Bankruptcy Judge OKs Debtor-In-Possession Financing For Beyond Oblivion

NEW YORK - (Mealey's) A federal bankruptcy judge in New York on Feb. 16 approved $ 750,000 in debtor-in-possession (DIP) financing for the digital music startup Beyond Oblivion (In Re: Beyond Oblivion Inc., No. 12-10282, Chapter 11, S.D. N.Y. Bkcy.).
 
Beyond Oblivion Inc. filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Jan. 24.
 
DIP Agreement

Bankruptcy Judge Allan A. Gropper approved the DIP agreement and issued the final order on Feb. 16. The DIP lenders will be Allen & Company LLC of New York and Clifford Burnstein of Q Prime in New York.

The DIP financing will provide working capital and will be used to pay the costs of administering the bankruptcy case. The financing will also cover prepetition debt in the amount of $ 150,000.
 
11 U.S. Code Section 364

The DIP order states that all DIP obligations made by DIP lenders will be considered allowed superpriority administrative expense claims under 11 U.S. Code Sections 364(c)(1), 503(b) and 507(b).

In the event of a default, the DIP order states that the DIP liens and DIP superpriority claims are subordinate only to what are known as "carve-out" provisions. The carve-out provisions state that the liens and superpriority claims are subordinate to:

* Statutory fees incurred pursuant to 28 U.S. Code Section 1930(a)(6) and any interest thereon pursuant to 31 U.S. Code Section 3717, with no cap.

* Reasonable expenses of a Chapter 7 trustee, if one is appointed, in an amount not to exceed $ 25,000.

* Allowed reasonable fees and expenses of attorneys and financial advisors employed by Beyond Oblivion pursuant to 11 U.S. Code Sections 327 and 1103 up to an aggregate amount not to exceed $ 75,000.

* Allowed fees and expenses of attorneys employed by the committee up to an aggregate amount not to exceed $ 25,000 provided, however, that such fees and expenses are approved by the Bankruptcy Court.

The DIP lenders are represented by Karen P. Dine of Pillsbury Winthrop Shaw & Pittman in New York. Beyond Oblivion is represented by Gerard Catalanello of Duane Morris in New York.
 
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