First Mariner committee asks court to reject proposed auction plan

By Kali Hays

New York, March 3 - First Mariner Bancorp's official committee of unsecured creditors filed an objection to the company's auction procedures motion, according to a Saturday filing with the U.S. Bankruptcy Court for the District of Maryland.

The committee said its basis for objection comes from the short period of time between First Mariner filing Chapter 11 and selecting RKJS Bank as a stalking horse bidder, forcing a "rushed and fundamentally flawed sale of the debtor's assets for no good reason."

The committee also claims that the company's timeframe discourages competitive bidding, as does the company's excessive break-up fees and preclusive requirements.

"The proposed process will simply hand the bank to RKJS. Numerous terms are so unfavorable to the estate that the entire process used to select the stalking horse and negotiation of the M&A agreement warrants closer inspection," the objection stated.

Among the unfavorable terms is a requirement of competing bidders to close by April 30 while the stalking horse has no deadline, a no-shop provision, a requirement that competing bidders provide a replacement DIP facility and unclear provisions regarding the use of the DIP facility, the committee said.

The committee is asking the court to reject all of the proposed auction procedures as they "will only encourage further abuse of the bankruptcy process."

First Mariner, the Baltimore-based holding company for 1st Mariner Bank, filed bankruptcy on Feb. 10. The Chapter 11 case number is 14-11952.

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