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UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION ______________________________________ In re: Chapter 11 1 DELTA PRODUCE, L.P. , Case No. 12-50073-LMC Debtors Jointly Administered _______________________________________ RESPONSE BY THE INTERNATIONAL BANK OF COMMERCE TO THE MOTION TO ENTER INTO DEBTOR IN POSSESSION FINANCING WITH INTERNATIONAL BANK OF COMMERCE AND GRANT POST-PETITION LIENS TO THE HONORABLE LEIF M. CLARK, UNITED STATES BANKRUPTCY JUDGE: Now Comes INTERNATIONAL BANK OF COMMERCE (IBC), to file this its Response (the Response) to the Motion to Enter into Debtor in Possession Financing and Grant Post-Petition Liens (the Borrowing Motion) (Doc. No. 157) filed by Debtor, Delta Produce, L.P. (Delta or Debtor), and would show unto the Court as follows. I. 1.1 1.2 1.3. 1.4 1.5 1.6 1.7 SPECIFIC RESPONSES

IBC admits the allegations of fact contained within 1 of the Borrowing Motion. IBC admits the allegations of fact contained within 2 of the Borrowing Motion. IBC admits the allegations of fact contained within 3 of the Borrowing Motion. IBC admits the allegations of fact contained within 4 of the Borrowing Motion. IBC admits the allegations of fact contained within 5 of the Borrowing Motion. IBC admits the allegations of fact contained within 6 of the Borrowing Motion. IBC admits the allegations of fact contained within 7 of the Borrowing Motion.

Debtors are the following entities: Delta Produce, L.P. Case No. 12-50073-LMC-11, Superior Tomato-Avocado, Ltd. Case No. 12-50074-LMC-11, Atled, Ltd. Case No. 12-50075-LMC11 and Staci Properties, Ltd. Case No. 12-50110-LMC

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1.8 1.9 1.10 1.11

IBC admits the allegations of fact contained within 8 of the Borrowing Motion. IBC admits the allegations of fact contained within 9 of the Borrowing Motion. IBC admits the allegations of fact contained within 10 of the Borrowing Motion. To the extent 11 contains any allegation of fact IBC admits to those

allegations, and agrees with Debtors contentions relating to the priming liens and security provided to IBC as adequate protection. 1.12 Paragraph 12 of the Borrowing Motion contains no allegation of fact requiring

admission or denial. 1.13 Paragraph 13 of the Borrowing Motion contains no allegation of fact requiring

admission or denial. 1.14 Paragraph 14 of the Borrowing Motion contains no allegation of fact requiring

admission or denial. 1.15 1.16 IBC admits the allegations of fact contained within 15 of the Borrowing Motion. Paragraph 16 of the Borrowing Motion contains no allegation of fact requiring

admission or denial. 1.17 Paragraph 17 of the Borrowing Motion contains no allegation of fact requiring

admission or denial. II. 2.1 ARGUMENTS AND AUTHORITIES

IBC is a secured creditor of the estate having extended prepetition loans on the

following basis: i. ii. iii. Delta Note in the amount of $1,500,000.00 dated April 23, 2007; Delta Note in the amount of $2,000,000.00 dated April 1, 2007; Delta Note in the amount of $6,000,000.00 dated June 8, 2010;

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iv.

Staci Produce (Superior) Note in the amount of $2,000,00.00 dated March 3, 2005;

v.

Staci Properties (Superior) Note in the amount of $2,400,000.00 dated March 3, 2005; and

vi.

Alted, Ltd. Note in the amount of $1,300,000.00 dated December 12, 2005.

2.2

As of January 4, 2012, IBC shows that the combined outstanding balance owed to

IBC by the Debtors amounts to $6,455,615.00. IBC has previously tendered IBC Exhibit Nos. 116 as attachments to its reply of the Joint Motion of Some PACA Trust Beneficiaries and Debtors for Use of the PACA Trust Funds (Doc. No. 45) and at the hearing held January 13, 2012 providing interim use of cash collateral. IBC requests that the Court take judicial notice of those previously tendered exhibits, including therein, copies of Deed of Trusts and Security Agreements confirming collateral rights of IBC within virtually all property owned by Debtors. In essence, IBC asserts a security interest which globally attaches all of Debtors property including real property, furniture, fixtures and equipment, inventory, account receivables, general in tangible and funds on deposit at IBC. IBCs security interest constitutes a first and prior security interest above all other collateral rights of creditors and parties-in-interest including collateral rights to Debtors receivables/cash and proceeds derived there from. 2.3 On the 12th day of March, 2012, this Court entered its Order Granting Debtors

Amended Application to Use Cash Collateral of IBC (Doc. No. 146). Therein, the Order provides that: IBC is automatically granted a perfected first and priming lien on all the Debtors real property and real property income generated in the form of rents and a lien on all automobiles and trucks and other equipment to the extent the cash collateral of IBC is used to pay any insurance costs; IBC

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shall have no priority or primary liens or claim to or against any property that constitutes trust property under the Perishable Agricultural Commodities Act (PACA), but it shall retain its lien on cash, accounts receivables and proceeds (to the extent that such assets are not PACA trust funds) except unto the extent that Debtors PACA claims are subject to the IBC prepetition security interest, and a second lien on all PACA trust assets not necessary to pay PACA claims, these liens shall be deemed perfected in compliance with state law. Consequently, IBC has both pre and post-petition liens and adequate protection claims against essentially all assets of Debtor excluding only those assets deemed to be PACA Trust Funds. 2.4 IBC has agreed to limited funding at the sole discretion of IBC, the cost and

expenses related to the preservation and marketing of IBC real property collateral which appears to be Debtors only remaining asset. IBC consent is limited to that period at IBCs sole

discretion deemed necessary to determine whether it is in the best interest of IBC for Debtor to continue with marketing and sales efforts to maximize the value of Debtors property, subject to IBC liens. Should IBC determine, at a sole discretion that Debtors sale efforts are not likely to result in a timely sale, maximizing value of IBC collateral, IBC may at its discretion withhold funding and seek alternative relief. 2.5 IBCs willingness to extend post-petition credit is subject to the following: i. Prompt access to any and all information relating to the sales efforts of Debtor, its agents or professionals; ii. Immediate and direct access to any broker, listing agent or other professional retained by or on behalf of the Debtor for the purpose of marketing and selling any or all of the IBC collateral; iii. Immediate access and delivery of any offer received whether written, oral or otherwise, from any interested third-party in relation to the purchase of

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any of Debtors assets which are in whole or in part secured by liens of IBC; iv. IBCs right, at its sole discretion, to reject any proposed sale, contract or proposal, which proposes a purchase price reflecting an amount insufficient to satisfy IBC liens on IBC collateral, made the subject of such offer or proposal. v. Post-petition liens on all Debtors assets, except those subject to PACA clams, offering adequate protection to IBC, for any cash advanced by IBC and consumed by Delta/Superior. PRAYER WHEREFORE, PREMISES CONSIDERED, IBC respectfully requests that upon due consideration, this Court grant the relief requested subject to terms and conditions relating to IBCs interest set forth herein and provide IBC such other relief at law or in equity to which IBC may be justly entitled.: Respectfully submitted, MARTIN & DROUGHT, P.C. 2500 Bank of America Plaza 300 Convent Street San Antonio, Texas 78205-3789 (210) 227-7591 / (210) 227-7924 By: /s/ Michael G. Colvard Michael G. Colvard State Bar No. 04629200 ATTORNEYS FOR INTERNATIONAL BANK OF COMMERCE

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CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing instrument was forwarded via United States Mail, First Class, postage prepaid, to the parties listed on the attached service list on March 27, 2012. /s/Michael G. Colvard Michael G. Colvard

12-50073-lmc Doc#181-1 Filed 03/27/12 Entered 03/27/12 15:44:44 Service List Pg 1 of 2

Delta Produce, LP 2001 S Laredo St San Antonio, TX 78207-7023 United States Trustee - SA12 US Trustee's Office 615 E Houston, Suite 533 PO Box 1539 San Antonio, TX 78295-1539 Dimare Newman, Inc. P.O. Box 517 Newman, CA 95360-0517 Craig A. Stokes Stokes Law Offices, LLP 3330 Oakwell Court, Suite 225 San Antonio, TX 78218 William R. Davis Jr Allen M. DeBard Langley & Banack, Inc 745 E Mulberry, Suite 900 San Antonio, TX 78212 Del Campo Supreme, Inc. 672 W. Frontage Rd. Noales, AZ 85621

A&A Transportation, Inc. 4741 College Park San Antonio, TX 78249

Divine Ripe, LLC 700 S. Bridge St., Suite C Hidalgo, TX 78557

Frank's Distributing of Produce P.O. Box 2020 Nogales, AZ 85628-2020

Harllee Packing, Inc. P.O. Box 8 Palmetto, FL 34220

Harvest Crown Co., Inc. P.O. Box 13578 Bakersfield, CA 93389 J-C Distributing, Inc. 2731 N. Donna Avenue Nogales, AZ 85621

IFCO Systems NA 5250 Tacco Drive San Antonio, TX 78244

Alamo Leasing 2010 NW Military Hwy. San Antonio, TX 78213 International Bank of Commerce 130 E. Travis San Antonio, TX 78205

Kingdom Fresh Produce, Inc. 2243 North Goolie Rd., #A Donna, TX 78537 Mission Produce, Inc. 2500 Vineyad Ave., Suite 300 Oxnard, CA 93036

Juniper Tomato Grower, Inc. P.O. Box 38 Greensboro, FL 32330

Rio Queen Citrus 4012 E. Goodwin Rd. Mission, TX 78574

Royal Flavor, LLC 2655 Melksee St. San Diego, CA 92154

Internal Revenue Service P.O. Box 7346 Philadelphia, PA 19101-7346

Valero Marketing & Supply P.O. Box 300 Amarillo, TX 79105-0300

A & D Carriers 4126 Luckenbach Rd. San Antonio, TX 78251

A&A Concepts, LLC 1219 S. Zarzamora St. San Antonio, TX 78207

Averitt Brokerage Co., Inc. 9999 Perrin Beitel, Suite B San Antonio, TX 78217 Coosemans Houston, Inc. 3124 Produce Row Houston, TX 77023

B. Catalani, Inc. 1500 S. Zarzamora, #326 San Antonio, TX 78207

Banana Distributing Company 1500 S. Zarzamora San Antonio, TX 78207

Fresh Farm Direct, LLC 106 Adams St., Suite 2A Monte Vista, CLO 81144

Gonzalez Mexican Produce 2501 W. Military Hwy., A-23 McAllen, TX 78503

Harllee Packing, Inc. P.O. Box 8 Palmetto, FL 34220

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Henry Avocado Corp. P.O. Box 300867 Escondidio, CA 92030-0867 Kitchen Pride P.O. Box 585 Gonzales, TX 78629

Le Best Banana Supply Co. P.O. Box 295 Hidalgo, TX 78557

M&P Logistics LP 1500 S. Zarzamora, #308 San Antonio, TX 78207

Maxim Egg Farms P.O. BOx 200805 Dallas, TX 75320-0805

Rio Bravo Produce 1006 S. Cesar Chavez Edinburg, TX 78542

Slankard Produce Co., Inc. 1500 S. Zarzamora San Antonio, TX 78207

Sunriver Sales P.O. Box 2738 Visalia, CA 93279

Touchstone & Associates 1500 S. Zarzamora St., #205 San Antonio, TX 78207

Willson Davis Company 1500 S. Zarzamora San Antonio, TX 78207

Robert E. Goldman 1 East Broward Blvd. Ste. 700 Fort Lauderdale, FL 33301

Tijerina & Sons, LLC c/o Zachary B. Aoki Thurman & Phillips, P.C. 8000 IH-10 West, Suite 1000 San Antonio, TX 78230 David G. Aelvoet Linebarger Gogan Blair 711 Navarro, Suite 300 San Antonio, TX 78205 Flatiron Capital c/o Robert L. Barrows 800 Broadway San Antonio, TX 78215
General Electric Capital Corp, NMHG Financial Services, Inc. c/o William H. Daniel McGinnis, Lochridge & Kilgore 600 Congress Ave., Ste. 2100 Austin, X 78701

Market Dispatch Service, Inc. c/o Celinda Baez Guerra Flume Law Firm, LLP 1020 N.E. Loop 410, Ste. 200 San Antonio, TX 78209 Muller Trading c/o Bruce W. Akerly Cantey Hanger LLP 1999 Bryan St., Suite 3300 Dallas, TX 75201
Divine Ripe, Rio Queen Citrus, Eco-Farms Sales, Garguilo, Inc. c/o Michael J. Black Burns & Black 750 Rittiman Road San Antonio, TX 78209 Steven E. Nurenberg Meuers Law Firm 5395 Park Centra Court Naples, FL 34109

Paul T. Curl/ Diana M. Geis Curl & Stahl, P.C. 700 N. St. Marys Street, Suite 1930 San Antonio, TX 78205 Wilson Davis Co. c/o Paul D. Barkhurst Barkhurst & Hinojosa, PC 110 Broadway, Suite 350 San Antonio, TX 78205
W. Scott Jenson c/o Elliott S. Cappuccio/Randall Pulman/Leslie S. Hyman Pulman Cappuccio Pullen & Benson 2161 NW Military Hwy., Suite 400 San Antonio, TX 78213

PACCAR Financial Corp. c/o Robert J. Reagan Reagan McLain Lee & Hatch, LLP 6060 North Central Expy., Ste. 690 Dallas, TX 75206

Divine Ripe, LLC c/o John Kurt Stephen Cardenas & Stephen 100 South Bicentennial McAllen, TX 78501

Daimler Trust c/o Stephen G. Wilcox Bassel & Wilcox P.O. Box 11509 Fort Worth, TX 76110-0509