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Implant Sciences Objection Filed

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Implant Sciences’ official committee of equity security holders filed with the U.S. Bankruptcy Court an objection to the Debtors’ financing motion.

The committee asserts, “The Debtors’ proposed DIP Loan set forth in the Motion, and as amended since the DIP Order, fails to satisfy these criteria and should not be approved on a final basis for the following reasons: First, the DIP Order provides for limited funding and unduly limited time for the Committee’s professionals to investigate prepetition liens, transactions or other claims as to parties OTHER than the DIP Lender here, thereby improperly constraining the Committee’s ability to assess if there are potential estate claims against the Pre-Petition Secured Parties (holders of debts alleged to exceed $80 million), particularly, whereas here one of those Parties, Platinum, is itself subject to an involuntary insolvency proceeding in a foreign jurisdiction and is subject to two Federal investigations relating to, among other things, potential insider trading of the very notes underlying the PrePetition Secured Debt, events that make it very difficult to reasonably estimate the time or cost to conduct any investigation; Second, the DIP Order includes the broad release of any and all claims against the Debtors’ Pre-Petition Secured Parties; Third, the DIP Order improperly grants liens and super-priority claims on proceeds of avoidance actions and other claims and estate causes of action; Fourth, the DIP Order inappropriately waives Bankruptcy Code sections 506(c) and 522(b) even with the expectation that the Pre-Petition Secured Parties will receive a full recovery in these chapter 11 cases; and fifth, the DIP Order proposes fees of nearly $1 million in relation to the $8 million DIP loan that are excessive and not reasonable – especially in light of interested competing DIP lenders which would provide DIP financing on more favorable pricing terms.”

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