Opinion
Case No. BK-N-03-52300 — BK-N-03-52304 and BK-N-03-52470 — BK-N-03-52474 (Joint Administration).
November 1, 2004
JUDY B. CALTON, ESQ., SARAH HILTZ SEEWER, ESQ., HONIGMAN MILLER SCHWARTZ AND COHN LLP, Detroit, MI, for Attorneys for Trustee.
JOAN C. WRIGHT, ESQ., JAMES R. CAVILIA, ESQ., ALLISON, MACKENZIE, RUSSELL, PAVLAKIS, WRIGHT FAGAN, LTD., Carson City, NV, Attorneys for Trustee.
MAYER, BROWN, ROWE AND MAW LLP, MICHAEL P. RICHMAN, ESQ., FREDERICK D. HYMAN, ESQ., New York, NY, Attorneys for Textron and the Textron Prepetition Lenders.
JAMES PATRICK SHEA, ESQ., SHEA CARLYON, Las Vegas, NV, Attorneys for Textron and the Textron Prepetition Lenders.
Neal L. Wolf, Esq., Todd L. Padnos, Esq., LeBoeuf, Lamb, Greene MacRae, LLP, San Francisco, CA, for Creditors Committee Attorney.
Adelaide Maudsley, Esq., LeBoeuf, Lamb, Greene MacRae, LLP, Salt Lake City, UT, for Creditors Committee Attorney.
THIRD ORDER APPROVING USE OF CASH COLLATERAL
This matter having come on to be considered upon the Third Motion to Approve Use of Cash Collateral filed by C. ALAN BENTLEY, Chapter 11 Trustee (the "Trustee") of the above-captioned Debtors, TEXTRON FINANCIAL CORPORATION ("Textron") and the OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF MEGO FINANCIAL CORP., et al ("Committee") have approved to the form and content of this Order, notice having been given, no further notice or hearing being necessary, the Court being fully advised in the premises:
THE COURT FINDS:
A. The Trustee and Textron are parties to that certain Revolving Credit Agreement dated as of August 5, 2003 (as amended, the "Credit Agreement");
B. On August 14, 2003, this Court entered the Final Order (i) Authorizing Postpetition Financing, (ii) Authorizing Use of Cash Collateral, and (iii) Granting Adequate Protection (the "Final Order");
C. On February 19, 2004, the Credit Agreement matured according to its terms. Accordingly, Events of Default have occurred and are continuing under Section 9.1.1 of the Credit Agreement as a result of the Debtors' failure to comply with Sections 3.2.3 and 3.4 of the Credit Agreement and that pursuant to the Final Order, the Debtors are prohibited from using the Textron Cash Collateral;
Capitalized terms used but not defined herein shall have the meanings accorded such terms in the Final Order.
D. The Court has previously approved use of cash collateral pursuant to the Order Approving Use of Cash Collateral dated March 31, 2004, Paragraph V of the Order Authorizing Sale of Real Estate, Promissory Notes and Other Personal Property Free and Clear of Liens, Claims, Encumbrances and Interests and Related Relief dated May 11, 2004 and the Second Order Approving Use of Cash Collateral dated July 2, 2004; and
E. The Trustee believes that payments pursuant to the Budget had to be made to avoid irreparable harm to the value of the Debtors' estates prior to the entry of this Order and therefore seeks retroactive relief relating to the same;
NOW THEREFORE, THE COURT HEREBY ORDERS as follows:
1. The Trustee shall be permitted to use Textron Cash Collateral during the period from July 31, 2004 through December 31, 2004 in accordance with the terms of the budget attached hereto (the "Budget"), subject to the conditions in Paragraph 6 and 7 below. Expenditures made during any week shall be no greater than 110% of the expenditures projected to be made during such week in the Budget, on a cumulative basis (so that expenditures not made in one week can be deferred to a later week).
2. Textron and the Textron Prepetition Lenders shall be entitled to adequate protection of the types described in Paragraph 8 of the Final Order for any diminution in the value of the Collateral and Textron Prepetition Collateral resulting from the Debtors' use of the Textron Cash Collateral pursuant to this Stipulation. Notwithstanding any other provision hereof, the grant of adequate protection to Textron and the Textron Prepetition Lenders is without prejudice to the right of Textron and the Textron Prepetition Lenders to seek modification of the grant of adequate protection provided hereby so as to provide different or additional adequate protection, and without prejudice to the right of the Trustee or any other party in interest to contest any such modification.
3. In the event that (i) the Trustee or any Debtor shall seek, or if there is entered, an order dismissing or converting any of the Chapter 11 Cases to a case under another chapter of the Bankruptcy Code, (ii) any event set forth in Section 9.1.9 of the Credit Agreement shall occur, or (iii) the Trustee or any Debtor shall be in default of any of its agreements or obligations hereunder, then, immediately and without the necessity for notice, the Trustee's authorization to use the Textron Cash Collateral hereunder shall terminate.
4. The Final Order remains in full force and effect and Textron and the Textron Prepetition Lenders shall be entitled to rights, privileges and benefits thereof with respect to the Debtors' use of the Textron Cash Collateral hereunder.
5. Any and all rights of the Committee with respect to Textron are reserved.
6. The Trustee will provide updated budgets covering approximately one month time periods (and the first updated budget shall also cover retroactive time periods) (the "Budgets") to Textron and the Committee by the end of each month. If the Committee objects that any item on the Budget is not required to be paid at the current time, the Trustee will not pay the expense until the dispute is resolved by the Court. The parties may present that dispute to the Court by telephonic hearings without the necessity of a motion. If Textron objects to payment of any item of the Budget, it will not be paid unless and until the Trustee brings a motion for use of cash collateral for such purpose on notice to Textron and prevails on such motion.
7. Textron or the Committee may withdraw their consent to the use of cash collateral with one week's notice or upon receipt and review of any updated Budget.