Eye Care Leaders’ replacement DIP loan draws U.S. trustee objection

By Sarah Lizee

Olympia, Wash., March 6 – Eye Care Leaders Portfolio Holdings, LLC’s motion for final approval of a replacement $8 million debtor-in-possession facility drew an objection from Region 6 U.S. trustee Kevin M. Epstein, according to documents filed Wednesday with the U.S. Bankruptcy Court for the Northern District of Texas.

The financing is with Colorado Bankers Life Insurance, as previously reported.

Epstein said he objects to the financing because the DIP lender is granted a lien on the proceeds of avoidance actions under Chapter 5 of the bankruptcy code, of which the lender will only avail itself if all of its other collateral is inadequate to repay the DIP financing in full.

The U.S. trustee also said he objects because third parties are enjoined from asserting the equitable doctrine of marshaling.

“The equitable doctrine of marshaling rests upon the principal that when a creditor has multiple sources of collateral with which to satisfy its debt, it may not, by its demand, defeat the claim of another creditor that has only one source of collateral with which to satisfy its debt,” Epstein said in the objection.

Eye Care Leaders is a Durham, N.C.-based practice management software provider for eye doctors. The company filed bankruptcy on Jan. 16 under Chapter 11 case number 24-80001.

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