Monitor wins interim approval of $30 million DIP; bid hearing scheduled

By Jim Witters

Wilmington, Del., Nov. 9 - Monitor Co. Group LP won interim access to $30 million in debtor-in-possession financing during a Nov. 9 hearing in the U.S. Bankruptcy Court for the District of Delaware.

Judge Christopher S. Sontchi also scheduled an expedited bid procedures hearing on Nov. 20 at the request of Monitor and stalking horse bidder Deloitte Consulting LLP.

As previously reported, Deloitte has submitted a bid and asset purchase agreement that includes a purchase price of $116.2 million, plus assumption of specified liabilities and payment of cure costs.

Monitor and Deloitte sought approval of bid procedures at a Nov. 13 hearing, but Sontchi demurred, saying he did not want to lock in place a procedure that would be hard to stop if the official committee of unsecured creditors objected.

The creditors committee is scheduled for formation on Nov. 15.

Deloitte had hoped to close the sale by Dec. 6, but now is targeting mid-December.

Deloitte is anxious to complete the sale because the company believes there are no competitors willing to bid on Monitor's assets and because a prolonged bankruptcy proceeding allows competing firms to coax away uncertain employees and clients, said Deloitte attorney J. Gregory Milmoe.

DIP facility

Monitor has obtained a commitment for $30 million in debtor-in-possession financing, with Bank of America, NA as the administrative and collateral agent.

The DIP loan consists of a $15 million revolving credit facility and a $15 million letter-of-credit facility.

The DIP facility will mature on the earliest of 70 days after the bankruptcy filing date, 30 days after the filing date if the court has not entered an order approving the sale procedures, closing of the sale of substantially all assets and acceleration of any of the DIP loans.

Interest is Base rate plus 425 basis points.

Before approving the DIP financing, Sontchi eliminated several phrases in the order that he believed restricted the court's authority unduly.

Monitor also was granted access to cash collateral.

The original motion called for cash collateral use during the anticipated 10-week bankruptcy case, plus funding for a winddown budget.

A provision of the asset purchase agreement calls for Monitor to continue operating for six months after the sale closes to provide a smooth transition to Deloitte.

However, Caltius Capital Management - a second-lien prepetition lender - objected to the winddown budget, and Monitor removed it from the request.

A final DIP hearing is scheduled for noon ET on Dec. 4.

Bid procedures

The proposed bid procedures call for competing bids to be due by 4 p.m. ET on Nov. 26.

The bids must be at least equal to the value of the stalking horse bid, plus $4 million in stalking horse protections and a $2 million initial overbid amount.

An auction would be held on Nov. 28, if necessary.

The hearing on the approval of the bid procedures is scheduled for 11 a.m. ET on Nov. 20.

Monitor, a Cambridge, Mass.-based strategy consulting firm filed for bankruptcy on Nov. 7. Its Chapter 11 case number is 12-13042.

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