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Lyon workspace employee motion
 

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    Lyon workspace employee motion Lyon workspace employee motion Document Transcript

    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main 1/19/2013 Docket #0011 Date Filed: Document Page 1 of 14 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISIONIn re Chapter 11LYON WORKSPACE PRODUCTS, L.L.C., etal.1, Case No. 13-2100 Debtor. Honorable Janet S. Baer DEBTORS’ MOTION FOR ORDER PURSUANT TO 11 U.S.C. §§ 507 AND 363 (A) AUTHORIZING, BUT NOT DIRECTING, PAYMENT OF PREPETITION PRIORITY WAGES, SALARIES AND EMPLOYEE BENEFITS AND CONTINUATION OF EMPLOYEE BENEFIT PLANS AND PROGRAMS POSTPETITION, (B) AUTHORIZING, BUT NOT DIRECTING, DEDUCTIONS FROM EMPLOYEES’ PAYCHECKS, AND (C) DIRECTING ALL BANKS TO HONOR PREPETITION CHECKS FOR PAYMENT OF PREPETITION EMPLOYEE OBLIGATIONS Lyon Workspace Products, L.L.C., et al. (collectively, the “Debtors”) submit this motion,pursuant to sections 105, 363(b), 507(a)(4) and 507(a)(5) of the Bankruptcy Code, for entry of anorder: (a) authorizing, but not directing, the Debtors to pay or otherwise honor the Debtors’employee-related prepetition priority obligations to, or for the benefit of, employees, and tocontinue postpetition the employee benefit plans and programs in effect immediately prior to thefiling of this case; (b) authorizing, but not directing, the Debtors to make deductions fromemployees’ paychecks; (c) directing all banks to honor prepetition checks for payment of theDebtors’ prepetition employee obligations; and (d) granting related relief. In support of thisMotion, the Debtors respectfully represent as follows: I. JURISDICTION 1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This isa core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue of these cases and this Motion inthis District is proper pursuant to 28 U.S.C. §§ 1408 and 1409. The statutory predicates for the 1 The other Debtors in these jointly administered chapter 11 cases are Pride Metals L.L.C., SycamoreSystems, L.L.C., Paris Metal Products, L.L.C., Durand Products, L.L.C., L&D Group, Inc., Miller Global Solutions, ¨1¤>5 -!3 *M« 130210013011900000000001063897-0002/LEGAL25579843.1
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 2 of 14relief requested herein are Bankruptcy Code sections 105, 363(b), 507(a)(4) and 507(a)(5). II. BACKGROUND 2. On January 19, 2013, each of the Debtors filed a voluntary petition for reliefunder chapter 11 of the Bankruptcy Code. The Debtors are operating their businesses andmanaging their properties as debtors in possession pursuant to sections 1107(a) and 1108 of theBankruptcy Code. No request for the appointment of a trustee or examiner has been made in theChapter 11 Cases and no official committee has been appointed. 3. The factual background relating to the Debtors’ commencement of these Chapter11 Cases is set forth in detail in the Declaration of Robert Wanat in Support of Debtors’ Chapter11 Petitions and First Day Motions (the “Wanat Declaration”) filed on the Petition Date andincorporated herein by reference. III. RELIEF REQUESTED 4. By this Motion, the Debtors request that the Court enter an order under sections507(a)(4) and (a)(5) and 363(b)(1) of the Bankruptcy Code authorizing the Debtors to (a) pay orotherwise honor all employee-related prepetition priority obligations of the Debtors to, or for thebenefit of, current employees (the “Employees”), (b) make deductions from Employees’paychecks, and (c) continue postpetition the Debtors’ employee benefit plans and programs asdescribed below. 5. The employee-related obligations (the “Prepetition Employee Obligations”)include, without limitation: (a) unpaid prepetition wages, salaries and commissions, up to the statutory maximum of $11,725 per employee, including holiday,L.L.C., and Lyon Workspace Products, Inc.63897-0002/LEGAL25579843.1 -2-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 3 of 14 vacation and sick leave pay earned prior to the Petition Date; (b) reimbursable business expenses incurred before the Petition Date; and (c) employee health and welfare benefit claims arising before the Petition Date (including, without limitation, (i) medical and dental claims under the Debtors’ self-funded health care plan and COBRA, (ii) long-term disability, accidental death and dismemberment and life insurance, (iii) supplemental health insurance, (iv) union dues for union Employees, (v) uniform rentals for uniformed Employees, and (iv) workers’ compensation claims arising before the Petition Date (collectively, the benefits in this subsection (c) shall be referred to as the “Employee Benefits”)). 6. The Debtors also seek an order directing all banks and financial institutions tohonor prepetition checks for payment of the Prepetition Employee Obligations. IV. AUTHORITY FOR REQUESTED RELIEF 7. In order to minimize the personal hardship that the Employees will suffer ifprepetition Employee-related obligations are not paid when due or as expected, and to maintainmorale and an essential workforce during this critical time, the Debtors respectfully submit that itis in the best interests of their estate, creditors and parties-in-interest for this Court to authorizepayment of the Prepetition Employee Obligations, to allow the Debtors to make deductions fromthe Employees’ paychecks and to continue the Employee Benefits in the ordinary course ofbusiness.A. Unpaid Compensation 8. As of the Petition Date, the Debtors’ workforce consisted of approximately 400full-time employees. Approximately 53% of the Debtors’ workforce consists of salariedEmployees, and the remaining 47% of the workforce is paid on an hourly basis. Of the salariedemployees, approximately 55% are eligible for overtime pay.63897-0002/LEGAL25579843.1 -3-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 4 of 14 9. The Debtors have two payrolls: one weekly and the other bi-weekly. The weeklypayroll varies depending upon plant volume, but is approximately $200,000. The bi-weeklypayroll is approximately $295,000 per pay period. Generally, hourly Employees are paid weeklyand salaried Employees are paid bi-weekly. Both salaried and hourly Employees are paidapproximately one to two weeks in arrears. 10. Eight percent of the Debtors’ Employees are union members whose employmentis governed by a collective bargaining agreement (“CBA”) with Local Union No. 1636 of theUnited Steelworkers of America, A.F.L.-C.I.O. 11. Through this Motion, the Debtors request authority, but not direction, to honor, inthe ordinary course of business, all of the obligations to union Employees in accordance with theterms and conditions of the CBA, including, but not limited to, the relevant Unpaid Wages andSalaries. 12. Though the Debtors are current on their payroll as of the Petition Date, theDebtors owe their Employees compensation in the form of accrued but unpaid wages and salaries(the “Unpaid Wages and Salaries”) in the approximate aggregate amount of $130,000. 13. The Debtors also use temporary workers during busy periods. These workers arenot Employees and are not paid by the Debtor. Rather, the Debtors pay the agencies that directlyemploy these workers. As of the Petition Date, the Debtors used an average of 25 temp workersper day and owe nine agencies at total of approximately $500,000 for the services of theirtemporary workers. 14. Additionally, approximately 50 Employees in the Debtors’ sales force are entitledto commissions based on a percentage of sales made each quarter (the “Unpaid Commissions,”and together with the Unpaid Wages and Salaries, the “Unpaid Compensation”). As of the63897-0002/LEGAL25579843.1 -4-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 5 of 14Petition Date, the Debtors estimate that the aggregate amount owed in the form of accrued butUnpaid Commissions is approximately $200,000. The Debtors seek authority to pay suchUnpaid Compensation as it becomes due and owing in the ordinary course of business. Only oneof the Employees entitled to an Unpaid Commission is owed more than the statutory maximum.In that case, the Debtors seek only to pay the statutory maximum of $11,725 (less any otheraccrued priority compensation).B. Paid Time Off 15. During the course of each year, certain Employees accrue vacation, sick leave andholiday pay that may be exercised in the ordinary course of the Debtors’ business (the “PaidTime Off”). Accrual of vacation time varies depending on the location of the Employee, his orher union membership, whether that employee is salaried or hourly and whether the employee isin an overtime exempt role. Vacation time of four weeks is the maximum accrual for the mostsenior non-union Employees and does not carry over from year to year, except for thoseemployees located in California. As of the Petition Date, aggregate accrued and unused vacationtime amounted to a total liability to the Debtors of approximately $300,000. 16. The Debtors also provide sick leave to full-time salaried Employees. The Debtorsrequest authority to continue to accrue such vacation, sick leave and other leave time in theordinary course of their business and to allow Employees to utilize such accrued time under thecustomary and/or contractual terms and conditions of such Employees’ employment.C. Reimbursement Obligations 17. It is the Debtors’ policy to reimburse Employees for certain expenses within thescope of their employment, including expenses for business-related travel (the “ReimbursementObligations”). The Debtors average $24,000 per month in expense reimbursements, and63897-0002/LEGAL25579843.1 -5-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 6 of 14estimates that, as of the Petition Date, approximately half that total was owed to Employees onaccount of the Reimbursement Obligations. The Debtors request the authority to pay suchaccrued but unpaid prepetition Reimbursement Obligations.D. Remitting and/or Paying Appropriate Deductions and Withholdings 18. During each applicable pay period, the Debtors routinely deduct certain amountsfrom paychecks, including, without limitation, (a) garnishments, child support and similardeductions, and (b) other pre-tax and after-tax deductions payable pursuant to certain of theEmployee Benefits discussed herein (such as an employee’s share of health care benefits,insurance premiums, pension payments, 401(k) contributions and other miscellaneousdeductions) (collectively, the “Deductions”) and forwards those amounts to various third partyrecipients. On average, the Debtors historically deducted approximately $12,000 from weeklypayroll and $28,000 from bi-weekly payroll from the Employees’ paychecks per applicablepayroll period. However, due to the commencement of this chapter 11 case, these funds werededucted from Employees’ earnings, but may not have been forwarded to the appropriate thirdparty recipients prior to the Petition Date. Accordingly, the Debtors seek for it or their agent tocontinue to forward these prepetition Deductions to the applicable third party recipients on apostpetition basis, in the ordinary course of business, as routinely done prior to the Petition Date. 19. Further, the Debtors are required by law to withhold from an Employee’s wagesamounts related to federal, state and local income taxes and social security taxes (collectively,the “Withheld Amounts”) for remittance to the appropriate federal, state or local taxingauthority. The Debtors must then match from their own funds for social security and pay, basedon a percentage of gross payroll, additional amounts for state and federal unemploymentinsurance (the “Employer Payroll Taxes,” and together with the Withheld Amounts, the “Payroll63897-0002/LEGAL25579843.1 -6-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 7 of 14Taxes”). The Debtors’ Payroll Taxes, including both the employee and employer portion, for thelast three quarters of 2012 were approximately $4,300,000. On average, the Debtors withholdapproximately $55,000 from weekly payroll and $80,000 from bi-weekly payroll in theaggregate from the Employees’ paychecks each payroll period. Before the Petition Date, theDebtors withheld the appropriate amounts from Employees’ earnings for the Payroll Taxes, butsuch funds may not have been forwarded to the appropriate taxing authorities prior to thePetition Date. As a result, the Debtors seek authority, but not direction, for it or their agent tocontinue to honor and process the prepetition obligations with respect to Payroll Taxes on apostpetition basis, in the ordinary course of business, as routinely done prior to the Petition Date.E. Employee Benefits 20. The Debtors also offer Employees many standard benefits under their EmployeeBenefit programs. Specifically, certain of the Debtors’ Employees are offered a choice of,among other things, medical and dental plans, COBRA, long-term disability, accidental deathand dismemberment insurance, basic life insurance and supplemental health insurance. 21. The Debtors offer medical and dental coverage to Employees and their families.The insurance plan is self-funded and independently administered by Blue Cross/Blue Shield.The total monthly contribution from Employees for insurance is approximately $45,000. TheDebtors are responsible for paying claims and administrative expenses to Blue Cross/ BlueShield from the Employees’ contribution and from their own funds. The monthly paymentvaries depending on actual claims activity, but the average payment is approximately $300,000per month, inclusive of the Employees’ contribution. As of the Petition Date, the Debtorsbelieve that claims for December and January in the approximate total amount of $400,000 willbe incurred but will not yet be due and owing.63897-0002/LEGAL25579843.1 -7-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 8 of 14 22. Approximately 350 Employees participate in one or more of: (a) long-termdisability through Met Life or Assurant, (b) life insurance through Met Life, (c) short termdisability, and/or (d) a uniform rental program. The annual cost to the Debtors is approximately$175,000. As of the Petition Date, the Debtors expect that the aggregate amount of thesebenefits outstanding will be $25,000. 23. The Debtors provide their Employees with a 401(k) plan. Under the CBA, theDebtors must match contributions up to 6% of a union employee’s salary. The Debtors monthlycontributions average $4500. As of the Petition Date, the Debtors expect that approximately$2,500 in required 401(k) contributions will be outstanding. 24. The Debtors request authority to continue to maintain the Employee Benefits intheir sole discretion and to pay any prepetition amounts related thereto.F. Workers Compensation 25. Because their sales force is national in scope, the Debtors are required to provideworkers’ compensation insurance 41 states. The Debtors insures workers’ compensation with alarge deductible program through Sentry Insurance, or if required by state law, through aretrospective rating policy through Sentry Insurance. The premiums for the insurance areapproximately $385,000 per year, plus claims paid. 26. It is critical that the Debtors be permitted to continue their workers’ compensationprogram and to pay any reconciled balances and unpaid premiums because alternativearrangements for workers’ compensation coverage would most certainly be more costly and thefailure to provide coverage may subject the Debtors and/or their officers to severe penalties.Accordingly, the Debtors seeks authority to continue to pay premiums related to workers’compensation, to pay any unpaid premiums that became due prepetition and to continue the63897-0002/LEGAL25579843.1 -8-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 9 of 14workers’ compensation program in the ordinary course of business in their sole discretion.G. Summary of Requests 27. In sum, pursuant to this Motion, the Debtors seek to pay the Prepetition EmployeeObligations and to continue the Debtors’ Employee Benefits in effect immediately prior to thefiling of this case. If the Debtors fail to pay or honor the Employees’ prepetition compensation,reimbursement procedures and employee benefits, the Employees will suffer extreme personalhardship and in many cases will be unable to pay their basic living expenses. This clearly woulddestroy Employee morale and result in unmanageable Employee turnover during the criticalearly stages of the Debtors’ chapter 11 case, which would negatively impact the Debtors’ abilityto sell their assets in a sale pursuant to § 363 of the Bankruptcy Code. The Debtors submit thatany significant deterioration in morale at this time will substantially and adversely impact theDebtors and their ability to sell their assets, thereby resulting in immediate and irreparable harmto the Debtors and their estates. In addition, the failure to pay workers’ compensation claimsmay result in Employee attempts to compel payment through litigation or similar means, therebyjeopardizing the Debtors’ ability to conduct business. 28. To retain Employees and maintain their morale through the asset sale, the Debtorsseek authorization, but not direction, to satisfy the Prepetition Employee Obligations andcontinue to provide postpetition the Employee Benefits and maintain accruals of those benefits inthe ordinary course of business. The Debtors further submit that the amounts to be paid to theEmployees pursuant to this Motion are reasonable compared with the importance and necessityof preserving Employee loyalty and morale and with the difficulties and losses the Debtors likelywill suffer if those amounts are not paid. 29. Accordingly, the Debtors seek authorization to pay the Prepetition Employee63897-0002/LEGAL25579843.1 -9-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 10 of 14Obligations (or to maintain accrued levels of benefits and continue such accrual where paymentis not yet due) all in accordance with the policies, plans and programs in place prior to thePetition Date.H. Banks to Honor Prepetition Checks for Prepetition Employee Obligations 30. In addition, the Debtors request that all applicable banks and other financialinstitutions be authorized and directed to receive, process, honor and pay all checks presented forpayment and to honor all fund transfer requests made by the Debtors related to the PrepetitionEmployee Obligations, whether such checks were presented or fund transfer requests weresubmitted prior to or after the Petition Date. The Debtors represent that checks other than thosefor the Prepetition Employee Obligations will not be honored inadvertently. Moreover, theDebtors represent that they have sufficient cash reserves, together with anticipated access todebtor-in-possession financing, to promptly pay all of the Prepetition Employee Obligations, tothe extent described herein, on an ongoing basis and in the ordinary course of their business. V. APPLICABLE AUTHORITY 31. Sections 507(a)(4) and (a)(5) of the Bankruptcy Code give priority up to $11,725per individual for prepetition claims for wages, salaries, vacation, sick leave and contributions toemployee benefit plans. The Debtors believe that the Prepetition Employee Obligations that theyseek to pay are entitled to priority under sections 507(a)(4) and (a)(5) of the Bankruptcy Code,and, as such, will be paid in full as a condition to confirmation of a plan of reorganization. See11 U.S.C. § 1129(a)(9). Therefore, payment of the Prepetition Employee Obligations in theordinary course of business merely accelerates the timing of payment of obligations that willotherwise be paid in any event, thereby not disrupting the Bankruptcy Code’s priority scheme. 32. This Court may also authorize the Debtors’ proposed payment of the Prepetition63897-0002/LEGAL25579843.1 -10-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 11 of 14Employee Obligations under section 363(b)(1) of the Bankruptcy Code. Section 363(b)(1)provides that a bankruptcy court, after notice and a hearing, may authorize a debtor to “use, sell,or lease, other than in the ordinary course of business, property of the estate.” See 11 U.S.C. §363(b)(1). Although stated various ways, courts generally hold that a debtor’s decision to enterinto a transaction outside of the ordinary course of business is governed by the businessjudgment standard. 3 COLLIER ON BANKRUPTCY ¶ 363.02[4] (16th ed. 2012); See e.g. In reZeigler, 320 B.R. 362, 381 (Bankr. N.D. Ill. 2005); see also In re Schipper, 933 F.2d 513, 515(7th Cir. 1991) (requiring “articulated business justification” for sale under § 363(b)(1)); In reU.S. Airways Grp., Inc., 287 B.R. 643, 645 (Bankr. E.D. Va. 2002). 33. When applying the “business judgment” rule, courts show great deference to adebtor’s decision making. See, e.g., In re Castre, 312 B.R. 426, 430 (Bankr. D. Colo. 2004); Inre Murphy, 288 B.R. 1, 5 (D. Me. 2002); In re Bakalis, 220 B.R. 525, 532 (Bankr. E.D. NY1998); In re First Wellington Canyon Assoc., No. 89 C 593, 1989 WL 165028, at *1 (N.D. IllDec. 28, 1989) (discussing business judgment rule in rejection of executory contracts); SummitLand co. v. Allen (In re Summit Land Co.), 13 B.R. 310, 315 (Bankr. D. Utah 1981). TheDebtors submit that, because the Prepetition Employee Obligations are entitled to priority status,and because the retention of the Debtors’ workforce is vital to the Debtors’ ongoing operationsand their prospects for effectuating a successful sale, it is in the best interest of the Debtors’estate to pay such claims in the ordinary course of business during this chapter 11 case. 34. The Debtors believe that there is a significant risk that Employees whosePrepetition Employee Obligations are not honored in the ordinary course of business willterminate their employment relationships with the Debtors. The continued service anddedication of the Employees is critical to the Debtors and their prospects for consummating a63897-0002/LEGAL25579843.1 -11-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 12 of 14successful sale. In order to retain their Employees, maintain morale under difficult workingconditions and avoid jeopardizing the basic operation of their business pending the sale of theirassets, the Debtors must have authority to pay or otherwise satisfy all Prepetition EmployeeObligations. 35. As the Wanat Declaration demonstrates, Employees leaving the Debtors’ employat this critical juncture will seriously undermine the sale process. Indeed, the vast majority of theEmployees are effectively irreplaceable during the expedited sale process because the Debtorswill be hard-pressed to hire replacements given the relatively uncertain situation. Moreover, theamounts to be paid pursuant to this Motion are reasonable compared with the importance andnecessity of the Employees. 36. The relief requested in this Motion is appropriate—and indeed critical—andshould be authorized under sections 507(a)(4), 507(a)(5) and 363(b) of the Bankruptcy Code.Courts routinely recognize that payment of employee obligations is essential to a Debtors’reorganization efforts and authorize full payment of prepetition wage, salary, commission,expense, severance and benefit claims. See, e.g., In re UNR Industries, 143 B.R. 506, 519(Bankr. N.D. Ill. 1992) rev’d on other grounds; In re Enesco Group, Inc., Case No. 07-00565(Bankr. N.D. Ill. Jan. 12, 2007); In re McLeodUSA Inc., Case No. 05-63230 (Bankr. N.D. Ill.Oct. 31, 2005); In re Comdisco, Inc., Case No. 01-24795 (Bankr. N.D. Ill. July 16, 2001); In reOutboard Marine Corporation, Case No. 00-37405 (EIK) (Bankr. N.D. Ill. Dec. 22, 2000); In reSourceOne Wireless, Inc., Case No. 99-13841 (Bankr. N.D. Ill Feb. 1, 2000); In re EnvirodyneIndustries, Inc., Case No. 93-00319 (Bankr. N.D. Ill. January 1, 1993). 37. Based upon the foregoing, the Debtors request that this Court enter an orderauthorizing, but not directing, the Debtors to pay the Prepetition Employee Obligations as63897-0002/LEGAL25579843.1 -12-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 13 of 14described herein and to continue the Employee Benefits plans postpetition in the ordinary courseof business. 38. Nothing in this Motion shall be construed as a request for authority to assume anyexecutory contract under section 365 of the Bankruptcy Code or affect the Debtors’ right toassume or reject any executory contract. VI. NOTICE 39. Notice of this Motion has been given to: (a) the Office of the United StatesTrustee; (b) the creditors the Debtors’ consolidated list of twenty (20) largest unsecuredcreditors; (c) counsel to the Debtors’ secured lenders; and (d) all other parties requesting noticepursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested, the Debtorssubmit that no further notice is required. WHEREFORE, the Debtors respectfully request that the Court enter an order (a)authorizing, but not directing, the Debtors to pay or otherwise honor the Debtors’ PrepetitionEmployee Obligations, (b) authorizing the Debtors to make deductions from the Employees’paychecks, (c) authorizing, but not directing, the Debtors to continue postpetition the EmployeeBenefits in effect immediately prior to the Petition Date, (d) directing all banks to honorprepetition checks for payment of such obligations, and (e) granting the Debtors such other andfurther relief as is just and proper. Respectfully submitted, LYON WORKSPACE PRODUCTS, L.L.C. By: s/ Daniel A. Zazove One of the proposed attorneys for the Debtor63897-0002/LEGAL25579843.1 -13-
    • Case 13-02100 Doc 11 Filed 01/19/13 Entered 01/19/13 19:27:48 Desc Main Document Page 14 of 14Daniel A. Zazove, ARDC No. 3104117Kathleen A. Stetsko, ARDC No. 6297704Charles R. Gibbs, ARDC No. 6309075Perkins Coie LLP131 South Dearborn Street, Suite 1700Chicago, IL 60603-5559312.324.840063897-0002/LEGAL25579843.1 -14-
    • UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF ILLINOIS Eastern DivisionIn Re: ) BK No.: 13-2100Lyon Workspace Products, L.L.C. et al. ) (Jointly Administered) ) Chapter: 11 ) Honorable Janet S. Baer ) ) Debtor(s) ) ORDER (A) AUTHORIZNG, BUT NOT DIRECTING, PAYMENT OF PREPETITION PRIORITY WAGES, SALARIES AND EMPLOYEE BENEFITS AND CONTINUATION OFEMPLOYEE BENEFIT PLANS AND PROGRAMS POSTPETITION, (B) AUTHORIZNG, BUT NOT DIRECTING, DEDUCTIONS FROM EMPLOYEES’ PAYCHECKS, AND (C) DIRECTING ALL BANKS TO HONOR PREPETITION CHECKS FOR PAYMENT OF PREPETITION EMPLOYEE OBLIGATIONS Upon the motion of the above-captioned debtors and debtors-in-possession (collectively, the“Debtors”) seeking an order (a) authorizing, but not directing, the Debtors to pay or otherwise honor theDebtors’ employee-related prepetition priority obligations to, or for the benefit of, employees, and tocontinue postpetition the employee benefit plans and programs in effect immediately prior to the filingof this case; (b) authorizing, but not directing, the Debtors to make deductions from employees’paychecks; (c) directing all banks to honor prepetition checks for payment of the Debtors’ prepetitionemployee obligations; and (d) granting related relief; the Court finding that (i) it has jurisdiction overthe matters raised in the Motion pursuant to 28 U.S.C. § 1334; (ii) this is a core proceeding pursuant to28 U.S.C. § 157(b)(2); (iii) notice of the Motion and the hearing on the Motion was sufficient under thecircumstances; (iv) the relief requested in the Motion is warranted; and (v) upon the record herein; andafter due deliberation thereon, good and sufficient cause exists for the granting of relief as set forthherein;IT IS HEREBY ORDERED THAT: 1. The Motion is granted. 2. All objections to the Motion or the relief requested therein that have not been made, withdrawn,waived, or settled, and all reservations of rights included therein, are overruled and disallowed on themerits. 3. The Debtors are authorized, but not directed, to pay certain of the Prepetition EmployeeObligations; provided, however, that payments to each Employee after the Petition Date on account ofamounts accrued prior to the Petition Date shall not exceed amounts afforded priority status by anyapplicable provision of section 507 of the Bankruptcy Code; provided further, however, that anypayments to each Employee shall be in accordance with the court approved debtor-in-possessionfinancing / cash collateral order and corresponding Budget; 4. The Debtors are authorized, but not directed, to continue the Employee Benefits; provided further,however, that any payments to each Employee shall be in accordance with the court approved debtor-in-possession financing / cash collateral order and corresponding Budget; 5. In accordance with this Order and any other order of this Court, each of the banks and financialinstitutions at which the Debtors maintain their accounts relating to the payment of the Employee Rev: 20130104_bko
    • Obligations and the Employee Payment, are authorized to honor checks presented for payment, and tohonor all funds transfer requests made by the Debtors related thereto, to the extent that sufficient fundsare on deposit in such accounts; 6. The relief granted herein shall not constitute or be deemed an assumption or an authorization toassume any executory contract or agreement, including, but not limited to, any benefit plans,employment agreements, or severance agreements to which the Debtors are party; 7. The relief set forth herein is necessary to avoid immediate and irreparable harm to the Debtorsestates; and 8. The Court retains jurisdiction to hear and determine all matters arising from the entry of this Order. Enter:Dated: United States Bankruptcy JudgePrepared by:Daniel A. Zazove, ARDC No. 3104117Kathleen A. Stetsko, ARDC No. 6297704Charles R. Gibbs, ARDC No. 6309075Perkins Coie LLP131 South Dearborn Street, Suite 1700Chicago, IL 60603-5559312.324.8400 Rev: 20130104_bko