A Getty Images ad hoc group of minority shareholders and warrant judgment holders is seeking to block final approval of the company’s Koch family DIP financing, arguing that the loan would lock in an insider buyout before the court can meaningfully examine valuation, potential estate claims or competing transactions.
The ad hoc group’s 10 November objection escalates its campaign for an official equity committee into a challenge to the financing underpinning Getty’s prepackaged restructuring. The group, represented by Brown Rudnick and Akerman, argues that the loan’s milestones, borrowing conditions and restrictions on investigation would force the court to choose between confirming the Getty and Koch families’ proposed takeover and triggering a financing default.
“The ‘engine’ of this case is the DIP Facility,” the group wrote, calling the financing an impermissible “sub rosa” plan — a transaction that effectively determines restructuring terms without satisfying the confirmation process.
Separately, Judge J. Kate Stickles entered an order setting the equity committee appointment motion for 18 November at 10am in the US Bankruptcy Court for the District of Delaware to coincide with the final DIP approval hearing. Responses are due on 14 November at 4pm and replies on 16 November at 4pm. The scheduling order resolves the request described in 9fin’s 9 November reporting.
The financing objection targets the mechanism supporting a plan that would give the Getty and Koch families all reorganized equity through $433m in cash and the equitization of approximately $100m of their secured debt. As previously reported, other secured debt would be reinstated on similar terms, general unsecured creditors paid in full and holders of $270m of unsecured notes paid $170.2m in cash, or approximately 63%. Minority shareholders and warrant holders would receive nothing.
That allocation makes the financing fight consequential beyond the price and availability of new money. The group argues that parties receiving full payment or negotiated recoveries have little incentive to challenge the families’ acquisition, while the constituencies facing a wipeout lack an estate-funded committee to investigate it.
The group asks the court to deny the DIP motion. It also opposes findings that the DIP lenders acted in good faith and requests a stay pending appeal if the court approves the financing.
The group’s central concern is the cumulative effect of the loan’s controls. The facility requires confirmation of an RSA-compliant plan within 55 days and emergence within 75 days. More unusually, the group points to a condition to borrowing requiring that no pending motion or pleading seek relief adverse to the lenders or inconsistent with the restructuring support agreement.
In the group’s reading, that condition allows the Koch lenders to stop advancing money when a stakeholder challenges the agreed transaction. It argues that restrictions on the use of DIP proceeds and cash collateral further prevent meaningful investigation of the DIP lenders and prepetition secured parties or challenges to their claims and enforcement rights.
The group also challenges releases of estate claims under the interim DIP order, arguing that insiders and other protected parties would receive releases without an adequately empowered investigation. It says the financing restrictions and default provisions undermine the debtors’ special committees’ ability to pursue claims, even if their investigations identify grounds to do so.
Those restrictions supply the link between the DIP objection and the equity committee request. The interim budget contains no resources for an official committee, according to the group, which seeks committee professional fee protection in both the carve-out and funded reserve account.
It also challenges the deadline for bringing claims — the earlier of the plan objection deadline and 75 days after entry of the interim DIP order — arguing that the absence of automatic standing or access to estate funds makes those rights illusory. Confirmation objections are due on 30 November, ahead of a combined disclosure statement and confirmation hearing scheduled for 15 December, as 9fin reported.
The objection’s legal theory has two principal arguments — heightened scrutiny of insider financing and a prohibition on using the loan to predetermine confirmation.
On the first, the group argues that the Koch family’s role as a controlling shareholder and prospective co-owner of the reorganized business requires an “entire fairness” review of process and price. It questions whether the debtors’ special committees had meaningful veto authority, citing their initial mandate to make nonbinding recommendations and uncertainty over when they gained sufficient decision-making powers.
The group also challenges the financing outreach. According to the objection, Guggenheim contacted 12 potential third-party funding sources but gave them less than two weeks before the RSA was signed. The DIP was an integral part of that agreement. The group argues that the outreach did not provide a meaningful market test and that fairness cannot be assessed while the company’s value remains contested.
As 9fin previously reported, the group contrasts Getty’s $1.3bn to $1.5bn enterprise valuation with an asserted solvency breakpoint of approximately $1.46bn. It also cites higher historical transaction-related analyses to argue that minority interests may have value.
On the second legal strand, the objection invokes Braniff, the Third Circuit’s Boy Scouts decision and Latam to argue that financing cannot short-circuit confirmation safeguards. It highlights the Southern District of New York bankruptcy court’s rejection of Latam Airlines’ shareholder-funded DIP containing an equity-conversion feature that would lock in a discount to plan value.
The group draws a parallel to Getty through the combined effect of the DIP and RSA — compressed milestones, restricted challenges and an exclusive investment opportunity for the controlling families. Its position is that those provisions effectively determine ownership and constrain scrutiny before the confirmation hearing.
The downside scenario is central to that argument. The group says the collateral package would allow insider lenders to pursue the company’s assets following a default, and objects to their credit bid rights remaining unrestricted. It argues that enforcement could become an alternative route to the acquisition the families seek under the plan.
The objection separately questions liquidity beyond the planned timetable, saying the DIP budget projects approximately $16m of cash by the eleventh week, roughly one-third of the company’s stated minimum operating requirement. The group argues that the facility therefore leaves insufficient room for an adversarial process or a longer case.
Finally, the group seeks to preserve a route to appellate review by contesting lender good-faith findings and requesting a stay if final DIP approval is granted. It argues that the financing’s alleged purpose — insulating the insider transaction from challenge — defeats those findings and that approval would cause irreparable harm.
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