Appvion Bankruptcy Objection Filed

Appleton Papers has changed its company name to Appvion, Inc. to reflect the full scope of its business. (PRNewsFoto/Appvion, Inc.)

Appvion’s official committee of unsecured creditors filed with the U.S. Bankruptcy Court an objection to the Company’s D.I.P. financing motion.

The committee asserts, “After the payment of the interest and fees required by the DIP Facility and the above repayments, the Debtors will have access to only $28.7 million of new money under DIP Facility (the ‘Available New Money’). The end result is that the Debtors are left without adequate capital to fund a successful reorganization and with very expensive secured debt that will be difficult to refinance in these chapter 11 cases.”

In addition, “The DIP Facility Agreement makes it difficult for the Debtors to escape from the DIP Lenders’ overreaching by including a ‘no call’ provision which prohibits the voluntarily prepayment of the New Money portion of the DIP Facility and a ‘Payment Premium’ which charges the Debtors 1.50% on the repayment or prepayment of the Roll-Up Loans, which would amount to $3.6 million. Undoubtedly, such provisions which make the Debtors unable to refinance and/or payoff the DIP Facility at any point are rare, excessive and inappropriate, and should not be approved. The proposed DIP further handcuffs the Debtors by imposing very restrictive time frames for the filing and confirmation of a plan of reorganization….While at first blush these deadlines may not appear unreasonable, in the context of these cases, where there are significant and challenging operational issues to be analyzed and remedied, the proposed case milestones represent artificial deadlines designed to force the Debtors to hastily develop and implement a restructuring plan – intended exclusively to repay the DIP Facility (including rolled up prepetition indebtedness) – before the Debtors’ problems can be fully identified and addressed. This control-type mechanism by the DIP Lenders should not be permitted.”

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