Limetree Bay unsecured creditors committee objects to DIP financing

By Sarah Lizee

Olympia, Wash., Aug. 6 – Limetree Bay Refining, LLC’s official committee of unsecured creditors objected Thursday to the company’s motion seeking final approval of a $25 million debtor-in-possession facility and access to cash collateral, according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The group said the DIP financing fails to provide for the payment of the projected administrative expenses or sufficient runway for the debtors to accomplish a sale process given the complexity of the estates’ refinery assets.

The committee said it also objects to any further encumbrance of avoidance actions and commercial tort claims at the expense of unsecured creditors.

“The committee is not sure whether the full $25 million under the DIP facility is even available to the debtors at this time,” the group added.

On Aug. 4, the debtors filed a further proposed six-week budget through Sept. 19 that contemplates up to $21.5 million of total borrowings, but the committee said it was informed that even that borrowing has not been approved by the DIP lenders.

Only $5.5 million of borrowings under the DIP facility have been approved to date.

The committee said that although it was only appointed last week and has been rapidly working to get itself and its professionals up to speed, most of the purported pre-petition secured parties are apparently heavily under secured, which means that there may be little in terms of recoveries for unsecured creditors aside from whatever assets may have been unencumbered as of the petition date.

“The committee therefore urges the court to deny any further interim or final approval of the motion that continues to encumber the estates’ avoidance actions, commercial tort claims, or any other unencumbered assets,” the committee said.

405 Sentinel LLC is the lender and administrative agent for the DIP financing, as previously reported.

The DIP facility bears interest at 3% in cash and 9% in kind.

The company has received interim court approval to use the cash collateral of 405 Sentinel and its pre-petition secured parties.

Limetree Bay is based in St. Croix, U.S. Virgin Islands and is capable of processing around 200,000 barrels per day. The company filed bankruptcy on July 12 under Chapter 11 case number 21-32351.

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