United States Bankruptcy Court Middle District of Florida Fort Myers Division

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United States Bankruptcy Court Middle District of Florida Fort Myers Division UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA FORT MYERS DIVISION In re: Chapter 11 VICTOR G. MELLOR, Case No. 9:10-bk-20398-DHA COLONIAL CONSTRUCTION Case No. 9:10-bk-28157-DHA COMPANY, INC., COLONIAL READY MIX, LLC, Case No. 9:10-bk-28160-DHA CCC TRUCKING, LLC, Case No. 9:10-bk-28161-DHA Debtors. (Jointly Administered under / Case No. 9:10-bk-20398-DHA) Emergency Hearing Requested for December 16, 2010 at 10:30 a.m. EMERGENCY MOTION OF COLONIAL CONSTRUCTION COMPANY, INC., COLONIAL READY MIX, LLC, AND CCC TRUCKING, LLC FOR ENTRY OF AN ORDER (A) AUTHORIZING THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OWNED BY DEBTORS COLONIAL CONSTRUCTION COMPANY, INC., COLONIAL READY MIX, LLC, AND CCC TRUCKING, LLC, FREE AND CLEAR OF LIENS, CLAIMS AND ENCUMBRANCES PURSUANT TO 11 U.S.C. § 363; (B) ESTABLISHING BID PROCEDURES AND SALE PROCESS; (C) APPROVING ASSET PURCHASE AGREEMENT; (D) APPROVING FORM AND MANNER OF NOTICES; (E) SCHEDULING AUCTION AND FINAL SALE APPROVAL HEARING; (F) AUTHORIZING THE REJECTION OF CERTAIN EXECUTORY CONTRACTS AT THE SALE HEARING AND AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF OTHERS; AND (G) GRANTING RELATED RELIEF Colonial Construction Company, Inc. (“Colonial”), Colonial Ready Mix, LLC (“Ready Mix”), and CCC Trucking, LLC (“CCC Trucking”, collectively with Colonial and Ready Mix, the “Debtors” or “Corporate Debtors”), by and through their undersigned counsel, and pursuant to 11 U.S.C. §§ 105, 363 and 365, Fed. R. Bank. P. 2002, 6004, 6006, and 9014 and Local Rules 2002-1, 6004-1, and 9014-1, move the Court for entry of an order: A. Authorizing the Sale of Substantially All of the Assets Owned by Debtors Colonial Construction Company, Inc., Colonial Ready Mix, LLC, and CCC Trucking, LLC, Free and Clear of Liens, Claims and Encumbrances Pursuant to 11 U.S.C. § 363; B. Establishing Bid Procedures and Sale Process; C. Approving Agreement for Purchase and Sale; D. Approving Form and Manner of Notices; E. Scheduling Auction and Final Sale Approval Hearing; F. Authorizing the Rejection of Certain Executory Contracts at the Sale Hearing and Authorizing the Assumption and Assignment of Others; and G. Granting Related Relief. In support of the Motion, the Debtors state as follows: I. INTRODUCTION In order to maximize the value of their assets for their estates and their creditors subject to Court approval, the Corporate Debtors intend to sell substantially all of their assets and property, as defined below, at auction and pursuant to the bidding procedures and sales process described below. The sale will be “as-is,” “where is,” without any warranties of any kind, free and clear of all liens, claims and encumbrances. Additionally, the Debtors seek to assume and reject various executory contracts as described below. II. JURISDICTION, VENUE, AND STATUTORY AND PROCEDURAL BASIS The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (N), and (O). Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409. The statutory predicates for the requested relief are Sections 105(a), 363(b), (f), (k), and (m), and 365(a) and (f) of Title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”), Rules 2002, 6004, 6006, and 9014 of the Federal Rules of Bankruptcy Procedure (“Fed. R. Bankr. P.”) and Local Rules 2002-1, 6004-1, and 9014-1. Page 2 of 23 III. BACKGROUND A. Debtors’ Businesses and Bankruptcy Filings 1. Colonial, owned by co-Debtor, Victor Mellor (“Mellor”) and his wife, Elizabeth Amy Mellor (“Amy Mellor”), is one of the largest single-plant producers of prestressed structural floor and roof systems (hollowcore plank) in the southeastern United States (Florida, Georgia, North Carolina, South Carolina, Texas, Virginia, Kentucky, and Tennessee). Ready Mix and CCC Trucking are also owned by the Mellors and operate as Colonial’s state of the art concrete batch plant and trucking fleet. Colonial manufactures 6”, 8”, 10”, and 12” hollowcore, solid slabs, precast stairs, double T’s, inverted beams, precast seawall panels, bin block, septic tanks, and cisterns. Colonial also supplies steel and block. Colonial, Ready Mix, and CCC Trucking all operate their businesses at 5250 Linwood Road, Placida, Florida (the “Placida Facility”). 2. On August 25, 2010, Mellor filed his Voluntary Petition for Relief under Chapter 11 of Title 11 of the Bankruptcy Code. Mellor is managing his financial affairs and property as a Debtor in Possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. 3. On November 22, 2010, Colonial, Ready Mix, and CCC Trucking filed their Voluntary Petitions for relief under Chapter 11 of the Bankruptcy Code and are operating their businesses and managing their property as Debtors in Possession pursuant to §§ 1107(a) and 1108 of the Bankruptcy Code. 4. No trustee or examiner has been appointed in these cases and no official committee has yet been appointed pursuant to § 1102 of the Bankruptcy Code. Page 3 of 23 B. Debtors’ Pre-Petition Secured Indebtedness 5. The Debtors believe that Perry Lawrence (“Lawrence”), will assert a secured claim against the Debtors, in connection with a Stock Purchase Agreement (the “SPA”) entered into between Lawrence and the Mellors, whereby the Mellors purchased the stock of Colonial, Ready Mix, and CCC Trucking. 6. The significant majority of the consideration for the SPA was provided by Colonial, Trucking, and Ready Mix. On or about January 5, 2009, the Debtors executed a Loan Agreement, pursuant to which Lawrence agreed to lend $2,500,000 to the Mellors and Colonial Construction to purchase Lawrence’s stock interest in the Debtors, secured by inter alia, certain real property owned by Colonial, and a second blanket lien on all the personal property of the Debtors. 7. The Debtors believe that Lawrence asserts a secured claim in the approximate amount of $2,300,000, secured by liens encumbering all of Debtors’ assets (the “Lawrence Secured Debt”). 8. The Debtors believe that the Lawrence Secured Debt and any claims of Lawrence against the Debtors are avoidable, subject to subordination, and otherwise invalid, and subject to bona fide dispute. 9. Prior to the Petition Date, Colonial borrowed monies on a secured basis from Marshall & Ilsley Bank (“M&I Bank”) in the approximate amount of $4,000,000. The UCC-1 financing statements on file for M&I Bank reflects that the intended collateral is all assets of the Debtors. Page 4 of 23 10. Bon Eau Enterprises, LLC (“Bon Eau”) asserts that it is the holder of the Loan Documents (collectively, the “Bon Eau Loan Documents”), as successor in interest to M&I Bank by asset assignment from M&I Bank. 11. As of the Petition Date, Colonial believes that Bon Eau will contend that it is owed approximately $4,561,501 under the Bon Eau Loan Documents (the “Bon Eau Secured Debt”). 12. Pursuant to the Bon Eau Loan Documents, it appears that Colonial may have granted to Bon Eau security interests in the Debtors’ assets and proceeds thereof (collectively, the “Collateral”). 13. The Debtors believe that Bon Eau will assert (a) that it has perfected liens on the Collateral, and (b) that its perfected liens generally have priority over all liens against the Collateral, other than property taxes. 14. Additionally, the following creditors have filed UCC Financing Statements with the Florida Secretary of State asserting secured claims against the Debtors’ equipment and/or all assets (the Additional Secured Creditors”): (a) American Express Business Finance Corp.; (b) CitiCapital Commercial Corp.; (c) Citicapital Commercial Leasing Corp.; (d) CNH Capital America, LLC; (e) Florida Community Bank; (f) Gold Bank; and (g) The Provident Bank. Page 5 of 23 (Lawrence, Bon Eau, and the Additional Secured Creditors are collectively referred to as the “Secured Creditors”). 15. The Debtors believe that Bon Eau will assert that its secured interest in the Collateral is superior in position to all other Secured Creditors. IV. PROPOSED SALE TRANSACTION, BIDDING PROCEDURES AND SALE PROCESS A. Sale Transaction 16. The Debtors intend to sell substantially all of the assets and property of Colonial, Ready Mix, and CCC Trucking pursuant to an Asset Purchase Agreement (“APA”) between the Debtors and Bon Eau Enterprises, LLC (“Bon Eau”), a copy of which is attached hereto as Exhibit “A”, or otherwise through the sale process described in this Motion, pursuant to the schedule proposed herein, and consistent with: (i) the due process requirements of the Bankruptcy Code and Fed. R. Bankr. P. and (ii) the APA. The assets and property (together, the “Property”) to be sold are expressly defined in the APA. The APA as attached is drafted for the transaction contemplated between the Corporate Debtors and Bon Eau. Should a party bid above any credit bid made by Bon Eau as contemplated herein and win the auction, the Debtors will enter into the APA with that highest and best bidder on terms substantially similar to those found in the APA except as otherwise provided for herein (including in this paragraph), and such other changes as shall be needed to reflect the name of the buyer and the purchase price. 17. The APA contemplates, inter alia, the following:1 Sellers: Colonial, Ready Mix, and CCC Trucking Buyer: Bon Eau or the Highest and Best Bidder Property: Substantially all of the assets of Colonial, Ready Mix, and CCC Trucking. 1 The above terms are merely set forth for convenience. The APA should be consulted for the actual terms of the sale. In the event of a conflict, the terms of the APA control. Page 6 of 23 Purchase Price: The Purchase Price for the Property shall be at least $2,000,000.00 (the “Purchase Price”).
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