Interim Order, including all findings, reservations, protections, and orders contained therein, are hereby ratified and confirmed in all respects, and is legal, valid, and binding on all parties in interest.
3. Authorization to Use Cash Collateral. Subject to the terms and conditions of this 4.
InterimFinal Order, and in accordance with the Budget, the Debtors are authorized to use Cash
Collateral for the period (the “Specified Period”) from the Petition Date through the earlier to occur of (a) the date of expiration of the Remedies Notice Period (as defined herein) or (b) 11:59 p.m. (Eastern time) onDecember 13, 2015.October 31, 2015 (or such latter date as the Debtors and the Pre-Petition Agent may agree). Except as otherwise expressly provided herein, Cash Collateral may be used during the Specified Period, at the times, in the amounts, and for the purposes identified in the cash collateral budget previously approved by the Pre-Petition Agent, a copy of which is attached hereto as Exhibit A (as may be amended as provided herein, the “Budget”). All Cash Collateral use must be in accordance with the terms of the Budget, subject to the variance provided in Paragraph 13(n), below. The
authorization for the Debtors to use Cash Collateral pursuant to this InterimFinal Order shall terminate upon the expiration of the Specified Period. Nothing in thisInterimFinalOrder shall constitute the Pre-Petition Secured Parties’ consent to the disposition of any assets of the Debtors or their estates outside the ordinary course of business, or the Debtors’ use of any Cash Collateral or other proceeds resulting therefrom, except as permitted in this InterimFinal Order.
4. Budget Maintenance. The Budget and any modification thereto, or extension, 5.
amendment or update thereof, shall be in form and substance acceptable to and approved in writing by the Pre-Petition Agent in its sole discretion. The Budget may be amended or modified in writing from time to time only with the written consent of the Pre-Petition Agent. Any modification to the Budget shall be provided by the Debtors to the Statutory Committee within one (1) business day after it is
approved in writing by the Pre-Petition Agent.
5. Adequate Protection Liens.
6.
Pursuant to sections 361 and 363(e) of the Bankruptcy Code, the Pre-Petition (a)
Agent, for the benefit of itself and the other Pre-Petition Secured Parties, as adequate protection of the interests of the Pre-Petition Secured Parties against any Diminution in Value of their interest in the Pre-Petition Collateral, is hereby granted additional and replacement continuing valid, binding,
enforceable, non-avoidable, and automatically perfected post-petition security interests in and liens (the
“Adequate Protection Liens”) on any and all presently owned and hereafter acquired personal property, real property and all other assets of the Debtors and their estates, together with any proceeds thereof (collectively, the “Adequate Protection Collateral” and together with the Pre-Petition Collateral, the
“Collateral”); provided that the Pre-Petition Agent shall not have a lien on any non-residential real estate leases of the Debtors or the leased property, but rather its lien shall be limited to the proceeds realized from the sale or other disposition of such leases. For purposes of this InterimFinalOrder,
“Adequate Protection Collateral” shall include causes of action under section 549 of the Bankruptcy Code and the proceeds thereof but shall not include other causes of action under chapter 5 of the Bankruptcy Code.
The Adequate Protection Liens shall be junior only to: (A) the Carve Out; (B) (i)
the Pre-Petition Liens; and (C) liens and security interests that are valid, properly perfected and non-avoidable as of the Petition Date. The Adequate Protection Liens shall otherwise be senior to all other security interests in, liens on, or claims against any of the Adequate Protection Collateral.
The Adequate Protection Liens shall be enforceable against and binding upon (ii)
the Debtors, their estates and any successor thereto, including without limitation, any trustee or other estate representative appointed in the Cases, or any case under chapter 7 of the Bankruptcy Code upon the conversion of the Cases, or in any other proceedings superseding or related to any of the foregoing (collectively, “Successor Case”). Except as provided herein, the Adequate Protection Liens shall not
be made subject to or pari passu with any lien or security interest by any court order heretofore or hereafter entered in the Cases or any Successor Case, and the Adequate Protection Liens shall be valid and enforceable against any trustee appointed in the Cases or any Successor Case, or upon the
dismissal of the Cases or any Successor Case. The Adequate Protection Liens shall not be subject to sections 506(c)(subject to the entry of a Final Order), 510, 549, or 550 of the Bankruptcy Code. No lien or interest avoided and preserved for the benefit of any estate pursuant to section 551 of the Bankruptcy Code shall be made pari passu with or senior to the Pre-Petition Liens or the Adequate Protection Liens.
6. Adequate Protection Superpriority Claims.
7.
As further adequate protection against any Diminution in Value of the interests (a)
of the Pre-Petition Agent and the other Pre-Petition Secured Parties in the Pre-Petition Collateral, the Pre-Petition Agent and the other Pre-Petition Secured Parties are each hereby granted as and to the extent provided by sections 503(b) and 507(b) of the Bankruptcy Code an allowed superpriority administrative expense claim in each of the Cases and any Successor Case (collectively, the “Adequate Protection Superpriority Claim”).
Except for the Carve Out, the Adequate Protection Superpriority Claims shall (b)
have priority over all administrative expense claims and unsecured claims against the Debtors or their estates, now existing or hereafter arising, of any kind or nature whatsoever, including, without
limitation, administrative expenses of the kinds specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 365, 503(a), 503(b),506(c), 507(a), 507(b), 546(c), 546(d), 1113,or1114 and, if approved in the Final Order, 506(c) of the Bankruptcy Code, whether or not such expenses or claims may become secured by a judgment lien or other non-consensual lien, levy or attachment. Other than the Carve Out, (i) no costs or expenses of administration, including, without limitation, professional fees allowed and payable under sections 328, 330, and 331 of the Bankruptcy Code, or otherwise, that have been or may be incurred in these proceedings, or in any Successor Cases, and (ii) no priority
claims are, or will be, senior to, prior to or on a parity with the Pre-Petition Superpriority Claim.
7. Adequate Protection Payments and Protections.
8.
Until all Pre-Petition Obligations have been paid in full, the Debtors are (a)
authorized and directed to provide adequate protection payments to the Pre-Petition Agent, on behalf of itself and the other Pre-Petition Secured Parties (the “Adequate Protection Payments”), in the form of: (i) payments of interest at the non-default rate and letter of credit, cash management and other fees, at the times specified therein; provided that if there is a Challenge pursuant to which the Pre-Petition Secured Parties are determined not to have had an allowed fully secured claim under, and within the meaning of, the Bankruptcy Code, such payments may be re-characterized as payments of principal on account of the Pre-Petition Obligations (subject to adjustment by the Court); (ii) ongoing payment of the reasonable fees, costs and expenses of the Pre-Petition Agent, including, without limitation, the reasonablefees and expenses of legal and other professionals (if any) retained by the Pre-Petition Agent; and (iii) at the end of each of Weeks 2, 4, 6, 8, and 10 (as shown on the Budget), repayments of the principal amount of the Pre-Petition Obligations in an amount equal to all Cash Collateral received by the Debtors from and after (or in the possession of the Debtors as of) the Petition Date in excess of the sum of the Total Disbursements (as reflected in the Budget) for the two weeks ending on each such date plus the Total Disbursements for the immediately succeeding week and after all Pre-Petition loans are paid in full to cash collateralize any letters of credit issued under the Existing ABL Credit Agreement. Subject to Paragraph 26 of this InterimFinalOrder, professionals for the Pre-Petition Agent shall not be required to comply with the U.S. Trustee fee guidelines for the payment of fees and expenses.
In addition, the Debtors shall (i) provide continued maintenance and insurance (b)
of the Collateral in the amounts and for the risks, and by the entities, required under the Pre-Petition Credit Documents, and (ii) pay all post-petition taxes and other charges on the Collateral as and when due.
8. Indemnity Obligations.
9.
After payment of the Pre-Petition Obligations (including the cash (a)
collateralization of all letters of credit), the Pre-Petition Agent and the Pre-Petition Secured Parties shall retain their Pre-Petition Liens, the Adequate Protection Liens, and the Adequate Protection Superpriority Claim, in addition to which the Debtors shall establish an account in the “control” (as defined in the UCC) of the Pre-Petition Agent (the “Pre-Petition Indemnity Account”) into which the sum of $75,000 shall be deposited, all as security for any reimbursement, indemnification or similar continuing obligations of the Debtors in favor of the Pre-Petition Agent and the other Pre-Petition Secured Parties under the Pre-Petition Credit Documents (the “Pre-Petition Indemnity Obligations”).
Subject to the provisions of Paragraph 26 of this Interim Order,Final Order, following three (3) business days advance written notice to the Debtors and the Statutory Committee, the Pre-Petition Secured Parties may apply amounts in the Pre-Petition Indemnity Account against the Pre-Petition Indemnity Obligations as and when they arise, without further notice to or consent from the Debtors, any Creditors’ Committee or any other parties in interest and without further order of this Court. The amounts deposited in the Pre-Petition Indemnity Account, for purposes of this Final Order, shall constitute Collateral and Adequate Protection Collateral, but may not be used by the Debtors as Cash Collateral.
Upon the Challenge Period Termination Date (as defined below) if, as of such (b)
date, no party has filed (x) an adversary proceeding, cause of action, objection, claim, defense, or other challenge as contemplated in Paragraph 17 hereof, or (y) an adversary proceeding, cause of action, objection, claim, defense, or other challenge against any Petition Secured Party related to the Pre-Petition Obligations, whether in the Cases or independently in another forum, court, or venue, all amounts then remaining and being held in the Pre-Petition Indemnity Account shall be released to the Debtors and the Pre-Petition Liens, the Adequate Protection Liens, and the Adequate Protection Superpriority Claim shall be released and terminated.
In the event that any person or entity files or asserts (by motion, complaint or (c)
otherwise) a Challenge against any of the Pre-Petition Agent or any other Pre-Petition Secured Party prior to the Challenge Period Termination, then the Pre-Petition Indemnity Account shall not be released and the Pre-PetitionLiens, the Adequate Protection Liens, and the Adequate Protection Superpriority Claim shall not terminate or expire, unless and until (i) all such Challenges are resolved and adjudicated by the entry of a final order of a court of competent jurisdiction from which no appeal (or no further appeal) can be taken, and (ii) any and all indemnification claims of any of the Pre-Petition Agent and the other Pre-Pre-Petition Secured Parties related thereto or arising therefrom have been satisfied in full.
9. Modification of Automatic Stay. The automatic stay under Bankruptcy Code section 10.
362(a) is hereby modified as necessary to effectuate all of the terms and provisions of thisInterimFinal Order, including, without limitation, to: (a) permit the Debtors to grant the Adequate Protection Liens and Adequate Protection Superpriority Claims; (b) permit the Debtors to perform such acts as the Pre-Petition Agent, or the other Pre-Pre-Petition Secured Parties may request in its or their sole discretion to assure the perfection and priority of the liens granted herein; and (c) authorize the Debtors to pay, and the Pre-Petition Agent and the other Pre-Petition Secured Parties to retain and apply, payments made in accordance with the terms ofthistheInterim Order and this Final Order.
10.Perfection of Adequate Protection Liens. ThisInterimFinalOrder shall be 11.
sufficient and conclusive evidence of the validity, perfection, and priority of the Adequate Protection Liens, without the necessity of filing or recording any financing statement or other instrument or document which may otherwise be required under the law or regulation of any jurisdiction or the taking of any other action (including, for the avoidance of doubt, entering into any deposit account control agreement) to validate or perfect (in accordance with applicable non-bankruptcy law) the Adequate Protection Liens, or to entitle the Pre-Petition Agent and the other Pre-Petition Secured Parties to the priorities granted herein. Notwithstanding the foregoing, the Pre-Petition Agent is
authorized to file, as it deems necessary in its sole discretion, such financing statements, notices of liens and other similar documents to perfect in accordance with applicable non-bankruptcy law or to otherwise evidence the applicable Adequate Protection Liens, and all such financing statements, mortgages, notices and other documents shall be deemed to have been filed or recorded as of the Petition Date; provided, however, that no such filing or recordation shall be necessary or required in order to create or perfect the Adequate Protection Liens. The Debtors are authorized and directed to execute and deliver to the Pre-Petition Agent, promptly upon demand therefor, all such financing statements, notices and other documents as the Pre-Petition Agent or the other Pre-Petition Secured Parties may reasonably request. The Pre-Petition Agent, in its sole discretion, may file a photocopy of thisInterimFinalOrder as a financing statement with any filing or recording office or with any registry of deeds or similar office, in addition to or in lieu of such financing statements, notices of lien or similar instrument. The Pre-Petition Agent shall continue to have all rights pursuant to all third party notifications and/or agreements in connection with the Pre-Petition Credit Documents, including all collateral access agreements and all other agreements with third parties (including any depository bank) relating to, or waiving claims against, any Pre-Petition Collateral, including without limitation, each collateral access agreement duly executed and delivered by any landlord of the Debtors and including, for the avoidance of doubt, all Blocked Account Agreements (as defined in the Pre-Petition Credit Documents).
11.Debtors’ Obligations. Until the Pre-Petition Obligations are paid in full and the 12.
Challenge Period has expired, the Debtors shall:
Maintain its current cash management system as it may be modified with the (a)
consent of the Pre-Petition Agent (such consent not to be unreasonably withheld) and subject to any order of this Court approving the Debtors’ motion to continue such cash management system and in connection therewith, remit all Cash Collateral, as and when received to one or more deposit accounts maintained by the Debtors with the Petition Agent, which accounts shall be subject to the
Pre-Petition Liens and the Adequate Protection Liens of the Pre-Pre-Petition Agent, but which Cash Collateral may be used by the Debtors to the extent provided in this InterimFinal Order;
Apply Cash Collateral and other sources of cash available to the Debtors (b)
hereunder to the expenses of the operationand disposition of its business as provided in, and as limited by, the Budget;
Deliver to the Pre-Petition Agent, with a copy to counsel for the Statutory (c)
Committee, on or before the close of business on Tuesday of each week (and if such day is not a business day, then the next succeeding business day) a (i) comparison for the prior week of actual results of all items contained in the Budget to the amounts originally contained in the Budget, and (ii) cumulative comparison for the period from the Petition Date through the end of the prior week of the actual results of all items contained in the Budget to the amounts originally contained in the Budget;
Deliver to the Pre-Petition Agent daily, until the Pre-Petition Obligations have (d)
been paid in full (except as provided in Paragraph 8 hereof), an updated Borrowing Base Certificate, in each case along with such supporting information as the Pre-Petition Agent may request;
Deliver to the Pre-Petition Agent, with a copy to counsel for the Statutory (e)
Committee, promptly after receipt, copies of all interim and final reconciliations and other reports received from the consultant engaged by the Debtors to assit in inventory management and the conduct of store closing sales;
Provide the Pre-Petition Agent with financial reports, including cash (f)
expenditures in relation to the Budget, when reasonably requested by the Pre-Petition Agent, with a copy to counsel for the Statutory Committee;
Serve the Pre-Petition Agent and its counsel with a copy of each monthly (g)
report filed by the Debtors in these Cases as required by the Court, the U.S. Trustee or applicable law;
and
Provide to the Pre-Petition Agent such information as it may reasonably (h)
request.
12.Disposition of Collateral. The Debtors shall not sell, transfer, lease, encumber or 13.
otherwise dispose of any portion of the Collateral other than (i) Inventory in the ordinary course of business, consistent with past practices, without the prior written consent of the Pre-Petition Agent, or (ii) as further ordered by the Court after notice and a hearing.
13.Events of Default. The occurrence of any of the following events, unless waived 14.
by the Pre-Petition Agent in writing, shall constitute an event of default (collectively, the “Events of Default”):
the failure of the Debtors to have repaid all Pre-Petition Obligations in full as (a)
of the end of the Specified Period;
the failure by the Debtors to perform, in any respect, any of the terms, (b)
provisions, conditions, covenants, or obligations under thisInterimFinalOrder (including, without limitation, the payment by the Debtors of administrative expenses other than as set forth in the Budget);
other than as provided herein, the obtaining after the Petition Date of credit or (c)
the incurring of indebtedness that is (i) secured by a security interest, mortgage or other lien on all or any portion of the Collateral which is equal or senior to any security interest, mortgage or other lien of the Pre-Petition Agent or the other Pre-Petition Secured Parties, or (ii) entitled to priority
administrative status which is equal or senior to that granted to the Petition Agent or the other Pre-Petition Secured Parties herein;
any of the Debtor’s return of goods (other than damaged goods) constituting (d)
Collateral pursuant to section 546(h) of the Bankruptcy Code (other than with the consent of the Pre-Petition Agent);
reversal, vacatur, or modification (other than a modification acceptable to the (e)
Pre-Petition Agent and the other Pre-Petition Secured Parties) of this InterimFinal Order;
dismissal of the Cases or conversion of the Cases to a chapter 7 case, or (f)
appointment of a chapter 11 trustee or examiner with enlarged powers or other responsible person;
any misrepresentation of a material fact made after the Petition Date by any of (g)
the Debtors to the Pre-Petition Agent or the other Pre-Petition Secured Parties about the financial
the Debtors to the Pre-Petition Agent or the other Pre-Petition Secured Parties about the financial