Mette Kurth: Unusual Renovate America bankruptcy case featured in Law360

 

Law360 recently published an article covering an unusual bankruptcy court case for which Culhane Meadows’ Delaware partner Mette Kurth is co-counsel for the debtors.

Here are a few excerpts from the article:

Bankrupt home improvement lender Renovate America Inc. pushed off a looming fight with unsecured creditors over its Chapter 11 sale terms Friday after its bankruptcy lender and stalking horse bidder agreed to add one week and $5 million to its original $18 million interim loan deadline.

U.S. Bankruptcy Judge Laurie Selber Silverstein approved the changes after talks among the debtor, lender and prospective buyer Finance of America Mortgage LLC and Renovate’s official committee of unsecured creditors stretched more than two hours past a scheduled hearing start.

“Generally speaking, in the broadest sense, what we need is to make sure we have no default under the milestones” in the debtor in possession agreement before a rescheduled hearing on the final DIP order Thursday, said Sharon Z. Weiss of Bryan Cave Leighton Paisner LLP, counsel to Renovate.

The extra cash and postponement were hammered out in the shadow of unsecured creditor arguments that bidding for the business would be chilled by unprecedented loan terms and deal protections that lender and stalking horse bidder FAM had demanded as part of its offer for the company.

Under FAM’s bid, any other buyer would have to repay in full the entire outstanding balance of the DIP within five days of outbidding the stalking horse at auction. The committee estimated the likely DIP balance at the time of bid decision at $38.75 million, or 90 percent of the minimum bid needed to beat FAM’s current $42.65 million offer. Repayment would be required without certainty that the alternative sale would ever get to closing.

“A financially unsophisticated home purchaser would not offer to purchase a house if he or she were required to commit to paying off the existing mortgage even if the house purchase did not close,” the committee said in an objection filed this week. “Yet the debtors and FAM claim that highly sophisticated financial and strategic buyers will risk tens of millions of dollars on a transaction that may never close.”

Renovate hit Chapter 11 on Dec. 21 with $115 million in liabilities and $102 million in assets with plans for a sale. Among its troubles, the debtors cited tightened requirements for financing of home energy efficiency improvements and, more recently, the market blunting effects of the COVID-19 pandemic. The business also has to face government and consumer class litigation over its origination and administration of home energy efficiency loans under a government program for middle- and low-income property owners.

Read the entire article HERE.


About Culhane MeadowsBig Law for the New Economy®
The largest woman-owned national full-service business law firm in the U.S., Culhane Meadows fields over 70 partners in ten major markets across the country. Uniquely structured, the firm’s Disruptive Law® business model gives attorneys greater work-life flexibility while delivering outstanding, partner-level legal services to major corporations and emerging companies across industry sectors more efficiently and cost-effectively than conventional law firms. Clients enjoy exceptional and highly-efficient legal services provided exclusively by partner-level attorneys with significant experience and training from large law firms or in-house legal departments of respected corporations. U.S. News & World Report has named Culhane Meadows among the country’s “Best Law Firms” in its 2014 through 2020 rankings and many of the firm’s partners are regularly recognized in Chambers, Super Lawyers, Best Lawyers and Martindale-Hubbell Peer Reviews.


The foregoing content is for informational purposes only and should not be relied upon as legal advice. Federal, state, and local laws can change rapidly and, therefore, this content may become obsolete or outdated. Please consult with an attorney of your choice to ensure you obtain the most current and accurate counsel about your particular situation.

*Culhane Meadows is ranked by U.S. News/Best Law Firms in Technology Law, Bankruptcy/Reorganization Law, and Information Technology Law. This website and the communications herein may be considered attorney advertising. Previous results are not a guarantee of future outcome. This website is for informational purposes only and does not constitute legal advice. The information herein is not intended to create an attorney-client or similar relationship. Until you establish such a relationship and receive an engagement letter, you have not hired a Culhane Meadows attorney nor become a client of the firm. Whether you are a new or existing client of the firm, Culhane Meadows must determine that there is no conflict of interest and that it is willing and otherwise able to accept the new engagement before representing you on a new matter. Only if and after Culhane Meadows has informed you it is willing and able to accept your new matter should you send the firm any information or documents that you consider private or confidential. Such information will not be treated as private, confidential or otherwise protected from disclosure until Culhane Meadows has communicated in writing that it is willing and able to accept your new matter and provide you with legal counsel. Whether you need legal services and which lawyer or law firm you select are important decisions that should not be based on this website alone.