Hooper Holmes – Creditors Committee Assails Bid Procedures and Stalking Horse APA, Raises Specter of Conversion to Chapter 7 or Dismissal

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September 13, 2018 – Hooper  Holmes’ Official Committee of Unsecured Creditors objected [Docket No. 82] to the Debtors’ bid procedures [Docket No. 18] and Stalking Horse APA. The Committee asserts, “The Committee is not opposed to the sale of the Debtors’ Assets through a fair, robust, and value-maximizing sale process….Nevertheless, there remain aspects of the proposed Bidding Procedures that do not foster a competitive sale process, but rather run counter to the Bankruptcy Code’s primary goal of maximizing value for the Debtors’ estates and creditors. Moreover, the Committee questions the wisdom of designating a bid for the Debtors’ assets [which] undoubtedly leaves the Debtors administratively insolvent and with no clear path to exit chapter 11….Given the present uncertainty regarding the payment of substantial postpetition administrative claims, the proposed Bid Procedures should be revised to provide that no bid (whether a credit bid or otherwise) will be approved unless it provides for the payment in full of all accrued post-petition administrative expense claims through sale closing….Not only could the proposed Sale render the Debtors administratively insolvent if it closes, but certain aspects of the proposed Bidding Procedures and Stalking Horse APA render the proposed cash consideration for the Debtors’ assets wholly illusory and the transaction itself essentially non-binding. Given this level of uncertainty, the Committee must consider whether any contemplated transaction could close at all, and if not, whether the Debtors’ creditors might be better served by conversion of these chapter 11 cases to chapter 7 or by dismissal.” 

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