$150M Post-Petition Financing Deal Approved For Bankrupt Vertis Holdings Inc.

by Tara Arick on November 5, 2012 · 0 comments

in Bankruptcy

- From LexisNexis® Mealey’s™ Daily Legal News.

The federal bankruptcy judge in Delaware presiding over the Chapter 11 proceeding of Vertis Holdings Inc. on Nov. 1 approved $ 150 million in post-petition financing that may pave the way for the company to continue operating and search for a stalking horse bidder (In Re: Vertis Holdings Inc., No. 12-12821, Chapter 11, D. Del. Bkcy.).

On Oct. 10, Vertis filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.

Debts

As of the date Vertis filed its bankruptcy petition, the company was indebted to its prepetition lenders for $ 104.1 million, comprising $ 88.3 million in revolving credit advances.

Prior to filing its bankruptcy, Vertis arranged with a lender to obtain $ 175 million in post-petition financing, also known as debtor-in-possession (DIP) financing; however, Bankruptcy Judge Christopher S. Sontchi authorized just $ 150 million.

The bankruptcy judge said the $ 150 million in DIP funding would comprise a letter of credit subfacility of $ 25 million and what is known as a swing line subfacility also in the amount of $ 25 million. The remaining $ 100 million would be available for other general expenses, the bankruptcy judge said.

Loan

Under the terms of the DIP order, Vertis is required to reimburse its prepetition lenders for various expenses incurred by the lenders under the loan agreement.

Furthermore, the bankruptcy judge said it would be considered a default of the DIP order if Vertis seeks authority to incur a claim or grants a lien that has a priority superior to those granted in the final order to the DIP agent and the DIP lenders.

Under the DIP order, Vertis also waives its right to assert a claim under 11 U.S. Code Section 506(c) for any costs and expenses incurred in connection with the preservation, protection or enhancement of, or realization by the DIP agent, the DIP lenders, the prepetition agent or the prepetition lenders upon the DIP collateral and the prepetition collateral.

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