Paradox DIP lender ordered to honor $1.5 million draw request

By Sarah Lizee

Olympia, Wash., Aug. 25 – Paradox Resources, LLC’s debtor-in-possession lender, Washington Federal Bank, has been directed to honor the debtor’s $1.5 million borrowing request by 6 p.m. ET on Aug. 26, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

Paradox had asked the court to enforce the final DIP order after WaFd refused to fund the amount.

The lender argued that the debtors failed to satisfy a milestone for obtaining an acceptable stalking horse bid for their assets by the deadline, and thus an event of default had occurred under the $7 million DIP facility.

However, Paradox said that following a consensual final DIP hearing, it understood that the lender had waived the milestone and would not declare an event of default.

Paradox claimed WaFd was attempting to evaluate bids before deciding whether to continue funding and supporting the process.

“WaFd should not be allowed to lay behind the log for weeks on end simply waiting to see if it likes the bids received and then spring an alleged default on the debtors on the eve of a crucial point in the sale process,” the company had said in its motion seeking the enforcement.

Under the bid procedures, the bid deadline is set for 6 p.m. ET on Aug. 28, an auction is scheduled for Aug. 31, and a sale hearing will take place on Sept. 6.

Paradox Resources is a Houston-based midstream company primarily focused on helium processing and carbon capture, utilization and sequestration. The company filed bankruptcy on May 22 under Chapter 11 case number 23-90558.

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