Prima Wawona’s Chapter 11 plan is unconfirmable, two lenders say

By Sarah Lizee

Olympia, Wash., Feb. 2 – MVK FarmCo LLC’s (Prima Wawona) Chapter 11 plan of liquidation drew an objection from lenders Cooperatieve Rabobank UA, New York Branch and Royal Bank of Canada, according to documents filed Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The lenders said the debtors’ proposed plan is an unconfirmable because it is premised on impermissibly layering at least $60 million of exit financing ahead of both senior secured loans extended under a prepetition bridge facility and $30 million in payments from asset sales owed to the lenders.

Rabobank and RBC said the payments were contemplated by a lender support agreement between the company and themselves.

“The root of the problem is that the self-described ‘required lenders’ now apparently believe that achieving a liquidation where they are in control and pre-existing debt is paid off over years, as hundreds of parcels of farmland across thousands of acres are gradually sold off, will require substantially more funds and take far longer than they had contemplated when they signed the lender support agreement that was supposed to provide a roadmap to the resolution of these cases,” the objecting lenders said.

“The required lenders appear to only be willing to provide those funds if they incur no incremental risk and the risk is instead borne entirely by other secured creditors,” Rabobank and RBC said.

“The required lenders have therefore constructed a plan that subordinates existing secured and priority debt to all of their potential funding needs.”

The confirmation hearing is scheduled for Feb. 28.

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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