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Cosmoledo’s bid procedures draw objection from creditors committee
By Sarah Lizee
Olympia, Wash., Sept. 24 – The official committee of unsecured creditors for Cosmoledo, LLC’s Chapter 11 case has objected to the debtors’ bid procedures and stalking horse agreement, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of New York on Thursday.
The committee said the stalking horse agreement and bid procedures are “vague and often misleading and contain a number of objectionable provisions that may chill bidding and ultimately depress the value received for the debtors’ assets.”
The committee said the debtors have proposed an expedited sales process, making it nearly impossible for the debtors and committee to market the assets effectively.
“Except for the stalking horse bidder’s desire to freeze out the competition, there is simply no compelling reason in this situation to impose a rushed Oct. 1 bid deadline,” the committee added.
The committee also said it is concerned that the sale may be “premised upon a credit bid that is ephemeral.”
“The committee must be afforded a reasonable amount of time, and a proper budget, to review the extent and legitimacy of the stalking horse bidder’s secured claims to ensure that the credit bid is valid and that interested potential purchasers are not forced out of the auction process because they cannot compete with the stalking horse bidder’s overwhelming and unchallenged ability to credit bid, which it acquired from the shareholder at a significant discount,” the objection said.
The committee also added that the debtors’ requests for approval of the break-up fee and expense reimbursement “must be denied or significantly limited as they are inappropriate in this case and could chill bidding.”
New York-based Cosmoledo operates fine casual dining restaurants. It filed Chapter 11 bankruptcy on Sept. 10 under case number is 20-12117.
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