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Full title: Ex Parte Motion for Continuation of Utility Service and Approval of Adequate Assurance of Payment to Utility Company Under Section 366(b) Filed by Debtor The Prospect-Woodward Home (Attachments: # 1 Exhibit A # 2 Exhibit B) (Astringer, Stephen) (Entered: 09/03/2021)

Document posted on Sep 2, 2021 in the bankruptcy, 9 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

The above-captioned debtor (“Hillside Village” or the “Debtor”) hereby moves (this “Motion”) pursuant to sections 105(a) and 366 of title 11 of the United States Code (the “Bankruptcy Code”), and Rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) for the entry of an order, substantially in the form of Exhibit A attached hereto (the “Proposed Order”) (i) prohibiting Utility Providers (as defined below) from altering, refusing, or discontinuing service, (ii) determining that adequate assurance of payment for post-petition utility services has been furnished to the Utility Providers, and (iii) establishing procedures for resolving future requests for additional adequate assurance.By this Motion, the Debtor seeks entry of an order: (a) prohibiting the Utility Providers from altering, refusing, or discontinuing service on account of unpaid prepetition invoices; (b) determining that, pursuant to Bankruptcy Code section 366, adequate assurance of payment for postpetition utility services has been furnished to the Utility Providers; and (c) approving the Additional Adequate Assurance Procedures (as defined below) as the method for resolving future requests by any Utility Provider for additional adequate assurance of payment.Consistent with Bankruptcy Code section 366(c)(1)(A), which defines the phrase “assurance of payment” to include, among other things, a cash deposit, and given the relatively de minimis amount of the funds required, the Debtor proposes to segregate on its books and records, within twenty (20) days of the entry of the Proposed Order an amount equal to the estimated cost for two weeks of Utility Services for each Utility Provider (each, an “Adequate Assurance Deposit”) calculated based on the historical data for TTM 7/31/2021 into one segregated bank account designated for the Adequate Assurance Deposits (the “Adequate Assurance Deposit Account”) for the benefit of all Utility Providers.Congress enacted Bankruptcy Code section 366 to protect a debtor from immediate termination of utility services after filing for bankruptcy, while at the same time providing the utility companies with adequate assurance of payment for post-petition utility services.(finding utility company violated Bankruptcy Code section 366 when it refused to restore debtor’s electric service, upon notice of bankruptcy filing, without prepayment of deposit as adequate assurance of future payment).

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF NEW HAMPSHIRE In re: ) Chapter 11 ) The Prospect-Woodward Home ) Case No. 21-10523-BAH dba Hillside Village, ) ) Debtor.1 ) ) EX PARTE MOTION OF DEBTOR FOR ENTRY OF AN ORDER (I) PROHIBITING UTILITY PROVIDERS FROM ALTERING, REFUSING, OR DISCONTINUING SERVICE AND (II) APPROVING THE DEBTOR’S PROPOSED ADEQUATE ASSURANCE OF PAYMENT FOR POSTPETITION SERVICES The above-captioned debtor (“Hillside Village” or the “Debtor”) hereby moves (this “Motion”) pursuant to sections 105(a) and 366 of title 11 of the United States Code (the “Bankruptcy Code”), and Rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) for the entry of an order, substantially in the form of Exhibit A attached hereto (the “Proposed Order”) (i) prohibiting Utility Providers (as defined below) from altering, refusing, or discontinuing service, (ii) determining that adequate assurance of payment for post-petition utility services has been furnished to the Utility Providers, and (iii) establishing procedures for resolving future requests for additional adequate assurance. In support of the Motion, the Debtor respectfully represents as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. § 157(b). 2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. 1 The last four digits of the Debtor’s federal taxpayer identification are 2146. The address of the Debtor’s headquarters is 95 Wyman Road, Keene, New Hampshire 03431.

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3. The statutory predicates for the relief requested herein are Bankruptcy Code sections 105 and 366 and Bankruptcy Rules 6003 and 6004. BACKGROUND 4. On August 30, 2021 (the “Petition Date”), the Debtor commenced this case by filing a voluntary petition for relief under chapter 11 of the Bankruptcy Code (the “Chapter 11 Case”). 5. The factual background regarding the Debtor, including business operations, capital and debt structure, and the events leading to the filing of the Chapter 11 Case is set forth in the Declaration of Toby Shea, Chief Restructuring Officer, in Support of the Debtor’s First Day Pleadings [Docket No. 24] (the “First Day Declaration”) and incorporated herein by reference. 6. The Debtor continues to operate and manage its business as a debtor in possession pursuant to Bankruptcy Code sections 1107 and 1108. 7. No trustee, examiner, or committee has been appointed in the Chapter 11 Case. 8. On the Petition Date, the Debtor filed the Emergency Ex Parte Motion of Debtor for Entry of Interim and Final Orders (I) Prohibiting Utility Providers from Altering, Refusing, or Discontinuing Service, (II) Approving the Debtor’s Proposed Adequate Assurance of Payment for Post-petition Services, and (III) Establishing Procedures for Resolving Requests for Additional Adequate Assurance of Payment for Post-petition Services, and (III) Establishing Procedures for Resolving Requests for Additional Adequate Assurance of Payment [Docket No. 16], which was denied by the Court on September 2, 2021. See Docket No. 87. UTILITY PROVIDERS 9. In connection with its day-to-day operations, the Debtor receives traditional utility services from approximately 10 utility providers (each a “Utility Provider” and collectively, the “Utility Providers”). The Utility Providers are identified on Exhibit 1 to Exhibit A hereto (the “Utility Service List”). The Debtor paid an average of approximately $64,000 per month on

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account of utility services during the trailing twelve months (“TTM”) ended July 31, 2021. As detailed in the First Day Declaration, the Debtor anticipates needing the services of the Utility Providers going forward to maintain operations of the continuing care retirement facility known as Hillside Village. RELIEF REQUESTED 10. Bankruptcy Code section 366 prohibits a utility company, within the first 30 days after the filing of a chapter 11 case, from altering, refusing, or discontinuing services to, or discriminating against, a debtor solely on the basis of the commencement of bankruptcy proceedings or the debtor’s failure to pay a prepetition debt. In a chapter 11 case, once the initial 30 days have expired, a utility company may discontinue services if the debtor has not provided the utility company with “adequate assurance of payment for utility service that is satisfactory to the utility.” 11 U.S.C. § 366(c)(2). 11. By this Motion, the Debtor seeks entry of an order: (a) prohibiting the Utility Providers from altering, refusing, or discontinuing service on account of unpaid prepetition invoices; (b) determining that, pursuant to Bankruptcy Code section 366, adequate assurance of payment for postpetition utility services has been furnished to the Utility Providers; and (c) approving the Additional Adequate Assurance Procedures (as defined below) as the method for resolving future requests by any Utility Provider for additional adequate assurance of payment. I. Proposed Adequate Assurance 12. Consistent with Bankruptcy Code section 366(c)(1)(A), which defines the phrase “assurance of payment” to include, among other things, a cash deposit, and given the relatively de minimis amount of the funds required, the Debtor proposes to segregate on its books and records, within twenty (20) days of the entry of the Proposed Order an amount equal to the estimated cost for two weeks of Utility Services for each Utility Provider (each, an “Adequate Assurance

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Deposit”) calculated based on the historical data for TTM 7/31/2021 into one segregated bank account designated for the Adequate Assurance Deposits (the “Adequate Assurance Deposit Account”) for the benefit of all Utility Providers. The Debtor specifically proposes the following Adequate Assurance Deposits (collectively, the “Proposed Adequate Assurance”):
Table 1 on page 4. Back to List of Tables
Utility Provider Proposed Adequate Assurance
Amount to be Segregated
PSNH –Eversource $5,954.58
Direct Energy $5,041.25
U.S. Cellular $167.74
Ascentium Capital $2,068.25
Suburban Propane $8,117.32
First Light Fiber $257.44
City of Keene $2,143.16
Single Digits, Inc. $6,513.08
Consolidated Communications, Inc. $25.59
Waste Management Corporate
Services, Inc.
$1,774.85
13. As of the date of the filing of this Motion, the Debtor has not yet had the opportunity to discuss the Proposed Adequate Assurance with the Utility Providers. However, in connection with the filing of this Motion, the Debtor will also send each of the Utility Providers and their registered agents, copies of the letter attached hereto as Exhibit B. The Debtor hopes to obtain the consent of the Utility Providers before any hearing on this Motion. II. Subsequent Modification of Utility Providers List 14. The Debtor requests that it be allowed, without further order of the Court, to supplement the Utility Providers List if any Utility Provider has been inadvertently omitted therefrom (each an “Additional Utility Provider”). If the Debtor determines that the Utility Providers List should be supplemented, the Debtor will, as soon as practicable, file with the Court a supplement to Exhibit 1 adding the name of any Additional Utility Provider to the Utility Providers List. The Debtor will then serve by email or by facsimile transmission (or, where the

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Debtor does not have the email address or fax number of a Utility Provider, by First Class Mail) a copy of this Motion and the signed Proposed Order, as applicable, on any Additional Utility Provider. BASIS FOR RELIEF REQUESTED 15. Congress enacted Bankruptcy Code section 366 to protect a debtor from immediate termination of utility services after filing for bankruptcy, while at the same time providing the utility companies with adequate assurance of payment for post-petition utility services. See H R. Rep. No. 95-595, at 350 (1977), reprinted in 1978 U.S.C.C.A.N. 5963, 6306. Bankruptcy Code Section 366 defines “assurance of payment” to mean several forms of security, including cash deposits, letters of credit, and prepayment of utility services. 11 U.S.C. § 366(c)(1)(A). Bankruptcy Code Section 366(c)(1)(B) explicitly excludes, however, offering administrative expense priority as adequate assurance of payment. Further, Bankruptcy Code section 366(c) restricts the factors that a court may consider when determining whether the “assurance of payment” is, in fact, adequate. Specifically, courts may no longer rely on (a) the absence of a security deposit before the debtor’s petition date, (b) the debtor’s history of timely payments, or (c) the availability of an administrative expense priority when determining the amount of a deposit. See Id. § 366(c)(3)(B). 16. Although Bankruptcy Code section 366(c) sets forth what constitutes adequate assurance of payment, the bankruptcy court nonetheless retains discretion to determine what, if any, adequate assurance is necessary to satisfy section 366’s requirement that assurance of payment must only be “adequate.” See In re Adelphia Bus. Solutions, Inc., 280 B.R. 63, 80 (Bankr. S.D.N.Y. 2002) (“The bankruptcy courts are in agreement that section 366(b) vests in the bankruptcy court the exclusive responsibility for determining the appropriate security which a debtor must provide to his utilities to preclude termination of service for nonpayment of prepetition utility bills.”); In re Circuit City Stores, 2009 WL 484553, at *4 (Bankr. E.D. Va. 2009) (stating

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that courts have discretion under section 366(c) to determine the amount of adequate payments or collateral required to a utility company); In re Begley, 41 B.R. 402, 405-06 (E.D. Pa. 1984), aff’d, 760 F.2d 46 (3d Cir. 1985). Accordingly, a court is not required to give the utility companies an “absolute guarantee of payment,” or require that the adequate assurance take the form of a deposit, bond, letter of credit, or similar security. In re Caldor, Inc. -NY, 199 B.R. 1, 3 (S.D.N.Y. 1996), aff’d sub nom., Va. Elec. & Power Co. v. Caldor, Inc., 117 F.3d 646 (2d Cir. 1997); In re Great Atl. & Pac. Tea Co., 2011 WL 5546954, at *5 (Bankr. S.D.N.Y. 2011) (finding that “[c]ourts will approve an amount that is adequate enough to insure against unreasonable risk of nonpayment, but are not required to give the equivalent of a guaranty of payment in full”). 17. Rather, in considering the facts and circumstances of each case, the Court must ensure only that the utility is not subject to an unreasonable risk of non-payment for post-petition services. See In re Adelphia, 280 B.R. at 80; Mass. Elec. Co. v. Keydata Corp. (In re Keydata Corp.), 12 B.R. 156, 158 (B.A.P. 1st Cir. 1981). The Court, therefore, must strike a balance between satisfying the utility company’s need for adequate assurance and ensuring that the debtor gives no more than what is adequate, as the debtor has a conflicting need to conserve financial resources. See In re Magnesium Corp. of Am., 278 B.R. 698, 714 (Bankr. S.D.N.Y. 2002) (holding that to require the debtor to allocate valuable liquidity to provide further “adequate assurance” to satisfy a utility’s obligations before its amount has been fixed would prejudice the entirety of the debtor’s unsecured creditor body for the benefit of a single one). 18. In determining whether a utility is subject to an unreasonable risk of nonpayment, the Court may consider whether the utility would seek the same additional security from a non-bankruptcy customer. See In re Caldor, Inc. -NY, 199 B.R. at 3 (finding that the utility companies were not seeking additional security for an adequate assurance of future payment, but solely

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because their monopoly position permitted them to capitalize on the debtor bankruptcy filing); Whittaker v. Phila. Elec. Co. (In re Whittaker), 84 B.R. 934, 937, 941-42 (Bankr. E D. Pa. 1988), aff’d, 882 F.2d 791 (3d Cir. 1989) (finding utility company violated Bankruptcy Code section 366 when it refused to restore debtor’s electric service, upon notice of bankruptcy filing, without prepayment of deposit as adequate assurance of future payment). 19. Because this Court is afforded the discretion to determine the assurance necessary to satisfy the Utility Providers’ needs, the Debtor submits that the Proposed Adequate Assurance is more than adequate to ensure that the Debtor will meet its post-petition utility obligations. 20. The Debtor’s receipt of uninterrupted Utility Services is vital to the Debtor’s continued business operations and, consequently, to the success of this Chapter 11 Case. Accordingly, the relief requested herein is necessary and in the best interests of the Debtor, the estate, and creditors. Such relief ensures that the Debtor’s business operations will not be disrupted and provides Utility Companies and the Debtor with an orderly and fair procedure for determining “adequate assurance.” 21. Based upon the foregoing, the Debtor submits that the relief requested herein should be granted. RESERVATION OF RIGHTS 22. Nothing in this Motion or the Proposed Order, or the Debtor’s payment of any claims pursuant to the Proposed Order, shall be deemed or construed as: (a) an admission as to the validity of any claim or lien against the Debtor or the estate; (b) a waiver of the Debtor’s rights to dispute any claim or lien; (c) a waiver of a Utility Provider’s rights with regard to assertion of any claim or interest; (d) an approval or assumption of any agreement, contract, or lease pursuant to Bankruptcy Code section 365; (e) an admission of the priority status of any claim, whether under Bankruptcy Code section 503(b)(9) or otherwise; or (f) a modification of the Debtor’s rights to

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seek relief under any section of the Bankruptcy Code on account of any amounts owed or paid to any Utility Provider. WAIVER OF MEMORANDUM OF LAW 23. The Debtor requests that the Court waive and dispense with the requirement set forth in LBR 7102(b)(2) that any motion filed shall have an accompanying memorandum of law. The legal authorities upon which the Debtor relies are set forth in the Motion. Accordingly, the Debtor submits that a waiver of the requirements set forth in LBR 7102(b)(2) is appropriate under the circumstances. NOTICE 24. Notice of the Motion has been provided to: (a) the Office of the United States Trustee for the District of New Hampshire; (b) counsel to the New Hampshire Insurance Department; (c) the Utility Providers; (d) counsel to UMB Bank, as indenture trustee; (e) the Debtor’s twenty (20) largest unsecured creditors; and (f) any party filing a notice of appearance in this Chapter 11 Case. 25. The Debtor submits that, in light of the nature of the relief requested, no further notice of this Motion is required. NO PRIOR REQUEST 26. No prior request for the relief sought herein has been made to this Court or any other court.

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WHEREFORE, the Debtor respectfully requests entry of an order, substantially in the form attached hereto as Exhibit A, granting the relief requested herein and granting such other relief as is just and proper. Dated:September 3, 2021 /s/ Stephen J. Astringer HINCKLEY, ALLEN & SNYDER LLP Daniel M. Deschenes (Bar No. 14889) Owen R. Graham (Bar No. 266701) 650 Elm Street Manchester, New Hampshire 03101 Telephone: (603) 225-4334 Facsimile: (603) 224-8350 ddeschenes@hinckleyallen.com -and- Jennifer V. Doran (Admitted Pro Hac Vice) 28 State Street Boston, Massachusetts 02109 Telephone: (617) 345-9000 Facsimile: (617) 345-9020 jdoran@hinckleyallen.com -and- POLSINELLI PC Jeremy R. Johnson (Admitted Pro Hac Vice) Stephen J. Astringer (Admitted Pro Hac Vice) 600 Third Avenue, 42nd Floor New York, New York 10016 Telephone: (212) 684-0199 Facsimile: (212) 684-0197 jeremy.johnson@polsinelli.com sastringer@polsinelli.com Proposed Counsel to the Debtor and Debtor in Possession

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