Pan Brothers (PB) has been downgraded by Fitch Ratings to RD from C as the standstill agreement with its lenders expired on February 12 post its default on bilateral loans and $138.5mn of syndication loans. The RD downgrade suggests that PB has default on its payment but has still not filed for bankruptcy procedure. PB’s $171mn senior unsecured notes due January 2022 have been affirmed at C with a recovery rating of RR4 indicating a recovery probability of 31%–50%. The expiry of the standstill agreement clears the way for the banks to initiate recovery actions. PB is still negotiating a loan extension with its lenders and the uncertainty could delay its planned $350mn bond issuance. The apparel manufacturer is looking for a “one-plus-one” extension of the loan to January 2023 in which the period from January 2022 to January 2023 would be subject to refinancing of its $171mn bonds due January 2022 into a longer tenor. The company is also struggling with negative cash flows from operations due to the large working capital requirements for its business model. Moody’s had downgraded the company to Ca with a negative outlook in January this year. PB’s7.625% 2022swas down 1.32 points and trading at a distressed level of 35.375 cents on the dollar.