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From: Zorkkum (Rep: 362)Date: 02/20/2013 12:15
Forum: SCHOOL SPECIALTY - Msg #15Thread #673503443 (Rec: 0)
The Ad Hoc DIP Commitment contains numerous terms4 that are more favorable
to the Debtors and their stakeholders. Among other features, the Ad Hoc DIP Commitment:
 provides the Debtors with the same $50 million of new money capital that
they would receive under the Bayside DIP Facility;
 provides the Debtors with a longer runway and enhanced flexibility by
allowing them to manage a dual-track plan of reorganization and sale
process in order to determine the most value-accretive path for their
creditors;
 provides the Debtors with a lower cost of capital by eliminating the
closing fee and unused line fee, and reducing the administrative agency
fee by $100,000;
 reduces the interest rate by 400 basis points and the default interest rate by
100 basis points; and
 provides for Bayside to receive payment in full, in cash, for all of its preand
postpetition debt (including the establishment of an escrow fund in the
amount of Bayside’s disputed Make-Whole Payment and default interest).
12. Accordingly, now that a superior alternative to the Bayside DIP Facility will
imminently be on the table, there is no legitimate reason why the Debtors should relinquish
control of the reorganization process to Bayside and rush to sell their assets at a fire-sale which
will almost certainly extinguish junior creditor interests. Bankruptcy courts do not allow DIP
lenders such as Bayside to propose financing terms that have the effect of converting ―the
bankruptcy process from one designed to benefit all creditors to one designed for the
unwarranted benefit of the post-petition lender.‖ In re Berry Good, LLC, 400 B.R. 741, 747
(Bankr. D. Ariz. 2008).

http://www.kccllc.net/documents/1310125/1310125130218000000000006.pdf



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