IN THE UNITED STATES BANKRUPTCY COURT FOR THE … · Bankruptcy Rules 6003 and 6004, and rule...

KE 69992376

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

) In re: ) Chapter 11 ) IQOR HOLDINGS INC., et al.,1 ) Case No. 20-34500 (DRJ) ) Debtors. ) (Joint Administration Requested) ) (Emergency Hearing Requested)

DEBTORS’ EMERGENCY MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING

THE DEBTORS TO PAY CERTAIN PREPETITION TRADE CLAIMS AND (II) GRANTING RELATED RELIEF

EMERGENCY RELIEF HAS BEEN REQUESTED. A HEARING WILL BE CONDUCTED ON THIS MATTER ON SEPTEMBER 11, 2020, AT 10:30 A.M. (CENTRAL TIME) AT THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS, COURTROOM 400, 515 RUSK, HOUSTON, TX 77002. IF YOU OBJECT TO THE RELIEF REQUESTED OR YOU BELIEVE THAT EMERGENCY CONSIDERATION IS NOT WARRANTED, YOU MUST EITHER APPEAR AT THE HEARING OR FILE A WRITTEN RESPONSE PRIOR TO THE HEARING. OTHERWISE, THE COURT MAY TREAT THE PLEADING AS UNOPPOSED AND GRANT THE RELIEF REQUESTED.

RELIEF IS REQUESTED NOT LATER THAN SEPTEMBER 11, 2020.

PLEASE NOTE THAT ON MARCH 24, 2020, THROUGH THE ENTRY OF GENERAL ORDER 2020-10, THE COURT INVOKED THE PROTOCOL FOR EMERGENCY PUBLIC HEALTH OR SAFETY CONDITIONS.

AUDIO COMMUNICATION WILL BE BY USE OF THE COURT’S DIAL-IN FACILITY. YOU MAY ACCESS THE FACILITY AT (832) 917-1510. YOU WILL BE RESPONSIBLE FOR YOUR OWN LONG-DISTANCE CHARGES. ONCE CONNECTED, YOU WILL BE ASKED TO ENTER THE CONFERENCE ROOM NUMBER. JUDGE JONES’ CONFERENCE ROOM NUMBER IS 205691.

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1 A complete list of each of the Debtors in these chapter 11 cases may be obtained on the website of the Debtors’

proposed claims and noticing agent at https://omniagentsolutions.com/iqor. The location of the Debtors’ service address is: 200 Central Avenue, 7th Floor, St. Petersburg, Florida 33701.

Case 20-34500 Document 13 Filed in TXSB on 09/10/20 Page 1 of 23

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MENU. SELECT “JUDGES’ PROCEDURES,” THEN “VIEW HOME PAGE” FOR JUDGE JONES. UNDER “ELECTRONIC APPEARANCE” SELECT “CLICK HERE TO SUBMIT ELECTRONIC APPEARANCE”. SELECT THE CASE NAME, COMPLETE THE REQUIRED FIELDS AND CLICK “SUBMIT” TO COMPLETE YOUR APPEARANCE.

The above-captioned debtors and debtors in possession (collectively, the “Debtors”)

respectfully state as follows in support of this motion (this “Motion”):2

Relief Requested

1. The Debtors seek entry of interim and final orders, substantially in the forms

attached hereto (respectively, the “Interim Order” and “Final Order”): (a) authorizing the Debtors

to pay in the ordinary course of business certain prepetition claims held by (i) certain essential

vendors and service providers (each, a “Critical Vendor”), (ii) certain essential foreign vendors

and service providers (each, a “Foreign Vendor”), (iii) shippers, warehousemen, and other lien

claimants (each, a “Lien Claimant”), and (iv) vendors whose claims may be entitled to priority

under section 503(b)(9) of the Bankruptcy Code (each, a “503(b)(9) Claimant” and, together with

the Critical Vendors, Foreign Vendors, and the Lien Claimants, the “Trade Claimants”);

(b) granting administrative expense priority to all undisputed obligations on account of goods or

services ordered by the Debtors prior to the date hereof (the “Petition Date”) that will not be

delivered or provided until after the Petition Date (the “Outstanding Orders”) and authorizing the

Debtors to satisfy such obligations in the ordinary course of business; (c) confirming the

administrative expense priority status of Outstanding Orders; and (d) granting related relief. In

addition, the Debtors request that the Court schedule a final hearing within 25 days of the

2 The facts and circumstances supporting this Motion are set forth in the Declaration of David A. Kaminsky, Chief

Financial Officer of iQor Holdings Inc., in Support of Debtors’ Chapter 11 Petitions and First Day Motions (the “First Day Declaration”), filed contemporaneously with this Motion and incorporated by reference herein. Capitalized terms used but not immediately defined have the meanings given to them elsewhere in this Motion or in the First Day Declaration, as applicable.


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commencement of these chapter 11 cases, or as soon thereafter as is convenient for the Court, to

consider approval of this Motion on a final basis.

Jurisdiction and Venue

2. The United States Bankruptcy Court for the Southern District of Texas

(the “Court”) has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This matter is a core

proceeding within the meaning of 28 U.S.C. § 157(b). The Debtors confirm their consent, pursuant

to rule 7008 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), to the entry

of a final order by the Court.

3. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

4. The bases for the relief requested herein are sections 105(a), 363, 503, 1107(a), and

1108 of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”),

Bankruptcy Rules 6003 and 6004, and rule 9013-1 of the Bankruptcy Local Rules for the Southern

District of Texas (the “Bankruptcy Local Rules”).

Background

5. The Debtors (together with their non-Debtor affiliates, the “Company”) comprise a

multinational business process outsourcing company that provides a range of intelligent customer

support and outsourcing services to some of the world’s largest brands. The Company’s operations

consist of two primary business segments—the customer care/call center business and the product

support business. The Company’s call center business provides customers with multiple service

offerings, including technical support solutions, omnichannel customer experience solutions,

analytical enabled customer retention solutions and revenue generation support services. The

Company’s product support business provides customers with technical services and supply chain

solutions, including repair services, quality assurance, kitting and packing, asset recovery and

recycling services, supply chain management, and service parts logistics. The Company is


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headquartered in St. Petersburg, Florida, but its operations are extensive and span across North

America, Europe, and Asia. The Company operates more than 40 call centers in eight countries

and prior to the COVID-19 pandemic, employed approximately 40,000 people globally.

6. On the Petition Date, each Debtor filed a voluntary petition for relief under chapter

11 of the Bankruptcy Code. The Debtors are operating their businesses and managing their

properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

Concurrently with the filing of this Motion, the Debtors filed a motion requesting procedural

consolidation and joint administration of these chapter 11 cases pursuant to Bankruptcy Rule

1015(b). No request for the appointment of a trustee or examiner has been made in these chapter

11 cases, and no committees have been appointed or designated.

Overview of the Debtors’ Vendors

7. The Debtors commence these chapter 11 cases to implement a restructuring through

a prepackaged chapter 11 plan of reorganization (the “Plan”). The Plan enjoys overwhelming

stakeholder support: approximately 97 percent of the lenders under the First Lien Term Loan

Facility and 84 percent of the lenders under the Second Lien Term Loan Facility (each as defined

in the Plan, filed concurrently with this Motion) have submitted votes in favor of the Plan. Notably,

the Plan leaves general unsecured creditors unimpaired and will allow the Debtors to minimize

disruptions to their go-forward operations while effectuating a value-maximizing transaction through

the chapter 11 process.

8. Accordingly, the relief requested herein will only affect the timing of payment, not

whether such payments will ultimately be made to creditors. The Debtors’ businesses rely on the

flow of products and services provided by approximately 1,100 domestic and foreign vendors to

fulfill their business obligations. Without strong vendor relationships, the Debtors’ ability to

continue to provide quality service to their customers would be impacted. The Debtors are making


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every effort to avoid interruptions in their operations in connection with the commencement of

these chapter 11 cases. Because of the nature of the Debtors’ businesses, the Debtors believe that

many Vendors will make credible and actionable threats that, unless paid on account of their

prepetition debt, they will cease to supply the Debtors with the critical goods and services

necessary to maintain the smooth operation of the Debtors’ businesses while in chapter 11, or may

otherwise impair the Debtors’ ability to operate their businesses. Accordingly, to maintain stability

during the opening days of these chapter 11 cases and to avoid jeopardizing the Debtors’ ability to

service their customers going forward, the Debtors, by this Motion seek the relief requested herein.

9. As of the Petition Date, the Debtors owe approximately $26.3 million on account

of all payables to the Debtors’ trade creditors. By this Motion, the Debtors are only seeking

authority to pay an amount necessary to preserve the value of their estates, which shall not exceed

$2.8 million on an interim basis on account of prepetition claims held by certain Trade Claimants

and accrued in the ordinary course of business (collectively, the “Trade Claims”). The Debtors

intend to apply their business judgment and discretion on a case-by-case basis and pay only those

Trade Claims that are critical to maintaining the supply chain. The following table summarizes

the types of claimants that the Debtors request authority to pay pursuant to this Motion:

Category Description of Claims

Estimated Amount Outstanding

as of the Petition Date

Estimated Amount Due Within 25

Days of the Petition Date

Critical Vendors

Vendors that supply goods or services that the Debtors rely upon to continue day-to-day operations, or which are sole or limited-source providers of the goods and services necessary for the uninterrupted operations of the Debtors’ business.

$2,700,000 $1,300,000

Foreign Vendors

Vendors that supply goods or services that are based outside the United States (not including Critical Vendors, Lien Claimants, or 503(b)(9) Claimants).

$300,000 $300,000

Lien Claimants

Claimants that may assert shippers, warehouseman, mechanics, or other liens against the Debtors’ property if unpaid

$450,000 $300,000


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503(b)(9) Claimants

Suppliers of goods that may be entitled to statutory priority under section 503(b)(9) of the Bankruptcy Code

$1,800,000 $900,000

Total Trade Claims $5,250,000 $2,800,000

I. The Critical Vendors.

10. The Debtors have identified certain Critical Vendors that supply products and

services (collectively, the “Critical Vendor Products and Services”) that are vital to the Debtors’

operations. The Debtors rely on a range of Critical Vendor Products and Services without which

they would not be able to operate their businesses. Certain of the Critical Vendors supply

operational goods and services that are vital to the Debtors’ ability to effectively and efficiently

serve their customers and generate revenue.

11. In many cases, the Critical Vendor Products and Services are available from only a

limited number of vendors, and in some cases, only one vendor. Even where alternative vendors

exist, the costs associated with switching from one vendor to another are often significant and

would be detrimental to the Debtors’ estates. Many of the Critical Vendors supply business

process outsourcing, customized supplies, and IT infrastructure to the Debtors, services critical to

the Debtors’ ability to effectively and efficiently serve their customers and generate revenue.

Furthermore, reentering the market for such Critical Vendor Products and Services at this time

could subject the Debtors to significant and unpredictable price volatility. Accordingly, the

Debtors believe that jeopardizing their relationships with the Critical Vendors and attempting to

procure the Critical Vendor Products and Services from replacement vendors, even if possible,

would impose a severe strain on their business operations and would likely result in significant

revenue loss. Even a temporary halt of the provision of Critical Vendor Products and Services

would impose a severe strain on the Debtors’ operations, and the cumulative impact of such events


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could have a catastrophic adverse effect on the Debtors’ operations and, particularly, on the ability

of the Debtors to maintain business-as-usual.

12. As of the Petition Date, the Debtors believe they owe the Critical Vendors

approximately $2,700,000, approximately $1,300,000 of which will come due within 25 days after

the Petition Date.

13. The interruption of business with or absence of the Critical Vendors would reduce

the efficiency of the Debtors’ operations. Any material interruption in the provision of the Critical

Vendor Products and Services—however brief—would disrupt the Debtors’ operations and could

cause irreparable harm to the Debtors’ go-forward businesses, goodwill, employees, customer

base, and market share. Such harm would likely far outweigh the cost of payment of the Critical

Vendor Claims.3 In order to maintain stability during this critical stage of these chapter 11 cases

and to avoid jeopardizing the Debtors’ sales and business operations going forward, the Debtors

request authority to pay the Critical Vendors as described herein.

II. The Foreign Vendors.

14. Due to the nature of the Debtors’ global operations, the Debtors procure goods and

services from certain Foreign Vendors located around the world. The Foreign Vendors are located

outside of the United States and may have confused and guarded reactions to a U.S. bankruptcy

filing. For example, many of these entities are unfamiliar (or uncomfortable) with the unique

debtor in possession mechanism of chapter 11. Nonpayment of prepetition obligations may cause

these Foreign Vendors to use extreme caution and adopt a wait and-see attitude towards the

3 Notwithstanding the relief requested herein, the Debtors reserve all of their rights and remedies under the

Bankruptcy Code and other applicable law to pursue any cause of action against any Critical Vendor on account of, among other things, any violation of the automatic stay pursuant to section 362(a)(6) of the Bankruptcy Code.


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Debtors, resulting in costly delays in the shipment of additional goods or in delivery of services.

The Debtors cannot afford delays of this nature.

15. The Foreign Vendors are primarily located in India, the Philippines, and Mexico

and supply goods, materials, or services to the Debtors that are crucial to the Debtors’ ongoing

U.S. operations. The majority of Foreign Vendors generally manufacture and ship goods to the

Debtors on “free on board” terms. Based on the reactions of foreign suppliers in other chapter 11

cases, the Debtors believe there is a significant risk that the continued nonpayment following the

Petition Date could cause a Foreign Vendor to stop shipping goods to the Debtors on a timely basis

or to sever its business relationship with the Debtors completely. Short of severing their business

relations with the Debtors, nonpayment of prepetition claims may cause Foreign Vendors to take

other precipitous actions, including delaying shipments until more certainty develops with respect

to the Debtors’ reorganization. As with any service provider, timely shipment of goods is critical

to the Debtors’ business operations—the Debtors cannot afford delays of this nature.

16. If prepetition claims held by the Foreign Vendors (the “Foreign Vendor Claims”)

are not paid, the Foreign Vendors may take action against the Debtors based upon an erroneous

belief that Foreign Vendors are not subject to the automatic stay provisions of section 362(a) of

the Bankruptcy Code. Although the automatic stay applies to protect the Debtors’ assets wherever

they are located in the world, attempting to enforce the Bankruptcy Code in foreign countries is

often a fruitless exercise. Even if the automatic stay could be effectively enforced abroad, the

automatic stay by itself may not protect assets of the Debtors’ non-Debtor foreign affiliates, which

could remain at risk of seizure or setoff. In the absence of enforcement of the automatic stay, the

Foreign Vendors could initiate a lawsuit in a foreign court and obtain a judgment against the


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Debtors to collect prepetition amounts owed to them or seek to attach or seize foreign assets of the

Debtors or their non-Debtor affiliates even prior to obtaining a judgment.

17. In light of these consequences, the Debtors have concluded that payment of the

Foreign Vendor Claims is essential to avoid disruption of the Debtors’ operations during these

chapter 11 cases. The Debtors’ estimated amount of the Foreign Vendor Claims pales in

comparison to the potential damage to the Debtors’ business if the Debtors’ operations were to

experience significant delays in the shipment of equipment or in the services provided by Foreign

Vendors. Therefore, the Debtors, their estates, and their stakeholders would ultimately benefit

from the Debtors’ payments to the Foreign Vendors.

18. The Debtors intend to pay Foreign Vendor Claims only where they believe, in their

business judgment, that the benefit to their estates from making such payments will exceed the

costs that their estates would incur by failing to receive the goods and services to be provided by

the Foreign Vendors. The Debtors estimate that, as of the Petition Date, approximately $300,000

is accrued and outstanding on account of Foreign Vendor Claims, all of which will come due

within the first 25 days after the Petition Date.

III. Lien Claimants.

19. In the ordinary course of business, the Debtors incur obligations

(the “Lien Claims”) from the Lien Claimants for the delivery of goods and the provision of

services on a regular basis for the receipt, distribution, and delivery of goods throughout the world.

The Debtors’ business operations rely on their ability to receive, distribute, and deliver products

in a timely fashion. To maintain their operations and efficiently transport products, the Debtors

employ an extensive distribution network that utilizes the services of Lien Claimants. Under the

laws of most states, these servicers or carriers will, in certain circumstances, have a lien on the

goods in their possession that secures the charges or expenses incurred in connection with the


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transportation of the goods or the supply of labor that improves the goods.4 If the Lien Claims are

not satisfied, the Lien Claimants may refuse to release the Debtors’ property, thereby disrupting

the Debtors’ product flow and operations. The cost of such disruption to the Debtors’ estates in

many cases would likely be greater than the applicable Lien Claims.

20. In the ordinary course of business, the Debtors contract with various Lien

Claimants, including, among others, customs brokers, freight forwarders, common carriers, and

warehousemen that retain or ship property of the Debtors in connection with the Debtors operation

of its product support business (collectively, the “Shippers and Warehousemen”). At any given

time, there are numerous shipments of products at various points in production or to the Debtors’

customers. Thus, it is a certainty that some of the Shippers and Warehousemen are currently in

possession of the Debtors’ property. The delivery of these goods is vital to maintaining the

Debtors’ operations during their transition into, and ultimately their emergence from, chapter 11.

If the Debtors do not pay the prepetition, ordinary course obligations owed to these Shippers and

Warehousemen, the Shippers and Warehousemen may refuse to deliver or release such property,

thereby disrupting the Debtors’ business operations. The Debtors’ supply chain depends on

services provided by the Shippers and Warehousemen.

21. The Debtors also routinely transact business with a number of third-party

contractors that may be able to assert a variety of statutory, common law, or possessory liens

against the Debtors and their property if the Debtors fail to pay for certain goods delivered or

services rendered (the “Third-Party Contractors”). These Third-Party Contractors perform various

4 For example, section 7-307 of the Uniform Commercial Code provides, in pertinent part, that a “carrier has a lien

on the goods covered by a bill of lading or on the proceeds thereof in its possession for charges after the date of the carrier’s receipt of the goods for storage or transportation (including demurrage and terminal charges) and for expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their sale pursuant to law.” See U.C.C. § 7-307(a) (2005).


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services for the Debtors, including the installation and repair of certain equipment, maintenance

and improvement of the Debtors’ property, manufacturing component parts necessary for the

Debtors’ operating equipment, and other repair, renovation, or construction of the facilities and

property therein. At any given time, the Third-Party Contractors may be performing services on,

and therefore be in possession of, the Debtors’ property and equipment. The Debtors’ failure to

satisfy payment obligations to the Third-Party Contractors could result in the Third-Party

Contractors’ refusal to return the Debtors’ property or equipment, thereby disrupting the Debtors’

business operations.

22. In order to maintain access to the Debtors’ property and provision of necessary

services that are essential to the continued viability of the Debtors’ operations, the Debtors seek

authority to pay outstanding amounts owed to Lien Claimants. As of the Petition Date, the Debtors

estimate that they owe an aggregate amount of approximately $450,000 on account of Lien Claims,

approximately $300,000 of which will come due within 25 days following the Petition Date. For

the avoidance of doubt, the Debtors seek authority to pay only those amounts that they determine,

in their sole discretion, are necessary or appropriate to (a) obtain release of critical or valuable

goods, (b) maintain a reliable, efficient, and smooth distribution system, and (c) induce the Lien

Claimants to continue performing and otherwise supporting the Debtors’ operations on a

postpetition basis.

IV. The 503(b)(9) Claimants.

23. The Debtors have received certain goods, equipment and materials from various

foreign and domestic 503(b)(9) Claimants within the 20-day period immediately preceding the

Petition Date. Certain of the 503(b)(9) Claimants do not have long-term contracts with the

Debtors. Rather, the Debtors obtain goods, equipment or other materials from the 503(b)(9)

Claimants on an order-by-order basis. As a result, the 503(b)(9) Claimants may refuse to supply


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new orders without payment of their prepetition claims. Any refusal could negatively impact the

Debtors’ estates as the Debtors’ operations are dependent on the steady flow of equipment and

goods. The Debtors believe that, as of the Petition Date, they owe approximately $1,800,000 on

account of goods delivered within the 20 days immediately preceding the Petition Date,

approximately $900,000 of which may come due in the first 25 days after the Petition Date and

the value of which may be entitled to administrative priority under section 503(b)(9) of the

Bankruptcy Code.

24. The Debtors request the authority, but not the direction, to pay those undisputed

claims arising from the value of such goods received by the Debtors within the 20 days

immediately preceding the Petition Date that were sold to the Debtors in the ordinary course of

business (each, a “503(b)(9) Claim”). The Debtors do not seek to accelerate or modify existing

payment terms with respect to the 503(b)(9) Claims. Rather, the Debtors will pay the 503(b)(9)

Claims as they come due in the ordinary course of business. Further, as with the Critical Vendor

Claims, the Foreign Vendor Claims, and the Lien Claims, the Debtors seek authority to pay only

those amounts that they determine are necessary or appropriate to (a) obtain critical or valuable

goods, (b) maintain a reliable, efficient, and smooth distribution system, and (c) induce the

503(b)(9) Claimants to continue to provide goods. The Debtors intend to pay prepetition 503(b)(9)

Claims only where they believe, in their business judgment, that the benefits to their estates from

making such payments will exceed the costs to their estates.

V. Customary Trade Terms.

25. The Debtors operate on an order-to-order basis with many of the Trade Claimants.

In general, the Trade Claimants are not required to ship products or provide services, nor are they

required to continue offering the same trade terms. Loss of trade terms (whether on account of

demands for cash-in-advance, cash-on-delivery, or otherwise) negatively impacts the Debtors’


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liquidity and ability to sustain the business. It is prudent that the Debtors take any and all

reasonable steps necessary to avoid imperiling the restructuring, subject to the Trade Claimants

performing their obligations in accordance with the terms of a prepetition relationship with the

Debtors (the “Customary Trade Terms”). In order to avoid disruption of the Debtors’ operations,

the Debtors seek authority, but not direction, to condition payment of a Trade Claim on a Trade

Claimant’s agreement to continue supplying goods and services on Customary Trade Terms.

VI. The Outstanding Orders.

26. Prior to the Petition Date, and in the ordinary course of business, the Debtors may

have ordered goods that will not be delivered until after the Petition Date. In the mistaken belief

that they would be general unsecured creditors of the Debtors’ estates with respect to such goods,

certain suppliers may refuse to ship or transport such goods (or may recall such shipments) with

respect to such Outstanding Orders unless the Debtors issue substitute purchase orders

postpetition—potentially disrupting the Debtors’ ongoing business operations and requiring the

Debtors’ to expend substantial time and effort in issuing such substitute orders. As set forth in

greater detail below, because the Outstanding Orders are administrative expenses of the Debtors’

estates, the Debtors are requesting that the Court confirm the administrative expense priority of

the Outstanding Orders and authorize the Debtors to pay amounts due on account of Outstanding

Orders in the ordinary course of business on a postpetition basis.

Basis for Relief

I. Payment of the Trade Claims Is Warranted Under 363(b)(1) of the Bankruptcy Code.

27. Courts have generally acknowledged that it is appropriate to authorize the payment

of prepetition obligations where necessary to protect and preserve the estate, including an

operating business’s going-concern value. See, e.g., In re CoServ, L.L.C., 273 B.R. 487, 497

(Bankr. N.D. Tex. 2002) (“Cases cited by Debtors that refer to necessity of payment to preserve


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going concern value imply such a rule, and this Court is prepared to apply the Doctrine of Necessity

to authorize payment of prepetition claims in appropriate cases.”); see also In re Scotia Dev., LLC,

No. 07-20027, 2007 WL 2788840, at *2 (Bankr. S.D. Tex. Sep. 21, 2007) (outlining the factors

for when a critical vendor payment is necessary); In re Ionosphere Clubs, Inc., 98 B.R. 174, 175

(Bankr. S.D.N.Y. 1989) (“The ability of a Bankruptcy Court to authorize the payment of pre-

petition debt when such payment is needed to facilitate the rehabilitation of the debtor is not a

novel concept.”). In so doing, these courts acknowledge that several legal theories rooted in

sections 105(a), 363(b), and 1107(a) of the Bankruptcy Code support the payment of prepetition

claims as provided herein.

28. Section 363(b) of the Bankruptcy Code permits a debtor, subject to court approval,

to pay prepetition obligations where a sound business purpose exists for doing so. See Ionosphere

Clubs, 98 B.R. at 175 (noting that section 363(b) provides “broad flexibility” to authorize a debtor

to honor prepetition claims where supported by an appropriate business justification). In addition,

under section 1107(a) of the Bankruptcy Code, a debtor in possession is given the same rights and

powers as a trustee appointed in a bankruptcy case, including the “implied duty of the debtor-in-

possession to ‘protect and preserve the estate, including an operating business’ going-concern

value.’” See, e.g., In re CEI Roofing, Inc., 315 B.R. 50, 59 (Bankr. N.D. Tex. 2004) (quoting In

re CoServ, 273 B.R. at 497). Moreover, under section 105(a) of the Bankruptcy Code, “[t]he Court

may issue any order, process, or judgment that is necessary or appropriate to carry out the

provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a); In re CoServ, L.L.C., 273 B.R. at 497

(“These are simply examples of claims that may require satisfaction for the debtor in possession

to perform its fiduciary obligations. In such instances, it is only logical that the bankruptcy court

be able to use Section 105(a) of the [Bankruptcy] Code to authorize satisfaction of the prepetition


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claim in aid of preservation or enhancement of the estate.”); In re CEI Roofing, Inc., 315 B.R. at

56 (citing In re Mirant Corp., 296 B.R. 427 (Bankr. N.D. Tex. 2003)); In re Mirant Corp., 296

B.R. 427.

29. No provision of the Bankruptcy Code expressly prohibits the postpetition payment

of prepetition trade claims. Indeed, the above-referenced sections of the Bankruptcy Code

authorize such payments when the payments are critical to preserving the going-concern value of

the debtor’s estate, as is the case here.

30. Courts have noted that there are instances in which debtors in possession can fulfill

their fiduciary duties “only . . . by the preplan satisfaction of a prepetition claim.” In re CoServ,

L.L.C., 273 B.R. at 497. The CoServ court specifically noted that the preplan satisfaction of

prepetition claims would be a valid exercise of a debtor’s fiduciary duty when the payment “is the

only means to effect a substantial enhancement of the estate,” id., and also when the payment was

to “sole suppliers of a given product.” Id. at 498. Courts in the Fifth Circuit, including the

Southern District of Texas have followed CoServ’s three-part test to determine whether a

prepetition claim of a “critical vendor” may be paid outside of the plan process on a postpetition

basis:

First, it must be critical that the debtor deal with the claimant. Second, unless it deals with the claimant, the debtor risks the probability of harm, or, alternatively, loss of economic advantage to the estate or the debtor’s going concern value, which is disproportionate to the amount of the claimant’s pre-petition claim. Third, there is no practical or legal alternative by which the debtor can deal with the claimant other than by payment of the claim.

In re CoServ, L.L.C., 273 B.R. at 498; see also In re Scotia Dev., LLC, 2007 WL 2788840, at *2; In re Mirant Corp., 296 B.R. at 429–30.

31. Allowing the Debtors to pay the Trade Claims is especially appropriate where, as

here, doing so is consistent with the “two recognized policies” of chapter 11 of the Bankruptcy


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Code—preserving the going concern value for the Debtors’ business and maximizing the value of

property available to satisfy creditors. See Bank of Am. Nat’l Trust & Savs. Ass’n v. 203 N. LaSalle

St. P’Ship, 526 U.S. 434, 453 (1999) (describing a reconciliation of “the two recognized policies

underlying Chapter 11 . . . preserving going concerns and maximizing property available to satisfy

creditors”). Indeed, reflecting the recognition that payment of prepetition claims of certain

essential suppliers and vendors is, in fact, both critical to a debtor’s ability to preserve going-

concerns and maximize creditor recovery, courts regularly grant relief consistent with that which

the Debtors are seeking in this Motion. See In re CoServ, L.L.C., 273 B.R. at 497 (noting that “it

is only logical that the bankruptcy court be able to use [s]ection 105(a) of the [Bankruptcy] Code

to authorize satisfaction of the prepetition claim in aid of preservation or enhancement of the

estate”).

32. The Debtors require a steady stream of goods and services from their Critical

Vendors to maintain operational stability while simultaneously transitioning into chapter 11.

Without the goods and services provided by the Critical Vendors, the Debtors could be forced to

halt production immediately while they search for substitute vendors and service providers and

may have to forego existing favorable trade terms in their haste to find new vendors. Importantly,

any disruption to the Debtors’ supply chain could result in a significant loss of operational

efficiency, decreasing the value of these businesses, which could impair stakeholder value at this

critical juncture in these chapter 11 cases. The Debtors submit that it is appropriate for the Court

to authorize the Debtors to engage in discussions with counterparties that may qualify as Critical

Vendors regarding the validity and amount of their respective claims and to determine whether

any such counterparties qualify as Critical Vendors and, subject to entry of the Final Order, for the

Court to authorize the Debtors to satisfy the Trade Claims as set forth herein.


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II. Failure to Make Timely Payment of the Lien Claims Would Threaten the Debtors’ Ability to Operate and May Subject the Debtors’ Assets to the Perfection of Liens.

33. Certain Lien Claimants may be entitled under applicable non-bankruptcy law to

assert certain possessory liens on the Debtors’ goods or equipment in their possession

(notwithstanding the automatic stay under section 362 of the Bankruptcy Code) in an attempt to

secure payment of their prepetition claim. Under section 362(b)(3) of the Bankruptcy Code, the

act of perfecting such liens, to the extent consistent with section 546(b) of the Bankruptcy Code,

is expressly excluded from the automatic stay.5 As a result, the Debtors anticipate that certain of

the Lien Claimants may assert or perfect liens, simply refuse to turn over goods in their possession,

or stop performing their ongoing obligations. Even absent a valid lien, to the extent certain Lien

Claimants have possession of the Debtors’ inventory, equipment, or products, mere possession or

retention could disrupt the Debtors’ operations.

34. Paying the Lien Claims should not impair unsecured creditor recoveries in these

chapter 11 cases. In instances where the amount owed to a Lien Claimant is less than the value of

the goods that could be held to secure a Lien Claimant’s claim, such party may be a fully-secured

creditor of the Debtors’ estates. In such instances, payment now only provides such party with

what they might be entitled to receive under a plan of reorganization, without any interest costs

that might otherwise accrue during these chapter 11 cases. Conversely, all creditors will benefit

from the seamless transition of the Debtors’ operations into bankruptcy and the ultimate delivery

and sale of inventory in the Debtors’ stores.

5 See 11 U.S.C. § 546(b)(1)(A) (providing that a debtor’s lien avoidance powers “are subject to any generally

applicable law that . . . permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection”).


18

III. The Court Should Authorize the Payment of 503(b)(9) Claims.

35. Additionally, section 503(b)(9) provides administrative priority for the “value of

any goods received by the debtor within 20 days before the date of commencement of a case under

this title in which goods have been sold to the debtor in the ordinary course of such debtor’s

business.” The 503(b)(9) Claims must be paid in full for the Debtors to confirm a chapter 11 plan.

See 11 U.S.C. § 1129(a)(9)(A). Consequently, payment of such claims now only provides such

parties with what they would be entitled to receive under a chapter 11 plan unless they consented

otherwise. The timing of such payments also lies squarely within the Court’s discretion. See In

re Global Home Prods., LLC, No. 06-10340 (KG), 2006 WL 3791955, at *3 (Bankr. D. Del. Dec.

21, 2006) (agreeing with parties that “the timing of the payment of that administrative expense

claim is left to the discretion of the Court”). The Debtors’ ongoing ability to obtain inventory and

other goods as provided herein is key to their survival and necessary to preserve the value of their

estates. Absent payment of the 503(b)(9) Claims at the outset of these chapter 11 cases—which

merely accelerates the timing of payment and not the ultimate treatment of such claims—the

Debtors could be denied access to the inventory and other goods necessary to maintain the Debtors’

business operations and maximize the value of the Debtors’ estates.

IV. The Court Should Confirm that Outstanding Orders Are Administrative Expense Priority Claims and that Payment of Such Claims Is Authorized.

36. Pursuant to section 503(b)(1) of the Bankruptcy Code, obligations that arise in

connection with the postpetition delivery of goods and services, including goods ordered

prepetition, are in fact administrative expense priority claims because they benefit the estate

postpetition. See 11 U.S.C. § 503(b)(1)(A) (providing that the “actual [and] necessary costs and

expenses of preserving the estate” are administrative expenses); see also In re John Clay & Co.,

43 B.R. 797, 809–10 (Bankr. D. Utah 1984) (holding that goods ordered prepetition but delivered


19

postpetition are entitled to administrative priority). Thus, the granting of the relief sought herein

with respect to the Outstanding Orders will not afford such claimants any greater priority than they

otherwise would have if the relief requested herein were not granted, and will not prejudice any

other party in interest.

37. Absent such relief, however, the Debtors may be required to expend substantial

time and effort reissuing the Outstanding Orders to provide certain suppliers with assurance of

such administrative priority. The attendant disruption to the continuous and timely flow of critical

raw materials and other goods to the Debtors would force the Debtors to potentially halt operations

and production, disrupt the Debtors’ business, and lead to a loss of revenue, all to the detriment of

the Debtors and their creditors. The Debtors submit that the Court should confirm the

administrative expense priority status of the Outstanding Orders and should authorize the Debtors

to pay the Outstanding Orders in the ordinary course of business.

Processing of Checks and Electronic Fund Transfers Should Be Authorized

38. The Debtors have sufficient funds to pay the amounts described in this Motion in

the ordinary course of business by virtue of expected cash flows from ongoing business operations,

debtor-in-possession financing, and anticipated access to cash collateral. In addition, under the

Debtors’ existing cash management system, the Debtors can readily identify checks or wire

transfer requests as relating to an authorized payment in respect of the relief requested herein.

Accordingly, the Debtors believe that checks or wire transfer requests, other than those relating to

authorized payments, will not be honored inadvertently. Therefore, the Debtors respectfully

request that the Court authorize and direct all applicable financial institutions, when requested by

the Debtors, to receive, process, honor, and pay any and all checks or wire transfer requests in

respect of the relief requested in this Motion.


20

Emergency Consideration

39. Pursuant to Bankruptcy Rule 6003, which empowers a court to grant relief within

the first 21 days after the commencement of a chapter 11 case “to the extent that relief is necessary

to avoid immediate and irreparable harm,” the Debtors respectfully request emergency

consideration of this Motion. The Debtors believe an immediate and orderly transition into chapter

11 is critical to the viability of their operations and that any delay in granting the relief requested

could hinder the Debtors’ operations and cause irreparable harm. Furthermore, the failure to

receive the requested relief during the first 21 days of these chapter 11 cases would severely disrupt

the Debtors’ operations at this critical juncture and imperil the Debtors’ restructuring.

Accordingly, the Debtors submit that they have satisfied the “immediate and irreparable harm”

standard of Bankruptcy Rule 6003 and, therefore, respectfully request that the Court approve the

relief requested in this Motion on an emergency basis.

Waiver of Bankruptcy Rule 6004(a) and 6004(h)

40. To implement the foregoing successfully, the Debtors request that the Court enter

an order providing that notice of the relief requested herein satisfies Bankruptcy Rule 6004(a) and

that the Debtors have established cause to exclude such relief from the 14-day stay period under

Bankruptcy Rule 6004(h).

Reservation of Rights

41. Nothing contained herein is intended or shall be construed as: (a) an admission as

to the amount of, basis for, or validity of any claim against the Debtors under the Bankruptcy Code

or other applicable nonbankruptcy law; (b) a waiver of the Debtors’ or any other party in interest’s

right to dispute any claim; (c) a promise or requirement to pay any particular claim; (d) an

implication or admission that any particular claim is of a type specified or defined in this Motion;

(e) a request or authorization to assume, adopt, or reject any agreement, contract, or lease pursuant


21

to section 365 of the Bankruptcy Code; (f) an admission as to the validity, priority, enforceability,

or perfection of any lien on, security interest in, or other encumbrance on property of the Debtors’

estates; (g) a waiver of any claims or causes of action which may exist against any entity under the

Bankruptcy Code or any other applicable law; or (h) a concession by the Debtors that any liens

(contractual, common law, statutory, or otherwise) that may be satisfied pursuant to the relief

requested in this Motion are valid, and the rights of all parties in interest are expressly reserved to

contest the extent, validity, or perfection or seek avoidance of all such liens. If the Court grants

the relief sought herein, any payment made pursuant to the Court’s order is not intended and should

not be construed as an admission as to the validity of any particular claim or a waiver of the

Debtors’ rights to subsequently dispute such claim.

Notice

42. The Debtors will provide notice of this Motion to the following parties or their

respective counsel, as applicable: (a) the United States Trustee for the Southern District of Texas;

(b) the holders of the 30 largest unsecured claims against the Debtors (on a consolidated basis);

(c) the administrative agent under the Debtors’ prepetition priority term loan credit facility and

prepetition first lien term loan credit facility, and counsel thereto; (d) the administrative agent

under the Debtors’ second lien term loan credit facility, and counsel thereto; (e) the accounts

receivable facility lender, and counsel thereto; (f) counsel to the ad hoc group of term loan lenders;

(g) the United States Attorney’s Office for the Southern District of Texas; (h) the Internal Revenue

Service; (i) the attorneys general for the states in which the Debtors operate; (j) the Critical

Vendors; (k) the Foreign Vendors; (l) the 503(b)(9) Claimants; and (m) any party that has

requested notice pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested,

no other or further notice need be given.


The Debtors respectfully request that the Court enter the Interim Order and the Final Order,

granting the relief requested in this Motion and granting such other relief as is appropriate under

the circumstances.

Houston, Texas September 10, 2020 Respectfully Submitted, /s/ Matthew D. Cavenaugh JACKSON WALKER L.L.P. KIRKLAND & ELLIS LLP Matthew D. Cavenaugh (TX Bar No. 24062656) KIRKLAND & ELLIS INTERNATIONAL LLP Jennifer F. Wertz (TX Bar No. 24072822) Christopher Marcus, P.C. (pro hac vice admission pending) Genevieve M. Graham (TX Bar No. 24085340) Rachael M. Bazinski (pro hac vice admission pending) Vienna F. Anaya (TX Bar No. 24091225) 601 Lexington Avenue 1401 McKinney Street, Suite 1900 New York, New York 10022 Houston, TX 77010 Telephone: (212) 446-4800 Telephone: (713) 752-4200 Facsimile: (212) 446-4900 Facsimile: (713) 752-4221 Email: [email protected]

Email: [email protected] [email protected]

[email protected] [email protected] [email protected]

Proposed Co-Counsel to the Debtors Proposed Co-Counsel to the Debtors and Debtors in Possession and Debtors in Possession


Certificate of Accuracy

I certify that the foregoing statements are true and accurate to the best of my knowledge. This statement is being made pursuant to Local Rule 9013-1(i).

/s/ Matthew D. Cavenaugh Matthew D. Cavenaugh

Certificate of Service

I certify that on September 10, 2020, I caused a copy of the foregoing document to be served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas.

/s/ Matthew D. Cavenaugh Matthew D. Cavenaugh



HOUSTON DIVISION

) In re: ) Chapter 11 ) IQOR HOLDINGS INC., et al.,1 ) Case No. 20-4500 (DRJ) ) Debtors. ) (Joint Administration Requested) ) ) Re: Docket No. __

INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO PAY CERTAIN PREPETITION

TRADE CLAIMS AND (II) GRANTING RELATED RELIEF

Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for entry of an interim order (this “Interim Order”), (a) authorizing

the Debtors to pay prepetition claims held by certain (i) Critical Vendors, (ii) Foreign Vendors,

(iii) Lien Claimants, and (iv) 503(b)(9) Claimants, in an aggregate amount not to exceed

$2,800,000 on an interim basis, (b) scheduling a final hearing to consider approval of the Motion

on a final basis, (c) granting administrative expense priority to all Outstanding Orders and

authorizing the Debtors to satisfy such obligations in the ordinary course of business, and

(d) granting related relief, all as more fully set forth in the Motion; and upon the First Day

Declaration; and this Court having jurisdiction over this matter pursuant to 28 U.S.C. § 1334, and

this Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and this

Court having found that venue of this proceeding and the Motion in this district is proper pursuant



2 Capitalized terms used in this Interim Order but not immediately defined have the meanings given to such terms in the Motion.

Case 20-34500 Document 13-1 Filed in TXSB on 09/10/20 Page 1 of 5

2

to 28 U.S.C. §§ 1408 and 1409; and this Court having found that the relief requested in the Motion

is in the best interests of the Debtors’ estates, their creditors, and other parties in interest; and this

Court having found that the Debtors’ notice of the Motion and opportunity for a hearing on the

Motion were appropriate under the circumstances and no other notice need be provided; and this

Court having reviewed the Motion and having heard the statements in support of the relief

requested therein at a hearing before this Court (the “Hearing”); and this Court having determined

that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for

the relief granted herein; and upon all of the proceedings had before this Court; and after due

deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:

1. The final hearing (the “Final Hearing”) on the Motion shall be held on _________,

2020, at__:__ _.m., prevailing Central Time. Any objections or responses to entry of a final order

on the Motion shall be filed on or before 4:00 p.m., prevailing Central Time, on _________, 2020.

2. The Debtors are authorized, but not directed, to pay Trade Claims of creditors in an

amount not to exceed $2,800,000 pending entry of the Final Order. In the event Debtors will

exceed the aggregate amounts in any category as detailed in the Motion during the interim period,

Debtors shall file a notice with the Court describing the category and overage amount.

3. The Debtors, in their sole discretion, may condition payment of Trade Claims on a

Trade Claimant’s maintenance or application of Customary Trade Terms.

4. All undisputed obligations on account of the Outstanding Orders are granted

administrative expense, and the Debtors are authorized, but not directed, to satisfy such obligations

in the ordinary course of business.

5. Nothing herein shall impair or prejudice the Debtors’ ability to contest, in their sole

discretion, the extent, perfection, priority, validity, or amounts of the Trade Claims. The Debtors


3

do not concede that any claims satisfied pursuant to this Interim Order are valid, and the Debtors

expressly reserve all rights to contest the extent, validity, or perfection or to seek the avoidance of

all such liens or the priority of such claims.

6. The Debtors are authorized to issue postpetition checks, or to effect postpetition

fund transfer requests, in replacement of any checks or fund transfer requests that are dishonored

as a consequence of these chapter 11 cases with respect to prepetition amounts owed in connection

with the relief granted herein.

7. The banks and financial institutions on which checks were drawn or electronic

payment requests made in payment of the prepetition obligations approved herein are authorized

to receive, process, honor, and pay all such checks and electronic payment requests when presented

for payment, and all such banks and financial institutions are authorized to rely on the Debtors’

designation of any particular check or electronic payment request as approved by this Interim

Order.

8. Notwithstanding the relief granted in this Interim Order and any actions taken

pursuant to this Interim Order, nothing in this Interim Order shall be deemed: (a) an admission as

to the validity of any prepetition claim against a Debtor entity; (b) a waiver of the Debtors’ or any

other party in interest’s right to dispute any prepetition claim on any grounds; (c) a promise or

requirement to pay any prepetition claim; (d) a waiver of the obligation of any party in interest to

file a proof of claim; (e) an implication or admission that any particular claim, interest or lien is of

a type specified or defined in this Interim Order or the Motion; (f) a request or authorization to

assume any prepetition agreement, contract, or lease pursuant to section 365 of the Bankruptcy

Code; (g) a waiver of the Debtors’ or any other party in interest’s rights under the Bankruptcy

Code or any other applicable law; or (h) a concession by the Debtors that any liens (contractual,


4

common law, statutory, or otherwise) satisfied pursuant to this Interim Order are valid, and the

rights of all parties in interest are expressly reserved to contest the extent, validity, or perfection

or seek avoidance of all such liens.

9. Notwithstanding anything to the contrary in this Interim Order, any payment made

or action taken by any of the Debtors pursuant to the authority granted in this Interim Order shall

be subject to any interim or final order entered by the Court approving the Debtors’ use of cash

collateral and/or the Debtors’ entry into any postpetition financing facilities or credit agreements,

and any budgets in connection therewith governing any such postpetition financing and/or use of

cash collateral (each such order, a “DIP Order”). To the extent there is any inconsistency between

the terms of the DIP Order and this Interim Order, the terms of the DIP Order shall control.

10. The Debtors shall maintain reasonable records of payments made pursuant to this

Interim Order on account of Trade Claims, including the following information: (a) the names of

the payee; (b) the amount of the payment; (c) the category or type of payment, as further described

and classified in the Motion; (d) the Debtor or Debtors that made the payment; and (e) the payment

date. If the Debtors do not confirm plan by November 9, 2020, the Debtors shall provide a copy

of such matrix/schedule to the U.S. Trustee, and any statutory committee appointed in these

chapter 11 cases every 30 days beginning upon entry of this Interim Order.

11. Nothing herein shall impair or prejudice the rights of the U.S. Trustee and the

statutory committee appointed in these chapter 11 cases, which are expressly reserved, to object

to any payment made pursuant to this Interim Order to an insider (as such term is defined in section

101(31) of the Bankruptcy Code), or an affiliate of an insider, of the Debtors. To the extent the

Debtors intend to make a payment to an insider or an affiliate of an insider of the Debtors, the

Debtors shall, to the extent reasonably practicable, provide three (3) business days’ advance notice


5

to, and opportunity to object by the U.S. Trustee and any statutory committee appointed in these

chapter 11 cases; provided, that if any party objects to the payment, the Debtors shall not make

such payment without further order of the Court.

12. Prior to the entry of a Final Order, the Debtor shall not pay any obligations under

this Interim Order unless they are due or are deemed necessary to be paid in the Debtor’s business

judgment to ensure ongoing provision of goods or services or otherwise to avoid an adverse effect

on operations.

13. The contents of the Motion satisfy the requirements of Bankruptcy Rule 6003(b).

14. Notice of the Motion as provided therein shall be deemed good and sufficient notice

of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Bankruptcy Local Rules

are satisfied by such notice.

15. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Interim

Order are immediately effective and enforceable upon its entry.

16. The Debtors are authorized to take all actions necessary to effectuate the relief

granted in this Interim Order in accordance with the Motion.

17. This Court retains exclusive jurisdiction with respect to all matters arising from or

related to the implementation, interpretation, and enforcement of this Interim Order.


related to the implementation, interpretation, and enforcement of this Interim Order.

Dated: __________, 2020 Houston, Texas UNITED STATES BANKRUPTCY JUDGE



HOUSTON DIVISION

) In re: ) Chapter 11 ) IQOR HOLDINGS INC., et al.,1 ) Case No. 20-34500 (DRJ) ) Debtors. ) (Joint Administration Requested) ) ) Re: Docket No. __

FINAL ORDER (I) AUTHORIZING THE DEBTORS TO PAY CERTAIN PREPETITION

TRADE CLAIMS AND (II) GRANTING RELATED RELIEF

Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for the entry of a final order (this “Final Order”), (a) authorizing the

Debtors to pay prepetition claims held by certain (i) Critical Vendors, (ii) Foreign Vendors,

(iii) Lien Claimants, and (iv) 503(b)(9) Claimants, (b) granting administrative expense priority to

all Outstanding Orders and authorizing the Debtors to satisfy such obligations in the ordinary

course of business; and (c) granting related relief, all as more fully set forth in the Motion; and

upon the First Day Declaration; and this Court having jurisdiction over this matter pursuant to 28

U.S.C. § 1334, and this Court having found that this is a core proceeding pursuant to 28 U.S.C.

§ 157(b)(2), and this Court may enter a final order consistent with Article III of the United States

Constitution; and this Court having found that venue of this proceeding and the Motion in this

district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and this Court having found that the



2 Capitalized terms used in this Final Order but not immediately defined have the meanings given to such terms in the Motion.


7

relief requested in the Motion is in the best interests of the Debtors’ estates, their creditors, and

other parties in interest; and this Court having found that the Debtors’ notice of the Motion and

opportunity for a hearing on the Motion were appropriate under the circumstances and no other

notice need be provided; and this Court having reviewed the Motion and having heard the

statements in support of the relief requested therein at a hearing before this Court (the “Hearing”);

and this Court having determined that the legal and factual bases set forth in the Motion and at the

Hearing establish just cause for the relief granted herein; and upon all of the proceedings had

before this Court; and after due deliberation and sufficient cause appearing therefor, it is HEREBY

ORDERED THAT:

1. The Debtors are authorized, but not directed, in the reasonable exercise of their

business judgment, to pay all or part of, on a case-by-case basis, the Trade Claims.

2. The Debtors, in their sole discretion, may condition payment of Trade Claims on a

Trade Claimant’s maintenance or application of Customary Trade Terms.

3. All undisputed obligations on account of the Outstanding Orders are granted

administrative expense, and the Debtors are authorized, but not directed, to satisfy such obligations

in the ordinary course of business.

4. Nothing herein shall impair or prejudice the Debtors’ ability to contest, in their sole

discretion, the extent, perfection, priority, validity, or amounts of the Trade Claims. The Debtors

do not concede that any claims satisfied pursuant to this Final Order are valid, and the Debtors

expressly reserve all rights to contest the extent, validity, or perfection or to seek the avoidance of

all such liens or the priority of such claims.

5. Notwithstanding the relief granted in this Final Order and any actions taken

pursuant to this Final Order, nothing in this Final Order shall be deemed: (a) an admission as to


8

the validity of any prepetition claim against a Debtor entity; (b) a waiver of the Debtors’ or any

other party in interest’s right to dispute any prepetition claim on any grounds; (c) a promise or

requirement to pay any prepetition claim; (d) an implication or admission that any particular claim

is of a type specified or defined in this Final Order or the Motion; (e) a request or authorization to

assume any prepetition agreement, contract, or lease pursuant to section 365 of the Bankruptcy

Code; (f) a waiver of the Debtors’ or any other party in interest’s rights under the Bankruptcy Code

or any other applicable law; or (g) a concession by the Debtors that any liens (contractual, common

law, statutory, or otherwise) satisfied pursuant to the Motion are valid, and the rights of all parties

in interest are expressly reserved to contest the extent, validity, or perfection or seek avoidance of

all such liens.

6. Notwithstanding anything to the contrary in this Final Order, any payment made or

action taken by any of the Debtors pursuant to the authority granted in this Final Order shall be

subject to any interim or final order entered by the Court approving the Debtors’ use of cash

collateral and/or the Debtors’ entry into any postpetition financing facilities or credit agreements,

and any budgets in connection therewith governing any such postpetition financing and/or use of

cash collateral (each such order, a “DIP Order”). To the extent there is any inconsistency between

the terms of the DIP Order and this Final Order, the terms of the DIP Order shall control.

7. Notice of the Motion as provided therein shall be deemed good and sufficient notice

of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Bankruptcy Local Rules

are satisfied by such notice.

8. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Final

Order are immediately effective and enforceable upon its entry.


9

9. The Debtors are authorized to take all actions necessary to effectuate the relief

granted in this Final Order in accordance with the Motion.


related to the implementation, interpretation, and enforcement of this Final Order.

Dated: __________, 2020 Houston, Texas UNITED STATES BANKRUPTCY JUDGE


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