Opinion
Case No. 11-23633-RAG
2011-12-29
In re: MARYLAND PAVING & SEALANT, INC. Debtor. WELLS FARGO EQUIPMENT FINANCE, INC. Movant, v. MARYLAND PAVING & SEALANT, INC. Respondent.
Nancy D. Greene (Bar No. 13859) Seeger Faughnan Mendicino P.C. Attorney for the Debtor Jeffrey S. Greenberg (Bar No. 29088) Ober, Kaler, Grimes & Shriver A Professional Corporation Attorneys for Wells Fargo Equipment Finance, Inc.
SO ORDERED
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U. S. BANKRUPTCY JUDGE
(Chapter 11)
STIPULATION AND CONSENT ORDER
REGARDING ADEQUATE PROTECTION AND THE AUTOMATIC STAY
Wells Fargo Equipment Finance, Inc. (the "Lender") and the debtor, Maryland Paving & Sealant, Inc. (a/k/a Maryland Paving and Sealant, Incorporated) (the "Debtor"), agree to the following facts and order:
1. The Debtor is indebted to the Lender under seven (7) loans (collectively, the "Paving Agreements") secured by the following seven (7) tractors, together with all accessories, attachments, parts, repairs and additions, or replacements (collectively, the "Paving Agreement Collateral"): (i) a 2007 Peterbilt 379 Dump Truck, VIN 1NP5LBEX47N746262 (the "First Paving Agreement Collateral"); (ii) a 2009 Peterbilt Truck Model 325, VIN 2NPYHM5X09M774475 (the "Second Paving Agreement Collateral"); (iii) a 2009 Peterbilt Chassis, Model 388, VIN 1NPWL4EX89N776528, with 17' J&J Steel Tri-Axle Dump Body, S/N TS06765 (the "Third Paving Agreement Collateral"); (iv) a 2009 Peterbilt 355, S/N 2NPLHN7X29M782929, with 1750 Gallon Centennial Asphalt Distributor Body, S/N S4889 (the "Fourth Paving Agreement Collateral"); (v) a 2008 Peterbilt Truck Model 388, VIN 1NPWL4EXX8D767687, with J&J Aluminum Dump Body (the "Fifth Paving Agreement Collateral"); (vi) a 2008 Peterbilt Truck Model 388, VIN 1NPWL4EXX8D767690, with J&J Truck Body, S/N 21543, and Snowplow, S/N 767690 (the "Sixth Paving Agreement Collateral"); and (vii) a 2007 Peterbilt Truck Model 335, VIN 2NPLHD7XX7M668085 (the "Seventh Paving Agreement Collateral").
2. The Debtor is also indebted to the Lender pursuant to the Debtor's guaranty of three (3) loans to the Debtor's affiliate, Maryland Sand and Stone Products, L.L.C. ("Maryland Sand"), which loans (collectively, the "Sand Agreements") are secured by the following three (3) pieces of equipment, together with all accessories, attachments, parts, repairs and additions, or replacements (collectively, the "Sand Agreement Collateral"): (i) a Hitachi Model EX 330LC-5 Hydraulic Excavator S/N 1H1P022697, with Indeco Model HP5500 Hammer, S/N 4857; (ii) a Kawasaki Model 70ZV Wheel Loader, S/N 70C4-5058; and (iii) a Powerscreen Model 1800 Warrior Screener, S/N 12302602.
3. On August 3, 2010, the Lender repossessed the Seventh Paving Agreement Collateral.
4. On June 29, 2011 and the petition date of June 30, 2011 (the "Petition Date"), the Lender respectively repossessed the Fourth Paving Agreement Collateral and the Fifth Paving Agreement Collateral.
5. The Lender claims that, as of the Petition Date, there was due and owing under the Paving Agreements and the Sand Agreements (collectively, with all other related loan documents, the "Loan Documents") $717,927.67, plus repossession costs of $23,516.00, and attorneys' fees and expenses.
6. On July 15, 2011, the Lender filed a motion for relief from the automatic stay (Doc. No. 21) (the "Motion") to exercise its rights and remedies under non-bankruptcy law with respect to the Paving Agreement Collateral.
7. On August 31, 2011, the Debtor filed a motion (Doc. No. 49) to sell the First Paving Agreement Collateral free and clear of liens pursuant to 11 U.S.C. § 363(f). With respect to the Debtor's proposed sale of the First Paving Agreement Collateral as identified in the motion to sell, the Lender has agreed to credit 30% of any sale proceeds received in excess of the indebtedness due under the Combination Note and Security Agreement dated September 17, 2007 in the original principal amount of $149,383.00, to the Lender's repossession costs.
8. The Lender and the Debtor have agreed to resolve the Lender's pending motion for relief from the automatic stay as set forth below:
NOW, THEREFORE, IT IS BY THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MARYLAND, ORDERED THAT:
1. The Motion is GRANTED, and the automatic stay of 11 U.S.C. § 362(a) is hereby
terminated as between the Lender and the Paving Agreement Collateral.
2. The Lender shall forbear from exercising and enforcing its rights and remedies under non-bankruptcy law with respect to the Paving Agreement Collateral and the Sand Agreement Collateral provided that the Debtor strictly complies with the terms and conditions of this order, including, without limitation, the terms and conditions set forth below:
A. The Debtor shall deliver to the Lender, at an address specified by the Lender, monthly adequate protection payments beginning on November 30, 2011 and continuing on the last day of each consecutive month thereafter until the effective date of the Debtor's plan of reorganization. Such monthly adequate protection payments shall be in the amount of $10,000.00 for the months of December, January and February, and in the amount of $18,000.00 for all other months.
B. The Debtor shall also deliver to the Lender, at an address specified by the Lender, four (4) monthly payments in the amount of $5,000.00 each towards the Lender's repossession costs, beginning on December 30, 2011 and continuing on the last day of each consecutive month thereafter through March 31, 2012. By no later than March 31, 2012, the Debtor shall have paid the Bank's total repossession costs in the amount of $23,516.00. The payments made pursuant to this provision are without prejudice to Debtor's ability to contest the claimed repossession costs on any grounds. Within ten (10) days entry after of this order, the Lender shall provide to the Debtor an itemized statement of the claimed repossession costs.
C. The Lender may at any time, or from time to time, waive all or any of its rights under this order and/or the Loan Documents, but any such waiver shall not constitute, unless specifically so expressed by the Lender in writing, a future waiver of performance or exact performance by the Debtor.
D. At all times, the Debtor shall: (i) maintain adequate property and liability insurance with respect to the Paving Agreement Collateral and the Sand Agreement Collateral in amounts and under such insurance policies as are acceptable to the Lender, and all such insurance policies shall name the Lender as a loss payee thereunder, and the Debtor shall immediately provide the Lender with copies of documentation evidencing the existence of such insurance policies (in the event that the Debtor's existing insurance policy with Erie Insurance Group is discontinued or altered in any respect); (ii) comply with the covenants and conditions contained in the Loan Documents, except as modified hereby or by a plan of reorganization confirmed by the Court in this bankruptcy case; (iii) maintain the Paving Agreement Collateral and the Sand Agreement Collateral in good repair and cause such maintenance and repairs to be performed as are customarily performed in connection with like property; and (iv) permit the Lender or its agents access to the Paving Agreement Collateral and the Sand Agreement Collateral for the purpose of conducting appraisals or other similar inspections upon reasonable telephonic notice by the Lender to the Debtor.3. Notwithstanding Section 2 of this Order, with respect to the First Paving Agreement Collateral, the Lender's forbearance shall expire on January 1, 2012 or at such earlier time as an event of default occurs under this order.
4. Notwithstanding Section 2 of this Order, there is no forbearance with respect to the Seventh Paving Agreement Collateral. The Lender is permitted to hold the Seventh Paving Agreement Collateral and dispose of it in a commercially reasonable manner under the Uniform Commercial Code. The net proceeds received by the Lender from the sale of the Seventh Paving Agreement Collateral shall first be credited to the Debtor's obligations under the Combination Loan and Security Agreement dated January 7, 2009 in the original principal amount of
$70,318.00, and then to the remainder of the debt in the Lender's sole discretion. The Debtor will not be responsible for the Lender's storage fees for the Seventh Paving Collateral, if any, after December 1, 2011.
5. The following shall each constitute an event of default under this order:
A. The failure of the Debtor to comply with or to perform any term or condition of this order.6. Upon the occurrence of an event of default under this order, the following terms and conditions shall apply:
B. The occurrence of a default under any other consent order to which the Lender and the Debtor are parties.
C. The occurrence of a default under any Loan Document, after the entry of this order by the Court, if such default arises out of the Debtor's failure to comply with any term or condition of any Loan Document, except to the extent inconsistent with this order.
D. The filing of a motion by the Debtor seeking to convert this bankruptcy case to a case under Chapter 7 of the United States Bankruptcy Code, or the actual conversion of this bankruptcy case to a case under Chapter 7 of the United States Bankruptcy Code.
E. A confirmable plan of reorganization shall not have been filed in the Debtor's Chapter 11 bankruptcy case by April 30, 2011.
F. The dismissal of this bankruptcy case without a confirmed plan of reorganization.
A. Provided that no more than two (2) previous events of default shall have occurred under this order within a 12 month period, the Lender shall provide the Debtor and its counsel written notice ("Default Notice") of the existence of a default, which Default Notice
shall notify the Debtor and its counsel that the Debtor has fifteen (15) days from the date of the Default Notice within which to cure such default. If the Debtor fails to cure such default within fifteen (15) days of the date of the Default Notice pertaining to the same, the Lender, immediately thereafter, without further notice or order of the Court, shall be entitled to immediately assert and enforce all rights and remedies which are available to the Lender under the Loan Documents, this order and applicable law with respect to the Paving Agreement Collateral and the Sand Agreement Collateral.7. By executing this stipulation and consent order, except with respect to the
B. If more than two (2) previous events of default shall have occurred under this order in a 12 month period and been timely cured by the Debtor pursuant to Section 6.A. of this order, upon the occurrence of a subsequent event of default, the Lender, immediately thereafter, without further notice or order of the Court, shall be entitled to immediately assert and enforce all rights and remedies which are available to the Lender under the Loan Documents, this order and applicable law with respect to the Paving Agreement Collateral and the Sand Agreement Collateral.
C. Notwithstanding Subsections (A) and (B) of this Section 6, in the event of a lapse of insurance on the Paving Agreement Collateral or the Sand Agreement Collateral (collectively "Collateral"), the Debtor will store the collateral at its principal office and not utilize the collateral until insurance coverage is restored. In the event that the Debtor does not restore or obtain replacement coverage within fifteen (15) days after the lapse, the Lender shall be entitled to immediately assert and enforce all rights and remedies which are available under the Loan Documents, this order and applicable law with respect to any collateral that is not fully insured.
Lender's repossession costs as set forth above, any damages to the Fourth Paving Agreement Collateral, and the total claimed amount of indebtedness, the Debtor: (a) specifically acknowledges and agrees to the validity and enforceability of the Lender's claim against the Debtor as evidenced by the Loan Documents and further agrees not to object or otherwise contest the same; (b) specifically acknowledges and agrees to the validity and enforceability of the Loan Documents and the validity and enforceability of the Lender's liens on its collateral; and (c) specifically acknowledges and agrees that the Lender's claim against the Debtor as evidenced by the Loan Documents is not subject to any defense, counterclaim or set-off pursuant to 11 U.S.C. § 547 or any other clawback provision. With respect to any repossession-related damage to the Fourth Paving Agreement Collateral (including that sustained while in storage), the Debtor may deduct from the December, 2011 adequate protection payment up to $3,000.00 for any such damage upon (i) written confirmation by Elliott/Wilson Capitol Trucks of the validity of the claimed damage amount; and (ii) production of invoices or other documentation substantiating the claimed damage amount. For any claimed damages to the Fourth Paving Agreement Collateral exceeding $3,000.00, the Debtor shall also obtain written confirmation by Elliott/Wilson Capitol Trucks and produce substantiating invoices or other documentation, but shall not deduct such damages from any adequate protection payment. The parties shall endeavor to amicably resolve any claimed damages to the Fourth Paving Agreement Collateral exceeding $3,000.00 as part of the Lender's treatment under the Debtor's plan of reorganization.
8. At such time that the Debtor is entitled to enforce its rights and remedies under non-bankruptcy law with respect to any Paving Agreement Collateral or any Sand Agreement Collateral pursuant to this order, the Lender shall immediately surrender and deliver the
respective equipment to the Lender at the Debtor's business address of 11035 Guilford Road, Annapolis Junction, Maryland.
9. Upon execution of this order by the Lender and the Debtor, the Debtor is entitled to recover the Fourth Paving Agreement Collateral and the Fifth Paving Agreement Collateral. The Lender is not responsible for any costs associated with transportation of the equipment from its storage location to the Debtor's business premises.
10. By executing this stipulation and consent order, the parties hereto further acknowledge and agree that this order shall be binding upon any trustee subsequently appointed in the Debtor's bankruptcy case, whether the case is a Chapter 11 case or ultimately converted to a case under Chapter 7 of the United States Bankruptcy Code.
11. By executing this order, the Debtor and the Lender further acknowledge and agree that, except to the extent inconsistent with this order, all other terms and conditions of the Loan Documents shall continue and remain in full force.
12. By executing this order, the Debtor and the Lender specifically acknowledge and agree that nothing contained in this order shall cause a novation of any of the Loan Documents, nor shall anything contained herein extinguish, terminate or impair the obligations of the Debtor under the Loan Documents.
13. The Debtor shall include payment of the total postpetition adequate protection arrearage (which the parties have stipulated to be $45,000.00 as of November 1, 2011) to the Lender under any plan of reorganization of the Debtor.
14. Other than as set forth in Section 13 above, this order does not determine the Lender's treatment under any plan of reorganization of the Debtor.
15. Any default under this order, which is not cured pursuant to Section 6 above, shall
constitute "cause" for relief from the automatic stay as to the Paving Agreement Collateral or the Sand Agreement Collateral in any bankruptcy case filed by Maryland Sand within three hundred sixty-five (365) days after entry of this order. In the event that such "cause" exists, the Lender is not required to move for the entry of a court order modifying the automatic stay and is immediately entitled to enforce all rights and remedies which are available to the Lender under the Loan Documents, this order and applicable law with respect to the Paving Agreement Collateral and the Sand Agreement Collateral.
16. Pursuant to Federal Rule of Bankruptcy Procedure 4001(d)(4), the notice procedures prescribed by Federal Rule of Bankruptcy Procedure Rule 4001(d) shall not apply to this order.
CONSENTED TO:
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Nancy D. Greene (Bar No. 13859)
Seeger Faughnan Mendicino P.C.
Attorney for the Debtor
____________________
Jeffrey S. Greenberg (Bar No. 29088)
Ober, Kaler, Grimes & Shriver
A Professional Corporation
Attorneys for Wells Fargo Equipment
Finance, Inc.
CERTIFICATION OF CONSENT
I certify that the terms of the copy of the stipulation and consent order submitted to the Court are identical to those set forth in the original stipulation and consent order, and that the signatures represented by the /s/ _____ on this copy reference the signatures of the consenting parties on the original.
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Jeffrey S. Greenberg
cc: Nancy D. Greene, Esquire
Seeger Faughnan Mendicino P.C.
21355 Ridgetop Circle, Suite 110
Dulles, Virginia 20166
Seth A. Robbins, Esquire
Seeger Faughnan Mendicino P.C.
2620 P St., N.W.
Washington, D.C. 20007
Jeffrey S. Greenberg, Esquire
Ober, Kaler, Grimes & Shriver
A Professional Corporation
100 Light Street
Baltimore, Maryland 21202
Katherine A. Levin, Esquire
Office of the United States Trustee
101 W. Lombard Street
Suite 2625
Baltimore, Maryland 21201
Nancy M. Gilmore, Esquire
Special Assistant United States Attorney
Internal Revenue Service
31 Hopkins Plaza, Room 1320
Baltimore, Maryland 21201