Opinion ID: 2954553
Heading Depth: 2
Heading Rank: 3

Heading: The Working Capital Adjustment.

Text: Three weeks later, on June 10, 2011, the Trustee and NuStar finalized the Working Capital Adjustment, agreeing to value the Working Capital Assets at about $4.8 million. The $3 million remaining in escrow was released to the Trustee and NuStar transferred an additional $2.8 million to the Trustee. All told, the Trustee received a final purchase price of about $48 million in the sale to NuStar: the $41 million base price (for the Refinery, the Adjacent Real Property, and the Elmendorf Tank Farm, collectively), plus $2.2 million (for the platinum on hand), plus $4.8 million (for the Working Capital 5 The Redfish Bay Sale Order provided, in pertinent part, as follows: [I]nterim partial payments of [JP Morgan’s] claims may be made from the proceeds of the transaction contemporaneously with the [c]losing. The Trustee submits that the interim, partial payments of the [DIP Financing Facility] due [JP Morgan] are entirely appropriate because (i) such payments were a precondition to the consents of [JP Morgan] and [Chase] to the [Redfish Bay] Sale . . . (ii) the Trustee might not be able to adequately protect the liens of [JP Morgan] in the cash proceeds of its collateral, and (iii) it would make little economic sense for the Trustee to retain the proceeds in escrow and continue to incur the substantial ongoing interest accruals and “negative carry” with respect to the [DIP Financing Facility]. 6 NuStar had posted back-up letters of credit, along with the Trustee’s segregation of cash collateral, to cover any outstanding letters of credit attributable to the DIP Financing Facility. Although JP Morgan was still owed certain accrued but unpaid letter of credit fees, those fees appear to have totaled less than $10,000. 6 Case: 14-50046 Document: 00513196170 Page: 7 Date Filed: 09/16/2015 No. 14-50046 Assets). 7 The Trustee did not allocate the $41 million base price among the various underlying collateral (the Refinery, the Adjacent Real Property, and the Elmendorf Tank Farm). Although the parties stipulated to a fair market value of the Adjacent Real Property of about $1.9 million, the parties dispute what portion of the remaining $39.1 million represents proceeds from sale of the Refinery (encumbered by Chase’s lien) versus the Elmendorf Tank Farm (unencumbered by Chase). The Committee argues on appeal that the Elmendorf Tank Farm represents between $1.3 million and $4 million of the base price and, therefore, that the proceeds from the sale of the Refinery total $35.4 to $38.1 million. 8