January 31, 2023 – The Court hearing the BSPV-Plano case has extended (for a fourth…and last time) the periods during which the Debtor has an exclusive right to file a Plan and solicit acceptances thereof, through and including December 31, 2022 (this date obviously now behind us but reflects the fact that the Debtor filed its Plan on December 31st) and February 28, 2023, respectively [Docket No. 250]. Absent the requested relief, the Plan filing and solicitation periods were scheduled to expire on November 30, 2022 and January 31, 2023, respectively.
The present order notes, “the period of initial Exclusivity (during which the Debtor has the exclusive right to file a Chapter 11 plan) is extended through December 31, 2022, and the period of Extended Exclusivity (during which the Debtor has the exclusive right to solicit acceptance of a plan), provided that the Debtor files a plan during the period of Initial Exclusivity, is extended through February 28, 2023; it is further ordered that exclusivity shall expire on March 1, 2023, and that no further extensions of exclusivity may be sought by any party, including the Debtor"
The order comes following a flurry activity relating to a motion filed by bond trustee The Huntington National Bank (the “Bond Trustee”) which had sought to terminate exclusivity, accusing the Debtor of "incompetence and bad behavior" and the Debtor's principal Steffen Waltz "a serial abuser of the bankruptcy process."
This order leaves the Bond Trustee in position to file a competing Plan but not to otherwise begin solicitation of a Plan (if approved) until March 1st.
In its December 30th motion to terminate exclusivity [Docket No. 216], the Bond Trustee argued: "Nearly ten months have passed since the Debtor filed this case on March 1, 2022, and during this time the Debtor has had nearly six months of extended exclusivity. Incredibly, after all this time and all the broken promises, the Debtor is no closer now to completing construction than it was at the beginning of the case. The Debtor’s control over the fate of this case (and the Project) must end….The Debtor has had ample time to get its act together, finish construction and propose a confirmable plan. It has not done any of these things. Creditors deserve finality and should not be held hostage any longer by the Debtor’s incompetence and bad behavior. Accordingly, the Bond Trustee requests that the Court terminate the Debtor’s exclusivity and clear the path for the Bond Trustee to file its plan."
Following a January 20th reply by the Debtor in which the Debtor highlighted its "herculean efforts and perseverance" (see below) [Docket No. 235], on January 23rd the Bond Trustee filed a return salvo (to correct "numerous misrepresentations" in the that reply) demonstrating its increased frustration with the Debtor: "this Debtor is not an honest debtor, and thus should not benefit from protections reserved for honest debtors. The Debtor is controlled, in part, by Steffen Waltz, a serial abuser of the bankruptcy process who has – on at least six occasions known to the Bond Trustee including this case – used the bankruptcy process as a weapon against secured creditors. Unfortunately for the holders (the 'Bondholders') of the approximately $67 million in publicly-traded bond debt that the Debtor borrowed to construct and ramp-up the Project (the 'Bonds'), although the official statement under which the Bonds were marketed and sold (the 'Official Statement') lauds Mr. Waltz’s alleged development expertise, it completely fails to mention Mr. Waltz’s propensity to put his projects into bankruptcy (at least five times as of the date of the Official Statement) or his repeated refusal to honor personal guarantees for borrowed money which have resulted in several lawsuits against Mr. Waltz personally. It would be impossible to inventory all the false, misleading and incomplete statements made by this Debtor and Mr. Waltz, both prior to and during the pendency of this case. But because the existence of bad faith is an important factor in the calculus of whether this Court should terminate the Debtor’s exclusivity, the Bond Trustee is constrained to point out at least the most egregious of the recent misrepresentations made by Mr. Waltz and the Debtor."
On March 1, 2022, BSPV-Plano, LLC (“BSPV-Plano” or the “Debtor,” an 85% completed 55+ retirement community in Plano, Texas) filed for Chapter 11 protection with estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $50.0mn and $100.0mn. At filing, the Debtor noted that: “poor and inclement weather experienced in the area during construction, including the 2021 freeze, resulted in construction delays. These delays were greatly exacerbated by the onset of the global pandemic in early 2020.”
On April 21st, the Court hearing the BSPV-Plano case issued a final order authorizing the Debtor to access the $460,410 balance of what is in total $1.0mn of debtor-in-possession (“DIP”) financing being provided by DCJ Capital (the “DIP Lender,” an entity affiliated with the Debtor’s equity sponsors) [Docket No. 90]. The Court also issued a separate final cash collateral order [Docket No. 91]. On March 14th, the Debtors got interim access to $500k of DIP financing [Docket No 47] with that interim amount nudged up $539,590 in a subsequent April 5th order [Docket No. 81].
On December 31, 2022, the Debtor filed its Plan and Disclosure Statement [Docket Nos. 218 and 219, respectively].
Responding to the Bond Trustee's motion to terminate, the Debtor provides [Docket No. 235]: "Because of the Debtor’s herculean efforts and perseverance under extraordinarily difficult conditions and because of the commitment to the project that its insiders have shown time and again, there is no question here that the Bond Trustee is oversecured, that the value of its collateral has only increased and rapidly continues to increase, and that there is more than enough value to pay all claims in full. It is because of the millions of dollars of new funds from insiders, which have funded the Bankruptcy Case and been used towards construction, that the Bond Trustee’s collateral has increased in value. The Debtor has now filed a plan of reorganization that pays all claims in full.
If the Bond Trustee had had its way at the outset, there would have been a fireside sale, an uncompleted project, and unpaid creditors—including its own two junior classes of bondholders. That last fact should not be lost on the Court or on the bondholders themselves: the Bond Trustee acts only upon the instructions of the senior Class A and B bondholders, who owe no duties to the junior Class C and D bondholders, and he does not and cannot care about recoveries to the junior bondholders because his instructions come only from Classes A and B. But, if the Bond Trustee gets the liquidation that he wants, or rather that the Class A and B bondholders want, then they alone get all of the massive upside and equity. That is what is really motivating the Motion.
The Motion is rife with ill-conceived ad hominem attacks that are a transparent attempt to poison the Court’s views of the Debtor and its principals, who have plainly evidenced their commitment to the project and their good faith. For example, the Motion repeatedly raises the Debtor’s alleged construction incompetence, but the Debtor has already engaged, with the Bond Trustee’s support and this Court’s authority, a replacement general contractor and a post-petition, third party, independent construction consultant1 who has express, day-to-day control over construction, whose competence and good faith the Bond Trustee admits it does not question, and who informed the Bond Trustee—before the Bond Trustee agreed to extend exclusivity—of the current construction schedule and anticipated completion date that the Motion now complains of.
For the Debtor, which filed for bankruptcy 11 months ago claiming that 85% of its Plano, Texas retirement community was complete as at filing, work apparently continues to advance; with "cottages…completed and…the Project’s apartment tower…scheduled for completion in early 2023."
As to mediation which began in late September and which according to the mediator "reached an impasse" on December 2oth, the Debtor noted: "The parties mediated again in person on November 21, 2022. The Debtor continues to assess a negotiated plan with the Bond Trustee and intends to continue working with the mediator on a potential consensual Chapter 11 plan of reorganization.”
The motion [Docket No. 206] provides, “During the first few weeks of the Bankruptcy Case, the Debtor was focused on litigating the use of the cash collateral of its senior secured creditor, The Huntington National Bank, in its capacity as trustee for certain pre-petition bonds and as secured lender to the Debtor (the ‘Bond Trustee’). This included a contested preliminary hearing at which the Court permitted the Debtor the interim use of cash collateral, discovery, additional (agreed) interim periods for the usage of cash collateral, and extensive negotiations which led to an agreement with the Bond Trustee and the Court entering an agreed order permitting the Debtor to use cash collateral on April 21, 2022. Additionally, the Debtor was focused on preparing and filing its schedules and statements, and to transitioning its business to Chapter 11.
During the first few months of the Bankruptcy Case, and continuing through to the present, the Debtor was primarily focused on completing the construction of the Project. Due to the natural and some unanticipated difficulties and delays in construction, the Debtor and its agents have expended, and continue to expend, substantial time and resources working towards this goal. Unfortunately, the Debtor missed multiple agreed construction milestones and completion of the Project has slipped by months. To assist the Debtor with construction issues, the Debtor recently retained Spire Consulting Group, LLC as its construction consultant, pursuant to an order entered by the Court on September 9, 2022. As of this filing, all of the Project’s cottages are completed and most have temporary certificates of occupancy, while the Project’s apartment tower is scheduled for completion in early 2023.
Commencing in August 2022, the Debtor opened negotiations with the Bond Trustee regarding the terms of a potentially consensual Chapter 11 plan of reorganization. Following an in-person negotiation, the parties retained Mark Andrews to serve as a mediator and they mediated in-person all day on September 27, 2022. Although no settlement was reached on that day, the parties and the meditator agreed to continue negotiations. On October 17, 2022, the mediator transmitted a mediator’s proposal to the parties and invited a further in-person mediation session. The parties mediated again in person on November 21, 2022. The Debtor continues to assess a negotiated plan with the Bond Trustee and intends to continue working with the mediator on a potential consensual Chapter 11 plan of reorganization.”
About the Debtor
According to the Debtor: “Bridgemoor @ Plano senior apartments will have a variety of one and two bedroom floor plans that are perfect for independent adults. Every apartment home will include internet service, basic cable, camera doorbells, ceiling fans, an all-electric kitchen with a pantry and breakfast bar, washer and dryer connections, extra private storage and a balcony or patio. Select homes come with an attached garage or a study. We feature both single-story and mid-rise apartment living. We understand that pets are family too, which is why we will be a pet-friendly community.”
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The post BSPV-Plano, LLC – Further to Momentary Ceasefire (of Sorts) with Bond Trustee Huntington National Bank, Debtor Gets Fourth and Last Extension of Exclusive Solicitation Period appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.