VPX Sports’ proposed DIP facility draws objection from Monster Energy

By Sarah Lizee

Olympia, Wash., Oct. 13 – The largest unsecured creditor of Vital Pharmaceuticals, Inc., which does business as VPX Sports, filed an objection to the debtor’s motion seeking approval of a proposed debtor-in-possession facility, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of Florida.

Monster Energy Co. and VPX are adverse parties in a number of disputes. Most recently, Monster was awarded a $293 million jury verdict against the debtor and its chief executive officer over false advertising relating to its Bang energy drink product.

As previously reported, the debtors seek authority to borrow up to $454.77 million, of which $100 million is new money and the rest is a roll up of prepetition debt.

Monster said an interim order would “firmly entrench the prepetition secured parties at the helm of these bankruptcy cases,” while enriching potentially under-secured lenders and insulating the lenders’ claims from meaningful challenge.

The interim order contemplates that the creditors’ committee must seek standing to bring a challenge within 60 days of its formation, and its standing motion must be granted by the challenge deadline – effectively shortening the challenge period to less than 60 days, Monster said.

Monster said a further complication to the creditors committee’s ability to assert a challenge is that some debtors are limited liability companies, calling into question the conduct of a debtor in possession waiving all defenses and claims against the prepetition secured parties when arguably no other party in interest can obtain standing to assert the estate’s claims.

“It is also apparent from the DIP budget that over a third of the proposed interim borrowings of $34 million will be round-tripped back to the lenders in the form of upfront fees, commitment fees, adequate protection and interest payments, or escrowed to pay for the debtors’ professional fees,” Monster said.

“Very little benefit is actually coming to the bankruptcy estates in exchange for millions of dollars in fees and the granting of senior liens to the prepetition secured parties.

“They should not be allowed to use their leverage to tilt the playing field acutely in their favor on the first day of the case.”

The Pembroke Pines, Fla.-based the maker of Bang energy drinks and other products filed Chapter 11 bankruptcy under case number 22-17842.

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