01/23/2008 362 Proposed Order submitted by Stephen Barnes (RE: related document(s)357 Motion to Approve, filed by Trustee Stephen Palmer). (Barnes, Stephen) (Entered: 01/23/2008)
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Doc 362
IN RE:
CASE NO. 07-50934
CHAPTER 11
HON. WILLIAM S. HOWARD
PLASTICON INTERNATIONAL , INC.
DEBTOR.
INTERIM ORDER (I) AUTHORIZING SECURED FINANCING PURSUANT TO SECTIONS 364 AND 507(B), (II) MODIFYING AUTOMATIC STAY UNDER SECTION 362, (III) GRANTING OTHER RELATED RELIEF, AND (IV) SCHEDULING A FINAL HEARING PURSUANT TO BANKRUPTCY RULE 4001
This matter is before the Court pursuant to the Emergency Motion by Trustee for Entry of an Interim Order Approving Post- etition Secured Financing and for Subsequent Final Order
(the “Motion”), filed by Stephen Palmer, Trustee, solely in his capacity as Trustee and not individually or personally (the “Trustee”). The Motion requests an Order, pursuant to Sections 364 and 507(b) of Title 11 of the United States Code (the “Bankruptcy Code”) and Rules 2002, 4001(b), (c) and (d) and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), authorizing the Trustee, inter alia, to obtain post-petition secured financing (the “Post-Petition Secured Financing”) pursuant to the terms and provisions of the Loan Documents as defined in the Motion, including obtaining emergency interim approval of the Loan Documents and the Post-Petition Secured Financing to and including the date of the Final Hearing; and requesting that this Court schedule the Final Hearing and approve notice with respect thereto and further requesting that this Court, upon the Final Hearing, enter an order approving the Post- Petition Secured Financing on a permanent basis. This Order is referred to as “this Order” or the “Interim Order”, and the Order proposed to be entered following the Final Hearing is referred to as the “Final Order”. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Motion.
In connection with the Post-Petition Secured Financing, the Trustee further requests authorization to grant the Lender, pursuant to Bankruptcy Code §364(c), liens and security interests in all of the Property[1] of the estate of the Debtor to secure the Trustee’s obligations under the Loan Documents, including, but not limited to, a continuing first priority lien and security interest encumbering the Property, subject only to Existing Liens and subject only to the statutory fees and expenses of the United States Trustee (the “United States Trustee Fees”). Notice of the Motion having been given to parties on the on the Master Service List and such notice being sufficient notice under the circumstances, an interim hearing on the Motion was held pursuant to such notice (the “Interim Hearing”); and upon all of the pleadings filed with the Court and all of the proceedings held before the Court and the evidence adduced at the Interim Hearing, and the Court having noted the appearances of all parties in interest in the record of the Court; and objections, if any, to the relief requested in the Motion having been withdrawn, resolved or overruled by the Court; and it appearing to the Court that the interim relief requested by the Motion is in the best interests of the estate of the Debtor and its creditors, is essential and is necessary to avoid immediate and irreparable harm to Debtor’s estate pending the Final Hearing; and it further appearing that the Trustee is unable to obtain unsecured credit for money borrowed allowable as an administrative expense under § 503(b)(l) of the Bankruptcy Code; and after due deliberation and consideration and good and sufficient cause appearing therefor,
[1] For avoidance of doubt, “Property” as defined in the Motion excludes Chapter 5 avoidance actions.
THE COURT HEREBY FINDS AND CONCLUDES that:
1. On May 16, 2007 (the “Petition Date”), Plasticon International, Inc. (“Plasticon”) (the “Debtor”) filed with this Court its voluntary petition for relief (the “Bankruptcy Case”) under Chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§101, et seq. (the “Bankruptcy Code”).
2. On June 26, 2007 the United States Trustee appointed a reconstituted official creditors committee in the Bankruptcy Case (the “Committee”). The Committee sought to employ counsel, and the retention of Wise DelCotto PLLC was authorized by the Court pursuant to an Order entered on August 27, 2007 [D.E. 175]. Pursuant to the Order authorizing the employment of counsel for the Committee, the Debtor was required to pay the sum of $25,000.00 to counsel for the Committee to be held in escrow pending further orders of the Court (the “Escrow Funds”).
3. This Court has jurisdiction over this proceeding and the parties in interest and properties and interests in properties affected hereby under §§ 157(b) and 1334 of title 28 of the United States Code (the “Judiciary Code”). Consideration of the Motion constitutes a core proceeding under § 157(b)(2) of the Judiciary Code.
4. The Trustee needs immediate availability of credit in order to pay costs of operation incurred by the Debtor, as set out on Exhibit A to the Motion, including health insurance premiums on employees to Anthem and accrued and unpaid payroll and payroll taxes, rent and telephone expense. Additionally, the Trustee needs funds to pay an accountant and a bookkeeper to prepare amended schedules herein and operating reports and to pay fees due the Office of the United States Trustee. The Trustee’s need for access to available funds is critical. Without the immediate availability of funds, serious economic hardship will be imposed on the employees of the Debtor. Accurate financial information is necessary for the Trustee to evaluate sale of the assets of the Debtor or the feasibility of a plan of reorganization.
5. The Trustee is unable to obtain interim or permanent financing from sources other than the Lender on terms more favorable than under the Loan Documents. The Trustee has been unable to obtain interim unsecured credit solely under § 503(b)(1) of the Bankruptcy Code as an administrative expense. New credit is unavailable to the Trustee without securing such with junior liens on and security interests in the Property.
6. The Lender has indicated a willingness to consent and agree to provide financing to the Trustee pursuant to the Loan Documents, subject to the terms and conditions thereof and to the entry of this Interim Order.
7. Based on the record before this Court, the Court finds that, under the circumstances of the Interim Hearing and the relief requested in the Motion, sufficient notice has been given pursuant to Bankruptcy Code §§102(1) and 364(c), and Bankruptcy Rules 2002 and 4001(c).
8. Based on the record before this Court, the Court finds that the Post-Petition Secured Financing has been negotiated in good faith and at arms-length between the Trustee and the Lender; and any credit extended and loans made to the Trustee pursuant to the Loan Documents will be deemed and are found to have been extended, issued, or made, as the case may be, in good faith as required by, and within the meaning of, Bankruptcy Code §364(e). Consequently, the Lender is entitled to the protections of Bankruptcy Code § 364(e).
9. Based on the record before this Court, the Court finds that the terms of the Post-Petition Secured Financing are fair and reasonable and reflect the Trustee’s exercise of prudent business judgment consistent with his fiduciary duties, and that the liens, security interests and administrative claim granted to the Lender in conjunction with the Post-Petition Secured Financing are supported by reasonably equivalent value and fair consideration.
10. Each of the foregoing findings by the Court will be deemed a finding of fact if and to the full extent that it makes and contains factual findings and a conclusion of law if and to the full extent that it makes legal conclusions.
11. Based upon the foregoing findings and conclusions, and upon the record made before this Court at the Interim Hearing, and good and sufficient cause appearing therefor;
IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1. The Motion is granted, subject to the terms and conditions set forth in this Interim Order. All objections to the entry of this Interim Order either have been resolved as stated on the record at the Interim Hearing, or shall be and hereby are, overruled. The Trustee shall be, and he hereby is, authorized, directed and empowered to execute and deliver the Loan Documents and to perform the respective obligations thereunder in accordance with the terms of the Loan Documents. The Loan Documents shall be, and they hereby are, approved by this Order and, by this reference, incorporated herein as part of this Order.
2. The Trustee is expressly authorized to borrow on a discretionary basis from the Lender, on the terms and subject to the conditions and limitations on availability set forth in the Loan Documents, a total of up to $140,000.00 in aggregate principal amount at any one time outstanding (the “Advances”).
3. The Trustee is authorized, directed and obligated to comply with and perform all of the terms and conditions contained in the Loan Documents. Any professional fees and expenses incurred by the Lender in entering into the Loan Documents, or in making advances under, or enforcing the Loan Documents, are not subject to the provisions of Bankruptcy Code §§ 327, 328, 329, 330 or 331, and shall be paid pursuant to the Loan Documents without the necessity of further order of this Court.
4. The Trustee is further authorized to use the proceeds of the Post Petition Secured Loan Financing to pay expenses of the estate of the Debtor as set out on Exhibit A to the Motion.
No portion of the Post-Petition Secured Loan shall be used to pay fees of the Trustee or professionals in this case, except for the Escrow Funds to be paid to counsel for the Committee
and fees due the Office of the United States Trustee.
5. As security for the Post-Petition Secured Financing and pursuant to Sections 364(c)(2) and (3) of the Bankruptcy Code, the Lender shall have and is hereby granted (effective upon the date of this Interim Order and continuing without the necessity of the execution, filing and/or recordation of mortgages, security agreements, patent security agreements, trademarks security agreements, pledge agreements, financing statements or otherwise), valid, perfected, and enforceable security interests and liens (collectively, the “Lender’s Lien”) upon all present and after-acquired personal property, fixtures, real property and interests in the property of the Debtor of any nature whatsoever, wherever located, including, without limitation, all accounts, inventory, general intangibles, equipment, goods, fixtures, chattel paper, books, records, insurance recoveries, investment property, money, cash and cash equivalents, and any other item of property of the estate of the Debtor within the meaning of section 541 of the Bankruptcy Code (collectively, with all proceeds and products of the foregoing, the “Property”), provided, however, that the Property does not include any of the Debtor’s claims and causes of action arising under Bankruptcy Code §§544, 545, 547, 548, 549, and 550, or proceeds therefrom.
6. Subject only to the terms of paragraph 7 below, Existing Liens, the Escrow Funds and the United States Trustee’s Fees, the Lender’s Lien in the Property held by or granted to the Lender as security for the Post-Petition Secured Financing shall be a first priority, senior, perfected lien securing the full amount thereof. The Lender’s Lien in the Property shall not prime valid, enforceable and unavoidable security interests which were properly perfected as of the Petition Date, or perfected subsequent thereto as permitted by section 546(b) of the Bankruptcy Code (such other pre-existing non-avoidable security interests in favor of parties other than the Lender, the “Existing Liens”). The security interests and liens granted to the Lender hereunder shall not be subject to any security interest or lien that is avoided and preserved for the benefit of any of the estates of the Debtor under § 551 of the Bankruptcy Code. The Lender’s lien shall not be made on a parity with, or subordinated to, any other security interest or lien under § 364(d) of the Bankruptcy Code or otherwise, or subject to obtaining credit or incurring indebtedness as a super priority claim under Bankruptcy Code Section 364(c)(1).
7. The Lender's Lien is not effective against i) the Plasticon proprietary product, molds and accounts receivable (the "Plasticon Property") referenced in Part 3, Section 1.(a) of the Compromise and Settlement Agreement (the "CSA") approved by Order entered January 14, 2008 (D.E. 349) if said property reverts to the Murphy Entities as set forth in Part 3, Section 1.(b) of the CSA; or ii) the Murphy Entities setoff rights as referenced in Part 3, Section 1.(a) of the CSA.
8. The Lender is hereby authorized to take possession of the Plasticon Property as agent for the Plasticon Trustee pursuant to the terms of the CSA and Order approving same. In the event Lender takes possession of the Plasticon Property, it will hold same in trust pending further directions from the Trustee or further Orders of this Court.
9. Entry of this Interim Order and any Final Order shall not be deemed as consent by Lender to any surcharge of the Collateral or to obtain other relief under Bankruptcy Code §506(c) or to obtain a lien (including any setoff right or other charge or adverse claim of any kind) with respect to the Collateral that is equal or senior to the Lender’s Lien on the Property. This Order shall not be construed to prevent the Trustee from seeking to incur additional debt or grant additional liens with the prior approval of the Lender.
10. The Lender’s Lien on the Property pursuant to this Interim Order and the Loan Documents is adjudicated to be valid, perfected, and enforceable against the Trustee, the Debtor, its estate and all other creditors and parties-in-interest of any kind, without regard to applicable federal, state, or local filing or recording statutes or other provisions of applicable law. The Lender may, but need not, take such steps as it deems appropriate to comply with such statutes or other applicable law.
11. As long as any portion of the Post-Petition Secured Financing remains unpaid, it shall constitute an Event of Default (i) if all amounts due Lender are not paid in full when due under the Loan Documents, or (ii) if there shall be entered in the Bankruptcy Case or any subsequent Chapter 7 case any order which authorizes under any section of the Bankruptcy Code, including Bankruptcy Code §§ 105 or 364, (a) the granting of any lien upon any of the Property in favor of any party other than the Lender, with priority senior or equal to the Lender’s Lien; and (b) the obtaining of credit or the incurring of indebtedness that is entitled to superpriority administrative status.
12. Upon the occurrence of and during the continuance of an Event of Default, the Lender may, pursuant to the Loan Documents and this Interim Order, exercise its rights and remedies and do all things necessary to protect its secured position without the necessity of further order of this Court, including, without the necessity of obtaining relief from the automatic stay pursuant to Bankruptcy Code §362(a) or any other applicable stay or injunction (all of which have been and hereby are modified by this Interim Order) including, without limitation:
(a) terminate the Post-Petition Secured Financing; (b) declare the principal and accrued interest, fees, and other liabilities comprising the Post-Petition Secured Financing to be immediately due and payable; and (c) take possession of the Property and enforce all rights and remedies against
the Property provided for in the Loan Documents, this Interim Order or applicable law. The Lender will provide each of the Trustee, the Debtor, the Committee, and the United States
Trustee at least five (5) days’ notice before taking any action to enforce its remedies under the
Loan Documents and hereunder.
13. The Trustee shall authorize, execute, acknowledge, deliver, file, register and record such security agreements, notices, financing statements, memoranda of intellectual property or patent security interests and other instruments as the Lender may reasonably request in order to evidence or to perfect the Lender’s Lien. Notwithstanding the foregoing sentence, this Interim Order shall be sufficient and conclusive evidence of the validity, perfection and priority of the Lender’s Lien, without the necessity of (i) filing or recording any financing statement or other instrument or document which may otherwise be required under the law of any jurisdiction or (ii) the taking of any other action to validate or perfect the Lender’s Lien.
14. This Interim Order shall be binding upon and shall govern the acts of all entities, including without limitation all filing agents, filing officers, title agents, title companies, recorders of mortgages, recorders of deeds, registrars of deeds, administrative agencies, governmental departments, secretaries of state, federal, state and local officials, and all other persons and entities who may be required by operation of law, the duties of their office, or contract, to accept, file, register or otherwise record or release any documents or instruments, or who may be required to report or insure any title or state of title in or to any of the Property.
15. The Loan Documents shall constitute and evidence the valid and binding obligations of the estate of the Debtor, which obligations shall be enforceable against the estate of the Debtor in accordance with their terms.
16. Based on the record presented, this Court has found that the Lender is extending credit and making the Post-Petition Secured Financing to the Trustee in good faith. Accordingly, the Lender is entitled to the full protection of Bankruptcy Code §364(e) with respect to the Post- Petition Secured Financing and the Lender’s Lien authorized, created, and adjudicated by this Interim Order if this Interim Order or any finding, authorization, or adjudication contained herein is stayed, vacated, reversed, or modified on appeal. Any stay, modification, reversal, or vacation of this Interim Order (by this or any other court) shall not affect the validity and enforceability of the Post-Petition Secured Financing of the Lender incurred pursuant to this Interim Order, or the validity, priority, and enforceability of the Lender’s Lien under this Interim Order. Notwithstanding any modification, reversal, or vacation of this Interim Order, all loans and
advances made by the Lender pursuant hereto under the Loan Documents incurred by the Trustee pursuant hereto prior to the effective date of any stay, modification, reversal, or vacation of this Interim Order shall be governed in all respects by the original provisions of this Interim Order; and the Lender shall be entitled to all of the rights and benefits granted herein with respect to the Post-Petition Secured Financing and the Lender’s Lien on Property securing the same.
17. The provisions of this Interim Order and any actions taken pursuant hereto shall survive entry of any order which may be entered: (a) confirming any plan of reorganization or liquidation in this bankruptcy case (and, to the extent not satisfied in full, the Post-Petition Secured Financing shall not be discharged by the entry of any such order, or pursuant to Bankruptcy Code § 1141(d)(4)); (b) converting the bankruptcy case to a case under chapter 7 of the Bankruptcy Code; or (c) dismissal of the bankruptcy case. The terms and provisions of this Interim Order and the Lender’s Lien granted pursuant to this Interim Order and the Loan Documents shall continue in full force and effect notwithstanding the entry of such order described in (a) through (c) above of this paragraph; and the Lender’s Lien shall maintain its priority as provided by this Interim Order until all of the obligations under the Loan Documents are paid to the Lender indefeasibly and in full.
18. Without limiting any provisions of the Loan Documents, the payment and performance of the Post-Petition Secured Financing are due and payable in full to the Lender upon the earliest to occur of: (a) the Due Date (as defined in the Loan Documents), or such extended maturity date to which the Lender and the Trustee agree in writing; and (b) acceleration after the occurrence and during the continuation of an Event of Default.
19. The provisions of this Interim Order shall be binding upon and inure to the benefit of the Lender, the Trustee, the Debtor, and their respective successors and assigns or other fiduciary hereafter appointed in the Bankruptcy Case as a legal representative of the Debtor or its estate. Without limiting the foregoing, this Interim Order shall bind any trustee or other fiduciary (including, without limitation, any examiner or responsible person) hereafter appointed for the estate of the Debtor, whether in the Chapter 11 case or in the event of the conversion of the Chapter 11 case to a case under Chapter 7 of the Bankruptcy Code.
20. The notice provisions approved by the Court by entry of this Interim Order shall constitute sufficient notice of the Final Hearing, and such notice shall be and hereby is adjudicated sufficient to provide due process to, and to bind, any other party asserting any lien or other adverse interest of any kind (including any setoff, other charge, recoupment, or other adverse claim) in any of the Property subject to Lender’s Lien.
21. The Trustee shall serve a copy of this Interim Order by the conclusion of the next business day after entry thereof on all parties who have entered an appearance through ECF and
all parties on the Master Service List in this case. Any objection to the continued effectiveness of this Interim Order as a Final Order shall be filed with the Court, served on all parties in the ECF systems of this Court and all parties on the Mater Service List on or before 5:00 pm February 5, 2008.
22. A Final Hearing to consider the Motion, if any objection is filed, will be held before the Court on February 7, 2008 at 3:00 pm. Pursuant to Bankruptcy Rule 4001(d)(3), if no objection is timely filed and served, this Interim Order shall become a Final Order without further hearing.
23. The Court has and will retain jurisdiction to enforce this Interim Order according to its terms. Notwithstanding the provisions of Bankruptcy Rules 6004(g), this Interim Order shall not be stayed for ten (10) days after the entry hereof, but shall be effective and enforceable immediately upon issuance hereof.
TENDERED BY:
WALTHER, ROARK & GAY, PLC
/s/ Stephen Barnes, Esq.
Jonathan L. Gay, Esq.
Stephen Barnes, Esq.
163 E. Main Street, Suite 200
P.O. Box 1598
Lexington, KY 40588-1598
(859) 225-4714
(859 225-1493 fax
jgay@wrgfirm.com
sbarnes@wrgfirm.com
COUNSEL FOR TRUSTEE
Pursuant to Local Rule 9022-1(c), Jonathan L. Gay shall cause a copy of this Order to be served on each of the
parties designated to receive this Order pursuant to Local Rule 9022-1(a) and shall file with the Court a
Certificate of Service of the Order upon such parties within ten (10) days hereof.
All parties in the ECF System.
All parties on the Master Service List |
