Opinion
Case No. 11-25973-DER
09-08-2011
In re: SWAMISHREE, LLC Debtor
Curtis C. Coon, Bar No. 01275 Coon & Cole, LLC Attorneys for the Debtor Alan M. Grochal, Bar No. 01447 Tydings & Rosenberg LLP Attorneys for SS4H Hospitality LLC Peter J. Duhig, Bar No. 26899 Buchanan Ingersoll & Rooney PC Attorneys for First-Citizens Bank & Trust Company
SO ORDERED
A final hearing on the Debtor's Motion for Use
of Cash Collateral [Docket No. 4] shall be held on
October 3, 2011 at 11:00 a.m. EDT.
DAVID E. RICE
U.S. BANKRUPTCY JUDGE
Chapter 11
STIPULATION AND CONSENT ORDER EXTENDING
INTERIM AGREEMENT FOR USE OF CASH COLLATERAL,
AUTHORIZING DEBTOR TO USE CASH COLLATERAL, AND GRANTING
ADEQUATE PROTECTION (THROUGH OCTOBER 15, 2011)
This matter originally came before the Court on the Emergency Motion for Authority to Use Cash Collateral and Grant Adequate Protection Therefor (the "Motion")(dkt. 4) filed by Swami Shree, LLC (the "Debtor"), together with agreements of the Debtor, S4H Hospitality LLC ("S4H" or the "Senior Creditor"), and First-Citizens Bank & Trust Company ("First Citizens" or the "Junior Creditor") concerning the Debtor's use of the cash collateral of the Senior Creditor and Junior Creditor (collectively, the "Secured Creditors"). On August 12, 2011, this Court entered a Consent Order Approving Interim Agreement for Use of Cash Collateral, Authorizing Debtor to Use Cash Collateral, and Granting Adequate Protection (the "Interim Order")(dkt. 27). The Interim Order covered the period through September 15, 2011.
The Debtor has a continuing need to use Cash Collateral to fund the operation of its business. To allow for the continued use of Cash Collateral, the Debtor and the Secured Creditors desire to enter into this Stipulation and Consent Order Extending Interim Agreement for Use of Cash Collateral, Authorizing Debtor to Use Cash Collateral, and Granting Adequate Protection (Through October 15, 2011)(the "Extension Order"). Except as set forth below, all terms set forth in the Interim Order are hereby incorporated by reference into the Extension Order and shall remain in full force and effect through and including October 15, 2011. Except as expressly provided herein, no terms of the Interim Order are amended, altered or otherwise nullified.
The Debtor and the Secured Creditors hereby STIPULATE and AGREE as follows:
A. The Debtor filed its petition for relief under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") on August 4, 2011 (the "Petition Date"). Pursuant to sections 1107 and 1108 of the Bankruptcy Code, the Debtor remains in possession of its assets and has continued the operation and management of its business as a Debtor-in-Possession.
B. This Court has jurisdiction over the Motion pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. §§ 157(b)(2)(A), (G), (M), and (O), involving matters concerning the use of cash collateral under section 363 of the Bankruptcy Code. Venue is proper in this district pursuant to 28 U.S.C. § 408.
C. The Debtor owns and operates a La Quinta franchised hotel, containing 70 suites and amenities, located at 304 Belle Hill Road, Elkton, Maryland 21921 (the "Property").
D. The Debtor represents that it requires the use of Cash Collateral and that the need for use of Cash Collateral is immediate and urgent. The Debtor further represents that the Budget (the "Budget"), attached as Exhibit 1, fairly and accurately states the Debtor's cash requirements for the period from September 15, 2011 through October 15, 2011 ("Specified Period"), and that without the use of the Cash Collateral during the Specified Period for the uses and purposes specified, serious and irreparable harm to the Debtor and its estate will likely occur.
E. The Debtor further represents that the relief requested in the Motion is necessary, essential, and appropriate for the continued operation of the Debtor's business and to preserve the value of its assets.
F. The Secured Creditors and the Debtor have negotiated at arms' length and in good faith regarding the Debtor's use of Cash Collateral to fund the continued operation of the Debtor's businesses. The Secured Creditors have agreed to permit the Debtor to use its Cash Collateral for the Specified Time subject to the terms and conditions set forth herein, and in doing so have acted in good faith.
G. Good and sufficient cause has been shown that the entry of the Extension Order is in the best interests of the Debtor and its estate. Among other things, the entry of this Extension Order will minimize the disruption to the Debtor's business operations and will preserve the value of the Debtor's estate.
H. The terms and conditions governing the Debtor's use of Cash Collateral are fair and reasonable under the circumstances and reflect the Debtor's exercise of prudent business judgment consistent with their fiduciary duties.
I. Notice of the September 8, 2011 hearing on the Motion and the relief requested in the Motion has been given to all persons known to claim an interest in the Property, and the Cash Collateral affected by the Motion, including (i) the Office of the United States Trustee, (ii) the creditors holding the 20 largest unsecured claims against the Debtor, (iii) the Senior Lender, (iv) the Junior Creditor, and (v) the office of the Cecil County Treasurer.
Upon the foregoing and under the circumstances, the Court FINDS that: (a) adequate and sufficient notice of the Motion and an opportunity for a hearing have been given in accordance with the provisions of sections 102, 105, 361 and 363 of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure, (b) the Secured Creditors and the Debtor have agreed to the terms of the Extension Order pursuant to Fed. R. Bankr. P. 4001(d) as a resolution of the issues raised by the Motion, and (c) no further notice relating to this proceeding is necessary or required.
Further, on the basis of and consistent with the foregoing, and good cause appearing to the Court:
IT IS HEREBY ORDERED that:
1. Authorization to Use Cash Collateral. The Debtor is authorized to use Cash Collateral during the Specified Period, in the amounts, at the times, and for the purposes set forth in the Budget, subject to a five percent (5%) overall variance in the cumulative expenditures set forth in the Budget for the Specified Period. The Debtor shall use Cash Collateral only during the Specified Period and only in strict accordance with the category limits set forth in the Budget for the Specified Period. The aggregate amount of Cash Collateral used during the Specified Period shall not exceed $96,915 subject to the five percent (5%) variance. The Debtor is prohibited from making any expenditures or disbursements except as specifically itemized in the Budget or as hereafter expressly authorized by the Senior Creditor, or as hereafter expressly authorized by an Order of this Court entered after notice to the Secured Creditors and an opportunity for a hearing.
2. Adequate Protection Payments to Secured Creditors. As further adequate protection for the Secured Creditors during the Specified Period: (i) the Debtor shall pay to the Senior Creditor a payment in the amount of $15,000 on or before September 23, 2011; and the Debtor shall also pay during the Specified Period to the Junior Creditor a payment in the amount of $6,000 on or before September 23, 2011.
3. Notice Of Entry of Extension Order. Within two business days of the entry of this Extension Order, the Debtor shall serve notice of entry of this Extension Order and notice of a final hearing, together with a copy of this Extension Order, on: (a) the parties having been given notice of the hearing on the Interim Order; (b) to counsel for the Secured Creditors; (c) to the twenty (20) largest unsecured trade creditors of the Debtor, (d) the Office of the United States Trustee, and (e) any other person which has filed a request for notice with the Court. The notice shall state that any party-in-interest objecting to the entry of a final order on the Motion shall file a written objection with the Clerk of the United States Bankruptcy Court for the District of Maryland (Baltimore Division) within the deadline set by this Court and contemporaneously serve the objection on counsel to the Debtor, counsel to the Secured Creditors and the Office United States Trustee.
4. Further Extensions of Extension Order. Extensions of this Extension Order shall be permitted without a hearing subject to notice and no objection being raised. CONSENTED AND AGREED TO: Curtis C. Coon, Bar No. 01275
Coon & Cole, LLC
Attorneys for the Debtor
Alan M. Grochal, Bar No. 01447
Tydings & Rosenberg LLP
Attorneys for SS4H Hospitality LLC
Peter J. Duhig, Bar No. 26899
Buchanan Ingersoll & Rooney PC
Attorneys for First-Citizens Bank & Trust Company
Certification Pursuant to Admin. Order 03-02. Ex. A. Sec. V.B.I
I HEREBY CERTIFY that the terms of the copy of the consent order submitted to the Court are identical to those set forth in the original consent order; and the signatures represented by the I si on this copy reference the signatures of consenting parties on the original consent order.
Alan M. Grochal