Case Doc 143 Filed 08/04/16 Entered 08/04/16 12:45:04 Desc Main Document Page 1 of 13

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1 Document Page 1 of 13 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION In re: ABC DISPOSAL SERVICE, INC., et al. Debtors Chapter 11 Case No: JNF Jointly-Administered 1 MOTION TO APPROVE ADEQUATE PROTECTION STIPULATION BY AND BETWEEN ABC DISPOSAL SERVICE, INC. AND BMO HARRIS BANK, N.A. Pursuant to 11 U.S.C. 361 and 363, Rule 2002, 4001 and 9019(a) of the Federal Rules of Bankruptcy Procedure, and MLBR and , ABC Disposal Service, Inc. (the Debtor ) hereby requests that this Court enter an order approving the proposed stipulation attached to this motion as Exhibit A (the Stipulation ) by and between the Debtor and BMO Harris Bank, N.A. ( BMO or the Bank and with the Debtor, the Parties ), which provides for agreed adequate protection payments to BMO on account of its asserted security interest in certain of the Debtor s vehicles. In support of this motion (the Motion ), the Debtor states as follows: JURISDICTION 1. This Court has jurisdiction to consider this motion pursuant to 28 U.S.C. 157 and Venue is proper in this district pursuant to 28 U.S.C and The predicates for the relief sought herein are Sections 361 and 363 of the United States Bankruptcy Code (the Bankruptcy Code ), Rules 2002, 4001, and 9019(a) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), and MLBR and The other debtors in these jointly-administered cases are: New Bedford Waste Services LLC (Case No ), Solid Waste Services, Inc. (Case No ), Shawmut Associates, LLC (Case No ), A&L Enterprises, LLC (Case No ), and ZERO Waste Solutions, LLC (Case No )

2 Document Page 2 of 13 BACKGROUND 1. On May 11, 2016 (the Petition Date ), the Debtor filed a voluntary petition for relief under Chapter 11 of 11 U.S.C. 101, et seq. (the Bankruptcy Code ) with the United States Bankruptcy Court for the District of Massachusetts (the Bankruptcy Court ), thereby commencing the above-captioned proceeding. 2. The Debtor and its affiliates are principally engaged in the business of waste hauling, disposal and recycling services, and the sale, rental and servicing of compaction and baling equipment to a variety of industrial, institutional, commercial and construction related customers. 3. Prior to the Petition Date and in connection with the operation of the Debtor s business, the Debtor and the Bank entered into certain loans and agreements (collectively, the Loans ), including: (i) that certain Loan and Security Agreement dated October 24, 2014; (ii) that certain Loan and Security Agreement dated February 13, 2015, and (iii) that certain Loan and Security Agreement dated March 3, 2015, copies of which are appended hereto as Exhibit A (collectively, the Loan Agreements ). 4. In connection with the Loans, the Bank asserts liens against certain vehicles and other assets of the Debtor as set forth more fully in the Loan Agreements (collectively, the Collateral ). 5. The Debtor contends, and the Bank disputes, that certain liens asserted by the Bank are avoidable as preferential transfers. Specifically, the Debtor contests the validity and enforceability of the Bank s asserted liens against the following items of Collateral: (i) four 2015 Mack LEU633 trucks, identified by serial numbers 1M2AU14C9FM002572, 1M2AU14C0FM002573, 1M2AU14C2FM002574, and 1M2AU14C4FM002575, and (ii) one 2016 Mack CHU613 truck, identified by serial number 1M1AN07Y8GM (collectively, the Disputed Collateral )

3 Document Page 3 of Since the Petition Date, the Debtor has remained in possession and/or control of the Collateral. The Bank asserts to be entitled to adequate protection on account of such continued possession and use of the Collateral. 7. On June 2, 2016, the Court entered the Final Order regarding Motion for Entry of Order (1) Authorizing the Use of Cash Collateral, (2) Granting Replacement Liens, (3) Scheduling a Hearing on the Further Use of Cash Collateral, and (4) Granting Other Relief [docket no. 80] (the Cash Collateral Order ), authorizing the Debtor to use cash collateral in its business and providing for periodic payments to BMO as set forth in the Stipulation. STIPULATION 8. The Debtor and the Bank have conferred and reached agreement on the Stipulation. The Stipulation provides, subject to the approval of the Bankruptcy Court and during its term, for periodic payments to the BMO and the escrowing of additional amounts pending a determination as to the Parties respective rights regarding the Disputed Collateral. It provides, in relevant part: 2 a. Adequate Protection and Payments. For the month of July 2016 and during the term of the Stipulation: i. The Debtor shall make monthly payments to the Bank in the amount of $15,000 (the Undisputed Adequate Protection Payment ), which payments shall constitute adequate protection of the Bank s interests in all Collateral other than the Disputed Collateral. ii. The Debtor shall make monthly deposits in the amount of $10,000 in a debtor-in-possession escrow account as and for adequate protection of the Bank s interest in the Disputed Collateral (the Disputed Adequate Protection Payment and with the Undisputed Adequate Protection Payment, the Adequate Protection Payments ). iii. Any Adequate Protection Payments that become due on or before the approval of the Stipulation shall be paid and/or escrowed within five (5) business days of the approval of this Stipulation by the Bankruptcy Court. Adequate Protection Payments which become due after the approval of the 2 The summary of the Stipulation contained in this motion is for descriptive purposes only. In the event of an inconsistency between the terms of this summary and the Stipulation, the terms of the Stipulation shall control

4 Document Page 4 of 13 Stipulation shall be made and/or escrowed on or before the fifth (5 th ) business day of each calendar month. iv. In the event any required payment is not timely made or escrowed, the Bank shall be entitled to file a notice of deficiency in this case and may seek relief from the automatic stay with respect to the Collateral. v. Adequate Protection Payments received by the Bank shall be applied to the Bank s allowed secured claim against the Debtor, the amount of which allowed secured claim shall be determined by further order of the Bankruptcy Court. vi. The Debtor shall be required to maintain existing insurance on the Collateral and to pay all personal property and other taxes related to the Collateral. b. Disbursement of the Disputed Collateral Payments. i. The Bank shall have a lien against each Disputed Adequate Protection Payment equal in validity, extent, and priority to the Bank s lien against the Disputed Collateral, and the Disputed Adequate Protection Payments shall continue to be held in escrow pending a determination of the validity, extent, and priority of such liens. ii. If the Bank is determined by a final and non-appealable order of the Bankruptcy Court to have a valid and perfected lien against the Disputed Collateral, the Disputed Adequate Protection Payments shall be disbursed as adequate protection payments under 11 U.S.C. 361 for the Bank s interests in the Disputed Collateral for the months in which the Disputed Adequate Protection Payments were placed in escrow. iii. If the Bank is determined by a final and non-appealable order of the Bankruptcy Court not to have a valid and perfected lien against the Disputed Collateral, the Disputed Adequate Protection Payments shall be released from the escrow account and returned to the Debtor free of any lien, encumbrance, or interest of the Bank. c. Term. The Stipulation shall be effective upon approval by the Bankruptcy Court and, so long as it is not terminated, continue through the confirmation of the Debtor s plan of reorganization. The Stipulation may be terminated upon thirty (30) days written notice by either the Debtor or the Bank. So long as the Debtor has complied with its payment obligations under the Stipulation, the Bank shall not be entitled to seek relief from the automatic stay with respect to the Collateral until after the later of (a) the date of termination of the Stipulation in accordance with this paragraph or (b) thirty (30) days following the date of the Debtor s last Adequate Protection Payment. d. Reservation of Rights. Each of the Parties reserves all of its rights relating to: (a) any claim asserted against the Debtor, (b) the extent, priority and validity of any lien asserted against the Debtor s property, (c) the right to seek to amend or modify - 4 -

5 Document Page 5 of 13 the terms of this Stipulation, (d) the automatic stay, and (e) any other claims, counterclaims, defenses, and choses in action of the Parties. THE STIPULATION IS IN THE BEST INTERESTS OF THE DEBTORS ESTATE 8. Rule 9019 of the Federal Rules of Bankruptcy Procedure provides, in pertinent part, that [o]n motion by the trustee and after notice and a hearing, the Court may approve a compromise or settlement. Local Rule also authorizes settlement of any controversy that affects the estate. While the decision to approve a particular settlement lies within the sound discretion of the Bankruptcy Court, the Court should give deference to the business judgment of the debtor-in-possession. City Sanitation, LLC v. Burdick, (In re American Cartage, Inc.) 438 B.R. 1, (D. Mass. 2010); Crawford v. Riley (In re Wolverine, Proctor & Schwartz, LLC) 436 B.R. 253, 266 (D. Mass. 2010). 9. In this case, the Stipulation resolves disputes and potential litigation with BMO respecting the value of its collateral and the amounts required to be paid on a monthly basis to adequately protect BMO for the asserted decrease in the value of its collateral during the Debtor s case arising from the Debtor s use of the Collateral. 10. The Stipulation is in the best interest of the Debtor s bankruptcy estate and creditors as it eliminates the costs, delays, and risks associated with litigation respecting appropriate adequate protection to BMO or any attempt by BMO to seek modification of or relief from the automatic stay. 12. The payments are provided for in the budget attached to the Cash Collateral Order

6 Document Page 6 of 13 WHEREFORE, ABC Disposal Service, Inc. respectfully requests that the Court enter an Order approving the Stipulation and granting to it such other relief as the Court may deem just. Respectfully submitted, ABC DISPOSAL SERVICE, INC., By its counsel, Dated: August 4, 2016 /s/ Christopher M. Condon Harold B. Murphy (BBO #362610) Christopher M. Condon (BBO #652430) Murphy & King Professional Corporation One Beacon Street, 21st Floor Boston, Massachusetts Telephone: (617) Facsimile: (617) ccondon@murphyking.com - 6 -

7 Document Page 7 of 13 EXHIBIT A

8 Document Page 8 of 13 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION In re: ABC DISPOSAL SERVICE, INC., et al. Debtors Chapter 11 Case No: JNF Jointly-Administered 1 STIPULATION FOR ADEQUATE PROTECTION PAYMENTS This Stipulation is entered into by and between ABC Disposal Service, Inc. ( Debtor ) and BMO Harris Bank N.A. (the Bank and with the Debtor, the Parties ): RECITALS: A. On May 11, 2016 (the Petition Date ), the Debtor filed a voluntary petition for relief under Chapter 11 of 11 U.S.C. 101, et seq. (the Bankruptcy Code ) with the United States Bankruptcy Court for the District of Massachusetts (the Bankruptcy Court ), thereby commencing the above-captioned proceeding. B. The Debtor and its affiliates are principally engaged in the business of waste hauling, disposal and recycling services, and the sale, rental and servicing of compaction and baling equipment to a variety of industrial, institutional, commercial and construction related customers. C. Prior to the Petition Date, the Debtor and the Bank entered into certain loans and agreements (collectively, the Loans ), including: (i) that certain Loan and Security Agreement 1 The other debtors in these jointly-administered cases are: New Bedford Waste Services LLC (Case No ), Solid Waste Services, Inc. (Case No ), Shawmut Associates, LLC (Case No ), A&L Enterprises, LLC (Case No ), and ZERO Waste Solutions, LLC (Case No ).

9 Document Page 9 of 13 dated October 24, 2014; (ii) that certain Loan and Security Agreement dated February 13, 2015, and (iii) that certain Loan and Security Agreement dated March 3, 2015, copies of which are appended hereto as Exhibit A (collectively, the Loan Agreements ). D. In connection with the Loans, the Bank asserts liens against certain assets of the Debtor as set forth more fully in the Loan Agreements (collectively, the Collateral ). E. The Debtor contends, and the Bank disputes, that certain liens asserted by the Bank are avoidable as preferential transfers. Specifically, the Debtor contests the validity and enforceability of the Bank s asserted liens against the following items of Collateral: (i) four 2015 Mack LEU633 trucks, identified by serial numbers 1M2AU14C9FM002572, 1M2AU14C0FM002573, 1M2AU14C2FM002574, and 1M2AU14C4FM002575, and (ii) one 2016 Mack CHU613 truck, identified by serial number 1M1AN07Y8GM (collectively, the Disputed Collateral ). F. Since the Petition Date, the Debtor has remained in possession and/or control of the Collateral while the Debtor and the Bank have negotiated an agreement providing for adequate protection of the Bank s interest in the Collateral. G. The Debtor and the Bank, by and through their attorneys of record, have conferred and hereby stipulated as follows: THE PARTIES HEREBY STIPULATE AND AGREE AS FOLLOWS: 1. Subject to the approval of this stipulation by the Bankruptcy Court, the Debtor shall: (i) pay $15,000 per month for each month from July 2016 through the effective date of any confirmed plan of reorganization (the Effective Date ) to the Bank (the Undisputed Adequate Protection Payment ), which payment shall constitute adequate protection of the Bank s interests in all Collateral other than the Disputed Collateral (the Undisputed Collateral ), and (ii) place $10,000 per month for each month from July 2016 through the Effective Date in a debtor-in

10 Document Page 10 of 13 possession escrow account as and for adequate protection of the Bank s interest in the Disputed Collateral (the Disputed Adequate Protection Payment and with the Undisputed Adequate Protection Payment, the Adequate Protection Payments ). 2. Subject to the approval of this Stipulation by the Bankruptcy Court, Undisputed Adequate Protection Payments shall be paid to the Bank, and Disputed Adequate Protection Payments shall be escrowed by the Debtor, on or before the fifth business day of each calendar month. Any Adequate Protection Payments that become due on or before the approval of this Stipulation shall be paid and/or escrowed by the Debtor, as applicable, within five (5) business days of the approval of this Stipulation by the Bankruptcy Court. In the event such payments are not timely made or escrowed, the Bank shall be entitled to file a notice of deficiency in this case and may seek relief from the automatic stay with respect to the Collateral in accordance with the terms of this Stipulation. 3. The Undisputed Adequate Protection Payments shall be considered to be adequate protection payments under 11 U.S.C The Bank shall have a lien against each Disputed Adequate Protection Payment equal in validity, extent, and priority to the Bank s lien against the Disputed Collateral, and the Disputed Adequate Protection Payments shall continue to be held in escrow pending a determination of the validity, extent, and priority of such liens. In the event the Bank is determined by a final and non-appealable order of the Bankruptcy Court to have a valid and perfected lien against the Disputed Collateral, the Disputed Adequate Protection Payments shall be disbursed as adequate protection payments under 11 U.S.C. 361 for the Bank s interests in the Disputed Collateral for the months in which the Disputed Adequate Protection Payments were placed in escrow. In the event the Bank is determined by a final and non-appealable order of the Bankruptcy Court not to have a valid and perfected lien against the Disputed Collateral, the - 3 -

11 Document Page 11 of 13 Disputed Adequate Protection Payments shall be released from the escrow account and returned to the Debtor free of any lien, encumbrance, or interest of the Bank. 4. Adequate Protection Payments received by the Bank shall be applied to the Bank s allowed secured claim against the Debtor, the amount of which allowed secured claim shall be determined by further order of the Bankruptcy Court. 5. As and for additional adequate protection of the Bank s interests in the Collateral, the Debtor shall be required to maintain existing insurance on the Collateral and to pay all personal property and other taxes related to the Collateral. 6. The Stipulation is terminable upon thirty (30) days written notice by either the Debtor or the Bank. The Debtor shall be required to make any payment and/or escrow any amount that comes due under this Stipulation prior to the effective date of the termination, provided that so long as the Debtor has complied with its payment obligations under paragraph 2 of this Stipulation, the Bank shall not be entitled to seek relief from the automatic stay with respect to the Collateral until after the later of (a) the date of termination of the Stipulation in accordance with this paragraph or (b) thirty (30) days following the date of the Debtor s last Adequate Protection Payment. Notwithstanding the foregoing, any Disputed Adequate Protection Payments escrowed as of the termination date shall remain in escrow pending a final determination by the Bankruptcy Court as to the validity, extent, and priority of the Bank s lien against the same. 7. This Stipulation does not constitute an agreement or stipulation that the Adequate Protection Payments are sufficient to adequately protect the Bank s interests in the Collateral, nor does it prohibit either the Bank from moving for additional or further relief from the Bankruptcy Court at any time, except that the Bank shall only be entitled to seek relief from the automatic stay - 4 -

12 Document Page 12 of 13 in accordance with the terms of this Stipulation and may not seek additional adequate protection with respect to the Collateral so long as this Stipulation has not been terminated. 8. Except as expressly provided in this Stipulation, each of the Parties reserves all of its rights, claims, and defenses under the Bankruptcy Code and applicable non-bankruptcy law including, without limitation the Parties respective rights, claims, and defenses relating to: (a) any claim asserted against the Debtor, (b) the extent, priority and validity of any lien asserted against the Debtor s property, (c) the right to seek to amend or modify the terms of this Stipulation, (d) the automatic stay, and (e) any other claims, counterclaims, defenses, and choses in action of the Parties

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