IN THE UNITED STATES BANKRUPTCY COURT FOR …omnimgt.com/CMSVol2/pub_47332/735326_151.pdfbusiness and property as a debtor in possession pursuant to Sections 1107 and 1108 of the Bankruptcy

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

---------------------------------------------------------------

In re:

L.K. BENNETT U.S.A, INC.,1

Debtor. ---------------------------------------------------------------

x : ::::: x

Chapter 11

Case No. 19-10760 (KG)

Related D.I.: 18, 52, 53, & 96

FINAL AGREED ORDER (I) AUTHORIZING USE OF CASH COLLATERAL, (II) GRANTING ADEQUATE PROTECTION, AND (III) MODIFYING THE AUTOMATIC

STAY

Upon the Motion of the Debtor For Approval of Agreed Interim and Final Orders (I)

Authorizing Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying the

Automatic Stay and (IV) Scheduling a Final Hearing [D.I. 18] (the “Motion”),2 pursuant to

Sections 105, 361, 362, 363, and 507 of title 11 of the United States Code, (the “Bankruptcy

Code”), Rule 4001 of the Federal Rules of Bankruptcy Procedures (“Bankruptcy Rules”) and

Rule 4001-2 of the Local Rules for the United States Bankruptcy Court for the District of

Delaware (“Local Rules”), inter alia, authorizing the Debtor’s use of Cash Collateral (as such

term is defined in section 363(a) of the Bankruptcy Code) of Wells Fargo Capital Finance (UK)

Limited and Wells Fargo Bank, N.A. (London Branch) (collectively, “Wells Fargo”); providing

adequate protection to Wells Fargo to the extent set forth in the Agreed Interim Order (I)

Authorizing the Use of Cash Collateral, (II) Granting Adequate Protection, (III) Modifying the

Automatic Stay and (IV) Scheduling a Final Hearing [D.I. 53] (the “First Interim Order”), the

1 The last four digits of the Debtor’s federal tax identification number are (6607). The mailing address for the Debtor is 595 Madison Avenue, New York, New York 10022.

2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Motion.

Case 19-10760-KG Doc 151 Filed 05/10/19 Page 1 of 31

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Second Agreed Interim Order (I) Authorizing the Use of Cash Collateral, (II) Granting Adequate

Protection, (III) Modifying the Automatic Stay and (IV) Scheduling a Final Hearing [D.I. 96]

(the “Second Interim Order,” and together with the First Interim Order, the “Interim Orders”)

and this final order (the “Final Order”); modifying the automatic stay to the extent necessary to

implement and effectuate the terms of the Interim Orders and this Final Order; and the Court

having considered the Motion, the First Day Declaration, the exhibits attached to the Motion, and

the evidence submitted or adduced and the arguments of counsel made at the interim hearings

held on April 9, 2019 and April 29, 2019 (collectively, the “Interim Hearings”) and the hearing,

if any, to consider entry of the Final Order (the “Final Hearing,” and together with the Interim

Hearings, the “Hearings”); and notice of the Hearings having been given in accordance with

Rules 4001(b) and (d) and 9014 of the Bankruptcy Rules and Rule 4001-2 of the Local Rules;

and the Hearings to consider the relief requested in the Motion having been held and concluded;

and all objections, if any, to the relief requested in the Motion having been withdrawn, resolved

or overruled by the Court; and it appearing to the Court that entry of the Final Order is fair and

reasonable and in the best interests of the Debtor, its estate, and its creditors, and is essential for

the preservation, maintenance and maximization of the value of the Debtor’s business; and after

due deliberation and consideration, and for good and sufficient cause appearing therefor

BASED UPON THE RECORD ESTABLISHED AT THE HEARINGS BY THE DEBTOR,

INCLUDING THE SUBMISSIONS OF DECLARATIONS AND THE

REPRESENTATIONS OF COUNSEL, THE COURT HEREBY MAKES THE

FOLLOWING FINDINGS OF FACT AND CONCLUSIONS OF LAW:


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A. Petition Date. On April 3, 2019 (the “Petition Date), the Debtor filed a voluntary petition

for relief under chapter 11 of the Bankruptcy Code (the “Case”) with the United States

Bankruptcy Court for the District of Delaware (the “Court”).

B. Debtor in Possession. The Debtor is continuing in the management and operation of its

business and property as a debtor in possession pursuant to Sections 1107 and 1108 of the

Bankruptcy Code. No trustee or examiner has been appointed in this Case.

C. Jurisdiction and Venue. This Court has jurisdiction over the persons and property

affected hereby pursuant to 28 U.S.C. §§ 157(b) and 1334. Consideration of the Motion

constitutes a core proceeding under 28 U.S.C. § 157(b)(2). Venue for the Case and proceedings

on the Motion is proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409. The bases for the

relief sought in the Motion and granted in this Final Order are sections 105, 361, 362, 363 and

507 of the Bankruptcy Code, Bankruptcy Rule 4001, and Local Bankruptcy Rule 4001-2.

D. Committee Formation. The Office of the United States Trustee for the District of

Delaware (“U.S. Trustee”) appointed an official committee of unsecured creditors pursuant to

Section 1102 of the Bankruptcy Code (the “Statutory Committee”) in the Case on April 16,

2019.

E. Notice. The Debtor has made reasonable efforts to afford the best notice possible under

the circumstances by serving the Motion on (i) the U.S. Trustee; (ii) the United States Attorney

for the District of Delaware; (iii) counsel to Wells Fargo Capital; (iv) the parties included on the

Debtor’s list of twenty (20) largest creditors; (v) the Internal Revenue Service, the Securities and

Exchange Commission and any other federal, state or local governmental agency to the extent


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required by the Bankruptcy Code, the Bankruptcy Rues, the Local Rules and orders of this

Court; (vi) the Banks; and (vii) any party that has requested notice pursuant to Bankruptcy Rule

2002.

F. Debtor’s Stipulations. Without prejudice to the rights of parties-in-interest as set forth

herein, including in paragraph 17 below, the Debtor, on its behalf and on behalf of its estate,

admits, stipulates, acknowledges, and agrees as follows (paragraphs F(i) through F(viii) below

are referred to in this Final Order, collectively, as the “Debtor’s Stipulations”):

i. Prepetition Credit Documents. As of the Petition Date, the Debtor had outstanding

secured debt owing to Wells Fargo pursuant to that certain Facility Agreement

between L.K. Bennett Limited and L.K. Bennett U.S.A, Inc. as borrowers, certain

guarantors thereto, Wells Fargo Capital Finance (UK) Limited (formerly Burdale

Financial Limited) and Wells Fargo Bank, N.A., London Branch as original

lenders and Wells Fargo Capital Finance (UK) Limited as agent, arranger and

security trustee (as amended, modified and supplemented from time to time, the

“Secured Facility” and together with all related security and other documents,

guaranties and agreements, the “Prepetition Credit Documents”).

ii. Guaranty. As of the Petition Date, the Debtor had outstanding secured debt owing

to Wells Fargo pursuant to that certain Guaranty to Facility Agreement between

L.K. Bennett Limited and L.K. Bennett U.S.A, Inc. as borrowers, certain

guarantors thereto, Wells Fargo Capital Finance (UK) Limited (formerly Burdale

Financial Limited) and Wells Fargo Bank, N.A., London Branch as original


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lenders and Wells Fargo Capital Finance (UK) Limited as agent, arranger and

security trustee (the “Guaranty”).

iii. Prepetition Obligations. As of the Petition Date, the aggregate outstanding amount

owed by the Debtor as either principal obligor or guarantor under the Prepetition

Credit Documents was not less than approximately $12,151,131.01, consisting of

guaranteed obligations of $11,467,442.71 on account of primary borrowings by

L.K. Bennett Limited and primary obligations of $683,688.30 on account of the

Debtor’s primary borrowings (the “Primary Borrowing,” collectively, the “Loan,”

and together with any interest, fees, costs and other charges or amounts paid,

incurred, or accrued prior to the Petition Date in accordance with the Prepetition

Credit Documents, and further including all indebtedness, and, to the extent

allowable, all interest, fees, costs and other charges which may be allowed under

Section 506(b) of the Bankruptcy Code, the “Prepetition Obligations”).3

iv. Collateral. As more fully set forth in the Prepetition Credit Documents, prior to

the Petition Date, the Debtor granted first-priority security interests in and liens

on the Collateral (as defined in the Prepetition Credit Documents) including,

without limitation, all inventory, accounts and accounts receivable, deposit

accounts, and all proceeds of the foregoing (collectively, the “Prepetition

Collateral”) to Wells Fargo (collectively, the “Prepetition Liens”) to secure

repayment of the Prepetition Obligations.

3 Under the Prepetition Credit Documents, the Loans, other than the Primary Borrowing, are denominated in Great Britain Pound Sterling. The exchange rate used to convert these amounts to United States Dollars is the applicable exchange rate of 1.3182 as of the Petition Date.


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v. Validity, Perfection and Priority of Prepetition Liens and Prepetition Obligations.

The Debtor and Wells Fargo acknowledge and agree that: (a) the Prepetition

Liens on the Prepetition Collateral are valid, binding, enforceable, non-avoidable

and properly perfected; (b) the Prepetition Liens have priority over any and all

other liens, if any, on the Collateral, subject only to certain other liens otherwise

permitted by the Prepetition Credit Documents; (c) the Prepetition Obligations

constitute legal, valid, binding, and non-avoidable obligations of the Debtor and

constitute “allowed claims” within the meaning of Section 502 of the Bankruptcy

Code; (d) no offsets, challenges, objections, defenses, claims, impairment or

counterclaims of any kind or nature to any of the Prepetition Liens or the

Prepetition Obligations exist, and no portion of the Prepetition Liens or the

Prepetition Obligations is subject to any challenge or defense including, without

limitation, avoidance, disallowance, disgorgement, recharacterization,

recoupment, reductions, setoff or subordination (whether equitable, contractual or

otherwise) pursuant to the Bankruptcy Code or applicable non-bankruptcy law;

and (e) the Debtor and its estate have no claims, objections, challenges, causes of

actions, counterclaims, and/or choses in action, including, without limitation,

avoidance claims under Chapter 5 of the Bankruptcy Code against Wells Fargo or

any of its affiliates, agents, attorneys, advisors, professionals, officers, directors or

employees arising out of, based upon or related to the Prepetition Credit

Documents.


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vi. Cash Collateral. The Debtor acknowledges and stipulates that all of the Debtor's

cash, including the cash in all of its deposit accounts, wherever located, whether

as original collateral or proceeds of other Prepetition Collateral, constitute Cash

Collateral and is Prepetition Collateral of Wells Fargo.

vii. Default by Debtor. The Debtor acknowledges and stipulates that the Debtor is in

default under each of the Prepetition Credit Documents. The Debtor also

acknowledges that it is in default under the Interim Orders (the “Post-Petition

Defaults”). In order to avoid further defaults and to ensure an efficient and

effective liquidation, the Debtor has retained Hilco Merchant Resources, LLC

(“Hilco Global”) pursuant to that certain Order (i) Authorizing the Debtor to

Enter into the Agreement with Hilco Merchant Resources, LLC nunc pro tunc to

April 29, 2019 and (ii) Granting Related Relief [D.I. ___] (the “Hilco Order”) to

assist with the remaining liquidation. Wells Fargo waived its right to issue a

Termination Notice under the First Interim Order for the Post-Petition Defaults

arising prior to entry of the First Interim Order effective nunc pro tunc to April

29, 2019. Wells Fargo will waive its right to issue a Termination Notice under

the Second Interim Order for the Post-Petition Defaults arising prior to the date

hereof, upon the entry of this Final Order and the Hilco Order.

viii. No Other Liens. As of the Petition Date, there were no security interests or liens

on the Prepetition Collateral other than the Prepetition Liens, subject only to

certain other liens otherwise permitted by the Petition Credit Documents, and any


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otherwise duly perfected and otherwise unavoidable lien existing as of the

Petition Date (collectively, the “Prior Liens”).

G. Findings Regarding the Use of Cash Collateral.

i. Request for Use of Cash Collateral. The Debtor seeks authority to use Cash

Collateral on a final basis on the terms described herein, in the amounts, at the

times and for the purposes described in the attached Budget. This Final Order is

in form and substance acceptable to Wells Fargo. Notice of the Final Hearing and

Final Order has been provided in accordance with the Interim Orders, the

Bankruptcy Code, the Bankruptcy Rules and the Local Rules.

ii. Need for Use of Cash Collateral. The Debtor’s need to use Cash Collateral is

immediate and critical in order to enable the Debtor to continue operations and to

administer and preserve the value of its estate, and to protect other property and

assets of its estate from loss or deterioration. The ability of the Debtor to pay its

employees to protect and maximize the value of its assets requires the continued

use of Cash Collateral, the absence of which would immediately and irreparably

harm the Debtor, its estate and its creditors.

iii. Use of Cash Collateral. As a condition to the authorization to continue to use

Cash Collateral, Wells Fargo requires, and the Debtor has agreed, that Cash

Collateral may be used at the times and exclusively for the purposes set forth in

the Budget (a copy of which is attached as Exhibit 1), as the same may be

modified from time to time with the prior written consent of Wells Fargo.


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H. Adequate Protection. Wells Fargo is entitled to receive adequate protection on account of

its interest in the Prepetition Collateral pursuant to Sections 361, 362, and 363 of the Bankruptcy

Code to the extent of any diminution in the value of its interest in the Prepetition Collateral

(including Cash Collateral) as it existed on the Petition Date, the Debtor’s use, sale or lease of

such Prepetition Collateral, and the imposition of the automatic stay (collectively, to the extent of

any such diminution in value, the “Diminution in Value”). As adequate protection, Wells Fargo

shall receive (a) a valid and perfected replacement security interest in, and lien on, all assets of

the Debtor (the “Adequate Protection Lien”), which Adequate Protection Lien is and shall be

valid, binding, enforceable and fully perfected nunc pro tunc to the Petition Date (without the

necessity of execution by the Debtor of mortgages, security agreements, pledge agreements,

financing statement or other agreements); (b) payment of any and all reasonable out-of-pocket

fees and expenses of Wells Fargo incurred after the Petition Date in connection with this chapter

11 case, which payment shall not be subject to further approval or allowance by this Court,

except as set forth in this Final Order; and (c) to the extent of any Diminution in Value a super-

priority administrative claim under section 507(b) of the Bankruptcy Code with priority over all

other administrative claims, but subject to the Carve-Out.

I. Sections 506(c) and 552(b). In light of Wells Fargo’s agreement to consent to the

continued use of Cash Collateral to fund the Budget, the Debtor shall be found to have waived

and Wells Fargo shall be deemed to have received a waiver of (a) the provisions of Section

506(c) of the Bankruptcy Code, and (b) any "equities of the case" claims under Section 552(b) of

the Bankruptcy Code.


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J. Good Faith. The terms of the Cash Collateral arrangement described in the Interim

Orders and this Final Order are fair and reasonable, reflect the Debtor’s exercise of prudent

business judgment consistent with its fiduciary duties, and are supported by reasonably

equivalent value and fair consideration. Entry of this Final Order is in the best interests of the

Debtor, its estate, and its creditors. The terms concerning the Debtor’s continued use of Cash

Collateral, as provided in this Final Order, were negotiated in good faith and at arms’-length

between the Debtor and Wells Fargo, and Wells Fargo’s claims, replacement liens and other

protections granted pursuant to the Interim Orders and this Final Order will have the protections

provided in Section 363(m) of the Bankruptcy Code and will not be affected by any appeal or

subsequent reversal, modification, vacatur, amendment, reargument or reconsideration of the

Interim Orders, this Final Order or any other order.

K. Notice. Notice of the Hearings and the relief requested in the Motion has been provided

by the Debtor, whether by facsimile, email, overnight courier or hand delivery, to certain parties

in interest, including: (a) the Office of the United States Trustee for the District of Delaware; (b)

prior to the formation of the Statutory Committee, those creditors holding the twenty largest

unsecured claims against the Debtor’s estates; (c) following the formation of the Statutory

Committee, counsel to the Statutory Committee; (d) the Internal Revenue Service, the Securities

and Exchange Commission and any other federal, state or local governmental agency to the

extent required by the Bankruptcy Code, the Bankruptcy Rules, the Local Rules or order of the

Court; (e) counsel to Wells Fargo; and (f) those parties, if any, who have filed a notice of

appearance and request for service of pleadings in this Case pursuant to Bankruptcy Rule 2002.


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Notice of the Final Hearing and Final Order have been provided in accordance with the Interim

Orders.

L. Based upon the foregoing findings and conclusions, the Motion and the record before the

Court with respect to the Motion, and good and sufficient cause appearing therefor,

IT IS HEREBY ORDERED THAT:

1. Use of Cash Collateral Approved. The Motion is GRANTED as set forth herein on a final

basis. The use of Cash Collateral on a final basis is authorized, subject to the terms and

conditions set forth in this Final Order and the Budget.

2. Objections Overruled. All objections to the Motion, to the extent not withdrawn or

resolved, are hereby overruled. This Final Order shall become effective immediately upon its

entry.

3. Authorization to Use Cash Collateral. Subject to the terms and conditions of this Final

Order, and limited to the maximum amounts, at the times and for the purposes set forth in the

Budget, the Debtor is authorized to continue to use Cash Collateral until the earlier of (a) June 1,

2019, and (b) the day following written notice from Wells Fargo of the occurrence of a

Termination Event (as defined in paragraph 14) (each of (a) and (b), a “Termination Date”).

4. Adequate Protection Liens, Adequate Protection Claim and Adequate Protection

Payments. Wells Fargo is entitled, pursuant to sections 361 and 363(e) of the Bankruptcy Code,

to adequate protection of their interests in the Prepetition Collateral (including Cash Collateral)

to the extent of any Diminution in Value of their interests in the Prepetition Collateral (such


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adequate protection as set forth in clauses (a)-(g) below, the “Adequate Protection Obligations”).

Wells Fargo is hereby granted, as applicable, to the extent of any Diminution in Value of their

interests in the Prepetition Collateral from and after the Petition Date, the following:

a. Adequate Protection Liens. As adequate protection of the interests of Wells Fargo

in the Prepetition Collateral against any Diminution in Value of such interests,

pursuant to sections 361 and 363(e) of the Bankruptcy Code, the Debtor is

authorized to, and as of entry of this Final Order is deemed to have granted, to

Wells Fargo additional and replacement continuing valid, binding, enforceable,

non-avoidable, and automatically perfected postpetition security interests in and

liens on (the “Adequate Protection Liens”) all of Debtor’s presently owned or

hereafter acquired property and assets (excluding any of the Debtor’s claims or

causes of action under sections 544, 545, 547, 548 or 550 of the Bankruptcy Code

or any other similar state or federal law, and any proceeds thereof), whether such

property and assets were acquired by the Debtor before or after the Petition Date,

of any kind or nature, whether real or personal, tangible or intangible, wherever

located, including, without limitation, all inventory, accounts receivable, general

intangibles, chattel paper, contracts, owned real estate, real and personal property

leaseholds, property, plants, fixtures and machinery and equipment, vehicles,

vessels, deposit accounts, cash and any investment thereof, letter of credit rights,

patents, copyrights, trademarks, trade names, rights under license agreements and

other intellectual property and stock of subsidiaries of the Debtor, and the

proceeds and products of the foregoing (collectively, together with the Prepetition


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Collateral and the Cash Collateral, the “Collateral”), provided, however,

notwithstanding anything contained herein that with respect to the Debtor’s leases

of non-residential property, the Adequate Protection Liens shall attach only to

proceeds of such leases. The Adequate Protection Liens shall be subject and

subordinate only to Prior Liens and the Carve-Out, and shall secure the

Prepetition Obligations to the extent of any Diminution in Value of Wells Fargo’s

interests in the Prepetition Collateral from and after the Petition Date. The

Adequate Protection Liens shall be enforceable against the Debtor, its estate, and

any successors thereto, including, without limitation, any trustee or other estate

representative appointed in this Case, or any case under chapter 7 of the

Bankruptcy Code upon the conversion of any of this Case, or in any other

proceedings superseding or related to any of the foregoing (collectively,

“Successor Cases”). Except as expressly provided herein, the Adequate

Protection Liens shall not be made subject to or pari passu with any lien or

security interest heretofore or hereinafter granted in the Case or any Successor

Cases, and the Adequate Protection Liens shall be valid and enforceable against

any trustee or other estate representative appointed in this Case or any Successor

Cases, or upon the dismissal of any of this Case or Successor Cases. The

Adequate Protection Liens shall not be subject to sections 510, 549, or 550 of the

Bankruptcy Code and the Adequate Protection Liens shall not be subject to

section 506(c) of the Bankruptcy Code. Except as to Prior Liens, the Adequate

Protection Liens shall be deemed legal, valid, binding, enforceable, and perfected

liens, not subject to subordination, impairment, or avoidance, for all purposes in


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this Case and any Successor Cases. For the avoidance of doubt, the Adequate

Protection Liens shall be deemed to be effective and perfected automatically as of

the Petition Date and without the necessity of the execution by the Debtor, or the

filing of, as applicable, mortgages, security agreements, pledge agreements,

financing statements, state or federal notices, recordings (including, without

limitation, any recordings with the United States Patent and Trademark or

Copyright Office), or other agreements and without the necessity of taking

possession or control of any Collateral. Except as otherwise expressly provided

herein, under no circumstances shall the Adequate Protection Liens be made

subordinate to the lien of any other party, no matter when arising.

b. Adequate Protection Superpriority Claim. To the extent of any Diminution in

Value of the interests of Wells Fargo in the Prepetition Collateral, Wells Fargo

shall be granted an allowed superpriority administrative expense claim pursuant to

sections 503(b), 507(a), and 507(b) of the Bankruptcy Code (the “507(b) Claim”),

which 507(b) Claim shall be an allowed claim against the Debtor, with priority as

provided in section 507(b) of the Bankruptcy Code. The 507(b) Claim shall be

payable from all prepetition and postpetition property of the Debtor and the

proceeds thereof, subject to the Carve Out and relative priorities set forth above.

c. Fees and Expenses. The Debtor is authorized and directed to pay, within ten (10)

calendar days of delivery of an invoice (which shall include reasonable supporting

detail, which may be redacted to protect privileged or confidential information but

will be provided in unredacted form to the U.S. Trustee upon request), all


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reasonable and documented prepetition and postpetition fees and expenses of

Wells Fargo, including without limitation fees and expenses of counsel for Wells

Fargo, Morgan Lewis & Bockius UK LLP and Morris, Nichols, Arsht & Tunnell

LLP. Payment of all such fees and expenses of Wells Fargo’s counsel shall not be

included in the calculation of the disbursement variance described below;

provided, however, that Wells Fargo shall promptly provide copies of invoices

received on account of the fees and expenses set forth above to counsel to the

Debtor, the U.S. Trustee and counsel to the Statutory Committee, and the Court

shall have exclusive jurisdiction over any objections raised by the Statutory

Committee or the U.S. Trustee to the invoiced amount of the fees and expenses

proposed to be paid, which objections may only be raised within ten (10) calendar

days after delivery of an invoice(s) therefor and shall be limited to the issue of the

reasonableness of such fees and expenses. In the event that within ten (10)

calendar days from delivery of such invoices the U.S. Trustee or counsel to the

Statutory Committee raises an objection to a particular invoice, and the parties are

unable to resolve such objection, the Court shall hear and determine such dispute.

Notwithstanding anything herein to the contrary, Wells Fargo reserves the right to

assert claims for the payment of any fees and expenses provided for under the

Prepetition Credit Documents, and for the payment of any other amounts provided

for in the Prepetition Credit Documents.

d. Adequate Protection Payment. The Debtor shall pay to Wells Fargo monthly

adequate protection payments (the “Adequate Protection Payments”), in an


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amount resulting from applying a per annum rate equal to the non-default contract

interest rate set forth in the Prepetition Credit Documents to the aggregate

outstanding amount of Prepetition Obligations of Primary Borrowings by the

Debtor as of the Petition Date in respect of such relevant periods ending after the

Petition Date; provided, however, that Wells Fargo reserves the right to assert

claims for the payment of additional interest calculated at any other applicable

rate of interest, or on any other basis, provided for under the Prepetition Credit

Documents, and for the payment of any other amounts provided for in the

Prepetition Credit Documents. The Adequate Protection Payments will be

calculated on a monthly basis, and be due and payable in arrears on the first

business day of each month beginning on May 1, 2019, which initial payment

shall be made two (2) business days of the entry of this Final Order and in an

amount equal to all interest accrued on and after the Petition Date.

e. Right to Seek Additional Adequate Protection. This Final Order is without

prejudice to, and does not constitute a waiver of, expressly or implicitly, the rights

of Wells Fargo to request further or alternative forms of adequate protection at

any time or the rights of the Debtor or any other party to contest such request.

5. Budget Maintenance. The Budget and any modification to, or amendment or update of,

the Budget (a “Budget Modification”) shall be in form and substance acceptable to Wells Fargo

and approved by Wells Fargo in writing in its sole discretion. A Budget Modification shall not

require further Court authorization or approval.


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6. Modification of the Automatic Stay. The automatic stay imposed under Section 362(a) of

the Bankruptcy Code is hereby modified as necessary to effectuate all of the terms and

provisions of this Final Order, including, without limitation, to permit the Debtor to grant the

Adequate Protection Liens, and apply proceeds in accordance with paragraph 4 above.

7. Automatic Perfection of Adequate Protection Liens. This Final Order shall be sufficient

and conclusive evidence of the validity, perfection, and priority of all liens granted herein,

including the Adequate Protection Liens, without the necessity of filing or recording any

financing statement, mortgage, notice, or other instrument or document that may otherwise be

required under the law or regulation of any jurisdiction or the taking of possession or 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 Wells Fargo to the priorities granted herein.

8. Access to Books and Records and Premises. As additional adequate protection of Wells

Fargo’s security interests in the Cash Collateral, the Debtor and its retained professionals shall

cooperate with and allow and provide Wells Fargo, its field auditors, collateral examiners, and

financial advisors with reasonable access to the premises, officers, employees, auditors,

appraisers, financial advisors, and the books and records of the Debtor, upon reasonable advance

notice in order to conduct appraisals, analyses, and audits of the Prepetition Collateral, the post-

petition collateral, and the Debtor’s financial affairs, and the Debtor and its retained

professionals shall otherwise reasonably cooperate in providing any other financial information

reasonably requested by Wells Fargo.


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9. Financial Information and Reporting Requests. The Debtor shall furnish to Wells Fargo

such financial and other information as Wells Fargo shall reasonably request. Debtor shall

furnish to Wells Fargo each of the following financial reports:

a. On a weekly basis, the Debtor will conduct a reconciliation of the prior week’s

activity and provide an adjusted report of actual receipts, disbursements and

ending balances of cash.

b. On a bi-weekly basis, the Debtor will conduct a reconciliation of the activity of

the two weeks prior and provide an adjusted report of accounts receivable and

inventory.

c. No later than 11:59 p.m. (prevailing Eastern Time) each Wednesday, beginning

on Wednesday, April 17, 2019 (for the bi-weekly period starting the Petition Date

and ending April 12, 2019), a weekly report for the prior week, detailed by line

item, of the actual cumulative receipts, budgeted cumulative receipts, and

cumulative variances in actual receipts and disbursements compared to the

projected receipts and disbursements in the Budget (the comparison of the actual

cumulative receipts and budgeted cumulative receipts in the Budget shall be

called the “Receipts Variance Report” and the comparison of the actual

cumulative disbursements and budgeted cumulative disbursements in the Budget

shall be called the “Disbursements Variance Report”);

d. No later than 11:59 p.m. (prevailing Eastern Time) each Wednesday, beginning

on Wednesday, April 17, 2019 (for the bi-weekly period starting the Petition Date


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and ending April 12, 2019), a detailed accounts receivable aged trial balance and

a detailed perpetual inventory listing as of the end of the prior week; and

e. Any financial information and pleadings filed with the Court and/or reporting

requirements of the U.S. Trustee shall be served upon Wells Fargo and its counsel

simultaneously with the filing of such information or pleading with the Court

and/or delivery to the U.S. Trustee.

10. Rights of Wells Fargo Regarding Disposition of Collateral. Nothing provided herein shall

limit the rights of Wells Fargo to object to any proposed disposition of the Prepetition Collateral

or the Post-Petition Collateral.

11. Termination Date. On the Termination Date (June 1, 2019), all authority to use Cash

Collateral shall cease and Wells Fargo may exercise any rights and remedies provided to Wells

Fargo under the Prepetition Credit Documents or at law or equity, including all remedies

provided under the Bankruptcy Code and pursuant to this Final Order.

12. Termination Event. The occurrence of any of the following (unless waived by Wells

Fargo in writing in its sole discretion) shall constitute a “Termination Event” under this Final

Order:

a. The failure to provide Wells Fargo with any of the financial information or

reports required in paragraph 9 of this Final Order by the date and time required,

after written notice of such failure and failure of the Debtor to provide such

information within three (3) business days.


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b. If the sum of (i) the percentage amount by which the Disbursement Variance

Report reflects actual disbursements in excess of those disbursements set forth in

the Budget and (ii) the percentage amount by which the Receipts Variance Report

reflects actual receipts less than the receipts set forth in the Budget, exceeds 20%.

c. Other than in connection with the payment in full in cash of the Prepetition

Obligations, the bringing of a motion, taking of any action or the filing of any

plan of reorganization or liquidation or disclosure statement attendant thereto by

or on behalf of the Debtor in the Case: (A) to obtain financing under Section

364(c) or (d) of the Bankruptcy Code secured by security interests in, or liens on,

the Prepetition Collateral; (B) except as provided in this Final Order, to use Cash

Collateral under Section 363(c) of the Bankruptcy Code without. the prior written

consent of Wells Fargo; or (C) any other action or actions materially adverse to

Wells Fargo or its rights and remedies hereunder or its interest in any Prepetition

Collateral or Post-Petition Collateral;

d. the entry of an order staying, vacating, or otherwise invalidating the Prepetition

Credit Documents, the Interim Orders or this Final Order, the Interim Order (a)

Authorizing the Continued Use of the Debtor’s Cash Management System and (B)

Scheduling a Final Hearing on the Motion [D.I. 48], or the final cash

management order without the prior written consent of Wells Fargo; or the

Interim Orders, this Final Order, or such cash management orders shall otherwise

not be in full force and effect;


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e. The appointment of an interim or permanent trustee in this Case or the

appointment of an examiner in this Case with expanded powers to operate or

manage the financial affairs, the business, or reorganization of the Debtor; or the

sale without Wells Fargo’s consent of all or substantially all of the Debtor’s assets

either through a sale under Section 363 of the Bankruptcy Code, through a

confirmed plan of reorganization in the Case, or otherwise that does not provide

for payment in full in cash of the Prepetition Obligations; and

f. The dismissal of this Case, or the conversion of this Case from Chapter 11 to

Chapter 7 of the Bankruptcy Code, or the Debtor shall file a motion or other

pleading seeking the dismissal or conversion of the Case under Section 1112 of

the Bankruptcy Code or otherwise without the prior written consent of Wells

Fargo.

g. The failure of the Debtor to obtain an order approving the retention of Hilco

Global within ten business days of the date of entry of the Second Interim Order,

nunc pro tunc to April 29, 2019.

13. Rights and Remedies Following Termination Event.

a. Termination. Immediately upon the occurrence and during the continuance of a

Termination Event, (i) Wells Fargo may terminate the Debtor's authority to use

Cash Collateral by providing written notice as set forth in paragraph 14(b) (such

notice, a “Termination Notice”) and (ii) at Wells Fargo’s option exercised in

accordance with Wells Fargo’s sole and absolute discretion, any right or ability of


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the Debtor to use any Cash Collateral (other than as expressly set forth in this

Final Order during the Remedies Notice Period (as defined below)) may be

terminated, reduced or restricted by Wells Fargo. Following the Termination

Notice, subject to the Remedies Notice Period, Wells Fargo may exercise all

rights and remedies available to it under the Prepetition Credit Documents or

applicable law against the Prepetition Collateral and the Post-Petition Collateral;

provided, however that Wells Fargo may only enter onto any leased premises of

the Debtor after a Termination Event in accordance with (i) a separate written

agreement by and between Wells Fargo and any applicable landlords, (ii) in

accordance with non-bankruptcy law or (iii) a further order of this Court after

notice and a hearing.

b. Without limiting the foregoing except as discussed immediately above, Wells

Fargo may (i) enter onto the premises of the Debtor in connection with an orderly

liquidation of the Collateral; (ii) exercise any rights and remedies provided to

Wells Fargo under the Prepetition Credit Documents, or at law or equity,

including all remedies provided under the Bankruptcy Code and pursuant to this

Final Order; (iii) direct the Debtor’s banks to immediately remit all proceeds

contained in any and all deposit accounts to Wells Fargo; and (iv) direct the

Debtor’s account debtors to pay their Accounts and Accounts Receivable directly

to Wells Fargo.

c. Notice of Termination. Notice shall be given by email or facsimile to counsel to

the Debtor, counsel to the Statutory Committee, and the U.S. Trustee (the earliest


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date any such Termination Notice is sent shall be referred to herein as the

“Termination Notice Date”). The use of Cash Collateral shall automatically cease

on the Termination Notice Date, other than such use of Cash Collateral as to

which Wells Fargo has agreed in advance in writing as may be necessary to

protect the Collateral. Any automatic stay otherwise applicable to Wells Fargo is

hereby modified so that five (5) business days after the Termination Notice Date

(“Remedies Notice Period”), Wells Fargo shall be entitled to exercise all rights

and remedies against the Prepetition Collateral and Post-Petition Collateral in

accordance with the Prepetition Credit Documents and this Final Order and shall

be permitted to satisfy the Adequate Protection Liens. During the Remedies

Notice Period, the Debtor shall be entitled to seek an emergency hearing with the

Court. Except as may otherwise be ordered by the Court in connection with an

emergency hearing, the automatic stay with respect to Wells Fargo shall

automatically be terminated at the end of the Remedies Notice Period without

further notice or order and Wells Fargo shall be permitted to exercise all remedies

set forth herein, in the Prepetition Credit Documents, and as otherwise available at

law against Prepetition Collateral and Post-Petition Collateral, without further

order of or application or motion to the Court, and without restriction or restraint

by any stay under Sections 105 or 362 of the Bankruptcy Code, or otherwise,

against the enforcement of the liens and security interest in the Prepetition

Collateral and Post-Petition Collateral, or any other rights and remedies granted to

Wells Fargo with respect thereto pursuant to the Prepetition Credit Documents or

this Final Order.


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14. Carve-Out. As used in this Final Order, the term “Carve-Out” shall mean the sum of (i)

all fees required to be paid to the clerk of the Court and any claims and noticing agent acting in

such capacity and to the Office of the U.S. Trustee or the Court under section 1930 of title 28 of

the United States Code plus interest at the statutory rate (without regard to the notice set forth in

(iii) below); (ii) fees and expenses of up to $25,000 incurred by a trustee under section 726(b) of

the Bankruptcy Code (without regard to the notice set forth in (iii) below); and (iii) allowed and

unpaid claims for unpaid fees, costs, and expenses (the “Allowed Fees”) incurred by persons or

firms retained by the Debtor or the Statutory Committee, whose retention is approved by the

Bankruptcy Court pursuant to section 327 and 1103 of the Bankruptcy Code (collectively, the

“Professional Persons”), subject to the terms of the Interim Orders, this Final Order and any

other interim or other compensation order entered by the Bankruptcy Court that are incurred

(A) at any time before delivery by Wells Fargo of a Carve-Out Trigger Notice (as defined

below), whether allowed by the Bankruptcy Court prior to or after delivery of a Carve-Out

Trigger Notice (the “Pre-Trigger Date Fees”), subject to any limits imposed by the Budget, the

Interim Orders or this Final Order or otherwise on fees permitted to be incurred in connection

with any permitted investigations of claims and defenses against Wells Fargo; and (B) after the

occurrence (the “Trigger Date”) and during the continuance of an Termination Event and after

delivery of written notice (the “Carve-Out Trigger Notice”) thereof (which may be by electronic

mail) to the Debtor, the Debtor’s counsel, the U.S. Trustee, and counsel for the Statutory

Committee, in an aggregate amount not to exceed $50,000 (the “Post-EoD Carve-Out Amount”);

provided, that nothing herein shall be construed to impair the ability of any party to object to the

fees, expenses, reimbursement or compensation described in clauses (i), (ii), (iii)(A) or (iii)(B)

above, on any grounds. Notwithstanding the foregoing, the Carve-Out shall not include, apply to


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or be available for any fees or expenses incurred by any party in connection with (a) the

initiation or prosecution of any claims, causes of action, adversary proceedings or other litigation

(i) against Wells Fargo (whether in such capacity or otherwise), or (ii) challenging the amount,

validity, perfection, priority or enforceability of or asserting any defense, counterclaim or offset

to, the obligations and the liens and security interests granted under the Prepetition Credit

Documents (whether in such capacity or otherwise), including, in each case, without limitation,

for lender liability or pursuant to section 105, 510, 544, 547, 548, 549, 550, or 552 of the

Bankruptcy Code, applicable non-bankruptcy law or otherwise; (b) attempts to modify any of the

rights granted to Wells Fargo; (c) attempts to prevent, hinder or otherwise delay any of Wells

Fargo’s assertion, enforcement or realization upon any Collateral in accordance with the

Prepetition Credit Documents; (d) paying any amount on account of any claims arising before

the commencement of the Case unless such payments are approved by an order of the Court; or

(e) after delivery of a Carve-Out Trigger Notice, any success, completion, back-end or similar

fees.

15. Prohibited Use of Cash Collateral. The Cash Collateral may not be used in connection

with or to finance in any way any action, suit, arbitration, proceeding, application, motion or

other litigation of any type adverse to or against the interests of Wells Fargo or its rights and

remedies under the Prepetition Credit Documents, the Interim Orders or this Final Order.

16. Reservation of Certain Third Party Rights.

a. The Debtor’s Stipulations, and other stipulations, findings, and representations

contained in this Final Order with respect to Wells Fargo, Prepetition Liens and

the Prepetition Obligations shall be binding upon the Debtor, all parties-in-


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interest, any creditor, any trustee appointed in this case, the Statutory Committee

and any other person (each, other than the Debtor, a “Challenge Party”), unless

and solely to the extent that (i) subject to clause (b) below, a Challenge Party with

standing initiates an action or adversary proceeding relating to a Challenge

(defined below) during the Challenge Period (defined below) and (ii) the Court

rules in favor of such Challenge Party in any such timely and properly filed

Challenge. For purposes of this paragraph 16: (a) “Challenge” means any claim or

cause of action against Wells Fargo, in each case, on behalf of the Debtor, its

estate or the Debtor’s creditors and interest holders or any other person, or to

object to or to challenge the stipulations, findings or Debtor’s Stipulations set

forth herein, including, but not limited to those in relation to: (i) the validity,

extent, priority, or perfection of the security interests and liens of Wells Fargo; (ii)

the validity, allowability, priority, or amount of any of the Prepetition

Obligations; (iii) the secured status of any of the Prepetition Obligations; or (iv)

any liability of Wells Fargo with respect to anything arising from any of the

respective Prepetition Credit Documents; and (b) “Challenge Period” means (i)

with respect to any person or any party-in-interest other than the Statutory

Committee, the period from the Petition Date until the date that is seventy-five

(75) calendar days after the Petition Date and (ii) with respect to the Statutory

Committee, June 15, 2019.

b. Upon the expiration of the Challenge Period without the filing of a Challenge

(“Challenge Period Termination Date”): (A) any and all such Challenges and


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objections by any party (including, without limitation, the Statutory Committee,

any Chapter 11 trustee, and/or any examiner or other estate representative

appointed in this Case, any Chapter 7 trustee and/or examiner or other estate

representative appointed in any Successor Case and any third party), shall be

deemed to be forever waived, released and barred, (B) all matters not subject to

the Challenge, and all findings, Debtor’s Stipulations, waivers, releases,

affirmations and other stipulations as to the priority, extent, and validity as to

Wells Fargo’s claims, liens, and interests shall be of full force and effect and

forever binding upon the Debtor, the Debtor’s estate and all creditors, equity

interest holders, any person and other parties in interest in this Case and any

Successor Case; and (C) any and all claims or causes of action against Wells

Fargo relating in any way to the Debtor or the Prepetition Credit Documents shall

be forever waived and released by the Debtor’s estates, all creditors, equity

interest holders, other parties and other parties in interest in this Case.

c. In the event the Debtor’s Case is converted to one under Chapter 7 of the

Bankruptcy Code prior to the Challenge Period Termination Date, the Interim

Chapter 7 Trustee shall have the unexpired portion of the Challenge Period or as

the Court may order otherwise, to initiate an action or adversary proceeding

relating to a Challenge against Wells Fargo.

17. No Third Party Rights. Except as explicitly provided for herein, this Final Order does not

create any rights for the benefit of any third party, creditor, equity security holder, or any direct,

indirect, or incidental beneficiary.


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18. Section 506(c) Claims. No costs or expenses of administration which have been or may

be incurred in the Case at any time shall be charged against Wells Fargo, the Prepetition

Collateral, or the Post-Petition Collateral pursuant to Sections 105 or 506(c) of the Bankruptcy

Code, or otherwise, without the prior written consent of Wells Fargo, and no such consent shall

be implied from any other action, inaction, or acquiescence on the part of Wells Fargo, its agents

or professionals.

19. No Marshalling/Applications of Proceeds. Wells Fargo shall not be subject to the

equitable doctrine of “marshaling” or any other similar doctrine with respect to any of the Pre-

Petition Collateral or Post-Petition Collateral.

20. Section 552(b). The “equities of the case” exception under Section 552(b) of the

Bankruptcy Code shall not apply to Wells Fargo with respect to proceeds, products, offspring, or

profits of any of the Prepetition Collateral.

21. No Further Right to Use Cash Collateral. The Debtor irrevocably waives the right to

move the Court or otherwise seek permission to use Cash Collateral other than the Cash

Collateral (a) authorized and permitted in the Budget and (b) additional Cash Collateral with the

prior written consent of Wells to be exercised in its sole discretion, at any time prior to, on or

after the Termination Date.

22. Rights Preserved. Notwithstanding anything herein to the contrary, the entry of this Final

Order is without prejudice to, and does not constitute a waiver of, expressly or implicitly: (a)

Wells Fargo’s right to seek any other or supplemental relief in respect of the Debtor; (b) any of

the rights of Wells Fargo under the Bankruptcy Code or under non-bankruptcy law, including,


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without limitation, the right to (i) request modification of the automatic stay of Section 362 of

the Bankruptcy Code, or (ii) request dismissal of the Case or any Successor Case, conversion of

the Case to a case under Chapter 7, or appointment of a Chapter 11 trustee or examiner with

expanded powers. Other than as expressly set forth in this Final Order, any other rights, claims or

privileges (whether legal, equitable or otherwise) of Wells Fargo are preserved.

23. No Waiver by Failure to Seek Relief. The failure of Wells Fargo to seek relief or

otherwise exercise its rights and remedies under the Interim Orders, this Final Order, or the

Prepetition Credit Documents, or applicable law, as the case may be, shall not constitute a waiver

of any of the rights hereunder, thereunder, or otherwise of Wells Fargo, as applicable.

24. Binding Effect of Final Order; No Stay. Immediately upon entry by this Court

(notwithstanding any applicable law or rule to the contrary), the terms and provisions of this

Final Order shall become valid and binding upon and inure to the benefit of the Debtor, Wells

Fargo, all other creditors of the Debtor, the Statutory Committee or any other court appointed

committee appointed in the Case, and all other parties in interest and their respective successors

and assigns, including any trustee or other fiduciary hereafter appointed in the Case, any

Successor Case, or upon dismissal of the Case or any Successor Case.

25. No Modification of Interim Orders or Final Order. The Debtor irrevocably waives the

right to seek and shall not seek or consent to, directly or indirectly; (a) without the prior written

consent of Wells Fargo (i) any modification, stay, vacatur or amendment to the Interim Orders or

this Final Order; or (ii) a priority claim for any administrative expense or unsecured claim

against the Debtor (now existing or hereafter arising of any kind or nature whatsoever, including,

without limitation any administrative expense of the kind specified in Sections 503(b), 507(a) or


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507(b) of the Bankruptcy Code) in the Case or any Successor Case, equal or superior to the

claims of Wells Fargo without the prior written consent of Wells Fargo; (b) without the prior

written consent of Wells Fargo, any order allowing use of Cash Collateral other than the Interim

Orders and this Final Order; and (c) without the prior written consent of Wells Fargo, any lien on

any of the Prepetition Collateral or Post-Petition Collateral with priority equal or superior to the

Adequate Protection Liens. The Debtor irrevocably waives any right to seek any material

amendment, modification, or extension of the Interim Orders or this Final Order without the

prior written consent of Wells Fargo and no such consent shall be implied by any other action,

inaction or acquiescence of Wells Fargo, its agents or professionals.

26. Final Order Controls. In the event of any inconsistency between the terms and conditions

of the Prepetition Credit Documents, the Interim Orders or this Final Order, the provisions of this

Final Order shall govern and control.

27. Survival. The provisions of this Final Order and any actions taken pursuant hereto and

the Adequate Protection Liens, and Adequate Protection Claim shall survive entry of any order

which may be entered: (a) confirming any plan of reorganization or liquidation in the Case; (b)

converting the Case to a case under Chapter 7 of the Bankruptcy Code; (c) dismissing the Case

or any Successor Case; or (d) pursuant to which this Court abstains from hearing the Case or any

Successor Case, provided however that the various superpriority claims or other administrative

expenses shall survive only to the extent permitted by applicable law. The terms and provisions

of this Final Order, including the claims, liens, security interests and other protections granted to

Wells Fargo pursuant to this Final Order or the Prepetition Credit Documents, notwithstanding

the entry of any such order, shall continue in the Case, in any Successor Case, or following


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dismissal of the Case or any Successor Case, and shall maintain their priority as provided by this

Final Order until all Prepetition Obligations have been paid in full.

28. Notice of Final Order. On or before the day that is five (5) business days from the entry

of this Final Order, the Debtor shall serve, by United States mail, first–class postage prepaid, a

copy of this Final Order upon: (a) the Office of the United States Trustee for the District of

Delaware; (b) the Statutory Committee; (c) the Internal Revenue Service, the Securities and

Exchange Commission and any other federal, state or local governmental agency to the extent

required by the Bankruptcy Code, the Bankruptcy Rules, the Local Rules or order of the Court;

(d) counsel to Wells Fargo; and (e) those parties who have filed a notice of appearance and

request for service of pleadings in this Case pursuant to Bankruptcy Rule 2002.

29. Effect of this Final Order. This Final Order shall constitute findings of fact and

conclusions of law pursuant to Bankruptcy Rule 7052 and shall take effect immediately,

notwithstanding anything to the contrary proscribed by applicable law.

30. Retention of Jurisdiction. The Court has and will retain jurisdiction to enforce this Final

Order according to its terms.

Dated: May 10th, 2019Wilmington, Delaware

KEVIN GROSSUNITED STATES BANKRUPTCY JUDGE


EXHIBIT 1

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