Lyon Workspace Products Bankruptcy Update: Company Seeks ...

As we reported earlier, Lyon Workspace Products L.L.C. voluntarily sought chapter 11 bankruptcy protection on Saturday in Illinois. ?On Monday, more details of the chapter 11 case were disclosed as new pleadings were filed. ?According to today?s court filings, Lyon Workspace is seeking an expedited sale process for substantially all of its assets because the company and its affiliates ?face severe liquidity constraints and do not have adequate financial resources to maintain their businesses through a prolonged chapter 11 process.? ?Under the proposed timeline (detailed below), Lyon is seeking to identify one or more buyers, hold an auction, and receive court approval of one or more sales which will collectively cover most or all of the company?s assets by early April.

Lyon Workspace has entered the bankruptcy case without having identified a stalking horse bidder for its assets. ?The company is seeking approval of a process which will, however, allow it to identify a stalking horse bidder by early March. ?No mention is made of the possibility of providing such a stalking horse bidder with bid protections such as a break-up fee or expense reimbursement. ?The proposed timeline for the asset sale is:

• March 7, 2013: Deadline for potential stalking horse bidders to deliver bid documents
• March 14, 2013: Deadline for the filing of cure and/or assignment objections for parties to contracts which may be assumed and assigned to a purchaser
• March 14, 2013: Deadline for all bids for some or all of Lyon Workspace?s assets
• March 21, 2013: Auction
• March 28, 2013: Deadline for filing of objections to the sale of Lyon Workspace?s assets
• April 2, 2013: Deadline for filing of objections to the assignment of contracts solely on the issue of whether the successful bidder can provide adequate assurance of future performance
• April 4, 2013: Hearing to approve the sale of Lyon Workspace?s assets

We?ve made a free copy of Lyon Workspace?s motion to approve the process to sell its assets available to read and/or download for free directly from this website. ?You can find it by clicking here.

Today, Lyon Workspace also filed a second motion pursuant to which the company seeks bankruptcy court approval to obtain debtor-in-possession financing and use secured creditors? cash collateral. ?Specifically, the motion seeks approval of the following:

• ?obtain postpetition financing . . . up to the aggregate principal amount of $22,327,344 from Capital One Leverage Finance Corp., Cole Taylor Bank or one of their affiliates . . .?;
• ?use the Cash Collateral pursuant to sections 361, 362 and 363 of the Bankruptcy Code, and other collateral in which the secured lenders have interests (the ?Pre-Petition Collateral?) both for operating purposes and to pay down the Prepetition Debt, and provide adequate protection with respect to any diminution in the value of the secured lenders? interests in the Pre-Petition Collateral resulting from the use of the Pre-Petition Collateral, including the Cash Collateral, or imposition of the automatic stay pursuant to section 362 of the Bankruptcy Code?; and
• ?on an interim basis, (i) forthwith borrow from the DIP Credit Facility up to the aggregate amount of $22,327,344 (based upon the formula described herein) from the DIP Lender under the DIP Credit Facility, (ii) use cash collateral to repay the Prepetition Debt as set forth in the Interim Financing Order, and (iii) provide the adequate protection hereinafter described.?

According to the DIP financing motion:

[Lyon Workspace and its affiliates] do not have sufficient available sources of working capital to finance their business operations without the DIP Credit Facility and the use of the Pre-Petition Collateral, including the Cash Collateral. The Debtors have an immediate need to obtain financing to permit, among other things, the continued operation of their business, to maintain postpetition business relationships with vendors, suppliers and customers, and to satisfy other working capital needs pending consummation of a sale of substantially all of their assets. In the absence of immediate authorization of the DIP Credit Facility and use of the Pre-Petition Collateral, the Debtors could not continue to operate their business, and immediate and irreparable harm to the Debtors and their estates would occur.

We?ve made a free copy of Lyon Workspace?s motion to approve the DIP financing available to read and/or download for free directly from this website. ?You can find it by clicking here.

Source: http://chapter11cases.com/lyon-workspace-products-bankruptcy-update-company-seeks-approval-of-asset-sale-process-dip-financing/