Local Rule LBR 4001-2: Cash Collateral and Post-Petition Credit

LBR 4001-2 Cash Collateral and Post-Petition Credit

(a) Motion. A motion for authority to use cash collateral or to obtain post-petition credit shall state the amount of cash collateral to be used or credit to be obtained, a narrative and budget reflecting the intended use of the funds, and any proposal for providing adequate protection. With respect to a motion for authority to obtain credit, the motion must identify the name and address of the lender and the proposed terms of the financing.

(b) Service. In addition to the requirements of Bankruptcy Rules 4001(b)(1) and (c)(1), a motion for authority to use cash collateral or to obtain post-petition credit shall be served on the United States Trustee, any trustee, and any federal or state taxing authority having a claim against the debtor. A motion for authority to obtain post-petition credit must also be served on any creditors asserting an interest in the collateral securing the post-petition credit and any proposed lenders.

(c) Interim Relief. Any motion seeking interim relief under Bankruptcy Rules 4001(b) or 4001(c) shall state the reasons necessitating an early hearing, the nature of any interim adequate protection or lien to be provided, and an estimation of the amount of cash collateral or credit that shall be used to avoid immediate and irreparable harm to the estate pending a final hearing.

(d) Chapter 11 Cases.

(1) Certain Provisions Restricted. Except as provided in subsection (d)(2) of this LBR, the following provisions in an agreement approving or authorizing the use of cash collateral, obtaining credit, or providing adequate protection, shall be unenforceable:

(A) Any acknowledgement of the validity, amount, perfection, priority, extent or enforceability of the secured claim, if the agreement or order purports to bind any party other than the debtor, unless the agreement or order affords an objection period of not less than 60 days after the earlier of (i) court approval of the retention of counsel to any creditor's committee, or (ii) an order authorizing the appointment of a trustee, during which period any committee or trustee may challenge the secured claim on any basis;

(B) Any release of claims or waiver of defenses by the debtor or estate representative;

(C) Any post-petition lien to secure a claim of a secured creditor other than (i) a claim arising from post-petition advances which constitute an additional non-replacement extension of credit, or (ii) a claim representing the diminution in value of a prepetition secured claim after the commencement of the case;

(D) Any grant of a security interest in avoidance actions or their proceeds;

(E) Any provision granting a creditor relief from the automatic stay without further order or hearing upon the breach of the cash collateral, adequate protection, or post-petition financing order or agreement;

(F) Provisions that grant cross-collateralization protection (other than replacement liens or other adequate protection) to the prepetition secured creditors;

(G) Provisions that provide treatment for the professionals retained by a committee appointed by the United States Trustee different from that provided for the professionals retained by the debtor with respect to a professional fee carve out, and provisions that limit the committee counsel's use of the carve out;

(H) Provisions that prime any secured lien, without the consent of that lienholder; and

(I) A declaration that the order does not impose lender liability of any secured creditor.

(2) Conspicuous Notice. The court may approve any terms and conditions listed above, provided that the (a) motion states the justification for the inclusion of such provision, and (b) proposed terms and conditions are boldface or otherwise conspicuously set forth in the proposed agreement or order.