Patriot National committee objects to DIP financing, eyes continuance

By Caroline Salls

Pittsburgh, Feb. 26 – Patriot National, Inc.’s official committee of unsecured creditors objected to the company’s proposed debtor-in-possession financing and asked the court to adjourn the DIP financing hearing for a minimum of two weeks from the current date of Feb. 28, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said it had been in existence for only 10 days as of Monday, and its financial adviser “has only been recently afforded access to a data room and will not be able to meet with the debtors’ professionals until after the filing of this objection.”

According to the filing, the proposed adjournment “will permit the committee to engage in a meaningful dialogue with the debtors and their proposed DIP lenders regarding the relief requested in the DIP motion and, hopefully, reach a consensus on, among other major issues, the proposed case milestones, releases, challenge period and roll-up of prepetition debt.”

In addition, the creditor group said it needs “some time to understand the ramifications of the DIP facility being approved on a final basis and ... whether the proposed DIP facility is even needed in the first place.”

The committee said in the objection that Patriot National’s cases were filed to confirm a plan of reorganization “at breakneck speed” that will transfer to a litigation trust all of the company’s litigation claims.

“Despite these chapter 11 cases being advertised as preserving all of the debtors’ causes of action for the benefit of unsecured creditors, Cerberus – a named defendant in pending derivative shareholder litigation against the debtors – is slated to be the beneficiary of broad sweeping releases by way of the proposed DIP motion,” the objection said.

Based in Fort Lauderdale, Fla., Patriot National provides workers’ compensation and managed care services. The company filed bankruptcy on Jan. 30 under Chapter 11 case number 18-10189.

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