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Health Diagnostic lender BB&T’s DIP financing order stay motion denied
By Caroline Salls
Pittsburgh, Aug. 18 – Health Diagnostic Laboratory, Inc. lender BB&T Equipment Finance Corp.’s motion for a stay of an interim court order approving Health Diagnostic’s debtor-in-possession financing was denied on Aug. 17 by the U.S. Bankruptcy Court for the Eastern District of Virginia.
The court approved the interim financing on Aug. 7. BB&T requested the stay of the order pending the outcome of its appeal on the same date.
“The debtors have a critically important sale hearing scheduled within the next month,” the court said in Monday’s order.
“The debtors need DIP financing in order to consummate this sale process, repay its debts and continue the operation of the business as a going concern.”
In addition, the court said, “BB&T is unlikely to prevail on the merits on appeal.”
According to the order, BB&T argues that it will succeed on appeal because the court’s approval of a priming lien for the DIP lender under the Bankruptcy Code is based on its determination that an equity cushion exists that will protect BB&T’s interests. BB&T believes that no such equity cushion exists, therefore leaving BB&T without adequate protection.
In addition, BB&T contends that the court incorrectly valued the Health Diagnostic debtors’ assets at fair market value, instead of using a forced liquidation analysis.
However, the court said it determined that the going concern, fair market value of the company’s property provides BB&T with an equity cushion that exceeds 100%.
Health Diagnostic, a Richmond, Va.-based blood testing company, filed for bankruptcy on June 7. The Chapter 11 case number is 15-32919.
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