- From LexisNexis® Mealey’s™ Daily Legal News.
The federal bankruptcy judge in the Chapter 11 case of Oreck Corp. on May 21 approved $ 9.5 million in post-petition financing, also called debtor-in-possession (DIP) financing (In Re: Oreck Corporation, No. 13-04006, Chapter 11, M.D. Tenn. Bkcy.).
Oreck filed for Chapter 11 in the U.S. Bankruptcy Court for the Middle District of Tennessee on May 6 at which time it immediately moved for approval of $ 11 million in DIP funding.
Bankruptcy Judge Keith M. Lundin approved the DIP order authorizing Oreck to borrow money up to an aggregate principal amount of $ 9.5 million.
As of the petition date, Oreck was indebted to its first lien lender for $ 4,230,719.33 and a second lien lender for $ 5,467,897. The company insisted that it could not continue to operate with $ 11 million in DIP funding.
However, the bankruptcy judge authorized $ 9.5 million, to be provided by Black Diamond Commercial Finance LLC, without explaining the reason for granting less financing than Oreck requested.
11 U.S. Code Section 364
Pursuant to 11 U.S. Code Section 364(c)(1) all of the DIP obligations will constitute allowed claims against Oreck with priority over any and all administrative expenses, diminution claims and all other claims existing currently, or arising after afterward, the bankruptcy judge said.
Oreck is represented by William L. Norton III and Alexandra E. Dugan of Bradley Arant Boult & Cummings in Nashville.