Foamex creditors committee objects to DIP facility

By Caroline Salls

Pittsburgh, March 11 - Foamex International, Inc.'s official committee of unsecured creditors objected to the company's proposed debtor-in-possession facility, arguing that the "illusory" $95 million DIP facility really only provides the company with no more than $56 million in new money, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the proposed DIP facility also actually reduces the company's maximum draw under its rolled-up pre-bankruptcy revolving credit facility by $5 million.

In addition, the committee said the DIP lenders will not be required to fund the costs of Foamex's bankruptcy case, and the company entered into the DIP facility mostly to facilitate lender MatlinPatterson Global Advisers LLC's credit bid for substantially all of the company's assets.

The committee said the proposed DIP loan agreement also does not give it enough time to review the loan documents and identify any claims against the lenders.

"The DIP facility should not be approved unless it is restructured to provide adequate benefits to the debtors' estates and create opportunities for something other than payment of the DIP lenders' prepetition debt," the committee said in the objection.

Foamex, a Media, Pa.-based producer of polyurethane foam-based and specialty comfort products, filed for bankruptcy on Feb. 18. Its Chapter 11 case number is 09-10560.

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