Angelica creditors committee object to proposed DIP as ‘overreaching’

By Susanna Moon

Chicago, April 24 – Angelica Corp. received an objection of the official committee of unsecured creditors to the motion of debtors, according to a motion filed with the U.S. Bankruptcy Court for the Southern District of New York.

The official committee of unsecured creditors of Angelica and its affiliated debtors and debtors in possession filed the objection for entry of a final order authorizing the debtors to

• Obtain post-petition secured superpriority financing;

• Grant liens and superpriority claims to the postpetition lenders;

• Use cash collateral of the prepetition senior lenders; and

• Provide adequate protection to the prepetition senior lenders and the prepetition junior lenders.

The committee filed the objection after a week of negotiations with counsel for the debtors, the postpetition agent and some prepetition secured parties, the filing noted.

“Notwithstanding the committee’s good faith efforts to reach consensus, those negotiations have not provided a satisfactory resolution of many of the flaws in the proposed final order. The committee intends to continue to negotiate in good faith in an effort to narrow the issues that remain for the court’s resolution on April 28. To the extent that the committee is able to narrow the disputes by reaching agreement on at least certain issues – an approach that the committee embraces – the committee will notify the court as early as possible,” the filing said.

The proposed DIP financing allows for a “litany of overreaching benefits and protections to the prepetition lenders while unfairly prejudicing the substantive rights of the bankruptcy estates and unsecured creditors,” the filing added.

The court is being asked to require that the final order be revised to address the issues raised by the objection as a condition to granting the DIP motion.

The official committee of unsecured creditors was appointed April 12 by Region 2 U.S. Trustee William K. Harrington, as previously reported.

Angelica is a St. Louis-based provider of outsourced linen management services to the health care industry. The company filed bankruptcy on April 3 under Chapter 11 case number 17-10870.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.