Gissing North America’s DIP facility draws objection from committee

By Sarah Lizee

Olympia, Wash., Aug. 23 – Gissing North America LLC’s proposed $30 million debtor-in-possession revolving credit facility drew an objection Tuesday from the official committee of unsecured creditors, according to court documents filed with the U.S. Bankruptcy Court for the Eastern District of Michigan.

The committee said that while the debtors’ motion purports to provide $30 million of credit to the debtors, over $13 million of the amount is nothing more than a roll up of the prepetition lenders’ debt into a post-petition loan.

“This was specifically designed to enhance the position of such lenders – but does so to the detriment of unsecured creditors,” the committee said in court documents.

Also, the debtors’ major original equipment manufacturer (OEM) customers are budgeted to provide about $14 million of funding under the DIP facility, because the survival of the debtors is essential to their businesses.

However, the customers and lenders have agreed to some terms in an accommodation agreement and access agreement which only benefit the customers and lenders, the committee said.

“The proposed funding leaves less than $3 million of funding that the prepetition lenders are actually providing to the debtors under the DIP facility,” the committee said.

The committee said it might accept the minimal funding and attendant fees if the DIP facility was otherwise a reasonable one.

“As proposed, however, the DIP facility is overbroad in its draconian protections and would unduly disadvantage the immediate and later interests of general unsecured creditors during these cases, including in connection with the announced sale process,” the committee said.

A final hearing is scheduled for Aug. 24.

The Bingham Farms, Mich.-based company is a manufacturer of acoustic systems for the automotive industry. The company filed bankruptcy on Aug. 8 under Chapter 11 case number 22-46160.

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