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There is still a problem where the SEC claims the company has some amount in millions of assets on the books that are 'overvalued'. I expect when the schedules are filed that we will see that 'shake out'.
Louis J. Desy Jr.
Common convert into warrants
In theory, the common will not be completely worthless; but I expect that Newco common shares will not trade high enough for the warrants to ever convert into any meaningful value, except maybe as a 'time premium value', like that for an option.
So if anyone wants to sell the existing common shares, and avoid getting it converted into worthless warrants, they would need to do it prior to the order being issued.
Louis
Calculating end date for ANVGQ Common Shares
From looking at DUNRQ, it looks like the common shares last day of trading is the day the court issues and order of 'Notice of Effective Date of Chapter 11 Plan'. As a comparison, that happened with DUNRQ on September 30, 2015 in document #574:
https://cases.primeclerk.com/duneenergy/Home-DownloadPDF?id1=MTk4MjA1&id2=0
In the 'overnight', NASDAQ issued a delisting notice of the shares on its web site prior to the opening of the market for October 1, 2015, and the stock did not open for trading on October 1, 2015. DUNRQ shares are unfortunately all done.
Prior to the court issuing a 'Notice of Effective Date of Chapter 11 Plan' there will be filings about the 'proposed effective order'. In the example of DUNRQ, that was in document #555 and happened on September 17, 2015. The hearing looks like is was on September 15, 2015.
So it looks like once the hearing is held on the plan, there is a notice filed a few days later on the proposed order for the plan, and then the effective date is within a few weeks of that. The day after the 'effective date of the plan', the common shares stop trading, delisted and wiped out. I think the document gets filed after the close of trading for the day so no one gets a chance to sell at market prior to the cancellation of the shares.
Louis J. Desy Jr.
Assumptions used in the PV10 reserve report
http://www.sec.gov/Archives/edgar/data/1321516/000160423215000086/ex99_1.htm
According to the reserve report, they used prices of $4.435/MMBTU and $91.48/barrel; but right now WTI is $45.51, and in the last year the high was only $85.67. Most people are expecting that oil is not going to go over $70/barrel for a few years, providing it can get back up to that level within a year or two. If that happens, it will knock a considerable about off of the PV10 valuation, since the most recent years in the PV10 calculation would normally have the highest effect on the final PV10 number. (Numbers out near the end of the PV10 would be discounted more years and have a lower PV10 number.
Louis J. Desy Jr.
Looks like common shares are worthless
http://ih.advfn.com/p.php?pid=nmona&article=65834334
A quick look at the Jan 31, 2015 10Q report, shows that equity is negative, and the company losing all kinds of money due to write downs. One would expect that in the intervening months that the company has continued to have or needed more write downs, resulting in a larger negative equity.
There is nothing left for the common shares. It looks like the common will be wiped out in the bankruptcy.
Louis J. Desy Jr.
Why not phone for info?
The problem is that towards the end, things got so bad that they did not even know at times where the district manager was, or even if the person was still employed with the company. At another point the person waiting for the bonus was moved to another store, after the original store closed that they were in, and both the district manager and even the regional manager could not be gotten ahold of. It looked like first the district manager got laid off, and then before notice was given as to who was the new district manager, the regional manager was laid off.
After they left it took a few weeks for them to find anyone that knew them to be able to give a letter of reference, that the original district manager and admin assistant had promised, prior to both of them being laid off.
I mentioned about filing a motion (basically a letter but it would get entered on the docket and require a ruling by the judge) with the court to ask for clarification but so far they have not wanted to do that.
I was shocked at how the chain of command broke down towards the end for a lot of the stores and even at some of the stores. I heard that a few employees were fired for stealing and there were rumors that at some stores the employees just started to loot the place the last week or so. (My take on it is that some employees were upset at not being told anything, including not even having a definite last day at times or the store being closed in advance of the original deadline.)
I think part of the problem was that no one really communicated what to expect and even seemed to act like the company was not going to live up to the commitments it had made to people since it was not telling anyone anything. some employees only found out when their store was closing by the news or looking at the docket for the case. Even at the end, some of the management, including the liquidation company, kept harping on about things like staying in dress code and other things that were meaningless since the store was closing. (what was the company going to do, fire them?) At other times, some employees could not get anyone to help with things, such as the wiping of the computer system when the procedure sent out was not working for a workstation.
I also heard that some items were shipped and then reshipped to stores as stores closed down and the leftovers had to be sent to a still opened store in order to have a chance at selling.
Louis J. Desy Jr.
I am surprised it all happened so fast
Back in April/May 2015, I thought it would take months and into next year before the stock reached the point of no reporting and days with it not trading. I expected that they would have kept things going for a while longer. Especially where they are all setup to do a reverse split and get the stock trading again, into which the convertible debt holders could convert and get cash for the shares. Something else must have happened that caused them to stop the reverse split and carrying on with getting cash for the CDs, but I have no idea what at this point.
Even now it looks like there are still people willing to buy shares if it started trading at any price.
Louis J. Desy Jr.
Lights out, within weeks maybe
I think it is all over for USEG.
http://ih.advfn.com/p.php?pid=nmona&article=68104914
According to the June 30, 2015 reports, the company can not run operations at a profit, and current liabilities are outrunning current assets ( 6 million in current assets to pay 15 million in current liabilities and the gap is growing larger ).
I expect that the mine is of no value since it still has not been approved. I guess the people in the area and the government agencies that dragged out the mine approval for years, will be 'glad' to know that they probably have helped put the company out of business, of course, they will have all kinds of time to ponder what they have done since the jobs the mine would have provided will probably never happen. No one will want anything to do with the mine after they take a look and see how USEG was dragged out for mine approvals for years with nothing to show for it.
Louis J. Desy Jr.
Lights out, within weeks maybe
I think it is all over for USEG.
http://ih.advfn.com/p.php?pid=nmona&article=68104914
According to the June 30, 2015 reports, the company can not run operations at a profit, and current liabilities are outrunning current assets ( 6 million in current assets to pay 15 million in current liabilities and the gap is growing larger ).
I expect that the mine is of no value since it still has not been approved. I guess the people in the area and the government agencies that dragged out the mine approval for years, will be 'glad' to know that they probably have helped put the company out of business, of course, they will have all kinds of time to ponder what they have done since the jobs the mine would have provided will probably never happen. No one will want anything to do with the mine after they take a look and see how USEG was dragged out for mine approvals for years with nothing to show for it.
Louis J. Desy Jr.
Officers left on Sept 21, to get severance package?
It looks like all of the top people left the company in order to get the severance package.
http://ih.advfn.com/p.php?pid=nmona&article=68626135
CEO got $550,000
CFO got $110,000
Principal accoutning officer got $110,000
Louis J. Desy Jr.
Bonus and vacation for workers paid out?
Does anyone know if the retention bonuses for managers and assistant store manager were paid out? I thought they were due once the person was let go after the store was closed but one person I know has not gotten anything.
I expect that the bonuses are priority unsecured in the plan.
Normally I would know the details but since the stock looked dead I had not
Louis J. Desy Jr.
The 10Q is not out and may never be filed
How are they going to pay the fees to file a 10Q report when the most cash ever to show on a quarterly report so far has been $515? I expect that it must cost at least a few thousand dollars to prepare and file a 10Q report.
Why is the 10Q late? The company appears to have no operations.
What happened to the reverse stock split? That was suppose to place weeks ago and nothing has happened.
Why is the web site not working? The fees for the hosting is only about $100 and they just needed to pay that to keep the site up and running, instead the web site looks like there is nothing there now.
In a few days the 3rd quarter of 2015 will be over and the 10Q for the 2nd quarter has not been filed, even though nothing appears to be going on to explain why they are 'too busy' to file the 10Q for the 2nd quarter.
Louis J. Desy Jr.
Real's devaluation
After more thinking, I realize what the problem with how I thought it would be.
I was thinking that for every one dollar effect would be offset by a decline in the expenses in Reals for the same amount, but then realize that it is not a 1:1 relationship; also the 'dollar effect' can go up by more than 100%, so that even if expenses drop to zero in Brazil Reals, the company is worse off.
A large enough devaluation of the Brazil Real could easily wipe out the company.
Louis J. Desy Jr.
CD holders
In the financial statements that are out, we never saw cash or assets go over $1,000. All of the CD money appear to have gone for expenses or some kinds of consulting services that never turned into any revenue.
At this point, I think it is possible that there will never be another 10Q/K report filed again since they do not have the cash to pay for the filings, and with the stock at $0.0001 and not trading most days, there is no way to raise money.
Louis J. Desy Jr.
CD holders
From what the financial statements have shown, the CD holders did not lend the company any cash. It looks more like it was supposed to be payment for some kind of 'consulting services' to the company, but there is no indications that anything of value was done for those services, since sales are still zero.
I think the CD holders, while they would like to convert the remaining 140K to shares that they will sell immediately, I think they already got enough from prior conversions that they are still ahead and can 'let it go'.
The reverse split was supposed to take place in August and now here it is, almost October, and nothing is happening;no reverse split, not 10Q report, the web site is dead.
I think it is 'all over' for the company.
Louis J. Desy Jr.
Warrants raised from 10% to 17.5%
I was surprised to see the percentage of warrants raised because in the initial PORs, it looked like if the common shares did not take the 10% warrants, the debtors implied they would file a plan with the common being wiped out.
I do not own the common shares but still look at them because if the strike price calculation is lowered, then they may have value; but at the moment I do not see that happening.
Louis J. Desy Jr.
People not releasing
I have to read to make absolutely sure, but usually the common shares are all in one class, so however the majority votes, that is what they all get and how they are treated. i.e. If the majority vote to accept but you vote to reject, you 'accept' as part of the class.
So if a majority votes to accept the plan in that class, then they all released also.
My understanding is that even if the common all vote to reject the plan, but the higher classes vote to accept the plan, then the plan will be accepted anyways.
With the way things are, I am not sure what people think they are doing if they refuse to accept the plan. The longer this goes on, the less the company will have. Once the cash falls below $25 million in cash required in the POR to put it into effect, the POR will have to be redone or even canceled. At that point, I expect the company will end up liquidated since if the company has to sell off more assets to fund the POR, there will not be much of anything left to operate in NewCo.
Louis J. Desy Jr.
Why does a lower Brazil currency hurt PBR?
I would normally expect that with oil prices in USD, and their labor costs mostly in Brazil reals, that the company should see some benefit as the labor costs decline in USD terms, instead the company seems to be getting worse.
Does anyone have an explanation for this?
Louis J. Desy Jr.
Blackout a good or bad sign?
A Blackout is a VERY BAD sign. This might be the end of any reporting or filings for the company. At best, the company only had $515 in cash and seems to have never taken in any cash to fund operations. It might be at the point that no one wants to fund the company anymore. Even the web site is not working.
With the way things look right now, I do not expect anyone is even going to hear from HDSI again. To me it look simular to what happened over at AWEC, where the company just stopped reporting after having issued several series of preferred shares.
Louis J. Desy Jr.
Comparison of Quicksilver with Hero Offshore
The situations, unfortunately, are not the same. While Hero Offshore did pay off the unsecured and the existing shareholders could get a few percent of the reformed company, that was because the assets on the books exceeded the liabilities by a large amount. Unfortunately, that is not the situation with Quicksilver, where stockholders equity has gone negative, meaning there is nothing left over from the assets for the common shares. The situation with Quicksilver is so bad that the unsecured are also taking large losses and the secured are getting almost all of the assets.
I think the bid mistake quicksilver made was to expand too fast with the large retail stores and into the clothing lines when surf wear was more popular. While still worn, the level of sales are not high enough to support all of the debt that was taken on to expand the product line.
Louis J. Desy Jr.
Voting on warrants
When you vote to accept or not accept the warrants, you are voting as a 'class' along with all of the other existing common shareholders. Unless a majority of the common vote no in that class, everyone will get the warrants.
The outcome or effect is on how the majority votes in the class for the common stock; so even if someone votes NO for their common shares, but the class votes yes, then everyone gets taken in as having voted yes.
It is also possible that even if the common share class votes to reject the plan, that the plan will still get done if the classes higher in priority all vote YES to accept the plan.
I am expecting the plan will get approved and confirmed, since I do not see any other reasonable alternatives.
I am surprised to see that the warrant amount got raised from 10% to 17.5%, the only problem is the strike price will be so high that unless gold rises to over $1,600; the warrants may never have any value.
Louis J. Desy Jr.
Why wait around on a short position?
The reason to wait around is because as long as the trade is still open, you do not have to pay the tax on the profit. If the 17.5% warrants have a ten year expiration, then the tax would not be owed until tax year filing for 2025. Before the IRS changed the rules after the LTV naked short problem, the tax rules was that the trade was not considered closed until covered; so if the shares got cancelled, and the trade was never closed, then the tax was NEVER owed.
After that the IRS changed the rules to when a short position could be constructively considered closed; i.e. the stock no longer traded.
Louis J. Desy Jr.
Document #1018 shows the company was dead, and the mine worthless
I understand that you mean the company had this report, knew the company was doomed, and went ahead anyways with the $20M share offer at $1. The damages would be for anyone who bought into the $20M shares at $1. The report mentions the December 9, 2014 capital raise of $20M shares, so the report was issued after that capital raise was done.
I do agree that was wrong, but any damages would be limited to the $20M on the Dec 2014 stock offering.
The report shows that it looks like the company was already dead:
Summary for Allied Nevada Gold on page 125, with my comments in brackets[]:
"
Allied Nevada Gold Corp. (Sector Underperform; One-Year Target $0.05) – Trevor Turnbull
• Diminishing liquidity runway. Allied Nevada Gold Corp. (Allied Nevada) finished November 2014 with only $1.3 million in cash and about $12 million available on its revolving line of credit. The revolver has approximately $12 million available to draw, after factoring in an allowance to offset the company’s cross-currency swap. At spot prices, we believe Allied Nevada will run out of cash by the end of 2015.
[They expected the company was going to go bankrupt.]
• Highly levered capital structure is straining cash reserves further. Allied Nevada carries $400 million in senior notes, paying an interest rate of 8.75% per annum and maturing in 2019. Overall, we calculate more than $40 million in annual interest costs, eroding most of the company’s operating
income at $1,200/oz. [The company can not turn a profit with gold at $1,200/oz.]
• We see no reasonable options for Allied Nevada to raise further funds; neither do we expect the company to be able to proceed with its unfunded sulphides project. In October, Allied Nevada released the results of its feasibility study for the Hycroft mill project. Unfortunately, we do not believe that there are
any fundraising options for the company to finance the $1+ billion project in this gold price environment. Selling a silver stream or royalty, raising more high-interest debt, bringing on a joint venture partner, or issuing equity – apart from the $21.5 million deal announced on December 9 – all appear to be too dilutive to valuation for serious consideration.
"
[The report was issued after the 20M shares were issued and the report expects the company can not fund the development of the mine.]
Louis J. Desy Jr.
How the shorts will get warrants
While not required, the warrants will probably be listed on a public exchange.
Even if the warrants are not listed for trading on a public exchange, I do not think it is a problem for someone that has a short position in ANVGQ.
I do not expect anyone short the stock would want to close out the trade. As long as the trade is still open, the taxes are not due yet on the profit.
LTV Steel when through something like this, the old common shares got converted and anyone short only had to cover by buying what the shares had converted into.
Louis J. Desy Jr.
Short squeeze always possible
It is always possible, since a true short squeeze can have nothing to do with the value of the shares, there just needs to be a requirement to deliver shares to cover and being unable to buy shares without the price rising.
One method is to hold shares in a cash only account, which makes the shares unavailable to be lent out with most brokerage firms.
The other way is that shares just keep getting bought up, until there are problems delivering shares to return them from where they were borrowed from.
Louis J. Desy Jr.
Document #1018 and attached report
I am not sure I understand what point Tuttle was trying to make with getting this report in the case, if anything, it seems to have predicted how things were going to turn out. Even the target price of $0.05 is near where the stock is trading now.
If I am reading it correctly, they give the company a price target of $0.05, and say they do not believe the mine can be developed, plus the company is going to run out of cash.
While they do not use the word bankrupt in the report, they seem to say everything but, that the company is bankrupt.
I assume that Tuttle must have thought and expected that the report was going to report something else.
Louis J. Desy Jr.
36M shares still short, what happens with them?
Any shares that are short, there are two things that could happen.
1: If the common shares are wiped out, the short never has to be covered. The tax on the position would have to be claimed and paid in that year.
2: If the existing common shares get converted into 17.5% warrants, then the short shares would also get converted, meaning to close out the short, that is what they would have to buy after the POR was put into effect. My earlier estimates are that the warrants may never have value, in which case someone short the shares would want to keep the short open by not ever buying to cover with the warrants, and wait for the warrants to expire.
In either case, anyone short the stock would want to delay covering for as long as possible. The reason is that the tax on the profit does not have to be paid until the short position gets covered or the stock get canceled. With a conversion into warrants, it could be five or tens years before the warrants expire and the tax on the profit have to be claimed on their taxes.
Anyone short the stock would want to see the warrants get approved.
Louis J. Desy Jr.
It is mainly liabilities greater than assets
That is the problem. All of the other classes, which are higher than the common shares, can not be made whole (paid off at 100%). Especially the unsecured creditors like vendors, so the secured loans become the new equity holders, and the existing common shares get wiped out.
Even though operations may improve, it is not going to save the existing common stock.
Louis J. Desy Jr.
Clothing verse surf gear quality
I think the clothing is just something that got branded and rode the brand name, allowing them to make up the clothes. i.e. If it was not for the fact that the brand name was built on the surf gear, then no one would ever buy the clothes.
I am looking to see what percentage of sales are surf gear stuff, like wet suits and related items verse clothes.
I have seen some people complain online about the surf gear, but I think part of the problem, especially with wet suits, is that you are trying to put qualities into a product that are mutually exclusive. i.e. If you make one part better, it makes another part worse.
As an example with wet suits:
You want it to be as thin and flexible as possible, but the more you make it, the shorter it lasts, the faster it wears out, the more likely it will be ruined from stretching, the faster it will develop holes in it that ruin the insulation.
Louis J. Desy Jr.
When shares could delist?
It is hard to know. It could happen as soon as the day after the POR is in effect. There was one other stock (exide or something like that) and as soon as the plan was in effect, the stock stopped trading the next day.
Louis J. Desy Jr.
ZQKSQ is a symbol change for ZQK
ZQKAQ is a symbol change for the 'old' existing common shares. The symbol change happened because when a stock files for bankruptcy, they put a 'Q' as the fifth character to the stock symbol.
ZQKAQ are NOT the new common shares in the reorganization. Those shares are going to be issued to debt holders and will not be traded on the open market when they first are available.
Louis J. Desy Jr.
http://finance.zacks.com/q-removed-stock-symbol-7812.html
"The letter “Q” added to the end of a stock symbol is not a good sign for investors; “Q” means the company is in the midst of bankruptcy proceedings. The SEC warns investors to steer clear of “Q” stock, unless you’ve carefully reviewed the proposed bankruptcy reorganization plan and it looks like the company will come out of the financial trouble on top. In many cases, however, the company’s old stock -- labeled with the ominous “Q” indicator -- is dissolved after the proceedings."
Old Stock vs. New Stock
Oftentimes during bankruptcy’s reorganization, the company retains its old common stock -- the “Q” stock -- on the secondary market and issues new stock shares under the reorganized business. Each stock will have different ticker symbols, and the new stock issue will not have a “Q.” Investors holding the old common stock still run the risk of losing their money despite a successful reorganization, because new investors will most likely purchase the stock offered by the reorganized company rather than the stock issued prior to the corporation’s bankruptcy.
“Q” Always Stays
The “Q” is never actually removed from the stock in question’s ticker symbol because it differentiates the pre-bankruptcy stock from the post-bankruptcy stock. This letter remains an important part of the stock’s ticker symbol; otherwise, potential investors would not be aware that they are purchasing stock involved in a bankruptcy that might become worthless on the markets once new stock is issued under the reorganized corporation.
Financial engineering gone bad
They just kept borrowing to expand, as though the demand for their products was going to keep growing forever. There is a recent article that mentions another one did the same thing. I think it was Vans, it became popular, then piled on debt to ramp up, demand for the products fell off and then they are in trouble since they can't keep up the payments for the debt.
If they had just grown from their own earnings, that would have grown slower and not been in trouble with all of the debt.
Louis J. Desy Jr.
Can't short this stock anymore
Retail investors can't short this anymore. Most firms will not allow one to open a short position with the stock below $5/share.
Louis J. Desy Jr.
Q as trading only
I have no objections, and even admiration, for the traders who know what is going on here, and trade stock with the Q symbol. They know 'what the game is' and are able to play it at that level.
I have thought of it myself at times in situations like this, but to me it seems like playing with fire, but I do admire the ones that can make profitable trades on something like this. Especially how they are able to read the stock in a situation like this.
Louis J. Desy Jr.
Open 6 new locations? While in Bankruptcy? I doubt it
I think that must be an old press release. There is no way a court or the trustee would allow the company to open more store when they are going to have to schedule liquidation sales for the closing locations, plus there is not enough to pay off the unsecured creditors.
While there may have been plans in place to open stores this year, with the bankruptcy those plans would now have to be canceled.
Even if the judge and trustee were nuts and allowed the company to open more locations while in bankruptcy, what landlord would want a company in the middle of a bankruptcy as a new tenant when they can't pay off the old unsecured creditors?
Louis J. Desy Jr.
Respect for the site and TOS
WoahBucks, what you are doing is against the TOS. There is no way you could be a bankruptcy attorney and could come up with such a wrong opinion on the value of the existing common shares.
What you are doing is more than a simple wrong opinion or misinterpretation of facts, it is out and out right fraud.
Louis J. Desy Jr.
CNN reports are mostly automated
Reports like that are mostly automated from other sources. It is clear that what they have there is outdated and not accurate in light of the bankruptcy filing.
A recent example was GNI, Great Northern Trust. It was a trust that ended April 6, 2015. The stock kept trading up because people thought the dividend was going to be paid and going forever. The stock summary pages would show the yield as something like 15% or higher. People would post after buying shares why the yield was so high, then someone else wold explain the dividend was only going to be paid for a few more quarters and then a final liquidating dividend. The result was that people were, at times, paying $20 for the right to get $15 in total dividends (quarterlies plus final) before the trust was closed. People could see that from the summary page and had to look into the company web site or SEC reports to see that.
Louis J. Desy Jr.
The common shares ARE GOING TO BE WIPED OUT
I find it hard to believe that you are really a bankruptcy attorney, with such a completely wrong analysis of a basic Chapter 11 situation as to how the existing common shares will be treated in the bankruptcy estate.
There is nothing left for the common shares. The PR already stated that the common shares are going to be wiped out, and the financial reports show that all of the equity is gone (Stockholders equity is negative.)
Louis J. Desy Jr.
GM's old shareholders did get wiped out
You are correct. The old GM shareholders were completely wiped out in the reorganization. They did later have an IPO for NewCo.
The old GM common traded as Motors Liquidation Company and have since delisted and stopped trading, completely worthless.
https://en.wikipedia.org/wiki/Motors_Liquidation_Company
"Motors Liquidation Company's stock symbol was changed from GMGMQ to MTLQQ, effective July 15, 2009.[2] MTLQQ stock was cancelled"
Louis J. Desy Jr.
How a company 'excludes' divisions in a bankruptcy
The only way it can be done is if the division is its own, separate entity, like a LLC or corporation.
While the division is then not part of the bankruptcy, in the sense that its operations are left alone and not subject to the trustee or the court, the ownership of the LLC/corporation is one of the assets of the parent company that is in the bankruptcy, and it is another asset, like another assets of the company that could be sold, borrowed against, managed, etc, for the parent company and the bankruptcy estate.
So while the division can operate without being effected by the bankruptcy, the ownership of the division (or the parent company's ownership interest if it is less than 100%) will be effected by the bankruptcy, and as an asset, either end up in NewCo or distributed against the claims in the order of priority, as would any other asset.
Louis J. Desy Jr.