ArborOne Deal (9-20-09)
ArborOne Deal (9-20-09)
Russ Kendig
".. ~:.;)'
United 8t~te. BankrUiJtCy Judge
EASTERN DIVISION
In re:
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)
)
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Chapter 11
Case No. 09-62467
Judge Russ Kendig
"Debtors"). In the Motion, Debtors seek authority to use certain funds, which may be cash
collateral within the meaning of 11 U.S.C. 363(a) ("Cash Collateral"), in order to pay
operating expenses, including payroll and payroll-related expenses, subject to the terms and
provisions of this Order.
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Notice of the Motion was given to the Lenders, including ArborOne ACA ("ArborOne"),
the Office of the United States Trustee (the "U.S. Trustee"), and the holders of the thirty (30)
largest unsecured claims on a consolidated basis as set forth on the list filed pursuant to Rule
1007(d) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). The Court,
having considered the Motion and based upon the agreement of the Debtors and ArborOne, finds
as follows:
A.
A voluntary petition for relief under chapter 11 of title 11 of the United States
Code (the "Bankruptcy Code") was filed by each of the Debtors on June 18, 2009 (the
"Petition Date"), and thereafter Debtors have continued in the management and possession of
their businesses and properties as debtors-in-possession.
B.
This Court has jurisdiction of this matter pursuant to 28 U.S.C. 1334 and 157.
Venue of this Chapter 11 case in this district and division is proper pursuant to 28 U.S.C. 1408
and 1409. This is a "core" proceeding, for purposes of 28 U.S.C. 157(b), as to which this
Court may enter a final order.
C.
Notice of the Hearing on the Motion was adequate and sufficient under the
particular circumstances, for purposes of sections 102(1), 105, 361, 363 of the Bankruptcy Code
and Rules 2002, 4001, 9007, 9013 and 9014 of the Bankruptcy Rules and other applicable law
and rules of Court.
D.
As of the Petition Date, certain of the Debtors are indebted to ArborOne under
multiple promissory notes (collectively the "Notes") executed pursuant to that certain loan
agreement (the "Loan Agreement"), dated July 13, 2006, as amended from time to time, and
entered into by J.J. Detweiler Enterprises, Inc., Sequatchie Mountain, LLC, and Wilder
Mountain, LLC, (collectively, the "Borrowers"), as borrowers, and ArborOne, as lender. A
detailed description of the indebtedness is attached hereto as Exhibit A. As of the Petition Date,
the principal amount outstanding under the Notes was approximately $6,992,944.15.
E.
priority security interests in and liens on certain real and personal property (the "Collateral") in
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connection with the real estate projects known to the Debtors as Sequatchie Mountain
C4the
Mountain ("Bobcaf'), including, without limitation, the proceeds in connection with certain
installment land contracts (the 44Contracts"). In certain instances, there are Contracts where the
purchaser has paid the Contract in full, but either has not received a deed to the land, or has not
received a partial release from ArborOne of its claimed mortgage interest in the land (the "Paid
Contracts").
F.
The Debtors have been unable and lack the ability to obtain unsecured credit.
G.
On June 23,2009, an expedited hearing was held on the Motion. Counsel for the
Debtors and ArborOne made statements on the record and asked the Court to enter a Stipulated
Interhn Order Authorizing Limited Use of Cash Collateral, Combined with Notice of Further
Hearing (the 44Interim Order"). The
Though the Interim Order was never fully negotiated and approved by the parties and entered, a
final hearing was scheduled on the Motion for July 20, 2009.
H.
An official committee of unsecured creditors (the 4'Committee") has not yet been
The Debtors and ArborOne are willing to consent to the use of Cash Collateral on
a final basis only upon the terms and conditions contained in this Order.
J.
The Debtors assert that it is in the best interests -of the Debtors' estates and their
creditors for the Debtors to maintain operations using the Cash Collateral ofArborOne, pursuant
to the terms ofthis Order.
K.
The terms of this Order are fair, equitable, and reasonable and were negotiated in
good faith and in an open and honest fashion by and between the Debtors and ArborOne.
L.
Good, adequate and sufficient cause has been shown to justify the entry of this
Order, and such entry is necessary to prevent irreparable harm to the Debtors' estates.
M.
The Debtors assert that ArborOne is adequately protected for Debtors' use of Cash
Collateral by virtue of the fact that it is secured with respect to the real estate in which it asserts a
3
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security interest. Notwithstanding the foregoing, based upon the tenns in this Order, the Debtors
and ArborOne have agreed to pennit the use of Cash Collateral until the Termination Date (as
defined below), or until an Event of Default (as defmed below) and the expiration of the Cure
Period (as defmed below).
N.
Attached to this Order as Exhibit B is a budget which, in part, covers the period
through September 30, 2009 (the "Initial Budgef'). The Court finds and determines that the
expenses that the Debtors propose to pay under the Initial Budget are necessary to avoid
immediate and irreparable harm to the Debtors' estates. It therefore is appropriate to authorize
Debtors to expend Cash Collateral until the Termination Date (and subj ect to the other terms and
provisions of this Order), solely to pay the expenses enumerated in the Initial Budget, as
amended from time to time pursuant to Paragraph II of this Order (the Initial Budget as so
amended is referred to as the "Budgef').
o.
The Court may authorize the terms of this Order pursuant to sections 363 and
1108 of the Bankruptcy Code and Rule 4001 of the Bankruptcy Rules.
Accordingly, based on the foregoing, it is hereby
ORDERED that:
(I)
The Motion, shall be and hereby is granted solely to the extent provided in this
Order.
(II)
Subject to the terms of this Order, Debtors shall be and hereby are authorized to
use that Cash Collateral generated by payments for certain land contracts for the
purchase of real property at Sequatchie, The Ledges, Bobcat and Wilder
(collectively, the "Accounts") until the Termination Date, or until an Event of
Default and the expiration of any Cure Period, solely to pay those expenses that
are enumerated in the Budget (or such additional amounts as ArborOne may
agree), but only to the extent that collected funds are available in the Accounts for
payment of the same. The Initial Budget extends through September 30, 2009.
Within three (3) business days of the entry of this Order, and by no later than the
last business day of each month thereafter, the Debtors shall provide ArborOne
with a proposed Budget for the calendar month after the expiration of the current
Budget. Following the submission of a proposed Budget, ArborOne shall have
ten (10) business days to object to the proposed Budget for any calendar month,
and the parties shall seek a hearing on an expedited basis for resolution by the
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Bankruptcy Court of the proposed Budget prior to the commencement of the next
Budget period.
(III)
(IV)
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The Debtors shall give ArborOne, its officers, employees, counsel, auditors, and
consultants, reasonable access to the offices and facilities of the Debtors, and to
the Debtors' books and records, during regular business hours, for the purposes of
general inspection and review, or to monitor the Debtors' operations and assets.
ArborOne shall have reasonable access to Sequatchie for the sole purpose of
determining the environmental conditions of the same.
(VI)
With respect to property located at Sequatchie, the Debtors and ArborOne agree
that Debtors shall immediately commence a process for selling substantially all of
the assets located thereon, including Accounts, together with the Accounts for
Wilder, Bobcat and The Ledges and the real property which is connected to such
Accounts (the real property connected to the Accounts for Sequatchie, Wilder,
Bobcat and The Ledges, collectively the "Real Property"). The Accounts and the
Real Property shall be auctioned together. The Debtors and ArborOne further
agree that the Accounts and Real Property shall be sold separately from the
remaining unsold Sequatchie real property (the "Remaining Real Property") and
that the Accounts and the Real Property shall be sold prior to the Remaining Real
Property. The Debtors shall immediately commence a sale process in which
Debtors must pursue a sale of all Accounts (for Sequatchie, Wilder, The Ledges
and Bobcat), the Real Property and/or the Remaining Real Property pursuant to
Section 363 of the Bankruptcy Code.
(VII) The Debtors, in consultation with ArborOne, may select a broker (the "Broker")
for the purposes of this process and will seek the retention of the Broker on terms
reasonably acceptable to the Debtors and ArborOne. The Debtors and ArborOne
agree that Debtors shall sell the Accounts, the Real Property and the Remaining
Real Property at an auction to occur no later than December I, 2009; provided
however, the parties may extend this auction date by mutual agreement.
(VIII) ArborOne, in its sole discretion, has the option to submit a bid for all or part of its
debt for (i) the Accounts with the Real Property, and/or (ii) Remaining Real
Property, at the auction. Notwithstanding the foregoing, ArborOne shall not
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require the Debtors to abandon the Remaining Real Property under Section 554 of
the Bankruptcy Code. Should ArborOne, or any affiliate of ArborOne, be the
successful bidder at a sale, then any subsequent consideration or payments
received by ArborOne from collection of the Contracts or sale of the Remaining
Property or other Collateral minus reasonable costs of collection and/or sale shall
be applied to the balance of the obligations of the Debtors to ArborOne to the
extent such aggregate amounts exceed the amount bid at the sale.
(IX)
During the term of this Order, the Debtors shall have the right to sell lot parcels in
the ordinary course of business, and upon receipt of an agreed upon release price,
ArborOne shall release its mortgage from the lot parcel to be sold. The Debtors
and ArborOne agree to a release price for Wilder and The Ledges of (i) $750 an
acre for lot parcels sold in connection with the Ledges, (ii) $1,500 an acre for lot
parcels sold in connection with Wilder, and (iii) $1,125 an acre for lot parcels sold
in connection with Bobcat. ArborOne agrees that Debtors shall have no less than
one (1) year from the date of this Order to sell any such parcels prior to the
exercise by ArborOne of any remedies related to its claim of a lien or mortgage
interest in and/or to such properties. The parties agree that, for cause, after
December 1, 2009, they may negotiate in good faith any changes in the release
prices set forth in this paragraph.
(X)
Debtors' right to use Cash Collateral under this Order shall immediately cease and
terminate, without further notice, hearing, or order of the Court, upon an Event of
Default (as defined below), after expiration of the Cure Period (if applicable), as
defined below. Upon the occurrence of any of the Events of Default, ArborOne
may provide Debtors and the Committee (if one is appointed) with written notice
thereof (a "Default Notice"). Debtors shall have five (5) business days from the
date of service of a Default Notice by ArborOne (the "Cure Period") within
which either to cure such Event of Default or file a motion with the Court
requesting an emergency hearing to determine whether such Event of Default has
occurred and has not been cured.
(XI)
Any of the following events shall constitute an event of default (an "Event of
Default") under this Order:
(A)
Debtors' use of the Cash Collateral to pay any obligation other
than those specified in a duly entered Order of this Court, or in the Budget, or
Debtors' use of the Cash Collateral to pay any obligation in excess of the
applicable amount specified in this Order or in the Budget;
(B)
Debtors' failure to remit payments from Accounts as required
herein after the date of this Order;
(C)
The entry of an order dismissing this bankruptcy case, converting
this jointly administered bankruptcy case to a case under chapter 7 of the
Bankruptcy Code, appointing a trustee (whether under chapter 11 or chapter 7 of
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(C0040llS.1)
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AND
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Exhibit A
ArborOne Loan Details
Original Loan
Original Debtors
Amount Loan Date
$5,718,911.00 7/13/2006 JJDE,
465510610
Wilder,
Sequatchie
251868-04 $1,443,969.38
$1,500,000.00 7/13/2006 JJDE,
Wilder,
Sequatchie
$633,150.00 11/16/2006JJDE,
465510620
$33,690.15
Wilder,
Sequatchie
$5,000,000.00 7/13/2006JJDE,
251868-01' $3,077,491.52:
Wilder,
Sequatchie
56,992,944.15 512,852,061.00
Loan No.
Principal
Balance
$2,437,793.10
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Co-Signor:
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September 2009
I
Cash Flow From Operations before Chapter 11
Fees, Professional Fees and Adequate Protection
Core
45.586
(99)
5.639
Sequatchie
Mountain
(16.941)
20.628
Wilder
NE Real
SE Real
SW Real
Mountain Properties Properties Properties
22.149
3.302
32.284
10.936
Total
123,483
Paymenls
Chapter 11 Fees
U.S. Truslee
o
o
Creditor's Committee
Professional Fees
56,211
11,098
55.000
Brouse McDowell
1,174
"Ill
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EXHIBIT C
M. COLETIE GIBBONS
PHONE: 2163945063
FAX: 216 3945088
EMAIL: CGIBBONS{glSZD.COM
ArborOne ACA
(843) 432-2332
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Exh:ibitD
llmTEDSTATESBANKRUPTCYCOURT
NORTHERN DISTRICT OF OIDO
EASTERN DMSION
In re:
Northeastem Real Properties, Ltd.
Debtor.
)
)
)
)
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)
)
)
Chapter 11
Case No. 09-62467
On September _ , 2009, this Court entered the Stipulated Final Order Authorizing the
Use of Cash Collateral of ArborOne, ACA (the "Cash Collateral Order"). Pursuant to the terms
of the Cash Collateral Order and upon the representation of counsel for the above captioned
debtors and debtors in possession (each a "Debtor" and collectively the "Debtors") and counsel
for ArborOne, ACA ("ArborOne") that they have agreed to the relief set forth below, and upon
due deliberation, the Court finds that (a) it has jurisdiction over this matter pursuant to 28 U.S.C.
157 and 1334; and (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2).
IT IS HEREBY ORDERED THAT:
1.
ArborOne is GRANTED relief from the automatic stay to the extent provided
2.
Capitalized terms not otherwise defined herein have the meanings given to them
herein.
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3.
immediate relief from stay to foreclose on the Accounts and the Remaining Real Property to the
extent provided in the Cash Collateral Order. ArborOne shall have the right to sell Sequatchie
and/or the Accounts or obtain payments on the Accounts until paid in full. Notwithstanding the
foregoing, ArborOne shall not require the Debtors to abandon the Remaining Real Property
under Section 554 of the Bankruptcy Code.
4.
any affiliate of ArborOne, be the successful bidder at a sale, then any subsequent consideration
or payments received by ArborOne from collection of the Contracts or sale of the Remaining
Property or other Collateral minus reasonable costs of collection and/or sale shall be applied to
the balance of the obligations of the Debtors to ArborOne to the extent such aggregate amounts
exceed the amount bid at the sale.
###
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lsi
Marc B. Merklin (0018195)
lsi
M. Colette Gibbons (
)
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