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In re Pen Holdings

United States Bankruptcy Court, M.D. Tennessee
Mar 5, 2002
No. 302-00979 (Bankr. M.D. Tenn. Mar. 5, 2002)

Opinion

Jointly Administered under Case No. 302-00979

March 5, 2002

HARWELL HOWARD HYNE GARBERT MANNER, P.C., BUCHANAN INGERSOLL PROFESSIONAL CORPORATION, Joel M. Walker, Philip J. Uher, Buchanan Ingersoll Professional Corporation, Pittsburgh, PA, COUNSEL FOR THE DEBTORS.


FINAL ORDER GRANTING AUTHORITY TO USE CASH COLLATERAL


This matter is before the Court on the Debtors' Emergency Motion for an Order (1) Granting Interim Authority to Use Cash Collateral and (2) Scheduling and Establishing Deadlines Relating to a Final Hearing (the "Cash Collateral Motion"). The First Amended Order (1) — Granting Interim Authority to Use Cash Collateral and (2) Scheduling and Establishing Deadlines Relating to A Final Hearing entered on Febuary 12, 2002 (Docket #66) (the "Amended Interim Order"), provided for submission of a final order in the absence of objections (the "Final Order") and no timely objections were filed as certified by signature of counsel below.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. Terms. All capitalized terms not otherwise defined herein are as defined in the Cash Collateral Motion.

2. Notice. Pursuant to Bankruptcy Rule 4001(c)(1) and local rules, notice of the Amended Interim Order and the Final Hearing was given to: (i) the Office of the United States Trustee (the "U.S. Trustee"); (ii) counsel for the Lenders; (iii) the twenty largest unsecured creditors of each of the Debtors, and (iv) counsel for the Creditors Committee; and (v) any other parties requesting such notice (collectively, the "Notice Parties"), as stated in the Certificate of Mailing filed on February 20, 2002 (Docket #75).

3. Jurisdiction. This Court has jurisdiction over the Debtors' cases and the parties and property affected hereby pursuant to 28 U.S.C.. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(d).

4. Interim Orders. On January 25, 2002, this Court entered its Order (1) Granting Interim Authority to Use Cash Collateral and (2) Scheduling and Establishing Deadlines Relating to a Final Hearing (the "Interim Order") following an initial interim hearing on the Cash Collateral Motion conducted on that same date. Among other things, the Interim Order (i) authorized the Debtors to use cash collateral on an interim basis through February 12, 2002, and (ii) scheduled a final hearing on the Cash Collateral Motion for February 12, 2002. Together, the Interim Order, the First Amended Order, and this Final Order shall be referred to as the "Cash Collateral Orders." On February 12, 2002, the Court entered the Amended interim Order that, among other things, (i) authorized the Debtors to use cash collateral on an interim basis through March 29, 2002, and (ii) scheduled a final hearing on the Cash Collateral Motion for March 5, 2002 (the "Final Hearing") with any objections to be filed no later than two business days prior to the hearing.

5. Purpose and Necessity of Requested Relief. Good cause has been shown for entry of this Final Order. The Debtors assert that they require the continued use of cash collateral to, among other things, fund cash requirements, including without limitation, payroll, purchases of inventory, material and supplies, and other working capital needs.

6. Exigency. The Debtors assert that their ability to continue to use cash collateral as provided herein is vital to the Debtors' estates and creditors thereof, so that the Debtors may continue to operate.

7. Relief Appropriate. The Court finds that the relief requested is appropriate under the circumstances, and hereby enters the following Final Order:

IT IS HEREBY ORDERED, ADJUDGED, FOUND, AND DECREED that:

A. Authorization to Use Cash Collateral. The Debtors are hereby immediately authorized to continue to use cash collateral to the extent that collected funds are available, consistent with and limited to the Budget attached hereto as Exhibit "A" for the period through March 29, 2002 (such time period is referred to hereafter as the "Cash Collateral Period" and the receipts and disbursements projected on Exhibit "A" for the Cash Collateral Period are referred to hereafter as the "Cash Collateral Budget"). Cash collateral used during the Cash Collateral Period will be used only to fund the Debtors' expenses in accordance with this Final Order and the Cash Collateral Budget. The Debtors' use of cash collateral shall be conditioned on the Debtors' ability to maintain sufficient Net Operating Cashflow such that the actual Cumulative Net Operating Cashflow of the Debtors must be (i) at least 80% of positive projected Cumulative Net Operating Cashflow and (ii) no more than 120% more than negative Cumulative Net Operating Cashflow, as reflected in the Cash Collateral Budget The Debtors' use of cash collateral is further conditioned on the Debtors' ability to produce at least 80% of the projected amount of weekly coal tonnage reflected on the production schedule attached hereto as Exhibit "B." If the Debtors fail to meet the appropriate levels of Cumulative Net Operating Cashflow and coal tonnage as described herein without the consent of the Lenders, the Debtors' right to use cash collateral shall terminate five (5) business days after the Lenders provide the Debtors, Debtors' counsel, and counsel to the Committee with written notice of default under this Order, unless the Debtors (a) cure such defaults within five (5) business days of the date of such notice, or (b) obtain an intervening order issued by this Court.

B. Reports. During the Cash Collateral Period, the Debtors shall provide to the Lenders, in addition to other regularly provided reports, weekly reports that indicate the Debtors' actual expenditures in comparison to the expenditures projected in the Cash Colalteral Budget by the third business day of the next week (the "Weekly Reports").

C. UST/Clerk Fees. The Debtors are further authorized to use cash collateral to pay amounts payable pursuant to 29 U.S.C. § 1930(a)(6) and any fees payable to the clerk of the Court (collectively, the "UST/Clerk Fees").

D. Adequate Protection: Continuation of Replacement Lien. As and for adequate protection for the use of cash collateral, the replacement liens granted to the Lenders under the Interim Order (and continued in effect by the First Amended Order) are hereby continued in effect (without the necessity of the execution or filing by the Debtors of a security agreement, financing statements, trademark, copyright, tradename, or patent assignment filings with the United States Patent and Trademark Office or Copyright Office, mortgages. landlord lien waivers, license consents or otherwise), pursuant to sections 361(2), 363(e) and 552 of the Bankruptcy Code as replacement security interests in and liens upon the Debtors' subsequently generated cash, inventory, and accounts receivable and any other property acquired by the Debtors after the Petition Date of the same type as the Lenders held a lien thereon prepetition, to the extent that the Debtors' use of cash collateral results in any decrease, following the petition date, in the value of the collateral securing the Lenders' claims, with such replacement liens having the same validity as the Lenders' liens and security interests in prepetition collateral. As and for additional adequate protection to the Lenders for the Debtors' use of cash collateral, the Debtors shall make weekly cash payments to the Lenders (the "Adequate Protection Payments") in the amounts, and during the weeks, as set forth in the "Adequate Protection Payments" line item of the Cash Collateral Budget, which payments shall be applied to the claim of the Lenders. The Adequate Protection Payments shall be made without prejudice to the rights of the Debtors, the Committee, or any creditor or party in interest to object to the characterization or allocation by the Lenders of the Adequate Protection Payments, which rights are expressly reserved.

E. Post-petition Interest. Solely for the purposes of this Final Order, the Lenders and Debtors hereby agree that the claim of the Lenders is fully secured, and interest that accrues on the claim of the Lenders shall accrue from the petition date at the rate of 6.25% per annum through the last day of the Cash Collateral Period.

F. Additional Perfection Measures. The replacement liens and priority granted to the Lenders pursuant to the Interim Order and continued in effect pursuant to this Final Order with respect to the property of the Debtors' estates have been and shall continue to be perfected by operation of law upon entry of this Final Order by the Court. The Lenders shall not be required to enter into or to obtain mortgagee waivers, bailee waivers, or warehouseman waivers or to file or record financing statements, mortgages, deeds of trust, leasehold mortgages, notices of lien or similar instnunents in any jurisdiction (including trademark, copyright, tradename or patent assignment filings with the United States Patent and Trademark Office, Copyright Office or any similar agency with respect to intellectual property), or obtain consents from any licensor or similar party-in-interest, or to take any other action in order to validate and to perfect the replacement security interest and lien granted to the Lenders pursuant to this Final Order.

G. Reservation of Rights. Nothing contained herein shall in any manner waive or prejudice (i) the right of the Lenders to seek additional adequate protection or a determination that the Lenders are not adequately protected or (ii) any objection that the Lenders may make to any of the relief requested by the Cash Collateral Motion other than the relief expressly granted in the Cash Collateral Orders.

H. Adequate Notice. The notice given by the Debtors of the Final Hearing was given in accordance with Bankruptcy Rules 2002 and 4001(b)(2) and the local rules of this Court. Under the circumstances, no further notice of the request for the relief requested in the Cash Collateral Motion or the entry of this Final Order is required.


Summaries of

In re Pen Holdings

United States Bankruptcy Court, M.D. Tennessee
Mar 5, 2002
No. 302-00979 (Bankr. M.D. Tenn. Mar. 5, 2002)
Case details for

In re Pen Holdings

Case Details

Full title:IN RE: PEN HOLDINGS, INC., PEN COAL CORPORATION, THE ELK HORN COAL…

Court:United States Bankruptcy Court, M.D. Tennessee

Date published: Mar 5, 2002

Citations

No. 302-00979 (Bankr. M.D. Tenn. Mar. 5, 2002)