Joan Fabrics receives second interim DIP approval; final hearing May 18

By Caroline Salls

Pittsburgh, May 9 - Joan Fabrics Corp. obtained its second interim approval of its $8 million debtor-in-possession facility from Bank of America, NA, according to a Wednesday filing with the U.S. Bankruptcy Court for the District of Delaware.

The final hearing is scheduled for May 18.

The company obtained interim approval to use up to $6 million of the DIP facility when it filed for bankruptcy in April.

The DIP proceeds will be used to pay down $2 million of a pre-bankruptcy emergency bridge facility, with the balance to be used for working capital and to support operations during the bankruptcy process.

The DIP facility will terminate at the earliest of May 23 if a final DIP approval order has not been entered, the maturity date of 180 days after the final order, upon the effective date of a plan of reorganization for either debtor, or upon dismissal or conversion of the Chapter 11 case to Chapter 7 bankruptcy.

Interest will be Base rate plus 300 basis points.

Joan Fabrics will pay a $160,000 initial lender fee and a $50,000 post-bankruptcy agent fee.

Joan Fabrics, a Tyngsboro, Mass., textile fabric company, filed for bankruptcy on April 10. Its Chapter 11 case number is 07-10479.

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