some or all of the following will be concerns raised by unsecured creditors which will be argued in front of judge drain tomorrow.
following are the major concerns raised by counsel for the unsecured creditor's committee prior to the start of the auction held in weil's offices. while some of these concerns may have already been addressed and resolved, i have not delved into that aspect at this time. maybe some of you know and can comment.
since the auction had neither commenced nor had any bid(s) been deemed successful, the lawyer addressed concerns with both esl's bid as well as the wind down proposal shc put forth:
esl's bid concerns:
(1) administrative costs. thought $300 million was too low. these are the legal and professional fees shc is incurring as a result of chapt 11
(2) felt there was an inherent conflict with esl's credit bid
(3) issues with leases and releases vis-a-vis the credit bid
(4) feels the $35 million release is inappropriate
(5) concerned esl's bid included assets which the debtors did not own asking how debtors could sell something they did not own
(6) didn't feel there were adequate assurances of future performance
(7) objected that esl did not provide them with a copy of esl's business plan
(8) thinks bid includes consents esl will be unable to provide
(9) concerns over (i) conditionality of closing items (ii) milestones as well as (iii) inability to pay 503(b)9 claims and other administrative expense claims. FYI, a 503(b)9 claim deals with a supplier's ability to be paid for goods delivered within 20 days of a bk filing.
shc wind down concerns:
(1) concern about a 507(b) claim which shc footnoted but the committee feels should be valued at zero as it is impossible to prove. FYI, a 507(b) claim is one in which a secured creditor is granted a super priority over all unsecured creditors as well as administrative claims.
(2) difference of opinion between shc's liquidation value of real estate versus that of the unsecured creditors. the unsecured creditors feel the real estate was valued between $300 million - $600 million low.
(3) the wind down doesn't provide for litigation claims
(4) unsecured creditors feel that esl's debt should be surcharged whether or not it is deemed to be a beneficiary of a 506(c) waiver. FYI, a 506(c) waiver grants the ability to avoid fees associated with preserving or disposing of properties otherwise subject to these fees.
after the comments from the lawyer for the unsecured creditors, esl's lawyer said the following:
we will be -- we disagree with virtually everything you said though we love you dearly, and we will be sending you a business plan right after this as well as the ABA (sic, think that should be the "APA" which is the asset purchase agreement). thank you
