Ritz Camera creditors committee objects to terms of proposed $85 million DIP loan

By Jennifer Lanning Drey

Portland, Ore., March 16 - Ritz Camera Centers, Inc.'s official committee of unsecured creditors objected to the company's proposed $85 million debtor-in-possession facility from Wachovia Bank, NA, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The creditors said the financing agreement provides "a phantasm of increased availability for the debtors when in reality it provides nothing more than a mechanism for the pre-petition lenders to convert their pre-petition debt into post-petition debt at lightening speed for their sole benefit after taking their $1.7 million fee."

The committee said due to the expedited liquidation of Ritz's assets, the borrowing base formula is poised to become increasingly more restrictive over the coming weeks, thereby reducing availability.

At the same time, a significant portion of the proceeds of the DIP facility must be used to satisfy the pre-bankruptcy obligations, they said.

"If the DIP facility is approved without modification by this court, the debtor will pay $1.7 million for little more availability than it had prior to the petition date," the creditors said.

The final DIP loan hearing is scheduled for March 19.

Ritz, a Beltsville, Md.-based specialty camera and image chain, filed for bankruptcy on Feb. 22. Its Chapter 11 case number is 09-10617.

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