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| Re: DesignLine is seeking $3 Million loan to fund its sale or liquidation (282981) | |||
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Re: DesignLine is seeking $3 Million loan to fund its sale or liquidation |
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Posted by Tony Clifton on Fri Aug 30 12:32:52 2013, in response to Re: DesignLine is seeking $3 Million loan in order to fund NJ Transit order, posted by Gold_12th on Thu Aug 29 13:13:08 2013. The money is not to fund the NJ Transit order. The money is needed to fund the sale or liquidation of the company because they lost the funding to complete the NJ Transit order.--- Bankrupt Electric Transit Bus Co. Seeks $3M Ch. 11 Loan By Matt Chiappardi Law360, Wilmington (August 28, 2013, 5:20 PM ET) -- Electric and alternative fuel transit bus manufacturer DesignLine Corp., driven into bankruptcy after losing pledged funding connected to a major contract with New Jersey Transit, sought permission late Tuesday to obtain $3 million in post-petition financing from a group of funds managed by Cyrus Capital Partners LP. The North Carolina-based company intends to use the funds to help it put together either a going-concern sale of the business or a liquidation as it tries to dig itself out of about $40 million in debt, according to a bankruptcy declaration by Chief Restructuring Officer Katie Goodman filed in Delaware bankruptcy court. DesignLine, which listed $14.1 million in assets in its bankruptcy petition, has been limited by capital constraints for several years, and was forced to seek court protection after attempts fell through to get funding that would have financed operations to build 76 buses fueled by compressed natural gas for NJ Transit, according to the declaration. "The company has a substantial backlog of buses to be delivered under its contract with the state of New Jersey and is owed substantial amounts under the contract," the declaration states. "Through 2012 and 2013, however, the company has been operating on a budget that has been dependent on continued borrowing to sustain ongoing operations." Goodman said the company had entered into a letter of intent with an undisclosed potential backer to get the necessary money, but the investor unexpectedly pulled out on July 27, leading DesignLine to terminate nearly all of its approximately 250-employee workforce. The company petitioned for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware on Aug. 15, but didn't file any substantial motions in the case until Tuesday when the declaration and request for debtor-in-possession financing were entered into the court record. By Wednesday, the bankruptcy case had already received some opposition when creditor Cameron Harris filed a motion to have the case moved out of Delaware and into North Carolina. Harris, who says he is DesignLine's third largest unsecured creditor, argues that the change of venue would be appropriate since the company's principle place of business, assets and 30 percent of its creditors are in North Carolina. The creditor's claim in the case stems from an agreement upon which he says DesignLine didn't perform, and Harris has been named to the official committee of unsecured creditors formed by the U.S. Trustee's Office on Tuesday. DesignLine was founded in the mid-1980s in New Zealand and built and sold mostly diesel-fueled buses until it started developing hybrid models in the 1990s, according to the declaration. In 2006, a group U.S. investors bought the firm, moved its headquarters and operations to North Carolina, and put together a growth strategy that catapulted annual revenues from about $5 million to $30 million, the declaration states. That strategy included developing hybrid and electric propulsion systems protected by a series of 14 patents and seven registered trademarks, and penetrating additional markets in the Middle East, Australia and the United States, according to court records. But DesignLine was dogged by losses of more than $20 million in 2010 and 2011, and has never been able to scale its operations enough to become profitable, according to Goodman. The company also hit several financial potholes including a failed reverse merger initial public offering that aimed to raise $50 million, and an exhausted $33 million credit facility as tried to meet the demands of the NJ Transit contract. Goodman listed DesignLine debts to include $8.7 million of outstanding first-lien senior secured debt and $19.5 million of outstanding second-lien senior secured debt. DesignLine also has more than $15 million in unsecured and trade liabilities, the declaration states. DesignLine is represented by Mark D. Collins of Richards Layton & Finger PA. Harris is represented by Robert J. Dehney, Gregory W. Werkheiser and Andrew R. Remming of Morris Nichols Arsht & Tunnell LLP. The case is In re: DesignLine Corp., case number 1:13-bk-12089, in the U.S. Bankruptcy Court for the District of Delaware. |
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