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October 14, 2022 – The Court hearing the Stored Solar Enterprises, Series LLC case issued an order authorizing the Debtor to: (i) access $3.35mn in new money, debtor-in-possession (“DIP”) financing from prepetition lender Hartree Partners, LP ("Hartree" or the “DIP Lender,” owed $8.9mn in respect of prepetition debt and also serving as a credit bidding stalking horse) on an interim basis and (ii) use cash collateral [Docket No. 124, which attaches an October 14, 2022 DIP term sheet]. The $5.65mn balance of what is in total $9.0mn of requested new money DIP financing, is to be made available on issuance of a final DIP order, with consideration of that order now scheduled for October 27, 2022.
On September 14, 2022, Stored Solar Enterprises, Series LLC (“SSE” or the “Debtor”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Maine, case No. 22-10191. The Debtors’ lead petition noted between 100 to 200 creditors; estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $10.0mn and $50.0mn*.
* The Debtor adds: “The value of the Debtor’s assets substantially exceed the amount of its secured debts, and the value of the Debtor’s assets is not declining. The Debtor believes that the aggregate value of the Plants exceeds $35 million, which is substantially greater than the amounts owed to creditors.”
The Debtor faced a number of objections, which were resolved at the last minute; including that of the Debtor's creditors' committee (the "Committee") [Docket No. 114]. At the October 14th hearing, initially scheduled to hear the Debtor's motion for an emergency hearing (and objections thereto) but then expanded to include a substantive discussion of the DIP financing motion when a settlement was reached, counsel for Hartree described key elements of the accord agreed amongst the Debtor, the Committee and Hartree which paved the way for the issuance of the interim DIP motion.
The key element of the settlement was the establishment of a $500k reserve fund sourced from sale proceeds, with that amount to be earmarked for general unsecured creditors. Also agreed was (i) a shift of $25k from amounts budgeted for the Debtor's professionals to the Committee's professionals and (ii) a carve out from the DIP's adequate protection liens for specified avoidance actions and D&O-related claims; with those "specified causes of action," including any against Hartree, left with the estate after a sale.
It was also noted that the Debtor's intended to file a sale motion by October 17th.
The DIP Motion
The motion [Docket No. 109] explains, “Specifically, the Debtor has an immediate need for the Interim Financing, among other things, (i) for ordinary course operations, such as funding payroll for employees and paying necessary vendors who are critical to ordinary course operations, and (ii) to make necessary capital expenditures; (iii) to acquire biomass inventory in order to sustain operations of its electric generation plants, and otherwise to pay necessary administrative expenses, all in accordance with the Budget. Without immediate access to the Interim Financing, the Debtor’s ability to generate electricity for salt to the New England Power Grid, to pay its employees, and preserve the value of the business will be immediately and irreparably jeopardized, resulting in significant harm to the estate and its secured and unsecured creditors. Such funding is necessary to maintain the going concern value of the Debtor and allow for a successful sale of its assets.”
Key Term of DIP Facility
- Borrower: Stored Solar Enterprises, Series LLC
- DIP Lender: Hartree Partners, LP
- Commitment: $9.0mn, $3.35mn interim
- New Money: $9.0mn
- Roll-Up: N/A
- Interest Rate: 8% per annum
- Default rate: 2.0% per annum
- Maturity Date: January 13, 2023
- Use of Proceeds: The DIP Facility will be used in accordance with a 13- week budget (a “Budget”), which shall be updated on a rolling, bi-weekly basis, and which shall require the payment of the following items: the actual costs of operating and maintaining the Facilities; payment of insurance premiums; payment of the fees and costs of the advisors to the DIP Lender. The Budget attached hereto as Exhibit A shall be the initial Approved Budget. Upon the furnishing of an updated Budget to the DIP Lender, the DIP Lender shall have the right to approve or disapprove such updated Budget. Upon such approval, the updated Budget shall become the Approved Budget. Until such approval the existing Approved Budget shall remain the Approved Budget for all purposes.
- Milestones: The Borrower shall comply with the following chapter 11 milestones which milestones may be extended in writing by the DIP Lender in their sole and absolute discretion (the “Milestones”):
- The Borrower shall have filed a motion seeking approval on an emergency basis of the DIP Facility in form and substance satisfactory to the DIP Lender; no later than October 13, 2022.
- The Bankruptcy Court shall have entered the Interim DIP Order in form and substance satisfactory to the DIP Lender; no later than October 14, 2022.
- The Borrower shall have filed the Approval, Procedures and Sale Motion on an emergency basis in form and substance satisfactory to the DIP Lender; no later than October 18, 2022.
- The Bankruptcy Court shall have entered the Sale Procedures Approval Order; no later than October 28, 2022
- The Bankruptcy Court shall have entered the Final DIP Order; no later than November 14, 2022, and
- The sale of the Facilities has closed; no later than December 27, 2022.
DIP Budget (see Exhibit A of Docket No. 124 for better image resolution)About the Debtor
The Debtor provides: "Collectively, these Plants are capable of producing significant electricity (up to 136 MW per hour when all seven Plants operating) to help satisfy the electricity needs of millions of New England homes and businesses without resorting to the use of fossil fuels. The Debtor earns from ISO-NE (a) payments for maintaining these Plants as available renewable-energy electricity producing resources, (b) payments for electricity generated from these plants, and (c) renewable energy credits (“RECs”) for supplying electricity meeting certain renewable energy requirements."
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