Off Lease Only’s cash collateral terms draw objection from committee

By Sarah Lizee

Olympia, Wash., Sept. 27 – Off Lease Only’s motion for final approval to use cash collateral drew an objection from the official committee of unsecured creditors, according to documents filed Tuesday 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 had objected to the cash collateral use but said it would be willing to consent to limited use of cash collateral on a short-term, three-week budget.

The committee was appointed on Sept. 20. Under the interim cash collateral order and proposed final order, the consensual use of cash collateral will expire on Sept. 30.

“After that, it is unclear how these cases continue in Chapter 11,” the committee said in the objection.

“That leaves the committee with about 9 days to do its job. That time-period is woefully deficient.”

The committee said that aside from the timing issues that the cases present, the stripped-down budget that was attached to the interim order, and presumably will be attached to the proposed final order, is insufficient to support the Chapter 11 cases and insufficient to allow the committee to conduct any concrete analysis or investigation.

“Unfortunately, the committee cannot force the Ally parties to permit the consensual use of cash collateral – whether that be in amount or time,” the group said.

“But what the committee can do is prevent the Ally parties from receiving any benefits that they are not otherwise entitled to as a secured lender.”

The committee said that if the court is inclined to grant the motion on a final basis, the order should be “stripped down just as the Ally parties stripped down the debtors’ budget.”

“Doing so will ensure that as much value as possible (including bankruptcy rights) is preserved for the benefit of a likely Chapter 7 trustee and, ultimately, for the debtors’ creditors,” the committee said.

“While the committee believes that appropriately funding these cases and pursuing an orderly process outside the context of a conversion to Chapter 7 would maximize the value of these estates, at present, that does not seem to be a reality.”

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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