SunEdison’s official committee of unsecured creditors’ filed with the U.S. Bankruptcy Court a limited objection to the Debtors’ motion for order authorizing Debtors (a) to obtain replacement post-petition financing, to utilize cash collateral and to repay existing post-petition financing.
The committee asserts, “The New DIP Motion is the latest in a series of actions taken by the Debtors, apparently at the behest of their pre-petition secured creditors, to further those creditors’ aim of liquidating the Debtors’ assets for the secured creditors’ exclusive benefit. As with prior actions along the same lines, this alliance once again comes at the disproportionately unfair expense of the Debtors’ unsecured creditors, who had no input into the purportedly lengthy negotiation of the replacement post-petition financing (the ‘New DIP’). The Committee did not even receive a draft of the proposed agreement governing the New DIP until barely a week before the deadline to object. The New DIP Motion crystalizes what has been increasingly apparent in these cases for some time—the Debtors appear to have abandoned any pretence of preserving their estates for the benefit of all of their constituencies, and instead are primarily focused on maximizing the recoveries of their pre-petition secured creditors….The New DIP further erodes those already inadequate distributions through, among other things, unreasonable financial terms that would force the Debtors to pay above-market up-front fees and interest rates on the New DIP, as well as certain non-financial terms that allow the prepetition secured lenders to extract additional value by effectively reneging on prior agreements intended to protect what little value exists in the estates for the benefit of the unsecured creditors and undermining certain existing causes of action filed by the Committee and other unsecured creditors…the New DIP provides no incremental liquidity to the Debtors—aside from simply paying off the Existing DIP—and in fact causes at least US $77.4 million in cash from the Debtors’ already thin balance sheet to evaporate into the prepetition secured lenders’ pockets. The New DIP also purports to carry over and finalize the roll-up of over US $300 million of the Existing DIP, even though under the terms of the Existing DIP Order and the Local Bankruptcy Rules, the roll-up should be unwound entirely because it has ‘unduly advantaged’ the holders of those loans and they weren’t secured by this amount on the Petition Date.”
More on the SunEdison’s bankruptcy.