ABS investors and credit analysts are awaiting the outcome of the Swifty Serve (EZ-Serve) Chapter 7 liquidation and assets auction, which will directly impact recovery levels in three GE Franchise Finance deals, formerly Franchise Finance Corp. of America.
According to published reports, several bids have been approved by the bankruptcy court. Another round of approvals will take place on Tuesday, Jan. 21. In all, nearly 600 stores are to be sold, with the proceeds going to creditors, including GE Franchise Finance, master servicer on the deals.
Swifty Serve, parent company of several other gas & convenience store brands, filed for Chapter 11 bankruptcy protection in October, later transitioning to Chapter 7, at which point the bankruptcy trustee hired National Real Estate Clearinghouse to auction off the assets, according to ratings comment released by Moody's Investors Service in December. At that point Moody's downgraded 25 classes from the three deals, FFCA 1998-1, FFCA 1999-2 and FFCA 2000-1. Fitch Ratings took action on the same deals, noting that Swifty Serve accounts for approximately $28.8 million in defaults in the 1999 pool, $22 million in the 1998 transaction and $53 million in the 2000 transaction.
Both agencies are also waiting for the result of environmental insurance claims filed with American International Group, which to different extents may benefit all three deals and will be incorporated into recoveries.
What's left of EMAC
Elsewhere in franchise land, bonds from Enterprise Mortgage Acceptance Co. were further downgraded last week by Fitch, the agency citing, among other things, a significant amount of un-recouped servicer advances.
The 1998 class A notes fell below investment grade to B' from BBB'. The class As in the 1999 deal, which is the worst performer with current defaults over 60%, were knicked from BB' to B.'