Northwest seeks court approval to sell accounts, obtain DIP financing

By Caroline Salls

Pittsburgh, April 21 – Northwest Co., LLC requested court approval to sell its post-bankruptcy accounts to CIT Group/Commercial Services, Inc. and obtain debtor-in-possession financing, according to a motion filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.

Northwest is required to file a motion for approval of the sale by May 18.

The company said it does not have available sources of working capital and financing sufficient to carry on its business operations without the DIP factoring facility and the use of CIT’s cash collateral.

Northwest said a proposed interim order will allow it to continue selling receivables to CIT and using CIT’s cash collateral.

In addition, the interim order will give the company the right to use the proceeds of the DIP factoring facility.

Interest on the factoring agreement, under which Northwest was indebted to CIT as of its bankruptcy filing date in the amount of $19.16 million, will accrue at the Chase Prime rate plus 200 basis points.

The facility will mature on the earliest of July 11, the effective date of Northwest’s Chapter 11 plan, the closing of an asset sale and dismissal or conversion of the Chapter 11 cases.

Northwest is a Roslyn, N.Y.-based branded home textiles company. The company filed bankruptcy on April 18 under Chapter 11 case number 20-10990.

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