Getty minority holders challenge Koch DIP financing

Getty Images minority shareholders and warrant judgment holders asked a Delaware bankruptcy court to reject the Koch family DIP financing, arguing the loan locks in an insider buyout before valuation is tested.

The group, represented by Brown Rudnick and Akerman, filed the objection on Nov. 10, 9fin reported.

The DIP sets a 55-day deadline to confirm an RSA-compliant plan and a 75-day deadline to emerge. It also conditions borrowing on no pending motion or pleading seeking relief adverse to the lenders or inconsistent with the restructuring support agreement. The group argues those controls force the court to choose between confirming the families' takeover and triggering a financing default.

The plan would give the Getty and Koch families all reorganized equity through $433 million in cash and the equitization of approximately $100 million of their secured debt, as Private Wealth Daily previously reported. Other secured debt would be reinstated on similar terms and general unsecured creditors paid in full.

Holders of $270 million of unsecured notes would receive $170.2 million in cash, or approximately 63%, while minority shareholders and warrant holders would receive nothing.

The group contends that parties receiving full payment or negotiated recoveries have little reason to contest the families' acquisition, while constituencies facing a wipeout have no estate-funded committee to investigate it. It asks the court to deny the DIP motion, opposes findings that the DIP lenders acted in good faith and requests a stay pending appeal if the financing is approved.

The group wrote that 'the engine of this case is the DIP Facility,' calling the financing an impermissible 'sub rosa' plan.

Judge J. Kate Stickles set the equity committee appointment motion for Nov. 18 at 10 a.m. in the US Bankruptcy Court for the District of Delaware, to coincide with the final DIP approval hearing. Responses are due Nov. 14 at 4 p.m. and replies Nov. 16 at 4 p.m.