By: dmc-admin//December 26, 2001//
“Perhaps the authorization of dip financing and the associated use of preference- recovery proceeds for ‘adequate security’ was imprudent; that some of the secured lenders refused to advance any more funds, even with super-security, suggests as much. (Though the fact that others of their number put up extra money, knowing that they were undersecured, implies a belief that keeping Qualitech alive had a positive option value.) But the time to make this point is long past. The bankruptcy judge did authorize financing with additional security to the original lenders. The unsecured creditors did not seek a stay, and it is too late to tell those among the secured lenders that opposed this dip financing that they, rather than the unsecured creditors, must swallow the loss from the decision even though sec.364(d) requires their protection.”
Affirmed.