Structurlam committee objects to some terms of DIP financing

By Sarah Lizee

Olympia, Wash., May 18 – Structurlam Mass Timber U.S., Inc.’s official committee of unsecured creditors objected Wednesday to the company’s proposed debtor-in-possession financing, according to documents filed with the U.S. Bankruptcy Court for the District of Delaware.

The committee said it is focused on encouraging a competitive auction that provides the greatest likelihood of funding meaningful creditor recoveries, and it recognizes the importance of a faster-than-normal sale process and appropriate financing terms to accomplish that goal.

However, the fast-track sale process and financing terms, which are expected to result in full payment of both the DIP obligations and the prepetition loan obligations, can’t come at the expense of the committee’s ability to fulfill its statutory duties or at the expense of the committee’s constituency, the group said.

“The committee asks simply that the DIP lender and prepetition lender pay the freight of these cases,” the committee said in its objection.

“Doing so requires that certain terms of the debtors’ proposed financing be modified to protect the committee’s ability to fulfill its statutory duties and the interests of general unsecured creditors.”

The group said the proposed final DIP order should be revised to remove the discriminatory cap on the committee’s professional fees covered by the carve-out.

And, the committee professionals’ line-item in the DIP budget should be no less than one-third that of the debtors’, the group said.

As previously reported, the company is seeking final approval of a C$7.5 million debtor-in-possession facility from the Bank of Montreal.

Interest on the loan is 14% per annum.

The facility is set to mature on June 30.

The manufacturer of mass timber solutions has headquarters in Penticton, B.C. The company filed Chapter 11 bankruptcy on April 21 under case number 23-10497.

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