Item 1.01 Entry into a Material Definitive Agreement
On October 28, 2010, AmericanWest Bancorporation (the “Company”) and SKBHC Hawks Nest Acquisition Corp. (the “Lender”) entered into a debtor-in-possession credit agreement (the “DIP Credit Agreement”), which agreement remains subject to approval by the Bankruptcy Court. Pursuant to the terms and subject to the conditions set forth in the DIP Credit Agreement, the Lender agreed to provide a debtor-in-possession financing facility (the “DIP Financing Facility”) in an amount not to exceed $2 million to the Company. The DIP Credit Agreement will provide an immediate source of funds to the Company, enabling the Company to satisfy customary obligations associated with ongoing operations of its business, as well as the timely payment of professional fees incurred in connection with the bankruptcy process. The Company and the Lender have proposed that the obligations under the DIP Financing Facility be secured by all assets of the Company, including without limitation a pledge of the stock of the Company’s principal operating subsidiary, AmericanWest Bank (the “Bank”). All amounts outstanding under the DIP Financing Facility are scheduled to become due and payable on December 12, 2010, subject to extension to December 27, 2010 upon written request by the Company and satisfaction of certain conditions.
The Company and the Lender have made customary representations, warranties and covenants in the DIP Credit Agreement.
Consummation of the DIP Credit Agreement is subject to customary closing conditions, including, among other things, the Bankruptcy Court entering an order approving the DIP Financing Facility.
The foregoing summary of the DIP Credit Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the DIP Credit Agreement attached as Exhibit 1.1, which is incorporated herein by reference. The DIP Credit Agreement has been attached to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or the Bank.
Item 1.03 Bankruptcy or Receivership
On October 28, 2010, the Company filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Washington (the “Chapter 11 Petition”). The Company will remain in possession of its assets and properties, and continue to operate its business as debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. During the bankruptcy proceedings, the Bank’s branches shall remain open and will continue serving their customers as usual.