Court Takes Evolution Adequate Protection Motion Under Advisement; UCC Warns Cash Demand Could Derail Imminent Settlement of First Brands Case Issues

Legal Analysis: Mike Legge Judge Christopher Lopez took under advisement Evolution Credit’s motion for adequate protection securing its $60.5 million receivables claim after hearing testimony and argument today. The judge said he will work to issue a ruling within “24-48 hours.” The debtors, prepetition lenders and other third-party factors oppose Evolution’s adequate protection motion. At today’s hearing, First Brands’ counsel Sunny Singh of Weil Gotshal told Judge Lopez the debtors “expect” to announce a settlement of case issues before the expiration of mediation on Friday, March 13. Singh said the parties have been “making very good progress” since announcing an agreement in principle resolving case issues at a Feb. 27 status conference. Singh also previewed the debtors’ motion to approve the sale of their Walbro business. Michael Duke of Elsberg Baker & Maruri, counsel for Evolution, explained the lender is essentially seeking to reverse the impact of a release of $55 million from the factored receivables account after U.S. District Judge Lee Rosenthal remanded Judge Lopez’ order authorizing the disbursement. Duke insisted the debtors need to either return approximately $25.7 million of the released amounts relating to Evolution receivables sellers or provide the indubitably equivalent through unencumbered cash or replacement[...]