IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION In re:
COUNTRY FRESH HOLDING COMPANY, INC.,
et al.,
Debtors.
Chapter 11
Case No.: 21-30574 (MI) (Jointly Administered)
XTRA LEASE LLC’S LIMITED OBJECTION TO AMENDED JOINT MOTION FOR ORDER AUTHORIZING AND APPROVING CONVERSION OF CHAPTER 11 CASES
XTRA Lease LLC (“XTRA”), by and through its undersigned counsel, hereby files its limited objection (this “Limited Objection”) to the Amended Joint Motion of the Debtors and the Ad Hoc Group of Secured Lenders for an Order (I) Authorizing and Approving the Conversion of the Chapter 11 Cases, (II) Extending the Designation Rights Period, and (III) Granting Related Relief [Docket No. 673] (the “Conversion Motion”). In support of this limited objection, XTRA states as follows:
BACKGROUND
1. As of February 15, 2021 (the “Petition Date”), XTRA and Country Fresh Transportation LLC (the “Debtor”) were parties to certain Equipment Lease Agreements and Equipment Rental Agreements (collectively, the “XTRA Agreements”), pursuant to which XTRA leased or rented trailers (the “XTRA Trailers”) to the Debtor.
and Stellex CF/Buyer (US) LLC (the “Buyer”) agreed to resolve the Stay Relief Motion by, among other things, (a) assumption and assignment of the XTRA Agreements related to sixteen (16) of the XTRA Trailers (the “Assumed XTRA Agreements”) to the Buyer effective as of June 7, 2021, (b) payment by the Buyer of the cure amount owing under the Assumed XTRA Agreements, and (c) rejection of the XTRA Agreements related to the remaining thirty-two (32) XTRA Trailers (the “Rejected XTRA Agreements”) effective as of 11:59 p.m. on June 6, 2021 (the “Rejection Date”).
4. On June 10, 2021, undersigned counsel for XTRA sent Debtors’ counsel (a) a chart (the “Unpaid Post-Petition Chart”) calculating the unpaid post-petition amounts currently owing under the Rejected XTRA Agreements through the Rejection Date, which amounts total not less than $117,432.30 (the “Unpaid Post-Petition Amounts”), and (b) copies of the invoices previously sent by XTRA to the Debtors that include the Unpaid Post-Petition Amounts (the “Unpaid Post-Petition Invoices”). Copies of the Unpaid Post-Petition Chart and the Unpaid Post-Petition Invoices are attached hereto as Exhibit A.
5. As of the filing of this Limited Objection, the Debtors have paid none of the Unpaid Post-Petition Amounts to XTRA.
LIMITED OBJECTION
6. XTRA objects to conversion of these cases to Chapter 7 until the Debtors have paid the Unpaid Post-Petition Amounts in full.
obligations of the debtor … first arising from or after 60 days after the order for relief in a case under chapter 11 of this title under an unexpired lease of personal property … until such lease is assumed or rejected notwithstanding section 503(b)(1) of this title …”).
8. Because each of the Unpaid Post-Petition Invoices was issued more than 60 days after the Petition Date, Section 365(d)(5) obligated the Debtors to fully and timely pay all of the Unpaid Post-Petition Amounts. Furthermore, even though Section 365(d)(5) provides “automatic” administrative expenses status to the Unpaid Post-Petition Amounts, the Unpaid Post-Petition Amounts would also constitute administrative expenses payable under Section 503(b)(1) of the Bankruptcy Code because the Debtor had full use and possession of the Rejected Trailers through the Rejection Date.
9. There exists no valid excuse as to why the Unpaid Post-Petition Amounts remain unpaid. XTRA invoiced the Debtors for the Unpaid Post-Petition Amounts in the ordinary course, and undersigned counsel even provided Debtors’ counsel with a detailed calculation of the Unpaid Post-Petition Amounts almost a week ago. The Debtors’ have simply refused to comply with their statutory obligations under Section 365(d)(5).
11. Finally, the Debtors should not be permitted to “dump” a bunch of unpaid post-petition invoices into the lap of a Chapter 7 trustee – particularly ones that the Debtors have been aware of for some time and were under a statutory obligation to have already paid. The Court should not burden a Chapter 7 trustee with the duty to review and pay unpaid post-petition invoices merely because the Debtors have refused to do so themselves.
WHEREFORE, XTRA respectfully requests that the Court (a) condition conversion of these cases to Chapter 7 upon the prior payment in full of the Unpaid Post-Petition Amounts, and (b) grant such other and further relief as is appropriate.
Dated: June 16, 2021 BRYAN CAVE LEIGHTON PAISNER LLP
By: /s/ David M. Unseth David M. Unseth, Esq.
Missouri Bar No. 48086 (Admitted Pro Hac Vice) 211 N. Broadway, Suite 3600
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the above pleading was
served by electronic filing in the CM/ECF system of the United States Bankruptcy Court for the Southern District of Texas on June 16, 2021.
