SunEdison committee objects to approval of replacement DIP financing

By Caroline Salls

Pittsburgh, April 18 – SunEdison, Inc.’s official committee of unsecured creditors objected to approval of the company’s proposed replacement debtor-in-possession financing, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

“The new DIP motion is the latest in a series of actions taken by the debtors, apparently at the behest of their pre-petition secured creditors, to further those creditors’ aim of liquidating the debtors’ assets for the secured creditors’ exclusive benefit,” the committee said in its objection.

The committee said unsecured creditors had no input into the negotiation of the replacement financing terms, and the committee did not even receive a draft of the proposed agreement governing the new financing agreement until barely a week before the deadline to object.

According to the objection, the proposed new DIP facility “further erodes...already inadequate distributions” through financial terms that would force SunEdison to pay above-market up-front fees and interest rates.

In addition, the creditor group said the proposed DIP loan includes non-financial terms that allow the pre-bankruptcy secured lenders “to extract additional value by effectively reneging on prior agreements intended to protect what little value exists in the estates for the benefit of the unsecured creditors and undermining certain existing causes of action filed by the committee and other unsecured creditors.”

At the same time, the committee said the proposed new financing provides no incremental liquidity to the company, aside from simply paying off the existing DIP loan, “and in fact causes at least US $77.4 million in cash from the debtors’ already thin balance sheet to evaporate into the prepetition secured lenders’ pockets.”

The committee said the new DIP loan also carries over and finalizes the roll-up of more than $300 million of the existing DIP financing, even though the terms of the existing DIP financing order and local bankruptcy rules dictate that “the roll-up should be unwound entirely because it has unduly advantaged the holders of those loans.”

A hearing is scheduled for April 25.

Based in Maryland Heights, Mo., SunEdison operates renewable power plants. It filed for bankruptcy on April 21, 2016 under Chapter 11 case number 16-10992.

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