Вы находитесь на странице: 1из 6

Case 13-04747

Doc 4-1

Filed 02/08/13

Entered 02/08/13 19:22:43

Desc Exhibit

1- Emergency Motion for Use of Cash Collateral

Page 1 of 6

IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

In re:

)

In Chapter 11

)

Case No. 13 B 04747

CIRCLE FAMILY HEALTHCARE

)

NETWORK, an Illinois Not-For-Profit

)

Honorable A. Benjamin Goldgar

Corporation

)

)

Motion Date:

Debtor.

)

Motion Time:

EMERGENCY MOTION FOR ENTRY OF ORDER PERMITTING DEBTOR INTERIM USE OF CASH COLLATERAL BELONGING TO NCB CAPITAL IMPACT AND U.S. BANK NATIONAL ASSOCIATION

Debtor, CIRCLE

FAMILY

HEALTHCARE

NETWORK, an

Illinois Not-For-Profit

Corporation, (“Debtor”), by and through its attorneys, GOLAN & CHRISTIE LLP, moves this

Court to enter an order permitting interim use of cash collateral belonging to NCB CAPITAL

IMPACT f/k/a NCB DEVELOPMENT CORPORATION (hereinafter “NCB”) and U.S. BANK

NATIONAL ASSOCIATION (hereinafter “US Bank”) in support thereof represents to the Court

as follows:

BACKGROUND

1. On February 8, 2013, Debtor filed a voluntary case under Chapter 11 of Title 11

of the United States Code ("Bankruptcy Code").

2. Debtor is in the business of education services, community development initiative

and providing limited health care.

3. This Court has jurisdiction over this Application pursuant to 28 U.S.C. §157 and

§1334. Venue is proper pursuant to 28 U.S.C. §§1408 and 1409. This matter is a core proceeding

pursuant to 28 U.S.C. §157(b).

4. No creditor’s committee has been appointed in these cases. No trustee has been

appointed. No patient care Ombudsman has been appointed.

Case 13-04747

Doc 4-1

Filed 02/08/13

Entered 02/08/13 19:22:43

Desc Exhibit

1- Emergency Motion for Use of Cash Collateral

Page 2 of 6

SECURITY INTEREST OF NCB

5. On or about January 10, 2006, NCB and Debtor entered into a loan and security

agreement (the “NCB Loan Agreement”), pursuant to which NCB agreed to extend a loan to

refinance an existing line of credit debt with NCB used by the Debtor in the amount of

$485,000.00 (the “NCB Loan.”). A copy of the Loan is attached hereto as Exhibit A.

6. On or about February 1, 2006, and in connection with the NCB Loan, Debtor

executed a promissory note in the amount of $485,000.00.

attached hereto as Exhibit B.

A copy of the promissory note is

7. Pursuant to Section 8 of the NCB Loan Agreement, the NCB loan was secured by

Debtor’s accounts receivable that were less than 90 days old and other instruments, general

intangibles, contract rights and proceeds, chattel paper and proceeds, inventory, equipment,

furniture and fixtures (the “Collateral”).

8. NCB allegedly holds a lien on the Collateral. It filed an initial UCC-1 financing

statement with the Illinois Secretary of State under Filing No. 12345658 on July 27, 2006

attached hereto as Exhibit C. No continuation statement has been located.

9. NCB alleges a balance due of $86,282.55 as of the date of filing.

SECURITY INTEREST OF US BANK

10. On or about November 1, 2008, Park National Bank (hereinafter referred to as

“Park National”) and Debtor entered into a Business Loan and Commercial Security Agreement

(the “Park National Loan Agreements”), pursuant to which Park National agreed to extend a loan

and refinanced a previous loan for the total sum of $300,000.00 (the “Park National Loan.”).

A

copy of the Loan Agreements are attached hereto as Group Exhibit D.

11. Pursuant to the Park National Loan Agreements, the Park National Loan was

secured by all of Debtor’s general business assets including all inventory, equipment, accounts

Case 13-04747

Doc 4-1

Filed 02/08/13

Entered 02/08/13 19:22:43

Desc Exhibit

1- Emergency Motion for Use of Cash Collateral

Page 3 of 6

(including but not limited to all health-care-insurance receivables and grants), instruments,

general

intangibles,

contract

rights

and

proceeds,

equipment, furniture and fixtures (the “Collateral”).

chattel

paper

and

proceeds,

inventory,

12. Upon information and belief, the Park National Loan was transferred, sold or

assigned and after multiple transfers is currently held with US Bank.

13. On or about December 1, 2011, US Bank and the Debtor entered into an

Extension Agreement of the Park National Loan for the principle amount of $298,538.00

(hereinafter known as the “US Bank Agreement”).

14. US Bank allegedly holds a valid perfected lien on the Debtor’s assets to the extent

set forth in the Park National Loan Agreement.

The most current UCC-1 financing statement

filed by US Bank with the Illinois Secretary of State under Filing No. 9098825 on March 11,

2011 is attached hereto as Exhibit E.

15. US Bank alleges a balance due of $$226,311.00 as of the date of filing.

DEBTOR REQUIRES USE OF CASH COLLATERAL

16. The Debtor requires the use of its cash collateral as it is defined in Section 363(a)

of the Bankruptcy Code and requests authorization of this Court to utilize the cash collateral

pursuant to the provisions of Section 363(c)(2)(B) of the Bankruptcy Code. A statement showing

Debtor’s anticipated expenses is attached hereto as Exhibit F.

17. Neither NCB nor US Bank will be harmed by the interim use of cash collateral

generated from the assets and proceeds thereof.

Further, Debtor proposes to grant NCB and US

Bank replacement liens upon the assets Debtor acquires subsequent to the filing of the Chapter 11

petition to the extent of the collateral utilized, subject to verification of the extent and validity of

their liens.

In addition, as adequate protection, Debtor proposes to grant NCB and US Bank

replacement liens upon the proceeds from assets Debtor acquires subsequent to the filing of the

Case 13-04747

Doc 4-1

Filed 02/08/13

Entered 02/08/13 19:22:43

Desc Exhibit

1- Emergency Motion for Use of Cash Collateral

Page 4 of 6

Chapter 11 petition to the extent that the collateral is utilized subject to verification of the extent

and validity of the lien.

18. The use of collateral held by the NCB and US Bank will cause little, if any, harm

to NCB and US Bank. Conversely, the harm to the Debtor will be substantial because the use of

cash collateral is essential to its status as a going concern. Debtor proposes to make monthly

adequate protection payments to NCB in the amount of $6,015.00 until a hearing on a final order

for use of cash collateral can be heard in order to protect NCB from any erosion of its lien upon

the Debtor’s assets due to the continuance of the automatic stay pursuant to §362 of the

Bankruptcy Code. In addition, Debtor proposes to make monthly adequate protection payments to

US Bank in the amount of $4,085.00 until a hearing on a final order for use of cash collateral can

be heard in order to protect US Bank from any erosion of its lien upon the Debtor’s assets due to

the continuance of the automatic stay pursuant to §362 of the Bankruptcy Code. The Debtor

further believes that NCB and US Bank are fully protected for the value of their liens provided by

replacement liens to the extent of collateral utilized. The amounts being offered to NCB and US

Bank are the average sums that they were receiving pre-petition.

NATURE OF EMERGENCY

19. The Debtor has no other non-designated sources of income for its overhead costs

including but not limited to salaries, benefits, rents, medical supplies, laboratory expenses,

utilities, insurance and other items required to operate its business. If Debtor is not given the use

of cash collateral, it will be unable pay its ongoing expenses as described in Exhibit F. If Debtor

is unable to pay the ongoing expenses, it will be unable to pay its employees, pay rent and acquire

supplies and provide health care services. In turn the Debtor will then be forced into a premature

liquidation.

Case 13-04747

Doc 4-1

Filed 02/08/13

Entered 02/08/13 19:22:43

Desc Exhibit

1- Emergency Motion for Use of Cash Collateral

Page 5 of 6

20. Pursuant to Rule 4001(b) of the Bankruptcy Rules, Debtor must give 14 day

notice to all creditors and parties in interest of a motion requesting leave to use cash collateral.

However, pursuant to Rule 4001(b)(2), the court may conduct a preliminary hearing before the 14

day period expires as is necessary to avoid immediate and irreparable harm.

NOTICE

21. Notice of this Emergency Motion has been served upon the Trustee, all parties

holding a lien upon the Debtor’s assets and the twenty largest creditors. Debtor believes that it is

appropriate to reduce the time for notice of this application.

DISCLOSURE PURSUANT TO LR 4001-2

22. Debtor represents that none of the provisions of the proposed cash collateral

warrant highlighting as required by LR 4001-2.

WHEREFORE, Debtor, CIRCLE FAMILY HEALTHCARE NETWORK, an Illinois Not-

For-Profit Corporation, prays that an order be entered as follows:

A. Authorizing it to utilize cash collateral to the extent needed pursuant to the

attached budget;

B. Granting NCB and US Bank liens on the proceeds from assets Debtor acquires

subsequent to the filing of the Chapter 11 petition to the extent that the collateral is utilized

subject to verification of the extent and validity of the lien;

C. Authorizing Debtor to make adequate assurance payments to NCB in the amount

of $6,015.00 pending the final hearing on use of cash collateral;

D. Authorizing Debtor to make adequate assurance payments to US Bank in the

amount of $4,085.00 pending the final hearing on use of cash collateral;

E. Reducing the time required for notice to all creditors and parties in interest;

F. Setting the matter down for final hearing on use of cash collateral; and

Case 13-04747

Doc 4-1

Filed 02/08/13

Entered 02/08/13 19:22:43

Desc Exhibit

1- Emergency Motion for Use of Cash Collateral

Page 6 of 6

G. For such other and further relief as this Court deems just and proper.

Robert R. Benjamin (ARDC # 0170429) Beverly A. Berneman (ARDC # 06189418) GOLAN & CHRISTIE LLP Attorneys for Debtor 70 West Madison, Suite 1500 Chicago, Illinois 60602

312-263-2300

CIRCLE FAMILY HEALTHCARE NETWORK, an Illinois Not-For-Profit Corporation, Debtor,

/s/

Robert R. Benjamin

Robert R. Benjamin One of its attorneys