Quadrant 4 Systems’ official committee of unsecured creditors filed with the U.S. Bankruptcy Court an objection to the Company’s post-petition financing motion.
The committee asserts, “The Proposed Final Order is not a proper exercise of the Debtor’s business judgment. The Debtor has no meaningful leverage in its negotiations with its primary lender, BMO Harris Bank, N.A. (‘BMO’), who continues to exert unabated control over the Debtor. Moreover, the Debtor has no intent to reorganize – this bankruptcy is a liquidation – and therefore its decisions must be considered in light of what’s best for its estate and its unsecured creditors and not just its senior lender. As filed, the Proposed Final Order overtly favors BMO over the Debtor’s estate through an impermissible and inequitable ‘roll-up’ of BMO’s pre-petition indebtedness, awards of liens on previously unencumbered assets in BMO’s favor and grants of other uncommon and excessive rights to BMO.”
In addition, “Under no circumstance should the Debtor have granted these rights and protections, and by doing so, demonstrated either a lack of proper business judgment or that it had absolutely no bargaining position – so the burden now falls on the Committee alone to protect the estate and interest of unsecured creditors by opposing entry of the Proposed Final Order….The Proposed Final Order substantially diminishes the possibility that general unsecured creditors receiving anything material….Finally, as a threshold matter, the Committee has been given no meaningful opportunity to review the final Budget to the Proposed Final Order, having not received the budget as of the time of this filing on Monday, August 28th despite numerous written requests.”
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