Houlihan’s committee voices objections to financing, bid procedures

By Caroline Salls

Pittsburgh, Dec. 3 – Houlihan’s Restaurants, Inc.’s official committee of unsecured creditors objected to the company’s motions for approval of debtor-in-possession financing and asset sale procedures, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the bid procedures motion seeks approval of an extremely expedited sale process, with bids due in less than two weeks. The creditor group, which was formed less than two weeks ago, said it has concerns regarding this expedited process, but also recognizes Houlihan’s liquidity constraints and the potential harm that could result from an extended process.

However, the committee said the company must immediately disseminate adequate assurance information for the stalking horse bidder and must serve adequate assurance information for competing bidders within 24 hours of the bid deadline to allow landlords time to assess the information and object if necessary.

As part of the DIP financing, the committee said the lenders are seeking inappropriate advance waivers.

Although the DIP financing budget includes payment of 503(b)(9) claims, other priority claims and stub rent, the committee said those payments are not slated to be made until the final week of the budget, while the waivers will take effect upon entry of the final financing order.

The committee said this leaves creditors exposed to the risk that the amounts are never paid in the event of a default or if the sale does not close.

To prevent this, the committee said the waivers should be conditioned on payment of the administrative claims, which, given the timeline, represents only a minor delay for the lenders.

“The court should not allow the debtors to race through a truncated sale process unless the rights of unsecured creditors are preserved,” the objection said.

A hearing is scheduled for Dec. 5.

Leawood, Kan.-based Houlihan’s operates a chain of restaurants. The company filed bankruptcy on Nov. 14 under Chapter 11 case number 19-12415.

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