MTE Holdings seeks approval of amendment to cash collateral order

By Sarah Lizee

Olympia, Wash., July 2 – MTE Holdings LLC is seeking an amendment to the order allowing the debtor to use the cash collateral of pre-petition secured lenders, according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

The debtors have defaulted under cash collateral order for failure to comply with plan-related milestones, which would constitute termination events under the order.

As a result of the delay in the Chapter 11 proceedings, the debtors can no longer meet the Aug. 30 deadline to confirm their plan and, in addition to potentially facing the loss of use of cash collateral, would lose the ability to credit any adequate protection payments against distributions to the pre-petition secured parties under the plan.

The company said the debtors are in need of relief from the interim adequate protection order, and the pre-petition secured parties have accommodated the request by reaching an agreement on the proposed milestones, subject to new adequate protection payments.

Under the new adequate protection payments, beginning the week ended July 16, the amount of the existing additional adequate protection payments, currently set at $250,000 per week, would increase to $450,000 per week, where the new adequate protection payments will not be subject to the carve-out and will be paid, or partially paid, so long as the debtors’ estimated week ending cash balance is at or above $5 million.

Should any payments be missed, they will become due as soon as possible in subsequent weeks so long as the estimated week ending cash balance, including cash for payments for any missed new adequate protection payments, is $5 million or greater.

MTE is a Midland, Tex.-based holding company. The company filed bankruptcy on Oct. 22, 2019 under Chapter 11 case number 19-12269.

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