Greenwich objects to creditors' alternative DIP proposal for American Business Financial

By Ellen Chang

Houston, Feb. 28 - Greenwich Capital Financial Products, Inc. said it objects to a proposal for an alternate source of debtor-in-possession financing for American Business Financial Services, Inc. put forward by the official committee of unsecured creditors, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

Under the creditors committee's plan, Wachovia Bank would provide the DIP instead of the current $500 million lined up by the company from Greenwich Capital Financial Products.

The committee had said it believes Wachovia will "minimize fees and interest rates." The fees would also be paid as they are used as opposed to be being drawn up front.

But Greenwich Capital Financial Products said the motion filed by the unsecured creditors committee should be denied because it does not have "standing" to request the approval of a new DIP lender and that it is not good "business judgment."

Greenwich also said that it believes the Wachovia DIP proposal is not a "real proposal" and is subject to numerous outstanding conditions that are "wholly impractical" for American Business Financial, according to the filing. The proposal has "serious flaws" and is not "superior," Greenwich said.

The Wachovia proposal also "attempts to force the Clearwing indemnification parties into a position pari passu with the Wachovia DIP loan in violation of the interim DIP order."

Meanwhile American Business Financial said it is considering the Wachovia proposal, according to a Monday filing. The company said its business plan has some risks, but is "achievable."

The company also said it is "committed' to finding a chief restructuring officer, a request made by the creditors' committee.

American Business Financial has already received interim approval for $250 million of the Greenwich DIP facility but the unsecured creditors are objecting to final approval.

American Business Financial Services, the Philadelphia-based company, originates, sells and services home equity loans and money mortgage loans. The company filed for Chapter 11 on Jan. 21 and its Chapter 11 case number is 05-10203.

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