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Hines Nurseries committee claims DIP loan hurts unsecured creditors
By Caroline Salls
Pittsburgh, Dec. 10 - Hines Nurseries LLC's official committee of unsecured creditors objected to the company's proposed debtor-in-possession financing, arguing that the loan is an attempt by lender Black Diamond Capital Management to protect its equity investment to the detriment of unsecured creditors, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.
"The court should not countenance Black Diamond's attempt to impose an overbearing DIP facility upon the debtors to the detriment of all other creditors under the guise of providing essential post-petition working capital," the committee said in the objection.
The committee said the Black Diamond affiliates who are the DIP loan lenders own 100% of the equity in Hines Nurseries, and therefore "exercise absolute authority" over the company.
The committee said the affiliates also own the majority of the company's pre-bankruptcy secured debt, claim to own the proceeds of the inventory and receivables of BD Bordiers Holdco, whose inventory the company sells alongside its own, employ and guarantee the salaries of Hines' managers and hold unspecified claims against the company.
In addition, the committee said Hines admits it did not solicit other lenders or investors to provide financing before it filed for bankruptcy.
According to the objection, "nearly every term of the DIP facility exceeds the boundaries of reasonableness under the unique facts of these cases."
Hines Nurseries, an Irvine, Calif., commercial nursery operation, filed for bankruptcy on Oct. 12. The case was filed under the name Consolidated Horticulture Group LLC. The Chapter 11 case number is 10-13308.
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