Vertis creditors committee says DIP benefits only lenders in sale

By Jim Witters

Wilmington, Del., Oct. 26 - The newly formed Vertis Holdings, Inc. official committee of unsecured creditors objects to the company's final access to a $150 million debtor-in-possession financing facility, saying the credit facility "is sufficient only to fund an expedited sale process for the benefit of the lenders," according to documents filed Oct. 26 with the U.S. Bankruptcy Court for the District of Delaware.

The DIP facility contains no "corresponding obligation for the lenders to pay the costs of administering these estates in Chapter 11" before or after the proposed sale, the creditors say.

While the DIP provides for the payment of "numerous professionals and fees for the lenders," the debtors' other creditors - including trade claims of $25 million - "will be left holding the bag unless material modifications to the proposed DIP credit facility are made to ensure that these estates are not rendered administratively insolvent," the objection states.

The committee is also concerned about "the unwarranted protections" sought by DIP lenders led by GE Capital, Restructuring Finance.

"The expedited sale process alone benefits the lenders and adequately protects them against any diminution in value of their collateral ... The lenders should not be permitted to marginalize the sale proceeds potentially available to other creditors through overreaching protections on previously unencumbered assets," the creditors committee said.

Through the DIP objection and a limited objection to the proposed bidding procedures, the creditors committee says its goals are to:

• Ensure that the estates are not left administratively insolvent;

• Minimize unwarranted protections provided to the lenders;

• Ensure that the value of the debtors' unencumbered assets are appropriately allocated; and

• Provide for a full investigation of the lenders' prepetition liens, claims and conduct.

As previously reported, Vertis has a $258.5 million stalking-horse bid from Quad/Graphics, Inc. for substantially all of its assets.

The final DIP hearing is scheduled for Nov. 1.

Vertis, a Baltimore-based marketing communications company, filed for bankruptcy on Oct. 10. Its Chapter 11 case number is 12-12821.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.