Party City Holdco Inc. won approval to borrow $75 million after its bankruptcy judge settled a fight among creditors including Mudrick Capital Management, Bloomberg News reported. Bankruptcy Judge David R Jones in a hearing yesterday said he would approve the loan, which is the first draw of a proposed $150 million financing package. The cash will allow the beleaguered party supplies retailer to keep paying employees and vendors while working on a plan to restructure more than of $1.4 billion of debt. Mudrick, a Party City creditor, objected to the financing because in order to participate in the deal — the debt bears interest at more than 14% and comes with potentially lucrative fees — the hedge fund would have been required to fully support a restructuring plan proposed by a majority first-lien noteholder group that includes Capital Group Cos Inc. and Silver Point Capital. Judge Jones overruled Mudrick’s objection, but asked the majority noteholder group to let Mudrick participate in the financing while reserving its right to oppose the restructuring proposal at a later date. The creditor group agreed to the adjustment.
