Fairbanks Gets DIP from Diocese
The Diocese of Great Falls-Billings in Montana is providing the debtor-in-possession financing.

By Mike Schoeck
Daily Deal
December 19, 2008

While Catholic Bishop of Northern Alaska couldn't get debtor-in-possession financing from a higher source, it was able to get one for $1 million from a fellow diocese.

The Diocese of Great Falls-Billings in Montana is providing the DIP, and on Dec. 12, Judge Donald MacDonald IV of the U.S. Bankruptcy Court for the District of Alaska in Fairbanks blessed interim use of $300,000 of it.

A final hearing to tap the remaining $700,000 of the DIP has not yet been scheduled.

The DIP had to come from a novel source since talks with potential lenders Wells Fargo Bank, First National Bank Alaska, Mt. McKinley Bank and Denali National Bank were only going to produce about half of the postpetition financing CBNA needed, documents show.

Funds from the DIP will go toward paying administrative fees involved with CBNA's bankruptcy proceeding, which is now in its ninth month. Among those fees are $300,000 for debtor counsel Quarles & Brady LLP in Tucson, Ariz., $100,000 to creditors' committee counsel Pachulski Stang Ziehl & Jones LLP in Los Angeles, and $50,000 each to CBNA's accountants, Keegan Linscott & Kenon PC in Tucson and debtor co-counsel Cook, Schuhmann & Groseclose Inc. in Fairbanks.

The superpriority loan from the Montana church carries a 20-year term and pricing of 7%. Fairbanks must make monthly payments of $7,753.

CBNA is putting up $3.03 million worth of collateral for Great Falls' secured interest as lender, including a 320-acre parcel that contains hot springs located in Nome, Alaska, valued at $1 million, as well as a 14.5-acre parcel of land adjacent to the Fairbanks church, valued at $850,000.

Other collateral includes a four-bedroom cabin, chapel, office building, warehouse and even an aircraft hanger at the Fairbanks International Airport. In all, these assets are valued at $1.18 million.

CBNA's bishop, Donald Kettler, said he decided to seek bankruptcy on March 1 to help settle the abuse-related suits.

Only eight of the 46 parishes in the Fairbanks diocese are financially self-sustaining, making it among the poorest in the U.S.