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Cengage claims $273.9 million of cash not part of collateral package
By Caroline Salls
Pittsburgh, Sept. 20 - Cengage Learning, Inc. filed a complaint Friday that asks the U.S. Bankruptcy Court for the Eastern District of New York to rule that the Cengage debtors' equity interest in $273.9 million of disputed cash is not part of pre-bankruptcy secured parties' collateral package, according to a court filing.
The complaint also asks the court to rule that no pre-bankruptcy secured party or entity acting as their agent has a security interest in the disputed cash.
As of June 30, Cengage said it had $5,803,900,000 of outstanding funded debt obligations, including the secured, funded debt at issue in the complaint.
Specifically, the debt at issue includes $3,867,900,000 principal amount of first-lien loans in five tranches, $725 million principal amount of 11½% first-lien notes, $13.3 million owed under swap agreements and $710 million principal amount of 12% second-lien notes.
According to the complaint, the Cengage debtors granted security interests to the collateral agents for the benefit of the lenders under the first-lien loans, the swap counterparties and the holders of first-lien and second-lien notes.
The company said some assets of the debtors are excluded from the collateral package, including all equity investments in entities other than wholly owned subsidiaries of Cengage.
As a result, Cengage said the disputed cash is not part of the collateral package.
Cengage, a Stamford, Conn.-based provider of teaching, learning and research services for the academic, professional and library markets, filed for bankruptcy on July 2. The Chapter 11 case number is 13-44106.
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