Elements Behavioral Health – Seeks Approval for Additional DIP Financing, Continued Use of Cash Collateral

October 11, 2018 – Elements Behavioral Health requested Court approval for supplemental debtor-in-possession (“DIP”) financing and continued access to cash collateral [Docket No. 503]. The financing motion explains, “Among other things, the Final DIP Order authorized the Debtors to enter into the DIP Credit Agreement, pursuant to which the Debtors were able to borrow up to an aggregate amount of $14,900,000 (the ‘DIP Facility’). The Final DIP Order also provided that the DIP Credit Agreement’s Maturity Date would be amended to August 31, 2018. The DIP Facility expired by its own terms on August 31, 2018, and through a series of stipulations, the Court approved the Debtors’ use of Cash Collateral on a consensual basis through October 12, 2018 pursuant to a modification of the DIP Credit Agreement and Final DIP Order. Although the Debtors have continued to use Cash Collateral on a consensual basis, the Debtors have determined, in their sound business judgment, that additional postpetition financing in an amount up to $18,000,000 (the ‘Supplemental Financing’) is required to fund the Chapter 11 Cases through the closing of the approved sale to PBBH. The Debtors will require $2,500,000 of the Supplemental Financing on an interim basis and will require additional interim funding amounts at a second interim hearing and final hearing. To that end, the Debtors seek approval to enter into the First Amendment to the DIP Credit Agreement (the ‘First Amendment’).” 

The motion continues, “The Debtors use of Cash Collateral expires October 12, 2018. The Debtors are unable to fund payroll and other expenses without Court approval no later than October 15, 2018. Therefore, Debtors will face immediate and irreparable harm without the entry of the Interim Order. The Debtors request that the Court waive the stay imposed by Bankruptcy Rule 6004(h) due to the exigent nature of the relief sought herein.”