Local Rule RULE 4001-3: Use of Cash Collateral and Obtaining Credit

RULE 4001-3 Use of Cash Collateral and Obtaining Credit A. Upon the filing of a motion for use of cash collateral or for obtaining credit, the movant must contact chambers for a hearing date. The movant must serve the motion and notice of hearing upon the entire mailing matrix. If an emergency hearing is held on less than twenty-one (21) days notice, the court may enter an interim order and schedule a final hearing on the matter. Interim relief may be granted when necessary to avoid immediate and irreparable harm to the estate pending a final hearing.

B. All motions for use of cash collateral or for obtaining credit must provide a summary of the essential terms (e.g. the interim and final borrowing limits, conditions, interest rate, maturity, events of default, limitations on use of funds, and protections afforded).

C. If applicable, all motions for use of cash collateral and for obtaining credit must include an explanation as to how the terms of the proposed relief differ from the terms of credit existing under the prepetition relationship. The motion must also include a detailed description of the terms of relief and highlight any provision which might prohibit or hamper the debtor, debtor's counsel, official committee, or the trustee from exercising their fiduciary responsibilities following the entry of the order. Requests for use of cash collateral and to approve debtor-in-possession financing must not request approval of any provision that limits the power of the court or the exercise of its judgment, except when the specific relief is requested in the motion and the provisions are separately detailed in the prayer for relief and the proposed Order.

D. Motions for use of cash collateral and for obtaining credit and their proposed orders must highlight the following provisions:

1. Cross-collateralization protection to the prepetition secured creditors;

2. Findings of fact that bind the estate or other parties in interest with respect to the validity, perfection or amount of the secured creditor's prepetition lien or the waiver of claims against the secured creditor without first giving parties in interest at least seventy-five (75) days from entry of the order, and the creditors' committee at least sixty (60) days from the date of its formation, to investigate such matters;

3. Waiver of estate rights;

4. Grants to a prepetition secured creditor liens on the debtor's claims and causes of action arising under 11 U.S.C. §§ 544, 545, 547, 548, and 549;

5. Declarations that deem prepetition secured debt to be postpetition debt or that use postpetition loans from a prepetition secured creditor to pay part or all of that secured creditor's prepetition debt, other than as provided in 11 U.S.C. § 552(b); and 6. Priming of any lien without the consent of that lienor.

E. After the court rules on the motion for approval of use of cash collateral or for obtaining credit, the movant must submit a proposed order. The proposed order or interim order must not incorporate loan documents by reference but must contain the salient terms of the relief.

See Local Rule 2002-1.