Prima Wawona committee takes issue with some DIP loan terms

By Sarah Lizee

Olympia, Wash., Jan. 12 – MVK FarmCo LLC’s (Prima Wawona) motion seeking approval of a $22 million debtor-in-possession multi-draw facility from some of its prepetition secured lenders drew a limited objection from the official committee of unsecured creditors, according to documents filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said that while it appreciates the debtors’ need for financing in order to proceed through confirmation of a plan and bring the cases to a close, some aspects of the relief requested through the motion are “an attempt at overreaching” by the DIP lenders at the expense of unsecured creditors.

Specifically, the committee said it objects to liens, super-priority claims, adequate protection claims, and any other claims being granted upon entry of the proposed orders and attaching to previously unencumbered assets, including avoidance actions and avoidance action proceeds.

The group also objects to waivers of the right to surcharge collateral for the cost and expenses associated with the preservation and disposition of the collateral under bankruptcy code and the power of the court to prevent prepetition liens from extending to post-petition proceeds of collateral “based on the equities of the case.”

A hearing is scheduled for Jan. 17.

Prima Wawona is a Fresno, Calif.-based producer of stone fruit. The company filed bankruptcy on Oct. 13 under Chapter 11 case number 23-11721.

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