Galey & Lord creditors object to DIP extension

By Carlise Newman

Chicago, Oct. 31 - Galey & Lord Inc.'s official committee of unsecured creditors has objected to the company's request to extend post-petition financing, saying lenders put restrictive conditions on the financing with each extension.

The lenders on the debtor-in-possession financing require Galey & Lord to submit a disclosure statement by Nov. 15 and make protection payments including monthly interest payments. The lenders also seek a 37.5 basis points amendment fee.

The creditors said the fee and other conditions are inappropriate because the lenders have not offered any material extension of funds, despite the company remaining in bankruptcy for more than 20 months. The company does not anticipate significantly drawing on the DIP during the period covered by the extension.

Also, with little progress made toward finalizing a reorganization plan, the imposition of conditions seems inappropriate, the committee said.

On Oct. 14, Galey & Lord received court approval to extend its DIP to Oct. 31 from Oct. 3. The company is now looking to extend it to Feb. 15, 2004.

In August, Galey & Lord reduced the total commitment on the DIP to $50 million from $75 million. The company previously reduced the DIP facility to $75 million from $100 million on Sept. 24, 2002.

On Feb. 19, 2002, the company filed for Chapter 11 bankruptcy protection and entered into a credit facility of up to $100 million in DIP financing with First Union National Bank and Wachovia Securities Inc.

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