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Off Lease Only lender Ally Bank objects to cash collateral use
By Sarah Lizee
Olympia, Wash., Sept. 11 – Off Lease Only’s motion to use cash collateral drew an objection from prepetition lender Ally Bank, according to documents filed Monday with the U.S. Bankruptcy Court for the District of Delaware.
As previously reported, Ally Bank, Spirit Realty, LP and Cerberus Off Lease Only LLC have an interest in the collateral.
Ally said that on Sept. 5, the debtors defaulted on their secured line of credit with Ally, which was established for wholesale floorplan automobile purchases, as well as all of the related cross-collateralized debt and guaranty obligations.
On Sept. 6, the debtors informed Ally that they had ceased all operations, intended to file bankruptcy the next day, and sought authority to use the cash collateral to fund the cases, the lender said.
“The Ally parties did not ask for the debtors to file Chapter 11 petitions, and the debtors did not provide the Ally parties with a meaningful opportunity to engage in any negotiations or discussions as to whether alternatives to the Chapter 11 process would facilitate the transfer of the Ally parties’ secured collateral to the Ally parties for liquidation in a more efficient and economical manner,” the lender said in the objection.
Ally said the debtors “miserably failed” to meet the burden they have to prove that Ally is adequately protected to permit the use of its cash collateral without its consent.
Ally said it would be willing to consent to limited use of cash collateral on a short-term, three-week budget.
Off Lease Only is an auto retailer based in West Palm Beach, Fla. The company filed bankruptcy on Sept. 7 under Chapter 11 case number 23-11388.
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