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April 23, 2019 – The Debtor requested Court authority to (i) access $25.0mn in debtor-in-possession (“DIP”) financing, ($1.8mn on an interim basis) to be provided by GE Capital US Holdings, Inc. ("GECUSH," the sole member of the DebtorFN1) [Docket No. 7] and (ii) file certain confidential information related to the DIP financing (ie, details as to collateral in certain confidential settlement agreements) under seal [Docket No. 13]. Clearly the bulk of this financing is for professional fees relating to the Chapter 11 process and the consummation of a settlement with ultimate parent General Electric Company (the "GE Settlement"); with $1.8mn of the Debtors' projected $2.4mn budget earmarked for professional fees from July 2019.
The DIP motion states, “Prior to the Commencement Date, given the state of the Debtor’s operations and the limited amount of cash on hand, the Debtor and its advisors determined that the Debtor would require post-petition financing to support its chapter 11 activities to pay (a) salaries and benefits of its employees, (b) other ordinary course post-petition obligations, and (c) professionals’ fees to, among other things, conduct negotiations with key constituents, consummate the GE Settlement and confirm a chapter 11 plan. During the Debtor’s discussions with GECUSH, GECUSH made an offer to provide post-petition financing to the Debtor.”
The seal motion [Docket No. 13] states, “The collateral securing the Debtor’s obligations under the DIP Facility consists of, among other things, all of the Debtor’s rights under the Settlement Agreements with certain non-Debtor parties (the ‘Non-Debtor Counterparties’). The Settlement Agreements are identified on Exhibit A to the Assignment Agreement (the ‘Confidential Exhibit’). The Debtor is obligated, pursuant to the terms of each Settlement Agreement, not to disclose the Settlement Agreements or any of their terms.”
FN1: GECUSH is a Delaware corporation and the sole member of the Debtor. The Debtor does not have any subsidiaries. GECUSH, in turn, is wholly-owned by GE Capital Global Holdings, LLC, which is a Delaware limited liability company. GE Capital Global Holdings, LLC, in turn, is wholly owned by General Electric Company (together with its affiliates “GE”).
Key Terms of the DIP Facility:
- Borrower: WMC Mortgage, LLC
- Lender: GECUSH
- DIP Facility: A secured post-petition credit facility in an aggregate principal amount of $25 million.
- Borrowing Limits: Upon entry of the Interim Order, up to $1.75 million. Following entry of the Final Order, and subject to the terms of the DIP Agreement, up to an additional $23.25 million.
- Use of Proceeds: The Debtor shall use the proceeds of Advances for working capital and general corporate purposes only, including the funding of the Debtor’s post-petition operations, professional fees and expenses, and other items all in accordance with the allowed disbursement line item(s) set forth in the Budget.
- Interest Rates: LIBOR plus 5.00% per annum.
- Maturity Date: The earliest of (a) January 23, 2020; (b) the consummation of a Chapter 11 Plan approved by the Bankruptcy Court, which provides for the indefeasible payment in full of the Obligations; (c) the date the DIP Lender accelerates the Obligations following the occurrence of an Event of Default subject to compliance with the Interim Order and the Final Order, as then applicable; and (d) the date of filing of any Chapter 11 Plan by the Debtor which is not an Acceptable Plan.
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