KB US committee objects to bid procedures and DIP financing motions

By Caroline Salls

Pittsburgh, Sept. 14 – KB US Holdings, Inc.’s official committee of unsecured creditors objected to the company’s motions for approval of asset sale procedures and debtor-in-possession financing, according to Friday filings with the U.S. Bankruptcy Court for the Southern District of New York.

The committee said its advisers have been in these cases for three business days “and working around the clock to get up to speed on the debtors’ affairs, the sales process and pre-petition marketing efforts, the proposed DIP financing and working to address the numerous other issues in these cases.”

The creditor group said the truncated sale timeline proposed by the company allows for just 46 days between the bankruptcy filing date and the auction and is “based on an artificial timeline dictated by the DIP lenders.”

“The DIP lenders, who are also the pre-petition lenders, are receiving, what is frankly, an offensive roll-up of approximately $83 million of pre-petition secured debt,” the bid procedures objection said. “Interestingly, these same lenders will be financing a substantial portion of the stalking horse bid from TLI Bedrock.”

The committee said the proposed stalking horse bid leaves KB US’s estates administratively insolvent and the sale process is not designed to solicit higher or better offers for the company’s assets.

According to the DIP financing objection, the sole purpose of the proposed DIP Facility is to allow the pre-bankruptcy secured parties to extract additional value from the KB US estates through the rollup in exchange for $17 million of new money provided in the DIP facility.

“Not only have the debtors not provided support for the appropriateness of the rollup, the debtors recognized and acknowledged at the first-day hearing that the rollup is aggressive,” the objection said.

A hearing on both motions is scheduled for Sept. 15.

KB is a Parsippany, N.J.-based operator of retail food stores. The company filed bankruptcy on Aug. 23 under Chapter 11 case number 20-22962.

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