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Maxim Crane rejects unsecured creditors' criticisms of emergency request for final DIP approval
By Jeff Pines
Washington, July 13 - ACR Management, which does business as Maxim Crane, rejected its committee of unsecured creditors' criticisms of its emergency request for final debtor-in-possession facility approval.
In a filing Tuesday with the U.S. Bankruptcy Court for the Western District of Pennsylvania, Maxim said its pre-Chapter 11 senior lenders drove a hard bargain before agreeing to have their rights primed by the post-petition lenders. Priming enables a creditor to move ahead of another in the right to be repaid.
Only two of Maxim's pre-Chapter 11 lenders have agreed to be post-petition lenders, the company said. It had more than $470 million of pre-Chapter 11 senior loans.
Among the committee's criticisms were that the company did not need the $70 million DIP facility because it had enough cash on hand.
To the contrary, Maxim said it has immediate need for cash for operational cash flow needs because its business is cyclical and having a DIP of this size sends a message to the marketplace that the company is here to stay.
As for the fees being excessive, Maxim said it is prepared to show otherwise in court. For example, if Maxim uses half of its $70 million, it would pay $175,000 for an unused line of credit fee.
In addition, the committee said pre-payments to pre-petition lenders are inappropriate, but Maxim said bankruptcy courts have approved this arrangement before if it was necessary to get the pre-petition lenders' permission to be primed.
A July 13 hearing is scheduled.
Maxim filed for bankruptcy on June 14. Its Chapter 11 case number is 04-27848.
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