SmileDirectClub receives final approval of $80 million DIP facility

By Sarah Lizee

Olympia, Wash., Nov. 7 – SmileDirectClub Inc. received final approval of an $80 million debtor-in-possession financing package, according to an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

Cluster Holdco LLC is administrative agent and collateral agent for the DIP lenders.

As previously reported, the financing consists of a $30 million interim amount, consisting of $20 million of initial draw T-1 loans and $10 million of accordion loans; and $50 million of additional DIP loans, consisting of $30 million of delayed-draw T-2 loans, made available if a delayed-draw condition is met, up to $15 million of additional accordion loans, and a rollup of $5 million of prepetition revolver debt.

The facility will accrue interest that is paid in kind monthly at a rate of 17˝% and has a scheduled maturity date of Dec. 29, 2023.

The maturity date may be extended in certain circumstances.

The facility provides the framework for a proposed toggle Chapter 11 plan, which would allow the debtors to pursue a going-concern sale of all or substantially all of their equity under a plan of reorganization and, absent interest in a going-concern transaction by Nov. 28, to pivot to a liquidation of the debtors’ estates.

The DIP facility is subject to a $2.5 million minimum liquidity covenant, to be used to fund a wind-down budget for the liquidating plan.

SmileDirectClub is a Nashville-based oral care company. It filed bankruptcy on Sept. 29 under Chapter 11 case number 23-90786.

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