in borrowings including $10 million from the government in the form of a Paycheck Protection Program (PPP) loan and $30 million of incremental term loan issued to the company's sponsors. Fitch expects adjusted leverage declined to under 7.0x in 2021 due to improved sales levels resulting from increased consumer mobility. PFC ended 3Q21 with liquidity of nearly $80 million including around $48 million of cash and around $30 million of availability on its $55 million revolver (with the balance committed to LOC). Liquidity improved significantly from under $20 million in 2020, given around $30 million of incremental debt as well as a nearly $35 million equity contribution from the sponsors. Fitch expects the company's liquidity position to decline through 2022 as the company spends heavily on brand remodels and new to-go units though expects liquidity to be sufficient to bridge to 2023 when remodel spend declines and FCF turns neutral. Remodels and Brand Relaunch Show Promise Stemming Traffic Weakness: Company data suggests PFC's SRS and traffic had been lagging the industry heading into 1Q19, the quarter in which the new sponsors took control of the company. Adjustments to the marketing strategy and a focus on delivery helped flip relative performance to positive in 2Q19 while the initiation of a "brand relaunch" focused on enhancing the dine-in experience accelerated performance relative to the industry in 2H19 and in early 2020. As the industry recovers from the pandemic, Fitch expects these measures to provide further support to PFC's SRS over the medium term. Focus on Costs and Pricing Benefit Margins: Fitch-calculated EBITDA margins of 6.4% for 2019 were well below casual dining peer Darden Restaurants, Inc. (BBB/Stable) at 14.7% for the YE May 2019. Under new management, P.F. Chang's has taken steps to reduce costs including optimizing its menu and implementing new systems and processes to manage inventory, waste and labor while simultaneously cutting back on discounting. While industry-wide inflationary pressures could negatively impact margins in 2022, Fitch expects EBITDA margins to stabilize in the mid-8% area as traffic returns towards 2019 levels and the company's cost cutting efforts and operational improvements continue to bear fruit. DERIVATION SUMMARY Wok's rating is lower than that of casual dining peer Darden Restaurants, Inc. (BBB/Stable) due to Wok's considerably smaller scale and significantly higher leverage (total adjusted debt-to-EBITDAR on a rent adjusted basis). Darden ended fiscal 2021 (May 2021) with revenue and EBITDA for of $7.2 billion and $1.1 billion respectively with adjusted debt/EBITDAR below 3.0x. The rating differential also considers the Wok's lack of brand-level diversification and weaker comparable sales trends compared to Darden. Despite secular headwinds in the industry, Darden's SRS has outperformed the broader casual segment, particularly with its Olive Garden and Longhorn Steakhouse concepts. Wok's rating is in line with that of Sizzling Platter, LLC (B-/Stable). While both companies have limited scale, a lack of FCF, high adjusted leverage in the 7.0x area and are highly tied to a single brand (Sizzling Platter derives over 75% of cash flow from the Little Caesars brand), Sizzling Platter benefits from slightly better diversification with 25% of sales coming from Dunkin', Wingstop and other brands. Sizzling Platter largely operates within the quick-serve dining segment which has proven to be more resilient than the casual dining segment through economic cycles as well as during the pandemic. Wok's rating is also in line with GPS Hospitality Holding Company (B-/Stable), another quick-serve restaurant franchisee, which has elevated leverage in the 7.0x area and minimal FCF but better diversification than Wok. KEY ASSUMPTIONS -- Fitch expects 2021 revenue around $900 million, up from around $690 million in 2020 as pandemic impacts fade. While efforts to pass through elevated inflation levels could result in 2022 revenues up in the high-single-digits, Fitch expects mid single-digit unit growth and low-single-digit SRS comps to result in low-to-mid single digit revenue growth in 2023 and beyond; -- EBITDA margins improve to the mid-9% area in 2021, up from around 6.5% in 2019 as benefits from cost cuts and operational improvements are partially offset by inflation and incremental costs as dining rooms reopen, resulting in EBITDA around $85 million, up from around $35 million in 2020. Fitch expects margins to retrench to the low-to-mid-8% area in 2022 due to inflationary pressures and stabilize there; -- Capex peaks at around $75 million in 2021 driven by robust spending on remodels and to-go location development, declining to more normalized levels in the mid-to-high $40 million range over time with FCF improving to around flat in 2023 from outflows in the $20 million area in 2020 and 2021; -- Adjusted leverage, which reached over 10x in 2020 due to pandemic impacts on EBITDA and incremental debt, returns below 7.0x in 2021 as EBITDA normalizes. Adjusted leverage remains in the mid-to-high-6x range with debt reduction limited to term loan amortization. RATING SENSITIVITIES Rating sensitivities are no longer relevant given Fitch's rating withdrawal. BEST/WORST CASE RATING SCENARIO International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. LIQUIDITY AND DEBT STRUCTURE Wok's capital structure includes a $55 million revolving credit facility due March 1, 2024 and an approximately $450 million term loan due March 26, 2026. Both the term loan and the revolver currently bear interest at LIBOR plus 6.50%. The term loan amortizes at a rate of 1% per annum or approximately $1.1 million per quarter and provides a cash flow sweep of up to 50% depending on leverage. The credit agreement has a maximum leverage ratio of 6.5x. In addition to the company's credit facility, PFC's debt structure at Sept. 30, 2021 included a $10 million PPP loan due 2022 received pursuant to the CARES Act though management stated they expect this loan to be forgiven. With no drawings on the revolver and $25.6 million in LOC, liquidity at the end of 3Q21 totaled around $77 million including $48 million of cash. PFC's sponsors, TriArtisan Capital Advisors and Paulson and Co., provided considerable support to the company during the pandemic providing $30 million in incremental term loan and nearly $35 million in equity to support the company's growth agenda. Recovery Considerations For issuers with IDRs of 'B+' and below, Fitch performs a recovery analysis for each class of obligations of the issuer. The issue ratings are derived from the IDR, the relevant Recovery Rating (RR) and prescribed notching. In a going concern scenario, Fitch assumes material stress on sales, rendering PFC's capital structure unsustainable and forcing a bankruptcy. Fitch assumes the company closes approximately one-quarter of its weakest restaurants, resulting in pro forma revenue around $675 million. Fitch assumes the company uses the bankruptcy or restructuring process to renegotiate leases and cut expenses resulting in an EBITDA margin around 7% and EBITDA of $50 million. Fitch applies a 5.0x enterprise value/EBITDA multiple, below the 6.7x median multiple for Gaming, Lodging & Leisure bankruptcy reorganizations analyzed by Fitch. The multiple reflects PFC's market position in the narrow Asian food segment, the secular decline in the casual dining space and lack of brand diversity. After deducting 10% for administrative claims, PFC's first-lien secured credit facility, revolver and term loan are expected to have average recovery prospects (31%-50%) and have been assigned 'B-'/'RR4' ratings. The revolver and term loan are secured by a first-priority interest in substantially all assets of the borrower (Wok Holdings, Inc.) and the guarantors (material direct and indirect wholly owned U.S. subsidiaries with certain exceptions, including unrestricted subsidiaries). ISSUER PROFILE Wok Holdings, Inc. is the operator of P.F. Chang's China Bistro, the leading pan-Asian themed full-service casual dining operator with over 200 company-operated stores in the U.S. and over 90 franchised locations around the world. ESG Considerations The highest level of ESG credit relevance, if present, is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. YELLOW CORP: BlackRock Has 6.3% Equity Stake as of Dec. 31 ---------------------------------------------------------- BlackRock, Inc. disclosed in a Schedule 13G filed with the Securities and Exchange Commission that as of Dec. 31, 2021, it beneficially owns 3,240,324 shares of common stock of Yellow Corp., representing 6.3 percent of the shares outstanding. A full-text copy of the regulatory filing is available for free at: https://www.sec.gov/Archives/edgar/data/716006/000083423722007172/us9855101062_020422.txt 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. Yellow Corp reported a net loss of $109.1 million for the year ended Dec. 31, 2021, a net loss of $53.5 million for the year ended Dec. 31, 2020, and a net loss of $104 million for the year ended Dec. 31, 2019. As of Dec. 31, 2021, the Company had $2.42 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. [*] ATRA Questions Approach vs. Major Mast Tort Bankruptcies ------------------------------------------------------------ Juliette Fairley of Legal Newsline reports that according to the American Tort Reform Association (ATRA), Congress is taking the wrong approach in suggesting that bankruptcy laws used to resolve major mass tort cases should be changed. "Why don't we look at some of the underlying issues that give rise to these bankruptcies as opposed to focusing exclusively on the bankruptcy process, notably mass tort litigation abuses and the multidistrict litigation process," said Tiger Joyce, ATRA president. A Congressional hearing, held this week, focused on the treatment of litigation in bankruptcy proceedings. Abusing Chapter 11: Corporate Efforts to Side-Step Accountability Through Bankruptcy was heard before the Subcommittee on Federal Courts, Oversight, Agency Action, and Federal Rights. "There can be no doubt that high-profile cases involving Purdue Pharma... and others have created a hue and cry that the bankruptcy process is unfair and that reforms backed by plaintiffs' lawyers are needed to improve the system," Joyce told Legal Newsline. "What the plaintiff's lawyers want and what these hearings are angling towards is they think that litigation, the creditors, or the whole structure of bankruptcy should make far different allowances for matters involving litigation. The truth is that the bankruptcy process takes all the claims and treats them the same." Plaintiffs' lawyers generally object to defendants filing for bankruptcy after they've won a lawsuit because it cuts into their fees, which can be one-third or more of a settlement or judgement, according to ATRA data. As a result, certain members of the plaintiff's bar would like to remove or limit bankruptcy as an option, according to Joyce. "The reality is that when the management of these cases becomes untenable, it's not just untenable from a legal standpoint," he said. "It potentially impacts the viability of a company and so it's striking the right balance because the bankruptcy process is one that moves by approval of the creditors. The creditors have to vote to approve or their representatives have to vote to approve a settlement or a restructuring plan." This is the second hearing on the bankruptcy process. Congress held its first hearing on the matter last year in October. "There is also an important hearing coming up on the Johnson & Johnson subsidiary bankruptcy, and the Purdue Pharma case is also obviously getting a lot of attention because they both involve matters where a lot of the creditors or the costs that are involved have led to bankruptcies and involve ongoing litigation and settlements," Joyce added. [^] Recent Small-Dollar & Individual Chapter 11 Filings ------------------------------------------------------- In re John David Bilbrey, II Bankr. M.D. Tenn. Case No. 22-00279 Chapter 11 Petition filed January 31, 2022 represented by: LEFKOVITZ AND LEFKOVITZ, PLLC In re Steven Lynn Walker and Catherine Marchelle Walker Bankr. M.D. Tenn. Case No. 22-00297 Chapter 11 Petition filed January 31, 2022 represented by: Denis Waldron, Esq. DUNHAM HILDEBRAND, PLLC In re Wroe Enterprises, LLC Bankr. N.D. Tex. Case No. 22-40218 Chapter 11 Petition filed January 31, 2022 See https://www.pacermonitor.com/view/EGVCIQY/Wroe_Enterprises_LLC__txnbke-22-40218__0001.0.pdf?mcid=tGE4TAMA represented by: Eric A. Liepins, Esq. ERIC A. LIEPINS E-mail: eric@ealpc.com In re Clayton Thom Bankr. C.D. Cal. Case No. 22-10390 Chapter 11 Petition filed February 1, 2022 represented by: Leslie Cohen, Esq. In re Patricia A. Covarrubias Bankr. C.D. Cal. Case No. 22-10389 Chapter 11 Petition filed February 1, 2022 represented by: Robert Yaspan, Esq. In re Rita Ramos Curiel Bankr. C.D. Cal. Case No. 22-10175 Chapter 11 Petition filed February 1, 2022 In re William Sloan Coats Bankr. N.D. Cal. Case No. 22-30061 Chapter 11 Petition filed February 1, 2022 represented by: Ruth Auerbach, Esq. In re David W. Lebsock and Cheryl R. Lebsock Bankr. D. Colo. Case No. 22-10322 Chapter 11 Petition filed February 1, 2022 represented by: Jeffrey Weinman, Esq. ALLEN VELLONE WOLF HELFRICH & FACTOR P.C. In re 10 PCKG, LLC Bankr. D.N.J. Case No. 22-10817 Chapter 11 Petition filed February 1, 2022 See https://www.pacermonitor.com/view/72EXVPY/10_PCKG_LLC__njbke-22-10817__0001.0.pdf?mcid=tGE4TAMA represented by: David L. Stevens, Esq. SCURA, WIGFIELD, HEYER, STEVENS & CAMMAROTA, LLP E-mail: ecfbkfilings@scuramealey.com In re Arrowhead Financial ICT, LLC Bankr. D. Kan. Case No. 22-10066 Chapter 11 Petition filed February 1, 2022 See https://www.pacermonitor.com/view/MDJ2LGI/Arrowhead_Financial_ICT_LLC__ksbke-22-10066__0001.0.pdf?mcid=tGE4TAMA represented by: Mark Lazzo, Esq. MARK J. LAZZO, ATTORNEY AT LAW E-mail: mark@lazzolaw.com In re Arkansas House Works, Inc. Bankr. W.D. Ark. Case No. 22-70114 Chapter 11 Petition filed February 2, 2022 See https://www.pacermonitor.com/view/KBISKKY/Arkansas_House_Works_Inc__arwbke-22-70114__0001.0.pdf?mcid=tGE4TAMA represented by: Marc Honey, Esq. HONEY LAW FIRM, P.A. E-mail: mhoney@honeylawfirm.com In re Amjad Maali and Cynthia R. Maali Bankr. M.D. Fla. Case No. 22-00389 Chapter 11 Petition filed February 2, 2022 represented by: Jeffrey Ainsworth, Esq. In re Travis R Cox and Jennifer N Cox Bankr. S.D. Ind. Case No. 22-00321 Chapter 11 Petition filed February 2, 2022 represented by: KC Cohen, Esq. In re Corporate Housing Solutions LLC Seattle PS Bankr. D. Nev. Case No. 22-10352 Chapter 11 Petition filed Feb. 2, 2022 See https://www.pacermonitor.com/view/2N3QJTA/CORPORATE_HOUSING_SOLUTIONS_LLC__nvbke-22-10352__0001.0.pdf?mcid=tGE4TAMA represented by: Matthew C. Zirzow, Esq. LARSON & ZIRZOW, LLC E-mail: mzirzow@lzlawnv.com In re Powerhouse Beverage Company, LLC Bankr. E.D.N.Y. Case No. 22-70181 Chapter 11 Petition filed February 2, 2022 See https://www.pacermonitor.com/view/PSNOFKY/Powerhouse_Beverage_Company_LLC__nyebke-22-70181__0001.0.pdf?mcid=tGE4TAMA represented by: Mark W. Greenfest, Esq. E-mail: m_greenfest@yahoo.com In re John Wayne McCrummen Bankr. M.D. Ala. Case No. 22-10110 Chapter 11 Petition filed February 3, 2022 In re Brady L. Skinner Bankr. M.D. Fla. Case No. 22-00445 Chapter 11 Petition filed February 3, 2022 represented by: Kathleen DiSanto, Esq. BUSH ROS, P.A. E-mail: kdisanto@bushross.com In re William F. Roth Bankr. M.D. Fla. Case No. 22-00453 Chapter 11 Petition filed February 3, 2022 represented by: David Jennis, Esq. In re EAD Transport & Logistics LLC Bankr. M.D. Fla. Case No. 22-00396 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/2BC2MHI/EAD_Transport__Logistics_LLC__flmbke-22-00396__0001.0.pdf?mcid=tGE4TAMA represented by: Jeffrey S. Ainsworth, Esq. BRANSONLAW, PLLC E-mail: jeff@bransonlaw.com In re D and V Enterprises I, LLC Bankr. S.D. Fla. Case No. 22-10903 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/SJBJLMA/D_and_V_Enterprises_I_LLC__flsbke-22-10903__0001.0.pdf?mcid=tGE4TAMA represented by: Victoria Morales, Esq. LAW OFFICE OF VICTORIA MORALES, P.A. E-mail: vmsua1889@gmail.com In re Camp Pizza, LLC Bankr. E.D. Ky. Case No. 22-70037 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/XKY656Q/Camp_Pizza_LLC__kyebke-22-70037__0001.0.pdf?mcid=tGE4TAMA represented by: Noah Friend, Esq. NOAH R FRIEND LAW FIRM E-mail: noah@friendlawfirm.com In re Andrew's Garden, Inc. Bankr. N.D. Ill. Case No. 22-01249 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/AJZLRPI/Andrews_Garden_Inc__ilnbke-22-01249__0001.0.pdf?mcid=tGE4TAMA represented by: John Lynch, Esq. LYNCH LAW LLC E-mail: jlynch@lynch4law.com In re Quality Care DayCare at BUP, LLP Bankr. D. Md. Case No. 22-10546 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/E7PJIXY/Quality_Care_DayCare_at_BUP_LLP__mdbke-22-10546__0001.0.pdf?mcid=tGE4TAMA represented by: William C. Johnson, Jr., Esq. THE JOHNSON LAW GROUP, LLC E-mail: William@JohnsonLG.Law In re Tranquility Med Spa Inc. Bankr. E.D.N.Y. Case No. 22-70184 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/YIITJ5Q/Tranquility_Med_Spa_Inc__nyebke-22-70184__0001.0.pdf?mcid=tGE4TAMA represented by: Ronald D. Weiss, Esq. RONALD D. WEISS, P.C. E-mail: weiss@ny-bankruptcy.com In re John Roesser Bankr. S.D.N.Y. Case No. 22-22049 Chapter 11 Petition filed February 3, 2022 In re Sub Alpine Mutual Beneficial Society Bankr. W.D. Pa. Case No. 22-20200 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/6NJMWUA/Sub_Alpine_Mutual_Beneficial_Society__pawbke-22-20200__0001.0.pdf?mcid=tGE4TAMA represented by: Michael S. Geisler, Esq. MICHAEL S. GEISLER E-mail: m.s.geisler@att.net In re MaCAllister & Associates, LLC Bankr. M.D. Tenn. Case No. 22-00318 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/MF767HQ/MACALLISTER__ASSOCIATES_LLC__tnmbke-22-00318__0001.0.pdf?mcid=tGE4TAMA represented by: Steven L. Lefkovitz, Esq. LEFKOVITZ & LEFKOVITZ E-mail: slefkovitz@lefkovitz.com In re Volz Forestry Inc. Bankr. W.D. Wisc. Case No. 22-10136 Chapter 11 Petition filed February 3, 2022 See https://www.pacermonitor.com/view/VMOVFJI/Volz_Forestry_Inc_Eau_Claire__wiwbke-22-10136__0001.0.pdf?mcid=tGE4TAMA represented by: Evan M. Swenson, Esq. SWENSON LAW GROUP, LLC E-mail: evan@swensonlawgroup.com In re Jaffan International, LLC Bankr. M.D. Fla. Case No. 22-00459 Chapter 11 Petition filed February 4, 2022 See https://www.pacermonitor.com/view/OGST6PY/JAFFAN_INTERNATIONAL_LLC__flmbke-22-00459__0001.0.pdf?mcid=tGE4TAMA represented by: Buddy D. Ford, Esq. BUDDY D. FORD, P.A. E-mail: All@tampaesq.com In re Gerald Edward Brazie, Jr. Bankr. D. Ore. Case No. 22-30180 Chapter 11 Petition filed February 4, 2022 represented by: Ann Chapman, Esq. VANDEN BOS & CHAPMAN, LLP In re Delva Janice Rodriguez Rodriguez Bankr. D.P.R. Case No. 22-00290 Chapter 11 Petition filed February 4, 2022 represented by: Juan Bigas Valedon, Esq. In re CSK Properties, LLC Bankr. D.S.C. Case No. 22-00292 Chapter 11 Petition filed February 6, 2022 See https://www.pacermonitor.com/view/4YZGUQY/CSK_Properties_LLC__scbke-22-00292__0001.0.pdf?mcid=tGE4TAMA represented by: Robert Pohl, Esq. POHL, P.A. E-mail: Robert@POHLPA.com In re Area X Inc. Bankr. E.D. Cal. Case No. 22-90041 Chapter 11 Petition filed February 7, 2022 See https://www.pacermonitor.com/view/IDAX7HQ/AREA_X_INC__caebke-22-90041__0001.0.pdf?mcid=tGE4TAMA represented by: David C. Johnston, Esq. DAVID C. JOHNSTON E-mail: david@johnstonbusinesslaw.com In re TSM Corals, LLC Bankr. D.N.J. Case No. 22-10987 Chapter 11 Petition filed February 7, 2022 See https://www.pacermonitor.com/view/4NGGXAQ/TSM_Corals_LLC__njbke-22-10987__0001.0.pdf?mcid=tGE4TAMA represented by: Robert N. Braverman, Esq. MCDOWELL LAW, PC E-mail: rbraverman@mcdowelllegal.com In re Marianne B. Waldron Bankr. S.D.N.Y. Case No. 22-35056 Chapter 11 Petition filed February 7, 2022 represented by: Michelle Trier, Esq. GENOVA, MALIN & TRIER LLP In re Theodore Eli Hsu Bankr. E.D.N.C. Case No. 22-00263 Chapter 11 Petition filed February 7, 2022 represented by: Danny Bradford, Esq. In re Timothy Lowe Wilkins Bankr. W.D. Wash. Case No. 22-10188 Chapter 11 Petition filed February 7, 2022 represented by: David Hill, Esq. ********* 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. 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