Vista Proppants and Logistics committee blasts DIP financing motion

By Caroline Salls

Pittsburgh, July 6 – Vista Proppants and Logistics, LLC’s official committee of unsecured creditors objected to the company’s proposed debtor-in-possession financing, according to a Friday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

“The DIP lenders, who are largely one and the same as the term loan secured parties, are seeking to provide a new DIP facility as a means to reap all of the benefits and value in these Chapter 11 cases, as well as end up as the new equity owners of the reorganized debtors pursuant a fast-tracked Chapter 11 plan process,” the committee said in its objection.

As currently proposed, the committee said the final DIP financing order would enable the lenders to encumber all previously unencumbered assets, leaving Vista’s unsecured creditors with nothing left to satisfy their claims.

“No principled reason exists to give away what little recovery may be available to general unsecured creditors to the DIP lenders/term loan secured parties who have no choice but to provide the DIP facility as a means to preserve the value of their collateral,” the objection said.

In addition, the creditor group said because the term loan secured parties agreed to prime themselves with the $11 million DIP facility as a means to preserve the value of their collateral “in an essentially mothballed business,” the lenders’ liens and claims should not encumber any unencumbered assets.

The committee also said the lenders propose to use the DIP facility to lock Vista’s cases into fast-paced, overly restrictive and unrealistic milestones, receive $2 million in professional fees, obtain waivers and grant adequate protection to some lenders that are not providing any value under the proposed facility.

Vista Proppants and Logistics is a Fort Worth-based pure-play, in-basin provider of frac sand solutions in prolific producing regions in Texas and Oklahoma. The company filed bankruptcy on June 9 under Chapter 11 case number 20-42002.

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