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January 10, 2019 – SunTrust Bank, as administrative agent (“WAC 7 Administrative Agent”) in respect of the Debtors’ Amended and Restated Credit Agreement dated as of April 28, 2017 (the “WAC7 Credit Agreement”) requested additional time to submit a credit bid and to extend related deadlines under the Debtors’ bidding procedures the “Bidding Procedures Order”) [Docket No. 159].
The motion noted that January 14, 2019 is the current deadline for submitting a credit bid based on collateral that it holds and for the WAC 7 Administrative Agent to submit a plan support agreement (the “PSA Deadline”) and requested that “The Court modify and extend the Credit Bid Deadline and the PSA Deadline pursuant to Bankruptcy Rule 9006(b) from January 14, 2019, to January 18, 2019.”
The motion states. “The WAC7 collateral includes a lien on all of the equity of WAC4. The only assets of WAC4 are contracts (the ‘PDP Contracts’) with an aircraft manufacturer pursuant to which WAC4 made certain pre-delivery payments (‘PDPs’) attributable to future aircraft deliveries (e.g.,these PDPs are available to reduce the ultimate sale price). The total outstanding balance on the WAC7 Credit Facility is in excess $100 million. The WAC7 Administrative Agent understands that the PDPs paid in connection with the PDP Contracts total in excess of $10 million.
Since the Debtors began its sale and marketing process, the WAC7 Administrative Agent has requested certain information from the Debtors….Despite repeated requests, the PDP Contracts (totaling in excess of 40 documents) were not produced to the WAC7 Agent until the afternoon of January 8. Similarly, the Settlement Agreement and material information related to the PDP contracts was not produced until the afternoon of January 9. With respect to the ‘form’ asset purchase agreement, notwithstanding the fact that the schedules to the ‘form’ APA were complete more than a month prior, the Debtors have been deficient with respect to the information provided to the WAC7 Administrative Agent (and, upon information and belief) other lenders.
For example, the Debtors did not disclose Schedule 4.19(c) to the Macquarie APA until January 9, 2019. Schedule 4.19(c) to the Macquarie APA discloses—for the first time—to the WAC7 Agent and Lenders that Buyer intends to acquire the PDP Contracts in connection with its APA.
The PDP Contracts, the Settlement Agreement, and complete schedules are critical to the WAC7 Administrative Agent’s ability to assess any potential credit bid and the value of the PDP Contracts….Although the WAC7 Administrative Agent is working diligently to digest the implications of the PDP Contracts and the Settlement Agreement, copies were not provided to SunTrust Bank until January 8, 2019 and January 9, 2019. Since this information has been in the Debtors possession for more than month, it is unreasonable for the WAC 7 Lenders to have between two and three business days before the WAC7 lenders are required to decide whether or not to credit bid for their collateral and/or to submit a PSA. The PDP Contracts and the Settlement Agreement, having a potential stream of value worth in excess of $10 million and would constitute a significant component of any credit bid by the WAC7 lenders.”
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