Progrexion’s bid protections for lenders draw objection from trustee

By Sarah Lizee

Olympia, Wash., June 22 – The bid procedures of PGX Holdings, Inc., which does business as Progrexion, drew an objection from the U.S. trustee for Regions 3 and 9, Andrew R. Vara, according to documents filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As background, the motion seeks approval of bid procedures for the sale of substantially all of the debtors’ assets and authority to enter into two stalking horse agreements.

The first stalking horse agreement is with the debtors’ debtor-in-possession lenders and prepetition first-lien lenders who seek to make a credit bid for substantially all of the assets of the debtors, exclusive of Lexington Law.

The second stalking horse agreement is with the owners and the principal attorney at Lexington Law for substantially all of the Lexington Law assets.

The two agreements are conditioned on each other and are intended to permit the debtors’ businesses to continue as a going concern.

Vara said he objects to the motion to the extent that it seeks to provide an expense reimbursement of up to $1 million to the lenders making the credit bid.

“Bid protections are intended to provide an incentive for a party to expend the time and resources performing necessary due diligence to make a stalking horse bid,” Vara said in the objection.

“Here, the lenders did not need any additional incentive to place a bid, as they are already incentivized to protect the value of their collateral as a secured lender to the debtors and will not need to be compensated if they are not the prevailing bidder.”

Vara also objects to the debtors’ request to treat any allowed expense reimbursement as a super-priority administrative claim.

Progrexion is a provider of consumer credit repair services based in Salt Lake City. The company filed bankruptcy on June 4 under Chapter 11 case number 23-10718.

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