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Appvion Objections Filed

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KeyBank National Association and Appvion’s official committee of unsecured creditors filed with the U.S. Bankruptcy Court separate objections to the motion of the debtors to incur senior DIP financing.

The committee asserts, “To the extent that it was unclear to this Court and other parties in interest thus far that the Debtors’ only goal in these Chapter 11 Cases is the appeasement of the Majority Lender, the relief requested under the Senior DIP Motion removes any remaining doubt. Through a single pleading, filed on an emergent basis where no emergency exists, the Debtors seek to refinance their postpetition secured credit facility, through a structure designed to trample upon the rights of other creditors and ensure that there will be no competitive auction process for the sale of the Debtors’ assets….The Debtors allege that they are in need of additional liquidity in order to finance operations through the conclusion of their sale process and these Chapter 11 Cases. Having already invested hundreds of millions of dollars in the Debtors, the Majority Lender is understandably willing to provide this additional financing of up to $15 million to protect its investment. However, the relief requested through the Senior DIP Motion goes far beyond simply providing additional liquidity to protect the Majority Lender’s investment….Not only does the relief requested through the Senior DIP Motion advance the Majority Lender’s agenda of ensuring that there is no competitive bidding process and that the Debtors will hand over the keys to the Majority Lender, but the Debtors seek permission to pay the Majority Lender approximately $685,000 in new fees for this privilege. The Committee submits that the requested relief is inappropriate, not supported by applicable law, and should not be approved by this Court. Moreover, the Debtors seek such drastic relief on an expedited basis solely to appease the Majority Lender in its role as the proposed Stalking Horse Purchaser, not to ‘avoid immediate and irreparable harm to the estate.’…. The Debtors should not be allowed to game the system by using increased DIP financing to eviscerate the substantive rights of other creditor constituents and to provide an advantage to the Majority Lender in its capacity as the proposed Stalking Horse Purchaser. Moreover, the Majority Lender should certainly not be permitted to receive a fee for acting in its own self-interest. Accordingly, the Committee respectfully requests that this Court defer consideration of the Senior DIP Motion until the next omnibus hearing.”

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