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Yucaipa: Judge should reconsider OK of Allied Systems new DIP facility
By Jim Witters
Wilmington, Del., July 2 - A judge should reconsider his approval of Allied Systems Holdings, Inc.'s replacement $33.5 million debtor-in-possession financing facility, the original DIP lender said in a July 2 filing with the U.S. Bankruptcy Court for the District of Delaware.
Yucaipa American Alliance Fund I, LP and Yucaipa American Alliance (Parallel) Fund I, LP are asking judge Christopher S. Sontchi to reverse or amend the DIP order he signed on June 19.
The replacement DIP is through BDCM Opportunity Fund II, Black Diamond CLO 2005-1 and Spectrum Investment Partners.
Incremental financing of up to $11.5 million and a maturity date of Dec. 31, 2013 are included in the replacement DIP agreement.
Yucaipa American Alliance Fund II, LLC provided $22 million under the original DIP facility, which matured on June 30.
Yucaipa objection
Yucaipa argued that Allied failed to present evidence that it met its burden to provide adequate protection to non-consenting holders of pre-petition first-lien and second-lien debt against the diminution of the value of their collateral.
"It is well-established in the [U.S. Court of Appeals for the] Third Circuit that a court, before authorizing a debtor to grant senior priming liens to secure post-petition financing, must find that the debtor has met its burden," the filing stated.
Yucaipa said the lack of evidence regarding adequate protection was part of its objection to the replacement financing.
A hearing on the motion is scheduled for 10 a.m. ET on July 19.
Allied Systems is a Decatur, Ga.-based distributor of new and used vehicles. The company filed for bankruptcy on June 11, 2012 under Chapter 11 case number 12-11564.
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