Trico files suit to preserve DIP financing, eyes cash collateral use

By Caroline Salls

Pittsburgh, Nov. 10 - Trico Marine Services, Inc. filed a lawsuit Wednesday asking the U.S. Bankruptcy Court for the District of Delaware to preserve the status quo on its debtor-in-possession financing arrangement after the DIP loan agent said it plans to terminate the company's cash collateral use and outstanding commitments.

The DIP loan agent is Obsidian Agency Services, Inc., and the lenders are Tennenbaum DIP Opportunity Fund, LLC, Tennenbaum Opportunities Partners V, LP and Special Value Continuation Partners, LP.

On Nov. 8, the DIP loan agent sent a termination notice to Trico, claiming events of default had occurred.

Specifically, the agent said it intended to terminate the cash collateral use, terminate any outstanding commitments and exercise default remedies after expiration of a waiting period that ends on Nov. 16.

Trico said it is in the process of selling assets that will allow it to repay the DIP loan in full. The sales process is expected to be completed within the next 45 days.

"The exercise of remedies as threatened by the DIP lenders would compromise the sales processes and prevent the debtors from successfully maximizing the value of their assets," Trico said in the complaint.

The company said termination of the financing would also jeopardize its ability to operate in Chapter 11 bankruptcy.

As a result, Trico has also requested court approval to use roughly $3 million in cash collateral to preserve the remaining value in its estates while it continues the assets sales and a wind-down of its business.

"If the debtors are not granted authority to use cash collateral, at a minimum, they will be forced to conduct a fire sale of their remaining assets at Tennenbam's behest, to the detriment of every single creditor of the debtors other than Tennenbaum," Trico said in the cash collateral motion.

Trico, a marine services company based in The Woodlands, Texas, filed for bankruptcy on Aug. 25. The Chapter 11 case number is 10-12653.

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