Whittaker, Clark & Daniels, Inc. and its affiliates returned to bankruptcy court for the third time seeking to expand their debtor-in-possession financing facility, requesting an additional $15.303 million as their cash reserves have dwindled to just $4.1 million—enough to fund operations for only a few more weeks, according to court documents filed October 15, 2025.
The motion, filed in the United States Bankruptcy Court for the District of New Jersey (Case No. 23-13575 (MBK)), seeks to increase the DIP credit facility to $95.303 million, up from the current $80 million approved through two previous amendments. The debtors stated in their filing that without the additional liquidity, they will be unable to continue administering the chapter 11 cases, which have been pending for more than two and a half years.
"Without access to additional funds, the Debtors will not have sufficient liquidity to seek confirmation of a plan or continue with the administration of these chapter 11 cases," the debtors stated in their motion before Chief Judge Michael B. Kaplan.
Background on the Case
Whittaker, Clark & Daniels filed for chapter 11 bankruptcy protection on April 26, 2023, to address talc and asbestos-related liabilities. According to the First Day Declaration referenced in the motion, the company is a former distributor of industrial minerals including talc and has substantially wound down operations, leaving it with primarily fixed assets and limited cash flows from interest on those assets.
The Official Committee of Talc Claimants was appointed on May 24, 2023. On June 26, 2023, the court entered an order appointing the Honorable Shelley C. Chapman (Ret.) as the Future Claimants' Representative to represent the interests of future claimants in the chapter 11 cases.
On September 3, 2024, the debtors filed a motion seeking approval of a settlement agreement with certain contributing parties. According to the Settlement Agreement attached to that motion, the settlement payment is comprised of: (a) an initial contribution of the DIP Facility; and (b) an amount equal to $535 million less the aggregate principal amount of DIP Loans funded by the DIP Lender in cash. Upon the Debtors' receipt of the Settlement Contribution, the principal amount of the DIP Loans will be forgiven, and the liens and security interests granted to the DIP Lender will be automatically released and terminated.
History of DIP Financing
On October 15, 2024, the bankruptcy court entered the DIP Order approving a $50 million DIP credit facility provided by National Indemnity Company, a Nebraska corporation. Under the DIP Order, the DIP Loans are senior secured and are entitled to superpriority administrative expense status pursuant to section 364(c) of the Bankruptcy Code. The DIP Credit Agreement provides that upon occurrence of the Settlement Contribution Date, the obligations under the DIP Facility Documents shall be automatically forgiven, released, and terminated in exchange for a reduction in the amount to be paid by the DIP Lender as set forth in the Settlement Agreement.
On March 27, 2025, the court entered the First DIP Amendment Order, which increased the DIP Commitment under the DIP Facility by up to $30 million, bringing the total to $80 million. The debtors completely drew down the full availability under the DIP Facility on July 23, 2025, receiving the final draw under the existing facility.
The current motion seeks to increase the facility by an additional $15.303 million to $95.303 million total.
Why Additional Financing Is Needed
According to the motion and the supporting declaration from Brian J. Griffith, the debtors' Treasurer and Secretary and a Senior Managing Director at M3 Advisory Partners, LP, the bankruptcy cases have extended beyond initial projections due to several factors:
Third Circuit Appeals: Multiple appeals were filed with the U.S. Court of Appeals for the Third Circuit regarding this Court's orders. On September 10, 2025, the Third Circuit affirmed the bankruptcy court's orders in In re Whittaker Clark & Daniels Inc. However, on October 1, 2025, the Committee petitioned the Third Circuit for panel rehearing or rehearing en banc. On October 9, 2025, the Third Circuit ordered the Debtors to submit an answer within 14 days.
Failed Mediation: On October 6, 2025, mediator Lawrence W. Pollack informed the court in an email that "after hard, constructive work by all involved, the mediation has concluded without a resolution."
Extended Litigation: Between March 3, 2025, and March 6, 2025, the Court conducted a four-day hearing on the Settlement Motion and Standing Motion. The motion states that the Debtors "spent more than five months defending this settlement."
Environmental Settlement Negotiations: The debtors are negotiating with certain environmental creditors regarding a potential settlement agreement with respect to environmental claims against Debtor Soco West, Inc.
The motion states that "the extended timeline resulted in higher case administration costs, including professional fees and litigation expenses." According to Griffith's declaration, the "anticipated timeline of these chapter 11 cases has been extended and professional fee and litigation expenses have exceeded initial projections."
The Amended DIP Budget attached to the motion shows projected professional fee disbursements of $1.819 million, $2.283 million, $1.082 million, and $6.239 million over various weeks through December 2025.
Marketing Process for Alternative Financing
Before returning to National Indemnity Company for additional financing, the debtors' advisor M3 Advisory Partners conducted a marketing process to obtain postpetition financing from third parties. According to Griffith's declaration, M3 contacted five potential third-party financing sources, including specialty lenders and litigation financing firms.
"As of the date of this Declaration, none of these third parties has indicated a willingness to provide any DIP financing proposal on terms reasonably comparable to those of the Amendment and the DIP Credit Agreement as an alternative to the DIP Lender's proposal—even when considering the contingent value attributable to the pending Settlement," Griffith stated in his declaration.
The motion states: "Given the Debtors' fixed assets, limited cash flows, and alleged liabilities, it is highly unlikely a third party would provide financing on more favorable terms."
Terms of the Amendment
The Amendment maintains the same terms as the original DIP Credit Agreement:
No Fees: The motion states that "the Amendment has none of the fees typically associated with third-party lender debtor-in-possession financing transactions."
PIK Interest: The Amendment "maintains the interest rate payable in kind in arrears applicable to the DIP Facility."
Automatic Forgiveness: Consistent with the DIP Credit Agreement, upon occurrence of the Settlement Contribution Date, the obligations under the DIP Facility Documents shall be automatically forgiven, released, and terminated in exchange for a reduction in the amount to be paid by the DIP Lender under the Settlement Agreement, and any liens or security interests granted to the DIP Lender shall be automatically released and terminated.
Superpriority Status: According to the proposed order, the new $15.303 million in loans will rank pari passu in right of payment and security with the original DIP Loans and the new money DIP Loans made available by the First DIP Amendment. The DIP Lender's claims with respect to the Additional DIP Loans shall be superpriority administrative expense claims with priority under section 364(c)(1) of the Bankruptcy Code over all other administrative expense claims and unsecured claims against the Debtors, subject only to the Carve Out.
New Milestones and Waiver of Defaults
The Amendment establishes new milestones to replace sections 6.7(a)-(d) of the Existing Credit Agreement:
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November 25, 2025: Filing a motion with the Bankruptcy Court seeking approval of the settlement agreement being negotiated by the Loan Parties, the DIP Lender, certain environmental creditors, and certain other parties.
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December 19, 2025: Entry by the Bankruptcy Court of an order setting a bar date for holders of manifested Tort Claims.
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December 24, 2025: Entry by the Bankruptcy Court of an Approved Order approving the Proposed Settlement.
According to the Amendment, "Events of Default have occurred and are continuing under Section 8(b) of the Existing Credit Agreement as a result of the Borrower's inability to satisfy the milestones set forth in Section 6.7(b)–(d) of the Existing Credit Agreement." The Amendment provides that the DIP Lender waives these "Milestone Events of Default" and certain other related defaults and noncompliance.
The waiver provision states that it "shall (i) in no way obligate the DIP Lender to make any other modification to the DIP Credit Agreement or waive the Loan Parties' compliance with any other term of the DIP Financing Documents arising after the date hereof and (ii) not be construed as a course of conduct or dealing on the part of the DIP Lender."
Use of Funds
The Amended DIP Budget attached to the motion provides projected cash flows from the week ending October 11, 2025, through the week ending December 27, 2025.
The budget shows:
- Beginning unrestricted cash balance of $4.108 million
- Projected $15.303 million DIP draw in the week ending November 8, 2025
- Professional fee disbursements totaling approximately $11.4 million over the period
- Minimal cash operating disbursements (board fees, utilities, bank fees totaling less than $150,000)
- Ending unrestricted cash forecasted to be approximately $7.8 million on December 31, 2025
As of the budget date, the debtors had approximately $9.37 million in accrued but unpaid professional fees.
Griffith stated in his declaration that "the projections contained in the Amended DIP Budget...present a reasonable estimate of the Debtors' cash sources and needs to continue these chapter 11 cases."
Legal Arguments
The motion argues that the Amendment satisfies the requirements of section 364 of the Bankruptcy Code.
The debtors contend that no lender other than the DIP Lender is willing to provide loans on as favorable terms. The motion states: "No lender other than the DIP Lender has been willing to provide a loan to the Debtors on as favorable or better terms, including because of the Debtors' fixed assets, limited cash flows from interest on such fixed assets, absence of prepetition lenders, and alleged liabilities."
The debtors also argue they need additional financing to successfully administer the chapter 11 cases. The motion states: "Without access to additional funds, the Debtors will not have sufficient liquidity to seek confirmation of a plan or continue with the administration of these chapter 11 cases."
The motion cites precedent including In re Ames Dep't Stores, Inc., 115 B.R. 34, 40 (Bankr. S.D.N.Y. 1990), for the proposition that "the court's discretion under section 364 is to be utilized on grounds that permit reasonable business judgment to be exercised so long as the financing agreement does not contain terms that leverage the bankruptcy process and powers or its purpose is not so much to benefit the estate as it is to benefit a party-in-interest."
The motion also cites In re Farmland Indus., Inc., 294 B.R. 855, 883, 885 (Bankr. W.D. Mo. 2003), which found that an amendment of a postpetition financing agreement was a "sound and reasonable business judgment" where the amendment allowed the debtors to "file their disclosure statement and plan" and "gain[] valuable time in which to reorganize their business."
Relationship to Settlement Agreement
The proposed order states that "the Amendment and the DIP Facility are independent from the Settlement Agreement" and that "the DIP Obligations, the DIP Liens, and the DIP Superpriority Claims...shall be allowed and enforceable pursuant to the terms and conditions set forth in this Order...regardless of whether or not the Proposed Settlement is approved by the Court, becomes effective, or is terminated."
However, the order also includes a reservation of rights: "For the avoidance of doubt, the findings of fact and conclusions of law set forth herein shall not limit the objection of any party in interest to the approval of the Proposed Settlement, and all parties' rights are reserved with respect thereto."
Under the Settlement Agreement, the Settlement Payment consists of: (a) an initial contribution of the DIP Facility; and (b) an amount equal to $535 million less the aggregate principal amount of DIP Loans funded by the DIP Lender in cash. Each dollar the DIP Lender advances under the DIP facility reduces the amount of cash the DIP Lender must contribute under the settlement.
Timeline and Next Steps
The bankruptcy court has scheduled a hearing on the motion for November 5, 2025, at 11:30 a.m. (ET) before Chief Judge Michael B. Kaplan at the Clarkson S. Fisher United States Courthouse in Trenton, New Jersey. The motion provides that "unless responses are timely and properly filed and served, the Motion shall be decided on the papers in accordance with D.N.J. LBR 9013-3(d), and the relief requested may be granted without further notice or hearing."
The objection deadline is October 29, 2025, at 4:00 p.m. (ET).
According to the motion, notice was provided to: (a) the U.S. Trustee; (b) the Committee; (c) the Top Counsel List; (d) NICO and counsel thereto; (e) the Office of the United States Attorney for the District of New Jersey; (f) the Internal Revenue Service; (g) the Securities Exchange Commission; (h) the Environmental Protection Agency; (i) the offices of the attorneys general in states where the Debtors conduct their business operations; (j) counsel to the FCR; and (k) any party that has requested notice pursuant to Bankruptcy Rule 2002.
If the motion is granted, the Amended DIP Budget projects that the debtors will draw the full $15.303 million in the week ending November 8, 2025.
Declarations and Supporting Documents
Brian J. Griffith submitted a declaration in support of the motion. Griffith stated he is the Treasurer and Secretary for the Debtors and a Senior Managing Director of M3 Advisory Partners, LP, the Debtors' restructuring advisor. He has been advising the Debtors since March 27, 2023, and was appointed as Treasurer and Secretary on May 3, 2023.
Griffith stated in his declaration that he believes that the additional funding to be provided pursuant to the Amendment is necessary to provide the Debtors the ability to continue to administer these chapter 11 cases and pursue plan confirmation and consummation for the benefit of all the Debtors' stakeholders.
He also stated: "I believe, absent the additional funding, the Debtors and their stakeholders will be harmed by a value-destructive interruption to the administration of these chapter 11 cases on account of limited liquidity."
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