Custom Alloy gets emergency interim access to cash collateral

By Sarah Lizee

Olympia, Wash., Oct. 20 – Custom Alloy Corp. gained emergency interim approval to use cash collateral, according to an order filed with the U.S. Bankruptcy Court for the District of New Jersey.

As previously reported, the debtor asked to use the cash collateral of prepetition lender CIBC Bank USA, and to the extent creditor Barings BDC, Inc. is not wholly unsecured, the cash collateral of Barings.

Custom Alloy has filed a lawsuit against CIBC, citing the lender is managing the debtor in a “commercially unreasonable” manner and contrary to the best interests of the company’s stakeholders.

The company also said CIBC is attempting to sell the company for its own benefit.

A final hearing on the cash collateral use is scheduled for Oct. 25.

The debtor is also seeking court approval of a $2 million debtor-in-possession facility with Euro American Funding Inc. as lender.

The facility is set to mature in six months and bear interest at 12%. The default interest rate would be 24%.

Fees include a 3% origination fee due at closing, a 3% exit fee due at maturity, a $10,000 due diligence fee, a $15,000 deposit on the lender’s legal fees, a $50,000 extension fee and a $10,000 monthly administration fee upon default.

Custom Alloy is a High Bridge, N.J.-based manufacturer of specialty metals for seamless and welded pipe fittings and forgings. The company filed bankruptcy on Oct. 13 under Chapter 11 case number 22-18143.

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