/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/240212.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 12, 2024, Vol. 28, No. 42 Headlines 13111 WESTHEIMER: Court OKs Cash Collateral Access Thru March 1 399 ATHERTON: Seeks to Hire Farsad Law as Bankruptcy Counsel 800 DEGREES: Artesian CPA Raises Going Concern Doubt 9370-3817 QUEBEC: $151MM Bank Debt Trades at 19% Discount AB INTERNATIONAL: Chiyuan Deng Cancels 235M Common Stock ACCELERATED HEALTH: $875MM Bank Debt Trades at 21% Discount ACE RESTORATION: Unsecureds to Get Share of Income for 5 Years ACME HOSPITALITY: Court OKs Cash Collateral Access Thru April 3 AIR INDUSTRIES: Michael Taglich Reports 21.01% Equity Stake AIR INDUSTRIES: Robert Taglich Reports 14.53% Equity Stake ALANDALOUS PROPERTIES: Case Summary & Four Unsecured Creditors ALL WEBS: Oaktree Specialty Marks $23.6MM Loan at 58% Off ALLEN MEDIA: S&P Affirms 'B-' ICR on New M&G Assessment Criteria ALR CONSTRUCTION: Court OKs Cash Collateral Access Thru March 4 AMC ENTERTAINMENT: S&P Ups ICR to 'CCC+' Following Debt Exchanges AMERICAN TIRE: Oaktree Specialty Marks $15MM Loan at 16% Off ANASTASIA PARENT: Oaktree Specialty Marks $3.7MM Loan at 39% Off ANNE FONTAINE: Seeks to Tap Klestadt Winters as Bankruptcy Counsel API HOLDINGS III: Guggenheim SOF Marks $1.5MM Loan at 40% Off APPLIED DNA: Posts $1.1 Million Net Loss in First Quarter 2024 APPS INC: Unsecured Creditors to Recover 3.5% over 5 Years ARC MANAGEMENT: Court OKs Cash Collateral Access on Final Basis ARCHBISHOP OF BALTIMORE: Comm. Taps Berkeley as Financial Advisor ARRIVAL: Joint Administrators for UK Subsidiaries Appointed ART OF GRANITE: Court OKs Interim Cash Collateral Access ARTERA SERVICES: $135MM Bank Debt Trades at 26% Discount ASTRA ACQUISITION: Oaktree Specialty Marks $15.7MM Loan at 35% Off AVISON YOUNG: Guggenheim SOF Marks $2.3MM Loan at 70% Off B-1208 PINE: Court OKs Interim Cash Collateral Access BAKELITE US HOLDCO: Fitch Affirms 'BB' IDR, Outlook Remains Stable BLOCKFI INC: DOJ Bid to Seize Assets Faces Another Obstacle BOB ELLIOTT: Seeks Approval to Hire Maltz Auctions as Appraiser BOXER RAMEN: Case Summary & 12 Unsecured Creditors BROTHERS GRIMM: Case Summary & 20 Largest Unsecured Creditors BURGESS BIOPOWER: Case Summary & Largest Unsecured Creditors CAPSTONE INVESTMENTS: Files Emergency Bid to Use Cash Collateral CAROLINA PANEL: Expects Sale Plan to Pay 100% to Unsecureds CBS TRUCKING: Seeks Cash Collateral Access CENTER FOR ALTERNATIVE: Unsecureds to Split $81K in Consensual Plan CENTER FOR SPECIAL: Voluntary Chapter 11 Case Summary CENTERPOINT RADIATION: Court OKs Deal on Cash Collateral Access CENTRAL NEW YORK RACEWAY: Taps Bernier Carr as Remediation Expert CGCC LLC: Amends Plan to Resolve Dr. Smith Claim Issues CHEMICAL EXCHANGE: Seeks to Extend Plan Exclusivity to April 15 CHPPR MIDCO: Moody's Assigns 'Caa1' CFR on Bankruptcy Emergence CLEARWATER CONTRACTING: Seeks to Tap Coles Reinstein as Accountant CLOVER FAST: Unsecured Creditors to Split $250K in Plan CONSOLIDATED ENERGY: Fitch Assigns 'BB-' Rating on Sr. Unsec. Notes CONSOLIDATED ENERGY: Fitch Assigns BB- LongTerm IDR, Outlook Stable CONSOLIDATED ENERGY: S&P Affirms BB- ICR & Alters Outlook to Stable CONSTANT CONTACT: Moody's Rates New $300MM 1st Lien Term Loan 'B2' CONSTANT CONTACT: S&P Affirms 'B-' ICR, Outlook Stable CONTROL SYSTEMS: Case Summary & 20 Largest Unsecured Creditors COTTLE CHRISTI: Unsecureds to Recover $7,200 over 36 Months COTTLE LLC: Claims to be Paid From Future Revenues COVANTA HOLDING: Fitch Lowers Rating on Sr. Unsecured Notes to 'B-' CPC ACQUISITION: Oaktree Specialty Marks $727,000 Loan at 50% Off CROSBY US: Moody's Raises CFR to 'B2' & Alters Outlook to Stable CURIS INC: PwC Raises Going Concern Doubt CYANOTECH CORP: Raises Going Concern Doubt DEL MAR RACE TRACK: Fitch Affirms BB- Rating on $33MM 2015 Bonds DELTA AIR LINES: Fitch Affirms 'BB+' LongTerm IDR, Outlook Positive DIAMOND SPORTS: Schulte Roth, MW&E Advise Dissenting Lenders DIOCESE OF SYRACUSE: Insurers Slam Chapter 11 Bankruptcy Plan DMK PHARMACEUTICALS: Hires Nelson Mullins Riley as Legal Counsel DMK PHARMACEUTICALS: Seeks to Hire Rock Creek as Financial Advisor DR. JOSEPH F. POLLACK: S&P Affirms 'BB' Rating on Refunding Bonds EBIX INC: Brown Rudnick & Reed Smith Advise Common Equity Holders EBIX INC: Committee Taps McDermott Will & Emery as Counsel EMCORE CORP: Incurs $5.7 Million Net Loss in First Quarter ENC PARENT: $450MM Bank Debt Trades at 18% Discount ERIC MCCRITE: Taps Law Offices of Henry F. Sewell as Counsel EXPANSION INDUSTRIES: Committee Taps Barron & Newburger as Counsel FINTHRIVE SOFTWARE: Oaktree Marks $31MM Loan at 40% Discount FINTHRIVE SOFTWARE: Oaktree Marks $4.32MM Loan at 20% Discount FRANCHISE GROUP: Guggenheim SOF Marks $3.9MM Loan at 26% Off FRANCISCAN FRIARS: Seeks to Tap Weintraub Tobin as Special Counsel FRANKLIN ENERGY: Guggenheim SOF Marks $1.5MM Loan at 15% Off FREEDOM FACILITY: Court OKs Cash Collateral Access on Final Basis FTX GROUP: Sued by Customers Over Ch. 11 Digital Asset Ownership GENESIS GLOBAL: Settles Gemini Earn Program Lawsuit WIth Lenders GEO. J. & HILDA: U.S. Trustee Unable to Appoint Committee GILLIAM CONSTRUCTION: Seeks to Use Cash Collateral GIP III STETSON: Fitch Hikes LongTerm IDR to 'BB-', Outlook Stable GLATFELTER CORP: Moody's Puts 'B3' CFR on Review for Upgrade GLATFELTER CORP: S&P Places 'CCC+' ICR on Watch Pos. on Merger GLOBAL ALARM: Seeks Cash Collateral Access GROWLIFE INC: Faces Suit Over Payment Default HEARTHSIDE GROUP: Guggenheim SOF Marks $1.3MM Loan at 23% Off HELIUS MEDICAL: Hudson Bay, Sander Gerber Own 7.86% Class A Shares HOWARD INTERVENTION: Wins Cash Collateral Access Thru March 31 HULL ORGANIZATION: Seeks Cash Collateral Access HUMANIGEN INC: RX Medical Appointed as New Committee Member IAMGOLD CORP: Donald Smith & Co, DSCO Value Hold 7.44% Stake ILLINOIS EXTRACTS: Seeks to Hire Rafool & Bourne as Legal Counsel IMERYS TALC: Asks Court Okay for Proposed Chapter 11 Plans IMPEL PHARMACEUTICALS: Cleared for $17.5-Million Sale to JN Bidco IMPEL PHARMACEUTICALS: Oaktree Marks $2.23MM Loan at 21% Discount IMPEL PHARMACEUTICALS: Oaktree Marks $28M Loan at 47% Off IMPEL PHARMACEUTICALS: Oaktree Marks $839,000 Loan at 21% Off IMPEL PHARMACEUTICALS: Oaktree Specialty Marks $1M Loan at 21% Off INDUSTRIAL AUTHORITY: Seeks to Extend Plan Exclusivity to April 1 INSTANT BRANDS: Plan Exclusivity Period Extended to March 15 INT'L. LONGSHORE UNION: Reaches Deal to Pay Port Operator $20Mil. INVIVO THERAPEUTICS: Winds Down in Chapter 11; Seeks April Auction INW MANUFACTURING: Oaktree Specialty Marks $43.9MM Loan at 20% Off ISLAND BREEZE: Hires John G. Rhyne Law as Bankruptcy Counsel ITA HOLDINGS: CSWC Marks $13M 1st Lien Loan at 15% Off ITA HOLDINGS: CSWC Marks $13MM Term B Loan at 15% Off IVANTI SOFTWARE: Oaktree Specialty Marks $13.9MM Loan at 19% Off JEFFERSON CAPITAL: Fitch Gives BB-(EXP) Rating on $400M Unsec Notes JNJ HOME: Wins Cash Collateral Access Thru April 12 JSMITH CIVIL: Court OKs Cash Collateral Access Thru March 6 KODIAK GAS: Fitch Gives BB First-Time LongTerm IDR, Outlook Stable LATIGO PROPERTIES: Seeks Cash Collateral Access LEAFBUYER TECHNOLOGIES: Hudson Bay, Sander Gerber Own 9.99% Stake LIFE UNIVERSITY: Moody's Affirms Ba3 Issuer & Revenue Bond Ratings LIVEONE INC: Incurs $2.2 Million Net Loss in Third Quarter LUCKY RABBIT: Seeks to Hire Baumeister Denz as Legal Counsel MAGENTA BUYER: Fitch Cuts IDR to 'CCC' & First Lien Loans to 'CCC+' MAGNA SERVICE: Case Summary & 20 Largest Unsecured Creditors MEDICAL DEPOT: $370.9MM Bank Debt Trades at 21% Discount MEJJM INC: Amends Unsecureds & First Internet Secured Claims Pay MERCON COFFEE: Comm. Taps Ankura Consulting as Financial Advisor MERCON COFFEE: Committee Taps O'Melveny & Myers as Legal Counsel MILLENNIAL BENEFIT: Seeks to Tap Stretto as Administrative Advisor MISHI LOGISTICS: Court OKs Cash Collateral Access Thru March 11 MORAN FOODS: Guggenheim SOF Marks $1.7MM Loan at 30% Off MOREY MACHINING: Court OKs Cash Collateral on a Final Basis MVK FARMCO: DOJ Objects to Prima Wawona's Liquidation Plan N&H SADDLEBRED: Seeks to Hire Herbert K. Ryder as Legal Counsel NANO MAGIC: Board Extends CEO's Term For One Year NANO MAGIC: Scott Rickert Holds 7.4% Equity Stake NATIONSTAR MORTGAGE: Fitch Rates $800MM Unsecured Notes 'BB(EXP)' NB COMMONS: Court OKs Continued Cash Collateral Access NEWBRIDGE ON THE CHARLES: Fitch Affirms 'BB+' IDR, Outlook Stable NIC ACQUISITION: Guggenheim SOF Marks $1.04MM Loan at 25% Off NORWICH ROMAN: UCR Taps Neubert Pepe & Monteith as Local Counsel NOVABAY PHARMACEUTICALS: Hudson Bay, Sander Gerber Have 9.9% Stake OCEAN PARKWAY: Hires Leech Tishman as Special Litigation Counsel OLIVER 889: Voluntary Chapter 11 Case Summary ORCHID MERGER: $400MM Bank Debt Trades at 34% Discount OTG MANAGEMENT: Oaktree Specialty Marks $1.30MM Loan at 18% Off OTG MANAGEMENT: Oaktree Specialty Marks $31.5MM Loan at 18% Off PARK HOTELS: S&P Ups ICR to 'BB-' on Improving International Travel PATTERN ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable PLAYPOWER INC: Guggenheim SOF Marks $2.1MM Loan at 19% Off PLUTO ACQUISITION I: S&P Cuts ICR to 'SD' on Distressed Exchanges PM MANAGEMENT: Seeks to Hire Omni Agent Solutions as Claims Agent PRETIUM PKG: $350MM Bank Debt Trades at 53% Discount PRINCESS PORT: Unsecureds Will Get 9% of Claims over 60 Months PRIZE MANAGEMENT: Court OKs Interim Cash Collateral Access PROMETHEUS INNOVATION: Wins Cash Collateral Access Thru April 1 RACKSPACE TECHNOLOGY: Appoints Mark Gross to Board of Directors RESTORATION FOREST: Okayed to Tap $12-Mil. DIP Loan for Ch.11 Plan ROYAL CARIBBEAN: S&P Raises ICR to 'BB+' on Expected Deleveraging RUSE AUTO TRANSPORT: Hires Gravis Law as Bankruptcy Counsel RUSS NOYES ROOFING: Wins Cash Collateral Access Thru March 27 S&G HOSPITALITY: Seeks to Hire Integra Realty as Appraiser S.A.M.S. VENDING: Files Emergency Bid to Use Cash Collateral S.A.M.S. VENDING: Hires Dentons Davis Brown as Bankruptcy Counsel S.A.M.S. VENDING: Hires Skutch Arlow Group as Financial Advisor SAN JORGE CHILDREN'S: Unsecured Creditors to Split $3.4M in Plan SANDVINE CORP: $110MM Bank Debt Trades at 38% Discount SAS AB: Has $325M for Unsecured Creditors; Committee Now Backs Plan SENSIENCE INC: S&P Lowers ICR to 'CCC-' on Constrained Liquidity SHUTTERFLY FINANCE: $968MM Bank Debt Trades at 22% Discount SIRVA WORLDWIDE: $435MM Bank Debt Trades at 15% Discount SKILLS ACADEMY: Bid to Use Cash Collateral Denied SM WELLNESS: Oaktree Specialty Marks $12MM Loan at 16% Off SONOMA PHARMACEUTICALS: Incurs $866K Net Loss in Q3 2023 STENSON LANDSCAPE: Seeks to Hire Eric A. Liepins as Legal Counsel STL HOLDING: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable STRONG CLEANING: Unsecureds to Get Nothing in Subchapter V Plan SVB FINANCIAL: Ch. 11 Attorney Fees Okayed Despite 'Sticker Shock' SVP SINGER: Oaktree Specialty Marks $25MM Loan at 45% Off TEHUM CARE SERVICES: Sen. Warren Tells DOJ to Toss Bankruptcy TERRAFORM LABS: Tells Court It Could be Penalized by SEC TGP HOLDINGS: Guggenheim SOF Marks $376,806 Loan at 15% Off THAT GOOD GOOD: Case Summary & 20 Largest Unsecured Creditors THE AVERY: Oaktree Specialty Marks $5.07MM Loan at 15% Off THRASIO LLC: Oaktree Specialty Marks $46.8MM Loan at 40% Off TIGHT ENDS: Unsecured Creditors to be Paid in Full in Plan TOOLOTS INC: Files Emergency Bid to Use Cash Collateral TRANSCENDIA HOLDINGS: Guggenheim SOF Marks $1.6MM Loan at 26% Off TRINITY PHARMACIES: Files Emergency Bid to Use Cash Collateral TWO RIVERS: Files Emergency Bid to Use Cash Collateral UKG INC: Fitch Assigns 'BB' Rating on Proposed $2.5BB Secured Notes US RENAL CARE: $1.25BB Bank Debt Trades at 17% Discount USA RV: Court OKs Interim Cash Collateral Access VERDE BUILDING: Court OKs Cash Collateral Access on Final Basis VIVO TECHNOLOGIES: Has Deal on Cash Collateral Access WARTBURG COLLEGE: Fitch Hikes LongTerm IDR to 'BB+', Outlook Stable WAYSTAR TECHNOLOGIES: Fitch Affirms 'B' LongTerm IDR, Outlook Pos. WE 25 BACON ROAD: $33.8MM Bank Debt Trades at 12% Discount WEST TECHNOLOGY: Fitch Lowers LongTerm IDR to 'CCC+' WESTERN DENTAL $50MM Bank Debt Trades at 49% Discount WESTJET LOYALTY: Fitch Assigns 'BB-' Rating on Senior Secured Bonds WESTLAKE SURGICAL: Seeks to Extend Plan Exclusivity to May 7 WEWORK INC: Unsecured Creditors to Get 0% in Joint Plan WHITEWATER DBR: S&P Assigns 'BB' ICR, Outlook Stable WILLIAM INSULATION: Hires Markus Williams Young as Legal Counsel WOMEN'S CARE: $120MM Bank Debt Trades at 22% Discount WYNN RESORTS: Fitch Assigns 'BB-' First-Time IDR, Outlook Stable XPLORNET COMMS: Guggenheim SOF Marks $4.5MM Loan at 38% Off YOGOLD U.S.A.: Seeks to Hire Patten Peterman Bekkedahl as Counsel [^] BOND PRICING: For the Week from February 5 to 9, 2024 ********* 13111 WESTHEIMER: Court OKs Cash Collateral Access Thru March 1 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, authorized 13111 Westheimer, LLC to use the cash collateral of Stellar Bank, Gelt Financial, LLC, and Bottomline Partners, LLC on an interim basis in accordance with the budget, with a 10% variance, through March 1, 2024. The Debtor is authorized, on a limited basis, to use cash collateral only as provided in strict accordance with the terms and conditions provided in the Cash Collateral Order. Cash collateral includes all money on hand or in banks, accounts receivable, all rents, lease revenue, deposits and income from tenants and other third parties for the right to use any part of the Debtor's building located at 13111 Westheimer Road, Houston, Texas 77077. As adequate protection, the Secured Lenders are granted valid and perfected additional and replacement security interests in, and liens upon all of the Debtor's cash collateral. To the extent of the aggregate Diminution of Value, if any, of their respective interests in the cash collateral, and subject to any court ordered Carve-Out, the Secured Lenders are granted, in addition to claims under 11 U.S.C. Section 503(b), an allowed superpriority administrative expense claim pursuant to 11 U.S.C. Section 507(b). The Secured Lenders will also be provided adequate protection payments. A final hearing on the matter is set for March 1 at 1:30 p.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=gPEdDm PacerMonitor.com. The Debtor projects $57,000 total cash receipts and $58,121 in total cash paid out for February 2024. About 13111 Westheimer, LLC 13111 Westheimer, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-34448) on November 9, 2023. In the petition signed by Nik Lavrinoff, managing member of End Litigation Advisors, LLC, disclosed up to $10 million in both assets and liabilities. Judge Eduardo V. Rodriguez oversees the case. Susan Tran Adams, Esq., at Tran Singh, LLP, represents the Debtor as legal counsel. 399 ATHERTON: Seeks to Hire Farsad Law as Bankruptcy Counsel ------------------------------------------------------------ 399 Atherton, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of California to hire Farsad Law Office, P.C. as its bankruptcy counsel. The firm's services include: a. advising the Debtor with respect to its powers and duties in the continued operation of its business and management of its property; b. taking necessary action to avoid any liens against the Debtor's property, if needed; c. assisting, advising and representing the Debtor in consultations with creditors regarding the administration of its Chapter 11 case, including the creditors holding liens on the property; d. advising and taking any action to stay foreclosure proceedings against any of the Debtor's property; e. preparing legal papers; f. preparing a disclosure statement and plan of reorganization, and representing the Debtor at any hearing to approve the disclosure statement and confirm the plan; g. assisting, advising and representing the Debtor in any manner relevant to a review of any contractual obligations, and asset collection and dispositions; h. preparing documents relating to the disposition of assets; i. advising the Debtor on finance and finance-related matters and transactions relating to the sale of its assets; j. assisting, advising and representing the Debtor in any issues associated with the acts, conduct, assets, liabilities and financial condition of the Debtor, and any other matters relevant to the case or to the formulation of a plan of reorganization; k. assisting, advising and representing the Debtor in the negotiation, formulation, preparation and submission of any plan of reorganization and disclosure statement; l. advising and assisting the Debtor with respect to resolving disputes with any creditor that may arise and providing other necessary services; m. preparing status conference statements, and appearing at all court hearings as necessary, including status conference hearings before the court; and n. obtaining the necessary court approval of the disclosure statement and soliciting ballots as necessary for plan confirmation. The firm will be paid at these rates: Arasto Farsad $350 per hour Nancy Weng $350 per hour Paralegals $100 per hour In addition, the firm will seek reimbursement for work-related expenses incurred. The Debtor provided the firm with a retainer of $10,000, plus the Chapter 11 filing fee of $1,738. Nancy Weng, Esq., a partner at Farsad Law Office, P.C., disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. Farsad Law Office can be reached at: Arasto Farsad, Esq. Nancy Weng, Esq. FARSAD LAW OFFICE, P.C. 1625 The Alameda, Suite 525 San Jose, CA 95126 Tel: (408) 641-9966 Fax: (408) 866-7334 Emails: farsadlaw1@gmail.com nancy@farsadlaw.com About 399 Atherton, LLC 399 Atherton is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). 399 Atherton, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. ND Cal. Case No. 24-50052) on Jan. 17, 2024. In the petition signed by Michael Luu as managing member, the Debtor estimated $1 million to $10 million in both assets and liabilities. Arasto Farsad, Esq. at Farsad Law Office, P.C. represents the Debtor as counsel. 800 DEGREES: Artesian CPA Raises Going Concern Doubt ---------------------------------------------------- In a Form 1-K Report filed by 800 Degrees Go, Inc. with the U.S. Securities and Exchange Commission for the fiscal year ended December 31, 2022, the Company's independent auditor, Artesian CPA, LLC, expressed that there is substantial doubt about the Company's ability to continue as a going concern. According to Artesian CPA, the Company has not generated profits since inception, has sustained net losses of $3,144,958 for the year ended December 31, 2022 and $672,118 for the period ended December 31, 2021 and has incurred negative cash flows from operations. As of December 31, 2022, the Company had an accumulated deficit of $3,817,076 and had limited liquid assets to satisfy its obligations as they come due with cash of $253,114. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. "The Company's ability to continue as a going concern for the next 12 months is dependent upon its ability to obtain additional capital financing. No assurance can be given that the Company will be successful in these efforts," Artesian CPA said. As of December 31, 2022, the Company had $1,589,124 in total assets, $897,662 in total liabilities, and $691,462 in total stockholders' equity. A full-text copy of the Report is available at http://tinyurl.com/2kut26ns About 800 Degrees Go, Inc. Chesterland, OH-based 800 Degrees Go, Inc. is a corporation organized August 13, 2021, under the laws of Delaware. The Company was formed to launch and scale a low-cost, small-footprint, tech-enabled pizza restaurant concept that responds to consumer demand for convenient, high-quality, fast-casual dining options. 9370-3817 QUEBEC: $151MM Bank Debt Trades at 19% Discount --------------------------------------------------------- Participations in a syndicated loan under which 9370-3817 Quebec Inc is a borrower were trading in the secondary market around 80.8 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $151.7 million facility is a Term loan that is scheduled to mature on January 15, 2026. The amount is fully drawn and outstanding. 9370-3817 Quebec Inc manufactures home and office furnishing products. AB INTERNATIONAL: Chiyuan Deng Cancels 235M Common Stock -------------------------------------------------------- AB International Group Corp. disclosed in a Form 8-K Report filed with U.S. Securities and Exchange Commission that on February 5, 2024, Chiyuan Deng, sole officer and director of the Company, cancelled 235,000,000 shares of common stock in the Company. About AB International Headquartered in Mt. Kisco, NY, AB International Group Corp. is an intellectual property (IP) and movie investment and licensing firm, focused on acquisitions and development of various intellectual property, including the acquisition and distribution of movies. Hackensack, New Jersey-based Prager Metis CPAs, LLC, the Company's auditor since 2022, issued a "going concern" qualification in its report dated Nov. 29, 2023, citing that the Company had an accumulated deficit of approximately $12.4 million and a working capital deficit of approximately $1.0 million. For the year ended August 31, 2023, the Company incurred a net loss of approximately $3.6 million and the net cash used in operating activities was approximately $0.6 million. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. As of November 30, 2023, the Company had an accumulated deficit of approximately $12.3 million and a working capital deficit of approximately $0.8 million. For the three months ended November 30, 2023, the net cash used in operating activities was approximately $36,000. The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet the Company's obligations as they become due. However, there is no assurance that the Company will be successful in securing sufficient funds to sustain the operations. These factors, among others, raise the substantial doubt regarding the Company's ability to continue as a going concern, according to the Company's Quarterly Report for the period ended Nov. 30, 2023. ACCELERATED HEALTH: $875MM Bank Debt Trades at 21% Discount ----------------------------------------------------------- Participations in a syndicated loan under which Accelerated Health Systems LLC is a borrower were trading in the secondary market around 78.6 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $875 million facility is a Term loan that is scheduled to mature on February 15, 2029. The amount is fully drawn and outstanding. Accelerated Health Systems, LLC offers athletic training, physical therapy, occupational therapy, and fitness services to affiliations including high schools, colleges, and many professional sports teams. ACE RESTORATION: Unsecureds to Get Share of Income for 5 Years -------------------------------------------------------------- Ace Restoration & Construction Inc. filed with the U.S. Bankruptcy Court for the Central District of California a Plan of Reorganization for Small Business dated February 1, 2024. The Debtor is a corporation. Since 2017, the Debtor has been in the business of General Construction. The Plan Proponent's financial projections show that the Debtor estimates it will have projected disposable income for the 60-month period of $493,052.47. The final Plan payment is expected to be paid on May 31, 2029. This is a reorganizing Chapter 11 and will pay 100% of all Allowed Claims. The Plan will be funded through the Debtor's operation and management of its business. Class 1 consists of Priority claims. Class 1 is impaired by this Plan, and each holder of a Class 1 Priority Claim will be paid from disposable income first before any other Classes. Class 2 consists of the Secured claim of SBA and Ally Financial. Both secured creditors will retain their liens and payments on their claims will be made pursuant to contract or stipulation. Class 3 consists of Non-priority unsecured creditors. Allowed General Unsecured Claims will accrue interest at the federal judgment rate and will receive quarterly payments of Debtor's Disposable Income based on the Projections on a pro rata basis with Class 3 beginning on the first date of each calendar quarter following the Effective Date for the earlier of 5 years from the Effective Date or until their claims are paid in full. This Class is impaired. Class 4 consists of Equity security holders of the Debtor. The Debtor shall retain all ownership rights in property of the estate. This is a reorganizing SubChapter V of Chapter 11 and proposes to pay 100% of Allowed Claims if Debtor meets its projections. The Plan will be funded through the Debtor's operation and management of its business. Commencing on May 1, 2024 (the "Effective Date"), Debtor shall make payments as set forth in the Payment Plan. Priority claims shall be paid in full on the Effective Date if funds are available and, if not, the first proceeds of Disposable Income. Allowed Administrative Claims will be paid next from Disposable Income until paid in full as long as Debtor is current on all Class 2 monthly payments. Thereafter, Class 3 Claims will be paid next from Disposable Income until paid in full as long as Debtor is current on all Class 2 monthly payments. A full-text copy of the Plan of Reorganization dated February 1, 2024 is available at https://urlcurt.com/u?l=5nRqpT from PacerMonitor.com at no charge. Attorney for the Plan Proponent: Marc C. Forsythe, Esq. GOE FORSYTHE & HODGES, LLP 17701 Cowan, Suite 210 Irvine, CA 92614 Tel: (949) 798-2460 Fax: (949) 955-9437 Email: mforsythe@goeforlaw.com About Ace Restoration & Construction Ace Restoration & Construction Inc. has been in the business of General Construction since 2017. The Debtor sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Cal. Case No. 23-15170) on Nov. 3, 2023, listing under $1 million in both assets and liabilities. Judge Scott H Yun oversees the case. Marc C Forsythe, Esq. at Goe Forsythe & Hodges LLP, is the Debtor's counsel. ACME HOSPITALITY: Court OKs Cash Collateral Access Thru April 3 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Ohio, Eastern Division, authorized Acme Hospitality, LLC to use cash collateral, on an interim basis, in accordance with the budget, through April 3, 2024. Huntington National Bank and the U.S. Small Business Administration made loans to the Debtor, at which time Debtor granted Huntington and the SBA a security interest in all its business assets, including its cash collateral. The Debtor also entered into several business loan agreements with merchant cash advance creditors and each may also assert a security interest in the Debtor's cash collateral. To the extent of any Diminution in Value, the creditors determined to have a security valid security interest in the Debtor's pre-petition assets are granted automatically perfected and enforceable adequate protection Replacement Liens, in accordance with the priority of the applicable creditors' prepetition security interests and liens, in collateral of the same type as such creditor has a valid prepetition lien. The Replacement Liens will have the same validity, priority, and extent as the liens on that existed at the time of the commencement of the above-captioned bankruptcy cases. The Replacement Liens granted are (i) effective as of the Petition Date, and (ii) deemed automatically perfected without the necessity for filing or execution of any security agreement, control agreement, financing statement, or other document which might otherwise be required for the perfection of security interests. The Replacement Liens will be subordinate to the payment of the Debtor's professional fees, including fees and expenses for Debtor's counsel, the Subchapter V Trustee, and other professionals authorized to be employed in such amounts and at such times as may be approved by the Court. A further hearing on the matter is set for April 2 at 11 a.m. A copy of the order is available at https://urlcurt.com/u?l=7emlzV from PacerMonitor.com. About ACME Hospitality ACME Hospitality, LLC owns and operates Moxies Grille, a family owned and operated restaurant founded in 2011 and known for scratch-made, homestyle meals. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ohio Case No. 24-50077) on January 22, 2024, with up to $50,000 in assets and $1 million to $10 million in liabilities. Jerad Miller, sole member, signed the petition. Judge Alan M. Koschik oversees the case. Steven J. Heimberger, Esq., at Roderick Linton Belfance, LLP represents the Debtor as legal counsel. AIR INDUSTRIES: Michael Taglich Reports 21.01% Equity Stake ----------------------------------------------------------- In a SC 13D/A Report filed with the U.S. Securities and Exchange Commission, Michael N. Taglich disclosed that as of February 5, 2024, he beneficially owned 696,069 shares of Air Industries Group's Common Stock, representing approximately 21.01% of the shares outstanding. The percentage is based upon 3,315,368 shares reported outstanding as of February 2, 2024. The shares beneficially owned include 23,995 shares held by Taglich Brothers, Inc., of which Michael Taglich is a shareholder and managing director, and 17,228 shares issuable upon conversion of convertible notes held by Taglich Brothers. A full-text copy of the report is available at http://tinyurl.com/mw7fv9ye About Air Industries Group Air Industries Group (NYSE American: AIRI) is an integrated manufacturer of precision assemblies and components for leading aerospace and defense prime contractors and original equipment manufacturers. The Company is a Tier 1 supplier to aircraft Original Equipment Manufacturers, a Tier 2 subcontractor to major Tier 1 manufacturers, and a Prime Contractor to the U.S. Department of Defense, and is highly regarded for its expertise in designing and manufacturing parts and assemblies that are vital for flight safety and performance. While the Company is presently in full compliance with its Webster Facility, it has failed to meet its covenants, as amended, during two out of three of the last fiscal quarters. Additionally, it is possible, that the Company may not meet its financial covenants in one of the upcoming fiscal quarters over the next 12 months due to either future losses or raising interest rates. Therefore, due to the aforementioned issues, the Company has classified the term loan that expires on December 30, 2025 as current as of September 30, 2023, in accordance with the guidance in ASC 470-10-45 related to the classification of callable debt. Failure to meet the revised covenants in future periods and secure any necessary waivers raises substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of this report. The Company is required to maintain a collection account with Webster Bank into which substantially all of the Company's cash receipts are remitted. If Webster were to cease lending and keep the funds remitted to the collection account, the Company would lack the funds to continue its operations, according to the Company's Quarterly Report for the period ended Sept. 30, 2023. AIR INDUSTRIES: Robert Taglich Reports 14.53% Equity Stake ---------------------------------------------------------- In a SC 13D/A Report filed with the U.S. Securities and Exchange Commission, Robert F. Taglich disclosed that as of February 5, 2024, he beneficially owned 481,667 shares of Air Industries Group's Common Stock, representing approximately 14.53% of the class, which is based upon 3,315,368 shares reported outstanding as of February 2, 2024. The shares beneficially owned include 23,995 shares held by Taglich Brothers, Inc., of which Robert Taglich is a shareholder and managing director, and 17,228 shares issuable upon conversion of convertible notes held by Taglich Brothers. A full-text copy of the report is available at http://tinyurl.com/3fwx7bsn About Air Industries Group Air Industries Group (NYSE American: AIRI) is an integrated manufacturer of precision assemblies and components for leading aerospace and defense prime contractors and original equipment manufacturers. The Company is a Tier 1 supplier to aircraft Original Equipment Manufacturers, a Tier 2 subcontractor to major Tier 1 manufacturers, and a Prime Contractor to the U.S. Department of Defense, and is highly regarded for its expertise in designing and manufacturing parts and assemblies that are vital for flight safety and performance. While the Company is presently in full compliance with its Webster Facility, it has failed to meet its covenants, as amended, during two out of three of the last fiscal quarters. Additionally, it is possible, that the Company may not meet its financial covenants in one of the upcoming fiscal quarters over the next 12 months due to either future losses or raising interest rates. Therefore, due to the aforementioned issues, the Company has classified the term loan that expires on December 30, 2025 as current as of September 30, 2023, in accordance with the guidance in ASC 470-10-45 related to the classification of callable debt. Failure to meet the revised covenants in future periods and secure any necessary waivers raises substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of this report. The Company is required to maintain a collection account with Webster Bank into which substantially all of the Company's cash receipts are remitted. If Webster were to cease lending and keep the funds remitted to the collection account, the Company would lack the funds to continue its operations, according to the Company's Quarterly Report for the period ended Sept. 30, 2023. ALANDALOUS PROPERTIES: Case Summary & Four Unsecured Creditors -------------------------------------------------------------- Debtor: Alandalous Properties Corp. f/k/a Peoples Foreign Exchange Corporatio 198-08 McLaughlin Ave Hollis, NY 11423 Business Description: The Debtor is primarily engaged in renting and leasing real estate properties. The Debtor owns Condo Unit C-1, 24 located at West 45 Street, NY 10036 - estimated value $2,500,000. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court Eastern District of New York Case No.: 24-40623 Judge: Hon. Elizabeth S. Stong Debtor's Counsel: Lewis W. Siegel, Esq. LEWIS W. SIEGEL 60 East 42nd Street - Suite 4600 New York, NY 10165 Tel: (212) 286-0010 Fax: (212) 884-9586 E-mail: LWS@LWSEsq.com Total Assets: $2,500,500 Total Liabilities: $2,819,145 The petition was signed by Alami Binani as president. A full-text copy of the petition containing, among other items, a list of the Debtor's four unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/24ROROQ/Alandalous_Properties_Corp__nyebke-24-40623__0001.0.pdf?mcid=tGE4TAMA ALL WEBS: Oaktree Specialty Marks $23.6MM Loan at 58% Off --------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $23,562,000 loan extended to All Web Leads, Inc., to market at $9,797,000 or 42% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty’s Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+ 8.50%) to All Web Leads. This loan was on non-accrual status as of December 31, 2023. The loan was set to mature on December 29, 2023. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 All Web Leads, Inc. provides web marketing firm services. The Company generates insurance leads and connects insurance agents, brokers, and carriers with consumers looking for automobile, health, life, home, and senior health insurance products. All Web Leads operate in the United States. ALLEN MEDIA: S&P Affirms 'B-' ICR on New M&G Assessment Criteria ---------------------------------------------------------------- S&P Global Ratings affirmed its 'B-' issuer credit rating on Allen Media LLC (AMG) and removed all its ratings from under criteria observation (UCO). S&P said, "Our stable outlook reflects our expectation that adjusted leverage will be about 6x, free operating cash flow (FOCF) to debt will be between 3% and 4%, and EBITDA interest coverage will be about 1.5x over the next 12 months. Our outlook also reflects our expectation that AMG will benefit from higher political advertising and meaningfully improved monetization of audience deficiency units (ADU) from its recent deal with VideoAMP, which we expect will improve its audience ratings deliveries. "We have completed our review of Allen Media LLC (AMG) under our new criteria for management and governance (M&G). "As a result, we assigned a new M&G assessment of negative to Allen Media. We also revised the comparable ratings analysis modifier to neutral from negative. "The affirmation of our 'B-' issuer credit rating follows the revision to our criteria for evaluating the credit risks presented by an entity's management and governance framework. The terms management and governance encompass the broad range of oversight and direction conducted by an entity's owners, board representatives, and executive managers. These activities and practices can affect an entity's creditworthiness and, as such, the M&G modifier is an important component of our analysis. "Our M&G assessment of negative reflects our view that the controlling ownership by Allen Media' founder and CEO, Byron Allen, can increase credit risk for Allen Media. The company recently expanded its board of directors and board-level executive management committees as part of its enterprise risk management efforts. In our view, the board still lacks independent members and a track record of effectiveness to mitigate the risks identified in our assessment. "We had previously reflected these risk factors through the negative application of the comparable ratings analysis (CRA). We have now revised our CRA assessment to neutral and capture the risk through the revised M&G assessment, leaving our 'B-' issuer credit rating unchanged. "Despite secular headwinds for cable television networks, we expect AMG's revenue growth to outperform the broader industry in 2024. Despite the lack of political advertising in 2023, we expect AMG's total revenue to decline only 1%-2% due to its strategy to broaden distribution within its cable networks segment through its new carriage agreements for The Weather Channel (TWC) and AMG's cable networks with YouTube TV and Hulu Live TV and from the success of its Black-owned media initiative in driving advertising revenue growth. Beyond 2023, we expect AMG's cable networks to face cord-cutting pressure similar to the broader industry's (5%-7% decline), even as it looks to supplement growth with its niche streaming offerings in local news and weather." AMG's EBITDA growth has not kept pace with revenue growth because production and programming expenses have increased faster than revenue growth in 2023. The company's recent deal with VideoAMP is expected to improve its ADU through improved audience ratings deliveries. This should benefit AMG's EBITDA margins over the next 12 months through higher advertising revenue and lower operating expenses incurred from acquiring primetime inventory on other owned and operated broadcast networks to meet its ADU obligations. S&P said, "We expect AMG's S&P Global Ratings-adjusted leverage to decline to about 6x in 2024 due to revenue and EBITDA growth. The deleveraging is expected to come from higher political advertising benefitting the broadcast segment and improved advertising revenue and EBITDA margins from the cable networks segment as detailed above. We expect adjusted leverage to increase to about 8.0x-8.5x in 2025, which is typical of companies exposed to the cyclical nature of political advertising. On a last-eight-quarters basis, we forecast AMG's adjusted leverage to be about 7.0x-7.5x between 2024 and 2025. Given the higher forecast EBITDA and improved operating margins, we forecast FOCF to debt to be about 3%-4% in 2024. "Our stable outlook reflects our expectation that adjusted leverage will be about 6x, FOCF to debt will be between 3% and 4%, and EBITDA interest coverage will be about 1.5x over the next 12 months. Our outlook also reflects our expectation that AMG will benefit from higher political advertising and improved monetization of ADU from its recent deal with VideoAMP, which we expect will improve its audience ratings deliveries." S&P could lower its ratings if it believes AMG's FOCF to debt will weaken below 3%, indicating an elevated risk of an unsustainable capital structure. This could occur if -- AMG's cable networks segment reverses advertising revenue growth trends over the next 12 months and experiences secular pressure similar to the broader cable networks industry; -- The company pursues significant debt-funded acquisitions indicating a higher leverage tolerance on a sustained basis; or -- AMG pursues a debt exchange that we deem tantamount to a default. S&P could raise its ratings on AMG if it expects adjusted leverage to decline and remain below 5.5x while FOCF to debt increases above 5% and EBITDA interest coverage approaches 2x on a sustained basis. This could occur if: -- Revenue growth at AMG's cable network remains robust beyond 2024 through continued advertising revenue growth, and increasing growth in DTC and digital products offset secular linear subscriber declines; -- FOCF generation remains above $75 million annually on a consistent basis; and -- S&P expects AMG to commit to a financial policy with respect to acquisitions and shareholder distributions that would keep credit metrics consistently within the thresholds discussed above. ALR CONSTRUCTION: Court OKs Cash Collateral Access Thru March 4 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Tennessee, Knoxville, authorized ALR Construction, Inc. to use cash collateral, on an interim basis, in accordance with the budget, through March 4, 2024. The Debtor advises that U.S. Bank is a consensual secured creditor known to it that asserts an interest in accounts and inventory as cash collateral as that term is defined in 11 U.S.C. Section 363(a). U.S. Bank, is owed approximately $47,615 on a line of credit and on revolving credit accounts as of the Petition Date and claims an interest in accounts and inventory other than the sale of inventory in the ordinary course of business as cash collateral as that term is defined in 11 U.S.C. Section 363(a). Global Merchant Cash, Inc. asserts and the Debtor may dispute that (a) on or around March 1, 2022, GMC entered into that certain Agreement for the Purchase and Sale of Future Receipts, by and between GMC, as Buyer, Debtor, as Seller, and Raymond Joseph Graham IV, as Validity Guarantor; (b) pursuant to the Agreement, GMC has a valid security interest on the Debtor's assets, including the Debtor's cash and accounts; (c) GMC duly perfected its lien by filing a UCC-1 Financing Statement on or around March 28, 2022; (d) the Debtor defaulted on its obligations under the Agreement on or around July 6, 2022; and (e) pursuant to the Agreement, GMC is owed no less than $166,664. In addition to all existing liens held by US Bank and GMC, as adequate protection for, and to the extent of, any diminution in the value of US Bank's interest and GMC's interest in cash collateral from and after the Petition Date, US Bank and GMC are granted, as additional security, effective as of the Petition Date, valid and perfected replacement liens, identical in scope, description, and priority and perfected to the same extent as the prepetition liens held by US Bank and GMC, in collateral of the same type as such creditors have valid prepetition liens; provided however, US Bank and GMC will not have a lien upon the avoidance claims of the Debtor pursuant to Chapter 5 of the United States Bankruptcy Code. The Replacement Liens are deemed valid and duly perfected as of the Petition Date, and shall be valid and enforceable against any trustee appointed in this Chapter 11 case or in any subsequent proceedings upon the conversion of this Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code. Other Secured Lenders (if any), without further action or documentation, are granted a replacement lien under 11 U.S.C. sections 361(2) and 363(f)(3) to the same extent, validity, and priority that existed in the prepetition property of the bankruptcy estate securing the indebtedness owed to them in accounts and any other cash collateral that the Debtor has generated or will generate post-petition, to the same nature, extent, priority, and validity that their liens existed at filing, and said replacement lien shall be deemed perfected and binding to the same extent that the lien was perfected and binding prepetition without the necessity of filing any documents otherwise required under nonbankruptcy law. A final hearing on the matter is set for February 29 at 10 a.m. A copy of the order is available at https://urlcurt.com/u?l=lMgI0L from PacerMonitor.com. About ALR Construction, Inc. ALR Construction, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Tenn. Case No. 24-30127) on January 25, 2024. In the petition signed by Raymond Graham IV, president, the Debtor disclosed up to $500,000 in assets and up to $10 million in liabilities. Judge Suzanne H Bauknight oversees the case. Brenda G. Brooks, Esq., at Moore & Brooks, represent the Debtor as legal counsel. AMC ENTERTAINMENT: S&P Ups ICR to 'CCC+' Following Debt Exchanges ----------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating to 'CCC+' from 'SD' (selective default) on AMC Entertainment Holdings Inc., the world's largest motion picture exhibitor. S&P also raised its issue-level rating on the second-lien notes to 'CCC-' from 'D'. The negative outlook reflects S&P's expectation that AMC's revenue will decline 8%-9% in 2024 due to a limited theatrical release slate, resulting in negative free operating cash flow (FOCF) and leverage around 8x. AMC completed a series of distressed exchanges to swap an aggregate $123 million of its second-lien notes due 2026 for common equity. S&P said, "Though marginally improved, we continue to view AMC's capital structure as unsustainable due to its substantial debt burden. AMC completed its debt-for-equity swaps, exchanging $123 million of its second-lien notes due in 2026 for common equity. Additionally, the company repurchased the $50 million aggregate principal amount of its outstanding debt at an average discount of approximately 20%. The impact of these exchanges is marginally positive and will reduce the company's cash interest costs by roughly $17 million per year. However, AMC maintains a heavy debt load, with roughly $4.65 billion in reported debt pro forma for the recent exchanges. Much of this debt bears high interest rates, which will likely lead to total reported debt interest costs of over $475 million in 2024. These interest costs will likely prevent AMC from generating positive FOCF. We believe the company is reliant on favorable economic and business conditions to meet its debt obligations over the next few years, specifically the coming maturity wall in 2026. AMC's operating performance will decline over the next 12 months as theater attendance weakens in 2024. The domestic box office reached about $8.9 billion in 2023, driven by tent-pole films' strong performance. However, S&P expects domestic box office revenue of $8.00 billion-$8.25 billion, or a decline of about 10%, in 2024. S&P's forecast incorporates a significant disruption to the theatrical release slate in 2024 as a result of the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) strikes that occurred in 2023. Ongoing macroeconomic risks could also affect AMC's performance over the next 12 months. The uncertain economic outlook poses a potential risk to theatrical revenue. Historically, cinema attendance has been relatively resilient during economic downturns due to the relative affordability of this out-of-home entertainment option. While S&P expects this trend to hold in general, the current state of the industry represents a unique set of challenges: average ticket prices are at an all-time high and consumers have never had more options for how to consume video content in the home. In the event of an economic recession, consumers will likely be increasingly sensitive to discretionary spending and may choose lower-cost, in-home viewing options. Consequently, it may prompt exhibitors to adjust their pricing tactics for tickets and concessions such that total revenue is less than currently planned. The negative outlook reflects S&P's expectation that AMC's revenue will decline 8%-9% in 2024 due to a limited theatrical release slate, resulting in negative FOCF and leverage around 8x. The outlook also reflects the risk that AMC could pursue additional subpar debt exchanges within the next 12 months. S&P could lower the rating if it expects AMC will default within the next 12 months. This could occur if: -- The industry experiences further headwinds such that AMC's cash burn worsens and we become concerned about its liquidity position; or -- The company pursues further subpar debt exchanges or any other notable form of debt restructuring. S&P could revise the outlook to stable if: -- S&P expects the release slate to stabilize in the second half of 2024; and -- S&P no longer believes there is a risk that AMC will pursue additional subpar debt exchanges. AMERICAN TIRE: Oaktree Specialty Marks $15MM Loan at 16% Off ------------------------------------------------------------ Oaktree Specialty Lending Corporation has marked its $14,907,000 loan extended to American Tire Distributors, Inc., to market at $12,548,000 or 84% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+ 6.25%) to American Tire. The loan accrues interest at a rate of 11.91% per annum. The loan matures on October 20, 2028. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 American Tire Distributors, Inc. distributes motor vehicle parts. The Company offers custom wheels, tires, and other related products. American Tire Distributor serves customers in the United States. ANASTASIA PARENT: Oaktree Specialty Marks $3.7MM Loan at 39% Off ---------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $3,691,000 loan extended to Anastasia Parent, LLC., to market at $2,257,000 or 61% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+ 3.75%) to Anastasia Parent. The loan accrues interest at a rate of 9.36% per annum. The loan matures on August 11, 2025. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Anastasia Parent, LLC is the parent company of Anastasia Beverly Hills, Inc., a prestige cosmetics brand that focuses on eyebrow shaping products. ANNE FONTAINE: Seeks to Tap Klestadt Winters as Bankruptcy Counsel ------------------------------------------------------------------ Anne Fontaine USA, Inc. seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to hire Klestadt Winters Jureller Southard & Stevens, LLP as its general bankruptcy counsel. The firm's services include: a. advising the Debtor with respect to its rights, powers and duties as a debtor and debtor-in-possession in the continued management and operation of its business and assets; b. attending meetings, negotiating with representatives of creditors and other parties in interest, advising and consulting on the conduct of the cases, including all of the legal and administrative requirements of operating under Chapter 11, Subchapter V; c. taking all necessary action to protect and preserve the assets of the Debtor's estate, including prosecuting legal action(s) on behalf of the Debtor, defending any actions commenced against the Debtor's estate, engaging in negotiations concerning litigation in which the Debtor may be involved and objecting to claims filed against their estates; d. preparing on behalf of the Debtor such motions, applications, answers, orders, reports, and papers necessary to the administration of its estate; e. assisting the Debtor in its analysis and negotiations with any third party concerning matters related to the realization by creditors of a recovery on claims and other means of realizing value; f. representing the Debtor at all hearings and other proceedings; g. assisting the Debtor in its analysis of matters relating to the legal rights and obligations of the Debtor with respect to various agreements and applicable laws; h. reviewing and analyzing all applications, orders, statements, and schedules filed with the Bankruptcy Court and advising the Debtor as to their propriety; i. assisting the Debtor in preparing pleadings and applications as may be necessary in furtherance of the Debtor's interests and objectives; j. assisting and advising the Debtor with regard to its communications to the general creditor body regarding any proposed Chapter 11 plan or other significant matters in this Subchapter V Case; k. assisting the Debtor with respect to consideration by the Bankruptcy Court of any plan prepared or filed pursuant to Secs. 1121 and 1189-1191 of the Bankruptcy Code and taking any necessary action on behalf of the Debtor to obtain confirmation of such plan; and l. performing such other legal services as may be required and/or deemed to be in the interests of the Debtor in accordance with its powers and duties as set forth in the Bankruptcy Code. The firm will be paid at these rates: Partners $695 to $950 per hour Associates $550 per hour Paralegals $250 per hour Klestadt Winters will also be reimbursed for reasonable out-of-pocket expenses incurred. Fred Stevens, partner of Klestadt Winters Jureller Southard & Stevens, LLP, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. Klestadt Winters can be reached at: Fred Stevens, Esq. KLESTADT WINTERS JURELLER SOUTHARD & STEVENS, LLP 200 West 41st Street, 17th Floor New York, NY 10036-7203 Tel: (212) 972-3000 Fax: (212) 972-2245 Email: fstevens@klestadt.com About Anne Fontaine USA New York-based Anne Fontaine USA, Inc. is an e-commerce platform for women's apparel, bags, shoes and accessories. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. S.D.N.Y. Case No. 24-10058) on Jan. 16, 2024, with $11,399,790 in assets and $6,441,453 in liabilities. Ari Zlotkin, chief executive officer, signed the petition. Judge Lisa G. Beckerman oversees the case. Fred Stevens, Esq., at Klestadt Winters Jureller Southard & Stevens, LLC represents the Debtor as legal counsel. API HOLDINGS III: Guggenheim SOF Marks $1.5MM Loan at 40% Off ------------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $1,568,396 loan extended to API Holdings III Corp to market at $942,026 or 60% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to API Holdings III Corp. The loan accrues interest at a rate of 6.32% (3 Month Term SOFR + 1.00%, Rate Floor: 1.00%). The loan matures on May 9, 2026. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 API Holdings III Corp., headquartered in Marlborough, Mass., is a holding company whose main operating subsidiary is API Technologies Corp. The company is a tier three or tier four supplier of radio frequency (RF) and performance components and subsystems for the US aerospace and defense industry. API is majority owned by affiliates of AEA Investors. APPLIED DNA: Posts $1.1 Million Net Loss in First Quarter 2024 -------------------------------------------------------------- Applied DNA Sciences, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q reporting a net loss of $1.13 million on $891,164 of total revenues for the three months ended Dec. 31, 2023, compared to a net loss of $3.84 million on $5.26 million of total revenues for the three months ended Dec. 31, 2022. As of Dec. 31, 2023, the Company had $9.91 million in total assets, $5.78 million in total liabilities, and $4.13 million in total equity. Applied DNA said, "The Company has recurring net losses. The Company incurred a net loss of $1,130,281 and generated negative operating cash flow of $3,757,679 for the three-month period ended December 31, 2023. At December 31, 2023, the Company had cash and cash equivalents of $3,359,045. These factors raise substantial doubt about the Company's ability to continue as a going concern for one year from the date of issuance of these financial statements. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues." Management Commentary "We made substantial progress in advancing the commercialization of our Linea IVT platform and the availability of GMP capacity for the manufacture of critical starting material for mRNA therapeutics during the past quarter," stated Dr. James A. Hayward, president and CEO of Applied DNA, in a press release. "Our efforts centered on establishing and implementing new quality systems for GMP manufacturing to meet our customer requirements at a scale sufficient for use through clinical-stage mRNA therapy development. In addition, we initiated a scale-up manufacturing project for our Linea RNA polymerase (RNAP) with an enzyme manufacturer to optimize the enzyme's production for commercial-scale use. We also secured our first CDMO partner to validate the commercial scale-up of Linea IVT within a cGMP workflow setting. "In parallel, we expanded our sales pipeline and active projects with the addition of new research and development-stage customers for Linea IVT that can serve as the basis for potential long-term supply agreements as customers' therapies enter toxicology, pharmacokinetics, and early-stage clinical development," continued Dr. Hayward. "We generated data readouts that further substantiate the capacity of Linea IVT to create equal or greater RNA yields with double-stranded RNA contamination at levels 10x-50x lower than those found using conventional mRNA production methods. Feedback to-date on our Linea IVT and Linea DNA platforms has been positive, having completed multiple successful customer evaluations within the quarter. Particularly noteworthy, we completed an evaluation with a clinical stage mRNA customer in which our IVT templates meet or exceeded all customer quality metrics with manufacturing speed that exceeded all other IVT template sources being evaluated by the customer." Concluded Dr. Hayward, "Supplying both DNA template and RNA polymerase positions us to capture a greater percentage of the economics of mRNA therapy production that we believe establishing our GMP production capacity will unlock. After the close of the quarter, we completed an equity offering that supports the initial phase of our GMP plan and timeline for critical starting materials in the production of mRNA. Slated to come online during first half of calendar 2024 and based on internal modeling, current pricing projections, and industry figures, we project our GMP facility, with an initial footprint of less than 1,000 square feet, to enable annual total Linea IVT revenues of up to $15 million. We believe our manufacturing workflow is highly reproducible, allowing us to scale our production facilities to meet incremental customer demand quickly. Looking ahead, we will continue to prioritize the commercialization of our Linea IVT and Linea DNA platforms and rationalize our cost structure in support of our biotherapeutic goals." A full-text copy of the Form 10-Q is available for free at: https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/744452/000141057824000021/apdn-20231231x10q.htm About Applied DNA Applied DNA Sciences, Inc. -- http//www.adnas.com -- is a biotechnology company developing technologies to produce and detect deoxyribonucleic acid ("DNA"). Using the polymerase chain reaction ("PCR") to enable both the production and detection of DNA, the Company operates in three primary business markets: (i) the manufacture of synthetic DNA for use in nucleic acid-based therapeutics; (ii) the detection of DNA in molecular diagnostics testing services; and (iii) the manufacture and detection of DNA for industrial supply chain security services. Melville, NY-based Marcum LLP, the Company's auditor since 2014, issued a "going concern" qualification in its report dated Dec. 7, 2023, citing that the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. APPS INC: Unsecured Creditors to Recover 3.5% over 5 Years ---------------------------------------------------------- Apps, Inc., and Market Share, Inc., filed with the U.S. Bankruptcy Court for the District of Connecticut a Joint Plan of Reorganization dated February 1, 2024. Apps is a Connecticut corporation. Mr. Newton owns 7.7% of Apps individually and 92.3% of Apps as the Trustee of Apps, Inc. Profit Sharing Plan. Gordon H. Newton is the president of Apps and the director of the board of directors. Market Share is a Connecticut corporation that is wholly owned by Apps. Mr. Newton is the president of Market Share and the director of the board of directors. It leases stores in four locations – Groton, CT, Guilford, CT, Old Saybrook, CT, and Westerly, RI. Market Share employs between 12 and 14 employees across its four locations. As an essential retailer servicing diverse demographics, including senior citizens and first responders, the Debtors navigated the Covid-19 pandemic without any store closures or layoffs. Unfortunately, however, the Debtors were eventually impacted by the long-term effects of the pandemic, such as rising interest rates affecting variable loans, inflation increasing operational costs, and a general retail slowdown, especially in wireless retail for major telecommunication carriers. These challenges led to increased labor rates and an approximate 12 to 15% drop in retail sales. To counter the decline, the Debtors diversified their approach, focusing on new product launches and a business-to-business initiative. Through participation in the Goldman Sachs 10,000 Small Business Program, the Debtors devised a growth plan involving sales to businesses outside traditional retail, necessitating new hires and an extending the typical sales cycle. Despite initial challenges, the B2B strategy has gained traction, especially with larger business customers. However, the current debt load was unsustainable for the Debtors, thus necessitating the instant bankruptcy filing. The Plan Proponents' financial projections show that the Debtors will have projected disposable income of approximately $111,000 in operating income over 5 years from the Effective Date. The final Plan payment is expected to be paid on or before December 31, 2028. Class 2 consists of General Unsecured Creditors. Approximately $3,193,694, including deficiency claims in the approximate amounts as follows: $1,912,000 to Newtek, $498,000 to the SBA, $308,000 to ODK Capital, $101,000 to Channel, $100,000 to TD Bank, and $62,000 to Everest. General unsecured creditors will receive approximately 3.5% on each claim, to be paid Pro Rata over 5 years. This Class is impaired. The Debtors intend to use operating income to fund the Plan. A full-text copy of the Joint Plan dated February 1, 2024 is available at https://urlcurt.com/u?l=chGz8k from PacerMonitor.com at no charge. Counsel for Debtors: Jeffrey M. Sklarz, Esq. GREEN & SKLARZ LLC 1 Audubon St, 3rd Fl New Haven, CT 06511 Tel: (203) 285-8545 Fax: (203) 823-4546 Email: jsklarz@gs-lawfirm.com About Apps, Inc. Apps, Inc., sells AT&T service plans, devices, and accessories to both individual consumers and businesses. Apps, Inc., sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Conn. Case No. 23-20895) on Nov. 3, 2023. In the petition signed by Gordon H. Newton, president, the Debtor disclosed up to $50,000 in assets and up to $10 million in liabilities. Judge James J. Tancredi oversees the case. Jeffrey M. Sklarz, Esq., at Green & Sklarz LLC, is the Debtor's legal counsel. ARC MANAGEMENT: Court OKs Cash Collateral Access on Final Basis --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia, Atlanta Division, authorized Arc Management Group, LLC 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 for general operational and administrative expenses. The Debtor is a borrower from Green Note Capital Partners SPV LLC, Cheetah Capital, Funding Club, Samson MCA LLC, Libertas Funding, LLC, and KYF Global Partners, LLC, who are merchant cash advance companies. One or more of the MCAs has filed UCC Financing Statements asserting a security interest in the Debtor's tangible and intangible personal property. The Debtor entered into Joint Venture Agreements with Flock Financial, LLC pursuant to which Flock provided funding to the Debtor for the purchase of the account receivables debt portfolios. Flock has filed UCC Financing Statements asserting a security interest in the Debt Portfolios. To provide adequate protection for Debtor’s use of cash collateral, Libertas, Super B, WebBank, Flock, and other creditors who assert an interest in the cash collateral, to the extent they hold a valid lien, security interest, or right of setoff as of the Petition Date under applicable law, are granted a valid and properly-perfected lien on all property acquired by Debtor after the Petition Date that is the same or similar nature, kind, or character as Libertas, Super B, WebBank, Flock's or other creditors' respective pre-petition collateral, except that no such replacement lien will attach to the proceeds of any avoidance actions under Chapter 5 of the Bankruptcy Code. The Adequate Protection Lien will be deemed automatically valid and perfected upon entry of the Order. A copy of the Debtor's motion and budget is available at https://urlcurt.com/u?l=NJ0pwe from PacerMonitor.com. The Debtor projects total expenses, on a monthly basis, as follows: $158,025 for February 2024; $173,375 for March 2024; $166,775 for April 2024; $176,625 for May 2024; and $161,775 for June 2024. About ARC Management Group, LLC ARC Management Group, LLC is a provider of billing, collection and debt recovery services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ga. Case No. 23-61742) on November 28, 2023. In the petition signed by William D. Wilson, chief executive officer, the Debtor disclosed up to $1 million in assets and up to $10 million in liabilities. Judge Wendy L. Hagenau oversees the case. William Rountree, Esq., at Rountree, Leitman, Klein & Geer, LLC, represents the Debtor as legal counsel. ARCHBISHOP OF BALTIMORE: Comm. Taps Berkeley as Financial Advisor ----------------------------------------------------------------- The official committee of unsecured creditors of Roman Catholic Archbishop of Baltimore seeks approval from the U.S. Bankruptcy Court for the Northern District of Maryland to employ Berkeley Research Group, LLC as its financial advisor. The firm will render these services: (a) assist the Committee in investigating the assets, liabilities, and financial condition of the Debtor or the Debtor's operations, including an independent analysis of any alleged donor restrictions on the Debtor's assets; (b) assist the Committee in the review of financial related disclosures required by the Court and/or Bankruptcy Code; (c) analyze the Debtor's accounting reports and financial statements; (d) review transfers of the Debtor's assets; (e) assist the Committee in evaluating the Debtor's ownership interests of property alleged to be held in trust by the Debtor for the benefit of third parties and/or property alleged to be owned by non-debtor entities; (f) assist the Committee in reviewing and evaluating any proposed asset sales and/or and other asset dispositions; (g) assist the Committee in evaluating the Debtor's cash management system, including unrestricted and restricted funds, deposit and loan programs, and pooled income or investment funds; (h) assist the Committee in the review of financial information that the Debtor may distribute to the Committee and others, and analyze proposed transactions for which Court approval is sought; (i) assist in the review and/or preparation of information and analyses necessary for the confirmation of a plan, or for the objection to any plan filed in this Case which the Committee opposes; (j) assist the Committee with the evaluation and analysis of claims, and on any litigation matters, including, but not limited to, avoidance actions for fraudulent conveyances and preferential transfers, and declaratory relief actions concerning the property of the Debtor's estate; and (k) analyze the flow of funds in and out of accounts the Debtor contends contain assets held in trust for others, to determine whether the funds were commingled with non-trust funds and lost their character as trust funds, under applicable legal and accounting principles. The firm will be paid at these hourly rates: Managing Director $755 - $1,150 Director & Associate Director $480 - $755 Professional Staff $225 - $480 Support Staff $160 - $225 Matthew Babcock, director at Berkeley Research, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Matthew K. Babcock Berkeley Research Group, LLC 201 S. Main, Suite 450 Salt Lake City, UT 84111 Telephone: (801) 364-6233 Facsimile: (801) 355-9926 Email: mbabcock@thinkbrg.com About Roman Catholic Archbishop of Baltimore Roman Catholic Archbishop of Baltimore is a non-profit religious institution that maintains its principal place of business at 320 Cathedral Street, Baltimore, Maryland 21201. Consistent with Canon Law and Maryland law, the RCAB holds property, including real property, as a corporation sole for the purposes of erecting churches, parsonages, burial grounds, or schools according to the discipline and government of the Roman Catholic Church, with all such property to be used only for such purposes. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Md. Case No. 23-16969) on September 29, 2023. In the petition signed by William E. Lori, archbishop, the Debtor disclosed $100 million to $500 million in assets and $500 million to $1 billion in liabilities. Judge Michelle M. Harner oversees the case. The Debtor tapped YVS Law, LLC and Holland & Knight LLP as legal counsel; Keegan Linscott & Associates, PC as financial and restructuring advisor; and Gallagher Evelius & Jones LLP as special counsel. Epiq Corporate Restructuring LLC is the claims, noticing, and balloting agent. The U.S. Trustee for Region 5 appointed an official committee to represent unsecured creditors in the Chapter 11 case of The Roman Catholic Archbishop of Baltimore. The committee hires Stinson LLP as counsel. Tydings & Rosenberg LLP as local counsel. ARRIVAL: Joint Administrators for UK Subsidiaries Appointed ----------------------------------------------------------- Arrival, on February 5, 2024, announced that Simon Edel, Alan Hudson, and Sam Woodward of EY-Parthenon's Turnaround and Restructuring Strategy team were appointed as joint administrators of Arrival UK Ltd and Arrival Automotive UK Limited, both subsidiaries of Arrival. All of Arrival's other subsidiaries will continue their activities as usual outside of the administration process. The Administrators are now exploring options for the sale of the business and assets of the Companies, including the electric vehicle platform, software, intellectual property and R&D assets, for the benefit of creditors. About Arrival Arrival's mission is to master a radically more efficient New Method to design, produce, sell and service purpose-built electric vehicles, to support a world where cities are free from fossil fuel vehicles. Arrival's in-house technologies enable a unique approach to producing vehicles using rapidly-scalable, local Microfactories. Arrival (Nasdaq: ARVL) is a joint stock company governed by Luxembourg law. Arrival reported a loss of EUR1.10 billion in 2021, a loss of EUR83.22 million in 2020, and a loss of EUR48.10 million in 2019. Arrival filed with the Securities and Exchange Commission a Notification of Late Filing on Form 12b-25 with respect to its Annual Report on Form 20-F for the fiscal year ended Dec. 31, 2022. The Company will not, without unreasonable effort and expense, be able to file its Form 20-F within the prescribed time period as the Company requires additional time to compile the necessary disclosure and financial information to complete the Form 20-F filing, including management's assessment of the Company's internal control over financial reporting as of Dec. 31, 2022. Such delay results in part from the diversion of the attention of management and other personnel responsible for the preparation of the Form 20-F to fundraising and business combination transactions. As a result of the Company's delay, KPMG LLP, the Company's independent registered public accounting firm, will also need additional time to complete its audit procedures. ART OF GRANITE: Court OKs Interim Cash Collateral Access -------------------------------------------------------- The U.S Bankruptcy Court for the Middle District of Florida, Jacksonville Division, authorized Art of Granite Countertops, Inc. to use cash collateral on an interim basis in accordance with the budget. The Debtor is authorized to use cash collateral to pay: (a) amounts expressly authorized by the Court, including payments to the US Trustee for quarterly fees; (b) the "bare necessities" for day-to-day operations and (c) prepetition wages to employees who are retained by the Debtor moving forward; (d) such additional amounts as may be expressly approved in writing by GFE Holdings, and Small Business Administration. As adequate protection, each creditor with a security interest in cash collateral will have a perfected post-petition lien against cash collateral to the same extent and with the same validity and priority as the prepetition lien, without the need to file or execute any document as may otherwise be required under applicable non bankruptcy law. The Debtor will maintain insurance coverage for its property in accordance with the obligations under the loan and security documents with the Secured Creditors. A continued hearing on the matter is set for April 3, 2024 at 8:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=xiBEx6 from PacerMonitor.com. About Art of Granite Countertops, Inc. Art of Granite Countertops, Inc. provides countertops to various contractors- for residential and commercial purposes. The Debtor also provides services for de-fabricating existing countertops and installing the newly ordered product. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 3:23-bk-02706) on November 2, 2023. In the petition signed by Marco Damas, president, the Debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Judge Jason A. Burgess oversees the case. Donald M. DuFresne, Esq., at Parker & DuFresne, P.A., represents the Debtor as legal counsel. ARTERA SERVICES: $135MM Bank Debt Trades at 26% Discount -------------------------------------------------------- Participations in a syndicated loan under which Artera Services LLC is a borrower were trading in the secondary market around 74.5 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The loans traded in the secondary market around 68.6 cents-on-the-dollar the previous week ended Feb. 2. The $135 million term loan facility is scheduled to mature on March 6, 2026. The amount is fully drawn and outstanding. Artera Services, LLC provides utility line construction services. The Company offers installation, repair, and maintenance of gas and electric distribution lines, as well as civil excavation, feasibility studies, horizontal directional drilling, and pollution prevention planning services. ASTRA ACQUISITION: Oaktree Specialty Marks $15.7MM Loan at 35% Off ------------------------------------------------------------------ Oaktree Specialty Lending Corporation has marked its $15,688,000 loan extended to Astra Acquisition Corp., to market at $10,230,000 or 65% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+5.25%) to Astra Acquisition. The loan accrues interest at a rate of 10.86% per annum. The loan matures on October 25, 2028. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Astra Acquisition Corp. is a provider of cloud-based software solutions for higher educational institutions. AVISON YOUNG: Guggenheim SOF Marks $2.3MM Loan at 70% Off --------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $2,305,623 loan extended to Avison Young (Canada), Inc to market at $688,805 or 30% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Avison Young (Canada), Inc. The loan accrues interest at a rate of 12.15% (3 Month Term SOFR + 6.50%, Rate Floor: 6.50%). The loan matures on January 31, 2026. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 Avison Young (Canada) Inc. provides real estate services. The Company offers consulting, advisory, lease administration, investment and asset management, and mortgage services. Avison Young (Canada) serves customers worldwide. B-1208 PINE: Court OKs Interim Cash Collateral Access ----------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington authorized B-1208 Pine, LLC to use cash collateral on an interim basis, in accordance with the budget, with a 10% variance. Specifically, the Debtor is authorized to use cash collateral (a) solely during the Interim Period, (b) to pay the costs and expenses and for the purposes identified in the Budget with respect to the Debtor's business operations, and (c) in amounts not to exceed the aggregate amount authorized under the Budget, subject only to the adjustments. As adequate protection for the Debtor's use of cash collateral: a. Pivot Lender is granted valid, binding, enforceable and perfected replacement liens on and security interests in all Postpetition Collateral, in same extent and with the same validity and priority as Pivot Lender's liens in cash collateral as of the Petition Date, to secure an amount equal to the decrease, if any, in the value of Pivot Lender's interest in Prepetition Cash Collateral. The Debtor will continue to maintain insurance on its assets as the same existed as of the Petition Date, but will (i) disclose to Pivot Lender by no later than February 9, 2024 the type of insurance policies it holds and the amount of insurance coverage it carries; and (ii) add Pivot Lender as an additional insured on the Debtor's insurance policies and provide proof to Pivot Lender that Pivot Lender has been added to the policies by no later February 9, 2024. A final hearing on the matter is set for February 22, 2024 at 9:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=aOwaxC from PacerMonitor.com. About B-1208 Pine LLC B-1208 Pine LLC is the owner of real property and improvements thereon located at 1208 Pine Street, Seattle, WA 98122, commonly known as the Pivot Apartments. The Property is valued at $31.72 million. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Wash. Case No. 24-10088) on January 16, 2024. In the petition signed by James H. Wong, manager, the Debtor disclosed $32,134,497 in assets and $46,793,638 in liabilities. Judge Marc L Barreca oversees the case. James L. Day, Esq., at Bush Kornfield, LLP, represents the Debtor as legal counsel. BAKELITE US HOLDCO: Fitch Affirms 'BB' IDR, Outlook Remains Stable ------------------------------------------------------------------ Fitch Ratings has affirmed Bakelite US Holdco, Inc's Issuer Default Rating (IDR) at 'BB'. Fitch has also affirmed the rating of Bakelite's term loan at 'BB+'/'RR2'. The Rating Outlook remains Stable. Bakelite's 'BB' rating reflects the company's leading market share in formaldehyde-based resins in North America and Europe, meaningful barriers to entry and its attractive pricing mechanism that allows for raw material price pass-through. Fitch forecasts positive FCF generation through the forecast driven by consistent margins, modest capex requirements and a manageable debt burden. The rating is tempered by the company's exposure to the cyclical construction and automotive end markets as well as exposure to formaldehyde and phenol. KEY RATING DRIVERS High Barriers to Entry: Resins sold in this industry are typically developed in close coordination with customers, leading to products that are specified into their customers' processes and products. Competitors need to continuously improve their products to meet customer manufacturing requirements. Bakelite has served most of its top 10 customers for 20-plus years. In addition, formaldehyde-based resins have a high water content and a short shelf life of approximately four weeks. This creates a maximum economic shipping radius of 200 miles. The incumbent participants have locational advantages with facilities located close to customers' locations. Strong Pass-Through Ability: Fitch views Bakelite's pass-through ability as favorable to the credit profile. Although the company's raw materials can exhibit price volatility, Bakelite's resin pricing contracts remove much of it. About eighty-five percent of Bakelite's volumes are covered by contracts or pricing mechanisms that allow for raw material price pass-through, which helps the company hold onto profit margins. Key raw materials, such as phenol, methanol and urea, are tied to market-based indices and resin prices move monthly, based on published market changes. In addition, annual adjustments are made for other costs such as overhead, freight and other raw materials. Established Position in Rationalized Market: After completing its acquisition of the Georgia-Pacific Chemicals business in 2022, Bakelite has established a No. 2 market position in North America and a No. 1 position in Europe. The formaldehyde-based resins industry is rational and well-structured, with the top three companies accounting for over 80% of volume in North America and roughly 50% of volume in Europe. Bakelite's bolt-on acquisition of LRBG Chemicals in August 2023 also serves to strengthen the company's position in the Northeastern U.S. and Canada. Fitch expects that any further M&A activity within the forecast horizon will be of a bolt-on nature and not transformational. Conservative Capital Structure: Fitch expects EBITDA Leverage of between 3.0x-3.5x through the forecast horizon, which is supportive of the current 'BB' rating. The company maintains a straight forward capital structure of a $100 million ABL and $485 million term loan. Consistent positive FCF throughout the forecast along with manageable annual capex requirements of around $40 million should allow Bakelite the financial flexibility to de-lever, pursue growth opportunities, or initiate equity distributions should management choose to do so. Sustainability Tailwinds: The construction market has seen growing emphasis on increased use of cladding and insulating materials that exhibit favorable fire, smoke, and toxicity (FST) resistance. Fitch views this positively for Bakelite's product portfolio as its phenolic resins are designed to withstand high heat loads while maintaining mechanical strength and providing good FST resistance. In addition to the construction industry, these same features are sought after in electric vehicle end markets. This provides further opportunities for phenolic resin producers as the products are used in battery cases and light-weighting applications. Cyclical End Markets: Bakelite is materially exposed to cyclical end markets like home construction/remodelling (around 50% of gross profit) as well as autos. Fitch notes that the company has thus far successfully navigated the near-term weakness in the residential and commercial construction industries. However, possible continued softness in these sectors due to higher-for-longer interest rates combined with Bakelite's sizable exposure to European markets could weigh on the company's financial performance over the next two to three years. Phenol and Formaldehyde Exposure: Bakelite, as a formaldehyde-based resin producer, is exposed to formaldehyde, which has been classified by the EPA as a possible human carcinogen. Phenol is also a hazardous monomer. Bakelite and the broader industry have been responsive to concerns around phenol and formaldehyde emissions by changing formulations and using alternative bio-based materials. Phenol and formaldehyde emissions from products using Bakelite resins are below that of background emissions of these substances. Formaldehyde-free options have been developed; however, at this point they are expensive and not widely in demand. DERIVATION SUMMARY Bakelite is the smallest of the peer set in its rating category. The company also generates lower EBITDA margins than publicly rated peers H.B. Fuller Company (BB/Stable) and Ingevity Corporation (BB/Stable). However, Bakelite does maintain similar EBITDA Leverage as H.B. Fuller and Ingevity, in the 3.0x-3.5x range. Although Fitch expects positive FCF in the forecast, Bakelite's FCF margin is lower than both H.B. Fuller and Ingevity. In relation to other peers Avient Corporation and Axalta Coating Systems Ltd., Bakelite's EBITDA Leverage is roughly in line, but EBITDA margins are materially lower than both peers. KEY ASSUMPTIONS - Organic revenue growth of 1%-2% each year 2024-2026 as global macro demand begins to recover; - Pricing and raw materials cost grow 1%-2% each year; - Capex around 3% of revenue each year; - Full realization of synergies from GP Chem and LRBG acquisitions in 2025; - Fitch assumes bolt-on acquisitions of $25 million-$35 million each year 2024-2026 at 7.5x multiple. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Although an upgrade is unlikely, one may be considered upon significant increases in size and scale while maintaining conservative credit metrics; - EBITDA margins approaching the mid-teens, reflecting increased pricing power; - EBITDA leverage durably below 3.0x. Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - EBITDA margins trending toward mid-single digits on a sustained basis, indicating the inability to successfully pass on raw material costs or operating inefficiencies; - EBITDA leverage durably above 4.0x; - Large debt-funded acquisitions or aggressive sponsor distribution policies. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Bakelite maintains adequate liquidity of $85 million at Sept. 30, 2023, consisting of $10 million in cash and $75 million in undrawn asset-backed loan availability. Liquidity needs are manageable throughout the forecast with around $5 million in required annual term loan amortization payments and only modest capex requirements. ISSUER PROFILE Bakelite is a global integrated producer of phenolic specialty resins and engineered thermoset molding compounds used in building materials, automotive products, industrial applications and specialty chemical intermediates, with sales across multiple end markets in Europe and North America. ESG CONSIDERATIONS Bakelite has an ESG Relevance Score of '4' for Exposure to Social Impacts due to Bakelite's exposure to formaldehyde. The '4' score reflects concerns that consumers may take an adverse view regarding formaldehyde emissions, notwithstanding the endemic nature of the material and the efforts that Bakelite and the industry have taken to reduce emissions. It is important to note that formaldehyde emissions are endemic in the environment (humans and most living organisms emit it) and that Fitch does not consider the company's handling of formaldehyde to be an issue. Bakelite, and the broader formaldehyde-based resins industry, has been responsive to concerns regarding formaldehyde. Bakelite has engineered its resins such that formaldehyde emissions from products containing its resins are below background levels and has formaldehyde-free product lines. Nevertheless, this issue has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Bakelite US Holdco, Inc. LT IDR BB Affirmed BB senior secured LT BB+ Affirmed RR2 BB+ BLOCKFI INC: DOJ Bid to Seize Assets Faces Another Obstacle ----------------------------------------------------------- Emily Lever of Law360 reports that a New Jersey bankruptcy judge dealt another blow to the Justice Department's efforts to seize assets stemming from criminal conduct related to the BlockFi bankruptcy, saying the U.S. government cannot pause an adversary case through criminal forfeiture. About BlockFi Inc. BlockFi is building a bridge between digital assets and traditional financial and wealth management products to advance the overall digital asset ecosystem for individual and institutional investors. BlockFi was founded in 2017 by Zac Prince and Flori Marquez and in its early days had backing from influential Wall Street investors like Mike Novogratz and, later on, Valar Ventures, a Peter Thiel-backed venture fund as well as Winklevoss Capital, among others. BlockFi made waves in 2019 when it began providing interest-bearing accounts with returns paid in Bitcoin and Ether, with its program attracting millions of dollars in deposits right away. BlockFi grew during the pandemic years and had offices in New York, New Jersey, Singapore, Poland and Argentina. BlockFi worked with FTX US after it took an $80 million hit from the bad debt of crypto hedge fund Three Arrows Capital, which imploded after the TerraUSD stablecoin wipeout in May 2022. BlockFi had significant exposure to the companies founded by former FTX Chief Executive Officer Sam Bankman-Fried. BlockFi received a $400 million credit line from FTX US in an agreement that also gave FTX the option to acquire BlockFi through a bailout orchestrated by Bankman-Fried over the summer. BlockFi also had collateralized loans to Alameda Research, the trading firm co-founded by Bankman-Fried. BlockFi is the latest crypto firm to seek bankruptcy amid a prolonged slump in digital asset prices. Lenders Celsius Network LLC and Voyager Digital Holdings Inc. also filed for court protection this year. Kirkland & Ellis is also advising Celsius and Voyager in their separate Chapter 11 cases. BlockFi Inc. and eight affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Lead Case No. 22-19361) on Nov. 28, 2022. In the petitions signed by their chief executive officer, Zachary Prince, the Debtors reported $1 billion to $10 billion in both assets and liabilities. Judge Michael B. Kaplan oversees the cases. The Debtors tapped Kirkland & Ellis and Haynes and Boone, LLP, as general bankruptcy counsels; Walkers (Bermuda) Limited as special Bermuda counsel; Cole Schotz, P.C., as local counsel; Berkeley Research Group, LLC as financial advisor; Moelis & Company as investment banker; and Street Advisory Group, LLC, as strategic and communications advisor. Kroll Restructuring Administration, LLC, is the notice and claims agent. BOB ELLIOTT: Seeks Approval to Hire Maltz Auctions as Appraiser --------------------------------------------------------------- Bob Elliott's Music Makers, LLC seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to employ Maltz Auctions Inc. to serve as its appraiser. Maltz has requested a flat fee of $4,350 to perform the appraisal the Debtor's musical equipment and electronic equipment. Richard Maltz, president of Maltz Auctions, assured the court that his firm has no adverse interest to the Debtor's estate, is disinterested and will provide a valuable service to the Debtor by assisting it in valuing its assets. The firm can be reached through: Richard Maltz Maltz Auctions Inc 39 Windsor Place Central Islip, NY 11722 Phone: (516) 349-7022 About Bob Elliott's Music Makers Bob Elliott's Music Makers, LLC filed Chapter 11 petition (Bankr. S.D.N.Y. Case No. 23-11556) on Sept. 27, 2023, with as much as $1 million in both assets and liabilities. Judge Lisa G. Beckerman oversees the case. The Debtor tapped Norma E. Ortiz, Esq., at Ortiz & Ortiz, LLP as bankruptcy counsel and Hernan Serrano, MBA, at YIP Associates, LLC as accountant. BOXER RAMEN: Case Summary & 12 Unsecured Creditors -------------------------------------------------- Debtor: Boxer Ramen LLC 2214 SE 8th Ave Portland, OR 97214 Business Description: The Debtor is a small chain of fast casual restaurants in the Portland metropolitan area. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court District of Oregon Case No.: 24-30324 Judge: Hon. Teresa H Pearson Debtor's Counsel: Thomas W. Stilley, Esq. SUSSMAN SHANK LLP 1000 SW Broadway Suite 1400 Portland, OR 97205 Tel: 503-227-1111 Email: tstilley@sussmanshank.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Micah Camden as member. A full-text copy of the petition containing, among other items, a list of the Debtor's 12 unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/SADA7UY/Boxer_Ramen_LLC__orbke-24-30324__0001.0.pdf?mcid=tGE4TAMA BROTHERS GRIMM: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Brothers Grimm Inc. 6180 Birch Lane Nampa, ID 83687 Business Description: The Debtor is a transportation service provider in Nampa, Idaho, specializing specializing in dry, refrigerated, and expedited freight hauling. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court District of Idaho Case No.: 24-00057 Judge: Hon. Noah G. Hillen Debtor's Counsel: D. Blair Clark, Esq. LAW OFFICE OF D. BLAIR CLARK, PC 967 E. Parkcenter Blvd., #282 Boise, ID 83706 Tel: (208) 475-2050 Fax: (208) 475-2055 E-mail: dbc@dbclarklaw.com Total Assets: $254,130 Total Liabilities: $3,977,136 The petition was signed by Brad Grimm as president. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/KSCQAYA/Brothers_Grimm_Inc__idbke-24-00057__0001.0.pdf?mcid=tGE4TAMA BURGESS BIOPOWER: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------ Two affiliates that concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code: Debtor Case No. ------ -------- Burgess BioPower, LLC (Main Case) 24-10235 c/o CS Operations, Inc. 631 US Hwy 1, #300 North Palm Beach, FL 33408 Berlin Station, LLC 24-10236 c/o CS Operations, Inc. 631 US Hwy 1, #300 North Palm Beach, FL 33408 Business Description: The Debtors comprise renewable energy power companies that own and operate a 75-megawatt biomass-fueled power plant (the "Facility") located on an approximately 62-acre site in Berlin, New Hampshire (the "Facility Site"). Berlin Station owns the Facility and the Facility Site, and Burgess BioPower leases the Facility pursuant to a long-term lease. Burgess BioPower also holds the necessary regulatory licenses for the operation of the Facility. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court District of Delaware Judge: Hon. Laurie Selber Silverstein Debtors' Delaware Counsel: Chantelle D. McClamb, Esq. GIBBONS P.C. 300 Delaware Ave., Suite 1015 Wilmington, DE 19801 Tel: (302) 518-6300 Email: cmcclamb@gibbonslaw.com - AND - Robert K. Malone, Esq. (pro hac vice pending) Kyle P. McEvilly, Esq. (pro hac vice pending) GIBBONS P.C. One Gateway Center Newark, New Jersey 07102 Tel: (973) 596-4500 E-mail: rmalone@gibbonslaw.com kmcevilly@gibbsonlaw.com Debtors' General Bankruptcy Counsel: Alison D. Bauer, Esq. William F. Gray, Jr., Esq. Jiun-Wen Bob Teoh, Esq. FOLEY HOAG LLP 1301 Avenue of the Americas, 25th Floor New York, New York 10019 Tel: (212) 812-0400 Email: abauer@foleyhoag.com wgray@foleyhoag.com jteoh@foleyhoag.com - AND - Kenneth S. Leonetti, Esq. Christian Garcia, Esq. FOLEY HOAG LLP 155 Seaport Boulevard Boston, Massachusetts 02210 Tel: (617) 832-1000 Email: ksl@foleyhoag.com cgarcia@foleyhoag.com Debtors' Provider of Chief Restructuring Officer: APPLIED BUSINESS STRATEGY LLC Debtors' Investment Banker: SSG CAPITAL ADVISORS, L.P. Each Debtor's Estimated Assets: $10 million to $50 million Each Debtor's Estimated Liabilities: $100 million to $500 million The petitions were signed by Dean Vomero as chief restructuring officer. A full-text copy of the petition is available for free at PacerMonitor.com at: Full-text copies of the petitions are available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/TNUMZHI/Burgess_BioPower_LLC__debke-24-10235__0001.0.pdf?mcid=tGE4TAMA https://www.pacermonitor.com/view/TSFI2MQ/Berlin_Station_LLC__debke-24-10236__0001.0.pdf?mcid=tGE4TAMA Burgess BioPower's Sole Unsecured Creditor: (1) Public Service Company of New Hampshire Doing Business as Eversource Energy PO Box 56003 Boston, MA 02205-6003 Contact: C/O Hunton Andrews Kurth LLP ATTN: Michael R. Perry, Esq. PHONE: 617-648-2742 FAX: 212-309-1100 Email: MPERRY@HUNTONAK.COM Nature of Claim: Utility Unsecured Claim: $27,819 Berlin Station's Two Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ 1. Public Service Company of Utility $122,902 New Hampshire Doing Business as Eversource Energy PO Box 56003 Boston, MA 02205-6003 CONTACT: C/O Hunton Andrews Kurth LLP ATTN: Michael R. Perry, Esq. TEL: 617-648-2742 FAX: 212-309-1100 EMAIL: MPERRY@HUNTONAK.COM 2. Public Service Company of New Contract N/A Hampshire Doing Business as Eversource Energy ATTN: Assitant General Counsel PSNH – Energy Park; 780 N. Commercial Street Manchester, NH 03101 CONTACT: C/O Hunton Andrews Kurth LLP ATTN: Michael R. Perry, Esq. PHONE: 617-648-2742 FAX: 212-309-1100 EMAIL: MPERRY@HUNTONAK.COM CAPSTONE INVESTMENTS: Files Emergency Bid to Use Cash Collateral ---------------------------------------------------------------- Capstone Investments, LLC asks the U.S. Bankruptcy Court for the Middle District of Louisiana for authority to use cash collateral and provide adequate protection. The Debtor sought bankruptcy protection because of its strained relationship with Federal National Mortgage Association (FNMA) d/b/a Fannie Mae. The crux of their dispute is the imposition of forced placed insurance. In 2023, the Debtor's insurance briefly lapsed, leaving the Apartment Complex temporarily without coverage. While the Debtor was able to procure replacement insurance (and has since remained insured), Fannie Mae forced place insurance in response and has since refused to remove the forced placed insurance. Although the Debtor could afford the regular monthly payment to Fannie Mae, it could not also afford pay Fannie Mae's forced placed insurance premiums. After several attempts to restructure the Fannie Mae debt, Fannie Mae filed a Petition for Executory Process in the 19th Judicial District Court for the Parish of Tangipahoa, State of Louisiana, commencing case no. C-740882. The Debtor requires the use of cash collateral to meet necessary expenses incurred in the ordinary course of its business, including payroll and the costs associated with its restructuring and these proceedings. As adequate protection for the use of cash collateral, the Debtor proposes to grant Fannie Mae replacement security interests in and liens on all post-petition assets of the Debtor and its estate on which Fannie Mar holds valid and perfected liens. A copy of the Debtor's motion is available at https://urlcurt.com/u?l=N1jEuY from PacerMonitor.com. About Capstone Investments, LLC Capstone Investments, LLC is engaged in activities related to real estate. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. La. Case No. 24-10064) on January 31, 2024. In the petition signed by David J. Wascom, managing member, the Debtor disclosed up to $10 million in both assets and liabilities. Ryan J. Richmond, Esq., at Sternberg, Naccari and White, LLC, represents the Debtor as legal counsel. CAROLINA PANEL: Expects Sale Plan to Pay 100% to Unsecureds ----------------------------------------------------------- Carolina Panel and Glass Erectors, Inc., filed with the U.S. Bankruptcy Court for the Eastern District of North Carolina a Disclosure Statement describing Chapter 11 Plan dated February 1, 2024. The company was formed in 2003 and has since operated as a specialty construction company that installs metal and glass sound barriers, primarily on public and large commercial projects throughout the Southeastern United States. The Debtor is a North Carolina corporation, owned by Rocky and Darla Duncan. The Debtor's business had been profitable prior to Mr. Duncan's association with the distributor, but revenues and profitability decreased dramatically over the past four years. By December 2023, the Debtor contacted counsel to prepare for liquidation through Chapter 11. The Debtor ceased operations on December 21, 2023 and all wage claims were paid prior to the petition date. The Debtor had three uncompleted contracts when it filed for bankruptcy protection but does not intend to provide any further construction services prior to liquidation. Class 3 consists of General Unsecured Claims. The Debtor believes that Allowed General Unsecured Claims total at least $130,596.67, not including the Department of Labor. The Debtor has $19,423.70 in funds on-hand on the petition date. In addition, the Debtor expects to collect approximately $164,430.00 from the net proceeds of asset sales and another $339,030.00 from collection of receivables. The Debtor will satisfy Claims in Class 3 by distributing funds on-hand at the time of the Claims Bar Date, (July 2, 2024), to Allowed General Unsecured Claims, after satisfying all Administrative costs and expenses, and after the payment of any filed priority claims that have not been objected to. The Debtor expects to pay Allowed General Unsecured Claims in Class 3 in full although the distribution to Class 3 Allowed Unsecured Claims will be on a pro rata basis and could be less than 100% if total claims exceed the balance of funds on hand after payment of Allowed Administrative, Secured and Priority Claims. Class 4 consists of Rocky and Darla Duncan as equity interest in the Debtor. Title to and ownership of all property of the estate will vest in the Debtor upon Confirmation of the Plan, subject to all valid liens of Secured Creditors under the Confirmed Plan. Liens of bifurcated Claims will be valid only to the extent of the Allowed Secured Amount of the Claim. To the extent that Class 3 does not accept the Plan, Rocky and Darla Duncan shall offer $3,000.00 of new Value for the purchase of their equity interests in the estate. In the event that any party desires to offer an amount in excess of $3,000.00 for the purchase of said equity interests, they must do so in writing to Debtor's counsel no later than the court-established deadline for balloting on this plan. The Debtor intends to sell all of its assets, subject to prior court approval, through private and/or public sales. The Debtor believes that asset sales will result in net funds of approximately $164,430.00. The Debtor further intends to collect all receivables, which it believes to be in the approximate amount of $339,030.00. Together with cash on-hand, the Debtor expects to have approximately $520,000.00 available to pay Allowed Administrative, Secured, Priority and General Unsecured Claims. A full-text copy of the Disclosure Statement dated February 1, 2024 is available at https://urlcurt.com/u?l=HmlYwm from PacerMonitor.com at no charge. Attorney for Debtor: Danny Bradford, Esq. BRADFORD LAW OFFICES 455 Swiftside Drive, Suite 106 Cary, NC 27518-7198 Telephone: (919) 758-8879 Email: Dbradford@bradford-law.com About Carolina Panel and Glass Erectors Carolina Panel and Glass Erectors, Inc., was formed in 2003 and has since operated as a specialty construction company that installs metal and glass sound barriers. The Debtor filed a Chapter 11 bankruptcy petition (Bankr. E.D.N.C. Case No. 24-00040-5-JNC) on Jan. 4, 2024, disclosing under $1 million in both assets and liabilities. The Debtor is represented by Bradford Law Offices. CBS TRUCKING: Seeks Cash Collateral Access ------------------------------------------ CBS Trucking, Inc. asks the U.S. Bankruptcy Court for the Southern District of New York for authority to use cash collateral and provide adequate protection. The Debtor has two creditors that assert liens on the Debtor's receivables, and one creditor that asserts a blanket lien on all of the Debtor's collateral. On April 27, 2020, the Debtor executed and delivered to ReadyCap Lending, LLC, a Business Loan Agreement, a Note and Security Agreement that is guaranteed by the Small Business Administration. As of the Petition Date, the Debtor was indebted to ReadyCap in the approximate amount of $1.1 million. ReadyCap was granted a security interest in the Debtor's receivables. On October 18, 2020, the Debtor executed and delivered to Key Bank a commercial loan agreement that is guaranteed by the SBA. The principal amount of the Loan was approximately $50,000. The current interest rate is believed to be 11.99%. Key Bank was granted a security interest in the Debtor's receivables. As of the Petition Date, the Debtor was indebted to Key Bank in the approximate amount of $49,928. In order to perfect its security interest in the Debtor's receivables, Key Bank filed a UCC-1 Financing Statement with the New York Secretary of State, bearing Filing Number 202010187807326. The Interim Order provides that, as adequate protection for the use of cash collateral, the Debtor will grant Key Bank a replacement lien in all of the Debtor's pre-petition and post-petition assets and proceeds. The Replacement Liens will be subject and subordinate only to: (a) United States Trustee fees payable under 28 U.S.C. Section 1930 and 31 U.S.C Section 3717; (b) professional fees of duly retained professionals in the Chapter 11 case as may be awarded pursuant to sections 330 or 331 of the Code or pursuant to any monthly fee order entered in the Debtor's Chapter 11 case; and (c) the fees and expenses of a hypothetical Chapter 7 trustee to the extent of $10,000. The Debtor submits that, in order to preserve the Debtor's estate and ensure the viability of the Debtor during the Chapter 11 case, Key Bank should be granted a Replacement Lien with the same nature, extent and validity of their pre-petition liens, subject to investigation by any creditors or committee appointed in the Debtor's Chapter 11 case. In addition to the liens and security interests proposed to be granted pursuant thereto, the Debtor will continue making the monthly debt service payments as provided for in the Key Bank Loan and in accordance with the terms set forth therein. The Debtor submits that, in order to preserve the Debtor's estate and ensure the viability of the Debtor during the Chapter 11 case, it is critical that the Court approve the proposed adequate protection payments to Key Bank and the grant to it a Replacement Lien with the same nature, extent and validity of Key Bank pre-petition lien, subject to investigation by any creditors or committee appointed in the Debtor's Chapter 11 case. A copy of the motion is available at https://urlcurt.com/u?l=4eoFal from PacerMonitor.com. About CBS Trucking, Inc. CBS Trucking, Inc. is part of the general freight trucking industry. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. N.Y. Case No. 23-35547) on June 30, 2023. In the petition signed by Sokol Bala, president, the Debtor disclosed $448,619 in assets and $1.236 million in liabilities. Judge Cecelia G. Morris oversees the case. James J. Rufo, Esq., at Law Office of James J. Rufo, represents the Debtor as legal counsel. CENTER FOR ALTERNATIVE: Unsecureds to Split $81K in Consensual Plan ------------------------------------------------------------------- Center for Alternative Medicine, PLLC, submitted a Second Amended Plan of Reorganization for Small Business under Subchapter V. The Debtor has utilized the breathing spell of the Bankruptcy Case to discover means to safeguard against repeating the actions and conduct leading to the Petition Date, and to ensure full compliance with this Plan. As an effort to afford Plan Payments, the Debtor focused on generating positive Net Income by and through reducing Net Expenses to such costs incurred in the ordinary course and necessary for continued operations; and the procedures implemented to ensure further and future operations subject to such reduced Net Expenses includes, but is not limited to, as follows: (1) remedy 6 years of inconsistent management of books and records arising from office staff turnover; (b) cease any and all operations arising under, related to, or associated with Aesthetic Care and (c) formulate a chart of prioritizing monthly expenses to prevent any possibility of becoming overleveraged by simultaneously attempting to meet all expenses without consideration of cash flows and Net Income during such period. Consensual Confirmation of the Plan shall require the Debtor, over the Plan Term, to commit to Plan Payments in the sum of $448,687.27 and warrant that Holders of Allowed Unsecured Claims recover a Pro-Rata Share of $81,000.00, or approximately twenty one cents on the dollar (i.e. 20.79%). As Consensual Confirmation of the Plan terminates the services of the Trustee, the Debtor need not pay the additional Administrative Expense for the Disbursing Agent in the projected sum of $18,500.00. Furthermore, unlike Treatment under a Cramdown Confirmation, a Consensual Confirmation shall require the Debtor to warrant Distributions to Holders of Allowed Unsecured Claims by prioritizing Plan Payments to Class 13 Claimants over the 4th monthly paycheck owing to Mr. Davis. Therefore, the Treatment of Claims arising from a Consensual Confirmation complies with Section 1190 of the Bankruptcy Code as Distributing consistent and reliable Plan Payments to Unsecured Claimants. Class 13 consists of the Unsecured Claims against the Estate. The Debtor estimates that Allowed Unsecured Claims, on account of Claims not Scheduled as contingent, disputed and/or unliquidated; Proofs of Claim filed on or before to the Claims Bar Date; and Claims not otherwise Disallowed by the Court, is the sum of $808,232.90. The manner of Treatment of the Class 13 Claimant and amount of the Allowed Unsecured Claim shall depend on whether Holders of Class 13 Claims vote to accept or reject the Plan, as follows: Consensual Treatment Holders of Allowed Unsecured Claims shall receive a Pro-Rata Share of $81,000.00, which shall derive from Cash maintained within the Operating Account as of the Effective Date and revenues generated during the Plan Term. The Debtor shall deposit the sum of $6,750.00 into the Disbursement Account on or before the 15th day of the 1st month following the close of each Calendar Quarter commencing on the Effective Date up to and through the 36th month following the Effective Date. The Debtor shall warrant the Consensual Treatment of the Plan Payments Distributed to Unsecured Claimants by prioritizing the monthly sum of $1,083.33 above the payment of wages owing to Mr. Davis for the 4th weekly Pay Period of each month and through depositing such monthly sum into the Reserve Account prior to tendering a paycheck for the 4th weekly Pay Period of each month to Mr. Davis. Cramdown Treatment Holders of Allowed Unsecured Claims shall receive a Pro-Rata Share of all Disposable Income realized during the Plan Term. The Debtor shall deposit the Disposable Income realized during the preceding Calendar Quarter into the Creditor Disbursement Fund on or before the 15th day following the close of each Calendar Quarter commencing on the Effective Date up to and through the 36th month following the Effective Date, for which the 1st deposit into the Creditor Disbursement Account of Disposable Income realized from the Effective Date up to and through December 31, 2023 shall arise on or before January 15, 2024, and the final Plan Payment shall be deposited on or before the 15th day of the 1st month following the 3rd Anniversary. The Debtor shall fund the Plan using Cash generated from one, or a combination of such sources, as follows: * Cash arising from Net Income realized Post-Petition, of which the Debtor maintains within the Operating Account as of the Effective Date, shall be Distributed to certain and specific Claimants as consideration for full payment of an Allowed Claim, or such portion thereof as mutually agreed upon by and the between the Debtor and such relevant Claimant(s), in such order more-fully identified within the Cash Flow Analysis, and for such basis as follows: (a) Allowed Professional Fees Claims; (b) Pre Consummation Distributions; and (c) the amount necessary to Cure an assumed Executory Contract and/or Unexpired Lease, if any. * The Debtor shall deposit into the Creditor Disbursement Fund such portion of the Net Income equal to the collective monthly sum of Plan Payments due and owing to Holders of Allowed Secured Claims, pursuant to Article VI supra and otherwise illustrated within the Cash Flow Analysis, on or before the 5th day of each month commencing on the 1st month following the Effective Date up to and through 5th day of the 3rd Anniversary following the Effective Date. * The Debtor shall deposit Plan Payments to Holders of Allowed Unsecured Claims into the Creditor Disbursement Fund. A full-text copy of the Second Amended Plan dated February 1, 2024 is available at https://urlcurt.com/u?l=qBVj3b from PacerMonitor.com at no charge. Counsel for the Debtor: Joshua B. Sheade Sheade Law Office, LLC 4126 Shoshone Street Denver, CO Tel: (720) 389-9291 Email: joshua@sheadelaw.com About Center for Alternative Medicine Center for Alternative Medicine, PLLC specializes in the management and treatment of disc lesions, overuse soft tissue injuries, traumatic injuries, pain management, and peripheral neuropathies. The company is based in Pueblo, Colo. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Colo. Case No. 23-12482) on June 7, 2023, with $500,000 to $1 million in assets and $1 million to $10 million in liabilities. Mark Dennis, a certified public accountant at SL Biggs, has been appointed as Subchapter V trustee. Judge Joseph G. Rosania, Jr. oversees the case. The Debtor tapped Joshua B. Sheade, Esq., at Sheade Law Office, LLC as legal counsel and Karen E. Heerschap, CPA, at Hewitt Heerschap & Couch PC as tax accountant. CENTER FOR SPECIAL: Voluntary Chapter 11 Case Summary ----------------------------------------------------- Debtor: The Center for Special Needs Trust Administration, Inc. 12425 28th St. N. Saint Petersburg, FL 33716 Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court Middle District of Florida Case No.: 24-00676 Judge: Hon. Roberta A Colton Debtor's Counsel: Scott A. Stichter, Esq. STICHTER, RIEDEL, BLAIN & POSTLER, P.A. 110 E. Madison St. Suite 200 Tampa, FL 33602 Tel: (813) 229-0144 Email: sstichter@srbp.com Estimated Assets: $100 million to $500 million Estimated Liabilities: $100 million to $500 million The petition was signed by William A. Long, Jr., as chief restructuring officer. A copy of the Debtor's list of 20 largest unsecured creditors is now available for free at PacerMonitor.com. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/4NAT3YA/The_Center_for_Special_Needs_Trust__flmbke-24-00676__0001.0.pdf?mcid=tGE4TAMA CENTERPOINT RADIATION: Court OKs Deal on Cash Collateral Access --------------------------------------------------------------- The U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, authorized CenterPoint Radiation Oncology, LLC, a California limited liability company, and affiliates to use cash collateral on an interim basis in accordance with their agreement with First-Citizens Bank & Trust Company and Delphi Investors, Inc. The parties agreed that the Debtor may use cash collateral on an interim basis through the close of business on February 29, 2024 in accordance with the budget, solely to the extent necessary to pay post-petition expenses. The Debtors will use $45,000 of cash collateral to pay Delphi Investors, LLC rent for February 2024 and such payment will be made on the same day that the Debtors pay to FCB $5,700, which represents the past due adequate protection payments that the Debtors owe to FCB. Delphi, in exchange for receipt of $45,000 of cash collateral for rent for February 2024, will not declare a default for failure to pay the sum of $101,000 rent for February 2024. A copy of the order is available at https://urlcurt.com/u?l=OvY56f from PacerMonitor.com. About CenterPoint Radiation CenterPoint Radiation Oncology, LLC filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 23-13448) on June 2, 2023, with $100,000 to $500,000 in assets and $1 million to $10 million in liabilities. Dr. Rosalyn Morrell, member, signed the petition. Judge Sheri Bluebond oversees the case. Ron Bender, Esq., at Levene, Neale, Bender, Yoo & Golubchik, LLP is the Debtor's counsel. CENTRAL NEW YORK RACEWAY: Taps Bernier Carr as Remediation Expert ----------------------------------------------------------------- Central New York Raceway Park, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of New York to hire Bernier, Carr & Associates, Engineers, Architects & Land Surveyors, PC as its remediation/stabilization expert. The firm will ensure the Debtor's compliance with the Consent Order, and specifically submit a remediation and stabilization plan to the New York State Department of Environmental Conservation for its approval, and ultimately compute costs associated with its implementation to inform the Debtor's efforts to market and sell its real property. The Debtor has agreed to pay Bernier on an hourly basis, with rates ranging from $50 up to $260 per hour, plus reimbursement of actual, necessary expenses and other charges. Bernier, Carr & Associates is a "disinterested person" as that term is defined in Bankruptcy Code Section 101(14), as modified by Section 1107(b); and does not hold or represent an interest adverse to the Debtor's estate, according to court filings. The firm can be reached through: Michael D. Altieri Bernier, Carr & Associates, Engineers, Architects & Land Surveyors, PC 327 Mullin St Watertown, NY 13601-3607 Tel: (315) 782-8130 About Central New York Raceway Park Central New York Raceway Park, Inc. is a privately-owned corporation, with its principal place of business in Central Squaret, N.Y., and its principal assets located in Oswego County. Central New York Raceway Park filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D.N.Y. Case No. 23-30367) on May 30, 2023, with $1 million to $10 million in assets and $10 million to $50 million in liabilities. Glenn Donnelly, president, signed the petition. Judge Wendy A. Kinsella oversees the case. Scott J. Bogucki, Esq., at Gleichenhaus, Marchese & Weishaar, P.C. is the Debtor's legal counsel. CGCC LLC: Amends Plan to Resolve Dr. Smith Claim Issues ------------------------------------------------------- CGCC, LLC, submitted an Amended Plan of Reorganization dated February 4, 2024. Debtor is a limited liability company with five equal members: Dr. James F. Smith, Dr. Frederick M. Schnell, Dr. Kenneth D. Deaton, Dr. Linda K. Hendricks, and Dr. Bruce T. Burns. Dr. Smith decided to exercise the retirement provision in the Operating Agreement that presumably required Debtor to purchase Dr. Smith's interest if he could not find an eligible doctor to buy his interest. Without a doctor interested in purchasing his 20% interest, he made demand upon Debtor to purchase his 20% interest. Dr. Smith absolutely knew that Debtor did not have the funds to purchase his interest. The Operating Agreement does not provide for a capital call requiring the other members to contribute money to buy back Dr. Smith's interest. As a result of Dr. Smith choosing to trade his economic and membership equity for debt, Debtor was compelled to file this Bankruptcy Case. This Amended Plan provides for payment of Dr. Smith's claim as settled and agreed upon by and between Debtor and Dr. Smith. Dr. Smith's claim is a separate class under this Amended Plan. This Amended Plan deals with all property of Debtor and provides for treatment of all Claims against Debtor and its property. Class 1 shall consist of General Unsecured Claims. If the Amended Plan is confirmed under Section 1191(a) of the Bankruptcy Code, Debtor shall pay the General Unsecured Creditors in full from the funds Debtor holds in its debtor in possession bank account on the Effective Date. Debtor anticipates and projects, but does not warrant, Dr. Linda Hendricks as the holder of Class 1 claim in the amount of $3,900.00. Dr. Hendricks will receive a distribution of 100% of their allowed claims. If the Amended Plan is confirmed under Section 1191(b) of the Bankruptcy Code, Class 1 shall be treated the same as if the Amended Plan was confirmed under Section 1191(a) of the Bankruptcy Code. Notwithstanding anything else in this document to the contrary, any claim listed shall be reduced by any payment received by the creditor holding such claim from any third party or other obligor and Debtor's obligations hereunder shall be reduced accordingly. The Claims of the Class 1 Creditor is Impaired by the Amended Plan. Class 2 consists of Dr. James Smith's Claim. Dr. Smith is a member of Debtor and holds a 20% member interest. His claim is based upon Dr. Smith's exercise of Section 9.06 of the Operating Agreement, pursuant to which he made demand on Debtor to purchase his ownership interest, and subsequent Lawsuit. Dr. Smith's member interest was valued at $583,909.00 according to a 2019 appraisal of the Building. In his Lawsuit, Dr. Smith also sought additional claims against Debtor in the amount of $132,522.76. Dr. Smith filed a proof of claim in the amount of $716,431.76. Debtor objected to Dr. Smith's proof of claim. Through mediation, Debtor and Dr. Smith resolved the claims asserted by Dr. Smith in the Adversary Proceeding and in his proof of claim and Debtor's objection to Dr. Smith's Claim as follows: * Debtor shall redeem Dr. Smith's 20% member interest in Debtor by paying $600,000.00 (the "Redemption Payment") to Dr. Smith upon entry of the Confirmation Order which is the Effective Date of the Amended Plan. Contemporaneously with the Redemption Payment, Dr. Smith shall execute a member transfer agreement transferring his 20% member interest back to Debtor. * Dr. Schnell, Dr. Deaton, Dr. Burns, and Dr. Hendricks, by wire or check deposited into Debtor's counsel's trust account no later than March 4, 2024, shall each pay $150,000.00 as a capital contribution to Debtor in order for Debtor to redeem Dr. Smith's member interest. Dr. Smith shall dismiss with prejudice the Adversary Proceeding within 3 days of the Effective Date. Absent written agreement signed by the parties, following plan confirmation there can be no modification of the terms of resolution between Debtor and Dr. Smith irrespective of any Bankruptcy Code rights and/or Bankruptcy Rules allowing for plan modifications. The parties agree to cooperate in executing all documents required to fulfill the terms of this Section 4.2. Dr. Smith will withdraw his objection to the Amended Plan and shall vote in favor of Debtor's Amended Plan. Upon confirmation, Reorganized Debtor will be charged with administration of the Amended Plan. Reorganized Debtor will be authorized and empowered to take such actions as are required to effectuate the Amended Plan. Reorganized Debtor will file all post-confirmation reports required by the United States Trustee's office or by the Subchapter V Trustee. The source of funds for the payments for general unsecured creditors pursuant to the Amended Plan are the funds in Debtor's debtor in possession account as of the Effective Date and the distributions received from HHC in the normal course of Reorganized Debtor's business operations. A full-text copy of the Amended Plan dated February 4, 2024 is available at https://urlcurt.com/u?l=B9rL8N from PacerMonitor.com at no charge. Attorneys for Debtor: William A. Rountree, Esq. Caitlyn Powers, Esq. ROUNTREE LEITMAN KLEIN & GEER, LLC Century Plaza I 2987 Clairmont Road, Suite 350 Atlanta, GA 30329 Tel: (404) 584-1238 Email: wgeer@rlkglaw.com cpowers@rlkglaw.com About CGCC LLC CGCC, LLC, was formed by Albert P. Reichert, Jr. as a Georgia Limited Liability Company by executing and transmitting Articles of Organization to the Secretary of State of Georgia in accordance with the provisions of Georgia law. The Debtor sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. M.D. Ga. Case No. 23-51097) on August 14, 2023, listing up to $50,000 in assets and $500,001 to $1 million in liabilities. Caitlyn Powers, Esq. at Rountree Leitman Klein & Geer, LLC, is the Debtor's counsel. CHEMICAL EXCHANGE: Seeks to Extend Plan Exclusivity to April 15 --------------------------------------------------------------- Chemical Exchange Industries, Inc. and its affiliates asked the U.S. Bankruptcy Court for the Southern District of Texas to extend their exclusivity periods to file a plan of reorganization and obtain acceptance thereof to April 15 and June 14, 2024, respectively. The Debtors and their investment banker Chiron Financial have been working diligently to solidify a buyer of the Debtors' asset, and currently are negotiating with at least 2 parties who have submitted non-binding offers to acquire the assets. Chiron anticipates receiving multiple additional non-binding offers. The Debtors are working toward preparing and filing their motion to approve bidding procedures and for the sale assets under 11 U.S.C. Section 363, but require additional time to finalize the terms of sale with a potential buyer and/or stalking horse bidder. This is the Debtors' first request to extend its exclusive periods. The Debtors are making significant progress toward their goal to sell the assets. The Debtors are paying their undisputed post-petition debts as they become due and have complied with all applicable post-petition administrative requirements and have filed their monthly operating reports. The extension request is not filed to pressure creditors, as the Debtors are working in good faith to sell their assets and distribute the proceeds under the priority system set forth in the Bankruptcy Code. Likewise, the Debtors are acutely aware of the need for a sale to be concluded on an expeditious schedule considering the operation of the business and DIP financing in place, and this first request for an extension is made in order to have the necessary time to complete the sale process rather than simply to delay matters, languish aimlessly in Chapter 11, or leverage the creditors. Further, no unresolved contingencies exist apart from the sale process. Co-Counsel for the Debtors: Joseph G. Epstein, Esq. JOSEPH G. EPSTEIN PLLC 24 E Greenway #970 Houston, TX 77046 Tel: (713) 222-8400 - and - Preston T. Towber, Esq. TOWBER LAW FIRM PLLC 1111 Heights Blvd. Houston, TX 77008 Tel: (832) 485-3555 About Chemical Exchange Industries Chemical Exchange Industries, Inc. specializes in contract manufacturing and tolling, and the manufacture of DCPD (dicyclopentadiene), DCPD alcohol, resin intermediates, n-butanol, DCPD/CPD derivatives, mining chemicals, aromatic solvents, and sustainable aviation fuel (SAF). The company is based in Galena Park, Texas. Chemical Exchange Industries and its affiliates filed Chapter 11 petitions (Bankr. S.D. Texas Lead Case No. 23-90778) on Sept. 18, 2023. In the petition signed by its chief executive officer, Douglas H. Smith, Chemical Exchange Industries disclosed $10 million to $50 million in assets and $1 million to $10 million in liabilities. Judge David R. Jones oversees the cases. The Debtors tapped Joseph Epstein, Esq., at Joseph G. Epstein, PLLC and The Tower Law Firm, PLLC as bankruptcy counsels; Chiron Financial, LLC as investment banker and financial advisor; and Melton & Melton, LLP as tax professionals. The U.S. Trustee for Region 7 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. The committee is represented by Zachary McKay, Esq., at Jackson Walker LLP; and Daren R. Brinkman, Esq., at Brinkman Law Group, PC as counsel. CHPPR MIDCO: Moody's Assigns 'Caa1' CFR on Bankruptcy Emergence --------------------------------------------------------------- Moody's Investors Service assigned a Caa1 Corporate Family Rating and Caa1-PD Probability of Default Rating to CHPPR MidCo Inc. (a/k/a "Air Methods Corporation"). Moody's also assigned a Caa1 rating to the new $250 million backed senior secured first lien term loan. The outlook is stable. On December 28, 2023, Air Methods completed its recapitalization process and emerged from Chapter 11. Through this process, Air Methods has reduced its debt by approximately $1.7 billion from pre-bankruptcy levels. The new capital structure includes an undrawn $200 million accounts receivables (A/R) facility, $250 million backed senior secured term loan and $268 million of aircraft financing leases. In its ratings assignment, Moody's considered the company's exit credit profile, including adequate liquidity, updated capital structure and operating performance. The Caa1 rating reflects the company's weak operating performance driven by persistent inflationary pressures such as upward wage costs due to pilot and, to a certain extent, clinical labor shortages, as well as some impact from elevated fuel prices. Additionally, Moody's forecasts incorporates the Veterans Affairs (VA) reimbursement rate reset in early 2025, which will cause material margin compression and leverage to increase to over 5.0x. Environmental, social and governance risk considerations are material to the rating action. With respect to social risks, Air Methods is negatively impacted by an evolving reimbursement landscape, including potential negative impacts from upcoming VA reimbursement rate cuts, as well as persistent labor shortages which increased operating expenses. Governance risk considerations include the company's financial strategy and risk management, evident with the company's recent chapter 11 bankruptcy in October 2023 and subsequent reorganization. Lastly, Air Methods also faces environmental risks, particularly carbon transition risk, due to its fossil fuel dependent helicopter fleet. RATINGS RATIONALE Air Methods' Caa1 CFR reflects Moody's forecast for elevated financial leverage of over 5.0x in 2025 following the VA rate reset, and persistent inflationary pressures on earnings. While the pro forma financial leverage is approximately 3x as of September 30, 2023, Moody's forecasts leverage to rise to the mid 5x in 2025 following the reimbursement rate cuts and persistently high operating costs. Air Methods' rating is supported by a sizeable revenue base, geographic diversity of operations, and the company's position as a leading provider of community-based air ambulance services in the United States. Moody's expects Air Methods to maintain an adequate liquidity position over the next 12 months. Air Methods had $87 million of cash as of December 28, 2023, when it emerged from bankruptcy. Moody's expects Air Methods will generate positive free cash flow of approximately $15 million in the next 12 months, before the VA rate cut. Air Methods has full availability under its new $200 million accounts receivable securitization facility. After the VA reimbursement rate cut in 2025, Moody's expects the company will not be able to generate positive free cash flow and will need to rely on its accounts receivable facility. The company has a springing fixed charge covenant of 1.0x if utilization of the securitization facility exceeds 50% of the borrowing base. Moody's expects the company would have adequate headroom if it were to be tested in the next several quarters. Air Methods' senior secured first lien credit facility, comprised of a $250 million backed senior secured term loan is rated Caa1, the same as the Caa1 Corporate Family Rating. This reflects the diminished collateral pool available to secured obligations available for the term loan after the accounts receivable securitization facility. Further, it also reflects the term loan's seniority in the capital structure relative to the large amount of financing leases related to the aircraft financing facilities. The outlook is stable. Moody's expects Air Methods to continue to face operating headwinds including earnings and margins pressures with the potential VA rate reset in 2025. Moody's expects financial leverage to remain in the mid 5 times range following the rate reset. Marketing terms for the new credit facilities (final terms may differ materially) include the following: Incremental pari passu capacity up to the greater of $143.0 million and 50% of consolidated EBITDA, plus unlimited amounts subject to 0.50x first lien net leverage ratio. There is no inside maturity sublimit. There are "blocker" provisions which cap the assets that can be held by Non-Guarantor Subsidiaries (i.e., unrestricted subsidiaries and non-credit parties, other than the AR securitization subsidiaries) at 5% of total assets. The credit agreement provides some limitations on up-tiering transactions, requiring affected lender consent for amendments that subordinate the debt and/or liens unless such lenders can ratably participate in such priming debt. Air Methods' CIS-5 indicates that the rating is lower than it would have been if ESG risk exposures did not exist and that the negative impact is more pronounced than for issuers scored CIS-4. Air Methods has credit risk exposure to governance risk considerations (G-5) driven by aggressive financial strategy and risk management, evident with the company's recent bankruptcy and reorganization. Air Methods also has exposure to social risk considerations (S-4), most notably to reimbursement changes partly driven by legislative actions. A portion of services are provided on an out-of-network basis, often resulting in payment disputes. Air Methods is also susceptible to human capital risks with labor shortages, particularly with pilots and skilled clinical personnel. Lastly, environmental risk considerations (E-3) reflect the company's use of fossil fuel dependent helicopter fleet which makes it exposed to carbon transition risk. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if the company improves its earnings and liquidity including consistent positive free cash flow generation after the anticipated rate reductions from the VA in 2025. Quantitatively, ratings could be upgraded if debt/EBITDA is sustained below 6.0 times, and interest coverage is maintained over 1.0x. Ratings could be downgraded if the company's operating performance or margins deteriorate, liquidity erodes including persistent negative free cash flow generation and significant reliance on the A/R facility. Negative legislative actions or reimbursement rate cuts could result in a ratings downgrade. Further, the ratings could be downgraded if the company's capital structures becomes unsustainable. CHPPR MidCo Inc. (a/k/a "Air Methods Corporation") is one of the largest providers of air medical emergency services in the United States. In addition to the core air medical emergency services business, the company also provides aerial tours in select U.S. tourist destinations. The company also has a small presence in the design, manufacture, and installation of medical aircraft interiors for domestic and international customers. Net revenues are approximately $1.3 billion as of September 30, 2023. The principal methodology used in these ratings was Business and Consumer Services published in November 2021. CLEARWATER CONTRACTING: Seeks to Tap Coles Reinstein as Accountant ------------------------------------------------------------------ Clearwater Contracting LLC seeks approval from the U.S. Bankruptcy Court for the District of Idaho to hire Susan M. Langley, CPA, CFE at Coles Reinstein, PLLC as its accountant. The firm will provide these services: a. provide as-needed financial accounting services, including ongoing financial accounting entries, reports, and statements; b. prepare federal and state income tax returns with supporting schedules and related tax report filings (income tax, payroll, etc.), and perform related research as necessary; c. consult and assist with tax liability projections; d. contribute to and attend conference calls, meetings, and hearings related to the services provided by the firm, as may be necessary. The firm will be paid at these rates: Administrative $65 per hour Processing $85 per hour Bookkeeping $110 per hour Tax Preparation $135 per hour Tax review $250 per hour Ms. Langley, accountant at Coles Reinstein, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Susan M. Langley, CPA, CFE Coles Reinstein, PLLC 960 S Broadway Ave #415, Boise, ID 83706 Phone: (208) 345-2350 Email: sue@colesreinstein.com About Clearwater Contracting Clearwater Contracting, LLC, a company in Nampa, Idaho, filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Idaho Case No. 23-00315) on June 23, 2023, with $2,291,065 in assets and $2,177,009 in liabilities. William Prather, president, signed the petition. Judge Noah G. Hillen oversees the case. Matthew Christensen, Esq., at Johnson May, PLLC represents the Debtor as legal counsel. CLOVER FAST: Unsecured Creditors to Split $250K in Plan ------------------------------------------------------- Clover Fast Food, Inc., filed with the U.S. Bankruptcy Court for the District of Delaware a Plan of Reorganization dated February 1, 2024. Clover is a mission-based company with the goal of addressing climate change through the transformation of the American food system by making vegetable-based fast food and home cooking the most desirable of all diets. Through the Plan, the Debtor proposes to continue operating its business and, on the Effective Date, make Distributions to its Creditors from the Exit Financing provided from the Prepetition Lenders and DIP Lenders. The Plan provides for three classes of claims and one class of interests. The first class consists of the Secured Claims of the ABL Lenders, Prepetition Lenders, and DIP Lenders, all of which shall remain impaired as of the Effective Date. The second class of claims consists of all priority unsecured claims, which the Debtor proposes to pay in full, upon the Effective Date. The third class consists of all general unsecured claims, including any deficiency claims of the IND Lenders and all lease rejection claims, which the Debtor proposes to pay pro rata a total of $250,000 through a consensual plan in full and final satisfaction on the Effective Date. The sole class of Interests consists of the same Interest Holders as they existed on the Petition Date. The Plan proposes to allow Interest Holders to retain their Interests, upon confirmation of the Plan, as Allowed Interests in the Reorganized Debtor. Class 3 shall consist of all Allowed General Unsecured Claims not otherwise classified. Except as set forth in Section 10.01 of this Plan, the GUC Distribution of $250,000, in total, shall be paid to Holders of Allowed Class 3 Claims on a Pro Rata basis on the Effective Date. Class 4 consists of the ownership Interests in the Debtor as they existed on the Petition Date and, upon the Effective Date, shall consist of the Allowed Interests of the Reorganized Debtor. After the Effective Date, the Reorganized Debtor intends to continue its operations indefinitely, and under no circumstances for a period shorter than that which is necessary for its repayment of all Allowed Claims as prescribed the Plan. The Plan will be funded with cash on hand, future operating revenue, and the Exit Financing. The Plan is feasible, pursuant to Section 1129(a)(11) of the Bankruptcy Code, based on the projected income of the Debtor over the term of the Plan. The Exit Financing will be available on the Effective Date for the Debtor to utilize, as necessary, to warrant the feasibility of the Plan. A full-text copy of the Plan of Reorganization dated February 1, 2024 is available at https://urlcurt.com/u?l=2Wn3h9 from PacerMonitor.com at no charge. Counsel for Clover Fast: CLARK HILL PLC Karen M. Grivner, Esq. 824 N. Market Street, Suite 710 Wilmington, DE 19801 Telephone: (302) 250-4750 Phone: kgrivner@clarkhill.com -and- Kevin H. Morse, Esq. Joseph A. Archambeau, Esq. 130 E. Randolph Street, Suite 3900 Chicago, IL 60601 Telephone: (312) 985-5556 Email: kmorse@clarkhill.com jarchambeau@clarkhill.com About Clover Fast Food Clover Fast Food, Inc., d/b/a Clover Food Lab, is a vegetarian fast food chain which operates restaurants around the Boston Metro Area. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 23-11812) on Nov. 3, 2023. In the petition signed by Julia Wrin Piper, as chief executive officer, the Debtor disclosed $8,397,968 in total assets and $4,573,997 in total liabilities. Judge Brendan Linehan Shannon oversees the case. Karen M. Grivner, Esq., at Clark Hill PLC, is the Debtor's legal counsel. CONSOLIDATED ENERGY: Fitch Assigns 'BB-' Rating on Sr. Unsec. Notes ------------------------------------------------------------------- Fitch Ratings has assigned a 'BB-'/'RR4' rating to Consolidated Energy Limited's (CEL) proposed senior unsecured notes. The debt issuance will be used in conjunction with its recently announced $745 million term loan to fund the acquisition of an additional stake in Oman Methanol Company LLC (OMC), refinance existing secured debt, and fund deferred M&A consideration from Proman's 2020 acquisition of CEL. KEY RATING DRIVERS Evolving Capital Structure: On Dec. 29, 2023, CEL acquired an additional stake in the OMC, increasing its total stake from 26.1% to 60.0% ownership for $347 million, allowing for full consolidation of OMC's financial results, resulting in annual EBITDA contribution of over $100 million. CEL is issuing $745 million in new term loan debt and $580 million in unsecured notes in order to fund the $347 million acquisition, refinance $658 million in existing secured debt, and fund $166 million deferred M&A consideration from Proman's 2020 acquisition of CEL. Fitch anticipates that CEL will not materially alter OMC's asset profile or operating strategy. Fitch also expects that management will pursue a mix of growth spending and modest debt reduction with its consistently strong cash generation - with a stronger medium-term outlook resulting in a heavier orientation towards growth spending. Commodity Price Exposure: CEL and other methanol producers have benefited from historically high methanol contract prices in recent years, with average U.S. contract prices above $600/MT in 2022 and above $500/MT in 2023. Though Fitch believes that the near-term pricing environment will soften as global fuel supply comes back online, a generally favorable demand environment for olefins and polyolefins coupled with ongoing strength in fuel demand should continue to drive a strong methanol pricing environment. This dynamic, coupled with historically high fertilizer pricing, led to robust FCF generation in 2021 and 2022. Fertilizer pricing declined steeply in 2023, alongside extended downtime on a major turnaround at CEL's Natgasoline assets and an outage at the company's ammonia, urea, and melamine (AUM) complex in Trinidad. This resulted in materially weaker EBITDA and cash flow generation. Fitch anticipates both facilities to run at typical utilization rates in 2024 and beyond. However, these outages and the generally volatile commodity price environment highlight the structural risks the company faces as a commodity producer with two business lines. Credible Deleveraging Path: CEL has proactively reduced debt by repaying $160 million in unsecured notes due 2022 and $150 million in unsecured notes due 2026. Management has articulated a desire to achieve investment-grade credit metrics, and Fitch believes the company has sufficient cash generation to pursue further deleveraging in the medium term. However, CEL's acquisition of a majority stake in OMC alongside its option to move forward with its Big Lake Fuels project, which would add roughly 1.8 million tons in capacity and cost around $1.8 billion, offer viable alternative uses of cash to debt reduction. Should CEL continue to elect to spend on growth rather than debt reduction - in particular with respect to the development of its Big Lake asset - then the ultimate funding mix and cash generation will be important in determining the rate at which the company is able to reduce debt. Low Cost Producer: The pricing dynamics of natural gas continue to drive CEL's position as a low-cost producer of methanol. Natural gas is CEL's main feedstock, and a combination of North American shale production and the Russia-Ukraine war has amplified the degree to which North American production is cost-advantaged. Fitch believes that modest capacity additions are unlikely to change this dynamic and expects CEL to maintain this advantage over the ratings horizon. Energy Applications Drive Profitability: Methanol prices are volatile and correlated to oil prices, while methanol's feedstock costs are linked to natural gas and coal prices in Asia. As a result, sharp declines in the oil/gas price ratio can periodically pressure CEL's credit profile. Methanol demand is increasingly driven by energy applications, which include MTO plants, gasoline blendstocks to increase octane (MTBE), a substitute for bunker fuel and an industrial boiler fuel. DERIVATION SUMMARY CEL is smaller than methanol industry peer Methanex Corp. (BB+/Stable) and fertilizer industry peers ICL Group Ltd. (BBB-/Stable) and CF Industries Holdings, Inc. (BBB/Stable). Though all issuers enjoyed strong pricing environments and robust cash flows in recent years, methanol producers CEL and Methanex have elected to use this period as an opportunity to pursue a more conservative capital deployment strategy relative to the years before the COVID-19 pandemic. In contrast, CF Industries and ICL Group enjoy more stable balance sheets. Methanex is moving forward with a reduced dividend and lower levels of share repurchases while it uses its excess cash to self-fund a large capacity expansion in Geismar, LA, while CEL has pursued a mix debt reduction and inorganic growth through the OMC transaction. Both companies benefit from a North American orientation, which has proven especially beneficial in the methanol industry, but CEL's slightly lower scale and reach, coupled with higher leverage, mean that it faces slightly more credit risk overall. KEY ASSUMPTIONS - Methanol prices moderate in the second half of 2023 and thereafter from historic highs, with cost-advantaged production driving earnings rather than price increases; - Ammonia - FOB Middle East $/tonne per Fitch's nitrogen fertilizer price assumptions (published Jan. 9, 2024): $430 in 2023; $360 in 2024; $330 in 2024; and $300 in 2025 and thereafter; - No significant capex in 2024 and beyond (a decision to move forward with a significant capacity expansion at that time would likely be coupled with a materially stronger pricing environment than is consistent with Fitch's forecast); - Excess cash used primarily for deleveraging; - Maturing debt not repaid with cash is refinanced. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Mid-cycle EBITDA leverage durably below 3.5x, potentially driven by increased global demand for methanol as power and methanol as a marine fuel; - Demonstrated commitment to a conservative capital deployment strategy even during periods of strong earnings and cash flow metrics; - Increased product diversification. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Mid-cycle EBITDA leverage durably above 4.5x; - Elevated capital or equity-friendly spending, representing a departure from management's commitment to deleveraging; - Sustained disruption in operations of major facilities. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity, Staggered Maturities: Fitch expects CEL to maintain solid liquidity throughout the ratings horizon, with solid medium-term cash generation and full availability on its new $175 million revolving credit facility due 2029. Natgasoline faces an approximately $500 million maturity in 2025. However, solid cash generation and a history of proactive debt repayment will likely give the company sufficient financial flexibility to address the maturity through a combination of refinancing and repayment. ISSUER PROFILE CEL is the world's second largest producer of methanol and one of the largest nitrogen producers. The company operates methanol production facilities in Trinidad and Tobago, the U.S., and Oman, with distribution reaching all major markets in the Americas, Europe, and Asia. DATE OF RELEVANT COMMITTEE January 25, 2024 ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery ----------- ------ -------- Consolidated Energy Limited senior unsecured LT BB- New Rating RR4 CONSOLIDATED ENERGY: Fitch Assigns BB- LongTerm IDR, Outlook Stable ------------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' first-time Long-Term Issuer Default Rating (IDR) to Consolidated Energy Ltd (CEL). Fitch has also assigned a 'BB+'/'RR2' to the company's secured debt, and a 'BB-'/'RR4' to its unsecured debt. The Rating Outlook is Stable. The 'BB-' IDR reflects CEL's position as a leading global supplier of methanol, with over 7 million metric tons (MT) in production capacity. The rating also reflects the company's advantaged North American positioning, realistic deleveraging strategy, and the expectation for strong cash generation in a strong pricing environment. Offsetting considerations include methanol's sensitivity to crude and natural gas prices and China's demand, a high debt burden, and the potential for high capital outlays. KEY RATING DRIVERS Evolving Capital Structure: On Dec. 29, 2023, CEL acquired an additional stake in the Oman Methanol Company LLC (OMC), increasing its total stake from 26.1% to 60.0% ownership for $347 million, allowing for full consolidation of OMC's financial results, resulting in annual EBITDA contribution of over $100 million. CEL is issuing $745 million in new term loan debt as well as other unsecured debt in order to fund the $347 million acquisition, refinance $658 million in existing secured debt, and fund $166 million deferred M&A consideration from Proman's 2020 acquisition of CEL. Fitch anticipates that CEL will not materially alter OMC's asset profile or operating strategy. Fitch also expects that management will pursue a mix of growth spending and modest debt reduction with its consistently strong cash generation - with a stronger medium-term outlook resulting in a heavier orientation towards growth spending. Commodity Price Exposure: CEL and other methanol producers have benefited from historically high methanol contract prices in recent years, with average U.S. contract prices above $600/MT in 2022 and above $500/MT in 2023. Though Fitch believes that the near-term pricing environment will soften as global fuel supply comes back online, a generally favorable demand environment for olefins and polyolefins coupled with ongoing strength in fuel demand should continue to drive a strong methanol pricing environment. This dynamic, coupled with historically high fertilizer pricing, led to robust FCF generation in 2021 and 2022. Fertilizer pricing declined steeply in 2023, alongside extended downtime on a major turnaround at the company's Natgasoline assets and an outage in the company's ammonia, urea, and melamine (AUM) complex in Trinidad. This resulted in materially weaker EBITDA and cash flow generation. Fitch anticipates both facilities to run at typical utilization rates in 2024 and beyond. However, these outages and the generally volatile commodity price environment highlight the structural risks the company faces as a commodity producer with two business lines. Credible Deleveraging Path: CEL has proactively reduced debt by repaying repaid $160 million in unsecured notes due 2022 and $150 million in unsecured notes due 2026. Management has articulated a desire to achieve investment-grade credit metrics, and Fitch believes the company has sufficient cash generation to pursue further deleveraging in the medium term. However, CEL's acquisition of a majority stake in OMC alongside its option to move forward with its Big Lake Fuels project, which would add roughly 1.8 million tons in capacity and cost around $1.8 billion, offer viable alternative uses of cash to debt reduction. Should the company continue to elect to spend on growth rather than debt reduction - in particular with respect to the development of its Big Lake asset - then the ultimate funding mix and cash generation will be important in determining the rate at which the company is able to reduce debt. Low Cost Producer: The pricing dynamics of natural gas continue to drive CEL's position as a low-cost producer of methanol. Natural gas is the company's main feedstock, and a combination of North American shale production and the Russia-Ukraine war has amplified the degree to which North American production is cost-advantaged. Fitch believes that modest capacity additions are unlikely to change this dynamic and expects CEL to maintain this advantage over the ratings horizon. Energy Applications Drive Profitability: Methanol prices are volatile and correlated to oil prices, while methanol's feedstock costs are linked to natural gas and coal prices in Asia. As a result, sharp declines in the oil/gas price ratio can periodically pressure CEL's credit profile. Methanol demand is increasingly driven by energy applications, which include MTO plants, gasoline blendstocks to increase octane (MTBE), a substitute for bunker fuel and an industrial boiler fuel. DERIVATION SUMMARY CEL is smaller than methanol industry peer Methanex Corp. (BB+/Stable) and fertilizer industry peers ICL Group Ltd. (BBB-/Stable) and CF Industries Holdings, Inc. (BBB/Stable). Though all issuers enjoyed strong pricing environments and robust cash flows in recent years, methanol producers CEL and Methanex have elected to use this period as an opportunity to pursue a more conservative capital deployment strategy relative to the years before the COVID-19 pandemic. In contrast, CF Industries and ICL Group enjoy more stable balance sheets. Methanex is moving forward with a reduced dividend and lower levels of share repurchases while it uses its excess cash to self-fund a large capacity expansion in Geismar, Louisiana, while CEL has pursued a mix debt reduction and inorganic growth through the OMC transaction. Both companies benefit from a North American orientation, which has proven especially beneficial in the methanol industry, but CEL's slightly lower scale and reach, coupled with higher leverage, mean that it faces slightly more credit risk overall. KEY ASSUMPTIONS - Methanol prices moderate in the second half of 2023 and thereafter from historic highs, with cost-advantaged production driving earnings rather than price increases; - Ammonia - FOB Middle East $/tonne per Fitch's nitrogen fertilizer price assumptions (published Jan. 9, 2024): 430 in 2023; 360 in 2024; 330 in 2024; and 300 in 2025 and thereafter; - No significant capital expenditures in 2024 and beyond (a decision to move forward with a significant capacity expansion at that time would likely be coupled with a materially stronger pricing environment than is consistent with Fitch's forecast); - Excess cash used primarily for deleveraging; - Maturing debt not repaid with cash is refinanced. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Mid-cycle EBITDA Leverage durably below 3.5x, potentially driven by increased global demand for methanol as power and methanol as a marine fuel; - Demonstrated commitment to a conservative capital deployment strategy even during periods of strong earnings and cash flow metrics; - Increased product diversification. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Mid-cycle EBITDA Leverage durably above 4.5x; - Elevated capital or equity-friendly spending, representing a departure from management's commitment to deleveraging; - Sustained disruption in operations of major facilities. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity, Staggered Maturities: Fitch expects the company to maintain solid liquidity throughout the ratings horizon, with solid medium-term cash generation and full availability on its new $175 million revolving credit facility due 2029. Natgasoline faces an approximately $500 million maturity in 2025. However, solid cash generation and a history of proactive debt repayment will likely give the company sufficient financial flexibility to address the maturity through a combination of refinancing and repayment. ISSUER PROFILE CEL is the world's second largest producer of methanol and one of the largest nitrogen producers. The company operates methanol production facilities in Trinidad and Tobago, the U.S., and Oman, with distribution reaching all major markets in the Americas, Europe, and Asia. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. DATE OF RELEVANT COMMITTEE January 25, 2024 Entity/Debt Rating Recovery ----------- ------ -------- Consolidated Energy Limited LT IDR BB- New Rating Consolidated Energy Finance S.A. senior unsecured LT BB- New Rating RR4 senior secured LT BB+ New Rating RR2 CONSOLIDATED ENERGY: S&P Affirms BB- ICR & Alters Outlook to Stable ------------------------------------------------------------------- S&P Global Ratings, on Jan. 30, 2024, revised its outlook on Consolidated Energy Ltd. (CEL) to stable from positive. S&P also affirmed its 'BB-' global scale issuer credit and issue-level ratings on CEL. At the same time, S&P assigned an issue-level rating of 'BB-' to the company's proposed secured Term Loan B of up to $745 million and senior unsecured notes of up to $580 million. The stable outlook indicates that S&P expects the company's operating and financial performance to improve through higher revenues and EBITDA in the next 12-18 months which should support its balance sheet deleverage and healthy credit metrics. CEL plant outages, in 2023, along with lower average prices in the AUM (ammonia, UAN - urea ammonium nitrate - , and melamine) division for fertilizers, and new debt, raised CEL's leverage above S&P's expectations, with a net debt to EBITDA above 3.0x. While methanol prices remained relatively solid during 2023 vs the previous year, with U.S. methanol contract prices of around $500 per metric ton (MT), lower volume sales during the year mainly due to outages at some of CEL's plants, weighed on CEL's results and leverage levels. In our previous upside scenario expectation, S&P considered the likelihood that CEL's credit metrics could continue to improve such that its weighted net debt to EBITDA could remain in the 3.0x area (or well below) on a consistent basis. This would have likely occurred due to a continued rise in revenue and EBITDA, thanks to a steady demand for the company's products and mainly solid methanol prices, coupled with broadly stable debt levels. However, lower global ammonia prices because of lower fertilizers industry demand, lower methanol and AUM volume production given the operational outages, and mainly the new $600 million in debt raised to fund CEL's stake increase in OMC and other corporate uses, deviated the company's key credit metrics, specifically its expected net leverage target of below 3.0x. Despite the company not reflecting a consistent net leverage metric below 3.0x, S&P thinks that the still favorable methanol price levels coupled with the expectation of uninterrupted and stable production across all CEL's facilities should support the company's financial results in the next 12-18 months. Methanol is used in various industries and applications, like automotive, antifreeze liquid production, industrial (fuel) and basic consumption products (mainly pharmaceuticals), and UAN for fertilizers (mainly). S&P said, "Although we anticipate a gradual recovery for the chemical industry in 2024; we expect that a better supply-demand dynamics and higher consumption in CEL's main end industries (mainly basic consumption products, fertilizers, and industrial fuel), should support healthier credit metrics. "Although the volatility inherent to the chemical industry can favorably or unfavorably affect the company's profitability margins, we expect the prices of CEL's main raw materials (especially natural gas) to remain stable, reflecting stability in the company's margins. In 2023, inflation took a toll on different raw materials affecting profitability margins. "Although CEL already maintained a 26% stake in OMC, we expect that the recent investment made to increase its shareholding to 60% will be "accretive" from a business and financial strategy perspective. We think this investment moderately increases CEL's geographic diversification by having a footprint in the Middle East and ability to meet the potential demand, while significantly reducing its logistics and transportation costs to meet the potential methanol needs in Asia. "We expect that the incremental revenues and EBITDA of about $300 million and $100 million, respectively, and non-material debt stemming from OMC, will strengthen CEL's consolidated revenues and EBITDA base. This should help leverage to reduce in the next 12-18 months (assuming no incremental debt over the forecasted horizon), and sit comfortably in the 3.0x area, in line with the company's financial policy." Although CEL recently disbursed a bridge loan of $600 million to fund the increase of its shareholding in OMC and other corporate uses; the company plans to refinance the bridge loan and other bank debt on its balance sheet through issuing two new long-term debt instruments. CEL will attempt to access the debt markets again to issue a potential long term of about $580 million unsecured bond coupled with an $745 million secured term loan. Although CEL has no significant debt maturities in 2024 (except the current $600 million bridge loan); the company will be refinancing the bridge loan and about $650 million of other debt well ahead of its final maturity (due 2025) with some cash and the proceeds of the intended issuance. This refinancing should enhance the company's debt maturity profile to an average tenor of around 5.1 years. S&P expects to maintain an adequate liquidity with an estimated free operating cash flow of about $200 million for the next 12-month period, coupled with its committed revolving credit facility. CONSTANT CONTACT: Moody's Rates New $300MM 1st Lien Term Loan 'B2' ------------------------------------------------------------------ Moody's Investors Service assigned a B2 rating to Constant Contact, Inc.'s proposed $300 million senior secured first lien term loan due 2028. Moody's also affirmed the company's B3 corporate family rating, B3-PD probability of default rating, B2 senior secured first lien bank credit facilities ratings and Caa2 senior secured second lien term loan rating. The outlook is maintained at stable. The company is a Massachusetts-based provider of marketing automation software. Net proceeds from the proposed incremental term loan, together with new cash equity from affiliates of financial sponsor Clearlake Capital Group, L.P. ("Clearlake"), will be used to buy back Siris Capital Group's equity stake in the company and repurchase a portion of the second lien debt. The proposed incremental term loan will rank pari passu with the existing senior secured first lien term loan and revolver. As part of the proposed refinancing transaction, the company will expand its funded debt by $250 million, thereby increasing debt-to-EBITDA (Moody's adjusted) to 7.3x from around 6.0x at close pro-forma as of December 31, 2023. Moody's expects the additional debt to also increase interest expense by approximately $22 million. Moody's believes that the additional interest expense and tax expense adds pressure to the company's free cash flow. Moody's expects year-end 2024 free cash flow-to-debt (Moody's adjusted) to be approximately 2% and EBITDA-capex/interest expense (Moody's adjusted) above 1.25x. RATINGS RATIONALE The B3 CFR reflects Constant Contact's: 1) high debt-to-EBITDA leverage (Moody's adjusted) of around 6.7x, Moody's projects at the end of 2024; 2) a high customer churn rate due to the short term nature of its subscription agreements; 3) modest revenue scale and narrow service line focus on providing self-service digital marketing solutions, primarily to small and medium businesses ("SMB"); 4) its concentrated operations within the highly fragmented and increasingly competitive email marketing industry, with low barriers to entry; and 5) aggressive financial growth strategies under private equity ownership, including debt-funded acquisitions and the potential for debt-funded shareholder returns. The rating is supported by the company's: 1) established market position within the SMB e-mail marketing software market, with good brand presence; (2) a diversified and long-tenured customer base with low customer concentration; (3) high EBITDA margins anticipated in the low 40% range over the next 12-18 months; (4) a largely variable and flexible cost structure with limited capital investment needs and pre-paid revenue streams generating favorable cash flow characteristics; and (5) Moody's expectation that the company will maintain good liquidity over the next 12-15 months. The stable outlook reflects Moody's expectation for organic revenue and EBITDA growth in the mid-single digit percentages over the next 12-18 months. Moody's also anticipates in the stable outlook that Constant Contact will continue to grow its subscribers, supplement its organic growth with periodic acquisitions, at times with debt, and maintain good liquidity. Moody's considers Constant Contact's liquidity profile as good. Moody's expects at least $25 million of annual free cash flow and full availability under the $125 million revolving credit facility due February 10, 2026 over the next 12-15 months. Moody's expects that additional free cash flow from revenue and earnings growth and lower interest expense from partially paying off a portion of the high-rate second lien term loan will help offset the incremental interest expense from the additional $300 million first lien term loan. Moody's expects the company to have more than $70 million of balance sheet cash and full access to its revolving credit facility at December 31, 2024. Moody's believes these cash sources provide good coverage for the required first lien term loan amortization of approximately $11 million per year, paid quarterly. There are no financial covenants applicable to the term loans. However, revolver access is subject to maintaining maximum first lien net leverage (as defined in the facility agreement) below 7.55x when the amount drawn under the revolver is greater than 35% ($43.75 million). Moody's expects the covenant will not be tested through 2024, but anticipates that the company would be in compliance with the covenant if it were measured. The affirmation of the B2 senior secured first lien bank credit facility rating ($125 million revolver due 2026 and approximately $1.3 billion term loan due 2028 – including the proposed $300 million incremental term loan at December 31, 2023), one notch above the company's B3 CFR, reflects facility's senior position in the capital structure relative to the second lien term loan and the company's unsecured claims. The first lien credit facility is secured by a first priority interest in substantially all tangible and intangible assets (including capital stock of subsidiaries) of the borrower and guarantors. The affirmation of the Caa2 senior secured second lien term loan due 2029 (approximately $243 million outstanding at December 31, 2023), two notches below the company's B3 CFR, reflects lien subordination to the first lien credit facility. The second lien term loan is secured by a second priority interest in the same assets securing the first lien credit facility. The senior secured first lien credit facility and senior secured second lien term loan are guaranteed on a senior secured basis by the borrower, Digital Marketing Technology Intermediate, Inc. (the direct parent company of the borrower) and each of the borrower's direct and indirect wholly-owned domestic subsidiaries. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's could upgrade Constant Contact's rating if the company builds a track record of sustained organic revenue growth and margin expansion, while maintaining good liquidity. Metrics that could support a higher rating include debt-to-EBITDA (Moody's adjusted) below 5.5x, EBITDA-Capex/interest expense (Moody's adjusted) above 1.5x, and free cash flow to debt (Moody's adjusted) sustained at 5% or better. Moody's could downgrade Constant Contact's ratings if revenues is expected to decline or free cash flow falls to near breakeven level. The ratings could also be downgraded if operating challenges or more aggressive financial policy leads to debt-to-EBITDA (Moody's adjusted) sustained above 7.5x, EBITDA-Capex/interest expense declines to approaching 1.0x, or liquidity deteriorates. The principal methodology used in these ratings was Software published in June 2022. Headquartered in Waltham, MA and controlled by affiliates of private equity sponsor Clearlake. Constant Contact, Inc. is a SaaS online marketing platform that enables SMBs to create, send and track email marketing campaigns. Moody's expect Constant Contact's revenue to approach $500 million in 2024. CONSTANT CONTACT: S&P Affirms 'B-' ICR, Outlook Stable ------------------------------------------------------ S&P Global Ratings affirmed its 'B-' issuer credit rating on digital marketing provider Constant Contact Inc. S&P also affirmed its 'B-' and 'CCC' issue-level ratings on the company's first- and second-lien debt, respectively. S&P said, "At the same time, we assigned our 'B-' issue-level rating and '3' (50%-70% recovery estimate) recovery rating to the planned $300 million incremental first-lien term loan. "The stable outlook reflects our expectation for the company to generate positive FOCF and maintain adequate liquidity in 2024 and 2025 despite elevated leverage, higher interest expense, and macroeconomic challenges. It also reflects our expectation that interest coverage ratios will remain sufficient to support annual debt servicing costs." Constant Contact intends to issue a $300 million incremental first-lien term loan to help fund the buyout of Siris Capital's $580 million equity ownership stake. S&P said, "We expect leverage will peak at around 6.7x in 2024, with gradual deleveraging thereafter. We expect the transaction will result in significantly higher S&P Global Ratings-adjusted debt to EBITDA of about 6.6x-6.7x in 2024, approximately 1.3x higher compared to our previous projections. We also expect annual debt service costs to increase around 22% in 2024 and about 21% in 2025, largely due to higher interest expense from the company's predominately floating rate debt (which is unhedged). We expect this will result in weaker cash flow and coverage ratios, including projected FOCF to debt of about 2% and EBITDA cash interest coverage of about 1.6x in 2024. "Credit metrics remain appropriate for the 'B-' rating. We project the company will be able to generate ample cash flow to service its debt load despite our expectation for higher leverage and interest expense. We expect revenue will grow in the mid-single-digit percent area, and S&P Global Ratings-adjusted EBITDA margins will be stable in the low-40% range. Additionally, the company's capital-light business model, with projected capital expenditure (capex) of approximately $15 million annually will support stable FOCF generation of $30 million-$40 million in 2024, growing to $40 million-$50 million in 2025. We attribute this year-over-year growth part to an easing of interest rates in 2025. We also forecast EBITDA interest coverage will remain above 1.5x through 2025. "We expect relatively stable operating performance over the next two years. The company reported solid results in 2023, including total revenue growth of about 4% year over year, benefitting from strong demand for its newly launched premium package (starts at $80 per month; launched April 2023), which has contributed to new customer average revenue per subscriber (ARPS) growth of about 50% in 2023. Healthy revenue growth combined with lower operating expenses from ongoing cost-saving initiatives--including cloud migration and increased offshoring--contributed to higher S&P Global Ratings-adjusted EBITDA margins of about 43% for 2023 compared to 40% in 2022. We expect the momentum will continue into 2024 and 2025 due to moderate subscriber and ARPS growth as existing customers continuing to migrate to higher priced packages. We also expect EBITDA margins will remain relatively stable in the low-40% range, as operating efficiencies are offset by increased investments in marketing focused on driving continued subscriber growth in the U.S. and international markets. "The net increase in total debt decreases the company's rating cushion. We believe there is limited cushion in the rating threshold for negative shifts in macroeconomic conditions given the significant increase in total debt outstanding and given that the entire balance of its outstanding debt is floating rate and unhedged. We believe our projections for improving credit metrics beginning in 2025 is heavily dependent on our forecast for interest rates to peak in 2024 and subsequently decline in 2025 and 2026; this is a key factor supporting our view for strong future cash flow generation to support future deleveraging and subject to change based on shifting macroeconomic conditions. We also recognize that Constant Contact's customer base is vulnerable to a downturn in the economy, which is not currently assumed in our base case. "The stable outlook reflects our expectation that Constant Contact's free cash flow will remain positive, and its liquidity will remain adequate in 2024 and 2025 despite elevated leverage, higher interest expense, and macroeconomic challenges. It also reflects our expectation that EBITDA interest coverage of at least 1.5x will remain sufficient to support annual debt servicing costs." S&P could lower the rating on Constant Contact if the company cannot generate sustainable positive free cash flow. This could occur if: -- Interest rates continue to rise and exceed our current expectations; -- Competition or cost pressures increase such that the company materially loses market share; or -- The company pursues substantial debt-financed acquisitions that are not immediately accretive. S&P could raise the rating on Constant Contact if the company: -- Can sustainably generate FOCF to debt well above 5%; -- Grows organic revenue in the low- to mid-single-digit percent area; and -- Maintains EBITDA interest coverage above 2x. CONTROL SYSTEMS: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Control Systems Design & Integration 5237 Nashville Rd, Bldg. 1 Bowling Green, KY 42101 Business Description: Control Systems Design is a controls engineering firm formed in Bowling Green, KY. Its services offerings have grown to include Project Management, Software Development, Controls Engineering, Material Handling, Embedded Contract Engineering Services, and Systems Integration Services. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court Western District of Kentucky Case No.: 24-10080 Debtor's Counsel: Robert C. Chaudoin, Esq. HARLIN PARKER 519 E. 10th Street P.O. Box 390 Bowling Green, KY 42102-0390 Tel: 270-842-5611 Fax: 270-842-2607 Email: chaudoin@harlinparker.com Estimated Assets: $500,000 to $1 million Estimated Liabilities: $1 million to $10 million The petition was signed by Bob Scheidegger as vice president. A full-text copy of the petition is available for free at PacerMonitor.com at: A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/EOWRWEI/Control_Systems_Design__Integration__kywbke-24-10080__0001.0.pdf?mcid=tGE4TAMA COTTLE CHRISTI: Unsecureds to Recover $7,200 over 36 Months ----------------------------------------------------------- Cottle Christi L, LLC, filed with the U.S. Bankruptcy Court for the Northern District of West Virginia an Amended Plan of Reorganization dated February 1, 2024. The Debtor was formed in 2015. The business operates a restaurant in downtown Martinsburg, Berkeley County, West Virginia; a sports bar at Falling Waters, Berkeley County, and a separate restaurant at Spring Mills. Since the date of the filing of this case, no additional funds have been obtained from Merchant Advance Lenders. Cottle Christi L was paying up to $75,000 per month to ACH deductions. Those monies will be available to operate the business. The Debtor grosses approximately $170,000 per month and the volume of business justifies seeking reorganization. This Plan of Reorganization proposes to pay creditors from future revenues. The Plan provides for priority creditors; an obligation to the SBA; and general unsecured creditors. The claims of Merchant Advance Lenders will not be paid according to the terms of the original agreements. Administrative expenses are subject to final approval by the U.S. Bankruptcy Court for the Northern District of West Virginia. Class U represents allowed general unsecured claims. US Foods did not file a proof of claim. Melody Minnick filed a proof of claim in this case. Melody Minnick, by counsel, did contact the Debtor directly and corresponded with the Debtor's counsel. Melody Minnick did file a late proof of claim. The Debtor will treat those actions as an informal proof of claim and through this case will pay the sum of $7,200 over 36 months at the rate of $200 per month. A full-text copy of the Plan of Reorganization dated February 1, 2024 is available at https://urlcurt.com/u?l=olULdi from PacerMonitor.com at no charge. Counsel for the Debtor: Joseph W. Caldwell, Esq. Caldwell &Riffee, PLLC P.O. Box 4427 Charleston, WV 25364 Tel: (304) 925-2100 Fax: (304) 925-2193 Email: jcaldwell@caldwellandriffee.com About Cottle Christi L LLC Cottle Christi L, LLC, operates a restaurant in downtown Martinsburg, Berkeley County, West Virginia; a sports bar at Falling Waters, Berkeley County, and a separate restaurant at Spring Mills. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. W.Va. Case No. 23-00295) on June 16, 2023, with $1 million to $10 million in both assets and liabilities. Christi L. Walls, owner and managing member, signed the petition. Joseph W. Caldwell, Esq., at Caldwell & Riffee, is the Debtor's legal counsel. COTTLE LLC: Claims to be Paid From Future Revenues -------------------------------------------------- Cottle, LLC and G&S Family, LLC filed with the U.S. Bankruptcy Court for the Northern District of West Virginia a Combined Plan of Reorganization dated February 1, 2024. Cottle, LLC operates a deli/convenience store located at Falling Waters, West Virginia. Cottle, LLC borrowed monies from Jolt Funding and from Capybara to start G&S Family. Both Cottle, LLC and G&S, LLC are owned by Larry Cottle. Cottle, LLC began business in 2017 and G&S Family began business in 2021. This Combined Plan of Reorganization proposes to pay creditors from future revenues of the business, and provides for priority creditors, West Virginia State Tax Department and the Internal Revenue Service; Workforce, West Virginia and general unsecured creditors. The claims of vulture advance lenders will not be paid according to the original contract terms and those contracts will be rejected. Administrative expense claims are subject to final approval by the U.S. Bankruptcy Court for the Northern District of West Virginia. The consolidation of these cases will protect creditors of each estate against potential conflict. Each entity previously filed a separate Chapter 11 Plan, and treatment under the Amended Joint Plan will be no less than what each individual Plan had provided. Consolidation will save on future management expense and accounting time and the seasonal nature of the operations of Cottle, LLC will be ameliorated by the Combined Plan. Class U consists of general unsecured claims. These claims are held by Melanie Minnick; Performance Foods; and Food Pro. Food Pro's claim will be treated as an executory contract which will be assumed and paid at the rate of $1,000 per month. The claim of Performance Foods shall receive a 50 percent dividend paid at the rate of $558 per month, and the claim of Melanie Minnick in both cases shall receive a 50 percent dividend paid at the rate of $290 per month. A full-text copy of the Combined Plan dated February 1, 2024 is available at https://urlcurt.com/u?l=Vnq9qv from PacerMonitor.com at no charge. Counsel for Debtor: Joseph W. Caldwell, Esq. Caldwell & Riffee, PLLC P.O. Box 4427 Charleston, WV 25364 Tel: (304) 925-2100 Email: jcaldwell@caldwellandriffee.com About Cottle LLC Cottle, LLC, operates a deli/convenience store located at Falling Waters, West Virginia. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. W.Va. Case No. 23-00296) on June 16, 2023, with $1 million to $10 million in both assets and liabilities. Larry D. Cottle, owner and managing member, signed the petition. Joseph W. Caldwell, Esq., at Caldwell & Riffee is the Debtor's legal counsel. COVANTA HOLDING: Fitch Lowers Rating on Sr. Unsecured Notes to 'B-' ------------------------------------------------------------------- Fitch Ratings has downgraded Covanta Holding Corporation's (CVA) senior unsecured notes to 'B-'/'RR6' from 'B'/'RR5'. Fitch currently rates CVA's Long-Term Issuer Default Rating (IDR) 'B+', and senior secured term loans 'BB+'/'RR1'. The Rating Outlook is Stable. The downgrade of the senior unsecured notes reflects the lower unsecured recovery prospects following the first-lien term loan add-on. CVA's IDR is supported by its high barrier to entry asset base, exposure to populous regional markets, steady and resilient nature of its waste business, baseload electricity production, and multi-year contracts with customers. Cash flows are exposed to electricity and recycled commodity prices; however, CVA manages these risks though fixed-price contracts or hedges for up to 2-3 years. Fitch forecasts neutral-to-positive FCF and EBITDA interest coverage in the high-2.0x to low 3.0x over 2024-2025, consistent with 'B+' rating tolerances. Fitch also considers execution risks in capturing the benefits of its profiled waste growth and operating efficiency programs that should help improve cash flow quality, while growth investment and one-time costs are reducing medium-term FCF. KEY RATING DRIVERS Unsecured Notes Downgraded: The transaction to term out about $150 million of revolving credit facility borrowings increases the first lien term loan, reducing recovery prospects for CVA's senior unsecured notes. The incremental debt capacity is not immediately matched with a value-accretive action such as M&A or organic growth investment. CVA's IDR of 'B+' is unaffected by the transaction which is leverage neutral and incrementally improves its liquidity position. Management continues to prioritize FCF toward repayment via remaining revolver and term loan borrowings. Waste Contracts, Hedges Support FCF: The market strengths and stability of the waste collection business provide a durable foundation for CVA's credit profile. While a portion of CVA's business is exposed to the variability of electricity and recycled material prices, Fitch believes the profitability and stability of the waste business would help support managing core operating and capital costs through periodic commodity market cyclicality. Fitch expects CVA to continue its strategy of engaging in rolling, multi-year hedges and risk-sharing arrangements that provide a good degree of multi-year visibility to cash flow. As of 2022, about 80% of CVA's waste revenue was contracted, and the remainder was in the spot market. Contracts provide inflation-based pricing escalators and a variety of cost pass-throughs. With much of the higher margin industrial profiled waste stream in the spot market, there is the potential to introduce variability in margin though volumetric risk is expected to remain low. Further, the company has also made some inroads in signing contracts with profiled waste customers. Neutral-Positive FCF Profile: Fitch's rating case forecasts improving EBITDA tends mainly benefiting from incremental waste price increases and favorable mix shift to profiled waste. Management has indicated that the company intends to make growth-linked capital investments to facilitate execution of its strategic operational and commercial objectives. Fitch currently forecasts near neutral FCF in 2024, up from around negative $50 million in 2023, followed by positive annual FCF in the $50 million-$100 million range through 2026. FCF is expected to be allocated toward repayment of its credit facility borrowings used to fund the recent acquisitions, including Circon Environmental in 2023. High-2.0x Coverage, Mid-6.0x Leverage: Fitch expects EBITDA interest coverage to remain in the high-2.0x range in 2024 followed by improvements toward the low-3.0x range, which is generally consistent with the 'B+'-rated peers. Fitch forecasts EBITDA leverage of mid-6.0x in 2024, while the company integrates Circon, grows in profiled waste and environmental services, makes early progress on operating efficiency programs and manages higher capex spend. Fitch expects leverage to subsequently moderate to the low-6.0x range in 2025-2026. Environmental Services Drive Growth: Growth is expected to be driven by CVA's plan to shift the mix of waste streams toward industrial profiled waste, which carries higher tip fees and therefore profitability, from traditional municipal solid waste. CVA has had success in pursuing and capturing pricing on profiled waste. The addition of Circon as well as planned investment in material processing facilities are expected to support growth of the business. From a macro perspective, industrial customers, including manufacturing, consumer goods and medical & pharmaceutical, may seek incineration as a more carbon-conscious disposal method than landfilling supporting the expectation for increased volumes. High Barriers to Entry: The positioning of CVA's incineration assets is a key strength of its business profile and is also supportive of a stable demand profile. The company owns or operates a number of incineration and material processing facilities around densely populated areas and in some regions where alternative disposal methods are difficult to access or regulatorily restricted. Development of new incineration facilities are heavily limited by political and capital constraints. DERIVATION SUMMARY Fitch compares CVA with other stable and contracted services companies including Garda World Security (GW; B+/Negative) and Stericycle, Inc. (SRCL; BB/Positive), as well as other waste management peers. CVA's waste to energy business benefits from a strong physical asset base in markets with scarcity in waste disposal options. Waste streams, tipping fees and service-contract revenue are expected to be stable and resilient due to recurring waste disposal needs. CVA has exposure to energy and recycled commodity prices through these risks are moderated by a high degree of multi-year hedging arrangements in place. Similarly, GW benefits from stable demand for security services and multi-year contracts, and SRCL provides medical waste and document shredding services. Fitch expects CVA's leverage to be in the mid-to-high 6.0x before trending to the low-6.0x in the medium term, which is moderately lower than Fitch's prior expectations for GW in the low-7.0x through 2024. CVA's interest coverage is also expected to be stronger in the high-2.0x to low-3.0x compared with GW around the low-to-mid 2.0x. The higher rated SRCL's EBITDAR leverage is expected to be in the low-3.0x range, which is relatively strong for its rating level though the credit profile remains constrained by execution risks associated with its operational, margin and FCF initiatives. KEY ASSUMPTIONS - High-single digit revenue growth in 2023 that moderates to the mid-single digits over the next two years; - EBITDA margin remains around the 22%-23% range over the medium term with pricing and cost optimization actions moderated by lower energy revenue and early contributions from the Circon acquisition; - Capex is temporarily elevated in 2023, then moderates to about 10% of revenue beginning in 2024, including growth investment; - Debt balances remain fairly flat from Q3 23 through 2024. CVA prioritizes deleveraging thereafter; - CVA's liquidity position remains near current levels over the next two years. RECOVERY ANALYSIS The recovery analysis assumes that CVA would be reorganized as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Fitch estimates CVA's GC EBITDA at $475 million. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which Fitch bases the enterprise valuation. The potential for a temporary yet steep decline in commodity prices coupled with liquidity event that constrains in the waste business. The recovery estimate assumes a recovery of commodity prices toward mid-cycle values and good value retention of CVA's incinerators and facilities. Fitch assumes CVA would receive a GC recovery multiple of 6.3x in this scenario. This multiple is applied to the GC EBITDA to calculate a post-reorganization enterprise value (EV). Ultimately CVA's multiple is driven by the scarcity and strong market position of CVA's incineration and processing facilities, coupled with the more volatile energy and recycling earnings streams. It also considers EQT's take-private transaction that valued CVA at approximately 12x. Fitch's recovery scenario assumes that CVA's $600 million revolver is fully drawn. These assumptions result in a 'BB+'/'RR1' rating for the senior secured debt and 'B-'/'RR6' for the senior unsecured debt. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade - Mid-cycle EBITDA leverage sustained below 5.5x; - Maintenance of risk-management characteristics including long-dated hedges and nearly full availability under its revolving credit facility; - A mix shift toward waste services, reducing exposure to commodity-linked businesses, that strengthens CVA's FCF profile. Factors that could, individually or collectively, lead to negative rating action/downgrade - EBITDA interest coverage sustained below 2.0x; - EBITDA leverage sustained above 7.0x; - Elevating liquidity risks resulting from materially negative FCF and revolver utilization above 50%. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: As of Sept. 30, 2023, CVA had $26 million of cash and $324 million of availability under its $600 million revolving credit facility. The stable waste-to-energy business and highly-hedged energy and metals recycling business are supportive of CVA's steady liquidity profile. The term loans amortize at 1% per year and matures in 2028. The revolving credit facility matures in 2026. CVA is adding approximately $150 million in term loan B financing. ISSUER PROFILE CVA owns and operates a network of waste-to-energy facilities and sells electricity and recycled materials that are created or captured in the waste incineration process. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. SUMMARY OF FINANCIAL ADJUSTMENTS CVA's term loan C is excluded from Fitch's debt calculation. CRITERIA VARIATION Fitch does not consider the term loan C as debt for analytical purposes, which is a variation from the Corporate Rating Criteria's definition of total debt. The term loan C is collateralized on a one-for-one basis by cash held in a restricted account. This account is not accessible by CVA, except for interest earned on the balance. Since the company is unable to utilize the restricted funds for any purpose other than collateralizing the loan, Fitch does not treat the term loan C as debt. Fitch looks to its Corporate Rating Criteria, dated Nov. 3, 2023, which outlines and defines a variety of quantitative measures used to assess credit risk. As per criteria, Fitch's definition of total debt is all encompassing. However, Fitch's criteria is designed to be used in conjunction with experienced analytical judgment, and, as such, adjustments may be made to the application of the criteria that more accurately reflects the risks of a specific transaction or entity. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Covanta Holding Corporation senior unsecured LT B- Downgrade RR6 B CPC ACQUISITION: Oaktree Specialty Marks $727,000 Loan at 50% Off ----------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $727,000 loan extended to CPC Acquisition Corp., to market at $365,000 or 50% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a Second Lien Term Loan (SOFR+7.75%) to CPC Acquisition. This loan was on non-accrual status as of December 31, 2023. The loan matures on December 29, 2028. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 CPC Acquisition Corp. is in the chemicals industry. CROSBY US: Moody's Raises CFR to 'B2' & Alters Outlook to Stable ---------------------------------------------------------------- Moody's Investors Service upgraded Crosby US Acquisition Corp.'s corporate family rating to B2 from B3 and probability of default rating to B2-PD from B3-PD. Moody's also assigned a B2 rating to the company's planned offering of $1.0 billion backed senior secured first lien term loan and the backed senior secured first lien revolving credit facility. Concurrently, Moody's upgraded Crosby's existing backed senior secured first lien bank credit facility ratings to B2 from B3. The outlook was changed to stable from positive. Proceeds from the senior secured term loan will be used to repay the two tranches of senior secured first lien loans outstanding totaling $986 million. The remainder of the proceeds will be used to pay transaction fees, which makes the transaction effectively leverage neutral. The rating on the existing term loan and revolver will be withdrawn at the close of the transaction. The upgrade of the corporate family rating to B2 from B3 reflects the company's improving operating performance highlighted by stronger margins and lower financial leverage. The upgrade also reflects the improved liquidity and the benefits being realized from the acquisition of Kito Corp. Moody's expects Crosby's profitability will continue to improve and debt-to-EBITDA will decline. RATINGS RATIONALE Crosby's credit profile reflects its dominant position in the production of specialized equipment used in rigging and lifting applications. The company's long history has contributed to the recognition and trust in its brands. Further, the company's products represent a relatively small portion of the total equipment cost for its customers but are nonetheless indispensable components in their operations. Crosby's credit profile also reflects the risk associated with the company's high financial leverage and exposure to highly cyclical and capital-intensive end markets. Crosby also operates in a highly competitive segment. The acquisition of Kito Corporation in October of 2022 was an important credit event that strategically not only doubled the company's revenue and greatly diversified its geographic presence but also lowered its financial leverage through the use of a significant contribution of equity. Moody's believes that this larger scale of operation will serve as a buffer against the impact of regional economic slowdowns. Moreover, it will reduce Crosby's exposure to cyclical end-markets such as oil and gas and mining. Lastly, Moody's anticipates that adjusted debt-to-EBITDA ratio will end fiscal 2024 at approximately 4.5x. Crosby is expected to maintain good liquidity. Moody's expects that the company will have full availability under its new $120 million revolver. Moody's estimates Crosby will have free cash flow of over $60 million over the next 12 months and maintain a cash balance under $200 million during that period. The stable outlook reflects Moody's expectation that debt-to-EBITDA will be maintained below 5.0 times and margins will improve as savings are realized from integration initiatives as they are completed in 2024. The outlook also reflects Moody's expectation of ongoing positive free cash flow and the ability absorb cost increases by managing price of the company to recover higher costs from its customers. Marketing terms for the new credit facilities (final terms may differ materially) include the following: Incremental pari passu debt capacity up to the greater of $125m and 100% of trailing four quarter cons. EBITDA, plus unlimited amounts subject to 3.40 times pro forma first lien secured debt net leverage ratio. There is an inside maturity sublimit up to the greater of $62.5m and 50% of the pro forma cons. EBITDA along with debt incurred in connection with a permitted acquisition or other investment. A "blocker" provision restricts the transfer of material intellectual property to unrestricted subsidiaries. There are no protective provisions restricting an up-tiering transaction. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Ratings could be upgraded if Crosby successfully completes the integration of Kito Corp. and sustains EBITDA margin of over 20% while maintaining debt-to-EBITDA at 4.5 times. Also, a more conservative financial policy and good liquidity would be necessary for a rating upgrade. Ratings could be downgraded if there is a deterioration in liquidity, including increased reliance on its revolver, debt-to-EBITDA is sustained above 5.5 times, or FFO-to-debt is sustained below 10%. Also, the ratings could be downgraded if the company makes a large debt funded acquisition or dividend. The principal methodology used in these ratings was Manufacturing published in September 2021. Crosby US Acquisition Corp., based in Richardson, Texas, a subsidiary of Crosby Worldwide Ltd, is a manufacturer of highly engineered lifting and rigging equipment, as well as customized material handling solutions. Proforma revenue was about $1.0 billion for the LTM period ended Sept 30, 2023. Crosby is owned by affiliates of Kohlberg Kravis Roberts & Co. L.P. (KKR). CURIS INC: PwC Raises Going Concern Doubt ----------------------------------------- In a Form 10-K Report filed by Curis Inc. with the U.S. Securities and Exchange Commission for the fiscal year ended December 31, 2023, the Company's independent auditor, PricewaterhouseCoopers LLP, expressed that there is substantial doubt about the Company's ability to continue as a going concern. In the Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers said, "In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. The Company has incurred losses and cash outflows from operations that raise substantial doubt about its ability to continue as a going concern." Curis has incurred significant annual net operating losses in every year since its inception. The Company expects to continue to incur significant and increasing net operating losses for at least the next several years. Its net loss was $47.4 million for the year ended December 31, 2023. As of December 31, 2023, the Company had an accumulated deficit of $1.2 billion. As of December 31, 2023, the Company had $56.3 million in existing cash, cash equivalents and investments. The Company expects these available cash resources to fund its operating expenses and capital expenditure requirements into 2025. The Company has based this assessment on assumptions that may prove to be wrong, and the Company could exhaust its available capital resources sooner than it expects. Based on its current cash, cash equivalents, and investments, recurring losses and cash outflows from operations since inception, an expectation of continuing losses and cash outflows from operations for the foreseeable future and the need to raise additional capital to finance the Company's future operations, the Company has concluded that it does not have sufficient cash on hand to support current operations beyond the next 12 months from the date of filing this Annual Report on Form 10-K. "We will require substantial additional capital, which may be difficult to obtain, and if we are unable to raise capital when needed, we could be forced to delay, reduce or eliminate our drug development program or commercialization efforts," Curis said. As of December 31, 2023, the Company had $77.3 million in total assets, $57.6 in total liabilities, and $19.7 million in total stockholders' equity. A full-text copy of the Report is available at http://tinyurl.com/2p9js567 About Curis Lexington, MA-based Curis, Inc. is a biotechnology company focused on the development of emavusertib (CA-4948), an orally available, small molecule inhibitor of Interleukin-1 receptor associated kinase, or IRAK4. IRAK4 plays an essential role in the toll-like receptor, or TLR, and interleukin-1 receptor, or IL-1R, signaling pathways, which are frequently dysregulated in patients with cancer. CYANOTECH CORP: Raises Going Concern Doubt ------------------------------------------ Cyanotech Corporation disclosed in a Form 10-Q Report filed with the U.S. Securities and Exchange Commission for the quarterly period ended December 31, 2023, that there is substantial doubt about its ability to continue as a going concern. According to the Company, it has sustained operating losses and negative cash flows from operations for these same periods. Furthermore, it was not in compliance with a debt covenant requirement on March 31, 2023, and First Foundation Bank instituted a freeze on additional advances from the Revolving Credit Agreement. These conditions raise substantial doubt about the Company's ability to continue as a going concern. For the three months ended December 31, 2023, the Company reported a net loss of $1.02 million, compared to a net loss of $598,000 for the same period in 2022. For the nine months ended December 31, 2023, the Company incurred a net loss of $3.2 million compared to a net loss of $2.01 million for the same period in 2022. As of December 31, 2023, Cyanotech had cash of $0.7 million and working capital of $3.7 million compared to $1.0 million and $5.4 million, respectively, at March 31, 2023. The Company had a Credit Agreement with the Bank that provided for borrowings up to $2.0 million on a revolving basis, however, as part of the covenant waiver at March 31, 2023, the borrowings under this line of credit were frozen at $1.8 million. On October 13, 2023, the Bank converted this line of credit to a term loan in the amount of $1.48 million with a maturity date of August 30, 2024. As of December 31, 2023, Cyanotech had $1.36 million outstanding on this loan and as of March 31, 2023, the Company had outstanding borrowings of $1.54 million on the line of credit. Funds generated by operating activities and available cash are the Company's most significant sources of liquidity for working capital requirements, debt service and funding of maintenance levels of capital expenditures. The Company has developed its operating plan to produce the cash flows necessary to meet all financing requirements. Although it has a history of either being in compliance with debt covenants or obtaining the necessary waivers, execution of the Company's operating plan is dependent on many factors, some of which are not within the control of the Company. However, no assurances can be provided that the Company will achieve its operating plan and cash flow projections for this fiscal year or its projected consolidated financial position as of December 31, 2024. Such estimates are subject to change based on future results and such change could cause future results to vary significantly from expected results. As of December 31, 2023, the Company had $27.3 million in total assets, $13.4 million in total liabilities, and $13.8 million in total stockholders' equity. A full-text copy of the Report is available at http://tinyurl.com/4y8ze5hy About Cyanotech Corp. Cyanotech Corporation, located in Kailua-Kona, Hawaii, was incorporated in the state of Nevada on March 3, 1983, and is listed on the NASDAQ Capital Market under the symbol "CYAN". The Company is engaged in the production of natural products derived from microalgae for the nutritional supplements market. DEL MAR RACE TRACK: Fitch Affirms BB- Rating on $33MM 2015 Bonds ---------------------------------------------------------------- Fitch Ratings has affirmed Del Mar Race Track Authority, CA's (Del Mar, RTA) $33 million of series 2015 revenue bonds at 'BB-'. The Rating Outlook is Stable. RATING RATIONALE The 'BB-' rating reflects the elevated vulnerability of Del Mar Race Track Authority's operating profile to the declining popularity of horse racing in California and across the country. Longer-term historical declines in race track attendance have resulted in lower margins for race track net revenues, ultimately leading to declining net race track revenues and increased reliance on concession revenues to support debt service. While Fitch recognizes that Del Mar will host the Breeders Cup in 2024 and 2025, Fitch's rating case assumes continued declines in gross racetrack revenues in 2026, and net concession revenues serving as the sole source of revenues to service debt after 2027. Fitch rating case 10-year average DSCR is 1.5x, falling to a minimum of 0.97x in 2037. The rating is supported by strong debt structural features, which include prepayment tests if coverage either exceeds or falls below 2.0x, and which is expected to amortize the bonds ahead of schedule, and mitigates the outer year risk around the horse racing industry in line with the 'BB-' rating level. Fitch's rating case conservatively does not assume any prepayments under the debt structure, although these are expected to occur in practice. Although net concession revenues bolster the debt service coverage ratio (DSCR) through debt tenor, this revenue stream is dependent on the continued operations of the facility with either continued attendance from non-horse racing events or increases in per capita concession spending, which Fitch views as uncertain over the long term. Fitch will continue to monitor the facility's financial viability and update the rating to reflect future material credit events as they arise. KEY RATING DRIVERS Revenue Risk: Franchise - Weaker Declining Fan Base: The declining nature of the California horse racing industry, as well as exposure to adverse events such as equine deaths at horse race tracks has led to a long-term trend of reduced attendance and uncertainty in fan support, despite recent improvements coming out of the pandemic. Racetracks also face increasing competition for gamblers, from both internet gaming and regional casinos. These weaknesses are somewhat offset by an affluent service area combined with semi-diverse revenues from wagering, and concessions generated from other events at the fairgrounds. However, given the industry's continued deterioration, the sustainability of race track revenues becomes less viable over the longer term. Facility Infrastructure Development/Renewal - Midrange Fitch has revised its Infrastructure Development/Renewal assessment to Midrange from Stronger. Limited Financial Obligation to Capital Improvement Plan: The score revision reflects the limited capacity of excess cashflows available to the Race Track Authority to fund any potential capital projects at the fairgrounds. Recent large capital projects at the fairgrounds were separately funded by the 22nd District Agricultural Association (DAA), including the renovation of an existing satellite wagering building into a multi-purpose entertainment venue known as the Sound, which is bolstering DAA concession revenues and supporting a mild diversification in pledged revenues. The RTA has previously relied on bond financings to fund major capital renovations to the race track grounds. There are currently no major capital spending plans that are the responsibility of the RTA. Debt Structure - 1 - Stronger Favorable Provisions & Reserves: Debt is 100% fixed-rate and fully amortizes by 2038 with a flat debt service profile of $3.2 million per annum. A debt prepayment feature accelerates prepayment of principal in the amount of 30% of pledged net revenues (subject to a $4 million cap on net concession revenues) that exceed 2.0x debt service. A second prepayment feature offers further protection if coverage test revenues (i.e. pledged revenues including all available uncapped net concession revenue) should fall below 2.0x debt service. No debt may be issued senior to the 2015 bonds, and rating agency verification is required for any additional parity bonds. A debt service reserve fund (DSRF) is fully cash funded at maximum annual debt service (MADS). Financial Profile Overall financial performance at Del Mar Racetrack has declined in the estimated calendar year 2023, following a surge in post-pandemic attendance in 2021 and 2022 at the race track. Net race track revenue is estimated to decline, while net concession revenues are expected to increase, as they benefit from revenue diversification including the new music venue at the fairgrounds, which is contributing to net concession revenue. Fitch cases incorporate the declining horse racing industry trends, and the thin operating margins for net racetrack revenues. This leads to higher reliance on net concession revenue, which itself is vulnerable to deterioration. Under the Fitch rating case, net racetrack revenues are depleted by 2027, and the 10-year average DSCR is 1.5x, falling to a minimum of 0.97x in 2037, as no pledged racetrack revenues are available to support debt service. The profile exhibits a high degree of volatility with slight changes in net race track profitability contributing to large variances in annual DSCR. PEER GROUP There are no directly comparable peers, as this is the only racetrack that Fitch rates. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Continued decline of the horse racing industry such that the racetrack is no longer financially sustainable. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Proactive managerial decisions that lead to viable cost reductions and/or consistent revenue growth resulting in a stable financial profile long term. CREDIT UPDATE Total racetrack attendance during 2023 was slightly lower than 2022, at 324,142 patrons. Summer meet attendance (85% of total) was affected by inclement weather, which reduced the number of racing days to 30 from 31. Despite the reduction in days, average daily attendance was up 2.5% compared with 2022. The 13-day Fall meet (15% of total) had attendance of 47,642, which is in line with 2022. Attendance in 2023 represents 70% of pre-pandemic attendance levels, which were already reduced significantly from previous peaks of over 700,000 patrons. Del Mar is scheduled to host the Breeder's Cup in 2024 and 2025, which will increase their total racing days to 46 in 2024. Del Mar previously hosted the two-day event in 2017 and 2021, which greatly increased overall race track and concession net revenue performance. The 2021 Breeders Cup occurred during the bond year period from October 2, 2021 to October 1, 2022, and the strong performance led to a turbo repayment of principal of approximately $1.1 million in the April 2023 debt service payment. Looking ahead, management anticipates strong "shoulder days" on either side of the event during the Fall meet, which are expected to increase admissions, on-track food & beverage (F&B), and wagering revenues. Overall attendance at the San Diego County Fair continued to recover from the pandemic in 2023, with with total attendance of over 997,000 during the year, up 3% from 2022. Wagering: Overall handle (the total amount wagered on a race) in 2022 decreased 21.1% due to the hosting of the Breeder's Cup at Del Mar in 2021, which greatly increased wagering. Non-Breeder's Cup handle remained flat in 2022 when compared with 2021. Out-of-state wagering continues to be the largest component of total handle at 54%, followed by off-track wagering at 37%. On-track wagering makes up only 7% of the total, representing a significant decline from 17% of total handle in 2014. Total handle is expected to decrease in 2023, due to the loss of one racing day during the year. Financial: Net racetrack revenues decreased by 46% in 2023 to an estimated $2.7 million due to a fall off from record highs of off-track betting in 2022. The decline in net racetrack revenues in 2023 was also due to higher operating expenses at the racetrack, driven primarily by increased staff costs. Net concession revenues generated by the DAA for the year-to-date through November 2023 are up 16% over the same 11-month period in 2022 and are estimated at $4.3 million. The amount available to service the RTA bonds remains capped at $4 million subject to the bond documents. Concessions have been bolstered by the higher average daily attendance at the summer race meet, strong F&B sales for higher margin premium seating business lines, and the operations of the Sound, which is contributing F&B revenues to the RTA bonds. Capital Improvements: In 2023, "the Sound" opened on the fairgrounds. The venue is a 1,892 seat multi-use entertainment venue primarily to host concerts. This capital project was undertaken and financed by DAA and was a renovation of an existing satellite wagering building. Since February 2023, it has hosted 55 performances, with management expecting 80 shows in 2024. Development of the venue signals management's intent to diversify revenue streams at the fair grounds and contribute additional concession revenues toward the rated bonds. There are no other major capital expenditures planned at Del Mar. FINANCIAL ANALYSIS Fitch's base and rating case analysis incorporates management estimates for fiscal year 2023 and budgeted results for fiscal year 2024 for the DAA and DMTC. Fitch's cases assume the hosting of the Breeder's Cup in 2024 and 2025, which will result in one-time spikes in revenues and ultimately net race track revenues in each year. Fitch's cases do not incorporate pre-payments of debt service for either over or under 2.0x coverage. Fitch Base Case Fitch's base case adopts management's expectations across racetrack and concession revenues for Breeder's Cup years 2024 and 2025, which Fitch views as reasonable. Race track net revenues are around $3.6 million in each period. Starting in 2026, revenues and expenses return to 2023 estimated levels. Thereafter, gross racetrack revenues grow at a 10-year CAGR of 1.5%, while expenses grow by a 10-year CAGR of 3%. Concession revenues increase in 2024 to around $6.9 million, and then revert back to 2023 levels and are flat thereafter, capped at $4 million. Under this scenario, net racetrack revenues are depleted in 2031, with annual revenue declines ranging from 8% to 12% from 2029 to 2031. Starting in 2031, concession revenues are the sole revenue supporting debt service. The Fitch Base Case DSCR falls to around 1.2x from 2031 onwards. The five-year average DSCR is 2.2x and the 10-year average DSCR is 1.8x. Fitch Rating Case Fitch's rating case haircuts the Breeder's Cup revenues by 5% in 2024 and 2025, keeping expenses flat, resulting in net race track revenues of around $1.6 million in each year. Starting in 2026, gross racetrack revenues are reduced by 1% from the baseline of 2023, while expenses grow by 2% thereafter. Under this scenario, net racetrack revenues are depleted by 2027. Once net racetrack revenues are depleted, F&B concessions are also assumed to decline by the historical 10-year CAGR of -2.8%. Under this scenario, the five-year average DSCR is 1.7x and the 10-year average DSCR is 1.5x. Fitch rating case minimum DSCR is 0.97x in 2037, as no pledged racetrack revenues are available to support debt service, relying solely on diminishing net concession revenue. Fitch's cases do not take into account the prepayment mechanisms in case of under and over-performance, which will likely result in final amortization on the bonds prior to the scheduled maturity in 2038. If these prepayments are taken into account, an additional $6.7 million of revenue would be trapped in the coverage calculation reduction account under the Fitch rating case projection, which mitigates the low coverage in outer years. Overall, the profile exhibits a high degree of volatility with slight changes in net race track profitability contributing to large variances in annual DSCR, which is supportive of the current rating. Additional Sensitivity Cases Fitch ran a breakeven sensitivity in which net pledged revenues decline by 1.5%, which is the decline observed from 2015 through 2022. Excluding the Breeder's Cup, starting from 2023, 1.5% declines in net revenue per year combined with inflationary cost increases of 2% per year results in a minimum 1.0x coverage in 2037. SECURITY The bonds are secured by net concession revenues (capped at $4 million) generated by the DAA and net racetrack revenues generated by DMTC. ESG CONSIDERATIONS Del Mar Race Track Authority (CA) has an ESG Relevance Score of '4' for Financial Transparency due to the delay in publication of audited financial statements, which has a negative impact on the credit profile, and is relevant to the rating in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Prior ----------- ------ ----- Del Mar Race Track Authority (CA) Del Mar Race Track Authority (CA) /Sports Facility Revenues - First Lien/1 LT LT BB- Affirmed BB- DELTA AIR LINES: Fitch Affirms 'BB+' LongTerm IDR, Outlook Positive ------------------------------------------------------------------- Fitch Ratings has affirmed Delta Air Lines, Inc.'s (Delta) Long-Term Issuer Default Rating (IDR) at 'BB+' and revised the Rating Outlook to Positive from Stable. Fitch has also affirmed Delta's senior secured debt ratings at 'BBB-'/'RR1' and its unsecured ratings and industrial revenue bonds at 'BB+'/'RR4'. The Positive Outlook reflects progress towards the company's de-leveraging goals to date along with Fitch's expectations that stable profitability and positive FCF generation will allow for further gross debt repayment over time. Fitch expects Delta's EBITDAR leverage to trend to the mid-to-low 2x range over the next 12 months, which Fitch views as supportive of a rating upgrade. The ratings consider Delta's financial flexibility which is supported by a large and growing base of unencumbered assets which provide significant protection in downturn scenarios along with manageable upcoming capital spending plans. Fitch has also affirmed its ratings on Delta Air Lines Pass Through Trust Certificates Series 2019-1 (Delta's EETC 2019-1) class AA at 'BBB+' and class A at 'BBB'. KEY RATING DRIVERS Leverage Improving: Delta ended the year with EBITDAR leverage at roughly 3x, ahead of its prior forecast, and approximately a turn higher than prior to the pandemic. Fitch expects leverage to trend to the mid to low 2x range over the next year to 18 months, which Fitch views as supportive of a ratings upgrade. Delta maintains a publicly stated goal to reach and maintain a 2.0x-3.0x leverage metric. Delta made $4.1 billion in debt principal payments in 2023, bringing gross debt and lease liabilities to $29 billion from nearly $33 billion at YE 2022. Although not captured in Fitch's leverage metrics, the company also benefits from reduced pension risk. Delta reported that pension obligations were fully funded at YE 2022, marking a material improvement from prior to the pandemic, when the plans were underfunded by more than $5 billion. Positive FCF Expected: Fitch expects Delta to generate positive FCF through its forecast period. Fitch anticipates EBITDAR margins stabilizing in the mid to upper teen range, driving sufficient cash from operations to cover capex that are likely to total around 10% of revenue annually. These assumptions drive FCF margins in the low single digits as a percentage of revenue through the forecast period, allowing Delta to address its planned capital spending while also bringing down debt. Fitch also expects positive FCF to enable a growing base of unencumbered assets, which Delta currently cites at $26 billion. Favorable Positioning Heading into 2024: Fitch views Delta as well-positioned to generate healthy operating margins and cash flows in 2024. Headwinds including potential areas of overcapacity and cost pressures are likely to keep profitability in line with or slightly below 2023 levels. While Fitch assumes margins remain below historical levels, Fitch's assumptions nevertheless allow for further improvement in Delta's credit metrics. Capacity growth is slowing as the company transitions away from a phase of post-pandemic network restoration. Fitch expects to see total capacity growth in the mid-single digits in 2024, down from roughly 16.6% in 2023, with growth mostly focused on Delta's core hubs where it generates its highest margins. Premium product offerings are also likely to hold up well as more affluent travelers are less impacted by potentially slower economic growth. The company may also have opportunities to benefit in places where competitors are struggling such as with capacity constraints for Spirit and JetBlue created by engine availability issues and potential merger-related complications. Constructive Environment: Fitch anticipates that demand for air travel will remain healthy through 2024, evidenced by recent reports of solid booking trends through the fourth quarter and the potential for improvement in business travel. Although Fitch expects slower U.S. economic growth next year, Fitch's Global Economic Outlook no longer anticipates a U.S. recession. Consumer resilience is likely to continue to include prioritizing spend on travel. Airline pricing power should remain broadly supported by limits on global seat supply driven by original equipment manufacturer (OEM) production delays and engine maintenance issues. However, inflationary pressure on consumer spending, overcapacity in certain markets, and the potential for weaker international travel following a resurgence in 2023 present downside risks. Manageable Cost Pressures: Fitch expects Delta's non-fuel unit costs to increase in the low single digits in 2024 in line with management's guidance, which Fitch views as manageable. The company had previously guided to lower unit costs in 2024, but higher labor and maintenance costs along with slower planned growth will put pressure on unit metrics. Pressures are partly offset by improving aircraft utilization and deliveries of new technology planes that are expected to provide cost tailwinds. Delta has also been operating with additional buffers in place to support operational reliability as it went through its network restoration process. Normalized levels of growth will allow slack to come out of the system. 2023 non-fuel unit costs remain roughly 25% above the comparable 2019 period, driven by inflationary pressures and higher labor costs. Resilient Loyalty and Non-Traditional Revenues: Revenues from airline loyalty programs continue to grow in importance to the industry, and act as an offsetting factor in potential downturns. Delta generated $6.8 billion in total remuneration from its partnership with American Express in 2023 and maintains a long-term goal of reaching $10 billion annually. Loyalty revenue has proven resilient, rebounding to pre-pandemic levels by YE 2021, well ahead of travel-related revenue. Delta reports that Loyalty, premium products, cargo and other revenues outside of main-cabin ticket sales now comprise 55% of total revenues. Loyalty revenues face regulatory risks from proposed legislation seeking to increase competition in the credit card industry and reduce credit card fees. Airline loyalty program revenues rely fees generated from card swipes and passage of the Credit Card Competition Act could have a materially adverse impact on these revenue streams. Fitch views the likelihood of the legislation being enacted as low in the current political environment, but this will remain a watch item. Delta's EETC 2019-1 Ratings: Class AA Certificate Affirmation: Loan-to-value (LTV) of the class AA certificates stood at 102% under Fitch's 'BBB' level stress, a slight improvement from its prior review but still above 100%. Collateral coverage was initially strong for the transaction but the LTV has risen over time due to the transaction's bullet structure. The pandemic impact on aircraft values and degradation of the 737-900ERs to Tier 2 aircraft under Fitch's assessment have also pushed up LTVs. The rating of the class AA is derived via a bottom up approach which is typically used for subordinated tranches. Fitch applies a three-notch uplift to the class AA from Delta's 'BB+' IDR, bringing the issue rating to 'BBB+'. The class AA is theoretically eligible for a four-notch uplift, consisting of a high affirmation factor (+2), the presence of a liquidity facility (+1) and strong recovery prospects (+1). However, Fitch caps the rating achieved via the bottom up approach at 'BBB+' for non-investment grade issuers as per Fitch's criteria. Class A Certificate Affirmation: The rating for the A certificates is also based on Fitch's bottom-up approach as the LTV remains above 100% under Fitch's 'BBB' level stress scenario. The class A certificates are theoretically eligible for up to three notches of uplift from Delta's 'BB+' IDR, including +2 for the high affirmation factor and +1 for the benefit of a liquidity facility. No recovery uplift is applied due to the certificates' weak recovery prospects. The rating is capped at 'BBB' to maintain a rating distinction between the class AA and A certificates. Fitch considers the affirmation factor for 2019-1's pool of aircraft to be high primarily due to the sheer number of older planes in Delta's fleet that are more likely to be rejected in a distress scenario. The collateral of the 2019-1 transaction consists of young vintage A220-100s, A321-200s, A350-900s and 737-900ERs. Fitch views the aircraft models as largely strategic to Delta's fleet planning; however, this is offset by the small collateral pool relative to Delta's fleet. DERIVATION SUMMARY Delta's 'BB+' rating remains higher than its two major network competitors, United Airlines, Inc. (B+/Stable) and American Airlines, Inc. (B+/Stable). The rating differential is driven in part by Fitch's expectations for Delta to maintain leverage metrics favorable to its peers through the forecast period, along with its strong margin and FCF history relative to its major competitors. Delta maintains a lower total debt balance than United, though on a net basis, the two are similar. However, Delta has lower capital spending commitments than United in the coming years and better prospects for FCF generation along with lower execution risk relative to United's fleet renewal plan. Delta is rated three notches lower than Southwest Airlines Co. (BBB+/Stable). The rating differential is largely driven by Southwest's balance sheet, as it remains in a net cash position. Delta compares well to investment grade peers in Europe. Fitch expects Delta to maintain gross leverage metrics in line with Deutsche Lufthansa (BBB-/Stable) and marginally better than Air France/KLM (BBB-/Stable). FCF metrics are expected to be better for Delta than its European counterparts. Delta's business profile also benefits from its relative size and scale and relative foreign exchange exposure compared European peers. KEY ASSUMPTIONS - Capacity growth of around 5% in 2024 and low single digits annually thereafter; - Continued passenger growth keeping load factors at 83%-84%; - Flat to modestly increasing unit revenues; - Jet fuel prices averaging around $2.80/gallon in 2024, implying Brent crude prices in the low-$80/barrel range, while crack spreads remain elevated above historical averages; - Capital spending in line with the company's public guidance. EETC: The rating case for the issuer include a harsh downside scenario in which Delta declares bankruptcy, chooses to reject the collateral aircraft, and where the aircraft are remarketed in the midst of a severe slump in aircraft values. A Delta Air Lines bankruptcy is hypothetical, and is not Fitch's current expectation as reflected in Delta's 'BB+' IDR. Fitch's models also incorporate a full draw on liquidity facilities and include assumptions for repossession and remarketing costs. In its stress analysis, Fitch has opted to apply the mid-point of its value stress range to Tier 1 A321s and A350-900s (25% in the BBB level scenario) and Tier 2 737-900ERs (30%). The A220-100s are stressed at the low end of its Tier 2 stress range (25%). Fitch's analysis incorporates a 6% annual depreciation rate for Tier 1 aircraft and a 7% annual depreciation rate for Tier 2 aircraft. Fitch's recovery analyses for subordinated tranches utilize its 'BB' level stress tests and include a full draw on liquidity facilities and assumptions for repossessions and remarketing costs. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Sustained commitment to conservative financial policies leading adjusted debt/EBITDAR to around or below 2.5x; - EBITDAR margins maintained in the high teens or better and expectations for through-the-cycle FCF margins in the low single digits; - Maintaining or boosting financial flexibility through increasing unencumbered assets and moving toward a less encumbered capital structure; - Continued gross debt paydown while maintaining liquidity. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Sustained adjusted debt/EBITDAR above 3.3x or EBITDAR/interest + rents falling below 3.5x on a sustained basis; - FCF margins declining to neutral on a sustained basis; - A deviation of FCF deployment causing total liquidity to fall below $7 billion absent an offsetting increase in leverageable assets EETC: Factors that could, individually or collectively, lead to positive rating action/upgrade: - Positive rating actions are unlikely at this time due to weak LTV compared to similar transactions rated in the 'A' category and the transaction's bullet structure that drives LTV to increase. Factors that could, individually or collectively, lead to negative rating action/downgrade: The ratings for the class AA and class A certificates are being capped at 'BBB+' and 'BBB' despite higher theoretical uplift in Fitch's bottom up approach. If Delta were to be downgraded to 'BB', the class AA certificates may stay at 'BBB+' and class A at 'BBB' due to the potential for higher uplift. The rating is also subject to changes in Fitch's view of affirmation factors for the underlying collateral. Unexpected decline in collateral values could result in Fitch's lower assessment of class AA recovery. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Delta ended 2023 with $6.8 billion in total liquidity, consisting of $3.8 billion in cash and short-term investments and availability under its revolving credit facilities. Delta has pared down liquidity more quickly than its large network peers in the U.S. Fitch considers Delta's liquidity to be adequate for its rating given its expectations for positive FCF generation over the forecast period, along with the financial flexibility provided by the company's unencumbered assets. However, Fitch would expect liquidity to be maintained near current levels to be supportive of an investment-grade rating. Delta's total adjusted debt declined to $29 billion at YE from $33 billion at YE 2022 and more than $35 billion at its peak during the pandemic. The company made $4.1 billion of debt principal payments in 2023. Upcoming maturities $2.8 billion in both 2024 and 2025, are manageable, given Fitch's expectations for the company to generate significant FCF in the coming two years. Delta's debt structure primarily consists of secured debt including its loyalty program financings, aircraft financings, senior secured notes backed by the company's slots gates and routes, and industrial revenue bonds. EETC: The class AA and A certificates benefit from dedicated 18-month liquidity facilities, which are provided by Commonwealth Bank of Australia acting through its New York Branch (A/F1/Stable). ISSUER PROFILE Delta is one of the largest airlines in the world, operating hubs in Atlanta, Boston, Detroit, Los Angeles, Minneapolis-St. Paul, New York-JFK and LaGuardia, Salt Lake City and Seattle. It is part of the SkyTeam Alliance, one of three major alliance networks of global airlines. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Delta Air Lines Inc. LT IDR BB+ Affirmed BB+ senior secured LT BBB- Affirmed RR1 BBB- senior unsecured LT BB+ Affirmed RR4 BB+ Delta Air Lines Pass Through Trust Certificates Series 2019-1 senior secured LT BBB+ Affirmed BBB+ senior secured LT BBB Affirmed BBB DIAMOND SPORTS: Schulte Roth, MW&E Advise Dissenting Lenders ------------------------------------------------------------ The law firms Schulte Roth & Zabel LLP and McDermott Will & Emery LLP filed a verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure to disclose that in the Chapter 11 cases of Diamond Sports Group LLC, et al., the firms represent Dissenting Lenders. The Dissenting Lenders hold claims against the Debtors including: (i) term loans (the "Second Lien Term Loans") and revolving loans (the "Second Lien Revolving Loans") outstanding under that certain Second Lien Credit Agreement dated as of March 1, 2022 among Diamond Sports Intermediate Holdings LLC, Diamond Sports Group, LLC ("Borrower"), the lenders party thereto, Wilmington Savings Fund Society, FSB, as term facility agent and collateral agent, and JPMorgan Chase Bank, N.A., as revolving credit facility agent; (ii) 5.375% Senior Secured Second Lien Notes due 2026 issued pursuant to that certain Indenture dated as of March 1, 2022, among Borrower and Diamond Sports Finance Company (collectively, "Issuers") and U.S. Bank Trust Company, National Association, as trustee and notes collateral agent; and/or (iii) 6.625% Senior Notes due 2027 (the "Unsecured Notes") issued pursuant to that certain Indenture dated as of August 2, 2019, among the Issuers and U.S. Bank, as trustee. On or around January 23, 2024, the Dissenting Lenders retained Schulte to advise and represent them in connection with the chapter 11 cases. On or around February 7, 2024, the Dissenting Lenders also retained McDermott as co-counsel to advise and represent them in connection with the chapter 11 cases. The Dissenting Lenders have indicated to Counsel that they hold and/or own disclosable economic interests, or such member or one or more of its affiliates acts as investment managers or advisors to funds and/or accounts that hold and/or own disclosable economic interests, in relation to the Debtors. The names, addresses, and disclosable economic interests of all the members of Dissenting Lenders are as follows: 1. Capital Ventures International C/O Susquehanna Advisors Group, Inc. 401 City Avenue - Suite 200 Bala Cynwyd, PA 19004 * Second Lien Notes ($56,815,000.00) * Unsecured Notes ($16,000,000.00) 2. Greywolf Capital Management LP, on behalf of certain managed funds 87 Graham Street, Suite 140 San Francisco, CA 94129 * Second Lien Term Loans ($36,466,355.83) * Second Lien Notes ($62,625,000.00) 3. Ellington Management Group, L.L.C., on behalf of its funds and accounts 53 Forest Ave Old Greenwich, CT 06870 * Second Lien Term Loans ($44,646,131.13) 4. Sound Point Capital Management, LP as Investment Manager on behalf of certain affiliated entities 375 Park Ave, 33 Floor New York, NY 10152 * Second Lien Term Loans ($120,241,577.18) * Second Lien Notes ($10,458,000.00) 5. Aristeia Capital, L.L.C., as Investment Manager to Underlying Funds One Greenwich Plaza Suite 300 Greenwich, CT 06830 * Second Lien Revolving Loans ($20,000,000.00) * Second Lien Term Loans ($45,000,000.00) * Second Lien Notes ($15,000,000.00) * Unsecured Notes ($40,700,000.00) 6. Whitebox Investment Advisors LLC, on behalf of certain funds as Investment Manager 515 Madison Ave., 34th Floor New York, NY 10022 * Second Lien Notes ($53,335,000.00) 7. Millennium CMM, Ltd. 399 Park Avenue New York, NY 10022 * Second Lien Notes ($220,990,000.00) 8. Verition Multi-Strategy Master Fund Ltd. 245 Park Avenue, Floor 35 New York, NY 10169 * Second Lien Term Loans ($15,000,000.00) 9. Deutsche Bank AG New York Branch Deutsche Bank Center 1 Columbus Circle New York, NY 10019 * Second Lien Revolving Loans ($30,625,000.00) * Second Lien Term Loans ($35,047,507.00) * Second Lien Notes ($37,820.000.00) 10. RBC Capital Markets, LLC 200 Vesey Street, 9th Floor New York, NY 10281 * Second Lien Term Loans ($9,489,949.74) * Second Lien Notes ($5,672,000.00) * Unsecured Notes ($12,867,000.00) Counsel to the Dissenting Lenders: Charles R. Gibbs, Esq. MCDERMOTT WILL & EMERY LLP 2501 North Harwood Street, Suite 1900 Dallas, Texas 75201 Tel: (214) 295-8000 Fax: (972) 232-3098 E-mail: crgibbs@mwe.com -and- Adam C. Harris, Esq. Reuben E. Dizengoff, Esq. SCHULTE ROTH & ZABEL LLP 919 Third Avenue New York, New York 10022 Tel: (212) 756-2000 Fax: (212) 593-5955 E-mail: adam.harris@srz.com reuben.dizengoff@srz.com -and- Douglas S. Mintz, Esq. SCHULTE ROTH & ZABEL LLP 555 13th Street, NW Washington, D.C. 20004 Tel: (202) 729-7470 Fax: (202) 730-4520 Email: douglas.mintz@srz.com About Diamond Sports Group Diamond Sports Group, LLC, and its affiliates own and/or operate the Bally Sports Regional Sports Networks, making them the nation's leading provider of local sports programming. DSG's 19 Bally Sports RSNs serve as the home for 42 MLB, NHL, and NBA teams. DSG also holds joint venture interests in Marquee, the home of the Chicago Cubs, and the YES Network, the local destination for the New York Yankees and Brooklyn Nets. The RSNs produce about 4,500 live local professional telecasts each year in addition to a wide variety of locally produced sports events and programs. DSG is an unconsolidated and independently run subsidiary of Sinclair Broadcast Group. Diamond Sports Group and 29 of its affiliates sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 23-90116) on March 14, 2023. In the petition filed by David F. DeVoe, Jr., as chief financial officer and chief operating officer, Diamond Sports Group listed $1 billion to $10 billion in both assets and liabilities. Judge Christopher M. Lopez oversees the cases. The Debtors tapped Paul, Weiss, Rifkind, Wharton & Garrison, LLP and Porter Hedges, LLP as bankruptcy counsel; Wilmer Cutler Pickering Hale, Dorr, LLP and Quinn Emanuel Urquhart & Sullivan, LLP as special counsel; AlixPartners, LLP as financial advisor; Moelis & Company, LLC and LionTree Advisors, LLC as investment bankers; Deloitte Tax, LLP, as tax advisor; Deloitte Financial Advisory Services, LLP, as accountant; and Deloitte Consulting, LLP as consultant. Kroll Restructuring Administration, LLC is the claims agent. The U.S. Trustee for Region 7 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. The committee tapped Akin Gump Strauss Hauer& Feld LLP as counsel; FTI Consulting, Inc., as financial advisor; and Houlihan Lokey Capital, Inc., as investment banker. DIOCESE OF SYRACUSE: Insurers Slam Chapter 11 Bankruptcy Plan ------------------------------------------------------------- Interstate Fire & Casualty Co., joined by a number of other insurance carriers, has objected to the Chapter 11 plan disclosure statement of the Roman Catholic Diocese of Syracuse, New York, saying that the plan's treatment of insurance policies abrogated the insurers' rights and that the disclosure contained inadequate information. "The Disclosure Statement is woefully inadequate, and the Plan it describes is even worse: the former lacks basic information that Section 1125(b) of Title 11 of the United States Code, 11 U.S.C. Secs. 101, et seq. requires, while the latter is facially deficient under Section 1129. Neither should go out for solicitation in their current state," the Interstate Insurers assert. The Interstate Insurers assert that until or unless the Debtor and the Official Committee of Unsecured Creditors bring both documents into compliance with the Bankruptcy Code, approval of the Disclosure Statement can, and should, be denied for at least two reasons. * First, the Joint Chapter 11 Plan of Reorganization for The Roman Catholic Diocese of Syracuse, New York that accompanies the Disclosure Statement is patently unconfirmable. The Plan is riddled with provisions that violate bedrock bankruptcy law, including, for example: an assignment mechanism that attempts to split the benefits of contracts (coverage under insurance policies) from their burdens (the concomitant obligations); requests for overbroad and unnecessary findings that serve no legitimate bankruptcy purpose (e.g., a good faith finding for documents other than the Plan); and a claims payment protocol that provides for distributions to known invalid claims – while installing fiduciaries with close connections to the plaintiffs' bar to allow and pay them. Every one of these defects is fatal to confirmation, and they barely scratch the surface. Approval of the Disclosure Statement should be denied for this reason alone. * Second, and independently of the Plan's flaws, the Disclosure Statement is itself inadequate under Bankruptcy Code Section 1125(b). That section makes clear that the purpose of a disclosure statement is to disclose -- to inform the average creditor how much he is receiving, when he should expect to receive it, and what risks there are to his recovery. This Disclosure Statement falls far short of that standard. It omits basic financial information, such as recovery estimates, for the largest group of creditors (the Abuse Claimants2) in the Chapter 11 Case. It likewise fails to adequately inform those creditors of the serious and substantial risks to their potential recoveries, not least of which is the material possibility that professional fees from the litigation contemplated in the Plan will erode Trust funding and lower distributions as a result. About The Roman Catholic Diocese of Syracuse The Roman Catholic Diocese of Syracuse, New York -- http://www.syracusediocese.org/-- through its administrative offices (a) provides operational support to the Catholic parishes, schools and certain other Catholic entities that operate within the territory of the Diocese in support of their shared charitable, humanitarian and religious missions; (b) conducts school operations by managing tuition and scholarship payments, employee payroll, and other school-related operating expenses for separately incorporated Diocesan schools, as well as providing parish schools with financial, operational and educational support; and (c) provides comprehensive risk management services to the OCEs through the Diocese's insurance program. The Roman Catholic Diocese of Syracuse, New York filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bank. N.D.N.Y. Case No. 20-30663) on June 19, 2020. Stephen A. Breen, chief financial officer, signed the petition. At the time of filing, the Debtor estimated $10 million to $50 million in assets and $50 million to $100 million in liabilities. Judge Margaret M. Cangilos-Ruiz oversees the case. Bond, Schoeneck and King, PLLC serves as the Debtor's bankruptcy counsel. The Debtor also tapped Mullen Coughlin LLC as special counsel, Arete Advisors LLC as cybersecurity consultant, and Moxfive LLC as technical advisor. Stretto is the claims agent and administrative advisor. The U.S. Trustee for Region 2 appointed a committee to represent unsecured creditors in the Debtor's bankruptcy case. The committee tapped Stinson, LLP, Saunders Kahler, LLP and Berkeley Research Group, LLC, as its bankruptcy counsel, local counsel and financial advisor, respectively. DMK PHARMACEUTICALS: Hires Nelson Mullins Riley as Legal Counsel ---------------------------------------------------------------- DMK Pharmaceuticals Corporation seeks approval from the U.S. Bankruptcy Court for the District of Delaware to employ Nelson Mullins Riley & Scarborough, LLP as its bankruptcy counsel. The firm's services include: a. advising the Debtors with respect to their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; b. advising and consulting on the conduct of these Chapter 11 Cases, including all of the legal and administrative requirements of operating in chapter 11; c. attending meetings and negotiating with representatives of creditors and other parties in interest; d. taking all necessary actions to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors, and representing the Debtors in negotiations concerning litigation in which the Debtors are involved, including, but not limited to, objections to claims filed against the Debtors' estates; e. preparing pleadings in connection with these Chapter 11 Cases, including motions, applications, answers, orders, reports, and papers necessary or otherwise beneficial to the administration of the Debtors' estates; f. representing the Debtors in connection with obtaining authority to obtain and post-petition financing, as applicable; g. advising the Debtors in connection with any potential sale of assets or negotiation, formulation and confirmation of a plan of reorganization or liquidation; h. appearing before the Court and any appellate courts to represent the interests of the Debtors' estates; i. taking any necessary action on behalf of the Debtors to negotiate, prepare, and obtain approval of a disclosure statement and confirmation of a chapter 11 plan and all documents related thereto; and j. performing all other necessary legal services. The firm will be paid at these rates: Partners $600 to $1,050 per hour Of Counsel $500 to 700 per hour Associates $320 to 650 per hour Paraprofessionals $135 to $350 per hour The firm received an advance retainer of $500,000. In accordance with Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, Nelson Mullins disclosed that: -- it has not agreed to any variations from, or alternatives to, its standard or customary billing arrangements for this engagement; -- none of the professionals included in the engagement vary their rate based on the geographic location of the bankruptcy case; -- the firm has has represented the Debtors in the twelve months prior to the Petition Date in matters unrelated to these cases. The firm has, and will continue to, bill at its standard hourly rates, with all fees and expenses; -- The Debtors and their professionals are currently in the process of formulating a detailed budget that is consistent with the form of budget attached as Exhibit C-1 to the UST Guidelines, recognizing that in the course of a case like these chapter 11 cases, it is highly likely that there may be a number of unforeseen fees and expenses that will need to be addressed by the Debtors and their professionals. Lee Hart, Esq., an attorney at Nelson Mullins Riley & Scarborough, disclosed in a court filing that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Lee B. Hart, Esq. Adam D. Herring, Esq. NELSON, MULLINS, RILEY & SCARBOROUGH LLP 201 17th Street NW, Suite 1700 Atlanta, GA 30363 Telephone: (404) 322-6000 Facsimile: (404) 322-6050 E-mail: lee.hart@nelsonmullins.com adam.hering@nelsonmullins.com About DMK Pharmaceuticals DMK Pharmaceuticals Corporation filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 24-10153) on Feb 2, 2024, listing 10 million to $50 million in both assets and liabilities. The petition was signed by Seth Cohen as chief financial officer. Michael G. Busenkell, Esq. at Gellert Scali Busenkell & Brown, LLC represents the Debtor as counsel. DMK PHARMACEUTICALS: Seeks to Hire Rock Creek as Financial Advisor ------------------------------------------------------------------ DMK Pharmaceuticals Corporation seeks approval from the U.S. Bankruptcy Court for the District of Delaware to employ Rock Creek Advisors, LLC as its financial advisors. The firm's services include: a. assisting the Debtor in evaluating strategic restructuring alternatives; b. assisting the Debtor in the preparation of a 13-week cash forecast, including professional fees related to potential restructuring alternatives; c. assisting in negotiating and obtaining debtor-in-possession financing; d. assisting the Debtor in building and maintaining a virtual data room for DIP financing; e. assisting the Debtor in obtaining and negotiating asset purchase agreements with respect to its assets; f. assisting the Debtor in building and maintaining a virtual data room for the marketing of its assets; g. assisting the Debtor and its legal counsel in negotiations with various parties-in-interest; h. providing guidance to the Debtor in completing the necessary schedules to accompany restructuring alternatives; i. assisting the Debtor in the preparation of data in order to prepare legal papers; j. providing information necessary to confirm and consummate a Chapter 11 plan; and k. assisting the Debtor in other matters. The firm will be paid at these rates: Managing Directors $450 to $595 per hour Managers/Senior Managers $325 to $450 per hour Associates and Staff $275 to $325 per hour In addition, the firm will receive reimbursement for its out-of-pocket expenses. The Debtors paid Rock Creek a $50,000 retainer. Brian Ayers, a managing director at Rock Creek Advisors, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Brian Ayers Rock Creek Advisors, LLC 1738 Belmar Blvd. Belmar, NJ 07719 Tel: (201) 315-2521 Email: bayers@rockcreekfa.com About DMK Pharmaceuticals DMK Pharmaceuticals Corporation filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 24-10153) on Feb 2, 2024, listing 10 million to $50 million in both assets and liabilities. The petition was signed by Seth Cohen as chief financial officer. Michael G. Busenkell, Esq. at Gellert Scali Busenkell & Brown, LLC represents the Debtor as counsel. DR. JOSEPH F. POLLACK: S&P Affirms 'BB' Rating on Refunding Bonds ----------------------------------------------------------------- S&P Global Ratings revised its outlook to negative from stable and affirmed its 'BB' long-term rating on the Michigan Public Educational Facilities Authority's series 2020 limited-obligation refunding bonds, issued for Dr. Joseph F. Pollack Academic Center of Excellence (PACE). "The outlook revision reflects our view of the school's weakened financial performance and subsequently maximum annual debt service coverage in fiscal 2023, stemming from a trend of declining enrollment," said S&P Global Ratings credit analyst Chase Ashworth. PACE's only debt outstanding is its series 2020 bonds with approximately $7.2 million as of fiscal 2023 year-end. State aid and a mortgage on the school's current facility secure the series 2020 bonds. Debt payments are made from 20% of the monthly school state-aid payments, deposited directly into the debt service fund. Bond covenants include a 45 days' cash on hand requirement and a minimum debt service coverage (DSC) ratio of 1.15x. Violation of covenants requires the engagement of a management consultant but does not constitute a technical default unless coverage falls below 1x. The school violated its enrollment covenant, which requires that enrollment levels in a given year be no less than 95% of the previous semester's enrollment levels. In accordance with the financing agreement, the enrollment covenant violation did not constitute an event of default and the school hired a management consultant to assist in improving enrollment levels. The school reports it is in compliance with its DSC covenant. S&P said, "We assessed PACE's enterprise profile as adequate based on declining enrollment patterns due to a competitive market with a short waitlist and poor student retention offset by a good charter standing and improved academic results relative to those of nearby schools in the most recent year of testing. We assessed the academy's financial profile as vulnerable in light of fluctuating and historically slim operating margins, and historically low, albeit recently improved, liquidity and financial flexibility. Furthermore, while the school's maximum annual debt service coverage had improved in fiscal 2021, due to the school's series 2020 refunding bonds and a one-time improvement in financial margins, it has since moderated in the past two fiscal years, and was below 1x for fiscal 2023, based on our calculation. We believe that, combined, these credit factors lead to an anchor of 'bb' and a final rating of 'BB'. "The negative outlook reflects our view that there is at least a one-in-three chance that we could lower the rating within the outlook period. If financial operations do not improve relative to fiscal 2023 levels and enrollment trends don't stabilize, we could lower the rating." EBIX INC: Brown Rudnick & Reed Smith Advise Common Equity Holders ----------------------------------------------------------------- The law firms Brown Rudnick LLP and Reed Smith LLP filed a verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure to disclose that in the Chapter 11 cases of Ebix, Inc., et al., the firms represent the ad hoc group of certain holders of common equity (the "Ad Hoc Group"). On February 2, 2024, the Ad Hoc Group retained Brown Rudnick to represent it in connection with seeking to obtain the appointment of an Official Equity Committee in the Debtors' chapter 11 cases. On February 6, 2024, the Ad Hoc Group retained Reed Smith to serve as its Texas co-counsel with respect to such matters. Counsel represents only the Ad Hoc Group and does not represent, or purport to represent, any other entity in connection with the Debtors' chapter 11 cases. Counsel does not represent the Ad Hoc Group as a "committee" (as such term is employed in the Bankruptcy Code and the Bankruptcy Rules) and does not undertake to represent the interests of, and is not a fiduciary for, any creditor, party in interest, or entity other than the Ad Hoc Group. The Members of the Ad Hoc Group's nature and amount of disclosable economic interests held in relation to the Debtors are: Name Address Common Equity ---- ------- ------------- Sara Konstantine 411 S. Blue Ridge Pkwy. 100,003 Cedar Park, TX 78613 Mark Lindee 506 Adelaide Drive 1,350,000 Santa Monica, CA 90402 Charles Myers 67 Byron Road 1,370,000 Weston, MA 02493 Watch Hill Capital 1333 2nd Street 2,671,749 LLC Suite 650 Santa Monica, CA 90401 ---------- 5,491,752 Counsel to the Ad Hoc Group: REED SMITH LLP Keith M. Aurzada, Esq. Omar J. Alaniz, Esq. Jay L. Krystinik, Esq. Michael P. Cooley, Esq. 2850 N. Harwood St., Suite 1500 Dallas, TX 75201 Telephone: (469) 680-4200 Email: kaurzada@reedsmith.com oalaniz@reedsmith.com jkrystinik@reedsmith.com mpcooley@reedsmith.com -and- BROWN RUDNICK LLP Robert J. Stark, Esq. Bennett S. Silverberg, Esq. Alexander F. Kasnetz, Esq. Seven Times Square New York, NY 10036 Telephone: (212) 209-4800 Email: rstark@brownrudnick.com bsilverberg@brownrudnick.com akasnetz@brownrudnick.com Tristan G. Axelrod, Esq. One Financial Center Boston, MA 02111 Telephone: (617) 856-8200 Email: taxelrod@brownrudnick.com About Ebix Inc. Ebix Inc. -- https://www.ebix.com/ -- is headquartered in Atlanta, Ga., and it supplies software and electronic commerce solutions to the insurance industry. With approximately 200 offices across six continents, Ebix, (NASDAQ: EBIX) endeavors to provide on-demand infrastructure exchanges to the insurance, financial services, travel and healthcare industries. Ebix and its affiliates filed Chapter 11 petitions (Bankr. N.D. Texas Lead Case No. 23-80004) on Dec. 17, 2023. At the time of the filing, Ebix reported between $500 million and $1 billion in both assets and liabilities. Judge Scott W. Everett oversees the cases. The Debtors tapped Sidley Austin, LLP as bankruptcy counsel; Alixpartners, LLP as financial advisor; and Jefferies, LLC as investment banker. Omni Agent Solutions, Inc. is the claims agent. EBIX INC: Committee Taps McDermott Will & Emery as Counsel ---------------------------------------------------------- The official committee of unsecured creditors of Ebix, Inc. and its affiliates seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ McDermott Will & Emery LLP as its counsel. The firm will render these services: a) advise the Committee with respect to its rights, powers, and duties in these Chapter 11 Cases; b) participate in in-person and telephonic meetings of the Committee and subcommittees formed thereby, if any; c) assist and advise the Committee in its meetings and negotiations with the Debtors and other parties in interest regarding the Chapter 11 Cases; d) assist the Committee in analyzing claims asserted against, and interests in, the Debtors, and in negotiating with the holders of such claims and interests and bringing, or participating in, objections or estimation proceedings with respect to such claims and interests; e) assist the Committee in analyzing the Debtors' assets and liabilities, including in its review of the Debtors' Schedules of Assets and Liabilities, Statements of Financial Affairs, and other reports prepared by the Debtors, investigating the extent and validity of liens and participating in and reviewing any proposed transfer, sale, or disposition of the Debtors' assets, financing arrangements, and cash collateral stipulations or proceedings; f) assist the Committee in its investigation of the acts, conduct, assets, liabilities, management, and financial condition of the Debtors, the Debtors' historic and ongoing operations of their businesses, and the desirability of the continuation of any portion of those operations, and any other matters relevant to the Chapter 11 Cases; g) assist the Committee in its analysis of, and negotiations with the Debtors or any third party related to, financing, asset disposition transactions, and compromises of controversies, reviewing and determining the Debtors' rights and obligations under leases and executory contracts, and assisting, advising, and representing the Committee in any manner relevant to the assumption and rejection of executory contracts and unexpired leases; h) assist the Committee in its analysis of, and negotiations with, the Debtors or any third party related to, the formulation, confirmation, and implementation of a chapter 11 plan(s) and all documentation related thereto (including the disclosure statement); i) assist, advise, and represent the Committee in understanding its powers and duties under the Bankruptcy Code and the Bankruptcy Rules and in performing other services as are in the interests of those represented by the Committee; j) assist and advise the Committee with respect to communications with the general creditor body regarding significant matters in the Chapter 11 Cases; k) respond to inquiries from individual creditors as to the status of, and developments in, the Chapter 11 Cases; l) represent the Committee at hearings and other proceedings before the Court and other courts or tribunals, as appropriate; m) review and analyze complaints, motions, applications, orders, and other pleadings filed with the Court, and advise the Committee with respect to formulating positions with respect, and filing responses, thereto; n) assist the Committee in its review and analysis of, and negotiations with the Debtors and their non-Debtor affiliates related to intercompany claims and transactions; o) review and analyze third-party analyses and reports prepared in connection with the Debtors' potential claims and causes of action, advise the Committee with respect to formulating positions thereon, and perform such other diligence and independent analysis as may be requested by the Committee; p) advise the Committee with respect to applicable federal and state regulatory issues, as such issues may arise in the Chapter 11 Cases; q) assist the Committee in preparing pleadings and applications, and pursuing or participating in adversary proceedings, contested matters, and administrative proceedings as may be necessary or appropriate in furtherance of the Committee's duties; r) take all necessary or appropriate actions as may be required in connection with the administration of the Debtors' estates, including with respect to a chapter 11 plan and related disclosure statement; and s) perform such other legal services as may be necessary or as may be requested by the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code. The firm will bill these hourly rates: Partners $1,330 to $1,735 Counsel $1,000 to $1,250 Associates $725 to $1,200 Non-lawyer Professionals $115 to $670 In accordance with Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, the following is provided in response to the request for additional information: Question: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? Response: Yes, all billing rates are being discounted by 10 percent. Question: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? Response: No rate for any of the professionals included in this engagement varies based on the geographic location of the Chapter 11 Cases. Question: If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed postpetition, explain the difference and the reasons for the difference. Response: McDermott did not represent the Committee, which was appointed by the U.S. Trustee during the course of the Chapter 11 Cases, during the 12 months prepetition. Question: Has your client approved your prospective budget and staffing plan, and, if so, for what budget period? Response: The Committee and McDermott expect to develop a prospective budget and staffing plan, recognizing that in the course of large chapter 11 cases, unforeseeable fees and expenses may arise that will need to be addressed by the Committee and McDermott. Charles Gibbs, Esq., partner of McDermott Will & Emery LLP, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtors and their estates. The firm can be reached at: Charles R. Gibbs, Esq. MCDERMOTT WILL & EMERY LLP 2501 North Harwood Street, Suite 1900 Dallas, TX 75201-1664 Telephone: (214) 295-8000 Facsimile: (972) 232-3098 E-mail: crgibbs@mwe.com About Ebix Inc. Ebix Inc. -- https://www.ebix.com/ -- is headquartered in Atlanta, Georgia, and it supplies software and electronic commerce solutions to the insurance industry. With approximately 200 offices across 6 continents, Ebix, Inc., (NASDAQ: EBIX) endeavors to provide on-demand infrastructure exchanges to the insurance, financial services, travel and healthcare industries. Ebix Inc. and its affiliates sought relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 23-80004) on Dec. 17, 2023. In the petition filed by Amit K. Garg, as secretary and authorized signatory, Ebix listed assets and liabilities between $500 million and $1 billion. Judge Scott W. Everett oversees the case. The Debtors tapped Sidley Austin LLP as bankruptcy counsel; Alixpartners, LLP, as financial advisor; and Jefferies LLC as investment banker. Omni Agent Solutions, Inc., is the claims agent. EMCORE CORP: Incurs $5.7 Million Net Loss in First Quarter ---------------------------------------------------------- EMCORE Corporation announced results for the fiscal 2024 first quarter (1Q24) ended Dec. 31, 2023. For 1Q24, EMCORE's consolidated revenue was $24.1 million. Net loss on continuing operations was $4.4 million and $2.6 million on a GAAP and non-GAAP basis, respectively. Adjusted EBITDA was negative $1.7 million. For the three months ended Dec. 31, 2023, the Company reported a net loss of $5.68 million on $24.12 million of revenue, compared to a net loss of $11.69 million on $19.98 million of revenue for the three months ended Dec. 31, 2022. As of Dec. 31, 2023, the Company had $135.18 million in total assets, $59.75 million in total liabilities, and $75.44 million in total shareholders' equity. "Chicago, Concord, and Alhambra showed increased revenue over the September quarter, but not enough to offset the lower shipments out of Budd Lake. We faced some unexpected headwinds from export license timing and a PCB materials issues that ran up against the holidays. Nevertheless, we continued to achieve a solid gross margin and substantially reduced internally-funded R&D. When comparing to the year-ago quarter, Inertial Navigation revenue grew 21%," said Jeff Rittichier, president and chief executive officer of EMCORE. "Going-forward, we expect a return to quarterly top-line growth in the June quarter, including revenue from new programs, continued engineering and operational integration among sites, and full business systems integration within the fiscal year." The Company expects revenue for the fiscal second quarter (2Q24) ending March 31, 2024 to be in the range of $23 million to $25 million. About Emcore EMCORE Corporation -- https://www.emcore.com -- is a provider of inertial navigation products for the aerospace and defense markets. The Company leverages industry-leading Photonic Integrated Chip (PIC), Quartz MEMS, and Lithium Niobate chip-level technology to deliver state-of-the-art component and system-level products across its end-market applications. EMCORE has vertically-integrated manufacturing capability at its facilities in Alhambra, CA, Budd Lake, NJ, Concord, CA, and Tinley Park, IL. Irvine, California-based KPMG LLP, the Company's auditor since 2010, issued a "going concern" qualification in its report dated Dec. 27, 2023, citing that the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern. ENC PARENT: $450MM Bank Debt Trades at 18% Discount --------------------------------------------------- Participations in a syndicated loan under which ENC Parent Corp is a borrower were trading in the secondary market around 81.8 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $450 million facility is a Term loan that is scheduled to mature on August 19, 2028. The amount is fully drawn and outstanding. ENC Parent Corporation, dba Evans Network of Companies or Evans Delivery, is an asset-light agent-based provider of services to operators in the intermodal drayage, truckload, and freight brokerage markets of the logistics industry. Services provided include national and regional sales support to agents via a number of back-office support functions including but not limited to accounts receivable management, payment processing, insurance, and compliance. ENC will be owned by PE firm Court Square Capital Partners. ERIC MCCRITE: Taps Law Offices of Henry F. Sewell as Counsel ------------------------------------------------------------ Eric McCrite Co. seeks approval from the U.S. Bankruptcy Court for the Northern District of Georgia to hire the Law Offices of Henry F. Sewell, Jr., LLC as its counsel. The firm's services include: (a) advising the Debtor regarding its powers and duties in the continued management and operation of its business and property; (b) attending meetings and negotiating with representatives of creditors and other parties-in-interest, and advising and consulting on the conduct of the Chapter 11 case; (c) taking necessary action to protect and preserve the Debtor's estate; (d) reviewing and preparing all documents and agreements as they become necessary and desirable; (e) reviewing and preparing all legal papers necessary to the administration of the estate; (f) negotiating and preparing a plan of reorganization, disclosure statement and all related documents, and taking any necessary action to obtain confirmation of such plan; (g) reviewing and objecting to claims, and analyzing, recommending, preparing and bringing any causes of action created under the Bankruptcy Code; (h) advising the Debtor in connection with any sale of assets; (i) appearing before the bankruptcy court, any appellate courts, and the Office of the U.S. Trustee; and (j) performing all other necessary legal services for the Debtor. The firm received retainer payments from the Debtor in the total amount of $27,500. The hourly rates of the firm's attorneys are as follows: Henry F. Sewell, Jr. $425 Eric Silva $300 In addition, the firm will seek reimbursement for expenses incurred. Henry Sewell, Jr., Esq., sole member of the Law Offices of Henry F. Sewell, Jr., disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Henry F. Sewell, Jr., Esq. LAW OFFICES OF HENRY F. SEWELL, JR., LLC 2965 Peachtree Road, NW, Suite 555 Atlanta, GA 30305 Telephone: (404) 926-0053 Email: hsewell@sewellfirm.com About Eric McCrite Eric McCrite Co., a company in Acworth, Ga., filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. N.D. Ga. Case No. 24-50463) on Jan. 15, 2024, with $1 million to $10 million in both assets and liabilities. Graydon Eric McCrite, president and sole shareholder, signed the petition. Henry Sewell, Esq., at the Law Offices of Henry F. Sewell, Jr., LLC represents the Debtor as bankruptcy counsel. EXPANSION INDUSTRIES: Committee Taps Barron & Newburger as Counsel ------------------------------------------------------------------ The official committee of unsecured creditors of Expansion Industries, LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to hire Barron & Newburger, P.C. as its counsel. The firm's services include: a. advising the Committee on all legal issues as they arise; b. representing and advising the Committee regarding the terms of any sales of assets or plans of reorganization or liquidation and assisting the Committee in negotiations with the Debtor and other parties; c. investigating Debtor's assets and pre-bankruptcy conduct; d. preparing, on behalf of the Committee, all necessary pleadings, reports, and other papers; e. representing and advising the Committee in all proceedings in the Bankruptcy Case; f. assisting and advising the Committee throughout the administration of the Debtor's estate; and g. providing such other services as are customarily provided by counsel to creditor committees in cases of this kind. The firm will be paid at these rates: Shareholders $475 to $600 per hour Associates $300 to $450 per hour Paralegals $100 to $150 per hour The firm will also be reimbursed for reasonable out-of-pocket expenses incurred. Stephen Sather, Esq., a senior counsel at Barron & Newburger, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Stephen Sather, Esq. BARRON & NEWBURGER, PC 7320 N. MoPac Expy, Suite 400 Austin, TX 78731 Tel: (512) 476-9103 Fax: (512) 279-0310 Email: gsiemankowski@bn-lawyers.com About Expansion Industries Expansion Industries, LLC, a company in Flower Mound, Texas, filed voluntary Chapter 11 petition (Bankr. E.D. Texas Case No. 23-41828) on Sept. 29, 2023, with up to $50,000 in assets and $10 million to $50 million in liabilities. Judge Brenda T Rhoades oversees the case. Eric A. Liepins, Esq., at Eric A. Liepins represents the Debtor as legal counsel. FINTHRIVE SOFTWARE: Oaktree Marks $31MM Loan at 40% Discount ------------------------------------------------------------ Oaktree Specialty Lending Corporation has marked its $31,074,000 loan extended to FINThrive Software Intermediate Holdings, Inc., to market at $18,745,000 or 60% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a Second Lien Term Loan (SOFR+6.75%) to FINThrive Software. The loan accrues interest at a rate of 12.22% per annum. The loan matures on December 17, 2029. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 FinThrive is a provider of revenue cycle management software solutions to the healthcare sector. FINTHRIVE SOFTWARE: Oaktree Marks $4.32MM Loan at 20% Discount -------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $4,324,000 loan extended to FINThrive Software Intermediate Holdings, Inc., to market at $3,457,000 or 80% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+4.00%) to FINThrive Software. The loan accrues interest at a rate of 9.47% per annum. The loan matures on December 18, 2028. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 FinThrive is a provider of revenue cycle management software solutions to the healthcare sector. FRANCHISE GROUP: Guggenheim SOF Marks $3.9MM Loan at 26% Off ------------------------------------------------------------ Guggenheim Strategic Opportunities Fund has marked its $3,995,519 loan extended to Franchise Group, Inc to market at $2,972,666 or 74% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Franchise Group, Inc. The loan accrues interest at a rate of 10.44% (3 Month Term SOFR + 4.75%, Rate Floor: 4.75%). The loan matures on March 10, 2026. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 Franchise Group, Inc., through its subsidiaries, operates franchised and franchisable businesses including The Vitamin Shoppe, Pet Supplies Plus, LLC, Badcock Home Furniture & More, American Freight, Buddy’s Home Furnishings and Sylvan Learning Systems, Inc. FRANCISCAN FRIARS: Seeks to Tap Weintraub Tobin as Special Counsel ------------------------------------------------------------------ Franciscan Friars of California, Inc. seeks approval from the U.S. Bankruptcy Court for the Northern District of California to employ Weintraub Tobin Chediak Coleman Grodin Law Corporation as its special counsel. The firm will represent the Debtor in the case ,"John TK Roe v. Franciscan Friars", Superior Court of California, County of Santa Barbara, Case No. 22CV01114. Weintraub is a disinterested person and neither represents nor holds any interest adverse to the Debtor, its estate, or the creditors, according to court filings. The firm's hourly rates are: Paul E. Gaspari $500 Daniel Zamora $450 Associates $250 Paralegals $125 Paul Gaspari,, Esq., shareholder at Weintraub Tobin, disclosed in court filings that the firm neither holds nor represents any interest materially adverse to the interests of the Debtor's estate, creditors or equity security holders. The firm can be reached through: Paul E. Gaspari, Esq. WEINTRAUB TOBIN CHEDIAK COLEMAN GRODIN LAW CORP. 475 Sansome Street, Suite 510 San Francisco, CA 94111 Phone: (415) 433-1400 About Franciscan Friars of California, Inc. The Debtor is a tax-exempt religious organization. The Debtor was formed to provide religious, charitable, and educational acts, ministry, and service to the poor. Franciscan Friars of California, Inc. in Oakland, CA, filed its voluntary petition for Chapter 11 protection (Bankr. N.D. Cal. Case No. 23-41723) on December 31, 2023, listing $1 million to $10 million in assets and $10 million to $50 million in liabilities. David Gaa, OFM, president of the Debtor, signed the petition. Judge William J Lafferty oversees the case. BINDER & MALTER, LLP serve as the Debtor's legal counsel. FRANKLIN ENERGY: Guggenheim SOF Marks $1.5MM Loan at 15% Off ------------------------------------------------------------ Guggenheim Strategic Opportunities Fund has marked its $1,584,000 loan extended to Franklin Energy (KAMC Holdings, Inc.) to market at $1,341,870 or 85% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Franklin Energy (KAMC Holdings, Inc.). The loan accrues interest at a rate of 9.65% (3 Month Term SOFR + 4.00%, Rate Floor: 4.00%). The loan matures on August 14, 2026. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 KAMC Holdings, Inc. was created to facilitate the buyout of Franklin Energy Services, LLC by ABRY Partners. FREEDOM FACILITY: Court OKs Cash Collateral Access on Final Basis ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York authorized Freedom Facility Maintenance LLC to use cash collateral, on a final basis, in accordance with the budget and its agreement with Fox Capital and BizFund, LLC, from January 12, 2024 through the effective date of the Debtor's Subchapter V Plan of Reorganization or the conversion or dismissal of the case. The Debtor requires the use of cash collateral to meet its day to day obligations and to remit adequate protection payments to the creditor, if it holds a valid lien. Fox Capital is a creditor of the Debtor by virtue of an alleged purchase agreement entered into by the Debtor with Fox wherein the Debtor pledged its accounts receivable to Fox in exchange for an advance of funding by Fox. Fox may have perfected a security interest in the receivables of the Debtor but Fox has not provided any documentation with the exception of a copy of a UCC filing that does not name Fox directly as a secured party. Further, it is unclear as to whether Fox holds a first position lien against the subject receivables in that a UCC lien search obtained by the Debtor reflects two possible other liens of a possible similar nature that are superior in priority to the lien alleged by Fox. As of the date of the petition, the Debtor had cash on hand and its pre-petition operating account of approximately $500. As of the date of the petition, the Debtor had assets of approximately $455,000, inclusive of $350,000 in accounts receivables and debts of approximately $497,000 of which only $136,000 is owed to Fox. Fox Capital will have an allowed secured claim in the amount of $116,729. Bizfund, LLC will have an allowed secured claim in the amount of $147,450. The parties acknowledge and agree that the receivable owed by DMC Facility Services to the Debtor is $70,000. DMC will release $16,729 to Fox Capital, $40,000 to Yaphank Main Street Partners (as a payment toward post petition rent for the period from November 22, 2023 to January 31, 2024) and $13,271 to the Debtor within 10 business days of entry of the Agreed Order. No adequate protection payments will be paid to Bizfund under the terms of the Agreed Order until the effective date of the Debtor's confirmed Subchapter V Plan of Reorganization. The Debtor will remit monthly payments of a minimum of $2,500 per month to Fox Capital, which may be adjusted based on cash flow projections included in the Subchapter V Plan, commencing February 15, 2024 and on the 15th day of each month thereafter for the next 39 months or until Fox has been paid the aggregate sum of $100,000. BizFund, LLC is granted adequate protection for the use of cash collateral in the form of replacement liens, to the extent its asserted prepetition liens are valid and enforceable, against the Debtor's post-petition accounts receivable, cash receipts and payment intangibles. The replacement liens will be deemed to have been perfected and automatically effective as of the entry of the Order, without the necessity of filing any UCC-1 financing statement, UCC continuation statement, notice, or other instrument or document in any state, local or other office or department or in any other public record, subject to the "Carve Out." To the extent of any diminution in the value of the any of the Debtor's collateral, including its cash collateral, Fox Capital has established the existence of a valid security interest in the assets of the debtor and therefore is granted valid, binding and enforceable post-petition liens upon and security interests in all assets of the Debtor, regardless of whether such assets are acquired by the Debtor prior to the Petition Date or after the Petition Date which liens will be senior to all other security interest in, liens upon or claims against any of the Collateral, subject to the Carve Out. The carveout will include (i) the payment of compensation to the Subchapter V Trustee; (ii) fees and expenses of a Chapter 7 trustee in an amount not to exceed $10,000; (iii) the fees and expenses of the Debtor's retained professionals and Committee retained professionals incurred and accrued on or prior to the entry of an Order of Confirmation (or a termination event as a result of an uncured Event of Default) to the extent that the amounts are approved by the Bankruptcy Court upon proper notice and motion, not to exceed in the aggregate the sum of $50,000 and (iv) all avoidance actions under 11 U.S.C. sections 544, 545, 547, 548, 549 and 550 and the proceeds thereof. A copy of the order is available at https://urlcurt.com/u?l=GAFV6F from PacerMonitor.com. About Freedom Facility Maintenance LLC Freedom Facility Maintenance LLC a facility maintenance service contractor serving various companies throughout the New York Metropolitan area. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. N.Y. Case No. 8-23-74389-las) on November 22, 2023. In the petition signed by Thomas M. Graff, managing member, the Debtor disclosed up to $500,000 in both assets and liabilities. Judge Louis A. Scarcella oversees the case. Richard S Feinsilver, Esq. represents the Debtor as legal counsel. FTX GROUP: Sued by Customers Over Ch. 11 Digital Asset Ownership ---------------------------------------------------------------- Emily Lever of Law360 reports that customers of defunct crypto exchange FTX Trading Ltd. filed a Chapter 11 adversary suit in Delaware bankruptcy court seeking a decision on whether the exchange or the customer owns digital assets in customer accounts. About FTX Group FTX is the world's second-largest cryptocurrency firm. FTX is a cryptocurrency exchange built by traders, for traders. FTX offers innovative products including industry-first derivatives, options, volatility products and leveraged tokens. Then CEO and co-founder Sam Bankman-Fried said Nov. 10, 2022, that FTX paused customer withdrawals after it was hit with roughly $5 billion worth of withdrawal requests. Faced with liquidity issues, FTX on Nov. 9, 2022, struck a deal to sell itself to its giant rival Binance, but Binance walked away from the deal amid reports on FTX regarding mishandled customer funds and alleged US agency investigations. At 4:30 a.m. on Nov. 11, 2022, SBF ultimately agreed to step aside, and restructuring vet John J. Ray III was quickly named new CEO. FTX Trading Ltd (d/b/a FTX.com), West Realm Shires Services Inc. (d/b/a FTX US), Alameda Research Ltd. and certain affiliated companies then commenced Chapter 11 proceedings (Bankr. D. Del. Lead Case No. 22-11068) on an emergency basis on Nov. 11, 2022. Additional entities sought Chapter 11 protection on Nov. 14, 2022. FTX Trading and its affiliates each listed $10 billion to $50 billion in assets and liabilities, making FTX the biggest bankruptcy filer in the US this year. According to Reuters, SBF shared a document with investors on Nov. 10, 2022, showing FTX had $13.86 billion in liabilities and $14.6 billion in assets. However, only $900 million of those assets were liquid, leading to the cash crunch that ended with the company filing for bankruptcy. The Hon. John T. Dorsey is the case judge. The Debtors tapped Sullivan & Cromwell, LLP as bankruptcy counsel; Landis Rath & Cobb, LLP as local counsel; and Alvarez & Marsal North America, LLC as financial advisor. Kroll is the claims agent, maintaining the page https://cases.ra.kroll.com/FTX/Home-Index The Official Committee of Unsecured Creditors tapped Paul Hastings as counsel, FTI Consulting, Inc., as financial advisor, and Jefferies LLC as the investment banker. Young Conaway Stargatt & Taylor LLP is the Committee's Delaware and conflicts counsel. Montgomery McCracken Walker & Rhoads LLP, led by partners Gregory T. Donilon, Edward L. Schnitzer, and David M. Banker, is representing Sam Bankman-Fried in the Chapter 11 cases. White-collar crime specialist Mark S. Cohen has reportedly been hired to represent SBF in litigation. Lawyers at Paul Weiss previously represented SBF but later renounced representing the entrepreneur due to a conflict of interest. GENESIS GLOBAL: Settles Gemini Earn Program Lawsuit WIth Lenders ---------------------------------------------------------------- Jonathan Randles of Bloomberg News reports that Genesis Global Holdco LLC has struck a deal with US regulators to end a civil lawsuit that accused the bankrupt crypto lender of breaking securities rules through its now terminated Gemini Earn program. Genesis, a subsidiary of Barry Silbert’s Digital Currency Group Inc., agreed to pay a $21 million civil penalty to the US Securities and Exchange Commission to end the lawsuit. But it will only have to pay the penalty if the company is able to fully repay its customers and other creditors in Chapter 11, according to papers filed Wednesday in New York bankruptcy court. The agreement, which must be approved by a bankruptcy judge, resolves allegations that Genesis illegally raised money from investors through its Gemini Earn program, which it ran jointly with Gemini Trust Co. The joint venture allowed customers to collect interest payments by loaning their digital assets, which the SEC alleged amounted to an offering of unregistered securities. Genesis and Gemini have denied wrongdoing and argued that the Earn program wasn’t a security. The program has since been terminated, according to court documents. The settlement comes weeks before Genesis will seek bankruptcy court approval on its debt repayment plan. Genesis said in court papers that the settlement will save cash by averting further litigation with the SEC. Continuing to defend against the lawsuit would also be a significant distraction for Genesis and its advisers as it tries to return as much cash as possible to creditors and win court approval of its debt-repayment plan, the company said. Genesis filed Chapter 11 in January 2023 following several other large crypto firms into bankruptcy. The bankruptcy is Genesis Global Holdco, LLC, 23-10063, US Bankruptcy Court, Southern District of New York (Manhattan) About Genesis Global Genesis Global Holdco, LLC, through its subsidiaries, and Global Trading, Inc., provide lending and borrowing, spot trading, derivatives and custody services for digital assets and fiat currency. Genesis Global Capital, LLC (GGC) and Genesis Asia Pacific PTE. LTD. (GAP) provide lending and borrowing, spot trading, derivatives and custody services for digital assets and fiat currency. Genesis Global Holdco, LLC owns 100% of GGC and GAP. Genesis Global Holdco, LLC, GGC and GAP each filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 23-10063) on Jan. 19, 2023. The cases are pending before the Honorable Sean H. Lane. At the time of the filing, Genesis Holdco reported $100 million to $500 million in both assets and liabilities. Genesis Holdco is a sister company of Genesis Global Trading, Inc. ("GGT") and 100% owned by Digital Currency Group, Inc. ("DCG"). GGT, DCG and certain of the Holdco subsidiaries are not included in the Chapter 11 filings. The non-debtor subsidiaries include Genesis UK Holdco Limited, Genesis Global Assets, LLC, Genesis Asia (Hong Kong) Limited, Genesis Bermuda Holdco Limited, Genesis Custody Limited ("GCL"), GGC International Limited ("GGCI"), GGA International Limited, Genesis Global Markets Limited, GSB 2022 II LLC, GSB 2022 III LLC and GSB 2022 I LLC. The Debtors tapped Cleary Gottlieb Steen & Hamilton, LLP as bankruptcy counsel; Morrison Cohen, LLP as special counsel; Alvarez & Marsal Holdings, LLC as financial advisor; and Moelis & Company, LLC as investment banker. Kroll Restructuring Administration, LLC, is the Debtors' claims and noticing agent and administrative advisor. The ad hoc group of creditors is represented by Kirkland & Ellis, LLP and Kirkland & Ellis International, LLP. The ad hoc group of Genesis lenders is represented by Proskauer Rose, LLP. The U.S. Trustee for Region 2 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. The committee tapped White & Case, LLP as bankruptcy counsel; Houlihan Lokey Capital, Inc., as investment banker; Berkeley Research Group, LLC as financial advisor; and Kroll as information agent. GEO. J. & HILDA: U.S. Trustee Unable to Appoint Committee --------------------------------------------------------- The U.S. Trustee for Region 13 disclosed in a court filing that no official committee of unsecured creditors has been appointed in the Chapter 11 case of The Geo. J. & Hilda Meyer Foundation. About The Geo. J. & Hilda Meyer Foundation The Geo. J. & Hilda Meyer Foundation owns and operates a senior living community in Higginsville Mo. The Debtor filed Chapter 11 petition (Bankr. W.D. Mo. Case No. 23-41685) on Dec. 4, 2023, with up to $10 million in both assets and liabilities. David Schmidt, president, signed the petition. Judge Brian T. Fenimore oversees the case. Conroy Baran, LLC serves as the Debtor's bankruptcy counsel. GILLIAM CONSTRUCTION: Seeks to Use Cash Collateral -------------------------------------------------- Gilliam Construction, Inc. asks the U.S. Bankruptcy Court for the District of Nevada for authority to use the cash collateral of Capybara Capital, Retail Capital LLC dba Credibly, and BayFirst National Bank and provide adequate protection. At the time the case was filed, the Debtor's cash totaled approximately $25,000 and the Debtor's receivables totaled approximately $50,000. The Debtor requires the use of cash collateral to pay ordinary expenses necessary for operation of its business. The Debtor is also willing to grant Secured Creditors a replacement lien against all cash received by Debtor post-petition. A copy of the motion is available at https://urlcurt.com/u?l=Wlk2nt from PacerMonitor.com. About Gilliam Construction, Inc. Gilliam Construction, Inc. offers new construction and remodeling services in Reno, Nevada. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Nev. Case No. 24-50090) on January 29, 2024. In the petition signed by Jeremiah Gilliam, president, the Debtor disclosed $159,251 in assets and $1,142,700 in liabilities. Kevin A. Darby, Esq., at Darby Law Practice, represents the Debtor as legal counsel. GIP III STETSON: Fitch Hikes LongTerm IDR to 'BB-', Outlook Stable ------------------------------------------------------------------ Fitch Ratings has upgraded GIP III Stetson I, L.P.'s and GIP III Stetson II, L.P.'s (collectively GIP Stetson) Long-Term Issuer Default Rating (IDR) to 'BB-' from 'B+'. Fitch has also upgraded GIP Stetson's senior secured rating to 'BB-'/'RR4' from 'B+'/'RR4'. The Rating Outlook is Stable. Debt reduction drives the upgrade. Faster-than-expected debt reduction has been helped by its general partner guiding EnLink Midstream LLC (EnLink) to prioritize (relative to Fitch's former understanding) the sum of (a) capex for the core growth strategies and (b) share repurchases, over large increases in unit distributions (previously, Fitch had forecasted repurchases below the recent run-rate). GIP Stetson has participated ratably in the repurchases, which triggers a prepayment provision. As EnLink's EBITDA has grown faster than GIP's distributions received, Fitch will now use proportional consolidation along with its customary standalone leverage metric. GIP Stetson's ratings are based on Fitch's forecast that proportional consolidated leverage in the 2025-2026 time-frame will around 5.0x. The ratings are also based on EnLink's credit quality. KEY RATING DRIVERS Parent-Subsidiary Linkage (PSL): Fitch regards GIP Stetson as EnLink's parent by virtue of GIP Stetson holding indirectly the general partnership stake in EnLink. Fitch views there to be some legal ringfencing between the entities, by virtue of both the conventions and provisions of GIP Stetson's general partnership role, as well as a financial covenant contained in EnLink's revolver. The extent of legal ring-fencing is viewed as porous (in the middle of insulated and open). In averaging the rest of the sub-factors in PSL, Fitch views Access/Control to also be porous. Fitch views the consolidated group profile to be 'bb'. GIP Stetson's IDR is notched down one from this consolidated group profile to reflect circumstances stemming from its status as a structurally subordinated borrower. Structural Subordination: EnLink's capital structure includes hybrid securities to which Fitch applies 50% debt credit, 50% equity credit. Equity credit is only allowed if coupons to the hybrids are allowed to be deferred. EnLink can only defer its payment of said coupons if it shuts off the dividend. Dividends are GIP Stetson's "first way out" (secondary/tertiary/etc. sources of debt service are a six-month debt service reserve instrument, selling common units, and an equity infusion). The above "waterfall" scheme points to the fact that the GIP Stetson loan is meaningfully structurally subordinated. In a period of challenged conditions in 2019-2020 (not the least of which was COVID), EnLink continued to pay the coupon on the hybrid, and it only cut the dividend in part, not in whole. Proportional Consolidated Leverage: Fitch forecasts 2025-2026 GIP Stetson proportional consolidation leverage to be at or under 5.0x. For a midstream company with no structural subordination and with EnLink's business risk, under 5.0x leverage (i.e., the value of GIP Stetson's proportional consolidation leverage) would be a 'BB' area company. Due to structural subordination, GIP Stetson is rated 'BB-'. DERIVATION SUMMARY Fitch in its coverage portfolio has no company in its portfolio in terms of GIP Stetson having a partial (not entire) economic stake in a subsidiary, as well as the general partnership stake. Absent a comparable as to "holdco" structure, one can bring to the fore that the derivation of GIP Stetson's rating does, indeed, relate its subsidiary. Fitch forecasts 2025-2026 GIP Stetson proportional consolidation leverage to be at or under 5.0x. For the same interval, the Fitch forecast for EnLink is more than a turn of leverage lower. EnLink is solidly positioned in its rating category, i.e., not weakly positioned in its rating category. The consolidated group profile of the family is viewed as being 'bb'. GIP Stetson is rated 'BB-' due to circumstances related to structural subordination. KEY ASSUMPTIONS - Distributions into GIP Stetson from EnLink are level; - Interest expense reflects Fitch Global Economic Outlook rates; - GIP Stetson continues to ratably participate in future EnLink unit re-purchase programs that are sized approximately as big as the just-announced 2024 program. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Though unlikely, GIP Stetson demonstrating proportional consolidated leverage below 4.0x might merit a positive rating action. Factors that could, individually or collectively, lead to negative rating action/downgrade: - An expectation that GIP Stetson's leverage will be inconsistent to achieving proportional consolidated leverage of at or under 5.0x by 2025-2026; - An expectation that GIP Stetson's stand-alone leverage will be at or above 6.0x; - An expectation that GIP Stetson's stand-alone interest coverage will be below 1.8x; - Significant deterioration of credit profile at EnLink. LIQUIDITY AND DEBT STRUCTURE Manageable Liquidity: Fitch expects GIP Stetson will have sufficient liquidity to service its interest expense and debt amortization requirements under EnLink's current distribution policy. Mandatory prepayments resulting from the excess cash flow provision and unit dispositions could facilitate further deleveraging in the future. GIP Stetson has a debt service reserve account to supplement liquidity. The account provides six months of backup liquidity to holders of the term loan in the form of bank issued letters of credit written in favor of the collateral agent. The obligation to repay the letter of credit resides at an entity above GIP Stetson in the ownership chain. ISSUER PROFILE GIP Stetson is an entity that owns an approximately 45% equity interest in EnLink Midstream LLC. GIP Stetson is an investment of infrastructure private equity company, Global Infrastructure Partners. SUMMARY OF FINANCIAL ADJUSTMENTS GIP Stetson reports its financial condition on a combined financial statements basis. GIP Stetson is considered by U.S. GAAP to be an investment company. Fitch assesses GIP Stetson's leverage through two calculations. Stand-alone leverage is the following ratio: GIP Stetson debt in the numerator, and actual distributions to GIP Stetson in the denominator. Proportional consolidation leverage is built up with a numerator that is the product of GIP Stetson's ownership stake and EnLink's EBITDA, and the denominator is the sum of (a) GIP Stetson's loan amount and (b) the product of GIP Stetson's ownership stake and EnLink's deemed debt. "Deemed debt" reflects hybrid criteria pertaining to EnLink's preferred stock. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- GIP III Stetson II, L.P. LT IDR BB- Upgrade B+ senior secured LT BB- Upgrade RR4 B+ GIP III Stetson I, L.P. LT IDR BB- Upgrade B+ senior secured LT BB- Upgrade RR4 B+ GLATFELTER CORP: Moody's Puts 'B3' CFR on Review for Upgrade ------------------------------------------------------------ Moody's Investors Service placed Glatfelter Corporation's B3 corporate family rating on review for upgrade. Previously the outlook was stable. At the same time, Moody's has also placed the company's B3-PD probability of default rating, Ba3 senior secured 1st lien bank credit facility rating, and Caa1 senior unsecured notes rating on review for upgrade. Glatfelter's speculative grade liquidity rating remains unchanged at SGL-3. The review follows the company's announcement[1] on February 7, 2024 that it has signed a definitive agreement with Berry Global Group Inc. (Berry, Ba1 stable) to spin-off and merge the majority of Berry's Health, Hygiene and Specialties segment (including the Global Nonwovens and Films business) with Glatfelter. The transaction will create a new publicly traded company (NewCo) with an enterprise value of approximately $3.6 billion. "The review for upgrade was prompted by the possibility that Glatfelter's credit and business profile will improve following the merger with Berry's spin-off business" said Aziz Al Sammarai, Assistant Vice President, Moody's Analyst. RATINGS RATIONALE / FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS Moody's review will focus on: the amount of debt financing taken to fund the transaction, post-closing credit metrics, NewCo future capital and organizational structure, the size and pace of any cost synergies that can be realized, and the company's ability to improve its liquidity. The transaction is expected to close in the second half of 2024 and is subject to various closing conditions, including regulatory approvals and Glatfelter shareholder approval. Glatfelter has obtained committed financing for this transaction and intends to fund the merger with permanent debt at closing. The principal methodology used in these ratings was Paper and Forest Products published in December 2021. Headquartered in Charlotte, North Carolina, Glatfelter is a manufacturer of fiber-based engineered materials. Based in Evansville, Indiana, Berry Global Group Inc. is a manufacturer of rigid and flexible plastic packaging products. GLATFELTER CORP: S&P Places 'CCC+' ICR on Watch Pos. on Merger -------------------------------------------------------------- S&P Global Ratings placed all its ratings on Glatfelter Corp., including its 'CCC+' issuer credit rating on the company, on CreditWatch with positive implications. On Feb. 7, 2024, Berry Global Group Inc. (BB+/Stable/--) announced that it will spin-off and merge its Health, Hygiene, and Specialties Nonwovens and Films Business with Glatfelter Corp. S&P said, "We view the merger as credit positive because we believe Glatfelter should benefit from lower debt leverage and increased scale and capacity after the transaction closes. We believe the merger will likely increase Glatfelter's scale and the scope of its operations and strengthen its geographic diversity. Similarly, we expect the combined company to generate approximately $3.6 billion in annual revenue and earnings sufficient to improve its S&P Global Ratings-adjusted debt leverage materially from current elevated levels. Glatfelter's S&P Global Ratings-adjusted debt leverage on a trailing-12-month basis was 9.5x at the end of its September 2023 quarter. "The CreditWatch positive placement reflects the likelihood that we could raise our issuer credit rating and senior unsecured issue-level ratings on Glatfelter when the acquisition closes as proposed. We aim to resolve the CreditWatch placement upon review of the new final capital structure, new ownership structure, financial policies, debt leverage, and our assessment of the combined businesses." GLOBAL ALARM: Seeks Cash Collateral Access ------------------------------------------ Global Alarm Protection asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for authority to use cash collateral and provide adequate protection. The Debtor seeks to use the proceeds from the confidential settlement agreement with Security Systems, Inc. and Safe Home Security, Inc., in the ordinary course of business and for bankruptcy expenses on an interim basis. The settlement agreement arises from the breach of contract action, titled Global Alarm Protection, Inc. v. The Sales Mob, Inc. et al, filed in the District Court in Dallas, Texas, Case No. DC-17-15848. Under the settlement, the monetary payments to the Debtor were set to begin on January 8, 2024. SSI made the first payment on January 8, 2024, to the Debtor's counsel, RHM LAW LLP, and the funds are being held in its client trust account. SSI will continue to make the periodic settlement payments to RHM's client trust account until the Court orders otherwise. The Debtor requests RHM to act as the disbursing agent for the Settlement Proceeds, depositing the requested monthly amount into the DIP account each month. The remaining proceeds will remain in RHM's client trust account pending further court order. The Debtor must start paying startup costs, including lead specialists and sales representatives, to generate revenue in February 2024. Payment can take 45 to 90 days, sometimes longer after a sale. The Debtor holds a judgment of approximately $40 million, allowing all creditors of the estate to be paid in full, unless the Debtor lacks funds to retain counsel for collection. On October 4, 2018, the Debtor entered into a litigation financing agreement with Desi Pro in order to assist it with continuing the Texas Litigation. As allowed under the Texas LFA, Desi Pro filed a UCC financing statement in the State of Texas, Office of the Secretary of State on September 1, 2023, Document No. 1280893850002. The Debtor believes that Desi Pro has failed to file a UCC in Texas with the correct name for the Debtor. The Debtor requires no less than $35,000 in its accounts as a reserve because it has expensive COGS. The Debtor believes that the operation of the business provides sufficient adequate protection while the validity of Desi Pro's security interest is being litigated. The Debtor does not believe that adequate protection payments are appropriate because the validity of the lien is currently being litigated and any payments to Desi prior to that determination could ultimately violate the Bankruptcy Code's priority distribution scheme. A hearing on the matter is set for February 28, 2024 at 9 a.m. A copy of the motion is available at https://urlcurt.com/u?l=WNSZBR from PacerMonitor.com. About Global Alarm Protection Global Alarm Protection filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. C.D. Calif. Case No. 23-18117) on Dec. 7, 2023, with $1 million to $10 million in both assets and liabilities. Louis Fizli, chief operating officer, signed the petition. Judge Sandra R. Klein oversees the case. Matthew D. Resnik, Esq., at RHM Law, LLP represents the Debtor as bankruptcy counsel. GROWLIFE INC: Faces Suit Over Payment Default --------------------------------------------- GrowLife, Inc. disclosed in a Form 8-K Report filed with the U.S. Securities and Exchange Commission that on January 19, 2024, the Company received a copy of a lawsuit filed by Coventry Enterprises, LLC, in the Superior Court of State of Delaware. Coventry filed suit against the Company alleging that the Company has defaulted under that certain Promissory Note dated November 9, 2022 for failure to make payments. Coventry has alleged that as a result of the Company's breaches of the Note, Coventry has suffered and continues to suffer damages in an amount not less than $265,811.61. The Company is engaging in settlement discussions with Coventry and otherwise intends to file an answer to the complaint. About GrowLife Founded in 2012, GrowLife, Inc. (PHOT) -- http://www.shopgrowlife.com/-- is the owner of Bridgetown Mushrooms, acting as its parent Company. Founded in 2018 in Portland Oregon, Bridgetown Mushrooms grows a variety of functional and gourmet mushrooms which are in turn sold through multiple commercial and consumer sales channels. The company also develops and markets mushroom based products nationwide as well as manufactures and sells Mycology supplies to meet the demand for commercial mushroom farmers across the United States. GrowLife reported a net loss of $4.48 million for the year ended Dec. 31, 2022, compared to a net loss of $5.47 million for the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company had $254,208 in total assets, $8.66 million in total current liabilities, and a total stockholders' deficit of $8.41 million. Irvine, CA-based Macias Gini & O'Connell LLP, the Company's auditor since 2021, issued a "going concern" qualification in its report dated June 13, 2023, citing that the Company has suffered recurring losses from operations, incurred negative cash flows from operating activities, and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. HEARTHSIDE GROUP: Guggenheim SOF Marks $1.3MM Loan at 23% Off ------------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $1,381,125 loan extended to Hearthside Group Holdings LLC to market at $1,064,336 or 77% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Hearthside Group Holdings LLC. The loan accrues interest at a rate of 9.65% (3 Month Term SOFR + 4.00%, Rate Floor: 4.00%). The loan matures on May 23, 2025. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 Hearthside Group Holdings LLC is a contract manufacturer and packager of packaged food products in North America and to a lesser extent Europe. It supplies companies such as General Mills, Kellogg's, Kraft Heinz, PepsiCo, and Mondelez. The company is owned by affiliates of The Goldman Sachs Group, Inc. HELIUS MEDICAL: Hudson Bay, Sander Gerber Own 7.86% Class A Shares ------------------------------------------------------------------ In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, Hudson Bay Capital Management LP and Sander Gerber disclosed that as of Dec. 31, 2023, they beneficially owned 60,422 shares of Class A Common Stock issuable upon exercise of warrants of Helius Medical Technologies, Inc., representing 7.86% of the shares outstanding. The percentage is calculated based upon 708,247 shares of Class A Common Stock outstanding as of November 3, 2023, as reported in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 filed with the Securities and Exchange Commission on November 9, 2023, and assumes the exercise of the reported warrants. Hudson Bay Capital Management LP (the "Investment Manager") serves as the investment manager to Hudson Master Fund Ltd., in whose name the securities reported herein are held. As such, the Investment Manager may be deemed to be the beneficial owner of all shares of Class A Common Stock issuable upon exercise of the warrants held by Hudson Master Fund Ltd. Gerber serves as the managing member of Hudson Bay Capital GP LLC, which is the general partner of the Investment Manager. Gerber disclaims beneficial ownership of these securities. A full-text copy of the report is available at http://tinyurl.com/yc6j7ed2 About Helius Medical Helius Medical Technologies, Inc. -- http://www.heliusmedical.com/ -- is a neurotech company in the medical device field focused on neurologic deficits using orally applied technology platform that amplifies the brain's ability to engage physiologic compensatory mechanisms and promote neuroplasticity, improving the lives of people dealing with neurologic diseases. Helius Medical reported a net loss of $14.07 million for the year ended Dec. 31, 2022, compared to a net loss of $18.13 million for the year ended Dec. 31, 2021. As of Sept. 30, 2023, the Company had $8.85 million in total assets, $5.83 million in total liabilities, and $3.02 million in total stockholders' equity. As of Sept. 30, 2023, the Company had cash, cash equivalents and warrant proceeds receivable from the issuance of Common Stock of $7.0 million. For the nine months ended Sept. 30, 2023, the Company had an operating loss of $10.2 million, and as of Sept. 30, 2023, its accumulated deficit was $158.9 million. For the nine months ended Sept. 30, 2023, the Company had $0.5 million of net revenue from the commercial sale of products. In its Quarterly Report for the three months ended Sept. 30, 2023, Helius said it expects to continue to incur operating losses and net cash outflows until such time as it generates a level of revenue to support its cost structure. There is no assurance that the Company will achieve profitable operations, and, if achieved, whether it will be sustained on a continued basis. These factors indicate substantial doubt about the Company's ability to continue as a going concern within one year after the date the consolidated financial statements are filed. HOWARD INTERVENTION: Wins Cash Collateral Access Thru March 31 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, authorized Howard Intervention Center, Inc. to use cash collateral on an interim basis, in accordance with the budget, with a 10% variance, through March 31, 2024. As adequate protection to the U.S. Small Business Administration, Headway Capital, LLC, Kapitus, LLC, The Fundworks, LLC, Emerald Group Holdings LLC dba Vitalcap and The Avanza Group, LLC and any other lien claimants, for the use of its Collateral or cash collateral, the Lien Claimants are granted post-petition replacement liens, to the extent and with the same priority as the Lien Claimants held pre-petition, in and to any presently existing or hereafter acquired cash collateral. A continued hearing on the matter is set for March 25 at 10 a.m. A copy of the order is available at https://urlcurt.com/u?l=FE3WnC from PacerMonitor.com. About Howard Intervention Center, Inc. Howard Intervention Center, Inc. sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ill. Case No. 23-16312) on December 5, 2023. In the petition signed by Cara K. Wilson, president, the Debtor disclosed $369,399 in assets and $1,085,759 in liabilities. Judge Benjamin Goldgar oversees the case. Gregory K. Stern, Esq., at GREGORY K. STERN, P.C., represents the Debtor as legal counsel. HULL ORGANIZATION: Seeks Cash Collateral Access ----------------------------------------------- Hull Organization, LLC and affiliates ask the U.S. Bankruptcy Court for the Western District of Kentucky, Louisville Division, for authority to use cash collateral and provide adequate protection. The Debtors acknowledge that the following entities have asserted interests in the Debtors' cash collateral, subject to proof of their respective perfected interests in accordance with applicable law: 1. PMGT, LLC 2. Stock Yards Bank 3. U.S. Small Business Administration 4. Mr. Martin Goldsmith 5. First Financial Bank The Debtor requires the use of cash collateral to meet its ordinary and necessary post-petition expenditures. As adequate protection for the use of cash collateral, the Debtors propose that the Cash Collateral Creditors will be granted replacement liens on all collateral of the same type and respective priorities upon which each held valid and properly perfected liens prior to the Petition Date. The Debtors submit that the proposed replacement liens, combined with the substantial "equity cushions" available to those Cash Collateral Creditors who also have interests in the Debtors' real estate holdings, are sufficient to protect the Cash Collateral Creditors' respective asserted interests in the cash collateral. A copy of the motion is available at https://urlcurt.com/u?l=zdsqiL from PacerMonitor.com. About Hull Organization Hull Organization, LLC is primarily engaged in renting and leasing real estate properties. The Debtor filed Chapter 11 petition (Bankr. W.D. Ky. Case No. 23-32983) on Dec. 13, 2023, with $1 million to $10 million in both assets and liabilities. Robert E. Hull, member, signed the petition. Judge Alan C. Stout oversees the case. Tyler R. Yeager, Esq., at Kaplan Johnson Abate & Bird, LLP represents the Debtor as legal counsel. HUMANIGEN INC: RX Medical Appointed as New Committee Member ----------------------------------------------------------- The U.S. Trustee for Region 3 appointed RX Medical Dynamics, LLC as new member of the official committee of unsecured creditors in the Chapter 11 case of Humanigen, Inc. Meanwhile, Chime Biologics (Wuhan) Co., LTD. has been removed from the committee. As of Feb. 7, the members of the committee are: 1. Eversana Life Sciences, LLC Attn: Matt Doyle 205 North Michigan Avenue, Suite 3200 Chicago, IL 60601 Email: matt.doyle@eversana.com 2. RX Medical Dynamics, LLC Attn: Frank Cerasoli 116 E. 16th St., 11th Fl. New York, NY 10003 Email: fcerasoli@rxmedyn.com About Humanigen Inc. Based in Brisbane, Calif., Humanigen, Inc. (OTCQB: HGEN) -- www.humanigen.com -- is a clinical stage biopharmaceutical company, developing its portfolio of proprietary Humaneered anti-inflammatory immunology and immuno-oncology monoclonal antibodies. Formerly known as KaloBios Pharmaceuticals, Inc., Humanigen's proprietary, patented Humaneered technology platform is a method for converting existing antibodies (typically murine) into engineered, high-affinity human antibodies designed for therapeutic use, particularly with acute and chronic conditions. The company has developed or in-licensed targets or research antibodies, typically from academic institutions, and then applied its Humaneered technology to optimize them. Its lead product candidate, lenzilumab, and its other product candidate, ifabotuzumab ("iFab"), are Humaneered monoclonal antibodies. Humanigen filed Chapter 11 petition (Bankr. D. Del. Case No. 24-10003) on Jan. 3, 2024, with assets of $521,000 and liabilities of $44,131,000. Ronald Barliant, independent director, signed the petition. Judge Brendan Linehan Shannon oversees the case. Potter Anderson & Corroon, LLP and SC&H Group, Inc. serve as the Debtor's bankruptcy counsel and investment banker, respectively. Epiq Corporate Restructuring, LLC is the claims and noticing agent. 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 Kilpatrick Townsend & Stockton, LLP and Womble Bond Dickinson (US), LLP as legal counsels, and Dundon Advisers, LLC as financial advisor. IAMGOLD CORP: Donald Smith & Co, DSCO Value Hold 7.44% Stake ------------------------------------------------------------ In a Schedule 13G Report filed with the U.S. Securities and Exchange Commission, Donald Smith & Co., Inc. and DSCO Value Fund, L.P. disclosed that as of December 31, 2023, they beneficially owned 35,778,309 shares of IAMGOLD Corporation's common stock, representing 7.44% of the shares outstanding. A full-text copy of the report is available at http://tinyurl.com/59427k2u About IAMGOLD Corporation Headquartered in Toronto, Canada, IAMGOLD Corporation is an intermediate gold producer and developer based in Canada with operating mines in North America and West Africa. In June 2023, S&P Global Ratings revised its outlook on IAMGOLD Corp. to positive from negative and affirmed its 'CCC+' issuer credit rating. At the same time, S&P lowered its issue-level rating on the company's unsecured notes to 'CCC' from 'CCC+' and revised its recovery rating to '5' from '4'. In September 2023, Egan-Jones Ratings Company maintained its 'B+' foreign currency and local currency senior unsecured ratings on debt issued by IAMGOLD. ILLINOIS EXTRACTS: Seeks to Hire Rafool & Bourne as Legal Counsel ----------------------------------------------------------------- Illinois Extracts LLC seeks approval from the U.S. Bankruptcy Court for the Central District of Illinois to hire Rafool & Bourne, P.C. as its bankruptcy counsel. The Debtor requires legal counsel to: (a) give advice regarding the rights, powers and duties of the Debtor in connection with the administration of its bankruptcy estate and the disposition of its property; (b) take necessary actions with respect to claims that may be asserted against the Debtor and property of its estate; (c) prepare legal papers; (d) represent the Debtor with respect to inquiries and negotiations concerning creditors of its estate and property; (e) initiate, defend or otherwise participate on behalf of the Debtor in all proceedings before the bankruptcy court or any other court of competent jurisdiction; and (f) perform other necessary legal services. The firm will be paid at the rate of $300 per hour, plus reimbursement of expenses incurred. Prior to the petition date, the firm received a retainer of $25,000 from the Debtor. Sumner Bourne, Esq., a partner at Rafool & Bourne, disclosed in a court filing that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Sumner A. Bourne, Esq. RAFOOL & BOURNE, PC 401 Main Street, Suite 1130 Peoria, IL 61602 Telephone: (309) 673-5535 Email: notices@rafoolbourne.com About Illinois Extracts LLC Illinois Extracts LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. C.D. Ill. Case No. 24-80044) on Jan. 29, 2024. The petition was signed by Jerry Read as manager. At the time of filing, the Debtor estimated $50,000 to $100,000 in assets and $1 million to $10 million in liabilities. Judge Peter W. Henderson presides over the case. Sumner A. Bourne, Esq. at RAFOOL & BOURNE, P.C. represents the Debtor as counsel. IMERYS TALC: Asks Court Okay for Proposed Chapter 11 Plans ---------------------------------------------------------- Clara Geoghegan of Law360 reports that bankrupt talc supplier Imerys Talc America, Inc. and its former owner Cyprus Mines Corp. asked a Delaware bankruptcy court to sign off on disclosure statements for their separate Chapter 11 plans that would create an $862.5 million joint trust to settle claims that their talc caused cancer. About Imerys Talc America Imerys Talc America, Inc. and its subsidiaries -- https://www.imerys-performance-additives.com/ -- are in the business of mining, processing, selling and distributing talc. Its talc operations include talc mines, plants and distribution facilities located in Montana (Yellowstone, Sappington, and Three Forks); Vermont (Argonaut and Ludlow); Texas (Houston); and Ontario, Canada (Timmins, Penhorwood, and Foleyet). It also utilizes offices located in San Jose, Calif., and Roswell, Ga. Imerys Talc America and its subsidiaries, Imerys Talc Vermont, Inc., and Imerys Talc Canada Inc., sought Chapter 11 protection (Bankr. D. Del. Lead Case No. 19-10289) on Feb. 13, 2019. The Debtors were estimated to have $100 million to $500 million in assets and $50 million to $100 million in liabilities as of the bankruptcy filing. Judge Laurie Selber Silverstein oversees the cases. The Debtors tapped Richards, Layton & Finger, P.A., and Latham & Watkins LLP as their legal counsel, Alvarez & Marsal North America, LLC as financial advisor, and CohnReznick LLP as restructuring advisor. Prime Clerk, LLC, is the claims agent. The U.S. Trustee for Region 3 appointed an official committee of tort claimants in the Debtors' Chapter 11 cases. The tort claimants' committee is represented by Robinson & Cole, LLP. IMPEL PHARMACEUTICALS: Cleared for $17.5-Million Sale to JN Bidco ----------------------------------------------------------------- Ben Zigterman of Law360 reports that migraine-drug maker Impel Pharmaceuticals can proceed with its sale to JN Bidco LLC, which had made a $17.5 million stalking horse bid, U.S. Bankruptcy Judge Stacey G. Jernigan said at a hearing Thursday in a Texas bankruptcy court. About Impel Pharmaceuticals Impel Pharmaceuticals Inc. is a commercial-stage pharmaceutical company developing transformative therapies for people suffering from diseases with high unmet medical needs. Impel offers development opportunities that pair its proprietary POD technology with well-established therapeutics. In September 2021, Impel received U.S. FDA approval for its first product, Trudhesa(R) nasal spray, which is approved in the U.S. for the acute treatment of migraine with or without aura in adults. On the Web: https://impelpharma.com/ Impel Pharmaceuticals Inc. sought relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Lead Case No. 23-80016) on Dec. 20, 2023. In the petition filed by Brandon Smith, as chief restructuring officer, the Debtor disclosed total assets of $35,073,000 and total debt of $126,978,000 as of Sept. 30, 2023. The case is overseen by the Honorable Bankruptcy Judge Stacey G. Jernigan. Impel is being advised by Moelis & Company LLC as its investment banker, Teneo Capital LLC as its financial advisor, and Sidley Austin LLP and Fenwick & West LLP as legal counsel. Omni Agent Solutions is the claims agent. IMPEL PHARMACEUTICALS: Oaktree Marks $2.23MM Loan at 21% Discount ----------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $2,232,000 loan extended to Impel Pharmaceuticals Inc., to market at $1,768,000 or 79% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+10.75%) to Impel Pharmaceuticals. This loan was on non-accrual status as of December 31, 2023. The loan matures on March 17, 2027. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Impel Pharmaceuticals Inc. is a Seattle-based, commercial-stage pharmaceutical company developing first-in-class intranasal drug treatments for disorders with high unmet medical needs. IMPEL PHARMACEUTICALS: Oaktree Marks $28M Loan at 47% Off --------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $28,010,000 loan extended to Impel Pharmaceuticals Inc., to market at $14,817,000 or 53% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+10.75%) to Impel Pharmaceuticals. This loan was on non-accrual status as of December 31, 2023. The loan matures on March 17, 2027. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Impel Pharmaceuticals Inc. is a Seattle-based, commercial-stage pharmaceutical company developing first-in-class intranasal drug treatments for disorders with high unmet medical needs. IMPEL PHARMACEUTICALS: Oaktree Marks $839,000 Loan at 21% Off ------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $839,000 loan extended to Impel Pharmaceuticals Inc., to market at $664,000 or 79% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+10.75%) to Impel Pharmaceuticals. This loan was on non-accrual status as of December 31, 2023. The loan matures on March 17, 2027. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Impel Pharmaceuticals Inc. is a Seattle-based, commercial-stage pharmaceutical company developing first-in-class intranasal drug treatments for disorders with high unmet medical needs. IMPEL PHARMACEUTICALS: Oaktree Specialty Marks $1M Loan at 21% Off ------------------------------------------------------------------ Oaktree Specialty Lending Corporation has marked its $1,001,000 loan extended to Impel Pharmaceuticals Inc., to market at $793,000 or 79% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+10.75%) to Impel Pharmaceuticals. This loan was on non-accrual status as of December 31, 2023. The loan matures on March 17, 2027. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Impel Pharmaceuticals Inc. is a Seattle-based, commercial-stage pharmaceutical company developing first-in-class intranasal drug treatments for disorders with high unmet medical needs. INDUSTRIAL AUTHORITY: Seeks to Extend Plan Exclusivity to April 1 ----------------------------------------------------------------- The Industrial Authority of Mayfield-Graves County asked the U.S. Bankruptcy Court for the Western District of Kentucky to extend exclusivity periods to file a plan of reorganization and obtain acceptance thereof to April 1 and May 31, 2024, respectively. The Debtor is presently managing the sale of the GenCanna Site, which consists of real property and improvements on a 34.379-acre tract of land located at 3155 State Route 45 North, Mayfield, Graves County, Kentucky, pursuant to Section 363 of the Bankruptcy Code. A successful sale of the GenCanna Site is the linchpin of the Debtor's reorganization efforts, and the Court has set a hearing on final approval of the sale (subject to auction, if any) for February 15, 2024. If a party other than the Debtor proposed a chapter 11 plan during Debtor's marketing and sale negotiations concerning the GenCanna Site, the uncertainty created would almost certainly depress the value of the property and chill the sale process. Therefore, Debtor requests an extension of the exclusivity periods set under Section 1121(b)- (c) of the Bankruptcy Code to enable Debtor to manage a robust sale process and then develop a confirmable chapter 11 plan after the sale. Counsel for the Debtor: Charity S. Bird, Esq. Tyler R. Yeager, Esq. KAPLAN JOHNSON ABATE & BIRD LLP 710 West Main Street, Fourth Floor Louisville, KY 40202 Tel: (502) 540-8285 Fax: (502) 540-8282 Email: cbird@kaplanjohnsonlaw.com - and - Ryan K. Cochran, Esq. Kendria Lewis EPSTEIN BECKER & GREEN, P.C. 1222 Demonbreun Street, Suite 1400 Nashville, TN 37203 Tel: (615) 564-6060 Fax: (615) 691-7715 Email: rcochran@ebglaw.com Email: klewis@kaplanjohnsonlaw.com About The Industrial Authority of Mayfield-Graves County The Industrial Authority of Mayfield-Graves County filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Ky. Case No. 23-50409) on Sep. 4, 2023. The petition was signed by Darvin D. Towery as chairman. At the time of filing, the Debtor estimated $10 million to $50 million in both assets and liabilities. Charity S. Bird, Esq., at KAPLAN JOHNSON ABATE & BIRD LLP, represents the Debtor as counsel. INSTANT BRANDS: Plan Exclusivity Period Extended to March 15 ------------------------------------------------------------ Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas extended Instant Brands Acquisition Holdings Inc. and certain of its affiliates' exclusivity periods to file a plan and to obtain acceptance thereof to March 15, 2024 and April 15, 2024, respectively. Counsel to the Debtors: Brian M. Resnick, Esq. Steven Z. Szanzer, Esq. Joanna McDonald, Esq. DAVIS POLK & WARDWELL LLP 450 Lexington Ave. New York, NY 10017 Tel.: (212) 450-4000 E-mail: brian.resnick@davispolk.com steven.szanzer@davispolk.com joanna.mcdonald@davispolk.com - and - Charles A. Beckham, Jr., Esq. Arsalan Muhammad, Esq. David A. Trausch, Esq. HAYNES AND BOONE, LLP 1221 McKinney St., Suite 4000 Houston, TX 77010 Tel.: (713) 547-2000 E-mail: charles.beckham@haynesboone.com arsalan.muhammad@haynesboone.com david.trausch@haynesboone.com About Instant Brands Instant Brands designs, manufactures and markets a global portfolio of innovative and iconic consumer lifestyle brands: Instant, Pyrex, Corelle, Corningware, Snapware, Chicago Cutlery, ZOID and Visions. Instant Brands Holdings Inc. and Instant Brands Inc., and their affiliates sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Tex. Lead Case No. 23-90716) on June 12, 2023. In the petition signed by Adam Hollerbach, chief restructuring officer, the Debtors disclosed up to $1 billion in both assets and liabilities. Judge David R. Jones oversees the case. Davis Polk & Wardwell LLP's Brian M. Resnick, Steven Z. Szanzer and Joanna McDonald serve as counsel to the Debtors. The Debtors also tapped Haynes and Boone, LLP as Texas counsel, Stikeman Elliott LLP as Canadian counsel, AlixPartners, LLP as financial advisor, Guggenheim Securities LLC as investment banker, and Epiq Corporate Restructuring, LLC as claims, noticing, agent, solicitation and administrative advisor. DLA Piper LLP (US) serves as counsel to the Official Committee of Unsecured Creditors. Ropes & Gray LLP serves as counsel to the DIP Lenders, and Moelis & Company LLC and Ankura Consulting Group, LLC act as advisors to the Term DIP Secured Parties. Skadden, Arps, Slate, Meagher & Flom LLP and Norton Rose Fulbright and Norton Rose Fulbright Canada LLP serve as counsel and FTI Consulting as financial advisor to the ABL DIP Secured Parties. Kramer Levin Naftalis & Frankel LLP serves as counsel to Cornell Capital. INT'L. LONGSHORE UNION: Reaches Deal to Pay Port Operator $20Mil. ----------------------------------------------------------------- Tim Ryan of Law360 reports that the International Longshore and Warehouse Union has agreed to pay a port operator $20.5 million to settle a decade-old lawsuit accusing the union of engaging in an unlawful boycott of the company during a labor dispute, the two sides announced Thursday, February 1, 2024. About The International Longshore and Warehouse Union The International Longshore and Warehouse Union (ILWU) is an international labor union that represents a wide range of workers on the West Coast of the United States, in Hawaii, and in British Columbia, Canada including dock workers, warehouse workers, tourism and hospitality workers, agricultural workers, miners, and others. The Debtor filed a Chapter 11 bankruptcy petition (Bankr. N.D. Cal. Case No. 23-30662) on Sept. 30, 2023, with $1 million to $10 million in assets and liabilities. William E. Adams, president, signed the petition. Jason H. Rosell, Esq. of PACHULSKI STANG ZIEHL & JONES LLP, is the Debtor's legal counsel. INVIVO THERAPEUTICS: Winds Down in Chapter 11; Seeks April Auction ------------------------------------------------------------------ InVivo Therapeutics Holdings Corp. and its subsidiary InVivo Therapeutics Corporation filed voluntary petitions for relief under the provisions of Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. The Company intends to continue to operate as a "debtor-in-possession". Richard Christopher, the Chief Financial Officer and Treasurer of InVivo, explained in court filings that the Chapter 11 cases are focused on finalizing the wind-down of InVivo's business. Like many developmental life sciences companies in the current market environment, InVivo has been unable, despite sustained efforts over a long course of time, to achieve meaningful clinical outcomes to support the continued pursuit of its Neuro-Spinal Scaffold device for development and ultimate commercialization in the area of spinal cord injury treatment. Over the same period of time, InVivo has been unable to attract or acquire new assets to support its continued operation. While InVivo has made significant advancements in its field over the past twenty years, those advancements have not resulted in a financially viable business moving forward. As a result, InVivo has pivoted to a wind-down strategy that it believes will result in the satisfaction of all creditor claims in full or nearly in full, in addition to funding all wind-down costs. InVivo is seeking chapter 11 protection to complete this wind-down because it believes the chapter 11 process is the most efficient method of concluding its clinical trials, liquidating its remaining assets and distributing remaining cash and any sale proceeds to creditors and, should there be any excess, to equityholders. Nasdaq Delisting On Feb. 2, 2024, the Company received a notice from the Listing Qualifications Department of the Nasdaq Stock Market LLC notifying the Company that, as a result of the Voluntary Petitions and in accordance with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, Nasdaq had determined that the Company's common stock will be delisted from Nasdaq. The Company does not intend to appeal this determination and, therefore, it is expected that its common stock will be delisted, which would not affect any actions it may take in bankruptcy. Nasdaq has informed the Company that trading of the Company's common stock will be suspended at the opening of business on Feb. 13, 2024 and a Form 25-NSE will be filed with the Securities and Exchange Commission, which will remove the Company's securities from listing and registration on Nasdaq. Sec. 363 Sale According to court filings, notwithstanding the challenges faced by the company to date, InVivo remains hopeful that the terms of a sale of its assets pursuant to section 363 of the Bankruptcy Code, specifically the "free and clear" protections provided by a bankruptcy sale process, will attract buyers who indicated some prior interest but did not submit bids prior to the Petition Date. The Debtors' investment banker, SSG Capital Advisors, LLC, remains retained by the Debtors to continue its efforts to find a purchaser for InVivo's assets, with the understanding that in some cases previously interested purchasers will submit bids for assets only after a seller's chapter 11 proceedings have commenced. Therefore, in order to facilitate the Sale, on the Petition Date, InVivo filed the motion for entry of orders approving, among other things, bid procedures relating to the sale of substantially all of the Debtors' assets. Subject to Court approval, the Bid Procedures contemplate these key process dates, designed to proceed efficiently in the context of significant pre-bankruptcy marketing efforts: * Bid Procedures Hearing: To be determined by the Court * Bid Deadline: March 29, 2024 at 4:00 p.m. (EST) * Auction: April 3, 2024 at 10:00 a.m. (EST) * Sale Hearing: April 5, 2024 at 10:00 a.m. (EST) (subject to the Court's availability) Subject to approval of and pursuant to the Bid Procedures, SSG will continue to market InVivo's assets with the assistance and based on the knowledge and experience of InVivo's continuing management. About InVivo Therapeutics InVivo Therapeutics -- https://www.invivotherapeutics.com/ -- is a research and clinical-stage biomaterials and biotechnology company with a focus on treatment of spinal cord injuries. InVivo pursued development of its investigational Neuro-Spinal Scaffold implant, a bioresorbable polymer scaffold that is designed for implantation at the site of injury within a spinal cord and is intended to treat acute SCI. InVivo Therapeutics Corp. and InVivo Therapeutics Holdings Corp. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-10137 and 24-10138) on Feb. 1, 2024. In the petition filed by Richard Christopher, as chief financial officer, InVivo Therapeutics Corp. reported total assets amounting to $9,584,000 and total debt of $666,000 as of Sept. 30, 2023. The Debtor tapped LANDIS RATH & COBB LLP as counsel; SONORAN CAPITAL ADVISORS, LLC, as financial advisor; and SSG ADVISORS, LLC, as investment banker. WILMER CUTLER PICKERING HALE AND DORR LLP is the corporate counsel. INW MANUFACTURING: Oaktree Specialty Marks $43.9MM Loan at 20% Off ------------------------------------------------------------------ Oaktree Specialty Lending Corporation has marked its $43,931,000 loan extended to INW Manufacturing, LLC, to market at $35,145,000 or 80% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+5.75%) to INW Manufacturing. The loan accrues interest at a rate of 11.36% per annum. The loan matures on March 25, 2027. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 INW Manufacturing, LLC is in the Vitamin, Nutrient, and Hematinic Preparations for Human Use business. * * * As reported by the Troubled Company Reporter on June 16, 2023, S&P Global Ratings affirmed its 'CCC' issue-level rating on INW Manufacturing LLC's first-lien term loan. S&P also revised its recovery rating to '4' (30%-50% recovery) from '3' (50%-70%) and its rounded recovery estimate to 45% from 55%. The company received a delayed-draw term loan facility with a maturity date of April 30, 2024. S&P said, "While the transaction has improved INW's short-term liquidity position, we are unclear as to whether the company will have unfettered access to this facility if it is unable to meet certain conditions precedent to additional funding. Further, we continue to expect INW's high debt service requirements will exceed projected EBITDA over the next 24-36 months. The company will need to address the maturity in early 2024." All of S&P's other ratings on INW, including its 'CCC' issuer credit rating, are unchanged. ISLAND BREEZE: Hires John G. Rhyne Law as Bankruptcy Counsel ------------------------------------------------------------ Island Breeze Grill, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of North Carolina to employ John G. Rhyne, Attorney At Law, as its counsel. The firm's services include: a. undertaking any and all steps and actions necessary to authorize the use of cash collateral pursuant to 11 U.S.C. Sec. 363, if applicable; b. advising the Debtor with respect to its powers and duties as debtor-in-possession in the continued management, operation, and reorganization of its business; c. reviewing any and all claims asserted against the Debtor by its creditors, equity holders, and parties of interest; d. representing the Debtor's interests at the Meeting of Creditors and 11 U.S.C. Sec. 341 and the Status Conference established by 11 U.S.C. Sec. 1188, and at any hearing or conference scheduled in the Bankruptcy Case before the Court related tot he Debtor; e. attending any meetings, conferences, and negotiations with representatives of creditors, the Trustee, and other parties in interest; f. reviewing and examining, if necessary, any and all transfers which may be avoided a preferential or fraudulent transfer under the appropriate provisions of the Bankruptcy Code; g. taking any and all necessary actions to protect and preserve the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any action commenced against the Debtor, negotiations concerning all litigation in which the Debtor is, or may become involved, and objections to any claims filed against the bankruptcy estate of the Debtor; h. preparing, on behalf of the Debtor all motions, applications, answers, orders, reports and pleadings necessary to the administration of the bankruptcy estate; i. preparing, on behalf of the Debtor, any plan of reorganization, and take any necessary actions on behalf of the Debtor to obtain confirmation of such plan of reorganization; j. representing the Debtor in connection with any potential post-petition financing; k. advising the Debtor in connection with the sale or liquidation, if applicable, of any assets and property to third parties; l. appearing before the Court, or any such appellate court, to protect the interests of the Debtor and the bankruptcy estate; m. representing the Debtor with respect to any general, corporate, or transactional matters that arise during the course of the administration of the Bankruptcy Case; and n. assisting and advising the Debtor with respect to negotiation, documentation, implementation, consummation, and closing of any corporate transactions, including sales of assets, in the Bankruptcy Case. The firm received a retainer in the amount of $11,738. John G. Rhyne does not represent an interest materially adverse to the Debtor or the estate in any matters upon which it is to be engaged, and is a disinterested within the meaning of 11 U.S.C. Secs. 327(a) and 1195 of the Bankruptcy Code, according to court filings. The firm can be reached through: John G. Rhyne, Esq. John G. Rhyne, Attorney At Law P.O. Box 8327 Wilson, NC 27893 Tel: (252) 234-9933 Fax: (252) 991-5567 E-mail: johnrhyne@johnrhynelaw.com About Island Breeze Grill, Inc. Island Breeze Grill, Inc. sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.C. Case No. 24-00258) on Jan. 26, 2024, listing $500,001 to $1 million in both assets and liabilities. Judge David M Warren presides over the case. John G. Rhyne, Esq. at John G. Rhyne, Attorney At Law represents the Debtor as counsel. ITA HOLDINGS: CSWC Marks $13M 1st Lien Loan at 15% Off ------------------------------------------------------ Capital Southwest Corporation has marked its $12,966,000 loan extended to ITA Holdings Group, LLC, to market at $11,013,000 or 85% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Capital Southwest's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. CSWC is a participant in a First Lien Term Loan (SOFR+8.00%, 2.00% PIK, Floor 2.00%/Q) to ITA Holdings. The loan accrues interest at a rate of 15.54% per annum. The loan matures on June 21, 2027. CSWC is an internally managed investment company that specializes in providing customized financing to middle-market companies in a broad range of investment segments located primarily in the United States. CSWC can be reached at: Bowen S. Diehl Capital Southwest Corporation 8333 Douglas Ave, Suite 1100 Dallas, TX 75225 Tel: 214-238-5700 ITA Holdings Group, LLC, doing business as Apollo MedFlight, operates as a holding company. The Company, through its subsidiaries, provides 24-hour emergency and non-emergency air medical transport services. Apollo MedFlight serves customers in the United States. ITA HOLDINGS: CSWC Marks $13MM Term B Loan at 15% Off ----------------------------------------------------- Capital Southwest Corporation has marked its $12,966,000 loan extended to ITA Holdings Group, LLC, to market at $11,005,000 or 85% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Capital Southwest's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. CSWC is a participant in a First Lien Term B Loan (SOFR+10.00%, 2.00% PIK, Floor 2.00%/Q) to ITA Holdings. The loan accrues interest at a rate of 17.54% per annum. The loan matures on June 21, 2027. CSWC is an internally managed investment company that specializes in providing customized financing to middle-market companies in a broad range of investment segments located primarily in the United States. CSWC can be reached at: Bowen S. Diehl Capital Southwest Corporation 8333 Douglas Ave, Suite 1100 Dallas, TX 75225 Tel: 214-238-5700 ITA Holdings Group, LLC, doing business as Apollo MedFlight, operates as a holding company. The Company, through its subsidiaries, provides 24-hour emergency and non-emergency air medical transport services. Apollo MedFlight serves customers in the United States. IVANTI SOFTWARE: Oaktree Specialty Marks $13.9MM Loan at 19% Off ---------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $13,939,000 loan extended to Ivanti Software, Inc., to market at $11,314,000 or 81% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a Second Lien Term Loan (SOFR+7.25%) to Ivanti Software. The loan accrues interest at a rate of 12.91% per annum. The loan matures on December 1, 2028. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Ivanti Software, Inc. provides information technology services. The Company offers IT asset management, security, endpoint, and supply chain solutions. JEFFERSON CAPITAL: Fitch Gives BB-(EXP) Rating on $400M Unsec Notes ------------------------------------------------------------------- Fitch Ratings expects to assign Jefferson Capital Holdings, LLC's proposed $400 million senior unsecured notes issuance a 'BB-(EXP)' rating. Proceeds from the issuance are expected to be used to repay outstanding balances of its revolving credit facility and for general corporate purposes. KEY RATING DRIVERS The unsecured debt is expected to rank pari passu with Jefferson's existing senior unsecured debt; therefore, the expected rating is aligned with the ratings on the existing unsecured debt and Jefferson's Long-Term Issuer Default Rating (IDR). The equalization of the rating reflects average recovery prospects under a stressed scenario given the availability of unencumbered assets. Fitch does not expect the debt issuance to have any meaningful impact on the company's leverage profile, as proceeds are expected to be used primarily to pay down the outstanding revolving credit facility. Proforma for the unsecured issuance, Jefferson's leverage, calculated as gross debt to adjusted EBITDA equates to 2.4x for the TTM ended 3Q23, which is within Fitch's 'bbb' category benchmark range of 1.5-2.5x and consistent with Jefferson's stated leverage target of 2.0-2.5x. Jefferson's ratings reflect its growing franchise within the debt purchasing sector, where it benefits from a recognized market position in the U.S., a leading franchise in Canada and a growing presence in the U.K. and Latin America; its diversification across secured and unsecured asset classes; and consistent through-the-cycle operating history via predecessor entities. In addition, the ratings reflect Jefferson's conservative leverage profile and limited near-term refinancing risk. Rating constraints include Jefferson's limited scale relative to top-tier peers, monoline business model primarily servicing charged-off debt, and a history of business acquisitions, which presents execution risks. Additional constraints include potential regulatory scrutiny associated with the consumer collections businesses, the company's reliance on internal modelling for portfolio valuations and associated metrics such as estimated remaining collections and its private equity ownership, which can yield uncertainty around strategic and financial targets. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sustained increase in debt/adjusted EBITDA above 2.5x or debt/tangible equity above 5x, resulting from EBITDA contraction and/or an increase in debt-funded acquisitions; - Failure to maintain a diverse funding profile and/or a shift to a largely secured balance sheet funding model; - A weakening in asset quality, as reflected in acquired debt portfolios significantly underperforming anticipated returns or repeated material write-downs in expected recoveries; - An adverse operational event or significant disruption in business activities (for example arising from regulatory intervention in key markets adversely impacting collection activities), thereby undermining franchise strength and business-model resilience. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - An enhancement of scale and franchise strength relative to peers and demonstrated earning resilience through the current economic cycle; - Further diversification of the funding profile and maintenance of an unsecured debt funding mix at greater than 40% of total debt on a sustained basis; - Leverage maintained consistently below 2x through the cycle on a debt/adjusted EBITDA basis and below 4x on a debt/tangible equity basis. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS Jefferson's expected senior unsecured debt rating is equalized with its Long-Term IDR, reflecting Fitch's expectation of average recovery prospects under a stressed scenario. The negative impact from an increase in secured funding in a priority position is offset by relatively low leverage. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES Jefferson's expected senior unsecured debt rating is primarily sensitive to changes in the company's Long-Term IDR and secondarily to the funding mix and recovery prospects on the unsecured debt. A material increase in the proportion of secured debt, which weakens recovery prospects for unsecured debtholders in a stressed scenario could result in the unsecured debt rating being notched down below the IDR. Date of Relevant Committee June 27, 2023 ESG CONSIDERATIONS Jefferson Capital Holdings LLC has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy & Data Security due to the importance of fair collection practices and consumer interactions and the regulatory focus on them, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. Jefferson Capital Holdings LLC has an ESG Relevance Score of '4' for Financial Transparency due to the significance of internal modelling to portfolio valuations and associated metrics such as estimated remaining collections, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors. These are features of the debt purchasing sector as a whole, and not specific to the company. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating ----------- ------ Jefferson Capital Holdings LLC senior unsecured LT BB-(EXP) Expected Rating JNJ HOME: Wins Cash Collateral Access Thru April 12 --------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of New York authorized JNJ Home Health Care, Inc. to use cash collateral on an interim basis in accordance with the budget, with a 10% variance. The U.S. Small Business Association holds a duly perfected security interest in all of the Debtor's property, and assets, including the proceeds thereof, by virtue of Loan Authorization and Agreement, Note, and Security Agreement, dated June 18, 2020. The original principal amount of the loan was $150,000; however, on October 21, 2021, the Debtor's loan amount was increased to $510,000. The Debtor acknowledges its repayment obligations under the Loan Agreements. The SBA asserts it is secured by, inter alia, liens and security interests in all of the Debtor's assets by virtue of UCC-1 Financing Statement. The Debtor acknowledges that its monthly repayment obligations under the SBA Loan were deferred until December 2022 in the amount of $2,521. As adequate protection, starting June 1, 2023, the Debtor will make payments of $2,521 per month to the SBA pursuant to the terms of the SBA Loan. The New York State Department of Taxation and Finance asserts a duly perfected security interest in all of the Debtor's property, and assets, including the proceeds thereof, by virtue of tax warrants filed against the Debtor and as more fully set forth in Claim No. 1 filed by the NYS DTF. The Debtor acknowledges its repayment obligations under the Tax Warrants and the NYS DTF asserts that it is secured by, inter alia, liens and security interests in all of the Debtor's assets by virtue of Tax Warrants having been duly perfected on September 3, 2020, February 9, 2023, and April 13, 2023. It is agreed that the Debtor will make adequate protection payments to NYS DTF in the amount of $1,500 per month, starting June 1, 2023. The Internal Revenue Service asserts a duly perfected security interest in all of the Debtor's property, and assets, including the proceeds thereof, by virtue of tax liens dated January 31, 2022, May 11, 2022, November 3, 2022, February 24, 2023, and February 27, 2023. The Debtor acknowledges its repayment obligations under the IRS Liens and the IRS asserts that it is secured by, inter alia, liens and security interests in all of the Debtor's assets by virtue of the IRS Liens. Beginning on June 1, 2023, the Debtor will make adequate protection payments to the IRS in the amount of $7,500 per month. Itria Ventures LLC holds a duly perfected security interest in the Debtor's business assets, including the proceeds thereof pursuant to a Receivables Sales Agreement dated February 23, 2023 whereby Itria purchased $202,500 of the Debtor's future accounts receivable. In addition, Itria holds a duly perfected security interest in the Debtor's business assets, including the proceeds thereof and the proceeds of an Employee Retention Tax Credit which Debtor is entitled to receive from the U.S. Internal Revenue Service by virtue of a Business Loan and Security Agreement dated Mach 2, 2023 made to the Debtor in the original principal amount of $400,000. The Debtor acknowledges its repayment obligations under the RSA and ERTC Loan and Itria asserts that it is secured by, inter alia, liens and security interests in all of the Debtor's assets, including but not limited to the ERTC Credit by virtue of duly filed UCC-1 Financing Statements. In addition to the Secured Parties' security interests, liens, rights, and other interests in and with respect to their collateral, as adequate protection for and to secure the payment of an amount equal to any diminution in the value of its collateral, the Debtor grants to the Secured Parties post-petition replacement liens on and security interests in (JMM), under 11 U.S.C. Section 361(2), on all property of the Debtor and its estate. The Replacement Liens granted to the Secured Parties will become valid, enforceable, and fully perfected liens without any action by Debtor or the Secured Parties, and no filing or recordation or other act that otherwise may be required under federal or state law in any jurisdiction will be necessary to create or perfect such liens and security interests. The Debtor's authorization to use cash collateral will immediately terminate without further Order on the earlier of: (a) April 12, 2024, at 5:00 p.m. EST; (b) the entry of and order granting any Secured Party, or any party other than the Secured Parties, relief from the automatic stay with respect to any property of the Debtor in which any Secured Party claims a lien or security interest, whether pursuant to the Fifth Interim Order or otherwise; (c) the entry of an order dismissing the Chapter 11 proceeding or converting the proceeding to a case under Chapter 7 of the Code; (d) the entry of an order confirming a plan of reorganization; or (e) the entry of an order by which the Fifth Interim Order is reversed, revoked, stayed, rescinded, modified or amended without the consent of the Secured Parties thereto. A ninth interim hearing on the matter is set for April 10 at 10:30 a.m. A copy of the order is available at https://urlcurt.com/u?l=E3QML3 from PacerMonitor.com. About JNJ Home Health Care, Inc. JNJ Home Health Care, Inc. is a provider of home healthcare services. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bakr. E.D.N.Y. Case No. 23-41382) on April 24, 2023. In the petition signed by Caren D. Serieux-Bazelais, CEO, the Debtor disclosed $1,616,300 in assets and $3,550,540 in liabilities. Judge Jil Mazer-Marino oversees the case. James J. Rufo, Esq., at the Law Office of James J. Rufo, represents the Debtor as legal counsel. JSMITH CIVIL: Court OKs Cash Collateral Access Thru March 6 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina, New Bern Division, authorized JSmith Civil, LLC to use cash collateral on an interim basis in accordance with the budget, with a 10% variance, through March 6, 2024. Due to unforeseen circumstances, including payment disputes preventing collection of outstanding accounts receivable for bonded and non-bonded projects in excess of $3 million in 2022, and delays in projects attributable to prime contractors and owners, the Debtor began to experience significant financial problems as a result of its inability to pay certain ongoing expenses associated with the performance of all its ongoing commercial construction projects throughout the State of North Carolina. The Debtor's sole sources of revenue and income consist of the following: (a) Funds currently on hand and on deposit in its bank accounts; (b) Income and revenue generated from the collection of outstanding accounts receivable; (c) Monthly income totaling not less than $85,042 generated from the lease of the Debtor's equipment and vehicles to third parties pursuant to Master Lease Agreements and Options to Purchase; (d) Income and revenue earned/generated from the continued performance of commercial construction and site preparation services to existing projects; and (e) Funds recovered from third parties for construction services and work performed for which payment to the Debtor was withheld and not remitted. The Debtor incurred multiple obligations to the following creditors who have security interests in certain collateral owned by the Debtor, as well as proceeds and products thereof, that may constitute cash collateral: (a) Ally Financial, Inc.; (b) Bank of the West; (c) Caterpillar Financial Services Corporation (d) CIT Bank, N.A.; (e) First-Citizens Bank & Trust Company; (f) Citizens One Auto Finance; (g) Engs Commercial Finance Co.; (h) De Lage Landen Financial Services, Inc.; (i) Ferguson Enterprises, Inc. (j) Gregory Poole Equipment Company; (k) PNC Equipment Financ, LLC; (l) Truist Equipment Finance Corp.; (m) Wells Fargo Bank, N.A.; (n) Westfield Insurance Company a/k/a Westfield National Insurance Company and/or Ohio Farmers Insurance Company; and (o) Second Wind Consultants, Inc. In the interim, and to continue and maintain its existing operations, the Debtor will be required to incur certain operating expenses, including payroll, payroll taxes, utilities, rent, insurance premiums, materials, costs, and supplies, and other costs and expenses associated with the performance of electrical services and operation of its business. As adequate protection, the Cash Collateral Creditors are granted continuing post-petition liens and security interests in all property and categories of property of the Debtor in which and of the same priority as each held as of the Petition Date, and the proceeds thereof, whether acquired prepetition or post-petition, but only to the extent of that cash collateral used. The post-petition replacement liens are deemed automatically perfected without the necessity of financing statement or other further actions by the Cash Collateral Creditors. As a condition of the use of cash collateral, the Debtor will: A. Remit an adequate protection payment in the amount of $100,000 to First-Citizens on or before March 5, 2024; B. Segregate all proceeds received from the Equipment Leases into a separate account, which will not be utilized until further Order of the Court; C. Maintain continuous insurance coverage on the personal property, equipment, and collateral; D. Provide a report, no less frequently than every 30 days, all revenue, income, and expenditures through a comparative analysis of actual revenue, income, and expenditures with budgeted/projected revenue, income, and expenditures; and E. Provide reasonable access to the Debtor's premises, books and records, and other financial information necessary to inspect any collateral and evaluate the Debtor's financial condition and affairs, and such additional information as may be reasonably requested by First Citizens, any other Cash Collateral Creditor, or the Bankruptcy Administrator for the purpose of evaluating the collateral or the Debtor's financial condition. The Order will remain in full force and effect until the earlier of the (a) entry of an Order by the Court modifying the terms of the Order; (b) entry of an Order by the Court terminating the Order for cause, including but not limited to breach of its terms and conditions; (c) upon filing of a notice of default as provided in the Order; (d) the entry of a subsequent interim or final Order approving use of cash collateral; (e) the appointment of a trustee or examiner in this proceeding; or (f) the dismissal or conversion of the Bankruptcy Case to a proceeding under chapter 7 of the Bankruptcy Code. A further hearing on the matter is set for March 6 at 1 p.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=0oNsjk from PacerMonitor.com. The Debtor projects $260,042 in total income and $392,773 in total operating expenses for one month. About JSmith Civil LLC JSmith Civil LLC is a Goldsboro contractor. JSmith Civil LLC sought relief under Chapter 11 of the U.S. Bankruptcy Code (Banjr. E.D.N.C. Case No. 23-02734) on September 19, 2023. In the petition filed by Jeremy Smith, as president, the Debtor reports estimated assets and liabilities between $10 million and $50 million each. Judge Joseph N. Callaway oversees the case. The Debtor is represented by at Joseph Zachary Frost, Esq. at Buckmiller, Boyette & Frost, PLLC. KODIAK GAS: Fitch Gives BB First-Time LongTerm IDR, Outlook Stable ------------------------------------------------------------------ Fitch Ratings has assigned Kodiak Gas Services, LLC (Kodiak) a first-time Long-Term Issuer Default Rating (IDR) of 'BB' and a 'BB'/'RR4' rating to its proposed issuance of senior unsecured notes. The Rating Outlook is stable. Kodiak's rating reflects stable cash flows supported by fixed-fee, take-or-pay-type contracts, relatively low leverage and customer diversification, with some geographic concentration within the Permian Basin. The company's weighted average remaining contract life is relatively short compared with higher rated midstream issuers; however, Fitch recognizes Kodiak has long-standing customer relationships. Strong underlying fundamentals supporting the compression industry include an expected approximate doubling of U.S. LNG export capacity by the end of the decade, in addition to relatively constructive oil prices, as in the Fitch price deck. The Stable Outlook reflects expectations for continued high utilization rates on Kodiak's assets, driven by the company's rigorous and systematic fleet maintenance practices, as well as strong expected demand for the company's services. KEY RATING DRIVERS Structural Tailwinds in Compression: There are several structural tailwinds supporting the compression industry, the most significant of which is the construction of multiple new North American LNG export facilities. Fitch expects U.S. LNG production to approximately double by 2030. These incremental LNG projects will require large amounts of natural gas, with contracted terms typically around 20 years. This is seen directly benefitting Kodiak, as its core operating areas are two regions (the Permian and Eagle Ford) with close proximity to LNG export facilities in the Gulf Coast. In the compressor market, there continues to be lead times for new compressors well in excess of a year, as strong demand and supply chain issues have remained. This has allowed Kodiak to increase contract length and contract rates. Fitch's price deck over the forecast period is relatively constructive for Kodiak's main operating area, the Permian, supporting expectations for maintained drilling activity and consequently increased production of associated gas. Approximately 65% of the post-acquisition pro-forma horsepower (HP) will be located in the Permian Basin, which Fitch considers to be a relatively strong crude oil basin in the U.S. due to its relatively low breakeven cost of production. While Kodiak is not mainly concentrated in mature basins, the extent of its business exposed to mature basins benefits from generally increasing gas to oil ratios. Cash Flow Stability: Essentially all Kodiak's EBITDA comes from fixed-fee, take-or-pay-type contracts with no volumetric or direct commodity price exposure. Additionally, Kodiak has a strong history of high utilization rates on its assets, achieving a greater than 98% utilization rate since 2019. Kodiak's recently announced acquisition (expected to close in 2Q24), CSI Compressco LP (CSI), has seen increasing utilization rates since the pandemic, most recently reaching approximately 88% in 3Q23. Kodiak management expects to be able to bring CSI's utilization rates closer to Kodiak levels in the near term. Regardless, the pro-forma entity is expected to have a roughly 97% utilization rate, assuming no improvement is made. Pro forma for the CSI acquisition, Kodiak's weighted average remaining contract term is expected to be under two years. Fitch considers concerns over the shorter relative remaining contract tenor to be somewhat mitigated by Kodiak's long relationships with its customers. Kodiak has a focus on large HP units, and the pro-forma entity will have approximately 74% of fleet HP above 1,000 HP. Large HP units provide relatively higher barriers to exit, as moving compression equipment is costly due to the large size of those units. Roughly 7% of Kodiak's HP is contracted on a month-to-month basis, a further reflection of Kodiak's longstanding customer relationships. This number is expected to increase slightly with CSI folded in. Low Relative Leverage: Pro-forma for the CSI acquisition, Fitch expects leverage to decline slightly over the forecast from approximately 4.4x in 2024. Kodiak has a leverage target of 3.5x by year-end 2025. Should Kodiak delever post-acquisition as expected, it would position Kodiak strongly in its rating category, in Fitch's view. Fitch calculates leverage on an LTM basis, while Kodiak calculates leverage on a last quarter annualized basis. Customer Diversification, Some Geographic Concentration: Fitch views Kodiak, pro-forma for the CSI acquisition, as having good customer diversity and considers this to be supportive of Kodiak's credit quality. As of Sept. 30, 2023, approximately 36% of Kodiak's revenues came from its four largest customers. Pro-forma for the CSI acquisition, the top five customers will account for around 30% of revenues, with one customer accounting for approximately 10% of total revenue. Kodiak has longstanding relationships with its customers. Its top pro-forma customers are investment-grade entities, and a little over 50% of current revenues come from investment grade counterparties. Pro forma for the CSI acquisition, approximately 65% of HP will be located in the Permian, about 15% in the Eagle Ford, and the remainder will be spread among other U.S. regions. The significant exposure to the Permian Basin introduces a level of geographic concentration risk to Kodiak's credit profile. This is balanced against Fitch's relatively constructive view of the Permian Basin and the relatively favorable production dynamics in the region due to lower breakevens. DERIVATION SUMMARY Kodiak's closest peer within Fitch's midstream coverage is USA Compression Partners, LP (USAC; BB/Stable). Both companies are large HP-focused natural gas compression service providers operating in the United States and both operate almost exclusively under fixed-fee, take-or-pay-type contracts. Kodiak's pro-forma top two areas of operations, the Permian and Eagle Ford, will make up approximately 80% of HP while those two regions make up about 55% of HP for USAC, with a further 25% coming from the Appalachian Basin. Fitch considers USAC to have better geographic diversification compared with Kodiak. Kodiak's utilization rate over the past four years has averaged approximately 99%, while USAC's recovered from pandemic lows in the low 80% range and reached its historical average of a little above 90% in 2022. Even with dips in utilization rates during the pandemic, USAC's EBITDA was steady, while Kodiak's EBITDA has grown due to its expansion of revenue-generating HP over the same time period. As of Q3 2023, USAC had approximately 23% of compression services provided on a month-to-month basis, a number that has come down with current compression market tightness, while Kodiak has roughly 7% of compression services provided on a month-to-month basis, which is expected to slightly increase with the CSI acquisition. Fitch expects USAC's leverage to be 5.0x in 2023 and for leverage to remain comfortably positioned below its negative sensitivity of 5.3x over the forecast. Kodiak's leverage is expected to be about 4.4x in 2024 and to modestly decline over the forecast. With slightly higher business risk at Kodiak, due to lower geographic diversification, being largely offset by lower expected Kodiak leverage, Fitch rates Kodiak and USAC at the same IDR level. KEY ASSUMPTIONS - Fitch base case oil and gas price deck; - Interest rate hedging policy remains in place over the forecast; - Capex is spent to grow the company's asset base, with total capex in a range of $300 million-$400 million per year; - Dividends held steady at the current announced level; - Base interest rate applicable to the ABL reflects the Fitch Global Economic Outlook, with an added spread included for the rate on the to-be-issued unsecured notes. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - EBITDA leverage expected to be at or below 4.0x on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDA leverage expected to be at or above 5.0x on a sustained basis; - An acquisition or organic growth strategy that significantly increases business risk. LIQUIDITY AND DEBT STRUCTURE Liquidity Adequate: As of Sept. 30, 2023, Kodiak had $6 million of cash on its balance sheet and approximately $400 million of availability on its $2.2 billion Asset Based Loan (ABL) facility due in March 2028. Fitch notes that the ABL facility currently provides most of the debt in the capital structure, and the borrowing base is subject to an annual determination. Pro-forma for the unsecured debt issuance, Kodiak's nearest debt maturity will be in 2028. Financial covenants require Kodiak to have a minimum interest coverage ratio of 2.5x, a maximum leverage ratio that steps down from a level of 5.75x for the first four quarters after the proposed unsecured debt issuance to 5.25x thereafter, and a secured leverage ratio that steps down from 3.75x for the first four quarters after the proposed unsecured debt issuance to 3.25x thereafter. As of Sept. 30, 2023, Kodiak was in compliance with these covenants. Fitch expects Kodiak to remain in compliance with its financial covenants over the forecast period. Kodiak has a financial policy of hedging 50%-80% of its floating rate debt with interest rate swaps. This policy helps mitigate floating rate exposure, and Fitch expects the policy to remain in place over the forecast period. ISSUER PROFILE Kodiak Gas Services, LLC provides compression services to upstream and midstream companies in the United States. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. DATE OF RELEVANT COMMITTEE January 25, 2024 Entity/Debt Rating Recovery ----------- ------ -------- Kodiak Gas Services, LLC LT IDR BB New Rating senior unsecured LT BB New Rating RR4 LATIGO PROPERTIES: Seeks Cash Collateral Access ----------------------------------------------- Latigo Properties, Inc. asks the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, for authority to use cash collateral and provide adequate protection. The Debtor requires the use of cash collateral to pay its post-petition expenses. Albert Uresti, M.P.A., PCC and Velocity Commercial Capital may assert an interest in the Debtor's cash collateral. The Debtor requests that the Alleged Secured Creditors be granted a replacement lien (securing payment of an amount equal to the amount of cash collateral, if any, used by Debtor) on all proceeds of receivables (after paying its post-petition expenses) to the extent acquired after the Petition Date and if it is ultimately determined that the Alleged Secured Creditors have a valid security interest in the pre-petition receivables and proceeds. In addition to the "equity cushion" in the collateral, such replacement liens will be adequate protection for the use of any cash collateral. A copy of the Debtor's motion and budget is available at https://urlcurt.com/u?l=TN9fYE from PacerMonitor.com. The Debtor projects total expenses, on a monthly basis, as follows: $11,744 for February 2024; $16,924 for March 2024; and $16,924 for April 2024. About Latigo Properties Latigo Properties, Inc., doing business as The Latigo Group, is primarily engaged in renting and leasing real estate properties. The company is based in San Antonio, Texas. Latigo Properties filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. W.D. Texas Case No. 24-50003) on Jan. 1, 2024, with $1 million to $10 million in assets and $500,000 to $1 million in liabilities. David B. Brigham, president, signed the petition. William B. Kingman, Esq., at the Law Offices of William B. Kingman represents the Debtor as bankruptcy counsel. LEAFBUYER TECHNOLOGIES: Hudson Bay, Sander Gerber Own 9.99% Stake ----------------------------------------------------------------- In a Schedule 13G/A Report filed with the U.S. Securities and Exchange Commission, Hudson Bay Capital Management LP and Sander Gerber disclosed that as of Dec. 31, 2023, they beneficially owned 11,035,345 shares of Common Stock issuable upon exercise of warrants of Leafbuyer Technologies, representing 9.99% of the shares outstanding. The Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 filed with the Securities and Exchange Commission on November 15, 2023 discloses that the total number of outstanding shares of Common Stock as of November 14, 2023 was 99,428,575. The percentage and the number of shares of Common Stock for each Reporting Person are based on the Company's total number of outstanding shares of Common Stock and assume the exercise of warrants held by Hudson Bay Master Fund Ltd., subject to the 9.99% Blocker. Pursuant to the terms of the Securities, the Reporting Persons cannot exercise such Securities if the Reporting Persons would beneficially own, after such exercise, more than 9.99% of the outstanding shares of Common Stock (the "9.99% Blocker"). The percentage for each Reporting Person gives effect to the 9.99% Blocker. Consequently, at this time, the Reporting Persons are not able to exercise all of the Securities due to the 9.99% Blocker. Hudson Bay Capital Management LP (the "Investment Manager") serves as the investment manager to Hudson Bay Master Fund Ltd., in whose name the Securities are held. As such, the Investment Manager may be deemed to be the beneficial owner of all shares of Common Stock, subject to the 9.99% Blocker, if any, underlying the Securities held by Hudson Bay Master Fund Ltd. Mr. Gerber serves as the managing member of Hudson Bay Capital GP LLC, which is the general partner of the Investment Manager. Mr. Gerber disclaims beneficial ownership of these securities. A full-text copy of the report is available at http://tinyurl.com/5e27745u About Leafbuyer Greenwood Village, Colorado-based Leafbuyer Technologies, Inc. is a marketing technology company for the cannabis industry and is an online cannabis resource. As of Sept. 30, 2023, Leafbuyer has $1,389,785 in total assets and $2,980,767 in total liabilities. Leafbuyer Technologies, Inc. disclosed in its Form 10-Q Report for the quarterly period ended September 30, 2023, that there is substantial doubt about its ability to continue as a going concern. As of September 30, 2023, the Company had $202,931 in cash and cash equivalents and a working capital deficit of $2,164,148. The Company is dependent on funds raised through equity financing. The Company's cumulative net loss of $24,435,698 was funded by debt and equity financing and the Company reported a net loss from operations of $398,598 for the three months ended September 30, 2023. LIFE UNIVERSITY: Moody's Affirms Ba3 Issuer & Revenue Bond Ratings ------------------------------------------------------------------ Moody's Investors Service has affirmed Life University's (GA) Ba3 issuer and revenue bond ratings. The bonds were issued through the Marietta Development Authority (Georgia). The university recorded $91.3 million of outstanding debt at fiscal end 2023. The outlook is stable. RATINGS RATIONALE Life University's (LU) Ba3 issuer rating reflects its relatively small scale, concentrated market niche in chiropractic education, and modest wealth and liquidity, with limited prospects for significant improvements in operations and financial resources. LU's limited brand and strategic positioning reflects a high reliance on tuition revenue, modest donor support and research activity, constrained pricing power in its core chiropractic programs and weaker pricing flexibility for undergraduate programs. Favorably, LU maintains disciplined financial management to budget for at least 1.3x debt service coverage, including reasonable student demand projections. LU's wealth is modest with $23.6 million of cash and investments for fiscal 2023, which covers debt and operations by a low 0.26x and 0.28x, respectively. Liquidity at 97 days for fiscal 2023 has weakened relative to pre-pandemic levels, due in part to ongoing capital investments, with age of plant of about 15 years. Despite high leverage, LU's debt structure is all fixed rate and amortizing. LU's CFO of 20 years has announced he is stepping down as of December 31, 2024. A search for his successor is currently underway. Affirmation of the Ba3 revenue bond rating incorporates the issuer rating, in addition to security features that include a gross revenue pledge, first mortgage pledge of university real property and a debt service reserve fund. RATING OUTLOOK The stable outlook reflects Moody's expectations that Life University will maintain steady operating performance, with ongoing fiscal discipline to meet more than ample debt service coverage, minimal use of reserves, and no borrowing plans beyond a potential partnership for additional student housing. FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS -- Material improvement in strategic positioning, reflected in continued enrollment diversification, growing net tuition revenue, and overall improvement in wealth and financial flexibility -- Sustained improvement in operating performance and debt affordability FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS -- Deterioration of student demand, given very high reliance on student generated revenue -- Inability to sustain sufficient operating performance to generate debt service coverage above 1x (on a Moody's adjusted basis) -- Material additional debt given already high leverage, or reduction in headroom on debt covenants or covenant violations LEGAL SECURITY The Series 2017A bonds are secured by a gross revenue pledge, first mortgage pledge of university real property and cash funded debt service reserve fund equal to maximum annual debt service (currently funded at $7.0 million). A small portion of the campus near the student housing funded by a portion of the bonds is carved out of the mortgage pledge to allow the university to support a future public-private partnership or alternative finance mechanism for additional student housing facilities. Covenants include: rates and charges sufficient to meet university operations and payments under the Loan Agreement; debt service coverage of 1.2x; liquidity covenant of at least 80 days cash on hand; long-term indebtedness ratio of at least 0.15x; and trades payable of at least 90% of payables at less than 60 days. As of June 30, 2023, the university's exceeded all covenants, with 1.68x coverage, 105 days cash on hand, indebtedness ratio of 0.28x, and trade payables at 99.4%. Failure to meet the required covenants would trigger the university's need to engage a consultant. Failure to meet the required covenants in any two consecutive calendar quarters would trigger the university's requirement to transfer all revenue to the trustee on a daily basis. PROFILE Life University was founded in 1974 as a private university in the Atlanta suburb of Marietta, Georgia. The majority of students are enrolled in its doctoral degree program in chiropractic. The university also offers undergraduate and graduate programs in health and wellness-oriented fields. In fiscal 2023, Life recorded operating revenue of $82.8 million and for the fall 2023 term, enrolled 2,576 full-time equivalent (FTE) students. METHODOLOGY The principal methodology used in these ratings was Higher Education Methodology published in August 2021. LIVEONE INC: Incurs $2.2 Million Net Loss in Third Quarter ---------------------------------------------------------- LiveOne, Inc. reported a net loss of $2.22 million on $31.24 million of revenue for the three months ended Dec. 31, 2023, compared to a net loss of $2.55 million on $27.31 million of revenue for the three months ended Dec. 31, 2022. For the nine months ended Dec. 31, 2023, the Company reported a net loss of $10.67 million on $87.54 million of revenue, compared to a net loss of $4.61 million on $74.06 million of revenue for the same period in 2022. As of Dec. 31, 2023, the Company had $65.83 million in total assets, $56.64 million in total liabilities, $4.93 million in mezzanine equity, and $4.25 million in total equity. LiveOne's CEO and Chairman, Robert Ellin commented, "I'm thrilled to announce our continued success and growth across all divisions. As we approach the end of Fiscal Year 2024, we are not only meeting but exceeding our targets. The momentum we've built sets the stage for an even more exciting and prosperous Fiscal Year 2025." Ellin continued, "From inception, our vision has been clear: to create the LiveOne Flywheel, a vertically integrated powerhouse. We utilize innovative AI technologies to cut costs while collaborating with creators and influencers, transcending traditional boundaries and mediums. Our commitment is unwavering: to promote their brands seamlessly across every facet of our organization, enriching both our talent and our shareholders." About LiveOne Headquartered in Los Angeles, California, LiveOne, Inc. (NASDAQ: LVO) (formerly known as LiveXLive Media, Inc.) is a creator-first, music, entertainment and technology platform focused on delivering premium experiences and content worldwide through memberships and live and virtual events. LiveOne reported a net loss of $10.02 million for the year ended March 31, 2023, compared to a net loss of $43.91 million for the year ended March 31, 2022. As of March 31, 2023, the Company had $65.89 million in total assets, $62.07 million in total liabilities, $4.83 million in redeemable convertible preferred stock, and a total stockholders' deficit of $1.01 million. Los Angeles, CA-based Macias Gini & O'Connell LLP, the Company's auditor since 2022, issued a "going concern" qualification in its report dated June 29, 2023, citing that the Company has suffered recurring losses from operations, negative cash flows from operating activities and has a net capital deficiency. These matters raise substantial doubt about the Company's ability to continue as a going concern. LUCKY RABBIT: Seeks to Hire Baumeister Denz as Legal Counsel ------------------------------------------------------------ Lucky Rabbit, LLC seeks approval from the U.S. Bankruptcy Court for the Western District of New York to hire Baumeister Denz LLP as its legal counsel. The firm will provide general legal services in bankruptcy, corporate, litigation, tax and other areas of law throughout the course of the Debtor's Chapter 11 case. Arthur Baumeister, Jr., Esq., the firm's attorney who will be handling the case, will be paid at his hourly rate of $350 and will be reimbursed for out-of-pocket expenses incurred. The Debtor paid the firm a retainer of $10,000. Arthur Baumeister, Jr., Esq., a partner at Baumeister Denz, disclosed in a court filing that his firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached at: Arthur G. Baumeister, Jr., Esq. BAUMEISTER DENZ, LLP 172 Franklin Street, Suite 2 Buffalo, NY 14202 Telephone: (716) 852-1300 Email: abaumeister@bdlegal.net About Lucky Rabbit Lucky Rabbit, LLC sought protection under Chapter 11 of the Bankruptcy Code (Bankr. W.D.N.Y. Case No. 24-10015) on Jan 5, 2024. At the time of the filing, Debtor had estimated assets of $50,001 to $100,000 and liabilities of between $100,001 and $500,000. Judge Carl L. Bucki oversees the case. Arthur G Baumeister, Jr. at Baumeister Denz, LLP, is the Debtor's legal counsel. MAGENTA BUYER: Fitch Cuts IDR to 'CCC' & First Lien Loans to 'CCC+' ------------------------------------------------------------------- Fitch Ratings has downgraded Magenta Buyer LLC's (dba Trellix and Skyhigh Security and fka McAfee Enterprise) Long-Term Issuer Default Rating (IDR) to 'CCC' from 'B-'. Fitch has also downgraded the first-lien term loan and revolver to 'CCC+'/'RR3' from 'B+'/'RR2'. Fitch has downgraded the second-lien term loan to 'CC' from 'CCC' and the recovery rating remains 'RR6'. The downgrade reflects Magenta Buyer's reduced liquidity position, ongoing revenue declines and CFO less capex to debt below 0% on a sustained basis. Fitch previously stated that negative rating action would occur if Magenta Buyer tripped these rating sensitivies. Fitch previously forecasted negative FCF for 2023 and 2024, however, the company has generated much worse negative FCF than expected and for the LTM ending Sept. 30, 2023, negative FCF was $257 million. The company's total liquidity was $198 million as of Sept. 30, 2023, down from $425 million Dec. 31, 2022. Magenta Buyer benefits from a strong gross retention rate and high recurring revenues as a percentage of total revenues, however, recurring revenues have been declining. The IDR also reflects the fragmented state of the cyber security market with several competing brands and products. As a private equity owned entity, Magenta Buyer's financial leverage is likely to remain elevated as stakeholders prioritize ROE maximization, thereby limiting debt reduction. KEY RATING DRIVERS Limited Liquidity: For the LTM ending 3Q23, the company generated negative FCF of $257 million which was worse than the outflow of $181 million in 2022. Fitch previously forecasted negative FCF in 2023 and 2024 but the pace of cash outflows has been greater than previously projected. The company attributes the recent cash outflow to changes in net working capital, however, the company has only had two quarters of positive FCF since 2022 began. In addition, cash on the balance sheet has been rapidly declining and it was $77 million at the end of 3Q23, down from $304 million as of Dec. 31, 2022 when cash on the balance sheet increased with a small amount of proceeds from the $415 million incremental term loan (the majority of proceeds were used to pay a dividend to the sponsor). The company has $121 million available on its $125 million revolver after accounting for $4 million used for letters of credit. Fitch assumes that Magenta Buyer will need to draw on its revolver in the near term and that in 2024, the company will require help from its sponsor to remedy the liquidity situation. Declining Revenues: In 3Q23, total revenues declined 11% YoY with Trellix falling 12% and Skyhigh decreasing 4%. For the quarter, Trellix accounted for 87% of revenues and Skyhigh was 13%. While recurring revenues were 80% of total revenues in 3Q23, they fell 6% YoY while non-recurring revenues fell 27% YoY. Recurring revenues consisted of subscription sales as well as support revenues for customers with perpetual software licenses. Fitch also notes that the company's deferred revenues have shown ongoing declines as well. As of Sept. 30, 2023, total deferred revenues fell 14% from Dec. 31, 2022 and 14% from Sept. 30, 2022. Execution Risk in Operational Improvements: The company has had ongoing cost optimization plans to improve margins and the company had stated that it had actioned the majority through 3Q23 with most of its action plan being completed in 4Q23. A substantial portion of projected EBITDA profitability for Magenta Buyer depends on successful execution of planned operating efficiency improvements. While Fitch deems such plans as realistic, execution risk does exist. Delay or failure in executing such plan would adversely affect the company's projected profitability and credit protection metrics. Elevated Leverage: Leverage at the end of 2022 was 6.2x, which also reflects the $415 million incremental term loan which was largely used for a dividend payment to the sponsors. For the LTM ending Sept. 30, 2023, leverage increased to 7.3x and Fitch notes that adjusted EBITDA included $199 million of addbacks for one-time items for stand-up, restructuring and transformation costs (approximately 34% of adjusted EBITDA). Fitch expects leverage to be in the range of 8.0x to 8.5x at the end of 2023 and 2024. Fitch does not anticipate any debt reductions beyond the mandatory amortization payments. Fitch expects limited deleveraging as Magenta's private equity ownership would likely prioritize ROE maximization over debt prepayment. As the company works to optimize efficiencies, EBITDA and margin have the potential to improve over time. Magenta Buyer's ability to execute its cost optimization plan will drive how much margins can improve. Ongoing Restructuring: There have been a lot of changes at the company over time. Initially, McAfee Enterprises was carved out of McAfee Corp. and it became a standalone entity focused on providing cyber-security products to enterprises. A consortium led by Symphony Technology Group (STG) acquired McAfee Enterprise from McAfee Corp. for $4 billion dollars in July 2021. Then in October 2021, STG combined McAfee Enterprises with FireEye Products which was purchased for $1.2 billion. In January 2022, the sponsors restructured the entity and the XDR segment was branded Trellix and the Data-Aware Cloud Security was branded Skyhigh Security. These are now two sister companies, each with its own top management. There was significant restructuring during 2022 and throughout 2023 as well. Management believes the majority of the restructuring has been completed and there should only be a limited amount left in 4Q23. Secular Cybersecurity Tailwinds: There are notable industry tailwinds over the intermediate term within the core segments for Magenta Buyer's solutions. The Endpoint Security market demand is expected to grow through increased sophistication, frequency, and overall cost of attacks as well as the proliferation of work from home policies which fuel growth in the number of endpoints. The Unified Cloud Edge market demand tailwinds include application consumption shifting from on-premise to SaaS-based (Software as a Service) applications and workloads increasingly operating outside of traditional corporate network perimeters. IT Security Threats Increasingly Complex: IT security threats have evolved from PC-centric to mobile devices, networks and user identities. The evolving threats enable a continuous stream of niche solutions to develop, addressing threats beyond the traditional PC-centric security to protect users, data and networks at various levels of the internet. While some of these solutions were developed by legacy cybersecurity providers, many were created by suppliers with narrow expertise. Magenta Buyer is a cybersecurity provider with a wide variety of offerings to address today's threat vectors. DERIVATION SUMMARY Magenta Buyer's 'CCC' rating is supported by the company's high recurring revenues, although they have been declining, a strong product portfolio and technology platform, as well as its position as a leading enterprise cybersecurity solution provider. The rating also reflects its weak and concerning liquidity position and ongoing generation of negative FCF. The company's 'CCC' rating is the same as Astra Acquisition Corp., and one notch below GoTo Group Inc. and QBS Parent Inc. which are both rated 'CCC+'. All of these issuers have liquidity constraints. Like other Fitch-rated software issuers owned by private equity, Magenta Buyer is in the 'CCC' rating category reflecting its limited liquidity and unsustainable capital structure. The company's ownership structure is designed to optimize ROE, limiting the prospect for accelerated deleveraging. KEY ASSUMPTIONS - Revenues fall in the low double digits in 2023 followed by mid-single digit declines in 2024; beyond then, Fitch assumes revenues stabilize; - EBITDA margins are in the low 30's; - Low capex of approximately 2.0% of revenues; - No assumptions are made for dividends or acquisitions; - Fitch assumes that Magenta Buyer can refinance the revolver in 2025 before it becomes current (the revolver extends until July 2026). RECOVERY ANALYSIS KEY RECOVERY RATING ASSUMPTIONS The Recovery analysis assumes that Magenta Buyer would be reorganized as a going concern in bankruptcy rather than liquidated. A 10% administrative claim is assumed as well. Going-Concern (GC) Approach: Magenta Buyer's GC EBITDA is assumed to be pressured by license and support revenue churn without successful conversions to subscription products. The assumption is that actioned optimization plans and integration strategies have challenges and some customers do not renew contracts. Following emergence from bankruptcy, Fitch assumes the GC EBITDA is $450 million, lower than the prior GC EBITDA assumption of $500 given the ongoing declining revenues. An enterprise value (EV) multiple of 6.0x EBITDA is applied to the GC EBITDA to calculate a post-reorganization EV. The multiple of 6.0x is below the prior multiple of 6.5x reflecting the company's weaker operating profile. The choice of this multiple considered the following factors: - Fitch's Bankruptcy Enterprise Values and Creditor Recoveries showed that bankruptcy case study exit multiples for technology peer companies ranged from 2.6x-10.8x. - Of these companies, only three were in the Software sector: Allen Systems Group, Inc. (8.4x); Avaya, Inc. (2017: 8.1x and 2023: 7.5x); Aspect Software Parent, Inc. (5.5x), Sungard Availability Services Capital Inc. (4.6x), and Riverbed Technology Software (8.3x). Fitch arrives at an EV of $2.7 billion on a GC basis. After applying the 10% administrative claim, adjusted EV of approximately $2.4 billion is available for claims by creditors. Fitch assumes a full draw on the $125 million revolver. Fitch estimates strong recovery prospects for the first lien term loan and revolver and rates them 'CCC+'/'RR3', one notch above Magenta Buyer's 'CCC' IDR. The second lien term loan is rated 'CC'/'RR6'. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Expectations of improved liquidity; - Positive FCF generation on a sustained basis; - Sustained revenue growth of mid-single digits, implying an overall stable market position; - (Cash from operations-capex)/debt at or above 0% on a sustained basis. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Elevated default risk as a result of a lack of liquidity from the capital markets and sponsor, which could hamper the company's ability to conduct operations; - Revenue declines beyond the single digits; - Accelerating negative FCF. LIQUIDITY AND DEBT STRUCTURE Limited Liquidity: As of Sept. 30, 2023, the company had $77 million of cash on the balance sheet and $121 million of availability on the revolver after accounting for $4 million of letters of credit. With significant negative FCF, Fitch has concerns about the company's liquidity which has been declining. There are no near-term maturities and the revolver extends until July 2026. In 2028, just under $3.3 billion of the first-lien term loan is due. In 2029, there is $750 million of a second-lien term loan due. ISSUER PROFILE Magenta Buyer provides cybersecurity software and derives revenue from the sale of security products, subscriptions, SaaS, support and maintenance, and professional services. The company offers solutions through Trellix and Skyhigh Security. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Magenta Buyer LLC LT IDR CCC Downgrade B- senior secured LT CCC+ Downgrade RR3 B+ Senior Secured 2nd Lien LT CC Downgrade RR6 CCC MAGNA SERVICE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Magna Service Agency, Inc. 141 Southpointe Drive Bridgeville, PA 15017 Business Description: Magna Service Agency provides the trucking industry with experienced, dependable, professional, and safe drivers. Magna Service Agency also provides the trucking industry with certified pilot car, escort vehicles and pole cars for over- dimensional/over-weight loads. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court Western District of Pennsylvania Case No.: 24-20318 Debtor's Counsel: Corey J. Sacca, Esq. BONONI & COMPANY, P.C. 20 N Pennsylvania Ave Suite 201 Greensburg, PA 15601 Tel: (724) 832-2499 Fax: (724) 836-0370 Total Assets: $839,413 Total Liabilities: $7,159,710 The petition was signed by Todd Matthew Bauer as chief executive officer. A full-text copy of the petition containing, among other items, a list of the Debtor's 20 largest unsecured creditors is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/QONH7JQ/Magna_Service_Agency_Inc__pawbke-24-20318__0001.0.pdf?mcid=tGE4TAMA MEDICAL DEPOT: $370.9MM Bank Debt Trades at 21% Discount -------------------------------------------------------- Participations in a syndicated loan under which Medical Depot Holdings Inc is a borrower were trading in the secondary market around 78.9 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $370.9 million facility is a Term loan that is scheduled to mature on June 1, 2025. The amount is fully drawn and outstanding. Medical Depot Holdings operates as a holding company. The Company, through its subsidiaries, manufactures and distributes medical equipment. MEJJM INC: Amends Unsecureds & First Internet Secured Claims Pay ---------------------------------------------------------------- MEJJM, Inc., submitted a Second Amended Combined Small Business Plan of Reorganization and Disclosure Statement dated February 1, 2024. Cash generated by ongoing operations shall first be used to fund administrative expenses, including professional and case Trustee fees and expenses, secured and lease claims, and operating 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 Class 2.1 consists of the Secured Claim of First Internet Bank. As part of Debtor's use of Cash Collateral Debtor agreed to make payments in the amount of $8,403.00 on the Term Loan and $2,804.10 on the Line of Credit for a total monthly adequate protection payment of $11,207.10 per month (the "Adequate Protection Payments"). First Internet Bank also retains all of its existing liens and security interests post-petition to the same extent as the liens and security interests it held pre-petition, including but not limited to, its post-petition replacement lien in all assets of the Debtor to the same extent as First Internet Bank's valid, enforceable and properly perfected liens on the Debtor's pre-petition property. Using $1,4MM as the FIB Allowed Secured Claim the balance of FIB's claim herein shall be treated as a general unsecured claim under Class 3 of this Plan. The recast FIB Allowed Secured Claim is demonstrated in the revised projection. The FIB Allowed Secured Claim shall be paid as part of Debtor's Chapter 11 Plan and shall be fully guaranteed by Guarantors and secured by the Collateral, and receive a monthly payment of $15,896.72 with 6.5% interest for 10 years. Debtor shall execute any loan documents that First Internet Bank deems necessary to adequately document the agreement above and confirm the full amount of the Total Indebtedness will be paid by Debtor Parties; provided that Debtor Parties shall receive a credit for any Adequate Protection Payments previously made in the Bankruptcy Case. Debtor agrees to maintain its bank accounts with FIB. Notwithstanding anything else to the contrary, in the event of default FIB shall be entitled to foreclose the Mortgages. Class 3 consists of Allowed General Unsecured Claims. Class 3 consists of Allowed General Unsecured Claims, including the deficiency claim of FIB and SBA, and the putative secured claims of IOU Financial and WebBank that are listed and treated as general unsecured claim herein. The Debtor's projections indicate that the Debtor expects to generate profits in each of the five years under the Plan of $105k total and that amount shall be the Projected Disposable Income of the Debtor. Class 3 claims shall receive a pro rata payment and shall be allowed, settled, compromised, satisfied and paid by five annual payments due on the anniversary of the Effective Date in the amount of such Projected Disposable Income. Class 3 is impaired. Debtor shall continue to operate its business in accordance with the projection of income, expense and cash flow attached hereto, and shall pay its projected net after tax cash profit to satisfy creditor claims. A full-text copy of the Second Amended Combined Plan and Disclosure Statement dated February 1, 2024 is available at https://urlcurt.com/u?l=lxpCGA from PacerMonitor.com at no charge. Attorney for the Debtor: KC Cohen, Esq. KC COHEN, LAWYER, PC 1915 Broad Ripple Ave. Indianapolis, IN 46220 Tel: (317) 715-1845 Fax: (317) 636-8686 Email: kc@smallbusiness11.com About MEJJM Inc. MEJJM, Inc., employs 6 people and subcontracts with 2 others to run a business that designs, imports and sells stationery, greeting cards and holiday cards into the retail space via its wholesale business. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ind. Case No. 23-03538) on Aug. 14, 2023. In the petition signed by Michael Smith, president, the Debtor disclosed $1,502,094 in assets and $2,887,831 in liabilities. Judge Jeffrey J. Graham oversees the case. KC Cohen, Esq., at KC COHEN, LAWYER, PC, is the Debtor's legal counsel. MERCON COFFEE: Comm. Taps Ankura Consulting as Financial Advisor ---------------------------------------------------------------- The official committee of unsecured creditors of Mercon Coffee Corp. and affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of New York to retain Ankura Consulting Group, LLC as its financial advisor. The firm will render these services: a. assist in the analysis, review and monitoring of any proposed asset sale or liquidation process, including, the assessment of potential recoveries for general unsecured creditors; b. assist in the review of financial information prepared by the Debtors, and the economic analysis of proposed transactions for which Court approval is sought; c. assist in the review of the Debtors' cash collateral budget and/or debtor in possession facility ("DIP Facility"), including but not limited to, evaluating liquidity needs, DIP sizing and related compliance reporting; d. assist in the review of the Debtors' prepetition financing transactions, dividends, distributions, and debt retirements, and associated events, including but not limited to, evaluating the Debtors' capital structure, financing agreements, defaults under any financing agreement, amendments and forbearances; e. attend meetings and assist in discussions with the Committee, the pre-petition secured lender, the DIP loan provider, the Debtors, the U.S. Trustee, and other parties in interest and professionals hired by the same, as requested; f. assist in the review of financial-related disclosures required by the Court, U.S. Trustee or the Bankruptcy Code, including the Schedules of Assets and Liabilities, the Statements of Financial Affairs, and Monthly Operating Reports; g. assist with the review of the assumption, assignment, or rejection of various executory contracts and leases and cure costs or rejection damage claims related to same; h. analysis and forensic investigation of avoidance actions, including fraudulent conveyances, preferential transfers, including certain transactions between the Debtors and affiliated entities or insiders; i. assist in the prosecution of Committee responses/objections to the Debtors' motions, including attendance at depositions and provision of expert reports/testimony on case issues as required by the Committee; j. consult on general business issues and provide such other assistance as the Committee or its counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals; k. assist and support in the evaluation of any transactions and the treatment of claims and interests proposed in any plan of reorganization or plan of liquidation propounded by a party other than the Committee, and in the preparation of a suitable plan of reorganization or plan of liquidation should it fall to the Committee to propound a plan for the resolution of the Bankruptcy Case; l. attend Committee meetings; m. attend Court hearings and provide reports, exhibits, and testimony in connection with any of the foregoing as requested; and n. perform other professional services not otherwise listed which have been requested by the Committee and are directly related to the Debtors' administration of a bankruptcy restructuring proceeding. The firm will be paid at these hourly rates: Senior Managing Director $1,205 to $1,350 Managing Director $1,000 to $1,120 Senior Director $820 to $945 Director $685 to $790 Senior Associate $560 to $630 Associate $460 to $520 Paraprofessional $360 to $415 Ankura does not hold any interest adverse to the Debtors' estates, and is a "disinterested person' as that term is defined in section 101(14) of the Bankruptcy Code, as modified by section 1107(b) of the Bankruptcy Code, according to court filings. The firm can be reached through: Bryan Gaston Ankura Consulting Group, LLC 2 Houston Center 909 Fanin Street, Suite 2450 Houston, TX 77010 Tel: (713) 646-5000 Email:bryan.gaston@ankura.com About Mercon Coffee Mercon Coffee Corp. -- https://www.merconcoffeegroup.com/ -- is a supplier of green coffee to the international coffee roasting industry. Mercon is headquartered in the Netherlands and has offices around the globe. Mercon Coffee Corp. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-11945) on Dec. 7, 2023. In the petition filed by CRO Harve Light, the Debtor reported assets and liabilities between $100 million and $500 million each. Judge Michael E. Wiles oversees the case. The Debtors are represented by Blaire Cahn, Esq. at Baker & McKenzie LLP. MERCON COFFEE: Committee Taps O'Melveny & Myers as Legal Counsel ---------------------------------------------------------------- The official committee of unsecured creditors of Mercon Coffee Corp. and affiliates seeks approval from the U.S. Bankruptcy Court for the Southern District of New York to retain O'Melveny & Myers LLP as its counsel. The firm will render these services: a. provide legal advice and services regarding local rules, practices, and procedures, including Second Circuit law; b. advise the Committee with respect to its rights, duties and powers in the Chapter 11 Cases; c. assist and advise the Committee in its consultations and negotiations with the Debtors and other parties in interest relative to the administration of the Chapter 11 Cases; d. assist the Committee in analyzing the claims of the Debtors' creditors and the Debtors' capital structure and in negotiating with holders of claims and equity interests; e. assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and their insiders and of the operation of the Debtors' businesses; f. assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning matters related to, among other things, the assumption or rejection of certain leases of non-residential real property and executory contracts, asset dispositions, financing of other transactions, and the terms of one or more plans of reorganization or liquidation for the Debtors and accompanying disclosure statements and related plan documents; g. assist and advise the Committee as to its communications to the general creditor body regarding significant matters in the Chapter 11 Cases; h. represent the Committee at all hearings and other proceedings before this Court; i. review and analyze applications, orders, statements of operations and schedules filed with the Court and advise the Committee as to their propriety and, to the extent deemed appropriate by the Committee, support, join or object thereto; j. advise and assist the Committee with respect to any legislative, regulatory or governmental activities; k. assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives; l. prepare, on behalf of the Committee, any pleadings, including, without limitation, motions, memoranda, complaints, adversary complaints, objections or comments in connection with any matter related to the Debtors or the Chapter 11 Cases; m. investigate and analyze any claims and causes of action that are property of the Debtors' estates; and n. perform such other legal services as may be required. The firm will be paid at these hourly rates: Partners $1,385 to $2,160 Counsel $1,120 to $1,385 Associates $760 to $1,115 Paraprofessionals $230 to $510 In accordance with Appendix B-Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. Sec. 330 for Attorneys in Larger Chapter 11 Cases, O'Melveny & Myers disclosed that: -- it has not agreed to any variations from, or alternatives to, its standard or customary billing arrangements for this engagement; -- none of the professionals included in the engagement vary their rate based on the geographic location of the bankruptcy case; -- the firm has not represented the Committee in the 12 months prepetition; and -- the firm has provided the Debtors and the Committee with an estimated budget for its services through Feb. 2, 2024. Louis Strubeck, Jr., a partner at O'Melveny, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Louis R. Strubeck, Jr., Esq. Matthew P. Kremer, Esq. O'MELVENY & MYERS LLP 7 Times Square New York, NY 10036 Telephone: (212) 326-2000 Email: lstrubeckjr@omm.com mkremer@omm.com About Mercon Coffee Mercon Coffee Corp. -- https://www.merconcoffeegroup.com/ -- is a supplier of green coffee to the international coffee roasting industry. Mercon is headquartered in the Netherlands and has offices around the globe. Mercon Coffee Corp. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Case No. 23-11945) on Dec. 7, 2023. In the petition filed by CRO Harve Light, the Debtor reported assets and liabilities between $100 million and $500 million each. Judge Michael E. Wiles oversees the case. The Debtors are represented by Blaire Cahn, Esq. at Baker & McKenzie LLP. MILLENNIAL BENEFIT: Seeks to Tap Stretto as Administrative Advisor ------------------------------------------------------------------ Millennial Benefit Management Corporation seeks approval from the U.S. Bankruptcy Court for the District of Delaware to employ Stretto, Inc. as its administrative advisor. The firm will provide these services: a. assist with, among other things, solicitation, balloting and tabulation of votes, and prepare any related reports in support of confirmation of a Chapter 11 plan; b. prepare an official ballot certification and, if necessary, testify in support of the ballot tabulation results; c. assist with the preparation of the Debtor's schedules of assets and liabilities and statements of financial affairs and gather data in conjunction therewith; d. provide a confidential data room; e. manage and coordinate any distributions pursuant to a Chapter 11 plan if designated as distribution agent under such plan; and f. provide claims analysis and reconciliation, case research, depository management, treasury services, confidential online workspaces or data rooms, and any related services otherwise required by applicable law, governmental regulations, or court rules or orders in connection with the Debtor's Chapter 11 case. The firm received an advance retainer in the amount of $20,000. Sheryl Betance, a senior managing director at Stretto, disclosed in a court filing that her firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Sheryl Betance Stretto, Inc. 410 Exchange, Ste. 100 Irvine, CA 92602 Tel: (714) 716-1872 Email: sheryl.betance@stretto.com About Millennial Benefit Management Millennial Benefit Management Corporation's business was an online pharmacy that used an online platform to connect patients, providers and pharmacists employing medication insights and savings recommendations. Prior to suspending all business operations, MBMC dispensed medicines, over-the-counter products and wellness supplements and shipped them nationwide. MBMC offered online insurance coordination, multi-dose medication packaging, delivery and management; as well as real-time pharmacy chat and support with personalized treatment plans that consumers could access via a health and wellness pharmacy dashboard. Millennial Benefit Management currently has two employees and one part-time contractor. Millennial Benefit Management and Mailmyprescriptions.com Pharmacy Corporation sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 23-12083 and 23-12084) on December 19, 2023, with $50,000 to $100,000 in assets and $10 million to $50 million in liabilities. Donovan Chin, chief restructuring officer, signed the petitions. Judge Thomas M. Horan oversees the cases. William E. Chipman, Jr., Esq., at Robert A. Weber, Esq. represents the Debtor as legal counsel. MISHI LOGISTICS: Court OKs Cash Collateral Access Thru March 11 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, authorized Mishi Logistics, Inc. to use cash collateral, on an interim basis, in accordance with the budget, through March 11, 2024. The U.S. Small Business Administration has a valid blanket lien upon the assets of the Debtor as of the date of the filing of the petition herein, and the cash proceeds thereof. Prepetition Secured Lender holds a security interest in all the assets of the Debtor by way of a valid lien duly filed of which the amount due and owing totals no less than $97,000. Other potential lien holders are as follows: a) Unknown creditor by virtue of UCC lien recorded August 2, 2023 as Document No. 29837325. The Prepetition Secured Parties will be secured by a lien to the same extent, priority and validity as existed prior to the Petition date. The Prepetition Secured Parties will receive a security interest in and replacement lien upon all of the Debtor's now existing or hereafter acquired property, real or personal, whether in existence before or after the Petition Date. In return for the Debtor's continued interim use of cash collateral, and for any diminution in value of Prepetition Secured Lender's interest in the cash collateral from and after the Petition date, the Prepetition Secured Parties will receive an administrative expense claim pursuant to Section 507(b) of the Code. In further return for the Debtor's continued interim use of cash collateral, Prepetition Secured Parties are granted a replacement lien in substantially all of the Debtor's assets, including cash collateral equivalents and the Debtor's cash and accounts receivable, among other collateral to the same extent and validity as held prepetition, without prejudice to the Debtor's right to object to the extent of any security interest of the Prepetition Secured Lender or the Additional Lien Holders. The liens granted will be valid, perfected, and enforceable without any further action by the Debtor and/or the Prepetition Secured Lender and need not be separately documented. The Debtor must maintain and pay premiums for insurance to cover the Collateral from fire, theft and water damage, and the Prepetition Secured Parties consents to the payment of such premiums from its cash collateral. A further hearing on the matter is set for March 11 at 10 a.m. A copy of the order is available at https://urlcurt.com/u?l=boWpqe from PacerMonitor.com. About Mishi Logistics, Inc. Mishi Logistics, Inc. operates a logistics and transportation business in which it utilizes numerous trucks and trailers. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Ill Case No. 24-00484) on January 15, 2024. In the petition signed by Kami Kalt, president, the Debtor disclosed $683,853 in assets and $1,959,767 in liabilities. Judge A Benjamin Goldgar oversees the case. Joshua D. Greene, Esq., at SPRINGERLARSENGREENE, LLC, represents the Debtor as legal counsel. MORAN FOODS: Guggenheim SOF Marks $1.7MM Loan at 30% Off -------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $1,760,777 loan extended to Moran Foods, LLC to market at $1,235,540 or 70% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Moran Foods, LLC. The loan accrues interest at a rate of 12.74% (3 Month Term SOFR + 7.25%, Rate Floor: 7.25%). The loan matures on June 30, 2026. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 Moran Foods, LLC, does business as Save-A-Lot, Ltd., a discount grocery store chain. MOREY MACHINING: Court OKs Cash Collateral on a Final Basis ----------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida, Fort Myers Division, authorized Morey Machining & Manufacturing, Inc. to use cash collateral, on a final basis, in accordance with the budget, with a 10% variance. Manufacturers Capital and OnDeck assert an interest in the Debtor's cash collateral. As adequate protection, the Secured Creditors will have a perfected post-petition lien against the Prepetition Collateral to the same extent and with the same validity and priority as their alleged prepetition lien, without the need to file or execute any document as may otherwise be required under applicable non-bankruptcy law. The Debtor will maintain insurance coverage for its property in accordance with its obligations under the loan and security documents with the Secured Creditors. A copy of the motion is available at https://urlcurt.com/u?l=iTvkTV from PacerMonitor.com. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=f0lV9H from PacerMonitor.com. The Debtor projects total operating expenses of $1,185 for the week ending February 18, 2024. About Morey Machining Morey Machining & Manufacturing Inc. is a family-owned and operated business dedicated to providing machining and fabrication services. Morey Machining & Manufacturing Inc. sought relief under Subchapter V of Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-01556) on December 22, 2023. In the petition filed by Timothy E. Morey, as president/owner, the Debtor disclosed total assets of $1,458,706 and total liabilities of $1,516,760. The petition states funds will be available to unsecured creditors. Kathleen L DiSanto has been appointed as Subchapter V trustee. The Debtor is represented by Michael R Dal Lago, Esq. MVK FARMCO: DOJ Objects to Prima Wawona's Liquidation Plan ---------------------------------------------------------- Randi Love of Bloomberg Law reports that the Justice Department's bankruptcy watchdog said Prima Wawona's liquidation plan improperly calls for discharging the company's debt and shielding third-party creditors from litigation. The US Trustee objected to Prima Wawona's motion to settle claims arising from the fruit-growing company's efforts to liquidate. The US Trustee's objection, filed Wednesday, January 31, 2024, in the US Bankruptcy Court for the District of Delaware, will be considered by Judge Laurie Selber Silverstein, who could decide to reject the company's plan. The federal watchdog, which monitors corporate bankruptcies, joins Prima Wawona's former CEO Daniel Gerawan in opposing the liability release provisions in the fruit grower's plan. About MVK FarmCo MVK FarmCo, LLC and its affiliates -- https://prima.com/ -- are providers of stone fruit, operating an integrated network of farms, ranches and packaging facilities. Founded in 1999 and headquartered in Fresno, Calif., the Debtors cultivate approximately 18,000 acres of land nestled throughout the San Joaquin Valley. The Debtors filed Chapter 11 petitions (Bankr. D. Del. Lead Case No. 23-11721) on Oct. 13, 2023. John Boken, chief executive officer, signed the petitions. At the time of the filing, the Debtors reported consolidated assets of $500 million to $1 billion and consolidated liabilities of $1 billion to $10 billion. Judge Laurie Selber Silverstein oversees the cases. The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis International, LLP as bankruptcy counsel; Young Conaway Stargatt & Taylor, LLP as local counsel; Houlihan Lokey as investment banker; and Stretto, Inc., as claims and noticing agent. AP Services, LLC, provides interim management and restructuring support services to the Debtors. N&H SADDLEBRED: Seeks to Hire Herbert K. Ryder as Legal Counsel --------------------------------------------------------------- N&H Saddlebred Holdings LLC seeks approval from the U.S. Bankruptcy Court for the District of New Jersey to employ Law Offices of Herbert K. Ryder, LLC as its attorneys. The firm will render these services: a) advise the Debtor as to its duties as a debtor-in-possession under the Bankruptcy Code, including, without limitation, the obligation to open debtor-in-possession bank accounts, file monthly operating reports with the Bankruptcy Court and the office of the United States Trustee, pay quarterly fees to the United States Trustee, maintain adequate insurance on all assets of the bankruptcy estate, pay all post-petition taxes when due and file timely returns therefor, neither hire nor pay any professional without prior authorization of the Bankruptcy Court, neither sell nor dispose of any assets outside the ordinary course of business without prior authorization of the Bankruptcy Court; b) represent the Debtor at the 341(a) hearing and at any meetings between the Debtor and creditors or creditors' committees; c) assist the Debtor in obtaining the authorization of the Bankruptcy Court to retain such accountants, appraisers or other professionals whose services applicant may require in connection with the operation of its business or the administration of the Chapter 11 proceedings; d) defend any motions made by secured creditors to enable the Debtor to retain the use of assets needed for an effective reorganization; e) negotiate with priority, secured and unsecured creditors to achieve a consensual resolution of their respective claims and the incorporation of such resolution into a plan of reorganization; f) file and prosecute of motions to expunge or reduce claims which the Debtor disputes; g) represent the Debtor in the Bankruptcy Court at such hearings as may require the Debtor's presence or participate to protect the interest of applicant and the bankruptcy estate; h) formulate, negotiate, prepare and file of a disclosure statement and plan of reorganization, or liquidation, which conforms to the requirements of the Bankruptcy Code and applicable rules of procedure; i) represent the Debtor at hearings on the approval of the disclosure statement and confirmation of a plan of reorganization and responding to any objections to same filed by creditors or other parties in interest; j) assist the Debtor in discharging its obligations in consummating any plan of reorganization which is confirmed; k) advise the Debtor whether and to what extent any of its assets constitute cash collateral under the Bankruptcy Code and prosecute applications for authorization to use any such assets; and l) provide such other varied legal advice and services as may be needed by applicant in the operation of its business or in connection with the Chapter 11 proceedings. Herbert K. Ryder will be paid at the hourly rate of $300. Herbert K. Ryder will also be reimbursed for reasonable out-of-pocket expenses incurred. Herbert Ryder, Esq., a partner at the Law Offices of Herbert K. Ryder, LLC, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Herbert K. Ryder can be reached at: Herbert K. Ryder, Esq. LAW OFFICES OF HERBERT K. RYDER LLC 531 U.S. Highway 22 East, Suite 182 Whitehouse Station, NJ 08889-3695 Tel: (908) 838-0543 Fax: (908) 838-0544 Email: hryder@hkryderlaw.com About N&H Saddlebred Holdings LLC Hunterdon Equestrian Center is a newly remodeled, state of the art facility that is home to two of New Jersey's top horse farms. N&H Saddlebred Holdings LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 23-21332) on Dec. 6, 2023, listing $1,000,001 to $10 million in both assets and liabilities. Judge John K Sherwood presides over the case. Herbert K. Ryder, Esq. at Law Offices Of Herbert K. Ryder LLC represents the Debtor as counsel. NANO MAGIC: Board Extends CEO's Term For One Year ------------------------------------------------- Nano Magic Inc. disclosed in a Form 8-K filed with the Securities and Exchange Commission that on Feb. 5, 202, the Board approved a one-year extension of the employment agreement with the Company's Chief Executive Officer and President, Tom J. Berman. Under the terms of the extension, effective Jan. 1, 2024, Mr. Berman will earn an annual salary of $225,000 and will be entitled to a profit bonus tied to 2024 revenue as well as a bonus if the EBITDA of the corporation is 20% or more. The specific bonus terms, including rights to payment of the profit bonus if the contract is terminated, are set forth in the extension. About Nano Magic Headquartered in Madison Heights, Michigan, Nano Magic Inc. -- www.nanomagic.com -- develops, commercializes and markets nanotechnology powered consumer and industrial cleaners and coatings to clean, protect, and enhance products for peak performance. Consumer products include lens and screen cleaners and coatings, anti-fog solutions, and household and automobile cleaners and protective coatings sold direct-to-consumer and in big box retail. Nano Magic reported a net loss of $2.10 million for the year ended Dec. 31, 2022, compared to a net loss of $1.57 million for the year ended Dec. 31, 2021. As of Sept. 30, 2023, Nano Magic has $3.5 million in total assets and $2.5 million in total liabilities. Sterling Heights, Michigan-based UHY LLP, the Company's auditor since 2019, issued a "going concern" qualification in its report dated April 11, 2023, citing that the Company has recurring losses from operations, negative cash flow from operations, and an accumulated deficit. These conditions raise substantial doubt about the Company's ability to continue as a going concern. As reflected in the unaudited consolidated financial statements, the Company had losses from continuing operations and net cash used by continuing operations of $2,003,577 and $1,057,794 for the nine months ended September 30, 2023, and a loss from continuing operations of $2,448,637 and cash used by continuing operations $1,488,818 for the nine months ended September 30, 2022. These factors raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that these unaudited consolidated financial statements are issued, according to the Company's Quarterly Report for the period ended Sept. 30, 2023. NANO MAGIC: Scott Rickert Holds 7.4% Equity Stake ------------------------------------------------- In a Schedule 13D/A Report filed with the U.S. Securities and Exchange Commission, Scott E. Rickert, director and chairman of Nano Magic Inc., disclosed that as of December 6, 2023, he beneficially owned 1,732,492 shares of the Company's common stock, representing 7.4% of the shares outstanding. A full-text copy of the report is available at http://tinyurl.com/2vythnz7 About Nano Magic Headquartered in Madison Heights, Michigan, Nano Magic Inc. -- www.nanomagic.com -- develops, commercializes and markets nanotechnology powered consumer and industrial cleaners and coatings to clean, protect, and enhance products for peak performance. Consumer products include lens and screen cleaners and coatings, anti-fog solutions, and household and automobile cleaners and protective coatings sold direct-to-consumer and in big box retail. Nano Magic reported a net loss of $2.10 million for the year ended Dec. 31, 2022, compared to a net loss of $1.57 million for the year ended Dec. 31, 2021. As of Sept. 30, 2023, Nano Magic has $3.5 million in total assets and $2.5 million in total liabilities. The Company disclosed in a Form 10-Q Report filed with the Securities and Exchange Commission for the quarterly period ended September 30, 2023, that there is substantial doubt about its ability to continue as a going concern within the next 12 months. Nano Magic's management could not provide assurance that the Company will ultimately achieve profitable operations, become cash flow positive or raise additional capital. NATIONSTAR MORTGAGE: Fitch Rates $800MM Unsecured Notes 'BB(EXP)' ----------------------------------------------------------------- Fitch Ratings expects to rate Nationstar Mortgage Holdings Inc.'s (Nationstar Holdings) $800 million senior unsecured notes 'BB(EXP)'. Nationstar Holdings is a wholly owned subsidiary of Mr. Cooper Group Inc. (Mr. Cooper). Proceeds from the issuance are expected to be used to repay a portion of the amounts outstanding under the company's mortgage servicing rights (MSR) facilities. KEY RATING DRIVERS The unsecured debt is expected to rank pari passu with Nationstar Holdings' existing senior unsecured debt, and therefore, the expected rating is equalized with its outstanding senior unsecured debt and its long-term Issuer Default Rating (IDR). The equalization reflects average recovery prospects under a stress scenario given the availability of unencumbered assets. The ratings of Nationstar Holdings are equalized with its parent, Mr. Cooper, given it is wholly owned and its debt benefits from a corporate guarantee from Mr. Cooper and Nationstar Mortgage LLC. Fitch does not expect the debt issuance to have a meaningful impact on the company's leverage profile as proceeds are expected to refinance outstanding secured debt. Mr. Cooper's leverage, calculated as debt to tangible equity, was 1.6x at 3Q23, compared to 1.5x at YE22. Mr. Cooper Group's rating is supported by its strong franchise and leading market position as a U.S. residential mortgage servicer, conservative funding profile with low leverage and solid liquidity, and experienced management team with extensive industry experience. Additionally, Mr. Cooper's origination capabilities and mortgage servicing right (MSR) hedging should provide relative earnings stability through interest rate cycles, and its subservicing business provides stable cash flows with minimal incremental capital requirements. The ratings are constrained by the highly cyclical nature of the mortgage industry; a reliance on secured, short-term, wholesale funding facilities; and potential servicing advance needs and regulatory scrutiny from its exposure to Ginnie Mae (GNMA) loans. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - A sustained increase in gross leverage above 4.0x; - A sustained increase in corporate leverage above 2.0x; - A decrease in unsecured funding below 25% of total debt; - Sustained profitability challenges that erode tangible equity; - A reduction in or ineffectiveness of MSR hedging that introduces substantial earnings volatility; - An inability to maintain sufficient liquidity to manage future servicer advances or margin calls; and/or - Substantial regulatory fines or litigation expenses that negatively impact the company's franchise or operating performance. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Gross leverage maintained at-or-below 3.0x; - A sustained reduction in corporate leverage below 1x; - Extension of funding duration and increased committed funding percentage while maintaining unsecured debt above 35% of total debt; - Continued consistency of operating performance with demonstrated profitability through cycles; and/or - Maintenance of market position and leadership in mortgage servicing. DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS The unsecured debt is expected to rank pari passu with Nationstar Holdings' existing senior unsecured debt, and therefore, the expected rating is equalized with its outstanding senior unsecured debt and its long-term IDR. The equalization reflects average recovery prospects under a stress scenario given the availability of unencumbered assets. The ratings of Nationstar Holdings are equalized with its parent, Mr. Cooper, given it is wholly owned and its debt benefits from a corporate guarantee from Mr. Cooper and Nationstar Mortgage LLC. DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES The unsecured debt rating is equalized with the long-term IDR and is expected to move in tandem with it. However, a meaningful increase in the proportion of secured funding or reduction of the unencumbered asset pool could result in the unsecured debt rating being notched down below the IDR. SUBSIDIARY AND AFFILIATE RATINGS: KEY RATING DRIVERS The ratings of Nationstar Mortgage Holdings Inc. (the debt-issuing subsidiary) and Nationstar Mortgage LLC (the operating company) are equalized with that of Mr. Cooper given they are wholly owned subsidiaries and debt issued by Nationstar Mortgage Holdings Inc. benefits from a corporate guarantee from Mr. Cooper and Nationstar Mortgage LLC. SUBSIDIARY AND AFFILIATE RATINGS: RATING SENSITIVITIES The ratings of Nationstar Mortgage Holdings Inc. and Nationstar Mortgage LLC are equalized with that of Mr. Cooper and are expected to move in tandem with them. ADJUSTMENTS - The Standalone Credit Profile has been assigned in line with the implied score. - The Business Profile score has been assigned below the implied score due to the following adjustment reason: Business model (negative). - The Asset Quality score has been assigned below the implied score due to the following adjustment reason: Non-loan exposures (negative). - The Earnings & Profitability score has been assigned below the implied score due to the following adjustment reasons: Earnings stability (negative). - The Capitalization & Leverage score has been assigned below the implied score due to the following adjustment reasons: Risk profile and business model (negative). - The Funding, Liquidity & Coverage score has been assigned below the implied score due to the following adjustment reason: Business model/funding market convention (negative). Date of Relevant Committee November 1, 2023 Entity/Debt Rating ----------- ------ Nationstar Mortgage Holdings Inc. senior unsecured LT BB(EXP) Expected Rating NB COMMONS: Court OKs Continued Cash Collateral Access ------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Washington authorized NB Commons, LLC to continue using cash collateral upon the same terms and conditions as exist pursuant to prior orders of the court, until the earlier of the effective date of the debtor's Fourth Amended Plan of Reorganization or March 1, 2024. As previously reported by the Troubled Company Reporter, the Debtor requires the use of cash collateral to preserve, maintain and operate its property that produces cash collateral in the form of monthly rent payments; timely and fully pay its property management team, utilities, taxes, and other operating expenses so as to permit it to continue its ordinary course operations and to maintain its ongoing business for the benefit of its estate and creditors. Pursuant to (i) the Promissory Note, dated as of October 14, 2020, executed by the Debtor, as borrower and (ii) the Loan Agreement, dated as of October 14, 2020, by and between the Debtor, as borrower, and U.S. Real Estate Credit Holdings III-A, LP, as lender, the Prepetition Secured Party agreed to make a loan in the aggregate principal amount of $40.950 million to the Debtor. As of the Petition Date, the Debtor was indebted to the Prepetition Secured Party pursuant to the Loan Documents in the aggregate amount of not less than $42.5 million plus additional amounts allowable under or in connection with the Loan Documents. A copy of the order is available at https://urlcurt.com/u?l=ws967o from PacerMonitor.com. About NB Commons, LLC NB Commons, LLC dba The Ruckus Student Living is a housing community in Pullman with an outdoor pool and indoor pool and spa that are open 24/7. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. Wash. Case No. 23-01053) on August 23, 2023. Judge Frederick P. Corbit oversees the case. John D. Munding, Esq., at Munding, P.S. represents the Debtor as legal counsel. NEWBRIDGE ON THE CHARLES: Fitch Affirms 'BB+' IDR, Outlook Stable ----------------------------------------------------------------- Fitch Ratings has affirmed the Issuer Default Rating (IDR) for NewBridge on the Charles (NewBridge) at 'BB+' and affirmed the 'BB+' rating on approximately $236 million of outstanding revenue refunding bonds, series 2017 issued by the Massachusetts Development Finance Agency on behalf of NewBridge. The Rating Outlook is Stable. Entity/Debt Rating Prior ----------- ------ ----- NewBridge on the Charles, Inc. (MA) LT IDR BB+ Affirmed BB+ NewBridge on the Charles, Inc. (MA) /General Revenues/1 LT LT BB+ Affirmed BB+ The 'BB+' rating and Stable Outlook continue to reflect Newbridge's strong business profile attributes, coupled with a still high debt burden, resulting in a limited financial cushion, and continuing to be the main constraint on the current rating. NewBridge, a historically strong operator, has displayed solid demand for its services, as indicated by high independent living unit (ILU) occupancy averaging over 96% over the last five fiscal years (2019-2023 FYE September). The rating is further supported by its location in a socioeconomically strong primary market area (PMA) and its relationship with Hebrew SeniorLife (HSL). HSL adds to NewBridge's favorable reputation outside of its PMA and provides Newbridge with access to the resources of a larger organization, as HSL is the largest provider or senior healthcare and communities in New England and is also affiliated with Harvard Medical School. SECURITY The bonds are secured by a mortgage on the retirement community facility, a security interest in NewBridge's collateral, as defined in the Master Trust Indenture, including gross revenues, a debt service reserve fund. KEY RATING DRIVERS Revenue Defensibility - 'a' High Occupancy; Good Market Position NewBridge's strong revenue defensibility reflects high demand for its services, as indicated by strong occupancy at all levels of care, owing to its relationship with Hebrew SeniorLife (HSL), attractive facilities, and favorable location. In the past year, approximately 50% of new residents came from the immediate PMA, while another 30% moved from another state. Management partially attributes the out of state move-ins to those desiring to be closer to family in the greater Boston area. Over the last five years (2019-2023 FYE September), Newbridge averaged an ILU occupancy of 96%, and averaged an assisted living (ALU) occupancy of 95%. The health care center (HCC) occupancy was 96.8% (long-term chronic care and skilled nursing) and approximately 92% in memory care units over this time. NewBridge has a robust waitlist with 270 prospective residents for Independent Living depositing a refundable $750 and 120 prospective residents for Assisted Living. Operating Risk - 'bbb' Strong Operations, High But Normalizing Debt Burden Fitch's assessment of NewBridge's operating risk reflects its predominantly type-C contract mix and strong overall operating performance. This is offset by a still high debt burden, although it continues to moderate, with average revenue-only maximum annual debt service (MADS) coverage of 1.1x and debt-to-net available of 13x in fiscal years 2019-2023 and MADS representing a high 23.0% of revenues in fiscal 2023. In audited FY23, revenue-only maximum annual debt service (MADS) coverage was 0.9x while debt-to-net available was 13.1x. NewBridge's, NOMA (net operating margin-adjusted) improved from 25.9% in fiscal 2022 to 29.5% in fiscal 2023. This was due to higher than average net entrance fees over the past year. Furthermore, although still adequate, the operating ratio declined slightly to 100.1% in FY23 from 96.3% in FY22, primarily as a result of sustained staffing related pressures and only moderate increases in healthcare center reimbursement. Operating cash flow is also supported by HCC lease payments from Hebrew Rehabilitation Center, Inc. (HRC), of which HSL is the sole corporate member. Lease payments totaled about $6.3 million in fiscal 2023. The lease agreement with HRC provides the community with monthly rental payments that are equal to 100% of net revenues of the leased space after payment of direct expenses related to those operations. Fitch believes this will provide NewBridge with a consistent and diversified revenue source. HCC's operations are supported by a relatively large private pay business (about 30% of net patient service revenues) and strong history of contracts with MassHealth for residents with Medicaid. The community is in the midst of converting its contract mix to predominantly a 50% refundable contract from a predominantly 90% refundable contract. Management has stated that the 50% contracts have proven attractive to younger couples who tend to buy the larger units. Management also expects to maintain its target level of 30% non-refundable which they hit last year. Fitch believes this conversion could continue to compress cash flow margins in the short term; however, over the longer term, this strategy is likely to benefit the community by reducing its refund liability and increasing its retained cash flow which Fitch views as a credit positive. NewBridge's average age of plant is 12.2 years, indicating a moderately low degree of lifecycle capital needs and justifying its historically modest capex that averaged about 25.7% of depreciation expense in fiscals 2019-2023. Currently, there are no debt issuance plans and no major capital spending plans for the community. Capital spending is expected to be approximately $6 million-$7 million, limited to what is necessary to refresh units when they turnover, which averages about 28-32 units, approximately 12% of total ILU count and other facility improvements and refurbishments. The community's track record of strong occupancy indicates that its plant and facilities are of sufficient quality to meet future market demand for amenities and services. Financial Profile - 'bb' Limited Financial Cushion; Improved MADS Coverage As of the end FYE 2023, Newbridge had approximately $57.2 million in unrestricted cash and investments an increase from $51.6 million. which was primary as a result of gains in the community's investment portfolio. This represents a relatively soft cash-to-adjusted debt of 30.7%. MADS coverage was 1.3x in FY23 above its required 1.2x covenant. As of FYE 2023 (Sept. 30), Fitch calculated days cash on hand totaled 434 days. Fitch's forward-looking scenario analysis includes a base case, or the agnecy's expectation for Newbridge's future performance given current operation performance and Fitch's economic outlook, and a stress case that incorporates a period of economic and operating stress. Given Newbridge's strong revenue defensibility and midrange operating risk assessments, Fitch's analysis indicates that the community will maintain a financial profile that is consistent with the current financial profile. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Reduction in ILU occupancy such that NewBridge experiences sustained levels below 93%; - Material drop in cash to adjusted debt from current levels; - Weakened cash flow such that MADS coverage is consistently at or below levels of 1.2x. Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - Significant balance sheet improvement could elevate the rating if debt moderates and NewBridge's liquidity position improves, with cash-to-adjusted debt stabilizing comfortably above 60% throughout Fitch's stress case scenario. PROFILE NewBridge is a life plan community (LPC) with 256 ILUs, 51 ALUs and 36 memory support units. NewBridge also includes a health care center (HCC) with 48 skilled nursing facility (SNF) beds dedicated to short-term rehabilitative care and 220 long-term chronic care beds. The HCC is leased by HRC, an affiliated entity of HSL. All facilities are located on an expansive 162-acre campus in Dedham, MA, about 10 miles southwest of downtown Boston and just north and east of Route 128/I-95. NewBridge had total operating revenues of $51.4 million and total assets of $267.4 million in fiscal 2023 (YE Sept. 30). The financial analysis and figures cited in this release are for NewBridge only and do not include HCC's revenues and expenses. The revenues and expenses of HRC's operations in the leased space are not reflected in NewBridge's financial statements, only the earnings related to the lease agreement. Sources of Information In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by information from Lumesis. ESG CONSIDERATIONS NewBridge on the Charles, Inc. (MA) has an ESG Relevance Score of '4' [+] for Group Structure due to its relationship with HSL. NewBridge's sole corporate member and manager is HSL, a prominent senior services enterprise that is affiliated with Harvard Medical School and has significant long-term care operations in the Boston region. This has a positive impact on the credit profile, and is relevant to the ratings in conjunction with other factors. The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. NIC ACQUISITION: Guggenheim SOF Marks $1.04MM Loan at 25% Off ------------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $1,043,229 loan extended to NIC Acquisition Corp to market at $786,334 or 75% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to NIC Acquisition Corp. The loan accrues interest at a rate of 9.40% (3 Month Term SOFR + 3.75%, Rate Floor: 3.75%). The loan matures on December 29, 2027. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 NIC Acquisition Corp., d/b/a Innovative Chemical Products Group, based in Andover, Mass., is a formulator of specialty coatings, adhesives, sealants, and elastomers serving the industrial and construction markets. ICP operates in two business segments -- ICP Building Solutions Group and ICP Industrial Solutions Group. NORWICH ROMAN: UCR Taps Neubert Pepe & Monteith as Local Counsel ---------------------------------------------------------------- Michael R. Hogan, the unknown claims representative appointed in the chapter 11 case of The Norwich Roman Catholic Diocesan Corporation, filed an amended application seeking approval from the U.S. Bankruptcy Court for the District of Connecticut to employ the law firm of Neubert, Pepe & Monteith, P.C. as his local counsel. The firm will render these services: (a) advising the UCR as to his rights, powers, and duties as UCR in the Chapter 11 Case; (b) preparing on behalf of the UCR necessary and appropriate applications, motions, proposed orders, other pleadings, notices, schedules, and other documents, and reviewing financial and other reports filed and to be filed in the Chapter 11 Case; (c) advising the UCR concerning, and preparing responses to, applications, motions, other pleadings, notices, and other papers that may be filed by other parties in the Chapter 11 Case; (d) advising the UCR in connection with the formulation, negotiation, and promulgation of a plan or plans of reorganization, and related transactional documents; and (e) negotiating with parties-in-interest. The firm will be paid at these rates: Douglas S. Skalka $475 per hour Principals $550 per hour Associates & Counsels $275 to $450 per hour Paralegal $165 to $225 per hour Douglas Skalka, Esq., principal at Neubert, disclosed in a court filing that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Douglas S. Skalka, Esq. NEUBERT PEPE & MONTEITH, PC 95 Church St New Haven, CT 06510 Phone: (203) 821-2000 Email: dskalka@npmlaw.com About The Norwich Roman Catholic Diocesan Corporation The Norwich Roman Catholic Diocesan Corporation is a nonprofit corporation that gives endowments to parishes, schools, and other organizations in the Diocese of Norwich, a Latin Church ecclesiastical territory or diocese of the Catholic Church in Connecticut and a small part of New York. The Norwich Roman Catholic Diocesan Corporation sought Chapter 11 protection (Bankr. D. Conn. Case No. 21-20687) on July 15, 2021. The Debtor estimated $10 million to $50 million in assets against liabilities of more than $50 million. Judge James J. Tancredi oversees the case. The Debtor tapped Ice Miller, LLP, Robinson & Cole, LLP and Gellert Scali Busenkell & Brown, LLC as bankruptcy counsel, Connecticut counsel and special counsel, respectively. Epiq Corporate Restructuring, LLC is the claims and noticing agent. On July 29, 2021, the U.S. Trustee for Region 2 appointed an official committee of unsecured creditors in the Chapter 11 case. The committee tapped Zeisler & Zeisler, PC as its legal counsel. NOVABAY PHARMACEUTICALS: Hudson Bay, Sander Gerber Have 9.9% Stake ------------------------------------------------------------------ Hudson Bay Capital Management LP and Sander Gerber disclosed in a Schedule 13G/A filed with the Securities and Exchange Commission that as of Dec. 31, 2023, they beneficially owned 718,678 shares of Common Stock of NovaBay Pharmaceuticals, Inc. (including 664,678 shares of Common Stock issuable upon exercise of warrants and/or conversion of shares of convertible preferred stock), representing 9.99 percent of the Shares outstanding. The percentages used in this Schedule 13G/A are calculated based upon 6,529,302 shares of Common Stock outstanding as of Nov. 6, 2023, as reported in the Company's Quarterly Report on Form 10-Q for the quarterly period ended Sept. 30, 2023 filed with the SEC on Nov. 9, 2023. The percentage are based on the Company's total number of outstanding shares of Common Stock and assume the exercise of warrants and the conversion of shares of convertible preferred stock held by Hudson Bay Master Fund Ltd., subject to the 9.99% Blocker. Pursuant to the terms of the Securities, the Reporting Persons cannot exercise or convert such Securities if the Reporting Persons would beneficially own, after such exercise or conversion, more than 9.99% of the outstanding shares of Common Stock. The percentage give effect to the 9.99% Blocker. The Investment Manager serves as the investment manager to Hudson Bay Master Fund Ltd. As such, the Investment Manager may be deemed to be the beneficial owner of all shares of Common Stock and the shares of Common Stock, subject to the 9.99% Blocker, underlying the Securities held by Hudson Bay Master Fund Ltd. Mr. Gerber serves as the managing member of Hudson Bay Capital GP LLC, which is the general partner of the Investment Manager. Mr. Gerber disclaims beneficial ownership of these securities. A full-text copy of the SEC filing is available for free at: https://www.sec.gov/Archives/edgar/data/1389545/000139382524000087/nby_13ga.htm About Novabay Headquartered in Emeryville, California, NovaBay Pharmaceuticals, Inc. -- http://www.novabay.com-- develops and sells scientifically created and clinically proven eyecare and skincare products. NovaBay's leading product, Avenova Antimicrobial Lid & Lash Solution, is often prescribed by eyecare professionals for blepharitis and dry-eye disease and is also available directly to eyecare consumers through online distribution channels such as Amazon. DERMAdoctor offers more than 30 OTC dermatologist-developed skincare products through the DERMAdoctor website, well-known traditional and digital beauty retailers, and international distributors. NovaBay also manufactures and sells effective, yet gentle and non-irritating wound care products. Novabay reported a net loss of $10.61 million for the year ended Dec. 31, 2022, a net loss and comprehensive loss of $5.82 million for the year ended Dec. 31, 2021, a net loss and comprehensive loss of $11.04 million for the year ended Dec. 31, 2020, a net loss and comprehensive loss of $9.66 million for the year ended Dec. 31, 2019, and a net loss and comprehensive loss of $6.54 million for the year ended Dec. 31, 2018. As of Sept. 30, 2023, the Company had $12.85 million in total assets, $5.81 million in total liabilities, and $7.04 million in total stockholders' equity. San Francisco California-based WithumSmith+Brown, PC, the Company's auditor since 2010, issued a "going concern" qualification in its report dated March 31, 2023, citing that the Company has a history of recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. OCEAN PARKWAY: Hires Leech Tishman as Special Litigation Counsel ---------------------------------------------------------------- Ocean Parkway BH 26 LLC seeks approval from the U.S. Bankruptcy Court for the Eastern District of New York to hire Leech Tishman Robinson Brog, PLLC as its special litigation counsel. The firm will render these services: a. represent the Debtor with respect to the claims and issues asserted in the Appeals and Foreclosure Action, including any post-trial motions and consolidation of the Appeals; b. assist and advise the Debtor and Debtor's bankruptcy counsel, in connection with settling and/or adjudicating the claims raised in the Appeals and Foreclosure Action and other claims in favor of the Debtor with respect to Sprout, HOF, or any of the other previous lenders; c. appear before this Court and any other Federal or State or Administrative Court, as the Debtor deems necessary and/or appropriate; and d. perform all other necessary legal services requested or required by the Debtor in this case as it relates to the Appeals and Foreclosure Action, and any related claims. The firm will be paid at these rates: Principals $475 - $750 per hour Associates $400 - $475 per hour Paralegals $250 - $285 per hour In addition, the firm will receive reimbursement for out-of-pocket expenses incurred. Michael Eisenberg, Esq., a partner at Leech Tishman, disclosed in court filings that his firm is a "disinterested person" pursuant to Section 101(14) of the Bankruptcy Code. The firm can be reached through: Michael Eisenberg, Esq., LEECH TISHMAN ROBINSON BROG, PLLC 875 Third Avenue, 9th Floor New York, NY 10022 Phone: (212) 603-6300 Email: meisenberg@leechtishman.com About Ocean Parkway BH 26 LLC Ocean Parkway is a Single Asset Real Estate debtor (as defined in 11 U.S.C. Section 101(51B)). The Debtor is the owner of real property located at 2105 Ocean Parkway, Brooklyn, NY 11223 having an appraised value of $9.8 million. Ocean Parkway BH 26 LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D.N.Y. Case No. 24-40210) on Jan. 17, 2024. In the petition signed by Salomao Laniado as manager, the Debtor disclosed $9,802,500 in assets and $5,387,703 in liabilities. Judge Nancy Hershey Lord presides over the case. Jonathan S. Pasternak, Esq. at DAVIDOFF HUTCHER & CITRON LLP represents the Debtor as counsel. OLIVER 889: Voluntary Chapter 11 Case Summary --------------------------------------------- Debtor: Oliver 889, LLC 889 Broadway New York, NY 10003 Business Description: The Debtor is engaged in activities related to real estate. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court Southern District of New York Case No.: 24-10215 Judge: Hon. Lisa G. Beckerman Debtor's Counsel: Ilan Markus, Esq. BARCLAY DAMON LLP 545 Long Wharf Drive, 9th Floor New Haven, CT 06511 Email: imarkus@barclaydamon.com Estimated Assets: $1 million to $10 million Estimated Liabilities: $1 million to $10 million The petition was signed by Noah Lenovitz as member. A copy of the Debtor's list of 20 largest unsecured creditors is now available for download at PacerMonitor.com. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/R74L2ZA/Oliver_889_LLC__nysbke-24-10215__0001.0.pdf?mcid=tGE4TAMA ORCHID MERGER: $400MM Bank Debt Trades at 34% Discount ------------------------------------------------------ Participations in a syndicated loan under which Orchid Merger Sub II LLC is a borrower were trading in the secondary market around 66.3 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The loans traded in the secondary market around 60 cents-on-the-dollar the previous week ended Feb. 2. The $400 million Term loan facility is scheduled to mature on July 27, 2027. About $347.8 million of the loan is withdrawn and outstanding. Orchid Merger Sub II LLC provides Technology services (IT services). OTG MANAGEMENT: Oaktree Specialty Marks $1.30MM Loan at 18% Off --------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $1,303,000 loan extended to OTG Management, LLC, to market at $1,074,000 or 82% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+10.00%) to OTG Management. This loan was on non-accrual status as of December 31, 2023. The loan matures on September 2, 2025. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 OTG Management, LLC, is a privately-owned company that owns and operates hundreds of restaurants, bars, and retail stores in airport terminals across North America. OTG MANAGEMENT: Oaktree Specialty Marks $31.5MM Loan at 18% Off --------------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $31,515,000 loan extended to OTG Management, LLC, to market at $25,959,000 or 82% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+10.00%) to OTG Management. This loan was on non-accrual status as of December 31, 2023. The loan matures on September 2, 2025. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 OTG Management, LLC, is a privately-owned company that owns and operates hundreds of restaurants, bars, and retail stores in airport terminals across North America. PARK HOTELS: S&P Ups ICR to 'BB-' on Improving International Travel ------------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on U.S. lodging REIT Park Hotels & Resorts Inc. (Park) two notches to 'BB-' from 'B'. S&P said, "We also raised our issue-level rating on the company's senior unsecured notes to 'BB' from 'B+'. Our '2' recovery rating remains unchanged. Park benefits from substantial asset coverage of its currently unencumbered high-quality hotel portfolio and restrictive covenants common in REIT debt agreements that we assume would limit incremental future secured and pari passu debt in its capital structure in our recovery analysis. The stable outlook reflects our forecast for S&P Global Ratings-adjusted leverage to remain below 5.5x through 2024, incorporating Park's special dividend, paid in January, 2024 (associated with taxable gain following the removal of its San Francisco properties), reduced capital spending, and modest share repurchases. "The upgrade to 'BB-' reflects our forecast for increased international visitation to Hawaii and strong group and business travel in 2024, resulting in leverage of 5.0x-5.5x through 2024. We believe Park's portfolio of primarily upper-upscale hotels will benefit from tailwinds at its leisure-oriented properties (primarily Hilton Hawaiian Village and Hilton Waikoloa Village), continued recovery in business and group travel across its urban and airport hotels, and less disruption from capital projects across its portfolio of core hotels in 2024. We expect its Hawaiian properties will benefit from a return of international tourists, especially from Japan, which made up a majority of international visitation to Hawaii in 2019. In addition, Japanese travelers comprised over 60% of the hotels' international room nights in 2019, but remained 86% below their 2019 peak in 2023. Arrivals from Japan remained 86% below their 2019 peak in 2023. However, multiple airlines increased service to Hawaii starting in the second half of 2023, and international visitation has increased approximately 30% year over year through January 2024. Meanwhile, we expect the company's urban hotels, which are concentrated in gateway cities such as Orlando (12% of trailing 12 months hotel adjusted EBITDA as of Sept. 31, 2023), Boston (6%), New York (6%), and Chicago (4%), will benefit from increased group room nights and stronger convention calendars as businesses increase travel & entertainment budgets to pre-covid spending levels. "We forecast consolidated RevPAR growth of approximately 5% in 2024. We also expect EBITDA margins will benefit from fewer disruptions from planned capital projects. Park underwent significant renovations at its Casa Marina, Key West, and Bonnet Creek, Orlando, properties in 2023, which it estimates reduced EBITDA by approximately $18 million for the full year. Despite our expectation for higher RevPAR, revenue, and EBITDA growth, we forecast leverage will modestly increase in 2024 to approximately 5.4x from 5.1x (estimated at year-end 2023) largely due to the special dividend, paid in January, 2024, associated with the taxable capital gain from the effective exit from its San Francisco Hilton properties. We assume Park will continue to repurchase shares, albeit at lower amounts compared to 2022 and 2023, which further impacts our leverage forecast for 2024. "We forecast lower leverage following Park's reduction of $725 million of CMBS debt and reduced exposure to San Francisco.On June 5, 2023, Park ceased payments on its $725 million nonrecourse CMBS loan secured by two San Francisco hotels--the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco Hilton Hotel. In October 2023, a receiver took control of the two hotels securing the loan. We do not view this as a default under our criteria because Park was not an obligor or guarantor of the debt. As such, Park does not retain a financial interest in the operations of the hotels and will re-designate the debt to 'debt associated with hotels in receivership' on the company's balance sheet which will remain a liability until final resolution with the lender, expected no later than the end of 2024. As a result, Park's net leverage improved just under a full turn, and we expect RevPAR and margins to increase as the company reduces its exposure to San Francisco, which has significantly trailed the overall lodging recovery. As of the fourth quarter 2023, RevPAR in San Francisco remained approximately 29% below the comparable period of 2019. Meanwhile, U.S. RevPAR increased 14.7% in the same time frame." Park's financial policy decisions could constrain near-term upside potential. Park has a publicly stated net leverage target of 3x-5x, and we believe that as the company improves toward the lower end of its targeted range, it could pursue debt-financed acquisitions to regrow its rooms base, or pursue incremental opportunistic share repurchases. Park has remained committed to returning capital to shareholders, not only through its dividend, which is required to maintain REIT status, but also through share repurchases. In February 2023, the Board of Directors authorized a new stock repurchase program of up to $300 million ending in February 2025 ($150 million remaining). Park repurchased $227 million of its shares in 2022 and $180 million in shares during the first nine months of 2023. S&P said, "We forecast approximately $75 million of share repurchases in 2024. Dividends and share repurchases could be higher than our forecast if Park sells additional noncore assets in 2024 as part of their capital recycling strategy. Park's noncore assets account for about 10% of the portfolio's net asset value. We anticipate Park could use the proceeds from asset sales to pay dividends to shareholders, repay debt, and invest in ROI projects in its core assets." Park's geographic concentration in Hawaii exposes the company to broad declines in destination travel and event risk. Since 2019, and following its acquisition of Chesapeake Lodging Trust, Park has sold 15 noncore hotels. Following the company's exit from its San Francisco Hilton properties, Hawaii will account for approximately 36% of hotel adjusted EBITDA, compared to around 26% in 2019. S&P views this concentration in a single market as a potential business risk that could result in additional volatility over an economic cycle if consumers pull back on discretionary travel to destination markets. Significant concentration in a destination travel market such as Hawaii also exposes the company to event risk related to terror attacks, geopolitical unrest, and health scares that, while temporary, have significant negative impacts on travel demand and financial performance of lodging companies. Events that could affect ratings are those similar in scope and longevity to the aftermath of Sept. 11, 2001, the COVID-19 pandemic, and periodic flu pandemic scares over the past two decades, particularly if they occur concurrent with an otherwise weak economy. The stable outlook reflects S&P's forecast for S&P Global Ratings-adjusted leverage to remain below 5.5x through 2024, incorporating Park's special dividend (associated with taxable gain following the effective exit from its San Francisco Hilton properties), reduced capital spending, and modest share repurchases. S&P could lower the rating if: -- Park's leverage is higher than we forecast, which could occur due to weakness in the company's RevPAR and EBITDA, or if it engages in a sizable debt-financed acquisitions; -- S&P believes Park will sustain S&P Global Ratings-adjusted net debt to EBITDA above 5.5x. S&P said, "We could raise the rating if Park maintains net leverage below 4.5x. An upgrade would depend on our belief that Park's leverage has sufficient cushion below 4.5x, incorporating share repurchases and debt-financed acquisitions. Park's publicly stated financial policy targets net leverage of 3x-5x. If the company nears the low end of its target range, we expect the company could entertain debt-financed acquisitions to grow the portfolio or pursue opportunistic share repurchases. Therefore, we believe it is unlikely that leverage would remain sufficiently below 4.5x in the near to intermediate term." PATTERN ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has affirmed Pattern Energy Operations LP's (PEO) Long-Term Issuer Default Rating (IDR) at 'BB-'. The Rating Outlook is Stable. Fitch has also affirmed PEO's senior unsecured notes due 2028 at 'BB-'/'RR4'. The 'RR4' rating denotes average recovery prospects (31%-50%) in the event of default. PEO's ratings reflect its long-term contracted cash flows from its portfolio of mostly wind projects and a robust leverage profile. Fitch expects PEO's Holdco-only FFO leverage will be in the low 4x through 2025. Fitch calculates PEO's credit metrics on a deconsolidated basis as its assets are financed with non-recourse project debt. The rating affirmation anticipates the company's continued adherence to its current financial policies and that any financial support provided to its parent's (Pattern Energy Group LP's (PEGLP)), development activities will be limited and transitory. Unexpected project delays or cost overruns on the SunZia projects that lead to more, or longer-term funding support from PEO, may result in a negative rating action. KEY RATING DRIVERS High Quality and Contracted Portfolio: PEO owns and operates 5.5 GW predominantly wind projects (PEO's share of 3.6 GW) in the U.S. and Canada. Approximately 89% of the total power generation is contracted with investment grade off-takers, with a remaining weighted average contract life of 12 years. This enhances PEO's revenue visibility in the long term, which Fitch sees as a credit strength. PEO structures most of its projects as investment-grade. All projects except for Western Interconnect have a required debt service coverage ratio (DSCR) of 1.2x. Projects typically post DSCRs well in excess of the minimum, and management targets DSCR of greater than 1.5x. In 9M23, the average DSCR was 1.64x. PEO maintains high turbine availability and has turbine availability warranties from its turbine manufacturers and minimum availability service guarantees from service providers. SunZia Project: PEGLP is developing the SunZia project, which include wind farms of 3,515MW and 553 miles of high voltage transmission lines. The SunZia project will provide renewable energy produced in eastern and central New Mexico to customers in Arizona and California, and is complementary to the solar generation in the Southwest. PEGLP plans to drop SunZia down to PEO around the time commercial operations begin, which is expected in 2026. The addition of the SunZia projects will enhance PEO's asset quality and market position, and likely result in improved credit metrics. However, it will heighten PEO's limited diversification in terms of geographic location, generation sources and project distribution. As with other PEGLP development projects, PEO and its finance subsidiaries may be called upon during SunZia's development and construction period to provide credit support in the form of letters of credit or temporary bridge financing. On Dec. 19, 2023, certain subsidiaries of PEO entered a USD250 million term loan maturing in August 2026 to support SunZia. Management plans to repay the term loan in 2024. Unexpected project delay or cost overrun on the SunZia that lead to larger or longer-term funding support from PEO may result in a negative rating action. Limited Portfolio Diversification: PEO's fleet is comprised of nearly 100% wind, which exposes PEO to higher resource variabilities, as wind resources are more volatile than solar. Solar generation is small with only one solar project, Phoenix Solar (83MW) under operation. PEGLP is developing several solar projects, but Fitch expects wind to be the dominant generation sources in the medium term with the 3.5GW SunZia wind facility coming online in 2026. Distribution is concentrated as the Western Spirit Wind (1.05GW) represented approximately 26%-40% of the total distribution in 2022-2023. Contribution from the top five projects is expected to increase to 70% of the total distributions in 2026, versus 57%-60% in 2022-2023. High concentration heightens the resource volatility risk, especially in New Mexico where both the SunZia project and Western Spirit are located. Financial Discipline Mitigates Execution Risk: PEO maintains a clear financial target of corporate debt to EBITDA between 3x to 4x, and keeps a target capital structure with adequate headroom. PEO's leverage ratio is tracked by the management team monthly, monitored by the Board of Directors and communicated with bond investors quarterly. Records of strict compliance to financial policies, augmented by capital contributions from shareholders, largely mitigates execution risk. Fitch believes the construction of the SunZia project will further test PEO's financial discipline in the rating horizon. Unexpected inability to effectively mitigate execution risk with resulting Holdco FFO leverage higher than 4.5x would likely trigger negative rating actions. Leverage in Line with Ratings: Fitch calculates PEO's holdco-only FFO leverage at 4x in 2023 with large distributions from Western Spirit and Grady Wind Project. Fitch expects PEO's holdco-only FFO to be 4.2x-4.4x in 2024-2025, and is expected to decrease substantially when the SunZia is dropped down. The calculation of holdco-only FFO leverage incorporates 50% equity credit for the perpetual preferred stock. The preferred dividends are cumulative. But dividends can be paid by cash only, not equity. Management's target of Debt to EBITDA between 3x to 4x assumes 100% equity credit for the preferred stock. Hedge Risks: PEO suffered losses primarily due to hedges at three operational Texas projects during the Winter Storm Uri event in Feb. 2021. Panhandle 1 and 2 and Logan's Gap experienced low wind resource, or were unable to operate at full capacity. They have hedge obligations under the PPA contracts that required PEO to acquire power at market price. Tail risks associated with hedged PPAs in Texas could lead to future losses. Sponsorship Largely Beneficial: PEO went private in 2020. Canada Pension Plan Investment Board (CPPIB) is PEO's largest indirect owner, which Fitch views positively given CPPIB's size and track record as a long-term investor. However, it lacks transparency. The nine-member board includes three independents with the remainder from CPPIB (three), Riverstone Holdings (two), and the CEO of Pattern Energy. Parent-Subsidiary Linkages: Fitch rates PEO on standalone basis and does not apply PSL between PEO and PEGLP, due to lack of transparency at PEGLP level. PEO and its financing companies have their own credit facilities. PEO holds only operational assets, but it can lend its liquidity to the development affiliates. However, PEO's financial policies provide credit protection for PEO. Fitch neither applies PSL between PEO and CPPIB as the latter acts as a financial investor. DERIVATION SUMMARY Fitch rates PEO on a deconsolidated basis, because its portfolio comprises assets financed using non-recourse project debt or with tax equity. Fitch applies similar approach to Leeward Renewables Energy Operations (LREO, BB-/Stable), Terraform Power Operating LLC. (TERPO; BB-/Stable), and Atlantica Sustainable Infrastructure plc (AY; BB+/Stable), all of which own and operate portfolios of nonrecourse projects. Fitch views LREO as PEO's closest peer due to similar wind portfolio, size, and company structure. PEO and LREO's nearly 100% wind generation assets exhibit more resource variability, which Fitch sees as a negative. In comparison, AY's solar projects accounts for approximately 60% of total renewable projects' distributions. TERP's portfolio consists of 43% solar and 57% wind projects in term of capacities. PEO's operating scale (3.6 GW proportionate capacity) is larger than AY and LREO but smaller than TERPO. PEO's long-term contracted fleet has a remaining contracted life of 12 years, compared with AY's 13 years, TERPO's 11 years and LREO's nine years. Nearly 100% of AY's output is contracted or regulated, compared with PEO's 89%, LREO's 80% and TERPO's 96%. PEO has high asset concentration with the largest project- Western Spirt representing approximately 24% of its total capacity. Fitch expects PEO's asset concentration to further increase with the SunZia wind project coming online in 2026, which will drive up the distribution of top five projects to approximately 70% in 2026, from 57% in 2022. LREO's project distributions are also less diversified with top five projects contributing approximately 59% of distributions in 2022. Fitch views PEO's geographic exposure in the U.S. and Canada favorably compared with TERPO's 68% and AY's 30% in the U.S. However, PEO's contracted and hedged exposure in Texas carry higher risks than its peers. Fitch forecasts PEO's holdco only FFO leverage to be in low 4x. LREO's holdco FFO leverage is expected to be around 3.5x-3.7x in 2023-2024, compared with 3.5x-3.8x for AY and mid-5.0x for TERPO. PEO's private ownership, similar to LREO and TERPO, is overall more advantageous than a public yieldco's. It removes the pressure for aggressive growth in distribution. AY's distribution per unit growth target is around 8%. Additionally, strong private sponsors provide a more predictable funding source and remove capital market uncertainties. CPPIB's indirect ownership of PEO (72%) is viewed positively given its large scale and track record as a diversified long-term investor. TERPO benefits from having Brookfield Asset Management (BAM, A-/Stable) as a sponsor. KEY ASSUMPTIONS - Fitch has used P50 to determine its rating case production assumption; - PEO will drop down SunZia in 2026 when it commences operation with no net cash cost; - The USD250 million bridge loan is repaid in 2024; - Exclusion of non-recourse project debt; - No asset sales. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Holdco-only FFO leverage below 3.5x on a sustained basis; - A track record of adhering to the management stated financial policies with corporate debt to EBITDA between 3x-4x; - Improved diversification by generation sources and project's distribution. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Holdco-only FFO leverage at or above 4.5x on a sustained basis; - Inability to mitigate the execution risk of the group's development business, especially SunZia, resulting in negative deviation from financial policies; - Underperformance in the underlying assets that lends material variability or shortfall to expected project distributions on a sustained basis; - Lack of access to capital that leads PEO to deviate from its target capital structure. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity PEO had total corporate liquidity of USD1,053 million at end of Sept., 30, 2023, including USD415 million and USD 638 million availability under corporate revolvers and Letter of Credit (LC) facilities. Fitch believes PEO has strong liquidity position to support its working capital and other development affiliates given its multiple funding sources. Certain subsidiaries of PEO, including Pattern U.S. Finance Company LLC (PUSFC) and Pattern Canada Finance Company LLC (PCFC) have a USD375 million secured corporate revolving credit facility and USD 200 million Corporate LC facilities maturing in 2026. Borrowers keep almost zero outstanding under its corporate revolver as of end Sept. 30, 2026. PUSFC, PCFC and certain subsidiaries of PEO, also entered into four new LC Facilities, with different termination dates in 2024. This increased the committed LC facilities to USD575 million by end of Sept. 30, 2023, from USD 200 million as end of 2022. Total outstanding under LC facilities were USD268 million at end of Sept. 30, 2023. PUSFC, PCFC and certain subsidiaries of PEO entered into a USD250 million term loan due 2026 on Dec. 19, 2023 to temporarily fund the SunZia project. Management expects to repay the term loan in around six months. Financial covenants of Corporate Revolver, LC facilities and the USD250 million term include first lien leverage ratio below 3.5x and interest coverage ratio exceeding 1.75x. As of Sept. 30, 2023, borrowers were in compliance with the covenants, with actual first lien leverage ratio at 0x and interest coverage at 7.28x, implying sufficient headroom for liquidity. ISSUER PROFILE PEO is a renewable energy provider which currently owns 26 renewable energy projects located in the United States and Canada, with an operating capacity of approximately 5.5GW at end of Sept. 30, 2023. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Pattern Energy Operations LP LT IDR BB- Affirmed BB- senior unsecured LT BB- Affirmed RR4 BB- PLAYPOWER INC: Guggenheim SOF Marks $2.1MM Loan at 19% Off ---------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $2,133,071 loan extended to PlayPower, Inc to market at $1,730,987 or 81% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to PlayPower, Inc. The loan accrues interest at a rate of 11.06% (3 Month Term SOFR + 5.50%, Rate Floor: 5.50%). The loan matures on May 8, 2026. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 PlayPower, Inc., based in Huntersville, North Carolina, primarily manufactures commercial playground equipment used in parks and schools throughout North America and Europe. PLUTO ACQUISITION I: S&P Cuts ICR to 'SD' on Distressed Exchanges ----------------------------------------------------------------- S&P Global Ratings lowered its issuer-credit rating on Pluto Acquisition I Inc. to 'SD' (selective default) from 'CC' and lowered its issue-level rating on its first-lien term loan to 'D' (default) from 'CC'. S&P also withdrew its rating on the now-replaced revolving credit facility. S&P expects to reassess our issuer and issue-level ratings on Pluto in the near term to reflect the post-transaction debt structure. Pluto Acquisition I Inc. completed a debt restructuring transaction that included exchanges into new term loans under a new credit agreement. First- and second-lien term loan holders were exchanged into new loans with extended maturities that will rank junior to both a new $175 million first-out obligation and an existing revolving credit facility that was previously ranked pari passu with the prior first-lien term loan. S&P views the transaction as a distressed exchange. The transaction included the exchange of Pluto's $852 million term loan and $282 million second-lien term loan for new second-out and third-out term loans, respectively, which rank below a new $175 million superpriority facility. In addition, the company's existing $40 million revolving credit facility was exchanged into an identical credit facility that now ranks pari passu with the new superpriority facility and ahead of the new second-out and third-out term loans. The exchange also includes maturity extensions of 27 months for the prior first-lien lenders and 18 months for the prior second-lien term loan lenders. Prior second-lien lenders also incurred the conversion of 22 months interest to a payment-in-kind (PIK) deferral with a 50 basis point (bps) increase in the interest rate for the first 10 months and 100 bps for months 11-22. S&P said, "We view these exchanges as distressed and tantamount to default because in our view, lenders are receiving less value than the original promises. Specifically, we do not believe there is adequate compensation for the delay in maturities, delay in cash interest for prior second-lien lenders (PIK for 22 months), and more junior ranking for first- and second-lien lenders given the addition of new priming debt. "We plan to reassess our issuer credit rating and issue-level ratings in the near term. We will shortly review Pluto's still-highly leveraged credit profile and operating challenges, offset partially by the improved liquidity provided by this transaction. We will also reassess our recovery ratings to reflect the introduction of super-priority debt." PM MANAGEMENT: Seeks to Hire Omni Agent Solutions as Claims Agent ----------------------------------------------------------------- PM Management - Killeen I NC LLC and its affiliates seek approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ Omni Agent Solutions, Inc. as its claims, noticing, and solicitation agent. Omni Agent will oversee the distribution of notices and will assist in the maintenance, processing and docketing of proofs of claim filed in the Chapter 11 case of Dorchester Resources. The firm will also provide bankruptcy administrative services. Omni will be billed at hourly rates ranging from $40 to $250. The Debtor agrees to reimburse the firm's out-of-pocket expenses. The firm will serve monthly invoices to the Debtor. Paul Deutch, the executive vice president of Omni, disclosed in court filings that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Brian K. Osborne Omni Agent Solutions 5955 De Soto Avenue, Suite 100 Woodland Hills, CA 91367 Telephone: (818) 906-8300 Email: Bosborne@omniagnt.com About PM Management - Killeen I NC LLC PM Management - Killeen I NC LLC and its affiliates concurrently filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Tex. Case No. 24-30240) on Jan. 29, 2024, listing $1 million to $10 million in both assets and liabilities. Elizabeth Nicolle Boydston, Esq. at Gutnicki LLP represents the Debtors as counsel. PRETIUM PKG: $350MM Bank Debt Trades at 53% Discount ---------------------------------------------------- Participations in a syndicated loan under which Pretium PKG Holdings Inc is a borrower were trading in the secondary market around 46.9 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The loans traded in the secondary market around 40.9 cents-on-the-dollar the previous week ended Feb. 2. The $350 million Term loan facility is scheduled to mature on October 1, 2029. The amount is fully drawn and outstanding. Pretium PKG Holdings, Inc. is a manufacturer of rigid plastic containers for variety of end markets, including food and beverage, chemicals, healthcare, wellness and personal care. Pretium PKG Holdings, Inc. is a portfolio company of Clearlake since January 2020. PRINCESS PORT: Unsecureds Will Get 9% of Claims over 60 Months -------------------------------------------------------------- Princess Port Bed and Breakfast, Inc., filed with the U.S. Bankruptcy Court for the Northern District of California a Plan of Reorganization for Small Business. The Debtor has been in the business of operating a Bed and Breakfast. Debtor rents rooms on a daily, weekly or monthly basis and also rents out two units to permanent guests. The Plan Proponent's financial projections show that the Debtor will have projected disposable income of $777.07. The final plan payment is expected to be paid on March 1, 2029. Non-priority unsecured creditors holding allowed claims will receive distributions, which the proponent of this Plan has valued at approximately 9 cents on the dollar. This Plan also provides for the payment of administrative and priority claims. Class 3 consists of non-priority unsecured creditors. Unsecured creditors will be paid 9% of their total allowed claim over 60 months beginning on the effective date. Debtor reserves the right to prepay the entire claim at any time. General unsecured creditors include Real Time Solutions ($473,525.74), United States Trustee ($250.00), and Law Office of Vincent Wood ($21,632.82). This Class is impaired. Class 4 consists of Equity security holders of the Debtor. The holders of any equity claim will retain their interest. The Plan will be funded by four sources. The income from the B&B, the income from two rental units and a new value contribution by the manager. A full-text copy of the Plan of Reorganization dated February 4, 2024 is available at https://urlcurt.com/u?l=8XR42U from PacerMonitor.com at no charge. Attorney for the Plan Proponent: Michael R. Totaro, Esq. TOTARO & SHANAHAN Pacific Palisades, CA 90272 Tel: (888) 425 2889 Email: ocbkatty@aol.com About Princess Port Bed and Breakfast Princess Port Bed and Breakfast, Inc., is the owner of real property located at 445 Mirada Road, Half Moon Bay, Calif., valued at $2.58 million based on Zillow valuation. The Debtor filed a Chapter 11 petition (Bankr. N.D. Cal. Case No. 23-30761) on Nov. 8, 2023, with $2,585,562 in assets and $1,429,200 in liabilities. Maria Boruta, principal, signed the petition. Judge Dennis Montali oversees the case. E. Vincent Wood, Esq., at The Law Offices of E. Vincent Wood, is the Debtor's bankruptcy counsel. PRIZE MANAGEMENT: Court OKs Interim Cash Collateral Access ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, authorized Prize Management, LLC to use cash collateral on an interim basis in accordance with the budget, with a 10% variance. The Debtor requires the use of cash collateral to make payment of ordinary operating expenses. The Debtor has represented that a UCC search at the North Carolina Secretary of State's web portal revealed the following UCC-1 filings which may reflect perfected liens on cash collateral: a. File # 20180107660B recorded October 19, 2018, in favor of First Bank, 355 N. Bilhen Street, Troy, NC 27371. The Debtor is directed to make another payment to First Bank of $5,000 on or prior to March 4, 2024. As adequate protection, the Potential Secured Creditor is granted a post-petition lien on the Debtor's assets including cash and inventory to the extent of the use and to the extent that the pre-petition lien in the same type of collateral was valid, perfected, enforceable, and non-avoidable as of the petition date. The Debtor's use of cash collateral will expire or terminate on the earlier of: (i) March 5, 2024; (ii) the Debtor ceasing operations of its business; or (iii) the noncompliance or default of the Debtor with any terms and provisions of the Order. The next interim hearing on the matter is set for March 4 at 1 p.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=BPi2YX from PacerMonitor.com. The Debtor projects $80,00 in income and $59,415 in total expenses for February 2024. About Prize Management, LLC Prize Management, LLC is a sand and gravel mining company which operates on the land owned by Sand Ridge Development Assn., Inc. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. N.C. Case No. 23-02681) on September 14, 2023. In the petition signed by Alton Williams, Jr., president, the Debtor disclosed up to $10 million in assets and up to $50 million in liabilities. Judge Pamela W. McAffee oversees the case. William P. Janvier, Esq., at Stevens Martin Vaugh & Tadych, PLLC, represents the Debtor as legal counsel. PROMETHEUS INNOVATION: Wins Cash Collateral Access Thru April 1 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey authorized Prometheus Innovation Corporation to use cash collateral on an interim basis, in accordance with the budget, with a 25% variance, for the period of January 31 to April 1, 2024. Univest Bank and Trust Co. asserts an aggregate claim against Debtor in the amount of $1.4 million as of the Petition Date, secured by liens on all or substantially all of the assets of the Debtor as well as second mortgages on certain non-debtor residential properties. The Debtor presently asserts that Univest Bank has liens on the Collateral. The Debtor is authorized to use cash collateral to meet ordinary cash needs and for such other purposes as may be approved in writing by the Secured Creditors for the payment of Debtor's actual expenses to (a) maintain and preserve its assets; and (b) continue operation of its business, including but not limited to payment for utilities, payroll, payroll taxes, and insurance expenses as reflected in the Cash Collateral Budget. As adequate protection, Univest is granted a replacement perfected security interest under 11 U.S.C. Section 361(2) to the extent Univest Bank's cash collateral is used by the Debtor, to the extent and with the same priority in the Debtor's post-petition collateral, and proceeds thereof that Univest Bank held in the Debtor's pre-petition collateral. To the extent the adequate protection provided for proves insufficient to protect Univest Bank's interests in and to the cash collateral, Univest Bank will have a super-priority administrative expense claim, pursuant to 11 U.S.C. Section 507(b), senior to any and all claims against the Debtor under 11 U.S.C. Section 507(a), whether in this proceeding or in any superseding proceeding. The replacement lien and security interest granted are automatically deemed perfected upon entry of the Order without the necessity of Univest Bank taking possession, filing financing statements, mortgages, or other documents. The Debtor will make adequate protection payments to Univest Bank in the monthly amount of $20,500. The Debtor's failure to make any payment will constitute a breach of its obligations under the Order and Univest Bank will have the right to seek an expedited hearing regarding further relief from the Court in respect of such breach. A final hearing on the matter is set for March 26, 2024 at 10 a.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=dEF3Sj from PacerMonitor.com. The Debtor projects total expenses, on a weekly basis, as follows: $20,100 for the week starting February 19, 2024; and $20,000 for the week starting February 26, 2024. About Prometheus Innovation Corporation Prometheus Innovation Corporation sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. N.J. Case No. 23-21813) on December 22, 2023. In the petition signed by Jelani Ellington, president, the Debtor disclosed up to $10 million in both assets and liabilities. Judge John K. Sherwood oversees the case. Eric H. Horn, Esq., at A.Y. STRAUSS LLC, represents the Debtor as legal counsel. RACKSPACE TECHNOLOGY: Appoints Mark Gross to Board of Directors --------------------------------------------------------------- Rackspace Technology announced the appointment of Mark Gross to its Board of Directors. Gross is an experienced and dynamic leader with over 25 years of broad-based experience, financial expertise, and deep insight into leading business transformations. Gross succeeds Thomas Cole, who unexpectedly passed away over the recent holiday season. "We were fortunate to find Mark, a seasoned executive with financial expertise and broad business experience to complement our current Board. We look forward to his guidance, helping to further solidify our market position as the leading hybrid multicloud solutions company," said Amar Maletira, chief executive officer Rackspace Technology. "We were devastated by Tom's unexpected passing. He was a member of our Board for a short time; however, his impact was profound. We will miss his contributions and extend our sincerest condolences to his family." "I'm thrilled to join the Rackspace Technology Board and have the opportunity to work together with its strong and seasoned leadership team," said Gross. "Rackspace has exciting opportunities ahead as we seek to create value for customers and all business stakeholders." Gross is an experienced board member and currently serves as a board member and governance committee chair at Diebold-Nixdorf, a global provider of banking and retail technology systems. He is also executive chairman of Southeastern Grocers, an $8 billion-plus annual revenue grocery retailer, co-chairman of $7 billion-plus grocery retailer Northeast Grocery Inc., and a board member and audit committee chair at Acosta, a leading full-service sales and marketing agency. He previously served as president, chief executive officer and director of Supervalu, a grocery wholesaler. Prior to Supervalu, Gross led Surry Investment Advisors, a firm he founded. Mr. Gross also served in various leadership roles at C&S Wholesale Grocers, including co-president, chief financial officer, and general counsel, as well as a member of the board. In addition, Gross spent seven years as an attorney with the law firm Skadden, Arps, Slate, Meagher & Flom LLP, where he worked on complex restructuring deals, finance transactions and mergers and acquisitions. Gross earned his law degree from the University of Pennsylvania and a Bachelor of Arts from Dartmouth College. About Rackspace Technology Headquartered in San Antonio, Texas, Rackspace Technology, Inc. -- www.rackspace.com -- is an end-to-end multicloud technology services company. The Company designs, builds, and operates its customers' cloud environments across all major technology platforms, irrespective of technology stack or deployment model. The Company partners with its customers at every stage of their cloud journey, enabling them to modernize applications, build new products and adopt innovative technologies. Rackspace reported a net loss of $804.8 million in 2022, a net loss of $218.3 million in 2021, and a net loss of $245.8 million in 2020. As of June 30, 2023, the Company had $4.66 billion in total assets, $4.63 billion in total liabilities, and $31.9 million in total stockholders' equity. * * * As reported by the TCR on May 18, 2023, S&P Global Ratings lowered its issuer credit rating on Rackspace to 'CCC+' from 'B-' and revised the outlook to negative from stable. S&P said the negative outlook reflects the rising risk of distressed exchange by the company from further EBITDA margin degradation and free cash flows sustaining negative. RESTORATION FOREST: Okayed to Tap $12-Mil. DIP Loan for Ch.11 Plan ------------------------------------------------------------------ Clara Geoghegan of Law360 reports that Renewable lumber producer Restoration Forest Products Group LLP received interim approval from a Delaware bankruptcy judge on Wednesday, January 31, 2024, for its $93. 3 million debtor-in-possession loan, keeping it on track to confirm a prepackaged Chapter 11 plan in March 2024. About Restoration Forest Products Initially founded in 2008, Restoration Forest Products Group, LLC is a sustainable forestry and wood products manufacturing company. By operating as a vertically-integrated wood processer with in-house harvesting, manufacturing, and distribution capabilities, the Company works to thin and restore the forests of Northern Arizona. Restoration Forest and three of its affiliates sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Lead Case No. 24-10120) on Jan. 29, 2024. In the petition filed by Kenneth Latz, chief restructuring officer, the Debtors disclosed $100 million to $500 million in assets against $100 million to $500 million in debt. Potter Anderson & Corroon LLP serves as the Debtors' counsel. Intrepid Investment Bankers LLP is the Debtor' investment banker. Riveron Management Services, LLC is the Debtors' restructuring and management services provider. Kroll Restructuring Administration LLC is the Debtors' claims, noticing and solicitation agent. ROYAL CARIBBEAN: S&P Raises ICR to 'BB+' on Expected Deleveraging ----------------------------------------------------------------- S&P Global Ratings raised its issuer credit rating on global cruise operator Royal Caribbean Cruises Ltd. by two notches to 'BB+' from 'BB-'. S&P also raised all issue-level ratings by one or two notches in conjunction with the upgrade. The stable outlook reflects S&P's forecast for continued improvement in credit measures in 2024, driven by anticipated revenue and EBITDA growth and net debt reduction from cash flow generation (despite debt for new ship deliveries). Royal's 2024 booked position and strong pricing should support significant improvement in credit measures again this year. Royal entered 2024 with a record booked position at significantly higher pricing. S&P said, "The company's current booked position and pricing provide significant revenue and cash flow visibility for 2024, increasing our confidence in our expectations for revenue, cash flow, and leverage improvement this year. Although we believe the booked position is lower in the second half of the year based on typical booking patterns, we expect it will continue to improve during the typical wave season, which is currently underway." On its recent earnings call, Royal reported continued strong momentum in bookings. The company's five best booking weeks in its history occurred since October 2023, and included the first three weeks of wave season. Royal has seen widespread booking strength across all its key itineraries. Royal is also benefitting from new ships. Icon of the Seas, which is the first in a new class of ships, is outperforming previous first-in-class ship introductions including Oasis of the Seas. The expansion of PerfectDay at CocoCay with the introduction of Hideaway Beach, the addition of Utopia of the Seas to the fleet on short cruise product, and Silver Ray are also supporting 2024 yield growth. In addition, strong consumer spending onboard and pre-cruise purchases for onboard experiences (which provide some visibility into future onboard revenue) are supporting the company's yield growth guidance. Pre-cruise purchases continue to exceed prior years because of a combination of higher participation in prebooking from customers and higher pricing for these products and services. As of its recent earnings call, Royal had 40% more pre-cruise onboard revenue booked in 2024 compared with 2023. Royal has observed that customers who purchase onboard experiences ahead of sailing spend about 2.5x more than customers who do not pre-book onboard experiences. S&P said, "Based on the company's current yield guidance and capacity growth, we expect 2024 revenue to be about 15% higher than 2023 and EBITDA to increase about 20%. Despite margin headwinds from a planned increase in drydock days and the opening of Hideaway Beach, we expect the company's margin to improve because of higher pricing, higher onboard revenue, the benefits of increasing scale, as well as relatively stable fuel expense despite increased capacity as a result of the company's hedged position and lower forecast oil prices this year. "As a result, we expect Royals' 2024 adjusted debt to EBITDA will improve to approximately 3.7x. This level of leverage is significantly below our 5x upgrade threshold for Royal from the 'BB-' issuer credit rating and provides good cushion relative to our 4.5x threshold for Royal at a 'BB+' issuer credit rating. Our forecasted funds from operations (FFO) to debt measure is just over 20% in 2024, which provides little cushion to our 20% FFO to debt threshold at the 'BB+' issuer credit rating. Our FFO to debt measure remains somewhat impaired by the company's higher interest burden, but we expect this will improve over time as the company addresses high-cost debt issued during the pandemic in its capital structure through refinancing or repayment." Royal's strong forward bookings, increased capacity, higher pricing, and more pre-cruise onboard revenue has driven significant growth in customer deposits, enabling accelerated debt reduction. Royal's modest EBITDA outperformance and nearly $1 billion more in cash flow from operations in 2023 relative to S&P's prior forecast, in large part due to a greater increase in customer deposits, resulted in a larger reduction in net debt by the end of 2023. Royal's customer deposit balance remains elevated at $5.3 billion at Dec. 31, 2023, as a result of strong booking volumes at higher prices, increased capacity, and increased pre-cruise onboard revenue sales. This compares to $4.2 billion at Dec. 31, 2022, and $3.4 billion at Dec. 31, 2019. Royal reduced its total debt in 2023 by approximately $2 billion (including new debt for 2023 ship deliveries). Most of its 2023 debt reduction was related to scheduled maturities and amortization payments. However, Royal also prepaid its 11.5% senior secured notes due June 2025, which had approximately $1.4 billion outstanding at the start of 2023, and carried one of the higher interest rates in its capital structure. Prepaying these high cost secured notes aligns with the company's strategic goals to reduce debt, lower interest expense, decrease secured and guaranteed debt to move toward a fully unsecured balance sheet, and manage maturities. Approximately 80% of Royal's debt is tied to fixed interest rates, which is a benefit in a higher interest rate environment and provides greater cash flow predictability. S&P said, "We believe Royal's financial policy will support debt reduction, as the company's strategic plan includes a goal to reduce leverage to 3.5x by the end of 2025. Under its current guidance, the company believes it could be in a position to achieve this goal about a year earlier than initially forecast. As a result, we expect Royal will prioritize the use of discretionary cash flow to continue to reduce debt ahead of resuming shareholder returns. The company's ability to resume shareholder returns is currently limited by provisions in certain outstanding pieces of debt." Royal's larger cash flow base compared with pre-pandemic and a more moderate ship delivery schedule should allow it to continue reducing leverage despite new ship debt. The funds needed for new ships makes the cruise industry capital intensive. In addition, the requirement to take delivery of ships regardless of the operating environment could slow Royal's ability to reduce leverage given its current ship delivery schedule. Cruise operators generally must commit to ship orders at least three to five years in advance given the limited number of shipyards globally that are equipped to build cruise ships for the contemporary segment. While the operators typically obtain financing commitments before delivery (often when they contract for delivery), which provides some liquidity support if cash flow declines, the incremental debt can significantly deteriorate credit measure during operating weakness because debt balances increase while EBITDA declines. Royal's overall ship delivery schedule, especially in 2024 and 2026, should allow for leverage reduction despite new ship debt. In 2024, Royal will take delivery of two ships, one of which is a smaller Silversea ship. In 2025, Royal has two large ship deliveries and only one in 2026. Royal has not placed new ship orders since the start of the pandemic. As a result, it has no scheduled ship deliveries beginning in 2027. S&P believes the company has prioritized cash flow recovery and leverage improvement in recent quarters as it's emerging from the pandemic ahead of placing new ship orders. However, its improving balance sheet, the need to reinvigorate the fleet with new ships and new amenities to stay competitive, and the requirement to periodically replace aging ships will likely cause Royal to resume orders for new ships over the next year. S&P said, "Given the significant disruptions stemming from the COVID-19 pandemic and the extraordinary amount of debt operators incurred to survive the long period of associated cash burn, we believe Royal may be more measured in committing to additional ship orders. As a result, we assume Royal will likely target one to two ship deliveries a year once it resumes ordering. Royal's growing cash flow base should allow it to generate good cash flow for leverage reduction over the next few years, despite expected debt to finance new deliveries. Furthermore, we believe Royal's larger cash flow base compared with before the pandemic provides it sufficient capacity to fund at least two large ships annually with operating cash flow. "The stable outlook reflects our forecast for continued improvement in credit measures in 2024 from a combination of EBITDA growth as the company's forward booked position suggests it will be able to absorb capacity increases and command higher pricing, as well as net debt reduction. We expect Royal's adjusted debt to EBITDA to improve to about 3.7x in 2024 from approximately 4.7x in 2023. We forecast FFO to debt to increase to about 20% by the end of 2024. "We could lower our rating on Royal if operating performance in 2024 is weaker than we expect or forward bookings deteriorate, such that we believe debt to EBITDA will be sustained above 4.5x and FFO to debt below 20%. "In our view, an investment-grade rating for Royal is unlikely over the next 12 months because of our forecasted credit measures. An upgrade to 'BBB-' would be preceded by an improvement in total debt to EBITDA to below 3.75x, FFO to debt higher than 25%, and EBITDA coverage of interest above 4.5x. Prior to raising the rating, we would also need to believe that Royal has sufficient cushion compared with these thresholds such that the company could sustain these levels during the next cyclical downturn, incorporating future ship orders and shareholder returns." RUSE AUTO TRANSPORT: Hires Gravis Law as Bankruptcy Counsel ----------------------------------------------------------- Ruse Auto Transport, Inc. seeks approval from the U.S. Bankruptcy Court for the Western District of Texas to hire Gravis Law, PLLC as its counsel. The firm's services include: (a) providing legal advice with respect to the powers, rights, and duties of the Debtor and Debtor-in-Possession; (b) providing legal advice and consultation related to the legal and administrative requirements of this case, including assisting Debtor in complying with the procedural requirements of the Office of the United States Trustee; (c) taking appropriate actions to protect and preserve the Estate, including prosecuting actions on the Debtor's behalf, defending actions commenced against the Debtor, and representing the Debtor's interests in any negotiations or litigation in which the Debtor may be involved, including objections to the claims filed against the Estate, and preparing witnesses and reviewing documents in this regard; (d) preparing appropriate documents and pleadings, including but not limited to Schedules, Applications, Motions, Answers, Orders, Complaints, Reports, or other documents appropriate to the administration of the Estate; (e) representing the Debtor's interests at the Initial Debtor Interview, the Meeting of Creditors, any Status Conferences, any Disclosure Statement Hearing, the Confirmation Hearing, and other hearings before this Court related to the Debtor; (f) assisting and advising the Debtor in the formulation, negotiation, and implementation of a Disclosure Statement and/or Chapter 11 Plan and all documents related thereto; (g) assisting and advising the Debtor with respect to negotiation, documentation, implementation, consummation, and closing of transactions, including the sale of assets or the incurring of debt; (h) assisting and advising the Debtor with respect to the use of cash collateral, obtaining financing, and negotiating, drafting, and seeking approval of any documents related thereto; (i) reviewing and analyzing claims filed in this case, and advising and representing the Debtor in connection with objections to such claims; (j) assisting and advising the Debtor with respect to executory contracts and unexpired leases, including assumptions, assignments, rejections, and renegotiations; (k) coordinating with other professionals employed in the case; (l) reviewing and analyzing applications, orders, motions, and other pleadings and documents filed with the Bankruptcy Court and advising the Debtor thereon; and (m) assisting the Debtor in performing such other services as may be in the interest of the Debtor and the Estate and performing all other legal services required by the Debtor. The firm will be paid at these rates: Amy Wilburn $350 per hour Paralegals $150 per hour The firm received a retainer of $20,000. Amy Wilburn, an attorney at Gravis Law, disclosed in a court filing that her firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Amy Wilburn, Esq. GRAVIS LAW, PLLC 7350 Cirque Dr W University Place, WA 98467 Phone: (253) 525-5714 Email: awilburn@gravislaw.com About Ruse Auto Transport, Inc. Ruse Auto Transport, Inc. provides auto transportation industry. Ruse Auto Transport, Inc. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. W.D. Tex. Case No. 24-10050) on Jan. 21, 2024. The petition was signed by Plamen Varbanov as owner. At the time of filing, the Debtor estimated $1 million to $10 million in assets and liabilities. Judge Shad Robinson presides over the case. Amy Wilburn, Esq. at the Law Office Of Amy Wilburn LLC represents the Debtor as counsel. RUSS NOYES ROOFING: Wins Cash Collateral Access Thru March 27 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida, Orlando Division, authorized Russ Noyes Roofing Inc dba Rhino Roofing Inc. to use cash collateral, on an interim basis, in accordance with the budget, through March 27, 2024. Specifically, the Debtor is permitted to use cash collateral to pay: (a) amounts expressly authorized by the Court, including payments to the United States Trustee for quarterly fees; (b) the current and necessary expenses set forth in the budget; and (c) additional amounts as may be expressly approved in writing by Creditor within 48 hours of the Debtor's request. As adequate protection, American Express National Bank will have a perfected post-petition lien against cash collateral to the same extent and with the same validity and priority as the pre-petition lien, without the need to file or execute any documents as may otherwise be required under applicable non-bankruptcy law. The Debtor will maintain insurance coverage for its property in accordance with the obligations under the loan and security documents with Secured Creditors. A continued preliminary hearing on the matter is set for March 27 at 2 p.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=BWz9cZ from PacerMonitor.com. The Debtor projects total operating expenses, on a monthly basis, as follows: $143,148 for February 2024; $150,547 for March 2024; and $145,539 for April 2024. About Russ Noyes Roofing Russ Noyes Roofing Inc., doing business as Rhino Roofing Inc., is a roofing contractor in Orlando, Fla., offering professional installation, repair, and maintenance of roofs for homes. Russ Noyes Roofing filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-05063) on Dec. 1, 2023, with total assets of $183,919 and total liabilities of $2,563,619. Russell Leonard Noyes, president, signed the petition. Judge Tiffany P. Geyer oversees the case. The Debtor is represented by Jeffrey S. Ainsworth, Esq., at BransonLaw PLLC. S&G HOSPITALITY: Seeks to Hire Integra Realty as Appraiser ---------------------------------------------------------- S&G Hospitality, Inc. and its affiliates seek approval from the U.S. Bankruptcy Court for the Southern District of Ohio to employ Integra Realty Resources, Inc. as appraiser and expert valuation witness. Integra will appraise certain of the Debtors' hotels and provide related expert testimony. The firm received a retainer in the amount of $10,200. In addition, Integra will be entitled to a fee of $400 per hour for Michael Hunter's time preparing for and providing any testimony related to the appraisals. Michael Hunter, director of Integra, assured the court that his firm does not hold or represent any interest adverse to the estate, and is a disinterested person as that tern is used pursuant to Code Secs. 101 (14) and 327. The firm can be reached through: Michael P. Hunter INTEGRA REALTY RESOURCES, INC. 6233 Riverside Drive, Suite 2N Dublin, OH 43017 Tel: (614) 764-8040 Fax: (614) 764-8050 About S&G Hospitality S&G Hospitality, Inc. is part of the traveler accommodation industry. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D. Ohio Case No. 23-52859) on August 18, 2023. In the petition signed by Abijit Vasani, president, the Debtor disclosed up to $10 million in assets and up to $1 million in liabilities. Judge Mina Nami Khorrami oversees the case. The Debtor tapped David Beck, Esq., at Carpenter Lipps LLP as legal counsel and Contemporary Business Solutions, Inc. as accountant. S.A.M.S. VENDING: Files Emergency Bid to Use Cash Collateral ------------------------------------------------------------ S.A.M.S. Vending, LLC asks the U.S. Bankruptcy Court for the Northern District of Iowa for authority to use cash collateral and provide adequate protection to its pre-petition secured lenders, the United States Small Business Administration, Credibly of Arizona, LLC, Rapid Finance, and Paige Williams. The Debtor requires the use of cash collateral for payment of its usual, ordinary, customary, regular, and necessary post-petition expenses incurred in the ordinary course of the Debtor's business and for payment of those pre-petition claims approved and allowed by order of the Bankruptcy Court and not otherwise. The Secured Creditors hold liens and security interests in, among other things, the Debtor's accounts, inventory, equipment, machinery and general intangibles, and all proceeds thereof. The Debtor proposes that in consideration for the Debtor's use of the cash collateral, and as adequate protection for any Diminution of Value of the Secured Creditors' security interests, the Debtor proposes to grant to the Secured Creditors a validly perfected first priority lien on and security interest in the Debtor's post-petition Collateral subject to existing valid, perfected and superior liens in the Collateral held by other creditors, if any, and the Carve-Out. In the event of, and only in the case of Diminution of Value of a Secured Creditor's interest in the Collateral, a super-priority claim that will have priority in the Debtor's bankruptcy case over all priority claims and unsecured claims against the Debtor and its estate, now existing or hereafter arising, of any kind or nature. As further adequate protection, the Debtor will make post-petition monthly payments to the Senior Secured Creditor, SBA. A copy of the motion is available at https://urlcurt.com/u?l=AuJ95q from PacerMonitor.com. About S.A.M.S. Vending, LLC S.A.M.S. Vending, LLC is a full service provider of vending machine solutions. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Iowa Case No. 24-00085) on February 2, 2024. In the petition signed by Joshua Gullicksen, manager/owner, the Debtor disclosed $307,527 in total assets and $1,139,430 in total liabilities. Krystal R. Mikkilineni, Esq., at Dentons Davis Brown PC, represents the Debtor as legal counsel. S.A.M.S. VENDING: Hires Dentons Davis Brown as Bankruptcy Counsel ----------------------------------------------------------------- S.A.M.S. Vending, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Iowa to employ Dentons Davis Brown, P.C. as its bankruptcy counsel. The firm will render these services: (a) advise and assist the Debtor with respect to compliance with the requirements of the United States Trustee; (b) advise the Debtor regarding matters of Bankruptcy Law, including the rights and remedies of the Debtor with regard to its assets and with respect to the claims of creditors; (c) represent the Debtor in any proceedings or hearings in the Bankruptcy Court and in any action in any other court where the Debtor's rights under the Bankruptcy Code may be litigated or affected; (d) conduct examinations of witnesses, claimants, or adverse parties and to prepare and assist in the preparation of reports, accounts, and pleadings related to this Chapter 11 case; (e) advise the Debtor concerning the requirements of the Bankruptcy Code and applicable rules as the same affect the Debtor in this proceeding; (f) assist the Debtor in the negotiation, formulation, confirmation, and implementation of a subchapter V, Chapter 11 Plan; (g) make any court appearances on behalf of the Debtor; and (h) take such other action and perform such other services as the Debtor may require of the firm in connection with the Chapter 11 case. The firm will be paid at these rates: Krystal R. Mikkilineni, Esq. $415 per hour Associates $245 to $330 per hour Paralegals $160 to $215 per hour The firm received a retainer in the amount of $45,000. As disclosed in court filings, Dentons is a disinterested person within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Krystal R. Mikkilineni, Esq. Tirzah R. Roussell, Esq. DENTONS DAVIS BROWN, P.C. The Davis Brown Tower 215 10th Street, Suite 1300 Des Moines, IA, 50309 Telephone: (515) 288-2500 Facsimile: (515) 243-0654 Emai: krystal.mikkilineni@dentons.com tirzah.roussell@dentons.com About S.A.M.S. Vending, LLC S.A.M.S. Vending, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Iowa Case No. 24-00085) on Feb. 2, 2024, listing $100,001 - $500,000 in assets and $1,000,001 - $10 million in liabilities. The petition was signed by Joshua Gullicksen as manager/owner. Krystal R. Mikkilineni, Esq. at Dentons Davis Brown PC represents the Debtor as counsel. S.A.M.S. VENDING: Hires Skutch Arlow Group as Financial Advisor --------------------------------------------------------------- S.A.M.S. Vending, LLC seeks approval from the U.S. Bankruptcy Court for the Northern District of Iowa to employ The Skutch Arlow Group, LLC, to serve as its financial advisor. The firm will render these services: a. assist in preparing a 13-week and 4-month cash flow budgets covering receipts and disbursements for the anticipated bankruptcy period; b. work with the Debtor to develop alternative strategies for improving profitability and liquidity and assist in the implementation thereof; c. assist with preparation of sources and uses projections for DIP financing; d. prepare a liquidation analysis of Debtor's assets as required; e. assist in producing financial documents that support the Bankruptcy Case; f. assist with analysis of the Debtor's business and advise on its strategic and tactical plans; g. assist in preparing operating reports, financial reports, monthly operating reports and pleadings for the Bankruptcy Case, if needed; h. assist in negotiations with creditors, shareholders, and other parties-in-interest as requested; i. assist in the maintenance/preparation of the cash flow models and the weekly reconciliations; k. participate in bankruptcy court hearings in matters about which Skutch Arlow has provided advice, has subject matter expertise, or can testify as a fact witness; l. assist with valuation or other analyses in support of a plan; m. assist with the formulation, evaluation, and implementation of a plan in the Bankruptcy Case; n. communicate with Debtor's counsel, management and stakeholders as needed; and o. provide other financial advisory services related to the Bankruptcy Case. Skutch Arlow will be paid at these hourly rates: Principals $445 Associates $295 Skutch Arlow will be paid a retainer in the amount of $20,000. Skutch Arlow will also be reimbursed for reasonable out-of-pocket expenses incurred. Josh Arlow, partner of The Skutch Arlow Group, LLC, assured the Court that the firm is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not represent any interest adverse to the Debtor and its estates. Skutch Arlow can be reached at: Josh Arlow THE SKUTCH ARLOW GROUP, LLC 10 S. LaSalle St., Suite 3500 Chicago, IL 60603 Tel: (312) 945-8718 E-mail: josh@skutcharlow.com About S.A.M.S. Vending, LLC S.A.M.S. Vending, LLC filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. N.D. Iowa Case No. 24-00085) on Feb. 2, 2024, listing $100,001 - $500,000 in assets and $1,000,001 - $10 million in liabilities. The petition was signed by Joshua Gullicksen as manager/owner. Krystal R. Mikkilineni, Esq. at Dentons Davis Brown PC represents the Debtor as counsel. SAN JORGE CHILDREN'S: Unsecured Creditors to Split $3.4M in Plan ---------------------------------------------------------------- San Jorge Children's Hospital, Inc., submitted a First Amended Disclosure Statement for First Amended Chapter 11 Plan of Reorganization dated February 1, 2024. Debtor had several unexpired leases with Solomon Property Trust, LLC. During the pendency of the bankruptcy case the debtor requested several extensions for the time to assume or reject unexpired leases and executory contracts. Notwithstanding, upon being unable to receive lessor's further consent for extensions, the Debtor filed to assume the unexpired lease of the Inpatient Behavioral Unit, which was approved by the Court (the "assumed lease"). On January 3, 2024, Solomon Property Trust, LLC filed an objection to the assumption and assignment of such assumed leased. The matter is still pending before the Court. Upon evaluating the bankruptcy estate's composition and examining the financial forecasts of the Hospital, the Debtor's management has concluded that the sale of all of the Hospital's assets is the reorganization strategy that would render more beneficious results for the creditors while also ensuring the continuity of its operations in benefit of the community it serves. To that end, the Debtor filed Debtor's Motion for and Order (I) Approving (A) Entry into Bidding Procedures and the form and Manner of Notice Thereof, (B) Authorizing Debtor to Designate Stalking Horse Bidder and Related Bid Protections (II) Scheduling the Sale Hearing, (III) Establishing Assumption and Assignment Procedures and Approving the Manner of Notice Thereof and (IV) Granting Certain Related Relief (hereafter, the "Debtor's Sale Motion") on November 17, 2023. On January 22, 2024, Debtor's filed Debtor's Motion to Inform the Successful Bidder Pursuant to the Auction Held on January 19, 2024. The Highest Successful Bidder as informed in the aforementioned motion remains Dorado Health Group LLC with an aggregate offer of $13,500,000.00. On January 23, 2024, Debtor filed a "Debtor's Motion Submitting Asset Purchase Agreement with Successful Bidder, Request for Entry of Order on Proposed Sale Order and to Schedule a Sale Hearing" ("Motion Submitting APA and Proposed Order"). Per the terms of the Asset Purchase Agreement, the closing is intended to occur no later than February 28, 2024. Class 3 consists of General Unsecured Claims. This class will be paid from the net sale proceeds of unencumbered assets, available carveouts and the ERC split to be paid pro-rata among all allowed claimants under this Class up to the full amount of principal owed provided, however that, (i) administrative and priority claims shall have preference with any surplus being made available for this Class, (ii) that to the extent that Class 1 votes to accept the Plan, as to the unsecured portion of the claim of the secured creditor, it shall be entitled to vote on this class but shall not receive any distribution on account of their allowed deficiency claims. As of this date, the aggregate distributions to this class are estimated at the amount of $3,375,000.00, subject to several assumptions or risk factors. Class 3 is Impaired under the Plan. Each Holder of a General Unsecured Claim will be entitled to vote to accept or reject the Plan. Class 5 consists of all creditors which allege to be entitled to make a claim against any insurance policy held by the debtor at any given period or policy year pursuant to non-bankruptcy law and which, if right to coverage and right to payment is adjudged by a Court of jurisdiction, may be entitled to received distributions directly from the insurer under the terms and limits of the policy (the "insurance claimants"). The insurance claimants will have the right to pursue their claims against insurance companies as may be applicable under non bankruptcy law. Debtor is not and will not be the payment beneficiary of any the disbursement under an insurance or coverage intended to provide direct payment to an insurance claimant. The bankruptcy case will move forward while allowing the creditors to pursue the final adjudication of their claim, if any, and in compliance with Section 502(c), the Debtor will estimate the claims within this class in the amounts claimed (hereafter the "estimated claim or amount") as a potential claim against an insurance policy for a specific policy year. To this date, the Debtor has estimated an amount over $1,300,000.00 in administrative expenses which are or would be incurred through the process of sale, confirmation and winding down of Debtors endeavors. * Sale Proceeds Carve Out. From the sale the debtor is expected to receive $500,000 from the sale of unencumbered real property. Therefore, the Debtor will be entitled to an additional $750,000.00 carveout from the net sale proceeds to fund its plan. * Cash Carve Out. All cash available at Debtor's account at the closing date of the transfer. Closing of the Sale of the encumbered assets shall be considered a carveout for the Debtor to fund the required distributions under the Plan and; * Accounts Receivable Carveout. The value of accounts receivable will be determined at the moment of the Closing Date of the sale of the encumbered assets. * ERC Split. The Employee Retention Credit (ERC) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Act) requested by Debtor will be split between the Debtor and the secured lender in 50% each. A full-text copy of the First Amended Disclosure Statement dated February 1, 2024 is available at https://urlcurt.com/u?l=ny8tzH from PacerMonitor.com at no charge. Attorneys for Debtor: Lugo Mender Group, LLC Wigberto Lugo Mender, Esq. Alexis A. Betancourt Vincenty, Esq. Amarys Vellise Bolorin Solivan, Esq. 100 Carr. 165 Suite 501 Guaynabo, PR 00968-8052 Tel.: (787) 707-0404 Fax: (787) 707-0412 Email: wlugo@lugomender.com About San Jorge Children's Hospital San Jorge Children's Hospital, Inc., operates a hospital in San Juan, P.R., which specializes in pediatrics. San Jorge Children's Hospital filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D.P.R. Case No. 22-02630) on Sept. 1, 2022, with between $10 million and $50 million in both assets and liabilities. Edward P. Smith, chief operating officer, signed the petition. Judge Maria De Los Angeles Gonzalez presides over the case. The Debtor tapped Wigberto Lugo Mender, Esq., at Lugo Mender Group, LLC, as bankruptcy counsel and Galindez, LLC, as external auditor. Cardona Jimenez Law Offices, P.S.C., is counsel to the official committee of unsecured creditors appointed in the Debtor's case while RSM Puerto Rico is the committee's financial advisor. SANDVINE CORP: $110MM Bank Debt Trades at 38% Discount ------------------------------------------------------ Participations in a syndicated loan under which Sandvine Corp is a borrower were trading in the secondary market around 62.5 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $110 million facility is a Term loan that is scheduled to mature on November 2, 2026. The amount is fully drawn and outstanding. Sandvine Corporation, headquartered in Waterloo, Ontario, Canada, and owned by funds affiliated with Francisco Partners, provides network and application intelligence solutions to mobile, fixed, cable, satellite and Wi-Fi service providers, and governments globally. The Company's country of domicile is Canada. SAS AB: Has $325M for Unsecured Creditors; Committee Now Backs Plan ------------------------------------------------------------------- SAS AB and its Subsidiary Debtors submitted a Second Amended Disclosure Statement for Second Amended Joint Chapter 11 Plan of Reorganization dated February 4, 2024. The Debtors commenced the Chapter 11 Cases to pursue and implement a comprehensive financial restructuring to deleverage the Debtors' balance sheet to ensure the Debtors' long-term viability. More specifically, the Plan incorporates the Transaction and provides for (among other things): * a total investment in Reorganized SAS AB of $1.2 billion, comprised of $475 million in new unlisted equity and $725 million in secured convertible debt; * the allocation of up to $325 million to fund distributions to general unsecured creditors through a combination of $250 million in cash and the remaining approximately 13.6% of new unlisted equity in Reorganized SAS AB in an amount equal to approximately $75 million, subject to the terms of the Investment Agreement and the Plan, subject to cash to be funded to the GUC Entities as set forth in the Plan; -- for illustrative purposes only, based on the prevailing foreign exchange rate on February 2, 2024 of 10.3538 SEK per USD, the initial distributable value taking into account the Available Cash and the New Shares Distribution Pool available for holders of Allowed General Unsecured Claims will be approximately (i) $61,840,000 at SAS AB, (ii) $42,970,000 at the Consolidated Debtors, (iii) $4,000,000 at the Gorm Entities, and (iv) $10,000 at SANA. These allocations were determined between the Debtors, the Creditors' Committee and the Non-State Investors based on an assessment of the assets and liabilities of each Debtor. The GUC Interests to be distributed to the holders of Allowed General Unsecured Claims against SAS AB, the Consolidated Debtors, and the Gorm Entities will be in the same proportion; * the allocation of certain percentages of the Available Cash and the New Shares Distribution Pool among SAS AB, the Consolidated Debtors, the Gorm Entities, and SANA; * the establishment of the GUC Entities (to be funded with (i) a portion of the $250 million in cash from the Investors' subscription of New Shares and New Convertible Notes and (ii) the Escrow Contribution Fees), which will be used by the Reorganized Debtors to (i) (a) defend themselves against any State non-tax claims attributable to the period from 2020 to 2023 that may be raised against the Debtors in national courts (each such claim, a "State Non-Tax Claim") and (b) satisfy any costs or expenses that may arise or have arisen from a third party agreeing to pay in full and without recourse to the Reorganized Debtors any State Non-Tax Claim, (ii) in the event of (a) a final decision and non-appealable decision from a competent court requiring any one or more of the Reorganized Debtors to pay any State Non-Tax Claim, or (b) a determination by the Reorganized Debtors to settle all or a portion of any State Non-Tax Claim or settlement amount, as applicable, when due and payable, to the extent a third party has not already paid, or irrevocably agreed to pay, such State Non-Tax Claim, and (iii) in the event that the funds in the GUC Entities exceed any amounts paid pursuant to the preceding clauses (i) and (ii), make distributions to holders of GUC Interests in accordance with the Plan and the Swedish Reorganization Plan; -- the GUC Interests will be distributed to the holders of Allowed General Unsecured Claims and provide for a right to receive distributions of GUC Cash held by any GUC Entity, in each case, as set forth in the Plan and the GUC Documents; -- the form of GUC Interests issued by, or evidencing a right or interest in, any GUC Entity will be further detailed in the Plan Supplement; -- absent any limitation or other restriction arising under applicable law, including applicable securities laws (or unless otherwise agreed among the Debtors, the Required Investors and the Creditor's Committee) or (b) other than GUC Interests to which any Disqualified Person or ineligible person, such GUC Interests are expected to be transferable, subject to customary resale restrictions for privately placed securities; * the allocation of GUC Interests to the holders of Allowed General Unsecured Claims, representing contingent interests to receive distributions from the GUC Cash used to fund the GUC Entities; -- the GUC Cash will be invested subject to investment guidelines mutually acceptable to the Debtors, the Investors, and the Creditors' Committee and by an investment manager mutually acceptable to those parties; -- net earnings on the GUC Cash will be distributed annually to holders of GUC Interests in accordance with the Plan and the GUC Documents; * approximately $1.1 billion of unrestricted cash on the Reorganized Debtors' go forward balance sheet. The Creditors' Committee supports the Plan and believes that the Plan is in the best interests of the Debtors' estates and holders of General Unsecured Claims as a whole under the circumstances of the Debtors' chapter 11 cases. Among its many benefits, the Plan allocates up to $325 million to fund distributions to holders of Allowed General Unsecured Claims through a combination of $250 million in cash and the remaining approximately 13.6% of new unlisted equity in Reorganized SAS AB in an amount equal to approximately $75 million. Accordingly, the Creditors' Committee strongly urges holders of General Unsecured Claims to vote to accept the Plan. The estimated recoveries for each Class of General Unsecured Claims at each of the Debtors are based on estimated claim pools of approximately (i) $1,023,000,000 at SAS AB, (ii) $1,879,000,000 at the Consolidated Debtors (including the $1,059,000,000 net Intercompany Claim held by SAS AB against the Consolidated Debtors), (iii) $440,000,000 at the Gorm Entities and (iv) $1,000,000 at SANA. On the Effective Date, (i) one or more GUC Entities shall be established and, as soon as practically possible thereafter in order to allow for the SCRO Registration, shall be funded by the Reorganized Debtors with a portion of the GUC Cash in accordance with the Plan and the GUC Documents and (ii) the Contribution Fee Escrow Account shall be established and shall be funded by the Convertible Notes Purchasers with the Escrow Contribution Fees, in each case in accordance with the Investment Agreement, this Plan, and the Swedish Reorganization Plan. The Reorganized Debtors shall pay all costs related to the establishment of the GUC Entities up to a maximum of $200,000 (including any mutually agreeable reserves, as shall be agreed in the Plan Supplement). The GUC Entities and the Contribution Fee Escrow Account shall be funded with Cash in the aggregate amount of the Reserved Funds, with a portion of the GUC Cash and the Escrow Contribution Fees used to constitute the Reserved Funds to be allocated to the GUC Entities, on the one hand, and the Contribution Fee Escrow Account, on the other hand, in amounts relatively proportionate to the amount of the Total Distributable Value as compared to the amount of the Contribution Fees. A full-text copy of the Second Amended Disclosure Statement dated February 4, 2024 is available at https://urlcurt.com/u?l=BIi7a0 from Kroll Restructuring Administration, LLC, claims agent. Attorneys for Debtors: Gary T. Holtzer, Esq. Kelly DiBlasi, Esq. David Griffiths, Esq. Lauren Tauro, Esq. Weil Gotshal & Manges, LLP 767 Fifth Avenue New York, NY 10153 Tel: (212) 310-8000 Fax: (212) 310-8007 Email: Gary.Holtzer@weil.com kelly.diblasi@weil.com david.griffiths@weil.com lauren.tauro@weil.com About Scandinavian Airlines SAS SAB -- https://www.sasgroup.net/ -- Scandinavia's leading airline, with main hubs in Copenhagen, Oslo and Stockholm, is flying to destinations in Europe, USA and Asia. In addition to flight operations, SAS offers ground handling services, technical maintenance, and air cargo services. SAS is a founder member of the Star Alliance, and together with its partner airlines offers a wide network worlxdwide. SAS AB and its subsidiaries, including Scandinavian Airlines Systems Denmark-Norway-Sweden and Scandinavian Airlines of North America Inc., sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case No. 22-10925) on July 5, 2022. In the petition filed by Erno Hilden, authorized representative, SAS AB estimated assets between $10 billion and $50 billion and liabilities between $1 billion and $10 billion. Judge Michael E. Wiles oversees the cases. The Debtors tapped Weil, Gotshal & Manges, LLP as global legal counsel; Mannheimer Swartling Advokatbyra AB as special counsel; FTI Consulting, Inc. as financial advisor; Ernst & Young AB as tax advisor; and Seabury Securities, LLC and Skandinaviska Enskilda Banken AB as investment bankers. Seabury is also serving as restructuring advisor. Kroll Restructuring Administration, LLC is the claims agent and administrative advisor. The U.S. Trustee for Region 2 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. The committee is represented by Willkie Farr & Gallagher, LLP. SENSIENCE INC: S&P Lowers ICR to 'CCC-' on Constrained Liquidity ---------------------------------------------------------------- S&P Global Ratings lowered its issuer credit rating on Sensience Inc. to 'CCC-' from 'CCC'. At the same time, S&P lowered its issue-level rating on its first-lien term loan to 'CCC-' from 'CCC' and its issue-level rating on its second-lien term loan to 'CC' from 'CCC-'. S&P said, "The negative outlook reflects our view that the company's constrained liquidity position, combined with our forecast for persistent high interest rates and weak cash flow generation, could lead it to undertake a distressed exchange or default in the next six months." On Jan. 30, 2024, Sensience issued about $5.5 million of incremental first-lien debt to an affiliate of its financial sponsor, One Rock Capital Partners, to improve its liquidity buffer amid ongoing cash flow deficits. The loan will be secured on a pari passu basis with the liens securing obligations under the First Lien Credit Agreement. S&P said, "The downgrade reflects our view that Sensience's liquidity position will remain stressed over the near term, increasing the likelihood for a distressed exchange or payment default. We assume the company's EBITDA generation in the quarter ended December 2023 remained minimal, thus we believe it has largely exhausted its liquidity sources. As of Sept. 30, 2023, Sensience had about $15.9 million on cash (of which about $1.6 million was unrestricted) and about $12 million of revolver availability. Since then, the company has further bolstered its liquidity with the proceeds from a mortgage loan it entered into on its Mexico facility and about $6 million of current availability under new revolving credit facilities in China. "While the proceeds from Sensience's recently issued loan will provide it with some liquidity support for the current quarter and we forecast its EBITDA generation will improve modestly over the next few quarters--mostly due to management's pricing and cost-out actions--we forecast its EBITDA will remain insufficient to fund its ongoing fixed charges, which comprise its current quarterly interest expense of about $16.5 million, capital expenditure (capex) of about $2.5 million, and annual term loan amortization of about $4 million. We expect the company will likely benefit from an inflow of cash related to the release of working capital in fiscal year 2024 as it works to extend its payable terms, shorten its receivables, and reduce its inventories. Given Sensience's constrained liquidity position and our forecast for continued near-term cash flow deficits, we believe it may be challenged to meet its April and July 2024 interest payments without additional liquidity enhancing actions. Therefore, we see a distressed restructuring as an increasingly likely outcome. "We forecast Sensience's end-market demand will remain relatively soft in 2024. The company's operating performance in the past few quarters has been negatively affected by reduced demand in its key HVAC and water heater end markets. We forecast Sensience will increase its revenue by the low-single-digit percent area in fiscal year 2024--mostly due to price increases--as the residential demand for HVAC systems, water heaters, and appliances remains depressed amid the high interest rate environment, which has slowed the pace of new home construction and existing home sales and led to muted volume trends. While we assume the company's cost-out actions and price increases will likely support a year-over-year improvement in its EBITDA margin in 2024, we believe its lower volumes will continue to constrain its EBITDA generation over the next few quarters. "The negative outlook reflects our view that Sensience's constrained liquidity position, combined with our forecast for persistent high interest rates and negative cash flow generation, could lead to a distressed exchange or default in the next six months. "We could lower our ratings on Sensience if it misses or announces it will miss a contracted principal or interest payment, it announces a transaction that we view as distressed, or we believe a default is a virtual certainty. "We could raise our ratings on Sensience if we no longer view a default scenario as a high probability over the next six months. This could occur if the company improves its liquidity position and its cash flow generation, such that we no longer anticipate material deficits." SHUTTERFLY FINANCE: $968MM Bank Debt Trades at 22% Discount ----------------------------------------------------------- Participations in a syndicated loan under which Shutterfly Finance LLC is a borrower were trading in the secondary market around 77.6 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The loans traded in the secondary market around 72.2 cents-on-the-dollar the previous week ended Feb. 2. The $968.9 million facility is a Payment In Kind Term loan that is scheduled to mature on October 1, 2027. About $959.2 million of the loan is withdrawn and outstanding. Shutterfly, LLC is an American photography, photography products, and image sharing company, headquartered in Redwood City, California. SIRVA WORLDWIDE: $435MM Bank Debt Trades at 15% Discount -------------------------------------------------------- Participations in a syndicated loan under which SIRVA Worldwide Inc is a borrower were trading in the secondary market around 84.8 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $435 million facility is a Term loan that is scheduled to mature on August 2, 2025. About $377.9 million of the loan is withdrawn and outstanding. SIRVA Worldwide, Inc., headquartered in Westmont, Illinois, is a wholly owned operating subsidiary of SIRVA, Inc., which provides relocation services, including transferring corporate and government employees and moving individual consumers. SKILLS ACADEMY: Bid to Use Cash Collateral Denied ------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado denied the motion to use cash collateral filed by Skills Academy Vocational Center, LLC for failure to comply with Fed. R. Bankr. P. 4001(d)(1)(A), (B) and (C). The Debtor filed an "Agreed Motion for Authorization to Use Cash Collateral" for $42,000 asserting the United States Small Business Administration holds a first priority security interest. The Debtor claims that the SBA's claim exceeds the value of its cash collateral. The Court reviewed the Certificate of Service and found that the Debtor failed to comply with Fed. R. Bankr. P. 4001(d)(1)(A), (B) and (C), particularly failing to serve a copy of the Agreed Motion to the 20 largest unsecured creditors. The Court requires the Debtor to serve these creditors with a copy of the Agreed Motion and Notice. A copy of the order is available at https://urlcurt.com/u?l=NtAEA8 from PacerMonitor.com. About Skills Academy Vocational Center, LLC Skills Academy Vocational Center, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Colo. Case No. 24-10155-TBM) on January 12, 2024. In the petition signed by Randee Van Ness, president, the Debtor disclosed up to $500,000 in assets and up to $1 million in liabilities. Judge Thomas B. McNamara oversees the case. Jeffrey A. Weinman, Esq., at Allen Vellone Wolf Helfrich & Factor, P.C., represents the Debtor as legal counsel. SM WELLNESS: Oaktree Specialty Marks $12MM Loan at 16% Off ---------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $12,034,000 loan extended to SM Wellness Holdings, Inc., to market at $10,169,000 or 84% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a Second Lien Term Loan (SOFR+8.00%) to SM Wellness. The loan accrues interest at a rate of 13.64% per annum. The loan matures on April 16, 2029. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Headquartered in Addison, Texas, SM Wellness Holdings, Inc. -- Solis -- is a provider of mammography services, operating over 90 centers across eight states dedicated to annual screenings, diagnostic mammograms, breast ultrasounds, biopsies and bone density screenings. Since August 2018, Solis is majority owned by private equity sponsor Madison Dearborn Partners. SONOMA PHARMACEUTICALS: Incurs $866K Net Loss in Q3 2023 -------------------------------------------------------- Sonoma Pharmaceuticals, Inc. filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q reporting a net loss of $866,000 on $3,138,000 of revenue for the three months ended December 31, 2023 and a net loss of $1,939,000 on $2,944,000 of revenue for the three months ended December 31, 2022. For the nine months ended December 31, 2023, the Company reported a net loss of $3,768,000 on $9,296,000 of revenue and $3,843,000 on $10,258,000 of revenue for the nine months ended December 31, 2022. At December 31, 2023 and March 31, 2023, the Company's accumulated deficit amounted to $193,282,000 and $189,514,000, respectively. The Company had working capital of $9,428,000 and $10,081,000 as of December 31, 2023 and March 31, 2023, respectively. The cash balance at December 31, 2023 and March 31, 2023 was $2,406,000 and $3,820,000, respectively. During the nine months ended December 31, 2023 and 2022, net cash used in operating activities amounted to $2,550,000 and $3,711,000, respectively. Management believes that the Company has access to additional capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means; however, the Company cannot provide any assurance that other new financings will be available on commercially acceptable terms, if needed. If the economic climate in the U.S. deteriorates, the Company's ability to raise additional capital could be negatively impacted. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays in the Company's continued efforts to commercialize its products, which is critical to the realization of its business plan and the future operations of the Company. These matters raise substantial doubt about the Company's ability to continue as a going concern. As of December 31, 2023, the Company has $14,618,000 in total assets, $7,926,000 in total liabilities, and $6,692,000 in total stockholders' equity. A full-text copy of the Report is available at http://tinyurl.com/ypsfvs5u About Sonoma Pharmaceuticals Sonoma Pharmaceuticals, Inc. (NASDAQ: SNOA) -- http://www.sonomapharma.com-- is a global healthcare company developing and producing stabilized hypochlorous acid, or HOCl, products for a wide range of applications, including wound care, eye care, oral care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants. The Company's products reduce infections, itch, pain, scarring, and harmful inflammatory responses in a safe and effective manner. In-vitro and clinical studies of HOCl show it to have impressive antipruritic, antimicrobial, antiviral, and anti-inflammatory properties. The Company's stabilized HOCl immediately relieves itch and pain, kills pathogens and breaks down biofilm, does not sting or irritate the skin, and oxygenates the cells in the area treated, assisting the body in its natural healing process. The Company sells its products either directly or via partners in 55 countries worldwide. Sonoma Pharmaceuticals reported a net loss of $5.15 million for the year ended March 31, 2023, compared to a net loss of $5.08 million for the year ended March 31, 2022. As of March 31, 2023, the Company had $16.23 million in total assets, $8.25 million in total liabilities, and $7.98 million in total stockholders' equity. Atlanta, Georgia-based Frazier & Deeter, LLC, the Company's auditor since 2021, issued a "going concern" qualification in its report dated June 21, 2023, citing that the Company has incurred significant losses and negative operating cash flows and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about its ability to continue as a going concern. STENSON LANDSCAPE: Seeks to Hire Eric A. Liepins as Legal Counsel ----------------------------------------------------------------- Stenson Landscape & Irrigation, Inc. seeks approval from the U.S. Bankruptcy Court for the Eastern District of Texas to hire to employ Eric A. Liepins, P.C. as counsel. The Debtor requires legal assistance for the purpose of orderly liquidating the assets, reorganizing the claims of the estate, and determining the validity of claims asserted in the estate. The firm will be paid at these rates: Eric A. Liepins $275 per hour Paralegals and Legal Assistants $30 to $50 per hour In addition, the firm will seek reimbursement for expenses incurred. The firm has been paid a retainer of $5,000 plus filing fee. Mr. Liepins, the sole shareholder of the firm, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: Eric A. Liepins, Esq. ERIC A. LIEPINS, PC 12770 Coit Road, Suite 850 Dallas, TX 75251 Tel: (972) 991-5591 Fax: (972) 991-5788 Email: eric@ealpc.com About Stenson Landscape & Irrigation, Inc. Stenson Landscape & Irrigation, Inc. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No. 24-40243) on Feb. 1, 2024, listing up to $50,000 in assets and $1 million to $10 million in liabilities. The petition was signed by Tracy Terrell Doyle as president. Eric Liepins, Esq. at ERIC A. LIEPINS represents the Debtor as counsel. STL HOLDING: Fitch Assigns 'B+' LongTerm IDR, Outlook Stable ------------------------------------------------------------ Fitch Ratings has assigned a Long-Term Issuer Default Rating (IDR) of 'B+' to STL Holding Company, LLC (dba DSLD Homes). Fitch has also assigned a 'BB-'/'RR3' rating to DSLD's unsecured revolving credit facility and proposed offering of senior unsecured notes. Proceeds from the proposed notes issuance will be used to repay the company's $219.1 million 7.5% senior unsecured notes due 2026. The Rating Outlook is Stable. The 'B+' IDR reflects DSLD's small scale, limited geographic diversity, low leverage and adequate financial flexibility. The company's leading positions within its local markets and land-light strategy along with volatile cash flow generation and concentrated ownership are also factored into the rating. The Stable Outlook reflects Fitch's expectation that housing demand will improve slightly in 2024 and that DSLD will continue to have meaningful rating headroom relative to Fitch's negative sensitivities for the 'B+' IDR. KEY RATING DRIVERS Small Scale and Limited Diversification: DSLD's small scale and geographic concentration are limiting factors for the IDR. The company was the 31st largest homebuilder in the U.S. based on 2022 home deliveries and operates 120 communities in 12 markets across five states. DSLD has meaningful concentration in Louisiana, with about 68% of revenues derived from this state. The company also targets first-time and move-up buyers, which exposes it to an outsized impact during regional or buyer segment downturns. DSLD holds leadership positions in most of the markets where it operates and generally competes with other regional homebuilders in these markets. Strong Credit Metrics: DSLD's credit metrics are strong for the 'B+' IDR, and it has meaningful rating headroom relative to the negative sensitivities for the rating. Net debt to capitalization (excluding $50 million of cash classified by Fitch as not readily available for working capital) was 35% as of Sept. 30, 2023, and Fitch expects this ratio will be between 30%-35% in the next few years. EBITDA leverage was 1.9x for the LTM ending Sept. 30, 2023 and is forecast to be 2.0x-2.5x in 2024 and 2025. Management seeks to maintain EBITDA leverage below 2.0x and debt to capitalization of 35%-40%. Interest coverage was 6.4x for the LTM ending Sept. 30, 2023, and Fitch expects this ratio will be at or above 5.5x during the forecast period. Land-Light Strategy: DSLD operates a land-light strategy primarily through finished lot option contracts with developers. The company owns a 1.6-year supply of lots, of which 21% are homes in backlog. The company controls an additional 3.5 years of land through option contracts. The company's owned lot position increased in 2023 compared to recent years, when the company had owned less than a one-year supply of land. Fitch generally views a land-light strategy positively, as write-downs and impairments should primarily be limited to forfeiture of option deposits during cyclical downturns. However, management typically does not retrade option agreements (i.e. re-negotiate terms if returns are lower than previously expected), and it is unlikely that it will walk away from these option contracts. Management feels that this approach allows the company to maintain relationships and be a preferred buyer of the lots at better prices. However, it also reduces the risk mitigation feature of the lot option strategy and could burden DSLD with excess land and result in meaningfully lower margins during a cyclical downturn. Volatile Cash Flow: Fitch expects DSLD will generate modestly negative cash flow from operations (CFO) in 2023 and slightly positive CFO in 2024 due to increased inventory spending. By comparison, the company generated positive CFO during 2019-2022. DSLD's IDR reflects Fitch's expectation that management will lower land spending if market conditions deteriorate and monetize its housing inventory. This should lead to stronger cash flow generation, which can be used to pay down debt or build cash on the balance sheet during cyclical downturns. The rating could be pressured if management elects to continue buying land during a housing downturn, resulting in consistently negative CFO. Financial Flexibility: DSLD has adequate liquidity with cash, marketable securities, revolver availability and funds from operations to grow its inventory modestly. The planned refinancing of its unsecured notes should further improve its financial flexibility and liquidity. The company distributes a meaningful portion of its net income to its shareholders as several of its subsidiaries are structured as S-corporations and its shareholders are taxed on part of the company's income. DSLD is likely to fund its growth with incremental debt and/or with its cash and marketable securities. Ownership Structure: DSLD is a privately held company with concentrated ownership among management and other owners, which poses an increased risk of shareholder friendly activities relative to publicly traded peers. However, there is no one dominant shareholder and the company has so far been disciplined with its capital allocation strategy, including employing a measured growth strategy and refraining from meaningful cash distributions to its shareholders. Housing Market Remains Challenged: Fitch expects the housing market to improve this year but remain anemic, as low housing affordability and a weak economic backdrop will keep housing demand constrained. Mortgage rates staying higher for longer, combined with elevated home prices, will keep affordability challenging. However, homebuilders' ability to adjust product offerings and offer mortgage rate buydowns will make new homes an attractive alternative for potential homebuyers. DSLD's offering of homes at affordable price points allows the company to meet homebuyers' needs. Fitch expects DSLD's revenues will grow 5%-6% in 2024 while EBITDA margins remain relatively stable at 13.5%-14.0%. DERIVATION SUMMARY DSLD has a relatively similar size and geographic diversification compared with Adams Homes, Inc. (B+/Stable) and is modestly smaller and slightly less geographically diversified than Dream Finders Homes, Inc. (DFH; BB-/Stable). DSLD has a shorter owned-lot position than Adams but higher than DFH. All three issuers have meaningful exposure to entry-level homes, but both DSLD and DFH have greater exposure to other price points and buyer segments. DSLD's credit metrics are comparable to Adams and DFH. KEY ASSUMPTIONS Fitch's Key Assumptions Within Its Rating Case for the Issuer - Home sales revenues grow 5%-6% in 2024 and 2%-4% in 2025; - EBITDA margin of 13.5%-14.0% in 2024 and 2025; - DSLD generates neutral to negative FCF in 2024 and 2025; - EBITDA leverage of 2.0x-2.5x and net debt to capitalization of 30%-35% in the next few years; - EBITDA interest coverage of 5.2x-5.7x in 2024 and 2025. RECOVERY ANALYSIS The recovery analysis assumes that DSLD would be reorganized as a going-concern (GC) in bankruptcy rather than liquidated. Fitch assumed a 10% administrative claim. The GC EBITDA estimate of $80 million reflects Fitch's view of a sustainable, post reorganization EBITDA level, upon which the agency bases the enterprise value (EV). The GC EBITDA is based on Fitch's assumption that distress would arise from further weakening of the housing market combined with a loss of market share. Fitch estimates annual revenues that are 25% lower than projected 2023 revenues and EBITDA margin of 11.5% (300 bps below 2023 projected EBITDA margin) would capture the lower revenue base of the company after a housing downturn, plus a sustainable margin profile after right sizing. An EV multiple of 5.5x EBITDA is applied to the GC EBITDA to calculate a post-reorganization EV. The choice of the multiple considered the following factors: - Fitch used a 5.5x multiple to calculate the EV of Adams Homes. Adams is the 29th largest homebuilder by deliveries with operations concentrated in the Southeast. Fitch used a 6.0x multiple to calculate the EV for Empire Communities Corp. (B-/Stable). Empire is one of the largest low-rise builders in the Greater Golden Horseshoe and Greater Toronto areas and a growing presence in the U.S. - U.S. homebuilders are currently trading at a 7.3x EV/EBITDA multiple and have traded between 3x-8x over the past 12 months. Fitch assumes that the revolving credit facility is 75% drawn at the time of distress, which accounts for potential shrinkage in the available borrowing base due to contracting inventory levels during a period of weaker demand that causes a default. The allocation of the value of the liability waterfall results in a recovery corresponding to an 'RR3' for the unsecured revolver and senior unsecured notes. RATING SENSITIVITIES Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade - The company increases its size and further enhances its geographic diversification and market leadership positions; - Net debt to capitalization consistently below 45% and the company maintains a healthy liquidity position; - Fitch's expectation that EBITDA leverage will sustain below 4.0x. Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Net debt to capitalization sustained above 55%; - EBITDA interest coverage falls below 2.0x; - Inventory to debt consistently below 1.2x; - Deterioration in the company's liquidity profile, including consistently negative CFO and limited availability under its revolving credit facility. LIQUIDITY AND DEBT STRUCTURE Sufficient Liquidity: DSLD has sufficient liquidity with $68.6 million of cash, $60.2 million of marketable securities, and full availability under its $75 million revolving credit facility. The company's revolving credit facility matures in December 2025 while its senior unsecured notes become due in February 2026. The planned refinancing of its senior notes further enhances DSLD's liquidity position. ISSUER PROFILE DSLD Homes designs, builds and markets detached and attached single-family homes in Louisiana, northwest Florida, Alabama, Mississippi, and east Texas. The company was the 31st largest homebuilder in the U.S. in 2022 based on home deliveries. SUMMARY OF FINANCIAL ADJUSTMENTS Historical and projected EBITDA is adjusted to add back interest expense included in cost of sales and also excludes impairment charges and land option abandonment costs. Fitch also excludes the EBITDA and debt of DSLD's financial services (FS) operations as this subsidiary's only debt, two mortgage repurchase facilities, is non-recourse to DSLD and the FS subsidiary generally sells the mortgage it originates and the related servicing rights to third-party purchases within a short period of time. However, as part of its captive finance adjustment, Fitch assumes a capital structure for the FS operations that is sufficiently robust for that entity to support its debt without reliance on the corporate entity. Fitch applies a hypothetical capital injection from the corporate entity to achieve a target capital structure (1.0x debt/equity) that is indicative of a self-sustaining credit profile for DSLD's FS operations. The debt to equity ratio of DSLD's FS operation was below this target level, so Fitch did not make any adjustments related to the FS operations. Shareholders' equity is assumed to be unaffected. Fitch reviews historical CFO on a consolidated basis and also forecasts CFO excluding these operations. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. DATE OF RELEVANT COMMITTEE January 19, 2024 Entity/Debt Rating Recovery ----------- ------ -------- STL Holding Company, LLC LT IDR B+ New Rating senior unsecured LT BB- New Rating RR3 STRONG CLEANING: Unsecureds to Get Nothing in Subchapter V Plan --------------------------------------------------------------- Strong Cleaning, Inc., filed with the U.S. Bankruptcy Court for the District of Nebraska an Amended Plan of Reorganization under Subchapter V dated February 4, 2024. Debtor was formed in 2015 as a husband and wife team operating a residential and commercial cleaning business. Debtor provides cleaning services for carpets, rugs, upholstery, etc. Debtor filed for protection under Chapter 11, Subchapter V of the Bankruptcy Code on November 6, 2023. Debtor filed as a result of predatory actions taken by merchant cash advances. After filing, the relief of debt repayment pressure has allowed Debtor to operate as normal and Debtor expects sufficient net profits to make the payments required herein. Debtor's final payment under this plan is expected to be paid on or around December 31, 2026. This Plan of Reorganization proposes to pay creditors of Debtor from the net income of Debtor in operation of its business. Class 1 consists of the partially secured claims of FC Marketplace and U.S. Small Business Administration ("SBA"). This class is impaired. The Internal Revenue Service has filed a claim for $6,071.11, which is attributable to unfiled 2023 returns, which Debtor shall file within 60 days of the confirmation of this plan. There is no tax liability expected by Debtor for 2023, or prior years. Class 2 consists of the general unsecured claims and the unsecured portion of the SBA claim. No distribution is required or anticipated to this class. This class is impaired. The allowed unsecured claims total $803,814.76 (including unsecured portions of secured claims). Debtor has one class of equity secured holders (Class 3), which is held by members Amy Strong (76%) and Jonathan Strong (24%). Class 3 consists of Debtor's equity position within its assets and earnings and this class is unimpaired. Debtor shall retain equity, after payment of ordinary expenses and payments pursuant to this plan for the benefit of equity holders. The primary source of funding this plan will be from the operation of Debtor as a residential and cleaning service. It is projected that through proper marketing efforts, Debtor will be able to gradually increase its business in order to pay off its secured debt. Debtor proposes a three-year plan to do so. A full-text copy of the First Amended Plan dated February 4, 2024 is available at https://urlcurt.com/u?l=R9Gf8k from PacerMonitor.com at no charge. Attorney for Debtor: John A. Lentz, Esq. LENTZ LAW, PC, LLO 650 J. St. Ste 215B Lincoln, NE 68508 Phone: (402) 421-9676 Email: john@johnlentz.com About Strong Cleaning Strong Cleaning, Inc., was formed in 2015 as a husband and wife team operating a residential and commercial cleaning business. The Debtor filed a petition under Chapter 11, Subchapter V of the Bankruptcy Code (Bankr. D. Neb. Case No. 23-41047) on Nov. 6, 2023, with up to $50,000 in assets and $500,001 to $1 million in liabilities. Judge Thomas L. Saladino oversees the case. John A. Lentz, Esq., at Lentz Law, PC, LLLO, is the Debtor's bankruptcy counsel. SVB FINANCIAL: Ch. 11 Attorney Fees Okayed Despite 'Sticker Shock' ------------------------------------------------------------------ Alex Wittenberg of Law360 reports that a New York bankruptcy judge gave initial approval on Thursday, February 1, 2024, to millions of dollars in fees requested by professionals working on the bankruptcy case of Silicon Valley Bank's former parent company, despite his "sticker shock" at Sullivan & Cromwell's $1,500 hourly rate. About Silicon Valley Bank Silicon Valley Bank was the nation's 16th largest bank and the biggest to fail since the 2008 financial meltdown. During the week of March 6, 2023, Silicon Valley Bank, Santa Clara, CA, experienced a severe "run-on-the-bank." On the morning of March 10, 2023, the California Department of Financial Protection and Innovation seized SVB and placed it under the receivership of the Federal Deposit Insurance Corporation (FDIC). The FDIC on March 13, 2023, disclosed that it transferred all deposits -- both insured and uninsured -- and substantially all assets of the former Silicon Valley Bank of Santa Clara, California, to a newly created, full-service FDIC-operated "bridge bank" in an action designed to protect all depositors of Silicon Valley Bank. SVB Financial Group is a financial services company focusing on the innovation economy, offering financial products and services to clients across the United States and in key international markets. Prior to March 10, 2023, SVB Financial Group owned and operated Silicon Valley Bank, a state-chartered bank. On March 17, 2023, SVB Financial Group sought Chapter 11 bankruptcy protection (Bankr. S.D.N.Y. Case No. 23-10367). The Hon. Martin Glenn is the bankruptcy judge. The Debtor had assets of $19,679,000,000 and liabilities of $3,675,000,000 as of Dec. 31, 2022. Centerview Partners LLC is proposed financial advisor, Sullivan & Cromwell LLP proposed legal counsel and Alvarez & Marsal proposed restructuring advisor to SVB Financial Group as debtor-in-possession. Kroll is the claims agent. SVP SINGER: Oaktree Specialty Marks $25MM Loan at 45% Off --------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $25,462,000 loan extended to SVP-Singer Holdings Inc., to market at $14,131,000 or 55% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+6.75%) to SVP-Singer Holdings. This loan was on non-accrual status as of December 31, 2023. The loan matures on July 28, 2028. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Headquartered in Nashville, Tenn., SVP-Singer Holdings Inc., through its subsidiaries, manufactures and distributes consumer sewing machines and accessories under the Singer, Husqvarna Viking, and Pfaff brands. Since the 2021 leverage buyout transaction, the company is majority owned by Platinum Equity Partners. TEHUM CARE SERVICES: Sen. Warren Tells DOJ to Toss Bankruptcy ------------------------------------------------------------- Evan Ochsner of Bloomberg Law reports that Sen. Elizabeth Warren (D-Mass.) told the Justice Department's bankruptcy watchdog it should consider moving to dismiss a prison health-care company's attempt to use bankruptcy to settle liability. Warren on Wednesday, January 31, 2024, asked the US Trustee, an arm of the Justice Department, to consider joining a motion to dismiss made by tort claimants in Tehum Care Services Inc.'s Chapter 11 case. Tort claimants earlier this month moved to dismiss Tehum's bankruptcy so they can sue its affiliates, providing them a path to recover more money than they say they would receive through bankruptcy. "The U.S. Trustee should carefully consider the merits of the TCC's motion for structured dismissal and support it if it agrees with the conclusions presented," Warren said in the letter, referring to the tort claimants committee. The letter was addressed to Tara Twomey, the director of the US Trustee program, and Kevin M. Epstein, the trustee for the Southern District of Texas, where Tehum filed its case. Tehum, a shell company created by Corizon Health Inc. using a controversial bankruptcy maneuver known as the Texas Two-Step to resolve hundreds of personal injury suits, filed for Chapter 11 in February 2023. Tort claimants say Corizon provided substandard health care to incarcerated victims in prison. The US Trustee has previously expressed skepticism over Corizon’s attempt to settle liability through Tehum's bankruptcy. The watchdog in October objected to a motion by Tehum to move forward with its bankruptcy plan, which the US Trustee called "patently unconfirmable." The plan has impermissible liability releases that would shield nonbankrupt people and entities from liability, the US Trustee said. It has argued against similar releases at the US Supreme Court. The US Trustee should challenge any plan that provides liability releases obtained without creditor consent, Warren said. Corizon Health is using the Texas Two-Step "xplicitly to evade its liabilities," Warren said. It's seeking approval of a plan that "will deny Corizon's creditors, including incarcerated individuals, adequate restitution for the company's serious harms," she said. The case is Tehum Care Services, Inc., Bankr. S.D. Tex., No. 23-90086, 1/31/24. About Tehum Care Services Tehum Care Services Inc., doing business as Corizon Health Services Inc., is a privately held prison healthcare contractor in the United States. It is based in Brentwood, Tenn. Tehum Care Services filed a petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-90086) on Feb. 13, 2023. In the petition filed by Russell A. Perry, as chief restructuring officer, the Debtor reported assets between $1 million and $10 million and liabilities between $10 million and $50 million. Judge Christopher M. Lopez oversees the case. The Debtor tapped Gray Reed & McGraw, LLP as bankruptcy counsel; Bradley Arant Boult Cummings, LLP, as special litigation counsel; and Ankura Consulting Group, LLC, as financial advisor. Russell A. Perry, senior managing director at Ankura, serves as the Debtor's chief restructuring officer. Kurtzman Carson Consultants, LLC, is the claims, noticing and solicitation agent. The U.S. Trustee for Region 7 appointed an official committee to represent unsecured creditors in the Debtor's Chapter 11 case. Stinson, LLP and Dundon Advisers, LLC, serve as the committee's legal counsel and financial advisor, respectively. TERRAFORM LABS: Tells Court It Could be Penalized by SEC -------------------------------------------------------- Alex Wittenberg of Law360 reports that cryptocurrency company Terraform Labs told a Delaware bankruptcy judge on Wednesday, January 31, 2024, the mere fact it could face a ruinous U. S. Securities and Exchange Commission fine in the future justifies Chapter 11 protection today, arguing a recent judgment in favor of the regulatory agency attests to its financial distress. About Terraform Labs Terraform Labs Pte. Ltd. -- https://www.terra.money -- is a startup that created Terra, a blockchain protocol and payment platform used for algorithmic stablecoins. It was co-founded by Do Kwon and Daniel Shin in 2018 in Seoul, South Korea. Terraform Labs introduced its first cryptocurrency token, TerraUSD, in 2019. Investment firms like Arrington Capital, Coinbase Ventures, Galaxy Digital, and Lightspeed Venture Partners helped Terraform Labs raise more than $200 million. The collapse of the stablecoins TerraUSD (UST) and Luna in May 2022 caused the temporary suspension of the Terra network, wiping out over $45 billion in market capitalization in a single week. Both of Terra Form Labs' founders have encountered legal problems as a result of the devaluation of the company's currency. In September 2022, South Korean prosecutors filed a warrant for Do Kwon's arrest. He was also added to Interpol's Red Notice list, which urges other law enforcement to find and detain him. Terraform Labs Pte. Ltd. sought relief under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-10070) on Jan. 22, 2024. In the petition filed by Chris Amani, as chief executive officer, the Debtor estimated assets and liabilities between $100 million and $500 million each. The Debtor is represented by: Zachary I Shapiro, Esq. Richards, Layton & Finger, P.A. 1 Wallich Street #37-01 Guoco Tower 078881 TGP HOLDINGS: Guggenheim SOF Marks $376,806 Loan at 15% Off ----------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $376,806 loan extended to TGP Holdings LLC to market at $320,545 or 85% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to TGP Holdings LLC. The loan accrues interest at a rate of 8.70% (1 Month Term SOFR + 3.25%, Rate Floor: 3.25%). The loan matures on June 29, 2028. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 TGP Holdings manufactures household appliances. THAT GOOD GOOD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: That Good Good LLC d/b/a SuperDelux 5009 SE Powell Blvd Portland, OR 97206 Business Description: SuperDeluxe is a restaurant chain based in Portland, Oregon. Chapter 11 Petition Date: February 9, 2024 Court: United States Bankruptcy Court District of Oregon Case No.: 24-30325 Judge: Hon. Peter C. Mckittrick Debtor's Counsel: Thomas W. Stilley, Esq. SUSSMAN SHANK LLP 1000 SW Broadway Suite 1400 Portland, OR 97205 Tel: 503-227-1111 Email: tstilley@sussmanshank.com Estimated Assets: $1 billion to $10 billion Estimated Liabilities: $1 million to $10 million The petition was signed by Micah Camden as manager. A full-text copy of the petition is available for free at PacerMonitor.com at: https://www.pacermonitor.com/view/SJN6AKY/That_Good_Good_LLC__orbke-24-30325__0001.0.pdf?mcid=tGE4TAMA List of Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount 1. US Small Business Admin. Substantially $1,420,967 PO Box 39180 All Property Portland, OR 97208-3818 Therese Meers Tel: 503-326-2882 Email: answerdesk@sba.gov 2. WebBank Loan $356,158 215 South State Street Suite 1000 Salt Lake City, UT 84111 Parris Sanz Phone: 844-994-2265 Email: parris.sanz@webbank.com 3. US Foods Vendor $126,000 350 S Pacific Hwy Woodburn, OR 97071 Martha Ha Phone: 408-766-5600 Email: martha.ha@usfoods.com 4. Fab King, LLC Loan $125,000 PO Box 6774 Portland, OR 97225 Stephanie Sahagian Phone: 302-658-7581 Email: stephanie@houseofspearsmgmt.com 5. Corfini Gourmet Vendor $92,000 11040 SW Myslony St #100 Tualatin, OR 97062 John M. Debenedetti Phone: 503-928-4771 Email: theresal@corfinigourmet.com 6. Urban Renaissance Group Commercial $54,570 PO Box 4800, Unit 98 Lease Portland, OR 97208 Tom Kilbane Phone: 206-381-3344 Email: tom@urbanrengroup.com 7. Rhino Holdings Commercial $13,986 Sherwood, LLC Lease PO Box 2519 Portland, OR 97208 Sanjiv Chopra Phone: 702-202-6573 Email: deals@rhinoig.com 8. Wizer Properties Commercial $10,433 1125 NW Coach St. Lease #450 Portland, OR 97209 Kimberly Wizer Phone: 503-459-7505 9. Portland General Utilities $4,406 Electric 121 SW Salmon St Portland, OR 97204 Carol Walker Phone: 503-464-8000 Email: customer.service@pgn.com 10. NW Natural Gas Utilities $2,996 250 SW Taylor St. Portland, OR 97204 Maardilyn Saathoff Phone: 800-422-4012 Email: smf@nwnatural.com 11. Waste Management Utilities $2,727 of Oregon Inc 800 Capital St Ste 300 Houston, TX 77002 Charles Boettcher Phone: 855-267-1046 Email: wmcares@wm.com 12. Pride Disposal Company Utilities $1,188 PO Box 820 Sherwood, OR 97140 Mike Leichner Phone: 503-625-6177 13. Pacific Power Utilities $1,141 1033 NE 6th Avenue Portland, OR 97256 Stefan Bird Phone: 888-221-7070 Email: accountnotices@pacificpower.net 14. Portland Disposal & Utilities $1,057 Recycling, Inc. 7202 NE 42nd Avenue Portland, OR 97218 Gianncarlo Cargni Phone: 503-281-8736 Email: ap@portlanddisposal.com 15. Happy Cup Coffee Company Vendor $1,000 2850 NE Sandy Blvd Portland, OR 97232 Scott Rector Phone: 503-484-0842 Email: coffee@happycup.com 16. Comcast Business Utilities $948 1701 John F Kennedy Blvd Philadelphia, PA 19103-2838 Francis M. Buano Phone: 866-429-0152 Email: francis_buono@comcast.net 17. Portland Water Bureau Utilities $904 664 N. Tillamook St. Portland, OR 97227 Gabe Solmer Phone: 503-823-7770 Email: PWBCustomerService@portlandoregon.gov 18. Cascade Disposal Utilities $630 1300 SE Wilson Avenue Bend, OR 97702 Patrick Shea Phone: 541-382-6660 Email: cust2012@wcnx.org 19. Cascade Natural Gas Corp. Utilities $607 8113 W Grandridge Blvd Attn Chris Ryan Kennewick, WA 99336 Attn Chris Ryan Phone: 888-522-1130 Email: chris.ryan@cngc.com 20. City of Sherwood Water Utilities $481 15527 SW Willamette St. Sherwood, OR 97140 Craid Sheldon Phone: 503-925-2310 Email: utilitybilling@sherwoodoregon.gov THE AVERY: Oaktree Specialty Marks $5.07MM Loan at 15% Off ---------------------------------------------------------- Oaktree Specialty Lending Corporation has marked its $5,065,000 loan extended to The Avery, to market at $4,290,000 or 85% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (PIK 10.00%) to Avery. This investment was on non-accrual status as of December 31, 2023. The loan matures on December 15, 2024. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 The Avery is in the Real Estate Operating Companies Industry. THRASIO LLC: Oaktree Specialty Marks $46.8MM Loan at 40% Off ------------------------------------------------------------ Oaktree Specialty Lending Corporation has marked its $46,832,000 loan extended to Thrasio LLC, to market at $28,099,000 or 60% of the outstanding amount, as of December 31, 2023, according to a disclosure contained in Oaktree Specialty's Form 10-Q for the quarterly period ended December 31, 2023, filed with the U.S. Securities and Exchange Commission. Oaktree Specialty is a participant in a First Lien Term Loan (SOFR+9.00%) to Thrasio. This loan was on non-accrual status as of December 31, 2023. The loan matures on December 28, 2026. Oaktree Specialty Lending Corporation is a specialty finance company that looks to provide customized, one-stop credit solutions to companies with limited access to public or syndicated capital markets. Oaktree Specialty was formed in late 2007 and operates as a closed-end, externally managed, non-diversified management Investment Company that has elected to be regulated as a Business Development Company under the Investment Company Act. Oaktree Specialty can be reached at: Armen Panossian Oaktree Specialty Lending Corporation 333 South Grand Avenue, 28th Floor Los Angeles, CA 90071 Tel: 213-830-6300 Thrasio LLC -- https://www.thrasio.com/ -- specializes in buying Amazon third-party private label businesses. Its portfolio includes Angry Orange pet odor eliminators and stain removers, Wise Owl Outfitters camping and outdoor gear, and more than 200 other Amazon and ecommerce brands. Thrasio was co-founded in 2018 by Joshua Silberstein. TIGHT ENDS: Unsecured Creditors to be Paid in Full in Plan ---------------------------------------------------------- Tight Ends Sports Bar & Grill LLC filed with the U.S. Bankruptcy Court for the Eastern District of Texas a Subchapter V Plan of Reorganization dated February 1, 2024. The Debtor once operated two sports bar restaurant locations, one in Plano which opened in November, 2015 and a second location in League City, Texas which opened in September, 2016. The League City location closed in April, 2022 in connection with the dispute between the Debtor and the landlord of the League City location, Salt & Pepper Restaurants Inc. ("SNP"). The fallout from the dispute between the Debtor and SNP resulted in the landlord of the Plano location insisting that the restaurant continue only in a new lease under a new entity. Consequently, on March 1, 2022, QSL Realty Plano LLC as Landlord and TE of North Texas LLC ("TENTX") entered into a new lease for the same building. Each landlord owns/owned substantially all of the personal property and contents of each restaurant location. All of the intellectual property associated with the Tight Ends brand is owned by a separate entity which entity is owned and controlled by Tim Dungan, and such intellectual property was never owned by the Debtor. The genesis of this case is the dispute and ultimately the Lawsuit between the Debtor and the landlord of the former League City, Texas location which is now the subject of an adversary proceeding pending in this Court, Adv. No. 23-04100. Class 2 consists of the disputed claims of SNP. The claim of SNP is disputed and is the subject of the Lawsuit. Ultimately, the Debtor believes that the Debtor will obtain a net recovery against SNP. The Debtor will continue prosecution of the Lawsuit in this Court through Adv. No. 23-04100 through its final adjudication and/or final appellate outcome. Any resulting allowed claim in favor of SNP will be paid by the net proceeds of any assets of the Plan Trust. If SNP elects at or before confirmation, the Debtor will pay $100,000 to SNP within 30 days of the Effective Date for a full global resolution of all claims and controversy and a full a mutual and global release by and among the Debtor and SNP and the insiders of each, including Tim Dungan and the principals of SNP. Class 3 consists of allowed general unsecured claims that are not secured by property of the estate. As set forth in TEG302, the Class 3 general unsecured creditors consist of general unsecured claims asserted in aggregate amount of approximately $4,657.00. he holders of allowed claims in Class 3 will receive payment in full within 30 days of the Effective Date. This Class is impaired. Class 4 consists of an SBA EIDL Covid-era small business relief loan. Tim Dungan is personally guaranteed on the loan. He has continued to service the debt according to its contractual terms since the closing of the League City location. Tim Dungan will continue to service this the SBA EIDL loan according to its contractual terms. Class 5 consists of Equity Interest Holders. The holders of equity interests in the Debtor will retain their interests. Thus, Tim Dungan will remain the sole member of the Debtor. The garnishment cash bond in Cause 23-42104 in the amount of $32,000 will be deemed to be released to the Debtor as of the entry of the Confirmation Order. The Confirmation Order will include instructions to the current holder of the bond to such effect. Tim Dungan will supply any additional funds necessary to meet the cash obligations of the Debtor as of the Effective Date. Otherwise, Tim Dungan will fund the litigation necessary to complete the lawsuit and recovery of assets of the estate from SNP in the Lawsuit. A full-text copy of the Subchapter V Plan dated February 1, 2024 is available at https://urlcurt.com/u?l=qahyT7 from PacerMonitor.com at no charge. Counsel for Debtor: Jeff Carruth, Esq. Weycer, Kaplan, Pulaski, & Zuber, P.C. 3030 Matlock Rd., Suite 201 Arlington, Texas 76015 Phone: (713) 341-1058 Facsimile: (866) 666-5322 Email: jcarruth@wkpz.com About Tight Ends Sports Bar & Grill Tight Ends Sports Bar & Grill, LLC operates sports bar restaurant in Texas. The Debtor sought protection for relief under Chapter 11 of the Bankruptcy Code (Bankr. E.D. Tex. Case No. 23-42104) on Nov. 3, 2023, listing under $1 million in both assets and liabilities. Jeff Carruth, Esq. at Weycer, Kaplan, Pulaski & Zuber, P.C., is the Debtor's counsel. TOOLOTS INC: Files Emergency Bid to Use Cash Collateral ------------------------------------------------------- Toolots, Inc. asks the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division, for authority to use cash collateral and continued maintenance of existing bank accounts for a limited period. To sustain its operations, Toolots historically raised capital from investors. However, with the evolving global market conditions, securing additional funding became increasingly challenging. In a bid to address cash flow issues, Debtor turned to high-interest loans from Merchant Capital advance companies, exacerbating their financial situation. Approximately five months ago, Toolots discontinued the use of PayPal as its payment processor. Unfortunately, this decision resulted in PayPal freezing over $864,785 in the Debtor's merchant account, as per their policy, to allow for customer protection in potential disputes. Most of these transactions have surpassed the 180-day mark, and despite the Debtor's efforts, it has been unsuccessful in engaging with PayPal to release these funds. As a consequence of these financial challenges, Toolots Inc. finds itself unable to meet its financial obligations, notably the upcoming warehouse rent payment of $250,000 due on February 6, 2024. With no other viable option in sight, the Debtor has made the difficult decision to file for Chapter 11 bankruptcy. The Debtor's secured creditors are Decathlon Alpha IV, L.P., Cobalt Funding Solutions, and CFT Clear Finance Technology Corp. d/b/a Clearco. The Debtor believes that the preservation of the entity as a going concern provides the adequate protection necessary for Debtor to obtain use of the cash collateral. A copy of the motion is available at https://urlcurt.com/u?l=s7LGe7 from PacerMonitor.com. About Toolots Inc. Toolots Inc. operates an online marketplace and distribution channel for factory-direct industrial tools, machinery and technology. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. C.D. Cal. Case No. 24-10893) on February 6, 2024. In the petition signed by Jason Fu, CEO, the Debtor disclosed $2,308,249 in assets and $7,026,470 in liabilities. Christopher J. Langley, Esq., at SHIODA LANGLEY & CHANG LLP, represents the Debtor as legal counsel. TRANSCENDIA HOLDINGS: Guggenheim SOF Marks $1.6MM Loan at 26% Off ----------------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $1,699,041 loan extended to Transcendia Holdings, Inc to market at $1,259,839 or 74% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Transcendia Holdings, Inc. The loan accrues interest at a rate of 9.23% (3 Month USD LIBOR + 3.50%, Rate Floor: 4.50%). The loan matures on May 30, 2024. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 Transcendia Holdings, Inc. is a provider of engineered specialty films materials across a range of end-markets. The company manufactures specialty films by extrusion of resin or converting film for specific customer applications. TRINITY PHARMACIES: Files Emergency Bid to Use Cash Collateral -------------------------------------------------------------- Trinity Pharmacies, LLC asks the U.S. Bankruptcy Court for the Western District of Texas, San Antonio Division, for authority to use cash collateral and provide adequate protection. The Debtor requires the use of cash collateral to pay normal operating expenses. Approximately 99% of the prescriptions filled by the Debtor are for patients who are in hospice care. As such, the prescriptions being filled are for an abnormally high percentage of pain management medications. The Debtor, a small independent pharmacy, was added as a named defendant in a lawsuit in Bexar County's multidistrict litigation against Purdue Pharma L.P. In this litigation, Bexar County has sued not only the manufacturers of opioid medications, but also added wholesalers and major retailers as defendants. Oddly enough, the Debtor was one of the added Defendants, despite its single location, limited resources, and the nature of the patients which are the Debtor's customers. Based upon an analysis of the UCC records filed with the Texas Secretary of State, the parties that may hold secured claims against the Debtor, which may give rise to cash collateral, are Americorp. Financial, LLC, ASSN Company as representative (creditor not known), CSC Company as representative (creditor not known, but believe to be On Deck Capital), and Morris & Dickson Co., LLC. The Debtor proposes to provide adequate protection to all parties with an interest in cash collateral case in the following manner: a. All creditors with an interest in cash collateral will be granted a replacement lien to the same extent, priority and validity as its pre-petition lien(s); b. The Debtor requests permission to continue to pay the secured lenders' Americorp Financial and On Deck Capital Inc., the regular debt service payments in order to provide adequate protection to such creditors until a plan is confirmed in the case; c. The Debtor also requests permission to continue its relationship with its suppliers in the ordinary course of the Debtor's business and pay such suppliers on the same terms which existed before the commencement of the case; d. The Debtor will continue to operate its business in the ordinary course of business thus generating additional cash collateral; and e. The Debtor will maintain insurance upon the property giving rise to the cash collateral. A copy of the motion is available at https://urlcurt.com/u?l=Nmzxqt from PacerMonitor.com. About Trinity Pharmacies, LLC Trinity Pharmacies, LLC sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. W.D. Tex. Case No. 24-50144-cag) on February 4, 2024. In the petition signed by Larry P. Oliver, president, the Debtor disclosed up to $500,000 in both assets and liabilities. H. Anthony Hervol, Esq., at Law Office of H. Anthony Hervol, represents the Debtor as legal counsel. TWO RIVERS: Files Emergency Bid to Use Cash Collateral ------------------------------------------------------ Two Rivers Corporate Centre, Limited Partnership asks the U.S. Bankruptcy Court for the Middle District of Tennessee, Nashville Division, for authority to use cash collateral and provide adequate protection. The Debtor requires the use of cash collateral to pay operating expenses including insurance, utilities, tenant improvements, cleaning, landscaping, maintenance and other expenses. Wells Fargo Bank, N.A. delivered a notice of foreclosure to the Debtor on January 12, 2024. The Debtor was forced to seek Chapter 11 protection to preserve the substantial equity in the Office Park. Wells Fargo holds a first priority lien on substantially all of the Debtor’s assets, including cash collateral, pursuant to certain loan documents and UCC-1 Financing Statements. As of the Petition Date, the balance due on such loan is approximately $19.8 million and the collateral that secures it is worth approximately $42 million. As for adequate protection for the limited use of cash collateral, the Debtor proposes to provide to the Secured Creditor replacement liens in accordance with 11 U.S.C. sections 361(2) and 552(b) to the extent of cash collateral actually expended, and on the same assets and in the same order of priority as existed immediately prior to the Petition Date. Any replacement lien will be to the same extent and with the same validity and priority as the Secured Creditor's pre-petition liens, without the need to file or execute any document as may otherwise be required under applicable nonbankruptcy law. A copy of the Debtor's motion and budget is available at https://urlcurt.com/u?l=rneEl3 from PacerMonitor.com. The Debtor projects total expenses, on a monthly basis, as follows: $76,400 for February 2024; $99,289 for March 2024; $99,289 for April 2024; $99,289 for May 2024; and $99,914 for June 2024. About Two Rivers Corporate Centre Two Rivers Corporate Centre was formed in 2001 and is the owner of a 3-building, 283,789 square foot single story office park situated on one parcel of 33 acres located at 2501 McGavock Pike, Nashville, Tennessee. The land is zoned CA (Commercial Attraction) which also allows for high density residential and industrial development by right in addition to office space and retail uses. The property has a number of Tenants that are government agencies with long-term leases in place as well as government contractors that serve governmental agencies. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. M.D. Tenn. Case No. 3:24-bk-00399) on February 7, 2024. In the petition signed by Floyd Shechter, chief manger of GP, RS Development of Nashville, LLC, the Debtor disclosed up to $50 million in both assets and liabilities. Robert J. Gonzales, Esq., at EmergeLaw, PLC, represents the Debtor as legal counsel. UKG INC: Fitch Assigns 'BB' Rating on Proposed $2.5BB Secured Notes ------------------------------------------------------------------- Fitch Ratings has assigned a 'BB'/'RR2' rating to the proposed $2.5 billion secured notes issued by UKG Inc. The proceeds, along with the $4.885 billion first-lien secured term loan, announced on Jan. 23, 2024, will be used to fully refinance the outstanding $7 billion first-lien term loan and outstanding revolving credit facility. KEY RATING DRIVERS The following Key Rating Drivers were published in conjunction with the most recent rating action on Jan. 23, 2024, when Fitch assigned UKG a 'B+' Issuer Default Rating/Stable Outlook. Moderate Financial Leverage: Fitch estimates UKG's gross leverage to be near 6.5x for FY2024 and trends down to near 5x for FY2025, driven primarily by EBITDA growth. Absent incremental debt, Fitch estimates gross leverage to approach 4x for FY2026. Given the private equity ownership that is likely to prioritize ROE, Fitch does not anticipate accelerated debt repayment. Fitch expects capital to be used for acquisitions, to accelerate growth, or for dividends to equity owners with financial leverage remaining at moderate levels. Broad Product Coverage Supports Cross-Selling: UKG has identified cross-selling and up-selling as components of its growth strategy. During the merger of Ultimate Software and Kronos, there was limited customer overlap, with Ultimate Software's product focused around core human capital management (HCM) and Kronos' products focused around workforce management (WFM). Fitch believes the complementary customer and product coverage provides UKG substantial opportunities to cross-sell its products and should be a meaningful growth driver in the coming years. High Revenue Retention and Recurring Revenue: Consistent with mission-critical enterprise software products, UKG has gross retention in the mid-90's and net retention benefitting from cross-selling and up-selling opportunities. As customers transitioned to SaaS in recent years, recurring revenue has increased to approximately 86% of total revenue for the past two fiscal years. The strong revenue retention characteristics and high levels of recurring revenue provide significant revenue visibility enabling UKG to effectively manage its profitability. Operating Leverage to Benefit Margins: UKG has largely integrated and optimized its product platforms and operations after the merger of Ultimate Software and Kronos exiting FY2023. The company expects to pivot to margin expansion through increase in cloud subscription revenue and operating leverage benefiting operating margins. Fitch believes the projected operating leverage is consistent with software peers operating at scale efficiency. Resilient Market Exposure: Most of UKG's revenue is from mid-market, enterprise, and large enterprise customers. Fitch believes this customer base is more resilient through economic cycles than the SMB segment. Fitch believes the Services and Other segment, representing 13.6% of fiscal 2023 total revenue, is more variable, as the segment includes implementation services and time clock hardware sales. The strong growth of the larger recurring software revenue should more than offset potential variability from the Services and Other segment. Fitch expects the contribution from Services and Other segment to decline as perpetual license revenue declines and recurring software revenue continues to outgrow the overall growth rate. Significant Customer Diversification: UKG has a highly diversified customer base of over 80,000, with no significant concentration in any industry verticals. The diverse customer base effectively minimizes idiosyncratic risks that are associated with individual industry verticals and should reduce revenue volatility for UKG. Competitive Landscape: The HCM industry is highly competitive and fragmented with competitors of various scales. The company provides HR employers with software tools that automate processes, including payroll and taxation processing, employee hiring and engagement, compliance and many more, encircling employee lifecycle management. Fitch expects continued growth in demand for HCM software as companies migrate to cloud-based solutions to automate administrative functions to reduce costs and time spent, while focusing more on strategic investment decisions. DERIVATION SUMMARY UKG's HCM products are considered mission-critical, as they encompass the entire employee lifecycle management and workforce management. Most of UKG's revenue is derived from the mid-market, enterprise, and large enterprise segments, which are generally more resilient than the SMB segment. The merger between Ultimate Software and Kronos provides UKG with broad product coverage and limited customer overlaps. This provides the company with opportunities for cross-selling of products as a driver for revenue growth. These benefits are demonstrated by UKG's gross revenue retention in the mid-90%. With the completion of integration between Ultimate Software and Kronos, including product platform consolidation and operational optimization, UKG is poised to benefit from operating leverage, as Fitch expects revenue growth to remain in the teens through the medium term with EBITDA margins expanding. Within the HCM market, UKG competes with Automatic Data Processing (ADP, AA-/Stable) and TriNet (BB+/Stable). ADP is substantially larger than UKG with approximate gross leverage of 0.5x. Similar to UKG, ADP also has significant enterprise exposure. UKG is similar in revenue scale as TriNet. However, TriNet's EBITDA margins are approximately half of UKG's margins primarily attributed to difference in revenue mix. TriNet's gross leverage is in the 2x range. While the three companies have product overlaps in some areas, UKG has a more software-centric product and operating profile compared to both ADP and TriNet. Fitch also compares UKG to other software peers in the 'B' to 'B+' rating categories. UKG's revenue scale compares favorably to peers. Fitch believes software companies operating at scale efficiency could achieve EBITDA margins near 40%, offering UKG upside potential for margin expansion from current levels. UKG's gross leverage and FCF generation are consistent with peers in the 'B' to 'B+' rating categories. KEY ASSUMPTIONS Fitch's Key Assumptions Within the Rating Case for the Issuer: - Organic revenue growth in the mid-teens declining to low-teens through the forecast period; - EBITDA margins gradually expands by 800 bps through fiscal 2027 from fiscal 2023 level; - Aggregate capex and capitalized software expense in the range of 3%-4% of revenue; - First-lien debt repayment limited to mandatory amortization; - Second-lien debt repaid at maturity in fiscal 2027; - Non-discretionary equity program is paid out as scheduled; - No acquisitions assumed through fiscal 2027; although, internal cash could support some acquisitions without external funding; - No dividend payments through fiscal 2027. RECOVERY ANALYSIS KEY RECOVERY RATING ASSUMPTIONS - The recovery analysis assumes that UKG would be recognized as a going concern in bankruptcy rather than liquidated; - Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach - Fitch assumed a distress scenario where a combination of operational under-performance and capital misallocation result in unsustainable capital structure. This could be a result of elevated customer churn, inability to maintain EBITDA margins, and debt-financed dividends or M&As; - Any decline in UKG's revenue base could result in EBITDA margin contraction on lower revenue scale. Fitch assumes that due to competitive pressure, revenue to suffer a 10% reduction along with margin contraction, resulting in GC EBITDA of $1.14 billion, approximately 15% lower than the forecasted fiscal 2024 EBITDA; - Fitch assumes that UKG will receive going-concern recovery multiple of 7.0x. The estimate considers several factors, including the highly recurring nature of the revenue, the high customer retention, the secular growth drivers for the sector, the company's strong FCF generation and the competitive dynamics. The EV multiple is supported by: - The historical bankruptcy case study exit multiples for technology peer companies ranged from 2.6x to 10.8x. Of these companies, only three were in the Software sector: Allen Systems Group, Inc., Avaya, Inc. and Aspect Software Parent, Inc., which received recovery multiples of 8.4x, 8.1x and 5.5x, respectively; - The highly recurring nature of UKG's revenue and mission critical nature of the product support the high-end of the range. - Fitch arrived at an EV of $7.97 billion. After applying the 10% administrative claim, adjusted EV of $7.18 billion is available for claims by creditors. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Fitch's expectation of EBITDA leverage sustaining below 4.0x; - (CFO-Capex)/Debt ratio sustaining near 10%; - Organic revenue growth sustaining above the high single digits. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Fitch's expectation of EBITDA leverage sustaining above 5.5x; - (CFO-Capex)/Debt ratio sustaining below 7%; - Organic revenue growth sustaining near or below 5%. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: The company's liquidity is projected to be ample, supported by its FCF generation and an undrawn $945 million RCF at closing of refinancing, and readily available cash and cash equivalents. Fitch forecasts UKG's normalized FCF margins to remain above 10% supported by EBITDA margin expanding to over 30%. Debt Structure: Pro forma for the transaction, UKG's debt will consist of $4.885 billion first-lien term loan, $2.5 billion secured notes, $1.45 billion second-lien term loan, an undrawn $945 million revolver. The earliest maturity is the second-lien term loan due FY2027. Fitch forecasts the company to have sufficient cash on balance sheet to repay the second-lien term loan. ISSUER PROFILE UKG is a provider of mission-critical SaaS HCM solutions for companies of all sizes. The company serves over 80,000 customers in 150 countries and diverse industry verticals. The company's "People-first" culture anchors its approach to customers and product offerings. DATE OF RELEVANT COMMITTEE January 18, 2024 Entity/Debt Rating Recovery ----------- ------ -------- UKG Inc. senior secured LT BB New Rating RR2 US RENAL CARE: $1.25BB Bank Debt Trades at 17% Discount ------------------------------------------------------- Participations in a syndicated loan under which US Renal Care Inc is a borrower were trading in the secondary market around 83.1 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The loans traded in the secondary market around 76.1 cents-on-the-dollar the previous week ended Feb. 2. The $1.25 billion Term loan facility is scheduled to mature on June 28, 2028. Nearly $1.25 billion of the loan is withdrawn and outstanding. U.S. Renal Care is a dialysis provider available for people living with chronic and acute renal disease. USA RV: Court OKs Interim Cash Collateral Access ------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of North Carolina, Raleigh Division, authorized USA RV, LLC to use cash collateral, on an interim basis, in accordance with the budget, with a 10% variance. The Debtor believes that the parties that may have an interest in its cash collateral are identified as follows: a. Automotive Finance Corporation - by way of Security Agreement and UCC-1 financing statement number 20190014043F filed on February 12, 2019 with the North Carolina Secretary of State. b. U.S. Small Business Administration - by way of Security Agreement and UCC-1 financing statement number 20200059522J filed on May 22, 2020 with the North Carolina Secretary of State. c. Northpoint Commercial Finance, LLC - by way of Security Agreement and UCC-1 financing statement number 20200102111A filed on July 9, 2020 with the North Carolina Secretary of State. d. SouthState Bank, NA - by way of Security Agreement and UCC-1 financing statement number 20220126386C filed on September 14, 2022 with the North Carolina Secretary of State. e. Wells Fargo Commercial Distribution Finance, LLC - by way of Security Agreement and UCC-1 financing statement number 20220157501G filed on November 22, 2022 with the North Carolina Secretary of State. At the time of the petition, the Debtor had cash on hand of approximately $32,835 in its bank accounts, all of which was transferred to the Debtor's DIP account after filing, and personal property valued at approximately $98,249. As adequate protection and to the extent that cash collateral is used, the Potential Secured Creditors will receive a post-petition lien on the Debtor's postpetition cash and personal property to the extent of the use of cash collateral and to the same extent, validity, and priority as each such creditor's lien in the same type of collateral existed prepetition. As additional adequate protection to the SBA and Northpoint, the Debtor will make monthly adequate protection payments to the SBA in the amount of $350 and to Northpoint in the amount of $1,000, beginning February 1, 2024, and continuing monthly for as long as the Debtor's use of cash collateral is authorized. The Order will remain in full force and effect until: (a) entry of a subsequent order by the Court regarding the use of cash collateral; (b) filing of a notice of default of the terms of the Order by a party-in-interest; (c) appointment of a trustee or examiner in the case; or (d) conversion or dismissal of the case. A further hearing on the matter is set for March 4, 2024 at 12:30 p.m. A copy of the court's order and the Debtor's budget is available at https://urlcurt.com/u?l=BCMExV from PacerMonitor.com. The Debtor projects $75,000 in net sales and $54,200 in total expenses for February/March 2024. About USA RV, LLC USA RV, LLC is a locally owned and operated company that sells new and used recreational vehicles. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. E.D. N.C. Case No. 24-00001) on January 1, 2024. In the petition signed by David W. Hall, member, the Debtor disclosed $2,850,847 in assets and $4,487,838 in liabilities. Judge David M. Warren oversees the case. Danny Bradford, Esq., at Paul D. Bradford, PLLC, represents the Debtor as legal counsel. VERDE BUILDING: Court OKs Cash Collateral Access on Final Basis --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of North Carolina, Charlotte Division, authorized Verde Building Solutions, Inc. to use cash collateral on a final basis in accordance with the budget, with a 10% variance. The Debtor asserts that it does not have one current secured creditor by way of filings with the North Carolina Secretary of State. Rather, the search results reveal only one creditor, Multiple Funding Solutions, Inc. which secured position lapsed on March 2, 2023. The Debtor's depository is Bank OZK who is in possession of the Debtor's cash. The account was opened for the sole purpose of earmarking funds for the benefit of the federal housing project known as "Vantage Point." On March 3, 2022, the Debtor executed an unsecured Promissory Note in favor of Carter Lumber of the South, Inc. On October 24, 2022, Carter Lumber filed suit in the Court of Common Pleas Portage County, Ohio. The action was reduced to final judgment in favor of Carter Lumber on August 24, 2023 in the principal amount of $273,234. Prior to the October 11, 2023 Petition Date, the judgment had not been domesticated to Mecklenburg County, North Carolina. On September 11, 2023, Bank OZK purportedly received from Carter Lumber its Affidavit, Order and Notice of Garnishment of Property Other Than Personal Earnings And Answer of Garnishee Notice of Garnishment to Bank OZK. As of the next full business date from the date of the purported garnishment notice the time of notice, the Bank OZK held in the Debtor's account $144,832. Carter asserts a perfected secured interest in the money held in the Bank OZK. The Debtor disputes such assertion, and upon information and belief, Bank OZK supports the Debtor's contention. The Debtor is authorized to pay Carter Lumber of the South a monthly adequate protection payment of $2,000 which will be credited against any allowed secured claim in the case. As adequate protection, Carter Lumber of the South is granted a replacement security interest under 11 U.S.C. Section 361 up to $207,808 to the same extent and in the same priority as its pre-petition security interest, and said replacement security interest includes (a) the Debtor's cash and cash equivalents, and (b) the Debtor's accounts receivable. A copy of the court's order budget is available at https://urlcurt.com/u?l=kWVe2D from PacerMonitor.com. About Verde Building Solutions Verde Building Solutions, Inc. is a full-service design, construction and development firm specializing in multi-family, residential and mixed-use projects. The company is based in Charlotte, N.C. Verde Building Solutions filed Chapter 11 petition (Bankr. W.D.N.C. Case No. 23-30704) on Oct. 11, 2023, with up to $1 million in assets and up to 10 million in liabilities. Ronald Staley Jr., president, signed the petition. Judge Laura T. Beyer oversees the case. The Debtor tapped John C. Woodman, Esq., at Essex Richards, PA as legal counsel and Michael T. Bowers, CPA, as accountant. VIVO TECHNOLOGIES: Has Deal on Cash Collateral Access ----------------------------------------------------- Vivo Technologies, LLC asks the U.S. Bankruptcy Court for the District of Arizona for authority to use cash collateral in accordance with its agreement with Arizona Bank & Trust, a division of HTLF Bank. The parties agreed that the Debtor may use cash collateral in the ordinary course of business to pay the expenses categorized in the Cash Flow budget through March 31, 2024, with a 10% variance. The Debtor is further authorized to pay any expenses necessary to maintain liability insurance. To the extent there is a diminution in the value of the Lender's interest in the cash collateral, the Lender is granted a first priority perfected replacement lien in all post-petition collateral of the Debtor that are or would be collateral under the Loan Documents, which Replacement Lien is valid, binding, enforceable and fully perfected as of the Petition Date without the necessity of the execution, filing or recording by the Debtor or the Lender of security agreements, pledge agreements, financing statements, or other agreements, and will be equivalent to a lien granted under 11 U.S.C. Section 364(c). To the extent the Replacement Lien does not adequately protect the diminution in the value of the Lender's interest in the Collateral from the Petition Date, the Lender is granted an allowed administrative claim under 11 U.S.C. Section 507(b) with respect to all Adequate Protection obligations, with the allowed amount to be determined upon Order of the Court. The Administrative Claim will be payable from and have recourse to all pre-petition and post-petition property of the Debtor and all proceeds thereof. If those property interests are insufficient to satisfy the Administrative Claim then the Administrative Claim will be satisfied on a pro rata basis with all other allowed administrative expenses claims of the estate from the proceeds of the Debtor's Chapter 5 avoidance actions. As additional adequate protection, the Debtor will continue to pay $10,093 each month to the Lender beginning in May 2023. Beginning on August 6, 2023, the Monthly Adequate Protection Payment will be due on the 6th day of each month. In the event Lender is determined to be oversecured, the adequate protection payments will be applied against accrued post-petition interest and other amounts awarded as part of Lender's Allowed Claim; otherwise, the adequate protection payments will be applied towards a reduction of principal. A copy of the stipulated motion is available at https://urlcurt.com/u?l=KWBLgp from PacerMonitor.com. A copy of the proposed interim order and budget is available at https://urlcurt.com/u?l=ymx5f1 from PacerMonitor.com. The Debtor projects total operating expenses, on a weekly basis, as follows: $62,585 for the week of February 19, 2024; and $16,961 for the week of February 26, 2024. About Vivo Technologies, LLC Vivo Technologies, LLC is a modern and holistic unified communications and collaboration (UCC) solutions provider. Vivo has evolved the process for designing, deploying, and supporting UCC solutions. The Debtor sought protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr. D. Ariz. Case No. 23-02964) on May 5, 2023. In the petition signed by Spencer Jones, manager, the Debtor disclosed up to $10 million in both assets and liabilities. M. Preston Gardner, Esq., at Davis Miles McGuire Gardner, PLLC, represents the Debtor as legal counsel. WARTBURG COLLEGE: Fitch Hikes LongTerm IDR to 'BB+', Outlook Stable ------------------------------------------------------------------- Fitch Ratings has upgraded Wartburg College's (IA) Long-Term Issuer Default Rating (IDR) to 'BB+' from 'BB-'. Fitch has also upgraded the rating on approximately $73 million outstanding private college facility revenue refunding bonds series 2015 at FYE 2023, issued by the Iowa Higher Education Loan Authority on behalf of Wartburg College (Wartburg) to 'BB+' from 'BB-'. The Rating Outlook is Stable. Entity/Debt Rating Prior ----------- ------ ----- Wartburg College (IA) LT IDR BB+ Upgrade BB- Wartburg College (IA) /General Revenues/1 LT LT BB+ Upgrade BB- Wartburg's 'BB+' IDR and bond ratings are based upon solid and improving student demand metrics, which have buoyed a small, but relatively stable enrollment even through the pandemic. Wartburg's competitiveness in student demand is now enhanced by state grants to students at private colleges and is also reflected in yoy growth in first year freshman and transfer classes in fall 2023. In addition, the ratings reflect healthy income from the endowment and gifts, an expectation of better operating performance (inclusive of expected investment income) following an anticipated but uncharacteristically weak fiscal 2023, limited internally-funded capex plans, and solid leverage metrics relative to debt. The Stable Outlook reflects Fitch's expectations for at least stable enrollment against fall 2023's 1,439 FTEs, with an associated trend in student-generated revenues. The Outlook also reflects Wartburg's ongoing execution of expense controls to restore its historically strong cash flow margins by fiscal 2026. These expectations result in continued solid leverage metrics in Fitch-modeled, forward-looking scenarios that are consistent with the current rating. SECURITY The series 2015 bond payments are a general obligation of Wartburg. Additionally, the bonds are secured by a mortgage on the college's 118-acre campus in Waverly, Iowa and a cash-funded debt service reserve fund. A $2 million SBA loan not rated by Fitch is also secured by a mortgage on campus property. KEY RATING DRIVERS Revenue Defensibility - 'bbb' Wartburg's 'bbb' Revenue Defensibility assessment, updated from 'bb', is based on Wartburg's regional draw, with approximately 30% out-of-state students. The updated assessment is also based on improved student demand metrics over the past two enrollment cycles, with a modestly competitive acceptance rate (excluding international applications) of about 60% and adequate 16% matriculation rate in fall 2023. Wartburg's Revenue Defensibility assessment also benefits from its increased competitiveness against public institutions due to state subsidies towards private colleges for Iowa students under certain income thresholds. Notably, Wartburg's incoming freshman and transfer classes yielded 472 new students, marking a strong rebound from the depressed fall 2022 numbers. Through an institution-wide commitment, Wartburg also increased its freshman-to-sophomore retention rate by 9% to a decent 80%. With approximately 30% of incoming freshmen eligible for federal Pell grants, according to federal data, and the local presence of lower-cost public alternatives, Wartburg's efforts to appeal to an economically diverse student base should boost competitiveness. Wartburg has benefited from the state of Iowa's (IDR: AAA) $7,500 per student annual subsidy that can be used at private colleges by low-income Iowa residents. In addition, freshmen starting in fall 2024 will be enrolled under The Wartburg Commitment, a three-prong program of reduced sticker price tuition, targeted scholarships, and funds for experiential education. Wartburg is also engaged in other initiatives to boost enrollment, including streamlining transfer processes by joining a private college consortium and partnering with community colleges. The college has increased international recruitment efforts and added graduate programs and cohorts in certain health science and leadership disciplines. So far, the transfer initiatives have proven fruitful, and others are in various stages of development. Wartburg benefits from a strong donor base, which has consistently provided operating and endowment gifts. Investment income, distributions from its $89 million endowment (FYE 2022) and operating gifts diversified revenues, with approximately 15% of fiscal 2023 revenues generated from these sources. The college's endowment spending policy is 5% of market value based on a rolling 36-month average, which Fitch considers sustainable. Operating Risk - 'a' Stronger Cash Flow Margins Expected Despite Uncharacteristically Weak Fiscal 2023 Wartburg has a consistent history of producing healthy Fitch-calculated cash flow margins above 15%. Nevertheless, in fiscal 2023, cash flow was reduced to 4%, mostly due to a mismatch in yoy expense growth (+9%) against a smaller revenue base (-3%). Wartburg management is focused on reducing expenses during fiscals 2024-2026 and expects to achieve closer-to-balanced operations over these years to restore cash flow margins closer to historic levels. Going forward, Fitch has incorporated expectations of healthy cash flow margins above 10%, which remains consistent with the 'a' Operating Risk assessment. Drawing on its success in generating capital grants, Wartburg expects any major capital projects in the near future to be donor-funded, with only routine maintenance-type projects to be funded internally. Some state funding is also available to Wartburg. The college's campus includes 17 buildings housed within a historic district, which makes renovations to some buildings eligible for refundable tax credits from the state. For instance, Wartburg completed a $12 million, primarily donor-funded residence hall renovation that is eligible for about a $2.5 million in state reimbursement funds. Financial Profile - 'bbb' Leverage Ratios Resilient to Stress and Compare Favorably to Peers in Fitch Forward-Look Fitch-calculated available funds (AF: cash and investments less permanently restricted net assets) at FYE 2023 was over $47 million, representing a 35% increase from the FYE 2019 level of $35 million. Leverage, measured as AF-to-adjusted debt was 64% and consistent with a Fitch Financial Profile assessment of 'bbb' in the context of Wartburg's 'bbb' Revenue Defensibility and 'a' Operating Risk assessments. Adjusted debt includes a $2 million SBA loan and about $1 million of lease liabilities. Liquidity, measured as AF-to-operations was a healthy 85% at FYE 2023. In a Fitch-modeled, forward-looking scenario that incorporates a potential financial market downturn and Fitch's expectations of Wartburg's future revenue, expenses, and internally-funded capex, leverage ratios weaken slightly before recovering back to stronger levels over time. The resilience of Wartburg's leverage ratios in this scenario and the relative strength of these ratios against similarly-rated Fitch peers underpins the current rating and Outlook. The series 2015 bonds contain liquidity and coverage covenants. During fiscal 2023, Wartburg had ample cushion in its liquidity ratio, recording 170% against two separate requirements at 50% and 75%. In addition, Wartburg reported debt service coverage of 1.33x during fiscal 2023 against a 1.1x covenant. The coverage calculation includes funds released from endowment for capital spending in the numerator. Without that, and as calculated by Fitch, coverage is just 0.4x in fiscal 2023; however Fitch expects cash flows to rebound to meet economic debt service coverage in fiscal 2024 to 2025. Asymmetric Additional Risk Considerations No asymmetric risk considerations affected the rating. RATING SENSITIVITIES Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade - Inability to restore operating cash flow margins to about 10%-15% by fiscal 2025 in Fitch forward-looking scenarios and/or operating performance resulting in debt service coverage ratios below the 1.1x bond covenant or below economic debt service coverage as calculated by Fitch; - Deterioration in student demand metrics, particularly if associated with declines in net student revenues; - Material capex spending from internal resources or debt without corresponding resource growth; - Weakening leverage ratios approaching AF-to-adjusted debt of 50% or lower at FYE 2024 and in Fitch forward-looking scenarios. 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; - Actual cash flow margins sustained above 15% and in Fitch forward-looking scenarios; - Sustained actual leverage ratios with AF-to-adjusted debt in excess of 80% and in Fitch forward-looking scenarios. PROFILE Wartburg College, established in 1852 as a liberal arts college of the Evangelical Lutheran Church in America, is located on a 118-acre campus in a suburban area of Waverly, IA. Part of the campus, encompassing 17 buildings, is designated as a historic district. In fall 2023, the college enrolled close to 1,439 FTEs, predominately at the undergraduate level. Approximately 70% of students originate from Iowa, and the balance mostly enroll from Iowa's contiguous states. Undergraduate students have a residency requirement with some exceptions made in senior year. Housing capacity is approximately 1,375 beds and was about 95% occupied in fall 2023. With several NCAA Division III sports programs, band and choral programs, a large 75% of students are involved in extracurricular activities and leadership positions. Wartburg recently launched its first Master's program, offered online in Leadership, and is exploring new affiliations with other institutions for accelerated graduate programs. Undergraduate program specialties include business, pre-professional programs in life sciences, education, engineering and foreign languages. Wartburg College's regional accreditation from The Higher Learning Commission was last affirmed in 2017. The college is governed by a 28-member Board of Trustees comprised of business and community leaders. The college's roughly 500-member staff as of fall 2023 included 84 full-time faculty and another 258 full-time employees. The remainder are part-time adjunct faculty and other. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. WAYSTAR TECHNOLOGIES: Fitch Affirms 'B' LongTerm IDR, Outlook Pos. ------------------------------------------------------------------ Fitch has affirmed Waystar Technologies, Inc.'s Long-Term Issuer Default Rating (IDR) at 'B', and its Rating Outlook is Positive. Fitch Ratings has assigned a rating of 'BB-'/'RR2' to Waystar's new first lien term loan. The new term loan will be used to refinance the existing $1.7 billion first lien and $448 million outstanding second lien term loan in full and extend the maturity of the first lien term loan to 2029. Fitch has also affirmed the rating on the company's $1.7 billion first lien term loan at 'BB-/RR2'. Fitch will withdraw ratings on this facility once it is repaid. The ratings and Outlook reflect Fitch expectation of declining leverage, with revenue growth expected in the low double digits and solid EBITDA generation allowing the company to naturally delever. Fitch expects growth expectations will lead to leverage declining below 5.5x in the next 18-24 months absent any significant debt-funded acquisitions. KEY RATING DRIVERS Decreased Leverage Expectations: Fitch expects the refinancing transaction to be leverage neutral. After the acquisitions of Patientco and eSolutions in 2020 and 2021, respectively, which raised gross leverage to above 9x, Waystar has reduced leverage to 6.5x as of LTM 3Q23, compared with the 8.2x median and 4.3x-10.2x range for peers. Fitch believes the company's robust operating profile driven by expectations of low double-digit revenue growth, solid EBITDA margins and healthy FCF generation will allow the company to naturally reduce its leverage to below 5.5x within the next 18 to 24 months absent any significant debt-funded acquisitions. Although Fitch expects higher interest payments, tax expenses, and acquisition costs to limit the (cash from operations [CFO] - capex)/debt ratio below Fitch's negative sensitivity threshold for fiscal 2023, the company's strong operating performance and cash generation expectations are anticipated to improve this ratio, averaging over 5% each year over the rating horizon. Furthermore, in light of the company's recent decision to go public, Fitch anticipates that there will be no significant debt-funded acquisitions in the near future. Fitch expects excess cash to be utilized toward smaller tuck in deals. While leverage expectations declining and remaining below 5.5x is favorable when compared with other Fitch-rated Health Care IT (HCIT) issuers in the 'B' category (typical sensitivity range between 5.5x to 7.5x), Fitch approaches this with caution given the absence of a public commitment by the company to reduce its leverage. Successful Integrations: Waystar has successfully completed the integrations of the transformative eSolutions and Patientco acquisitions, achieving synergy targets with no disruption to go-to-market efforts or client retention. As a result, Waystar has quickly scaled to become one of the more meaningful revenue cycle management (RCM) providers with a continuing pace of share gains. In addition, the company has assembled a unique RCM offering with processing capabilities across commercial and governmental payors and a strong patient engagement/payments platform. As a result, Fitch expects Waystar to continue to gain share, growing in excess of the market at double-digit rates in the near term. Strong Growth Opportunity: Fitch expects Waystar's organic growth rate to be sustained at double-digit levels in the near term as a result of strong secular trends in U.S. healthcare spending and utilization, as well as the company's successful go-to-market and cross sales effort. The Centers for Medicare and Medicaid Services (CMS) forecasts national health expenditure growth of 5.4% annually through 2031 due to long-standing trends including an aging demographic, medical procedure/drug cost inflation and utilization growth. In addition, increased regulatory burdens, claims processing complexity and pressures on provider profitability serve as strong tailwinds for continued software adoption by providers. The company's growth prospects are further supported by strong retention rates resulting from high switching costs that include staff training, implementation costs, business interruption risks and reduced productivity when swapping vendors. Fitch believes that the secular tailwinds and high switching costs produce a dependable growth trajectory that benefits Waystar's credit profile. Low Cyclicality: Fitch expects Waystar, which has experienced revenue growth in every year since its inception, including during the pandemic-driven downturn in healthcare visit volumes, to continue exhibiting low cyclicality for the foreseeable future. Fitch believes the company will exhibit continued strong correlation to overall U.S. healthcare spending and utilization, which is highly non-discretionary and has experienced uninterrupted growth since at least 2000 according to CMS. As a result, Fitch believes Waystar will demonstrate a stable credit profile with little sensitivity to macroeconomic cycles. Strong Margin Profile: Fitch forecasts EBITDA margins of 46% for the combined Waystar, eSolutions and Patientco the high end of the 28%-47% range for Fitch-rated HCIT peers. In addition, the strong margins and low capital intensity contribute to robust FCF margins, with Fitch forecasting an increase to high-teens levels, despite a heavy interest expense burden and past acquisitive activity. Fitch believes Waystar stands out amongst PE-sponsored HCIT issuers with its ability to generate positive FCF and use excess funds to reduce debt. Strategy Risks: Waystar's sales strategy targets the broad healthcare provider market by leading with a strong technology offering, rather than focusing on a narrow niche in the healthcare universe. This presents competitive risks given direct competition with larger RCM providers that could quickly scale up investment in their product offerings and go-to-market efforts. This risk is somewhat mitigated by the 2020 acquisition of eSolutions' NSV offerings that require direct contracts with CMS and, as a result, experience limited competition. Evolving Marketplace: Waystar faces risks from an evolving healthcare marketplace where efforts to slow cost growth will require all constituents to modify their strategies. The nascent efforts to shift to value-based care, where reimbursements are directed toward successful outcomes rather than volume of procedures, will require Waystar to re-examine its go-to-market and pricing strategies to align more closely with the emerging incentives that are based on medical outcomes. While the transition to value-based case is slow-moving, Fitch believes that the shift introduces risk of disruption and rejection from the marketplace that may result in decreased growth DERIVATION SUMMARY Fitch is evaluating Waystar post its acquisitions of eSolutions and Patientco, having now had sufficient time to digest the transactions. Fitch believes the company benefits from a favorable growth opportunity as medical claim processing volumes continue to expand due to long-standing trends in the U.S. healthcare industry including, an aging demographic, medical procedure/drug cost inflation and utilization growth. The company exhibits strong client growth prospects with a leading technology platform that addresses the increased regulatory burdens, claims processing complexity and profitability pressures that serve to promote continued software adoption by providers. Fitch believes growth is further ensured by strong client retention rates, high switching costs, robust sales efforts, and a history of share gains. Similar to the company's continued positive organic growth during the pandemic-led downturn, Fitch expects Waystar to demonstrate minimal cyclicality and durable resistance to economic cycles due to the non-discretionary nature of healthcare spending. As the company has completed the integrations of recent transactions, Fitch expects leverage to decline to 6.5x by YE 2023, compared with the 8.2x median and 4.3x-10.2x range for peers. Fitch believes the company's robust operating profile driven by expectations of low double-digit revenue growth and solid EBITDA and healthy FCF generation will allow the company to organically reduce its leverage to below 5.5x within the next 18-24 months. Further, considering the company's recent announcement to go public, Fitch does not foresee any significant debt-funded acquisitions in the near future. The expectations of reduced leverage through EBITDA growth have led to Fitch keeping the company's Outlook at Positive, while affirming the IDR at 'B'. No country-ceiling, parent/subsidiary or operating environment aspects had an impact on the rating. KEY ASSUMPTIONS - Organic revenue growth expected in the low double-digits in 2023 and 2024 due to growth in patient volumes, cross-sell efforts, and strong bookings with organic growth in high single digits thereafter due to client growth, cross-selling opportunities, price increases, increasing medical procedure volumes and rising healthcare expenditure; - EBITDA margins estimated at approximately 46% due to synergy achievement, with minimal margin expansion thereafter due an optimized cost structure; - Capital intensity of 2.5%-3.5% consistent with history and peers. RECOVERY ANALYSIS KEY RECOVERY RATING ASSUMPTIONS - The recovery analysis assumes that Waystar would be reorganized as a going-concern in bankruptcy rather than liquidated; - 10% administrative claim. Going-Concern (GC) Approach - The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level upon which the agency bases the enterprise valuation (EV). - Fitch uses as higher GC EBITDA estimate as compared to the agency's previous review. The higher GC EBITDA reflects Waystar's strong operational performance leading to Waystar achieving consistent organic low-double digit revenue growth in the last four quarters while the company being able to maintain EBITDA margins in the mid-40s range. A high GC EBITDA further reflects the company being able to main strong gross retention rates averaging over 95% in the last two years. - Fitch contemplates a scenario in which platform consolidation into a unified RCM offering leads to increased client churn, slowing revenue growth, and increases in sales and R&D expenses to address the challenges. As a result, Fitch expects that Waystar would likely be reorganized with a similar product strategy and higher than planned levels of operating expenses as the company reinvests to ensure customer retention and defend against competition. - Under this scenario, Fitch believes revenue growth would slow significantly to low single digits per annum with EBITDA margins declining such that the resulting going-concern EBITDA is approximately 14% below 3Q23 LTM proforma EBITDA. - An EV multiple of 7x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this EV multiple considered the following factors: - Comparable Reorganizations: In Fitch's 2023 "TMT Bankruptcy Enterprise Values and Creditor Recoveries" case study, the agency notes twelve past reorganizations in the technology sector, where the median recovery multiple was 5.3x. Of these companies, only two were in the software subsector: Allen Systems Group, Inc. and Aspect Software Parent, Inc., which received recovery multiples of 8.4x and 5.5x, respectively. Fitch believes that the Allen Systems Group, Inc. reorganization is highly supportive of the 7.0x multiple assumed for Waystar given the mission critical nature of both companies' offerings. - M&A Multiples: A study of M&A transactions in the healthcare IT industry from 2015 to 2020, particularly those competing in the RCM space, establishes a median EV/EBITDA transaction multiple of 15x. The acquisition of eSolutions represented a 21.3x multiple, not including synergies, while the acquisition of Patientco represented a 7.3x multiple of revenue. The recovery model implies a 'BB-' and 'RR2' Recovery Rating for the company's first-lien senior secured facilities, reflecting Fitch's belief that lenders should expect to recover 71%-90% in a restructuring scenario. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - (CFO - capex)/debt sustained above 6.5%; - Fitch expectations of EBITDA leverage sustaining below 5.5x; - Consistent organic revenue growth sustained in the high single digit range and above. Factors that could, individually or collectively, lead to an affirmation and Stable Outlook: - Expectations of debt funded acquisitions leading to EBITDA leverage sustaining above 5.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - (CFO - capex)/debt sustained below 3%; - Fitch's expectations of EBITDA leverage sustaining above 7.5x; - Consistent organic revenue declines resulting from deterioration in competitive position. LIQUIDITY AND DEBT STRUCTURE Adequate Liquidity: Fitch expects Waystar to maintain strong liquidity given moderate operating expense requirements that result in strong margins, a highly variable cost structure, a short cash conversion cycle due to monthly billing, and low capital intensity. Liquidity is currently comprised primarily of the undrawn $342.5 million revolving credit facility (RCF). This constitutes a considerable RCF commitment in relation to the company's revenue scale. Liquidity is further supported by Fitch's forecast for consistent FCF generation over the rating horizon. Fitch forecasts steady growth in liquidity to over $400 million by 2024 due to accumulation of FCF and the expectation for the RCF to remain undrawn. Debt Maturities: Following the transaction, there are no significant debt maturities expected over the rating horizon. Waystar's securitization facility matures in 2026. Given Waystar's strong operating performance, FCF generation improving from low teens to high teens over the rating horizon, the company should be able to refinance or extend this facility. Further, Waystar is capable of recommitting FCF towards deleveraging in order to achieve a more conservative posture so that future refinancing is not entirely dependent on capital market conditions when maturities fall due. ISSUER PROFILE Waystar is a provider of cloud-based revenue cycle management (RCM) software that healthcare providers use to track patient care and data from registration through appointment with a high degree of accuracy in order to ensure final payment and avoid reimbursement denials, allowing providers to lower processing costs and increase collections. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- Waystar Technologies, Inc. LT IDR B Affirmed B senior secured LT BB- New Rating RR2 senior secured LT BB- Affirmed RR2 BB- WE 25 BACON ROAD: $33.8MM Bank Debt Trades at 12% Discount ---------------------------------------------------------- Participations in a syndicated loan under which WE 25 Bacon Road LLC is a borrower were trading in the secondary market around 88.0 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The loans traded in the secondary market around 82.3 cents-on-the-dollar the previous week ended Feb. 2. The $33.8 million term loan facility is scheduled to mature on February 28, 2027. The amount is fully drawn and outstanding. WE 25 Bacon Road LLC operates as a real estate company. The Company develops real estate properties. WEST TECHNOLOGY: Fitch Lowers LongTerm IDR to 'CCC+' ---------------------------------------------------- Fitch Ratings has downgraded the Long-Term Issuer Default Rating (IDR) for West Technology Group, LLC (West) to 'CCC+' from 'B-'. Fitch has also downgraded West's first-lien secured revolver and term loan to 'CCC+'/'RR4' from 'B'/'RR3' and second lien secured notes to 'CCC-'/'RR6' from 'CCC'/'RR6'. The 'CCC+' rating reflects concerns about the company's negative FCF generation in 2023 and Fitch's forecast for negative FCF to continue. Fitch believes there is material execution risk associated with achieving sustained organic growth in its core offerings. West's leverage remains elevated, despite repayment of debt in FY23. The liquidity position of the company remains satisfactory, benefitting from divestment related cash proceeds. KEY RATING DRIVERS Organic Growth Headwinds: After a series of divestments in the last couple of years, West's core business offerings now focus on its TeleVox, Notified and Mosaicx segments. The revenue growth in its core business segment remains subdued, with headwinds in the Events sub-segment of Notified business and customer churn experienced in the Mosaicx segment. Fitch believes there is significant execution risk associated with achieving sustained organic growth in its remaining core business segments, which face intense competition and the growth prospects for the company remain uncertain despite its investments in product enhancements and go-to-market initiatives. Mosaicx, in particular, competes with much larger and better capitalized peers offering similar services. Negative FCF Generation: West's FCF is projected to remain negative across the rating horizon, driven by lower EBITDA levels and ongoing investments in the business. FCF for the company remains pressured, driven by an uneven top-line growth, lower than expected EBITDA levels and elevated restructuring costs. The reduction in total debt means declining interest burden for the company, however, the impact on FCF is modest as interest rates remain elevated. The company also incurs significant restructuring costs that help drive future cost savings but are incurred upfront and have an impact on FCFs. Fitch expects the one-time costs to wind down in 2024 & beyond, leading to narrowing negative FCF margins, however, FCF remains in the negative territory across the rating horizon. Elevated Leverage: Leverage for the company remains elevated, despite the debt reduction carried out in 2023. Fitch expects debt in 2023 to be approximately $1.2 billion. With the sale proceeds of the Safety Services business, West reduced its total outstanding debt, however, the divestment also carved out almost one-half of the company's EBITDA. The company paid down additional debt using proceeds from the School Messenger business divestment. However, Leverage continues to remain elevated as the company now operates at a much smaller EBITDA level. Fitch forecasts leverage to remain above 9.0x across the forecast horizon. Volatile Profitability: EBITDA margins for West have remained volatile, declining from little over 30% in FY19 to low 20s by FY22. Fitch expects EBITDA margins to remain in the mid-20s across the forecast horizon. Despite the company's strategy of implementing business optimization initiatives and divesting non-profitable businesses, the EBITDA margins remain pressured. West's growth investments in its remaining core business segments is necessary to drive future growth and tackle the top-line revenue declines that the company is experiencing. However, this means, elevated operating expenses which will act as a drag on the EBITDA margins. Furthermore, the EBITDA Interest coverage for the company is expected to remain pressured in the near-term. Satisfactory Liquidity: West has sufficient near-term liquidity supported by cash balances and availability under its revolver. Given the company's negative FCF generation, it is particularly reliant on this access for the rating horizon. Sale proceeds from the SchoolMessenger business in 3Q23 further strengthened West's cash position. The company also extended maturities on its debt to 2027 and has the revolver commitment until 2026. This provides some cushion to the liquidity position of the company and refinancing risk remains limited in the near-term. DERIVATION SUMMARY West's business profile entails an amalgamation of a diverse portfolio of technology solutions, and is not directly comparable to its peers, which may provide similar but different mix of technology services. In the TeleVox segment, West competes with Luma Health (not rated [NR]), Relatient (NR), Solutionreach (NR) and WELL Health (NR), while in Notified it competes with companies such as Business Wire (NR), Cision (NR) and several other specialized service providers. In its Mosaicx segment, West competes in a fragmented competitive landscape, including large investment grade operators such as Microsoft Corporation (NR) and IBM (A-/Stable) and a host of other providers that generate less than $50 million annually. With the narrowing negative FCF expected across the rating horizon and EBITDA interest coverage lower than 1.0x for 2023-2024, West exhibits characteristics of a 'CCC+' issuer. There is significant execution risk associated with company achieving sustainable top-line growth across the rating horizon, further pressuring credit metrics. KEY ASSUMPTIONS - Fitch expects 2023 core revenue of about $400 million reflecting the divestiture of Safety and SchoolMessenger Business. Revenue in 2024 is forecasted to grow in low single digits driven by strong growth in TeleVox segment offset by headwinds in the Events business and customer churn in Mosaicx; - EBITDA margins for the company to hover around 25% across the forecast horizon driven by subdued top-line growth, increased spending on go-to market initiatives and corporate savings execution; - Capex expenditures ranging between $30 million-$40 million over the rating horizon; - Interest rates forecast to remain elevated at 4.6% in 2024, before coming down in the 3.25%-3.5% range in 2025-2026; - No dividends assumed in the model; - Fitch has incorporated debt pay-down amounting to about $2.2 billion from the sale proceeds of Safety Business in 1Q23 and SchoolMessenger business in 3Q23. RECOVERY ANALYSIS KEY RECOVERY RATING ASSUMPTIONS The recovery analysis assumes that West would be considered a going concern in a bankruptcy and that the company would be reorganized rather than liquidated. Fitch has assumed a 10% administrative claim and a 5% concession allocation paid from First Lien Lenders to Second Lien Lenders to facilitate the restructuring process. The revolving facility is assumed to be fully drawn upon default at the commitment amount of $153 million. Fitch estimates a post-reorganization enterprise valuation based on 5.0x multiple. The choice of this multiple considered the following factors: The Apollo transaction valued West at approximately 7.8x EV/EBITDA. West's acquisition of Nasdaq Public relations and Digital Media Services (now Notified) in 2018 at an estimated 5.2x multiple. Based on 2023 Fitch case studies for the sector, the median multiple was 5.9x for 71 cases for which there was adequate information to make an estimate. Fitch assumes the recovery multiple is lower than the median level due primarily to West's weak expected cash flow generation, and uncertain business prospects. Fitch's going-concern EBITDA estimate is based on a stressed scenario wherein Fitch assumes that West experiences revenue declines in Notified and Mosaicx segment, stemming from macroeconomic headwinds and increased competition. To regain its market share, Fitch assumes that West increases its investments in product development and sales initiatives, which causes EBITDA margins to contract, ultimately resulting in a restructuring. After a period of rehabilitation, Fitch assumes revenue of $378 million and EBITDA margin of 25%, resulting in GC EBITDA of $ 95 million. The recovery analysis assigns a recovery rating of 'RR4' to the company's senior first-lien secured debt and 'RR6' to the second lien notes. This results in corresponding issue-level rating of 'CCC+' for the first lien debt and 'CCC-' for the second lien notes. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Improvement in operating profile including positive revenue growth exceeding Fitch's expectations; - FCF approaching breakeven; - EBITDA Interest coverage sustained above 1.5x. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Meaningful liquidity deterioration; - Deterioration in operating profile such that Fitch believes a restructuring is imminent; - Accelerating negative FCFs; - EBITDA Interest coverage sustained below 1.0x. LIQUIDITY AND DEBT STRUCTURE Fitch believes West's liquidity is sufficient, supported by the cash balances and availability under the revolver. The total revolver commitment reduced to $153 million following the SchoolMessenger sale. FCFs are expected to remain negative, albeit deficits to reduce over the next couple of years. West's debt structure as of Sept. 30, 2023 includes a $153 million revolving facility, $749 million outstanding in first-lien term loans maturing in 2027, and $446 million outstanding on 2027 second lien notes. The revolver is due to mature in Aug. 9, 2026. ISSUER PROFILE West Technology Group, LLC (West) is a leading global provider of technology‐enabled communication services. The company provides a vast array of essential solutions for a diverse client base that includes Fortune 1000 companies, state and local governments, along with small and medium enterprises in a variety of vertical industries. West has sales and/or operations in the U.S., Canada, Europe, the Middle East, Asia-Pacific, Latin America and South America. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- West Technology Group, LLC LT IDR CCC+ Downgrade B- senior secured LT CCC+ Downgrade RR4 B Senior Secured 2nd Lien LT CCC- Downgrade RR6 CCC WESTERN DENTAL $50MM Bank Debt Trades at 49% Discount ----------------------------------------------------- Participations in a syndicated loan under which Western Dental Services Inc is a borrower were trading in the secondary market around 51.5 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $50 million facility is a Delay-Draw Term loan that is scheduled to mature on August 18, 2028. About $0.0 million of the loan is withdrawn and outstanding. Western Dental Services, Inc., a dental and oral health maintenance organization, provides dental and oral health care services in California, Arizona, Nevada, and Texas. Western Dental Services, Inc. operates as a subsidiary of Premier Dental Services Inc. WESTJET LOYALTY: Fitch Assigns 'BB-' Rating on Senior Secured Bonds ------------------------------------------------------------------- Fitch Ratings has assigned ratings of 'BB-'/'RR2' to WestJet Loyalty LP's proposed senior secured bonds. The proposed debt issuance will be secured by WestJet's loyalty program assets and brand intellectual property. The bonds will be pari passu with the term loan announced last week. Proceeds from the issuance will be used to partly refinance the company's existing term loan. In November 2023, Fitch upgraded WestJet's Long-Term Issuer Default Rating to 'B' from 'B-'. The upgrade reflected continuing improvement in demand for Canadian air travel that is driving top line growth and improved profit margins for WestJet. Results through the first part of 2023 outperformed Fitch's prior expectations, and the agency now anticipates that EBITDAR leverage and coverage metrics will be consistent with 'B' rating tolerances in the 2024-2025 timeframe. KEY RATING DRIVERS Loyalty Program Debt Rating: WestJet's planned debt issuance will be secured by a priority interest in its WestJet Rewards loyalty program and brand intellectual property. WestJet will act as a parent guarantor, while the notes will be issued by WestJet Loyalty LP, a new Alberta based SPV. The 'BB-'/'RR2' rating for the notes is driven by a bespoke recovery analysis. Fitch's recovery analysis is based on a going-concern scenario in which the agency uses an estimated sustainable EBITDA of CAD600 million and an EV multiple of 5x. Fitch's going-concern EBITDA estimate reflects a post-restructuring scenario where margins are structurally impaired, potentially by a weak operating environment, rising costs and competition, or a combination thereof. The choice of this multiple considers the historical bankruptcy case study exit multiples for peer companies ranged from 3.1x to 6.8x Fitch believes the core nature of the collateral represented by the loyalty program and brand IP provide compelling motivation for the airline to affirm its obligations in a bankruptcy scenario. Fitch also expects the value of the collateral to grow over time as WestJet's fleet and topline revenues grow. However, the value of the assets largely rests on WestJet continuing as a going concern. Liquidation of the airline would materially affect the collateral values and weaken recovery. Solid Recovery in Traffic: Canadian air traffic showed solid momentum in 2023, driving much improved financial results for WestJet. Traffic first rebounded sharply in 2022 after initially lagging the recovery in the U.S. relative to 2019 levels. The Canadian recovery is now largely in line with the U.S. Fitch's prior forecasts anticipated some weakness, with persistent inflation dampening consumer demand. However, air travel demand continues to hold. Fitch expects Canadian air traffic growth to slow from its recent pace but to remain positive based on expectations for modest macroeconomic growth, potential improvement in business travel, and positive impacts driven by sizable levels of migration into Canada. Credit Metrics Improving: Fitch calculates WestJet's gross EBITDAR leverage at roughly 5.6x at Sept. 30, 2023, which remains elevated from pre-pandemic levels but is better than prior expectations. Fitch anticipates that leverage will decline further as operating margins continue to improve, driven by relatively stable demand and the benefits of the company's strategic network reconfiguration. WestJet also benefits from additional EBITDA acquired through its integration of Sunwing, following the close of the acquisition in May 2023. EBITDAR fixed-charge coverage, which had also been depressed post-pandemic, is expected to rise toward 2x within the forecast period, from below 1x in 2022. DERIVATION SUMMARY WestJet's 'B' IDR is two notches below its primary domestic competitor, Air Canada. The difference reflects WestJet's higher near-term leverage prospects and smaller relative size. WestJet's liquidity position is also not as strong as Air Canada's, which likely has better access to funds given its size and unencumbered assets. These factors are partially offset by WestJet's favorable cost structure, and relative exposure to business demand, which is taking longer to recover from the pandemic. KEY ASSUMPTIONS - Rebounding traffic in 2023, leaving total RPMs down in the single digits below 2019 levels; - Traffic continues to grow modestly in 2024 despite softer economic conditions; - Operating margins improve sequentially but remain below pre-pandemic levels through Fitch's forecast period, reflecting higher operating costs and modest assumptions about unit revenues. RECOVERY ANALYSIS The recovery analysis assumes that WestJet would be reorganized as a going concern in bankruptcy rather than liquidated. Fitch has assumed a 10% administrative claim. Going-Concern (GC) Approach Fitch has assumed a going-concern EBITDA of CAD600 million. The GC EBITDA estimate reflects Fitch's view of a sustainable, post-reorganization EBITDA level, upon which Fitch bases the enterprise valuation. Fitch's going-concern EBITDA estimate reflects a post-restructuring scenario where margins are structurally impaired, potentially by a weak operating environment, rising costs and competition, or a combination thereof. The EV multiple is reflective of prior airline bankruptcies. An EV multiple of 5.0x EBITDA is applied to the GC EBITDA to calculate a post-reorganization enterprise value. The choice of this multiple considers the historical bankruptcy case study exit multiples for peer companies ranged from 3.1x to 6.8x. These assumptions lead to an estimated recovery of 'BB-'/'RR2' for the senior secured debt. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - Total adjusted debt/EBITDAR below 4.5x; - Operating EBITDAR/gross interest + rent above 2x; - EBIT margins sustained in the mid-single digits or higher; - Evidence of increasing financial flexibility, potentially including an increasing base of unencumbered assets. Factors that could, individually or collectively, lead to negative rating action/downgrade: - Operating EBITDAR/gross interest + rent toward 1.5x; - Total adjusted debt/EBITDAR sustained above 5.5x; - Heightened liquidity risks, including cash + revolver availability falling toward $800 million and/or decreasing likelihood of ability to access contingent liability options. LIQUIDITY AND DEBT STRUCTURE Solid Liquidity: Fitch views Westjet's liquidity as supportive. The company ended the third quarter with CAD1.4 billion in cash and cash equivalents and full availability on its USD350 million revolver. Maturities are manageable, largely consisting of the 2026 maturity of the company's term loan B. Capital spending will step up over the forecast period, but capex primarily consists of financeable aircraft. ISSUER PROFILE WestJet Airlines, Ltd. is Canada's second largest airline. ESG Considerations The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. DATE OF RELEVANT COMMITTEE January 23, 2024 Entity/Debt Rating Recovery ----------- ------ -------- WestJet Loyalty LP senior secured LT BB- New Rating RR2 WESTLAKE SURGICAL: Seeks to Extend Plan Exclusivity to May 7 ------------------------------------------------------------ Westlake Surgical, L.P. d/b/a The Hospital at Westlake Medical Center asked the U.S. Bankruptcy Court for the Western District of Texas to extend exclusivity periods to file a plan of reorganization and obtain acceptance thereof to May 7 and July 8, 2024, respectively. The Debtor believes it cannot file a meaningful plan by the current deadline because the Debtor is actively pursuing outside investments, restructuring options, and plan options. The additional time requested will allow the Debtor to continue to investigate value-maximizing options. In addition, creditors will also benefit from the requested extension because, by obtaining a better understanding of the Debtor's future prospects, the Debtor will be better able to ensure that any plan it proposes will be feasible and will maximize the payment to all of its creditors. The Debtor says its bankruptcy case has been designated as a complex case and involves thousands of creditors, scores of contracts, hundreds of employees, and complex interplays between interested parties. That complexity has required more time for a full analysis and forward-looking plan than the initially allotted 120 days. The Debtor believes an extension will give it time to sufficiently determine and realize the value(s) of the assets at issue, giving it the ability to structure a plan that is in the best interest of the creditors, the estate, and the Debtor. Counsel for the Debtor: Charlie Shelton, Esq. Ruth Van Meter, Esq. HAYWARD PLLC 7600 Burnet Road, Suite 530 Austin, TX 78757 Tel: (737) 881-7101 Email: cshelton@haywardfirm.com About Westlake Surgical The Hospital at Westlake Medical Center is a physician-owned boutique hospital in Westlake Hills, Texas, a suburb of Austin. Guided by an unwavering commitment to delivering quality healthcare services in a comfortable setting, its core service areas include surgical procedures, outpatient radiology, and a 24/7 emergency room. Westlake Surgical, LP, doing business as The Hospital at Westlake Medical Center, sought Chapter 11 protection (Bankr. W.D. Texas Case No. 23-10747) on Sept. 8, 2023. The Honorable Shad Robinson is the case judge. The Debtor tapped Hayward, PLLC as legal counsel and Stout Capital, LLC as investment banker. Donlin, Recano & Company, Inc. is the claims agent. eCapital Healthcare Corp., the DIP lender, is represented by Foley & Lardner, LLP. WEWORK INC: Unsecured Creditors to Get 0% in Joint Plan ------------------------------------------------------- WeWork Inc. and its Debtor Subsidiaries filed with the U.S. Bankruptcy Court for the District of New Jersey a Disclosure Statement relating to Joint Plan of Reorganization dated February 4, 2024. The Debtors, together with their non Debtor affiliates, are the global leader in flexible workspace, where they integrate community, member services, and technology. Founded in 2010 and headquartered in New York City, WeWork's mission is to create a collaborative work environment where people and companies across a variety of industries, from freelancers to Fortune 100 companies, come together to optimize performance. On Nov. 6, 2023, the Debtors commenced Chapter 11 cases in the United States Bankruptcy Court for the District of New Jersey. On the eve of the Chapter 11 cases and after good faith, arm's length negotiations, WeWork reached an agreement with the SoftBank Parties, the Ad Hoc Group, and Cupar (collectively, the "Consenting Stakeholders") on the terms of a comprehensive restructuring transaction, embodied in the RSA. Among other things, the RSA contemplated (i) the equitization of Drawn DIP TLC Claims (other than up to $100 million of such Claims, which shall be satisfied with loans under a New 1L Exit Term Loan Facility), Prepetition LC Facility Claims, the 1L Notes Claims, and the 2L Notes Claims into New Interests; (ii) the cancelation of all other indebtedness and preexisting equity interests (other than any equity interests held by the SoftBank Parties with respect to which, pursuant to the Plan and as agreed by other parties, the SoftBank Parties would contribute claims in exchange for its retention of its equity interests); and (iii) the issuance of a New 1L Exit Term Loan Facility in an aggregate amount equal to (a) the lesser of (I) the total amount of all Drawn DIP TLC Claims and (II) $100 million, plus, in each case, (b) the aggregate amount of DIP TLC Fee Claims. On November 16, 2023, the U.S. Trustee appointed the Creditors' Committee. Since then, the Debtors have devoted significant time and resources to providing diligence and engaging with the Creditors' Committee and its advisors to bring them up to speed on the developments in the Chapter 11 Cases, including reaching a settlement regarding the terms of the DIP LC/TLC Facility. The Plan does not currently contemplate any recovery for Holders of General Unsecured Claims. Pursuant to the Plan, Holders of Allowed Claims will receive, except to the extent that a Holder of an Allowed Claim agrees to less favorable treatment, the following treatment in full and final satisfaction, compromise, settlement, release, and discharge of, and in exchange for, such Holders' Claims and Interests: * Each Holder of an Allowed Other Secured Claim shall receive, at the option of the applicable Debtor (or Reorganized Debtor, as applicable) and with the consent of the Required Consenting Stakeholders, either (i) payment in full in Cash of its Allowed Other Secured Claims, (ii) the collateral securing its Allowed Other Secured Claim, (iii) Reinstatement of its Allowed Other Secured Claim, or (iv) such other treatment that renders its Allowed Other Secured Claim Unimpaired in accordance with section 1124 of the Bankruptcy Code; * Each Holder of an Allowed Other Priority Claim shall receive, at the option of the applicable Debtor (or Reorganized Debtor, as applicable) and with the consent of the Required Consenting Stakeholders, either (i) payment in full in Cash of its Allowed Other Priority Claim or (ii) treatment in a manner consistent with section 1129(a)(9) of the Bankruptcy Code; * Each Holder of an Allowed Drawn DIP TLC Claim shall receive (i) in the case of the Rolled Drawn DIP TLC Claim, loans under the Exit TLC Facility on a dollar-for-dollar basis, and (ii) in the case of an Equitized Drawn DIP TLC Claim, its Pro Rata share of the Drawn DIP TLC Equity Distribution; * Each Holder of an Allowed Undrawn DIP TLC Claim shall receive (i) in the case of an Excess DIP TLC Claim, payment in full in Cash in an amount equal to such Excess DIP TLC Claim from amounts remaining from the proceeds of the DIP TLC Facility (or, for the avoidance of doubt, interest accrued on the amounts funded pursuant to the DIP TLC Facility), which amounts shall be funded solely from amounts remaining in the DIP LC Loan Collateral Accounts after the funding of the SoftBank Parties' obligations to back the Exit LC Facility, and (ii) in the case of a Rolled Undrawn DIP TLC Claim, obligations under the Exit LC Facility on a dollar-for-dollar basis, plus its Pro Rata share of the New LC Equity Allocation; * Each Allowed Unsecured Notes Claim shall be discharged and released, and each Holder of an Allowed Unsecured Notes Claim shall not receive or retain any distribution, property, or other value on account of such Allowed Unsecured Notes Claim; provided, however, that, to the extent there are unencumbered assets held by the Debtor against which an Unsecured Notes Claim is Allowed, each Holder of such Allowed Claim shall receive, on account of and in full and final satisfaction of such Allowed Claim its Pro Rata share (together with each Holder of an Allowed 3L Notes Claim and an Allowed General Unsecured Claim against the applicable Debtor) of the liquidation value of the unencumbered assets held by the Debtor against which such Claim is Allowed; * Each Allowed General Unsecured Claim shall be discharged and released, and each Holder of an Allowed General Unsecured Claim shall not receive or retain any distribution, property, or other value on account of such Allowed General Unsecured Claim, provided, however, that, to the extent there are unencumbered assets held by the Debtor against which a General Unsecured Claim is Allowed, each Holder of an Allowed Claim shall receive, on account of and in full satisfaction of such Allowed Claim, its Pro Rata share (together with each Holder of an Allowed 3L Notes Claim and an Allowed Unsecured Notes Claim against the applicable Debtor) of the liquidation value of the unencumbered assets held by the Debtor against which such Claim is Allowed; and * Each Allowed Intercompany Interest shall be (i) Reinstated, (ii) canceled, released, or discharged, or (iii) otherwise set off, settled, or distributed, at the option of the Debtors or the Reorganized Debtors, and with the reasonable consent of the Required Consenting Stakeholders, in each case in accordance with the Restructuring Transactions Exhibit. Class 8 consists of General Unsecured Claims. Each General Unsecured Claim shall be discharged and released, and each Holder of an Allowed General Unsecured Claim shall not receive or retain any distribution, property, or other value on account of such Allowed General Unsecured Claim, provided, however, that, to the extent there are unencumbered assets held by the Debtor against which a General Unsecured Claim is Allowed, each Holder of an Allowed Claim shall receive, on account of and in full satisfaction of such Allowed Claim, its Pro Rata share (together with each Holder of an Allowed 3L Notes Claim and an Allowed Unsecured Notes Claim against the applicable Debtor) of the liquidation value of the unencumbered assets held by the Debtor against which such Claim is Allowed. This Class will receive a distribution of 0% of their allowed claims. The Debtors and the Reorganized Debtors shall fund distributions under the Plan, as applicable, with (a) the proceeds from the Exit Facilities; [(b) Cash or other proceeds from the sale of the Rights Offering Securities (if any, as applicable) in connection with the Rights Offering (if any);] (c) the New Interests; (d) Cash or other proceeds from the sale of Estate property (if any); and (e) the Debtors' Cash on hand, as applicable. A full-text copy of the Disclosure Statement dated February 4, 2024 is available at https://urlcurt.com/u?l=nk2N1r from Epiq Corporate Restructuring, LLC, claims agent. Co-Counsel for Debtors: Edward O. Sassower, P.C. Joshua A. Sussberg, P.C. Steven N. Serajeddini, P.C. Ciara Foster, Esq. KIRKLAND & ELLIS LLP KIRKLAND & ELLIS INTERNATIONAL LLP 601 Lexington Avenue New York, New York 10022 Tel: (212) 446-4800 Fax: (212) 446-4900 Email: edward.sassower@kirkland.com joshua.sussberg@kirkland.com steven.serajeddini@kirkland.com ciara.foster@kirkland.com Co-Counsel for Debtors: Michael D. Sirota, Esq. Warren A. Usatine, Esq. Felice R. Yudkin, Esq. Ryan T. Jareck, Esq. COLE SCHOTZ P.C. Court Plaza North, 25 Main Street Hackensack, New Jersey 07601 Tel: (201) 489-3000 Email: msirota@coleschotz.com wusatine@coleschotz.com fyudkin@coleschotz.com rjareck@coleschotz.com About WeWork Inc. New York, NY-based WeWork Inc. is a global flexible workspace provider, serving a membership base of businesses large and small through its network of 779 Systemwide Locations, including 622 Consolidated Locations as of December 2022. WeWork Inc. and its affiliates sought relief under Chapter 11 of the Bankruptcy Code (Bankr. D.N.J. Case No. 23-19865) on Nov. 6, 2023. In its petition, WeWork Inc. reported $19 billion of liabilities and $15 billion of assets. The Debtors tapped Kirkland & Ellis LLP and Kirkland & Ellis International LLP, Cole Schotz PC, and Munger, Tolles & Olson LLP as counsel; Alvarez & Marsal North America LLC and Province, LLC as financial advisors; and PJT Partners LP as investment banker. Softbank is represented by Weil Gotshal & Manges LLP and Wollmuth Maher & Deutsch LLP as legal counsel and Houlihan Lokey Capital as financial advisor. The Ad Hoc Group of First Lien and Second Lien Lenders is represented by Davis Polk & Wardwell LLP (Eli Vonnegut, Elliot Moskowitz, Natasha Tsiouris, Jonah Peppiatt) and Greenberg Traurig LLP (Alan Brody) as legal counsel and Ducera Partners LLC as financial advisor. The U.S. Trustee for Regions 3 and 9 appointed an official committee to represent unsecured creditors in the Debtors' Chapter 11 cases. WHITEWATER DBR: S&P Assigns 'BB' ICR, Outlook Stable ---------------------------------------------------- S&P Global Ratings assigned its 'BB' issuer credit rating to WhiteWater DBR Holdco LLC (WhiteWater DBR). At the same time, S&P assigned its 'BB' issue-level rating and '3' recovery rating to the company's senior secured term loan. The '3' recovery rating indicates its expectation of meaningful (50%-70%; rounded estimate: 60%) recovery in a payment default scenario. The stable outlook reflects the predictability and stability of WhiteWater DBR's cash flow due to its significant percentage of contracted volumes. S&P expects S&P Global Ratings-adjusted debt to EBITDA will improve below 5.0x in 2025 from the 7.0x area in 2024. S&P said, "Our view of WhiteWater DBR reflects our view of operating subsidiary DBR, which owns and operates the Agua Blanca Pipeline, a natural gas pipeline connecting Delaware processing capacity to the Waha hub. "We expect the pipeline to have capacity of 3.5 billion cubic feet per day (bcf/d) after completion of an expansion project in the third quarter of 2024. It has 3.3 bcf/d contracted under fixed-fee minimum volume commitments with mostly investment-grade counterparties. The favorable contract structure minimizes the company's direct exposure to cyclical commodity markets. We recognize the strong market demand for natural gas pipelines in the Delaware Basin and DBR's position to connect 50% of the basin to the Waha Hub. DBR is well positioned for growth, and we believe the completion of expansion projects over time will bring additional capacity and help drive cash flow growth. Its small size relative to peers partially offsets these business strengths, with expected 2024 EBITDA of about $130 million increasing to about $170 million in 2025. DBR also has a lack of geographic diversity, operating only in the Delaware. "We expect WhiteWater DBR's financial measures to improve through 2025. "We fully consolidate the debt at DBR, about $380 million as of year-end 2023. We expect S&P Global Ratings-adjusted debt to EBITDA of approximately 7x in 2024 and falling below 5x in 2025, driven by the increased cash flow from the expansion project, amortization of operating company debt, and a cash flow sweep of the holding company term loan B. We forecast WhiteWater DBR will generate surplus free operating cash flow of about $115 million in 2025 given its minimal capital needs after completion of the expansion. "Our stable outlook reflects the predictability and stability of WhiteWater DBR's cash flow due to its significant percentage of contracted volumes. We expect S&P Global Ratings-adjusted debt to EBITDA will improve to under 5x in 2025 from 7.0x in 2024 on the commencement of expansion projects and ramp-up of minimum volume commitments. "We could consider a negative rating action if WhiteWater DBR pursues a more aggressive financial policy such that we expect leverage above 5.5x on a consistent basis. "We could consider a positive rating action if WhiteWater DBR achieves an adjusted-debt-to-EBITDA ratio below 4.5x on a consistent basis." WILLIAM INSULATION: Hires Markus Williams Young as Legal Counsel ---------------------------------------------------------------- William Insulation Company, Inc. seeks approval from the U.S. Bankruptcy Court for the District of Wyoming to hire Markus Williams Young & Hunsicker LLC as its counsel. The firm will render these services: a. assist in the production of the Debtor's schedules and statement of financial affairs and other pleadings necessary to file its chapter 11 case; b. prepare on behalf of the Debtor all necessary applications, complaints, answers, motions, orders, reports, and other legal papers to commence a chapter 11 case; c. assist in the preparation of the plan of reorganization and/or liquidation; d. advise the Debtor on the local rules and standard practices of the United States Bankruptcy Court for the District of Wyoming; e. represent the Debtor in adversary proceedings and contested matters related to the Debtor's bankruptcy case; f. provide legal advice with respect to Debtor's rights, powers, obligations, and duties as a chapter 11 debtor-in-possession; and g. provide other legal services for the Debtor as necessary and appropriate for the administration of the Debtor's estate. The firm will be paid at these rates: Bradley T. Hunsicker $425 per hour Ryan L. Blansett $325 per hour Paralegal $175 per hour The firm received pre-petition retainers in the total amount of $78,500. As disclosed in court filings, Markus Williams Young &Hunsicker is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. The firm can be reached through: Bradley T. Hunsicker, Esq. MARKUS WILLIAMS YOUNG & HUNSICKER LLC 2120 Carey Avenue, Suite 101 Cheyenne, WY 82001 Telephone: (307) 778-8178 Facsimile: (303) 830-0809 Email: bhunsicker@MarkusWilliams.com About William Insulation Company William Insulation Company is an industrial insulation contractor serving the industrial insulation and fire proofing market. William Insulation Company, Inc. filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code (Bankr. D. Wyo. Case No. 24-20024) on Feb. 2, 2024. The petition was signed by Kenneth Milne as CEO. At the time of filing, the Debtor estimated $5,588,438 in assets and $10,402,598 in liabilities. Bradley T Hunsicker, Esq. at Markus Williams Young & Hunsicker LLC represents the Debtor as counsel. WOMEN'S CARE: $120MM Bank Debt Trades at 22% Discount ----------------------------------------------------- Participations in a syndicated loan under which Women's Care Holdings Inc is a borrower were trading in the secondary market around 78.1 cents-on-the-dollar during the week ended Friday, Feb. 9, 2024, according to Bloomberg's Evaluated Pricing service data. The $120 million facility is a Term loan that is scheduled to mature on January 15, 2029. The amount is fully drawn and outstanding. Headquartered in Tampa, Florida, Women's Care is a provider of a variety of women's health services, including obstetrics and gynecology, fertility care and genetic counseling, among others. WYNN RESORTS: Fitch Assigns 'BB-' First-Time IDR, Outlook Stable ---------------------------------------------------------------- Fitch Ratings has assigned a first-time 'BB-' Issuer Default Rating (IDR) to Wynn Resorts, Limited (WRL), Wynn Resorts Finance, LLC (WRF), Wynn Las Vegas, LLC (WLV), Wynn Macau, Limited (WML), and WM Cayman Holdings Limited II (WMC), or collectively, "Wynn". Fitch has also assigned a 'BB+'/'RR1' to all first lien secured debt of Wynn and a 'BB-'/'RR4' to all unsecured debt of Wynn. The Rating Outlook is Stable. The ratings reflect the high-quality portfolio of its gaming assets, the expected improvement in Macau's gaming market in terms of visitation and gaming activity that is expected to drive further improvement in credit metrics, strong results in Las Vegas, and robust liquidity that should fund near-term capital projects and could lead to further debt reduction. This is somewhat offset by the company's average diversification, although it operates in two of the largest gaming markets in the world, and the capital required to fund current and potential capital projects, which could affect the pace of more meaningful credit improvement. The Stable Outlook reflects Fitch's view that the Macau market will continue to recover from the removal of travel restrictions due to the pandemic, healthy Las Vegas market, and strong liquidity. KEY RATING DRIVERS Macau Recovery Builds Strength: The strong rebound in Macau gaming revenues following the removal of the travel restrictions in early-2023 is expected to be an important driver of Wynn's overall credit improvement. Fitch estimates that mass market baccarat has almost fully recovered to 2019 levels, particularly in the premium mass, which is Wynn's target market. Mass market baccarat was 91% of full year 2019 levels, although 4Q23 levels exceeded the 4Q19. Despite the rapid growth in gaming revenues, visitation and airline capacity remain below 2019 levels, and the rebound in those metrics should provide another source of further revenue growth over the near term. Results at Wynn Palace has responded strongly, with mass market revenues and property EBITDAR margins for 3Q23 already above 2019 levels. Wynn Macau has rebounded a bit slower as the property continues to focus away from the VIP market while increasingly catering more to the premium mass market. Improving Credit Story: As results in Las Vegas and Macau continue to improve, Fitch expects EBITDAR leverage to improve from slightly below 7x in 2023 to the low-5x range by 2025 through EBITDA growth and partial debt reduction. Fitch expects Wynn to be FCF positive over the forecast horizon. Meanwhile, liquidity is robust, which includes $2.8 billion in cash, $792 million in short-term investments, and $737 million of availability on the WRF revolver. Fitch expects the credit will continue to improve despite the existence of several material capital projects in Macau, Las Vegas, Boston and the United Arab Emirates. Other potential projects could include a casino development in New York if the company is awarded a license by the state gaming commission. Management does not have an explicit financial policy on leverage, although the balance sheet has been managed prudently over the years, despite taking on development projects that increase leverage for a short period of time. The company repurchased shares in 2023, but Fitch expects further repurchases will be opportunistic and the dividend program will be the cornerstone of capital return to shareholders. Robust Las Vegas Results: Wynn's Las Vegas properties have improved strongly as the impact of the pandemic weakened. The high-quality nature of the properties combined with its favorable reputation attracts a more affluent customer, which allows the company to charge at a higher price point without affecting occupancy. There is some belief that gaming revenues in Las Vegas could decline over the next two years as the impact of pent-up demand recedes. However, this could be offset by stronger room rates from the return of the group and convention customer and visitation driven by the attraction of entertainment offerings in Las Vegas (the Wynn properties have benefited from the opening of The Sphere) and sporting events. Development Pipeline: Wynn plans to expand its Boston Harbor complex through the addition of parking and other amenities. The project is expected to begin in 2024 and be completed in 2026. In Macau, the company is committed to $2.2 billion of investment over 10 years, which is split between $1.2 billion in capex and $1 billion for non-gaming focused operations, such as concerts and events. The commitment could increase by 20% if total Macau gross gaming revenue exceeds $22.5 billion. Room renovations in Las Vegas are expected in 2024 and 2025 along with other smaller food and beverage projects. Finally, the company is moving forward with a resort development in Ras Al Khaimah in the United Arab Emirates. Wynn is a 40% owner of the destination resort and the total cost is expected to be $4 billion. Strong Parent and Subsidiary Linkage: Fitch views Wynn on a consolidated basis because the linkage between the parent, Wynn Resorts Finance, and the operating subsidiaries is strong. The parent has no unencumbered property cash flows, but benefits from a meaningful royalty stream from the three distinct subsidiaries. Wynn Resorts Finance, the primary debt-issuing entity in the U.S., is considered a stronger parent relative to the weaker Las Vegas and Macau subsidiaries, given it benefits from ownership in three district geographies (including Massachusetts). As a result, Fitch applied the strong parent/weak subsidiary approach under its Parent and Subsidiary Linkage Rating Criteria. The linkage is strong because of perceived high strategic and operational incentive, as the subsidiaries share brands and customers across the system. Of note, there are no material ring-fencing mechanisms to block cash movement from the subsidiaries. WRF's bonds are cross-defaulted with Wynn Las Vegas' bonds. DERIVATION SUMMARY Wynn historically maintained a 'BB' credit profile except in times of large development spending or economic crisis, such as COVID or the global financial crisis. The company has high-quality assets and operates in attractive regulatory regimes, while typically maintaining strong liquidity. Fitch expects Wynn to continue to pursue development projects and expansions/renovations on existing properties, but will do so in a prudent manner that preserves liquidity. Las Vegas Sands (BB+/Positive) has a larger presence in Macau with five gaming properties and also is one of two operators in Singapore. EBITDAR leverage at 4.0x is lower than Wynn and operations have rebounded quickly given that Singapore was not subject to the same travel restrictions as Macau. The company has a strong commitment to a conservative financial policy and also maintains very strong liquidity. The Seminole Tribe of Florida (BBB/Stable), maintains lower leverage, enjoys a degree of exclusivity in a deep Florida market, and stronger credit metrics. Conversely, Seminole has less discretionary distributions, which partially fund tribal government operations, and is less diversified. KEY ASSUMPTIONS Macau operations are expected to have mid-teens revenue growth as easy comparisons in early 2024 slowly decline to more normalized levels. EBITDAR margins are expected to improve by 100-150bp in 2024 and improve slightly over the forecast horizon. Las Vegas operations are expected to realize low single-digit growth as lower casino revenues are offset by higher room, food and beverage, and entertainment revenues. EBITDAR margins are expected to remain flat over the forecast horizon. Encore Boston Harbor revenues are expected to be slightly lower in 2024 due to disruption at the property from the Sumner Tunnel construction project. Revenues are expected to improve post 2025 as the road construction is completed and later in 2026 from the expansion of the casino. Capex and investment activity include the Encore Boston Harbor expansion, the Macau concession agreements, the UAE resort development, and expected room renovations in Las Vegas. There is no assumption for investments in a potential New York casino license. Wynn has repurchased stock in 2023, but Fitch believes capital allocation to shareholders will focus primarily through the dividend. A nominal amount of share repurchases is estimated over the forecast horizon as opportunistic purchases. RATING SENSITIVITIES Factors that could, individually or collectively, lead to positive rating action/upgrade: - EBITDAR leverage declining below 5.0x; - EBITDAR fixed charge coverage above 3.0x; - Maintain strong liquidity in order to ensure capital spending and working capital needs are sufficiently financed. Factors that could, individually or collectively, lead to negative rating action/downgrade: - EBITDAR leverage exceeding 6.0x on a sustained basis; - EBITDAR fixed charge coverage sustaining below 2.5x; - An increase in financial commitments due to new development projects or increased capital allocations to shareholders that anticipates the company will breech the EBITDAR leverage or EBITDAR fixed charge coverage targets described above. LIQUIDITY AND DEBT STRUCTURE Strong liquidity: Liquidity includes $2.8 billion in cash, $792 million in short-term investments, and $737 million of availability on the WRF revolver. Fitch expects the credit will continue to improve despite the existence several material capital projects in Macau, Las Vegas, Boston and the United Arab Emirates, which should be primarily through FCF and cash on hand. Other potential projects could include a casino development in New York if the company is awarded a license by the state gaming commission. Management does not have an explicit financial policy on leverage, although the balance sheet has been managed prudently over the years, despite taking on development projects that increase leverage for a short period of time. During 2023, Wynn addressed current maturities and a significant portion of 2025 maturities. Fitch believes that remaining maturities should be manageable over the forecast horizon. The company repurchased shares in 2023, but Fitch expects further repurchases will be opportunistic and the capital allocation to shareholders will primarily be through the recently enacted dividend program. ISSUER PROFILE Wynn Resorts, Ltd. owns and operates Encore Boston Harbor, Wynn Las Vegas (including Wynn Encore) and through its 72% owned subsidiary, Wynn Macau Limited, Wynn Macau and Wynn Palace in Macau, SAR. The company also operates Wynn Interactive in Nevada, Massachusetts, New York and Michigan. ESG CONSIDERATIONS The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' 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. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. DATE OF RELEVANT COMMITTEE January 26, 2024 Entity/Debt Rating Recovery Prior ----------- ------ -------- ----- WM Cayman Holdings Limited II LT IDR BB- New Rating senior unsecured LT BB- New Rating RR4 Wynn Macau, Limited LT IDR BB- New Rating WD senior unsecured LT BB- New Rating RR4 USD 1 bln 5.5% bond/note 15-Jan-2026 98313RAG1 LT BB- New Rating RR4 XPLORNET COMMS: Guggenheim SOF Marks $4.5MM Loan at 38% Off ----------------------------------------------------------- Guggenheim Strategic Opportunities Fund has marked its $4,557,000 loan extended to Xplornet Communications, Inc to market at $2,836,733 or 62% of the outstanding amount, as of November 30, 2023, according to a disclosure contained in Guggenheim SOF's Form N-CSR for the Fiscal year ended November 30, 2023, filed with the Securities and Exchange Commission on February 2, 2024. Guggenheim SOF is a participant in a Bank Loan to Xplornet Communications, Inc. The loan accrues interest at a rate of 9.65% (3 Month Term SOFR + 4.00%, Rate Floor: 4.00%). The loan matures on October 2, 2028. Guggenheim Strategic Opportunities Fund was organized as a Delaware statutory trust on November 13, 2006. The Fund is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. Guggenheim Strategic Opportunities Fund maybe reached at: Brian E. Binder President and Chief Executive Officer Guggenheim Strategic Opportunities Fund 227 West Monroe Street Chicago, IL 60606 Xplornet Communications Inc operates as a broadband service provider. The Company offers voice and data communication services through wireless and satellite networks. Xplornet Communications serves customers in Canada. YOGOLD U.S.A.: Seeks to Hire Patten Peterman Bekkedahl as Counsel ----------------------------------------------------------------- Yogold U.S.A. Corporation seeks approval from the U.S. Bankruptcy Court for the District of Montana to hire Patten, Peterman, Bekkedahl & Green, PLLC as its attorneys. The firm will render general counseling and local representation of the Debtor before the bankruptcy court in connection with this Chapter 11 case. The hourly rates of the firm's counsel and staff are as follows: James A. Patten, Esq. $400 Molly S. Considine, Esq. $300 Other attorneys $180 - $385 Diane S. Kephart, Paralegal $175 April J. Boucher, Paralegal $160 Other Paralegals $90 - $175 In addition, the firm will seek reimbursement for expenses incurred. The firm received a retainer of $5,000 from the Debtor. James Patten, Esq., a partner at Patten, Peterman, Bekkedahl & Green, disclosed in a court filing that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. The firm can be reached through: James A. Patten, Esq. Molly S. Considine, Esq. PATTEN, PETERMAN, BEKKEDAHL & GREEN, PLLC 2817 2nd Avenue North, Ste. 300 P.O. Box 1239 Billings, MT 59103 Telephone: (406) 252-8500 Facsimile: (406) 294-9500 Email: apatten@ppbglaw.com mconsidine@ppbglaw.com About Yogold U.S.A. Corporation Yogold U.S.A. Corporation filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Court (Bankr. D. Mont. Case No. 24-90002) on Jan. 4, 2024, listing $1 million to $10 million in both assets and liabilities. The petition was signed by Jerod C. Edington as president. Judge Benjamin P Hursh presides over the case. Gary S. Deschenes, Esq. at Deschenes & Associates Law Offices represents the Debtor as counsel. [^] BOND PRICING: For the Week from February 5 to 9, 2024 --------------------------------------------------------- Company Ticker Bid Price Coupon Maturity ------- ------ --------- ------ -------- 2U Inc TWOU 49.250 2.250 5/1/2025 3M Co MMM 99.452 5.939 2/14/2024 99 Escrow Issuer Inc NDN 32.931 7.500 1/15/2026 99 Escrow Issuer Inc NDN 32.931 7.500 1/15/2026 99 Escrow Issuer Inc NDN 32.931 7.500 1/15/2026 Acorda Therapeutics Inc ACOR 56.538 6.000 12/1/2024 Amyris Inc AMRS 3.260 1.500 11/15/2026 Anagram Holdings LLC/Anagram International Inc AIIAHL 1.052 10.000 8/15/2026 Anagram Holdings LLC/Anagram International Inc AIIAHL 1.052 10.000 8/15/2026 Anagram Holdings LLC/Anagram International Inc AIIAHL 1.052 10.000 8/15/2026 At Home Group Inc HOME 30.035 7.125 7/15/2029 At Home Group Inc HOME 29.358 7.125 7/15/2029 Audacy Capital Corp CBSR 4.125 6.750 3/31/2029 Audacy Capital Corp CBSR 4.000 6.500 5/1/2027 Audacy Capital Corp CBSR 3.438 6.750 3/31/2029 BPZ Resources Inc BPZR 3.017 6.500 3/1/2049 Biora Therapeutics Inc BIOR 58.750 7.250 12/1/2025 Cano Health LLC CANHEA 7.250 6.250 10/1/2028 Cano Health LLC CANHEA 7.309 6.250 10/1/2028 Citigroup Global Markets Holdings Inc/United States C 75.000 8.300 5/25/2037 Citizens Financial Group Inc CFG 92.500 6.375 N/A CommScope Inc COMM 44.859 8.250 3/1/2027 CommScope Inc COMM 44.371 8.250 3/1/2027 CommScope Technologies LLC COMM 38.080 5.000 3/15/2027 CommScope Technologies LLC COMM 37.384 5.000 3/15/2027 CorEnergy Infrastructure Trust Inc CORR 60.200 5.875 8/15/2025 Cornerstone Chemical Co CRNRCH 29.922 10.250 9/1/2027 Curo Group Holdings Corp CURO 26.364 7.500 8/1/2028 Curo Group Holdings Corp CURO 20.000 7.500 8/1/2028 Cutera Inc CUTR 26.713 2.250 6/1/2028 Cutera Inc CUTR 24.750 4.000 6/1/2029 Cutera Inc CUTR 40.875 2.250 3/15/2026 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 94.991 4.450 4/1/2024 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 8.904 5.150 3/15/2042 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 12.645 6.000 8/15/2040 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 7.613 6.350 3/15/2040 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 8.904 5.150 3/15/2042 DIRECTV Holdings LLC / DIRECTV Financing Co Inc DTV 8.904 5.150 3/15/2042 Danimer Scientific Inc DNMR 7.250 3.250 12/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.625 5.375 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.250 6.625 8/15/2027 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 5.488 5.375 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 4.700 6.625 8/15/2027 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 6.000 5.375 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 3.250 5.375 8/15/2026 Diamond Sports Group LLC / Diamond Sports Finance Co DSPORT 4.875 5.375 8/15/2026 Endo Finance LLC / Endo Finco Inc ENDP 5.021 5.375 1/15/2023 Endo Finance LLC / Endo Finco Inc ENDP 5.021 5.375 1/15/2023 Energy Conversion Devices Inc ENER 0.551 3.000 6/15/2013 Enviva Partners LP / Enviva Partners Finance Corp EVA 37.457 6.500 1/15/2026 Enviva Partners LP / Enviva Partners Finance Corp EVA 52.000 6.500 1/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 27.000 11.500 7/15/2026 Exela Intermediate LLC / Exela Finance Inc EXLINT 26.712 11.500 7/15/2026 Federal Home Loan Banks FHLB 97.458 0.400 3/12/2024 Federal Home Loan Banks FHLB 99.829 5.000 2/9/2024 Federal Home Loan Banks FHLB 99.829 5.000 2/9/2024 Federal Home Loan Banks FHLB 71.431 5.000 5/8/2024 Federal Home Loan Banks FHLB 96.810 0.370 3/13/2024 Federal National Mortgage Association FNMA 99.414 5.125 2/9/2024 Federal National Mortgage Association FNMA 93.929 5.220 5/3/2024 First Republic Bank/CA FRCB 4.547 4.375 8/1/2046 First Republic Bank/CA FRCB 4.455 4.625 2/13/2047 Fisker Inc FSR 10.250 2.500 9/15/2026 GNC Holdings Inc GNC 0.409 1.500 8/15/2020 Goodman Networks Inc GOODNT 5.000 8.000 5/11/2022 Goodman Networks Inc GOODNT 1.000 8.000 5/31/2022 Gossamer Bio Inc GOSS 37.456 5.000 6/1/2027 H-Food Holdings LLC / Hearthside Finance Co Inc HEFOSO 5.500 8.500 6/1/2026 H-Food Holdings LLC / Hearthside Finance Co Inc HEFOSO 8.250 8.500 6/1/2026 Hallmark Financial Services Inc HALL 16.888 6.250 8/15/2029 Hill-Rom Holdings Inc HRC 100.000 7.000 2/15/2024 HomeStreet Inc HMST 33.500 3.500 1/30/2032 Homer City Generation LP HOMCTY 38.750 8.734 10/1/2026 Independent Bank Corp INDB 95.881 4.750 3/15/2029 Independent Bank Corp INDB 95.881 4.750 3/15/2029 Inseego Corp INSG 31.250 3.250 5/1/2025 Invacare Corp IVC 83.125 5.000 11/15/2024 Invacare Corp IVC 0.717 4.250 3/15/2026 JPMorgan Chase & Co JPM 97.232 3.050 3/6/2024 JPMorgan Chase Bank NA JPM 87.231 2.000 9/10/2031 Karyopharm Therapeutics Inc KPTI 54.750 3.000 10/15/2025 Ligado Networks LLC NEWLSQ 17.500 15.500 11/1/2023 Ligado Networks LLC NEWLSQ 19.950 15.500 11/1/2023 Lumen Technologies Inc LUMN 40.343 6.875 1/15/2028 Lumen Technologies Inc LUMN 26.549 4.500 1/15/2029 Lumen Technologies Inc LUMN 26.448 4.500 1/15/2029 Lumen Technologies Inc LUMN 26.490 5.375 6/15/2029 Lumen Technologies Inc LUMN 27.556 5.375 6/15/2029 Luminar Technologies LAZR 39.750 1.250 12/15/2026 MBIA Insurance Corp MBI 4.430 16.836 1/15/2033 MBIA Insurance Corp MBI 4.455 16.831 1/15/2033 Macy's Retail Holdings LLC M 84.544 6.700 7/15/2034 Macy's Retail Holdings LLC M 86.745 6.900 1/15/2032 Mashantucket Western Pequot Tribe MASHTU 46.887 7.350 7/1/2026 Morgan Stanley MS 75.832 1.800 8/27/2036 OMX Timber Finance Investments II LLC OMX 0.850 5.540 1/29/2020 Photo Holdings Merger Sub Inc SFLY 45.001 8.500 10/1/2026 Photo Holdings Merger Sub Inc SFLY 45.001 8.500 10/1/2026 Polar US Borrower LLC / Schenectady International Group SIGRP 20.981 6.750 5/15/2026 Polar US Borrower LLC / Schenectady International Group SIGRP 22.214 6.750 5/15/2026 Porch Group Inc PRCH 36.500 0.750 9/15/2026 PureCycle Technologies Inc PCT 31.278 7.250 8/15/2030 Renco Metals Inc RENCO 24.875 11.500 7/1/2003 Rite Aid Corp RAD 4.563 7.700 2/15/2027 Rite Aid Corp RAD 5.876 6.875 12/15/2028 Rite Aid Corp RAD 5.876 6.875 12/15/2028 RumbleON Inc RMBL 55.163 6.750 1/1/2025 SBL Holdings Inc SECBEN 69.250 7.000 N/A SBL Holdings Inc SECBEN 66.000 7.000 N/A SVB Financial Group SIVB 1.750 4.000 N/A SVB Financial Group SIVB 67.000 3.500 1/29/2025 SVB Financial Group SIVB 1.750 4.250 N/A SVB Financial Group SIVB 1.750 4.100 N/A SVB Financial Group SIVB 1.500 4.700 N/A Shift Technologies Inc SFT 1.150 4.750 5/15/2026 Spanish Broadcasting System Inc SBSAA 54.612 9.750 3/1/2026 Spanish Broadcasting System Inc SBSAA 54.095 9.750 3/1/2026 Spirit Airlines Inc SAVE 40.832 1.000 5/15/2026 TerraVia Holdings Inc TVIA 4.644 5.000 10/1/2019 Tricida Inc TCDA 9.744 3.500 5/15/2027 Veritone Inc VERI 28.375 1.750 11/15/2026 Virgin Galactic Holdings Inc SPCE 38.250 2.500 2/1/2027 Voyager Aviation Holdings LLC VAHLLC 28.000 8.500 5/9/2026 Voyager Aviation Holdings LLC VAHLLC 28.000 8.500 5/9/2026 Voyager Aviation Holdings LLC VAHLLC 28.000 8.500 5/9/2026 WeWork Cos LLC / WW Co-Obligor Inc WEWORK 3.000 5.000 7/10/2025 WeWork Cos LLC / WW Co-Obligor Inc WEWORK 4.250 5.000 7/10/2025 WeWork Cos US LLC WEWORK 4.500 7.875 5/1/2025 WeWork Cos US LLC WEWORK 4.125 7.875 5/1/2025 WeWork Cos US LLC WEWORK 19.375 11.000 8/15/2027 WeWork Cos US LLC WEWORK 33.000 15.000 8/15/2027 WeWork Cos US LLC WEWORK 1.605 12.000 8/15/2027 WeWork Cos US LLC WEWORK 33.950 15.000 8/15/2027 WeWork Cos US LLC WEWORK 19.125 11.000 8/15/2027 Webster Financial Corp WBS 100.000 4.375 2/15/2024 Wesco Aircraft Holdings Inc WAIR 9.750 9.000 11/15/2026 Wesco Aircraft Holdings Inc WAIR 11.500 8.500 11/15/2024 Wesco Aircraft Holdings Inc WAIR 3.000 13.125 11/15/2027 Wesco Aircraft Holdings Inc WAIR 10.856 8.500 11/15/2024 Wesco Aircraft Holdings Inc WAIR 12.995 9.000 11/15/2026 Wesco Aircraft Holdings Inc WAIR 2.989 13.125 11/15/2027 Wheel Pros Inc WHLPRO 27.012 6.500 5/15/2029 Wheel Pros Inc WHLPRO 30.001 6.500 5/15/2029 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