Otter Tail: U.S. Bank objects to order allowing use of cash collateral

By Lisa Kerner

Charlotte, N.C., Oct. 14 - U.S. Bank NA asked the court to vacate its Oct. 12 order authorizing Otter Tail AG Enterprises, LLC to use cash collateral through Dec. 31, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Minnesota.

U.S. Bank filed the motion as indenture trustee for the holders of the Otter Tail County, Minn., subordinate exempt facility revenue bonds, series 2007, in the outstanding principal amount of $20 million.

A hearing is set for Oct. 20.

U.S. Bank said the October order "went far beyond its represented scope of continuing prior orders for the use of cash collateral" by including additional concessions to the debtor's senior lenders requiring either the consent of all affected parties or the opportunity for creditors to object.

According to U.S. Bank, it did not consent to the order, which included provisions establishing certain deadlines for a 363 sale process of the debtor's assets and for the debtor to pay in full the $4,365,003 principal balance of its pre-petition revolving line of credit.

U.S. Bank said it was entitled to advance notice of the proposed $4 million paydown of pre-petition secured debt and to advance notice of the proposed deadlines for a 363 sale process, which might impact U.S. Bank's recovery on its claim.

Otter Tail, a Fergus Falls, Minn., ethanol company, filed for bankruptcy on Oct. 30, 2009. Its Chapter 11 case number is 09-61250.

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