Case Document 290 Filed in TXSB on 02/17/16 Page 1 of 8

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1 Case Document 290 Filed in TXSB on 02/17/16 Page 1 of 8 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION IN RE: SHERWIN ALUMINA COMPANY, LLC et al CASE NO C-11 Joint Administration Debtors J. M. DAVIDSON, INC.'S LIMITED OBJECTION TO EMERGENCY MOTION OF SHERWIN ALUMINA COMPANY, LLC, ET AL., FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING DEBTORS TO (A) OBTAIN POSTPETITON SECURED FINANCING AND (B) UTILIZE CASH COLLATERAL, (II) GRANTING LIENS AND PROVIDING SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) GRANTING ADEQUATE PROTECTION TO PREPETITION LENDER, (IV) MODIFYING THE AUTOMATIC STAY, AND (V) SCEHDULING A PERMANENT FINANCE HEARING PURSUANT TO SECTIONS 105, 361, 362, 363, 364, AND 507 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 4001, AND (Dkt. 26) TO THE HONORABLE JUDGE OF SAID COURT: NOW COMES J. M. DAVIDSON, Inc., (hereinafter "JMD"), a creditor and party in interest herein and files this its Limited Objection to Emergency Motion of Sherwin Alumina Company, LLC, et al, For Entry of Interim And Final Orders (I) Authorizing Debtors to (A) Obtain Postpetition Secured Financing And (B) Utilize Cash Collateral, (II) Granting Liens And Providing Superpriority Administrative Expense Claims, (III) Granting Adequate Protection to Prepetition Lender, (IV) Modifying The Automatic Stay, and (V) Scheduling A Permanent Finance Hearing Pursuant to Sections 105, 361, 362, And 507 of The Bankruptcy Code And Bankruptcy Rules 2002, 4001, And 9014 ("Motion"), and in support thereof would show the Court as follows:

2 Case Document 290 Filed in TXSB on 02/17/16 Page 2 of 8 1. J. M. Davidson, Inc. has in one form or another had the privilege of providing construction services to Sherwin Alumina and its predecessors for over thirty (30) years, all the way back to Reynolds Metals and currently has 13 employees working at the plant. 2. J. M. Davidson, Inc. has filed two affidavits of lien covering different projects and dates as follows and is, therefore, a "M & M Lien Creditor" under the various documents filed by Debtors: A. Pre-petition unpaid billings accrued in the amount of $2,972, related to a capital project managed by Worley Parsons Engineering and on which JMD has filed an affidavit claiming a lien in that amount. The period of services in this category are from June 2015 through November B. Pre-petition unpaid billings accrued in the amount of $563, for operational and maintenance services provided outside of the capital projects from October 20, 2015 through January 10, The lien affidavits claiming liens were properly and timely filed under both Texas law and the Bankruptcy Code. See Tex. Property Code and 11 U.S.C. 362(b)(3) The Debtor s proposed Chapter 11 plan (Document No filed 1/13/16) states that M&M Lien Creditors have an unimpaired claim. A review of the proposed treatment of M&M Lien Creditors claims in the Plan reveals some ambiguity. TheThe language states that they will be (1) paid, (2) reinstated (no specifics about proposed reinstatement terms are provided), or (3) otherwise treated in some unclear fashion at some unknown date such that the claim will allegedly be unimpaired. Plan at These unclear three options proposed for M&M Lien Creditors claims (two of which are entirely unclear) is surprising. The Powerpoint exhibit the Debtor provided to the Court on January 13, 2016 (the same day the Plan was filed) at

3 Case Document 290 Filed in TXSB on 02/17/16 Page 3 of 8 the first day hearings clearly states on page 33 regarding Other Secured Claims that they will be Paid in full. The Plan s non-confirmable proposed treatment of M&M Lien Creditors' lien claims make it all the more important that JMD's interests be protected. 5. The applicable asset purchase agreement, loan agreement, and the other documents filed by the Debtors in this case are lengthy, dense documents that have a multiplicity of defined terms that contain other multiple defined terms. It is clear that the basic concept is that the proposed DIP loan will prime all liens except for either Permitted Priority liens (as stated on page 7 of the Motion), or Priority Permitted Encumbrances as defined on page 20 on the proposed DIP Credit Agreement (it is not clear if there is a distinction between a Priority Permitted Encumbrances ), and a Permitted Priority Lien or whether they are meant to be one of the same but they have inadvertently has been described differently in two different documents). Regrettably, instead of saying something straightforward like The relief requested in this Motion does (or does not) call for the priming of valid mechanic s liens timely filed under Texas law, one is left with the uncertainty described above. These documents do not provide the clarity that M&M Lien Creditors are entitled to that the proposed new loan will not step ahead in any fashion of M&M Lien Creditors mechanics lien claims. The Debtors have not shown that there are grounds to prime M&M Lien Creditors valid mechanics lien claims by having any new DIP loan monies step ahead of M&M Lien Creditors secured claims. 11 U.S.C. 364(d). If any such priming of M&M Lien Creditors are intended by the Motion, M&M Lien Creditors are entitled to adequate protection for their lien claims, and the Debtor has the burden of showing that those lien claims are adequately protected. 11 U.S.C. 364(d)(2). This burden should be an especially heavy one for the Debtor to bear in this case given the close connections between the Debtor, it is pre-petition and post-petition lender. See, e.g., Statement of Financial Affairs

4 Case Document 290 Filed in TXSB on 02/17/16 Page 4 of 8 (Document No. 208) at 101. The typical checks and balances among these parties appear to be lacking in this case. 6. Section 364 (d)(l) of the Bankruptcy Code provides that a court may authorize a Debtor to incur postpetition debt on a senior or priming basis only if (a) the Debtor is unable to obtain credit otherwise and (b) 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. See 11 U.S.C. 364(d)(l). Here the Debtor may seek to borrow senior secured postpetition financing on a priming basis. To obtain this extraordinary relief, the Debtor is required to show that M&M Lien Creditors interests are adequately protected. See 11 U.S.C. 364(d)(1)(B); In re LTAP US, LLLP, 2011 WL (Bankr. Del. 2/18/11) ( extraordinary relief requiring a strong showing that the loan to be subordinated is adequately protected ). 7. Under 361 of the Bankruptcy Code, adequate protection may include: (a) periodic cash payments; (b) additional or replacement liens; or (c) the indubitable equivalent of a secured creditor s interest in such property. See 11 U.S.C. 361; In re Swedeland Dev. Grp., Inc., 16 F.3d 552, 364 (3d Cir. 1994) (citing 11 U.S.C. 361). What constitutes adequate protection is decided on a case-by-case basis and may take various forms. Swedeland, supra at 564; In re Energy Future Holding Corp., 527 B. R. 157, 165 (D. Del. 2015) ( creditors with depreciating collateral values may petition the court for cash payments, replacement liens, or administrative expenses to provide the necessary adequate protection ); In re Beker Indus. Corp., 58 B.R. 725, 736 (Bankr. S.D.N.Y. 1986) (the application of adequate protection 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 ).

5 Case Document 290 Filed in TXSB on 02/17/16 Page 5 of 8 8. As noted in one of the more frequently cited Circuit Court opinions on the topic, the whole purpose of adequate protection for a creditor is to insure that the creditor receives the value for which he bargained prebankruptcy. Swedeland, supra at 564. In other words, the proposal should provide the prepetition secured creditor with the same level of protection it would have had if there had not been post-petition superpriority financing. Id. (emphasis added). 9. The proposed DIP loan appears to provide for roll-up and cross-collateralization of pre-petition debt. Courts disfavor, and indeed some reject altogether, cross-collateralization and roll-ups in DIP financing. See, e.g., Shapiro v Saybrook Mfg. Co. (In re Saybrook Mfg. Co.), 963 F. 2d 1490, (11 th Cir. 1992), Official Committee of Unsecured Creditors v. New World Pasta Co., 322 B.R. 560, at n.4 (M.D. Pa. 2005); In re Tenney Village Co., Inc., 104 B.R. 562, 570 (Bankr. D.N.H. 1989). Courts that reject roll-ups and cross-collateralization do so, in part, because such provisions run directly contrary to the fundamental priority scheme of the Bankruptcy Code. Saybrook, 963 F.2d at The Motion evidently seeks to do precisely that thereby, flouting the Bankruptcy Code s priority scheme to the disadvantage of its creditors. This is particularly inappropriate here where the lender and the Debtor are affiliated entities and the alleged debt may be more properly characterized as equity (or if a debt may be subject to equitable subordination). 10. JMD objects to: (i) the granting of the DIP lender adequate protection liens in rights, claims, or causes of action (including any avoidance claims or causes of action arising under Chapter 5 of the Bankruptcy Code); (ii) the payment of the lender s fees, costs, and expenses, in particular without notice and the opportunity to object, (iii) the sixty (60) day Challenge Deadline; (v) the broad releases to the Noteholders and waivers of claims under

6 Case Document 290 Filed in TXSB on 02/17/16 Page 6 of 8 506(c); and (v) the payment of interest when it is not clear the lender is fully secured (assuming for the moment that the alleged debt is not equity; if it is more properly characterized as equity, no payments should be made to the lender). 11. The Debtor has not provided adequate protection for JMD's secured claims that are senior to the proposed DIP loan, and accordingly, it objects to entry of a final DIP Order unless the Debtor either carves out their senior lien from any priming provision of the proposed DIP Final Order regarding the Motion, or alternatively, the Debtor provides JMD with adequate protection equal to at least what is proposed in favor of the proposed DIP Lender as required under 364(d) of the Bankruptcy Code. 12. JMD requests that if the Court grants the Motion, that a provision be included in the order granting the Motion that provides the following: A. Nothing contained in this Order reduces in any way the rights of any party with a mechanics and materialmen s lien claim valid under Texas law to the applicable property of the applicable Debtor to which it applies. This means that this Order shall not affect or impair the priority, validity, or amount of any such party s statutory lien rights arising under applicable non-bankruptcy law that is presently filed or that may be filed in the future in accordance with applicable non-bankruptcy law and/or 546(b) of the Bankruptcy Code. Any funds advanced January 11, 2016 or later to either of the Debtors by the proposed DIP lender (the Motion indicates this party is Commodity Funding, LLC) after the inception (as determined by Texas law) of a party s valid mechanic s lien claim will be behind in lien priority for all purposes a mechanic s lien claimant s lien claim filings that are valid under Texas law regarding the real property to which its lien claim filings apply. If this adequate protection provided to these parties for their

7 Case Document 290 Filed in TXSB on 02/17/16 Page 7 of 8 mechanic s lien claims proves to be inadequate, such lien claims shall have a priority claim equivalent in priority to a claim under 364(c)(1). The signing of this Order does not in any way prevent any person or entity, such as, but not limited to, JMD, or the Unsecured Creditors Committee in this case, from challenging the pre-petition indebtedness and/or the post-petition indebtedness, allegedly owed to Commodity Funding LLC or from arguing that such alleged debt is more properly characterized as equity and not a genuine debt, or that if a debt, that this debt should be subordinated pursuant to applicable law to some or all of the other debts owed by the Debtor. B. If the Court does not include the above language in any order regarding the Motion, the Motion should be denied. JMD additionally requests that the Court grant it all other relief to which it is entitled, whether in law or in equity, including, but not limited to, all rights JMD's liens may grant it to cash collateral of the Debtors. WHEREFORE, PREMISES CONSIDERED, JMD requests that the Court deny the Motion or in the alternative, condition the relief consistent with this Limited Objection, and for such other and further relief, at law or in equity, to which JMD may show itself to be justly entitled.

8 Case Document 290 Filed in TXSB on 02/17/16 Page 8 of 8 Respectfully submitted /s/ Patricia Reed Constant PATRICIA REED CONSTANT SBN One Shoreline Plaza 800 North Shoreline Blvd., Ste. 320 S Corpus Christi, Texas TEL: (361) FAX: (361) prc@prconstantlaw.com ATTORNEY FOR J. M. DAVIDSON, Inc. CERTIFICATE OF SERVICE The undersigned does hereby certify that a true and correct copy of the above and foregoing document has been served by electronic transmission to the attorneys and parties in this case who are enrolled in the ECF system and to the parties shown below, by first class mail, postage prepaid, on this the 17th day of February, 2016: Zack A. Clement Zack A. Clement PLLC 3753 Drummond Houston, TX Stephen Douglas Statham Office of US Trustee 515 Rusk, Suite 3516 Houston, TX US Trustee 606 N. Carancahua Corpus Christi, TX Joshua A. Sussberg Kirkland & Ellis, LLP 601 Lexington Ave. New York, NY Gregory F. Pesce Kirkland & Ellis, LLP 300 North LaSalle Chicago, Illinois /s/ Patricia Reed Constant PATRICIA REED CONSTANT

9 Case Document Filed in TXSB on 02/17/16 Page 1 of 2 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION IN RE: SHERWIN ALUMINA COMPANY, LLC et al CASE NO C-11 Joint Administration Debtors ORDER SUSTAINING J. M. DAVIDSON, INC.'S LIMITED OBJECTION TO EMERGENCY MOTION OF SHERWIN ALUMINA COMPANY, LLC, ET AL., FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING DEBTORS TO (A) OBTAIN POSTPETITON SECURED FINANCING AND (B) UTILIZE CASH COLLATERAL, (II) GRANTING LIENS AND PROVIDING SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (III) GRANTING ADEQUATE PROTECTION TO PREPETITION LENDER, (IV) MODIFYING THE AUTOMATIC STAY, AND (V) SCEHDULING A PERMANENT FINANCE HEARING PURSUANT TO SECTIONS 105, 361, 362, 363, 364, AND 507 OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 4001, AND (Dkt. 26) CAME ON FOR HEARING the limited objection of J. M. Davidson, Inc. to Emergency Motion of Sherwin Alumina Company, LLC, et al, For Entry of Interim And Final Orders (I) Authorizing Debtors to (A) Obtain Postpetition Secured Financing And (B) Utilize Cash Collateral, (II) Granting Liens And Providing Superpriority Administrative Expense Claims, (III) Granting Adequate Protection to Prepetition Lender, (IV) Modifying The Automatic Stay, and (V) Scheduling A Permanent Finance Hearing Pursuant to Sections 105, 361, 362, And 507 of The Bankruptcy Code And Bankruptcy Rules 2002, 4001, And 9014, ("Motion") and the Court, having considered the evidence and argument of counsel and finding that good cause has been shown for the relief requested, it is therefore GRANTED. ORDERED that the limited objection of J. M. Davidson, Inc. to the Motion is hereby

10 Case Document Filed in TXSB on 02/17/16 Page 2 of 2 DATED: DAVID R. JONES UNITED STATES BANKRUPTCY COURT ORDER SUBMITTED BY: PATRICIA REED CONSTANT SBN One Shoreline Plaza 800 N. Shoreline Blvd., Suite 320 S Corpus Christi, TX TEL: (361) FAX: (361) prc@prconstantlaw.com ATTORNEY FOR J. M. DAVIDSON, INC.

Case Document 645 Filed in TXSB on 06/16/16 Page 1 of 5

Case Document 645 Filed in TXSB on 06/16/16 Page 1 of 5 Case 16-20012 Document 645 Filed in TXSB on 06/16/16 Page 1 of 5 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS CORPUS CHRISIT DIVISION IN RE: CHAPTER 11 SHERWIN ALUMINA COMPANY LLC,