United Road’s unsecured creditors oppose Medley’s adequate protection

New York, March 22 – United Road Towing, Inc.’s official committee of unsecured creditors said Medley Capital Corp. should not be granted adequate protection, according to a filing Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said that it should be given the chance to conduct a “full and fair investigation” of Medley’s actions before the bankruptcy filing.

United Road Towing underwent a debt restructuring and change of control in 2014, the committee noted.

Those transactions resulted in Medley extending a second lien credit facility to the company which currently has $19,365,000 outstanding.

In addition, Medley became an insider and equity holder of the company, the committee stated.

The committee said it “does not yet know the level of control exerted by Medley prepetition on the debtors and whether there are any claims against Medley for recharacterization or equitable subordination.”

Until those questions are resolved, Medley should not be given adequate protection on a final basis, the committee added.

Medley was given interim protection on March 8.

A hearing is scheduled for March 30.

United Road is a Mokena, Ill.-based towing, recovery, impound and vehicle management solutions company. The Chapter 11 case number is 17-10249. It filed for bankruptcy on Feb. 6.

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