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INRE:
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
CHAPTERll
DELTA PRODUCE, L.P.
1






CASE NO. 12-50073-LMC
DEBTORS Jointly Administered
MOTION TO ENTER INTO DEBTOR IN POSSESSION FINANCING WITH
INTERNATIONAL BANK OF COMMERCE AND GRANT POST -PETITION LIENS
TO THE HONORABLE LEIF M. CLARK, JUDGE,
UNITED STATES BANKRUPTCY COURT:
NOW COMES Delta Produce, L.P. ("Delta"), Superior Tomato-Avocado, Ltd., Atled,
Ltd. and Staci Properties, Ltd. (collectively, the "Debtors"), the Debtors in the above captioned
cases (the "Cases"), and file this Motion to Enter into Debtor in Possession Financing with
International Bank of Commerce and Grant Post-Petition Lines (the "Motion"), and in support
thereof would respectfully show the Court the following:
I. JURISDICTION, VENUE AND BACKGROUND
1. This Court has jurisdiction to consider the Motion pursuant to 28 U.S.C. 157
and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(A). Venue is proper before
this Court pursuant to 28 U.S.C. 1408 and 1409(a). The statutory predicates for the relief
1
Debtors arethefollowingentities: Delta Produce, L.P. -Case No. 12-50073-LMC-11, Superior Tomato-Avocado, Ltd.
-Case No. 12-50074-LMC-11, Atled, Ltd.- Case No. 12-50075-LMC-11 and Staci Properties, Ltd.- Case No. 12-
50110-LMC.
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requested herein are section 364 of the Bankruptcy Code and Federal Rule of Bankruptcy
Procedure 4001.
II. BACKGROUND
2. On January 3, 2012 (the "Petition Date"), the Debtors (with the exception ofStaci
Properties, Ltd which filed its Chapter 11 case on January 9, 2012) filed voluntary petitions for
relief under Chapter 11 of title 11 of the United States Code, 11 U.S.C. 101-1532 (as
amended, the "Bankruptcy Code").
3. The Debtors continue to manage and operate their businesses as debtors
in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No creditors'
committee has been appointed in these Cases by the United States Trustee. Further, no trustee or
examiner has been requested or appointed.
4. The Debtors were involved in the produce supply business. The Debtors are no
longer operating and consequently have no more inventof'J. The Debtors are seeking to liquidate
assets in order to pay creditors. The have a large number of creditors that hold claims under the
Perishable Agricultural Commodities Act ("P ACA").
5. International Bank of Commerce ("IBC") holds pre-petition liens on the Debtors'
equipment, furniture and fixtures, inventory, accounts, general intangibles and insurance policies.
6. IBC consented to, and the Court approved the use of cash collateral on an interim
basis pursuant to that Order dated January 24, 2012 [Dkt. No. 49] and on a final basis after a
hearing on February 2, 2012 [Dkt. No. 146]. Pursuant to the final order, the Debtors are
permitted to use cash collateral through post-petition loans advanced by IBC. The Debtors will
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be able to use rent money collected from the short term lessee ($15,000 per month) that is
currently renting approximately half of the Delta warehouse space in accordance with the 90 cash
collateral budget attached to that order. IBC has consented to make post-petition Debtor-in-
Possession loans, subject to Court Order approving same, to cover the shortfall between the cash
collateral budget and the rent proceeds (the "DIP Facility").
II. RELIEF REQUESTED
7. The Debtors seek authority under 11 U.S.C. 364 to obtain post-petition
financing from IBC and grant IBC post-petition liens on assets that do not constitute P ACA
funds or assets. The Debtors urgently require the use of the funds to be realized from the
execution and consummation of the proposed post-petition financing facility with IBC in order to
pay employees, utilities, insurance costs and other expenses associated with maintaining the
assets of the estate in order to maximize value for a liquidation. Debtors have insufficient other
u.'1.encu.'nbered cash resources, and have been unable to obtain sufficient post-petition credit to
administer its business operations other than pursuant to section 364 of the Bankruptcy Code.
III. ARGUMENT
8. Without immediate access to cash on a monthly basis commensurate with the
proposed 90 day budget, the Debtors will be unable to maintain the remaining assets to the extent
necessary to sell on the open market as a going concern or piece-meal liquidation. Debtors
require the continued use of cash collateral to make payments on, among other things, taxes, fuel,
rentals, insurance, payroll, payroll expenses, utility charges, and the costs of supplies used in the
operation of the business. Such expenses are encountered by Debtors in the ordinary course of
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the Debtors' business, and the payment of these expenses is critical to the continued existence of
the business and the administration of the case and bankruptcy estate. A copy of the Debtors'
proposed ninety (90) day budget is attached hereto as Exhibit "A".
9. Prior to the Petition Date, pre-petition injunctions caused the Debtors' bank
accounts to be frozen, specifically those accounts in the name of Delta and Superior Tomato-
Avocado, Ltd. ("Superior"). The Debtors' bank accounts consist of both cash collateral that can
be used by the Debtors in the event the Court approves this motion, and other trust funds that the
Debtors do not seek permission to use through this Motion.
10. Immediately prior to the Petition Date, IBC advanced approximately $450,000
through a line of credit to the Debtor. Through the final cash collateral order, these funds plus
other funds on deposit with the Debtors' pre-petition IBC accounts and outstanding cashiers
checks, less any that were spent from the accounts that constitute payments to non-P ACA entities
......... +,.,. ror ;., """""hang"" .f,.,.,.. Tlll''c ...,,..,.,.m;ce tn 1Pnrl monPv on l'l monthlv b''""l.S to
U\.1 J.V\..UJ...l.lV\.1. \.V .I..LI'---' .l.l.l '"'L'\..V.I.J. .1.1. ""'.I..V.I. .I...LJ'-" u y.a.....,.o..a. .a.v .,....., ... .....,.....__ .A.a..a. ........ wJ _. ......... - ............ _. ______ .1 ..-
Debtors in connection with the 90 day budget. The Debtor does not seek the use of funds in its
various accounts that constitute trust funds under the Perishable Agricultural Commodities Act
("P ACA") through this Application.
11. The Debtor proposes to provide adequate protection to IBC to the extent required
by this Court, in the form of the following:
a. First and to the extent necessary, priming liens on all of the Debtors' real property
and all personal property other than property constituting P ACA funds; and
b. A second lien on all P ACA trust funds.
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12. Bankruptcy Rule 4001(c), which governs the procedures for obtaining post-
petition financing, provides in relevant part:
(2) Hearing. The court may commence a final haring on a motion for
authority to obtain credit no earlier than 14 days after service of the
motion. If the motion so requests, the court may conduct a hearing
before such 14 day period expires, but the court may authorize the
obtaining of credit only to the extent necessary to avoid immediate and
irreparable harm to the estate pending a final hearing, Fed R. Bankr. P.
4001(c).
13. Accordingly, the Court is authorized to permit the Debtors to borrow funds on
an interim basis post-petition under the DIP Facility. To enable the Debtor to maintain
insurance and preserve its estates' assets, pending a final hearing, the interim financing
requested herein should be authorized by this Court.
14. Ample justification exists for the approval of the proposed DIP Facility under
sections 364(c) and 364(d) of the Bankruptcy Code. As set forth above, the Debtors' ability to
enter into the DIP Facility is critical to the value of the estates. Without the DIP Facility, the
Debtor will be unable to maintain its assets for sale.
15. Under the DIP Facility, IBC will take a first and priming lien on all the Debtors'
real and personal property to the extent that lien does not attach to any P ACA assets or trust
funds, and a second lien on all P ACA trust fund.
16. The Debtors submit that approval of the DIP Facility is in the best interests of the
creditors and all parties in interest, and that the Court should therefore grant the Motion in all
respects and authorize the Debtors to enter into the DIP Facility and make interim borrowings
thereunder.
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17. The Debtors request the Court for an interim hearing to allow the commencement
of advances under the DIP Facility. The Debtors request that the Court conduct a hearing on the
entry of a final DIP order after fourteen (14) days notice.
WHEREFORE, PREMISES CONSIDERED, the Debtors request that the Court authorize
them to borrow from the DIP Facility from International Bank of Commerce upon the terms and
conditions set forth herein, and for such other and further relief at equity or law to which Debtors
may show themselves justly entitled.
Date: March 1t2012
L & B 14013/0002/L0583664.WPD/
Respectfully submitted,
ll" wJ
-
State Bar No. 05565500
ALLEN M. DeBARD
State Bar No. 24065132
LANGLEY & BANACK, INC.
745 E. Mulberry, Suite 900
San Antonio, TX 78212
(21 0) 736-6600
ATTORNEYS FOR DEBTORS AND DEBTORS
IN POSSESSION
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CERTIFICATE OF SERVICE
I hereby certify that on March A 2012, a true and correct copy of the above and foregoing
instrument was mailed, first class, postage prepaid to the attached notice list.
ALLEN M. DeBARD
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A&A Transportation, Inc.
4741 College Park
San Antonio, TX 78249
Bonanza 2001
P.O. Box 357
Hidalgo, TX 78857
Dimare Newman, Inc.
P.O. Box 517
Newman, CA 95360-0517
Harllee Packing, Inc.
P.O. Box 8
Palmetto, FL 34220
J -C Distributing, Inc.
2731 N. Donna Avenue
Nogales, AZ 85621
Mission Produce, Inc.
2500 Vinyard Ave., Suite 300
Oxnard, CA 93036
Royal Flavor, LLC
2655 Melksee St.
San Diego, CA 92154
A&D Carriers
4126 Luckenbach Road
San Antonio, TX 78251
B. Catalani
1500 S. Zarzamora, Unit 236
San Antonio, TX 78207
Fresh Farm Direct, LLC
106 Adams St., Suite 2A
Monte Vista, CO 81144
Alamo Leasing
2010 NW Military Hwy.
San Antonio, TX 78213
Del Camp Supreme, Inc.
672 W. Frontage Road
Noales, AZ 85621
Divine Ripe, LLC
700 S. Bridge St., Suite C
Hidalgo, TX 78557
Harvest Crown Co, Inc.
P.O. Box 13578
Bakersfield, CA 93389
Juniper Tomato Grower, Inc.
P.O. Box 38
Greensboro, FL 32330
Rio Queen Citrus
4012 E. Goodwin Rd.
Mission, TX 78574
Slankard Produce Co., Inc.
1500 S. Zarzamora
San Antonio, TX 78207
A&A Concepts, LLC
1219 S. Zarzamora St.
San Antonio, TX 78207
Banana Distributing
1500 S. Zarzamora, Unit 401
San Antonio, TX 78207
Gonzalez Mexican Produce
2501 W. Military Hwy., A-23
McAllen, TX 78503
Bernardi & Associates
557 E. Frontage Road
Nogales, AZ 85621
Delta Produce Marketing
2001 S. Laredo St.
San Antonio, TX 78207
Frank's Distributing of Produce
P.O. Box 2020
Nogales, AZ 85628-2020
IFCO Systems NA
5250 Tacco Drive
San Antonio, TX 78244
Kingdom Fresh Produce, Inc.
2243 North Goolie Rd., #A
Donna, TX 78537
United States Trustee
615 E. Houston St., #533
San Antonio, TX 78205
Valero Marketing & Supply
P.O. Box 300
Amarillo, TX 79105-0300
Averitt Brokerage Co., Inc.
9999 Perrin Beitel, Suite B
San Antonio, TX 78217
Coosemans Houston, Inc.
3124 Produce Row
Houston, TX 77023
Harllee Packing, Inc.
P.O. Box 8
Palmetto, FL 34220
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Henry Avocado Corp.
P.O. Box 300867
Escondidio, CA 92030-0867
M&P Logistic LP
1500 S. Zarzamora, Unit 306
San Antonio, TX 78207
Slankard Produce
1500 S. Zarzamora St.
San Antonio, TX 78207
Willson Davis Co.
1500 S. Zarzamora St., #103
San Antonio, TX 78207
Craig A. Stokes
Stokes Law Offices, LLP
3330 Oakwell Court, Suite 225
San Antonio, TX 78218-3066
Zachary B. Aoki
Thurman & Philiips, P.C.
8000 IH-10 West, Suite 1000
San Antonio, Texas 78230
Celinda Baez Guerra
Flume Law Firm, LLP
1020 NE Loop 410, Suite 200
San Antonio, TX 78209
David G. Aelvoet
Linebarger Goggan Blair & Sampson
711 Navarro, Suite 300
San Antonio, TX 78205
Joe R. Hinojosa
Barkhurst & Hinojosa, PC
110 Broadway, Suite 350
San Antonio, TX 78205
Evan S. Goldstein
Updike, Kelly & Spellacy, PC
P.O. Box 231277
Hartford, CT 06123-1277
Kitchen Pride
P.O. Box 585
Gonzales, TX 78629
Maxim Egg Farms
P.O. Box 200805
Dallas, TX 75320-0805
Sunriver Sales
P.O. Box 2738
Visalia, CA 93279
International Bank of Commerce
130 E. Travis St.
San Antonio, TX 78205-1601
Robert E. Goldman, Esq.
1 East Broward Blvd., Ste. 700
Fort Lauderdale, FL 33301
National LS, Inc.
C/0 Zach Dworaczyk
P.O. Box 840352
Houston, TX 77284
Michael J. Black
Burns & Black, PLLC
750 Rittiman Rd.
San Antonio, TX 78209
Bruce W. Akerly
Cantey Hanger, LLP
1999 Bryan St., Suite 3300
Dallas, TX 75201
Elliott S. Cappuccio
Pulman, Cappuccio, Pullen & Benson
2161 NW Military Hwy., Suite 400
San Antonio, TX 78213
Le Best Banana Supply Co.
P.O. Box 295
Hidalgo, TX 78557
Rio Bravo Produce
1006 S. Cesar Chavez
Edinburg, TX 78542
Touchstone & Associates
1500 S. Zarzamora St., #205
San Antonio, TX 78207
Internal Revenue Service
P.O. Box 7346
Philadelphia, PA 19101-7346
Michael Colvard
Martin & Drought
Suite 300 Convent Street, 25
1
h Floor
San Antonio, TX 78205
Diana M. Geis
Curl & Stahl, PC
700 N. St. Mary's, #1930
San Antonio, TX 78205
Steven E. Nurenberg
Meuers Law Firm
5395 Park Central Court
Naples, FL 34109
Jason R. Klinowski
Freeborn & Peters, LLP
311 S. Wacker Dr., Suite 3000
Chicago, IL 60606
Randall A. Pulman
Pulman, Cappuccio, Pullen & Benson
2161 NW Military Hwy., Suite 400
San Antonio, TX 78213
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EXHIBIT ''A''
12-50073-lmc Doc#157-1 Filed 03/22/12 Entered 03/22/12 09:18:36 Exhibit A Pg 2 of 3
90 DAY CASH COLLATERAL BUDGET
Superior Tomato-Avocado, Ltd.
Februaa 2012 March 2012
Wages, Salaries & Benefits 3,000.00
1
3,000.00
Deducts for Child Support 0.00 0.00
Due (past due
Utilities - CPS 8,800.00 8,800.00
SAWS 1,904.00 1,904.00
Phones 2,160.00 2,160.00
Package Ins. (Building, 2,605.13 2,605.13
Contents, Equipment, Crime ,
General Premises Liab)
Business Auto Insurance 4,961.77 4,961.77
Motor Cargo 1,382.84 1,382.84
Adequate Assurance Deposit 0.00 0.00
for Utility Services
Key Man Insurance 1,319.85 1,319.85
Pest Control 300.00 300.00
Shortfall for January Premium 179.31
Payments to Flatiron
'T'A'T' A T
~ 2 6 h
1
2.
0
0 '1:26 433.5Q l V lrl.L.
I"' '
Delta Produce, LP
Februaa 2012
Wages, Salaries & Benefits 12,500.00 (plus
benefitsi
Deducts for Child Support 0.00
Due (past due)
Utilities - CPS 20,000.00
SAWS 3,600.00
Internet Connection 200.00
Phones (Leasing/Equipment) 1,705.89
Telephone Service 1,060.28
Iso-Therm Refrigeration 600.00
1
Named employee to be determined- $3,000- plus benefits
2
Melinda Day-Harper, CRO $7,500- plus benefits
Scott Russell, Transp. Oper. $5,000 -plus benefits
March 2012
12,500.00 (plus
benefits)
0.00
20,000.00
3,600.00
200.00
1,705.89
1,060.28
600.00
April2012
3,000.00
0.00
8,800.00
1,904.00
2,160.00
2,605.13
4,961.77
1,382.84
0.00
1,319.85
300.00
~ 2 6 433.59
I"'+" '
April2012
12,500.00 (plus
benefitsl
0.00
20,000.00
3,600.00
200.00
1,705.89
1,060.28
600.00
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Package Insurance (Building, 4,185.72 4,185.72 4,185.72
Contents, Equipment, Crime ,
General Premises Liab)
Auto Insurance 13,521.57 13,521.57 13,521.57
Boiler & Machinery Insurance 322.65 322.65 322.65
Floater/Transit Insurance 1,670.43 1,670.43 1,670.43
Umbrella Policy 3,957.20 3,957.20 3,957.20
Pest Control 300.00 300.00 300.00
ADT Security (Warehouse) 101.94 101.94 101.94
ADT Security (Offices) 157.01 157.01 157.01
Time Warner Cable 407.30 407.30 407.30
Toshiba (Lease on 4 Copiers}; 1,969.91 1,969.81 1,969.91
General Business Sol. (IT) 600.00 600.00 600.00
TOTAL: $66,859.90 $66,859.90 $66,859.90
3
Debtor has indicated that only one copier is needed, and will call Toshiba to attempt to rework this lease
or to the extent necessary, Debtor will reject this lease.