VPX Sports trustee opposes roll-up in $454 million DIP facility

Chicago, Nov. 8 – Vital Pharmaceuticals, Inc., which does business as VPX Sports, requested $454.77 million in post-petition debtor-in-possession financing, as background for an objection from Region 21 U.S. trustee Mary Ida Townson filed with the U.S. Bankruptcy Court for the Southern District of Florida.

Of the total amount requested, $100 million is new money and the rest is a roll-up of prepetition debt.

The trustee principally objects to the roll-up portion of the financing.

The pre-petition claims have no right to a super-priority administrative expense claim status, senior liens on all unencumbered assets and priming liens on all encumbered assets, she says.

The lender did not bargain for these superior rights when making a business judgment to loan the amount to the debtor pre-petition and should not be able to go back now and require protections they did not ask for when they originally advanced the financing.

The roll-up loan would also improperly provide for cross-collateralization – securing prepetition debt with pre- and post-petition collateral as part of a post-petition financing arrangement.

The DIP financing, as outlined, would constitute over-reach and would disregard statutory law in the bankruptcy code, the trustee concluded.

The Pembroke Pines, Fla.-based the maker of Bang energy drinks and other products filed Chapter 11 bankruptcy under case number 22-17842.

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