Document Page 1 of 8 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION ) In re: ) ) THE UPPER CRUST, LLC, et al., 1 ) Chapter 11 ) Case No. 12-18134-HJB Debtors. ) ) (Jointly Administered) MOTION OF DEBTORS AND DEBTORS-IN-POSSESSION FOR ORDER AUTHORIZING (A) MAINTENANCE OF CERTAIN OF THE DEBTORS EXISTING BANK ACCOUNTS AND BUSINESS FORMS AND (B) RELATED RELIEF (Emergency Determination Requested) The Upper Crust and the other Debtors, the debtors and debtors-in-possession in the above-captioned Chapter 11 cases, hereby move the Court for the entry of an order authorizing the maintenance and continued use of the Debtors existing bank accounts and business forms and related relief. The Debtors operate a chain of upscale pizza restaurants in and around Boston, Massachusetts and in Washington, DC. In connection with their businesses, the Debtors utilize 1 1 The other cases jointly administered with the case of Upper Crust, LLC ( Upper Crust ) are The Upper Crust Back Bay, LLC (Case No. 12-18135) ( Upper Crust Back Bay ), The Upper Crust Fenway, LLC (Case No. 12-18136) ( Upper Crust - Fenway ), The Upper Crust Harvard Square, LLC (Case No.12-18137) ( Upper Crust Harvard ), The Upper Crust Hingham, LLC (Case No.12-18138) ( Upper Crust Hingham ), The Upper Crust Lexington, LLC (Case No. 12-18139) ( Upper Crust Lexington ), The Upper Crust State Street, LLC (Case No. 12-18140) ( Upper Crust State Street ), The Upper Crust South End, LLC (Case No. 12-18142) ( Upper Crust South End ), The Upper Crust Pennsylvania Avenue, LLC (Case No. 12-18143) ( Upper Crust Penn. Av. ), The Upper Crust DC, LLC (Case No. 12-18148) ( Upper Crust DC ), The Upper Crust Waltham, LLC (Case No. 12-18144) ( Upper Crust Waltham ), The Upper Crust Watertown, LLC (Case No. 12-18145) ( Upper Crust Watertown ), The Upper Crust Wellesley, LLC (Case No. 12-18146) ( Upper Crust Wellesley ) and JJB Hanson Management, Inc. (Case No. 12-18147) ( JJB ). Upper Crust Back Bay, Upper Crust Fenway, Upper Crust Harvard, Upper Crust Hingham, Upper Crust Lexington, Upper Crust State Street, Upper Crust South End, Upper Crust Penn. Av., Upper Crust Waltham, Upper Crust Watertown and Upper Crust Wellesley are collectively termed the Stores herein. Upper Crust, Upper Crust DC, JJB and the Stores are collectively termed the Debtors herein.
Document Page 2 of 8 12 bank accounts for the payment of payroll and expenses. By this motion, the Debtors seek authority to maintain the prepetition bank accounts for each store and the prepetition operating account and the prepetition payroll account of JJB. The maintenance of the prepetition operating accounts is necessary to the continued operations of the Debtors and to make payments to the Debtors employees. Accordingly, the Debtors state that the relief requested in this motion is warranted and in the best interests of the Debtors estates and creditors. In further support of this motion, the Debtors respectfully represent as follows: JURISDICTION 1. This Court has jurisdiction to consider and determine this application pursuant to 28 U.S.C. 1334. This is a core proceeding within the meaning of 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. BACKGROUND 2. On October 4, 2012 (the Petition Date ), the Debtors each filed voluntary petitions for relief under Chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) in the United States Bankruptcy Court for the District of Massachusetts (the Court ). 3. The Debtors continue to operate as debtors in possession pursuant to Sections 1107 and 1108 of the Code. As of the date of this motion, no official committee of creditors has been appointed in any of the Debtors cases. A. Overview of the Debtors 4. The Debtors operate a chain of upscale pizza restaurants that provide customers with both traditional and daring pizza combinations in multiple locations. In the aggregate, the Debtors have 176 employees. 2
Document Page 3 of 8 5. The Upper Crust, LLC ( Upper Crust ), a Massachusetts limited liability company, is the parent company of the other Debtors, except for JJB. The membership interests of Upper Crust are owned 40% by Joshua Huggard ( Huggard ), 15% by Brendan Higgins ( Higgins ) and 45% by Jordan Tobins ( Tobins ). In June 2012 Higgins and Huggard terminated Tobins right to participate in the management and operation of Upper Crust for improper conduct. 6. JJB is a Massachusetts corporation that provides payroll, procurement and other financial services for the other Debtors. Higgins, Huggard and Tobins each own one-third of the outstanding shares of JJB. 7. Upper Crust, as ultimate parent of the Debtors (except for JJB) owns 100% of the membership interests in the following entities. Upper Crust Back Bay is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant at 222 Newbury Street in the Back Bay area of Boston, Massachusetts. Upper Crust Fenway is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 1330 Boylston Street in Boston, Massachusetts. Upper Crust Harvard is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 49B Brattle Street in Cambridge, Massachusetts. Upper Crust Hingham is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 73 South Street in Hingham, Massachusetts. Upper Crust Lexington is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 41 Waltham Street in Lexington, Massachusetts. Upper Crust State Street is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 107 State Street in Boston, Massachusetts. Upper Crust South End is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 683 Tremont Street in Boston, Massachusetts. 3
Document Page 4 of 8 Upper Crust Penn. Av. is a limited liability company organized in the District of Columbia that owns and operates the Upper Crust restaurant located at 1747 Pennsylvania Avenue NW in Washington DC. Upper Crust DC is the sole member of Upper Crust Penn. Av. Upper Crust is the sole member of Upper Crust DC. Upper Crust Waltham is a Massachusetts limited liability company that formerly owned and operated the Upper Crust restaurant located at 435 Moody Street in Waltham, Massachusetts. Upper Crust Watertown is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 94 Main Street in Watertown, Massachusetts. Upper Crust Wellesley is a Massachusetts limited liability company that owns and operates the Upper Crust restaurant located at 99 Central Street in Wellesley, Massachusetts. 8. There are also several non-debtor affiliates. Coletrain, Inc. ( Coletrain ), a Massachusetts corporation, is a non-debtor affiliate that owns and operates the Upper Crust restaurant at 20 Charles Street in Boston, Massachusetts. Coletrain is the asserted owner of The Upper Crust trademark (USPTO serial number 77346810). Coletrain granted a non-exclusive, perpetual license to Upper Crust to use the trademark and to sub-license the trademark to entities that Upper Crust controlled. Tobins owns 80% of the outstanding shares of Coletrain. Higgins and Huggard each own 10% of the outstanding shares of Coletrain. 9. Coleman, Inc. ( Coleman ), a Massachusetts corporation, is a non-debtor affiliate that owns and operates the Upper Crust restaurant at 286 Harvard Street in Brookline, Massachusetts. Tobins owns 80% of the outstanding shares of Coleman. Higgins and Huggard each own 10% of the outstanding shares of Coleman. 10. Cocobling, LLC ( Cocobling ), a Massachusetts limited liability company, is a non-debtor affiliate that franchises the Upper Crust brand to independently owned and operated franchisees. Presently, there are four franchise locations one each in Newburyport, Massachusetts, Plymouth, Massachusetts, Portsmouth, New Hampshire, and West Roxbury, 4
Document Page 5 of 8 Massachusetts. The membership interests in Cocobling are owned 40% by Huggard, 15% by Higgins and 45% by Tobins. 11. Information respecting the precipitating causes of the bankruptcy filings, the Debtors capital structure, and related issues are set forth in the Affidavit of Dan Hurley in Support of First Day Motions and Applications filed contemporaneously herewith and incorporated by reference. BASIS FOR REQUESTED RELIEF 12. The relief requested in this Motion will help ensure the Debtors orderly entry into Chapter 11 and avoid disruption that could unnecessarily distract the Debtors from more important matters during the initial days of these Chapter 11 cases. REQUEST FOR AUTHORITY TO CONTINUE UTILIZING EXISTING CASH MANAGEMENT SYSTEM, BANK ACCOUNTS AND BUSINESS FORMS 13. Prior to the commencement of this case, the Debtors cash management system involved 12 bank accounts. Each Boston area Store has a bank account with Bank of America; Upper Crust Penn. Ave has a bank account with Capitol One Bank (the Store Accounts ). All receipts for each Store are deposited in the Store Account by 11:00 a.m. of the next day. Deposits into the Store Accounts are immediately swept into a payroll account maintained by JJB with Bank of America (the Payroll Account ). Credit card receipts are processed directly to the JJB Payroll Account. JJB also maintains an operating account with Bank of America (the Operating Account, together with the Store Accounts and the Payroll Account, the Bank 5
Document Page 6 of 8 Accounts ). 2 A list of the Bank Accounts and account numbers is attached as Exhibit A. JJB transfers funds in the Payroll Account in excess of payroll obligations to the Operating Account to facilitate payment of the Debtors other obligations. 14. The Debtors seek to continue to utilize their existing cash management system to pay their employees and their other obligations without disrupting their operations. In connection with continued use of the cash management system, the Debtors seek to maintain their existing Bank Accounts. The Debtors would be subject to a substantial administrative burden and expense if they were required to close and reopen the Bank Accounts. 15. Bankruptcy courts in this jurisdiction have permitted the continued use of prepetition bank accounts. See, e.g., In re GPX International Tire Corp., Case No. 09-20170 (Bankr. D. Mass. 2009); In re Syratech Corp., Case No. 05-11062 (Bankr. D. Mass. 2005); In re Divine, Inc., Case No. 03-11472 (Bankr. D. Mass. 2003); In re Arch Wireless, Inc., Case No. 01-47330 (Bankr. D. Mass. 2001). 16. The Debtors cash management system includes controls to enable the Debtors to trace funds that pass through the Bank Accounts. The Debtors personnel will distinguish between prepetition and postpetition checks without closing the Bank Accounts. The Debtors will continue to maintain strict records with respect to all transfers of cash so that they may readily account for all transfers between and among the Bank Accounts. 17. The Debtors request authorization to maintain and continue to use any and all existing stationery, correspondence and business forms associated with the Bank Accounts. JJB 2 The Debtors have several other accounts in addition to the Bank Accounts involved in the cash management system. Upper Crust has an account with Bank of America that is dormant. Upper Crust Waltham has an account with Bank of America that is dormant (the Waltham Store recently closed). Upper Crust Penn. Av. has an account with Capital One Bank that is dormant. The Debtors will close these dormant accounts. 6
Document Page 7 of 8 will, nevertheless, mark its existing checks and arrange for the printing of new checks, when such become necessary, with a Debtor-in-Possession designation and the case number for the case under which the Debtors cases are jointly administered. 18. The Debtors also request that the Court order the banks which administer the Bank Accounts be authorized and directed to maintain, service and administer these accounts. 19. Upon information and belief, the Debtors financial institution, at which the Bank Accounts are maintained, is an institution approved by the Office of the United States Trustee to maintain the accounts of debtors-in-possession. NOTICE 20. The Debtors have served this motion by this Court s ECF System, overnight mail, facsimile or electronic mail, upon (a) all known secured creditors, (b) taxing authorities, (c) the 20 largest unsecured creditors, (d) the Office of the United States Trustee, and (e) all parties who have filed a notice of appearance in this case. In light of the relief requested herein, the Debtors submit that no other or further notice is required. 7
Document Page 8 of 8 WHEREFORE, the Debtors respectfully request that this Court enter an order: (a) authorizing the Debtors continued use of the Bank Accounts; and (b) granting the Debtors such other and further relief as this Court deems just and proper. Respectfully submitted, THE UPPER CRUST, LLC, ET AL., By their proposed counsel, Dated: October 5, 2012 635353-v1 /s/ Harold B. Murphy Harold B. Murphy (BBO #362610) John C. Elstad (BBO #654469) MURPHY & KING, P.C. One Beacon Street Boston, MA 02108-3107 Tel: (617) 423-0400 Fax: (617) 556-8985 hbm@murphyking.com 8
Case 12-18134 Doc 6-1 Filed 10/05/12 Entered 10/05/12 15:15:33 Desc Exhibit A Page 1 of 2 IN RE: THE UPPER CRUST, LLC, ET AL. BANKRUPTCY NO. 12-18134 (HJB) EXHIBIT A TO MOTION OF DEBTORS AND DEBTORS-IN-POSSESSION FOR ORDER AUTHORIZING (A) MAINTENANCE OF CERTAIN OF THE DEBTORS EXISTING BANK ACCOUNTS AND BUSINESS FORMS AND (B) RELATED RELIEF 636050-v1
Case 12-18134 Doc 6-1 Filed 10/05/12 Entered 10/05/12 15:15:33 Desc Exhibit A Page 2 of 2 Business Name Type of Account Bank Name Last 4 Digits for Account The Upper Crust Back Bay, LLC Store Bank of America -7447 The Upper Crust Fenway, LLC Store Bank of America -7395 The Upper Crust Harvard Square, LLC Store Bank of America -7502 The Upper Crust Hingham, LLC Store Bank of America -7434 JJB Hanson Management, Inc. (AC Pay) Operational Bank of America -7256 JJB Hanson Management, Inc. (Hanson) Payroll Bank of America -7382 The Upper Crust Lexington, LLC Store Bank of America -7463 The Upper Crust South End, LLC Store Bank of America -7492 The Upper Crust State Street, LLC Store Bank of America -7528 The Upper Crust Watertown, LLC Store Bank of America -7476 The Upper Crust Wellesley, LLC Store Bank of America -7421 The Upper Crust Pennsylvania Avenue, LLC Store Capital One -8723 636050-v1
Case 12-18134 Doc 6-2 Filed 10/05/12 Entered 10/05/12 15:15:33 Desc Exhibit B Page 1 of 4 IN RE: THE UPPER CRUST, LLC, ET AL. BANKRUPTCY NO. 12-18134 (HJB) EXHIBIT B TO MOTION OF DEBTORS AND DEBTORS-IN-POSSESSION FOR ORDER AUTHORIZING (A) MAINTENANCE OF CERTAIN OF THE DEBTORS EXISTING BANK ACCOUNTS AND BUSINESS FORMS AND (B) RELATED RELIEF
Case 12-18134 Doc 6-2 Filed 10/05/12 Entered 10/05/12 15:15:33 Desc Exhibit B Page 2 of 4 UNITED STATES BANKRUPTCY COURT DISTRICT OF MASSACHUSETTS EASTERN DIVISION ) In re: ) ) THE UPPER CRUST, LLC, et al., 1 ) Chapter 11 ) Case No. 12-18134 Debtors. ) ) (Jointly Administered) ORDER AUTHORIZING (A) MAINTENANCE OF CERTAIN OF THE DEBTORS EXISTING BANK ACCOUNTS AND BUSINESS FORMS AND (B) RELATED RELIEF This matter having come before the Court on the Motion of Debtors and Debtors-in- Possession for Order Authorizing (A) Maintenance of Certain of the Debtors Existing Bank Accounts and Business Forms and (B) Related Relief (the Motion ) filed by the abovecaptioned debtors and debtors-in-possession (the Debtors ); the Court having reviewed the Motion; the Court finding that (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2), (c) venue of this Chapter 11 case in this District is proper pursuant to 28 U.S.C. 1408 and 1409; 1 The other cases jointly administered with the case of Upper Crust, LLC ( Upper Crust ) are The Upper Crust Back Bay, LLC (Case No. 12-18135) ( Upper Crust Back Bay ), The Upper Crust Fenway, LLC (Case No. 12-18136) ( Upper Crust - Fenway ), The Upper Crust Harvard Square, LLC (Case No.12-18137) ( Upper Crust Harvard ), The Upper Crust Hingham, LLC (Case No.12-18138) ( Upper Crust Hingham ), The Upper Crust Lexington, LLC (Case No. 12-18139) ( Upper Crust Lexington ), The Upper Crust State Street, LLC (Case No. 12-18140) ( Upper Crust State Street ), The Upper Crust South End, LLC (Case No. 12-18142) ( Upper Crust South End ), The Upper Crust Pennsylvania Avenue, LLC (Case No. 12-18143) ( Upper Crust Penn. Av. ), The Upper Crust DC, LLC (Case No. 12-18148) ( Upper Crust DC ), The Upper Crust Waltham, LLC (Case No. 12-18144) ( Upper Crust Waltham ), The Upper Crust Watertown, LLC (Case No. 12-18145) ( Upper Crust Watertown ), The Upper Crust Wellesley, LLC (Case No. 12-18146) ( Upper Crust Wellesley ) and JJB Hanson Management, Inc. (Case No. 12-18147) ( JJB ). Upper Crust Back Bay, Upper Crust Fenway, Upper Crust Harvard, Upper Crust Hingham, Upper Crust Lexington, Upper Crust State Street, Upper Crust South End, Upper Crust Penn. Av., Upper Crust Waltham, Upper Crust Watertown and Upper Crust Wellesley are collectively termed the Stores herein. Upper Crust, Upper Crust DC, JJB and the Stores are collectively termed the Debtors herein.
Case 12-18134 Doc 6-2 Filed 10/05/12 Entered 10/05/12 15:15:33 Desc Exhibit B Page 3 of 4 and (d) notice of the Motion was sufficient under the circumstances; the Court determining that the legal and factual bases set forth in the Motion establish just cause for the relief granted by this Order; and it appearing that the relief requested is in the best interests of the Debtors estate, their creditors and other parties in interest; IT IS HEREBY ORDERED THAT: 1. The Motion is GRANTED in its entirety. 2. The Debtors are authorized to: (a) designate, maintain, and continue to use the Bank Accounts 2 in the names and with the account numbers existing immediately prior to the Petition Date; provided, however, that the Debtors may close certain such Bank Accounts and open new debtor-in-possession accounts as may be necessary, in the Debtors business judgment, to facilitate the Debtors Chapter 11 cases; (b) deposit funds in and withdraw funds from such bank accounts by all usual means including, without limitation, checks, wire transfers, automated clearinghouse transfers, and other debits; and (c) treat their prepetition Bank Accounts for all purposes as debtor-in-possession accounts. 3. The Debtors are authorized to utilize their existing checks, and shall arrange for the printing of new checks, when such becomes necessary, with a designation of their debtor-inpossession status. 4. The Debtors are directed to maintain records of all transfers within their cash management system so that all transfers and transactions shall be adequately and promptly documented in, and readily ascertainable from, its books and records, to the same extent 2 Capitalized terms not otherwise defined in this Order shall have their meanings given to them in the Motion.
Case 12-18134 Doc 6-2 Filed 10/05/12 Entered 10/05/12 15:15:33 Desc Exhibit B Page 4 of 4 maintained by the Debtors prior to the Petition Date. 5. All banks with which the Debtors maintain bank accounts as of the Petition Date are authorized and directed to maintain, service and administer such Bank Accounts; provided, however, that nothing contained in this Order shall authorize any such bank to honor any check issued or dated prior to the Petition Date, except as otherwise provided by order of this Court. 6. Subject to Section 553 of the Bankruptcy Code, all banks at which the Bank Accounts are maintained are prohibited from offsetting, affecting or otherwise impeding any funds of the Debtor deposited in the Bank Accounts on account of, or by reason of, any claim (as defined in Section 101(5) of the Bankruptcy Code) of any such bank against the Debtor that arose before the Petition Date, absent further order of this Court. 7. The Debtors are granted an additional fifteen (15) days from the Petition Date to come into compliance with Section 345 of the Bankruptcy Code; provided, that if the Debtors determine that they are unable to comply with the requirements of Section 345 within the fifteen (15) day period, the Debtor shall file a motion seeking authority to deviate from such requirements. 8. The Debtors are authorized to take or refrain from taking such actions as are necessary and appropriate to implement and effectuate the relief granted in this Order. 9. This Court shall retain jurisdiction over all matters arising from or related to the interpretation and implementation of this Order. Dated:, 2012 636034-v1 Henry J. Boroff United States Bankruptcy Judge