Heritage Home Group unsecured creditors object to DIP financing motion

By Caroline Salls

Pittsburgh, Aug. 22 – Heritage Home Group LLC’s official committee of unsecured creditors objected to the company’s motion for approval of debtor-in-possession financing, according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

Specifically, the committee said Heritage Home lender PNC Bank, NA and company founder KPS Capital Partners, LP did not “contribute sufficient post-petition consideration to justify all the benefits they receive through the motion.”

The committee said PNC’s post-bankruptcy consideration of $9 million to $14 million is not enough to justify the $80 plus million roll-up and related relief sought through the DIP financing motion for the benefit of PNC and KPS.

“The debtors’ require post-petition financing,” the objection said. “However, the amount of funding required does not justify the extreme relief that the debtors’ seek for their lenders, affiliates and insiders.

“The motion demands close scrutiny, particularly since the motion is infused with protections and waivers.”

According to the objection, the proposed DIP financing impermissibly seeks a roll-up, even though the non-insider portion of the company’s debt is fully secured.

In addition, the committee said the proposed financing “imposes excessive interest, coupled with tripwire covenants, that heighten the prospect of a default.”

A hearing is scheduled for Aug. 27.

High Point, N.C.-based Heritage Home Group is a home furnishings manufacturer and retailer. The company filed bankruptcy on July 29 under Chapter 11 case number 18-11736.

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