Local Rule RULE 4001–2: Cash Collateral

RULE 4001–2 Cash Collateral

(a) Motions. Except as provided herein and elsewhere in these Local Bankruptcy Rules, all cash collateral requests under 11 U.S.C. § 363 shall be heard by motion filed under Bankruptcy Rules 2002, 4001, and 9014.

(1) Required Content. In addition to the requirements of Bankruptcy Rule 4001, unless the Court orders otherwise, a motion for authorization to use cash collateral shall set forth, if applicable: (i) if there is an insider relationship between the debtor and the creditor whose cash collateral is to be used, the nature of the relationship; (ii) the nature or source of the cash collateral; (iii) a cash flow projection for the period for which authorization is sought that includes both projected revenue and a line-item proposed budget for the use of the funds; (iv) disclosure of a request for approval (interim or final) of any of the following (which will require an extraordinary showing in an interim or emergency order): (A) cross-collateralization; (B) roll ups (including (i) provisions deeming prepetition debt to be postpetition debt; and (ii) provisions requiring the proceeds of postpetition loans to be used to repay prepetition debt); (C) liens on avoidance actions or proceeds of avoidance actions; (D) default provisions and remedies (including (i) provisions terminating the automatic stay without further order, (ii) provisions waiving rights to challenge lenders' ability to exercise post-default remedies; and (iii) provisions limiting required proof or altering the burden of proof at post-default hearings); (E) releases of claim against lender or others; (F) limitations on the use of cash collateral other than general "carve-outs" to pay approved fees and expenses of advisors to official committees or future trustees; (G) priming liens; and (H) any provision that limits the ability of estate fiduciaries to fulfill their duties under the Bankruptcy Code and applicable law. (v) an estimated amount the debtor owes to creditors claiming an interest in cash collateral as of the date the petition was filed, including, if known, any accrued unpaid interest, costs or fees as provided in any pre-petition agreements; and (vi) a description of the collateral pledged to secure the claims of creditors claiming an interest in cash collateral.

(2) Interim Relief.

(i) When a cash collateral motion is filed with the Court on or shortly after the petition date, the Court may grant interim relief pending review by interested parties of such debtor-in-possession financing arrangement. Such interim relief shall be only what is necessary to avoid immediate and irreparable harm to the estate pending a final hearing.

(ii) A cash collateral order that contains a release of claims against lenders and other third parties by the debtors shall provide that an official committee of unsecured creditors has at least sixty (60) days from the date of the committee's formation to investigate claims against the lenders and challenge the extent and validity of any liens or the appropriateness of such release.

(b) Filing of Notice of Hearing with Motion. Unless filed with a motion to shorten notice and expedite hearing, the moving party must file and serve with the motion, with at least twenty-one (21) days' notice, a notice of the motion and notice of hearing (which complies with this Rule and Local Bankruptcy Rule 9013–1).

(c) Service of Motion. The moving party shall serve a copy of the motion upon the debtor and if applicable, upon: (1) debtor's attorney; (2) any duly appointed trustee; (3) any official committee appointed in the case or its authorized representative; (4) if a chapter 11 case, any additional creditors if required by Bankruptcy Rule 4001(b)(1)(C); and (5) any other party in interest as directed by the Court.

(d) Obtaining a Hearing Date. Prior to filing a motion under this Local Bankruptcy Rule, the moving party shall consult the Court's website to obtain a date and time for the hearing from the dates that are available or contact the Courtroom Deputy.