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March 8, 2019 – The Debtors’ Official Committee of Tort Claimants (the “Committee”) objected to the Debtors’ proposed debtor-in-possession (“DIP”) financing motion [Docket No. 23].
The objection [Docket No. 800] states, “The Debtors and the DIP Lenders propose financing terms that may constitute 'market' terms on Wall Street or in a standard business bankruptcy case, but the terms are by no means justifiable in this case given the essential public service the Debtors provide to millions of Californians. It is not acceptable for the DIP Lenders to reserve for themselves the unilateral right to foreclose on utility assets, nor control the timing or terms of the plan of reorganization. DIP Lenders should not be able to procure a seat at the table in these Cases in any meaningful respect where the collateral for the proposed DIP Loans is worth many times the amount of the loans and the DIP Lenders have no meaningful risk of nonpayment.
The protections granted to the DIP Lenders under the proposed order bear no relationship to the actual risk to the DIP Lenders of nonpayment in these Cases. Eight of nine DIP Lenders also hold prepetition unsecured claims against both the utility and the holding company. Any control over the Debtors’ plan process or their assets through the provisions of the DIP Loans will give these unsecured creditors an unfair advantage in negotiations over other claimants holding claims of the same priority. Approval of the Motion should be conditioned on the following terms:
- Eliminate the automatic stay relief upon the Court finding that a “Termination Event” has occurred.
- Limit any stay relief that is granted by the Court to enforcement of liens on the Debtors’ assets that do not constitute “utility assets,” and allow further relief only upon a showing by the DIP Lenders that amounts remain owing after all non-utility asset collateral has been liquidated.
- Condition the borrowing on the Debtors’ agreement to use a small portion of the proceeds to (1) fund a program for housing, food and other necessities for Camp fire victims who are still living in tents or trailers or sleeping on friends’ couches, and (2) pay the roughly $15-20 million in signed settlements with Butte County victims that the Debtors refused to pay shortly before filing the Cases.”
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