In one of the the latest developments in the Bouchard Transportation bankruptcy, the Official Committee of Unsecured Creditors yesterday filed suit in the U.S. Bankruptcy Court for the Southern District of Texas objecting to the designation of Hartree Partners as stalking horse bidder in the bankruptcy auction. The creditors also objected to the approval of a break up fee and expense reimbursement for Hartree.
A report in Bankrupt Company News notes that the committee’s objection came before the debtors “even had a chance to digest their July 19th auction results and file notice of a successful bidder,” which was not Hartree.
“Like almost everything related to the Bouchard bankruptcy, this is a shambolic mess,” says Bankrupt Company News, “with the Debtors’ motion to designate Hartree coming only hours before the Debtors’ auction at which debtor-in-possession (“DIP”) lender JMB Capital Partners Lending, LLC (“JMB”), long-known to be a potential credit bidder, emerged as the winning bidder for the majority of the Debtors’ assets.”
Bloomberg Law cites a JMB lawyer as saying JMB’s winning bid was $115 million.
In the fling, the creditors state:
“Unfortunately, after running an extended sale process and otherwise trying to turn the business around, the Debtors’ hope will be unrealized. Indeed, any unsecured creditor recovery hinges largely on a potential ‘surcharge’ claim against Wells Fargo Bank, National Association (Wells Fargo), for which funding is at risk because of, among other things, the Debtors’ decision to anoint Hartree the Stalking Horse Bidder and offer Hartree, the former DIP lender, a 3% break-up fee (the ‘Break-Up Fee’) and an expense reimbursement of up to $1.5 million (the ‘Expense Reimbursement’) pursuant to the Bid Procedures Order (as defined below). For the reasons set forth below, the Committee opposes both the designation of Hartree as the Stalking Horse Bidder at the auction already held and the Break-Up Fee and Expense Reimbursement. Additionally, the Committee further objects to Hartree being designated and approved as the “back-up bidder” absent substantial modification to the Hartree APA [Asset Purchase Agreement].”
The filing continues with another 15 pages of legal arguments and narrative.
You can download it below.