RMH Franchise Holdings – Bank of America Objects to Exclusivity Extension, Insists on December 4, 2018 Plan Confirmation Deadline

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November 13, 2018 – Bank of America, N.A., acting in its capacity as Administrative Agent, Collateral Agent and L/C Issuer (the “Agent”) filed an objection [Docket No.758] to RMH Franchise Holdings’ extension motion [Docket No. 688]. 

Bank of America asserts, “Under 11 U.S.C. § 1121(d), the exclusive periods may only be extended by the Court for “cause.” Generally, the standard for determining whether ‘cause’ for an extension exists is whether granting the extension will increase the likelihood of a successful reorganization. Here, Debtors have offered nothing to support their contention that the requested extensions are likely to lead to a better outcome. The requested extensions would permit Debtors to obtain confirmation of a plan well past the deadlines agreed to in the Cash Collateral Order and after Debtors’ original plan would have failed to be confirmed, a result no party in this case would want other than Debtors’ original equity holders and Debtors. Furthermore, given that Debtors’ cash projections indicate that their cash position will decline to less than $1.0 million for the week ended December 2, 2018, the requested extensions put Debtors at an increased risk of not being able to meet operating requirements as they become due. The Cash Collateral Order deadline for confirmation of a plan was a material condition upon which Agent consented to the use of cash collateral and Agent does not consent to an extension of the deadline. If a plan is not confirmed by December 4, 2018, thereby terminating Debtors’ right to use cash collateral, the exclusive periods should also terminate. In that event, Agent, Senior Lenders and other parties in interest should be afforded the opportunity to file their own proposed plan and Debtors should no longer have exclusivity as Debtors would have then failed to confirm the ACON-sponsored plan currently proposed. Any extension of the exclusivity periods should be tied to the deadlines in the Cash Collateral Order.”

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