GVS Texas seeks approval of settlement with senior mezzanine lender

By Sarah Lizee

Olympia, Wash., Jan. 13 – GVS Texas Holdings I, LLC is seeking court approval of a settlement with senior mezzanine lender ESS-GV Holdings, LLC, according to a motion filed Thursday with the U.S. Bankruptcy Court for the Northern District of Texas.

The debtors’ professionals have negotiated a resolution of the claims to facilitate the auction process and avoid litigation, the company said.

As the debtors approach an auction of their assets, they and the senior mezzanine lender have reached a proposed settlement which contemplates the resolution of the allowed amount of the lender’s claims.

Under the settlement, the lender’s claim will be allowed in the full amount of the $103 million outstanding principal debt due under the senior mezzanine loan and post-petition default interest through April 15. The lender’s claims for prepetition default interest and yield maintenance default premium (YMDP) are compromised.

The lender’s claim will be paid from the proceeds of the company’s asset or property sales.

“The senior mezz lender settlement resolves two significant issues underlying the senior mezz lender claim: payment of the YMDP and the accrual date for prepetition default interest,” the company said in its motion.

“Absent the settlement, each of these issues will be subject to complex and protracted litigation, with the funds reserved and accruing interest to the detriment of other creditors.”

GVS said the settlement will save the debtors about $7 million in default interest, in addition to legal fees, costs and interests that would continue to accrue for the duration of the litigation, and any appeals, injuring the benefit of all stakeholders.

A hearing is scheduled for Feb. 11.

GVS Texas is an indirect subsidiary of GVS Portfolio I B, LLC, which does business as Great Value Storage, an Austin, Tex.-based storage chain. GVS Texas Holdings I filed bankruptcy on June 17, 2021 under Chapter 11 case number 21-31121.

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