Otter Tail's requested extension faces opposition by bondholders

By Lisa Kerner

Charlotte, N.C., April 19 - Otter Tail AG Enterprises, LLC indenture trustee U.S. Bank NA and an ad hoc group holding a majority of the principal amount of the revenue bonds filed an objection to the company's request for a 60-day extension to its exclusive periods to obtain acceptances for its plan of reorganization, according to a filing with the U.S. Bankruptcy Court for the District of Minnesota.

As previously reported, Otter Tail wants to extend its exclusive solicitation period to June 30 from April 28.

A hearing has been scheduled for April 22.

According to the filing, "The debtor cannot meet its burden of demonstrating 'cause' for the requested extension because the facts and circumstances of this case, including the 'new value' component in the existing plan proposed by the debtor, weigh heavily in favor of opening up the process to competing plans."

In addition, the debtor's authority for use of cash collateral expires in less than six weeks and the senior lenders are reluctant to permit use of cash collateral beyond the expiration, the filing said.

Otter Tail said it filed its proposed plan of reorganization and disclosure statement on Feb. 25.

The disclosure statement hearing is scheduled for May 12.

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

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