Bishop’s Lodge mezzanine guarantor says alternate DIP ‘far superior’

By Sarah Lizee

Olympia, Wash., Sept. 16 – BL Santa Fe, LLC’s, which owns the Bishop’s Lodge resort in Santa Fe, N.M., mezzanine loan guarantor objected to the company’s motion seeking final approval of a $5.86 million superpriority senior secured debtor-in-possession facility via mezzanine lender Juniper Bishops, LLC, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The guarantor, Richard F. Holland, said that at a first-day hearing, its council reminded the debtors and their independent director that a “far superior” DIP financing and exit financing package remained available.

“The debtors have largely chosen to ignore that proposal to the detriment of the debtors’ estates,” the guarantor said.

The guarantor claims the alternative DIP financing package is less costly to the debtors and their estates, will save the debtors and their constituents millions of dollars, and contemplates a transaction that pays all creditors in full while giving equity better treatment than proposed under the original DIP package.

The guarantor said the amount and type of the alternative facility would be substantially similar to the original DIP facility, provided that the alternative DIP facility would be secured by a lien on the borrower debtor’s assets and constitute a super-priority administrative expense of the debtors’ estates.

Notably, the debtors wouldn’t be charged any commitment, exit or similar fees, except for a 1% upfront fee.

“In the first year alone, the alternative DIP and accompanying exit facility would save the debtors in excess of $4 million, and carries with it the real prospect of recoveries to equity,” the guarantor said.

“The original DIP makes it all but certain that equity will see no recovery.”

As previously reported, if the original DIP facility is fully funded, a $2.64 million additional senior DIP loan may be provided to the company by senior lender DB Bishops Lodge LLC.

The loan from Juniper Bishops has a 10% exit fee, while the loan from DB Bishops would have a 1% exit fee.

The Santa Fe, N.M.-based hotel owner filed Chapter 11 bankruptcy on Aug. 30 under case number 21-11190.

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