Flat out crazy ee motion

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Flat out crazy ee motion

  1. 1. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document 1/25/2013 Docket #0013 Date Filed: Pg 1 of 28Stephen D. LernerElliot M. SmithKristin E. RichnerAndrew M. Simon (Pro Hac Vice Pending)SQUIRE SANDERS (US) LLP30 Rockefeller PlazaNew York, NY 10112(212) 872-9800 (Phone)(212) 872-9815 (Fax)stephen.lerner@squiresanders.comelliot.smith@squiresanders.comkristin.richner@squiresanders.comandrew.simon@squiresanders.comProposed Attorneys for Debtors andDebtors in PossessionUNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORKIn re: Chapter 11 1Flat Out Crazy, LLC, et al. , Case No. 13-22094 (RDD) Debtors. Joint Administration Requested MOTION OF DEBTORS AND DEBTORS IN POSSESSION FOR AN ORDER AUTHORIZING THEM TO PAY: (A) PREPETITION EMPLOYEE WAGES, SALARIES AND RELATED ITEMS; (B) PREPETITION EMPLOYEE PAYROLL DEDUCTIONS AND WITHHOLDINGS; (C) PREPETITION PAYROLL TAXES; (D) PREPETITION CONTRIBUTIONS TO, AND BENEFITS UNDER, EMPLOYEE BENEFIT PLANS; AND (E) ALL COSTS AND EXPENSES INCIDENT TO THE FOREGOING Flat Out Crazy, LLC (“FOC”) and the above-captioned affiliated debtors (collectively,the “Debtors”), debtors and debtors in possession in these bankruptcy cases (the “Cases”),hereby move this court (the “Bankruptcy Court”), pursuant to sections 105(a), 363, 507(a)(4),1 The Debtors in these cases and the last four digits of their Employer Identification Numbers are: Stir Crazy CaféWest Nyack, LLC (5828); Flat Out Crazy, LLC (0160); SCR Operations, LLC (9375); SCR Hospitality, LLC(4309); SCR Concessions, LLC (6669); Stir Crazy Restaurants, LLC (2289); Stir Crazy Café Oakbrook, LLC(2976); Stir Crazy Café Northbrook, LLC (7070); Stir Crazy Café Woodfield, LLC (1104); Stir Crazy Café GreatLakes, LLC (9634); Stir Crazy Café Boca Raton, LLC (9942); Stir Crazy Café Creve Coeur, LLC (0003); Stir CrazyCafé Legacy Village, LLC (8744); Stir Crazy Café Cantera, LLC (4842); and Stir Crazy Operations, LLC (8114).CINCINNATI/97523.5 ¨1¤@4~-!9 ;r« 1322094130125000000000027
  2. 2. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 2 of 28507(a)(5), 541(b)(7) and 541(d) of the United States Bankruptcy Code (the “Bankruptcy Code”),for an order authorizing them to pay (a) prepetition employee wages, salaries and related items;(b) prepetition employee payroll deductions and withholdings; (c) prepetition payroll taxes;(d) prepetition contributions to, and benefits under, employee benefit plans; and (e) all costs andexpenses incident to the foregoing (the “Motion”). This Motion is supported by the “Affidavit of Steve DeLong in Support of Chapter 11Petitions and First Day Motions” (the “DeLong Affidavit”) filed concurrently herewith, theentire record of these Cases, and by the following memorandum of points and authorities. JURISDICTION AND VENUE 1. The Bankruptcy Court has jurisdiction over these Cases pursuant to 28 U.S.C.§§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). 2. Debtor Stir Crazy Café West Nyack, LLC is a limited liability company organizedunder the laws of the state of New York and has been so organized for more than 180 days priorto the petition date in these Cases. Accordingly, venue of its chapter 11 case and the chapter 11cases of each of the affiliated Debtors, as well as any proceedings arising in these Cases, isproper in this District under 28 U.S.C. §§ 1408 and 1409. GENERAL BACKGROUND 3. On January 25, 2013 (the “Petition Date”), each of the Debtors filed a voluntarypetition for relief under chapter 11 of the Bankruptcy Code with the Bankruptcy Court. TheDebtors also filed a motion seeking to have their bankruptcy cases procedurally consolidated andjointly administered together, which motion currently remains pending before the BankruptcyCourt.CINCINNATI/97523.5 2
  3. 3. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 3 of 28 4. The Debtors are continuing in possession of their property and are operating andmanaging their businesses as debtors in possession pursuant to sections 1107 and 1108 of theBankruptcy Code. 5. No trustee, examiner, or committees have been appointed in these Cases. 6. The Debtors hereby incorporate by reference the factual background set forth inthe DeLong Affidavit which includes, among other things, a detailed description of the Debtors’business and affairs, the Debtors’ capital structure and prepetition indebtedness, and the eventsleading to the commencement of these Cases. RELIEF REQUESTED AND BASIS FOR RELIEF 7. The Debtors respectfully request that the Bankruptcy Court enter an orderauthorizing them to pay (a) prepetition employee wages, salaries and related items;(b) prepetition employee payroll deductions and withholdings; (c) prepetition payroll taxes;(d) prepetition contributions to, and benefits under, employee benefit plans; and (e) all costs andexpenses incident to the foregoing. 8. The Debtors operate a chain of full-service Asian restaurants and a chain ofcreate-your-own stir fry restaurants. The success of the Debtors’ operations during these Casesis largely dependent on the Debtors’ ability to minimize disruptions to their workforce. Therelief sought by this Motion is essential to minimizing possible disruptions. 9. In aggregate, the Debtors employ approximately 1,185 people (the “Employees”),all of whom are non-union employees. The Employees assist in critical aspects of running thebusiness. At the Debtors’ restaurants, the Employees include chefs and other food preparers,servers, bartenders, hosts and hostesses, dishwashers and store managers. The Employees alsoinclude area managers and executives and staff located at the Debtors’ corporate headquarters inCINCINNATI/97523.5 3
  4. 4. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 4 of 28Chicago. The Employees’ knowledge, expertise, and experience are essential to maintaining theDebtors’ businesses as a going concern during these Cases. Indeed, without the continuedcommitment of the Employees to the Debtors’ business operations, an effective reorganizationwould not be possible. Accordingly, by this Motion, the Debtors seek authority, in their solediscretion, to pay certain outstanding prepetition obligations owed to the Employees, up to$11,725 per Employee, and related obligations, and to continue to honor, in the ordinary courseof business and the exercise of their business judgment, the Debtors’ prepetition compensationand benefit programs. The relief requested herein is essential to maintain employee morale andproductivity, thereby preventing unnecessary and harmful disruption in the operation of theDebtors’ business as they endeavor to pursue successful reorganization.I. The Debtors’ Workforce 10. As of January 16, 2013, the end of the Debtors’ most recent pay period, theDebtors’ aggregate workforce consisted of approximately 1,200 Employees, of whomapproximately 1,100 are hourly (the “Hourly Employees”) and 100 are salaried (the “SalariedEmployees”). During the most recent pay period, the Employees worked at eleven full-serviceStir Crazy Fresh Asian Grill restaurants (“Stir Crazy”), eighteen create-your-own stir-fry FlatTop Grill restaurants (“Flat Top”), one quick service SC Asian restaurant (“SC Asian” and,together with Stir Crazy and Flat Top, the “Restaurants”) and the Debtors’ corporateheadquarters. Because of the concentration of Restaurants in Illinois, more Employees(approximately 600) are located in Illinois than in any other state. During the most recent payperiod, the Debtors also had Employees located in Florida, Indiana, Wisconsin, Michigan, Ohio,New York, Missouri, California, and Alabama. 11. Employees are the lifeblood of any restaurant business and the Debtors’Employees in the field perform a variety of critical tasks, including preparing and serving food,CINCINNATI/97523.5 4
  5. 5. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 5 of 28interacting with customers, ordering food and supplies, cleaning dishes and the restaurantpremises, supervising other employees and other tasks. In addition, the Debtors employ aheadquarters staff of approximately 14 persons who provide corporate functions such asaccounting and finance, marketing, human resources and other tasks. The Employees’ skills andtheir knowledge and understanding of the Debtors’ operations are essential to the effectiveoperation and restructuring of the Debtors’ businesses. Without the continued services of theEmployees, an effective restructuring of the Debtors will not be possible. 12. If prepetition wage, compensation, benefit and reimbursement amounts are notreceived by the Employees in the ordinary course, they will suffer extreme personal hardship andin many cases will be unable to pay their basic living expenses. Such a result obviously woulddestroy Employee morale and result in unmanageable Employee turnover, causing immediateand pervasive damage to the Debtors’ ongoing business operations. Any significantdeterioration in Employee morale at this time will substantially and adversely affect the Debtorsand their ability to reorganize, thereby resulting in immediate and irreparable harm to theDebtors and their estates. 13. The Debtors anticipate that the accrued prepetition obligations owed to the vastmajority of Employees will be substantially less than the statutory maximum of $11,725 forpriority treatment as set forth in sections 507(a)(4) and (a)(5) of the Bankruptcy Code. Asdescribed below, there is one instance where prepetition obligations owing to an Employeeexceeds $11,725 as of the Petition Date, and such amount is relatively small. 14. The relief requested in this Motion will reduce significantly the administrativeburden that might otherwise be imposed in the Cases. The compensation and benefit amountsCINCINNATI/97523.5 5
  6. 6. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 6 of 28that the Debtors seek to pay the Employees constitute priority claims under sections 507(a)(4)and (5) of the Bankruptcy Code to the extent of $11,725 per Employee. 15. To minimize the personal hardship that the Employees will suffer if prepetitionemployee-related obligations are not paid when due or as expected and to maintain morale andan essential workforce during this critical time, the Debtors seek entry of an order authorizing,but not directing, the Debtors in their sole discretion: (a) to pay and honor prepetition claims upto the statutory maximum for, among other things, (i) wages, salaries, vacation, overtime pay andother compensation described below; (ii) federal and state withholding taxes and other amountswithheld or deducted from Employees’ pay (e.g., garnishments, Employees’ share of insurancepremiums, 401(k) contributions, etc.); (iii) payroll taxes owed to local, state and federalgovernments on account of the Employees; and (iv) reasonable and customary business expensesthat are reimbursable by the Debtors under company policy, including those incurred byEmployees on corporate credit cards (the “Reimbursable Expenses”) (together, items (i) through(iv) referred to herein as (the “Prepetition Employee Obligations”); (b) to continue certainemployee benefit programs including health benefits, insurance benefits, retirement savingsbenefits, and all other benefits that the Debtors have historically paid or provided to Employeesin the ordinary course of business, as further described below (collectively, the “EmployeeBenefits”); (c) to direct banks and other financial institutions to receive, process, honor and payall checks presented for payment and electronic payment requests related to any of the foregoingor, to the extent necessary, issue replacement checks or electronic fund transfers related to theforegoing Prepetition Employee Obligations and Employee Benefits; and (d) pay all costs andexpenses related to the foregoing.CINCINNATI/97523.5 6
  7. 7. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 7 of 28II. Prepetition Employee Obligations 16. The Debtors’ Prepetition Employee Obligations include wages and salaries,overtime pay, certain payroll deductions and withholdings, payroll taxes and ReimbursableExpenses. Before the Petition Date, the Debtors customarily either paid or withheld all of thesePrepetition Employee Obligations in the ordinary course of business. A description of theDebtors’ Prepetition Employee Obligations, and the estimated liabilities associated with each, isset forth below. A. Wages & Salaries 17. The Debtors’ Employees are paid on a bi-weekly basis (the “Pay Period”). PayPeriods end on Wednesdays. The Debtors utilize an outside processor, Automatic DataProcessing, Inc. (“ADP”) to perform most payroll functions for the Employees. The Friday afterthe end of a Pay Period, the Debtors initiate a wire transfer to ADP (the “Payroll Wire”) to coverthe wages and salaries for the just-ended Pay Period. Employees paid by direct deposit receivedeposits the following business day, usually a Monday. Employees paid by check typicallyreceive their checks on the first Wednesday after a Payroll Wire is sent. 18. The total wages and salaries for the Pay Period ended January 16, 2013 (the“Recent Pay Period”) excluding Payroll Taxes, were approximately $525,000. Each Pay Period,ADP charges the Debtors processing fees of approximately $3,000 (the “Processing Costs”),which Prepetition Processing Costs are paid by automatic debit from the Debtors’ concentrationbank account 2-3 business days after the Payroll Wire. The Debtors hereby seek authority to paythe Processing Costs, including any prepetition accrued, unpaid amounts thereof, in the ordinarycourse. The payroll system always has at least one week of accrued, unpaid wages and salaries.Other than the accrual from this inherent lag, the Debtors were current with all payrollobligations to the Employees through the last completed Pay Period before the Petition Date.CINCINNATI/97523.5 7
  8. 8. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 8 of 28The Debtors estimate that as of the Petition Date, accrued but unpaid payroll costs, includingwages and salaries, plus benefits and before deducting withholdings such as Payroll Taxes,aggregate approximately $425,000 (or approximately $313,000, net of Payroll Taxes). 19. The Debtors maintain both quarterly and annual bonus programs for eligibleEmployees (the “Bonuses”). These bonuses are mainly linked to achieving sales andprofitability targets at the restaurants. Employees who work as General Managers and AssistantManagers at Flat Top restaurants are eligible to earn Bonuses on a quarterly basis if theirrestaurant achieves year-over-year growth in quarterly profit after controllable expenses(“PAC”). General Managers at Flat Top are eligible to earn annual Bonuses if their storeachieves annual revenue growth. Management employees at Stir Crazy restaurants (includingOperating Partners, General Managers, Executive Kitchen Managers, Assistant GeneralManagers, Kitchen Managers, Assistant Managers, and Assistant Kitchen Managers) are eligibleto earn Bonuses on a quarterly basis if their restaurant achieves year-over-year growth inquarterly PAC. Operating Partners at Stir Crazy are eligible for annual Bonuses if their storeachieves annual revenue growth. Regional Partners are eligible to earn Bonuses on a quarterlybasis if the restaurants in their region achieve year-over-year growth in quarterly PAC on anaggregate basis. During 2012, the Debtors paid a total of approximately $81,000 in Bonuses.The Debtors estimate that as of the Petition Date, accrued but unpaid Bonuses aggregateapproximately $75,000. The Debtors consider the continued payment of these Bonuses essentialto maintain the focus of their managers on maximizing the success of their stores as well as foremployee morale. In addition, Bonuses have become an expected part of these Employees’compensation and could negatively impact the personal finances of eligible Employees if theprograms are not continued.CINCINNATI/97523.5 8
  9. 9. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 9 of 28 B. Overtime Pay and Vacation Time 20. The Debtors’ Hourly Employees are entitled to overtime pay equal to time and ahalf for work performed in excess of 40 hours per week or as required by state law. The Debtorspaid approximately $15,000 in overtime pay during the Recent Pay Period. The Debtorsestimate that accrued but unpaid overtime pay is currently approximately $9,000. 21. All full-time Salaried Employees (i.e., those who work at least 40 hours per week)are eligible to use vacation benefits after they have been employed by the Debtors for 30consecutive days. Salaried Employees earn vacation days (“Vacation Time”) based on theirconsecutive years of service to the Debtors. Those in their first year of service earn one vacationday per month worked, up to 10 days maximum. Those in years 2-4 earn 10 days. Those inyears 5-9 earn 15 days. Those in years 10 and beyond earn 20 days. Salaried Employees’ fullvacation allotment is available on January 1 each year and no unused vacation days may becarried over from year to year for any reason. Salaried Employees who terminate are eligible forpayout of earned, unused vacation and are subject to payback for any vacation deficit. HourlyEmployees who average 30 hours of work per week for the entire year receive one week of paidvacation per year. For tipped Employees, the Vacation Time is paid out at minimum wage. Forfront of house and back of house staff, Vacation Time is paid out at their usual hourly rate. Forthe Recent Pay Period, the Debtors paid out approximately $3,500 of Vacation Time. TheDebtors estimate that as of the Petition Date, accrued but unpaid Vacation Time aggregatedapproximately $5,000. C. Deductions & Withholdings 22. During each Pay Period, the Debtors routinely deduct certain amounts fromEmployees’ paychecks, including: (a) garnishments, child support, personal bankruptcy planpayments and similar deductions; and (b) other pretax and after-tax deductions payable pursuantCINCINNATI/97523.5 9
  10. 10. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 10 of 28to certain of the Employee Benefit plans described below (including, without limitation, suchEmployees’ share of health care premiums, 401(k) contributions and other miscellaneousdeductions) (those items referenced in (a) and (b) collectively, the “Deductions andWithholdings”), and forward those amounts (with the exception of amounts owing on account ofself-insured programs) to various third-party recipients. Each Pay Period, the amount ofnecessary Deductions and Withholdings are transferred by wire transfer to ADP approximately 4business days after the Payroll Wire. For the Recent Pay Period, the Debtors withheld a total ofapproximately $22,000 from Employees’ pay on account of the Deductions and Withholdings.The Debtors estimate that as of the Petition Date, accrued but unpaid Deductions andWithholdings are approximately $14,000. 23. Additionally, the Debtors are required by law to withhold from Employees’ wagesand salaries amounts related to federal, state and local income taxes, social security andMedicare taxes (collectively, the “Withholding Taxes”) for remittance to the appropriate taxingauthority. The Debtors must also match from their own funds social security and Medicare taxesso withheld, and pay (based on a percentage of gross payroll) additional amounts for state andfederal unemployment insurance (the “Employer Payroll Taxes”, and, together with theWithholding Taxes, the “Payroll Taxes”). The Debtors remit all Payroll Taxes to the appropriateauthorities through ADP by a wire transfer made approximately 4 business days after the PayrollWire each Pay Period. For the Recent Pay Period, Payroll Taxes totaled approximately$175,000. The Debtors estimate that as of the Petition Date, accrued but unpaid Payroll Taxestotaled approximately $112,000. D. Reimbursable Expenses and Corporate Cards 24. In the ordinary course of business, the Debtors reimburse Employees for certainreasonable and customary expenses incurred on behalf of the Debtors in the scope of theirCINCINNATI/97523.5 10
  11. 11. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 11 of 28employment, in accordance with IRS regulations. The Reimbursable Expenses are paid each PayPeriod. The Debtors estimate that as of the Petition Date, accrued but unpaid ReimbursableExpenses, excluding items charged on corporate credit cards totaled approximately $10,000. 25. Additionally, certain Employees incur travel expenses and make purchases onbehalf of the Debtors, which they pay for using corporate credit cards. Ten (10) Employees havecorporate credit cards issued by American Express (the “Amex Cards”) that are primarily usedfor work-related travel and certain purchases made on behalf of the Debtors. The Amex Cardsare issued to three (3) Regional Operations Managers, the Marketing Director, the Controller, theCEO, the Chairman of the Board, the Culinary Director, the Franchising Specialist, andOperations Support. 26. Although the Debtors receive one consolidated statement each month fromAmerican Express that lists the balances on each of the Amex Cards, the individual Employeecardholders can be held personally liable by American Express for unpaid amounts on theirAmex Card. Accordingly, the Debtors’ policy is to pay off the full balance of the Amex Cardsmonthly. The aggregate balance incurred on the Amex Cards (the “Amex Balance”) isapproximately $60,000 to $80,000 per month, payable on the 28th day of each month. 27. By this Motion, the Debtors seek authority to pay all Reimbursable Expenses andall business expenses incurred on the Amex Cards in the ordinary course. This relief is essentialto avoid the Employee cardholders from being held personally liable for incurring businessexpenses on behalf of the Debtors and to otherwise preserve the continuity of the Debtors’operations. The Debtors made their regular payment in respect of the prior month’s AmexBalance immediately before the Petition Date in the amount of approximately $76,000. Becauseof the normal billing cycle of credit cards, there is almost always approximately one month ofCINCINNATI/97523.5 11
  12. 12. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 12 of 28expenses outstanding on the Amex Cards. As of the Petition Date, the amount of outstandingexpenses on the Amex Cards was approximately $70,000. By this motion, the Debtors seekauthority to pay outstanding amounts on the Amex Cards as they come due and to direct theirbanks to honor any prepetition payments made to American Express prior to the Petition Date inrespect of the Amex Balance.II. Employee Benefits 28. In the ordinary course of business, the Debtors offer Employees several forms ofinsurance programs, including (a) medical and dental insurance coverage (the “Health InsurancePrograms”); (b) long-term disability, short-term disability, group life and accidental death anddismemberment coverage, (the “Disability and Life Insurance Programs”); and (c) a 401(k)retirement savings plan (the “401(k) Plan”). Each of the Health Insurance Programs, theDisability and Life Insurance Programs and the 401(k) Plan are described more fully below. A. Health Insurance Programs 29. The Debtors offer the Health Insurance Programs for medical, dental and visioninsurance coverage and prescription benefits to full-time Employees (defined as those whoaverage more than 30 hours per week) who have worked for the Debtors for more than 30consecutive days. The medical insurance plan is an employer-funded health and welfare planproviding group health benefits. FOC is the Plan Administrator and UMR, a division ofUnitedHealthcare, is the third party claims administrator. The Debtors also offer prescriptionbenefits administered by Prescription Solutions. In addition, Employees located in Illinois (otherthan Chicago), Michigan or Missouri may add dental coverage offered in the form of an HMOadministered by First Commonwealth. Employees located in Chicago may add dental coverageoffered in the form of a PPO administered by Guardian. Employees may also elect visionbenefits provided by VSP.CINCINNATI/97523.5 12
  13. 13. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 13 of 28 30. Employees included in the Health Insurance Programs are required to makecontributions to the Health Insurance Programs each Pay Period (the “Employee HealthContributions”). Employee Health Contributions are determined by the number of dependentsincluded under the individual Employee’s medical coverage, as well as whether an Employeeadds dental coverage. Employee Health Contributions are withheld each Pay Period andperiodically transferred to the various administrators of the Health Insurance Programs.Approximately $25,000 in Employee Health Contributions was withheld but untransferred as ofthe Petition Date. The Debtors seek authority to transfer such untransferred amounts to theplans’ administrators. 31. The Debtors subsidize the Employees’ cost of participating in the HealthInsurance Programs by paying monthly premiums to the various plan administrators (the“Debtors’ Responsibility”). Approximately $145,000 in Debtors’ Responsibility was accrued butuntransferred as of the Petition Date. The Debtors seek authority to transfer such untransferredamounts to the plans’ administrators. B. Life/AD&D, and Disability Insurance 32. The Debtors offer life insurance and accidental death and dismembermentinsurance (the “Life/AD&D Plan”) through MetLife to all active full-time salaried employeesworking at least 40 hours per week (“Full-Time Salaried Employees”). The Debtors pay theentire premium under the Life/AD&D Plan. The Life/AD&D Plan provides $75,000 of basic lifeinsurance and $75,000 of accidental death and dismemberment insurance to covered Employees.Benefits under the Life/AD&D Plan begin are reduced by 35% once the covered Employeereaches age 65 and are reduced by half at age 70. Premiums under the Life and AD&D Plan arepaid monthly and total approximately $1,250. The next premium payment for the Life/AD&DCINCINNATI/97523.5 13
  14. 14. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 14 of 28Plans in the amount of $1,213.26 is due on February 1, 2013. The Debtors seek authority to paythis amount to MetLife when due. 33. The Debtors also offer group short-term disability and long-term disability plans(together, the “Disability Plans”) to all Full-Time Salaried Employees. The Disability Plans areoffered through MetLife. The Debtors pay the entire premiums under the Disability Plans. If aneligible Employee is absent from work for a qualifying reason for more than 7 days and less than12 weeks, the short-term disability plan pays up to 66 2/3% of the Employee’s predisabilityweekly earnings, up to a maximum of $300 per week. If an eligible Employee is absent fromwork for a qualifying reason for more than 90 days, the long-term disability plan pays up to 60%of the Employee’s predisability monthly earnings, up to a maximum of $8,000 per month.Premiums under the Disability Plans are paid monthly and total approximately $1,600. The nextpremium payment for the Disability Plans in the amount of $1,574 is due on February 1, 2013.The Debtors seek authority to pay this amount to MetLife when due. 34. The Debtors hereby seek authority to continue offering the Life and AD&D Planand the Disability Plans to their Full-Time Salaried Employees and to continue paying premiumsin respect of these plans in the ordinary course of business. The Life and AD&D Plan and theDisability Plans are considered a significant part of Full-Time Salaried Employees’compensation and failure to provide these plans would result in a drastic reduction in suchEmployees’ overall compensation. Furthermore, provision of these plans provides affectedEmployees with important insurance coverage. C. 401(k) Plan 35. The Debtors offer a 401(k) retirement savings plan (the “401(k) Plan”) to itsEmployees. The Plan Administrator of the 401(k) Plan is Debtor Flat Out Crazy, LLC (the“401(k) Plan Administrator”). Employees who are over 21 years of age, have been employed byCINCINNATI/97523.5 14
  15. 15. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 15 of 28the Debtors for more than 1 year, and who have worked more than 1,000 hours during the yearare eligible to participate in the 401(k) Plan beginning on the first day of the first plan year forwhich they become eligible to participate or the first day of the seventh month of the plan yearduring which they first become eligible. 36. As of September 30, 2012 (the most recent plan reporting date available as of thePetition Date) there were approximately 123 total participants in the 401(k) Plan, with 113 of theparticipants actively contributing to the 401(k) Plan. The total plan asset balances as ofSeptember 30, 2012 was approximately $1.5 million. Each Employee’s contributions to the401(k) Plan are immediately 100% vested. The Debtors may match Employee contributions (the“Debtors’ Match”) on a discretionary basis. The Debtors’ Match vests beginning at 20% after 1year of plan participation and at an increasing rate each year for the first five years during whichthe Employee participates in the 401(k) Plan. After a participating Employee completes fiveyears’ participation in the 401(k) Plan, the Debtors’ Match is 100% vested. As of the PetitionDate, the accrued but unpaid Debtors’ Match totaled approximately $2,000. The Debtors seekauthority to transfer such accrued, unpaid Debtors’ Match to the 401(k) Plan Administrator. 37. Employee contributions and loan repayments to the 401(k) Plan (“Employee401(k) Contributions”) are withheld each Pay Period. After the Debtors withhold the Employee401(k) Contributions, the funds are briefly segregated in a separate bank account in the Debtors’name and then submitted to the 401(k) Administrator via wire transfer. As of the Petition Date,amounts withheld on account of the 401(k) Plan but not transferred totaled approximately$6,000. The Debtors seek authority to transfer such untransferred Employee 401(k)Contributions to the 401(k) Plan Administrator.CINCINNATI/97523.5 15
  16. 16. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 16 of 28 38. By this Motion, the Debtors seek authority to continue transferring Employee401(k) Contributions in the ordinary course of the Debtors’ businesses. The Debtors also seekauthority to transfer the accrued but unpaid Debtors’ Match to the 401(k) Administrator, alongwith any associated administration fees. The 401(k) Plan is an integral part of each Employee’scompensation package and represents an essential service provided by the Debtors so that theireligible Employees may plan for their retirement.III. The Prepetition Employee Obligations are Entitled to Priority Status 39. Pursuant to sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code, a debtor’semployees’ claims for “wages, salaries, or commissions, including vacation, severance, and sickleave pay” earned within 180 days before the Petition Date, and claims against the debtors forcontributions to employee benefit plans arising from services rendered within 180 days beforethe Petition Date, are afforded unsecured priority status to the extent of $11,725 per employee.11 U.S.C. § 507(a)(4) and (a)(5). Furthermore, section 363(b)(1) of the Bankruptcy Codeprovides, “[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in theordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(l). Section 105(a) of theBankruptcy Code further provides: The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.11 U.S.C. § 105(a). 40. The Debtors believe that only one Employee (the “Sullivan Manager”) is owed inexcess of $11,725 on account of Prepetition Employee Obligations and/or Employee Benefits asof the Petition Date. The Sullivan Manager, who is owed approximately $9,000 of prepetitionCINCINNATI/97523.5 16
  17. 17. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 17 of 28amounts in excess of the priority limit as of the Petition Date, is the General Manager of one ofthe Restaurants and remains an important member of the Debtors’ businesses going forward.Given the relatively small amount owed to this Employee in excess of the statutory limit forunsecured priority claims, the fact that no other Employees are owed amounts in excess of thestatutory limit, and the importance of this individual to the Debtors’ businesses, the Debtors seekauthority to pay all prepetition obligations to Employees, including all amounts owed to theSullivan Manager. The Debtors submit that payment of such amounts at this time is critical totheir continued operation of their businesses in furtherance of their eventual reorganization. See,e g., In re General Growth Properties, Inc. et al.., No. 09-11977 (ALG) (Bankr. S.D.N.Y May 8,2009) (order authorizing debtors to, among other things, pay prepetition wages, salaries,employee benefits and other compensation, maintain employee benefits programs and payrelated administrative obligations pay prepetition wages, reimburse prepetition employeebusiness expenses and make payments for which payroll deductions were made); In re ChryslerLLC, et al., No. 09-50002 (AJG) (Bankr. S.D.N.Y. May 1, 2009) (order authorizing the debtors,among other things, to pay: prepetition regular employee wages, salaries and related items;prepetition regular employee business expenses; prepetition contributions to, and benefits under,employee benefit plans; prepetition regular employee payroll deductions and withholdings;prepetition additional workforce costs; and all related costs and expenses); In re IonosphereClubs, Inc., 98 B.R. 174, 176 (Bankr. S.D.N.Y. 1989); In re Chateaugay Corp., 80 B.R. 279(S.D.N.Y. 1987). 41. Payment of the Prepetition Employee Obligations is consistent with the “doctrineof necessity,” which allows bankruptcy courts to authorize the payment of certain prepetitiondebts that are deemed needed to facilitate the rehabilitation of the debtor. See Ionosphere Clubs,CINCINNATI/97523.5 17
  18. 18. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 18 of 2898 B.R. at 175-76 (citing Miltenberger v. Logansport, C. & S.W. R.Co., 106 U.S. 286 (1882)).This doctrine is consistent with the paramount goal of chapter 11 of “facilitating the continuedoperation and rehabilitation of the debtor.” Ionosphere Clubs, 98 B.R. at 176. 42. Any delay in paying Prepetition Employee Obligations will adversely impact theDebtors’ relationship with their Employees and will irreparably impair the Employees’ morale,dedication, confidence, and cooperation. The Employees’ support for the Debtors’reorganization efforts is critical to the success of those efforts. At this early stage, the Debtorssimply cannot risk the substantial damage to their businesses that would inevitably attend anydecline in its Employees’ morale attributable to the Debtors’ failure to pay wages, salaries,benefits and other similar items. 43. Moreover, absent an order granting the relief requested in this Motion, theEmployees will suffer undue hardship and, in many instances, serious financial difficulties, asthe amounts in question are needed to enable certain of the Employees to meet their ownpersonal financial obligations. Finally, without the requested relief, the stability of the Debtorswill be undermined, perhaps irreparably, by the possibility that otherwise loyal Employees willseek other employment alternatives. 44. The Debtors do not seek to alter their compensation, vacation, and other benefitpolicies at this time. This Motion is intended only to permit the Debtors, in their sole discretion,to make payments consistent with those policies to the extent that, without the benefit of an orderapproving this Motion, such payments would be inconsistent with the Bankruptcy Code, and topermit the Debtors, in their discretion, to continue to honor their practices, programs and policieswith respect to their Employees, as such practices, programs and policies were in effect as of thePetition Date.CINCINNATI/97523.5 18
  19. 19. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 19 of 28 45. Indeed, with respect to Payroll Taxes in particular, the Supreme Court has heldthat taxes such as those taxes withheld under the Federal Insurance Contributions Act (“FICA”)and withholding taxes are property held by a debtor in trust for another and, as such, do notconstitute property of its estate. See Begier v. Internal Revenue Serv., 496 U.S. 53, 55-56, 59-61,66-67 (1990). Thus, the Bankruptcy Code does not prohibit a debtor from paying such taxes. 46. Accordingly, pursuant to sections 363(b) and 105(a) of the Bankruptcy Code, theDebtors seek authority to pay the Prepetition Employee Obligations that become due and owingduring the pendency of this case, to ratify Prepetition Employee Obligations paid prior to thePetition Date and to continue at this time their practices, programs and policies with respect totheir Employees, as such practices, programs and policies were in effect as of the Petition Date(except to the extent, as described above, that the amounts owed to the Sullivan Manager exceedthe $11,725 priority limit), including allowing vacation for which Employees are eligible buthave not used, as of the Petition Date. 47. Bankruptcy courts in this District and elsewhere have granted similar relief inmany other cases. See, e.g., In re Residential Capital, LLC, No. 12-12020 (MG) (Bankr.S.D.N.Y. June 15, 2012) (order authorizing debtors to pay prepetition employee obligations,including wages, salaries, benefits and expenses and maintain employee compensation andbenefit programs); In re Hostess Brands, Inc., No. 12-22052 (RDD) (Bankr. S.D.N.Y. Jan. 27,2012) (order authorizing debtors, in their sole discretion, to pay prepetition compensation,business expenses, deductions, benefits and related costs); In re Friendly Ice Cream Corp., No.11-13167 (KG) (Bankr. D. Del. Oct. 6, 2011) (order authorizing debtors to pay employee wages,taxes, withholdings and costs, expense reimbursements, and benefit obligations); In re JenniferConvertibles, Inc., No. 10-13779 (ALG) (Bankr. S.D.N.Y. July 22, 2010) (order authorizingCINCINNATI/97523.5 19
  20. 20. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 20 of 28debtors to pay prepetition employee wages, salaries, benefits and related expenses); In re OldCarco LLC (f/k/a Chrysler LLC), No. 09-50002 (AJG) (Bankr. S.D.N.Y. May 4, 2009) (orderauthorizing debtors to pay specified employee obligations).IV. Certain Deductions and Withholdings Are Not Property of the Debtors’ Estates 48. Pursuant to sections 541(b)(7) and 541(d) of the Bankruptcy Code, certain of theDeductions and Withholdings are not property of the Debtors’ estates and, accordingly, are notavailable for distribution to their creditors. The Bankruptcy Court should authorize the Debtorsto pay or transfer Deductions and Withholdings that are rightfully the property of someone else,as determined either by express carve out from the Bankruptcy Code definition of property of theestate (section 541(b)(7) of the Bankruptcy Code) or a trust fund theory (section 541(d) of theBankruptcy Code). 49. Items like withholdings related to the 401(k) Plan and Employee Benefits areexplicitly excluded from the definition of property of the estate by section 541(b)(7), whichexcludes, in relevant part any amount (a) “withheld by an employer from the wages ofemployees for payment as contributions… to … an employee benefit plan that is subject to titleI of the Employee Retirement Income Security Act of 1974…” (§ 541(b)(7)(A)(i)(I)); and(b) “received by an employer from employees for payment as contributions” (i) “to … anemployee benefit plan that is subject to title I of the Employee Retirement Income Security Actof 1974…” (§ 541(b)(7)(B)(i)(I)); and (ii) “to a health insurance plan regulated by State lawwhether or not subject to such title…” (§ 541(b)(7)(B)(ii)). Contributions by Employees to the401(k) Plan or in respect of Employee Benefits are not property of the Debtors’ estates, despitethe fact that some of these amounts may have been held in the Debtors’ bank accounts beforeand after the Petition Date. In order to avoid irreparable harm to the Debtors’ relationship withCINCINNATI/97523.5 20
  21. 21. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 21 of 28its Employees, the Bankruptcy Court should authorize the Debtors to continue to pay andtransfer such amounts in the ordinary course of business. 50. Section 541(d) of the Bankruptcy Code provides, in relevant part, that “[p]ropertyin which the debtor holds, as of the commencement of the case, only legal title and not anequitable interest … becomes property of the estate … only to the extent of the debtor’s legaltitle to such property, but not to the extent of any equitable interest in such property that thedebtor does not hold.” 11 U.S.C. § 541(d). Although the Debtors possess the funds related toDeductions and Withdrawals that were untransferred as of the Petition Date, they do not haveequitable interest in these funds. Rather, these funds belong to other parties including benefitplan administrators, the 401(k) Administrator and others and the Debtors merely hold them intrust. The Bankruptcy Court should authorize the Debtors to transfer any such trust funds to therespective parties holding equitable interests in such funds.V. Request that Banks be Authorized to Honor Checks Issued to Prepetition Employee Obligations, Employee Benefits and Costs Related to the Same 51. By this Motion, the Debtors request that any applicable banks or financialinstitutions be authorized and directed, when requested by the Debtors in the Debtors’ solediscretion, to receive, process, honor and pay any and all checks presented for payment of, and tohonor all fund transfer requests made by the Debtors related to the Prepetition Employee Wagesand Employee Benefits, as well as related costs and expenses, whether such checks werepresented or fund transfer requests were submitted prior to or after the Petition Date, providedthat sufficient funds are available in the applicable accounts to make the payments. The Debtorsrepresent that these checks are drawn on identifiable payroll and disbursement accounts and canbe readily identified as relating directly to the authorized payment of the Prepetition EmployeeObligations and Employee Benefits and the costs related thereto. Accordingly, the DebtorsCINCINNATI/97523.5 21
  22. 22. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 22 of 28believe that there is no risk that checks other than those relating to the payments requested hereinwill be honored inadvertently. 52. Contemporaneously herewith, the Debtors have filed emergency motions seekingauthority to fund their postpetition operations using cash collateral (“Cash Collateral”) and tocontinue using their existing cash management system and existing checks and other businessforms. The Cash Collateral will provide the Debtors with access to sufficient funds to pay,among other things, the Prepetition Employee Obligations and Employee Benefits and costsrelated thereto, all of which are contemplated in the budget submitted in support of the Debtors’request for approval of the use of Cash Collateral. 53. Nothing in this Motion is intended, and shall not be deemed or construed, as:(a) an admission as to the validity of any claim against the Debtors; (b) a waiver of the Debtors’rights to dispute any claim on any grounds; (c) a promise to pay any claim; (d) an implication oradmission that any particular claim is a claim for Prepetition Employee Obligations, EmployeeBenefits or costs related thereto; or (e) a request to assume any executory contract or unexpiredlease, pursuant to section 365 of the Bankruptcy Code.VI. Requests for Immediate Relief and Waiver of Stay 54. By this Motion, the Debtors seek immediate relief and a waiver of any stay of theeffectiveness of any order granting the relief requested in this Motion. Rule 6003(b) of theFederal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) provides that “[e]xcept to theextent that relief is necessary to avoid immediate and irreparable harm, the court shall not, within21 days after the filing of the petition, issue an order granting … a motion to pay all or part of aclaim that arose before the filing of the petition…”. Fed. R. Bankr. P. 6003(b). Bankruptcy Rule6004(h) provides that “[a]n order authorizing the use, sale, or lease of property other than cashcollateral is stayed until the expiration of 14 days after entry of the order, unless the court ordersCINCINNATI/97523.5 22
  23. 23. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 23 of 28otherwise.” Fed. R. Bankr. P. 6004(h). As set forth above, the Debtors’ rehabilitation cruciallyrelies on their ability to exercise discretion and timely pay the Prepetition Employee Obligations,Employee Benefits and costs related thereto. Delay of these payments could result in potentiallyirreparable damage to the Debtors’ operations and is likely to impair their successfulreorganization. Accordingly, the Debtors submit that sufficient cause exists for: (i) entry of theproposed order attached as Exhibit A hereto immediately, in accordance with the requirements ofBankruptcy Rule 6003(b); and (ii) waiving the fourteen-day stay imposed by Bankruptcy Rule6004(h), to the extent that it applies. NOTICE 55. Notice of this Motion has been given to: (a) each committee appointed to serve inthe case pursuant to 11 U.S.C. § 1102 (or, if no committee has been appointed, to those entitiesappearing on the Debtors’ Consolidated List of Top 30 General Unsecured Creditors), (b) theOffice of the United States Trustee for the Southern District of New York; (c) counsel to TheHillstreet Fund IV, L.P. in its capacity as the Debtors’ prepetition senior and junior securedlender; (d) counsel to Vogen Funding, L.P.; (e) counsel to U.S. Foods; and (f) the InternalRevenue Service. In light of the nature of the relief requested herein, the Debtors submit that noother or further notice is required. NO PRIOR REQUEST 56. No prior request for the relief sought in this Motion has been made to thisBankruptcy Court or any other court in connection with these Cases. WHEREFORE, the Debtors respectfully request that the Court enter an Order insubstantially the form attached: (a) authorizing, but not directing, the Debtors to pay and honorthe Prepetition Employee Obligations specifically as set forth herein; (b) authorizing, but notdirecting, the Debtors to continue to provide the Employee Benefits in the ordinary course ofCINCINNATI/97523.5 23
  24. 24. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 24 of 28business; (c) authorizing, but not directing, the Debtors to continue the Reimbursement Programsin the ordinary course of business; (d) authorizing, but not directing, the Debtors to pay allrelated costs and expenses; (e) directing banks to receive, honor and pay all checks andelectronic payment requests related to the foregoing; and (f) granting such further relief as is justand proper.Dated: January 25, 2013 Respectfully submitted, /s/ Stephen D. Lerner Stephen D. Lerner Elliot M. Smith Kristin E. Richner Andrew M. Simon (Pro Hac Vice pending) SQUIRE SANDERS (US) LLP 30 Rockefeller Plaza New York, NY 10112 (212) 872-9800 (Phone) (212) 872-9815 (Fax) stephen.lerner@squiresanders.com elliot.smith@squiresanders.com kristin.richner@squiresanders.com andrew.simon@squiresanders.com Proposed Attorneys for Debtors and Debtors in PossessionCINCINNATI/97523.5 24
  25. 25. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 25 of 28 Exhibit A Proposed OrderCINCINNATI/97523.5
  26. 26. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 26 of 28UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORKIn re: Chapter 11Flat Out Crazy, LLC, et al.1, Case No. 13-22094 (RDD) Debtors. Joint Administration Requested ORDER, AUTHORIZING, BUT NOT DIRECTING, THE DEBTORS TO PAY: (A) PREPETITION EMPLOYEE WAGES, SALARIES AND RELATED ITEMS; (B) PREPETITION EMPLOYEE PAYROLL DEDUCTIONS AND WITHHOLDINGS; (C) PREPETITION PAYROLL TAXES; (D) PREPETITION CONTRIBUTIONS TO, AND BENEFITS UNDER, EMPLOYEE BENEFIT PLANS; AND (E) ALL COSTS AND EXPENSES INCIDENT TO THE FOREGOING Upon the Motion, pursuant to sections 105(a), 363, 507(a)(4), 507(a)(5), 541(b)(7) and541(d) of the Bankruptcy Code, for an Order Authorizing Them to Pay: (A) PrepetitionEmployee Wages, Salaries and Related Items; (B) Prepetition Employee Payroll Deductions andWithholdings; (C) Prepetition Payroll Taxes; (D) Prepetition Contributions to, and BenefitsUnder, Employee Benefit Plans; And (E) All Costs and Expenses Incident to the Foregoing (the“Motion”);2 filed by the debtors and debtors in possession (the “Debtors”); the Bankruptcy Courthaving reviewed the Motion and the DeLong Affidavit and having heard statements of counsel insupport of the Motion at a hearing before the Bankruptcy Court (the “Hearing”); the BankruptcyCourt having found that: (i) it has jurisdiction over this matter under 28 U.S.C. §§ 157 and 1334and venue is proper under 28 U.S.C. §§ 1408 and 1409; (ii) this matter is a core proceeding1 The Debtors in these cases and the last four digits of their Employer Identification Numbers are: Stir Crazy CaféWest Nyack, LLC (5828); Flat Out Crazy, LLC (0160); SCR Operations, LLC (9375); SCR Hospitality, LLC (4309);SCR Concessions, LLC (6669); Stir Crazy Restaurants, LLC (2289); Stir Crazy Café Oakbrook, LLC (2976); StirCrazy Café Northbrook, LLC (7070); Stir Crazy Café Woodfield, LLC (1104); Stir Crazy Café Great Lakes, LLC(9634); Stir Crazy Café Boca Raton, LLC (9942); Stir Crazy Café Creve Coeur, LLC (0003); Stir Crazy CaféLegacy Village, LLC (8744); Stir Crazy Café Cantera, LLC (4842); and Stir Crazy Operations, LLC (8114).2 Capitalized terms used but not defined herein shall have the meanings assigned in the Motion.CINCINNATI/97522.2
  27. 27. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 27 of 28under 28 U.S.C. § 157(b)(2); (iii) due and adequate notice of the Motion and the Hearing hasbeen given under the circumstances; and (iv) the relief requested in the Motion is in the bestinterests of the Debtors, their estates and creditors, and other interested parties; accordingly, afterdue deliberation, and good and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED AND DECREED: 1. The Motion is granted. 2. The Debtors are authorized in accordance with their stated policies (as suchpolicies may be modified from time to time) and in the Debtors’ sole discretion, to pay:(a) Prepetition Employee Obligations identified in the Motion, including but not limited to(i) prepetition compensation, (ii) Prepetition Business Expenses, and (iii) Deductions andWithholdings; and (b) Employee Benefits that accrued but remained unpaid as of the PetitionDate to or for the benefit of the Employees; provided, however, that no such PrepetitionEmployee Obligations and Employee Benefits paid pursuant to this Order may exceed $11,725for any individual Employee, other than as specified below. 3. The Debtors are authorized to pay Prepetition Employee Obligations andEmployee Benefits owed to the Sullivan Manager in excess of $11,725, as described in theMotion. 4. The Debtors are authorized, in the Debtors’ sole discretion, to pay the prepetitionProcessing Costs and any outstanding prepetition Payroll Taxes. 5. The Debtors’ banks and other financial institutions (collectively, the “Banks”) areauthorized and directed, when requested by the Debtors in the Debtors’ sole discretion, toreceive, process, honor and pay all checks presented for payment of, and to honor all fundtransfer requests made by the Debtors related to Prepetition Employee Obligations, Employee 2CINCINNATI/97522.2
  28. 28. 13-22094-rdd Doc 13 Filed 01/25/13 Entered 01/25/13 18:42:14 Main Document Pg 28 of 28Benefits and costs related thereto, whether such checks were presented or fund transfer requestswere submitted prior to or after the Petition Date, provided that funds are available in theDebtors’ accounts to cover such checks and funds transfers. The Banks are authorized to rely onthe Debtors’ designation of any particular check or funds transfer as approved by this Order. 6. Nothing in the Motion or this Order, nor the Debtors’ payment of claims pursuantto this Order, shall be deemed or construed as: (a) an admission as to the validity of any claimagainst the Debtors; (b) a waiver of the Debtors’ rights to dispute any claim on any grounds; (c) apromise to pay any claim; (d) an implication or admission that any particular claim is a claim forPrepetition Employee Obligations, Employee Benefits or costs related thereto; or (e) a request toassume any executory contract or unexpired lease, pursuant to section 365 of the BankruptcyCode. 7. Pursuant to Rule 6004(h), to the extent applicable, this order shall be immediatelyeffective and enforceable upon its entry.Dated: January ___, 2013 /s/ United States Bankruptcy Judge 3CINCINNATI/97522.2

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