JASPAN SCHLESINGER LLP Attorneys for Secured Creditor, Capital One, NA.

300 Garden City Plaza Garden City, New York 11530 (516) 393-8289 Frank C. Dell' Amore, Esq. UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

Return Date and Time: March 23, 2011 at 11:00 a.m.

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In re: LEHR CONSTRUCTION CORP. Case No. 11-10723 (SHL) Debtor. Chapter II

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LIMITED OBJECTION TO MOTIONS AND NOTICES OF PRESENTMENT SEEKING PERMISSION TO USE CASH COLLATERAL IN WlllCH CAPITAL ONE, N.A. HAS AN INTEREST
TO THE HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE Capital One, N.A., successor by merger to North Fork Bank (the "Bank"), by and through its counsel, Jaspan Schlesinger LLP, submits this Limited Objection to the following submissions of the debtor, Lehr Construction Corp. ("Debtor"): (1) Notice of Presentment of Final Order Pursuant to Section 105(a), 363(b), and 541 of the Bankruptcy Code (I) Authorizing Payment of Certain Prepetition Taxes and (II) Allowing Financial Institutions to Cash and Process Related Checks [Docket No. 28]; (2) Amended Notice of Presentment of Final Order Pursuant to Sections 105(a), 362(d), 363(b) and 503(b) of the Bankruptcy Code and Bankruptcy Rules 4001(d) and 6004(a) (I) Authorizing Debtor to (A) Continue its Workers' Compensation Program and Its Insurance Programs and (B) Pay All Obligations in Respect Thereof and (II) Authorizing Financial Institutions to Honor and Process Checks and Transfers Related to Such Obligations

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[Docket No. 29]; (3) Notice of Presentment of Final Order Pursuant to Section 105(a) and 363(b) of the Bankruptcy Code (!) Authorizing Payment of Wages, Compensation and Employee Benefits and (II) Authorizing Financial Institutions to Honor and Process Checks and Transfers Related to Such Obligations [Docket No. 30]; (4) Notice of Motion For an Order, Pursuant to Sections 1OS( a), 327, 328, and 330 of the Bankruptcy Code, Authorizing the Employment of Professionals Utilized in the Ordinary Course of Business Nunc Pro Tunc to the Petition Date [Docket No. 31]; (5) Notice of Debtor's Application For Entry of An Order Under Bankruptcy Code Sections 327, 328 and 330 Authorizing Retention and Employment of Rosen Seymour Shapss Martin & Company LLP as Financial Advisor to the Debtor Nunc Pro Tunc to the Petition Date [Docket No. 25]; and (6) Notice of the Debtor's Motion for Entry of An Order Authorizing Payment of Prepetition Critical Construction Vendor Claims and to Provide Adequate Assurance of Future Performance for Subcontractors and Materialmen who have Statutory Lien Rights [Docket No. 46] (collectively, the "Motions"). In further support thereof, Bank alleges as follows: BACKGROUND
1. On February 22, 2011(the "Filing Date"), the Debtor filed for protection under Chapter

11, Title 11 of the Bankruptcy Code, whereupon the Debtor was authorized to continue in the operation and control of its business and property as a debtor-in-possession pursuant to Sections 11 07 and 1108 of the Bankruptcy Code. 2. On August 26, 2006, the Debtor executed a Security Agreement, granting the Bank a security interest in all property, then owned or thereafter acquired by the Debtor, including, without limitation, all goods, consumer foods, farm products, inventory, equipment, furniture, money, instruments, accounts, accounts receivable. contract rights, documents, chattel paper and

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general intangibles (collectively the "Collateral"), and all products and proceeds thereof
("Security Agreement").

The income generated by the Collateral is cash collateral ("Cash

Collateral") within the meaning of the Bankruptcy Code.

3. The Security Agreement also secures, inter alia, any and all liabilities of the Debtor to the Bank, whether they were direct or indirect, absolute or contingent, present or future, due or to become due. 4. On September 1, 2006, the Bank duly perfected its security interest in the Collateral by tlling a UCC Financing Statement with the New York Department of State, under filing number 200609015861205. 5. On May 5, 2010, the Bank issued a letter of credit in the amount of $5,000,000.00 for account of the Debtor and for the benefit of a third-party, NBA Properties, Inc. ("NBA"), which letter of credit was thereafter amended on December 17, 2010 to reduce the amount of credit available thereunder to $3,000,000.00 (the ''Letter of Credit''). 6. in connection with the Letter of Credit, the Debtor executed a Continuing Agreement for Irrevocable Standby Letters of Credit, in which the Debtor again granted the Bank a security interest in all of the Collateral. 7. Accordingly, Bank is a secured creditor of the Debtor and based on the undersigned's review of the New York State, Division of Corporations, State Records and Uniform Commercial Code's website, no other creditor of the Debtor has a blanket security interest superior to that of the Bank's security interest 8. As of the Filing Date, the Bank has a secured contingent claim against the Debtor in the amount of $3,000,000.00. 9. Indeed, at any time, the NBA has the irrevocable right to liquidate the Letter of Credit,

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requiring the Bank to pay the NBA as much as $3,000,000.00

LIMITED OBJECTION

10. Pursuant to II U.S.C. 363(e), the Bank hereby requests that this Court limit the Debtor's use of Cash Collateral to the tenns set forth in the Interim Order (I) Authorizing Debtor to Obtain Postpetition Financing Pursuant to Section 364(C)(3) of the Bankruptcy Code, (II) Authorizing Use of Cash Collateral Pursuant to Section 363 of the Bankruptcy Code, (III) Granting Certain Liens, (IV) Granting Adequate Protection to Prepetition Lender, and (V) Modifying the Automatic Stay ("Interim Order") and the Budget attached thereto as Exhibit "B." See Docket No. 73. II. The Bank and the Debtor have been attempting to come to an agreement permitting the Debtor to use the Bank's Cash Collateral; however the parties have not been able to reach an agreement as to the adequate protection to be given to the Bank in exchange for such use of Cash Collateral. 12. The Replacement Liens given in the Interim Order do not constitute adequate protection for the Debtor's use of Cash Collateral because a significant unknown portion of the Debtor's post-petition receivables are subject to a trust funds for the benefit of a subcontractors, as well as for the payment of payroll taxes, unemployment taxes, employment benefits and insurance premiums, pursuant to New York Lien Law 70 et seq. 13. Thus, without certainty as to the amount of the post-petition receivables which would be available to the Bank, the Replacement Liens do not constitute adequate protection. \4. "The purpose of 'adequate protection' for a creditor 'is to insure that the creditor receives the value for which he bargained prebankruptcy."' In re: Mosello, 195 B.R. 277, 288 (Bankr. S.D.N.Y. 1996) citing In re: Swedeland Development Group, Inc., 16 F.3d 552, 564 (3d Cir.

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1994). 15. The Debtor has the burden of establishing that the Bank Swedeland, supra, 16 F.3d at 564 16. A finding of adequate protection should not be based on speculation; rather it "should be premised on facts, or on projections grounded on a firm evidentiary basis." Mosello, supra 195 B.R. at 292. 17. Plaintiff respectfully submits that the Replacement Liens are speculative and not premised on facts or a firm evidentiary basis. 18. Therefore, the Debtor cannot establish that the Bank will be adequately protected if the Debtor is permitted to use the Bank's Cash Collateral. 19. Regardless. the Bank consented to the Interim Order with the understanding that a thirdparty will pledge additional collateral to it in the form of a specific securities account maintained at a nationally recognized brokerage house. 20. Thus, the Bank is hopeful that it will be adequately protected before the expiration of the Interim Order (AprilS, 2011). 21. Until such time, it is respectfully requested that the Debtor's use of Cash Collateral be in accordance with the terms and conditions of the Interim Order.
IS

adequately protected.

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WHEREFORE, the Bank respectfully requests that this Court limit the Debtor's use of Cash
Collateral to the terms of the Interim Order, together with such other and further relief as this Court deems just and proper. Dated: Garden City, New York March 21,2011 JASPAN SCHLESINGER LLP Attorneys for Capital One, N.A.

By: Is/ Frank C Dell 'Amore Frank C. Dell' Amore, Esq. 300 Garden City Plaza Garden City, New York 11530 (516) 393-8289

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK --------------------------------------------------------------------X In re: LEHR CONSTRUCTION CORP., Debtor. ---------------------------------------------------------------------X

Chapter 11 Case No.: 11-10723 (SHL) AFFIDAVIT OF SERVICE

JENNIFER VELEZ, of Nassau County, New York being duly sworn, deposes and says that deponent is not a party to this proceeding and is over 18 years of age. On March 21, 2011, deponent served a copy of the within LIMITED OBJECTION TO MOTIONS AND NOTICES OF PRESENTMENT SEEKING PERMISSION TO USE CASH COLLATERAL IN WHICH CAPTIAL ONE, N.A. HAS AN INTEREST, annexed thereto, upon the party(ies) listed below, at the address(es) listed below, said address(es) being designated for that purpose via regular first class mail by depositing a true copy of same enclosed in a properly addressed wrapper, in an official depository under the exclusive care and custody of the US Postal Service. To: Lehr Construction Corp. 902 Broadway New York, NY 10010 James A. Beldner, Esq. Cooley LLP 1114 Avenue of the Americas New York, NY 10036 Susan D. Golden, Esq. Office of United States Trustee SDNY 33 Whitehall Street New York, NY 10004 Fred Stevens, Esq. Klestadt & Winters, LLP 570 Seventh Ave. 17th Floor New York, NY 10018

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Mitchell D. Goldberg, Esq. Ochs & Goldberg, LLP 60 East 42nd Street, Suite 2101 New York, New York 10165 Burton S. Weston, Esq. Afsheen Shah, Esq. Garfunkel Wild, P.C. 111 Great Neck Road Great Neck, New York 11021 Lori Lapin Jones, Esq. Lori Lapin Jones PLLC 98 Cutter Mill Road, Suite 201 North Great Neck, New York 11021 Albert Turi, Esq. General Counsel BWD Group LLC BWD Plaza P.O. Box 9050 Jericho, New York 11753-8950 Anna J. Ervolina, Esq. Morris Duffy Alonso & Faley 2 Rector Street, 22nd Floor New York, New York 10006 Robert L. Pryor, Esq. Pryor & Mandelup, L.L.P. 675 Old Country Road Westbury, New York 11590 Seth Ptasiewicz, Esq. Trivella & Forte, LLP 1311 Mamaroneck Avenue, Suite 170 White Plains, New York 10605

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Todd M. Galante, Esq. Jason C. DiBattista, Esq. LeClairRyan, A Professional Corporation One Riverfront Plaza, 16th Floor 1037 Raymond Boulevard Newark, New Jersey 07102

/s/ Jennifer Velez JENNIFER VELEZ Sworn to before me this 21st day of March, 2011

/s/ Sandra A. Noisette Notary Public

Sandra A. Noisette Notary Public, State of New York No. 01NO6207868 Qualified in Nassau County Commission Expires June 15, 2013

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