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Full title: EDITED ENTRY: THIS IS A NOTICE OF HEARING AND MOTION FOR ORDER GRANTING EXPEDITED RELIEF AND ESTABLISHING PROCEDURES REGARDING ADEQUATE ASSURANCE OF FUTURE PERFORMANCE FOR UTILITIES. NOT A Notice of Hearing and Motion for Order (I) Granting Expedited Relief and (II) Establishing Procedures for the Resolution of Reclamation Claims and Administrative Claims Pursuant to Section 503(b)(9) of the Bankruptcy Code filed by Tea Olive I, LLC . An affidavit or verification, Memorandum of law, Proposed order. Hearing scheduled 1/13/2021 at 02:00 PM at *TELEPHONIC HEARING* with Judge William J. Fisher (St Paul). (Barbie MNBS) Modified on 1/11/2021 (Kristin MNBM). (Entered: 01/11/2021)
Document posted on Jan 10, 2021 in the bankruptcy, 25 pages and 1 tables.
List of Tables
Page 1UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF MINNESOTA In re: Case No.: 21-30037 Tea Olive I, LLC d/b/a Stock+Field, Chapter 11 Case Debtor. NOTICE OF HEARING AND MOTION FOR ORDER (I) GRANTING EXPEDITED RELIEF AND (II) ESTABLISHING PROCEDURES REGARDING ADEQUATE ASSURANCE OF FUTURE PERFORMANCE FOR UTILITIES TO: The parties in interest as specified in Local Rule 9013-3(a)(2). 1. The above-captioned debtor and debtor in possession (the “Debtor”) hereby moves this Court for the relief requested below and gives notice of hearing. 2. The Court will hold a hearing on this Motion at 2:00 p.m. (CT) on Wednesday, January 13, 2021, in Courtroom 2B, 232 Warren E. Burger Federal Building and U.S. Courthouse, 316 North Robert Street, St. Paul, MN 55101. The hearing will be held telephonically: a. Dial 1-888-684-8852; b. When prompted, enter ACCESS CODE: 5988550; c. When prompted, enter SECURITY CODE: 0428. 3. Local Rule 9006-1(c) provides deadlines for responses to this Motion. However, given the expedited nature of the relief sought, the Debtor does not object to written responses being served and filed two hours prior to the hearing. UNLESS A RESPONSE OPPOSING THE MOTION IS TIMELY FILED, THE COURT MAY GRANT THE MOTION WITHOUT A HEARING.
Page 24. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. §§ 157 and 1334, Rule 5005 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Local Rules 1070-1 and 1073-1. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409. The petition commencing this chapter 11 case was filed on January 10, 2021 (the “Filing Date”). The case is currently pending in this Court. 5. This Motion arises under sections 105(a) and 366 of the Bankruptcy Code, and is filed under Local Rules 9013-1, 9013-2 and 9013-3. Expedited relief is requested pursuant to Bankruptcy Rule 9006(c) and Local Rule 9006-1(e). Notice of the hearing on this Motion is provided pursuant to Bankruptcy Rule 9013 and Local Rules 9013-2 and 9013-3. The Debtor requests entry of an order granting expedited relief and establishing procedures regarding adequate assurance of future performance for utilities. BACKGROUND 1. On the Filing Date, the Debtor filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Debtor has continued in possession of its respective assets and the management of its business as a debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. There is presently no pending request or motion for appointment of a trustee or examiner, and no official committee of unsecured creditor has yet been appointed in the chapter 11 case. 6. Further general background information about the Debtor and this case is set forth in the Declaration of Matthew F. Whebbe in Support of Chapter 11 Petition and Initial Motions. The additional facts relevant to this Motion set forth below are verified by Matthew Whebbe as evidenced by the attached verification.
Page 3RELIEF RFEQUSTED 7. Section 366 of the Bankruptcy Code prevents utility companies from discontinuing, altering or refusing service to a debtor during the first 30 days of a chapter 11 case. However, after such 30-day period, a utility company has the option of terminating its services pursuant to section 366(c)(2) of the Bankruptcy Code if a debtor has failed to furnish adequate assurance of payment to the utility company. 8. By this motion, the Debtor seeks entry of an order (a) granting expedited relief, (b) determining that the Utilities (as defined below) have “adequate assurance of payment” within the meaning of section 366 of the Bankruptcy Code, subject to the procedures set forth below for resolving requests by Utilities for additional or different assurances beyond those set forth in this Motion, (c) prohibiting the Utilities from altering, refusing, or discontinuing any utility services on account of prepetition amounts outstanding or on account of any perceived inadequacy of the Debtor’s proposed adequate assurance, subject to the procedures set forth below for resolving requests by Utilities for additional or different assurances beyond those set forth in this Motion, and (d) establishing procedures for the Utilities to seek to opt out of the Debtor’s proposed adequate assurance procedures. THE UTILITIES 9. In connection with the operation of its business and management of its properties, the Debtor obtains utility services (collectively, the “Utility Services”) from several utilities, as that term is used in section 366 of the Bankruptcy Code (the “Utilities”). Attached hereto as Exhibit A is a list of Utilities that provide Utility Services to the Debtor as of the Filing Date. The relief requested herein is for all Utilities providing Utility Services to the Debtor, and is not limited
Page 4to those listed on Exhibit A.1 The Debtor has made an extensive and good faith effort to identify all of the Utilities that provide Utility Services and to include them in Exhibit A. Nonetheless, the Debtor reserves the right to supplement Exhibit A by filing a notice (a “Supplemental Notice” and, together with Exhibit A, as may be so supplemented, the “Utilities List”) at a later date with the Court. 10. During the past 12 months, the Debtor paid an average of approximately $271,888 per month on account of Utility Services. As of the Filing Date, the Debtor estimates that approximately $450,000 on account of Utility Services may be outstanding with respect to prepetition periods. 11. Uninterrupted Utility Services are essential to the Debtor’s ongoing operations, and, therefore, to the Debtor’s ability to maximize value through the sale and winddown process. The Debtor operates retail stores that depend on the reliable delivery of power and other Utility Services, and because of the nature of the Debtor’s operations, it is essential that the Utility Services continue uninterrupted. Should any Utility refuse or discontinue service, even for a brief period, the Debtor’s operations could be severely disrupted, and there could be safety issues related to in-store customers. The impact of this disruption on the Debtor’s business operations and revenue would be extremely harmful and could jeopardize the Debtor’s sales and other efforts to maximize value for all parties in interest. ADEQUATE ASSURANCE 12. The Debtor intends to pay all postpetition obligations owed to the Utilities in a timely manner. 1 The inclusion of any entity on, as well as any omission of any entity from, Exhibit A is not an admission by the Debtor that such entity is, or is not, a utility within the meaning of section 366 of the Bankruptcy Code, and the Debtor reserves all rights with respect thereto.
Page 513. The Debtor requests an order confirming that it is authorized, but not directed, to pay on a timely basis, in accordance with its prepetition practices, all undisputed invoices for Utility Services rendered by the Utilities to the Debtor after the Filing Date. 14. The Debtor proposes to provide a deposit2 (the “Adequate Assurance Deposit”) equal to a half month of Utility Service less any deposit already held by such Utility, calculated as a historical average over the past 12 months, to any Utility that requests such a deposit in writing as set forth below; provided that such requesting Utility does not already hold a deposit equal to or greater than a half month of Utility Services; and provided further that such Utility is not currently paid in advance for its Utility Services. As a condition of requesting or accepting an Adequate Assurance Deposit or any portion thereof, the Debtor proposes that the requesting Utility shall be deemed to have stipulated that the Adequate Assurance Deposit constitutes adequate assurance of payment to such Utility within the meaning of section 366 of the Bankruptcy Code, and shall be prohibited from challenging or opting out of the Adequate Assurance Procedures (as defined below), filing an Additional Assurance Request (as defined below), or requesting any additional adequate assurance of payment of any kind at any time, notwithstanding any attempt by such Utility to reserve a right to seek any such relief. 15. Given its current cash reserves, the Debtor submits that each Adequate Assurance Deposit, in conjunction with the Debtor’s ability to pay for future Utility Services in the ordinary course of business (collectively, the “Proposed Adequate Assurance”), constitutes sufficient adequate assurance to each of the Utilities. If any Utility believes additional assurance is required, they may request such assurance pursuant to the following procedures. 2 Section 366(c)(1)(A) of the Bankruptcy Code defines “assurance of payment” to mean, among other things, a cash deposit.
Page 6THE PROPOSED ADEQUATE ASSURANCE PROCEDURES 16. In light of the severe consequences to the Debtor of any interruption in services by the Utilities, but recognizing the right of each of the Utilities to evaluate the Proposed Adequate Assurance on a case-by-case basis, the Debtor proposes that the Court approve the following procedures (the “Adequate Assurance Procedures”): a. The Debtor will: (a) fax, e-mail, serve by first-class mail, or otherwise expeditiously send a copy of the Order, which contains the proposed Adequate Assurance Procedures, to each of the Utilities listed in Exhibit A within three business days after entry of the Order by the Court; and (b) post this order on the Debtor’s case information website maintained by the Debtor’s claims and noticing agent at <www.donlinrecano.com/sf>. b. Any Utility requesting payment of an Adequate Assurance Deposit must send to (i) the Debtor, Tea Olive I, LLC d/b/a Stock+Field, 2600 Eagan Woods Drive, Eagan, MN 55121 Attn: Matt Whebbe; and (ii) proposed counsel to the Debtor, Fredrikson & Byron, P.A. 200 South Sixth Street, Suite 4000, Minneapolis, Minnesota 55402, Attn: Samuel M. Andre (together, the “Request Parties”) a written request (a “Deposit Request”) that names the Utility and includes payment instructions for the Adequate Assurance Deposit, on or before 4:00 p.m. (prevailing Central time) on the date that is 21 days from the entry of the Order (the “Adequate Assurance Deposit Request Deadline”). c. Upon the receipt of a Deposit Request, the Debtor shall provide the requesting Utility with the corresponding Adequate Assurance Deposit; provided, however, that such requesting Utility does not already hold a deposit equal to or greater than a half month of Utility Services; and provided further that such Utility is not currently paid in advance for its Utility Services. Any Utility that submits a Deposit Request and already holds a deposit of less than a half month of Utility Service shall receive an amount equal to the difference between the deposit held and the Adequate Assurance Deposit. Any Utility that is currently paid in advance for its Utility Services shall continue to be so paid in the ordinary course of business. d. Any Utility desiring additional adequate assurance in the form of a deposit, prepayment, or otherwise different form from the Proposed Adequate Assurance must, on or prior to the Adequate Assurance Deposit Request Deadline, file with the Court and serve on the Request Parties a request (an “Additional Assurance Request”), which must be in writing and set forth (i) the amount and form of additional adequate assurance payment
Page 7requested, (ii) the location(s) for which the Utility Services are provided and the relevant account numbers, (iii) the Debtor’s payment history for the most recent 12 months, (iv) a list of any deposits, prepayments, or other security currently held by the Utility on account of the Debtor, (v) a description of any prior material payment delinquency or irregularity and (vi) an explanation of why the Utility believes the Proposed Adequate Assurance is not sufficient adequate assurance of payment. e. The Debtor may, in its discretion, resolve and settle any Additional Assurance Request by mutual agreement with the Utility and without further order of the Court. The Debtor shall not be required to provide a Utility that files an Additional Assurance Request with an Adequate Assurance Deposit until such Additional Assurance Request is resolved. f. For any Utility that timely files an Additional Adequate Assurance Request for which the Debtor is not able to reach a consensual resolution, the Debtor will file a motion (which may address the Additional Assurance Requests of multiple Utilities) and request a hearing before this Court to determine the adequacy of assurance of payment with respect to such Utility (the “Determination Hearing”), pursuant to section 366(c)(3) of the Bankruptcy Code. g. Pending resolution of a Utility’s Additional Assurance Request by the Court, such Utility shall be prohibited from discontinuing, altering, or refusing service to the Debtor. h. Any Utility that does not submit a Deposit Request or file an Additional Assurance Request shall be deemed to have been provided with adequate assurance of payment as required by section 366 of the Bankruptcy Code and shall be prohibited from discontinuing, altering or refusing to provide Utility Services, including on account of unpaid charges for prepetition Utility Services, during the pendency of these proceedings. 17. Any period of time prescribed or allowed by the Order will be computed in accordance with Bankruptcy Rule 9006. SUBSEQUENT MODIFICATIONS OF UTILITY LIST 18. Although the Debtor has made a good faith effort to identify all of the Utilities that currently provide Utility Services to the Debtor, it is possible that some Utilities may not be listed on Exhibit A. For any additional Utilities that the Debtor identifies, the Debtor will file a Supplemental Notice, and will (a) serve the Supplemental Notice by e-mail or fax (or, where the
Page 8Debtor does not have the e-mail address or fax number for a Utility, by first-class mail) on all Utilities listed in such Supplemental Notice, and (b) post the Supplemental Notice on the Debtor’s case information website maintained by the Debtor’s claims and noticing agent at <www.donlinrecano.com/sf>. The Debtor requests that the order on this Motion apply to all Utilities, regardless of whether or when such Utility was added by Supplemental Notice; provided, however, that the Adequate Assurance Deposit Request Deadline shall be extended for any Utility first listed in such Supplemental Notice to the date that is 21 days from the date that such Supplemental Notice is filed. EXPEDITED RELIEF 19. The Debtor requests expedited relief on this Motion. The Debtor has scheduled and served a number of “first day” motions designed to facilitate an orderly transition to chapter 11. Uninterrupted utility service is crucial to the Debtor’s operations. If a disruption in utility service occurred, the negative impact on the Debtor’s business operations and revenue—and potentially worker and customer safety—could be severe. Furthermore, the relief requested provides the Utilities with a fair and orderly procedure for addressing requests for additional or different adequate assurance. The Debtor receives service from approximately 75 Utilities with a total of over 352 different accounts. Without the Adequate Assurance Procedures, the Debtor could be forced to address numerous requests by Utilities in a disorganized manner at a critical period in this chapter 11 case and during a time when the Debtor’s efforts could be more productively focused on the continuation of the Debtor’s operations and pursuit of a going concern sale for the benefit of all parties in interest. 20. Pursuant to Local Rule 9013-2, this Motion is verified and is accompanied by a Memorandum of Law, proposed order and proof of service.
Page 921. Pursuant to Local Rule 9013-2, the Debtor gives notice that it may, if necessary, call one or more of the following to testify regarding the facts set forth in this Motion: (a) Matthew Whebbe, the Chief Executive Officer of the Debtor, whose business address is 2600 Eagan Woods Drive, Suite 120, Eagan, MN 55121 and (b) Michael Wesley, a Partner at Clear Thinking Group, the Chief Restructuring Officer and Financial Advisor to the Debtor, whose business address is 401 Towne Centre Drive, Hillsborough, NJ 08844. REQUEST FOR WAIVER OF STAY 22. In addition, by this Motion, the Debtor seeks a waiver of any stay of the effectiveness of the order approving this Motion. Pursuant to Bankruptcy Rule 6004(h), “[a]n order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise.” As set forth herein, the Debtor requires immediate relief to continue ordinary business operations for the benefit of all parties in interest. Accordingly, the Debtor submits that ample cause exists to justify a waiver of the 14-day stay imposed by Bankruptcy Rule 6004(h), to the extent that it applies. NO PREVIOUS REQUEST 23. No previous request for the relief sought herein has been made by the Debtor to this or any other court. WHEREFORE, the Debtor respectfully moves the Court for an order A. Granting expedited relief; B. Prohibiting Utilities from altering, refusing or discontinuing service and deeming Utilities adequately assured of future performance, subject to the proposed procedures for determining requests for adequate assurance;
Page 10C. Approving the procedures for determining requests for adequate assurance as set forth herein; and D. Granting such other and further relief as the Court may deem just and equitable. Dated: January 11, 2021 /s/ Steven R. Kinsella Clinton E. Cutler (#0158094) James C. Brand (#0387362) Steven R. Kinsella (#0392289) Samuel M. Andre (#0399669) FREDRIKSON & BYRON, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402-1425 (612) 492-7000 email@example.com firstname.lastname@example.org email@example.com firstname.lastname@example.org PROPOSED ATTORNEYS FOR THE DEBTOR
Page 11EXHIBIT A
Page 12Utility Provider Utility Type Account and/or Location Adequate Assurance Alliant Energy - PORTAGE, WI $2,219 Ameren Illinois - WASHINGTON, IL, TILTON, IL, D $15,755American Electric Power - LIMA, OH, Findlay, OH $4,715Aqua - DANVILLE, IL, TILTON, IL, DAN $331Area Disposal Service Inc Waste Removal GIBSON CITY, IL, Danville, IL, Ti $276Att - Multiple in IL, IN, WI and OH $1,312Bay County Department Of Water & Sewer - - $3Burlington Water Utility - BURLINGTON, WI $157Call One - Multiple in IL, and IN $12,229Centerpoint Energy - Multiple in IL, and IN $3,140Centerpoint Energy - 5145-009 - Watseka, IL, Gibson City, IL $1,753Century Link - Pekin, IL, Warsaw, IN, Lima, OH $236City Of Findlay - Findlay, OH $112 City Of Gibson - Gibson City, IL $51 City Of Lima Utilities - Lima, OH $527 City Of Mchenry - McHenry, IL $78 City Of Morris - MORRIS, IL $59 City Of Pekin Waste Water - Pekin, IL $34City Of Pontiac - Pontiac, IL $36 City Of Streator - STREATOR, IL $43 City Of Wabash Watse Water - WABASH, IN $160City Of Warsaw - WARSAW, IN $210 City Of Washington - Washington, IL $78City Of Watseka - Watseka, IL $202 Columbia Gas Of Ohio - Findlay, OH $611Com Ed - Morris - Sign, IL, STREATOR, IL, $575Comcast Business - Wabash, IN $1,515 Constellation - Streator, IL $0 Consumers Energy - BAY CITY, MI, LANSING, MI $2,654Crawfordsville Light & Power - CRAWFORDSVILLE, IN $4,415Crawfordsville Utilities - Crawfordsville, IN $101Cressy - SOUTH BEND, IN $91 Daggett Container Service - LANSING, MI $465Danville Sanitary District - Danville, IL $53Department Of Water Works - Michigan City, IN $145Dominion Energy - Lima, OH $548 Duke Energy - Rochester, IN, Wabash, IN $5,788Dynegy - HOMER GLEN, IL, MORRIS, IL, M $8,963Elkhart Public Utilities - Elkhart, IL $101Environmental Recycling - Morris, IL $654E-Vergent - Burlington, WI $44 Frontier - Washington, IL, Pontiac, IL, STREA $466Granite Telecommunications - McHenry, IL, Lima, OH $293Illinois American Water - STREATOR, IL, PEKIN, IL, Pontia $614Indiana American Water - WABASH, IN, WARSAW, IN, Cra $748Indiana Michigan Power - Marion, IN, Elkhart, IL, SOUTH BE $10,236Kankakee Disposal - Watseka, IL $76 Lima Security Inc - Lima, OH $7 Lansing Board And Light - LANSING MI, MI $7,065
|Utility Provider||Utility Type||Account and/or Location||Adequate
|Mediacom||-||STREATOR, IL, Watseka, IL, Gibs||$1,507|
|Michiana Recycling & Disposal||-||Michigan City, IN||$134|
|Nipsco||-||Warsaw, IN, Rochester, IN, Warsaw||$13,807|
|Portage Indiana Utility||-||PORTAGE, IN||$563|
|Portage Utilites||-||PORTAGE, IN||$140|
|Republic Services||-||Multiple in IL, IN, WI and OH||$6,153|
|Rochelle Municipal Utilities||-||Rochelle, IL||$1,680|
|Rochester Telephone Company||-||Rochester, IN||$203|
|Rochester Water & Sewer||-||Rochester Sprinkler, IN||$114|
|Rochester Water & Sewer||-||Rochester, IN||$72|
|South Bend Municipal Utilities/South Bend Water Works||-||South Bend, IN||$375|
|Spectrum Business||-||PORTAGE, WI||$71|
|Spectrum Enterprise||-||FINDLAY, OH||$60|
|Stafford Solid Waste||-||Warsaw, IN||$307|
|Symmetry Energy Solutions||-||Multiple in IL, and IN||$2,272|
|Thomas Excavating||-||DANVILLE, IL||$76|
|Touchtone||-||Multiple in IL, and IN||$18|
|Vectren||-||Marion, IN, Crawfordsville, IN||$839|
|Waste Management||Waste Removal||Marion, IN, Crawfordsville, IN, Wa||$1,176|
|We Energies||-||Burlington, WI||$3,143|