Bon-Ton Stores’ second lien noteholders filed with the U.S. Bankruptcy Court an objection to the Debtors’ motion for authority to pay a work fee to DW Partners, Namdar Realty Group (including its partner Mason Asset Management) and Washington Prime Group in connection with the proposed purchase of substantially all of the Debtors’ assets.
The noteholders assert, “Only one of those ‘bids’ involves a potential ‘going concern,’ and that ‘bid’ is not actually a bid that remotely complies with the requirements imposed by the Bidding Procedures Order. Rather, it is a non-binding ‘Letter of Intent’ from various parties-in-interest in these cases – two landlords and an affiliate of a vendor, along with a former shareholder (collectively, referred to in the Motion as the ‘Investor Group’) – all of which were given the same opportunity as other bidders to participate by the rules that were proposed more than two months ago by the Debtors and approved by this Court. Unlike the bids received from other parties (including the Joint Bid submitted by GA Retail, Tiger Capital Group, and WSFS on behalf of the Second Lien Noteholders), the Letter of Intent is subject to a long list of contingencies.”
In addition, “In short, there is no basis, in law or in fact, for the Debtors to request this Court to approve payment of $500,000 in fees and expenses for the Investor Group to conduct belated due diligence starting one week after the Bidding Deadline….The fact that the Investor Group is, at this late stage, not even willing to proceed forward with due diligence absent payment of the ‘Work Fee’ speaks volumes about its lack of serious intent. Indeed, the only effect of authorizing the payment to the Investor Group, as well as the Stalking Horse Protections that are embedded in the Letter of Intent, will be to tilt, even further, an unbalanced scale in favor of a ‘going concern’ proposal, regardless of the value to the estate presented by that proposal, and to degrade the integrity of the bidding process in a manner that impacts not only these bankruptcy cases but future ones.”
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