Katy Industries’ official committee of unsecured creditors filed with the U.S. Bankruptcy Court an objection to the form of the sale order.
The committee asserts, “The Sale Order contains a number of findings, provisions regarding the interplay between the Sale Order and other orders (present or future) of the Court, and prohibitions of (and injunctions against) certain actions by parties, which the Committee does not believe were intended to limit or otherwise affect its challenge rights under the Final DIP Order, but could arguably be construed as doing so…..Paragraph 28 of the Sale Order is not congruent with either the limitations in the APA or the disclosures in the Sale Motion.”
In addition, “Accordingly, the paragraph must be stricken from the Sale Order. Paragraph II(G) of the Sale Order refers to the revisions to the APA made in response to objections by parties in interest as ‘brought about by the competitive nature of the sale process.’ While perhaps innocuous, this finding is simply not true as worded. 10. Paragraph IV(A) of the Sale Order states ‘the Successful Bidder in no way induced or caused the chapter 11 filing by any of the Debtors,’ which is at odds with the reality that the Stalking Horse Purchaser, prior to the Debtors’ bankruptcy filing, made a purchase offer expressly conditioned upon a chapter 11 sale process to be funded by the Stalking Horse Purchaser. Again, while perhaps innocuous, this proposed finding is simply not true as worded (nor is it the sort of ‘good faith’ finding that is routinely made under section 363(m)).”
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