Greensill Capital seeks court approval of bid procedures for Finacity

By Sarah Lizee

Olympia, Wash., March 30 – Greensill Capital Inc. is seeking court approval of the bid procedures for its 100% ownership interests in Finacity Corp., according to a motion filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.

The company is also seeking court approval of a stalking horse agreement with the founder and current chief executive officer of Finacity.

Greensill said that an insider of the asset but not the seller, the CEO is in a particular position to properly value the debtor’s interest in the Finacity equity and set the floor as a stalking horse bidder, but at the same time, has no conflicts in relation to the debtor or its officers that would raise suspicions about the legitimacy or impartiality of the sale process.

The stalking horse purchase agreement provides for total consideration of about $24 million, consisting of $3 million in cash and the release of all liabilities stemming from the earn-out payments, against the debtor and the guarantors, and of all other claims held by the stalking horse bidder against the debtor, which if allowed in their full amounts could aggregate to more than $21 million in general unsecured claims against the debtor’s estate.

The debtor’s potential liability on account of the earn-out payments is larger than the debtor’s estimated general unsecured claims pool – $21.13 million, which includes the maximum earn-out payment payable in June and amounts due if the Finacity CEO becomes entitled to the maximum earn-out payments for the next three years – versus about $5 million to $7 million in general unsecured claims, excluding intercompany claims.

“The transaction contemplated by the stalking horse purchase agreement is therefore also beneficial in that it serves to simplify and resolve potential unsecured claims against the debtor,” the company said in its motion.

The stalking horse agreement includes a 2% breakup fee and an up to $100,000 expense reimbursement.

Under the proposed bid procedures, bids would be due by 4 p.m. ET on April 20, an auction would be held on April 23, a sale hearing would be held on April 27 and the sale would close on April 30.

A hearing on the proposed bid procedures is scheduled for April 5.

New York-based Greensill Capital is the U.S. arm of Greensill Capital Management, a financial services company. The Chapter 11 case number is 21-10561.

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