BSPV-Plano bond trustee objects to DIP financing, cash collateral use

By Sarah Lizee

Olympia, Wash., March 7 – BSPV-Plano, LLC’s motion seeking court approval of a $1 million debtor-in-possession facility and access to cash collateral drew an objection on Monday from bond trustee Huntington National Bank, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Texas.

As previously reported, the lender is DCJ Capital, LLC, an entity affiliated with the equity sponsors of BSPV-Plano, which was formed in May 2018 to acquire, own, develop and operate an independent senior luxury apartment community known as the Bridgemoor at Plano.

The company financed the acquisition and development of the project, in part, through a transaction with New Hope Cultural Education Facilities Finance Corp. Under this transaction, New Hope entered into a trust indenture with Huntington National Bank as trustee, under four series of revenue bonds that were issued.

In turn, New Hope entered into a loan agreement with BSPV-Plano as borrower, under which proceeds from the bonds were used to advance loans to the company.

Huntington said the cash collateral motion seeks to force $6.2 million of cash collateral away from the bond trustee to support the debtor’s “misguided efforts to pour more funds” into a “bottomless money pit.”

In November 2020, the debtor stopped making the payments required under the governing loan documents, putting the debtor in default under its bond financing. Because of the defaults, the loan documents prohibited the bond trustee from advancing the funds the debtor now seeks to “forcibly remove” from the bond trustee, Huntington said.

Huntington said in its objection that while the debtor claims that it can complete the project in June by using only the $6.2 million in the project fund, the $1 million from the DIP loan, and the initial rents generated from opening the project, the bond trustee’s experience over the last few years is that the debtor “cannot be taken at its word when it comes to budgets or timing issues.”

“Throughout the prior 18-month period, the debtor has continuously failed to meet any budget or timing milestone that it has set for itself,” the bond trustee said.

“There is no indication that the debtor can do so now that it is in bankruptcy.”

Huntington said that the proposed use of cash collateral risks leaving the bond trustee with a still-incomplete project but with no funds on hand.

The Plano, Tex.-based company filed Chapter 11 bankruptcy on March 1 under case number 22-40276.

© 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.