Delivery Agent unsecured creditors object to proposed bid procedures

By Wendy Van Sickle

Columbus, Ohio, Oct. 11 – Delivery Agent, Inc.’s official committee of unsecured creditors opposed the company’s proposed bidding procedures for an asset, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said the bid procedures unfairly favor Hillair Capital Investments LP, the debtors’ prepetition lender, post-petition financing lender and proposed stalking horse purchaser.

“As proposed, the bidding procedures are very likely to set this case on an inescapable course that turns substantially all of the debtors’ assets over to Hillair, with no benefit whatsoever to general unsecured creditors of the debtors’ estate,” the unsecured creditors’ committee’s objection states.

Delivery Agent’s proposed bid deadline of 3 p.m. ET on Oct. 31, with sale objections due on Nov. 1, an auction to be held on Nov. 4, a sale hearing by Nov. 8 and closing by Nov. 12 do not allow enough time to thoroughly market the assets, according to the committee’s objection, which argues that an additional four weeks would ensure the auction is “robust.”

Additionally, the proposed bid protections for Hillair – a $350,000 expense reimbursement and a $500,000 break up fee – are excessive, the objection claims.

Also, the committee objected to the lack of limitation of Hillair’s credit bidding under the proposed bidding procedures.

Under the proposal, Hillair, as the stalking horse purchaser, will submit a credit bid for the full purchase price of $18,914,000 plus accrued interest, which is the total of $5,425,000 in proposed DIP financing to be lent by Hillair, plus Hillair’s purported pre-petition secured claim of $13,489,000, which the debtors propose to roll up into their DIP Financing, according to the objection.

The creditors objected to this use of credit bidding, in part, on the grounds that Hillair’s pre-petition claims are still subject to potential challenge.

Delivery Agent is a San Francisco-based entertainment content solutions company. The company filed bankruptcy on Sept. 15 under Chapter 11 case number 16-12051.

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