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Broadstripe creditors committee says proposed DIP unfairly benefits lenders
By Jennifer Lanning Drey
Portland, Ore., Feb. 2 - Broadstripe, LLC's official committee of unsecured creditors objected to the company's proposed $15 million of debtor-in-possession financing, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.
The committee believes the DIP loan serves to benefit DIP lender Highland Credit Strategies Fund, Highland Floating Rate Advantage Fund and Highland Floating Rate Fund.
Highland is an equity holder, a holder of first- and second-lien debt and the largest alleged unsecured creditor, according to the filing.
The committee called the loan a "predatory financing facility that sets into motion a fast-paced Chapter 11 process to facilitate and whitewash Highland's ownership of the debtors."
Additionally, they said the DIP facility appears to extend funding that is not necessary as a pretext to affording Highland the control enjoyed by an arms-length DIP lender.
The committee went on to say that the protections sought by Highland in the DIP agreement are inappropriate due to its "entrenchment in the debtors' capital structure and decision making, and where such provisions would impose severe harm on the estates by shielding pre-petition insider acts from proper scrutiny by the court and other estate fiduciaries such as the committee."
The hearing for final DIP approval is scheduled for Feb. 5.
As previously reported, Broadstripe obtained interim access to $6 million of the facility on Jan. 6.
Broadstripe, a St. Louis provider of integrated video, broadband and home phone services, filed for bankruptcy on Jan. 2. Its Chapter 11 case number is 09-10006.
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