Sumitomo argues that the intention of lenders (including Sumitomo) to credit bid in respect of the Debtors’ assets (which are collateral securing loans made by Sumitomo and other lenders) has been made abundantly clear throughout the section 363 sales process, and certainly was known to the Debtors prior to the retention of Houlihan. It further notes that the credit bidding of lenders is likely in aggregate to surpass the $650mn bid of stalking horse Macquarie, a bid which lenders believe to be unreasonably low. Macquarie, Sumitomu argues, is not only a stalking horse but a straw man, the presence of which in a purported auction process should not obscure the fact that what is actually going on here is the foreclosure of lenders on its collateral, something which it always had a right to do pursuant to loan agreements…and most certainly not a sale.
Adding insult to injury, the inflated fees will ultimately come out of the pocket of whomever buys the Debtors’ assets, including possibly the pocket of the Sumitomo itself.
[NB: Sumitomo does not address the possibility of result of an auction result where Macquarie (or any other non-credit bidding bidder) ends up the winning bidder.]
In a related objection [Docket No. 254, which we cover separately] filed by the U.S. Trustee assigned to the Waypoint Leasing Holdings case also questions Houlihan’s fee in the context of credit bidding. That objection states, “For example, [it] is unclear why Houlihan should earn a Sale Transaction Fee in the event of a credit bid. In such instance what, if any, benefit is there to the Debtors’ estates?“
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The post Waypoint Leasing Holdings – Sumitomo Objects to Retention of Houlihan Lokey, $7mn (plus) of Sales-Related Fees in a Non-Sale appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.