Judge Michael Wiles held a status conference today in the Greensill Capital case on the bid procedures for the sale of the debtor’s 100% membership interest in Finacity, a wholly owned subsidiary of the debtor, with respect to allegations of misconduct by Finacity’s management chilling the sale process. The official committee of unsecured creditors laid out these allegations
of “wrongful conduct” earlier today in a motion seeking to extend the sale timeline to bring bidders back to the table. Continue reading as our Americas Middle Market team analyzes the Greensill extension of sale timeline and Request a Trial for access to our coverage of thousands of other stressed/distressed debt situations as well as access to the linked documents.
Kyle Ortiz of Togut, counsel for the debtor, said that senior members of Finacity took inappropriate actions to discourage bidders from bidding. However, the debtor requested a more “modest” extension than the UCC to keep within the May 15 outside date required by the stalking horse bidder. Judge Wiles agreed to the debtor’s requested extended timeline and denied the UCC’s request for a longer runway, saying he would not give more time based on where things stand today. Judge Wiles cautioned, however, that he would not approve a sale to the stalking horse unless he is convinced that there was an “open and untainted” process, and stressed to impress upon Finacity CEO Adrian Katz (a member of the stalking horse group) to “get his house in order” and get everyone to cooperate.
The debtor requested that the bid deadline be moved to May 10 (from May 5), that the auction be held on May 11 (instead of May 7), and that the court keep the sale hearing on May 12. The UCC had requested that the bid deadline be moved to June 14, with a June 16 auction, June 21 sale hearing and sale closing by June 25.
Justin Kesselman of Arent Fox, for the UCC, said that the “modest” extension requested by the debtor would not provide enough time to investigate what happened and the extent to which Katz has been involved in holding up the process and messaging to bidders. Kesselman also requested more time to investigate the “broad” releases that are proposed as part of the transaction. After Judge Wiles said he would not grant a longer sale timeline extension based on “speculation,” UCC counsel noted that they plan to begin discovery and expect to take Katz’s deposition next week.
Counsel for the joint administrators for Greensill Capital (UK) said that the joint administrators are supportive of the sale process and are “agnostic” as to whether the stalking horse is the winning bidder.