Gecc

BACKGROUND

GECC and Future Media Productions, Inc. (“Debtor”) were parties to a Loan and Security Agreement (“loan agreement”), dated August 13, 2004. The loan agreement included a $10.5 million, 42-month term loan, as well as a $5 million revolving line of credit. Interest under the loan agreement accrued prior to default (“pre-default rate”) at the Index Rate plus 1.5% per annum, with additional interest of 2% per annum after default (“default rate”). The loan agreement, governed by New York law, obligated Debtor to pay attorneys’ fees and costs incurred by GECC in connection with any dispute relating to the loan agreement. All advances under the loan agreement were secured by a perfected, first priority security interest in substantially all of Debtor’s assets.

On March 31, 2005, an event of default occurred, and the loans began to bear interest at the default rate. Additional events of default occurred thereafter. These difficulties, and others, led Debtor to conclude that an orderly liquidation of its assets would best serve its interests and those of its credi- tors. On February 14, 2006, Debtor filed a petition for relief under Chapter 11 of the Bankruptcy Code. After…