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VER Technologies HoldCo Objection Filed

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VER Technologies HoldCo’s Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court an objection to a motion to approve adequacy of the disclosure statement, solicitation and notice procedures, forms of ballots and notices in connection therewith, and certain dates with respect thereto.

In its motion, the committee asserts, “The Disclosure Statement’s bold pronouncement that the Plan ‘maximizes recoveries available for all constituents [and] provides for an equitable distribution to the Debtors’ stakeholders’ is nothing more than a platitude lacking any disclosed substance. In fact, the Debtors conceded at the May 4, 2018 hearing that there likely will be no recovery for general unsecured creditors. In sum, the Disclosure Statement should not be approved because it contains scant information relative to numerous material issues….Instead of offering creditors an objective and detailed history of the LBO, Debtors’ finances, and the post-LBO management of the Debtors leading to the RSA and these chapter 11 cases, the Debtors entirely gloss over the December 2014 transaction—which burdened the company with over a half-billion of debt and lined the pockets of selling shareholders with more than $511 million cash—as though it was merely a bump in the road….The Debtors should also state with a degree of specificity the manner in which they arrived at the estimated Class 4 pool of $61,961,668. By now the Debtors may have paid a significant amount of both foreign and critical vendor claims (the Debtors were authorized to pay, on a final basis, up to $14 million in Critical Vendor Claims as well as Foreign Vendor Claims in accordance with the terms of the respective final orders)….The Disclosure Statement merely provides a description of the Second Amendment to the Prepetition ABL Facility the Debtors entered into with Catterton which purportedly provided $30 million of credit support through a letter of credit issued by Silicon Valley Bank in exchange for which the Debtors issued a promissory note in favor of Catterton in the amount of the letter of credit. Absent from the Disclosure Statement is an answer to the following critical question: what were the circumstances and business conditions which led to the Second Amendment? In addition, there is no mention of a First Amendment to the Prepetition ABL Facility, and the events leading to its execution. The Disclosure Statement, at a minimum, must provide this basic information which is crucial for creditors seeking to understand how the Debtors ended up in chapter 11….The Debtors are pushing the envelope in an attempt to circumvent the bankruptcy process, including the substantive legal and due process rights of creditors, but the Court should not rush this case to confirmation merely at the urging of the Debtors and GSO. By adhering to the timetable established in the RSA (negotiated without the participation of the unsecured creditors), unsecured creditors who are owed, at minimum, at least $50 million and perhaps as much as $90-$100 million, are put at an enormous disadvantage. Due to the numerous infirmities in the Disclosure Statement, the Court is presented with an opportunity to call a halt to the artificial timeframes that exist and which the RSA parties seek to effectuate.”

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