Hartshorne unsecured creditors committee objects to DIP financing

By Sarah Lizee

Olympia, Wash., March 24 – The official committee of unsecured creditors appointed to Hartshorne Holdings, LLC’s Chapter 11 bankruptcy case objected to the company’s debtor-in-possession and cash collateral motion, according to a Friday filing with the U.S. Bankruptcy Court for the Western District of Kentucky.

The committee said that, while it doesn’t object to the debtors’ decision to seek the financing in order to have the capital necessary to seek a sale or implement a restructuring, it does object to the debtors, DIP financing parties and prepetition secured parties “using the post-petition financing as a vehicle to silence the committee and give the secured lenders undue control over these Chapter 11 cases,” the objection said.

The committee said the terms of post-petition financing will severely constrain its ability to adequately meet its fiduciary obligations.

In addition, the committee cited general concerns about the impact of the coronavirus on the Chapter 11 cases.

“At a minimum, the secured lenders should not be permitted to call an event of default if such default is being caused by or related to the coronavirus pandemic,” the objection said.

Rumsey, Ky.-based Hartshorne develops and operates coal mining projects in the United States. The company filed bankruptcy on Feb. 20 under Chapter 11 case number 20-40133.

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