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Corsicana Mattress DIP financing draws objection from U.S. trustee
By Sarah Lizee
Olympia, Wash., July 19 – Corsicana Bedding, LLC’s motion seeking access to a debtor-in-possession financing package drew an objection Monday from Region 6 U.S. trustee William T. Neary, according to court documents filed with the U.S. Bankruptcy Court for the Northern District of Texas.
The U.S. trustee said the proposed limitation on lender liability and release should be subject to “extra scrutiny” given that one of the DIP lenders is a potential insider.
Neary also said the milestones under the DIP financing package should be rolled back.
As previously reported, the company, which does business as Corsicana Mattress, has lined up an asset purchase agreement with prepetition term lender Blue Torch Finance, LLC.
In connection with the proposed sale transaction, Corsicana has received a commitment for DIP financing from Blue Torch and from prepetition ABL lender Wingspire Capital LLC.
The DIP financing includes up to $40 million of revolving commitments from Wingspire and up to $18 million of term loan commitments from Blue Torch.
The revolver bears interest at an alternate base rate plus 375 basis points and the term loan bears interest at adjusted term SOFR plus 900 bps.
The facilities will mature on Oct. 23.
There is a 0.5% unused line fee and a 2% exit fee on the revolver, and a 2% facility fee, a $100,000 agent fee and a 2% exit fee on the term loan.
Following an interim order, the company has access to the full amount of the revolver and up to $9.75 million of the term loan.
Corsicana has also received interim court approval to use the cash collateral of its prepetition secured lenders.
The Corsicana, Tex.-based mattress company filed Chapter 11 bankruptcy on June 25 under case number 22-90016.
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