Nuvectra unsecured creditors committee objects to cash collateral use

By Caroline Salls

Pittsburgh, Dec. 19 – Nuvectra Corp.’s official committee of unsecured creditors objected to the company’s request to use cash collateral, according to a Wednesday filing with the U.S. Bankruptcy Court for the Eastern District of Texas.

The committee said Nuvectra’s budget showed that it had $43.6 million in “beginning cash” just before it filed bankruptcy, but it “inexplicably” made a $35 million prepayment to pre-bankruptcy lenders Oxford Finance LLC and Silicon Valley Bank (SVB), leaving the company with only $7.1 million in cash after other payments.

“Now, without any evidence that the lenders’ collateral is or will diminish in value, and without negotiating any new money in the form of debtor-in-possession financing or otherwise, the proposed final cash collateral order provides virtually every conceivable adequate protection to the lenders for the use of cash collateral,” the objection said.

“Even after taking $35 million in cash on the petition date, the lenders are trying to abscond what little value is left in the estate.”

In addition, the committee said the proposed final cash collateral use order includes overly restrictive procedures to challenge the lenders’ claim and liens, no permitted budget variance and underfunded budgets for professional fees and investigations.

The final cash collateral hearing is scheduled for Dec. 30.

Nuvectra is a Plano, Tex.-based neurostimulation company. The company filed bankruptcy on Nov. 12 under Chapter 11 case number 19-43090.

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