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Zohar granted court approval to use cash collateral through Nov. 30
By Caroline Salls
Pittsburgh, Nov. 2 – Zohar III, Corp. obtained court approval to use cash collateral on an interim basis, according to an order filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.
Under the interim order, the company’s access to cash collateral will expire on Nov. 30, or sooner if the court enters an order denying the motion on a final basis.
The cash collateral may be used solely to fund administrative costs and expenses.
On Oct. 30, a group of Zohar secured parties objected to the cash collateral motion.
Through the cash collateral use order, the secured parties said the MBIA/Zohar controlling parties are trying to renegotiate essential terms of a settlement agreement approved by the court in May “by imposing on the debtors terms and conditions for the use of cash collateral that vitiate these cardinal principles and other essential elements of the settlement agreement, as well as a prior order of this court holding in abeyance the allocation of the independent directors’ fees.”
The secured parties said the Zohar III debtors proposed a stipulation in the cash collateral order that other stakeholder creditors’ liens and claims will be allowed without challenge, resulting in an “undisclosed $148 million windfall to MBIA that violates the settlement agreement.”
In addition, the secured parties said the order impairs the Zohar III debtors’ and several Patriarch entities’ ability to satisfy settlement agreement milestones if creditors are paid 50% of specified amounts set in the settlement by Aug. 21, 2019 and expands the creditors’ access to confidential information “beyond the narrow information rights that were negotiated under the settlement.”
Zohar is a Grand Cayman, Cayman Islands-based collateralized debt obligation. The company filed bankruptcy on March 11, 2018 under Chapter 11 case number 18-10512.
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