/raid1/www/Hosts/bankrupt/TCR_Public/240329.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Friday, March 29, 2024, Vol. 28, No. 88
Headlines
225 BOWERY: Seeks to Extend Plan Exclusivity to July 24
4011-4090 NW 34TH: Seeks to Extend Plan Exclusivity to May 14
9 ANGELINO HEIGHTS: Voluntary Chapter 11 Case Summary
AEROCISION PARENT: Commences Chapter 11 Liquidation
AETIUS COMPANIES: Plan Exclusivity Period Extended to April 15
ALLEGIANCE COAL: Spars With Ch. 11 DIP Lender Over $1.8Mil. Fees
ALLIANCE RESOURCE: Moody's Affirms Ba3 CFR, Outlook Remains Stable
ALPINE 4 HOLDINGS: CEO Outlines Strategic Reorganization Plan
AMPIO PHARMACEUTICALS: Lowers Net Loss to $8.6 Million in 2023
AMPIO PHARMACEUTICALS: Voluntarily Delists From NYSE
ATLAS LITHIUM: Widens Net Loss to $42.6 Million in 2023
BESTWALL LLC: Says 'Texas Two-Step' Irrelevant to Asbestos Ch.11
BESTWALL LLC: Texas Two-Step Ruling Appealed by Asbestos Claimants
BESTWALL LLC: Wants Direct Appeal Effort Blocked
BOWFLEX INC: Cleared for April Auction, $37.5M Stalking Horse Bid
BOY SCOUTS: Judge Voids 3 Ballots for Possible Forgery
BREITMEYER FABRICATIONS: Case Summary & Top Unsecured Creditors
BUTLER HEALTH: Moody's Downgrades Issuer & Revenue Ratings to Ba1
BYJU'S ALPHA: Hedge Fund Manager Faces Arrest
CANE CREEK: U.S. Trustee Unable to Appoint Committee
CARDIFF LEXINGTON: Grassi & Co CPAs Raises Going Concern Doubt
CAREISMATIC BRANDS: Wants to Speed Up Bankruptcy Process
CASINO GROUP: Simpson Thacher Advises Quatrim Noteholders
CBL & ASSOCIATES: S&P Downgrades ICR to 'B-', Outlook Stable
CELSIUS NETWORK: Seeks Return of $2-Bil Withdrawn Prior to Collapse
CELSIUS NETWORK: Seeks to Calm Creditors Over Delayed Payouts
CHARGE ENTERPRISES: In Chapter 11, to Hand Control to Arena
CINEMARK HOLDINGS: Fitch Alters Outlook on 'B+' IDR to Stable
CURO GROUP: Implements Prepackaged Chapter 11 Restructuring Plan
CURO GROUP: S&P Lowers ICR to 'D' on Chapter 11 Bankruptcy Filing
DCERT BUYER: Fitch Alters Outlook on 'B' LongTerm IDR to Negative
DELCATH SYSTEMS: Incurs $47.7 Million Net Loss in 2023
DIGERATI TECHNOLOGIES: Reports $4.02M Net Loss in Second Quarter
DIOCESE OF CAMDEN: Court Confirms Plan With $87.5 Mil. Deal
DIOCESE OF NORWICH: Retired Judge to Review Abuse Claims
DIOCESE OF SACRAMENTO: To File Chapter 11 Petition on April 1
DIRECTBUY HOME: April 16 Plan & Disclosures Hearing Set
EASTERN VAULT: Public Sale Auction Slated for April 3
ELITE KIDS: Seeks to Delay Confirmation Deadline to July 31
EMPOWER PAYMENTS: S&P Withdraws 'B-' Issuer Credit Rating
ENCORE CAPITAL: Fitch Rates $500MM Secured Notes Due 2029 'BB+'
ENVISION HEALTHCARE: Gets Final Nod for $177.5-Mil. Investor Deal
ENVIVA INC: U.S. Trustee Appoints Creditors' Committee
EVOFEM BIOSCIENCES: BPM LLP Raises Going Concern Doubt
EVOKE PHARMA: Names Matthew D'Onofrio as New CEO
EYEWEAR SHOP: Amends Oriental Bank Secured Claims Pay
FREE SPEECH SYSTEMS: Wants to Hire New Bankruptcy Lawyer
FREE SPEECH: Chapter 11 Reorganization Doubtful, Says Trustee
FREE SPEECH: PQPR Wants New Chapter 11 Trustee
FREE SPEECH: Trustee Asks for Mediation to Resolve Cases
FREEDOM PLUMBERS: Updates Unsecured Claims Pay; Plan Hearing May 14
FTX GROUP: CEO Ray Slams SBF's 'Zero' Harm Claims
FTX GROUP: Reaches Bankruptcy Deal w/ BlockFi for Up to $875-Mil.
FTX GROUP: SBF Says 50-Year Sentence Only Fit for Super Villain
FTX GROUP: Sentencing for Sam Bankman-Fried Set
FTX GROUP: Will Sell Majority of Its Startup Anthropic Stake
FTX TRADING: Plan Exclusivity Period Extended to May 13
GARAGE BUILDERS: April 18 Confirmation Hearing Set
GEORGINA FALU: April 9 Disclosure Statement Hearing Set
GIRARDI & KEESE: Feds, Defense Attys. to Delay Trial to August
GIRARDI & KEESE: Tom Girardi's Fraud Trial Delayed to August 6
GLOBAL FERTILITY: Files Amendment to Disclosure Statement
GOLI NUTRITION: Gets CCAA Initial Stay Order; Deloitte as Monitor
GREENIDGE GENERATION: Delays Filing of 2023 Annual Report
HAWAIIAN HOLDINGS: PAR Entities Report 5.4% Equity Stakes
HEALTHIER CHOICES: Marcum LLP Raises Going Concern Doubt
HERBALIFE: Moody's Lowers Unsecured Notes to B3
HLF FINANCING: S&P Rates Term Loan B 'B+', On Watch Negative
JOANN INC: $400K CFO Cash Retention Bonus Before Chapter 11 Filing
JOANN INC: Aims for Quick Exit From Chapter 11
JOANN INC: Approved for Quick Stint in Chapter 11
JOANN INC: Faces Nasdaq Delisting Amid Bankruptcy
JOANN INC: Okayed to Tap $95-Mil. of DIP Financing
JRGC LLC: April 19, 2024 Evidentiary Hearing on Plan Set
JSMITH CIVIL: Income & Lease Agreement Proceeds to Fund Plan
KAISER GYPSUM: High Court Considers Standing of Insurers in Ch. 11
KEVIN CONCANNON: Plan Exclusivity Period Extended to May 28
L'ADRESSE LLC: Unsecureds to Recover 20% via Quarterly Payments
LADRX CORP: Weinberg & Company Raises Going Concern Doubt
LEXARIA BIOSCIENCE: Amends Intellectual Property License Agreement
LTL MANAGEMENT: J&J Surprised by Talc Plaintiffs' Ties With Atty.
MASSAGE BY DENISE: Case Summary & 12 Unsecured Creditors
MATIV HOLDINGS: Moody's Lowers CFR to 'B1', Outlook Stable
MOUNTAIN VIEW: Seeks to Extend Plan Exclusivity to July 17
NASHVILLE SENIOR: Seeks to Extend Plan Exclusivity to April 15
ODYSSEY LOGISTICS: Moody's Alters Outlook on 'B2' CFR to Stable
ORGANON & CO: Moody's Affirms 'Ba2' CFR, Outlook Remains Stable
PARAMOUNT GLOBAL: S&P Lowers ICR to 'BB+' on Weak Credit Metrics
PEGASUS HOME: Seeks to Extend Plan Exclusivity to June 20
PERSPECTIVES INC: Case Summary & 20 Largest Unsecured Creditors
PONCE BAKERY: Updates Banco Popular's Secured Claim Pay
PREMIER KINGS: Plan Exclusivity Period Extended to August 21
PREMIER KINGS: Updates Secured Claims Pay Details
PRESTO AUTOMATION: Issues $4M Promissory Note to Presto CA
PRUDENT AMERICAN: Plan Exclusivity Period Extended to May 14
QUAD/GRAPHICS INC: Fitch Alters Outlook on B+ LongTerm IDR to Pos.
RV RETAILER: S&P Lowers ICR to 'B-' on Prolonged Leverage Spike
S&B RESTAURANTS: Voluntary Chapter 11 Case Summary
SANDVINE LP: S&P Downgrades ICR to 'CCC', Outlook Negative
SECURE ENERGY: Moody's Withdraws 'Ba3' CFR on Debt Repayment
SINTX TECHNOLOGIES: Incurs $8.3 Million Net Loss in 2023
SORRENTO THERAPEUTICS: $2-Mil. Financing Infusion, Asset Sale OK'd
SORRENTO THERAPEUTICS: Can Keep Chapter 11 Case in Houston
SPITFIRE ENERGY: Plan Exclusivity Period Extended to May 7
ST. IVES RV RESORT: Case Summary & Seven Unsecured Creditors
SVB FINANCIAL: Farella Braun & Martel Wants $49,000 Unpaid Fees
SVB FINANCIAL: Wants to Sell SVB India to First Citizens
TENET HEALTHCARE: Fitch Alters Outlook on 'B+' LongTerm IDR to Pos.
THREE GUYS: April 30 Plan Confirmation Hearing Set
TRINITAS FARMING: Chapter 11 Loan Final Approval Delayed
WESTSIDE NEIGHBORHOOD: S&P Assigns 'BB' Rating 2024A-B Rev Bonds
WHAIRHOUSE REAL ESTATE: Plan Exclusivity Period Extended to May 24
WHITTAKER CLARK: Bid to Appoint Creditors' Committee Draws Flak
YELLOW CORP: $137Million Fight Discovery Pause Request Declined
YELLOW CORP: Fights w/ Pension Funds on Venue of $5-Bil. Claims
YELLOW CORP: Wants Teamsters' $257-Mil. Bankruptcy Claim Tossed
[*] Jackson Walker Fights DOJ's Bid to Reopen Chapter 11 Cases
[*] Looming Supreme Court Ruling to Affect Tort Cases
[*] Nursing Homes Continue to See Staffing Challenges
[^] BOOK REVIEW: The Titans of Takeover
*********
225 BOWERY: Seeks to Extend Plan Exclusivity to July 24
-------------------------------------------------------
225 Bowery, LLC asked the U.S. Bankruptcy Court for the District of
Delaware to extend its exclusivity periods to file a plan of
reorganization and obtain acceptance thereof to July 24 and
September 24, 2024, respectively.
Since the entry of the Third Extension Order, the Debtor has made
significant progress with its key stakeholders as reflected in the
Plan and Disclosure Statement. The Debtor entered into the Paz
Parties Settlement Term Sheet with David S. Paz and certain of his
affiliates (collectively, the "Paz Parties"), which collectively
have filed claims in this case totaling more than $30 million (the
"Paz Parties Claims").
Meanwhile, the Debtor and Hotel and Gaming Trades Council, AFL-CIO
(the "Union") have had a number of meetings to discuss a potential
consensual resolution of the Union's claims and the modification or
termination of the collective bargaining agreement between the
Union and the Hotel Association of New York City, Inc. The Debtor
plans to continue the constructive dialogue it has had with the
Union and is optimistic that an agreement with the Union can be
reached.
225 Bowery Lender LLC (the "Secured Lender") remains the last key
stakeholder for which the Debtor has not yet reached an agreement
for the consensual treatment of its claim. The Debtor has yet again
agreed to delay the hearing to consider approval of the Disclosure
Statement to continue negotiations with the Secured Lender to
determine whether a consensual resolution between the parties is
possible.
The Debtor asserts that while it has made a great amount of
progress towards exit and as discussed at prior status conferences
held before the Court, if the Exclusive Periods are not extended
and control of the administration of the Debtor's estate is
improperly wrested away now, the Debtor is concerned that the
Chapter 11 Case could be unnecessarily disrupted, the exit from the
Chapter 11 Case delayed, and further administrative expenses
incurred.
The Debtor further asserts that termination of the Exclusive
Periods at this critical juncture in this Chapter 11 Case would
defeat the very purpose of section 1121 of the Bankruptcy Code, to
afford the debtor a meaningful opportunity to propose a confirmable
chapter 11 plan based on adequate information that maximizes value
and that is fair and equitable to all of the Debtor's economic
stakeholders.
Finally, because of the overwhelming consensus around the Plan, the
Debtor believes that the only other party likely to propose a plan
in this case is the Secured Lender. The Debtor has agreed to
another delay of the hearing to consider approval of the Disclosure
Statement (i.e., initially scheduled nearly two months ago on
January 23, 2024) to accommodate and attempt to reach consensus
with the Secured Lender.
The Debtor submits that it would be inequitable to allow the
Secured Lender to use these delays to allow the Exclusive Periods
to expire and that such delays weigh in favor of finding that
"cause" exists for an extension of the Exclusive Periods.
225 Bowery, LLC is represented by:
Michael R. Nestor, Esq.
Matthew B. Lunn, Esq.
Ryan M. Bartley, Esq.
Joshua B. Brooks, Esq.
YOUNG CONAWAY STARGATT & TAYLOR, LLP
Rodney Square
1000 North King Street
Wilmington, DE 19801
Tel: (302) 571-6600
Email: mnestor@ycst.com
mlunn@ycst.com
rbartley@ycst.com
jbrooks@ycst.com
-and-
Gerard S. Catalanello, Esq.
James J. Vincequerra, Esq.
Dylan S. Cassidy, Esq.
Kimberly J. Schiffman, Esq.
ALSTON & BIRD LLP
90 Park Avenue
New York, NY 10016
Tel: 212-210-9400
Email: gerard.catalanello@alston.com
james.vincequerra@alston.com
dylan.cassidy@alston.com
kimberly.schiffman@alston.com
About 225 Bowery
225 Bowery, LLC, is a New York-based company operating in the
traveler accommodation industry.
225 Bowery sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10094) on Jan. 24,
2023. In the petition signed by its chief restructuring officer,
Nat Wasserstein, the Debtor reported $50 million to $100 million in
both assets and liabilities.
Judge Brendan L. Shannon oversees the case.
Alston & Bird LLP and Young Conaway Stargatt and Taylor, LLP
represent the Debtor as legal counsel while Nat Wasserstein of
Lindenwood Associates, LLC serves as the Debtor's chief
restructuring officer.
Bank Hapoalim B.M., as lender, is represented by Scott S. Balber,
Esq., at Herbert Smith Freehills New York, LLP.
4011-4090 NW 34TH: Seeks to Extend Plan Exclusivity to May 14
-------------------------------------------------------------
4011-4090 NW 34th Street LLC asked the U.S. Bankruptcy Court for
the Southern District of Florida to extend its exclusivity periods
to file a plan of reorganization and obtain acceptance thereof to
May 14 and July 15, 2024, respectively.
The Debtor is a single asset real estate company which owns and
operates an 18-unit commercial shopping center in Lauderdale Lakes,
FL.
The Debtor intends to file a plan of reorganization that will
provide, inter alia, for payment to holders of allowed claims, over
time, in an amount that is in excess of what creditors would
receive in a Chapter 7 proceeding.
The Debtor claims that it has a number of unresolved contingencies.
The Debtor submits that it has a reasonable prospect for filing a
viable plan of reorganization because it has a positive cash flow,
which will be sufficient to provide a substantial distribution to
creditors.
The Debtor asserts that this request is being made to ensure the
company's continued management of its business affairs and
negotiation with its creditors, as well as to preserve the Debtor's
possibility of reorganization and going concern value for the
benefit of creditors.
The Debtor further asserts that this case is moderately complex due
to the number of creditors, amounts owed to creditors, and the
dispute between the Debtor and disputed creditor IPG International
Products Group Inc. regarding both IPG's entitlement to any claim
against the Debtor and the amount of such a claim, should be Court
find the Debtor has an obligation to IPG.
The Debtor explains that it is not seeking an extension of
exclusivity in order to pressure creditors to submit to the
Debtor's reorganization demands. Rather, the Debtor feels that it
would lead to an efficient and smooth plan confirmation process.
4011-4099 NW 34th Street, LLC is represented by:
Christian Somodevilla, Esq.
LSS LAW
2 South Biscayne Boulevard, Suite 2200
Miami, FL 33131
Telephone: (305) 894-6163
Facsimile: (305) 503-9447
Email: cs@lss.law
About 4011- 4099 NW 34th Street
4011- 4099 NW 34th Street, LLC is the owner of real property
located at 4011-4090 NW 34th Street, Lauderhill, Fla., valued at $2
million.
4011- 4099 NW 34th Street filed Chapter 11 petition (Bankr. S.D.
Fla. Case No. 23-19421) on Nov. 16, 2023. In the petition signed by
Jose Gaspard Morell, an authorized officer, the Debtor disclosed
$2,054,566 in total assets and $590,001 in total liabilities.
Judge Corali Lopez-Castro oversees the case.
The Debtor tapped Zach B. Shelomith, Esq., and Christian
Somodevilla, Esq., at LSS Law as bankruptcy counsel and Hal
Levenberg at Yip Associates as accountant.
9 ANGELINO HEIGHTS: Voluntary Chapter 11 Case Summary
-----------------------------------------------------
Debtor: 9 Angelino Heights LLC
801 E. Edgeware Road
Los Angeles, CA 90026
Chapter 11 Petition Date: March 28, 2024
Court: United States Bankruptcy Court
Central District of California
Case No.: 24-12375
Judge: Hon. Julia W Brand
Debtor's Counsel: Christopher J. Langley, Esq.
SHIODA LANGLEY & CHANG LLP
1063 E. Las Tunas Dr.
San Gabriel, CA 91776
Tel: 951-383-3388
Fax: 877-483-4434
Email: chris@slclawoffice.com
Estimated Assets: $10 million to $50 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Barbara Behm as managing member.
The Debtor indicated it has no unsecured creditors.
A full-text copy of the petition is available for free at
PacerMonitor.com at:
https://www.pacermonitor.com/view/5KE2OYA/9_Angelino_Heights_LLC__cacbke-24-12375__0001.0.pdf?mcid=tGE4TAMA
AEROCISION PARENT: Commences Chapter 11 Liquidation
---------------------------------------------------
Rick Archer of Law360 reports that AeroCision, a troubled supplier
of airplane components, has informed Delaware's bankruptcy court
its Chapter 11 liquidation plan has gone into effect, distributing
remaining assets of the business after it went on the auction block
late last year, 2023.
About AeroCision Parent
AeroCision Parent, LLC and affiliates are are part of an
organization known as Bromford Group, a global manufacturing
business in the aerospace, defense, and power generation industry
that was founded in the United Kingdom in 1973. Bromford supplies
turbine engine and related components to all major OEM's, including
many of the industry's most prominent manufacturers, like General
Electric Aviation, Pratt & Whitney, and Rolls Royce, among others.
The manufacturers use Bromford's components to manufacture engines
for aircraft and other vehicles.
The Debtors sought protection under Chapter 11 of the Bankruptcy
Code (Bankr. D. Del. Lead Case No. 23-11032) on July 31, 2023. In
the petition signed by David Nolletti, chief restructuring officer,
the Debtor disclosed up to $500 million in both assets and
liabilities.
Judge Karen B. Owens oversees the case.
Young Conaway Stargatt & Taylor, LLP represents the Debtors as
legal counsel, Riveron Consulting, LLC as restructuring advisor,
Jefferies LLC as investment banker, and Epiq Corporate
Restructuring, LLC as notice, claims, solicitation and balloting
agent and administrative advisor.
AETIUS COMPANIES: Plan Exclusivity Period Extended to April 15
--------------------------------------------------------------
Judge J. Craig Whitley of the U.S. Bankruptcy Court for the Western
District of North Carolina extended Aetius Companies, LLC and
affiliates' exclusive periods to file a plan of reorganization and
obtain acceptance thereof to April 15 and June 15, 2024,
respectively.
Counsel to the Debtors:
Robert A. Cox, Jr., Esq.
HAMILTON STEPHENS STEELE + MARTIN, PLLC
525 North Tryon Street, Suite 1400
Charlotte, NC 28202
Tel: (704) 344-1117
Email: rcox@lawhssm.com
About Aetius Companies, LLC
Aetius Companies, LLC and affiliates operate a restaurant chain.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. W.D. N.C. Lead Case No. 23-30470) on July
19, 2023.
In the petition signed by Mark Cote, president, the Debtor
disclosed up to $50 million in both assets and liabilities.
Judge Craig Whitley oversees the case.
Robert A. Cox, Jr., Esq., at Hamilton Stephens Steele + Martin,
PLLC, represents the Debtor as legal counsel.
Judge Craig Whitley, upon recommendation of the U.S. Bankruptcy
Administrator for the Western District of North Carolina, issued an
order appointing an official committee to represent unsecured
creditors in the Chapter 11 cases of Aetius Companies, LLC and its
affiliates. Brinkman Law Group, P.C. as counsel, and Cole Hayes,
Esq. as local counsel.
ALLEGIANCE COAL: Spars With Ch. 11 DIP Lender Over $1.8Mil. Fees
----------------------------------------------------------------
Emily Lever of Law360 reports that a Delaware bankruptcy judge on
Friday, March 6, 2024, declined to rule on a petition from mining
company Allegiance Coal USA to toss its debtor-in-possession
lender's adversary proceeding demanding $1. 8 million in fees,
allowing more time to determine whether the fees have priority over
the rest of the debtor's obligations.
About Allegiance Coal USA Limited
Allegiance Coal USA Limited is a listed Australian company focused
on seaborne met coal mine development and operations, with
operating mines in southeast Colorado, central Alabama, as
well as a development project in northwest British Columbia.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 23-10234) on Feb. 21,
2023. In the petition signed by Jonathan Romcke, chief
executive officer, the Debtor disclosed up to $100 million in
assets and up to $50 million in liabilities.
Judge Craig T. Goldblatt oversees the case.
Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell LLP,
represents the Debtor as legal counsel.
ALLIANCE RESOURCE: Moody's Affirms Ba3 CFR, Outlook Remains Stable
------------------------------------------------------------------
Moody's Ratings affirmed Alliance Resource Operating Partners,
L.P.'s Ba3 corporate family rating, Ba3-PD probability of default
rating, and the B1 rating on its backed senior unsecured notes. The
speculative grade liquidity rating of SGL-2 is unchanged. The
rating outlook remains stable.
RATINGS RATIONALE
Alliance's credit profile (Ba3 CFR) is supported by a diversified
portfolio of assets comprising coal mining operations in the
Illinois and Appalachia basins, a coal royalties business, and an
oil & gas royalties business. Alliance's business model creates
stronger and more stable discretionary cash flow generation
compared to rated peers in the United States. Alliance is
structured as a master limited partnership (MLP) which makes
regular cash distributions to unitholders, although with the
flexibility to adjust them based on market conditions.
Additionally, Alliance's well contracted position provides earnings
visibility over the next 12-18 months.
Alliance's credit profile is constrained by the ongoing secular
decline in domestic demand for thermal coal, as well as ESG
challenges facing the coal sector. ESG-related risk for thermal
coal producers is high, but Alliance's diversified portfolio
compared to rated peers in the US offers some offset. Increasing
concern about environmental, social, and governance factors could
create challenges for coal companies and constrain access to
capital in the longer term.
As of February, nearly 93% of Alliance's expected 2024 coal
production was contracted at a healthy cash margin. While Moody's
expect EBITDA to come down year-over-year based on the contracted
prices, it would still be high compared to historical levels.
However, Alliance is guiding to elevated capital spending in 2024
due to reliability-related investments into its existing mines,
which will result in negative Moody's adjusted free cash flow
(including distributions).
Environmental, social, and governance considerations are important
factors influencing Alliance's credit quality. Moody's believes
that investor concerns about the coal industry's ESG profile are
intensifying and coal producers will be increasingly challenged by
access to capital issues in the current decade. An increasing
portion of the global investment community is reducing or
eliminating exposure to the coal industry with greater emphasis on
moving away from thermal coal. The aggregate impact on the credit
quality of the coal industry is that debt capital will become more
expensive over this horizon, particularly in the public bond
markets, and other business requirements, such as surety bonds,
which together will lead to much more focus on individual coal
producers' ability to fund their operations and articulate clearly
their approach to addressing environmental, social, and governance
considerations.
The SGL-2 reflects good liquidity to support operations in the next
12-18 months. Alliance reported $444 million of liquidity at
year-end 2023, comprised of $60 million of cash and $384 million
available under the $425 million revolving credit facility (due
March 2027), net of $41 million letters of credit. Moody's expect
Moody's adjusted free cash flow (including distributions) to be
negative in 2024 as a result of elevated capital spending plans,
resulting in a draw on the revolver. Moody's also expect a material
cushion of compliance under financial maintenance covenants that
govern the credit agreement. Moody's expect that Alliance will
continue to distribute material discretionary cash flow to
unitholders.
The stable outlook reflects expectations for strong credit metrics,
good liquidity over the next 12-18 months despite the expectation
of negative Moody's adjusted free cash flow (including
distributions) in the near-term, and a timely refinancing of the
senior unsecured notes which mature in May 2025. Note that the
revolver maturity springs to January 2025 from March 2027 in the
event that the senior unsecured notes are still outstanding as of
that date and Alliance does not have liquidity of at least $200
million.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Further ratings upside remains constrained by secular issues facing
the coal industry, including expected decline in demand for thermal
coal, as renewable energy sources replace coal fired power
generation. However, Moody's could consider an upgrade if portfolio
diversification were to improve materially, there is improved
visibility into the long-term sustainable earnings power of the
company, there is further reduction in gross debt levels, and if
there is a meaningful reduction in non-debt liabilities.
Moody's could downgrade the ratings with expectations for adjusted
financial leverage sustained above 2.0x (Debt/EBITDA), persistent
negative free cash flow, or further intensification of ESG concerns
that call into question the company's ability to handle debt
maturities.
Alliance Resource Operating Partners, L.P. is a subsidiary of
Alliance Resource Partners, L.P., which is a publicly traded master
limited partnership ("MLP"). At December 31, 2023, the company had
approximately 663 million tons of proven and probable coal reserves
in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West
Virginia. The company generated approximately $2.6 billion in
revenues for the twelve month period ended December 31, 2023.
The principal methodology used in these ratings was Mining
published in October 2021.
ALPINE 4 HOLDINGS: CEO Outlines Strategic Reorganization Plan
-------------------------------------------------------------
Kent Wilson, the Chief Executive Officer of Alpine 4 Holdings,
Inc., issued a letter to shareholders and the public on March 21,
2024. The text of the Letter follows:
"In my December 2023 CEO update letter, I began to outline a new
course for Alpine 4 to become a more streamlined, robust, and
profitable entity, particularly within the industries of Aerospace
and UAV (Unmanned Aerial Vehicle) development, Commercial
Electronics, Energy Storage, and Manufacturing."
"Our commitment to change began with the termination of our prior
auditing firm RSM in early January and the appointment of Marcum in
early February. While the change to RSM in Q3 2022 was fraught with
challenges, the Board of Directors felt that a fresh start with a
new firm that is more in line with our business structure would set
the auditor and Company relationship on the right track. We believe
once Marcum is fully in cadence with our reporting structure, on
time and punctual reporting will follow."
"The US business landscape is ever-changing, and Alpine 4 has
reached a decisive moment to pivot and embrace the future. In
accordance with our Maintain, Invest, Divest, Close (MIDC) process,
we have scrutinized our portfolio of subsidiaries to identify what
businesses are most likely to push the company forward into the
future. The MIDC process has been important in making informed
decisions on which entities to maintain, divest, or wind down."
In the letter, Wilson outlines the company's objectives to maintain
in RCA Commercial and Quality Circuit Assembly, invest in Vayu
Aerospace Corporation, Identified Technologies, Elecjet, and Global
Autonomous Corporation, divest from Morris Sheet Metal / JTD Spiral
/ Deluxe Sheet Metal, and Alternative Laboratories, and close
operations for Thermal Dynamics and Excel Construction Services.
"Alpine 4 is akin to an engine which, when firing on all cylinders,
creates great motion and the power to achieve/accomplish incredible
things. To be candid, our engine has not been firing uniformly, and
through disjointed effort has created inefficiencies that has
resulted in unproductive capital expenditures, cost overruns and
inefficient decision making to name a few. We believe that the
solution is centralization but our ability to do so requires many
different facets to be established. With the downsizing of Alpine 4
and a more refined focus, we believe that our ability to create and
implement a more robust centralization plan is obtainable. For
reference, a centralization of accounting, finance, purchasing, and
HR offers several significant benefits that can streamline
operations and enhance strategic alignment. By consolidating
decision-making authority at the top levels of our organization,
Alpine 4 can achieve a more unified direction and vision, ensuring
that all parts of the business work cohesively towards common
goals.This top-down approach will lead to more efficient allocation
of resources as decisions regarding investments, cost-cutting, and
prioritization of projects are made with a comprehensive
understanding of the company's overall strategy and objectives.
Centralization also simplifies the communication process, reducing
the likelihood of misinterpretation and ensuring that policies and
procedures are uniformly applied across the organization.
Furthermore, it allows for quicker decision-making in response to
market changes or competitive pressures, as fewer individuals are
involved in the approval process. This can be particularly
beneficial in the industries we serve where speed and agility are
critical to maintaining competitive advantage. Over the next six
months, management anticipates that the Company will bring in-house
much of our accounting, finance, and HR processes to our Corporate
Office in Phoenix, AZ. This will allow our subsidiaries to focus on
their key objective which is profitable sales. As we continue to
push forward into 2024, you will see that our subsidiary holdings
and direction of Alpine 4 change, with the overall goal of
positioning Alpine 4 as a technology centric company. I want
shareholders to know that we appreciate you sharing our vision as
we navigate this pivotal transformation. It also is important to me
that you, the shareholders, know we understand the challenges you
and we have experienced in the past. We believe that embracing
these changes will lead to the success that we all strive for!"
A full-text copy of the Letter filed on Form 8-K with the
Securities and Exchange Commission is available at
https://tinyurl.com/4x677drj
About Alpine 4
Alpine 4 Holdings, Inc (formerly Alpine 4 Technologies, Ltd) is a
Nasdaq traded Holding Company (trading symbol: ALPP) that acquires
business, wholly, that fit under one of several portfolios:
Aerospace, Defense Services, Technology, Manufacturing or
Construction Services as either a Driver, Stabilizer or Facilitator
from Alpine 4's disruptive DSF business model.
Alpine 4 Holdings reported a net loss of $12.87 million for the
year ended Dec. 31, 2022, compared to a net loss of $19.48 million
for the year ended Dec. 31, 2021. As of Dec. 31, 2022, the Company
had $145.63 million in total assets, $75.64 million in total
liabilities, and $69.99 million in total stockholders' equity.
Phoenix, Arizona-based RSM US LLP, the Company's auditor since
2022, issued a "going concern" qualification in its report dated
May 5, 2023, citing that the Company has suffered recurring losses
from operations and recurring negative cash flows from operations.
This raises substantial doubt about the Company's ability to
continue as a going concern.
As of June 30, 2023, the Company had positive working capital of
$1.6 million, which was a decrease of $14 million compared to Dec.
31, 2022. The Company has bank financing totaling $35 million ($35
million in lines of credit including $0.5 million in capital
expenditures lines of credit availability) of which $4.4 million
was available and unused as of June 30, 2023. There are three
lines of credit that are set to mature during the next 12 months.
These three lines of credit total $13.7 million, of which $8.7
million was used as of June 30, 2023, and are shown as a current
liability on the consolidated balance sheet. According to the
Company, these factors raise substantial doubt about its ability to
continue as a going concern.
AMPIO PHARMACEUTICALS: Lowers Net Loss to $8.6 Million in 2023
--------------------------------------------------------------
Ampio Pharmaceuticals, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K reporting a net loss of
$8.63 million for the year ended Dec. 31, 2023, compared to a net
loss of $16.34 million for the year ended Dec. 31, 2022.
As of Dec. 31, 2023, the Company had $5.74 million in total assets,
$2.37 million in total liabilities, and $3.36 million in total
stockholders' equity.
Denver, Colorado-based Moss Adams LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 27, 2024, citing that the Company has suffered recurring
losses from operations, plans to pursue voluntary de-listing of the
Company's common stock, and is preserving cash to fund an orderly
wind down of operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001411906/000155837024004090/ampe-20231231x10k.htm
About Ampio Pharmaceuticals
Headquartered in Englewood, Colorado, Ampio Pharmaceuticals, Inc.
-- http://www.ampiopharma.com-- is a pre-revenue stage
biopharmaceutical company that until February 2024 was focused on
the development of a potential treatment for osteoarthritis of the
knee ("OAK") as part of its OA-201 development program ("OA-201
program" or "OA-201"). The OA-201 program sought to advance
Ampio's unique and proprietary small molecule formulation that was
Ampio's only product development opportunity. In late 2023, the
Company initiated non-clinical studies to determine whether OA-201
would support an Investigational New Drug ("IND") submission.
Previous smaller studies had demonstrated that OA-201 showed
efficacy versus saline control to reduce pain and preserve
cartilage in non-clinical models of osteoarthritis of the knee.
However, as the Company announced in February 2024, the pain
reduction benefit was not observed in the data from the recent set
of non-clinical studies which utilized a larger population of
animal subjects.
AMPIO PHARMACEUTICALS: Voluntarily Delists From NYSE
----------------------------------------------------
Ampio Pharmaceuticals, Inc. announced that its Board of Directors
determined to voluntarily delist its common stock from the NYSE
American and deregister its common stock in order to terminate and
suspend its reporting obligations under the Securities and Exchange
Act of 1934, as amended.
On March 25, 2024, the Company notified the NYSE American of its
intention to voluntarily delist its shares of common stock from the
NYSE American. The Company intends to file a Form 25 with the
Securities and Exchange Commission to effect the delisting and
deregistration of its common stock on or about April 4, 2024 and
the delisting is expected to become effective on or about April 14,
2024.
Following the delisting of the Company's common stock from the NYSE
American, the Company intends to file a Form 15 with the SEC on or
about April 15, 2024 to suspend its reporting obligations under the
Act. As a result of the filing of the Form 15, the Company's
obligation to file certain Exchange Act reports and forms with the
SEC, including Forms 10-K, 10-Q, and 8-K, will cease. Other SEC
filing requirements will terminate upon the effectiveness of the
deregistration. The Company expects that the deregistration of its
common stock will become effective 90 days after the filing of the
Form 15 with the SEC.
The Board made the decision to pursue delisting and deregistration
of its common stock following its review and careful consideration
of a number of factors, including, but not limited to, the
Company's current and likely future non-compliance with the
continued listing requirements of the NYSE American that would
inevitably result in delisting of the Company's common stock by the
NYSE American and the required personnel resources and the high
costs relating to Exchange Act and NYSE American disclosure and
reporting requirements and related regulatory burdens, which have
resulted and would continue to result in significant operating
expense. In light of these factors, the Board has determined that
it is in the Company's best interests that the Company take steps
designed to ensure sufficient cash to adequately fund an orderly
wind down of the Company's operations and to maximize the Company's
cash position.
About Ampio Pharmaceuticals
Headquartered in Englewood, Colorado, Ampio Pharmaceuticals, Inc.
-- http://www.ampiopharma.com-- is a pre-revenue stage
biopharmaceutical company that until February 2024 was focused on
the development of a potential treatment for osteoarthritis of the
knee ("OAK") as part of its OA-201 development program ("OA-201
program" or "OA-201"). The OA-201 program sought to advance
Ampio's unique and proprietary small molecule formulation that was
Ampio's only product development opportunity. In late 2023, the
Company initiated non-clinical studies to determine whether OA-201
would support an Investigational New Drug ("IND") submission.
Previous smaller studies had demonstrated that OA-201 showed
efficacy versus saline control to reduce pain and preserve
cartilage in non-clinical models of osteoarthritis of the knee.
However, as the Company announced in February 2024, the pain
reduction benefit was not observed in the data from the recent set
of non-clinical studies which utilized a larger population of
animal subjects.
Denver, Colorado-based Moss Adams LLP, the Company's auditor since
2019, issued a "going concern" qualification in its report dated
March 27, 2024, citing that the Company has suffered recurring
losses from operations, plans to pursue voluntary de-listing of the
Company's common stock, and is preserving cash to fund an orderly
wind down of operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
ATLAS LITHIUM: Widens Net Loss to $42.6 Million in 2023
-------------------------------------------------------
Atlas Lithium Corporation filed with the Securities and Exchange
Commission its Annual Report on Form 10-K reporting a net loss of
$42.63 million on $0 of revenue for the 12 months ended Dec. 31,
2023, compared to a net loss of $5.66 million on $6,765 of revenue
for the 12 months ended Dec. 31, 2022.
As of Dec. 31, 2023, the Company had $43.68 million in total
assets, $34.37 million in total liabilities, and $9.31 million in
total stockholders' equity.
Atlas Lithium said, "We have historically incurred net operating
losses and have not yet received material revenues from the sale of
products or services. As a result, our primary sources of
liquidity have been derived through proceeds from the (i) sales of
our equity and the equity of one of our subsidiaries, and (ii)
issuance of convertible debt. As of December 31, 2023, we had cash
and cash equivalents of $29,549,927 and working capital of
$24,044,931, compared to cash and cash equivalents $280,525 and a
working capital deficit of $2,452,553 as of December 31, 2022. We
believe our cash on hand will be sufficient to meet our working
capital and capital expenditure requirements for a period of at
least twelve months through March 2025. However, our future short-
and long-term capital requirements will depend on several factors,
including but not limited to, the rate of our growth, our ability
to identify areas for mineral exploration and the economic
potential of such areas, the exploration and other drilling
campaigns needed to verify and expand our mineral resources, the
types of processing facilities we would need to install to obtain
commercial-ready products, and the ability to attract talent to
manage our different areas of endeavor. To the extent that our
current resources are insufficient to satisfy our cash
requirements, we may need to seek additional equity or debt
financing. If the needed financing is not available, or if the
terms of financing are less desirable than we expect, we may be
forced to scale back our existing operations and growth plans,
which could have an adverse impact on our business and financial
prospects and could raise substantial doubt about our ability to
continue as a going concern."
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001540684/000149315224011539/form10-k.htm
About Atlas Lithium
Atlas Lithium Corporations formerly Brazil Minerals, Inc. is a
mineral exploration and development company with lithium projects
and multiple lithium exploration properties. In addition, the
Company owns exploration properties in other battery minerals,
including nickel, copper, rare earths, graphite, and titanium. The
Company's current focus is the development from exploration to
active mining of our hard-rock lithium project located in the state
of Minas Gerais in Brazil at a well-known lithium-bearing
pegmatitic district, which has been denominated by the government
of Minas Gerais as "Lithium Valley." The Company intends to mine
and then process its lithium-containing ore to produce lithium
concentrate (also known as spodumene concentrate), a key ingredient
for the battery supply chain.
Atlas Lithium reported a net loss of $4.03 million in 2021, a net
loss of $1.55 million in 2020, a net loss of $2.08 million in 2019,
a net loss of $1.85 million in 2018, a net loss of $1.89 million in
2017, a net loss of $1.74 million in 2016, and a net loss of $1.88
million in 2015.
BESTWALL LLC: Says 'Texas Two-Step' Irrelevant to Asbestos Ch.11
----------------------------------------------------------------
Vince Sullivan of Law360 reports that Bestwall, the bankrupt
asbestos unit of Georgia-Pacific, told the U. S. Supreme Court
Friday, March 22, 2024, that a pre-bankruptcy corporate
restructuring in Texas that separated its asbestos liability from
the parent business should not matter in determining whether a
bankruptcy court has jurisdiction over the subsidiary's asbestos
injury claims.
About Bestwall LLC
Bestwall LLC -- http://www.Bestwall.com/-- was created in an
internal corporate restructuring and now holds asbestos
liabilities. Bestwall's asbestos liabilities relate primarily to
joint systems products manufactured by Bestwall Gypsum Company, a
company acquired by Georgia-Pacific in 1965. The former Bestwall
Gypsum entity manufactured joint compounds containing small amounts
of chrysotile asbestos; the manufacture of these
asbestos-containing products ceased in 1977.
Bestwall's non-debtor subsidiary, GP Industrial Plasters LLC
("PlasterCo"), develops, manufactures, sells and distributes gypsum
plaster products, including gypsum floor underlayment, industrial
plaster, metal casting plaster, industrial tooling plaster, dental
plaster, medical plaster, arts and crafts plaster, pottery plaster
and general purpose plaster.
On Nov. 2, 2017, Bestwall sought Chapter 11 protection (Bankr.
W.D.N.C. Case No. 17-31795) in an effort to equitably and
permanently resolve all its current and future asbestos claims.
The Debtor estimated assets and debt of $500 million to $1 billion.
It has no funded indebtedness.
The Hon. Laura T. Beyer is the case judge.
The Debtor tapped Jones Day as bankruptcy counsel; Robinson,
Bradshaw & Hinson, P.A., as local counsel; Schachter Harris, LLP as
special litigation counsel for medicine science issues; King &
Spalding as special counsel for asbestos matters; and Bates White,
LLC, as asbestos consultants. Donlin Recano LLC is the claims and
noticing agent.
On Nov. 8, 2017, the U.S. bankruptcy administrator appointed an
official committee of asbestos claimants in the Debtor's case. The
committee retained Montgomery McCracken Walker & Rhoads, LLP as
legal counsel; and Hamilton Stephens Steele + Martin, PLLC and JD
Thompson Law as local counsel.
On Feb. 22, 2018, the court approved the appointment of Sander L.
Esserman as the future claimants' representative in the Debtor's
case. Mr. Esserman tapped Young Conaway Stargatt & Taylor, LLP, as
legal counsel; Hull & Chandler, P.A., as local counsel; Ankura
Consulting Group, LLC, as claims evaluation consultant; and FTI
Consulting, Inc., as financial advisor.
BESTWALL LLC: Texas Two-Step Ruling Appealed by Asbestos Claimants
------------------------------------------------------------------
Evan Ochsner of Bloomberg Law reports that Georgia-Pacific unit,
Bestwall LLC, asbestos claimants appeal Texas two-step ruling.
Georgia-Pacific's asbestos claimants appealed a failed bid to
dismiss the company's liability-limiting bankruptcy, asking a
district court to rule that bankruptcy courts don't have
jurisdiction over debtors who aren't in financial distress.
The notice of appeal, filed Wednesday, March 6, 2024, comes after
Judge Laura T. Beyer of the US Bankruptcy Court for the Western
District of North Carolina issued a written ruling rejecting a
motion to dismiss the bankruptcy of Bestwall, the Georgia-Pacific
unit created to handle asbestos liability. Beyer’s Feb. 21
written order came nearly seven months after she indicated at a
hearing she would allow Bestwall to remain in bankruptcy.
About Bestwall LLC
Bestwall LLC -- http://www.Bestwall.com/-- was created in an
internal corporate restructuring and now holds asbestos
liabilities. Bestwall's asbestos liabilities relate primarily to
joint systems products manufactured by Bestwall Gypsum Company, a
company acquired by Georgia-Pacific in 1965. The former Bestwall
Gypsum entity manufactured joint compounds containing small amounts
of chrysotile asbestos; the manufacture of these
asbestos-containing products ceased in 1977.
Bestwall's non-debtor subsidiary, GP Industrial Plasters LLC
("PlasterCo"), develops, manufactures, sells and distributes gypsum
plaster products, including gypsum floor underlayment, industrial
plaster, metal casting plaster, industrial tooling plaster, dental
plaster, medical plaster, arts and crafts plaster, pottery plaster
and general purpose plaster.
On Nov. 2, 2017, Bestwall sought Chapter 11 protection (Bankr.
W.D.N.C. Case No. 17-31795) in an effort to equitably and
permanently resolve all its current and future asbestos claims.
The Debtor estimated assets and debt of $500 million to $1 billion.
It has no funded indebtedness.
The Hon. Laura T. Beyer is the case judge.
The Debtor tapped Jones Day as bankruptcy counsel; Robinson,
Bradshaw & Hinson, P.A., as local counsel; Schachter Harris, LLP as
special litigation counsel for medicine science issues; King &
Spalding as special counsel for asbestos matters; and Bates White,
LLC, as asbestos consultants. Donlin Recano LLC is the claims and
noticing agent.
On Nov. 8, 2017, the U.S. bankruptcy administrator appointed an
official committee of asbestos claimants in the Debtor's case. The
committee retained Montgomery McCracken Walker & Rhoads, LLP as
legal counsel; and Hamilton Stephens Steele + Martin, PLLC and JD
Thompson Law as local counsel.
On Feb. 22, 2018, the court approved the appointment of Sander L.
Esserman as the future claimants' representative in the Debtor's
case. Mr. Esserman tapped Young Conaway Stargatt & Taylor, LLP, as
legal counsel; Hull & Chandler, P.A., as local counsel; Ankura
Consulting Group, LLC, as claims evaluation consultant; and FTI
Consulting, Inc., as financial advisor.
BESTWALL LLC: Wants Direct Appeal Effort Blocked
------------------------------------------------
Evan Ochsner of Bloomberg Law reports that Georgia-Pacific's
bankrupt asbestos liability unit is seeking to block asbestos
claimants from directly appealing their most recent failed attempt
to get the bankruptcy dismissed.
The motion by claimants to get the US Court of Appeals for the
Fourth Circuit to review a failed bid to dismiss the bankruptcy
raises issues that have already been answered over the almost seven
years since Georgia-Pacific unit Bestwall LLC filed Chapter 11,
Bestwall said.
"Serially litigating the same issues over and over does nothing to
materially advance this case to conclusion," Bestwall said in a
Thursday, March 21, 2024, objection in the US Bankruptcy Court for
the Western District of North Carolina.
About Bestwall LLC
Bestwall LLC -- http://www.Bestwall.com/-- was created in an
internal corporate restructuring and now holds asbestos
liabilities. Bestwall's asbestos liabilities relate primarily to
joint systems products manufactured by Bestwall Gypsum Company, a
company acquired by Georgia-Pacific in 1965. The former Bestwall
Gypsum entity manufactured joint compounds containing small amounts
of chrysotile asbestos; the manufacture of these
asbestos-containing products ceased in 1977.
Bestwall's non-debtor subsidiary, GP Industrial Plasters LLC
("PlasterCo"), develops, manufactures, sells and distributes gypsum
plaster products, including gypsum floor underlayment, industrial
plaster, metal casting plaster, industrial tooling plaster, dental
plaster, medical plaster, arts and crafts plaster, pottery plaster
and general purpose plaster.
On Nov. 2, 2017, Bestwall sought Chapter 11 protection (Bankr.
W.D.N.C. Case No. 17-31795) in an effort to equitably and
permanently resolve all its current and future asbestos claims.
The Debtor estimated assets and debt of $500 million to $1 billion.
It has no funded indebtedness.
The Hon. Laura T. Beyer is the case judge.
The Debtor tapped Jones Day as bankruptcy counsel; Robinson,
Bradshaw & Hinson, P.A., as local counsel; Schachter Harris, LLP as
special litigation counsel for medicine science issues; King &
Spalding as special counsel for asbestos matters; and Bates White,
LLC, as asbestos consultants. Donlin Recano LLC is the claims and
noticing agent.
On Nov. 8, 2017, the U.S. bankruptcy administrator appointed an
official committee of asbestos claimants in the Debtor's case. The
committee retained Montgomery McCracken Walker & Rhoads, LLP as
legal counsel; and Hamilton Stephens Steele + Martin, PLLC and JD
Thompson Law as local counsel.
On Feb. 22, 2018, the court approved the appointment of Sander L.
Esserman as the future claimants' representative in the Debtor's
case. Mr. Esserman tapped Young Conaway Stargatt & Taylor, LLP, as
legal counsel; Hull & Chandler, P.A., as local counsel; Ankura
Consulting Group, LLC, as claims evaluation consultant; and FTI
Consulting, Inc., as financial advisor.
BOWFLEX INC: Cleared for April Auction, $37.5M Stalking Horse Bid
-----------------------------------------------------------------
Clara Geoghegan of Law360 reports that fitness equipment maker
BowFlex Inc. received a New Jersey bankruptcy judge's approval
Friday, March 8, 2024, to sell its U. S. and Canada businesses at
an auction next month, setting it up to repay its
debtor-in-possession loan and draw up a Chapter 11 liquidation
plan.
About Bowflex Inc.
BowFlex, Inc., together with its affiliates, is an international
developer, distributor, and manufacturer of health and fitness
products sold under several marquee fitness brands across
international markets. The company is headquartered in Vancouver,
Wash.
BowFlex and BowFlex New Jersey, LLC concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D.N.J. Lead Case No. 24-12364) on March 4, 2024. Jim Barr,
chief executive officer, signed the petitions.
At the time of the filing, BowFlex reported $50 million to $100
million in both assets and liabilities while BowFlex New Jersey
reported as much as $50,000 in both assets and liabilities.
Judge Andrew B Altenburg Jr. presides over the cases.
The Debtors tapped Fox Rothschild, LLP and Sidley Austin, LLP as
bankruptcy counsels, and Epiq Corporate Restructuring, LLC as
claims agent.
BOY SCOUTS: Judge Voids 3 Ballots for Possible Forgery
------------------------------------------------------
Clara Geoghegan of Law360 reports that three Chapter 11 plan
ballots that opted for a quicker but smaller settlement payout in
the Boy Scouts of America's bankruptcy should be tossed, a Delaware
bankruptcy judge ruled, finding they were likely forged.
About Boy Scouts of America
The Boy Scouts of America -- https://www.scouting.org/ -- is a
federally chartered non-profit corporation under title 36 of the
United States Code. Founded in 1910 and chartered by an act of
Congress in 1916, the BSA's mission is to train youth in
responsible citizenship, character development, and self-reliance
through participation in a wide range of outdoor activities,
educational programs, and, at older age levels, career-oriented
programs in partnership with community organizations. Its national
headquarters is located in Irving, Texas.
The Boy Scouts of America and affiliate Delaware BSA, LLC, sought
Chapter 11 protection (Bankr. D. Del. Lead Case No. 20-10343) on
Feb. 18, 2020, to deal with sexual abuse claims.
Boy Scouts of America was estimated to have $1 billion to $10
billion in assets and at least $500 million in liabilities as of
the bankruptcy filing.
The Debtors have tapped Sidley Austin LLP as their bankruptcy
counsel, Morris, Nichols, Arsht & Tunnell LLP as Delaware counsel,
and Alvarez & Marsal North America, LLC, as financial advisor.
Omni Agent Solutions is the claims agent.
The U.S. Trustee for Region 3 appointed a tort claimants' committee
and an unsecured creditors' committee on March 5, 2020. The tort
claimants' committee is represented by Pachulski Stang Ziehl &
Jones, LLP, while the unsecured creditors' committee is represented
by Kramer Levin Naftalis & Frankel, LLP.
BREITMEYER FABRICATIONS: Case Summary & Top Unsecured Creditors
---------------------------------------------------------------
Debtor: Breitmeyer Fabrications, Inc.
d/b/a Superior Hydraulics & Fabrication
1615 Marietta Way
Reno, NV 89510
Business Description: The Debtor is a hydraulic repair service
provider in Nevada.
Chapter 11 Petition Date: March 28, 2024
Court: United States Bankruptcy Court
District of Nevada
Case No.: 24-50300
Judge: Hon. Hilary L. Barnes
Debtor's Counsel: Kevin A. Darby, Esq.
DARBY LAW PRACTICE
499 W. Plumb Lane, Suite 202
Reno, NV 89509
Tel: 775-322-1237
Fax: 775-996-7290
Email: kevin@darbylawpractice.com
Estimated Assets: $0 to $50,000
Estimated Liabilities: $1 million to $10 million
The petition was signed by Martin W. Breitmeyer III 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/DFLIGXQ/BREITMEYER_FABRICATIONS_INC__nvbke-24-50300__0001.0.pdf?mcid=tGE4TAMA
BUTLER HEALTH: Moody's Downgrades Issuer & Revenue Ratings to Ba1
-----------------------------------------------------------------
Moody's Ratings has downgraded Butler Health System, PA's (Butler;
BHS) issuer and revenue ratings to Ba1 from Baa3. The outlook
remains negative. Butler has approximately $120 million of debt
outstanding.
The downgrade of the issuer and revenue ratings to Ba1 reflects
Butler Health's ongoing financial stress and operating cash flow
losses, resulting in continued cash burn and continued covenant
breaches and debt acceleration risk. There is a possibility that
BHS will breach its MTI debt service coverage covenant for the
second year in a row at FYE 2024 (June 30, 2024). Butler has also
continued to breach its quarterly debt service coverage test for
its bank debt. To date, Butler has not received bondholder
agreement to waive acceleration, although BHS is working on a
forbearance agreement to provide relief.
RATINGS RATIONALE
The Ba1 rating reflects Butler Health's still relatively solid
liquidity position with sufficient cash to cover potential debt
acceleration (115% cash to debt and 110 days cash on hand at
December 31, 2023). The rating is supported by the system's market
position which has been strengthened as part of integrating with
Excela Health (Baa3 stable), to provide larger scale, synergy
savings, and greater negotiating leverage. Butler maintains strong
leading market share and long-term partnerships with area payors
and providers.
While Butler's patient volumes are improving, labor expenses
continue to drive still weak results. Butler Health's financial
challenges have resulted in ongoing debt service coverage covenant
violations for its bank debt and MTI debt. Bonds under the MTI are
subject to cross-default provisions which could result in immediate
acceleration of all of Butler's debt. Additionally, competition
will continue to heighten with ongoing encroachment from larger
more tertiary Pittsburgh based providers and Hhgh age of plant will
drive the need for increased spending.
RATING OUTLOOK
The negative outlook reflects ongoing risk of debt acceleration,
further liquidity declines given cash flow losses, and limitations
on its partner organization to provide cash, should it be needed.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATINGS
-- Material and sustained improvement in operating performance
that results in improved debt service coverage
-- Notable growth in cash reserves relative to operations and
debt
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATINGS
-- Increased risk of debt acceleration
-- Inability to produce positive cash flow in 2025 and demonstrate
durability
-- Decline in cash measures below 90 days cash on hand and cash to
debt of 100%
LEGAL SECURITY
The bonds are secured by a gross revenue pledge of the obligated
group, as well as a security interest in all mortgaged property
which includes the main hospital, Butler Memorial Hospital. The
obligated group includes Butler Health System, Clarion Hospital
(added to the obligated group on February 28, 2023), Butler
Healthcare Providers (d/b/a Butler Memorial Hospital and
Subsidiaries), Butler Medical Providers and Nixsar Corporation,
which comprise 98% of the system's net assets and over 95% of net
revenues.
Butler Health System is subject to financial covenants, the most
restrictive of which are under the bank held debt, requiring a
minimum of 90 days cash on hand (measured annually), a maximum
annual debt service (MADS) coverage ratio of at least 1.25 times
(tested quarterly on a rolling four quarter basis), and a debt to
capitalization ratio not to exceed 65% (measured quarterly). The
failure to meet any of the financial covenants provides the trustee
with the right to declare an event of default and could result in
immediate acceleration of debt at the bank's discretion. Butler
breached the debt service coverage test associated with the bank
debt for the rolling twelve-month periods ending September 30, 2023
and December 31, 2023, resulting in an event of default. The bank
has the ability to accelerate the debt.
There are also multiple financial covenants under the Master Trust
Indenture (MTI) all of which are measured annually, and a
cross-default provision to the bank held debt is also included.
Financial covenants under the MTI include a maximum annual debt
service coverage test of at least 1.1 times and a minimum 90 days
cash on hand test. Failure to meet the days cash on hand
measurement or the 1.1 MADS coverage would result in a consultant
call-in. Failure to maintain at least 1.0 times MADS coverage
provides the trustee with the right to declare an event of default.
There is a 30 day cure period, and if it is deemed that 30 days is
insufficient time for the covenant to be remedied but the system is
taking action, no event of default shall be deemed to have
occurred. However, upon the occurrence of an event of default the
Master Trustee may and, if requested by the holders of not less
than 25% in aggregate principal amount of all obligations
outstanding declare immediate acceleration of all outstanding debt.
Currently, the system has sufficient cash to cover outstanding debt
in the event of an acceleration of all outstanding bonds.
PROFILE
Butler Health System owns and operates a regional health care
delivery system located in and around Butler and Clarion counties,
approximately 40 miles north of Pittsburgh. Butler Health is
comprised of Butler Memorial Hospital, a 326 staffed bed hospital
in Butler County, and Clarion Hospital, a 67 staffed bed hospital
in Clarion County. The system also has 72 ambulatory locations
serving an eight-county region with primary care, laboratory,
imaging, health screening, occupational medicine and urgent care
services, and an integrated multi-specialty physician medical group
of about 250 providers. In January 2023 Butler merged with Excela
Health, a three-hospital system located east of Pittsburgh in
Westmoreland County. The organizations have merged governance
structures but maintain separate obligated groups.
METHODOLOGY
The principal methodology used in these ratings was US
Not-for-profit Healthcare published in February 2024.
BYJU'S ALPHA: Hedge Fund Manager Faces Arrest
---------------------------------------------
WION reports that a US bankruptcy judge ordered the arrest of hedge
fund manager William Cameron Morton amidst allegations for
reportedly aiding Indian ed-tech startup Byju's in concealing $533
million from its creditors.
According to court documents filed by Byju's Alpha, a subsidiary
controlled by Byju's lenders, the start-up defaulted on $1.2
billion in debt, prompting its US bankruptcy filing in February.
During efforts to recoup losses, lenders unearthed sizable
transfers to Morton's hedge fund, Camshaft Capital, raising
eyebrows over the nature of these transactions.
Judge Dorsey, presiding over the case, had summoned Morton to
elucidate the whereabouts of the funds.
Despite claiming to be incapacitated and overseas, Morton's failure
to provide evidence or contact details prompted scepticism from the
court.
Dorsey, unconvinced by Morton's assertions, remarked, "Given his
absolute contempt for this court, I don't believe him."
Consequently, Dorsey issued a warrant for Morton's arrest and
imposed a daily fine of $10,000 on him and Camshaft until
compliance with court directives regarding the investigation into
the missing funds is achieved.
Morton's purported involvement in the affair has raised significant
questions.
Byju's lenders, in their legal action against Morton and Camshaft,
highlight the lack of rationale behind funnelling huge sums to
Morton, particularly given his limited experience and the apparent
absence of credible business operations at Camshaft.
Describing Morton, who is in his mid-twenties, as lacking the
requisite qualifications to manage a hedge fund, lenders note the
opacity surrounding Camshaft's activities, revealing its primary
business address to be an International House of Pancakes in Miami,
casting doubt on its legitimacy.
Byju's, once a pinnacle of success in the ed-tech sector with a
valuation of $22 billion under its former parent company, Think &
Learn Private Ltd, now finds itself embroiled in this financial
complication.
What are the updates?
A press release signalled legal victory for the ad hoc group of
term loan lenders of Byju's.
The United States Bankruptcy Court for the District of Delaware has
issued a preliminary injunction in favour of Byju's Alpha, Inc
against several defendants including Riju Ravindran, Inspilearn
LLC, and Camshaft Capital Fund, LP and its affiliates.
This ruling halts any further movement or utilisation of $533
million, rightfully owed to the lenders.
The court also found Byju Raveendran and Divya Gokulnath to be
collaborating with the defendants and instructed them to adhere to
the court's directive.
According to the Order, the defendants are prohibited from
transferring or utilising the $533 million in loan proceeds
previously held by Camshaft Capital Fund, LP, and subsequently
moved to an undisclosed offshore trust.
Judge Dorsey, expressed strong condemnation towards the defendants'
actions, labelling the transfer of funds and subsequent concealment
as potentially fraudulent.
"The fact that the parent company is attempting to hide where the
assets are is huge. It shows that they are engaged in what appears
to be a potential fraud," Judge Dorsey commented during the
proceedings.
Additionally, a warrant has been issued for the arrest of William
Morton, founder of Camshaft Capital Fund, LP, who absconded the
country before the hearing.
Morton's refusal to cooperate and provide requested information
regarding the funds led to the court ordering his arrest and
imposing a fine until compliance is achieved.
"I'm still very upset about the fact that (the Defendants) are
obfuscating where this money is. And they are trying every trick in
the book to be able to say, ‘we don't know, this guy doesn’t
know, that guy doesn’t know, we don’t know where it is, we
can’t tell you,’ and I'm tired of it," remarked Judge Dorsey.
The SteerCo, representing the term loan lenders, highlighted the
court's ruling in their pursuit of recovering the missing funds.
"There should be no doubt that Byju is not the victim he purports
to be, but rather the architect of a scheme that has vaporised tens
of billions of dollars in value in what was once a great Indian
company," stated the SteerCo in a released statement.
The case dates back to 2021 when Byju’s Alpha, Inc was
established to receive proceeds of the term loan.
Subsequent transfers of funds orchestrated by Riju Ravindran,
including a transfer to Camshaft Capital Fund, LP, and later to
Inspilearn LLC, have raised suspicions of fraudulent activities.
Despite court orders, neither the defendants nor Byju Raveendran
and Divya Gokulnath have provided any specific information
regarding the whereabouts of the funds.
About BYJU's Alpha
BYJU's Alpha, Inc. designs and develops education software
solutions. The Debtor sought protection under Chapter 11 of the
U.S. Bankruptcy Code (Bankr. D. Del. Case No. 24-10140) on February
1, 2024. In the petition signed by Timothy R. Pohl, chief executive
officer, the Debtor disclosed up to $1 billion in assets and up to
$10 billion in liabilities.
Judge John T. Dorsey oversees the case.
YOUNG CONAWAY STARGATT & TAYLOR, LLP and QUINN EMANUEL URQUHART &
SULLIVAN, LLP are serving as the Debtor's legal counsel.
GLAS Trust Company LLC, as Prepetition Agent, is represented by
Kirkland & Ellis LLP and Pachulski Stang Ziehl & Jones.
CANE CREEK: U.S. Trustee Unable to Appoint Committee
----------------------------------------------------
The U.S. Trustee for Region 14 disclosed in a court filing that no
official committee of unsecured creditors has been appointed in the
Chapter 11 case of Cane Creek Alliance Construction & Development,
LLC.
About Cane Creek Alliance Construction
& Development
Cane Creek Alliance Construction & Development, LLC filed Chapter
11 petition (Bankr. D. Ariz. Case No. 24-01231) on Feb. 21, 2024,
with $1 million to $10 million in assets and liabilities.
Judge Brenda K. Martin oversees the case.
Barski Law, PLC is the Debtor's bankruptcy counsel.
CARDIFF LEXINGTON: Grassi & Co CPAs Raises Going Concern Doubt
--------------------------------------------------------------
Cardiff Lexington Corp. disclosed in a Form 10-K Report filed with
the U.S. Securities and Exchange Commission for the fiscal year
ended December 31, 2023, that Grassi & Co., CPAs, PC, the Company's
auditor since 2022, 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
dated March 27, 2024, Jericho, New York-based Grassi & Co. said,
"The Company has sustained an accumulated deficit and negative cash
flows from operations, which raise substantial doubt about its
ability to continue as a going concern."
The Company had previously sustained operating losses since its
inception and has an accumulated deficit of $68,684,115 and
$70,932,435, respectively, as of December 31, 2023 and 2022. The
Company reported a net income of $3,028,394 for the year ended
December 31, 2023, as compared to a net loss of $5,429,521 for the
year ended December 31, 2022. It also had negative cash flow from
operations of $1,807,987 and $1,099,461 during the years ended
December 31, 2023, and 2022. These factors raise a substantial
doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue as a going concern and the
appropriateness of using the going concern basis is dependent upon,
among other things, additional cash infusions. Management has
prospective investors and believes the raising of capital will
allow the Company to fund its cash flow shortfalls and pursue new
acquisitions. There can be no assurance that the Company will be
able to obtain sufficient capital from debt or equity transactions
or from operations in the necessary time frame or on terms
acceptable to it. Should the Company be unable to raise sufficient
funds, it may be required to curtail its operating plans. In
addition, increases in expenses may require cost reductions. No
assurance can be given that the Company will be able to operate
profitably on a consistent basis, or at all, in the future. Should
the Company not be able to raise sufficient funds, it may cause
cessation of operations.
As of December 31, 2023, the Company had $20,745,811 in total
assets, $14,124,289 in total liabilities, $5,890,104 in total
mezzanine equity, and $731,418 in total stockholders' equity.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/4pywmr5t
About Cardiff Lexington
Las Vegas, NV-based Cardiff Lexington Corporation is an acquisition
holding company focused on locating undervalued and
undercapitalized companies, primarily in the healthcare industry,
and providing them capitalization and leadership to maximize the
value and potential of their private enterprises while also
providing diversification and risk mitigation for stockholders.
CAREISMATIC BRANDS: Wants to Speed Up Bankruptcy Process
--------------------------------------------------------
Randi Love of Bloomberg Law reports that Careismatic Brands LLC's
junior creditors accused the company of trying to improperly push
forward a "skeleton" plan outline to start its reorganization plan
approval process.
The unsecured creditors' committee objection comes as the bankrupt
medical apparel company seeks approval of its plan disclosure
statement—which would allow it to begin polling creditors on its
proposed restructuring—at an upcoming court hearing. The
committee, which recently opposed Careismatic's $125 million
bankruptcy loan as well, on Tuesday, March 5, 2024, called the
disclosure statement a "meaningless shell" that doesn't give voting
creditors sufficient information about the plan.
About Careismatic Brands
The Santa Monica, Calif.-based Careismatic Brands, LLC is a
designer, marketer, and distributor of medical apparel, footwear,
and accessories. Founded in 1995 in Chatsworth, Calif.,
Careismatic has grown from operating a single flagship brand,
Cherokee Medical Uniforms, to a portfolio of seventeen brands. The
company offers value to its stakeholders through its spectrum of
medical apparel and workwear and omnichannel distribution
capabilities across the globe. It has an extensive portfolio of
iconic and emerging brands across the health and wellness platform,
including Cherokee Uniforms, Dickies Medical, Heartsoul Scrubs,
Infinity, Scrubstar, Healing Hands, Med Couture, Medelita,
Classroom Uniforms, AllHeart, Silverts Adaptive Apparel, and BALA
Footwear.
Careismatic Brands filed a Chapter 11 petition (Bankr. D.N.J. Lead
Case No. 24-10561) on Jan. 22, 2024, with $1 billion to $10 billion
in both assets and liabilities. Kent Percy, chief restructuring
officer, signed the petition.
Judge Vincent F. Papalia oversees the case.
Kirkland & Ellis, LLP and Kirkland & Ellis International, LLP
represent the Debtor as general bankruptcy counsel; Cole Schotz,
P.C. as local bankruptcy counsel; AP Services, LLC as financial
advisor; PJT Partners, LP as investment banker; and C Street
Advisory Group as strategic communications advisor. Donlin, Recano
& Company, Inc. is the claims, noticing and solicitation agent and
administrative advisor.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Debtor's Chapter
11 case. The committee is represented by Bradford J. Sandler, Esq.,
at Pachulski Stang Ziehl & Jones, LLP.
CASINO GROUP: Simpson Thacher Advises Quatrim Noteholders
---------------------------------------------------------
Simpson Thacher advised the ad hoc group of noteholders of Senior
Secured Notes issued by Quatrim S.A.S. in connection with the
successful completion of a comprehensive restructuring by Casino
Group, the French-headquartered international food retailer. The
transaction sees the group benefit from EUR1.5 billion of new money
and a conversion of EUR3.5 billion of existing debt to equity.
Quatrim owns 100% of the shares in Immobiliere Groupe Casino, which
owns the development and management of properties, including
hypermarket, supermarket, convenience stores, many of which are
leased to Casino Group entities. The noteholders will see their
notes paid down throughout the term of the notes in accordance with
an asset disposal plan.
Casino (and the wider food retail industry) had faced significant
headwinds in recent years. Stretched by a c.EUR11 billion debt
burden and liquidity issues, the group entered French conciliation
protective measures last year. This restructuring, implemented
using a cramdown under an accelerated safeguard plan in the Paris
Commercial Court, is one of the most high profile European
restructuring transactions in the past year.
The Simpson Thacher team includes Partners Adam Gallagher, Marc
Hecht and Nicholas Baker (New York), Counsel Sian Perez, and
Associates Dasha (Daria) Bechade, Ryan Edge, Philip DiDonato (New
York) and Chloe Potter (Restructuring); and Partner Nicholas Shaw,
Counsel Uma Sud and Associate Iakovos Anagnostopoulos (Capital
Markets). All attorneys are based in London unless otherwise
stated.
CBL & ASSOCIATES: S&P Downgrades ICR to 'B-', Outlook Stable
------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on U.S.-based
retail REIT CBL & Associates Properties Inc. (CBL) to 'B-' from 'B'
and its issue-level rating on its senior secured term loan due 2025
to 'B+' from 'BB-'. S&P's '1' recovery rating on the term loan is
unchanged, indicating its expectation for very high (90%-100%;
rounded estimate: 95%) recovery in a hypothetical default
scenario.
The stable outlook reflects S&P's expectation that, given its
current level of cash and cash equivalents (including Treasuries),
the company will retain adequate liquidity to repay a portion of
its outstanding secured term loan (prior to its current maturity in
November 2025) and extend its maturity.
CBL capital structure contains a material amount of secured and
variable-rate debt with a weighted average maturity of less than
three years, which S&P believes could prove challenging for it to
refinance and extend if its operating performance deteriorates or
its access to the capital market becomes constrained.
S&P said, "CBL now has a shorter weighted-average debt profile,
including a substantial amount of variable-rate and secured debt,
which leads us to view its capital structure negatively. We
typically view companies with short debt maturity ladders (less
than three years for real estate entities) as facing greater
refinancing risk than their peers with longer-weighted average debt
maturities. As of Dec. 31, 2023, CBL's weighted-average debt
maturity profile was 2.4 years when excluding extension options.
The company's capital structure contains a material amount of
secured and variable-rate debt, including guarantees on some of its
joint-venture debt, with near-term maturities. Approximately 53% of
CBL's consolidated debt was variable rate and most of its debt was
secured as of Dec. 31, 2023. While this figure drops to about 40%
when including its pro rata share of consolidated, unconsolidated,
and other debt, it remains materially higher than the level at
other rated REITs. As of Dec. 31, 2023, the weighted average
interest rates on CBL's pro rata, variable-rate, and fixed-rate
debt increased to 6.54% (from 5.76% in 2022), 8.42% (from 7.10% in
2022), and 5.26% (from 4.83% in 2022), respectively.
"Most of the company's debt (about $800 million as of Dec. 31,
2023) is associated with its secured term loan due November 2025.
CBL has the option to extend the term loan's maturity by up to two
additional years, subject to certain stipulations, including paying
down the term loan to $670 million in November 2025 and $615
million in November 2026. However, we do not factor the potential
extension into our weighted-average maturity calculation per our
criteria. That said, given the company's current liquidity
position--$296 million in cash and marketable securities, including
Treasuries--we view these extensions as feasible.
"CBL also successfully executed $575 million of financing in 2023.
We expect the company will return some underperforming properties
to its lenders to reduce its overall debt burden. However, we
believe it must address most of its other maturities via
refinancings and extensions. This could prove difficult and require
CBL to pay down all or a portion of certain maturities, which would
absorb some of its liquidity. Thus far in 2024, the company has
monetized some of its Treasuries to retire the $15.3 million
recourse loan secured by its Brookfield Square Anchor redevelopment
in Brookfield, Wis.
"We expect the company's credit-protection measures will remain
relatively stable over the next year. CBL modestly reduced its GAAP
interest expense in 2023 by reducing the non-cash debt accretion
amounts attributable to its fresh start accounting. Therefore, the
company's S&P Global Ratings-adjusted fixed-charge coverage (FCC)
improved to 1.2x for the year (from 1.0x in 2022) despite continued
high interest rates and the material amount of variable-rate debt
and principal amortization in its capital structure. Given our
economists expectation that the Fed will begin cutting rates in the
latter half of 2024, we expect the pressure on CBL's FCC will ease
somewhat. In addition, we anticipate reduced debt principal
amortization as the company repay portions of its term loan in 2025
and 2026. Based on these expectations, we estimate its S&P Global
Ratings-adjusted FCC will improve to the mid-1x area over the next
two years while its debt to EBITDA remains in the mid- to high-6x
range. That said, CBL's FCC could be pressured if its operating
performance deteriorates more severely than we expect, perhaps due
to a higher level of bankruptcies or store closures that cause its
metrics to weaken below the assumptions in our current base-case
forecast."
The company's liquidity could deteriorate if it is unable to extend
or refinance its term loan and the facility becomes due in the next
12 months. This could occur if CBL uses its cash and marketable
securities to repay other debt or for general corporate needs
because it does not have access to a revolving credit facility.
This would lead S&P to take a less-favorable view of the company's
liquidity position. S&P notes that CBL's secured mortgage debt is
non-recourse, thus it does not affect our liquidity analysis.
S&P said, "We expect CBL's same-property performance will remain
modestly negative over the next year. The company's same-property
net operating income (NOI) declined by 1.5% in 2023 (the higher end
of management's guidance), due to uncollectible revenue and lower
percentage rents, with its portfolio occupancy remaining steady at
90.9%. As anticipated, CBL's same-center tenant sales per square
foot remained negative, declining by 4.4% over the year to $416
(from $435 in 2022). Management executed 4.4 million square feet of
leases during the year with flat blended leasing spreads (a 2.6%
decline in renewal lease spreads and a 26.2% increase in new lease
spreads). We expect the company will favor retaining its occupancy
levels over raising rents. Therefore, we expect the B-quality mall
assets held by CBL to demonstrate weaker operating metrics (lower
occupancy, same-store NOI growth, and re/leasing spreads) than
those of their higher-quality mall peers.
"We believe the company could be more negatively affected by store
closures, including Macy's decision to close 150 of its
underperforming stores by 2026, including 50 in the current fiscal
year. While Macy's is not one of CBL's top tenants by revenue,
anchor spaces require greater capital expenditure (capex) to
re-tenant and the closure of a location could trigger co-tenancy
clauses. Based on these factors, we expect CBL's same-center NOI
will remain modestly negative in 2024, with the improvements from
its leasing activity offset by lower percentage rents, higher bad
debt expense, and greater operating costs.
"The stable outlook reflects our expectation that CBL's EBITDA
generation will remain relatively stable over the next 12 months
from modestly negative same-property NOI and occupancy in the
low-90% to high-80% area, which should support a modest improvement
in its FCC over the next year as interest rate pressures stabilize.
It also reflects our expectation that, given its current level of
cash and cash equivalents (including Treasuries), the company will
retain adequate liquidity to repay a portion of its outstanding
secured term loan in November 2025 and extend its maturity date."
S&P could lower its rating on CBL if it is unable to:
-- Maintain sufficient liquidity, including its balance of cash
and cash equivalents (including treasuries), and operating
performance to comfortably meet term loan extension requirements,
including paying down portions of its term loan to extend
facility's maturity date; or
-- Refinance the term loan balance or develop a credible plan to
paydown the balance, increasing the risk of a default and leading
S&P to view its capital structure as unsustainable.
While highly unlikely, S&P could upgrade CBL if:
-- It successfully extends its debt maturity profile and we see a
clear path for it to meet the stipulations to extend the term loan
to 2026 and 2027 such that its weighted-average maturity extends
beyond three years;
-- Its liquidity remains adequate, with sufficient cash and cash
equivalents (including Treasuries) to compensate for its lack of a
revolving credit facility;
-- S&P expects the company's FCC will be about 1.3x or better;
and
-- Its operating performance improves such that S&P expects
same-property NOI will be flat to slightly positive, with
manageable tenant distress.
CELSIUS NETWORK: Seeks Return of $2-Bil Withdrawn Prior to Collapse
-------------------------------------------------------------------
Jonathan Randles of Bloomberg News reports that advisers overseeing
the wind-down of Celsius Network LLC are demanding major customers
who collectively withdrew more than $2 billion from the crypto
platform just before it filed bankruptcy return those funds to
avoid potential litigation.
An oversight committee formed during Celsius's Chapter 11 case has
begun contacting customers who withdrew more than $100,000 from the
platform in the lead-up to the company's July 2022 bankruptcy.
Assets recovered through this process will help repay creditors who
didn't withdraw funds from Celsius, according to a letter the
committee is sending targeted customers.
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network, LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtors estimated assets and liabilities between $1
billion and $10 billion.
The Debtors tapped Kirkland & Ellis, LLP as bankruptcy counsel;
Fischer (FBC & Co.) as special counsel; Centerview Partners, LLC as
investment banker; and Alvarez & Marsal North America, LLC, as
financial advisor. Stretto is the claims agent and administrative
advisor.
On July 27, 2022, the U.S. Trustee appointed an official committee
of unsecured creditors. The committee tapped White & Case, LLP, as
its bankruptcy counsel; Elementus Inc. as its blockchain forensics
advisor; M3 Advisory Partners, LP as its financial advisor; and
Perella Weinberg Partners, LP as its investment banker.
Shoba Pillay, Esq., is the examiner appointed in the Debtors'
Chapter 11 cases. Jenner & Block, LLP, and Huron Consulting
Services, LLC, serve as the examiner's legal counsel and financial
advisor, respectively.
CELSIUS NETWORK: Seeks to Calm Creditors Over Delayed Payouts
-------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that Celsius Network LLC
responded to hundreds of creditor complaints over bankruptcy plan
payment snags, saying it's "working as quickly as possible" to
resolve issues related to cash and cryptocurrency distributions.
Celsius filed a detailed update Wednesday, March 13, 2024, with the
US Bankruptcy Court for the Southern District of New York to
address problems flagged by creditors who say they haven’t
received payments from the failed crypto lending platform's Chapter
11 reorganization plan, which went into effect on January 31,
2024.
Under Celsius' plan, hundreds of thousands of creditors are
receiving liquid cryptocurrency or cash to compensate them for
digital assets that were trapped.
About Celsius Network
Celsius Network LLC -- http://www.celsius.network/-- is a
financial services company that generates revenue through
cryptocurrency trading, lending, and borrowing, as well as by
engaging in proprietary trading.
Crypto lenders such as Celsius boomed during the COVID-19 pandemic,
drawing depositors with high interest rates and easy access to
loans rarely offered by traditional banks. But the lenders'
business model came under scrutiny after a sharp sell-off in the
crypto market spurred by the collapse of major tokens terraUSD and
luna in May 2022.
New Jersey-based Celsius froze withdrawals in June 2022, citing
"extreme" market conditions, cutting off access to savings for
individual investors and sending tremors through the crypto
market.
The list of major crypto firms that have filed for bankruptcy
protection in 2022 now includes Celsius Network, Three Arrows
Capital and Voyager Digital.
Celsius Network, LLC and its subsidiaries sought protection under
Chapter 11 of the U.S. Bankruptcy Code (Bankr. S.D.N.Y. Lead Case
No. 22-10964) on July 14, 2022. In the petition filed by CEO Alex
Mashinsky, the Debtors estimated assets and liabilities between $1
billion and $10 billion.
The Debtors tapped Kirkland & Ellis, LLP as bankruptcy counsel;
Fischer (FBC & Co.) as special counsel; Centerview Partners, LLC as
investment banker; and Alvarez & Marsal North America, LLC, as
financial advisor. Stretto is the claims agent and administrative
advisor.
On July 27, 2022, the U.S. Trustee appointed an official committee
of unsecured creditors. The committee tapped White & Case, LLP, as
its bankruptcy counsel; Elementus Inc. as its blockchain forensics
advisor; M3 Advisory Partners, LP as its financial advisor; and
Perella Weinberg Partners, LP as its investment banker.
Shoba Pillay, Esq., is the examiner appointed in the Debtors'
Chapter 11 cases. Jenner & Block, LLP, and Huron Consulting
Services, LLC, serve as the examiner's legal counsel and financial
advisor, respectively.
CHARGE ENTERPRISES: In Chapter 11, to Hand Control to Arena
-----------------------------------------------------------
Jonathan Randles of Bloomberg News reports that Charge Enterprises
Inc., a public company building charging stations for electric
vehicles and broadband infrastructure, filed bankruptcy to
implement a restructuring plan that will hand control of the
business to senior lender Arena Investors.
Charge Enterprises's assets have a book value of more than $114
million compared to liabilities of roughly $48.7 million, according
to papers it filed Thursday in Delaware bankruptcy court. The
company said it started polling creditors on its restructuring plan
earlier this week and will seek to win bankruptcy court approval on
the Arena deal by April 24, 2024.
Meanwhile, Law 360reports that Charge Enterprises has urged a
Delaware bankruptcy judge to let it offer about $400,000 in bonuses
to keep a dozen employees the firm deemed critical during its
Chapter 11 case.
About Charge Enterprises
Charge Enterprises, Inc. is an electrical, broadband, and electric
vehicle charging infrastructure company that provides clients with
end-to-end project management services, from advising, designing,
engineering, acquiring, and installing equipment, to monitoring,
servicing, and maintenance.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D. Del. Case No. 24-10349) on March 7,
2024, with $114,368,349 in assets and $48,718,180 in liabilities.
Craig Harper-Denson, authorized officer, signed the petition.
The Debtor tapped Ian J. Bambrick, Esq. at FAEGRE DRINKER BIDDLE &
REATH LLP as bankruptcy counsel; BERKELEY RESEARCH GROUP, LLC as
financial restructuring adviser; and SQUIRE PATTON BOGGS (US) LLP
as special litigation counsel.
CINEMARK HOLDINGS: Fitch Alters Outlook on 'B+' IDR to Stable
-------------------------------------------------------------
Fitch Ratings has revised Cinemark Holdings, Inc and Cinemark USA,
Inc.'s Rating Outlook to Stable from Negative. Fitch has also
affirmed Cinemark's Long-Term Issuer Default Rating (IDR) at 'B+',
its senior secured debt at 'BB+/RR1', and its senior unsecured debt
at 'B/RR5'.
The Stable Outlook reflects a rebound in cinema attendance,
bolstered by a more consistent film release schedule, the
restoration of the exclusive theatrical window, and non-theatrical
content demand. Despite production setbacks from union strikes,
Cinemark's monetization strategy has enhanced EBITDA margins and
FCF generation, while maintaining ample liquidity, driving EBITDA
Leverage down to 4.1x from 7.9x in FY22.
KEY RATING DRIVERS
Video Streaming Platform Competition: Since the pandemic, the film
industry has experienced rising competition from Direct-To-Consumer
(DTC) streaming services such as Disney+, Max or Paramount+. As
part of the initial strategy to grow their DTC subscribers, these
studios diverted certain films directly to their platforms, often
skipping the traditional theater release. However, the studios have
been reverting to more normal theatrical releases after recognizing
that DTC releases are not as profitable as expected. Furthermore,
most studios have recently committed substantial budgets to
theatrical films, recognizing the economic relevance of the
exclusive theatrical window.
Fitch anticipates that the growing trend for at-home film viewing,
especially for smaller-format movies, will persistently challenge
cinema attendance. As such, Fitch does not expect theatrical
attendance to return to historical peak levels over the rating
horizon, offsetting some of the expected growth in average ticket
prices and concessions.
Film Production Cycle Recovery and Industry Headwinds: As result of
the pandemic and subsequent supply chain challenges, the film
industry experienced a significant extension in the typical film
creation cycle timeline (averaging about 31 months). Since the
re-opening post-pandemic, theatrical films released in North
America have increased from 401 movies ($1.9 billion in box office)
in FY20 to 580 in 2023 (about $9 billion in box office). While box
office performance met Fitch's expectations for FY23, recovery
levels are still approximately 20% below FY2019 levels (660
releases amounting to $11.2 billion in box office).
During 2023 The Writers Guild of America and The Screen Actors
Guild-American Federation of Television and Radio Artists went on
strike for over 110 days, contributing to the biggest interruption
of content production in the American film and television industry.
This resulted in over $1.6 billion of film content being
rescheduled to 2025 from 2024. Fitch expects FY24 and FY25 to be
crucial years for the industry with studios streamlining content
creation cycles and returning to a more normalized theatrical
release schedule.
High Dependence on Film Studio Product: Movie theater operators
rely on the quality, quantity and timing of movie products, which
are beyond management's control. Throughout the pandemic, film
studios delayed theatrical releases while also redirecting certain
titles to their own DTC offerings, with options ranging from
day-and-date simultaneous releases on DTC platforms and theaters to
theatrical releases only. Studios have since returned almost
exclusively to theatrical releases of new films, although the
theatrical window has been shortened to allow for earlier
transition to DTC platforms.
Fitch believes that theatrical exhibition will remain a key window
for film studios' large film releases (tent poles) going forward.
Studios have consistently reasserted their own belief in theatrical
windowing as they understand the opportunity it presents for
franchise branding, future revenue opportunities and ultimately
film longevity. In addition, theatrical exhibition offsets the high
production and marketing costs associated with these projects while
the talent involved in creating films rely to some extent on box
office metrics for current and future income generation.
Improved Liquidity Position: As of Dec. 31, 2023, Cinemark had $849
million of available cash and full availability under its new $125
million revolving credit facility maturing in May 2028. During
2023, the company generated $295 million of FCF vs. $25 million in
FYE22, primarily driven by a low double-digit growth in attendance
levels across regions, and maximizing concession opportunities
while maintaining a stable cost structure. Fitch expects Cinemark
to continue improving its cash flow generation, as the industry
continues its recovery path and the company continues to benefit
from investments to enhance the guest experience.
Improving Operating Performance and Leverage: During 2023, Cinemark
generated $3.07 billion in revenue, reflecting a 24.9% growth vs.
FY22, supported by a 21.5% (y/y) increase in attendance to 210
million (still below 2019 levels at 280 million), coupled with a
low single-digit increase in both ticket prices and concession
revenue per patron across regions. Adj. EBITDA was $594 million for
2023, achieving a 19.4% margin, which compares favorably to a 13.7%
margin in FY22. Deleveraging also supported improved credit ratios
with EBITDA leverage decreasing to 4.1x in FY23 from 14.4x in
FY21.
Diversification and Market Position: Cinemark's ratings are
supported by its scale as the third-largest theater exhibitor in
the U.S., operating 4,324 screens in 309 theaters with a sustained
market share across 42 states and 104 Designated Market Areas
(DMAs). The company also has a dominant position in Latin America,
where it operates 1,395 screens in 192 theaters across 13
countries. Cinemark is the leading theater exhibitor in Brazil and
Argentina and the second-largest exhibitor in Chile and Colombia.
DERIVATION SUMMARY
Cinemark's ratings reflect its higher operating scale and
diversification, as the third largest theater chain in the U.S.,
with a solid presence in key Latin American markets, when compared
to regional peers like Cineplex, Inc. ('B'/Stable). Although
Cineplex's scale is significantly smaller than Cinemark's (about
one-third), Cineplex enjoys a dominant position with a 75% market
share in Canada. While both issuers focus on enhanced theatrical
experiences and premium offering markets, Cinemark has proven a
more effective model with historically higher EBITDA margins and
FCF generation, also reflecting healthier leverage levels than
Cineplex.
Cinemark maintains a more conservative balance sheet and greater
liquidity than its peers, Cineplex and AMC Entertainment, which
provides it with a better ability to manage the business through
periods of operating and economic uncertainty.
KEY ASSUMPTIONS
- Attendance: For FY24, a mid-to-high single digit decline in
attendance as result of about $1.6 billion in film content being
delayed and rescheduled to FY25. For FY25, a modest recovery is
assumed, accounting for the delayed product from FY24, with the
last three years growing at a mid-single digit rate.
- Average Ticket Price: Fitch assumes a low single-digit decrease
in ticket price for FY24 across regions, reflecting some softness
given the absence of a "Barbenheimer" type phenomenon coupled with
the film content being rescheduled to the next year. For FY25, a
mid single-digit increase is assumed due to the rescheduled films
from the prior year and a more normalized release schedule. From
FY26 on, a mid single digit growth was assumed across segments.
- Concession Revenue Per Patron: Fitch is expecting a decrease in
attendance and ticket pricing due to the rescheduling of film
content in FY24 but assumed a low single-digit increase in
concession revenue per patron for FY24, attributed to sustained and
captive consumer behavior supported by premium offerings. From FY25
on, a mid single-digit growth per year was assumed supported by
consumer sentiment across locations.
- Adj. EBITDA margin: For FY24, Fitch assumed a 21% decrease in
Adjusted EBITDA generation reaching a 16.8% margin, in line with
its assumptions for attendance and pricing but also assuming a
modest increase in operating costs. From FY25 to the end of the
projection, Fitch assumed a margin around 16.5%, assuming
sustainable attendance trends and relatively stable cost
structure.
- Corporate overhead of 6.0% of revenues per annum.
- Effective tax rate at 13.5% throughout the projected period.
- Capex intensity at 5.25% in FY24 and 5.00% in FY25, reflecting
strategic investments to enhance guest experience, gradually
decreasing to 4.50% by the end of the projection.
- Fitch assumed additional cash outflows of about ~$40 million per
year related to cash impact on FX rates and additional working
capital requirements.
- $150 million full prepayment of the 8.75% Senior Secured Notes
due 2025, Fitch also assumed the full repayment of the convertibles
notes due 2025 using cash on hand.
RECOVERY ANALYSIS
The recovery analysis assumes Cinemark would be considered a going
concern in bankruptcy and that the company would be reorganized
rather than liquidated. Fitch has assumed a 10% administrative
claim.
- EBITDA: Cinemark's going-concern EBITDA is based on a run-rate
pre-pandemic EBITDA of $656 million. Fitch then stresses EBITDA by
assuming theaters close due to operational weakness driven by
accelerated declines in theatrical attendance as a result of
continued media fragmentation and changing consumer preferences.
This results in a going-concern EBITDA of $263 million, or a
roughly 60% stress.
Prior recessions provide little precedent for a stress case as
theatre attendance increased in six of the last eight recessions
due to the fact that theatrical exhibition was a relatively cheap
form of entertainment. However, the rise of alternative
distribution platforms and streaming subscription plans with all
you can eat offerings (e.g. Netflix, Hulu, Disney+, Max), including
independent smaller format movies that are not dependent on
exclusive theatrical windows could place added pressure on
theatrical exhibition in future downturns, particularly in urban
areas where the cost of an average theater ticket exceeds $15.
Fitch believes the theater member subscription plans like
Cinemark's Movie Club could help support attendance levels.
- Multiple: Fitch employs a 5x enterprise value multiple to
calculate post-reorganization valuation, roughly in-line with the
median TMT emergence enterprise value/EBITDA multiple, and
incorporates the following into its analysis: (1) Fitch's belief
that theater exhibitors have a limited tangible asset value and
that the business model bears the risk of being disrupted over the
longer-term by new distribution models (e.g. Netflix typically
releases films in theaters and to its streaming subscribers
simultaneously, with some limited exceptions for awards
contention); (2) Recent trading multiples (EV/EBITDA) in a range of
6x-17x; (3) Transaction multiples in a range of 9x (e.g. Cineworld
Group plc acquired U.S. theater circuit Regal Entertainment for
$5.8 billion in February 2018 for an LTM EBITDA purchase price
multiple of roughly 9.0x. AMC purchased U.S. theater circuit
Carmike for $1.1 billion in December 2016 for a purchase price
multiple of 9.2x and AMC purchased international circuit Odeon and
UCI for $1.2 billion in November 2016 at a purchase price multiple
of 9.1x).
- Fitch estimates an adjusted, distressed enterprise valuation of
$1.3 billion.
- Debt: Fitch assumes a fully drawn revolver in its recovery
analysis since credit revolvers are tapped when companies are under
distress. For Fitch's recovery analysis, leases are a key
consideration. While Fitch does not assign recovery ratings for the
company's operating lease obligations, it is assumed the company
rejects only 30% of its remaining $1.3 billion in operating lease
commitments (calculated at a net present value) due to their
significance to the operations in a going-concern scenario and is
liable for 15% of those rejected values. This incorporates the
importance of the leased space to the core business prospects as a
going concern. Fitch excludes Cinemark Holdings, Inc's $450 million
convertible notes as they rank junior to Cinemark's existing debt,
are structurally subordinated and have no security or liquidity
requirements.
- Cinemark had $2.4 billion in total debt as of Dec. 31, 2023.
- The recovery results in a 'BB+'/'RR1' on the senior secured notes
and existing secured credit facilities reflecting expectations that
91%- 100% recovery is reasonable. The recovery results in a
'B'/'RR5' on the unsecured notes reflecting reduced recovery
prospects owing to the debt seniority in the capital structure.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- EBITDA Leverage sustained below 3.0x and EBITDAR Leverage
sustained below 4.5x.
- FCF margins sustained in the mid-to high-single digits.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- EBITDA Leverage sustained above 4.0x and EBITDAR Leverage
sustained above 5.5x.
- Significant deterioration in Cinemark's liquidity position.
- Increasing secular pressure as illustrated in sustained declines
in attendance and/or concession spending per patron.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity: Cinemark's liquidity as of Dec. 31, 2023 was
supported by $849 million in cash on balance and full availability
under its new $125 million revolving credit facility, which matures
in 2028. Over the last two years the company has demonstrated its
ability to generate positive cash flow, even during periods of low
attendance levels. During 2023, the company generated approximately
$295 million of FCF vs. $25 million in FYE22, using approximately
$100 million to partially redeem its 8.75% senior secured notes due
2025.
As part of its deleveraging strategy, the company is planning to
redeem the remaining balance of its 8.75% senior secured notes due
2025 in May 2024, when the notes step down to par with cash on
hand.
Debt Structure: Cinemark had $2.3 billion in total debt as of Dec.
31, 2023. There are no significant maturities until 2025, when its
8.75% senior secured and 4.50% convertible notes mature.
The senior secured facility is guaranteed by Cinemark Holdings,
Inc. (downstream) and certain of Cinemark USA, Inc.'s domestic
subsidiaries (upstream). The credit facility is secured by
mortgages on certain fee and leasehold properties and security
interests in substantially all of Cinemark USA and guarantor's
personal property including a pledge on capital stock of certain
Cinemark USA's domestic subsidiaries and 65% of the voting stock of
certain foreign subsidiaries.
Additionally, under the credit agreement documentation, the term
loan is subject to a springing maturity date of April 15, 2028 if
the 5.25% senior notes due 2028 have not been paid or refinanced.
The revolving credit facility is subject to springing maturity
dates of Jan. 30, 2025, Dec. 14, 2025 and April 15, 2028 if the
8.75% senior secured notes due 2025, 5.875% senior notes due 2026
and 5.25% senior notes due 2028 have not been paid or refinanced.
The 4.50% convertible notes are effectively and structurally
subordinated to all existing (and future) secured and guaranteed
debt in the capital structure. The notes were issued on an
unsecured basis with no guarantee from the parent.
ISSUER PROFILE
Cinemark Holdings, Inc. is the third largest theater U.S.
exhibitor, operating 309 theaters across 42 states and operates 192
theaters across 13 countries in Latin America. It is the leading
theater exhibitor in Brazil and Argentina and the second largest in
Chile and Colombia.
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
----------- ------ -------- -----
Cinemark Holdings,
Inc. LT ID B+ Affirmed B+
Cinemark USA, Inc. LT IDR B+ Affirmed B+
senior secured LT BB+ Affirmed RR1 BB+
senior unsecured LT B Affirmed RR5 B
CURO GROUP: Implements Prepackaged Chapter 11 Restructuring Plan
----------------------------------------------------------------
CURO Group Holdings Corp. announced that, on March 22, 2024, it
entered into a Restructuring Support Agreement ("RSA") that is
supported by holders (or their investment managers) of more than
74% of each of: (i) loans under the Company's First Lien Credit
Agreement ("1L Lenders"), (ii) the Company's 7.500% Senior 1.5 Lien
Secured Notes due 2028 (the "1.5L Notes" and, such parties, the
"1.5L Noteholders"), and (iii) the Company's 7.500% Senior Secured
Notes due 2028 (the "2L Notes" and, such parties, the "2L
Noteholders").
To implement the terms of the RSA, CURO and certain subsidiaries
have filed for voluntary relief under Chapter 11 (the "Chapter 11
Cases") of the United States Bankruptcy Code in the U.S. Bankruptcy
Court for the Southern District of Texas, Houston Division (the
"Bankruptcy Court"). Prior to commencing the Chapter 11 Cases, the
Company also commenced solicitation of the 1L Lenders, the 1.5L
Noteholders, the 2L Noteholders and holders of CURO's common stock
for votes for a prepackaged joint plan of reorganization of the
Company and certain of its subsidiaries (the "Plan"), which Plan
has been filed contemporaneously with the filing of the Chapter 11
Cases. CURO also intends to file recognition proceedings in Canada
under Part IV of the Companies' Creditors Arrangement Act.
The RSA sets forth terms for a consensual restructuring plan that
is expected to reduce the Company's debt by approximately $1
billion, saving the Company approximately $75 million in cash
interest annually and enabling CURO to invest in long-term growth.
CURO branches are open, operating as usual and continuing to serve
customers in the U.S. and Canada. Customer loans are unaffected by
the filing.
"Implementing this restructuring through a court-supervised process
is the most efficient path to enable us to make changes to our
capital structure that will allow us to continue to grow
responsibly, execute with excellence and solidify the foundation of
the Company," said Doug Clark, Chief Executive Officer at CURO.
"The significant support we have received from our lenders and
stakeholders will allow us to move forward expeditiously as we
continue to provide our customers with a variety of convenient,
easily accessible financial services. We are confident in our
ability to successfully exit this process as a stronger company
with significantly less debt and we will be better positioned to
achieve long-term profitable growth."
"We are grateful for the ongoing support of our vendors, landlords
and business partners. With the changes that will result from this
process, our future is bright."
A steering committee comprised of funds managed by Oaktree Capital
Management, LP. ("Oaktree"), Caspian Capital LP, and Empyrean
Capital Partners (the "Ad Hoc Group") led negotiation of the RSA on
behalf of creditors. "I want to express my gratitude to the CURO
team, both in the U.S and Canada, for their hard work and
dedication," David Smolens, Managing Director in Oaktree's Special
Situations Group said. "We look forward to working with and
supporting CURO as it moves on to its next chapter."
CURO has filed a number of customary motions with the Bankruptcy
Court to ensure that its operations continue uninterrupted while
its balance sheet is restructured.
CURO has also received a commitment of up to $70 million of new
capital in the form of debtor-in-possession ("DIP") financing from
certain of the Company's prepetition stakeholders, subject to
satisfaction of certain customary conditions. The DIP financing,
which is subject to court approval, is expected to support the
Company's ongoing operations during the court-supervised process.
Given the broad support of lenders, CURO expects to receive
Bankruptcy Court approval of a Plan of Reorganization and
Disclosure Statement expeditiously and it expects to emerge from
the restructuring process in no later than 120 days.
In connection with the Chapter 11 Cases, the applicable non-debtor
subsidiaries of the Company also entered into waivers and
amendments with the lenders under the Company's existing loan
receivables securitization programs. These accommodations ensure
that such securitization programs remain in effect notwithstanding
the filing of the Chapter 11 Cases and are able to continue, with
certain negotiated modifications, following the Company's emergence
from Chapter 11.
Additional information regarding the Company's court-supervised
process is available at CURO's restructuring website,
https://dm.epiq11.com/Curo.
Court filings and other information related to the proceedings are
available on a separate website administered by the Company's
claims agent, Epiq, at https://dm.epiq11.com/Curo, by calling Epiq
toll-free at (877) 354-3909 (or (971) 290-1442 for calls
originating outside of the U.S.), or by sending an email to
CURO@epiqglobal.com.
Akin Gump Strauss Hauer & Feld LLP is serving as legal counsel to
the Company, Cassels Brock & Blackwell LLP is serving as Canadian
legal counsel to the Company, and Oppenheimer & Co. Inc., is
serving as investment banker to the Company. Wachtell, Lipton,
Rosen & Katz and Vinson & Elkins LLP are serving as legal counsel
to the Ad Hoc Group, and Houlihan Lokey Capital, Inc. is serving as
financial advisor to the Ad Hoc Group.
A full-text copy of the Company's report filed on Form 8-K with the
Securities and Exchange Commission is available at
https://tinyurl.com/2zwxmjf5
About Curo Group
Headquartered in Chicago, IL, Curo Group Holdings Corp. is a
tech-enabled, omni-channel consumer finance company serving a full
spectrum of non-prime, near-prime and prime consumers in portions
of the U.S. and Canada. CURO was founded over 25 years ago to meet
the growing needs of consumers looking for alternative access to
credit. The Company continuously updates its products and
technology platform to offer a variety of convenient, accessible
financial and loan services.
Curo Group reported a net loss of $185.48 million for the year
ended Dec. 31, 2022. As of Dec. 31, 2022, the Company had $2.79
billion in total assets, $2.84 billion in total liabilities, and a
total stockholders' deficit of $54.13 million.
* * *
As reported by the TCR on Mar. 7, 2024, S&P Global Ratings lowered
its issuer credit rating on Curo Group Holdings Corp. to 'SD' from
'CCC-'. S&P also lowered its issue ratings on the company's
1.5-lien and junior notes to 'D' from 'CC' and 'C', respectively.
"The downgrade reflects that Curo has not made interest payments
for its 1.5-lien notes and junior notes within 30 days of their due
date of Feb. 1, 2024, which we view as an event of default. The
company is in discussions with its lenders and key stakeholders
regarding a potential comprehensive financial restructuring. It
also entered in forbearance agreements on March 1, 2024, with its
noteholders, which will end on the earlier of March 18, 2024, or
the occurrence of specified events. Curo also received waivers from
the lenders of its senior 1.0-lien term loan and funding debt for
the cross-defaults and potential breach of the $75 million minimum
liquidity covenant requirement."
As reported by the TCR on Feb. 15, 2024, Moody's Investors Service
has downgraded Curo Group Holdings Corp.'s corporate family rating
to Ca from Caa2. The senior secured debt rating was downgraded to
Caa3 from Caa1 and the senior unsecured rating was downgraded to C
from Caa3. The outlook remains negative.
CURO GROUP: S&P Lowers ICR to 'D' on Chapter 11 Bankruptcy Filing
-----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Curo Group
Holdings Corp. to 'D' from 'SD'. The 'D' issue ratings on the
company's 1.5-lien and junior notes are unchanged.
S&P subsequently withdrew the ratings at the company's request.
On March 25, 2024, Curo Group Holdings Corp. filed for Chapter 11
bankruptcy protection, which constituted a default on its senior
secured term loan ($178 million outstanding), senior 1.5-lien
secured notes ($682 million outstanding), and junior second-lien
notes ($318 million outstanding).
The downgrade reflects Curo entering into Chapter 11 bankruptcy.
The company entered Chapter 11 bankruptcy to implement the terms of
a restructuring support agreement, which would save Curo $75
million in cash interest payments annually by cancelling all the
outstanding 1.5-lien and junior notes. As part of the restructuring
support agreement, Curo received $70 million of new capital
commitments in the form of debtor-in-possession financing that will
convert into new first out loans after the company emerges from
Chapter 11. While Curo's bankruptcy-remote funding debt are also in
default due to cross-default provisions and covenant breaches, the
company was able to obtain waivers for these default events.
S&P subsequently withdrew all its ratings on Curo and its debt. At
the company's request, S&P withdrew its issuer credit rating on
Curo and its issue ratings on the company's 1.5-lien and junior
notes.
DCERT BUYER: Fitch Alters Outlook on 'B' LongTerm IDR to Negative
-----------------------------------------------------------------
Fitch Ratings has affirmed DCert Buyer, Inc.'s Long-Term Issuer
Default Rating (IDR) at 'B'. The Rating Outlook has been revised to
Negative from Stable. Fitch has also affirmed the company's $135
million undrawn first-lien secured revolver and $2 billion
first-lien term loan at 'BB-'/'RR2' and $496 million second-lien
term loan at 'CCC+'/'RR6'. In addition, Fitch has assigned a first
time 'B' Long-Term IDR to DCert Parent, LLC. The Rating Outlook is
Negative.
The Negative Outlook reflects weakening credit protection metrics
and operating profile pressures. Fitch expects leverage for the
company will remain elevated for longer than previously
anticipated. The ratings reflect DCert's resilient business model
and dominant position within the Public Key Infrastructure (PKI)
and Certificate Authority (CA) markets. These markets enable
continuing growth of digitalization of information, supporting
growth in use cases and internet traffic.
KEY RATING DRIVERS
Near-term Profit Headwinds: DCert faces headwinds towards improving
its profitability, including slower bookings, increasing operating
expenses and execution risk associated with go-to-market
initiatives. Overall, Fitch expects EBITDA margins to remain lower
than historically observed levels. DCert acquired DNS Made Easy and
Mocana in 2022 in an effort to expand into markets adjacent to CA.
While these new areas provide DCert with new growth opportunities,
the acquisitions have had a dilutive effect on the company's EBITDA
margin. Revenue growth has remained subdued in the first three
quarters of FY24; however, it is expected to improve in 4Q fiscal
2024 onwards.
Weaker Leverage, Coverage Metrics: Fitch expects DCert's leverage
and EBITDA interest coverage to remain weaker than previously
anticipated in the near term. Fitch's base case projects the
Fitch-calculated leverage to remain above 8x in FY24, with
potential to improve thereafter. The EBITDA Interest coverage ratio
is also projected to remain pressured, driven by elevated interest
expenses and lower EBITDA levels. DCert is majority owned by
private equity firms Clearlake and TA Associates. Fitch believes
private equity ownership is likely to result in some level of
ongoing leverage to optimize ROE.
Strong Position in Niche Segment: DCert has effectively
consolidated the CA industry with a solid leading position and an
even stronger position in the core Extended Validation (EV) and
Organizational Validation (OV) segments. The company's business
also benefits from industry tailwinds such as heightened awareness
about secure web access, growing necessity to foster confidence
within the expanding base of online customers and the need to
comply with stringent regulations and compliance standards. The
growing adoption of Internet of Things (IoT) and Bring Your Own
Device (BYOD) trends will also boost the demand for authentication
certificates.
Limited Technology Obsolescent Risks: With increasing information
being exchanged over the internet and expanding footprint of
devices, the need to ensure data security will continue to rise.
Secure Sockets Layer (SSL) and PKI provide important security by
authenticating devices and websites and by encrypting data
transported over the internet.
Fitch believes SSL and PKI technologies will be continuously
enhanced, including adaptation for quantum computing, by building
on the existing foundations to ensure full backward compatibility
rather than being replaced by new disruptive technologies. Such
technological evolution tends to favor incumbents such as DCert.
Browser Lifecycle a High Entry Barrier: CAs need to be embedded
into various available access points, which could result in new CAs
being incompatible with outdated browsers and devices, as it could
take five to 10 years for older access points to be eliminated from
the market. Without full compatibility with all existing access
points, the value of certificates issued by new CAs diminishes.
Fitch believes the inability to be fully compatible is an effective
entry barrier.
Recurring Revenue: Consistent with historical revenue trends, Fitch
expects DCert's revenue to be 100% subscription-based with a high
net retention rate. Fitch expects the continuing growth in the
underlying demand for CAs should provide the foundation for
resilient market growth. This results in a highly predictable
operating profile for the company. Given the concentrated industry
structure and high entry barriers, Fitch expects DCert to sustain
strong profitability, although lower than the high levels
previously recorded.
DERIVATION SUMMARY
DCert is a CA that enables trusted communications between website
servers and terminal devices such as browsers and smartphone
applications. Increasingly, applications are expanding to include
Internet of Things terminal devices. A CA verifies and
authenticates the validity of websites and their hosting entities,
and facilitates the encryption of data on the internet. CA services
are 100% subscription-based and generally recurring in nature.
The 'B' IDR reflects DCert's solid business model and stable cash
flow generation (excluding the impact of one-time business
optimization related costs). Fitch believes the private equity
ownership is likely to prioritize ROE optimization over accelerated
deleveraging, resulting in leverage remaining elevated.
DCert's ratings reflect Fitch's view of the resilience and the
predictability of DCert's revenue and profitability as a result of
the continuing demand for trust over the internet. Within the
broader internet security segment, Gen Digital Inc. (f/k/a
NortonLifeLock Inc.) (BB+/Negative) is also a leader in its space.
Gen Digital Inc. has larger revenue scale and lower financial
leverage than DCert, but operates in a more competitive space and
does not have the market dominant position DCert has in its niche
space.
KEY ASSUMPTIONS
- Revenue growth flat in FY24 and mid to high single digits
thereafter;
- EBITDA margins projected in the low 50s;
- Capex intensity at about 3.5% of revenue;
- $150 million aggregate acquisitions through 2027 funded with
internal cash;
- $11.97 million other note payable to unit holder repaid in 2024.
- Interest rates forecasted to be 5.0% in 2024, declining gradually
to 3.5% by 2027.
RECOVERY ANALYSIS
- The recovery analysis assumes that DCert would be reorganized as
a going-concern in bankruptcy rather than liquidated;
- Fitch has assumed a 10% administrative claim.
Going-Concern (GC) Approach
- As DCert's business model depends on the ability to provide trust
supported by its technology infrastructure, customer churn could
rise in times of distress.
- In estimating a distressed EV for DCert, Fitch assumes a
combination of customer churn and margin compression on lower
revenue scale to result in approximately 11% revenue decline
leading to a going concern EBITDA that is approximately 17% lower
relative to FY23 EBITDA.
- Fitch applies a 7.0x multiple and a 10% administration claim to
arrive at an adjusted EV of $1,581 million. The multiple is higher
than the median TMT enterprise value multiple due to the company's
strong market positioning. In the 2023 edition of Fitch's
Bankruptcy Enterprise Values and Creditor Recoveries case studies,
Fitch notes Technology sector's recovery multiples ranging from
2.6x to 10.8x. DCert's operating profile is supportive of a
recovery multiple in the upper bound of this range.
- Fitch assumes a fully drawn revolver in its recovery analysis
since credit revolvers are tapped as companies are under distress.
Fitch assumes a fully drawn $135 million revolver.
- Applying the Fitch estimated enterprise value of the business to
the securities and using standard notching criteria, Fitch arrives
at an IDR of 'BB-'/'RR2' on the first lien debt and a rating of
'CCC+'/'RR6' on the second-lien debt.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, lead to a Stable
Outlook:
- EBITDA interest coverage sustained above 1.5x;
- Fitch's expectation of EBITDA leverage sustaining below 7.5x;
- Improving operating profile as demonstrated by sustained
mid-single-digits revenue growth and stable EBITDA & FCF margins.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch's expectation of EBITDA leverage sustaining below 6.0x;
- (CFO-Capex)/Debt sustaining above 6.5%;
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- EBITDA interest coverage below 1.5x;
- Fitch's expectation of EBITDA leverage sustaining above 7.5x;
- (Cash from Operations-Capex)/Debt sustained below 3.5%;
- Weakening market position as demonstrated by sustained negative
revenue growth and EBITDA and FCF margin erosion.
LIQUIDITY AND DEBT STRUCTURE
Adequate Liquidity: The company had $178 million in readily
available cash at Oct. 31, 2023. Fitch forecasts DCert to generate
EBITDA of about $289 million in FY24, resulting in approximately
$191 million in readily available cash exiting FY24. Additionally,
DCert's liquidity is supported by an undrawn $135 million revolving
facility and a favorable debt maturity schedule, with the nearest
term loan maturing in 2026. Liquidity may potentially be hampered
by special dividends to the sponsors or large acquisitions.
ISSUER PROFILE
DCert Parent, LLC is a Certificate Authority (CA) that enables
trusted communications between website servers and terminal devices
such as browsers, smartphones, and IoT devices. The company
verifies and authenticates the validity of websites and their
hosting entities, and facilitates the encryption of data on the
internet.
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
----------- ------ -------- -----
DCert Parent, LLC LT IDR B New Rating
DCert Buyer, Inc. LT IDR B Affirmed B
senior secured LT BB- Affirmed RR2 BB-
Senior Secured
2nd Lien LT CCC+ Affirmed RR6 CCC+
DELCATH SYSTEMS: Incurs $47.7 Million Net Loss in 2023
------------------------------------------------------
Delcath Systems, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K disclosing a net loss of
$47.68 million on $2.06 million of total revenues for the year
ended Dec. 31, 2023, compared to a net loss of $36.51 million on
$2.72 million of total revenues for the year ended Dec. 31, 2022.
As of Dec. 31, 2023, the Company had $38.61 million in total
assets, $22.84 million in total liabilities, and $15.78 million in
total stockholders' equity.
New York, NY-based Marcum LLP, the Company's auditor since 2018,
issued a "going concern" qualification in its report dated March
26, 2024, citing that the Company has a significant working capital
deficiency, 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.
"The Company's future results are subject to substantial risks and
uncertainties. The Company has operated at a loss for its entire
history and there can be no assurance that it will ever achieve or
maintain profitability. The Company has historically funded its
operations primarily with proceeds from sales of common stock,
warrants and prefunded warrants for the purchase of common stock,
sales of preferred stock, proceeds from the issuance of convertible
debt and borrowings under loan and security agreements," Delcath
said.
"If there is a substantial delay in the activation of sites
approved to administer HEPZATO, the Company expects to need to
raise additional capital under structures available to the Company,
including debt and/or equity offerings, which may not be on
favorable terms. In a substantially delayed site activation
scenario, the Company would not have sufficient funds to meet its
obligations within twelve months from the issuance date of these
condensed consolidated financial statements. As such, there is
uncertainty regarding the Company's ability to maintain liquidity
sufficient to operate its business effectively, which raises
substantial doubt about the Company's ability to continue as a
going concern. Debt financing and equity financing, if available,
may involve agreements that include covenants limiting or
restricting the Company's ability to take specific actions, such as
incurring additional debt, making capital expenditures or declaring
dividends. If the Company raises funds through collaborations, or
other similar arrangements with third parties, it may have to
relinquish valuable rights to its technologies, future revenue
streams, research programs or product candidates or grant licenses
on terms that may not be favorable to the Company and/or may reduce
the value of its common stock. If the Company is unable to raise
additional funds through equity or debt financings when needed, it
may be required to delay, limit, reduce or terminate its product
development or future commercialization efforts or grant rights to
develop and market its product candidates even if the Company would
otherwise prefer to develop and market such product candidates
itself," the Company said.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/872912/000162828024013008/dcth-20231231.htm
About Delcath Systems
Headquartered in New York, NY, Delcath Systems, Inc. --
http://www.delcath.com-- is an interventional oncology company
focused on the treatment of primary and metastatic liver cancers.
The company's proprietary products, HEPZATO KIT (Hepzato
(melphalan) for Injection/Hepatic Delivery System) and CHEMOSAT
Hepatic Delivery System for Melphalan percutaneous hepatic
perfusion (PHP) are designed to administer high-dose chemotherapy
to the liver while controlling systemic exposure and associated
side effects during a PHP procedure.
DIGERATI TECHNOLOGIES: Reports $4.02M Net Loss in Second Quarter
----------------------------------------------------------------
Digerati Technologies, Inc. filed with the U.S. Securities and
Exchange Commission its Quarterly Report on Form 10-Q reporting a
net loss of $4.02 million on $7.6 million in total operating
revenue for the three months ended January 31, 2024, compared to a
net loss of $104,000 on $7.9 million in total operating revenue for
the three months ended January 31, 2023.
Net loss for the six months ended January 31, 2024 was $8.5 million
on $15.2 million in total operating revenue, compared to a net loss
for the six months ended January 31, 2023 of $5.2 million on $16.1
million in total operating revenue.
As of January 31, 2024, the Company had $37.1 million in total
assets, $75.8 million in total liabilities, and $38.7 million in
total stockholders' deficit.
As previously disclosed in the Company's Form 8-K Report, on
February 2, 2024 (with effect from December 31, 2023), the Company
and Verve Cloud, Inc., a Nevada corporation formerly known as T3
Communications, Inc., a Nevada corporation that is a controlled
subsidiary of the Company, and Verve Cloud's subsidiaries (Verve
Cloud and its subsidiaries, collectively, the "Verve Cloud Nevada
Parties"), Post Road Administrative LLC and its affiliate Post Road
Special Opportunity Fund II LP (collectively, "Post Road"), entered
into a Third Forbearance Agreement and Amendment to Loan Documents,
which (a) extends the maturity date of our term loan C note with
Post Road from December 31, 2023, to November 17, 2024 (which is
also the maturity date of the other loans outstanding under the
credit agreement, dated as of November 17, 2020 (as amended,
supplemented and otherwise modified from time to time, including by
the Third Forbearance Agreement, the "Post Road Credit Agreement"),
among the Verve Cloud Nevada Parties, Post Road and, with respect
to certain sections thereof, the Company), (b) provides that Post
Road and the other lenders under the Post Road Credit Agreement
shall forbear through November 17, 2024 from exercising their
rights and remedies under the loan documents and applicable law
with respect to the Specified Defaults (as defined below) and (c)
amends certain other provisions of the Post Road Credit Agreement,
as described herein.
The Third Forbearance Agreement provides for forbearance with
respect to the following events of default that have occurred and
are continuing under the Post Road Credit Agreement, consisting of
(a) the existing events of default that were the subject of the
forbearance granted under the Second Forbearance Agreement,
Amendment to Loan Documents and Limited Consent, dated as of
November 22, 2023 (with effect from November 2, 2023), among the
Company, the Verve Cloud Nevada Parties, the lenders party thereto
and Post Road, (b) certain events of default that have occurred
since November 2, 2023, and remain continuing and (c) certain
events of default that are expected to arise before November 17,
2024. The Third Forbearance Agreement replaces the Second
Forbearance Agreement, which expired in accordance with its terms
on December 31, 2023.
The forbearance provided under the Third Forbearance Agreement will
expire on the earliest to occur of (a) November 17, 2024, (b) any
other event of default not constituting a Specified Default
enumerated in the Third Forbearance Agreement or (c) any failure of
the Company or any Verve Cloud Nevada Party to comply with any
requirement of the Third Forbearance Agreement. The Third
Forbearance Agreement does not waive the Specified Defaults nor
does it impair the ability of Post Road to exercise its rights and
remedies after the expiration of the forbearance. After the
expiration of the forbearance provided under the Third Forbearance
Agreement, Post Road will be immediately entitled to exercise any
and all rights and remedies it has under the loan documents and
applicable law, including the right to foreclose on some or all of
the assets of the Verve Cloud Nevada Parties.
Full-text copies of the Company's Form 10-Q and Report on Form 8-K
containing further information about the Company's entry into the
Third Forbearance Agreement are available at
https://tinyurl.com/37zd3pmd and https://tinyurl.com/2559s497,
respectively.
About Digerati
Digerati Technologies, Inc. (OTCQB: DTGI), through its
subsidiaries, provides Internet-based telephony products and
services through its cloud application platform and session-based
communication network. The company was formerly known as ATSI
Communications Inc. and changed its name to Digerati Technologies,
Inc. in March 2011. Digerati Technologies, Inc. was founded in
1993 and is headquartered in San Antonio, Texas.
DIOCESE OF CAMDEN: Court Confirms Plan With $87.5 Mil. Deal
-----------------------------------------------------------
Randi Love of Bloomberg Law reports that Camden Diocese's
bankruptcy exit plan was confirmed by the bankruptcy court.
The plan, approved by Judge Jerrold N. Poslusny Jr., of the US
Bankruptcy Court for the District of New Jersey, allows the
Catholic Diocese of Camden and its parishes to begin distributing
payments to people who say they were sexually abused as children by
members of the clergy. The Camden diocese was one of several across
the country that filed for bankruptcy after being hit with
allegations of child sexual abuse.
The judge's approval of the plan came after he rejected earlier
versions. The $87.5 million trust will be funded by the diocese and
its parishes over five years.
The settlement also includes enhanced protocols to protect
children, which the diocese said in a statement "were first
implemented by the diocese in 2002."
Survivors speaking out helped make the diocese accountable,
according to Jeff Anderson of Jeff Anderson & Associates, an
attorney for a group of abuse survivor claimants.
"From their courage and collective action, brings about real
reckoning," Anderson said.
The judge overruled plan objections from the diocese's insurers,
who weren't part of the settlement.
"My prayers go out to all survivors of abuse and I pledge my
continuing commitment to ensure that this terrible chapter in the
history of the Diocese of Camden, New Jersey never happens again,"
Camden diocese Bishop Dennis Sullivan said in a statement.
The diocese is represented by Trenk Isabel Siddiqi & Shahdanian PC;
Cole Schotz PC and McManimon, Scotland & Baumann LLC.
The official committee of tort claimants is represented by
Lowenstein Sandler LLP.
The official committee of unsecured trade creditors is represented
by Porzio, Bromberg & Newman PC.
A separate group of abuse survivor claimants is represented by Jeff
Anderson & Associates; Baldante & Rubenstein PC; Janet, Janet &
Suggs LLC; Raynes & Lawn; D'arcy Johnson Day PC; and Peter W Smith
Law LLC.
The case is In re: Diocese of Camden, NJ, Bankr. D.N.J., No.
20-bk-21257, hearing 3/14/24.
About The Diocese of Camden, NJ
The Diocese of Camden, New Jersey is a nonprofit religious
corporation organized pursuant to Title 16 of the Revised Statutes
of New Jersey. The Diocese is the secular legal embodiment of the
Roman Catholic Diocese of Camden, a juridic person recognized
under
Canon Law.
The Diocese of Camden sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. D.N.J. Case No. 20-21257) on Oct. 1, 2020.
The petition was signed by Reverend Robert E. Hughes, vicar General
and vice president. At the time of the filing, the Debtor had
total assets of $53,575,365 and liabilities of $25,727,209. Judge
Jerrold N. Poslusny Jr. oversees the case. McManimon, Scotland &
Baumann, LLC, is the Debtor's legal counsel.
DIOCESE OF NORWICH: Retired Judge to Review Abuse Claims
--------------------------------------------------------
Aaron Keller of Law360 reports that a Connecticut bankruptcy judge
has appointed Salvatore C. Agati, a retired Connecticut Superior
Court judge and current partner at Carmody Torrance Sandak &
Hennessey LLP, one of the Constitution State's largest law firms,
to review abuse claims against the bankrupt Norwich Roman Catholic
Diocesan Corp. of eastern Connecticut.
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.
DIOCESE OF SACRAMENTO: To File Chapter 11 Petition on April 1
-------------------------------------------------------------
Lindsay Weber of KCRA 3 reports that the Diocese of Sacramento
announced its plan to file a petition in bankruptcy court next
month. Bishop Jaime Soto said he will file the petition on April
1, 2024. The Diocese announced the decision to file bankruptcy in
December 2023.
The filing comes in the wake of lawsuits accusing clergy of sexual
abuse.
"The bankruptcy process is the only respectful and equitable way to
address the substantial number of claims by those who have been
abused by clergy and other church workers," the bishop said in a
press release. "Bankruptcy is a lengthy process, but it provides
supervision and transparency for all the parties involved so that
an equitable resolution is offered to the victim-survivors of
abuse."
In December 2023, the Survivors Network of Those Abused by Priests
(SNAP) shared concerns that the bankruptcy filing would limit
transparency.
The bishop said he intends to be as transparent as he can.
On Saturday, the bishop announced that the Diocese would create a
Chapter 11 Bankruptcy page on its website. The page will include
communications from the diocese pertaining to bankruptcy as well as
court filings and documentation.
The bishop said by involving the court and filing for bankruptcy,
it would allow the diocese to sustain the teaching and charitable
work of the Catholic church in Northern California.
About Sacramento Diocese
The Diocese of Sacramento is a Latin Church ecclesiastical
territory or diocese of the Catholic Church in the northern
California region of the United States.
DIRECTBUY HOME: April 16 Plan & Disclosures Hearing Set
-------------------------------------------------------
Judge Stacey L. Meisel has entered an order that the Disclosure
Statement of Directbuy Home Improvement, Inc. is approved on an
interim basis under Section 1125 of the Bankruptcy Code and
Bankruptcy Rule 3017.
Any objections to the adequacy of the information contained in the
Disclosure Statement are expressly reserved for consideration at
the Confirmation Hearing.
The Confirmation Schedule is approved in its entirety as follows:
* Hearing on Solicitation Procedures Motion is on March 5, 2024
at 11:00 a.m. (ET).
* Record Date is on March 5, 2024.
* Deadline to Serve the Notices and the Solicitation Package
will be on March 11, 2024.
* Deadline to File Plan Supplement will be on April 1, 2024.
* Deadline to Object to final approval of the Disclosure
Statement and Confirmation of the Plan will be on April 9, 2024 at
4:00 p.m. (ET).
* Voting Deadline will be on April 9, 2024 at 4:00 p.m. (ET).
* Deadline for Debtor to File Certification of Balloting will be
on April 12, 2024 at 4:00 p.m. (ET).
* Deadline for Debtor to File Confirmation Brief and/or Reply to
any Plan or Disclosure Statement Objections April 12, 2024.
* Combined Hearing on Final Approval of the Disclosure Statement
and Confirmation of the Plan will be on Apr. 16, 2024 at 11:00 a.m.
(ET).
Attorneys for the Debtor:
Michael D. Sirota, Esq.
Warren A. Usatine, Esq.
David M. Bass, Esq.
Matteo Percontino, Esq.
COLE SCHOTZ P.C.
Court Plaza North, 25 Main St.
P.O. Box 800
Hackensack, NJ 07602-0800
Tel: (201) 489-3000
Fax: (201) 489-1536
E-mail: msirota@coleschotz.com
wusatine@coleschotz.com
dbass@coleschotz.com
mpercontino@coleschotz.com
About DirectBuy Home Improvement
DirectBuy Home Improvement, Inc., doing business as Z Gallerie, is
a specialty retailer focused on fashion and art-inspired home
décor and home furnishings. The company is based in Gardena,
Calif.
DirectBuy Home Improvement sought protection under Chapter 11 of
the U.S. Bankruptcy Code (Bankr. D.N.J. Case No. 23-19159) on
October 16, 2023. In the petition signed by Robert Fetterman, chief
financial officer and interim chief executive officer, the Debtor
disclosed up to $100 million in both assets and liabilities.
The Debtor tapped Michael D. Sirota, Esq., at Cole Schotz PC as
legal counsel and Stretto, Inc. as administrative advisor.
ZG Lending SPV, LLC, as DIP agent and prepetition agent, is
represented by Lowenstein Sandler LLP's Robert M. Hirsh, Esq., and
Phillip Khezri, Esq.
EASTERN VAULT: Public Sale Auction Slated for April 3
-----------------------------------------------------
Secured party Credit Agency Services LLC will offer for sale at
public auction all of rights, title and interest of Eastern Vault
Company Inc., Seminole Precast LLC and MST Concrete Products Inc.
in and to the collateral pledged to the secured party to secured
the loans made under the credit agreement dated March 26, 2021.
The public auction will be held on April 3, 2024, at 9:00 a.m.
(prevailing Eastern Time) at the offices of Candlewood Partners LLC
located at 600 Superior Avenue East, 18th Floor, Cleveland, Ohio
44114.
Interested parties who intend to bid on the collateral must contact
Emily Zielinski, phone: (216) 472-6660; email:
erz@candlewoodpartners.com and Rishi Agarwal, phone: (216)
472-6662; email: ra@candlewoodpartners.com at Candlewood Partners
LLC and Bradley Thomas Giordano, counsel to Secured Party, Phone
(312) 372-2000; email: bgiordano@mwe.com not less than two business
days prior to the date of the sale to receive the bid procedures
for public UCC sale and bidding instructions.
Eastern Vault Company Inc. -- https://wwweasternvault.net/ --
provides pre-stressed and pre-cast concrete manholes to bridge
beams.
ELITE KIDS: Seeks to Delay Confirmation Deadline to July 31
-----------------------------------------------------------
Elite Kids Services, Inc., filed a motion to extend its time to
confirm a Chapter 11 Small Business Plan of Reorganization and
Disclosure Statement.
The Debtor is a small business Debtor as defined in Bankruptcy Cold
s 101(51D).
The Debtor requests an extension of the time by which a Plan of
Reorganization should be confirmed for an additional 90 days,
through and including Jul. 31, 2024.
This third request is not made for the purpose of delay. This third
requested extension of the time period for confirmation, is
necessary due to the fact, that the time to confirm a plan is set
to expire on May 2, 2024, and the Debtor needs an additional time
to finalize the Settlement agreement, resolving a claim of M.M.
Infant under 14 and Olia Royzman, to obtain a Court approval of the
reached settlement terms and to proceed the claim objection with
respect to the claim filed by the U.S. Small Business
Administration, and thereafter to file an Amended plan and
disclosure statement. As of today, the proposed Settlement
agreement was circulated to the parties.
The requested extension of the time period for confirmation will
allow the Debtor to confirm a Chapter 11 plan without violating the
Bankruptcy Code and to provide treatment to its Creditors.
Counsel for the Debtor:
Alla Kachan, Esq.
LAW OFFICES OF ALLA KACHAN, P.C.
2799 Coney Island Avenue, Suite 202
Brooklyn, NY 11235
Tel: (718) 513-3145
About Elite Kids Services
Elite Kids Services, Inc., filed a Chapter 11 bankruptcy petition
(Bankr. E.D.N.Y. Case No. 22-42915) on Nov. 22, 2022, with as much
as $1 million in both assets and liabilities. Judge Elizabeth S.
Stong oversees the case.
Alla Kachan, Esq., at the Law Offices of Alla Kachan, PC and Wisdom
Professional Services, Inc., serve as the Debtor's legal counsel
and accountant, respectively.
EMPOWER PAYMENTS: S&P Withdraws 'B-' Issuer Credit Rating
---------------------------------------------------------
S&P Global Ratings withdrew all of its ratings on Empower Payments
Intermediate Holdings Inc. (Revspring), including the 'B-' issuer
credit rating, at the issuer's request.
The company requested the withdrawal following the completion of
its sale to Frazier Healthcare Partners on March 12, 2024, and the
associated refinancing of its rated debt. At the time of
withdrawal, S&P's outlook on Revspring was stable.
ENCORE CAPITAL: Fitch Rates $500MM Secured Notes Due 2029 'BB+'
---------------------------------------------------------------
Fitch Ratings has assigned Encore Capital Group, Inc.'s
(BB+/Stable) USD500 million issue of 9.25% senior secured notes due
2029 (ISINs: US292554AQ52, USU2915CAF78) a final rating of 'BB+'.
The final rating is in line with the expected rating Fitch assigned
to the notes on March 12, 2024.
The notes are principally being used in the near term to reduce
drawings under the group's revolving credit facility, ahead of
potential redemption later this year of GBP300 million of senior
secured notes due 2026.
KEY RATING DRIVERS
Equalised with Long-Term IDR: The senior secured notes are
guaranteed by most Encore group subsidiaries and rank equally with
other senior secured obligations. The majority of Encore's debt is
senior secured, with only a small higher-ranking super-senior
element. Consequently, the senior secured debt rating is equalised
with Encore's Long-Term Issuer Default Rating (IDR), as Fitch
expects average recoveries for the notes.
Leading Franchise; Concentrated Activities: Encore's Long-Term IDR
reflects its leading franchise in the debt-purchasing sector, its
experienced management team and its long-term earnings record. The
rating also takes into account the company's concentration of
activities within the debt-purchasing sector and the need to
accommodate wholesale market funding costs within profitable
underwriting. Fitch expects that net leverage will remain at the
upper end of management's long-term guidance of 2-3x in the near
term while portfolio purchasing exceeds recent years' levels.
For further detail of the key rating drivers and sensitivities for
Encore's IDR, see 'Fitch Affirms Encore at 'BB+'; Outlook Stable',
dated 29 June 2023.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- A sustained fall in cash collections, resulting in significantly
reduced earnings generation, material write-down of the value of
portfolio investments or cash-flow leverage consistently at the
upper end of management's target range for net debt/adjusted EBITDA
of 2x-3x.
- A material adverse operational event or regulatory intervention
undermining franchise strength or business-model resilience.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Material growth in the company's tangible equity position, while
also maintaining cash-flow leverage consistently at the low end of
management's current guidance range.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
The notes' rating is primarily sensitive to changes in Encore's
Long-Term IDR. Changes to Fitch's assessment of relative recovery
prospects for senior secured debt in a default (e.g. as a result of
a material shift in the proportion of Encore's debt which is either
unsecured or super-senior secured) could also result in the senior
secured debt rating being notched up or down from the IDR.
ESG CONSIDERATIONS
Encore Capital Group, Inc. 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, particularly in the
US.
Encore Capital Group, Inc. 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. These factors have negative
influences on the rating, but their impact is only moderate, and
they are features of the debt purchasing sector as a whole, and not
specific to Encore.
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
----------- ------ -----
Encore Capital Group, Inc.
senior secured LT BB+ New Rating BB+(EXP)
ENVISION HEALTHCARE: Gets Final Nod for $177.5-Mil. Investor Deal
-----------------------------------------------------------------
Martina Barash of Bloomberg Law reports that Envision Healthcare
Corp.'s $177.5 million settlement with investors over its billing
practices merits final approval, a federal court said in bringing
an end to a long-running securities fraud suit.
An attorneys' fee request for 30% of the settlement fund -- $53.25
million -- is fair and reasonable, Judge William L. Campbell Jr.
said Thursday for the US District Court for the Middle District of
Tennessee.
The litigation against the health-care staffing company and
numerous individual defendants lasted more than six years and
involved extensive discovery, according to a Feb. 15, 2024 brief
seeking approval for the deal.
About Envision Healthcare Corporation
Envision Healthcare Corporation -- http://www.EnvisionHealth.com/
-- is a national medical group that delivers physician and advanced
practice provider services, primarily in the areas of emergency and
hospitalist medicine, anesthesiology, radiology, teleradiology and
neonatology. As a leader in ambulatory surgical care, AMSURG holds
ownership in more than 250 surgery centers in 41 states and the
District of Columbia, with medical specialties ranging from
gastroenterology to ophthalmology and orthopedics. In total, the
medical group offers a differentiated suite of clinical solutions
on a national scale with a local understanding of communities,
creating value for health systems, payers, providers and patients.
On May 15, 2023, Envision and affiliates filed voluntary petitions
for relief under Chapter 11 of the Bankruptcy Code (Bankr. S.D.
Tex. Lead Case No. 23-90342). Envision reported $1 billion to $10
billion in both assets and liabilities.
Judge Christopher M. Lopez oversees the cases.
The Debtors tapped Kirkland & Ellis, LLP and Kirkland & Ellis
International, LLP as bankruptcy counsels; Jackson Walker, LLP as
conflict counsel and co-counsel with Kirkland & Ellis; Alvarez &
Marsal North America, LLC as restructuring advisor; PJT Partners,
LP as investment banker; and KPMG, LLP as tax consultant. Kroll
Restructuring Administration, 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 Debtors' Chapter 11 cases. The
committee tapped White & Case, LLP as legal counsel and Force Ten
Partners, LLC as financial advisor.
Daniel T. McMurray is the patient care ombudsman appointed in the
Debtors' cases.
ENVIVA INC: U.S. Trustee Appoints Creditors' Committee
------------------------------------------------------
The U.S. Trustee for Region 4 appointed an official committee to
represent unsecured creditors in the Chapter 11 cases of Enviva,
Inc. and its affiliates.
The committee members are:
1. RWE Supply & Trading GmbH
Altenessener Strasse 27
Essen, 45141
Germany
2. Ryder Integrated Logistics
11690 NW 105th Street
Miami, FL 33178
3. Drax Power Limited
Drax Power Station
Selby, YO8 8PH
United Kingdom
Official creditors' committees serve as fiduciaries to the general
population of creditors they represent. They may investigate the
debtor's business and financial affairs. Committees have the right
to employ legal counsel, accountants and financial advisors at a
debtor's expense.
About Enviva Inc.
Headquartered in Bethesda, Md., Enviva Inc. --
https://www.envivabiomass.com -- is a producer of industrial wood
pellets, a renewable and sustainable energy source produced by
aggregating a natural resource, wood fiber, and processing it into
a transportable form, wood pellets. Enviva exports its wood pellets
to global markets through its deep-water marine terminals at the
Port of Chesapeake, Virginia, the Port of Wilmington, North
Carolina, and the Port of Pascagoula, Mississippi, and from
third-party deep-water marine terminals in Savannah, Georgia,
Mobile, Alabama, and Panama City, Florida.
Enviva Inc. and certain affiliates sought protection under Chapter
11 of the U.S. Bankruptcy Code (Bankr. E.D. Va. Lead Case No.
24-10453) on March 13, 2024. In the petition signed by Glenn T.
Nunziata, interim chief executive officer and chief financial
officer, Enviva Inc. disclosed $2,893,581,000 in assets and
$2,631,263,000 in liabilities.
Judge Brian F. Kenney oversees the cases.
The Debtors tapped Vinson & Elkins, LLP as general bankruptcy
counsel; Kutak Rock, LLP as local counsel; Lazard Freres & Co., LLC
as investment banker; Alvarez & Marsal Holdings, LLC as financial
advisor; and Kurtzman Carson Consultants, LLC as notice and claims
agent.
EVOFEM BIOSCIENCES: BPM LLP Raises Going Concern Doubt
------------------------------------------------------
Evofem Biosciences, Inc. disclosed in a Form 10-K Report filed with
the U.S. Securities and Exchange Commission for the fiscal year
ended December 31, 2023, that BPM LLP, the Company's auditor since
2023, 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
dated March 26, 2024, Walnut Creek, California-based BPM LLP said,
"The Company has suffered recurring losses from operations,
negative cash flows from operations since inception, has received a
notice of default for its convertible notes, and does not have
sufficient capital to repay such obligations, which are now
currently due and has a net capital deficiency that raise
substantial doubt about its ability to continue as a going
concern."
"We have incurred yearly losses and negative cash flows since our
inception, other than the net income of $53 million (excluding
deemed dividends) for the year ended December 31, 2023, which was
primarily attributable to a non-cash gain on debt extinguishment.
As of December 31, 2023, we had an accumulated deficit of $888.7
million. Negative cash flows from our operations are expected to
continue for the foreseeable future. To date, we have devoted
substantially all our financial resources to the development and
commercialization of Phexxi for hormone-free contraception and to
the development of EVO100 for the prevention of chlamydia and
gonorrhea and our other product candidates, as well as providing
general and administrative support for our operations. Our
utilization of cash has historically been highly dependent on these
development programs and the commercialization of Phexxi in the US.
In October 2022, we discontinued development of EVO100 and have no
plans to advance clinical development of this program or to
significantly invest in other clinical programs or product
candidates for the foreseeable future. We plan to allocate capital
to fund our continued commercialization efforts. Our cash expenses
will also continue to be dependent on the terms and conditions of
our contracts with service providers and any license partners," the
Company said.
"To date, we have financed our operations primarily through the
sale of equity securities, notes, warrants, convertible notes,
convertible preferred stock and through other debt arrangements.
The amount of our future net losses will depend, in large part, on
our ability to generate revenue from the sale of Phexxi, the rate
of our future expenditures and our ability to obtain additional
funding through equity or debt financings, strategic collaborations
or grants which may be particularly challenging or impossible in
light of market conditions. The commercialization and development
of biopharmaceutical products involves a substantial degree of
risk," the Company said.
The Company expects to continue to incur significant operating
expenses and to continue to incur significant losses for the
foreseeable future as it:
* incur sales, marketing, and distribution costs to
commercialize Phexxi;
* incur costs associated with the commercial manufacturing of
Phexxi;
* implement post-approval changes and process improvements to
manufacturing;
* seek regulatory and marketing approvals for Phexxi outside
the US;
* seek reimbursement for Phexxi or any product(s) we may
commercialize in the future
* continue our efforts to identify, assess, acquire, and/or
commercialize other products;
* work to close the Merger Agreement;
* make milestone, royalty or other payments under third-party
license agreements;
* make payments related to debt agreements;
* seek to maintain, protect, and expand our intellectual
property portfolio; and
* seek to attract and retain skilled personnel.
"The net losses we incur may fluctuate significantly from quarter
to quarter and year to year, such that a period-to-period
comparison of our results of operations may not be a good
indication of our future performance. Due to the recurring losses,
negative cash flows from operating activities since inception, and
net working capital at December 31, 2023, the report of our
independent registered public accountant on our consolidated
financial statements as of and for the year ended December 31, 2023
filed with this Annual Report on Form 10-K for the year ended
December 31, 2023 includes explanatory language describing the
existence of substantial doubt about our ability to continue as a
going concern. In addition, our management has further determined
that there is a substantial doubt about our ability to continue as
a going concern over the next 12 months from the filing date of
March 27, 2024," the Company said.
As of December 31, 2023, the Company had $10.6 million in total
assets, $72.5 million in total liabilities, $4.6 million in
commitments and contingencies, and $66.5 million in total
stockholders' deficit.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/3eke8txz
About Evofem Biosciences
Evofem Biosciences, Inc. is a San Diego-based commercial-stage
biopharmaceutical company with a strong focus on innovation in
women's sexual and reproductive health.
EVOKE PHARMA: Names Matthew D'Onofrio as New CEO
------------------------------------------------
Evoke Pharma, Inc. disclosed in a Form 8-K Report filed with the
U.S. Securities and Exchange Commission that on March 20, 2024, the
board of directors of the Company appointed Matthew J. D'Onofrio as
the Company's Chief Executive Officer, effective as of March 31,
2024.
D'Onofrio will succeed Dave A. Gonyer, R. Ph., the Company's
current Chief Executive Officer, who is resigning effective as of
March 31, 2024, for personal reasons. Gonyer's departure is not due
to any disagreement with the Company or on any matter related to
the Company's operations, policies, or practices. Gonyer has also
resigned as a member of the Board and D'Onofrio was appointed as a
member of the Board, in each case, effective as of March 31, 2024.
D'Onofrio is one the Company's co-founders and has served as our
President, Chief Operating Officer, Secretary and Treasurer since
February 2023 and in prior executive positions at the Company since
March 2007.
About Evoke Pharma
Headquartered in Solana Beach, California, Evoke Pharma, Inc. --
http://www.evokepharma.com-- is a specialty pharmaceutical company
focused primarily on the development of drugs to treat GI disorders
and diseases. The Company is developing Gimoti, a nasal spray
formulation of metoclopramide, for the relief of symptoms
associated with acute and recurrent diabetic gastroparesis.
Evoke Pharma reported a net loss of $7.79 million in 2023, a net
loss of $8.22 million in 2022, and a net loss of $8.54 million for
the year ended Dec. 31, 2021.
San Diego, California-based BDO USA, P.C., the Company's auditor
since 2014, issued a "going concern" qualification in its report
dated March 14, 2024, citing that the Company has suffered
recurring losses and negative cash flows from operations since
inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
EYEWEAR SHOP: Amends Oriental Bank Secured Claims Pay
-----------------------------------------------------
Eyewear Shop LLC submitted an Amended Disclosure Statement
describing Amended Plan of Reorganization dated March 19, 2024.
The Amended Disclosure Statement and Amended Plan does not alter
any rights of creditors, the only purpose of this amendment is to
consistently specify that the payments to Class 1 will be made
during 120 consecutive months.
The purpose of the Amended Disclosure Statement is to provide such
information as Debtor believes may be deemed necessary for its
creditors to make an informed decision in exercising their rights
to vote on Debtor's Amended Plan. Particularly, this Amended
Disclosure Statement describes the background of the events that
occurred before and the significant events during the bankruptcy
case.
Class 1 is for secured creditor Oriental Bank, which provides for a
secured amount of $70,161 payable in 120 monthly installments of
principal and annual interest at 11% of $966.47 is used as the
insured. The remainder of the claim of $164,923 is unsecured and is
treated in class 3.
The Amended Disclosure Statement does not alter the proposed
treatment for unsecured creditors and the equity holder:
* Class 2 consists of General unsecured claims in the amount
$10,000 or less (convenience class). One-time cash dividend of
$1,000, payable at effective date on a pro-rata basis over the
amount of allowed claims in this class. Currently, the cash
dividend represents 5.55% of the allowed claims within this class.
* Class 3 consists of General unsecured in the amount of
$10,001 or more. Monthly cash dividend of $250, beginning on the
effective date of the plan, during a period of 60 consecutive
months, distributed on a pro-rata basis over the amount of allowed
claims in this class. The sum of these 60 monthly payments is
$15,000 and currently represents 7.67% of the allowed claims within
this class.
* Class 4 consists of Equity Interest Holders. There will be
no distribution to this class.
Payments and distributions under the Plan will be funded by the
cash flow from future income of the Debtor.
A full-text copy of the Amended Disclosure Statement dated March
19, 2024 is available at https://urlcurt.com/u?l=WoCB5J from
PacerMonitor.com at no charge.
Attorney for the Debtor:
Carlos A. Ruiz Rodriguez, Esq.
Licenciado Carlos Alberto Ruiz, LLC
P.O. Box 1298
Caguas, PR 00726
Telephone: (787) 286-9775
Email: carlosalbertoruizquiebras@gmail.com
About Eyewear Shop
Eyewear Shop, LLC, operates an optical and lens store in San Juan,
Puerto Rico.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. D.P.R. Case No. 23-01967) on June 28, 2023,
with as much as $1 million in both assets and liabilities.
The Debtor tapped Carlos A. Ruiz Rodriguez, Esq., at Licenciado
Carlos Alberto Ruiz, LLC as bankruptcy counsel and Albert Tamarez
Vasquez, CPA, at Tamarez CPA, LLC as accountant.
FREE SPEECH SYSTEMS: Wants to Hire New Bankruptcy Lawyer
--------------------------------------------------------
Alex Wolf of Bloomberg Law reports that the owner of Alex Jones'
Infowars says its relationship with its lawyer has become so
strained that it needs to swap in someone else to complete its
bankruptcy.
Free Speech Systems LLC is prepared to part ways with attorney Ray
Battaglia and appoint a new lawyer to steer the company's Chapter
11 case to a close, chief restructuring officer J. Patrick Magill
told the US Bankruptcy Court for the Southern District of Texas in
a filing Tuesday, March 5, 2024. Magill said he agreed with
Battaglia's description of the pair's relationship as
"fundamentally broken," but for different reasons.
The shake-up of legal representation comes amid efforts by Free
Speech to advance a Chapter 11 plan of reorganization that would
create a trust to partially pay families of the 2012 Sandy Hook
Elementary School shooting victims, who hold $1.5 billion worth of
legal judgments against Jones and Infowars.
In a heavily-redacted brief, Magill said some of the allegations
lodged by Battaglia in his Feb. 29 motion to withdraw from the case
"appear to violate a Texas attorney's obligation of
confidentiality." Battaglia, in his motion, had discussed an
internecine dispute over whether the estate should pursue an
unspecified lawsuit.
Battaglia is mistaken about the scope of the CRO's role and
decision-making authority, Magill said. He proposed substituting
Battaglia with attorney Annie Catmull of O’ConnorWechsler PLLC,
which he said will advance the estate’s goals of bringing the
case to a speedy conclusion and making payments to creditors,
including the Sandy Hook families.
"Being bankruptcy counsel for FSS is not a desirable
representation," but Catmull is up to the task, Magill told the
court.
Battaglia represented Jones in a prior, involuntary bankruptcy case
brought against him by his ex-wife, according to court papers. That
case was ultimately dismissed.
Magill also asked the court to approve the company's application to
hire attorney Harold May as litigation counsel over an objection
lodged by litigation target PQPR Holdings, an Infowars vendor
managed by Jones’ father.
A hearing to approve the proposed bankruptcy plan for Free Speech
is scheduled to begin March 25, 2024.
The Sandy Hook families for years suffered unwarranted attacks from
Jones, who falsely called the 2012 massacre a hoax, using his
Infowars platform to amplify his claims. The families were awarded
state court judgments in 2022, facilitating the defendants'
bankruptcy filings.
Last month, the families voted 100% in favor of a Chapter 11 plan
for Jones that would liquidate and redistribute his property and
cash. The plan would preserve potential legal actions against other
parties affiliated with Jones and Infowars. The parties have
requested to hold a plan approval hearing in Jones'case in late
May.
The case is In re Free Speech Systems LLC, Bankr. S.D. Tex., No.
22-60043, response filed 3/5/24.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
FREE SPEECH: Chapter 11 Reorganization Doubtful, Says Trustee
-------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that te parent company of Alex
Jones' Infowars program appears unlikely to reorganize in
bankruptcy following an irreparable feud between the company's
chief officer and lead attorney, a court-appointed trustee said.
Efforts to rehabilitate Free Speech Systems LLC in Chapter 11 are
about to fail, trustee Melissa Haselden told the US Bankruptcy
Court for the Southern District of Texas in a one-page brief on
Sunday. The trustee's statement comes as Free Speech's chief
restructuring officer, Patrick Magill, is asking to replace lead
attorney Ray Battaglia after both men said their relationship was
"fundamentally broken."
The dispute, which was recently made public in a series of
heavily-redacted briefs, is raising questions about the company's
path out of bankruptcy and bid to settle about $1.5 billion in
claims held by the families of Sandy Hook School shooting victims
through a Chapter 11 plan. The company is scheduled to appear in
court on March 25 to seek approval of its proposed reorganization
plan, but it’s unclear how Battaglia's motion to withdraw and
Magill's bid to swap legal representation may affect the course of
the case.
"In the interest of transparency, the Trustee has concluded that
the case is quickly approaching, if it has not already arrived, at
a place in which a reorganization is not possible," Hadelden said
in Sunday's filing.
Free Speech has outstanding litigation filed against a dietary
supplement provider indirectly owned by Jones and his father,
accusing the Infowars vendor of receiving millions in insider
payments.
A group of Sandy Hook families said in a March 8 filing that
they're particularly concerned about an apparent accusation lodged
by Magill that Battaglia "was not independent, particularly with
respect to the debtor's sole shareholder, Alex Jones."
"The Connecticut families are bewildered by the various
finger-pointing that underlies the current dispute," the group
said. "But more importantly, they are concerned about the pattern
of dysfunction revealed by the pleadings and the fact that none of
these events were brought to the creditors' or the court's
attention in advance."
If the company is going to replace its counsel, it should do so at
minimal cost and object to Battaglia's fees if he acted under a
conflict of interest or refused to follow Magill's instructions,
the families said.
The parties are scheduled to appear in court Monday, March 11, 2024
afternoon regarding the requests to switch counsel.
Jones and his right-wing media company filed separate bankruptcy
cases in 2022 after losing state court defamation cases for calling
the 2012 school shooting a hoax.
The Sandy Hook families last month voted 100% in favor of a Chapter
11 plan for Jones that would liquidate and redistribute his
property and cash.
The trustee is represented by The Law Office of Liz Freeman.
The Connecticut families are represented by Paul Weiss Rifkind
Wharton & Garrison LLP, Koskoff Koskoff & Bieder PC, and Cain &
Skarnulis PLLC.
Free Speech's proposed counsel is O'ConnorWechsler PLLC.
The case is In re Free Speech Systems LLC, Bankr. S.D. Tex., No.
22-60043, brief filed 3/10/24.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
FREE SPEECH: PQPR Wants New Chapter 11 Trustee
----------------------------------------------
Alex Wolf of Bloomberg Law reports that an Alex Jones-related
company that sold dietary supplements he regularly hawked to his
Infowars audience moved to disempower an independent officer
running the bankruptcy of the media company's parent.
PQPR Holdings Limited LLC, a company managed and partially owned by
Jones' father, on Thursday, March 7, 2024, asked the US Bankruptcy
Court for the Southern District of Texas to appoint someone new to
take over the Chapter 11 case for Free Speech Systems LLC.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
FREE SPEECH: Trustee Asks for Mediation to Resolve Cases
--------------------------------------------------------
Alex Wolf of Bloomberg Law reports that the bankruptcy cases for
conspiracy theorist Alex Jones and his online media platform need a
judicial mediator to help facilitate a quick resolution with
families of Sandy Hook School shooting victims, a trustee said.
Judge Edward L. Morris of the US Bankruptcy Court for the Northern
District of Texas should be appointed on an emergency basis to
mediate negotiations in the closely tied Chapter 11 cases for Jones
and his company Free Speech Systems LLC -- which owns and operates
Jones' Infowars program -- trustee Melissa Haselden said in a court
filing Monday. Haselden was statutorily appointed to oversee Free
Speech's bankruptcy case in 2022, pursuant to bankruptcy rules for
small businesses.
If Judge Christopher Lopez accepts her request, families of Sandy
Hook victims could see a speedier resolution after winning $1.5
billion in state defamation judgments against Jones and his
Infowars platform for repeatedly calling the 2012 elementary school
shooting a hoax.
Haselden warned earlier this month that the company's prospects for
reorganizing in bankruptcy were doubtful after Free Speech's chief
restructuring officer moved to appoint a new lead attorney
following a feud with prior counsel over the direction of the
case.
The swap in legal representation was ultimately consensual, but
advanced pursuant to an agreement that the key parties involved in
both bankruptcy cases would meet for face-to-face negotiations to
speed up the proceedings.
Haselden told the US Bankruptcy Court for the Southern District of
Texas in her filing Monday, March 25, 2024, that Morris has agreed
to mediate two days of negotiations next month in Fort Worth, and
that his appointment should be approved in short order to allow the
parties "to commence conversations, prepare themselves for the
meeting and to make needed travel arrangements."
"These cases have been on file for more than a year," Haselden
said. "For a variety of reasons, a resolution of these cases needs
to be reached in short order."
The bankruptcy proceedings have been complicated by disputes over
how much Jones and Free Speech should ultimately pay, and the
filing of a lawsuit accusing an Infowars vendor owned by Jones and
his parents of receiving millions in insider payments.
Morris, who is willing to mediate the Houston bankruptcy cases in
his own district, "will greatly assist the parties in their
negotiations," Haselden said.
The trustee is represented by Elizabeth C. Freeman. Free Speech is
represented by O’ConnorWechsler PLLC. Jones is represented by
Crowe & Dunlevy PC. The creditors are represented by Akin Gump
Strauss Hauer & Feld LLP.
The case is In re Free Speech Systems LLC, Bankr. S.D. Tex., No.
22-60043, motion filed 3/25/24.
About Free Speech Systems
Free Speech Systems LLC is a broadcast media production and
distribution company that provides broadcasting aural programs by
radio to the public. Free Speech Systems is a family-run business
founded by Alex Jones.
FSS is presently engaged in the business of producing and
syndicating Jones' radio and video talk shows and selling products
targeted to Jones' loyal fan base via the Internet. Today, FSS
produces Alex Jones' syndicated news/talk show (The Alex Jones
Show) from Austin, Texas, which airs via the Genesis Communications
Network on over 100 radio stations across the United States and via
the internet through websites including Infowars.com.
Due to the content of Alex Jones' shows, Jones and FSS have faced
an all-out ban of Infowars from mainstream online spaces. Shunning
from financial institutions and banning Jones and FSS from major
tech companies began in 2018.
Conspiracy theorist Alex Jones has been sued by victims' family
members over Jones' lies that the 2012 Sandy Hook Elementary School
shooting was a hoax.
Jones' InfoW LLC and affiliates, IWHealth, LLC and Prison Planet
TV, LLC, filed petitions under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. S.D. Texas Lead Case No. 22-60020) on April
18, 2022.
The Debtors agreed to the dismissal of the Chapter 11 cases in June
2022 after the Sandy Hook victim families dismissed the three
bankrupt companies from their lawsuits.
Free Speech Systems filed a voluntary petition for relief under
Subchapter V of Chapter 11 of the Bankruptcy Code (Bankr. S.D. Tex.
Case No. 22-60043) on July 29, 2022. In the petition filed by W.
Marc Schwartz, as chief restructuring officer, the Debtor reported
assets and liabilities between $50 million and $100 million.
Melissa A Haselden has been appointed as Subchapter V trustee.
Alexander E. Jones filed for personal bankruptcy under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Tex. Case No. 4:22-bk-60043) on
Dec. 2, 2022, listing $1 million to $10 million in assets against
liabilities of $1 billion to $10 billion in liabilities.
Raymond William Battaglia, of Law Offices of Ray Battaglia, PLLC,
is FSS's counsel. Raymond W. Battaglia and Crowe & Dunlevy, P.C.,
led by Vickie L. Driver, Christina W. Stephenson, Shelby A. Jordan,
and Antonio Ortiz are representing Alex Jones.
FREEDOM PLUMBERS: Updates Unsecured Claims Pay; Plan Hearing May 14
-------------------------------------------------------------------
Freedom Plumbers Corporation submitted a First Amended Disclosure
Statement describing First Amended Plan of Reorganization dated
March 19, 2024.
The Debtor intends to operate its business continuing to be a
septic company with a plumbing division. Mr. Salinas, the CEO and
shareholder, works in excess of 40 hours weekly. Provided that he
retains the equity in the Debtor, Mr. Salinas intends to continue
to work for the Debtor post-confirmation.
Class 12 consists of General Unsecured Claims. Unsecured creditors
hold claims totaling $280,389.68. This class will be paid pro rata
at 10% on account of their claims over a 54-month period beginning
in month 7. Monthly payment amount shall be $519.24. The Debtor
will make payments to this class monthly. The Debtor can elect to
make the monthly payments on a quarterly basis for administrative
convenience.
The 10% dividend is an estimate. The actual amount may be more or
less depending on the outcome of any objections to claims, whether
creditors withdraw claims and/or whether claims that would normally
be classified in other classes ultimately are determined to be
members of this class. The Debtor is paying a 10% dividend based on
an estimated $280,389.68 in claims. If the percentage ultimately
paid is more or less than 10%, that shall not constitute a default
under the Plan.
Attached to the Disclosure Statement as Exhibit "F" is a chart
listing all creditors including General Unsecured Creditors. The
chart lists the scheduled amount for each creditor, the amount of
any proof of claim filed by such creditors and a reconciled amount
for such creditors with the reconciled amount being the amount of
such creditors' claims as reflected in such creditors' proofs of
claim. General Unsecured Creditors can view this chart to see the
amount of the estimated distribution to them based on the
percentage estimated.
Before a Class Member may add attorney's fees or other charges on
to its claim, the Bankruptcy Court must approve the allowability
and reasonableness of any such fee or charge, with a motion seeking
approval filed no later than 30 days following entry of the order
confirming the Plan. The failure to seek such timely review shall
constitute a waiver of all such fees and other charges.
Richard Salinas holds 100% of the equity interests in the Debtor,
and is its CEO and President, responsible for all of the day-to-day
operations of the business. As a practical matter, continued
operation of the business and payment of the Plan payments, require
his continued employment. Not later than 20 days prior to the
confirmation hearing, Mr. Salinas will contribute $20,000 to the
Debtor to assist in making payments due under the Plan on the
Effective Date to professionals. In exchange, he will obtain the
equity interest in the Reorganized Debtor.
Funding for the Plan will come from cash on hand, future revenues
of the Debtor and from a new value contribution of $20,000 by the
Debtor's principal in exchange for obtaining the equity in the
Reorganized Debtor.
The Bankruptcy Court has scheduled a hearing on Confirmation on the
Plan to commence on May 14, 2024, at 12:00 p.m., at the United
States Bankruptcy Court in Alexandria, Virginia, Courtroom III. For
a vote to count, the ballot must be received no later than May 7,
2024.
A full-text copy of the First Amended Disclosure Statement dated
March 19, 2024 is available at https://urlcurt.com/u?l=hVjp9h from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Steven R. Fox, Esq.
The Fox Law Corporation, Inc.
17835 Ventura Blvd., Suite 306
Encino, CA 91316
Telephone: (818) 774-4656
Telecopier: (818) 774-3707
Email: srfox@foxlaw.com
Local Counsel to Debtor:
Christopher L. Rogan, Esq.
ROGANMILLERZIMMERMAN, PLLC
50 Catoctin Circle, NE, Suite 300
Leesburg, VA 20176
Tel: (703) 777-8850
Fax: (703) 777-8854
Email: crogan@RMZLawFirm.com
About Freedom Plumbers
Freedom Plumbers Corporation is a Virginia corporation that was
formed in 2018 and engaged in the plumbing industry.
The Debtor filed a Chapter 11 petition (Bankr. E.D. Va. Case No.
23-11654) on Oct. 12, 2023, with $500,001 to $1 million in both
assets and liabilities.
The Debtor tapped Steven R. Fox, Esq., at The Fox Law Corporation,
Inc., as lead bankruptcy counsel and RoganMillerZimmerman, PLLC, as
local counsel.
FTX GROUP: CEO Ray Slams SBF's 'Zero' Harm Claims
-------------------------------------------------
Sidhartha Shukla of Bloomberg News reports that acting FTX CEO John
J. Ray III slammed claims made by his predecessor Sam Bankman-Fried
that customers of the exchange suffered "zero" harm and that no
money was lost when it collapsed in November 2022.
In a letter to US District Judge Lewis Kaplan, Ray branded
Bankman-Fried's claims as "categorically, callously, and
demonstrably false."
Bankman-Fried had argued in a statement on Tuesday that US
prosecutors' attempts to send him to prison for as long as 50 years
distorted reality by painting him as a "depraved super-villain."
Sam Bankman-Fried should spend 40 to 50 years in prison for
engaging in a massive fraud that sank his FTX crypto exchange,
Manhattan federal prosecutors argued, pushing back against a
request by defense counsel for a sentence of roughly six years,
according to Law 360.
About FTX Group
FTX was the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offered
various 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 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, Bankman-Fried 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.
FTX GROUP: Reaches Bankruptcy Deal w/ BlockFi for Up to $875-Mil.
-----------------------------------------------------------------
Alex Wolf of Bloomberg Law reports that FTX Trading Ltd. will
recognize $874.5 million in creditor claims asserted by BlockFi
Inc., resolving a thorny dispute that emerged between the two
cryptocurrency platforms when they each collapsed into bankruptcy.
The deal, announced Wednesday, March 6, 2024, in court filings,
provides BlockFi with a claim for about $689 million in loans owed
by FTX affiliate Alameda Research Ltd., of which $250 million will
be given priority repayment treatment. Additionally, FTX will
recognize about $185 million owed in BlockFi customer claims.
BlockFi will be able to collect on those claims following approval
of a Chapter 11 plan for FTX and Alameda.
About FTX Group
FTX was the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offered
various 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 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, Bankman-Fried 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.
About BlockFi Inc.
BlockFi Inc. says it's 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.
FTX GROUP: SBF Says 50-Year Sentence Only Fit for Super Villain
---------------------------------------------------------------
Rachel Graf of Bloomberg News reports that Sam Bankman-Fried said
US prosecutors' proposal to put him in prison for as long as 50
years "distorts reality" and paints him as a "depraved
super-villain."
Prosecutors have argued that a sentence ranging from 40 to 50 years
is necessary for the FTX co-founder's "historic" crime involving
more than 1 million victims and losses of more than $10 billion in
the collapse of his crypto empire.
The Manhattan US attorney argued to the judge who will sentence
Bankman-Fried on March 28 that he showed "unmatched greed and
hubris" and broke the law based on a "pernicious megalomania guided
by the defendant's own values and sense of superiority." The
government's request is far less than the 100 years recommended in
US criminal sentencing guidelines, but much more than the 6
1/2-years Bankman-Fried's lawyers suggested.
In a response Tuesday, the defense lawyers called the prosecutors'
filing "disturbing" and claimed the government "wants to break" the
32-year-old.
"With marked hostility, the memorandum distorts reality to support
its precious 'loss' narrative and casts Sam as a depraved
super-villain; it attributes to him dark and megalomaniacal motives
that fly in the face of the record; it makes apocalyptic prophecies
of recidivism; and it adopts a medieval view of punishment to reach
what amounts to a death-in-prison sentencing recommendation,"
Bankman-Fried's lawyers wrote. "That is not justice."
A jury in Manhattan convicted Bankman-Fried in November of seven
charges, including wire fraud and conspiracy. Prosecutors said he
directed the transfer of FTX customer money into Alameda Research,
an affiliated hedge fund, for risky investments, political
donations and expensive real estate before both companies collapsed
into bankruptcy in 2022. Before then, FTX was valued at $32
billion.
The case is US v. Bankman-Fried, 22-cr-00673, US District Court,
Southern District of New York (Manhattan).
About FTX Group
FTX was the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offered
various 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 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, Bankman-Fried 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.
FTX GROUP: Sentencing for Sam Bankman-Fried Set
-----------------------------------------------
Chris Dolmetsch and Greg Farrell of Bloomberg News report that Sam
Bankman-Fried, founder of FTX, is facing decades in jail as
prosecutors plug crypto loophole.
In the waning days of 2022, a month after the collapse of FTX,
federal prosecutors filed eight charges against Sam Bankman-Fried,
the face of the bubble-like crypto industry. Four of them involved
wire fraud.
Manhattan US Attorney Damian Williams was able to act quickly
because he relied on a law passed in the 1950s, decades before the
advent of the internet, email and the world of digital currencies.
Wire fraud, which applies when any form of electronic communication
is used, has become the weapon of choice to hone in on crypto crime
as the debate over whether crypto currencies are securities plays
out in court.
Prosecutions built around wire fraud as the most serious charge --
which include cases against Bankman-Fried and Theranos Inc. founder
Elizabeth Holmes -- have reached an all-time high even as overall
white-collar crime cases have dropped. In 2023, prosecutors used
wire fraud in more than 1,300 instances, up from about 900 in 2016,
according to Justice Department data compiled by Syracuse
University. That corresponds with a flurry of crypto cases last
year, including prosecutions linked to the collapse Celsius Network
LLC.
The government is using mail and wire fraud laws to fill in
loopholes where there are no existing statutes or regulations, said
Samuel Buell, a professor at Duke University Law School and a
former federal prosecutor.
"Regulators are fighting about where crypto fits, but while that's
going on, you can't have a bunch of people exploiting that gap to
commit fraud," he said. "That's where the mail and wire fraud
statutes come in."
Bankman-Fried, the 32-year-old FTX co-founder, is scheduled to be
sentenced on Thursday, March 28, 2024, following his October
conviction for his role in the collapse of the cryptocurrency
exchange. Prosecutors have recommended he get 40 to 50 years in
prison, while his attorneys have asked for 6 1/2 years or less.
Coinbase, OpenSea
Williams has used the law against others accused of misconduct with
digital assets, such as a former employee of digital token
marketplace OpenSea and a former manager of the cryptocurrency
exchange Coinbase Global Inc., both of whom received prison time
for trading on confidential information.
Bankman-Fried's sentencing comes as the US Securities and Exchange
Commission has had mixed results attempting to classify digital
assets as securities. In what's been seen by many as a loss for
the agency's jurisdiction, a federal judge ruled last year that
sales of Ripple Labs' XRP token to retail investors on exchanges
didn't amount to investment contracts. But another judge that same
month reached the opposite conclusion in the regulator's case
against Terraform Labs Pte. A trial in that case began Monday,
March 18, 20244.
Wire fraud charges are "incredibly powerful," and provide
advantages that other laws don't simply because of the statute'
breadth, said Sarah E. Paul, co-global head of corporate crime and
investigations at Eversheds Sutherland and a former prosecutor in
the Southern District of New York, who cited the OpenSea case as an
example.
Prosecutions of white-collar crime -- which include securities
fraud, antitrust violations and other illegal activity -- have
declined more than 56 percent over the last 20 years and reached a
new low in the 12 months ending Sept. 30, 2022, according to data
from a Syracuse University project that monitors trends in federal
law enforcement. While there was a slight uptick in the last fiscal
year, that number has declined in nearly every year since hitting a
two-decade high in 2011.
The rise of wire-fraud charges coincides with the "crypto winter"
of late 2022, when Bitcoin plunged to a two-year low of $15,485.
Crypto markets have rebounded dramatically over the last year and a
half. Bitcoin has surged more than 360% from its low in the wake of
FTX's bankruptcy in November 2022 and earlier this month it climbed
to a new record of $73,798, according to data compiled by
Bloomberg.
At least one judge has recognized the power of mail fraud statutes
-- a close cousin of wire fraud -- for decades. US District Judge
Jed Rakoff, who was nominated to the bench in 1995, wrote a paper
back in 1980 calling it the "true love" of prosecutors.
Colt .45, Louisville Slugger
"To federal prosecutors of white-collar crime, the mail fraud
statute is our Stradivarius, our Colt .45, our Louisville Slugger,
our Cuisinart -- and our true love," Rakoff wrote in the Duquense
Law Review. "We may flirt with other laws and call the conspiracy
law 'darling,' but we always come home to the virtues of the mail
fraud statute."
The law is "more versatile," as it allows prosecutors in many cases
to avoid having to address obstacles under other legal theories,
such as proving that a cryptocurrency is a security, said Jill E.
Fisch, a professor of business law at the University of
Pennsylvania Carey Law School. Fisch pointed to a 1987
insider-trading case involving leaked tips from a Wall Street
Journal column, in which the Supreme Court upheld a wire fraud
conviction but was divided on whether the conduct violated
securities law.
"The world of financial fraud has gotten more complicated," Fisch
said. "There are new instruments and there are new ways of
committing fraud. Historically, not just right now, prosecutors
have used the wire fraud statute in those periods of uncertainty or
transition."
Richard N. Wiedis, a partner with Diaz Reus in Washington, said
that wire fraud was "perfectly designed to cover a basic scheme
like the executives at FTX were running."
"Why go into securities fraud or bank fraud when you've just got
basic stealing?" said Wiedis, who was previously an assistant US
Attorney in the Justice Department's Fraud section.
About FTX Group
FTX was the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offered
various 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 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, Bankman-Fried 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.
FTX GROUP: Will Sell Majority of Its Startup Anthropic Stake
------------------------------------------------------------
Emily Nicolle of Bloomberg News reports that the estate of bankrupt
crypto exchange FTX is offloading about two-thirds of its 8% stake
in artificial intelligence startup Anthropic in a series of sales
worth $884 million. ATIC Third International Investment Company
LLC, a unit associated with the sovereign wealth fund Mubadala in
the United Arab Emirates, will buy close to $500 million of FTX's
shares in the business, according to a court filing.
About FTX Group
FTX was the world's second-largest cryptocurrency firm. FTX is a
cryptocurrency exchange built by traders, for traders. FTX offered
various 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 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, Bankman-Fried 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.
FTX TRADING: Plan Exclusivity Period Extended to May 13
-------------------------------------------------------
Judge John T. Dorsey of the U.S. Bankruptcy Court for the District
of Delaware extended FTX Trading Ltd. and its affiliates' exclusive
periods to file a chapter 11 plan and solicit acceptances thereof
to May 13 and July 11, 2024, respectively.
As shared by Troubled Company Reporter, the Debtors explain they
continue discussions with the U.S. Department of Justice with
respect to asset forfeitures and other governmental agencies
regarding voluntary subordination of governmental claims behind the
victims of the fraudulent activities of prepetition insiders. Given
improved projections as to distributable value, the Debtors also
remain in discussions with the Committee, the Ad Hoc Committee and
other key stakeholders regarding the terms of a final Plan and key
components of creditor recoveries, including, but not limited to
postpetition interest, exit liquidity and the resolution of
disputes about the legal nature of digital asset entitlements.
The Debtors assert that they continue to collaborate with key
stakeholders, including the Committee, the Ad Hoc Committee, FTX DM
and the JOLs. The forthcoming amended plan will reflect hard fought
consensus with respect to a range of challenging and complex issues
with each of these parties and numerous other stakeholders.
Accordingly, the relief requested herein will further the Debtors'
efforts to progress these Chapter 11 Cases in collaboration with
their creditors and other parties-in-interest.
The Debtors further assert that the request to extend the Exclusive
Periods is not intended to exert pressure on creditors or any other
interested party in these Chapter 11 Cases. To the contrary, the
Debtors propose extending the Exclusive Periods to permit the
Debtors to capitalize on the momentum they have built and to file
an amended plan that is the result of constructive discussions and
negotiations with the key stakeholders in these Chapter 11 Cases.
FTX Trading Ltd. and its affiliates are represented by:
Adam G. Landis, Esq.
Kimberly A. Brown, Esq.
Matthew R. Pierce, Esq.
LANDIS RATH & COBB LLP
919 Market Street, Suite 1800
Wilmington, DE 19801
Tel: (302) 467-4400
Email: landis@lrclaw.com
brown@lrclaw.com
pierce@lrclaw.com
- and -
Andrew G. Dietderich, Esq.
James L. Bromley, Esq.
Brian D. Glueckstein, Esq.
Alexa J. Kranzley, Esq.
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
Tel: (212) 558-4000
Email: dietdericha@sullcrom.com
bromleyj@sullcrom.com
gluecksteinb@sullcrom.com
kranzleya@sullcrom.com
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 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, Bankman-Fried 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
million 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.
GARAGE BUILDERS: April 18 Confirmation Hearing Set
--------------------------------------------------
Judge David M. Warren has entered an order that the disclosure
statement of Garage Builders of Raleigh, Inc., is conditionally
approved.
April 11, 2024, is fixed as the last day for filing and serving
written objections to the disclosure statement.
The hearing on confirmation of the plan will be on Thursday, April
18, 2024 at 11:00 AM in 300 Fayetteville Street, 3rd Floor
Courtroom, Raleigh, NC 27601.
April 11, 2024, is fixed as the last day for filing written
acceptances or rejections of the plan.
April 11, 2024, is fixed as the last day for filing and serving
written objections to confirmation of the plan.
About Garage Builders of Raleigh
Garage Builders of Raleigh, Inc., filed a Chapter 11 bankruptcy
petition (Bankr. E.D.N.C. Case No. 23-02416) on August 22, 2023,
disclosing under $1 million in both assets and liabilities.
The Debtor is represented by Stevens Martin Vaughn & Tadych, PLLC.
GEORGINA FALU: April 9 Disclosure Statement Hearing Set
-------------------------------------------------------
Judge Michael E. Wiles has entered an order that the hearing to
consider the approval of the amended disclosure statement of
Georgina Falu Co, LLC, will be held, in person, before the Hon.
Michael E. Wiles, United States Bankruptcy Judge, in Courtroom 617,
at the United States Bankruptcy Court for the Southern District of
New York, One Bowling Green New York, New York 10004, on April 9,
2024, at 10:00 a.m.
April 2, 2024 is fixed as the last day for filing and serving
written objections to the amended disclosure statement.
April 4, 2024 is fixed as the last day for the Debtor to file and
serve any replies to any written objections to the amended
disclosure statement.
About Georgina Falu Co
Georgina Falu Co, LLC, in New York, NY, filed its voluntary
petition for Chapter 11 protection (Bankr. S.D.N.Y. Case No.
23-11004) on June 27, 2023, listing $2,430,026 in assets and
$1,497,164 in liabilities. Georgina Falu as CEO, signed the
petition.
Judge Michael E. Wiles oversees the case.
THE LAW OFFICES OF CHARLES A. HIGGS serves as the Debtor's legal
counsel.
GIRARDI & KEESE: Feds, Defense Attys. to Delay Trial to August
--------------------------------------------------------------
Ryan Boysen of Law360 reports that disgraced attorney Tom Girardi's
criminal trial could now be pushed back from May to August 2024,
after prosecutors and Girardi's defense attorneys filed a mutual
request for a few more weeks of preparation in the closely watched
case.
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It
served clients in California in a variety of legal areas. It was
known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7
trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
An involuntary Chapter 7 petition was also filed against Thomas
Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter
7 trustee can be reached at:
Jason M. Rund
Email: trustee@srlawyers.com
840 Apollo Street, Suite 351
El Segundo, CA 90245
GIRARDI & KEESE: Tom Girardi's Fraud Trial Delayed to August 6
--------------------------------------------------------------
Emily Lever of Law360 reports that a California federal judge has
agreed to postpone disgraced California plaintiffs attorney Tom
Girardi's trial to August 6, 2024 setting the proceedings to begin
16 months later than originally required at the outset of the
case.
About Girardi & Keese
Girardi and Keese or Girardi & Keese was a Los Angeles-based law
firm founded in 1965 by lawyers Thomas Girardi and Robert Keese. It
served clients in California in a variety of legal areas. It was
known for representing plaintiffs against major corporations.
An involuntary Chapter 7 petition (Bankr. C.D. Cal. Case No.
20-21022) was filed in December 2020 against GIRARDI KEESE by
alleged creditors Jill O'Callahan, Robert M. Keese, John Abassian,
Erika Saldana, Virginia Antonio, and Kimberly Archie.
The petitioners' attorneys:
Andrew Goodman
Goodman Law Offices, Apc
Tel: 818-802-5044
E-mail: agoodman@andyglaw.com
Elissa D. Miller, a member of the firm SulmeyerKupetz, has been
appointed as Chapter 7 trustee for GIRARDI KEESE. The Chapter 7
trustee can be reached at:
Elissa D. Miller
333 South Grand Ave., Suite 3400
Los Angeles, California 90071-1406
Telephone: (213) 626-2311
Facsimile: (213) 629-4520
E-mail: emiller@sulmeyerlaw.com
An involuntary Chapter 7 petition was also filed against Thomas
Vincent Girardi (Case No. 20-21020) on Dec. 18, 2020. The Chapter
7 trustee can be reached at:
Jason M. Rund
Email: trustee@srlawyers.com
840 Apollo Street, Suite 351
El Segundo, CA 90245
GLOBAL FERTILITY: Files Amendment to Disclosure Statement
---------------------------------------------------------
Global Fertility & Genetics, New York, LLC, submitted First Amended
Disclosure Statement describing First Amended Plan of
Reorganization dated March 19, 2024.
This is a reorganization plan. In other words, the Proponent seeks
to accomplish payment under the plan from cash flow from its
business and from monetary and non-monetary contributions from its
equity holder.
This Plan proposes to pay all creditors in full upon the effective
date of the Plan rendering all creditors unimpaired. This Plan also
proposes to have the Debtor's current equity holder remain the sole
equity holder of the reorganized debtor, rendering the equity
holder unimpaired.
In an effort to remedy the problems that led to the bankruptcy
filing, the Debtor has endeavored to diversify its clientele and
that of KJD to increase its domestic patients, has expanded its
international marketing beyond China and has shored up its
relationship with KJD.
Additionally, the Debtor will receive, upon confirmation of the
Plan, a significant cash infusion from Holding, pursuant to the
terms of Holding's Operating Agreement that will ensure sufficient
capital to pay all claims in full, continue its operations, and be
sufficiently capitalized to thrive going forward.
Class 1 consists of liquidated, undisputed and noncontingent
general unsecured claims. Payment of 100% of the allowed general
unsecured claims to be paid on the effective date of the Plan. This
Class is unimpaired.
Class 2 consists of unliquidated, disputed or contingent general
unsecured claims. Payment of 100% of the allowed claims within 15
days of liquidation of such claims or within 15 days of resolution
of any disputes. This Class is unimpaired.
Holders of other general unsecured claims in Classes 1 and 2 are
unimpaired and their total amount of claims is still "to be
determined", according to the Amended Disclosure Statement.
This class of interest holders is comprised of the sole member of
the Debtor, GFG Holding Group Co., LLC. Holding will remain the
sole member of the Debtor and will contribute the funds necessary
to implement the Plan.
The Plan will be funded by cash on hand and contributions from the
Debtor's sole member, GFG Holding Group Co., LLC.
Holding, as the sole member of the Debtor, will contribute
sufficient funding to the Debtor to implement the Plan and provide
working capital sufficient to allow efficient business growth
(hereinafter, the "Holding Contribution").
A full-text copy of the First Amended Disclosure Statement dated
March 19, 2024 is available at https://urlcurt.com/u?l=HZMYxq from
PacerMonitor.com at no charge.
Counsel to the Debtor:
Michael J. Kasen, Esq.
Kasen & Kasen, PC
115 Broadway, 5th Floor
New York, NY 10006
Telephone (646) 397-6226
Email: mkasen@kasenlaw.com
About Global Fertility & Genetics
Global Fertility & Genetics, New York, LLC, is a reproductive
endocrinology and fertility center in New York.
The Debtor filed Chapter 11 petition (Bankr. S.D.N.Y. Case No.
23-10905) on June 6, 2023, with $289,407 in assets and $1,123,740
in liabilities. Judge Philip Bentley oversees the case.
Michael J. Kasen, Esq., at Kasen & Kasen, P.C., is theDebtor's
legal counsel.
David Crapo is the patient care ombudsman appointed in the Debtor's
Chapter 11 case.
GOLI NUTRITION: Gets CCAA Initial Stay Order; Deloitte as Monitor
-----------------------------------------------------------------
The Superior Court of Québec (Commercial Division) in Montreal,
Quebec, Canada (the Canadian Court) rendered an initial order (the
Initial Order) pursuant to the Companies' Creditors Arrangement Act
(Canada) (the CCAA) in respect of each of Goli Nutrition Inc.,
("Goli Canada"), and Goli Nutrition Inc., ("Goli US") ("Goli
Canada") ("Debtors") ("CCAA Proceedings").
Pursuant to the Initial Order, inter alia, Deloitte Restructuring
Inc. was appointed to monitor the business and financial affairs of
the Debtors in accordance with the CCAA and all proceedings against
the Debtors and their property were stayed until March 27, 2024.
Pursuant to the Initial Order, the Monitor was also authorized to
act as the "foreign representative" of the Debtors for purposes of
seeking protection and assistance from courts outside Canada in
connection with the CCAA Proceedings. In its capacity as foreign
representative, on March 19, 2024, the Monitor commenced cases for
each of the Debtors in the United States Bankruptcy Court for the
District of Delaware by the filing of a petition for recognition of
the CCAA Proceedings under section 1515 of the United States
Bankruptcy Code ("Chapter 15 Cases").
A hearing before the Canadian Court ("Transaction Approval
Hearing") to consider the approval of two transactions involving
the Debtors' business and assets will take place on April 9, 2024
at the Montreal Courthouse located at 1 Notre-Dame East Street,
Montreal, Québec, Canada at a time and in a room to be determined
by the Canadian Court. The Monitor will post the details for the
Transaction Approval Hearing once they are available on its website
at: https://www.insolvencies.deloitte.ca/goli.
At the Transaction Approval Hearing, the Debtors will seek orders
approving and in connection with the Proposed Transactions, which
can be summarily described as follows:
a) The Principal Transaction: an acquisition of substantially
all of Goli Canada's business and assets, except the Equipment, by
a purchaser group, which includes one of the Debtors' founders.
The Principal Transaction contemplates the continuation of the
Debtors’ business as a going concern.
The Principal Transaction is proposed to be implemented in
accordance with a Subscription Agreement entered into on March 15,
2024, between Goli Canada and the purchaser group, pursuant to
which a newly constituted entity will subscribe for new shares in
Goli Canada and effectively acquire 100% of the equity interest
therein. The Subscription Agreement is intended to be approved
pursuant to a reverse vesting order (RVO) and thereafter recognized
and enforced in the United States in the Chapter 15 Cases. Certain
excluded assets as well as certain contracts and liabilities of
Goli Canada (Excluded Contracts and Liabilities) will be vested out
of Goli Canada and transferred to a "Residual Co." as part of the
contemplated RVO structure. All liabilities and contracts that are
not Excluded Contracts and Liabilities will be retained by Goli
Canada. A copy of the proposed RVO relating to the approval of the
Subscription Agreement to the Initial Application and is available
on the Monitor's website.
b) The Equipment Transaction: the sale of certain manufacturing
equipment owned by Goli Canada and located in a facility in Norco,
California (the Equipment) to be conducted by a liquidator. The
Equipment Transaction is proposed to be implemented in accordance
with an Agency Agreement entered into on March 15, 2024, between
Goli Canada and the liquidator, pursuant to which the Equipment
will be marketed and sold free and clear of any encumbrances to one
or more purchasers and the proceeds will be remitted to Goli
Canada’s secured creditors. A copy of the proposed Liquidation
Order relating to the approval of the Agency Agreement to the
Initial Application and is available on the Monitor’s website.
Any party wishing to make representations at the Transaction
Approval Hearing can appear in person at the address identified
above or by videoconference via Teams. The permanent Teams links
for all rooms at the Montreal Courthouse can be accessed at the
following link: https://bit.ly/3PsEAey. Any person appearing at
the Transaction Approval Hearing must respect the applicable rules
of representation, which require, inter alia, that corporations be
represented by an attorney entitled to make representations before
the Canadian Court.
A comeback hearing on the Initial Application has also been
scheduled before the Canadian Court for March 27, 2024 at 9:30 a.m.
in room 16.11 of the Montreal Courthouse located at 1 Notre-Dame
East Street, Montreal, Québec, Canada.
Complete copies of the proceedings and other documents filed in the
CCAA Proceedings and the Chapter 15 Cases are available on the
Monitor’s website at https://www.insolvencies.deloitte.ca/goli.
If you are unable to access the Monitor's website, wish to be added
to the Service List in the CCAA Proceedings, or have any other
inquiries, a representative of the Monitor can be reached at
goliccaa@deloitte.ca.
Goli Nutrition Inc. -- https://goli.com -- sells and distributes
nutritional products and supplements.
GREENIDGE GENERATION: Delays Filing of 2023 Annual Report
---------------------------------------------------------
Greenidge Generation Holdings Inc. has filed with the Securities
and Exchange Commission a Notification of Late Filing on Form
12b-25 with respect to its Annual Report on Form 10-K for the
period ended Dec. 31, 2023. The Company has determined that it is
unable to file its Form 10-K within the prescribed time period
provided by the applicable rules of the Securities and Exchange
Commission without unreasonable effort and expense.
The principal reason for the delay is that recently identified
changes required to certain of the Company's accounting policies,
namely, its revenue recognition policy and the principal market
used to measure the fair value of its digital assets, have created
the need to conduct additional review prior to finalizing the
assessment and the audit of the Company's financial statements as
of and for the year ended Dec. 31, 2023. Notwithstanding the
Company's inability to file the Form 10-K within the prescribed
time period, the Company currently does not expect any material
changes to the financial results disclosed in the Company's
earnings release dated Feb. 1, 2024.
The Company is working diligently along with its external auditor
to complete its work processes and audit and expects to file the
Form 10-K within the grace period prescribed by Rule 12b-25 under
the Securities Exchange Act of 1934, as amended.
About Greenidge Generation
Greenidge Generation Holdings Inc. (NASDAQ: GREE) is a vertically
integrated power generation company, focusing on cryptocurrency
mining, infrastructure development, engineering, procurement,
construction management, operations and maintenance of sites.
Greenidge said in its Quarterly Report for the period ended Sept.
30, 2023, that given the uncertainty regarding the Company's
financial condition over the next 12 months from the date these
financial statements were issued, the Company has concluded that
there is substantial doubt about its ability to continue as a going
concern for a reasonable period of time.
Dallas, Texas-based Armanino LLP, the Company's auditor since 2021,
issued a "going concern" qualification in its report dated March
31, 2023, citing that the Company incurred a loss from operations
and generated negative cash flows from operations during the year
ended Dec. 31, 2022. These conditions raise substantial doubt
about the Company's ability to continue as a going concern.
HAWAIIAN HOLDINGS: PAR Entities Report 5.4% Equity Stakes
---------------------------------------------------------
PAR Investment Partners, LP, PAR Group II, LP, and PAR Capital
Management, Inc. disclosed in a Schedule 13G Report filed with the
U.S. Securities and Exchange Commission that as of March 11, 2024,
they beneficially owned 2,791,000 shares of Hawaiian Holdings,
Inc.'s common stock, representing 5.4% of the shares outstanding.
A full-text copy of the Report is available at
https://tinyurl.com/2p8khdvk
About Hawaiian Holdings
Headquartered in Honolulu, Hawaii, Hawaiian Holdings, Inc. provides
transportation services. As of September 30, 2023, Hawaiian
Holdings has $3,923,260 in total assets and $3,744,502 in total
liabilities.
* * *
On November 15, 2023, Egan-Jones Ratings Company retained its
'CCC-' foreign currency and local currency senior unsecured ratings
on debt issued by Hawaiian Holdings.
HEALTHIER CHOICES: Marcum LLP Raises Going Concern Doubt
--------------------------------------------------------
Healthier Choices Management Corp. disclosed in a Form 10-K Report
filed with the U.S. Securities and Exchange Commission for the
fiscal year ended December 31, 2023, that Marcum LLP, the Company's
auditor since 2017, 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
dated March 27, 2024, Saddle Brook, NJ-based Marcum LLP said, "The
Company has a working capital deficiency, has incurred significant
losses and needs to raise additional funds to meet its obligations
to sustain its operations. These conditions raise substantial doubt
about the Company's ability to continue as a going concern."
The Company has incurred recurring net losses and operations have
not provided cash flows. For the year ended December 31, 2023, the
Company reported a net loss of $18.5 million, compared to a net
loss of 7.2 million for the same period in 2022.
In view of these matters, there is substantial doubt about the
Company's ability to continue as a going concern. In order to
improve the Company's liquidity position, management's plans
include significantly reducing the use of outside consultants,
which would result in a reduction of over $1 million in general and
administrative expenses savings based on the actual spend for the
year ended December 31, 2023. The Company contracted a third party
consultant, whose expertise is streamlining operations, to identify
areas of improvement and cost savings. The Company will enact the
consultant's recommendation in anticipation of realizing savings
and achieving profitability. The Company plans on continuing to
expand via acquisition which will help achieve profitability. Also,
the Company is formulating plans to raise capital from outside
investors, as it has done in the past, to fund operating losses and
also provide capital for further business acquisitions. The result
of the capital raise is to improve the Company's operating and
financial performance. The success of these plans is dependent upon
various factors, foremost being the ability to reduce outside
consulting expenses and the ability to secure additional capital
from outside investors. There can be no assurance that such plans
will be successful.
As of December 31, 2023, the Company had $31 million in total
assets, $23.1 million in total liabilities, $1.1 million in
liquidation preference of Series E convertible preferred stock, and
$6.8 million in total stockholders' equity.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/496vmn5x
About Healthier Choices Management
Hollywood, FL-based Healthier Choices Management Corp. is a holding
company focused on providing consumers with healthier daily choices
with respect to nutrition and other lifestyle alternatives.
HERBALIFE: Moody's Lowers Unsecured Notes to B3
-----------------------------------------------
Moody's Ratings assigned a Ba2 rating to HLF Financing SaRL, LLC's
(HLF) proposed senior secured term loan B. Concurrently, Moody's
downgraded the senior unsecured notes ratings of HLF and Herbalife
Ltd. (Herbalife) to B3 from B2. Moody's affirmed Herbalife's B1
Corporate Family Rating, B1-PD Probability of Default rating, Ba2
rating on the proposed senior secured first lien revolver, and
affirmed the Ba2 rating on HLF's existing senior secured first lien
credit facility (revolver, term loan A and term loan B) and the Ba2
rating on the previously proposed senior secured term loan A. The
Speculative Grade Liquidity Rating of SGL-3 is unchanged. The
rating outlook remains negative.
Herbalife plans to utilize the proceeds from the proposed senior
secured term loan B and other secured debt sources to repay the
outstanding $236.1 million senior secured term loan A due March
2025, repay the outstanding $650.6 million senior secured term loan
B due August 2025, redeem $300 million principal outstanding of the
$600 million 7.875% unsecured notes due September 2025, and pay
fees and expenses related to the transaction. Herbalife is also
seeking to upsize its revolving credit facility. The refinancing
discussions are ongoing and the rating actions are based on
preliminary sources and uses. If the final capital structure does
not include the proposed term loan A, the rating will be
withdrawn.
Moody's affirmed the CFR because the transaction improves liquidity
by addressing the bulk of the company's significant 2025
maturities, and the company is taking steps to restore growth in
the distributor base, modernize its technology platforms, and
streamline costs. However, the proposed refinancing is forecasted
to result in meaningfully higher cash interest costs and lower free
cash flow that reduces the company's flexibility to reinvest in the
business and repay debt to reduce the high leverage. The rating is
thus weakly positioned and the company will need to execute well to
generate sufficient earnings growth to reduce leverage and maintain
free cash flow at levels expected for the rating.
The existing $330 million revolver expiring in March 2025 is being
upsized to $400 million, with the expiration extended to 2028. The
expiration will spring to March 2025 if the principal amount of the
2025 notes exceeds $200 million. After the proposed refinancing
transactions, the nearest debt maturity will be the estimated $300
million remaining portion of the 7.875% unsecured notes due
September 2025, and beyond that $278 million of 4.25% convertible
senior notes due June 2028. Moody's expects to withdraw the Ba2
ratings on the existing revolver, senior secured term loan A and
senior secured term loan B if the instruments are retired as
anticipated in conjunction with the refinancing. Moody's assumes in
the ratings that the company will issue an additional $700 million
of secured debt as outlined in the presentation to lenders in
addition to the proposed term loan B.
The ratings downgrade of the existing senior unsecured notes to B3
from B2 reflects Herbalife's intent to increase the mix of secured
instruments and use the proceeds to partially repay its senior
unsecured notes. This results in an increase in the amount of
secured debt that has effective priority to unsecured debt, and
reduces the expected recovery for the senior unsecured notes in the
event of a default.
RATINGS RATIONALE
Herbalife's B1 CFR broadly reflects its niche product and service
offering and its aggressive financial strategy due to a history of
debt financed share buybacks. The company offers meal replacement
products and customer support, aiding clients in weight management
and improved nutrition. Product volumes, distributor recruitment
and earnings benefited from the focus on nutrition and individuals
looking for income opportunities while staying at home during the
pandemic. Competition in the health and wellness industry and
broader work opportunities are now pressuring volumes, recruitment
and earnings. The implementation of digital tools to streamline
business and simplify transactions for distributors and customers
is a necessary strategy by Herbalife to stabilize and enhance
operations. However, these investments, while crucial for enhancing
the functionality of its digital tools, are also consuming cash and
weakening free cash flow in 2024. The global multi-level marketing
structure (MLM), under regulatory scrutiny for years, could face
challenges with a declining distributor count and the availability
of work-from-home flexible options. The long term risk for MLMs in
developing markets is high due to increasing retail penetration,
e-commerce activity, competition, and foreign exchange pressures,
which can gradually erode legacy distribution advantages.
Therefore, Herbalife needs to maintain stronger credit metrics than
similar companies with more stable and less risky business
profiles. The company suspended its share buyback policy in 2023
and is committed to achieving its gross leverage ratio target of 3x
(currently gross debt-to-credit agreement adjusted EBITDA was -3.9x
as of December 31, 2023 based on management's calculation) amid
weaker recruitment efforts and earnings pressures. Herbalife is in
the process of refinancing the bulk of its balance sheet, which is
expected to increase interest costs and reduce free cash flow
generation, with pro-forma debt-to-EBITDA leverage of 5.4x on a
Moody's adjusted basis and EBITA-to-interest below 2x in 2024.
Credit metrics are expected to improve in 2025 largely through
EBITDA growth as the cost savings the company identified as part of
its Transformation Program and new restructuring plan announced in
March 2024 are realized. The ratings are weakly positioned and are
based on Moody's expectation that the company will refinance the
2025 maturities at par and that its debt-to-EBITDA will improve to
a mid 4x range and EBITA-to-interest will increase to mid 2x range
in 2025.
The ratings are supported by consumer focus on health and wellness
including weight loss, product innovation, predictable free cash
flow, and excellent geographic diversity. The nutrition and
wellness sector is expected to witness strong long-term demand due
to an aging population, high obesity, and a continued focus on
wellness, though competition requires continual investment and new
products to avoid market share erosion. The ratings also reflect
Moody's expectation that the company will continue to generate free
cash flow of at least $100 million and utilize cash and free cash
flow to reduce its outstanding debt balance. Moody's also assumes
that Herbalife will continue to suspend all share buybacks until
management's gross leverage target of 3x is achieved.
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 $675
million and 100% of consolidated EBITDA, plus unlimited amounts
subject to 1.5x first lien net leverage ratio. There is no inside
maturity sublimit. The term sheet and existing credit agreement
allow for the designation/re-designation of restricted subsidiaries
as unrestricted.
The credit agreement is expected to include "J. Crew" and "Serta"
protection provisions.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The negative outlook reflects the high leverage and the execution
risk Herbalife faces to improve earnings and credit metrics over
the next 12 months given the uncertainty surrounding the timing and
successful execution of synergies and cost savings associated with
the company's Transformation Program and new restructuring plan
announced in March 2024. Higher than expected costs, weakening
demand for the company's products, and uncertainty relating to the
level of interest expense necessary to address all of the 2025
maturities could also weaken free cash flow and slow deleveraging.
Ratings could be upgraded if Herbalife achieves its targeted cost
savings and demonstrates sustained growth in sales and
profitability with good liquidity. The company would also need to
adhere to a more conservative financial strategy. Debt-to-EBITDA
sustained below 4x, EBITA-to-interest sustained above 2.5x and
retained cash flow (RCF)-to-net debt sustained in the mid-20% range
would also be necessary for an upgrade.
Ratings could be downgraded if liquidity weakens including the
approach of upcoming debt maturities, or if the cost of refinancing
maturities raises cash interest expense and weakens free cash flow.
An inability to stabilize and improve operating performance,
debt-to-EBITDA above 5x, EBITA-to-interest below 2x or free cash
flow below $100 million could also lead to a downgrade.
The principal methodology used in these ratings was Consumer
Packaged Goods published in June 2022.
Herbalife Ltd., founded in 1980 and based in Los Angeles, CA, is a
global nutrition company that sells weight management, targeted
nutrition, energy, sports and fitness, and outer nutrition products
to and through a network of independent members intended to support
a healthy lifestyle. The company operates through a multi-level
marketing system that consists of approximately 6.5 million global
members across 95 markets. Revenues for the fiscal year ended
December 31, 2023 for the publicly traded company were
approximately $5.06 billion.
HLF FINANCING: S&P Rates Term Loan B 'B+', On Watch Negative
------------------------------------------------------------
S&P Global Ratings assigned its 'B+' issue-level rating and '2'
recovery rating to HLF Financing S.a.r.l. LLC's (HLF) proposed $500
million term loan B facility reflecting its expectation for
substantial recovery (70%-90%; rounded estimate: 70%) in the event
of a payment default. Concurrently, S&P placed the rating on
CreditWatch with negative implications. S&P's ratings assume the
transactions will close substantially on the terms presented to
them.
S&P's 'B' issue-level rating on the senior unsecured debt is
unchanged with a '4' recovery rating (30%-50%; rounded estimate:
35%).
S&P said, "All our ratings on Herbalife remain on CreditWatch with
negative implications, where we placed them on March 20, 2024. Our
'B' issuer credit rating on Herbalife continues to reflect the
heightened refinancing risk given uncertainty around the company's
ability to successfully refinance its maturities on terms
consistent with the proposed transaction."
Herbalife needs to raise substantial debt to alleviate refinancing
risk and maintain a 'B' rating.
U.S.-based Herbalife Ltd. formally launched a refinancing process
for its term loan B due in August 2025. The company's overall
refinancing strategy will include upsizing its revolving credit
facility, issuing a new $500 million senior secured term loan B,
and $700 million of pari passu other senior secured debt, the last
of which S&P assumes will be launched over the near term.
Under the proposed transaction, Herbalife will repay its term loan
A ($236 million outstanding as of Dec. 31, 2023) due March 19,
2025; its term loan B ($651 million outstanding as of Dec. 31) due
Aug. 18, 2025; $300 million of its $600 million senior unsecured
notes due Sept. 1, 2025; and other miscellaneous debt, fees, and
expenses with the net proceeds from the proposed $500 million term
loan B and $700 million of other senior secured debt (to be
launched over the near term) and $100 million cash. Additionally,
Herbalife intends to upsize its revolving credit facility to $400
million (with $141 million pro forma borrowings) from $330 million
to potentially address upcoming debt maturities.
S&P said, "We assume the upsized revolver and proposed term loan B
will be subject to springing maturities if the balance of the
existing 2025 senior unsecured notes exceeds $200 million as of
March 2025 for the revolver (182 days prior to the Sept. 1, 2025,
maturity of the 2025 notes) and in June 2025 for the term loan B
(91 days prior to the maturity date of the 2025 notes).
"Pro forma for the proposed issuance, we forecast less free
operating cash flow (FOCF) by about $10 million in 2024 due to our
expectation for higher interest costs consistent with the terms of
the transaction. Final rates could differ meaningfully from the
proposed terms.
"Additionally, we assume the proposed $400 million revolver terms
to include a looser financial leverage covenant of 4.5x (compared
to 4.25x for the quarter ending March 31, 2024, stepping down to 4x
thereafter under the existing credit agreement). We believe this
will provide greater flexibility to draw on the revolver and repay
outstanding debt. Additionally, we assume the proposed revolver
terms will include three new financial covenants: minimum liquidity
(including revolving credit facility capacity plus accessible cash)
of $200 million, a first-lien net leverage ratio of 2.5x (with up
to $250 million cash netting), and a minimum interest coverage
ratio of 2x. Under our base case, we estimate the company will meet
these additional covenants over the next year.
"The CreditWatch negative status on the ratings, including the
rating of the proposed term loan B, reflects looming maturities
totaling $1.5 billion through 2025. We could lower the ratings up
to two notches in the next few months if Herbalife cannot refinance
its maturities on terms consistent with the proposed transaction.
We could affirm our ratings if the company refinances its debt
maturities on terms consistent with the proposed transaction,
including repaying the 2025 notes down to $300 million. This should
enable Herbalife to repay the notes down to the $200 million
springing maturity threshold on its bank facility with FOCF and
revolver borrowings. We could affirm the ratings shortly after a
successful refinancing."
JOANN INC: $400K CFO Cash Retention Bonus Before Chapter 11 Filing
------------------------------------------------------------------
Grace Noto of CFODrive reports that the board for craft and arts
retailer Joann approved a one-time $400,000 cash retention bonus
for its CFO Scott Sekella as it faces speculation of a looming
bankruptcy, according to a Thursday, March 14, 2024, filing with
the Securities and Exchange Commission. Last May 2023, Sekella was
also named co-lead of the interim office of the CEO upon the
retirement of Wade Miquelon, the company's former president and
CEO.
The Hudson, Ohio-based company also expanded its board of directors
from six members to seven, appointing Pamela Corrie as a director
effective March 13. In association with her appointment as an
independent director, Corrie will receive a fixed monthly cash fee
of $30,000, according to the filing.
Sekella's bonus is subject to repayment if he voluntarily
terminates his employment or if his employment is terminated for
cause, within six months of the bonus, the company said.
Dive Insight
A veteran retail executive who has worked at such companies as
Under Armour and Crocs as well as Henkel, Pfizer and Ford Motor
Company, Sekella joined the arts and crafts provider as its CFO in
September 2022, according to a company press release. In taking
Joann’s CFO seat, Sekella received an annual base salary of
$425,000 as well as a sign-on bonus of $235,085, according to the
company's most recent proxy statement.
The changes to the company's board and Sekella's bonus follow a
rough patch for Joann. In May, the retailer announced the
resignation of Miquelon, who departed after seven years in the
company's top seat following a "challenging" fiscal year, Industry
Dive sister publication Retail Dive reported. Joann appointed
Sekella as well as Chief Customer Officer Chris DiTullio to lead
the interim office of the CEO during the hunt for a permanent
successor.
Joann has faced cash flow and liquidity as well as inventory
challenges throughout the past year as it juggled a tough consumer
environment, leading to speculations that the retailer may soon
file for bankruptcy, according to a Bloomberg report citing people
familiar with the matter.
While the retailer saw a year-over-year improvement in e-commerce
sales as well as a bump in gross profit, net sales declined 4.1% to
$539.8 million YoY in the third fiscal quarter ended Oct. 28, 2023,
according to its most recent earnings report.
"In light of the uncertain consumer environment, we are working to
manage all aspects of the business prudently while leveraging our
read and react capabilities through advanced data analytics to
control what we can control and capitalize on new opportunities as
they arise," Sekella said in a statement included in the earnings
release.
The company also continued to execute on its cost improvement
initiatives, he said, identifying $200 million of targeted annual
cost savings across its supply chain, product and SG&A expenses —
a target it has increased to $225 million, he said. Joann also
completed a sale and leaseback transaction for its Hudson, Ohio
facility for the price of $34.5 million, according to the earnings
report.
However, the retailer's cash flow worries have continued, with
Joann beginning confidential talks with lenders in February for a
deal that would reportedly help to boost its cash reserves and
would include a Chapter 11 bankruptcy filing on the part of Joann,
Bloomberg reported. Negotiations are still ongoing, but the
retailer is reportedly seeking support from lenders that would
enable it to quickly exist from Chapter 11 in a pre-pack filing,
people familiar with the matter told Bloomberg.
About JOANN Inc.
JOANN operates in the fabric and sewing industry with one of the
largest assortments of arts and crafts products. JOANN has
transformed itself into a fully-integrated, digitally-connected
omni-channel retailer.
JOANN reported a net loss of $200.6 million for the year ended Jan.
28, 2023.
JOANN listed $2,257,700,000 in assets against $2,440,700,000 in
liabilities as of Oct. 28, 2023.
On March 18, 2024, JOANN Inc. and 9 affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 24-10418).
The Debtors tapped LATHAM & WATKINS LLP as legal counsel; HOULIHAN
LOKEY CAPITAL, INC., as investment banker; and ALVAREZ & MARSAL
NORTH AMERICA, LLC, as financial advisor. KROLL RESTRUCTURING
ADMINISTRATION LLC is the noticing agent.
JOANN INC: Aims for Quick Exit From Chapter 11
----------------------------------------------
Forbes reports that arts and crafts retailer Joann Inc. has filed
for Chapter 11 bankruptcy protection but expects to emerge from
administration within weeks.
The Ohio-based retailer announced that it had entered into what is
called a "transaction support agreement" (TSA) with the majority of
its financial stakeholders and is targeting a fast track turnaround
to go private.
The financial restructuring contemplated by the TSA will be
implemented through a pre-packaged court-supervised process in
which Joann will continue to operate in the ordinary course of
business. On completion of the process, progressed via the District
of Delaware, Joann will be owned by a number of its lenders and
industry parties and its shares will no longer be listed on the
Nasdaq, the company said in a statement today.
Joann added that it had received around $132 million in fresh
financing and said that it expects to reduce funded debt on its
balance sheet by approximately $505 million. According to its most
recent quarterly earnings release, the company is currently more
than $1 billion in debt.
Joann operates 829 stores across 49 states around the U.S. and its
stores and website will remain open for business during the Chapter
11 bankruptcy process.
About JOANN Inc.
JOANN operates in the fabric and sewing industry with one of the
largest assortments of arts and crafts products. JOANN has
transformed itself into a fully-integrated, digitally-connected
omni-channel retailer.
JOANN reported a net loss of $200.6 million for the year ended Jan.
28, 2023.
JOANN listed $2,257,700,000 in assets against $2,440,700,000 in
liabilities as of Oct. 28, 2023.
On March 18, 2024, JOANN Inc. and 9 affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 24-10418).
The Debtors tapped LATHAM & WATKINS LLP as legal counsel; HOULIHAN
LOKEY CAPITAL, INC., as investment banker; and ALVAREZ & MARSAL
NORTH AMERICA, LLC, as financial advisor. KROLL RESTRUCTURING
ADMINISTRATION LLC is the noticing agent.
JOANN INC: Approved for Quick Stint in Chapter 11
-------------------------------------------------
Steven Church of Bloomberg News reports that crafts retailer Joann
Inc. fabric and crafts retailer Joann Inc. won court approval for a
quicker-than-normal schedule to end its bankruptcy case after most
the company's lenders agreed to back a plan to cut debt in exchange
for equity.
US Bankruptcy Judge Craig Goldblatt agreed to hold a hearing next
month, April 2024, to decide whether to approve the debt-cutting
plan, which would reduce what Joann owes creditors by about $505
million; the company currently owes lenders more than $1 billion,
bankruptcy attorney Ted A. Dillman said during a court hearing
Tuesday, March 19, 2024.
Joann is taking advantage of rules that allow companies with
overwhelming support from creditors.
About JOANN Inc.
JOANN operates in the fabric and sewing industry with one of the
largest assortments of arts and crafts products. JOANN has
transformed itself into a fully-integrated, digitally-connected
omni-channel retailer.
JOANN reported a net loss of $200.6 million for the year ended Jan.
28, 2023.
JOANN listed $2,257,700,000 in assets against $2,440,700,000 in
liabilities as of Oct. 28, 2023.
On March 18, 2024, JOANN Inc. and 9 affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 24-10418).
The Debtors tapped LATHAM & WATKINS LLP as legal counsel; HOULIHAN
LOKEY CAPITAL, INC., as investment banker; and ALVAREZ & MARSAL
NORTH AMERICA, LLC, as financial advisor. KROLL RESTRUCTURING
ADMINISTRATION LLC is the noticing agent.
JOANN INC: Faces Nasdaq Delisting Amid Bankruptcy
-------------------------------------------------
JOANN, Inc. disclosed in a Form 8-K Report filed with the U.S.
Securities and Exchange Commission that on March 20, 2024, the
Company was notified by the Listing Qualifications Department of
The Nasdaq Stock Market LLC that Nasdaq had determined to delist
the Company's common stock, par value $0.01 per share.
Nasdaq reached its decision that the Company is no longer suitable
for listing pursuant to Nasdaq Listing Rules 5101, 5110(b), and
IM‑5101-1 as a result of the Company's commencement of voluntary
proceedings under Chapter 11 of the United States Bankruptcy Code
on March 18, 2024. The Company does not intend to appeal this
determination.
A Form 25-NSE will be filed with the Securities and Exchange
Commission, which will remove the Company's Common Stock from
listing and registration on Nasdaq.
About JOANN Inc.
JOANN operates in the fabric and sewing industry with one of the
largest assortments of arts and crafts products. JOANN has
transformed itself into a fully-integrated, digitally-connected
omni-channel retailer.
JOANN reported a net loss of $200.6 million for the year ended Jan.
28, 2023.
On March 18, 2024, JOANN Inc. and 9 affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 24-10418).
The Debtors tapped LATHAM & WATKINS LLP as legal counsel; HOULIHAN
LOKEY CAPITAL, INC., as investment banker; and ALVAREZ & MARSAL
NORTH AMERICA, LLC, as financial advisor. KROLL RESTRUCTURING
ADMINISTRATION LLC is the noticing agent.
JOANN listed $2,257,700,000 in assets against $2,440,700,000 in
liabilities as of Oct. 28, 2023.
JOANN INC: Okayed to Tap $95-Mil. of DIP Financing
--------------------------------------------------
Clara Geoghegan of Law360 reports that Joann Inc. can tap $95
million of DIP as it eyes quick Chapter 11.
Joann Inc., the retailer known as Joann Fabric and Crafts, received
a Delaware bankruptcy judge's approval Tuesday, March 19, 2024, on
a bundle of first-day motions, ahead of an impending bid for
confirmation of its prepackaged Chapter 11 plan to slash over half
a billion dollars of debt and let creditors take over the
reorganized business.
About JOANN Inc.
JOANN operates in the fabric and sewing industry with one of the
largest assortments of arts and crafts products. JOANN has
transformed itself into a fully-integrated, digitally-connected
omni-channel retailer.
JOANN reported a net loss of $200.6 million for the year ended Jan.
28, 2023.
JOANN listed $2,257,700,000 in assets against $2,440,700,000 in
liabilities as of Oct. 28, 2023.
On March 18, 2024, JOANN Inc. and 9 affiliates filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 24-10418).
The Debtors tapped LATHAM & WATKINS LLP as legal counsel; HOULIHAN
LOKEY CAPITAL, INC., as investment banker; and ALVAREZ & MARSAL
NORTH AMERICA, LLC, as financial advisor. KROLL RESTRUCTURING
ADMINISTRATION LLC is the noticing agent.
JRGC LLC: April 19, 2024 Evidentiary Hearing on Plan Set
--------------------------------------------------------
Judge Jason A. Burgess has entered an order that the Disclosure
Statement of JRGC, LLC is conditionally approved.
An evidentiary hearing will be held on April 19, 2024, at 9:00 a.m.
to consider and rule on the disclosure statement and any objections
or modifications and to conduct a confirmation hearing, including
hearing objections to confirmation. All parties may attend this
evidentiary hearing via Zoom or in person at Courtroom 4A, 300 N.
Hogan St., Jacksonville, Florida 32202.
Creditors and other parties in interest will file with the clerk
their written acceptances or rejections of the plan (ballots) no
later than seven days before the date of the Confirmation Hearing.
Any party desiring to object to the disclosure statement or to
confirmation will file its objection no later than seven days
before the date of the Confirmation Hearing.
About JRGC LLC
JRGC, LLC, a company in Tampa, Fla., owns multiple properties
having an aggregate value of $18.3 million.
JRGC filed a petition under Chapter 11, Subchapter V of the
Bankruptcy Code (Bankr. M.D. Fla. Case No. 23-04975) on Nov. 2,
2023, with $18,300,202 in assets and $9,714,612 in liabilities.
Jordan Ruben, managing member, signed the petition.
Buddy D. Ford, Esq., at Buddy D. Ford, P.A., is the Debtor's legal
counsel.
JSMITH CIVIL: Income & Lease Agreement Proceeds to Fund Plan
------------------------------------------------------------
JSmith Civil, LLC, filed with the U.S. Bankruptcy Court for the
Eastern District of North Carolina a Disclosure Statement
describing Chapter 11 Plan.
The Debtor, a limited liability company organized in February 2016
under the laws of the State of North Carolina, is a diversified
heavy civil construction company that provides commercial
contracting and site preparation services to projects across the
State of North Carolina.
The Bankruptcy Case was filed on September 19, 2023 to reorganize
the Debtor's assets and liabilities, and to stay collection actions
taken by various creditors, including the civil action that was
filed by First-Citizens Bank & Trust Company ("FCB") with the Wayne
County Superior Court (the "FCB Collection Action").
The Insurance Litigation, previously filed by the Debtor against
The Cincinnati Insurance Company and John Hackney Agency, Inc., for
previously-submitted and rejected claims for insurance coverage
under various insurance policies that were issued by The Cincinnati
Insurance Group, is currently pending before the Court. The Debtor
may continue, institute, or abandon such legal actions as the
Debtor deems necessary and which have not been expressly waived.
All Bankruptcy Causes of Action and Litigation Claims shall be
brought in the Bankruptcy Court and are to be governed by Rule 7001
et seq. of the Federal Rules of Bankruptcy Procedure. Any
compromise or other settlement of a controversy by the Debtor prior
to the Effective Date of the Plan shall be approved by the Court.
General Unsecured Claims are not secured by property of the estate
and are not entitled to priority under Section 507(a) of the
Bankruptcy Code. Under Section 1129(a)(15) of the Bankruptcy Code,
and if an Unsecured Creditor objects to the Plan, the Debtor either
pay the present value of that Unsecured Claim, in full, or make
distributions under the Plan totaling at least the value of
Debtor's net disposable income over the greater of: (i) 5 years; or
(ii) the time period during which the Plan provides for payments.
The terms of this Plan, including payments to Creditors set forth
hereunder, shall be derived from the following sources:
* Income and revenues generated from the post-Effective Date
performance of existing contracts and contracting services to third
parties, as well as collection of any accounts receivable for work
performed and completed by the Debtor;
* Proceeds generated from the Master Lease Agreements ("MLAs")
with Marks and Civil Contracting, approval of which will be sought
by the Debtor through Section 363 of the Bankruptcy Code or in
connection with confirmation of the Plan;
* Recovery of Employee Retention Tax Credit from the IRS, as
requested and sought in the IRS Adversary Proceeding currently
pending before the Court;
* Recoveries, if any obtained from the Litigation Claims set
forth in Part 6(B) of the Liquidation Analysis, as well as any
claims, causes of action or adversary proceedings filed by the
Debtor seeking to avoid, as preferential or fraudulent, any
prepetition transfer made by the Debtor within the four-year period
preceding the filing of the Bankruptcy Case.
* Proceeds generated and paid from the marketing and sale of
any of the Debtor's right, title, ownership, and interest in the
Assets, which include the real property, equipment, vehicles, and
personal property that the Debtor does not need in order to conduct
its business operations and affairs.
A full-text copy of the Disclosure Statement dated March 19, 2024
is available at https://urlcurt.com/u?l=NqjOp6 from
PacerMonitor.com at no charge.
Counsel for the Debtor:
Joseph Z. Frost, Esq.
Blake Y. Boyette, Esq.
BUCKMILLER, BOYETTE & FROST, PLLC
4700 Six Forks Road, Suite 150
Raleigh, NC 27609
Tel: (919) 296-5040
Fax: (919) 977-7101
Email: jfrost@bbflawfirm.com
bboyette@bbflawfirm.com
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 Sept. 19,
2023. In the petition filed by Jeremy Smith, as president, the
Debtor 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.
KAISER GYPSUM: High Court Considers Standing of Insurers in Ch. 11
------------------------------------------------------------------
Reuters reports that on Tuesday, March 19, 20224, the Supreme Court
heard oral argument in Truck Insurance Exchange v. Kaiser Gypsum
Company, Inc., a case that will influence claims and policyholders'
liabilities for which insurers may be called upon to defend or
provide indemnification. The issue to be decided is whether an
insurer with financial responsibility for a bankruptcy claim is a
"party in interest" that may object to a Chapter 11 plan of
reorganization.
A central point in the appeal is whether the bankruptcy doctrine of
"insurance neutrality" may be applied to exclude an insurance
company from raising objections to a plan of reorganization when
the plan ostensibly does not increase the insurer's liability
exposure above pre-bankruptcy levels.
The outcome of the Court's ruling in Truck Insurance Exchange will
have major implications for the resolution of mass tort claims in
Chapter 11. The decision will impact insurance providers as well as
companies seeking to rid themselves of mass tort liabilities in
Chapter 11 bankruptcy cases.
Chapter 11 of the Bankruptcy Code is a collective proceeding that
permits a debtor to achieve a comprehensive resolution of all its
liabilities, including mass tort claims. Congress created a
structure that encourages participation by those whose rights may
be affected. The applicable statutes are clear and broad in scope:
Any "party in interest" is empowered to "raise" and "appear and be
heard on any issue" in a Chapter 11 reorganization case.
Insurers often play an important, albeit indirect, role in
defending tort cases on behalf of their insureds. In fact, insurers
are at the center of mass tort bankruptcies. Bankruptcy
reorganizations that involve companies facing mass tort liabilities
often result in the establishment of a trust to resolve and pay
claims against a debtor. That trust is funded, at least in part,
with insurance proceeds. The trust is generally responsible for
administering a court-approved (and streamlined) procedure for
resolving tort claims and making distributions.
Unlike the tort system, the trust process established under a
Chapter 11 plan can alter the dynamics that normally exist between
an insurer and its policyholder. The previous alignment of
interests changes due to the bankrupt's desire to rid itself of
liability and limit its participation in the claims resolution
process. Indeed, debtors often have little or no incentive to fight
mass tort claims in bankruptcy cases because plans, which discharge
the debtor of liability, assume that payment to tort creditors will
come from the insurance company.
The goal of debtors is in fact to maximize the insurance proceeds
available to pay claims and to minimize an insurer's ability to
dispute coverage or challenge claim valuations. The concern of
insurers involved in mass tort bankruptcies is that a flood of
meritless or inflated tort claims will be allowed without scrutiny
and the economic obligor — the insurance company funding the
trust — will be left without meaningful recourse.
Factual background
Kaiser Gypsum Company, Inc. and Hanson Permanente used to sell
products containing asbestos. Facing over 38,000 asbestos-related
lawsuits, the companies sought refuge in Chapter 11. The debtors
proposed a reorganization plan to halt all litigation, channel tort
claims to a trust and move liability away from the debtors.
The viability of the Chapter 11 plan was dependent on general
insurance liability policies issued by the insurer to defend the
claims. The insurer was the only objector to the plan.
The insurance carrier opposed the plan due to perceived failures to
include provisions that would mitigate potential fraudulent claims
(for example, claims that may have received partial payment from an
alternate source or were otherwise inflated). The insurer contended
the plan's impact increases the insurer's economic exposure.
The bankruptcy court confirmed the Chapter 11 plan, finding it to
be "insurance neutral" and therefore not impacting the rights or
obligations of the insurance provider under existing policies. The
bankruptcy court refused to allow the insurer to participate in the
bankruptcy at all. The court declined to consider the merits of the
insurer's objections centering on the concerns that the plan
contained insufficient protections against fraudulent and excess
payments.
The matter involved multiple appeals, including a ruling last year
by the 4th U.S. Circuit Court of Appeals affirming the finding that
the insurer lacked standing to challenge the plan and was not a
"party in interest."
The 3rd U.S. Circuit Court of Appeals, in contrast, has recognized
that insurers should have an opportunity to challenge such a plan
since they are the ultimate payors and have cognizable injuries
that afford standing.
Positions of the parties
The debtors argued before the Supreme Court that the Chapter 11
plan was "insurance neutral," a finding supported by the rulings of
the lower courts that considered the issue.
The debtors contended that the insurer, which is bound under
existing policies to pay on claims up to its insurance limits, is
seeking to improve its position by mandating new protections not
provided for in its policies for resolving claims. The insurer is
therefore seeking to inject itself into bankruptcy proceedings when
its rights are not impaired and claiming an entitlement that it
does not currently have.
The insurer chided the lower courts for deciding it lacked standing
to be heard based upon judge-made limitations engrafted over the
express provisions of the Bankruptcy Code. The insurer argued to
the Court at the beginning of oral argument that it is the party in
interest in the bankruptcy case since it will be the one satisfying
the claims against the debtor's estate: "If anyone is entitled to
be heard it is the insurer who is paying all the claims."
The United States Government joined in the briefing to the Court
and supported the insurer's position, contending that the contracts
between the debtors and their insurers are property of the
bankruptcy estate. As such, the contracts must be either rejected,
assumed, or assigned in a Chapter 11 proceeding -- in any case,
impacting the interests of the counterparty. As the insurer is a
creditor and party in interest based upon its contracts, it should
be recognized as a party that has a bona fide interest in the
outcome of case.
Questioning by Court and implications
In arguments on March 19, the justices appeared sympathetic to the
position of the insurance company with respect to the fundamental
issue before the Court: "Who can be heard?" in a Chapter 11
proceeding.
The members of the Court peppered the insurer with challenging
questions about when the party-in-interest standard is to be
determined, at the beginning of the bankruptcy case or at some
other point in time given the fluid nature of bankruptcy.
Hypotheticals were also posed to counsel about whether someone
could be a party in interest if it had not reason to believe that
the plan would impact it in any way.
It became clear that the Justices were not receptive to the
debtors' argument that the insurer is unimpaired with interests too
attenuated to be afforded standing to object to the plan. Justice
Elena Kagan indicated in her remarks to debtors' counsel that "What
everybody is saying to you, is 'well [the insurer does] have an
interest,' not just a concern but a material interest.'" Justice
Brett Kavanaugh observed that the debtors simply do not want the
insurers "to be heard" at all and that it was "just common sense
that an insurer ... is going to have an interest."
The issue of who can object to a plan of reorganization or
otherwise participate in a Chapter 11 bankruptcy case is
significant:
* The stakes in Truck Insurance Exchange are high for the U.S.
tort system. The Supreme Court's ultimate decision will add
clarity, and undoubtedly a new dynamic, to mass tort bankruptcies,
as organizations such as the Boy Scouts of America, the Catholic
Dioceses and Purdue Pharma developed bankruptcy plans that
addressed the avalanche of tort claims each was facing -- all were
dependent upon funding from insurance policies.
* The ramifications of denying insurance companies that have an
undeniable economic stake in the outcome of a Chapter 11 bankruptcy
case the right to participate and, yes, even object, is significant
in cases where mass tort claims and insurance are at issue. The
questioning at oral argument by the Justices did not seem to favor
a process that excludes an interested party and leaves the very
insurer whose policies were central to the resolution of the case
out of the claims resolution process that could increase the
prospect of inflated and meritless claims.
The ultimate question in Truck Insurance Exchange v. Kaiser Gypsum
Co. is whether insurers have a big enough stake in bankruptcy plans
to have the right to challenge them (or at least be heard). The
Supreme Court will examine the statutory text of the Bankruptcy
Code in light of the standards required by Article III of the U.S.
Constitution as well as the effects of the plan and undoubtedly
clarify the "party in interest" requirement for standing —
focusing on whether the insurer has an interest sufficient enough
to have a voice.
About Kaiser Gypsum
Kaiser Gypsum Company, Inc.'s principal business consisted of
manufacturing and marketing gypsum plaster, gypsum lath and gypsum
wallboard. It has no current business operations other than
managing its legacy asbestos-related and environmental liabilities.
Kaiser Gypsum has no material tangible assets.
Hanson Permanente Cement, Inc.'s primary business was the
manufacture and sale of Portland cement products. It is a
wholly-owned, indirect subsidiary of non-debtor Lehigh Hanson,
Inc.
HPCI is the direct parent of Kaiser Gypsum as well as non-debtor
Hanson Micronesia Cement, Inc. and non-debtor Hanson Permanente
Cement of Guam, Inc., the operating subsidiaries. Non-debtor
Permanente Cement Company, which has no assets or operations, is
also a wholly-owned subsidiary of HPCI.
Kaiser Gypsum and HPCI sought protection under Chapter 11 of the
Bankruptcy Code (Bankr. W.D.N.C. Case Nos. 16-31602 and 16-10414)
on Sept. 30, 2016. Charles E. McChesney, II, vice president and
secretary, signed the petitions.
The Debtors tapped Rayburn Cooper & Durham P.A. and Jones Day as
their bankruptcy counsel, NERA Economic Consulting as consultant,
and PricewaterhouseCoopers LLP as financial advisor. Cook Law Firm
P.C., K&L Gates LLP and Miller Nash Graham & Dunn LLP serve as
special counsel.
At the time of the bankruptcy filing, the Debtors estimated their
assets and liabilities at $100 million to $500 million.
The U.S. Bankruptcy Administrator for the Western District of North
Carolina appointed an official committee of unsecured creditors.
The creditors' committee hired Blank Rome LLP and Moon Wright &
Houston, PLLC as bankruptcy counsel.
The official committee representing asbestos personal injury
claimants retained Caplin & Drysdale, Chartered as its legal
counsel.
Lawrence Fitzpatrick, the future claimants' representative, tapped
Young Conaway Stargatt & Taylor, LLP as his bankruptcy counsel,
Alexander Ricks PLLC as local counsel, and Ankura Consulting Group,
LLC as claims evaluation consultant.
KEVIN CONCANNON: Plan Exclusivity Period Extended to May 28
-----------------------------------------------------------
Judge Christopher Lopez of the U.S. Bankruptcy Court for the
Southern District of Texas extended Kevin Concannon, LLC d/b/a
Lifeline Pharmacy's exclusive periods to file a chapter 11 plan of
reorganization and obtain acceptance thereof to May 28 and July 29,
2024, respectively.
As shared by Troubled Company Reporter, the Debtor has made
substantial progress towards settlements with the Debtor's other
significant stakeholders. Over the past several months, the Debtor
has been negotiating and documenting settlements with the merchant
cash advance ("MCA") lenders that are some of the Debtor's other
largest creditors. During the extended Exclusive Periods, the
Debtor hopes to finalize the settlements with the MCA lenders,
which will potentially result in a consensual plan of
reorganization.
The Debtor explains that the Chapter 11 case is complex. As of the
First Exclusivity Order, the Debtor, the LP 1 Parties and McKesson
entered into an agreement to mediate with Judge Schmidt. and the
court entered an order appointing him as mediator. Pursuant to the
Agreed Order regarding Mediation, the parties also agreed to
standstill with respect to further litigation and contested
hearings while they attempted to settle. As the Court is familiar
from prior contested hearings in this case, the parties' varying
rights and legal positions add complexity to the settlement
negotiations.
Moreover, the Debtor operates in the inherently complex
pharmaceutical industry. As detailed in the First Exclusivity
Motion, in the first few months of this Chapter 11 case, the Debtor
has not been idle. Rather, it has taken important actions to
maximize value and lay the groundwork to be able to execute on a
restructuring strategy efficiently.
Kevin Concannon, LLC is represented by:
Patrick J. Neligan, Jr., Esq.
Douglas J. Buncher, Esq.
Neligan LLP
4851 LBJ Freeway, Suite 700
Dallas, TX 75244
Telephone: (214) 840-5300
Email: pneligan@neliganlaw.com
dbuncher@neliganlaw.com
- and -
Robert L. Rattet, Esq.
James B. Glucksman, Esq.
John D. Molino, Esq.
Davidoff Hutcher & Citron LLP
605 Third Avenue
New York, NY 10158
Telephone: (914) 381-7400
Email: rlr@dhclegal.com
jbg@dhclegal.com
jdm@dhclegal.com
About Kevin Concannon LLC
d/b/a Lifeline Pharmacy
Kevin Concannon, LLC is a locally owned pharmacy serving the
Edinburg, McAllen, Mission, San Juan, Alamo, Elsa, Alton, Weslaco,
Pharr, Hidalgo, Mercedes, Donna, Palmview, La Joya, Penrtas,
Palmhurst and the surrounding areas.
The Debtor sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. Tex. Case No. 23-90759) on August 2,
2023. In the petition signed by Kevin Concannon, manager, the
Debtor disclosed up to $50 million in both assets and liabilities.
Judge Christopher M. Lopez oversees the case.
Patrick J. Neligan Jr., Esq., at Neligan LLP, represents the Debtor
as legal counsel.
L'ADRESSE LLC: Unsecureds to Recover 20% via Quarterly Payments
---------------------------------------------------------------
L'Adresse, f/k/a Coffeemania Bryant Park, LLC, filed with the U.S.
Bankruptcy Court for the Southern District of New York a Disclosure
Statement for the Plan of Reorganization dated March 19, 2024.
The Debtor operates a publicly acclaimed restaurant styled as an
"American Bistro" located in Bryant Park in Manhattan.
The Debtor was severely impacted by the 2020-2021 Covid 19 Pandemic
and shutdown which caused the Debtor to fall in substantial arrears
with its landlord. The Debtor was unable to work out a deal with
the landlord once it was able to reopen in November 2022. The
landlord obtained a judgment authorizing the issuance of a warrant
of eviction and entry of a money judgment.
The Debtor has continued to operate its business during the Chapter
11 case. As a result of the Debtor's improvement in operations, the
Debtor is now in a position to successfully emerge from Chapter 11
and effectuate the Plan. Since entry of the order, the Debtor and
landlord have continued to engage in numerous discussions
concerning the lease.
Class 5 consists of 18 holders of Allowed General Unsecured Claims.
This Class total approximately $240,708.91. This class will be paid
$50,000.00 or 20% of its Allowed Claims with quarterly payments
commencing within 30 days of the effective date of the Plan without
interest. This class will receive a total of $50,000.00 payable in
twenty equal, consecutive, quarterly payments of $2,500.00 each
commencing 30 days after the effective date of the plan. The
general unsecured creditors are impaired.
L'Adresse North America, Inc., the sole member of the Debtor's LLC
has contributed $50,000.00 of new value to the Debtor and shall
retain its 100% interest in the Debtor.
The Plan shall be effectuated from a new value contribution of
$50,000.00 by the sole member of the Debtor. The balance of the
payments are to be funded from ongoing business operations.
A full-text copy of the Disclosure Statement dated March 19, 2024
is available at https://urlcurt.com/u?l=L87VFC from
PacerMonitor.com at no charge.
Attorneys for the Debtor:
Heath S. Berger, Esq.
Berger Fischoff Shumer Wexler & Goodman LLP
6901 Jericho Turnpike #230
Syosset, NY 1179
Phone: 800-806-1136
Email: hberger@bfslawfirm.com
About L'Adresse, LLC
L'Adresse, LLC sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. S.D. N.Y. Case No. 22-11583-jlg) on
November 29, 2022. In the petition signed by Evgeny Zhuravlev,
managing member, the Debtor disclosed up to $500,000 in assets and
up to $10 million in liabilities.
L'Adresse, LLC operates a publicly acclaimed restaurant styled as
an "American Bistro" located in Bryant Park in Manhattan. L'Adresse
operates seven days a week serving breakfast, lunch and dinner.
A separate sister restaurant is located in Nomad and is not part of
the proceeding.
Judge James L. Garrity, Jr. oversees the bankruptcy case.
Heath S. Berger, Esq., at Berger, Fischoff, Shumer, Wexler &
Goodman, LLP, is the Debtor's legal counsel.
LADRX CORP: Weinberg & Company Raises Going Concern Doubt
---------------------------------------------------------
LadRx Corp. disclosed in a Form 10-K Report filed with the U.S.
Securities and Exchange Commission for the fiscal year ended
December 31, 2023, that Weinberg & Company, the Company's auditor
since 2019, 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
dated March 27, 2024, Los Angles, CA-based Weinberg & Company said,
"The Company has no recurring source of revenue, has incurred
recurring operating losses and negative operating cash flows since
inception and has an accumulated deficit at December 31, 2023.
These matters raise substantial doubt about the Company's ability
to continue as a going concern."
During the year ended December 31, 2023, although the Company
realized a net income of $0.4 million, the Company had a loss from
operations of $3.8 million, and incurred a net loss of $4.2 million
for the year ended December 31, 2022, and had total stockholders'
equity as of December 31, 2023 of $0.1 million. The Company has no
recurring revenue, and it is likely to continue to incur losses
unless and until it concludes a successful strategic partnership or
financing for its LADR technology. As a result, management has
concluded that there is substantial doubt about the Company's
ability to continue as a going concern.
"In order to fund our business and operations, we have relied
primarily upon sales of our equity securities, including proceeds
from the exercise of stock options and common stock purchase
warrants and long-term loan financing. We also have received
limited funding from our strategic partners and licensees. We will
ultimately be required to obtain additional funding in order to
execute our long-term business plans, although we do not currently
have commitments from any third parties to provide us with
long-term debt or capital. We cannot assure that additional funding
will be available on favorable terms, or at all. If we fail to
obtain additional funding when needed, we may not be able to
execute our business plans and our business may suffer, which would
have a material adverse effect on our financial position, results
of operations and cash flows. We have approximately $1 million of
contractual obligations in 2024 and expect to pay these out of the
Company's balance sheet cash. We have a total of approximately $1
million in material contractual obligations beyond 2024," the
Company said.
"We have no commitments from third parties to provide us with any
additional financing, and we may not be able to obtain future
financing on favorable terms, or at all. Failure to obtain adequate
financing would adversely affect our ability to operate as a going
concern. If we raise additional funds by issuing equity securities,
dilution to stockholders may result and new investors could have
rights superior to some or all of our existing equity holders. In
addition, debt financing, if available, may include restrictive
covenants. If adequate funds are not available to us, we may have
to liquidate some or all of our assets or to delay or reduce the
scope of or eliminate some portion or all of our development
programs or clinical trials," the Company said.
As of December 31, 2023, the Company has $2.3 million in total
assets, $2.2 million in total liabilities, and $107,354 in total
stockholders' equity.
A full-text copy of the Company's Form 10-K is available at
https://tinyurl.com/2s43m827
About LadRx Corp
LadRx Corporation is a biopharmaceutical research and development
company specializing in oncology. The Company's focus is on the
discovery, research and clinical development of novel anti-cancer
drug candidates that employ novel technologies that target
chemotherapeutic drugs to solid tumors and reduce off-target
toxicities.
LEXARIA BIOSCIENCE: Amends Intellectual Property License Agreement
------------------------------------------------------------------
Lexaria Bioscience Corp. disclosed in a Form 8-K Report filed with
the U.S. Securities and Exchange Commission that its wholly-owned
subsidiary Lexaria Hemp Corp. ("Hempco") and Premier Anti-Aging
Co., Ltd. ("Parentco") agreed to amend the Intellectual Property
License Agreement from being an exclusive perpetual license to a
non-exclusive license having a renegotiable term that ends on
August 31, 2025. Pursuant to this amended agreement, Hempco and
Parentco have agreed to reduce the associated Territory and minimum
fees as follows:
Quarter Combined Territory and Minimum
Fee (US$)
May 31, 2024 84,000
Aug. 31, 2024 84,000
Nov. 30, 2024 174,000
Feb. 28, 2025 174,000
May 31, 2025 174,000
Aug. 31, 2025 174,000
The amended agreement was signed by all parties on March 21, 2024
and has an effective date of March 15, 2024.
On May 20, 2022, Lexaria, through its wholly-owned subsidiary
Lexaria Hemp Corp., entered into a Definitive Intellectual Property
License Agreement with Premier Wellness Science Co., Ltd. a
Japanese based R & D and product development company in the field
of health, beauty, anti-aging and sports (the "Hempco Agreement")
pursuant to which Premier licensed the perpetual, exclusive rights
to utilize Lexaria's patented DehydraTECH technology with hemp
ingredients containing no more than 0.01% THC to produce consumable
non-liquid, consumable liquid and topical skin products in Japan.
The Hempco Agreement provided for quarterly territory fees
commencing with the quarter ended Aug. 31, 2023 and minimum fees of
$16,875 per quarter commencing with the quarter ended November 30,
2022 with the minimum fees increasing to US$60,000 per quarter
commencing with the quarter ended November 30, 2023, increasing
again to US$150,000 per quarter commencing with the quarter ended
November 30, 2024 and increasing again to US$332,500 per quarter
commencing with the quarter ended November 30, 2025.
On November 1, 2023, Premier was acquired and merged into its
parent company Premier Anti-Aging Co., Ltd. ("Parentco") and
Parentco assumed the rights and obligations of the Hempco
Agreement.
About Lexaria
Lexaria Bioscience Corp. -- http://www.lexariabioscience.com-- is
a biotechnology company developing the enhancement of the
bioavailability of a broad range of fat-soluble active molecules
and active pharmaceutical ingredients using its patented
DehydraTECH drug delivery tecnnology. DehydraTECH combines
lipophilic molecules or APIs with specific long-chain fatty acids
and carrier compounds that improve the way they enter the
bloodstream, increasing their effectiveness and allowing for lower
overall dosing while promoting healthier oral ingestion methods.
Lexaria Bioscience incurred a net loss of $6.71 million for the
year ended Aug. 31, 2023, a net loss of $7.38 million for the year
ended Aug. 31, 2022, a net loss and comprehensive loss of $4.19
million for the year ended Aug. 31, 2021, a net loss and
comprehensive loss of $4.08 million for the year ended Aug. 31,
2020, and a net loss and comprehensive loss of $4.16 million for
the year ended Aug. 31, 2019. As of Nov. 30, 2023, the Company had
$3.63 million in total assets, $254,040 in total liabilities, and
$3.37 million in total stockholders' equity.
Since inception, the Company has incurred significant operating and
net losses. Net losses attributable to shareholders were $1.2
million and $1.8 million for the quarters ended November 30, 2023
and 2022, respectively. As of November 30, 2023, the Company had an
accumulated deficit of $46.9 million. The Company expects to
continue to incur significant operational expenses and net losses
in the upcoming 12 months. The Company's net losses may fluctuate
significantly from quarter to quarter and year to year, depending
on the stage and complexity of its R&D studies and corporate
expenditures, additional revenues received from the licensing of
its technology, if any, and the receipt of payments under any
current or future collaborations it may enter into. The recurring
losses and negative cash flows from operations raise substantial
doubt as to the Company's ability to continue as a going concern,
the Company said in its Quarterly Report for the period ended Sept.
30, 2023.
LTL MANAGEMENT: J&J Surprised by Talc Plaintiffs' Ties With Atty.
-----------------------------------------------------------------
George Woolston of Law360 reports that Johnson & Johnson's vice
president of litigation said on Monday, March 25, 2024, he was
"utterly shocked and appalled" upon learning an attorney who served
as the company's outside counsel was working with its adversary
Beasley Allen Law Firm and one of its attorneys in litigation over
the alleged link between the company's talcum powder products and
ovarian cancer.
About LTL Management
LTL Management, LLC, is a subsidiary of Johnson & Johnson (J&J),
which was formed to manage and defend thousands of talc-related
claims and oversee the operations of Royalty A&M. Royalty A&M owns
a portfolio of royalty revenue streams, including royalty revenue
streams based on third-party sales of LACTAID, MYLANTA/MYLICON and
ROGAINE products.
LTL Management filed a petition for Chapter 11 protection (Bankr.
W.D.N.C. Case No. 21-30589) on Oct. 14, 2021. The case was
transferred to New Jersey (Bankr. D.N.J. Case No. 21-30589) on Nov.
16, 2021. The Hon. Michael B. Kaplan is the case judge. At the
time of the filing, the Debtor was estimated to have $1 billion to
$10 billion in both assets and liabilities.
The Debtor tapped Jones Day and Rayburn Cooper & Durham, P.A., as
bankruptcy counsel; King & Spalding, LLP and Shook, Hardy & Bacon
LLP as special counsel; McCarter & English, LLP as litigation
consultant; Bates White, LLC as financial consultant; and
AlixPartners, LLP, as restructuring advisor. Epiq Corporate
Restructuring, LLC, is the claims agent.
An official committee of talc claimants was formed in the Debtor's
Chapter 11 case on Nov. 9, 2021. On Dec. 24, 2021, the U.S.
Trustee for Regions 3 and 9 reconstituted the talc claimants'
committee and appointed two separate committees: (i) the official
committee of talc claimants I, which represents ovarian cancer
claimants, and (ii) the official committee of talc claimants II,
which represents mesothelioma claimants.
The official committee of talc claimants I tapped Genova Burns LLC,
Brown Rudnick LLP, Otterbourg PC and Parkins Lee & Rubio LLP as its
legal counsel. Meanwhile, the official committee of talc claimants
II is represented by the law firms of Cooley LLP, Bailey Glasser
LLP, Waldrep Wall Babcock & Bailey PLLC, Massey & Gail LLP, and
Sherman Silverstein Kohl Rose & Podolsky P.A.
Re-Filing of Chapter 11 Petition
On Jan. 30, 2023, a panel of the Third Circuit issued an opinion
directing the Court to dismiss the 2021 Chapter 11 case on the
basis that it was not filed in good faith. Although the Third
Circuit panel recognized that the Debtor "inherited massive
liabilities" and faced "thousands" of future claims, it concluded
that the Debtor was not in financial distress before the filing.
On March 22, 2023, the Third Circuit entered an order denying the
Debtor's petition for rehearing. The Third Circuit entered an
order denying LTL's stay motion on March 31, 2023, and, on the same
day, issued its mandate directing the Bankruptcy Court to dismiss
the 2021 Chapter 11 Case.
The Bankruptcy Court entered an order dismissing the 2021 Case on
April 4, 2023.
Johnson & Johnson on April 4, 2023, announced that its subsidiary
LTL Management LLC (LTL) has re-filed for voluntary Chapter 11
bankruptcy protection (Bankr. D.N.J. Case No. 23-12825) to obtain
approval of a reorganization plan that will equitably and
efficiently resolve all claims arising from cosmetic talc
litigation against the Company and its affiliates in North
America.
In August 2023, U.S. Bankruptcy Judge Michael Kaplan in Trenton,
New Jersey, ruled that the second bankruptcy case should be
dismissed, ending J&J's second attempt to use bankruptcy to resolve
thousands of lawsuits alleging that its talc products sometimes
contained asbestos and caused mesothelioma and ovarian cancer.
MASSAGE BY DENISE: Case Summary & 12 Unsecured Creditors
--------------------------------------------------------
Debtor: Massage by Denise Leslie Inc.
DBA Medical and Sports Massage
220 Sandy Springs Circle
#157B
Sandy Springs, GA 30328
Business Description: The Debtor specializes in a wide range of
massage techniques, including Graston,
Cryotherapy, sports massage, deep tissue,
and medical massage.
Chapter 11 Petition Date: March 28, 2024
Court: United States Bankruptcy Court
Northern District of Georgia
Case No.: 24-53178
Judge: Hon. Jeffery W Cavender
Debtor's Counsel: Michael D. Robl, Esq.
ROBL LAW GROUP LLC
3754 LaVista Road
Suite 250
Tucker, GA 30084
Tel: 404-373-5153
Fax: 404-537-1761
Email: michael@roblgroup.com
Total Assets: $5,807
Estimated Liabilities: $1,261,932
The petition was signed by Denise Leslie as CEO.
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/ULXKX4Y/Massage_by_Denise_Leslie_Inc__ganbke-24-53178__0001.0.pdf?mcid=tGE4TAMA
MATIV HOLDINGS: Moody's Lowers CFR to 'B1', Outlook Stable
----------------------------------------------------------
Moody's Ratings downgraded Mativ Holdings, Inc.'s corporate family
rating to B1 from Ba3 and probability of default rating to B1-PD
from Ba3-PD. Concurrently, Moody's downgraded the rating on Mativ's
backed senior secured bank credit facility, consisting of the
company's term loans and revolving credit facility, to Ba3 from
Ba2, and on the senior unsecured notes to B3 from B2. The outlook
remains stable. The SGL-3 speculative grade liquidity rating
remains unchanged.
The downgrades reflect the company's underperformance relative to
Moody's expectations as weaker demand has constrained margins and
sustained Mativ's high leverage, with Moody's adjusted
debt-to-EBITDA near 6x (including accounts receivable
securitization debt), despite significant debt reduction from
recent divestiture proceeds. Additionally, Moody's expects that
macroeconomic pressures will weigh on near term earnings and cash
flow and on the timing to derive benefits from Mativ's M&A in
recent years, which have been slow to materialize. Therefore, any
significant improvement in operating performance is unlikely to
materialize for some time.
RATINGS RATIONALE
Mativ's ratings reflect its transition to specialty materials
markets with good prospects for longer term growth following the
sale of its Engineered Papers ("EP") business in December 2023.
This has better positioned the company for the long term
considering EP's secular decline and correlation with the
environmental and social risks of the tobacco industry. As well,
Mativ's funded debt is significantly reduced (down 35%) following
the use of EP divestiture proceeds to pay down debt. However,
leverage remains high, partly due to lower volumes that have
negatively impacted fixed cost absorption and outweighed
improvements from pricing actions and positive progress on the
realization of synergies from the 2022 merger with Neenah, Inc. The
company has faced end market pressures from customer destocking and
macro headwinds, including negative impacts of a higher interest
rate environment and geopolitical tensions. Moody's expects
adjusted debt-to-EBITDA to improve toward 5x over the next 12-18
months. Moody's anticipates the company will benefit from its more
stable end markets (filtration, healthcare and sustainable
packaging) and continue right-sizing manufacturing and managing
costs in the face of near term top line pressures.
The ratings also reflect the company's exposure to cyclical and
competitive markets, and to secular pressures in its fine paper and
printing business (roughly 20% of revenue). Additionally, the sale
of EP has resulted in the loss of a high margin business with solid
cash flow that helped to fund the growth of Mativ's industrial
platform through acquisitions. Acquisitive growth will remain core
to the company's growth strategy, but creates uncertainty and has
diluted Mativ's margins and contributed to its high leverage.
Moody's believes the company will continue to prioritize
deleveraging (as publicly indicated), with its dividend
substantially reduced for greater flexibility to repay debt and be
within its net leverage target of 2.5x-3.5x by early 2025.
The B3 rating on the senior unsecured notes, two notches below the
B1 CFR, reflects their junior ranking behind the Ba3 rated senior
secured credit facility. The Ba3 rating on the senior bank credit
facility reflects its senior priority of claim in the capital
structure.
The stable outlook reflects Moody's expectation that credit metrics
will improve over the next 12-18 months, aided by cost-out actions,
continued focus on pricing discipline and realizing merger
synergies, and moderate top line growth as demand gradually
improves. Moody's also expects Mativ to maintain adequate
liquidity. The stable outlook does not assume any debt-funded
acquisitions in the near term.
The SGL-3 speculative grade liquidity rating reflects Moody's
expectation of adequate liquidity, based on cash on hand ($120
million at December 31, 2023), positive free cash flow over the
next year and ample revolver availability. The $600 million senior
secured revolving credit facility, expiring in 2027, had
approximately $334 million available at December 31, 2023, net of
borrowings and letters of credit. Moody's anticipates the company
will pay down revolver borrowings periodically. However, revolver
draws will fluctuate with working capital needs and depend on the
pace and magnitude of future acquisitions, though Mativ has
indicated acquisitions are on pause. The credit agreement includes
a maximum net leverage threshold of 4.5x and minimum interest
coverage covenant of 3.0x. Moody's expects Mativ to remain in
compliance with the covenants. There are no material debt
maturities until the company's $175 million accounts receivables
facility expires in December 2025. The company has no mandatory
amortization payments following the use of net EP sale proceeds to
pay down debt, resulting in debt reduction of about $585 million in
2023.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be downgraded with rising leverage or delays in
reducing leverage, including due to further declines in operating
results, or debt-to-EBITDA expected to remain above 5x beyond 2024.
Inability to improve the EBITDA margin and/or EBITA to interest
coverage sustained at or below 2x could also pressure the ratings.
Deteriorating liquidity, including sustained negative free cash
flow or increased reliance on the revolving credit facility, could
also result in a ratings downgrade. Additional debt-funded
acquisitions or transactions that weaken the metrics or liquidity
would also pressure the ratings.
The ratings could be upgraded with improving organic growth and
material margin expansion such that Moody's expects the EBITDA
margin to remain above 15%. Consistent solid free cash flow boosted
by accelerating growth prospects in the company's specialty
materials end markets could also support a ratings upgrade. Free
cash flow-to-debt sustained above 5% and debt-to-EBITDA remaining
below 4.5x while executing acquisitions would be important
considerations for an upgrade.
The principal methodology used in these ratings was Manufacturing
published in September 2021.
Mativ Holdings, Inc. (fka Schweitzer-Mauduit International, Inc.),
based in Alpharetta, Georgia, is a producer of specialty materials
focused on resin-based nets, films and other non-wovens through its
Advanced Technical Materials (ATM) segment. The company also
manufactures fine paper and packaging products through its Fiber
Based Solutions (FBS) segment. Mativ's legacy Engineered Papers
business, consisting of cigarette papers and reconstituted tobacco
products, was sold for $620 million on December 1, 2023. The
company merged with Neenah, Inc., a manufacturer of fiber-based
technical products and fine paper and packaging products, in July
2022. Revenue was approximately $2 billion for the fiscal year
ended December 31, 2023.
MOUNTAIN VIEW: Seeks to Extend Plan Exclusivity to July 17
----------------------------------------------------------
Mountain View Orchard, Inc., asked the U.S. Bankruptcy Court for
the District of Maryland to extend its exclusivity periods to file
a plan of reorganization and obtain acceptance thereof to July 17
and September 15, 2024, respectively.
The Debtor is a Virginia corporation that operates a farm in
Stafford County, Virginia. The farming primarily consists of the
harvesting and sale of produce to local grocery stores.
Yellow Breeches Capital LLC, (the "Lender"), asserts a secured
claim of approximately $3,505,865.45 (the "Secured Debt") against
the Debtor's assets by way of, inter alia, the Debtor's obligations
under three loans as borrower or guarantor, and which are
respectively secured by the security interests (altogether, the
"Security Interests").
Prior to the commencement of this case, the Debtor was declared to
be in default of the Secured Debt and, thereafter, subject to
foreclosure. Following unsuccessful negotiations to reinstate or
resolve the loan, the Debtor was forced to commence this
proceeding.
The Debtor anticipates that the ongoing sale and/or reorganization
efforts of its affiliates, the two entities identified and others,
will satisfy the majority of the balance owed on the Secured Debt.
The Debtor explains that while the size and complexity of this case
may not be significant in comparison the reorganization efforts of
larger operations, the Debtor finds its reorganization effort to be
substantial and complex due to the contemporaneous Chapter 11
proceedings of its affiliates and the significant liabilities that
the Debtor will best resolve with the success of the affiliates'
efforts.
The Debtor claims that while it believes that it could resolve the
claim of its Lender through a sale, the resulting unknown of where
that would leave the Debtor, its creditors, and employees, leaves
the Debtor unable to formulate a plan of reorganization prior to
the expiration of the current Exclusive Proposal Period.
Admittedly, the Debtor's progress has been limited, but the Debtor
continues to work towards compliance with its duties as a debtor
in-possession. Notably, the Debtor has successfully negotiated
ongoing terms for its use of cash collateral.
The Debtor believes that an additional 120 day extension of the
Exclusive Periods will give a better opportunity to propose a plan
of reorganization.
Mountain View Orchard, Inc. is represented by:
Joseph M. Selba, Esq.
TYDINGS & ROSENBERG, LLP
1 E. Pratt Street, Suite 901
Baltimore, MD 21202
Telephone: (410) 752-9700
Email: jselba@tydingslaw.com
About Mountain View Orchard, Inc.
Mountain View Orchard, Inc. is in the business of fruit and tree
nut farming.
Mountain View Orchard, Inc. filed its voluntary petition for relief
under Chapter 11 of the Bankruptcy Code (Bankr. D. Md. Case No.
23-15149) on July 23, 2023. The petition was signed by Anthony C.Y.
Cheng as president. At the time of filing, the Debtor estimated
$500,000 to $1 million in assets and $1 million to $10 million in
liabilities.
Judge Nancy V. Alquist oversees the case.
Joseph M. Selba, Esq. at Tydings & Rosenberg LLP represents the
Debtor as counsel.
NASHVILLE SENIOR: Seeks to Extend Plan Exclusivity to April 15
--------------------------------------------------------------
Nashville Senior Care, LLC and affiliates asked the U.S. Bankruptcy
Court for the Middle District of Tennessee to extend their
exclusivity periods to file a plan of reorganization and obtain
acceptance thereof to April 15 and May 17, 2024, respectively.
Since the Petition Date, the Debtors have remained in possession of
their assets and have continued to operate and manage their
businesses as debtors in possession pursuant to sections 1107(a)
and 1108 of the Bankruptcy Code.
After the commencement of an adversary proceeding, the Debtors and
Nexus have recently reached a settlement in principle of their
disputes, which will be subject to Court approval. The Debtors
anticipate that the Sale will move forward with Cascasis and close
sometime in the next couple of months.
The Debtors explain that given the proposed resolution with Nexus
and issues relating to closing the Sale, the Debtors require
additional time to work with their primary creditor constituencies
on finalizing a plan and formalizing the process outlined in the
Plan/Disclosure Statement Motion.
The Debtors claim that they have been cooperative with parties in
interest and have kept major constituencies in the case informed
about the Debtors' restructuring efforts. The Debtors have also
informed both the Committee and the Indenture Trustee of this
proposed additional extension of the Exclusivity Period and the
Solicitation Period.
The Debtors assert that they have no ulterior motives, such as
obtaining an unfair bargaining position over parties in interest in
seeking an additional extension of the Exclusivity Period and
Solicitation Period, the Debtors. Rather, they seek to maintain the
status quo so that they can move toward a Sale closing and finalize
negotiations with parties in interest on the formulation of a
plan.
Counsel to the Debtors:
Shawn M. Riley, Esq.
Scott N. Opincar, Esq.
Michael J. Kaczka, Esq.
Maria G. Carr, Esq.
MCDONALD HOPKINS LLC
600 Superior Avenue, E., Suite 2100
Cleveland, Ohio 44114
Tel: (216) 348-5400
Fax: (216) 348-5474
Email: sriley@mcdonaldhopkins.com
sopincar@mcdonaldhopkins.com
mkaczka@mcdonaldhopkins.com
mcarr@mcdonaldhopkins.com
Robert J. Gonzales, Esq.
Nancy B. King, Esq.
EMERGELAW, PLC
4235 Hillsboro Pike, Suite 350
Nashville, Tennessee 37215
Tel: (615) 815-1535
Email: robert@emerge.law
nancy@emerge.law
About Nashville Senior Care
Nashville Senior Care, LLC and affiliates are comprised of five
senior living communities and one Medicare-certified home health
agency affiliated with the Trousdale Foundation. All of the real
estate associated with the senior living communities is owned by
the Debtors.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. M.D. Tenn. Lead Case No. 23-02924) on Aug.
14, 2023. In the petitions signed by Thomas Johnson, executive
director, Nashville Senior Care disclosed $50 million to $100
million in assets and $100 million to $500 million in liabilities.
Judge Marian F. Harrison oversees the cases.
The Debtors tapped McDonald Hopkins LLC as general bankruptcy
counsel; EmergeLaw, PLC as co-counsel; and Houlihan Lokey Capital,
Inc. as investment banker. Stretto, Inc. is the notice, claims and
balloting agent.
On Aug. 31, 2023, the U.S. Trustee for Region 8 appointed an
official committee of unsecured creditors in these Chapter 11
cases. The committee tapped Womble Bond Dickinson (US), LLP and
Dunham Hildebrand, PLLC as legal counsel, and Rock Creek Advisors,
LLC as financial advisor.
Teresa Teeple is the patient care ombudsman appointed in the
Debtors' Chapter 11 cases.
ODYSSEY LOGISTICS: Moody's Alters Outlook on 'B2' CFR to Stable
---------------------------------------------------------------
Moody's Ratings affirmed Odyssey Logistics & Technology
Corporation's ratings, including its B2 corporate family rating,
B2-PD probability of default rating, and the B2 rating on the
company's senior secured first lien bank credit facilities. Moody's
also changed the outlook to stable from positive.
The affirmation of the ratings reflects Moody's view that Odyssey's
diversified logistics offerings, moderate financial leverage and
good liquidity position the company to adequately manage through a
challenging and competitive freight market. The company's operating
performance in 2023 was negatively impacted by lower volumes and
pricing, which was common for many freight market participants.
Moody's expects market conditions to only moderately improve over
the course of 2024. As a result, Moody's changed the rating outlook
to stable from positive based on expectations that Odyssey's
profitability and free cash flow, while both improving in 2024,
will not meet previous expectations.
RATINGS RATIONALE
Odyssey's B2 CFR reflects its moderate scale as a specialized
provider of intermodal, less-than-container-load (LCL)
consolidation and trucking services to a variety of end markets
including metals, chemicals, industrial and food and beverage.
Odyssey maintains a good competitive position with long-term
relationships with its customers. Nonetheless, the company's
financial performance has been volatile over the past few years
given its exposure to broader supply chain dynamics.
Moody's expects Odyssey's net revenue (gross revenue less
transportation costs) to increase at least 5% in 2024 following a
decline of at least 15% in 2023. Further, Moody's expects Odyssey
to maintain an EBITDA margin in the low-teens range supported by
operating efficiencies and cost savings identified as the company
further integrates its businesses into four segments (previously 16
separate units).
Odyssey's debt/EBITDA is expected to remain in the range of 4x to
4.5x over the next twelve months. Despite the earnings decline in
2023, Odyssey's leverage remained moderate since the company repaid
slightly more than $100 million in debt using proceeds from an
asset sale last year.
Moody's expects Odyssey to maintain good liquidity over the next
twelve months supported by a cash position of at least $50 million
and full availability under its $125 million revolving credit
facility that expires in 2027. Moody's expects Odyssey to generate
modestly positive free cash flow in 2024.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings could be upgraded if Odyssey sustains strong operating
performance, including an operating margin above 5%, through
cyclical periods in its end markets. In addition, Odyssey would
need to demonstrate conservative financial policies and sustain
debt/EBITDA below 4.5x for a rating upgrade. Further, maintaining
good liquidity with consistently positive free cash flow would also
be required for an upgrade.
The ratings could be downgraded if operating performance
deteriorates either due to a loss of customers, lower volumes or
weak execution. Ratings could also be downgraded if Odyssey takes a
more aggressive approach to debt funded dividends or shareholder
returns. For example, if debt/EBITDA is maintained above 5.5x.
Further, the ratings could be downgraded if Odyssey's free cash
flow approaches breakeven or availability on its revolving credit
facility is materially reduced.
The principal methodology used in these ratings was Surface
Transportation and Logistics published in December 2021.
Odyssey Logistics & Technology Corporation is a provider of
multimodal logistics solutions for thousands of customers across a
variety of primarily industrial-based end markets. Its services
include managed services, intermodal, rail, ground transportation,
warehousing, LTL and LCL consolidation, and consulting. Gross
revenue for the twelve months ended September 30, 2023 was
approximately $1 billion.
ORGANON & CO: Moody's Affirms 'Ba2' CFR, Outlook Remains Stable
---------------------------------------------------------------
Moody's Ratings affirmed the ratings of Organon & Co. including the
Ba2 Corporate Family Rating, the Ba2-PD Probability of Default
Rating, the Ba2 senior secured credit facility ratings and notes,
and the B1 senior unsecured rating. At the same time, Moody's
upgraded Organon's Speculative Grade Liquidity Rating (SGL) to
SGL-1 from SGL-2. The outlook remains stable.
The rating affirmation reflects Moody's expectations for Organon's
performance over the next 12 to 18 months. Moody's anticipates
modest growth in revenue and earnings driven by women's health and
biosimilars, with a decline in gross debt/EBITDA towards 4.5x. In
addition, Moody's anticipates growth in free cash flow as certain
stand-alone costs continue to decline. The rating remains
constrained by limited organic growth prospects and by an uneven
track record in operating performance since Organon's separation
from Merck & Co., Inc. ("Merck") in 2021.
RATINGS RATIONALE
Organon's Ba2 rating reflects its niche position in the global
pharmaceutical industry, offering women's health products,
biosimilars, and established off-patent products. Organon has good
diversity at the product and geographic level. The established
brands have good name recognition in global markets. The women's
health franchise has good growth prospects owing to demographic
trends including rising demand for fertility treatments.
These strengths are offset by limited organic growth owing to the
nature of established brands which face pricing and volume pressure
amid competition from generics. Organon's free cash flow will
remain constrained by costs associated with separating from Merck
and restructuring activities. However, free cash flow will improve
as these costs decline over time, facilitating improvement in
credit ratios. There is event risk of acquisitions as the company
is likely to pursue initiatives to improve earnings growth.
Organon's SGL-1, Speculative Grade Liquidity rating, signifies very
good liquidity. Moody's anticipates positive free cash flow even
after separation and restructuring expenses, as previous working
capital constraints continue to moderate. In addition, Organon's $1
billion revolving credit facility was undrawn as of December 31,
2023 and provides liquidity support. Moody's anticipates good
cushion under the 4.75x net debt/EBITDA covenant under the
revolving credit facility.
The outlook is stable, reflecting Moody's expectation for declining
financial leverage over the next 12 to 18 months such that gross
debt/EBITDA is sustained below 4.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Factors that could lead to an upgrade include improvement in
organic growth rates, substantial expansion in free cash flow, and
debt/EBITDA sustained below 3.5x. Factors that could lead to a
downgrade include a significant contraction in revenue due to
pricing pressure or competition, substantial debt-financed
acquisitions, or debt/EBITDA sustained over 4.5x.
Headquartered in Jersey City, New Jersey, Organon & Co., is a
global pharmaceutical company with expertise in women's health,
established brands and biosimilars. Revenues in 2023 totaled $6.3
billion.
The principal methodology used in these ratings was Pharmaceuticals
published in November 2021.
PARAMOUNT GLOBAL: S&P Lowers ICR to 'BB+' on Weak Credit Metrics
----------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on New York
City-based diversified global media company Paramount Global and
its issue-level rating on its senior unsecured debt to 'BB+' from
'BBB-'. At the same time, S&P lowered its issue-level rating on its
junior subordinated debt to 'BB-' from 'BB' and our short-term
rating to 'B' from 'A-3'.
The stable outlook reflects S&P's expectation that leverage will
decline to around 4.0x in 2024 with FOCF/debt improving to about 5%
as losses in the streaming segment materially decline.
S&P said, "We lowered Paramount's rating to 'BB+' from 'BBB-' as we
forecast FOCF/debt will remain below 10% and that adjusted leverage
will remain above 3.5x beyond 2025. We downgraded Paramount due to
the degradation of credit metrics from the accelerating declines in
linear media and the shift toward a more competitive and less
certain streaming model. Paramount ended 2023 with S&P Global
Ratings-adjusted leverage at 4.9x and FOCF/debt at 2% and both
metrics have been outside of our threshold for the 'BBB-' rating
for the past two years since it began heavily investing in growing
its streaming business. We forecast S&P Global Ratings-adjusted
leverage to decline toward 4x in 2024 and 3.6x by 2025, but for
FOCF/debt to only reach 4% in 2024 and 6%-7% in 2025, well below
the 10% threshold, even as streaming losses significantly abate
over the next two years.
"Paramount will need to execute its plan to substantially improve
streaming losses over the next two years to mitigate further
downside ratings pressure. Paramount's current credit metrics are
weak for the 'BB+' rating. Our stable outlook is predicated on our
expectation that EBITDA and FOCF will materially improve in 2024
such that leverage declines to about 4x and FOCF/debt approaches
5%. This is largely based on our assumption that streaming losses
will improve by more than $700 million due to strong average
revenue per user (ARPU) growth from price increases enacted in
mid-2023 and ongoing, albeit more modest, subscriber growth. We
also expect some stabilization at the linear television segment,
mostly due to the airing of the Super Bowl and the increased
political advertising spend in an election year. If these
assumptions don't materialize to the extent we are forecasting due
to a more competitive streaming environment or an acceleration in
declines in linear television, we could reassess our rating or
outlook.
"The stable outlook reflects our expectation that S&P Global
Ratings-adjusted leverage will decline to about 4.0x in 2024 with
FOCF to debt approaching 5% as earnings improve due to lower losses
in its streaming segment.
"We could lower our ratings on Paramount if it is unable to reduce
leverage below 4.25x and increase FOCF to debt above 5% over the
next 12 to 18 months."
This could occur if:
-- The path to DTC profitability is extended so that it remains
unprofitable through 2026; or
-- Declines in the linear television business accelerate at a pace
exceeding improvements at the DTC segment resulting in minimal
leverage and cash flow improvement.
While unlikely within the next year, S&P could raise its ratings on
Paramount if it reduces leverage below 3.5x and generates FOCF to
debt sustainably above 10%.
This could occur if:
-- DTC profitability improves significantly faster than expected
and the path to profitability is sooner than forecast; and
-- The linear television segment stabilizes such that EBITDA
declines are at a low single-digit percent rate.
PEGASUS HOME: Seeks to Extend Plan Exclusivity to June 20
---------------------------------------------------------
PHF, Inc. f/k/a Pegasus Home Fashions, Inc. and Its Affiliated
Debtors asked the U.S. Bankruptcy Court for the District of
Delaware to extend their exclusivity periods to file a plan of
reorganization and obtain acceptance thereof to June 20 and August
19, 2024, respectively.
The Debtors commenced these Chapter 11 Cases with the paramount
goal to maximize the value of their estates for the benefit of the
Debtors' creditor constituencies and other stakeholders through the
sale of substantially all of their assets.
Since the Petition Date, the Debtors and their advisors committed
all of their resources to maximizing value for the benefit of their
creditors and estates, including by contacting dozens of strategic
and financial potential buyers, providing access to a data room,
and answering diligence questions. Ultimately, as a result of these
efforts, the Debtors proposed a value-maximizing sale to the Court
which recently closed.
The Debtors explain that with the Sale process behind them, the
companies and their advisors have re-directed their attention to
confirmation of the Combined Disclosure Statement and Plan. While
the Debtors anticipate confirmation of the Combined Disclosure
Statement to occur in the near term, they file this Motion out of
an abundance of caution.
The Debtors claim that they have worked with their major
constituents to resolve outstanding issues and are optimistic that
the Combined Disclosure Statement and Plan will be confirmed at the
Confirmation Hearing. Accordingly, the Debtors submit that this
factor weighs in favor of extending the Exclusive Periods.
The Debtors assert that they have no ulterior motive in seeking an
extension of the Exclusive Periods. The Debtors have worked
diligently over the past few months to preserve the value of their
assets during the pendency of these Chapter 11 Cases and require
the extension sought by this Motion. The Debtors are not seeking an
extension to pressure creditors or other parties in interest.
The Debtors further assert that termination of the Exclusive
Periods would adversely impact the Debtors' efforts to preserve and
maximize the value of the estates and the progress of these Chapter
11 Cases. In effect, if the Court were to deny the Debtors' request
for an extension of the Exclusive Periods, any party in interest
would be free to propose an alternative chapter 11 plan for the
Debtors.
Counsel to the Debtors:
Michael R. Nestor, Esq.
Kenneth J. Enos, Esq.
S. Alexander Faris, Esq.
Kristin L. McElroy, Esq.
Rodney Square
1000 North King Street
Wilmington, DE 19801
Telephone: (302) 571-6000
Facsimile: (302) 571-1253
Email: mnestor@ycst.com
kenos@ycst.com
afaris@ycst.com
kmcelroy@ycst.com
About Pegasus Home Fashions
Pegasus Home Fashions Inc., is a manufacturer of house furnishing
products based in Elizabeth, N.J.
Pegasus and its affiliates filed Chapter 11 petitions (Bankr. D.
Del. Lead Case No. 23-11236) on Aug. 24, 2023. In the petition
filed by its chief executive officer, Timothy Boates, Pegasus
reported $100 million to $500 million in both assets and
liabilities.
The Debtors tapped Michael R. Nestor, Esq., at Young Conaway
Stargatt & Taylor, LLP as bankruptcy counsel; SSG Advisors, LLC as
investment banker; Reindeer Consulting Group, LLC as tax
consultant; Prager Metis CPAs, LLC as tax preparer and tax services
provider; and Timothy Boates of RAS Management Advisors, LLC as
interim chief executive officer. Epiq Corporate Restructuring, LLC
serves as the Debtors' administrative advisor and notice, claims,
solicitation and balloting agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent unsecured creditors in the Debtors' Chapter
11 cases. Lowenstein Sandler, LLP and Morris James, LLP serve as
the committee's bankruptcy counsel and Delaware counsel,
respectively.
* * *
The Company filed for bankruptcy protection with a stalking horse
credit bid from an affiliate of Blue Torch Capital LP in August
2023 to secure additional funding and explore available
alternatives to the stalking horse proposal. With no competing
bids received, the Company cancelled an auction and proceeded with
the Blue Torch offer. The transaction closed in December 2023.
Blue Torch is a direct lender and investment manager that seeks to
invest in middle-market companies.
PERSPECTIVES INC: Case Summary & 20 Largest Unsecured Creditors
---------------------------------------------------------------
Debtor: Perspectives, Inc.
3381 Gorham Avenue
St. Louis Park, MN 55426
Business Description: Perspectives is a human service program that
addresses society's most pressing issues:
equity, diversity, inclusion, homelessness,
poverty, addiction, mental illness, food
security, and lack of access to life
-changing opportunities for disenfranchised
women and children.
Chapter 11 Petition Date: March 28, 2024
Court: United States Bankruptcy Court
District of Minnesota
Case No.: 24-40832
Judge: Hon. Katherine A. Constantine
Debtor's Counsel: Steven R. Kinsella, Esq.
FREDRIKSON & BYRON, P.A.
60 South 6th Street, Suite 1500
Minneapolis, MN 55402
Tel: 612-492-7000
Email: skinsella@fredlaw.com
Estimated Assets: $1 million to $10 million
Estimated Liabilities: $1 million to $10 million
The petition was signed by Susan Grafton as chair of the Board of
Directors.
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/G6W6K5Y/Perspectives_Inc__mnbke-24-40832__0001.0.pdf?mcid=tGE4TAMA
PONCE BAKERY: Updates Banco Popular's Secured Claim Pay
-------------------------------------------------------
Ponce Bakery, Inc., submitted a Third Amended Disclosure Statement
describing Third Amended Plan dated March 19, 2024.
The disclosure statement filed has been amended to reflect the
correct treatment to Banco Popular's Secured Claim, treatment to
Priority Creditors and proposed distributions to unsecured
creditors.
Class 2C consists of the Secured Claim of Banco Popular de PR in
the amount of $251,707.12. The debtor will sell part of its
property located at Santa Isabel, PR, for an estimated $125,000.00
which will reduce the secured claim to $126,707.12, with proceeds
to attach to the creditor. The balance due will be paid in 96 equal
installments of $1,544.47 which includes 4% annual interest. The
debtor will commence adequate protection payments of $850.00 on the
total claim filed until the property is sold. The debtor proposes
to sell the property three months after the segregation is approved
or by September, 2024.
Class 3 consists of General Unsecured Claims. The Debtor will pay
100% of the allowed unsecured claims to be paid in 60 monthly
payments of $654.44 including 3% interest per annum with a total
payout of $39,266.40.
Payments and distributions under the Plan will be funded from the
debtor's post-petition income from the operation of the business.
Total distributions of the approved plan is $3,572.43 per month to
all creditors, Secured, Priority and Unsecured. The plan
contemplates adequate protection payments to BPPR of $850.00
monthly on the full claim filed of $251,707.12 until a segregated
lot is sold.
A full-text copy of the Third Amended Disclosure Statement dated
March 19, 2024 is available at https://urlcurt.com/u?l=bRpLUD from
PacerMonitor.com at no charge.
Counsel for Debtor:
Modesto Bigas Mendez, Esq.
PO Box 7462
Ponce, PR 00732-746
Tel: (787) 844-1444
Fax: (787) 842-4090
E-mail: mbigasmendez @ gmail.com
About Ponce Bakery
Ponce Bakery, Inc., sought protection for relief under Chapter 11
of the Bankruptcy Code (Bankr. D.P.R. Case No. 23-01719) on June 5,
2023, with $500,001 to $1 million in assets and $100,001 to
$500,000 in liabilities. Judge Maria De Los Angeles Gonzalez
oversees the case.
The Debtor tapped Modesto Bigas-Mendez, Esq., at Modesto Bigas Law
Office as bankruptcy counsel, and Cynthia Garcia Fraticelli as
accountant.
PREMIER KINGS: Plan Exclusivity Period Extended to August 21
------------------------------------------------------------
Judge Tamara O. Mitchell of the U.S. Bankruptcy Court for the
Northern District of Alabama extended Premier Kings, Inc., and
affiliates' exclusive periods to file a plan of reorganization and
obtain acceptance thereof to August 21 and September 20, 2024,
respectively.
As shared by Troubled Company Reporter, the Debtors explain that
although not as large as some cases, the Debtors' cases are
certainly complex. As noted, to move forward with a consensual and
confirmable plan, certain complex issues must first be resolved,
including, but not limited to, (i) an agreed upon wind-down budget
with the prepetition secured lenders, and (ii) the powers and
limitations on the post-confirmation fiduciary to run the wind-down
of the cases.
Since the inception of the Chapter 11 Cases, the Debtors have
progressed in good faith. The Debtors have already to date: (a)
timely filed their schedules and statements of financial affairs;
(b) successfully established the Claims Bar Date; (c) ran a fulsome
marketing and sale process which culminated in sales in excess of
$45.0 million; and (d) formulated and filed the Plan and Disclosure
Statement.
The Debtors assert that they are current on all postpetition
obligations and anticipates that this practice will continue.
Counsel for the Debtors:
Jesse S. Vogtle, Jr., Esq.
Eric T. Ray, Esq.
HOLLAND & KNIGHT LLP
1901 Sixth Avenue North, Suite 1400
Birmingham, AL 35203
Tel: (205) 226-5700
Fax: (205) 214-8787
E-mail: Jesse.vogtle@hklaw.com
etray@hklaw.com
- and -
Gary H. Leibowitz, Esq.
COLE SCHOTZ P.C.
1201 Wills Street, Suite 320
Baltimore, MD 21231
Tel: (410) 528-2971
Fax: (410) 230-0667
E-mail: gleibowitz@coleschotz.com
About Premier Kings
Premier Kings, Inc., and affiliates are the owners and operators of
174 operating Burger King franchise locations.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ala. Lead Case No. 23-02871) on Oct.
25, 2023. At the time of the filing, Premier Kings reported $10
million to $50 million in assets and $50 million to $100 million in
liabilities.
Judge Tamara O. Mitchell oversees the cases.
The Debtors tapped Cole Schotz, PC, as the lead bankruptcy counsel;
Holland & Knight, LLP as local counsel; Bilzin Sumberg Baena Price
& Axelrod, LLP and Lehr Middlebrooks Vreeland & Thompson, P.C. as
special counsels; Raymond James & Associates, Inc. as investment
banker; and The Franchise CPA as accountant. Kurtzman Carson
Consultants, LLC is the Debtors' noticing and claims agent.
On Nov. 6, 2023, the U.S. Bankruptcy Administrator for the Northern
District of Alabama appointed an official committee to represent
unsecured creditors in the Debtors' Chapter 11 cases. The
committee is represented by the law firm of Christian & Small, LLP.
PREMIER KINGS: Updates Secured Claims Pay Details
-------------------------------------------------
Premier Kings, Inc., et al., submitted an Amended Disclosure
Statement for Plan of Liquidation dated March 19, 2024.
The Plan will be funded primarily from the net proceeds of the
Sale. The Plan provides for distributions on account of secured
claims, unsecured claims (including claims arising from the
rejection of leases or contracts), priority claims and
administrative claims, in priority of payment and, in the event
that funds were to remain after payment of all Allowed Claims in
full, which is unexpected, any such remaining funds would be
distributed to holders of Interests.
Through the implementation of the strategic measures, the Debtors
effectively, among other things, (i) stabilized the business; (ii)
updated the financial books and records; (iii) separated
intercompany transactions; (iv) identified and asserted claims to
recover funds; (v) managed day-to-day operations; (vi) updated
franchise processes to bring into compliance and improved its
franchisee rating with Burger King Company, LLC ("BKC") from a D-
to a B+; (vii) increased company EBITDA and going concern value;
(viii) entered a forbearance agreement with the Prepetition Agent;
(ix) resolved ongoing insurance and environmental issues; and (x)
conducted a successful national marketing and sale process for
substantially all of the Debtors' assets which together brought
$45,500,000 into the Estates.
Class 1 consists of the secured claims of Wells Fargo Bank,
National Association in its capacity as prepetition secured agent
and the related prepetition lenders under that certain February 25,
2021 Second Amended and Restated Credit Agreement as amended by
that certain First Amendment to Credit Agreement dated as of May
18, 2023. Class 1 is impaired under the Plan. The holders of Class
1 Claims are entitled to vote on the Plan. Each Class 1 Allowed
Claim shall be paid pursuant to the terms of the Plan. This Class
will receive a distribution of 51% of their allowed claims.
Like in the prior iteration of the Plan, the holders of Allowed
General Unsecured Claims shall receive their Pro Rata Share of all
remaining distributions under the Plan, if any, after all Allowed
Claims are paid in full or otherwise treated as provided for under
the Plan. This Class will receive a distribution of 3% of their
allowed claims.
Means For Implementation and Execution of the Plan
The Sale. The net proceeds of the Sale, as well as the sale of
other assets owned by the Debtors shall be the primary source of
funds for distribution to holders of Allowed Claims and Interests
(if applicable) pursuant to the terms of the Plan.
Specified Litigation Proceeds. 90% of the Specified Litigation
Proceeds shall be distributed to the Prepetition Agent on the Plan
Payment Date, with the remainder used to fund payments under this
Plan to holders of Allowed Class 3 Claims.
Insurance Proceeds. Insurance Proceeds currently, or in the future,
held by the Debtors or post-confirmation Debtors shall be
distributed to the Prepetition Agent (for the benefit of the
Prepetition Lenders), for the benefit of the holders of the Class 1
Allowed Claims, upon the Effective Date in the amount of
$1,488,895.14 (or such lesser amount as may be agreed to by the
Prepetition Agent), and, if any such Insurance Proceeds are
received after the Effective Date, within 5 Business Days of the
post-confirmation Debtors' receipt of such Insurance Proceeds.
Substantive Consolidation. This Plan contemplates, and is
predicated upon, the entry of an order, which may be the
Confirmation Order, substantively consolidating the Estates and the
Chapter 11 Cases for administrative convenience and for purposes of
implementing this Plan, voting, assessing whether the standards for
Confirmation have been met, calculating and making Distributions
under the Plan and filing post-Confirmation reports and paying
quarterly fees to the Bankruptcy Administrator.
A full-text copy of the Amended Disclosure Statement dated March
19, 2024 is available at https://urlcurt.com/u?l=vV4sMe from
PacerMonitor.com at no charge.
Counsel for the Debtors:
Jesse S. Vogtle, Jr., Esq.
Eric T. Ray, Esq.
HOLLAND & KNIGHT LLP
1901 Sixth Avenue North, Suite 1400
Birmingham, AL 35203
Tel: (205) 226-5700
Fax: (205) 214-8787
E-mail: Jesse.vogtle@hklaw.com
etray@hklaw.com
- and -
Gary H. Leibowitz, Esq.
COLE SCHOTZ P.C.
1201 Wills Street, Suite 320
Baltimore, MD 21231
Tel: (410) 528-2971
Fax: (410) 230-0667
E-mail: gleibowitz@coleschotz.com
About Premier Kings
Premier Kings, Inc. and affiliates are the owners and operators of
174 operating Burger King franchise locations.
The Debtors sought protection under Chapter 11 of the U.S.
Bankruptcy Code (Bankr. N.D. Ala. Lead Case No. 23-02871) on Oct.
25, 2023. At the time of the filing, Premier Kings reported $10
million to $50 million in assets and $50 million to $100 million in
liabilities.
Judge Tamara O. Mitchell oversees the cases.
The Debtors tapped Cole Schotz, PC as the lead bankruptcy counsel;
Holland & Knight, LLP as local counsel; Bilzin Sumberg Baena Price
& Axelrod, LLP and Lehr Middlebrooks Vreeland & Thompson, P.C. as
special counsels; Raymond James & Associates, Inc. as investment
banker; and The Franchise CPA as accountant. Kurtzman Carson
Consultants, LLC is the Debtors' noticing and claims agent.
On Nov. 6, 2023, the U.S. Bankruptcy Administrator for the Northern
District of Alabama appointed an official committee to represent
unsecured creditors in the Debtors' Chapter 11 cases. The committee
is represented by the law firm of Christian & Small, LLP.
PRESTO AUTOMATION: Issues $4M Promissory Note to Presto CA
----------------------------------------------------------
Presto Automation Inc. disclosed in a Form 8-K Report filed with
the Securities and Exchange Commission that on March 21, 2024, the
Company, together with Presto Automation, LLC, issued to Presto CA
LLC secured promissory note in the principal amount of $4,000,000,
pursuant to which Presto CA agreed to make two loans totaling an
aggregate of $4,000,000 to the Company. The first loan was made on
March 21, 2024 in the amount of $2,000,000 and the second loan will
be made on March 30, 2024 in the amount of $2,000,000, subject to
the conditions described below.
The Second Loan is subject to the following conditions: (1) each of
the Seventh Amendment (as defined below), the Security Agreement
(as defined below) and the Subordination Agreement (as defined
below) remain in full force and effect and Presto is in full
compliance with each of such agreements, (2) each of the
representations and warranties made in the Note or in the Security
Agreement by Presto are true and correct and (3) there shall not
have occurred, or Presto CA shall not have become first aware,
since the making of the First Loan, of any event or circumstance
that has had, or could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect (as defined in the
Credit Agreement (as defined below)), provided that the price per
share of the Company's common stock and its continued listing on
the Nasdaq Stock Market will not constitute a Material Adverse
Effect.
The Loans shall be repaid no later than May 15, 2024.
Interest on the Note accrues by increasing principal at a rate of
12.0% per annum. On the Maturity Date, Presto will pay the interest
then due by adding such outstanding interest to the aggregate
principal amount of the Loans.
The Note is secured by a first priority lien on substantially all
of the Company's assets, pursuant to that certain security
agreement, dated as of March 21, 2024, by and between the Company,
Presto Automation LLC, a wholly owned subsidiary of the Company,
and Presto CA (the "Security Agreement").
The Note is subject to a subordination agreement among Metropolitan
Partners Group Administration, LLC, the administrative, payment and
collateral agent for Metropolitan Levered Partners Fund VII, LP,
Metropolitan Partners Fund VII, LP, Metropolitan Offshore Partners
Fund VII, LP and CEOF Holdings LP, Presto CA, the Company and
Presto Automation LLC. Pursuant to the Subordination Agreement, (1)
the Agent and the Lenders agree to subordinate their liens on the
collateral to the liens of Presto CA securing the Note, (2) Presto
CA agrees that, prior to repayment of amounts payable to the
Lenders, it will not take any enforcement action with respect to
the Note without the consent of the Agent, (3) the Agent will
retain the sole right to engage in enforcement actions and
otherwise manage the collateral, and (4) the Agent and/or the
Lenders, at any time, may purchase the outstanding Loans, at par,
without regard to any prepayment penalty or premium.
The Note is also subject to (i) a participation agreement (the
"Partners Fund Participation Agreement") between Presto CA and
Partners Fund and (ii) a participation agreement (the "Levered
Partners Fund Participation Agreement" and together with the
Partners Fund Participation Agreement, collectively, the
"Participation Agreements") between Presto CA and Levered Partners
Fund. Pursuant to the Participation Agreements, Partners Fund and
Levered Partners Fund, collectively, have purchased and accepted,
and Presto CA has agreed to sell and grant to Partners Fund and
Levered Partners Fund, collectively, an interest in 25% of the
Loans outstanding under the Note such that they will own up to a
maximum interest of $1 million in the Note.
Additionally, on March 21, 2024, the Company entered into a Seventh
Amendment to the Credit Agreement dated as of September 21, 2022
with the Agent for the Lenders. Under the Credit Agreement, the
Lenders extended term loans with a current principal amount of
$51.7 million (the "Term Loans") pursuant to the terms and subject
to the conditions of the Credit Agreement.
Pursuant to the Seventh Amendment, the Lenders agreed not to
exercise remedies with respect to a number of events of default as
follows:
-- prior to April 15, 2024 to the extent $2 million is advanced
to the Company pursuant to the Note on March 21, 2024; and
-- prior to May 15, 2024 to the extent an additional $2 million
is advanced to the Company pursuant to the Note on March 30, 2024.
Each such date being referred to as a "Forbearance Termination
Date".
The Seventh Amendment further provides that (1) the minimum
unrestricted cash amount under the Credit Agreement will be zero
from March 21, 2024 until the day prior to the Forbearance
Termination Date and will become $10 million on the Forbearance
Termination Date, and (2) an event of default by the Company under
the Note will constitute an event of default under the Credit
Agreement as well.
In connection with the issuance of the Note, the Company entered
into a Second Amendment to Purchase Agreement dated October 10,
2023, between the Company and Presto CA. Pursuant to the CA
Purchase Agreement, the Company had issued and sold to Presto CA
1,500,000 shares of the Company's common stock at a purchase price
of $2.00 per share for an aggregate purchase price of $3 million.
The CA Purchase Agreement contained anti-dilution provisions
relating to future issuances or deemed issuances of the Company's
common stock from October 16, 2023 through April 1, 2024 at a price
per share below $2.00. The Second Amendment extended that period
through September 30, 2024 and affirmed that the current trigger
price for anti-dilution protection is an issuance below $0.25 per
share following other recent offerings by the Company.
Furthermore, on March 21, 2024, in connection with the transactions
described herein, Presto CA and the Lenders entered into a waiver
and extension of registration rights, pursuant to which the parties
agreed to extend the deadline for the Company to register the
Anti-Dilution Shares and the Forbearance Shares (each as defined in
the Extension) until April 15, 2024.
On March 4, 2024, in connection with the previously-disclosed
offering of 8,533,000 shares of the Company's common stock (the
"March Common Stock Offering") at an offering price of $0.25 per
share, anti-dilution adjustments were triggered with respect to the
Third Amendment Warrants and the Fifth Amendment Warrants.
The "Third Amendment Warrants" were originally issued on October
10, 2023 in connection with the Third Amendment to the Credit
Agreement and, upon initial issuance, entitled the Lenders to
purchase 3,000,000 shares of the Company's common stock at a
purchase price of $0.01 per share. The Third Amendment Warrants
have been subject to adjustments previously disclosed and, as a
result of the March Common Stock Offering, became exercisable for
24,000,000 shares of the Company's common stock. The Third
Amendment Warrants contained anti-dilution provisions relating to
future issuances or deemed issuances of the Company's common stock
from October 16, 2023 through April 1, 2024. That period was
extended through September 30, 2024.
The "Fifth Amendment Warrants" were originally issued on January
31, 2024 in connection with a fifth amendment to the Credit
Agreement and, upon initial issuance, entitled the Lenders to
purchase 5,323,298 shares of the Company's common stock at a
purchase price of $0.01 per share. The Fifth Amendment Warrants
have been subject to adjustments previously disclosed and, as a
result of the March Common Stock Offering, became exercisable for
8,517,278 shares of the Company's common stock. The Fifth Amendment
Warrants contained anti-dilution provisions relating to future
issuances or deemed issuances of the Company's common stock from
October 16, 2023 through April 1, 2024. That period was extended
through September 30, 2024.
The Company projects that the initial $2 million financed under the
Note will be sufficient to fund its operations through April 15,
2024 and the additional $2 million will be sufficient to fund its
operations through May 15, 2024.
About Presto Automation
Presto (Nasdaq: PRST) provides enterprise-grade AI and automation
solutions to the restaurant industry. Presto's solutions are
designed to decrease labor costs, improve staff productivity,
increase revenue, and enhance the guest experience. Presto offers
its AI solution, Presto Voice, to quick service restaurants (QSR)
and its pay-at-table tablet solution, Presto Touch, to casual
dining chains. Some of the most recognized restaurant names in the
United States are among Presto's customers, including Carl's Jr.,
Hardee's, and Checkers for Presto Voice.
"Substantial doubt exists about the Company's ability to continue
as a going concern within one year after the date that the
financial statements are available to be issued. The Company
continues efforts to mitigate the conditions or events that raise
this substantial doubt, however, as some components of these plans
are outside of management's control, the Company cannot offer any
assurances they will be effectively implemented. The Company
cannot offer any assurance that any additional financing will be
available on acceptable terms or at all. If the Company is unable
to raise additional capital it would likely lead to an event of
default under the Credit Agreement and the potential exercise of
remedies by the Agent and Lender, which would materially and
adversely impact its business, results of operations and financial
condition," the Company said in its Quarterly Report for the period
ended Sept. 30, 2023.
PRUDENT AMERICAN: Plan Exclusivity Period Extended to May 14
------------------------------------------------------------
Judge Brenda T. Rhoades of the U.S. Bankruptcy Court for the
Eastern District of Texas extended Prudent American Technologies,
Inc.'s exclusive periods to file its plan of reorganization and
obtain acceptance thereof to May 14 and July 15, 2024,
respectively.
As shared by Troubled Company Reporter, the Debtor is engaged in
the manufacturing and sale of key metal and plastic components in
the assembly of military and commercial firearms and other
products.
The Debtor cites that it has proposed to sell substantially all of
its assets pursuant to Section 363 of the Bankruptcy Code. A sale
hearing is set for March 12, 2024. If the sale is approved, the
Debtor intends to file a liquidating plan.
Prudent American Technologies is represented by:
Howard Marc Spector, Esq.
Spector & Cox, PLLC
12770 Coit Road, Suite 850
Dallas, TX 75251
Tel: (214) 365-5377
Fax: (214) 237-3380
Email: hspector@spectorcox.com
About Prudent American Technologies
Prudent American Technologies, Inc., filed voluntary Chapter 11
petition (Bankr. E.D. Texas Case No. 23-41959) on Oct. 17, 2023,
with up to $50,000 in assets and $10 million to $50 million in
liabilities. Jay Rigby, interim president and chief executive
officer, signed the petition.
Judge Brenda T. Rhoades oversees the case.
Howard Marc Spector, Esq., at Spector & Cox, PLLC, is the Debtor's
legal counsel.
The U.S. Trustee for Region 6 appointed an official committee to
represent unsecured creditors in the Debtor's Chapter 11 case.
QUAD/GRAPHICS INC: Fitch Alters Outlook on B+ LongTerm IDR to Pos.
------------------------------------------------------------------
Fitch Ratings has affirmed Quad/Graphics, Inc.'s Long-Term Issuer
Default Rating (IDR) at 'B+' and revised the Rating Outlook to
Positive from Stable. Fitch has also affirmed Quad's senior secured
credit facility and term loan at 'BB'/'RR2'.
The Positive Outlook reflects Fitch's expectation of EBITDA
leverage remaining at low 2x in the next 18-24 months.
Additionally, the ratings reflect Quad's leading market position,
deleveraging capacity via significant debt reduction and
expectation of FCF margin in the low single digit range. The
ratings are constrained by secular industry headwinds limiting
revenue growth over the forecast period.
KEY RATING DRIVERS
Leading Market Position: Quad's ratings reflect its leading market
position as the second largest commercial printer in the U.S and
14th largest marketing agency company, according to the 2023 Ad Age
Agency Report. Fitch believes the company's significant scale and
size provides economies of scale benefits in a highly competitive
and fragmented printing industry. Quad also benefits from
longstanding relationships with its clients (its largest clients
average over 22 years as customers), a high contracted revenue base
and low customer concentration.
Low Leverage: Fitch expects gross leverage at approximately 2.1x by
the end of FY 2024, improving significantly from 3.3x gross
leverage at FY 2021, largely due to debt reduction. Fitch expects
management will persist in their strategy of allocating capital
towards debt repayments, distribution of dividends and shareholder
returns. Quad has also lowered its long-term net leverage target to
1.75x-2.25x from 2.0x-2.5x. Additionally, the company has recently
reinitiated dividends in 2024 after a more than three year gap.
Fitch expects the company to continue its dividend and share
buyback practices over the forecast period.
Secular Industry Headwinds: Quad's business profile continues to
face secular headwinds limiting revenue growth over the forecast.
Fitch believes the print industry will keep seeing volume declines
as digital substitution has curbed demand for printed products.
According to a recent IBIS report, printing revenue has fallen at a
CAGR of 1.9% over the past five years with expected revenues of
$87.7 billion.
The pandemic and the increased interest rates in 2022-2023, as well
as the increase in postage rates, have accelerated the shift to
digital media, as it catapulted the distribution and hosting of
media content through online channels. The declining demand has
resulted in overcapacity and pricing pressures in the U.S. print
industry.
Good Financial Flexibility: The ratings are supported by sufficient
liquidity derived from cash balances, availability under the
company's revolver and its expectation for Quad to generate FCF
margins in the low single digit range over the forecast period.
Continued cost rationalizations and deleveraging with sale of any
non-core asset sales could also provide additional financial
flexibility.
Diversifying Revenue: Quad is diversifying its revenue base by
expanding its higher growth marketing solutions with new and
existing clients. During 2023, approximately 10% of revenue came
from agency solutions. Quad's transformation as a marketing
solutions provider began in 2014 when the company started making
several growth acquisitions/ investments. This revenue
diversification combined with continued cost rationalization will
continue to transform Quad's operating profile over the long run.
DERIVATION SUMMARY
Quad's ratings reflect its leading market position. Fitch expects
that gross leverage will remain in the low 2x range over the next
18-24 months. In addition, the ratings reflect financial
flexibility supported by sufficient liquidity, cost rationalization
efforts and expectation of positive FCF. The ratings are
constrained by secular industry headwinds limiting revenue growth
from digital substitution.
Quad has a relatively strong competitive position based on the
scale and size of its operations in the U.S. commercial printing
market. Although Fitch does not provide ratings for any closely
comparable peers in this sector, the company is well positioned
with EBITDA leverage in low 2.0x range, positive FCF and strong
interest coverage relative to other industry peers at the 'B+'
rating level.
KEY ASSUMPTIONS
- Fitch expects 2024 revenue to decline in mid-single digits due to
organic decline in the printing segment as well as secular industry
headwinds;
- EBITDA in the low 8% range over the forecast period based on the
recent cost reduction initiatives and plant closures;
- Capex of $65 million-$70 million range annually;
- Dividends ranging in $10 million-$20 million;
- Share buybacks ranging in $10 million-$15 million;
- Debt reduction in 2024 with uses of cash flow prioritized towards
dividend and share-repurchases, resulting in gross EBITDA leverage
in low 2.0x range.
RECOVERY ANALYSIS
For entities rated 'B+' and below, where default is closer and
recovery prospects are more meaningful to investors, Fitch
undertakes a tailored, or bespoke, analysis of recovery upon
default for each issuance. The resulting debt instrument rating
includes a Recovery Rating or published 'RR' (graded from 'RR1' to
'RR6') and is notched from the IDR accordingly. In this analysis,
there are three steps: (i) estimating the distressed enterprise
value (EV); (ii) estimating creditor claims; and (iii) distribution
of value.
Key Recovery Rating Assumptions: Fitch assumes that Quad would be
reorganized as a going-concern in bankruptcy rather than
liquidated. Fitch has assumed a 10% administrative claim.
Going-Concern (GC) Approach: Quad's GC EBITDA estimate reflects
Fitch's view of a sustainable, post-reorganization EBITDA level
upon which Fitch bases the enterprise valuation. The GC EBITDA is
assumed at $200 million and reflects a secular decline in
commercial printing and highly competitive and fragmented nature of
the industry.
An EV multiple of 4x EBITDA is applied to the GC EBITDA to
calculate a post-reorganization enterprise value. The choice of
this multiple considered the following factors: The historical
bankruptcy case study exit multiples in TMT sector have ranged from
4.0x-7.0x, with a median of 5.9x. The recovery analysis assumes
that the Company's revolving credit facility is fully drawn to
provide liquidity in a distress situation. The waterfall results in
a recovery rating of 'RR2' (ranging from 71% to 90%) for senior
secured credit facility.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Material improvement in operating profile evidenced by sustained
positive low single digit revenue growth and stabilization in
EBITDA margins;
- EBITDA leverage sustained below 3.0x;
- Consistently positive FCFs with FCF margin near mid-single
digits;
- (CFO-Capex)/Debt above 10%.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Sustained revenue declines or higher than expected deterioration
of EBITDA margins;
- EBITDA Leverage at or above 4.0x;
- FCFs sustained near zero;
- (CFO-Capex)/Debt less than 5%.
LIQUIDITY AND DEBT STRUCTURE
Sufficient Liquidity: Fitch views liquidity as sufficient,
supported by cash balances of $52.9 million and $401.4 million
availability under the revolving facility as of Dec. 31, 2023.
Total liquidity is reduced to $406.7 million under the company's
most restrictive debt covenants, and consists of $52.9 million in
cash and $353.8 million available under its revolving facility. The
company's revolving credit facility was reduced to $342.5 million
as a portion of the RCF matured on Jan. 31, 2024. Fitch expects FCF
margin in low single digit range as Quad resumes dividends in
2024.
Debt Structure: Quad amended its credit facility in November 2021,
which reduced the revolver commitment to $432.5 million from $500
million and extended the maturity of the revolver and term loan. A
portion of the revolver ($90 million) and term loan of $91.5
million, of which $87.7 million was due on Jan. 31, 2024, was paid
at maturity date. The remaining outstanding amounts are due in
November 2026.
The company utilized the available cash in hand and revolving
credit facility to repay its outstanding debt on Term Loan A of
$87.7million due on January 31, 2024. The next significant debt
maturity is due in November 2026.
The company's seventh amendment transitioned the company's
reference rate from LIBOR to SOFR. In addition, the company added
an additional $25 million to Term Loan A under the extended
maturity date of November 2026 as part of its eight amendment in
January 2024.
ISSUER PROFILE
Quad/Graphics, Inc. (Quad) is the second largest commercial
printing company in the U.S. and one of the largest globally in the
very fragmented printing industry.
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
----------- ------ -------- -----
Quad/Graphics, Inc. LT IDR B+ Affirmed B+
senior secured LT BB Affirmed RR2 BB
RV RETAILER: S&P Lowers ICR to 'B-' on Prolonged Leverage Spike
---------------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on RV Retailer
Intermediate Holdings LLC to 'B-' from 'B+'. S&P also lowered its
issue-level rating on the company's term loan to 'B' from 'BB-'.
S&P's '2' recovery rating indicates our expectation for substantial
(70%-90%; rounded estimate: 75%) recovery in the event of a payment
default.
S&P said, "The stable outlook reflects our forecast for S&P Global
Ratings-adjusted debt to EBITDA of approximately 7x in fiscal 2024
and our expectation for RV Retailer to generate sufficient EBITDA
to cover its fixed charges and maintain adequate liquidity through
at least 2024.
"The downgrade to 'B-' reflects our revised forecast for leverage
of approximately 7x in fiscal 2024 due to a longer-than-anticipated
recovery in RV retail demand. Despite our expectation for improved
credit metrics in 2024, we downgraded RV Retailer because we expect
a more prolonged recovery for retail sales due to lower
industrywide volumes and weaker pricing for new RVs, which will
result in leverage of approximately 7x through at least 2024. We
estimate RV Retailer ended fiscal 2023 (ended Dec. 2024) with S&P
Global Ratings-adjusted leverage of about 11x, driven by a rapid
decline in demand for RVs, significant discounting, and increased
selling costs to clear aged inventory from its dealerships.
"Our measure of adjusted debt adds a sizable operating lease
adjustment and does not net cash. We also do not add costs
associated with sales incentives, rebranding costs and losses
related to flooding in 2023. We now forecast total RV revenue will
be flat to down 5% in 2024 and S&P Global-ratings adjusted EBITDA
margin will improve to 6.0%-6.5% from about 4% in 2023. While we
expect RV retail sales will stabilize in 2024, pricing could
decline as the industry produces more lower-priced models to entice
buyers into the market. Our expectation for substantial margin
improvement is predicated on reduced discounting and lower abnormal
selling costs, such as commissions paid to salespeople to clear out
aged inventory, compared with 2023.
"Nonetheless, while we expect leverage could further improve over a
two-year time frame, our forecast is reliant on a recovery in
retail RV demand in 2024 and 2025 and the nonrecurrence of certain
operating events. Additionally, the current macroeconomic backdrop
poses downside risks to our base-case forecast for RV Retailer
because RVs are a highly discretionary purchase that are typically
financed over 10-20 years. Buyers may continue to stay on the
sidelines through 2024 if interest rates on loans remain high. The
interest rate equation for those trading in used RVs is also
affected by the fact that the vehicle the consumer currently owns
was likely financed at a much more attractive interest rate."
RV Retailer's acquisitive appetite is a risk factor. The company
has an expansion and investment plan that includes store
acquisitions, real estate purchases, and expanding its servicing
and repairs footprint. Since its formation in 2018, RV Retailer has
meaningfully expanded its footprint of dealerships to be the
second-largest retailer of RVs in North America in under three
years. It added 17 stores in 2022 and as of September 2023, the
company operated 104 retail locations across 33 states, making it
the second-largest RV dealer in the U.S.
While the company has not made meaningful acquisitions since the
start of 2023 and has closed some underperforming dealerships, S&P
believes growth through acquisition remains a key piece of the
company's strategy going forward, and RV Retailer might even take
advantage of the difficult retail environment to negotiate
acquisitions, possibly increasing leverage compared with its base
case. Its sizable investment plan is a source of risk, particularly
if it makes acquisitions during a period of poor RV demand.
The economic cycle and potential declines in consumer credit
availability could further slow demand for new and used RVs. RV
Retailer operates in a competitive and highly fragmented industry.
The company's geographic footprint is somewhat concentrated, and
manufacturing supplier relationships are highly concentrated, which
is typical for RV dealerships. In addition, with an EBITDA margin
historically in the high-single- to low-double-digit percent range,
the company ranks lower than most other rated leisure companies.
Dealers typically vie for inventory when buying behavior is
strong.
In turn, RV original equipment manufacturers compete to manufacture
and deliver inventory to satisfy dealers. In 2019 and 2022,
wholesale shipments outpaced retail demand and contributed to
industrywide corrections and surplus inventory at dealerships,
which led to discounting and temporarily pressured dealer margins.
Such dynamics could introduce variability in revenue, EBITDA
margin, and working capital if the industry does not match supply
with demand.
Business risks are partly offset by less volatile demand for
vehicle parts and services, high margins from finance and
insurance, and the company's increasing scale. RV Retailer will
increasingly benefit from scale efficiencies as it expands, if
scale enhances its ability to manage inventory, extract cost
savings, and raise capital to attract acquisitions.
S&P said, "The stable outlook reflects our forecast for S&P Global
Ratings-adjusted debt to EBITDA of approximately 7x in fiscal 2024
and our expectation for RV Retailer to generate sufficient EBITDA
to cover its fixed charges and maintain adequate liquidity through
at least 2024.
"We could lower our rating on RV Retailer if its retail sales,
EBITDA margin, and cash flow significantly underperform our
base-case forecast in a manner that leads us to view its capital
structure as unsustainable over the long term. We could also lower
our ratings if the company's liquidity position meaningfully
deteriorates due to its use of revolver availability for
acquisition or its cash flow unexpectedly declines.
"Although unlikely over the next 12 months, we could raise the
rating on RV Retailer if we believe it can sustain S&P Global
Ratings-adjusted debt to EBITDA below 6x with a sufficient cushion
to absorb volatility and acquisition activity over an economic
cycle. Such a scenario would depend on whether we believe RV demand
is sufficiently sustainable to enable RV Retailer to manage costs
and maintain leverage below 6x. The RV business is highly cyclical;
therefore, we would likely require at least a 1x sustained cushion
compared to our upgrade threshold during times of economic and
consumer spending growth."
S&B RESTAURANTS: Voluntary Chapter 11 Case Summary
--------------------------------------------------
Debtor: S&B Restaurants
d/b/a Gio's Pizza
2700 Yulupa Avenue, #5
Santa Rosa, CA 95405
Chapter 11 Petition Date: March 27, 2024
Court: United States Bankruptcy Court
Northern District of California
Case No.: 24-10160
Judge: Hon. William J. Lafferty
Debtor's Counsel: Arasto Farsad, Esq.
FARSAD LAW OFFICE, P.C.
1625 The Alameda, Suite 525
San Jose, CA 95126
Tel: 408-641-9966
Estimated Assets: $500,000 to $1 million
Estimated Liabilities: $500,000 to $1 million
The petition was signed by Barindervir Singh Sidhu, president.
A full-text copy of the petition is now available for download at
https://www.pacermonitor.com/view/BLYVF6Q/SB_Restaurants_dba_Gios_Pizza__canbke-24-10160__0001.0.pdf?mcid=tGE4TAMA
SANDVINE LP: S&P Downgrades ICR to 'CCC', Outlook Negative
----------------------------------------------------------
S&P Global Ratings lowered its issuer credit rating on Sandvine
L.P. to 'CCC' from 'B-'. S&P also lowered its issue-level rating on
its first-lien term loan and revolving credit facility to 'CCC' and
its issue-level rating on its second-lien term loan to 'CCC-'.
The negative outlook reflects the elevated risk of a distressed
transaction within the next 12 months given the potentially
damaging effects of the Entity List placement.
The two-notch downgrade reflects the negative impacts of the Entity
List placement to Sandvine combined with the October 2025
first-lien maturity. Prior to the Entity List placement, Sandvine's
performance had been weak. The company faced year-over-year revenue
declines for six consecutive quarters as of September 2023 due to
the transition to lower-risk customers and markets, product
consolidation, product digestion after COVID-19, and a tougher
macroeconomic environment. Its S&P Global Ratings-adjusted
debt-to-EBITDA was 7.3x as of September 2023--not necessarily an
unsustainable level--but its EBITDA interest coverage was low at
1.3x. While its cash flow was positive by more than $20 million for
the prior 12 months, most of that was due to working capital
monetization. Despite these metrics, S&P previously had a stable
outlook on Sandvine because it expected revenue to stabilize in
2024 and cost savings to boost its margin and cash flow.
S&P said, "While the impact of the Entity List placement is
difficult to quantify given the early stage of the issue, we
believe it will likely tip the balance such that we will view its
capital structure as unsustainable given the already weakened state
of the operating metrics. Bloomberg News reported in September 2023
that Sandvine made sales worth more than $30 million in Egypt.
"In addition, the company may suffer reputational damage, at least
temporarily over the next several quarters, that prevents some
customers from placing new orders. Finally, we note that similar
issues have arisen in the past. In 2020, Belarus' use of the
company's products to block internet access during a disputed
presidential election drew criticism from multiple U.S. senators.
Subsequently, the company terminated its deal with Belarus in
September 2020.
The near-term nature of the first-lien term loan maturity in
October 2025 elevates the risk of a distressed transaction within
12 months, fitting the definition of the 'CCC' rating as opposed to
a 'CCC+' rating, for which the risk of a distressed transaction is
typically beyond 12 months. If not for the near-term maturity, S&P
may have limited its downgrade to a single notch because Sandvine
would have had more time to adjust its business model before the
pressure of a current maturity set in. A distressed transaction
could be an exchange of instruments or even a maturity extension
without adequate compensation.
The negative outlook reflects elevated risk of a distressed
transaction within the next 12 months given the potentially
damaging effects of the Entity List placement.
S&P could lower the rating to 'CCC-' if it sees elevated risk of a
distressed transaction within six months. This would likely occur
if:
-- The Entity List placement remains unresolved into 2025.
-- A resolution of the placement results in Sandvine abandoning a
significant amount of revenue or changes in its product or business
practices that S&P believes render the capital structure
unsustainable.
-- The company has not addressed its October 2025 first-lien term
loan before six months to maturity.
S&P said, "We could lower the company's rating to 'SD' (selective
default) if it engages in a transaction we deem to be distressed,
such as an exchange of instruments or a maturity extension without
adequate compensation. The key test will be whether we believe
there is a realistic possibility of a conventional default in the
absence of the transaction.
"We could take a positive rating action if Sandvine can minimize
the business impact of the Entity List placement and reduce its
cost structure such that we believe the capital structure is
sustainable. This would likely require a resolution over the next
several months and a large cost restructuring put in place in time
for lenders to gain confidence in providing financing at
nondistressed spreads. It may require an equity infusion.
"Social factors are a negative consideration in our credit analysis
of Sandvine. While the company's deep packet inspection products
allow telecom operators to perform legitimate functions including
prioritizing certain web traffic like streaming services and
filtering out exploitative content, it can also be misused by
authoritarian regimes to surveille, silence, and target dissidents.
The U.S. Commerce Department placed the company on its Entity List
because of its sales in Egypt. Separate from the Entity List
placement, in 2020 the use of the company's products by Belarus to
block internet access during a disputed presidential election drew
criticism from multiple U.S. senators. The company terminated its
deal with Belarus in September 2020.
"Management and governance factors are a negative consideration. We
believe multiple cases of government scrutiny on the company for
how certain authoritarian countries misuse its products indicates a
higher business risk tolerance than most of the other companies we
rate. We also believe the company's highly leveraged financial risk
profile points to corporate decision-making that prioritizes the
interests of its controlling owners, as is the view for most
financial sponsor-owned companies. This also reflects
private-equity owners' generally finite holding periods and focus
on maximizing shareholder returns."
Environmental, social, and governance (ESG) credit factors for this
change in credit rating/outlook and/or CreditWatch status:
-- Social capital
-- Risk management, culture, and oversight
SECURE ENERGY: Moody's Withdraws 'Ba3' CFR on Debt Repayment
------------------------------------------------------------
Moody's Ratings has withdrawn all ratings for Secure Energy
Services Inc., including the Ba3 corporate family rating, Ba3-PD
probability of default rating, the B2 senior unsecured notes
ratings and B1 senior secured second lien notes rating. The SGL-1
speculative grade liquidity rating has also been withdrawn. Prior
to withdrawal the outlook was stable.
RATINGS RATIONALE
Moody's has withdrawn the ratings because Secure has repaid the
debt rated by Moody's.
Secure Energy Services Inc. is an oilfield services company
headquartered in Calgary Alberta, primarily focused on serving the
Western Canadian oil and gas industry and the Northern US.
SINTX TECHNOLOGIES: Incurs $8.3 Million Net Loss in 2023
--------------------------------------------------------
SINTX Technologies, Inc. filed with the Securities and Exchange
Commission its Annual Report on Form 10-K reporting a net loss of
$8.26 million on $2.63 million of total revenue for the year ended
Dec. 31, 2023, compared to a net loss of $12.04 million on $1.56
million of total revenue for the year ended Dec. 31, 2022.
As of Dec. 31, 2023, the Company had $15.36 million in total
assets, $6.59 million in total liabilities, and $8.77 million in
total stockholders' equity.
Lehi, Utah-based Tanner LLC, the Company's auditor since 2017,
issued a "going concern" qualification in its report dated March
27, 2024, citing that the Company has recurring losses from
operations and negative operating cash flows and needs to obtain
additional financing to finance its operations. These issues raise
substantial doubt about its ability to continue as a going
concern.
A full-text copy of the Form 10-K is available for free at:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001269026/000149315224011546/form10-k.htm
About SINTX Technologies
Headquartered in Salt Lake City, Utah, SINTX Technologies, Inc. --
https://ir.sintx.com -- is an advanced ceramics company that
develops and commercializes materials, components, and technologies
for biomedical, technical, and antipathogenic applications . The
core strength of SINTX Technologies is the manufacturing, research,
and development of advanced ceramics for external partners.
SORRENTO THERAPEUTICS: $2-Mil. Financing Infusion, Asset Sale OK'd
------------------------------------------------------------------
Emlyn Cameron of Law360 reports that a Texas bankruptcy judge on
Friday, March 8, 2024, approved drug developer Sorrento
Therapeutics Inc.'s bid for an asset sale and $2 million in funds
to fuel its Chapter 11 case, saying they represented the only
option outside of a transition to Chapter 7.
About Sorrento Therapeutics
Sorrento Therapeutics, Inc. -- http://www.sorrentotherapeutics.com/
-- is a clinical and commercial stage biopharmaceutical company
developing new therapies to treat cancer, pain (non-opioid
treatments), autoimmune disease and COVID-19. Sorrento's
multimodal, multipronged approach to fighting cancer is made
possible by its extensive immuno-oncology platforms, including key
assets such as next-generation tyrosine kinase inhibitors ("TKIs"),
fully human antibodies ("G-MAB(TM) library"), immuno-cellular
therapies ("DAR-T(TM)"), antibody-drug conjugates ("ADCs"), and
oncolytic virus ("Seprehvec(TM)"). Sorrento is also developing
potential antiviral therapies and vaccines against coronaviruses,
including STI-1558, COVISHIELD(TM) and COVIDROPS(TM), COVI-MSCTM;
and diagnostic test solutions, including COVIMARK(TM).
Sorrento Therapeutics, Inc., and Scintilla Pharmaceuticals, Inc.,
sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No.
23-90085) on Feb. 13, 2023. Sorrento disclosed assets in excess of
$1 billion and liabilities of about $235 million as of Feb. 10,
2023.
Judge David R. Jones originally oversaw the cases.
The Debtors tapped Latham & Watkins, LLP as bankruptcy counsel;
Jackson Walker, LLP as local counsel; Tran Singh, LLP as conflicts
counsel; and M3 Advisory Partners, LP as financial advisor. Mohsin
Y. Meghji, managing partner at M3, serves as the Debtors' chief
restructuring officer. Stretto Inc. is the claims, noticing and
solicitation agent.
Norton Rose Fulbright US, LLP and Milbank, LLP represent the
official committee of unsecured creditors appointed in the Debtors'
Chapter 11 cases.
On April 10, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent the Debtors' equity security
holders.
On April 10, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent the Debtors' equity security
holders. Glenn Agre Bergman & Fuentes, LLP and Greenberg Traurig,
LLP serve as the equity committee's bankruptcy counsel.
SORRENTO THERAPEUTICS: Can Keep Chapter 11 Case in Houston
----------------------------------------------------------
Randi Love of Bloomberg Law reports that a Texas judge ruled that
Sorrento Therapeutics Inc. can keep its bankruptcy case in Houston
following a dispute over the legitimacy of its connection to the
Lone Star state.
Judge Christopher M. Lopez of the US Bankruptcy Court for the
Southern District of Texas rejected an effort by the Justice
Department's bankruptcy watchdog, the US Trustee, to dismiss or
transfer the case, finding the request was untimely.
About Sorrento Therapeutics
Sorrento Therapeutics, Inc. -- http://www.sorrentotherapeutics.com/
-- is a clinical and commercial stage biopharmaceutical company
developing new therapies to treat cancer, pain (non-opioid
treatments), autoimmune disease and COVID-19. Sorrento's
multimodal, multipronged approach to fighting cancer is made
possible by its extensive immuno-oncology platforms, including key
assets such as next-generation tyrosine kinase inhibitors ("TKIs"),
fully human antibodies ("G-MAB(TM) library"), immuno-cellular
therapies ("DAR-T(TM)"), antibody-drug conjugates ("ADCs"), and
oncolytic virus ("Seprehvec(TM)"). Sorrento is also developing
potential antiviral therapies and vaccines against coronaviruses,
including STI-1558, COVISHIELD(TM) and COVIDROPS(TM), COVI-MSCTM;
and diagnostic test solutions, including COVIMARK(TM).
Sorrento Therapeutics, Inc., and Scintilla Pharmaceuticals, Inc.,
sought Chapter 11 protection (Bankr. S.D. Tex. Lead Case No.
23-90085) on Feb. 13, 2023. Sorrento disclosed assets in excess of
$1 billion and liabilities of about $235 million as of Feb. 10,
2023.
Judge David R. Jones originally oversaw the cases.
The Debtors tapped Latham & Watkins, LLP as bankruptcy counsel;
Jackson Walker, LLP as local counsel; Tran Singh, LLP as conflicts
counsel; and M3 Advisory Partners, LP as financial advisor. Mohsin
Y. Meghji, managing partner at M3, serves as the Debtors' chief
restructuring officer. Stretto Inc. is the claims, noticing and
solicitation agent.
Norton Rose Fulbright US, LLP and Milbank, LLP represent the
official committee of unsecured creditors appointed in the Debtors'
Chapter 11 cases.
On April 10, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent the Debtors' equity security
holders.
On April 10, 2023, the U.S. Trustee for Region 7 appointed an
official committee to represent the Debtors' equity security
holders. Glenn Agre Bergman & Fuentes, LLP and Greenberg Traurig,
LLP serve as the equity committee's bankruptcy counsel.
SPITFIRE ENERGY: Plan Exclusivity Period Extended to May 7
----------------------------------------------------------
Judge Robert L. Jones of the U.S. Bankruptcy Court for the Northern
District of Texas extended Spitfire Energy Group, LLC's exclusive
periods to file a plan of reorganization and obtain acceptance
thereof to May 7 and July 5, 2024, respectively.
As shared by Troubled Company Reporter, the Debtor explains that it
has been working diligently, with the assistance of its advisors,
towards an exit from bankruptcy. A hearing on the Debtor's request
to sell substantially all of the Debtor's physical assets is
scheduled for February 28, 2024. Said sale hearing was delayed due
to the Debtor receiving a topping bid following the auction.
In addition, said bid will enable the Debtor to realize more than
$1 million in additional value for its assets. Following the
closing of the sale, the Debtor's primary remaining assets will
consist of cash and litigation claims. The Debtor anticipates being
able to propose a confirmable plan. Under these circumstances,
cause exists for the requested extension of the Exclusive Periods.
Spitfire Energy Group, LLC is represented by:
Clayton D. Ketter, Esq.
PHILLIPS MURRAH P.C.
3710 Rawlins Street, Suite 900
Dallas, TX 75219
Tel: (405) 235-4100
Email: cdketter@phillipsmurrah.com
- and -
Jason A. Sansone, Esq.
PHILLIPS MURRAH P.C.
101 North Robinson Ave., Suite 1300
Oklahoma City, OK 73102
Tel: (405) 235-4100
Email: jasansone@phillipsmurrah.com
About Spitfire Energy Group
Spitfire Energy Group, LLC is a strategic midstream and water
management provider and currently operates commercial saltwater
disposal facilities in the Texas panhandle with over 165 miles of
pipeline gathering and a disposal capacity of over 100,000 barrels
per day. Such facilities are primarily located in Hemphill County
and Wheeler County, Texas.
Spitfire Energy Group filed Chapter 11 petition (Bankr. N.D. Texas
Case No. 23-20186) on Sept. 1, 2023, with $10 million to $50
million in both assets and liabilities. David D. Le Norman,
manager, signed the petition.
Judge Robert L. Jones oversees the case.
The Debtor tapped Clayton D. Ketter, Esq., at Phillips Murrah PC as
legal counsel; Energy Capital Solutions, LLC as investment banker;
and Watts Guerra LLP, Lovell, Isern & Farabough, LLP and Lovell
Hoffman Law, PLLC as special litigation counsel.
ST. IVES RV RESORT: Case Summary & Seven Unsecured Creditors
------------------------------------------------------------
Debtor: St. Ives RV Resort LLC
4959 FM 2917 Rd
Alvin, TX 77511
Business Description: The Debtor owns and operates RV Park and
campsites.
Chapter 11 Petition Date: March 28, 2024
Court: United States Bankruptcy Court
Southern District of Texas
Case No.: 24-80083
Judge: Hon. Jeffrey P. Norman
Debtor's Counsel: Robert C Lane, Esq.
THE LANE LAW FIRM
6200 Savoy Dr Ste 1150
Houston TX 77036-3369
Tel: (713) 595-8200
Fax: (713) 595-8201
Email: notifications@lanelaw.com
Total Assets: $1,521,677
Total Debts: $5,038,189
The petition was signed by Jay Pasala as president.
A full-text copy of the petition containing, among other items, a
list of the Debtor's seven unsecured creditors is available for
free at PacerMonitor.com at:
https://www.pacermonitor.com/view/2D3J6DI/St_Ives_RV_Resort_LLC__txsbke-24-80083__0001.0.pdf?mcid=tGE4TAMA
SVB FINANCIAL: Farella Braun & Martel Wants $49,000 Unpaid Fees
---------------------------------------------------------------
Emlyn Cameron of Law360 reports that Farella Braun & Martel LLP,
which previously represented Silicon Valley Bank's parent in a
dispute over fraud coverage, has sued the Federal Deposit Insurance
Corp. in a California federal court to extract nearly $49,000 in
unpaid legal fees it says the agency must pay on behalf of the
defunct lender.
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.
On June 13, 2023, a collective of depositors of the Silicon Valley
Bank (Cayman Islands Branch) filed a petition with the Court
seeking an order that SVB Cayman be wound up and liquidators be
appointed under the provisions of the Companies Act (2023 Revision)
on the grounds that the Company is insolvent.
On June 29, 2023, the Grand Court of the Cayman Islands appointed
Andrew Childe and Michael Pearson of FFP limited in the Cayman
Islands and Niall Ledwidge from Stout in New York, United States as
Joint Official Liquidators of SVB Cayman.
Liquidators of Silicon Valley Bank (Cayman Islands) filed a Chapter
15 bankruptcy petition (Bankr. S.D.N.Y. Case No. 24-10076) on Jan.
18, 2024. The Liquidators' counsel in the U.S. case:
Warren E. Gluck
Holland & Knight LLP
Tel: (212) 513-3396
E-mail: warren.gluck@hklaw.com
SVB FINANCIAL: Wants to Sell SVB India to First Citizens
--------------------------------------------------------
Evan Ochsner of Bloomberg Law reports that Silicon Valley Bank's
bankrupt former parent company, SVB Financial, plans to sell its
subsidiary in India to First Citizens Bank for up to $21.8
million.
The proposed sale will help First Citizens "achieve synergies" with
SVB banking assets that it bought after the bank collapsed, SVB
Financial Group said in a court filing. First Citizens purchased
most of SVB's assets out of receivership last year after the bank
collapsed amid a run on deposits.
SVB Financial, which is in Chapter 11, asked the US Bankruptcy
Court for the Southern District of New York to approve the sale of
SVB India.
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.
On June 13, 2023, a collective of depositors of the Silicon Valley
Bank (Cayman Islands Branch) filed a petition with the Court
seeking an order that SVB Cayman be wound up and liquidators be
appointed under the provisions of the Companies Act (2023 Revision)
on the grounds that the Company is insolvent.
On June 29, 2023, the Grand Court of the Cayman Islands appointed
Andrew Childe and Michael Pearson of FFP limited in the Cayman
Islands and Niall Ledwidge from Stout in New York, United States as
Joint Official Liquidators of SVB Cayman.
Liquidators of Silicon Valley Bank (Cayman Islands) filed a Chapter
15 bankruptcy petition (Bankr. S.D.N.Y. Case No. 24-10076) on Jan.
18, 2024. The Liquidators' counsel in the U.S. case:
Warren E. Gluck
Holland & Knight LLP
Tel: (212) 513-3396
E-mail: warren.gluck@hklaw.com
TENET HEALTHCARE: Fitch Alters Outlook on 'B+' LongTerm IDR to Pos.
-------------------------------------------------------------------
Fitch Ratings has affirmed Tenet Healthcare Corp.'s (Tenet)
Long-Term Issuer Default Rating (IDR) at 'B+' and revised the
Rating Outlook to Positive from Stable. Fitch has also affirmed the
ABL's 'BB+'/'RR1' rating and upgraded the first lien notes to
'BB'/'RR2' from 'BB-'/'RR3', and the second lien and unsecured
notes to 'BB-'/'RR3' from 'B+'/'RR4'.
The Positive Outlook reflects Tenet's improving competitive
position and the durability of its financial results in recent
years, led by the increasing contribution of an Ambulatory segment
that has delivered consistently robust revenue growth with EBITDA
margins well above the double-digit levels in its Hospital
Operations and Services segment. Proceeds from high-multiple
hospital divestitures have recently enabled Tenet to repay over
$2.0 billion in debt.
Whether Tenet intends to stay at these improved leverage levels
will be a key factor in resolving the Positive Outlook and Fitch
will observe how the company deploys the pending divestiture
proceeds and allocates cash flow in future periods. Importantly and
as described in the Recovery Analysis section, the instrument
ratings are sensitive to the use of proceeds from the hospital
sales and could be downgraded depending on the amount of debt
repaid and amount reinvested into guarantor versus non-guarantor
assets.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Tenet Healthcare Corp. LT IDR B+ Affirmed B+
senior unsecured LT BB- Upgrade RR3 B+
senior secured LT BB+ Affirmed RR1 BB+
senior secured LT BB Upgrade RR2 BB-
Senior Secured
2nd Lien LT BB- Upgrade RR3 B+
KEY RATING DRIVERS
Ambulatory Segment Driving EBITDA Growth: Tenet is one of the
largest for-profit operators of acute care hospitals and ambulatory
surgery centers (ASCs). Following a step down in 2024 from Tenet
divesting over $250 million in hospital EBITDA in 1Q24, Fitch sees
sustainable, secular ASC tailwinds and Tenet's continuing ASC
investments driving mid-single-digit consolidated EBITDA growth
over the rating horizon.
While its Hospital Operations and Services segment (including its
Conifer revenue cycle management business) contributes about 80% of
revenue, Fitch estimates that its rapidly-growing Ambulatory
segment now accounts for over 40% of EBITDA net of NCI
distributions, and is likely to comprise nearly half thereof by YE
2025 inclusive of ongoing development and likely further
acquisitions.
The Ambulatory segment's ASCs not only diversify Tenet by sites of
care and payor mix, their margins are more than double those of its
hospitals and growth has been notable, with system-wide,
same-facility revenues up nearly 10% in 2023 (up nearly 20% in
aggregate for two years), driven 2/3 by volumes and 1/3 by revenue
per case, the latter reflecting Tenet's ongoing focus on increasing
service line acuity.
EBITDA Margin Likely Stable to Improving: Fitch expects Operating
EBITDA margin to decline slightly in 2024 due to Medicare payment
reductions, California minimum wage legislation and Tenet's 1Q24
hospital divestitures. However, Fitch sees increasing contributions
from its ASCs via organic growth, capital investment and M&A
driving further increases in consolidated Operating EBITDA margin
over the forecast within the 16%-17% range, consistent with a 'BB-'
IDR and hence the Positive Outlook.
EBITDA margin in the Hospital Operations and Services segment
declined about 100 bps over the past two years to about 12% amid a
spike in temporary labor costs and wage inflation in 2022 and
rising medical specialist fees in 2023, an increasing contribution
from Tenet's high-margin Ambulatory segment drove consolidated
Operating EBITDA margin about 50 bps higher over the same period to
about 16% in 2023, which is also up from pre-pandemic levels under
14% in 2019.
EBITDA Leverage Trending Lower; Issuer Unspecific: The Positive
Outlook reflects Fitch's expectation that EBITDA Leverage
(calculated using EBITDA net of NCI distributions as compared to
gross debt) will decline to 4.5x by YE 2024 (assuming Tenet repays
another $0.5 billion of debt later in 2024) and gradually trend
down to the bottom of the 4.0x-4.5x range by YE 2026, a range
consistent with a 'BB-' IDR.
The Positive Outlook further anticipates that Tenet will allocate
capital prudently going forward, balancing its objectives of
expanding via M&A and de novo development and returning capital to
shareholders with balance sheet management sustaining EBITDA
leverage under 4.5x. However, Fitch notes that while the company
publicly speaks to its leverage improvements, it has not
articulated a specific leverage target nor ratings target and thus
there is some risk that leverage drifts higher or makes a step
function increase in the case of a large acquisition (not assumed
in the Rating Case but have occurred in prior years).
The expected leverage levels are significantly improved from years
ago and a 2020 pandemic peak of about 8.0x. Tenet finished 2023
with EBITDA Leverage of 5.1x, down from 5.5x at YE 2022, driven by
an 8% increase in EBITDA net of NCI distributions in 2023. Several
recently-announced, high-multiple hospital divestitures, with
proceeds totaling $3.0 billion after taxes (over half received to
date) recently enabled Tenet to repay $2.1 billion of debt,
reducing leverage by a half turn and supporting Fitch's
expectation
Solid FCF: Fitch expects Tenet's FCF margin will sustain in the
3.5%-4% range through the rating horizon and as compared to nearly
$1.0 billion and an FCF margin of nearly 5% of revenue in 2023.
With Tenet divesting hospital assets contributing over $250 million
of EBITDA in early-to-mid 2024, Fitch expects FCF to step back to
nearly $700 million in 2024 but increase to nearly $900 million by
2026.
These levels, and CFO-CapEx/Debt forecasted at 6.5%-9.0%, are
consistent with the 'BB-' IDR and expected to trend up within their
ranges over the forecast, supporting the Positive Outlook. After
divestiture-driven debt reduction in 2024, Fitch assumes future FCF
is allocated solely to Ambulatory segment M&A (assumed at $0.5
billion annually, double Tenet's $250 million "baseline" for annual
ASC investment) and share repurchases (assumed at $300 million in
2024, rising to $500 million in 2026, vs. $250 million in 2022 and
$200 million in 2023).
DERIVATION SUMMARY
Tenet's Long-Term IDR reflects its higher leverage relative to
hospital industry peers HCA Healthcare, Inc. (HCA) and Universal
Health Services, Inc. (UHS; BB+/Stable). While Tenet's operating
and FCF margins lag those of HCA and UHS, Tenet made progress in
closing the gap by reducing costs, divesting lower-margin hospitals
and expanding its higher-margin ASC business. Tenet has a stronger
operating profile than lower-rated hospital industry peer Community
Health Systems, Inc. (CYH; CCC+). In contrast to CYH, but similar
to HCA and UHS, Tenet's operations are primarily located in urban
or large suburban markets with more favorable organic growth
prospects.
KEY ASSUMPTIONS
- Organic revenue growth of 2.5%-4.0% annually (about 4.0%-5.0%
including ASC acquisitions), driven by low-to-mid single-digit
growth in ASC volumes, low single-digit growth in hospital volumes,
and acuity-adjusted low single-digit growth in hospital and ASC
pricing, with revenue down in 2024 solely due to divestitures;
- Organic EBITDA growth of about 4.0% annually (about 6.0%-7.0%
including ASC acquisitions), reflecting only slight margin
improvement over the forecast with the higher-margin ASC business
commanding a rising share of Tenet's EBITDA mix;
- Capex rising slightly to 4.0% of revenue and $0.5 billion of
acquisitions annually, with M&A and development spending focused on
expanding the ASC business and offering higher-acuity services in
both segments;
- Interest payments of about $700 million-$725 million in
2025-2027, reflecting $2.1 billion in debt repayment in 1Q24 and
Fitch's assumption that Tenet repays another $0.5 billion in debt
in mid-2024 (note also that 2027 notes are assumed refinanced at
7.00%);
- FCF rising within 3.5%-4.0% of revenue and averaging $0.8 billion
annually, funding share repurchases averaging $0.4 billion
annually.
RECOVERY ANALYSIS
Fitch estimates an enterprise value (EV) on a going-concern basis
of $9.9 billion for Tenet after deducting 10% for administrative
claims assumed to be accrued in restructuring. The estimated EV
reflects estimated post-reorganization EBITDA-NCI of $1.5 billion
(GC EBITDA) based on Fitch's view GC EBITDA around these levels may
trigger a default or restructuring given likely refinancing risk
from negative FCF and high leverage. These assumptions have been
reduced from the prior committee to reflect the completed
dispositions.
Fitch's GC EBITDA calculation is based on a scenario in which: (i)
acute care hospital volumes turn negative amid elevated pressure
from adverse secular shifts in the settings in which care is
provided, with declines in acuity mix and pricing further
pressuring revenue and compressing margins amid rising labor costs;
(ii) the ASC business expands at a much slower pace than assumed in
its ratings case; and (iii) the Conifer business generates lower
revenue growth, further pressuring consolidated margins. The EV
further reflects Fitch's use of a 7.25x EV/EBITDA multiple,
unchanged from prior reviews.
In estimating claims, Fitch assumes Tenet would draw 80% of the
amount available on the $1.5 billion credit facility in a
bankruptcy scenario (previously 100% draw assumed), and includes
that amount of debt in the claims waterfall along with $0.2 billion
of mortgages. The waterfall analysis also reflects (i) senior
secured claims consisting of $8.3 billion of senior secured
first-lien notes pro forma for the repayment of the 2026 notes and
$1.5 billion of senior secured second lien notes, each
collateralized solely by the capital stock of Tenet's wholly-owned
guarantor subsidiaries that own or operate hospitals, and (ii) $2.9
billion of senior unsecured notes.
Fitch assumes non-guarantor subsidiaries (the Conifer and ASC
businesses) slightly less than half of Tenet's distributable EV),
reflecting an increasing share of the EV attributable to an
expanding ASC business garnering a rising share of EBITDA after the
completed dispositions.
Fitch assumes that the collateral attributable to the guarantor
subsidiaries is recovered from the credit facility and mortgage
claims in full, and thereafter by the senior secured first lien
notes in part due to insufficient remaining value, leaving the
senior secured first-lien notes with a deficiency claim of $5.0
billion, and leaving the senior secured second-lien notes with no
recovery from the collateral and a full deficiency claim of $1.5
billion.
Fitch assumes these deficiency claims of $6.4 billion and the
senior unsecured note claims of $2.9 billion, together totaling
$9.3 billion in unsecured claims, receive a pro-rata recovery of
the $5.1 billion of distributable EV attributable to the
non-guarantor subsidiaries, with all such unsecured claims thus
recovering 51%-70%. The senior secured first-lien notes, in
contrast, recover 71%-90%, as they further benefit from a partial
recovery from the guarantor subsidiaries collateral. Further
hospital divestitures or continuing ASC investments could narrow
the notching between the senior secured first-lien notes and the
senior unsecured notes or trigger rating actions.
Fitch notes that if and when the pending hospital divestitures
close, Tenet will have a reinvestment period to either repay first
lien debt or reinvest the proceeds. The first-lien ratings could be
downgraded back to 'RR3' depending on the issuer's decisions and
any other refinancing activity (e.g. refinancing junior-ranking
debt with first lien debt) and Fitch will update the aforementioned
assumptions and instrument ratings as necessary.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Fitch's expectation of leverage sustained below 4.5x EBITDA-NCI;
and
- Fitch's expectation of FCF sustained above 5.0% of revenue.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- Fitch's expectation of leverage sustained above 5.5x EBITDA-NCI;
and
- Fitch's expectation of FCF sustained below 2.0% of revenue.
LIQUIDITY AND DEBT STRUCTURE
Solid Liquidity Profile: Tenet's liquidity totaled over $2.7
billion at YE 2023, including over $1.2 billion of cash and a full
$1.5 billion of availability under its asset-backed revolving
credit facility. Tenet's announced divestitures are further
expected to bring in cash of $3.9 billion ($3.0 billion after
taxes), of which Tenet received $2.40 billion ($1.75 billion after
taxes) in February 2024, funding its redemption of $2.1 billion of
senior secured first lien notes due 2026 and potentially also
another $0.5 billion of debt that Fitch assumes will be repaid in
mid-2024.
Tenet's nearest debt maturities include $1.5 billion of senior
secured second-lien notes due February 2027 and $1.5 billion of
senior secured first-lien notes due November 2027. Fitch expects
Tenet can refinance both bonds by issuing new senior secured
first-lien notes, and expects Tenet is likely to maintain access to
such capital. While liquidity also benefits from fixed-rate bonds
comprising all funded debt, its forecast reflects interest on new
senior secured first-lien notes at 7.00%, above recent yields on
comparable Tenet bonds. Fitch notes Tenet's only financial
maintenance covenant is a 1.5x fixed-charge coverage requirement
that applies only if revolver availability declines below $150
million.
ISSUER PROFILE
Tenet Healthcare Corp. is a leading U.S. for-profit health system.
As of YE 2023, its Hospital Operations & Services segment operated
61 acute care and specialty hospitals (52 PF for divestitures) and
164 outpatient centers (imaging, urgent care, emergency care)
across nine states (with 60% of the latter located in Arizona and
Texas), and provided RCM and value-based care services via Conifer
Health Solutions (76% owned joint venture with Catholic Health
Initiatives), while its Ambulatory Care segment operated over 460
ASCs and 24 surgical hospitals across 35 states.
ESG CONSIDERATIONS
Tenet has an ESG Relevance Score of '4' for Exposure to Social
Impact due to societal and regulatory pressures to constrain growth
in health care spending in the U.S. This 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.
THREE GUYS: April 30 Plan Confirmation Hearing Set
--------------------------------------------------
Judge Mindy A. Mora has entered an order that the disclosure
statement of Three Guys Roofing, Inc. is conditionally approved.
The Court will conduct the confirmation hearing and consider final
approval of the disclosure statement on April 30, 2024 at 2:30 P.M.
in United States Bankruptcy Court, Flagler Waterview Building,
Courtroom A 1515 North Flagler Drive, 8th Floor West Palm Beach, FL
33401.
These deadlines apply with respect to the confirmation hearing and
hearing on fee applications:
* Deadline for Serving this Order, disclosure statement, plan,
and ballots (30 days before the confirmation hearing) will be on
Mar. 31, 2024.
* Deadline for Objections to Claims (14 days before confirmation
hearing) will be on
April 16, 2024.
* Deadline for Filing and Serving Fee Applications (24 days
before confirmation hearing) will be on April 5, 2024.
* Deadline for Filing and Serving Notice Summarizing All Fee
Applications (21 days before the confirmation hearing) will be on
April 9, 2024.
* Deadline for Filing Ballots Accepting or Rejecting plan (7
days before confirmation hearing, per Local Rule 3018-1) will be on
April 23, 2024.
* Deadline to File Motions under Fed. R. Civ. P. 43(a) (7
business days before confirmation hearing) will be on April 19,
2024.
* Deadline for Objections to Confirmation (3 business days
before confirmation hearing) will be on April 25, 2024
* Deadline for Objections to Final Approval of the disclosure
statement (3 business days before confirmation hearing) will be on
April 25, 2024.
* Deadline for Filing Proponent's Report and Confirmation
Affidavit (3 business days before confirmation hearing) will be on
April 25, 2024.
* Deadline for Filing Local Form 71 "Individual Debtor
Certificate for Confirmation Regarding Payment of Domestic Support
Obligations and Filing of Required Tax Returns" (individual cases
only) (3 business days before confirmation hearing) will be on
April 25, 2024.
* Deadline for Filing Exhibit Register and Uploading Any
Exhibits a Party Intends to Introduce into Evidence at the
confirmation hearing (3 business days before confirmation hearing)
will be on April 25, 2024.
About Three Guys Roofing
Three Guys Roofing, Inc., is a roofing contractor that was formed
on May 17, 2013.
The Debtor filed a voluntary petition for relief under Chapter 11
of the Bankruptcy Code (Bankr. S.D. Fla. Case No. 23-18506) on Oct.
17, 2023, with as much as $1 million in both assets and
liabilities. Shawn Wolfe, president, signed the petition.
Judge Mindy A. Mora oversees the case.
Brian K. McMahon, Esq., at Brian K. McMahon, PA serves as the
Debtor's legal counsel.
TRINITAS FARMING: Chapter 11 Loan Final Approval Delayed
--------------------------------------------------------
Rick Archer of Law360 reported that a California bankruptcy judge
Thursday, March 7, 2024, pushed back final approval of $30 million
in Chapter 11 financing for almond grower Trinitas Farming, saying
more time is needed to address his concerns with the loan
agreement.
To recall, the Court held an emergency hearing on the DIP financing
motion on Feb. 21, 2024, and entered an order, approving an initial
draw of $1 million by the Debtors. After the second emergency
hearing held Feb. 29, 2024, the Court entered an order approving a
second draw of $2,500,000 subject to the terms of the Second
Interim Order. Following the hearing on March 7, 2024, the Court
on March 22, 2024, entered another interim order, authorizing the
Debtors to draw $8 million.
The final hearing to consider approval of the entire $30 million
loan package is slated for April 4, 2024, at 11:00 a.m., Pacific
time.
About Trinitas Farming
Trinitas Advantaged Agriculture Partners IV, LP (TAAP IV) is an
investment vehicle that was organized in 2015 to acquire, develop,
cultivate, and operate primarily almond ranches in the Central
Valley of California. TAAP IV owns and, through Trinitas Farming
LLC, operates 17 almond ranches, each of which is held by a
separate subsidiary, covering 7,856 planted acres in Solano, Contra
Costa, San Joaquin, Fresno, and Tulare Counties.
Trinitas and its affiliates filed voluntary Chapter 11 petitions
(Bankr. N.D. Calif. Lead Case No. 24-50211) on Feb. 19, 2024. At
the time of the filing, Trinitas reported $100 million to $500
million in both assets and liabilities.
Judge Dennis Montali oversees the cases.
The Debtors tapped Keller Benvenutti Kim, LLP as legal counsel and
Donlin, Recano & Company, Inc. as claims and noticing agent.
WESTSIDE NEIGHBORHOOD: S&P Assigns 'BB' Rating 2024A-B Rev Bonds
----------------------------------------------------------------
S&P Global Ratings assigned its 'BB' long-term rating to the
California Municipal Finance Authority's $86.1 million series 2024A
tax-exempt and 2024B taxable education revenue bonds to be issued
for Westside Neighborhood School (WNS). The outlook is stable.
Bond proceeds will finance the acquisition and renovation of a new
facility, finance a debt service reserve fund, and fully refinance
an existing $2.5 million construction loan outstanding with
California Bank & Trust.
"The rating reflects our view of WNS' highly limited financial
resources relative to significant pro forma debt, with an elevated
lease-adjusted maximum annual debt service burden and very high
debt per student," said S&P Global Ratings credit analyst Avani
Parikh. "These factors are balanced in our view by the school's
sound demand, growing enrollment, experienced and proactive
management team, and generally positive operating trends though
performance is likely to weaken in the near term given the upcoming
construction project and expansion plans."
S&P said, "We assessed the enterprise risk profile as strong and
the financial risk profile as highly vulnerable; combined, these
credit factors lead to an anchor of 'bb-'. As our criteria
indicate, the final rating can be within one notch of the anchor.
The final 'BB' rating better reflects WNS' long operating history
and unique position as the largest preschool-to-grade 8 private
school in the Los Angeles metropolitan area, with sound demand that
we expect will support projected enrollment growth targets. In
addition, management's track record of successfully navigating
prior facility moves and renovation projects using operating cash
flow and fundraising supports our view that the upcoming project,
while significant, will be handled successfully, allowing WNS to
grow into its debt obligations over time.
"The stable outlook reflects our expectation that, during our
one-year outlook period, WNS will meet enrollment targets, sustain
healthy demand, and manage operations and finances consistent with
current expectations. Over time, we expect the school will
successfully execute on its facility project tracking to budget and
timeline, supporting improved operations and balance sheet growth
over time.
"We could consider a negative rating action if WNS experiences
enrollment declines or notable weakening in demand, a sustained
trend of operating losses beyond the current near-term deficit
projections, softening financial resources from already thin
levels, or significant construction delays or unplanned cost
overruns that affect finances.
"Although unlikely during the near term given the significant
capital and debt plans, we could consider a positive rating action
over time if WNS produces consistent operational surpluses
supporting notable growth in financial resources and a moderating
debt burden, meets planned enrollment targets, and executes
successfully on the construction project."
WHAIRHOUSE REAL ESTATE: Plan Exclusivity Period Extended to May 24
------------------------------------------------------------------
Judge Rosemary Gambardella of the U.S. Bankruptcy Court for the
District of New Jersey extended the Chapter 11 trustee's exclusive
period within which the Chapter 11 Trustee has the exclusive right
to file a chapter 11 plan for Whairhouse Real Estate Investments,
LLC and affiliates to May 24, 2024.
Counsel for the Chapter 11 trustee:
McMANIMON, SCOTLAND & BAUMANN, LLC
Anthony Sodono, III, Esq.
Sari B. Placona, Esq.
75 Livingston Avenue, Suite 201
Roseland, New Jersey 07068
(973) 622-1800
About Whairhouse Real Estate Investments
Whairhouse Real Estate Investments, LLC filed Chapter 11 petition
(Bankr. D.N.J. Case No. 23-16723) on Aug. 4, 2023, with $1 million
to $10 million in both assets and liabilities. The petition was
filed pro se.
Judge Rosemary Gambardella oversees the case.
Mark Politan is the Chapter 11 trustee appointed in the Debtor's
case. The trustee is represented by McManimon, Scotland & Baumann,
LLC.
WHITTAKER CLARK: Bid to Appoint Creditors' Committee Draws Flak
---------------------------------------------------------------
Andrew Vara, the U.S. Trustee for Regions 3 and 9, asked a
bankruptcy court to deny the motion to appoint an official
committee that will represent unsecured commercial creditors in the
Chapter 11 cases of Whittaker, Clark & Daniels, Inc. and its
affiliates.
The motion was filed on Feb. 17 by the ad hoc committee of
unsecured commercial creditors whose members hold more than $5.8
million in claims.
In a filing with the U.S. Bankruptcy Court for the District of New
Jersey, the U.S. Trustee said the motion was brought by law firms
and other professionals who defended the companies in a
pre-bankruptcy tort litigation that led to the filing of the cases.
"Movants owe fiduciary duties to the [companies]. In addition, many
of them were retained by the [companies'] insurance carriers and
have direct claims against them," the U.S. Trustee said.
According to the U.S. Trustee, even if this case involves trade
creditors, the movants are not suitable representatives of those
creditors based on their ability to recover from the companies'
insurers.
"In addition, the movants for the most part are sophisticated
counsel who may represent their interests or choose to do so
through the ad hoc committee," the U.S. Trustee further said.
The motion also drew opposition from the official committee of talc
claimants and the legal representative for the future talc personal
injury claimants. Both argued the appointment is not necessary to
ensure adequate representation of a small group in the companies'
bankruptcy cases.
About Whittaker, Clark & Daniels
Whittaker, Clark & Daniels, Inc. and affiliates, Brilliant National
Services Inc., Soco West Inc. and L.A. Terminals Inc., were engaged
in nonmetallic mineral mining and quarrying.
The Debtors sought Chapter 11 protection (Bankr. D.N.J. Lead Case
No. 23-13575) on April 26, 2023. The Debtors estimated $100 million
to $500 million in assets against $1 billion to $10 billion in
liabilities as of the bankruptcy filing.
The Hon. Michael B. Kaplan is the case judge.
The Debtors tapped Kirkland & Ellis LLP as general bankruptcy
counsel; Cole Schotz P.C. as co-bankruptcy counsel; and M3 Partners
LLC as financial advisor. Stretto, Inc. is the claims agent.
The U.S. Trustee for Regions 3 and 9 appointed an official
committee to represent talc claimants in the Debtors' Chapter 11
cases. The talc committee is represented by Cooley, LLP.
The Hon. Shelley Chapman was appointed as the future claimants'
representative (FCR) in these Chapter 11 cases. Willkie Farr &
Gallagher, LLP is the FCR's counsel.
YELLOW CORP: $137Million Fight Discovery Pause Request Declined
---------------------------------------------------------------
Emily Brill of Law360 reports that a Kansas federal judge shot down
the Teamsters' request to pause the discovery process in a $137
million lawsuit accusing the union of holding up a necessary
corporate restructuring at the now-bankrupt trucking company Yellow
Corp. , ordering the union to keep producing documents.
About Yellow Corporation
Yellow Corporation -- http://www.myyellow.com/-- operates
logistics and less-than-truckload (LTL) networks in North America,
providing customers with regional, national, and international
shipping services throughout. Yellow's principal office is in
Nashville, Tenn., and is the holding company for a portfolio of LTL
brands including Holland, New Penn, Reddaway, and YRC Freight, as
well as the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow
Corporation had $2,152,200,000 in total assets against
$2,588,800,000 in total liabilities. The petitions were signed by
Matthew A. Doheny as chief restructuring officer.
The Debtors tapped Kirkland & Ellis, LLP as restructuring counsel;
Pachulski Stang Ziehl & Jones, LLP as Delaware local counsel;
Kasowitz, Benson and Torres, LLP as special litigation counsel;
Goodmans, LLP as special Canadian counsel; Ducera Partners, LLC, as
investment banker; and Alvarez and Marsal as financial advisor.
Epiq Bankruptcy Solutions is the claims and noticing agent.
Milbank LLP serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
while White & Case, LLP and Arnold & Porter Kaye Scholer, LLP serve
as counsels to Beal Bank USA and the U.S. Department of the
Treasury, respectively.
On Aug. 16, 2023, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors in the Chapter 11 cases.
The committee tapped Akin Gump Strauss Hauer & Feld, LLP and
Benesch, Friedlander, Coplan & Aronoff, LLP as counsels; Miller
Buckfire as investment banker; and Huron Consulting Services, LLC,
as financial advisor.
YELLOW CORP: Fights w/ Pension Funds on Venue of $5-Bil. Claims
---------------------------------------------------------------
Randi Love of Bloomberg Law reports that former trucking giant
Yellow Corp. and a group of pension funds argued over whether a
bankruptcy court is the proper venue to resolve nearly $5 billion
in liability claims.
Judge Craig T. Goldblatt of the US Bankruptcy Court for the
District of Delaware said on Wednesday, March 6, 2024, that he
needs time to "think hard and look at the facts and circumstances"
before making a ruling, but plans to do so soon.
The parties said the dispute was the most important decision in the
bankruptcy, which Yellow filed in August 2023.
About Yellow Corporation
Yellow Corporation -- http://www.myyellow.com/-- operates
logistics and less-than-truckload (LTL) networks in North America,
providing customers with regional, national, and international
shipping services throughout. Yellow's principal office is in
Nashville, Tenn., and is the holding company for a portfolio of LTL
brands including Holland, New Penn, Reddaway, and YRC Freight, as
well as the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow
Corporation had $2,152,200,000 in total assets against
$2,588,800,000 in total liabilities. The petitions were signed by
Matthew A. Doheny as chief restructuring officer.
The Debtors tapped Kirkland & Ellis, LLP as restructuring counsel;
Pachulski Stang Ziehl & Jones, LLP as Delaware local counsel;
Kasowitz, Benson and Torres, LLP as special litigation counsel;
Goodmans, LLP as special Canadian counsel; Ducera Partners, LLC, as
investment banker; and Alvarez and Marsal as financial advisor.
Epiq Bankruptcy Solutions is the claims and noticing agent.
Milbank LLP serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
while White & Case, LLP and Arnold & Porter Kaye Scholer, LLP serve
as counsels to Beal Bank USA and the U.S. Department of the
Treasury, respectively.
On Aug. 16, 2023, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors in the Chapter 11 cases.
The committee tapped Akin Gump Strauss Hauer & Feld, LLP and
Benesch, Friedlander, Coplan & Aronoff, LLP as counsels; Miller
Buckfire as investment banker; and Huron Consulting Services, LLC,
as financial advisor.
YELLOW CORP: Wants Teamsters' $257-Mil. Bankruptcy Claim Tossed
---------------------------------------------------------------
Evan Ochsner of Bloomberg Law reports that bankrupt Yellow Corp. is
seeking to block a Teamsters effort to assert about $257 million in
debt it says the fallen trucker owes in benefit liability.
The Chapter 11 claim asserted by the Western Conference of
Teamsters Pension Trust Fund is years late and charges improper
interest, Yellow said in a Monday, March 25, 2024, objection in the
US Bankruptcy Court for the District of Delaware.
About Yellow Corporation
Yellow Corporation -- http://www.myyellow.com/-- operates
logistics and less-than-truckload (LTL) networks in North America,
providing customers with regional, national, and international
shipping services throughout. Yellow's principal office is in
Nashville, Tenn., and is the holding company for a portfolio of LTL
brands including Holland, New Penn, Reddaway, and YRC Freight, as
well as the logistics company Yellow Logistics.
Yellow Corporation and 23 affiliates concurrently filed voluntary
petitions for relief under Chapter 11 of the Bankruptcy Code
(Bankr. D. Del. Lead Case No. 23-11069) on August 6, 2023, before
the Hon. Craig T. Goldblatt. As of March 31, 2023, Yellow
Corporation had $2,152,200,000 in total assets against
$2,588,800,000 in total liabilities. The petitions were signed by
Matthew A. Doheny as chief restructuring officer.
The Debtors tapped Kirkland & Ellis, LLP as restructuring counsel;
Pachulski Stang Ziehl & Jones, LLP as Delaware local counsel;
Kasowitz, Benson and Torres, LLP as special litigation counsel;
Goodmans, LLP as special Canadian counsel; Ducera Partners, LLC, as
investment banker; and Alvarez and Marsal as financial advisor.
Epiq Bankruptcy Solutions is the claims and noticing agent.
Milbank LLP serves as counsel to certain investment funds and
accounts managed by affiliates of Apollo Capital Management, L.P.
while White & Case, LLP and Arnold & Porter Kaye Scholer, LLP serve
as counsels to Beal Bank USA and the U.S. Department of the
Treasury, respectively.
On Aug. 16, 2023, the U.S. Trustee for Region 3 appointed an
official committee of unsecured creditors in the Chapter 11 cases.
The committee tapped Akin Gump Strauss Hauer & Feld, LLP and
Benesch, Friedlander, Coplan & Aronoff, LLP as counsels; Miller
Buckfire as investment banker; and Huron Consulting Services, LLC,
as financial advisor.
[*] Jackson Walker Fights DOJ's Bid to Reopen Chapter 11 Cases
--------------------------------------------------------------
Randi Love of Bloomberg Law reports that Texas law firm Jackson
Walker LLP said the Justice Department's bankruptcy watchdog hasn't
stated specific facts to warrant reopening several closed Chapter
11 cases in its bid to challenge fees the firm collected.
The firm's Wednesday, March 6, 2024, court filing comes amid the
fallout of a previously undisclosed relationship between one of its
former attorneys, Elizabeth Freeman, and former Houston-based
bankruptcy judge David R. Jones. The judge, who regularly oversaw
cases that Jackson Walker worked on, resigned from his position on
the US Bankruptcy Court for the Southern District of Texas in
October after admitting to the longstanding relationship.
[*] Looming Supreme Court Ruling to Affect Tort Cases
-----------------------------------------------------
Evan Ochsner of Bloomberg Law reports that the Supreme Court is
hearing oral arguments in a dispute with significant implications
for thousands of tort victims and hundreds of millions of dollars
proposed settlements across several cases.
In Truck Insurance Exchange v. Kaiser Gypsum Co., the court will
consider if insurers have a big enough stake in bankruptcy plans to
challenge them. Insurers in many bankruptcies are kept at arm's
length, barred from objecting to a reorganization plan unless they
are specifically affected by it.
Truck Insurance Exchange, which lost appeals at the district and
circuit levels, says it should be allowed to object to Kaiser
Gypsum's reorganization plan because Truck is on the hook to pay
thousands of personal injury claimants who say they contracted
asbestos-related illnesses from the company's wallboard
manufacturing business.
The Supreme Court's ultimate decision has the potential to add a
fresh dynamic to the growing world of mass tort bankruptcies, as
organizations like Catholic dioceses and the Boy Scouts of America
use bankruptcy to settle liability through court-approved plans
that are often funded with the help of insurance policies.
One of the most high-profile mass liability bankruptcies, Purdue
Pharma, has garnered major attention for its own Supreme Court
case. Like Purdue, Tuesday's arguments in Kaiser's case could lead
to cascading effects through the bankruptcy and mass tort systems.
The Supreme Court's decisions for this term could come by the end
of June.
"This one is sort of flying under the radar, but in mass torts,
it's a big deal," Tancred Schiavoni, co-chair of O'Melveny & Myers
insurance practice, said.
Truck's backers, like Schiavoni, say insurance companies should
have standing to challenge bankruptcy plans because they have a
significant financial stake and can help root out fraud. Because
insurers are often asked to cover the cost of tort claims, they
have a financial incentive to make sure they're not paying out
fraudulent claims. In many mass tort cases, insurers fight for more
stringent standards to evaluate claims.
Opponents say the fraud concerns are overblown. Allowing an insurer
to object will open bankruptcies to disruption from anyone
adversely affected by a plan, they say.
"What this potentially does is further complicate the ability of
people to get compensation," Robert Peck, president of the Center
for Constitutional Litigation, said. Peck wrote an amicus brief on
behalf of the American Association for Justice, a plaintiff lawyer
group.
An Insurer's Interest
The US Bankruptcy Court for the Western District of North Carolina
in 2020 approved Kaiser Gypsum's Chapter 11 plan. The plan
established a trust to pay personal injury claims, but it didn't
include anti-fraud measures for insured claims.
Truck accused Kaiser of colluding with asbestos claimant
representatives to include anti-fraud measures only for uninsured
claims, leaving the insurer without fraud protection for 14,000
insured claims, for which it now "bears the financial burden."
Truck objected to Kaiser's plan on those grounds, but the
bankruptcy court determined the insurer didn't have standing to
challenge the plan because it was not a "party in interest." A
district court rejected an appeal from Kaiser, and the US Court of
Appeals for the Fourth Circuit affirmed, ruling Truck didn't have
standing because the bankruptcy plan didn't change its rights or
responsibilities. In other words, the plan was “insurance
neutral.”
Truck asked the Supreme Court to determine if an insurer's
financial responsibility for a bankruptcy claim gives it standing
under the US Bankruptcy Code. A bankruptcy plan doesn't need to
change an insurer's responsibilities in order for it to be a party
in interest, Truck says.
"As the party who must pay, it seems reasonable to conclude that
the insurer does have standing, that it is a 'party in interest,'
and that it should be afforded a meaningful opportunity to be
heard," Scott Seaman, a partner at Hinshaw & Culbertson LLP, said
in an email.
Even though the bankruptcy plan didn't change Truck's
responsibilities, the insurer is still affected by the plan, it
says.
"Only two outcomes were possible: a plan with fraud-prevention
measures or a plan without them," Truck said in a brief. "That
choice directly and adversely affects Truck."
Insurers are a central component of bankruptcy plans, their
policies frequently providing a source of victim compensation,
Schiavoni said. "The entire plans are basically vehicles to exhaust
the policies and coverage," he said.
'Cornucopia of Characters'
Kaiser and asbestos claimants say the insurer is trying to rewrite
bankruptcy law and is overplaying fraud concerns without evidence.
Allowing insurers with interests like Truck to object to plans
would open bankruptcies to disruption from a wide range of parties,
Kaiser said.
"As this Court has explained, the focus of Chapter 11 is aiding
debtors and their creditors, not the cornucopia of characters that
may fear a collateral injury from a reorganization plan," Kaiser
said in a Supreme Court filing.
Fraud is rare and Truck hasn’t backed up its collusion
allegations, Kaiser said. Courts have processes for weeding out
fraud, and companies themselves have incentives to push against
fraudulent claims, not needing an insurer to bring them to their
attention, Peck said.
"Companies are constantly afraid of liability," he said. "They're
not anxious to see that fraudulent claims are made so that they
could potentially be made in the future against them."
Truck Exchange is represented by Gibson, Dunn & Crutcher LLP.
Kaiser Gypsum is represented by Jones Day.
The case is Truck Insurance Exchange v. Kaiser Gypsum Co., U.S.,
No. 22-1079, 3/19/24.
[*] Nursing Homes Continue to See Staffing Challenges
-----------------------------------------------------
Kirk O'Neil of The Street reports that operators of nursing homes
and senior living facilities were severely impacted during the
Covid-19 pandemic in 2020 as about 40% of residents had or likely
had Covid-19 that year. More than 1,300 nursing homes had infection
rates of 75% or higher during surge periods, the U.S. Department of
Health and Human Services Office of the Inspector General
reported.
The high infection rates led to severe staffing challenges,
including significant loss of staff and substantial difficulties in
hiring, training and retraining new staff, according to a February
2024 report.
Those staffing challenges, however, continue today, as rising
inflation makes it more expensive to compensate these essential
workers.
In addition to staffing challenges, operators have also faced a
number of economic issues that have driven some of these companies
to file for bankruptcy or, in some cases, shut down facilities.
Rising inflation, which affects products, supplies and employee
wages, and higher interest rates over the past couple years have
severely impacted operators' budgets. On top of those economic
issues, operators are battling inadequate Medicare, Medicaid and
insurance reimbursements that can lead to capital shortfalls.
Senior care facility bankruptcies rise
Financial hardship has led dozens of operators of senior facilities
to file for bankruptcy over the past three years, with 13 companies
filing petitions in 2021, 12 debtors filing in 2022 and 15 more in
2023, according to advisory firm Gibbins Advisors.
Notable Chapter 11 filings over the past year have included
Evangelical Retirement Homes of Greater Chicago, which filed
Chapter 11 in the U.S. Bankruptcy Court for the Northern District
of Illinois in June 2023 to sell its assets at auction. Also,
Windsor Terrace Health, an operator of 32 nursing homes in
California and three in Arizona, filed its petition in the U.S.
Bankruptcy Court for the Central District of California in August
2023 listing $1 million to $10 million in assets and liabilities
and unable to pay its debts.
More recently, Magnolia Senior Living, an operator of four
facilities in Georgia, filed for Chapter 11 protection on March.
19, 2024 in the U.S. Bankruptcy Court for the Northern District of
Georgia.
[^] BOOK REVIEW: The Titans of Takeover
---------------------------------------
Author: Robert Slater
Publisher: Beard Books
Softcover: 252 pages
List Price: $34.95
Order your personal copy at
http://www.beardbooks.com/beardbooks/the_titans_of_takeover.html
Once upon a time -- and for a very long while -- corporate
behemoths decided for themselves when and if they would merge. No
doubt such decisions were reached the civilized way, in a proper
men's club with plenty of good brandy and better cigars. Like
giants, they strode Wall Street, fearing no one save the odd
trust-busting politico, mutton-chopped at the turn of the twentieth
century, perhaps mustachioed in the 1960s when the word was no
longer trust but monopoly.
Then came the decade of the 1980s. Enter the corporate raiders,
men with cash in hand, shrewd business sense, and not a shred of
reverence for the Way Things Have Always Been Done. These
businesspeople -- T. Boone Pickens, Carl Icahn, Saul Steinberg, Ted
Turner -- saw what others missed: that many of the corporate giants
were anomalies, possessed of assets well worth possessing yet with
stock market performances so unimpressive that they could be had
for bargain prices.
When the corporate raiders needed expert help, enter the investment
bankers (Joseph Perella and Bruce Wasserstein) and the M&A
attorneys (Joseph Flom and Martin Lipton). And when the merger
went through, enter the arbitragers who took advantage of stock
run-ups, people like Ivan "Greed is Good" Boesky.
The takeover frenzy of the 1980s looked like a game of Monopoly
come to life, where billion-dollar companies seemed to change
ownership as quickly as Boardwalk or Park Place on a sweet roll of
dice.
By mid-decade, every industry had been affected: in 1985, 3,000
transactions took place, worth a record-breaking $200 billion. The
players caught the fancy of the media and began showing up in the
news until their faces were almost as familiar to the public as the
postman's. As a result, Jane and John Q. Citizen's in Wall Street
began its climb from near zero to the peak where (for different
reasons) it is today.
What caused this avalanche of activity? Three words: President
Ronald Reagan. Perhaps his most firmly held conviction was that
Big Business was Being shackled by the antitrust laws, deprived a
fair fight against foreign competitors that has no equivalent of
the Clayton Act in their homelands.
Reagan took office on Jan. 20, 1981, and it wasn't long after that
that his Attorney General, William French Smith, trotted before the
D.C. Bar to opine that, "Bigness does not necessarily mean badness.
Efficient firms should not be hobbled under the guise of antitrust
enforcement." (This new approach may have been a necessary
corrective to the over-zealousness of earlier years, exemplified by
the Supreme Court's 1966 decision upholding an enforcement action
against the merger of two supermarket chains because the Court felt
their combined share of 8% (yes, that's "eight percent") of the Los
Angeles market was potentially anticompetitive.)
Raiders, investment bankers, lawyers, and arbitragers, plus the fun
couple Bill Agee and Mary Cunningham --remember them? -- are the
personalities Profiled in Robert Slater's book, originally
published in 1987, Slater is a wonderful writer, and he's given us
a book no less readable for being absolutely stuffed with facts,
many of them based on exclusive behind-the-scenes interviews.
About The Author
Robert Slater (1943-2014) was an American author and journalist.
He was known for over two dozen books, including biographies of
political and business figures like Golda Meir, Yitzhak Rabin,
George Soros, and Donald Trump. Slater graduated with honors from
the University of Pennsylvania in 1966, with a degree in political
science. He received a master's degree in international relations
from the London School of Economics in 1967.
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices are
obtained by TCR editors from a variety of outside sources during
the prior week we think are reliable. Those sources may not,
however, be complete or accurate. The Monday Bond Pricing table
is compiled on the Friday prior to publication. Prices reported
are not intended to reflect actual trades. Prices for actual
trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy or
sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers
public debt and equity securities about which we report.
Each Tuesday edition of the TCR contains a list of companies with
insolvent balance sheets whose shares trade higher than $3 per
share in public markets. At first glance, this list may look like
the definitive compilation of stocks that are ideal to sell short.
Don't be fooled. Assets, for example, reported at historical cost
net of depreciation may understate the true value of a firm's
assets. A company may establish reserves on its balance sheet for
liabilities that may never materialize. The prices at which
equity securities trade in public market are determined by more
than a balance sheet solvency test.
On Thursdays, the TCR delivers a list of recently filed
Chapter 11 cases involving less than $1,000,000 in assets and
liabilities delivered to nation's bankruptcy courts. The list
includes links to freely downloadable images of these small-dollar
petitions in Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
The Sunday TCR delivers securitization rating news from the week
then-ending.
TCR subscribers have free access to our on-line news archive.
Point your Web browser to http://TCRresources.bankrupt.com/and use
the e-mail address to which your TCR is delivered to login.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Philadelphia, Pa., USA.
Randy Antoni, Jhonas Dampog, Marites Claro, Joy Agravante,
Rousel Elaine Tumanda, Joel Anthony G. Lopez, Psyche A. Castillon,
Ivy B. Magdadaro, Carlo Fernandez, Christopher G. Patalinghug, and
Peter A. Chapman, Editors.
Copyright 2024. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers. Information contained
herein is obtained from sources believed to be reliable, but is
not guaranteed.
The TCR subscription rate is $975 for 6 months delivered via
e-mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Peter A.
Chapman at 215-945-7000.
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