Oregon Ruling Could Chill Prepetition DIP Offers

Law360, New York (May 15, 2014, 3:19 PM ET) -- On April 8, 2014, Chief Bankruptcy Judge Frank R. Alley III for the United States Bankruptcy Court for the District of Oregon found that Sunstone Business Finance LLC's claim against debtor C&K Market Inc. did not constitute an administrative expense claim. The claim arose from a breakup fee for proposed debtor-in-possession financing after C&K selected an alternative DIP lender.

The court denied Sunstone's request for an administrative claim for two reasons. First, the court found that the breakup fee did not arise from a transaction with...
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