Urban Commons committee says some DIP facility terms need to change

By Sarah Lizee

Olympia, Wash., Jan. 5 – Urban Commons 2 West LLC’s official committee of unsecured creditors expressed concerns over some of the terms of the company’s proposed $6.05 million term loan with BPC DIP Lender, LLC, according to documents filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said it generally supports the DIP motion but takes issue with some of the case milestones, which are “seemingly inapposite to the debtors’ stated goal” to maximize the value of its lease for the property located at 2 West Street, New York.

The group said the case milestones do not provide enough time for the sale process.

Specifically, a potential buyer would only have nine days to close the sale after entry into a sale order – which would result in a maximum of 14 days from the auction to closing.

The committee said this might chill interests and competitive bidding if a potential buyer that needs financing to purchase the lease is not given enough time to obtain and close on that financing.

The committee also took issue with some of the language contained in the DIP term sheet regarding professionals’ fees. The term sheet provides that all professional fees subject to the carve-out would require the “approval” of the DIP lender in addition to approval by the court.

“This added level of approvals is inappropriate under the circumstances, and could theoretically permit BPC DIP lender to improperly direct the conduct of the case by refusing to approve professional fees incurred for certain purposes,” the committee said.

As previously reported, the court gave interim approval for the company to access $816,425 of the facility.

Urban Commons is a Corona Del Mar, Calif.-based company that modernizes underperforming hotels. The company filed Chapter 11 bankruptcy on Nov. 15 under case number 22-11509.

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