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United States Bankruptcy Court Central District of California Judge Victoria Kaufman, Presiding Courtroom 301 Calendar San Fernando Valley Thursday, January 24, 2019 301 Hearing Room 9:30 AM James Tomas and Imelda Tomas 1:15-10931 Chapter 13 #1.00 Opposition to declaration re default under adequate protection fr. 12/19/18 78 Docket *** VACATED *** REASON: Rescheduled for 01/23/2019 at 9:30 a.m. - NONE LISTED - Tentative Ruling: Party Information Debtor(s): James Tomas Represented By R Grace Rodriguez Joint Debtor(s): Imelda Tomas Represented By R Grace Rodriguez Trustee(s): Elizabeth (SV) F Rojas (TR) Pro Se Page 1 of 22 1/23/2019 4:56:45 PM

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Page 1: United States Bankruptcy Court Central District of Californiaecf-ciao.cacb.uscourts.gov/Posted/VK_012419.pdf · 2019-01-24 · resume for Mr. Tilem (Exh. 1), it does not contain the

United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

9:30 AMJames Tomas and Imelda Tomas1:15-10931 Chapter 13

#1.00 Opposition to declaration re default under adequate protection

fr. 12/19/18

78Docket *** VACATED *** REASON: Rescheduled for 01/23/2019 at 9:30 a.m.

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

James Tomas Represented ByR Grace Rodriguez

Joint Debtor(s):

Imelda Tomas Represented ByR Grace Rodriguez

Trustee(s):

Elizabeth (SV) F Rojas (TR) Pro Se

Page 1 of 221/23/2019 4:56:45 PM

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

10:30 AMBaseNet, LLC1:14-14742 Chapter 7

#2.00 Trustee's final report and applications for compensation

David K. Gottlieb - Chapter 7 Trustee

Sulmeyer Kupetz - Attorney for Trustee

Crowe Horwath LLP - Accountant for Trustee

Faucher Law and Edward P. Kerns - Attorney's for Debtor

243Docket

The Court will continue this hearing to February 7, 2019 at 10:30 a.m.

Appearances on January 24, 2019 are excused.

Tentative Ruling:

Party Information

Debtor(s):

BaseNet, LLC Represented ByJohn D FaucherEdward P Kerns

Trustee(s):

David Keith Gottlieb (TR) Represented ByDaniel A Lev

Page 2 of 221/23/2019 4:56:45 PM

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

10:30 AMIntegrated Dynamic Solutions, Inc.1:18-12156 Chapter 11

#3.00 Application for payment of interim fees and/or expenses for Reorganization Counsel to Debtor in Possession

90Docket

Contrary to LBR 2016-(a)(1)(J), Law Offices of David A. Tilem ("Applicant") did not include a declaration by the debtor or describe the steps that were taken to obtain the debtor’s consent to the application. Second, although the application includes a resume for Mr. Tilem (Exh. 1), it does not contain the information required by LBR 2016-1(a)(1)(H) with respect to the other billing individuals. Third, contrary to LBR 2016-1(a)(1)(A)(iii), the application does not discuss the estimated amount of other accrued expenses of administration.

Finally, contrary to LBR 2016-1(a)(1)(A)(iii), the application does not discuss the amount of cash on hand in the estate. If the requested fees and expenses are allowed, it is unclear how the debtor would pay the allowed fees and expenses.

Applicant requests allowance and payment of $60,691.67 in attorneys’ fees and costs; according to Applicant, a prepetition retainer in the amount of $10,787.00 remains available to pay approved fees and expenses. Based on the debtor’s most recent monthly operating report, as of November 30, 2018, the debtor had an ending balance of $25,037.65 in its general account and $9,715.39 in its cash collateral account. If all funds in the debtor's general account are used to pay Applicant's allowed fees and expenses (net the prepetition retainer), the Court is concerned about the debtor having sufficient cash reserves to continue to operate. For example, in the Motion for Order Authorizing Debtor to Assume Nonresidential Real Property [doc. 84], the debtor states that it will pay $7,875.00 to cure lease obligation defaults immediately upon entry of an order granting that motion.

Tentative Ruling:

Party Information

Debtor(s):

Integrated Dynamic Solutions, Inc. Represented ByDavid A Tilem

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

1:00 PMAmir Elosseini1:17-13142 Chapter 11

#4.00 Status conference re: chapter 11 case

fr. 2/8/18; 8/16/18; 11/15/18

1Docket

On January 15, 2019, the debtor filed a chapter 11 plan [doc. 84] and related disclosure statement [doc. 85]. The Court intends to set a hearing on the adequacy of the debtor’s proposed disclosure statement on March 14, 2019 at 1:00 p.m. In accordance with Local Bankruptcy Rule 3017-1, no later than January 31, 2019, the debtor must provide notice of the hearing, the ability of creditors to receive, on request, copies of the plan and related proposed disclosure statement, and the deadline to file any objections to the proposed disclosure statement.

The Court will continue this status conference to March 14, 2019 at 1:00 p.m. to be held in connection with the hearing on the adequacy of the debtor’s proposed disclosure statement. The debtor must file a status report, to be served on the debtor’s 20 largest unsecured creditors, all secured creditors, and the United States Trustee, no later than 14 days before the continued status conference. The status report must be supported by evidence in the form of declarations and supporting documents.

Appearances on January 24, 2019 are excused.

Tentative Ruling:

Party Information

Debtor(s):

Amir Elosseini Represented ByKevin Tang

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

1:00 PMRobert Edward Zuckerman1:18-11150 Chapter 11

#5.00 Status conference re: chapter 11 case

from: 8/2/18; 12/6/18

1Docket

The Court will continue this chapter 11 status conference to March 7, 2019 at 2 p.m. to be held in connection with the Party in Interest's Motion to Convert Case to Chapter 7 Nunc Pro Tunc as of May 4, 2018 [doc. 102]. The debtor must file a status report, to be served on the debtor’s 20 largest unsecured creditors, all secured creditors, and the United States Trustee, no later than 14 days before the continued status conference. The status report must be supported by evidence in the form of declarations and supporting documents.

Appearances on January 24, 2019 are excused.

Tentative Ruling:

Party Information

Debtor(s):

Robert Edward Zuckerman Represented BySandford L. FreyStuart I Koenig

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

1:00 PMMidiCi Group, LLC1:18-12354 Chapter 11

#6.00 Status conference re chapter 11 case

fr. 11/8/18

1Docket

On December 26, 2018, the debtor filed an application to employ an accountant [doc. 64] and an application to employ general business counsel [doc. 66]. In both applications the debtor is requesting approval of employment nunc pro tunc as of September 21, 2018.

"Both § 327 and Bankruptcy Rule 2014 explicitly require attorneys [and other professionals] to seek the approval of the court before they commence employment for the estate." In re Downtown Inv. Club III, 89 B.R. 59, 63 (B.A.P. 9th Cir. 1988). "The Ninth Circuit allows retroactive (nunc pro tunc) awards of fees for services rendered without prior court approval where: (1) the applicant has a satisfactory explanation for the failure to receive prior judicial approval; and (2) the applicant has benefitted the estate in some significant manner." In re Mehdipour, 202 B.R. 474, 479 (B.A.P. 9th Cir. 1996), aff'd, 139 F.3d 1303 (9th Cir. 1998). "‘These strict requirements are not to be taken lightly ‘lest it be too easy to circumvent the statutory requirement of prior approval.’" Id. (quoting In re B.E.S. Concrete Prods., Inc., 93 B.R. 228, 231 (Bankr.E.D.Cal.1988)). "A retroactive authorization order should not be issued where the lateness in seeking court approval of employment is accompanied by inexcusable or unexplained negligence." Downtown, 89 B.R. at 63–64.

Under Local Bankruptcy Rule 2014-1(b)(E), "an application for the employment of counsel for a debtor in possession should be filed as promptly as possible after the commencement of the case, and an application for employment of any other professional person should be filed as promptly as possible after such person has been engaged."

Here, the debtor has not explained in either application what circumstances exist such that the Court should approve employment nunc pro tunc.

Tentative Ruling:

Party InformationPage 6 of 221/23/2019 4:56:45 PM

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

1:00 PMMidiCi Group, LLCCONT... Chapter 11

Debtor(s):

MidiCi Group, LLC Represented ByDouglas M NeistatYi S Kim

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

1:00 PMElizabeth Y. Zaharian1:18-12785 Chapter 11

#6.10 Status conference re: chapter 11 case

fr. 1/10/19

1Docket

The parties should address the following:

Deadline for debtor and/or debtor in possession to file proposed plan and related disclosure statement: July 31, 2019.Continued chapter 11 case status conference to be held at 1:00 p.m. on August 15, 2019.

The debtor in possession or any appointed chapter 11 trustee must file a status report, to be served on the debtor's 20 largest unsecured creditors, all secured creditors, and the United States Trustee, no later than 14 days before the continued status conference. The status report must be supported by evidence in the form of declarations and supporting documents.

The Court will prepare the order setting the deadlines for the debtor and/or debtor in possession to file a proposed plan and related disclosure statement.

1/10/2019 Tentative:

Contrary to the Court's Order Setting Hearing on Status of Chapter 11 Case and Requiring Report on Status of Chapter 11 Case [doc. 14], the debtor did not support her status report with evidence. No later than January 17, 2019, the debtor must file and serve a declaration in support of the status report.

In her schedule I, the debtor states that she receives no income; in her schedule J, the debtor lists $16,754.35 in monthly expenses. In her Statement of Financial Affairs, the debtor indicates that she has not received any income in 2016 or 2017, with the exception of $52,000 distributed from an IRA. In the debtor's schedule A/B, the

Tentative Ruling:

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

1:00 PMElizabeth Y. ZaharianCONT... Chapter 11

debtor indicates that she owns an IRA with a value of $1,958.57, as of the petition date. Is this the IRA which generated the $52,0000 in distributions?

In her Statement of Financial Affairs, the debtor indicates that she is married; in her schedule H, the debtor indicates that her spouse resides at the debtor's address. However, the debtor has not included her spouse's income in her schedule I, which requires information about a debtor's non-filing spouse if the spouse lives with the debtor.

The debtor lists multiple liens against her residence (5 of which arise from deeds of trust), totaling $1,984,964.25. Only two of these liens are described as disputed.

Based on the debtor's valuation of her residence, it does not have any non-exempt equity. How will the debtor pay for her monthly living expenses, post-petition? How does the debtor intend to fund a chapter 11 plan?

In her declaration to be filed in support of the status report, the debtor must discuss the debtor's ability to fund her post-petition living expenses, as well as to fund payments required to confirm and to implement a chapter 11 plan.

No later than January 17, 2019, the debtor must file and serve an amended schedule I to include information about her spouse's income, and an amended schedule J to account for her spouse's expense contributions. The debtor also must file her 2017 tax returns with the Court.

If the debtor does not timely file her declaration, her amended schedules and her 2017 tax returns, the Court may convert or dismiss the debtor's case with a 180-day bar pursuant to 11 U.S.C. §§ 105(a), 349 (a) and 1112(b).

Party Information

Debtor(s):

Elizabeth Y. Zaharian Represented ByRaymond H. Aver

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.1:18-12156 Chapter 11

#7.00 Motion for order authorizing debtor to assume nonresidential real property

84Docket

Grant.

Movant must submit the order within seven (7) days.

Note: No response has been filed. Accordingly, no court appearance by movant is required. Should an opposing party file a late opposition or appear at the hearing, the Court will determine whether further hearing is required and movant will be so notified.

Tentative Ruling:

Party Information

Debtor(s):

Integrated Dynamic Solutions, Inc. Represented ByDavid A Tilem

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.1:18-12156 Chapter 11

#8.00 Motion for order extending exclusivity under sec 1121 for a period of 4 month

86Docket

For the reasons discussed below, the Court will grant the motion.

I. BACKGROUND

On August 22, 2018, Integrated Dynamic Solutions, Inc. ("Debtor") filed a voluntary chapter 11 petition. Debtor provides internet and software consulting services, including the development of custom software. Nasrollah Gashtili is Debtor’s only shareholder. Mr. Gashtili is currently a debtor and debtor-in-possession in his own chapter 11 case pending before the Court [1:18-bk-10715-VK].

On December 18, 2018, Debtor filed the Motion for Order Extending Exclusivity Under § 1121 for a Period of 4 Months (the "Motion") [doc. 86]. In the Motion, Debtor requests an extension of the plan filing exclusivity period to April 22, 2019, and the plan confirmation date to June 21, 2019. On January 10, 2019, VitaVet Labs, Inc. ("Creditor") filed an opposition to the Motion (the "Opposition") [doc. 104]. On January 17, 2019, Debtor filed a reply to the Opposition [doc. 113].

II. DISCUSSION

Pursuant to 11 U.S.C. § 1121—

(b) Except as otherwise provided in this section, only the debtor may file a plan until after 120 days after the date of the order for relief under this chapter.

(d)(1) Subject to paragraph (2), on request of a party in interest made within the respective periods specified in subsections (b) and (c) of this section and after notice and a hearing, the court may for cause reduce or

Tentative Ruling:

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

increase the 120-day period or the 180-day period referred to in this section.

(2)(A) The 120-day period specified in paragraph (1) may not be extended beyond a date that is 18 months after the date of the order for relief under this chapter.

(B) The 180-day period specified in paragraph (1) may not be extended beyond a date that is 20 months after the date of the order for relief under this chapter.

"The key question…is whether [an] extension of exclusivity function[s] to facilitate movement towards a fair and equitable resolution of the case, taking into account all the divergent interests involved." In re Henry Mayo Newhall Mem'l Hosp., 282 B.R. 444, 453 (B.A.P. 9th Cir. 2002). Relevant factors showing cause include:

(1) a first extension; (2) in a complicated case; (3) that had not been pending for a long time, relative to its size and complexity; (4) in which the debtor did not appear to be proceeding in bad faith; (5) had improved operating revenues so that it was paying current expenses; (6) had shown a reasonable prospect for filing a viable plan; (7) was making satisfactory progress negotiating with key creditors; (8) did not appear to be seeking an extension of exclusivity to pressure creditors; and (9) was not depriving [creditors] of material or relevant information.

Id., at 452 (citing to In re Dow Corning Corp., 208 B.R. 661, 664-65 (Bankr. E.D. Mich. 1997); In re Express One Int’l, Inc., 194 B.R. 98, 100 (Bankr. E.D. Tex. 1996)).

"The party seeking…an extension or reduction must establish that there is cause for the court to do so based upon the facts and circumstances of the particular case." In re New Meatco Provisions, 2014 WL 917335, at *2 (Bankr. C.D. Cal. Mar. 10, 2014) (unpublished disposition).

Here, this is Debtor’s first extension. Debtor asserts that the complexity in this case has to do with interrelationship between this estate and that of Mr. Gashtili, as well as their joint liability to Creditor. The case has not been pending for a long time.

It does not appear that Debtor is proceeding in bad faith. Debtor has attempted to

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

negotiate with creditors and is in compliance with the Office of the United States Trustee. Further, Debtor has increased its revenue and is able to pay its regular operating bills as they come due. Debtor has shown a reasonable prospect for filing a viable plan. Debtor has successfully completed settlement negotiations with one secured creditor [See doc. 106.] Finally, the extension is not for the purpose of pressuring creditors.

In the Opposition, Creditor argues that Debtor has not shown cause to extend the exclusivity period. However, based on the application of the Dow Corning factors, Debtor has shown sufficient cause to extend the exclusivity period.

Debtor must submit the order within seven (7) days.

Party Information

Debtor(s):

Integrated Dynamic Solutions, Inc. Represented ByDavid A Tilem

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.1:18-12156 Chapter 11

#9.00 Motion for order authorizing use of cash collateral

88Docket

The Court will grant the motion, except with respect to the monthly payments from Automated Systems America, Inc. ("ASAI").

I. BACKGROUND

On July 30, 2014, Integrated Dynamic Solutions, Inc. ("Debtor") and ASAI entered into a licensing agreement (the "Agreement") [doc. 88, Exh. C]. Under the terms of the Agreement, Debtor granted ASAI the non-exclusive right and license to use its software. Id. at sec. 1.1. In return, ASAI is to pay Debtor a one-time license fee in the aggregate amount of $2,2000,000.00. Id. at sec. 1.3. ASAI was to pay $200,000.00 by August 1, 2014, and to pay the remaining $2,000,000.00 in monthly installments of $16,666.67 for 120 months. Id.

On August 22, 2018, Debtor filed a voluntary chapter 11 petition. On September 6, 2018, Debtor filed an emergency motion order authorizing interim and final use of cash collateral (the "First CC Motion") [doc. 18]. VitaVet Labs, Inc. ("Creditor") opposed the First CC Motion. The Court held several hearings on the First CC Motion and allowed the parties to submit supplemental briefing.

On December 7, 2018, the Court entered an order on the First CC Motion granting it in part, and denying in part (the "CC Order") [doc. 81]. Specifically, the Court prohibited Debtor from using the $16,666.67 received each month from ASAI. The Court noted in relevant part in ruling on the First CC Motion,

Keeping in mind that the "ASAI Receivable" is a finite sum of money, it appears that the debtor has not demonstrated the existence of adequate protection for its proposed, ongoing use of the monthly payments made by "ASAI."

Tentative Ruling:

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

Doc. 105, Exh. A.

On December 19, 2018, Debtor filed a second motion for use of cash collateral (the "Motion") [doc. 88]. In the Motion, Debtor argues that the monthly payments from ASAI are not cash collateral. On January 10, 2019, Creditor filed an opposition to the Motion (the "Opposition") [doc. 105]. In the Opposition, Creditor argues that the ASAI payments are an account receivable subject to Creditor’s judgment lien on personal property ("JLPP"). On January 17, 2019, Debtor filed a reply to the Opposition (the "Reply") [doc. 112].

II. DISCUSSION

Pursuant to 11 U.S.C. § 363(a):

In this section, "cash collateral" means cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents whenever acquired in which the estate and an entity other than the estate have an interest and includes the proceeds, products, offspring, rents, or profits of property and the fees, charges, accounts or other payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties subject to a security interest as provided in section 552(b) of this title, whether existing before or after the commencement of a case under this title.

Pursuant to 11 U.S.C. § 363(c)(2):

The trustee may not use, sell, or lease cash collateral under paragraph (1) of this subsection unless—

(A) each entity that has an interest in such cash collateral consents; or

(B) the court, after notice and a hearing, authorizes such use, sale, or lease in accordance with the provisions of this section.

Pursuant to 11 U.S.C. § 363(e):

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11Notwithstanding any other provision of this section, at any time, on request of an entity that has an interest in property used, sold, or leased, or proposed to be used, sold, or leased, by the trustee, the court, with or without a hearing, shall prohibit or condition such use, sale, or lease as is necessary to provide adequate protection of such interest. This subsection also applies to property that is subject to any unexpired lease of personal property (to the exclusion of such property being subject to an order to grant relief from the stay under section 362).

The debtor in possession "has the burden of proof on the issue of adequate protection." 11 U.S.C. § 363(p)(1).

Here, Creditor holds a JLPP over Debtor’s personal property. A JLPP extends to the types of property listed in California Code of Civil Procedure ("C.C.P.") § 697.503.

C.C.P. § 697.503 provides in relevant part,

(a) A judgment lien on personal property is a lien on all interests in the following personal property that are subject to enforcement of the money judgment against the judgment debtor pursuant to Article 1 (commencing with Section 695.010) of Chapter 1 at the time when the lien is created if the personal property is, at that time, any of the following:

(1) Accounts receivable, and the judgment debtor is located in this state.

C.C.P. § 680.130 defines "accounts receivable" as used in C.C.P. § 697.503, as "‘account’ as defined in paragraph (2) of subdivision (a) of Section 9102 of the Commercial Code."

California Commercial Code § 9102 states in relevant part,

(2) "Account," except as used in "account for," means a right to payment of a monetary obligation, whether or not earned by performance, (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered. . .

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

(emphasis added).

Here, Debtor granted ASAI a non-exclusive right and license to use its software. In the Reply, Debtor argues that until a license fee is due, the licensee has no obligation to pay it and the licensor has no right to payment. Debtor contends that until a right to payment exists, there can be no lien. Debtor argues that ASAI's obligation to make the monthly payments is contingent on: (1) ASAI having the right to continue using the software; and (2) Debtor being available to maintain the software.

Under California Commercial Code § 9102, the definition of "account receivable" includes the right to payment of a monetary obligation for property that has been licensed. Under the terms of the Agreement, ASAI is to pay Debtor a one-time license fee, payable in installments. Debtor has a right to the entire amount. If ASAI defaults on the agreement, Debtor can demand 150% of any remaining balance due at the time of the default. Agreement, art. 11. Accordingly, it appears that the payments from ASAI are an account receivable under C.C.P. § 697.503, and therefore, subject to Creditor’s JLPP.

Moreover, 11 U.S.C. § 365(n) applies to the Agreement, and the provisions of § 365(n) further support the characterization of the ASAI payments as an "account," subject to Creditor's JLPP, and as cash collateral.

Pursuant to 11 U.S.C. § 365(n):

(1) If the trustee rejects an executory contract under which the debtor is a licensor of a right to intellectual property, the licensee under such contract may elect—

(A) to treat such contract as terminated by such rejection if such rejection by the trustee amounts to such a breach as would entitle the licensee to treat such contract as terminated by virtue of its own terms, applicable nonbankruptcy law, or an agreement made by the licensee with another entity; or

(B) to retain its rights (including a right to enforce any exclusivity provision of such contract, but excluding any other right under applicable

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

nonbankruptcy law to specific performance of such contract) under such contract and under any agreement supplementary to such contract, to such intellectual property (including any embodiment of such intellectual property to the extent protected by applicable nonbankruptcy law), as such rights existed immediately before the case commenced, for—

(i) the duration of such contract; and

(ii) any period for which such contract may be extended by the licensee as of right under applicable nonbankruptcy law.

(2) If the licensee elects to retain its rights, as described in paragraph (1)(B) of this subsection, under such contract—

(A) the trustee shall allow the licensee to exercise such rights;

(B) the licensee shall make all royalty payments due under such contract for the duration of such contract and for any period described in paragraph (1)(B) of this subsection for which the licensee extends such contract; and

(C) the licensee shall be deemed to waive—

(i) any right of setoff it may have with respect to such contract under this title or applicable nonbankruptcy law; and

(ii) any claim allowable under section 503(b) of this title arising from the performance of such contract.

(3) If the licensee elects to retain its rights, as described in paragraph (1)(B) of this subsection, then on the written request of the licensee the trustee shall—

(A) to the extent provided in such contract, or any agreement supplementary to such contract, provide to the licensee any intellectual property (including such embodiment) held by the trustee; and

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

(B) not interfere with the rights of the licensee as provided in such contract, or any agreement supplementary to such contract, to such intellectual property (including such embodiment) including any right to obtain such intellectual property (or such embodiment) from another entity.

(4) Unless and until the trustee rejects such contract, on the written request of the licensee the trustee shall—

(A) to the extent provided in such contract or any agreement supplementary to such contract—

(i) perform such contract; or

(ii) provide to the licensee such intellectual property (including any embodiment of such intellectual property to the extent protected by applicable nonbankruptcy law) held by the trustee; and

(B) not interfere with the rights of the licensee as provided in such contract, or any agreement supplementary to such contract, to such intellectual property (including such embodiment), including any right to obtain such intellectual property (or such embodiment) from another entity.

Even if Debtor were to reject the Agreement, ASAI has the right to continue to exploit the license, under § 365(n). If it does so, ASAI must pay the licensing fee to the bankruptcy estate.

In light of the provisions of the Agreement, and CCP §§ 697.503 and 680.130, as well as the application of 11 U.S.C. § 365(n), the ASAI installment payments under the Agreement constitute cash collateral.

As the Court noted previously, the monthly installments from ASAI are a finite sum of money. Debtor has not demonstrated the existence of adequate protection for its proposed, ongoing use of the monthly installment payments.

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.CONT... Chapter 11

III. CONCLUSION

The Court will grant the Motion in part, and deny with respect to use of the monthly installments made by ASAI under the Agreement.

Debtor must submit the order within seven (7) days.

Party Information

Debtor(s):

Integrated Dynamic Solutions, Inc. Represented ByDavid A Tilem

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.1:18-12156 Chapter 11

#10.00 Motion of creditor Vitavet Labs, Inc. for appointmrnt of chapter 11 examiner per 11 U.S.C. section 1104

Order appr stip to cont ent 1/7/19

fr. 1/17/19;

92Docket

Deny. Movant has not established that the appointment of an examiner in this case "is in the interests of creditors, any equity holders, and other interests of the estate." 11 U.S.C. § 1104(c).

Debtor must submit the order within seven (7) days.

Evidentiary Rulings

Debtor’s Objections to the Declaration of Matt Simpson [doc. 92]

paras. 3-9: sustained.

Tentative Ruling:

Party Information

Debtor(s):

Integrated Dynamic Solutions, Inc. Represented ByDavid A Tilem

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United States Bankruptcy CourtCentral District of California

Judge Victoria Kaufman, PresidingCourtroom 301 Calendar

San Fernando Valley

Thursday, January 24, 2019 301 Hearing Room

2:00 PMIntegrated Dynamic Solutions, Inc.1:18-12156 Chapter 11

#11.00 Application for payment of interim fees and/or expenses for David A Tilem, Debtor's Attorney

90Docket *** VACATED *** REASON: Hearing advanced to 10:30 a.m. per order

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Integrated Dynamic Solutions, Inc. Represented ByDavid A Tilem

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