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National Envelope's creditors committee objects to DIP facility motion
By Lisa Kerner
Charlotte, N.C., July 8 - National Envelope Corp.'s official committee of unsecured creditors filed an objection to the debtors' motion for interim and final orders authorizing the use of cash collateral, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.
In addition, the committee opposes the entry of a final order authorizing the debtors to enter into the proposed post-petition financing facility "because approval will dictate an expedited sale process under circumstances designed to benefit only the debtors' senior secured lenders, [to] the detriment of other creditor constituencies," the filing said.
According to the committee, the debtor-in-possession facility's "roll up" feature converts approximately $109 million of pre-petition secured claims into post-petition administrative claims. This "eliminates the debtors' ability to pursue any strategy other than a quick asset sale supported by the senior secured lenders."
As previously reported, in June National Envelope was granted interim access to its $138.96 million in DIP financing despite an objection from the company's term B lenders.
The final hearing is scheduled for July 13.
According to the term B lenders' objection, "the proposed DIP financing compels a rushed sale process that is designed to generate recoveries only for the senior secured lenders and provide extraordinary relief for a single unsecured creditor, International Paper, Inc."
The term B lenders include LBC Credit Partners, LP, LBC Credit Partners Parallel, LP, Island Funding, LLC and Wayzata Recovery Fund, LLC.
National Envelope, a Uniondale, N.Y.-based envelope manufacturing company, filed for bankruptcy on June 10. Its Chapter 11 case number is 10-11890.
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