Verity Health System of California – UMB Bank and Wells Fargo Bank Obect to Proposed Final DIP Order

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October 3, 2018 – Verity Health System of California’s creditors UMB Bank, as master indenture trustee, and Wells Fargo Bank, as indenture trustee, filed with the Court an objection [Docket No. 398] to a proposed final order issued in respect of the Debtors’ debtor-in-possession (“DIP”) financing [Docket No. 31]. The creditors assert, “The Secured Parties’ objection is based upon the fact that the Proposed Final Order does not reflect the proceedings held in Court today on the Financing Motion, or the Court’s ruling on the Intercreditor Agreement at that hearing.  The Secured Parties have attempted to resolve, but were unable to resolve, the problems with the Proposed Final Order that form the basis for this objection. At today’s hearing on the Financing Motion, the Court ruled that the final order on the Financing Motion should provide that any priority of replacement liens between the Secured Parties and Note Trustee should be governed by the Intercreditor Agreement, subject to further order of the Court. The Proposed Final Order provides only the following statement, which appears in Section 5(a): ‘Unless otherwise ordered by the Court, the Intercreditor Agreement shall not be deemed altered or modified by the terms of this Final Order or the DIP Financing Agreements.’ This is not what was stated at the hearing. The Court’s ruling was that the final order on the Financing Motion should provide that any priority of replacement liens between the Secured Parties and Note Trustee should be governed by the Intercreditor Agreement, subject to further order of the Court. For the convenience of the Court, a full copy of the Secured Parties’ proposed final order, which includes this language, is attached hereto as Exhibit C.”

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