10000001579

Case:12-24882-ABC Doc#:402 Filed:08/30/12
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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLORADO In re: CORDILLERA GOLF CLUB, LLC dba The Club at Cordillera EIN: 27-0331317, Debtor. ) ) ) ) ) ) )
Case No. 12-24882 ABC Chapter 11
MOTION FOR FINAL ORDER APPROVING DEBTOR-IN-POSSESSION FINANCING, USE OF CASH COLLATERAL AND ADEQUATE PROTECTION
The Debtor, Cordillera Golf Club, LLC dba The Club at Cordillera, Debtor in Possession herein (Debtor or Borrower), by and through its undersigned counsel, for its Motion for Final Order Approving Debtor-in-Possession Financing, Use of Cash Collateral and Adequate Protection, hereby states as follows: I. Introduction 1. On July 19, 2012, the Debtor filed its Emergency Motion for (A) Approval of Interim Order Pursuant to 11 U.S.C. 105, 361, 362, 363(c), 364(c), 364(d), and 364(e) and Fed.R.Bankr.P. 2002, 4001, and 9014 (I) Authorizing Debtor to Obtain Post-Petition Secured Financing, (II) Granting Security Interests and Superpriority Administrative Expense Claims, and (III) Authorizing the Use of Cash Collateral [Dkt. No. 200] (the Emergency DIP Motion). Through the Emergency DIP Motion, the Debtor sought approval of its interim debtor in possession financing agreement (the Interim DIP Loan) with Alpine Bank (Alpine or Lender) and use of cash collateral. On July 27, 2012, the Court entered an Interim Order approving the Emergency DIP Motion [Dkt. No. 270] (the Interim Order). Under the Interim Order, the Court authorized the Debtor to use cash collateral and DIP financing through August 31, 2012. 2. Subsequent to entry of the Interim Financing Order, the Debtor and Alpine worked diligently to negotiate the terms of a final debtor in possession financing agreement. On August 22, 2012, concerned regarding the impending expiration date of the Interim Order, the Debtor filed a Motion to (A) Extend and Increase Interim Financing and (B) Extend Use of Cash Collateral Under the Terms of the Prior Order (the Motion to Extend Interim Financing). On August 27, 2012, the Court entered an order granting the Motion to Extend Interim Financing, thereby extending the Interim Order and approved an increase in the borrowing limit. 3. After much negotiation, the Debtor and Alpine have reached agreement as to the terms of a final debtor in possession post-petition financing arrangement. By this Motion, the Debtor seeks final approval (the Final Order) of the post-petition financing with Alpine. A
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copy of the term sheet (the Term Sheet) for the debtor in possession loan agreement (the DIP Loan or the Post-Petition Loan) is attached hereto as Exhibit 1 and incorporated herein by this reference. The parties are preparing the final loan documents (the Post-Petition Loan Documentation) and will file a supplement to the within Motion with copies of the Post-Petition Loan Documentation upon completion. The proposed DIP Loan will preserve the Debtors business for the benefit of all parties. II. Background 4. The Debtor filed its Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware on June 26, 2012 (the Petition Date). On July 16, 2012, venue was transferred to this Honorable Court. The Debtor is operating its business as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 5. The Debtor is the owner and operator of the Club at Cordillera (the Club) located in Edwards (Eagle County), Colorado. The Club facilities consist of, among other property, three (3) full length golf courses (the Courses), four distinct clubhouses, real estate surrounding the Courses, a Dave Pelz short course, an athletic club offering indoor lap pool and fitness facilities, a tennis and swim club, and a winter nordic center with groomed tracks (collectively, the Facilities). 6. Or about June 26, 2009, Alpine and the Debtor entered into that certain Business Loan Agreement (the Alpine Loan Agreement), pursuant to which Alpine loaned to the Debtor the original principal amount of $13,700,000 (the Alpine Loan). 7. The Alpine Loan is evidenced by a Promissory Note dated June 29, 2009 (the Alpine Note). The Note matured on June 26, 2012. The Alpine Loan purports to be secured pursuant to a Deed of Trust dated June 26, 2009 and recorded in Eagle County Recorders Office on June 29, 2009 as Document No. 200912623 (the Alpine Deed of Trust). 8. As security for the Debtors obligations under the Alpine Note, the Alpine Deed of Trust purports to encumber the real property described therein, including all or a portion of the Facilities (the Real Property). The Alpine Deed of Trust also purports to encumber certain personal property described therein, including all equipment, fixtures, and other articles of personal property now or hereafter owned by Grantor, and now or hereafter attached or affixed to the Real Property. . . . The Alpine Note also purports to be secured pursuant to a Collateral Assignment of Contracts dated June 26, 2009 purporting to encumber certain water rights, and related contracts as listed therein; a Collateral Assignment and Security Agreement Covering Agreements, Permits and Contracts dated June 26, 2009, purporting to encumber the Collateral as defined therein, including contracts, licenses, and other agreements as described therein; a Collateral Assignment and Security Agreement Covering Golf Membership Revenues dated June 26, 2009, purporting to encumber Net Sales Revenues and Income from Dues as defined therein, including revenues from the sale of golf course memberships with respect to the Courses and dues, assessments, fees or other charges on account of memberships in the Club; a Commercial Pledge Agreement dated June 26, 2009 purporting to encumber all memberships in the Club; and a Commercial Security Agreement dated June 26, 2009 purporting to encumber
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furniture, fixtures, equipment, inventory, accounts receivable, general intangibles, contracts and contract rights, permits, goods, instruments, investment property, letter of credit rights, chattel paper, commercial tort claims, and all proceeds from the disposition thereof (all of the personal property purporting to be collateral for the Alpine Note (collectively, the Personal Property). On June 30, 2009, Alpine filed a UCC Financing Statement with the Delaware Secretary of State purporting to perfect its security interest in the Personal Property. The documents executed in connection with the Alpine Loan are collectively referred to as the Alpine Pre-Petition Loan Documentation.1 All collateral purported to secure the Alpine Note is collectively referred to as the Alpine Pre-petition Collateral. 9. On or about June 23, 2010, David Wilhelm (Wilhelm) made a loan to the Debtor in the original principal amount of $6,500,000 (the Wilhelm Loan), evidenced by a Promissory Note dated June 23, 2010 (as at any time amended or modified, the Wilhelm Note). The Wilhelm Note purports to be secured by a Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture filing dated June 23, 2010, and recorded with the Eagle County Recorder's Office on August 12, 2010 as Document No. 20105834 (as at any time amended or modified, the Wilhelm Deed of Trust), purportedly encumbering the Real Property and portions of the Personal Property, as further described therein.2 The documents executed in connection with the Wilhelm Loan are collectively referred to as the Wilhelm Loan Documents.3 All collateral purported to secure the Wilhelm Note is collectively referred to as the Wilhelm Pre-petition Collateral. 10. Pre-petition, Wilhelm assigned his beneficial interest in the Wilhelm Note and the Wilhelm Deed of Trust to The Rush Family Trust (Rush) as collateral for obligations of Wilhelm to Rush. 11. The Alpine Pre-petition Collateral and the Wilhelm Pre-petition Collateral is collectively referred to as the Pre-petition Collateral; Pre-petition Collateral which is personal property is collectively referred to as the Pre-petition Personal Property Collateral; and the Pre-petition Lenders Liens therein are collectively referred to as the Pre-petition Lenders Liens. Alpine, Wilhelm and Rush are collectively referred to as the Pre-petition Lenders. 12. As of the filing date, the Debtor's books and records reflect the amount of the outstanding principal and interest of the Alpine Loan and the Wilhelm Loan as approximately $12,765,617 and $7,532,608.02, respectively (collectively, the Pre-petition Lenders Debt). 13. Substantially all of the Debtors assets are also subject to the liens granted Alpine under the Interim Order.
1 The Alpine Pre-Petition Loan Documentation referred to herein was filed with the Court on June 26, 2012 [Docket No. 11]. The Debtor reserves the right to supplement this record for all purposes. 2
Wilhelm also asserts that his lien is a first priority lien as to certain Personal Property.
3 The Wilhelm Loan Documents referred to herein were filed with the Court on June 26, 2012 in the App. to Motion [Docket No. 11]. The Debtor reserves the right to supplement this record for all purposes.
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14. The Debtor is also a party to various equipment leases and/or financing arrangements with third parties, including Colorado Golf & Turf, Inc., Heartland Business Credit Corporation, John Deere Credit, Inc., Deere Credit, Inc., Pitney Bowes Global Financial Services LLC, Wells Fargo Financial Leasing, Inc., Ford Motor Credit Co., Toyota Motor Credit Corporation and Toyota Financial Services, covering equipment and/or vehicles (collectively, the "Vendors"). Some or all of these leases or financing agreements may be secured interests. The Debtor reserves all rights with respect thereto, including with respect to the nature or characterization of such agreements. 15. By this Motion, the Debtor does not seek to prime the asserted interests of the Vendors (collectively, the "Vendors Interests"), in the specific equipment or vehicles which are the subject of their respective agreements (collectively, the "Vendors Property"), to the extent valid, perfected, enforceable and unavoidable and to the extent any such interests are senior to the interests of the pre-petition liens of Alpine and/or Wilhelm. 16. However, the Debtor does seek, by this Motion, to prime the interests of Wilhelm and Rush in the Debtors assets. 17. Alpine consents to the relief requested herein. The Debtor anticipates receiving the consent of both Wilhelm and Rush prior to the final hearing on the Motion and will supplement the Motion with such consents upon receipt. 18. Order. III. Motion For Final Order Approving DIP Financing Summary of Material Provisions 19. A copy of the Term Sheet for the proposed DIP Loan agreement is attached hereto as Exhibit 1. The proposed Final Order is also filed with this Motion. Parties in interest should refer to the Final Order and the Post-Petition Loan Documentation for a complete understanding of the terms and conditions of the proposed DIP Loan. A summary of the material terms of the DIP Loan and proposed Final Order, together with identification of the specific locations of the terms, in accordance with Fed.R.Bankr.P. 4001(c)(B) and Local Rule 4001-3, is as follows: Borrowing Limits: Exhibit 1, p. 1; Final Order, p. 1. $3,239,995 (the Maximum Amount), which amount includes the $587,000 authorized under the Interim Order and the $90,000 for which approval was sought in the Motion to Extend Interim Financing. (a) Each advance under the DIP Loan (an Advance) shall be used solely to pay expenses contained in the Budget, a copy of which is attached hereto as Exhibit A to the proposed Final Order, subject to a 10% permitted variance per advance and in the aggregate (the The Debtor has funded its operations since June 26, 2012 pursuant to the Interim
Exhibit 1, pp. 2-4; Final Order, 3-5, 18.
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Permitted Variance). Any such expenses shall first be paid from Borrowers cash-on-hand, to the extent thereof, prior to the use of Advances. (b) No Advances may be used to (i) object to, contest, or raise any defense to, the validity, perfection, priority, extent, or enforceability of (1) any amount due under or with respect to the DIP Loan, (2) the DIP Liens (as hereinafter defined), (3) any amount due to Lender under or with respect to the pre-petition obligations of Borrower to Lender (the Pre-Petition Obligations), or (4) the liens and security interests granted by the Alpine Pre-Petition Loan Documentation, (ii) assert any claims, defenses, or causes of action against Lender or its agents, affiliates, subsidiaries, directors, officers, representatives, attorneys or advisors, (iii) prevent, hinder, or otherwise delay Lenders assertion or enforcement of its rights and remedies provided under (1) the Post-Petition Loan Documentation, (2) the Interim Order and Final Orders, or, (3) after expiration of the Forbearance (as hereinafter defined), the Alpine Pre-Petition Loan Documentation, (iv) seek to modify any of the rights granted to Lender under the Post-Petition Loan or the Post-Petition Loan Documentation or the Interim or Final Orders, or (v) otherwise take any action, the result of which is or would give rise to an Event of Default (each of the foregoing, a "Prohibited Use"). (c) Advances shall be made a maximum of once per week (unless otherwise agreed to by Lender in its sole discretion), in accordance with such procedures as shall be reasonably agreed to between Borrower and Lender and incorporated into the Post-Petition Loan Documentation; provided, that notwithstanding anything in PostPetition Loan Documentation to the contrary, and regardless of any extension of the Outside Date as hereinafter provided, Lender shall not be obligated to make any Advance after January 28, 2013, other than a Professional Advance (as hereinafter defined) to the extent hereinafter provided. (d) Notwithstanding the occurrence of an Event of Default or passage of the Maturity Date, Lender, subject to the Maximum Amount, shall make Advances to pay the Court-approved fees and expenses of professionals in the bankruptcy case (a "Professional Advance"), so long as such fees and expenses were (i) incurred prior to the Maturity Date, (ii) have not arisen in connection with any Prohibited Use, (iii) do not exceed amounts set forth in the Budget for such fees and expenses, subject to the Permitted Variance, and (iv) to the extent incurred after the occurrence of an Event of Default and delivery of a Termination Notice (as
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hereinafter defined), do not exceed $100,000 in the aggregate. Notwithstanding the foregoing, Lender shall be entitled to object to approval of any such fees and expenses on any available grounds. Lender in its sole discretion may at any time and from time to time pre-Advance anticipated Professional Advances into a retainer account for the applicable professional or professionals, and any such amounts so advanced (i) to the extent thereof, shall be used in lieu of Professional Advances for payment of the fees and expenses of such professional or professionals, and (ii) shall be part of the Post-Petition Obligations (as hereinafter defined) for all purposes, and secured by the DIP Liens. Borrowing Conditions: Exhibit 1, p. 7. On the funding date of each Advance, the following conditions precedent shall have been satisfied or waived by Lender: (a) The Final Order shall have been entered and shall be in full force and effect and shall not have been reversed, vacated or stayed and shall not have been amended, supplemented or otherwise modified without the prior written consent of Lender (which consent may be withheld in its sole discretion). (b) All Post-Petition Loan Documents, including, without limitation, the note, security agreement and mortgage or deed of trust, and any otherwise customary or appropriate agreement or document shall have been executed and delivered in form and substance satisfactory to Lender in its sole discretion. (c) Except in the case of a Professional Advance, subject to the conditions set forth above, there shall exist no Event of Default or event that with notice or lapse of time, or both, would constitute an Event of Default. (d) The representations and warranties of Borrower in the PostPetition Loan Documentation shall be true and correct immediately prior to, and after giving effect to, funding, except to the extent that any such representation or warranty expressly relates only to an earlier date. Exhibit 1, pp. 5-6. Borrower shall be required to satisfy the following restructuring benchmarks (the Benchmarks): (a) On or before September 15, 2012, Borrower shall cause GA Keen Realty Advisors, LLC (GA Keen) to prepare and implement a written program for the solicitation and implementation of a
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Capital Event, such program to be subject to the reasonable approval of Lender and to be diligently and in good faith pursued by GA Keen. GA Keen shall provide to the Lender, concurrently with the provision thereof to Borrower, status reports on implementation of such program, such reports to be prepared not less frequently than bi-weekly. Lender shall execute a confidentiality and non-disclosure agreement reasonably acceptable to Lender and Borrower with respect to such written program and such status reports. (b) Unless Borrower has previously obtained a binding commitment (a Commitment), accompanied by a deposit of at least 10% of the amount thereof and not subject to any financing contingency for a Consensual Capital Event (as hereinafter defined), and has filed Capital Event Pleadings with respect thereto, then no later than January 2, 2013 (the Filing Deadline), Borrower shall have filed Capital Event Pleadings seeking either (i) approval of a sale agreement (a "Sale Agreement") executed by a "stalking horse" bidder, if any, subject to higher and better bids in accordance with such procedures as shall be set forth in such pleadings, or (ii) scheduling of an open auction (an "Open Auction") of all or substantially all of the assets of Borrower, in accordance with such procedures, and on such terms and conditions, as are set forth in such pleadings. Any Commitment, Capital Event Pleadings, and Sale Agreement filed in accordance with this subsection (b) shall be in form and substance reasonably satisfactory to Lender, and drafts thereof shall be provided to lender not less than one week before the filing thereof. For the avoidance of doubt, it shall, without limitation, be deemed reasonable for Lender to find unsatisfactory (i) any Commitment or any Capital Event Pleading filed in connection with Consensual Capital Event that (1) would not result in sufficient net proceeds to repay in full (A) the PostPetition Obligations, and (B) the Pre-Petition Obligations, or (2) would not result in a closing on or before the Outside Date, or (ii) any Capital Event Pleading filed in connection with a Sale Agreement or an Open Auction that (1) does not preserve Lenders right to credit bid both the Post-Petition Obligations and the PrePetition Obligations, or (2) would not result in a closing on or before the Outside Date. For purposes hereof, Consensual Capital Event shall mean a Capital Event, the net proceeds of which shall be received by Borrower on or before the Outside Date, and which shall be sufficient to, and shall be used to, repay in full the Post-Petition Obligations and the Pre-Petition Obligations on or before such date.
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(c) In the event that Borrower has met the Filing Deadline in accordance with subsection (b) above, Borrower may, and in the event that such deadline was met by the filing of Capital Event Pleadings after December 1, 2012, shall, extend the Outside Date by up to 30 days by paying to Lender, on or before the date on which such Outside Date would otherwise occur, an extension fee of $100,000. Such extension fee may not be funded with proceeds of the DIP Loan. (d) Any order obtained by Borrower extending plan filing or solicitation exclusivity shall provide that such exclusivity shall expire as to Lender (and only Lender) upon the occurrence of an Event of Default and delivery of a Termination Notice. Interest Rate: Exhibit 1, p. 2. Each advance under the DIP Loan shall bear interest at a rate equal to 6% per annum.
Default Interest Rate: Exhibit 1, p. 2. During the continuance of an Event of Default (as such term shall be defined in the Post-Petition Loan Documentation and as otherwise specified herein), the DIP Loan shall bear default interest at 10% per annum.
Commitment Fee: Exhibit 1, p. 2. Maturity: Exhibit 1, p. 2; Final Order, 3. The Post-Petition Loan and all interest, fees, expenses and other amounts provided for under the Post-Petition Loan Documents (the Post-Petition Obligations) shall be due and payable on the Maturity Date, which shall be the earlier of (a) the effective date, closing, or other consummation of a Capital Event (as hereinafter defined), or (b) January 31, 2013 (the Outside Date). For purposes hereof, a Capital Event, whether effected by motion or by a plan of reorganization or liquidation (Capital Event Pleadings), shall be (a) a sale of any material portion of the assets of Borrower (including, without limitation, the sale of one or more of Borrowers golf courses), (b) an equity investment in, or the purchase of an equity interest of, the Borrower or a successor entity under a plan (including, None.
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without limitation, the issuance and purchase of (i) warrants to acquire any such equity interest, or (ii) debt convertible into any such equity interest), or (c) the incurrence by Borrower of any debtor-inpossession or reorganization financing from any source other than Lender; provided, that (x) the incurrence in the ordinary course of business of trade or similar debt or debt that is secured by a Permitted Encumbrance, or (y) equity investments by any existing direct or indirect equity holder of the Borrower made during the course of the Proceeding to fund working capital shortfalls shall not be deemed to be a Capital Event. Events of Default: Exhibit 1, pp. 7-8; Final Order, 22-23. (a) The Post-Petition Loan Documentation shall contain Events of Default comparable to those contained in the Alpine Pre-Petition Loan Documentation, plus the following: (i) The failure to repay the Post-Petition Obligations in full on or before the Maturity Date. (ii) The issuance of an order (i) staying, reversing, modifying (unless such modification will not adversely affect Lender, the DIP Liens, or the rights of Lender under or with respect to the Post-Petition Loan or the Post-Petition Loan Documentation), withdrawing, or vacating the Final Order, or (ii) otherwise adversely affecting Lender, the DIP Liens, or the rights of Lender under or with respect to the Post-Petition Loan or the Post-Petition Loan Documentation, in either case without the consent of Lender. (iii) The dismissal of the Proceeding or the conversion of the Proceeding to chapter 7. (iv) The appointment of a chapter 11 trustee or an examiner with expanded powers in the Proceeding. (v) The filing of a plan of reorganization or liquidation by Borrower or, if exclusivity has been terminated, by any other person or entity, that is inconsistent with the terms of the Post-Petition Loan Documentation or the Final Order in any material respect. (vi) The granting of relief from the automatic stay to any creditor having a lien on or security interest in any material portion of the DIP Collateral permitting foreclosure or repossession of such material portion of the DIP Collateral. (vii) The failure to meet any Benchmark.
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(viii) Expenditure of any amounts not provided for, or in excess of the limits set forth in (subject to the Permitted Variance), the Budget, except to the extent otherwise consented to by Lender. (ix) (1) The filing by Borrower of any motion seeking to use Cash Collateral in a manner inconsistent with the Post-Petition Loan Documentation or the Final Order, or the granting of any such motion filed by any other person or entity, or (2) the filing by any person or entity of any Capital Event Pleading, other than by Borrower in accordance with the requirements of the Post-Petition Loan Documents, or as otherwise consented to by Lender. (b) Upon the occurrence of an Event of Default, Lender may deliver to Borrower a notice of termination (a "Termination Notice"), whereupon any obligation to make further Advances (except Professional Advances as provided above) shall terminate, the Forbearance shall terminate, and Lender shall be entitled to exercise all of its rights and remedies with respect to the PostPetition Obligations, the Pre-Petition Obligations, and the collateral therefor as provided under the Post-Petition Loan Documents, the Pre-Petition Loan Documents, the Final Order, and applicable law. Grant of Priority or Lien on Property of the Estate under 364(c) or (d): Exhibit 1, pp. 4-5; Final Order, 10-17. The Post-Petition Loan and all other Post-Petition Obligations shall be secured by fully perfected liens, security interests and mortgages (the DIP Liens) in all of the assets of the Debtor (collectively, the DIP Collateral), excluding only (a) claims and recoveries under sections 544-550 of the Bankruptcy Code (the Avoidance Actions), and (b) payroll and fiduciary deposit accounts required by law, and any assets which are not assignable by the Debtor as a matter of law, including under the Bankruptcy Code, subject only to the liens and security interests listed on Exhibit B to the Interim Order and Final Order (collectively, the Permitted Senior Liens). The DIP Liens shall be deemed automatically perfected without the need to make filings or record any documentation under applicable non-bankruptcy law, provided, however, that Lender shall have the right to make any such filings or record any such instruments if it elects to do so in its sole discretion. The Post-Petition Obligations shall be: (a) Pursuant to Section 364(c)(1) of the Bankruptcy Code, entitled to superpriority administrative expense claim status in the Case over any and all administrative expenses, whether heretofore or
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hereafter incurred, of the kind specified in Sections 503(b) or 507(b) or of the Bankruptcy Code; and (b) Pursuant to Section 364(d) of the Bankruptcy Code, secured by first priority, priming and senior security interests and liens in and on the DIP Collateral, not subject to subordination or to any prior liens, other than Permitted Encumbrances (as hereinafter defined), and the Pre-petition Lenders Liens, other than Permitted Encumbrances, shall be primed and made subject to and subordinate to the DIP Liens, which DIP Liens shall also prime any liens on the DIP Collateral granted after the commencement of the Proceeding to provide adequate protection to the Pre-petition Lenders, or to any other creditor. For purposes hereof, Permitted Encumbrances shall mean such liens and other encumbrances are permitted as are encumbrances under the Interim Order. Waiver or Modification of Code Provisions Relating to the Automatic Stay: Exhibit 1, pp. 4-5; Final Order, 20-21. Pursuant to the Final Order, Lender shall be granted relief from the automatic stay with respect to its rights and remedies under the Alpine Pre-Petition Loan Documentation and DIP Loan and under applicable state law. Lender shall forbear (the Forbearance) from exercising any of such rights and remedies until the earlier of (a) the Maturity Date, (b) repayment in full of the Post-Petition Obligations, or (c) the occurrence of an Event of Default and delivery of a Termination Notice, unless simultaneously therewith, the Pre-Petition Loan Obligations are repaid in full. The DIP Loan Should be Approved 10. The Debtor proposes to obtain financing under the DIP Loan by providing security interests and liens as set forth above pursuant to sections 364(c) and (d) of the Bankruptcy Code. The statutory requirement for obtaining postpetition credit under section 364(c) is a finding, made after notice and hearing, that the debtors are unable to obtain unsecured credit allowable under section 503(b)(1) of the [the Bankruptcy Code]. 11 U.S.C. 364(c). Indeed, section 364(c) financing is appropriate when the debtor in possession is unable to obtain unsecured credit allowable as an ordinary administrative claim. See In re Ames Dep't Stores, Inc., 115 B.R. 34, 37-39 (Bankr. S.D.N.Y. 1990) (debtor must show that it has made a reasonable effort to seek other sources of financing under sections 364(a) and (b) of the Bankruptcy Code); In re Crouse Group, Inc., 71 B.R. 544, 549 (Bankr. E.D. Pa. 1987) (secured credit under section 364(c)(2) of the Bankruptcy Code is authorized, after notice and hearing, upon showing that unsecured credit cannot be obtained).
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11. Courts have articulated a three-part test to determine whether a debtor is entitled to financing under section 364(c) of the Bankruptcy Code. Specifically, courts look to whether: (a) the debtor is unable to obtain unsecured credit under section 364(b), i.e., by allowing a lender only an administrative claim; the credit transaction is necessary to preserve the assets of the estate; and the terms of the transaction are fair, reasonable, and adequate, given the circumstances of the debtorborrower and the proposed lender.
(b) (c)
In re Ames Dep't Stores, 115 B.R. at 37-39. 12. Prepetition, the Debtor endeavored to identify potential sources of postpetition financing. Based on discussions with potential lenders, the Debtor has determined that adequate postpetition financing on an unsecured basis or on a junior priority basis to the Pre-petition Lenders is not available. Without postpetition financing, the Debtor would be unable to operate its businesses as a going concern, which would significantly impair the value of the Debtors assets to the detriment of all stakeholders. Furthermore, by obtaining postpetition financing, the Debtor will be in a position to preserve and maximize the value of its assets for the benefit of all creditors. Finally, the terms of the DIP Loan are fair, reasonable and adequate given the Debtor's circumstances, all as more fully set forth below. 13. In making the decision to enter into the DIP Loan, moreover, the Debtors business judgment is entitled to deference. A debtors authority to operate its business necessarily includes the concomitant discretion to exercise reasonable judgment in ordinary business matters. . . . The discretion to act with regard to planning business activities is at the heart of the debtors power. . . . Business judgments should be left to the board room and not to this Court. In re Simasko Prod. Co., 47 B.R. 444, 449 (D. Colo. 1985). Pursuant to Simasko and similar precedent, the Debtor may exercise reasonable business judgment in negotiating the terms of loans such as the DIP Loan, and to make the trade-offs necessary to complete a deal. 14. The Debtors decision to obtain the DIP Loan represents an exercise of its sound business judgment in the continued operation of its business and the beginning of the process to consummate a reorganization plan. The proposed DIP Loan is the mechanism that is most likely to allow the Debtor to operate efficiently in bankruptcy, increase the value of its assets, and reorganize. 15. The deference normally afforded a debtors business judgment is appropriately heightened at the commencement of a case like this. Reorganization is the ultimate goal of Chapter 11. MBank Dallas N.A. v. OConnor (In re OConnor), 808 F.2d 1393, 1397-98 (10th Cir. 1987). The Debtors efforts are not only to be encouraged, but also their efforts during the 12
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administration of the proceeding or measured in light of that [goal]. Id. Because the proposed DIP Loan preserves values and furthers a reorganization, the Debtors decision to proceed with financing should be approved. Approval of Priming Liens and Adequate Protection under Section 364(d) 16. If a debtor is unable to obtain adequate credit under the provisions of section 364(c) of the Bankruptcy Code, the debtor may obtain credit secured by a senior or equal lien on property of the estate that is already subject to a lien, commonly referred to as a priming lien. 11 U.S.C. 364(d). Section 364(d)(1) of the Bankruptcy Code, which governs the incurrence of postpetition debt secured by senior or priming liens, provides that the court may, after notice and a hearing, authorize the obtaining of credit or the incurring of debt secured by a senior or equal lien on property of the estate that is subject to a lien only if (a) (b) the trustee is unable to obtain such credit otherwise; and there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior or equal lien is proposed to be granted.
11 U.S.C. 364(d). 17. The determination of adequate protection is a fact-specific inquiry to be decided on a case-by-case basis. See In re Mosello, 195 B.R. 277, 288 (Bankr. S.D.N.Y. 1996). Its application is left to the vagaries of each case . . . but its focus is protection of the secured creditor from diminution in the value of its collateral during the reorganization process. Id. (quoting In re Beker Indus. Corp., 58 B.R. 725, 736 (Bankr. S.D.N.Y. 1986)). The Debtor has concluded that adequate and acceptable alternative financing on a non-priming basis and on terms more favorable than those being provided by Alpine under the DIP Loan is currently unobtainable. Indeed, the Debtor and its advisors spent substantial effort attempting to negotiate a debtor in possession financing facility with multiple parties, but ultimately the terms required by the other lenders were determined by the Debtor to be too onerous given the availability of the DIP Loan proposed herein. 18. Following the receipt of the proposal from Alpine, the Debtor proceeded to expeditiously negotiate with Alpine. The Debtor ultimately concluded that the DIP Loan represented the best available financing for the Debtor under the circumstances. The Debtor believes that financing on the same or comparable terms (both monetary and non-monetary) is otherwise unavailable. As set forth above, the Pre-petition Lenders enjoy a significant equity cushion with respect to their purported Pre-petition Lenders Debt. In fact, the Debtor believes that the value of the Pre-petition Collateral substantially exceeds the amount of the Pre-petition Lenders Debt and the proposed DIP Loan. The Debtor believes that the substantial equity cushion enjoyed by the Pre-petition Lenders provides adequate protection to the Pre-petition Lenders. Because the Debtor has demonstrated that (i) the same or superior financing is otherwise unavailable, and (ii) the Pre-petition Lenders will be adequately protected, Section
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364(d) has been met and the Court should authorize the priming of the Pre-petition Lenders Liens by the DIP Liens in connection with the DIP Loan. 19. Significantly, Alpine consents and Wilhelm and Rush are expected to consent to the priming security interests, superpriority claim and other rights granted Alpine under the DIP Loan and proposed order filed herewith. No Adequate Alternative to the DIP Loan is Currently Available 20. A debtor need only demonstrate by a good faith effort that credit was not available without the protections afforded to potential lenders by sections 364(c) and (d) of the Bankruptcy Code. See In re Snowshoe Co., 789 F.2d 1085, 1088 (4th Cir. 1986); see also In re Plabell Rubber Prods., Inc., 137 B.R. 897, 900 (Bankr. N.D. Ohio 1992). 21. Substantially all of the Debtors assets are subject to the Pre-petition Lenders Liens. Because of the amount of the Pre-petition Lenders Debt, obtaining the financing needed by the Debtor as unsecured debt or debt which would be secured by liens junior to the liens of the Pre-petition Lenders was not a realistic option, especially given the current state of the capital markets. 22. In the weeks prior to the commencement of this case, the Debtors financial advisors pursued efforts to find replacement financing that would also provide additional debtorin-possession funding and in that regard contacted a number of potential lenders with the capability of providing a debtor-in-possession facility. As a result of those efforts, the Debtor and its advisors received at least four proposals from lender groups considering providing postpetition financing to the Debtor. The terms of the DIP Loan, taken as a whole, provided the Debtor with greater liquidity and significant non-monetary accommodations which, in the Debtors belief, will preserve and maximize the value of its estate. As a result and under the circumstances, the Debtor determined that the instant DIP Loan was the best proposal received by the Debtor. Based on the foregoing, the Debtor determined that the proposed debtor-inpossession financing with Alpine is the best financing option available to the Debtor under the circumstances. The DIP Loan Terms are Fair, Reasonable, and Appropriate 23. The proposed terms of the DIP Loan are fair, reasonable, and adequate under the circumstances. First and foremost, as discussed more fully above, the Debtor has made a concerted, good-faith effort to obtain credit on the most favorable terms currently available given the circumstances. Although the Debtor contacted various alternate lending institutions, no other lender was willing to provide an adequate stand alone financing facility junior to the Pre-petition Lenders Liens. Moreover, no lender was willing to provide financing sufficient to repay the Prepetition Lenders Debt in full and provide additional liquidity sufficient for the Debtor to operate its business to preserve and maximize the value of its assets. 24. Against this backdrop, the Debtor carefully evaluated the proposed financing structure from Alpine, evaluated its ability to, and the risks associated with, priming the Prepetition Lenders Liens, engaged in negotiations with Alpine regarding the Term Sheet, worked with its various advisors to obtain the best possible pricing from Alpine, and determined 14
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that Alpines proposal was best suited to the Debtors needs given the circumstances. Moreover, the terms and conditions of the DIP Loan were negotiated by the parties in good faith and at arms length, and, as outlined above, were instituted for the purpose of enabling the Debtor to meet ongoing operational expenses while in chapter 11 while preserving and maximizing the value of the Debtors estate. 25. Accordingly, given the circumstances, the terms of the DIP Loan are fair, reasonable and adequate, and Alpine should be accorded the benefits of section 364(e) of the Bankruptcy Code in respect of such agreement. Certain Specific Loan Provisions Are Appropriate in These Cases 26. As indicated above, the proposed financing includes one term included in the Local Rule 4001-3APP: automatic relief from the automatic stay upon default. The Debtor asserts that this provision is (a) reasonable, (b) a provision required by Alpine as a condition of providing the necessary funding, and (c) does not adversely affect the estate or creditors. IV. Motion For Final Order Approving Use of Cash Collateral 27. On June 26, 2012, the Debtor filed with the Court its Motion of the Debtor for Entry of Interim and Final Orders (A) Authorizing Use of Cash Collateral; (B) Granting Adequate Protection; (C) Scheduling Final Hearing; and (D) Granting Related Relief [Docket No. 9] (the "Cash Collateral Motion"). The Cash Collateral Motion is incorporated herein, and pursuant thereto the Debtor requested authority to use Cash Collateral as provided therein. The Cash Collateral Motion sets forth in detail the adequate protection offered as a condition to the use of Cash Collateral. As set forth therein, as additional adequate protection for the use of purported Cash Collateral, the Debtor proposed to provide the Pre-petition Lenders with, inter alia, replacement liens to secure the repayment of any portion of the Cash Collateral used by the Debtor, in the Debtor's now existing or hereafter acquired personal property of the same type as the Personal Property Collateral, respectively, but specifically excluding avoidable transfer claims and recoveries and/or similar claims and recoveries pursuant to Sections 542 through 550 of the Bankruptcy Code. The Interim Cash Collateral Order [Docket No. 44] sets forth the interim adequate protection for such use as provided therein, including, but not limited to replacement liens granted to the same extent, and with the same validity and priority, as such Pre-petition Lenders' existing liens existing on the Petition Date. To the extent the relief sought herein, the Interim Order or the Final Order is inconsistent with the Interim Cash Collateral Order or final order on the Cash Collateral Motion, the Interim Order and the Final Order on this Motion shall control. The Debtor does not believe that the DIP Loan proceeds are Cash Collateral of the Pre-petition Lenders; but in any event the Debtor requests approval to use the DIP Loan proceeds are to be used in accordance with the Interim Order, the Final Order and the DIP Loan. 28. The interests of both Pre-petition Lenders' interests in the Pre-petition Collateral is adequately protected by the value of their respective interests in the Real Property. The estimated value of the real property is $33,000,000, creating a large equity cushion protecting both Pre-petition Lenders' interests. The purported secured debt of Alpine and Wilhelm is
15
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approximately $12,765,617 and $7,532,608, respectively. Accordingly, even taking into account the DIP Loan of $3,239,995, both Pre-Petition Lenders have signification equity cushions. 29. Because the above-described equity cushion protects both Pre-petition Lenders' interests, no further adequate protection is required under the Bankruptcy Code. Moreover, Alpine consents and Wilhelm and Rush are expected to consent to the use of cash collateral proposed herein. 30. The Debtor, as well as any creditor's committee appointed in the Debtor's case or other creditors or parties-in-interest as may have or be granted standing under applicable law or order of this Court, reserve their rights to dispute that the Prepetition Lenders (or either of them) hold a valid, enforceable, perfected and/or unavoidable security interests in and/or liens upon the Prepetition Collateral, or any of the Debtor's other property, including without limitation, the Real Property and/or the Personal Property, as well as any Cash Collateral derived from the Debtor's business operations. V. Conclusion 31. For the foregoing reasons, the Debtor submits that the proposed lending and cash collateral use described herein are in the best interest of the estate, complies with applicable provisions of the Bankruptcy Code, and should be approved. Dated: August 30, 2012 Christopher Celentino (CA No. 131688) Mikel Bistrow (CA No. 102978) Dawn A. Messick (CA No. 236941) Admitted Pro Hac Vice 402 West Broadway, Suite 2100 San Diego, California 92101 Telephone: 619-234-6655 Facsimile: 619-234-3510 Email: ccelentino@foley.com Email: mbistrow@foley.com Email: dmessick@foley.com Counsel for Debtor and Debtor in Possession -and-
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SENDER & WASSERMAN, P.C. /s/ David V. Wadsworth Harvey Sender, #7546 David V. Wadsworth, #32066 1660 Lincoln Street, Suite 2200 Denver, CO 80264 Telephone: 303-296-1999 Facsimile: 303-296-7600 Email: dvw@sendwass.com Counsel for Debtor and Debtor in Possession
17
Case:12-24882-ABC Doc#:402-1 Filed:08/30/12
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Post-Petition Financing Term Sheet THIS IS A TERM SHEET ONLY. CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY IS SUBJECT TO EXECUTION OF DEFINITIVE DOCUMENTATION (POST-PETITION LOAN DOCUMENTATION)1 AND APPROVAL BY THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLORADO (THE COURT) IN THE CHAPTER 11 BANKRUPTCY PROCEEDING OF CORDILLERA GOLF CLUB, LLC, CASE NO. 12-24882-ABC (THE PROCEEDING). The Borrower: Cordillera Golf Club, LLC, as debtor and debtor-in-possession in the Proceeding, a Delaware limited liability corporation (Borrower). Alpine Bank (Lender). The post-petition loan contemplated hereby (the Post-Petition Loan) shall be in an aggregate of up to $3,239,955 (the "Maximum Amount"), including repayment of all amounts previously advanced to the Borrower under the terms of the Interim Order Pursuant to 11 U.S.C. 105, 361, 362, 363(c), 364(c), 364(d), and 364(e) and Fed. R. Bankr. P. 2002, 4001 and 9014 (i) Authorizing Debtor to Obtain Post-Petition Secured Financing, (ii) Granting Security Interests and Superpriority Administrative Expense Claims, and (iii) Authorizing the Use of Cash Collateral as Provided Herein, Dkt. #270 (the Interim Order), upon the terms and conditions stated herein and in the Post-Petition Loan Documentation. The balance of the PostPetition Loan not already advanced under the Interim Order shall be available to be drawn upon the entry of a final order of the Court approving the Post-Petition Loan, substantially in the form of the Interim Order, modified as necessary to incorporate the terms hereof and of the Post-Petition Loan Documents, and otherwise containing terms and conditions satisfactory to Lender in its sole discretion (the Final Order), and satisfaction of the other conditions precedent hereinafter set forth. All motions and other documents to be filed with and submitted to the Court in connection with the Post-Petition Loan and obtaining the Final Order shall be in form and substance satisfactory to Lender in its sole discretion.
Post-Petition Lender: The Post-Petition Loan Amount:
1 In
addition to the points addressed herein, the Post-Petition Loan Documentation will contain usual and customary terms and provisions for financings of this type. 1
Exhibit 1
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Interest Rate:
Each advance under the Post-Petition Loan (an Advance) shall bear interest at a rate equal to 6% per annum. Interest shall be payable monthly, in cash, in arrears, calculated on an actual/360 day basis, and Lender may make Advances to itself to fund such interest (whether accruing at the non-default or default rate) as and when such interest shall become due and payable. During the continuance of an Event of Default (as such term shall be defined in the Post-Petition Loan Documentation and as otherwise specified herein), the Post-Petition Loan shall bear default interest at 10% per annum, calculated on an actual/360 basis. None. The Post-Petition Loan and all interest, fees, expenses and other amounts provided for under the Post-Petition Loan Documents (the Post-Petition Obligations) shall be due and payable on the Maturity Date, which shall be the earlier of (a) the effective date, closing, or other consummation of a Capital Event (as hereinafter defined), or (b) January 31, 2013 (the Outside Date). The Post-Petition Loan shall not be subject to amortization. For purposes hereof, a Capital Event, whether effected by motion or by a plan of reorganization or liquidation (Capital Event Pleadings), shall be (a) a sale of any material portion of the assets of Borrower (including, without limitation, the sale of one or more of Borrowers golf courses), (b) an equity investment in, or the purchase of an equity interest of, the Borrower or a successor entity under a plan (including, without limitation, the issuance and purchase of (i) warrants to acquire any such equity interest, or (ii) debt convertible into any such equity interest), or (c) the incurrence by Borrower of any debtor-in-possession or reorganization financing from any source other than Lender; provided, that (x) the incurrence in the ordinary course of business of trade or similar debt or debt that is secured by a Permitted Encumbrance, or (y) equity investments by any existing direct or indirect equity holder of the Borrower made during the course of the Proceeding to fund working capital shortfalls shall not be deemed to be a Capital Event.
Default Interest Rate:
Commitment Fee: Maturity and Amortization:
Use and Making of Advances; Special Provisions as to Professional Advances:
(a) Advances shall be used solely to pay expenses contained in the Budget (as hereinafter defined), subject to a 10% permitted variance per advance and in the aggregate (the Permitted Variance). Any such expenses shall first be paid from 2
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Borrowers cash-on-hand, to the extent thereof, prior to the use of Advances. (b) No Advances may be used to (i) object to, contest, or raise any defense to, the validity, perfection, priority, extent, or enforceability of (1) any amount due under or with respect to the Post-Petition Loan, (2) the DIP Liens (as hereinafter defined), (3) any amount due to Lender under or with respect to the prepetition obligations of Borrower to Lender (the Pre-Petition Obligations), or (4) the liens and security interests granted by the documentation evidencing the Pre-Petition Obligations (the PrePetition Loan Documentation), (ii) assert any claims, defenses, or causes of action against Lender or its agents, affiliates, subsidiaries, directors, officers, representatives, attorneys or advisors, (iii) prevent, hinder, or otherwise delay Lenders assertion or enforcement of its rights and remedies provided under (1) the Post-Petition Loan Documentation, (2) the Interim and Final Orders, or, (3) after expiration of the Forbearance (as hereinafter defined), the Pre-Petition Loan Documentation, (iv) seek to modify any of the rights granted to Lender under the PostPetition Loan or the Post-Petition Loan Documentation or the Interim or Final Orders, or (v) otherwise take any action, the result of which is or would give rise to an Event of Default (each of the foregoing, a "Prohibited Use"). (c) Advances shall be made a maximum of once per week (unless otherwise agreed to by Lender in its sole discretion), in accordance with such procedures as shall be reasonably agreed to between Borrower and Lender and incorporated into the PostPetition Loan Documentation; provided, that notwithstanding anything herein to the contrary, and regardless of any extension of the Outside Date as hereinafter provided, Lender shall not be obligated to make any Advance after January 28, 2013, other than a Professional Advance (as hereinafter defined) to the extent hereinafter provided. (d) Notwithstanding the occurrence of an Event of Default or passage of the Maturity Date, Lender, subject to the Maximum Amount, shall make Advances to pay the Court-approved fees and expenses of professionals in the Proceeding (a "Professional Advance"), so long as such fees and expenses were (i) incurred prior to the Maturity Date, (ii) have not arisen in connection with any Prohibited Use, (iii) do not exceed amounts set forth in the Budget for such fees and expenses, subject to the Permitted Variance, and (iv) to the extent incurred after the occurrence of an Event of Default and delivery of a Termination Notice (as 3
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hereinafter defined), do not exceed $100,000 in the aggregate. Notwithstanding the foregoing, Lender shall be entitled to object to approval of any such fees and expenses on any available grounds. Lender in its sole discretion may at any time and from time to time pre-Advance anticipated Professional Advances into a retainer account for the applicable professional or professionals, and any such amounts so advanced (i) to the extent thereof, shall be used in lieu of Professional Advances for payment of the fees and expenses of such professional or professionals, and (ii) shall be part of the Post-Petition Obligations for all purposes, and secured by the DIP Liens. Priority and Security: The Post-Petition Loan and all other Post-Petition Obligations shall be secured by fully perfected liens and security interests (the DIP Liens) on all of the assets of Borrower and all proceeds from the sale thereof, other than those assets excluded from the liens granted by the Interim Order (the DIP Collateral). The DIP Liens shall be deemed automatically perfected without the need to make filings or record any documentation under applicable non-bankruptcy law, provided, however, that Lender shall have the right to make any such filings or record any such instruments if it elects to do so in its sole discretion. The PostPetition Obligations shall be: (a) Pursuant to Section 364(c)(1) of the Bankruptcy Code, entitled to super priority administrative expense claim status in the Case over any and all administrative expenses, whether heretofore or hereafter incurred, of the kind specified in Sections 503(b) or 507(b) or of the Bankruptcy Code; and (b) Pursuant to Section 364(d) of the Bankruptcy Code, secured by first priority, priming and senior security interests and liens in and on the DIP Collateral, not subject to subordination or to any prior liens, other than Permitted Encumbrances (as hereinafter defined), and all existing liens, rights and interests on the DIP Collateral (the Pre-Petition Liens), other than Permitted Encumbrances, shall be primed and made subject to and subordinate to the DIP Liens, which DIP Liens shall also prime any liens on the DIP Collateral granted after the commencement of the Proceeding to provide adequate protection to the holders of Pre-Petition Liens, or to any other creditor. For purposes hereof, Permitted Encumbrances shall mean such liens and other encumbrances are permitted as are encumbrances 4
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under the Interim Order. Restructuring Benchmarks: Borrower shall be required to satisfy the following restructuring benchmarks (the Benchmarks): (a) On or before September 15, 2012, Borrower shall cause GA Keen Realty Advisors, LLC (GA Keen) to prepare and implement a written program for the solicitation and implementation of a Capital Event, such program to be subject to the reasonable approval of Lender and to be diligently and in good faith pursued by GA Keen. GA Keen shall provide to the Lender, concurrently with the provision thereof to Borrower, status reports on implementation of such program, such reports to be prepared not less frequently than bi-weekly. Lender shall execute a confidentiality and non-disclosure agreement reasonably acceptable to Lender and Borrower with respect to such written program and such status reports. (b) Unless Borrower has previously obtained a binding commitment (a Commitment), accompanied by a deposit of at least 10% of the amount thereof and not subject to any financing contingency for a Consensual Capital Event (as hereinafter defined), and has filed Capital Event Pleadings with respect thereto, then no later than January 2, 2013 (the Filing Deadline), Borrower shall have filed Capital Event Pleadings seeking either (i) approval of a sale agreement (a "Sale Agreement") executed by a "stalking horse" bidder, if any, subject to higher and better bids in accordance with such procedures as shall be set forth in such pleadings, or (ii) scheduling of an open auction (an "Open Auction") of all or substantially all of the assets of Borrower, in accordance with such procedures, and on such terms and conditions, as are set forth in such pleadings. Any Commitment, Capital Event Pleadings, and Sale Agreement filed in accordance with this subsection (b) shall be in form and substance reasonably satisfactory to Lender, and drafts thereof shall be provided to lender not less than one week before the filing thereof. For the avoidance of doubt, it shall, without limitation, be deemed reasonable for Lender to find unsatisfactory (i) any Commitment or any Capital Event Pleading filed in connection with Consensual Capital Event that (1) would not result in sufficient net proceeds to repay in full (A) the PostPetition Obligations, and (B) the Pre-Petition Obligations, or (2) would not result in a closing on or before the Outside Date, or (ii) any Capital Event Pleading filed in connection with a Sale Agreement or an Open Auction that (1) does not preserve Lenders right to credit bid both the Post-Petition Obligations and 5
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the Pre-Petition Obligations, or (2) would not result in a closing on or before the Outside Date. (c) In the event that Borrower has met the Filing Deadline in accordance with subsection (b) above, Borrower may, and in the event that such deadline was met by the filing of Capital Event Pleadings after December 1, 2012, shall, extend the Outside Date by up to 30 days by paying to Lender, on or before the date on which such Outside Date would otherwise occur, an extension fee of $100,000. Such extension fee may not be funded with proceeds of the Post-Petition Loan. (d) Any order obtained by Borrower extending plan filing or solicitation exclusivity shall provide that such exclusivity shall expire as to Lender (and only Lender) upon the occurrence of an Event of Default and delivery of a Termination Notice. For purposes hereof, Consensual Capital Event shall mean a Capital Event, the net proceeds of which shall be received by Borrower on or before the Outside Date, and which shall be sufficient to, and shall be used to, repay in full the Post-Petition Obligations and the Pre-Petition Obligations on or before such date. Stay Relief as to PrePetition Obligations and Forbearance: Pursuant to the Final Order, Lender shall be granted relief from the automatic stay with respect to its rights and remedies under the Pre-Petition Loan Documentation and under applicable state law. Lender shall forbear (the Forbearance) from exercising any of such rights and remedies until the earlier of (a) the Maturity Date, (b) repayment in full of the Post-Petition Obligations, or (c) the occurrence of an Event of Default and delivery of a Termination Notice, unless simultaneously therewith, the Pre-Petition Loan Obligations are repaid in full. Unless Lender shall otherwise consent, the Post-Petition Obligations shall be pre-paid with the net proceeds of any sale of assets by Borrower that is not a Capital Event, but which is outside of the ordinary course of business. Any such prepayment shall be applied to the Post-Petition Obligations in the order set forth in the Post-Petition Loan Documents. Amounts pre-paid in accordance with the foregoing may not be re-borrowed. On the funding date of each Advance, the following conditions precedent shall have been satisfied or waived by Lender: (a) The Final Order shall have been entered and shall be in 6
Mandatory Prepayments:
Conditions Precedent To Advances:
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full force and effect and shall not have been reversed, vacated or stayed and shall not have been amended, supplemented or otherwise modified without the prior written consent of Lender (which consent may be withheld in its sole discretion). (b) All Post-Petition Loan Documents, including, without limitation, the note, security agreement and mortgage or deed of trust, and any otherwise customary or appropriate agreement or document shall have been executed and delivered in form and substance satisfactory to Lender in its sole discretion. (c) Except in the case of a Professional Advance, subject to the conditions set forth above, there shall exist no Event of Default or event that with notice or lapse of time, or both, would constitute an Event of Default. (d) The representations and warranties of Borrower in the Post-Petition Loan Documentation shall be true and correct immediately prior to, and after giving effect to, funding, except to the extent that any such representation or warranty expressly relates only to an earlier date. Events of Default; Remedies: (a) The Post-Petition Loan Documentation shall contain Events of Default comparable to those contained in the PrePetition Loan Documentation, plus the following: (i) The failure to repay the Post-Petition Obligations in full on or before the Maturity Date. (ii) The issuance of an order (i) staying, reversing, modifying (unless such modification will not adversely affect Lender, the DIP Liens, or the rights of Lender under or with respect to the Post-Petition Loan or the Post-Petition Loan Documentation), withdrawing, or vacating the Final Order, or (ii) otherwise adversely affecting Lender, the DIP Liens, or the rights of Lender under or with respect to the Post-Petition Loan or the Post-Petition Loan Documentation, in either case without the consent of Lender. (iii) The dismissal of the Proceeding or the conversion of the Proceeding to chapter 7. (iv) The appointment of a chapter 11 trustee or an examiner with expanded powers in the Proceeding.
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(v) The filing of a plan of reorganization or liquidation by Borrower or, if exclusivity has been terminated, by any other person or entity, that is inconsistent with the terms of the PostPetition Loan Documentation or the Final Order in any material respect. (vi) The granting of relief from the automatic stay to any creditor having a lien on or security interest in any material portion of the DIP Collateral permitting foreclosure or repossession of such material portion of the DIP Collateral. (vii) The failure to meet any Benchmark.
(viii) Expenditure of any amounts not provided for, or in excess of the limits set forth in (subject to the Permitted Variance), the Budget, except to the extent otherwise consented to by Lender. (ix) (1) The filing by Borrower of any motion seeking to use Cash Collateral in a manner inconsistent the Post-Petition Loan Documentation or the Final Order, or the granting of any such motion filed by any other person or entity, or (2) the filing by any person or entity of any Capital Event Pleading, other than by Borrower in accordance with the requirements of the PostPetition Loan Documents, or as otherwise consented to by Lender. (b) Upon the occurrence of an Event of Default, Lender may deliver to Borrower a notice of termination (a "Termination Notice"), whereupon any obligation to make further Advances (except Professional Advances as provided above) shall terminate, the Forbearance shall terminate, and Lender shall be entitled to exercise all of its rights and remedies with respect to the Post-Petition Obligations, the Pre-Petition Obligations, and the collateral therefor as provided under the Post-Petition Loan Documents, the Pre-Petition Loan Documents, the Final Order, and applicable law. Representations and Warranties: The Post-Petition Loan Documentation shall contain representations and warranties concerning the Property comparable to those contained in the Pre-Petition Loan Documentation, subject to such changes as are required by or consistent with the commencement of the Proceeding. The Post-Petition Loan Documentation shall contain covenants comparable to those contained in the Pre-Petition Loan 8
Affirmative and Negative Covenants:
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Documentation, plus such other covenants as are consistent with Borrowers obligations with respect to the Benchmarks, use of Advances, compliance with the Budget, and the other terms and conditions set forth herein, subject to such changes as are required by or consistent with the commencement of the Proceeding. Consents: Amendments, waivers and modifications to the terms of the PostPetition Loan and to the Post-Petition Loan Documentation will require the written consent of Lender. (a) Borrower and Lender have agreed upon a budget for the operation and maintenance of the assets of Borrower and for the conduct of the Proceeding until January 31, 2013, a copy of which is attached hereto (the Budget). (b) Subject to execution by Lender of a confidentiality and non-disclosure agreement reasonably acceptable to Lender and Borrower, Borrower (i) shall provide Lender with copies of all non-privileged reports, information and other materials reasonably requested from time to time by Lender related to Borrower or its assets, (ii) shall cooperate with and permit representatives of Lender to have access to Borrowers golf courses and other assets, non-privileged records, management personnel, and non-privileged or non-confidential meetings related to Borrower or its assets, and (iii) shall cause its officers and other personnel to make themselves available to and to cooperate reasonably with the representatives of Lender and their reasonable information requests related to Borrower and its assets. Expenses: Borrower shall be obligated, subject to such Bankruptcy Court approval as may be required, for all reasonable out of pocket costs and expenses of Lender (including, without limitation, reasonable fees, expenses and disbursements of Ballard Spahr LLP, and Garfield & Hecht P.C. as counsel to Lender) in connection with (a) negotiating, documenting, and closing the Post-Petition Loan and the Post-Petition Loan Documentation, and (b) the enforcement of any Lender's rights and remedies under the PostPetition Loan Documentation or the Interim or Final Orders, which obligations shall be part of the Post-Petition Obligations and secured by the DIP Liens. Such amounts shall be due and payable on the Maturity Date, if not sooner repaid by consummation of a Capital Event or otherwise. (a) Lender shall provide such cooperation as is reasonable requested by Borrower in connection with obtaining Court 9
Budget and Provision of Financial and Other Information:
Lender Cooperation; Right of First Refusal:
Case:12-24882-ABC Doc#:402-1 Filed:08/30/12 10
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approval of the Post-Petition Loan Documents and any Capital Event Pleadings filed by Borrower in compliance with the terms of the Post-Petition Financing Documentation and the Final Order. (b) In the event that Lender receives an offer (an "Offer") to purchase from Lender the Pre-Petition Obligations, the PostPetition Obligations, or both (such obligations as are the subject of such Offer, the "Subject Obligations") that is acceptable to Lender, Lender shall provide written notice thereof to Borrower and David Wilhelm, either of whom or their designee shall than have the right, within 10 days of such notice, to purchase the Subject Obligations on the same terms and conditions as contained in such Offer. State of Colorado.
Governing Law:
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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLORADO
In re Chapter 11
CORDILLERA GOLF CLUB, LLC1 dba The Club at Cordillera,

Debtor.
Case No. 12-24882-ABC
FINAL ORDER PURSUANT TO 11 U.S.C. 105, 361, 362, 363(c), 364(c), 364(d), AND 364(e) AND FED. R. BANKR. P. 2002, 4001 AND 9014 (I) AUTHORIZING DEBTOR TO OBTAIN POST-PETITION SECURED FINANCING, (II) GRANTING SECURITY INTERESTS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, AND (III) AUTHORIZING THE USE OF CASH COLLATERAL AS PROVIDED HEREIN Upon the motion (the "Motion")2 of above captioned debtor and debtor in possession, Cordillera Golf Club, LLC (the "Debtor"), seeking an order of this Court pursuant to sections 105, 363(c) and 364(c), (d) and (e) of Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"), Rules 2002, 4001, and 9014 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and Local Rules 4001-3 and 9013-1 (a) authorizing the Debtor to incur postpetition indebtedness in the amount of up to $3,239,955 (the Maximum Amount) on a final basis substantially on the terms and conditions set forth herein and in certain loan documentation to be executed and delivered by the Debtor; (b) granting priming security interests and superpriority claims; and (c) granting related relief; and upon the entire record made at the hearing on September 17, 2012 (the "Hearing"); and this Court having found good and sufficient cause appearing therefor,
The Debtor in this chapter 11 case, and the last four digits of its employer tax identification number, is XXXXX1317. The corporate headquarters address for the Debtor is 97 Main Street, Suite E202, Edwards, Colorado 81632.
2
Unless otherwise defined herein, capitalized terms have the meanings ascribed to them in the Motion.
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IT IS HEREBY FOUND that: A. On June 26, 2012 (the "Petition Date"), the Debtor filed a voluntary petition for
relief with this Court under Chapter 11 of the Bankruptcy Code, thereby initiating the abovecaptioned bankruptcy case (the Case). The Debtor is continuing to manage its property and operate its business as a debtor in possession pursuant to Bankruptcy Code 1107 and 1108. B. On July 27, 2012, this Court entered its Interim Order Pursuant to 11 U.S.C.
105, 361, 362, 363(c), 364(c), 364(d), and 364(e) and Fed. R. Bankr. P. 2002, 4001 and 9014 (i) Authorizing Debtor to Obtain Post-Petition Secured Financing, (ii) Granting Security Interests and Superpriority Administrative Expense Claims, and (iii) Authorizing the Use of Cash Collateral as Provided Herein, Dkt. #270 (the "Interim Order"), pursuant to which this Court approved the borrowing by the Debtor of up to $587,000 (the "Interim DIP Loan") from Alpine Bank. C. On August 27, 2012, this Court entered its Order granting the Debtor's Motion to
(a) Extend and Increase Interim Financing and (B) Extend Use of Cash Collateral Under the Terms of the Prior Order, Dkt. #393, extending the term of the Interim DIP Loan through September 14, 2012, and increasing the approved amount thereof to $677, 000. Use of Cash Collateral (as hereinafter defined) was further extended to September 17, 2012 by consent of the parties claiming an interest therein. As required by the terms thereof, the Interim DIP Loan shall be repaid in full upon closing of, and from the proceeds of, the Final DIP Loan (as hereinafter defined). D. This Court has jurisdiction over this Case and the Motion pursuant to 28 U.S.C.
157(b) and 1334. Consideration of the Motion constitutes a core proceeding as defined in 28 U.S.C. 157(b)(2).
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E.
Notice of the Hearing and the relief requested in the Motion has been given to (i)
the Office of the U. S. Trustee, (ii) counsel to Alpine Bank (in its capacity as the provider of DIP financing pursuant hereto, the DIP Lender, and in its capacity as pre-petition secured lender Alpine), (iii) counsel to David Wilhelm (Wilhelm), (iv) all other known secured creditors; (v) counsel to the official committee of unsecured creditors appointed pursuant to Section 1102 of the Bankruptcy Code in the Case (the "Committee"); (vi) all parties requesting notice pursuant to Bankruptcy Rule 2002; and (vii) the Cordillera Metropolitan District and any other governmental authority to whom the Debtor owes or may owe obligations for the payment of tax assessments (collectively, the Notice Parties). Given the nature and the relief sought in the Motion, the foregoing notice of the Hearing and the relief requested in the Motion has been given pursuant to and complies with all applicable provisions of the Bankruptcy Code and the Bankruptcy Rules, including, without limitation, section 102(1) of the Bankruptcy Code and Bankruptcy Rules 2002 and 4001 and was sufficient and adequate. F. The requirements of Rule 4001 of the Federal Rules of Bankruptcy Procedure and
Local Rule 4001-3 have been satisfied. G. The Debtor is seeking authorization to incur final post-petition indebtedness, up to
the Maximum Amount (the "Final DIP Loan"), from the DIP Lender pursuant to the terms hereof and the documentation filed with the Court on September ___, 2012 (Dkt # ___) (the DIP Loan Documents), as the same may be modified, supplemented or amended from time to time as provided herein, and to grant liens, security interests and superpriority claims to the DIP Lender under the terms set forth in this Final Order.
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Findings Regarding the Final DIP Loan H. The Debtor has an immediate need to obtain the Final DIP Loan in order to
permit, among other things, the orderly continuation of the operation of its business, the maintenance of real property that comprises the value of the estate, and to pay insurance and costs of administration. The ability of the Debtor to obtain sufficient working capital and liquidity through the incurrence of the Final DIP Loan is vital to the preservation and maintenance of the value of the estate. I. The DIP Lender is willing to allow the Debtor to obtain financing under the Final
DIP Loan only upon the terms and conditions set forth in this Final Order and the DIP Loan Documents. J. The Debtor is unable on a final basis to procure financing in the form of
unsecured credit allowable under Section 503(b)(1) of the Bankruptcy Code, as an administrative expense under Section 364(a) or (b) of the Bankruptcy Code, or in exchange for a grant of an administrative expense priority pursuant to Section 364(c)(1) of the Bankruptcy Code, without the grant of liens on assets. The Debtor has been unable to procure the necessary final financing on terms in the aggregate more favorable than the financing offered by the DIP Lender pursuant hereto and to the DIP Loan Documents. K. The terms of the DIP Loan Documents and this Final Order are fair, just and
reasonable under the circumstances, are ordinary and appropriate for secured financing to debtors-in-possession, reflect the Debtor's exercise of its prudent business judgment consistent with its fiduciary duties, and are supported by reasonably equivalent value and fair consideration. The terms and conditions of the DIP Loan Documents and this Final Order have been negotiated in good faith and at arms' length and by and among the Debtor and the DIP Lender, with all
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parties being represented by counsel. Any credit extended under the terms of this Final Order shall be deemed to have been extended in good faith by the DIP Lender as that term is used in Section 364(e) of the Bankruptcy Code, and the DIP Lender is and shall be entitled to the full benefits of such section with respect to the Final DIP Loan and the liens, security interests, and administrative priority granted hereby. L. The relief requested in the Motion, to the extent granted herein, is necessary,
essential and appropriate, and is in the best interest of and will benefit the Debtor, its creditors and its estate, as its implementation will, among other things, provide the Debtor with the necessary liquidity to (a) minimize disruption to the Debtor's business and on-going operation, (b) preserve and maximize the value of the Debtor's estate for the benefit of all the Debtor's creditors, and (c) avoid immediate and irreparable harm to the Debtor, its creditors, its businesses, its employees and its assets. Findings Regarding Prepetition Secured Debt M. Wilhelm, the Rush Family Trust, and Alpine have consented to the priming
security interests, superpriority claim, and other rights granted to the DIP Lender in this Final Order and the DIP Loan Documents. Findings Regarding Use of Cash Collateral N. The DIP Loan proceeds are not the cash collateral, as defined in section 363(a) of
the Bankruptcy Code (Cash Collateral), of Alpine, Wilhelm, or the Rush Family Trust. In any event, Alpine, Wilhelm, and the Rush Family Trust have consented to the use of the DIP Loan proceeds in accordance with this Final Order and the DIP Loan Documents. O. Subject to the provisions of this Final Order and the DIP Loan Documents, the
DIP Lender consents, under Bankruptcy Code 363(c)(2), to the Debtor's use of Cash Collateral 5
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that is subject to the DIP Liens (as hereinafter defined) or the Superpriority Claim (as hereinafter defined) in accordance with the Budget (as hereinafter defined) and on the terms set forth herein and in the DIP Loan Documents. P. Subject to the provisions of the Interim Order (A) Authorizing Debtors Use of
Cash Collateral, (B) Granting Adequate Protection, and (C) Scheduling Final Hearing Pursuant to Bankruptcy Rule 4001, dated June 27, 2012 (as such order is amended and made final hereby and may be amended from time to time hereafter in accordance with the terms thereof or further order of the Court with the consent of Wilhelm and Alpine, the Cash Collateral Order), Alpine and Wilhelm have consented to use of Cash Collateral in accordance with the Budget and on the terms set forth therein and herein. To the extent required, the Rush Family Trust also consents on the same terms. Based upon the foregoing findings and conclusions, and upon the record made before this Court at the Hearing and the record in the Case, and good and sufficient cause appearing therefor, IT IS HEREBY ORDERED that: 1. The Motion is hereby granted in accordance with Bankruptcy Rule 4001(c)(2) to
the extent provided in this Final Order. This Final Order shall be referred to herein as the "Final Order." Final DIP Loan 2. The terms and conditions of the Final DIP Loan, as set forth herein and in the DIP
Loan Documents, are hereby approved in all respects and made fully enforceable against the Debtor and the DIP Lender.
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3.
The Debtor is hereby authorized to request advances ("Advances") under the
Final DIP Loan, pursuant to this Final Order and the DIP Loan Documents and in accordance with the procedures set forth in such documents, up to the Maximum Amount during the period from the date of this Final Order through the "Maturity Date," which shall be the earlier of (a) the effective date, closing, or other consummation of a Capital Event (as hereinafter defined), (b) acceleration of the Final DIP Loan by the DIP Lender, as hereinafter provided, after the occurrence of an Event of Default (as hereinafter defined) that is not cured as provided in the DIP Loan Documents or waived, or (c) January 31, 2013 (the Outside Date). The Final DIP Loan, and all other Post-Petition Obligations (as hereinafter defined), shall be due and payable in full on the Maturity Date; provided, that for such purpose, and not for the purpose of the making of Advances, the Outside Date may be extended for one thirty (30) day period on the terms and conditions set forth in the DIP Loan Documents. For purposes hereof, Capital Event," whether effected by motion or by a plan of reorganization or liquidation (Capital Event Pleadings), shall mean (i) a sale of any material portion of the assets of the Debtor (including, without limitation, the sale of one or more of the Debtors golf courses), (ii) an equity investment in, or the purchase of an equity interest of, the the Debtor or a successor entity under a plan (including, without limitation, the issuance and purchase of (x) warrants to acquire any such equity interest, or (y) debt convertible into any such equity interest), or (iii) the incurrence by the Debtor of any debtor-in-possession or reorganization financing from any source other than the DIP Lender; provided, that (A) the incurrence in the ordinary course of business of trade or similar debt or debt that is secured by a Permitted Encumbrance, or (B) equity investments by any existing direct or indirect equity holder of the the Debtor made during the course of the Case to fund working capital shortfalls shall not be deemed to be a Capital Event.
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4.
Subject to the terms and conditions contained in this Final Order and the DIP
Loan Documents, the Debtor shall use the proceeds of the Final DIP Loan solely for (a) repayment of the Interim DIP Loan on the closing date of the Final DIP Loan (which repayment shall be effected by the DIP Lender by making an Advance directly to itself for such purpose), (b) the payment of interest accruing on the Final DIP Loan in accordance with the DIP Loan Documents, (c) the payment of disbursements specifically identified in the budget attached to the Interim Order that were not previously funded by advances from the Interim DIP Loan, subject to the variances permitted by such Interim Order, and (d) the payment of disbursements specifically identified in the budget attached as Exhibit A to this Final Order (as the same may be supplemented or revised from time to time with (x) the approval of the DIP Lender, and (y) the consent of the Committee or order of the Court, the "Budget"), subject to the following permitted variances (the "Permitted Variances"): i. expenditures budgeted to be spent during a certain period, but not actually spent in such period, may be spent in later periods; ii. as to each line item in the Budget, total actual expenditures may exceed total budgeted expenditures by up to 10% (or such other greater amount as the DIP Lender and the Committee may consent to, or as the Court, with the consent of the DIP Lender, may authorize); and iii. the variance between total actual and total budgeted expenditures may not exceed 10% in the aggregate (or such other greater amount as the DIP Lender and the Committee may consent to, or as the Court, with the consent of the DIP Lender, may authorize).
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5.
The proceeds of the Final DIP Loan shall not be used to pay professional fees or
expenses of any party to assert or join in any claim, counterclaim, action, proceeding, application, motion, objection, defense or other contested matter seeking (a) to modify (without the consent of the DIP Lender), or to object to, contest, or raise any defense to the validity, perfection, priority, extent, or enforceability of, (i) any amount due or obligation owed under or with respect to the Final DIP Loan or the rights and remedies of the DIP Lender with respect thereto (the "Post-Petition Obligations"), (ii) the DIP Liens or the Superpriority Claim, (ii) any amount due or obligation owed under or with respect to the pre-petition obligations of the Debtor to Alpine or the rights and remedies of Alpine with respect thereto (the Pre-Petition Obligations), or (iv) the liens and security interests (the "Pre-Petition Liens") granted by the documentation evidencing the Pre-Petition Obligations (the Pre-Petition Loan
Documentation), (b) to assert any claims, defenses, or causes of action against the DIP Lender, Alpine, or their respective agents, affiliates, subsidiaries, directors, officers, employees, representatives, attorneys or advisors, or successors or assigns (in such capacities), (c) to prevent, hinder, or otherwise delay the DIP Lenders or Alpine's assertion or enforcement of its rights and remedies provided under (i) the DIP Loan Documents, (ii) this Final Order, or (iii) after expiration of the Forbearance (as hereinafter defined), the Pre-Petition Loan Documentation, (d) to dismiss the Case or to convert the Case to a case under Chapter 7 of the Bankruptcy Code, or (e) to otherwise take any action, the result of which is or would give rise to an Event of Default (each of the foregoing, a "Prohibited Use"). 6. Except as provided in the Budget and permitted hereby, no costs or expenses of
administration which have or may be incurred in the Case at any time shall be charged against the DIP Lender, its claims, or the DIP Collateral, pursuant to Section 506(c) of the Bankruptcy
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Code or otherwise, without the prior written consent of the DIP Lender, and no such consent shall be implied from any other action, inaction, or acquiescence by the DIP Lender. DIP Loan Documents 7. In furtherance of the foregoing, the Debtor is authorized and directed to do and
perform all acts, and to make, execute and deliver all instruments and documents, that may be reasonably required or necessary for the Debtor's performance hereunder, including, without limitation, execution of the DIP Loan Documents evidencing and incorporating the terms hereof and the other terms and conditions of the Final DIP Loan, and any such acts, instruments, and documents are hereby approved. Whether or not hereinafter set forth in whole or in part, the provisions of the DIP Loan Documents shall be deemed incorporated as part of this Final Order, and made an order of this Court, as though fully set forth herein. 8. Prior to execution thereof, the Debtor and the DIP Lender, without further
approval or order of this Court, may make such conforming or other changes to the DIP Loan Documents as are necessary to make such documents consistent with the terms hereof, or which otherwise are not inconsistent herewith and do not materially adversely impact the rights of the Debtor hereunder or thereunder. Thereafter, the Debtor and the DIP Lender may amend, modify, supplement or waive any of the terms and conditions of the Final DIP Loan, including, without limitation, to extend the maturity thereof, increase the amount thereof, or amend or modify the Budget (an "Amendment") without further approval or order of the Court so long as (a) such Amendment is consented to by the Committee, Wilhelm, and the Rush Family Trust, (b) the Debtor files the Amendment with the Court and gives notice thereof to the Notice Parties (an Amendment Notice), and (c) no objection to the Amendment is filed with the Court within two (2) business days from the later of the date the Amendment Notice is served or the date the
10
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Amendment is filed with the Court in accordance with this paragraph. Nothing herein shall preclude the Debtor from seeking an order of the Court with respect to an Amendment in the event that Wilhelm, the Rush Family Trust, or the Committee declines to consent thereto, or for any other reason. Superpriority Claim 9. To secure the prompt payment and performance of any and all of the Debtor's
Post-Petition Obligations, the DIP Lender is hereby granted, effective as of the date of this Final Order, pursuant to section 364(c)(1) of the Bankruptcy Code, a claim (the "Superpriority Claim") with priority over any and all administrative expenses or other claims of the kind specified in, or ordered pursuant to, sections 105, 326, 327, 328, 330, 331, 503(b), 506(c), 507(a), the "equity" exception in section 552(b), 726, or any other provision of the Bankruptcy Code (whether incurred in this Case or in any successor cases) equal to the amount of PostPetition Obligations authorized by this Final Order. DIP Liens 10. To secure the prompt payment and performance of any and all Post-Petition
Obligations, effective as of the date of this Final Order, pursuant to Bankruptcy Code sections 364(c)(2) and 364(d)(1), the DIP Lender shall have, and is hereby granted, liens, security interests and mortgages in all of the assets of the Debtor (collectively, the "DIP Collateral"), excluding only (a) claims and recoveries under sections 544-550 of the Bankruptcy Code (the Avoidance Actions), (b) the Retainer Account (as hereinafter defined) or Advances deposited therein, except to the extent, if any, that after payment of all allowed fees and expenses for which a Professional Fee Advance (as hereinafter defined) would have been available under the Final DIP Loan, a balance remains in such account, (c) the "Retainers," as defined in the Interim
11
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Order, and (d) payroll and fiduciary deposit accounts required by law, and any assets which are not assignable by the Debtor as a matter of law, including under the Bankruptcy Code, which security interests, liens and mortgages shall be priming, first priority liens and mortgages (collectively, the "DIP Liens"), subject only to the liens and security interests listed on Exhibit B to this Final Order (collectively, the "Permitted Senior Liens"). 11. Pursuant to Bankruptcy Code section 364(d)(1), the DIP Liens that are granted on
the DIP Collateral shall be perfected first priority, senior priming liens and mortgages, subject and subordinate only to the Permitted Senior Liens, and all other security interests, liens and mortgages on the DIP Collateral shall be primed by and made subject and subordinate to the DIP Liens. The DIP Liens granted in favor of the DIP Lender in all of the DIP Collateral shall be perfected without the recordation of any Uniform Commercial Code financing statements, notices of lien or other instruments of mortgage or assignment. 12. Any of the DIP Liens which are subject to Permitted Senior Liens shall be DIP
Liens junior in right and interest only to the Permitted Senior Liens (such junior liens, the "Second Liens"). The Second Liens are part of the DIP Liens, are secured by the DIP Collateral, and are automatically perfected as provided in Paragraph 16 hereof. 13. The DIP Lender shall have such rights and remedies with respect to the DIP
Collateral as are set forth in the DIP Loan Documents and as are otherwise available under applicable law. 14. The DIP Liens shall not be subject or subordinate to: (i) any lien or security
interest that is avoided and preserved for the benefit of the Debtor and its estate under section 551 of the Bankruptcy Code, or (ii) any liens arising after the Petition Date including, without limitation, any liens or security interests granted in favor of any federal, state, municipal, or other
12
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governmental unit, commission, board or court for any liability of the Debtor, except in each case the Permitted Senior Liens. 15. Notwithstanding anything to the contrary in this Final Order, Avoidance Actions,
other than avoidance actions under section 549 of the Bankruptcy Code to the extent any portion of the DIP Collateral is transferred in a manner not authorized by the Court or the Bankruptcy Code, the Retainer Account (except to the extent, if any, that after payment of all allowed fees and expenses for which a Professional Fee Advance would have been available under the Final DIP Loan, a balance remains in such account), and the Retainers do not constitute DIP Collateral. 16. This Final Order shall be sufficient and conclusive evidence of the priority,
perfection and validity of the DIP Liens, effective as of the Petition Date, without any further act and without regard to any other federal, state, or local requirements or law requiring notice, filing, registration, recording or possession of the DIP Collateral, or other act to validate or perfect such security interest or lien, including without limitation, control agreements with the Debtor's existing U.S. Bank commercial accounts or with any other financial institution(s) holding a blocked account or other depository account consisting of DIP Collateral (a "Perfection Act"). Notwithstanding the foregoing, if the DIP Lender shall, in its sole discretion, elect for any reason to file, record, or otherwise effectuate any Perfection Act, the DIP Lender is authorized to perform such act, and the Debtor is authorized and directed to perform such act to the extent necessary or required by the DIP Lender, which act or acts shall be deemed to have been accomplished as of the date and time of entry of this Interim Order notwithstanding the date and time actually accomplished, and in such event, the subject filing or recording office is authorized to accept, file, or record any document in regard to such act in accordance with
13
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applicable law. The DIP Lender may choose to file, record, or present a certified copy of this Final Order in the same manner as a Perfection Act, which shall be tantamount to a Perfection Act, and, in such event, the subject filing or recording office is authorized to accept, file, or record such certified copy of this Final Order in accordance with applicable law. Should the DIP Lender so choose and attempt to file, record, or perform a Perfection Act, no defect or failure in connection with such attempt shall in any way limit, waive or alter the validity, enforceability, attachment, or perfection of the post-petition liens and security interests granted herein by virtue of the entry of this Final Order. 17. Notwithstanding anything to the contrary contained in any pre-petition agreement,
contract, lease, document, note, or instrument to which the Debtor is a party or under which the Debtor is obligated, any provision that restricts, limits, or impairs in any way the Debtor from granting the DIP Lender security interests in or liens upon any of the Debtor's assets or properties (including, among other things, any anti-lien granting or anti-assignment clauses in any leases or other contractual arrangements to which the Debtor is a party) under the DIP Loan Documents or this Final Order, or otherwise entering into and complying with all of the terms, conditions and provisions hereof, shall not (a) be effective and/or enforceable against the Debtor of the DIP Lender, or (b) adversely affect the validity, priority or enforceability of the liens, security interests, claims, rights, priorities and/or protections granted to the DIP Lender pursuant to this Final Order or the DIP Loan Documents to the maximum extent permitted under the Bankruptcy Code and other applicable law. Special Provisions Regarding Professional Fees 18. Notwithstanding the occurrence of an Event of Default (as hereinafter defined) or
passage of the Maturity Date, Lender, subject to the Maximum Amount, shall make Advances to
14
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pay the Court-approved fees and expenses of professionals in the Case (a "Professional Advance"), so long as such fees and expenses were (i) incurred prior to the Maturity Date, (ii) have not arisen in connection with any Prohibited Use, (iii) do not exceed amounts set forth in the Budget for such fees and expenses, subject to the Permitted Variance, and (iv) to the extent incurred after the occurrence of an Event of Default and delivery of a Termination Notice (as hereinafter defined), do not exceed $100,000 in the aggregate. Nothing contained herein shall prohibit or restrict the ability of the DIP Lender to object to approval of any such fees and expenses on any available grounds. 19. The DIP Lender in its sole discretion may at any time and from time to time pre-
Advance anticipated Professional Advances into a retainer account (the "Retainer Account") for the applicable professional or professionals, and any such amounts so advanced (i) to the extent thereof, shall be used in lieu of Professional Advances for payment of the fees and expenses of such professional or professionals, and (ii) shall be part of the Post-Petition Obligations for all purposes, and secured by the DIP Liens. Automatic Stay 20. The automatic stay of section 362(a) of the Bankruptcy Code is hereby modified
to the extent necessary (a) to permit the Debtor to grant the DIP Liens and to perform the Debtor's obligations under the DIP Loan Documents, and (b) following the occurrence of and Event of Default and delivery of a Termination Notice, to permit the DIP Lender to exercise all rights and remedies provided for hereunder or under the DIP Loan Documents. 21. The automatic stay of section 362(a) of the Bankruptcy Code is hereby
immediately terminated to permit Alpine and its successors and assigns, to exercise its nonbankruptcy rights and remedies with respect to the Pre-Petition Liens in the collateral covered
15
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thereby (the "Pre-Petition Collateral") in accordance with the Pre-Petition Loan Documentation and applicable non-bankruptcy law. Notwithstanding the foregoing, Alpine shall forbear (the "Forbearance") from exercising any of such rights and remedies until the earlier of (a) the Maturity Date, (b) repayment in full of the Post-Petition Obligations, or (c) the occurrence of an Event of Default and delivery of a Termination Notice, unless simultaneously therewith, the PrePetition Loan Obligations are repaid in full. So long as the Case is pending, nothing herein shall be deemed to permit Alpine to pursue any deficiency, if any, remaining after any exercise of its rights in the Pre-Petition Collateral against the Debtor or its estate except in accordance with the Bankruptcy Code's claims allowance and distribution process or further order of this Court. Events of Default 22. Unless the DIP Lender shall have provided prior written consent, or all Pre-
Petition Obligations and Post-Petition Obligations shall have been indefeasibly paid in full in cash, each of the following shall constitute an "Event of Default":
(a)
The failure to repay the Post-Petition Obligations in full on or before the
Maturity Date.
(b)
The issuance of an order (i) staying, reversing, modifying (unless such
modification will not adversely affect the DIP Lender, the DIP Liens, or the rights of DIP Lender under or with respect to the Post-Petition Obligations or the DIP Loan Documents), withdrawing, or vacating the Final Order, or (ii) otherwise adversely affecting Lender, the DIP Liens, or the rights of DIP Lender under or with respect to the Post-Petition Obligations or the DIP Loan Documents, in either case without the consent of Lender.
(c)
The dismissal of the Case or the conversion of the Case to chapter 7.
16
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(d)
The appointment of a chapter 11 trustee or an examiner with expanded
powers in the Case.

(e)
The filing of a plan of reorganization or liquidation by the Debtor or, if
exclusivity has been terminated, by any other person or entity, that is inconsistent with the terms of the DIP Loan Documents or this Final Order in any material respect.
(f)
The granting of relief from the automatic stay to any creditor having a lien
on or security interest in any material portion of the DIP Collateral permitting foreclosure or repossession of such material portion of the DIP Collateral.
(g)
The failure to meet the restructuring covenants set forth in the DIP Loan
Documents.
(h)
Expenditure of any amounts not provided for, or in excess of the limits set
forth in (subject to the Permitted Variance), the Budget, except to the extent otherwise consented to by the DIP Lender.
(i)
(i) The filing by the Debtor of any motion seeking to use Cash Collateral
in a manner inconsistent the DIP Loan Documents, this Final Order, or the Cash Collateral Order, or the granting of any such motion filed by any other person or entity, or (ii) the filing by any person or entity of any Capital Event Pleading, other than by the Debtor in accordance with the requirements of this Final Order and the Post-Petition Loan Documents, or as otherwise consented to by Lender.
(j)
The occurrence of any other Event of Default as set forth in the DIP Loan
Documents that is not waived or cured as provided therein. 23. Upon the occurrence of an Event of Default, the DIP Lender may deliver to the
Debtor a notice of termination (a "Termination Notice"), whereupon any obligation to make
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further Advances (except Professional Advances as provided above) shall terminate, the Forbearance shall terminate, and the DIP Lender and Alpine, as applicable, shall be entitled to exercise all of its rights and remedies with respect to the Post-Petition Obligations, the PrePetition Obligations (limited, as set forth above to the Pre-Petition Collateral), and the collateral therefor as provided under the DIP Loan Documents, the Pre-Petition Loan Documentation, this Final Order, and applicable law. Miscellaneous 24. Unless and until the Post-Petition Obligations and the Pre-Petition
Obligations are unconditionally and indefeasibly repaid in full in cash, (a) the protections afforded to the DIP Lender and Alpine, respectively, under this Final Order and under the DIP Loan Documents, as applicable, shall survive the entry of any order confirming a plan of reorganization or converting the Case into a case under chapter 7 of the Bankruptcy Code, and (b) the DIP Liens and the Superpriority Claim shall continue and shall maintain their priority as provided by this Final Order. 25. In no event shall the DIP Lender be subject to the equitable doctrine of
"Marshaling" or any similar doctrine with respect to the DIP Collateral as it relates to the PostPetition Obligations. 26. This Court shall retain jurisdiction with respect to all matters arising from or
related to the implementation of this Final Order. 27. Other than as expressly set forth in this Final Order, no party shall be limited in
the actions or positions it may take, oppose, or support, consistent with such partys rights under applicable law, court orders, and agreements.
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28.
The Cash Collateral Order is hereby amended to (a) extend the term thereof
through and including the Outside Date, (b) to substitute the Budget for the budget attached to the Cash Collateral Order, and (c) to make such order a final order for use of Cash Collateral. 29. Notwithstanding the possible applicability of Bankruptcy Rules 4001(a)(3),
6004(h), 7062, 9014, or other rules, the terms and conditions of this Final Order shall be immediately effective and enforceable upon its entry. 30. The Debtor shall promptly mail copies of this Final Order to the Notice Parties.
Dated: September ___, 2012
A. BRUCE CAMPBELL UNITED STATES BANKRUPTCY JUDGE
19
CordilleraGolfClubLLC ForecastedCashFlowBudget FortheWeeksEndedSeptember7,2012February1,2013
Case:12-24882-ABC Doc#:402-2 Filed:08/30/12 Entered:08/30/12 12:29:46 Page20 of AttorneyClientPrivilegedForinternaluseonly 23
Exhibit A
9/7/12 Revenues: MembershipDuesSocial&Golf GolfRevenue(greens,cartfees,rental,other) GolfShopSales FoodandBeverage OtherRevenue TotalRevenues CostofGoods:F&B Food&BeverageOperations GolfOperations GolfCourseMaintenance OtherAmenities/Misc.Expense General/Administrative/Management BuildingMaintenance Utilities,Insurance,POA PropertyTaxes TotalOperationalDisbursements CashFlowBeforeCapitalExpenditures CapitalExpenditures CashFlowFromOperations Restructuring: PrePetitionInterest DIPFees Debtor,Legal,Restructuring,&FinancialAdvisors USTFees UtilityDeposits CapitalEvent MarketingCosts PrincipalPaymenttoDIPLenderandAlpineBank TotalRestructuringCosts TotalCashFlowBeforeDIP BeginningCash TotalCashFlowBeforeDIP DIPInterest DIPLoanDraw EndingCash 14 1 2 3 4 5
9/14/12
9/21/12
9/28/12
10/5/12
10/12/12
10/19/12
10/26/12
11/2/12
11/9/12
11/16/12
11/23/12
$39,500 $11,500 $ 1,200 $4,500 $ $ $ $ $ $ $ $ 34,114 7,500 9,600 90,714 34,639 7,500 9,150 62,789 34,114 7,500 9,000 51,814 33,939 7,500 10,000 55,939 18,125 5,000 8,200 31,325 14,500 5,000 8,000 27,500 13,625 5,000 8,000 26,625 8,626 5,000 4,800 18,426 6,585 1,250 4,200 12,035 1,965 1,250 4,000 7,215 10,000 10,000 6,800 6,800
6 7 8 9 10 11 12 13
(26,907) (22,838) (45,912) (3,837) (36,816) (5,615) (40,925) (182,850)
(4,000) (12,072) (30,056) (800) (21,727) (9,793) (41,845) (120,293)
(16,432) (12,938) (47,812) (2,837) (25,715) (20,615) (8,671) (135,020)
(6,000) (36,380) (30,057) (800) (19,727) (12,793) (9,741) (115,498)
(16,432) (8,237) (38,912) (1,837) (36,813) (10,615) (32,659) (145,505)
(4,000) (34,059) (33,886) (800) (5,304) (9,266) (9,741) (97,056)
(16,432) (5,737) (16,688) (37,715) (5,615) (8,671) (90,858)
(1,000) (8,041) (33,886) (800) (15,303) (8,266) (9,741) (77,037)
(12,432) (3,446) (14,788) (26,813) (3,615) (6,461) (431,890) (499,445)
(250) (6,858) (10,813) (800) (2,577) (8,783) (32,659) (62,740)
(9,750) (3,446) (16,688) (27,715) (3,615) (8,671) (69,885)
(6,250) (6,858) (10,813) (800) (2,578) (8,784) (6,461) (42,544)
(92,136) (57,504) (83,206) (59,559) (114,180) (69,556) (64,233) (58,611) (487,410) (55,525) (59,885) (35,744) (66,000) (11,000) (92,136) (57,504) (149,206) (59,559) (125,180) (69,556) (64,233) (58,611) (487,410) (55,525) (59,885) (35,744)
15 16 18 19 20 21 24 22
(510,000) (510,000)
(5,000) (5,000)
(5,000) (5,000)
(5,000) (5,000)
(5,000) (5,000)
(110,000) (10,400) (120,400)
(5,000) (5,000)
(5,000) (5,000)
(110,000) (110,000)
(92,136) (57,504) (659,206) (64,559) (130,180) (74,556) (69,233) (179,011) (492,410) (60,525) (59,885) (145,744) 40,000 (92,136) (2,621) 94,757 $ 40,000 40,000 (57,504) 57,504 $ 40,000 40,000 (659,206) 659,206 $ 40,000 40,000 (64,559) 64,559 $40,000 40,000 (130,180) (4,954) 135,134 $ 40,000 40,000 (74,556) 74,556 $ 40,000 40,000 (69,233) 69,233 $ 40,000 40,000 (179,011) 179,011 $ 40,000 40,000 (492,410) (8,014) 500,424 $ 40,000 40,000 (60,525) 60,525 $40,000 40,000 (59,885) 59,885 $40,000 40,000 (145,744) 145,744 $40,000
17 23
Printedon8/21/2012at9:28AM
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DRAFTSubjecttoChange
CordilleraGolfClubLLC ForecastedCashFlowBudget FortheWeeksEndedSeptember7,2012February1,2013
Case:12-24882-ABC Doc#:402-2 Filed:08/30/12 Entered:08/30/12 12:29:46 Page21 of AttorneyClientPrivilegedForinternaluseonly 23
11/30/12 Revenues: MembershipDuesSocial&Golf GolfRevenue(greens,cartfees,rental,other) GolfShopSales FoodandBeverage OtherRevenue TotalRevenues CostofGoods:F&B Food&BeverageOperations GolfOperations GolfCourseMaintenance OtherAmenities/Misc.Expense General/Administrative/Management BuildingMaintenance Utilities,Insurance,POA PropertyTaxes TotalOperationalDisbursements CashFlowBeforeCapitalExpenditures CapitalExpenditures CashFlowFromOperations Restructuring: PrePetitionInterest DIPFees Debtor,Legal,Restructuring,&FinancialAdvisors USTFees UtilityDeposits CapitalEvent MarketingCosts PrincipalPaymenttoDIPLenderandAlpineBank TotalRestructuringCosts TotalCashFlowBeforeDIP BeginningCash TotalCashFlowBeforeDIP DIPInterest DIPLoanDraw EndingCash 14 1 2 3 4 5
12/7/12
12/14/12
12/21/12
12/28/12
1/4/13
1/11/13
1/18/13
1/25/13
2/1/13
Total
$ $ $ $ $ $ $ 100,000 $ 100,000 $ 100,000 $125,000 $481,700 6,000 6,000 6,000 6,000 10,800 10,800 12,000 12,000 12,000 12,000 12,000 12,000 12,000 112,000 12,000 112,000 12,000 112,000 12,000 137,000 200,232 52,500 198,550 932,982
6 7 8 9 10 11 12 13
(22,182) (3,446) (14,787) (37,715) (3,615) (6,461) (88,206)
(6,250) (8,581) (5,375) (800) (13,933) (8,841) (32,659) (76,439)
(22,182) (3,446) (14,788) (32,715) (3,615) (10,191) (86,937)
(6,250) (8,581) (7,275) (800) (2,835) (8,841) (8,671) (43,253)
(22,182) (3,445) (14,787) (37,715) (3,615) (10,191) (91,935)
(6,250) (8,581) (5,374) (800) (15,496) (8,841) (10,191) (55,533)
(22,182) (3,446) (14,788) (25,715) (3,615) (32,659) (102,405)
(6,250) (8,581) (7,275) (800) (16,396) (8,841) (8,671) (56,814) 55,186 55,186
(22,182) (3,445) (14,788) (35,713) (3,615) (10,191) (89,934)
(6,250) (3,671) (5,374) (800) (13,933) (8,841) (10,191) (49,060)
(262,045) (216,133) (434,922) (17,311) (490,969) (169,655) (356,322) (431,890) (2,379,246)
(82,206) (70,439) (76,137) (31,253) (79,935) (43,533) 9,595 (20,000) (102,206) (70,439) (76,137) (31,253) (79,935) (43,533) 9,595
22,066 87,941 (1,446,264) (97,000) 22,066 87,941 (1,543,264)
15 16 18 19 20 21 24 22
(120,000) (120,000)
55,186
(115,000) (6,500) (121,500)
(965,000) (16,900) (30,000) (1,011,900)
(102,206) (70,439) (76,137) (151,253) (79,935) (43,533) 9,595 40,000 (102,206) 102,206 $ 40,000 40,000 (70,439) (14,927) 85,366 $ 40,000 40,000 (76,137) 76,137 $ 40,000 40,000 (151,253) 151,253 $ 40,000 40,000 (79,935) 79,935 $ 40,000 40,000 (43,533) (13,988) 57,521 $ 40,000
(99,434) 87,941 (2,555,164) 5,347 87,941 (18,708) $74,579 40,000 (2,555,164) (63,212) 2,652,955 $74,579
17 23
40,000 49,595 104,781 9,595 55,186 (99,434) $ 49,595 $ 104,781 $5,347
Printedon8/21/2012at9:28AM
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DRAFTSubjecttoChange
Case:12-24882-ABC Doc#:270 Filed:07/27/12 Entered:07/27/12 11:45:00 Page23 of 26 Case:12-24882-ABC Doc#:402-2 Filed:08/30/12 Entered:08/30/12 12:29:46 Page22 of 23
Exhibit B to Final Order Permitted Senior Liens

The following shall be deemed Permitted Senior Liens, unless held by Alpine, Wilhelm, or the Rush Trust, each of which have consented and agreed that any liens, claims, encumbrances, or other interests held by them in the DIP Collateral, as security for the DIP Obligations, are subject and subordinate to the DIP Lien: 1. Matters of record set forth in the title report dated June 20, 2012, issued by Stuart Title, Order No. 958951. 2. The interest of John Deere I Deere Credit, Inc. in the property described in the UCC financing statement filed on November 9, 2009, as and to the extent properly perfected. 3. The interest of Wells Fargo Financial Leasing, Inc. in the property described in the UCC financing statement filed on July 2, 2010, as and to the extent property perfected. 4. Security interests and liens in existence as of the Petition Date in personal property to the extent such security interests and liens are properly perfected. 5. Liens on unearned insurance premiums granted in connection with insurance policy premium financing arrangements with respect to the insurance policies obtained by the Debtor, as and to the extent properly perfected. 6. Liens of any taxing authority to the extent such liens relate back and have priority under applicable non-bankruptcy law. 7. Purchase money security interests (including capital leases) arising after the Petition Date securing the cost of acquisition of the property covered thereby, as and to the extent that such security interests (a) are properly perfected, (b) encumber only the property acquired in connection therewith, and (c) do not exceed in the aggregate amounts for such purpose reflected on the Budget (with permitted variances). 8. The following liens to the extent arising after the Petition Date and perfected: (a) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like liens, arising in the ordinary course of business, in each case only for amounts not yet due or which are being contested in good faith by appropriate proceedings, subject to adequate reserves in accordance with GAAP; (b) liens or rights of setoff of a customary nature on bank, brokerage or similar accounts or on negotiable instruments incurred in the ordinary course of business; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation; (d) other liens imposed by law or that arise by operation of law in the ordinary course of business (other than any such liens granted under Sections 363 or 364 of the Bankruptcy Code), in each case only for amounts not yet due or which are being contested in good faith by appropriate proceedings, subject to adequate reserves in accordance with GAAP, and which are disclosed by the Debtor to the DIP Lender immediately upon arising.
Case:12-24882-ABC Doc#:270 Filed:07/27/12 Entered:07/27/12 11:45:00 Page24 of 26 Case:12-24882-ABC Doc#:402-2 Filed:08/30/12 Entered:08/30/12 12:29:46 Page23 of 23
Nothing contained herein shall constitute an admission of or with respect to the extent, validity or priority of any claim of lien or security interest.
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Case:12-24882-ABC Doc#:402 Filed:08/30/12

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Case No. 12-24882 ABC Chapter 11

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Exhibit 1, pp. 2-4; Final Order, 3-5, 18.

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Post-Petition Lender: The Post-Petition Loan Amount:

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Default Interest Rate:

Commitment Fee: Maturity and Amortization:

Use and Making of Advances; Special Provisions as to Professional Advances:

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Conditions Precedent To Advances:

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Affirmative and Negative Covenants:

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Budget and Provision of Financial and Other Information:

Lender Cooperation; Right of First Refusal:

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