Utica- The Honorable Diane Davis, of the United States Bankruptcy Court Northern District of New York, is scheduled to hold the sale hearing today in the bankruptcy case of Nirvana, Inc., the spring water plant and bottling facility just outside of Boonville. The Nirvana plant employs about 70 people currently, with more than 20 of the employees residing in Lewis County. Workers will be anxious to hear whether their facility will remain open or be auctioned off as individual assets. Employees have been offered a chance to attend the hearing with a bus being provided for employees wishing to attend. There is some uncertainty after the auction process that took place on Thursday. In court documents obtained by linkinglewiscounty.com, an affirmation filed late Monday afternoon by Principal and Managing Director of Keen-Summit Capitol (KEEN), Harold J. Bordwin, sheds new light on a recent series of events leading up to and including the auction. KEEN was appointed to act as the business broker for the Debtors (Nirvana) for the purpose of marketing the Assets for sale, either as going concerns or separately, to prospective purchasers. KEEN helped secure the "stalking horse" bid (see previous story here) referred to below as the SNG Agreement. According to the affirmation: "On November 5, 2015, the Debtors advised their legal counsel that the amount of the raw materials inventory was overvalued by the Debtors by $426,168.75, so that the Inventory value stated in Schedule 1.1(e) (Inventory) to the SNG Agreement should have been $1,679,888.23. As of the November 12, 2015 Auction, the Debtors estimated that the total downward adjustment to the Purchase Price would be at least $1,100,000.00, effectively reducing the Purchase Price from $7,350,000.00 to $6,250,00.00. Operations and DIP Facility In addition, during the weeks leading up to the Auction, the Debtors were faced with unanticipated cash outlays for, among other things, workers compensation and utility deposits, which depleted the Debtors' working capital." "In order the reduce their operating expenses, as of October 29, 2015, the Debtors eliminated the salaries of the shareholders Mozafar and Mansur Rafizadeh totaling approximately $5,000.00 per week, and beginning the week of November 5, eliminated the salaries for Daria and Mo Rafizadeh for an additional saving of $4,000.00 per week. The Debtors were also looking for other cost savings, but were unable to cut any further costs without laying off its employees and shuttering operations." "Two conditions precedent to a closing under the SNG Agreement include (i) the continued operation of the Debtors' businesses as a going concern as of closing and (ii) the filing of the Debtors' 2014 tax returns. Prior to the Auction, the Debtors were concerned that they would not have sufficient cash to operate as a going concern or to pay their accountants to complete and file the 2014 tax returns. Accordingly, the Debtors approached SNG and their senior secured lenders fora $250,000.00 debtor in possession financing facility ("DIP Facility") to bridge the gap to a closing of the SNG Agreement." "Both SNG and Comsource, Inc. ("Comsource") offered the Debtors a DIP Facility conditioned upon, among other things, the granting of priming liens and superpriority claims, and that the DIP Facility be paid from first dollars received from the sale of the Assets. Neither SNG nor Comsource provided a firm commitment for such financing, but the general terms offered by Comsource were more favorable than those offered by SNG. As such, the Debtors pursued the Comsource DIP Facility. On or about November 10, 2015, the Debtors and Comsource reached an agreement in principle on most of the terms of a consensual $200,000.00 DIP Facility that would prime all existing lenders and grant superpriority claims to Comsource. Comsource and the senior secured lenders, however, were unable to resolve certain intercreditor issues. On November 10 and 11, 2015, Debtors' counsel drafted and circulated to Comsource and the senior secured lenders, a proposed Stipulation and Order setting forth the terms of the Comsource DIP Facility. The parties continued to negotiate the provisions of this financing on November 12, but did not conclude those discussions before the start time of the Auction. Without the DIP Facility, the Debtors were out of cash for continued operations or to complete the 2014 tax returns." "As of the November 6, 2015 Bid Deadline established by the Stalking Horse Order, the Debtors received the following bids for the Assets:
b. a Qualified Bid of $3,750,000 by CG Roxane LLC to acquire the Debtors' real estate only; and c. allon-Qualified Bid of $6,591,825 by Alder Creek Beverages, LLC ("Alder Creek") to acquire the Debtors' businesses as agoing-concern, excluding the Comsource Equipment. Alder Creek submitted a comprehensive bid package, including a deposit. However, its bid was not a Qualified Bid because it was contingent upon the United States Department of Agriculture approving the form of guaranty for Alder Creek's lender."
the Auction in person or by telephone, but was prepared to perform under the terms of the SNG Agreement if it were determined to be the Successful Bidder. Based upon extensive discussions with Alder Creek's principals and counsel, the Debtors and their professionals believed that the contingency was likely to be removed prior to the Auction. On November 10, 2015, after consultation with counsel for the secured lenders and the Creditors' Committee, the Debtors requested that Alder Creek either waive or resolve its contingency prior to the Auction. Alder Creek was unwilling to waive the contingency but agreed to try to resolve the contingency and to attend the Auction. As November 11, 2015 was a federal and banking holiday, the Debtors determined that Alder Creek may require the morning of November 12, 2015 to contact the USDA regarding the status of the guaranty approval and the satisfaction of the financing condition. As such, on November 11, 2015, all bidders were advised that the start time for the Auction was adjourned from 10:00 a.m. to 1:00 p.m. on November 12, 2015." "On the morning of November 12, 2015, prior to the commencement of the Auction, Debtors received a written offer from CRG Acquisition jointly with PPL Group ("CRG/PPL") to purchase the Debtors' machinery and equipment ("M&E") (excluding the Comsource Equipment) for $1,250,000.00. CRG/PPL concomitantly wired a $500,000.00 deposit to Debtors' counsel's escrow account. "The participants present at the Auction on November 12, either in person at the law offices of Bond Schoeneck &King PLLC or on the telephone, were:
telephone), Edward R. Wiehl, CFO and Harold Bordwin and Chris Mahoney of Keen; b. For NBT Bank: Jeffrey A. Dove, Esq., Paul A. Vellano, Esq. and John Keshavan; c. For NYBDC and SZCC: Paul A. Levine, Esq. and Michael Zihal; d. For Comsource: Lee E. Woodard, Esq., Kevin Hanlon, Tracy Stauffer, Bonnie Silvernail and Carl Austin; e. For the U.S. Small Business Administration: Nancy L. Caple, Esq.; f. For the Committee: Nicole Stefanelli, Esq. (by telephone); g. For the Office of the United States Trustee: Guy A. Van Baalen, Esq.; h. For Alder Creek Beverages, LLC: Eric Chariton, Esq., F.X. Matt, Esq., Wade Abraham and Paul Rayhill; i. For CG Roxane PLC: Richard Weisz, Esq. and Page Beykpour; and j. For CRG Acquisition and PPL Group: William J. Firestone (by telephone)."
would occur and, if there was an Auction, which parties would participate. This was because: (i) the Debtors did not have a committed DIP Facility and it was unclear whether the going concern and tax return filing conditions precedent to closing the SNG Agreement could be satisfied; (ii) there were no competing bids to the SNG stalking horse bid and SNG declined to participate in the Auction process; (iii) the CRG/PPL bid arrived after the Bid Deadline, but was accompanied by proof of funds and a substantial deposit, and (iv) the combined bids of CRG/PPL bid ($1,250,000) for the M&E and the CG Roxane bid ($3,750,000) for the real property totaled only $5,000,000.00 and were substantially less than the reduced Purchase Price of $6,250,000.00 under the SNG Agreement, IF the Debtors were able to satisfy the closing conditions precedent." "At of the commencement of the Auction, Alder Creek failed to waive or satisfy the financing condition to its bid and it was disqualified from bidding. There was no competing going concern offer and SNG declined to attend or participate at the Auction. The secured lenders advised that there would be no DIP Facility provided to bridge the closing of a sale to SNG. As a result, the Debtors reasonably believed that they would not be able to close the SNG Agreement and that they would be forced to consider liquidation bids." "To satisfy the requirement in the Bid Procedures Order that the Assets also be offered for sale in separate groups, the Debtors and their professionals then continued the process with an orderly competitive sale of the Assets on a liquidation basis. The Debtors therefore determined to proceed with the Auction to ascertain whether an orderly competitive sale of the Assets would generate sufficient proceeds to pay the approved break-up fee to SNG and provide a return to creditors. Mindful of the terms of the Bid Procedures Order and the Amended Bidding Procedures, the Debtors announced that they were proceeding with the Auction of the individual Asset groups, but would not announce a winning bidder or bidders until after the Debtors and their professionals reviewed the bids, the Amended Bid Procedures and available alternatives. The Debtors advised the parties present that they would report to the Court that (i} the CRG/PPL bid was submitted after the Bid Deadline and (ii) whether the secured lenders could credit bid would have to be resolved. All parties reserved all rights with respect to the Auction, the bids and the Auction process." "The auction proceeded for approximately three (3) hours, with numerous breaks taken for parties to confer. At the conclusion of the Auction, the Debtors had the following offers:
inventory adjustment of approx. $1,100,000.00) _ $6,250,000.00. (However, the Debtors did not believe that they could consummate this transaction absent SNG's agreement to modify the SNG Agreement and (i) waive the going concern contingency; (ii) waive the requirement that the 2014 tax returns be filed; and (iii) agree to operate and fund (on an equity basis) the Debtors' businesses during the gap period between approval of the sale by this Court and closing.) b. Aggregate Bids for Individual Asset Groups: i. Cash Bids 1. Real Property $3,750,000.00 (CG Roxane) 2. General Equipment: $ 400,000.00 (CRG/PPL) Total: $4,150,000.00 Less Break-Up Fee: ~$ 216,825.00) Cash proceeds: $3,933,175.00 ii. Credit Bids 1. SIPA Bottling Equip.: $1,050,000.00 (NYBDC) 2. A/R &Inventory: $ 500,000.QO (NBT) 3. IP: $ 20,000.00 (NBT) 4. Comsource Equip. $ 750,000.00 (Comsource) 5. Total: $2,320,000.00 iii. Total Individual Bids: $6,253,175.00
not obtain a DIP Facility on terms acceptable to the secured lenders and therefore attempted to obtain the necessary waivers from SNG in order to salvage the $6,250,000.00 Purchase Price and preserve the 70 jobs at the Debtors' Boonville, NewYork facility if the Debtors are sold as a going concern. At this time, SNG has not waived the two closing conditions.The Debtors have not identified the Successful Bidder for the Assets for the reasons set forth above and they reserve the right to reject all offers." That ends the affirmation which seems to indicate, depending on the courts decision to accept or not, that the assets could likely be sold individually, ending operations at the plant. We will have a full report after the ruling. |
| Bankruptcy Judge Could Decide Fate of Nirvana, Inc. Tuesday; New Details From Auction Revealed 11/17/15 12:00am |
| Copyright 2015 linkinglewiscounty.com all rights reserved privacy policy here |
| Everything You Need To Know About Lewis County In One Place! |
| PLEASE SUPPORT OUR LEWIS COUNTY SITE SPONSORS! |
(315)301-4056
| Click Image For Menu |
| Click Image For More Details |
| Thank You For Visiting linkinglewiscounty.com! Send Us Your Feedback! |
SITE SEARCH |
 |
 |
| HOME | ADVERTISE | BUSINESS DIRECTORY | CALENDAR | CLASSIFIED | COMMUNITY | CONTACT | | ENTERTAINMENT | GOVERNMENT | HIGH SCHOOL SPORTS | MEMBERS | ORIGINAL ARTICLES | | PUBLIC RECORDS | SCANNER LINK | SCHOOL LUNCH MENUS | SHOP | SITE SEARCH: |
| This Prime Ad Space is Available! Contact Us! |
Lewis County's 24/7 Digital Source for important News & Information! linkinglewiscounty.com |