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Elements Behavioral Health Unsecured Creditors Objection Filed

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Elements Behavioral Health’s Official Committee of Unsecured Creditors filed with the U.S. Bankruptcy Court an objection to the Debtors (a) proposed bidding procedure and (b) DIP motion.

The Committee asserts, “The Committee believes a longer sale process is more appropriate as it will provide the Committee with sufficient time to (a) determine whether there are alternatives to the proposed sale which could yield recovery to unsecured creditors, (b) ensure that the assets and the businesses have been properly marketed, (c) assess the terms of the sale, (d) assess the value of the assets, (e) assess the fairness of the transaction, and (e) determine the extent of the dominion, control and involvement of the lender. The sale process should be extended to allow prospective bidders a reasonable amount of time to conduct diligence, negotiate purchase agreements and submit binding alternative bids….The Committee’s proposal of a sale hearing in early August, is still within the boundaries of an accelerated sale process, and in the Committee’s view, provides the additional time necessary to encourage the participation of potential bidders…extension of the sale process is permissible under the Debtors’ budget. An expedited sale process is also inappropriate where, as here, the proposed Stalking Horse Bid by PBBH is in the form of a potentially chilling credit bid which will result in zero cash available to the Debtors’ estates and unsecured creditors. The proposed Bidding Procedures provides PBBH would be able to credit bid up to the full amount of its purported prepetition and DIP indebtedness (i.e., allegedly approximately $130 million)….Significantly, the terms of the sale do not provide for a cash bid in the event PBBH is not entitled to the benefits of 363(k)7. The Committee must be afforded an opportunity to investigate the circumstances surrounding the credit bid and, if it determines cause exists, move to cap PBBH’s ability to credit bid its debt. The Committee believes that allowing PBBH to credit bid the full amount of its claim pursuant to the expedited schedule may eliminate the participation of prospective bidders and set these cases on track to the foregone conclusion of a sale to the Stalking Horse Bidder. The Committee must have sufficient time to develop the record and determine whether a challenge to the Stalking Horse Bidder’s ability to credit bid is appropriate.” In respect of D.I.P. financing, the objection notes, “A hearing on the Final DIP Order is scheduled for June 26, 2018. At the hearing on June 11, 2018, the Debtors and PBBH are seeking to extend the terms of the Interim DIP Order through entry of a second Interim DIP Order (the “Second Interim DIP Order”) which seeks to obtain relief again on all previously adjudicated matters. At the time of entry of the Interim DIP Order, the Committee was not yet in existence. The Committee has certain issues and concerns with the relief requested in the Second Interim DIP Order (which was already granted in the Interim DIP Order) and, therefore, objects to the entry of such order…. Further, the Committee objects to the request to separately approve the “Transaction Fee” of Houlihan Lokey Capital, Inc. as part of the Carve-Out. The Interim DIP Order already provides for the payment of the Debtor Professionals pursuant to the Carve-Out. Moreover, the terms of Houlihan’s retention have not yet been approved. Therefore, it is premature to seek approval of the Transaction Fee in the Carve-Out.”

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The post Elements Behavioral Health Unsecured Creditors Objection Filed appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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