| Add to balance / Manage account | User: | Log out |
| Prospect News home > News index > List of issuers M > Headlines for Mississippi Phosphates Corp. > News item |
Mississippi Phosphates unsecured creditors object to DIP loan terms
By Kali Hays
New York, Dec. 1 – Mississippi Phosphates Corp.’s official committee of unsecured creditors objected to approval of the company’s proposed $11 million of debtor-in-possession financing and the continued use of cash collateral, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of Mississippi.
As previously reported, the company received interim access to $5 million of the DIP facility on Oct. 30.
Included in the committee’s objection is the “overlap” of pre-bankruptcy lenders and DIP lenders as “all of the DIP lenders are pre-petition lenders.”
As a result of this overlap, the committee claims that “key features and provisions of the DIP facility are unduly prejudicial to the interests of unsecured creditors and the debtor’s estate as a whole.”
The committee said that the DIP agreement includes “overreaching” liens, superpriority administrative claims and adequate protection provisions, “stringent and unreasonable constraints” on the committee to investigate the lenders, an “unworkable budget” to fund the committee and any litigation brought against the lenders, “unreasonable events of default” and “inappropriate case controls” that “inhibit the debtor’s ability to sell its assets in such a way that maximizes value for all creditors – not just the DIP lenders.”
“In short, the DIP facility as proposed puts the unsecured creditors in a worse place than they would be if this case were proceeding under a Chapter 7 liquidation,” the objection stated.
The committee asked that the provisions objected to be removed from the DIP agreement or that a court order modify the terms.
A hearing to consider final approval of the facility is set for Dec. 3.
Mississippi Phosphates, a Pascagoula, Miss., fertilizer company, filed for bankruptcy on Oct. 27. The Chapter 11 case number is 14-51667.
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.