Grupo Hima San Pablo sent to mediation following DIP loan denial

By Sarah Lizee

Olympia, Wash., Aug. 29 – Grupo Hima San Pablo Inc. has been ordered to mediate on Thursday following the U.S. Bankruptcy Court for the District of Puerto Rico’s rejection of its proposed debtor-in-possession financing, according to documents filed Tuesday.

The company is seeking approval of a $6 million DIP facility with Alter Domus (US) LLC as administrative agent and collateral agent and prepetition secured lender Island Healthcare LLC as lender, as well as access to the cash collateral of its prepetition secured lenders.

The facility would also include a 5:1 rollup of prepetition first-lien debt, for a total of $39.6 million of super-priority loans. The company said Island Healthcare would only be willing to provide the financing with the included rollup.

The Municipal Revenue Collection Center (CRIM), the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF) and the U.S. trustee overseeing the case filed objections to the financing motion.

The court’s decision focused mainly on whether or not the priming of CRIM’s first-rank statutory lien under the proposed financing arrangement is appropriate, since it appears that CRIM will be the only party directly affected by the priming of its statutory lien.

The court found that the debtors hadn’t satisfied their burden of establishing that CRIM’s first-ranked statutory lien is adequately protected, and that the debtor’s adequate protection analysis lacks crucial factual financial information on both the asset and liability side of the balance sheet, the court said.

The company has been given authorization to use cash collateral on an interim, non-consensual basis on seven-day intervals for a total of 28 days.

Following the court’s order denying the DIP financing, the company asked the court for mediation between the debtors, DIP lenders and objecting parties.

The company said it will be forced to close its operations if a resolution can’t be reached.

The Caguas, Puerto Rico-based health care services company filed bankruptcy on Aug. 15 under Chapter 11 case number 23-02510.

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