Home Interiors creditors committee objects to DIP financing

By Jennifer Lanning Drey

Portland, Ore., May 27 - Home Interiors & Gifts Inc.'s official committee of unsecured creditors objected to the company's motion for approval of $5.1 million in debtor-in-possession financing, according to a Tuesday filing with the U.S. Bankruptcy Court for the Northern District of Texas.

According to the filing, the committee believes the DIP provisions favor the company's pre-bankruptcy lenders, who are also the DIP lenders.

Additionally the committee is concerned about the size of the financing, which it thinks may be inadequate. If the company runs out of cash, the lenders would be in a position to "have a veto over anything in the bankruptcy case and will be able to pull the plug for their sole benefit even with the cash-flow positive season on the horizon, leaving nothing but an empty shell to the unsecured creditors," the committee said.

The committee also objected to fees related to the DIP financing, including an up-front fee of $50,000 and monthly fee of $5,000 for administrative fees and ongoing interest requirements.

The committee said it does not object to the company paying "reasonable" fees.

As previously reported, NexBank, SSB is the administrative agent of the DIP facility.

Home Interiors & Gifts is a Dallas-based integrated manufacturer and distributor of home decorative accessories. The company filed for bankruptcy on April 29. Its Chapter 11 case number is 08-31961.

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