In re:

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
Chapter 11
Cordillera Golf Club, LLC,
1
dba The Club at Cordillera,
Case No. 12-11893 ( ' - _ ~ )
Debtor.
DECLARATION OF DANIELL. FITCHETT, JR. IN SUPPORT
OF CHAPTER 11 PETITIONS AND FIRST DAY RELIEF
I, DANIELL. FITCHETT, JR., do hereby declare, under penalty of perjury, that:
1. I am the ChiefExecutive Officer ("CEO") of Cordillera Golf Club LLC (the
"Debtor"), a limited liability company duly organized under and existing pursuant to the laws of
the State of Delaware. In my capacity as such, I have detailed knowledge of, and experience
with, the business and financial affairs of the Debtor.
2. As the Debtor's CEO, I am one of the officers of the Debtor responsible for
devising and implementing the Debtor's business plans and strategies, overseeing the Debtor's
financial, operational and legal affairs, and supervising the maintenance of its books and records.
In addition, I have been involved in the Debtor's chapter 11 planning process (the "Chapter 11
Process"), including, inter alia, (i) participating in the development, negotiation and
implementation of various strategic alternatives for restructuring, (ii) managing the advisors
engaged by the Debtor in connection with the Chapter 11 Process, (iii) supervising the
preparation of documentation needed to implement the Chapter 11 Process, and (iv) consulting
1
The Debtor in this chapter 11 case, and the last four digits of its employer tax identification number, is:
XX-XXXJ317. The corporate headquarters address for the Debtor is 97 Main Street, Suite E202,
Edwards, CO 81632.
01:122303 71.4
on a regular basis with the Debtor's other officers and executives, including but not limited to the
Chief Restructuring Officer ("CRO") of the Debtor.
3. On the date hereof (the "Petition Date"), the Debtor filed a voluntary petition (the
"Petition") for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. 101 et
seq. (the "Bankruptcy Code"), in an effort to preserve and maximize the value of its chapter 11
estate.
4. The Debtor intends to operate its business and to manage its properties as a
debtor-in-possession under sections 1107(a) and 1108 of the Bankruptcy Code. I am advised by
counsel that this Court has jurisdiction over these chapter 11 cases pursuant to 28 U.S.C. 157
and 1334 and venue is proper in the United States Bankruptcy Court for the District of Delaware
pursuant to 28 U.S.C. 1408 and 1409.
BACKGROUND
5. Cordillera is a renowned and exclusive residential golf community located in
Edwards, Colorado. Boasting some of the most beautiful views in the world, golfers at
Cordillera enjoy some of the most exclusive golf amenities available anywhere.
6. Initially conceived in the early 1990's, Cordillera today has burgeoned into a
sprawling development spanning approximately 7,000 acres. The Cordillera community is
governed by a homeowners association known as the Cordillera Property Owners' Association
("CPOA") and the Cordillera Valley Club Property Owners' Association ("CVCPOA").
Cordillera is comprised of four distinct residential neighborhoods known as the Divide, the
Ranch, the Summit, and the Cordillera Valley Club which collectively consist of 1087 privately
owned residential lots, over half of which are improved with custom and semi-custom single
family homes.
01:122303 71.4
2
A. The Cordillera Club
7. The Cordillera lifestyle and experience are punctuated by private amenities and
facilities available to members (collectively, "Club Members") who join the exclusive Club at
Cordillera (hereinafter the "Cordillera Club"). The Cordillera Club boasts of three signature golf
courses, a Dave Pelz designed short course, three tennis centers and fitness facilities, five indoor
and outdoor pools, a summer camp with Trailhead clubhouse for children, and miles of
maintained riding, hiking and Nordic ski trails (collectively, the "Private Amenities" or "Club
Facilities").
8. The Cordillera Club offers its members year-round opportunities to participate in
clubs, classes, parties, events, outings and tournaments. In addition, Club Members can purchase
memberships granting direct access to alpine skiing through affiliation with the Cordillera Vail
Club.
9. Each property owner within Cordillera is a voting member of the CPOA and pays
dues and assessments to CPOA. Ownership of property at Cordillera with the concomitant
membership in CPOA does not include a right of access to or use of the Private Amenities
offered by the Cordillera Club.
10. The Cordillera Club sells non-equity and non-voting memberships to the
Cordillera Club ("Club Memberships") by which its Club Members may access and use the
Private Amenities.
11. The Cordillera Club Membership Plan ("Membership Plan") currently provides
that there shall be no more than 1085 golf memberships and up to 100 social memberships.
Approximately one-half of all property owners within Cordillera are Club Members.
01:12230371.4
3
12. The primary source of revenue to fund the operations and management ofthe
extensive Cordillera Club Facilities is derived from membership deposits, initiation fees and
annual membership dues. Other sources of revenue include transfer fees, golf fees, guest fees,
pro shop revenue, food and beverage revenues and operating department revenues.
B. The Membership Plan
13. Membership at the Cordillera Club is governed by the terms and conditions of the
Membership Plan and the particular Membership classification selected by any individual. The
primary difference between the various Club Membership classifications is related to rights,
benefits, privileges, transferability, reissue priorities and financial obligations.
14. The Membership Plan provides for different rights, privileges and obligations
based upon designated categories of Club Memberships.
15. Initiation fees, membership deposits and membership dues at the Cordillera Club
are commensurate with the offerings of comparable private resort golf clubs and are generally in
line with comparable clubs in the geographic region with only one golf course.
16. The Membership Plan, which may be revised from time to time, grants the
Cordillera Club broad discretion in determining the annual dues, minimums, fees and other
charges to be paid by Club Members.
17. The Membership Plan also grants the Cordillera Club discretion to control the use
of Club Facilities.
18. The Membership Plan does not obligate the Cordillera Club to make Club
Facilities available for use on any given date or during any given hours.
01:122303 71.4
4
C. The Debtor's Acquisition of the Cordillera Club
19. In June 2009, the Debtor acquired the Cordillera Club including all of its
facilities, improvements and the approximate 730 acres of real property.
20. Prior to June 2009, the Debtor's current equity owner- David Wilhelm- owned
an approximate 30% interest in the Debtor but held no management positions with the Debtor.
Following a forensic audit completed at Mr. Wilhelm's request, it was revealed that the Debtor's
then-current management- none of whom are associated in any way with the Debtor's current
management or ownership- had diverted substantial funds away from the Debtor's operations.
This revelation lead to arbitration proceedings among Mr. Wilhelm (in his capacity as 30%
owner of Cordillera) and the Debtor's then-current management team, which also owned the
remaining 70 per cent. As a result of that arbitration, entities formed by Mr. Wilhelm acquired a
100% ownership interest in the Debtor and anyone associated with the Debtor's then-current
management's mismanagement of the Debtor was relieved of their positions. No management
team member involved in the arbitration holds any management position at the Debtor. Instead,
current ownership immediately employed outside professional management to run the Club, and
today utilizes the services of a CFO as well as the CRO. In fact, no member of the former
majority owner has set foot on or been involved in the Club since June of2009.
21. An independent appraisal report dated as of May 1, 2009 prepared for the
Debtor's senior lender, Alpine Bank ("Alpine") valued the Cordillera Club Facilities and
property at approximately $50 million.
22. As part of the Debtor's acquisition of the Cordillera Club, Debtor borrowed $13.7
million from Alpine and secured the loan with a deed of trust against the Cordillera Club's real
01:12230371.4
5
property, facilities and improvements. The balance owing under that loan as of the petition date,
as claimed by the Bank, is $12.7 million.
23. The Debtor envisioned transforming the Cordillera Club into one of the premier
private golfing and residential clubs in the country, hoping to further enhance the value of the
property and brand that the Debtor had acquired.
24. The Debtor and its respective affiliates had developed an innovative and
proprietary business model known as the Wind Rose Collection of Private Clubs (including the
Wind Rose Lodging Club). The Debtor's business strategy was to create a new paradigm in the
way in which members of exclusive private clubs acquire and utilize second homes and vacation
properties, essentially providing reciprocal membership privileges and lodging options across the
collection of private clubs owned and operated by affiliates of the Debtor.
25. The Wind Rose Lodging Club model is visionary in its unique approach that sets
it apart from the high-end hotel, fractional, destination clubs and private residence clubs.
Cordillera is one of few properties in North America that provided the size, zoning,
infrastructure, cachet, seasons and amenities required of the Debtor's business model. The
Debtor thereby invested in and acquired Cordillera as the cornerstone property to their planned
Wind Rose Collection of Private Clubs.
26. In furtherance of their vision, the Debtor introduced two new categories of
membership - Premier and Charter- and invested substantial sums of money into improving the
Cordillera Club Facilities, services and operations for its Club Members. Approximately 166
Club Members upgraded to the new Premier Memberships, lending validity to the widespread
interest in and viability of the Wind Rose Lodging Club model.
01:12230371.4
6
D. Tension With the Club Members
27. Starting in August 2010, a small but vocal minority of current and former Club
Members commenced tactical activities that, in the Debtor's view, represents an orchestrated and
pervasive pattern of conduct and activities designed to create an environment that the Debtor
believes was intended to result in a below-market transfer of ownership and control of the
Cordillera Club to those current and former Club Members.
28. These activities included interfering with the Cordillera Club's contractual
relations with its Club Members, inciting Club Members to resign in substantial numbers from
the Cordillera Club, and to boycott the Club Facilities. Unfortunately, the actions of this sub-
group of current and former Club Members resulted in a decrease in annual dues and similar
revenue from Club Members and a decrease in revenue from pro shop sales, food and beverage
sales, guest fees, golf fees, special events, tournaments, banquets and other events. These
revenue streams are vital to sustain and support the operations and the Club Facilities at the
Cordillera Club.
29. These current and former Club Members additionally leveled accusations against
the Debtor and certain of its principals that the Debtor had diverted monies to other entities or
purposes.
30. Taking these accusations seriously and in order to vindicate itself, the Debtor
retained the accounting firm of Ehrhardt Keefe Steiner & Hottman ("EKS&H") to conduct a
forensic audit of Debtor's books and records. The Debtor further agreed to authorize EKS&H to
share Debtor's confidential financial data with an independent accounting firm to be hired by,
inter alia, the CPOA. The CPOA designated its own auditor, Hein & Associates, who worked in
concert with EKS&H in conducting the audit of Debtor's accounting records.
01:12230371.4
7
31. Neither EKS&H nor He in & Associates found any evidence supporting the
former and current Club Members' prior accusations that Debtor had diverted monies to other
entities or purposes. To the contrary, both accounting firms concluded that the Debtor's internal
accounting controls are sound and that all receipts and expenses were properly booked and
utilized solely for operations of Cordillera Club.
32. Despite the Debtor vindicating itself as to the former and current Club Members'
accusations, the damage resulting from this small group's campaign- including significant
membership cancellations- required the Debtor to dramatically cut back its planned operations
for 2011. Coupled with a nationwide sluggish economy, these factors precipitated
unprecedented loss of capital from operations of the Club.
33. In May 2011, the Club advised the members that the mass exodus of members,
coupled with certain Club Members' apparent boycott of the Club Facilities, had severely and
detrimentally impacted the Club and, as a result, the Club had no alternative but to open only one
of the four club facilities- the Valley Club. Later in 2011, the decision was made to also open
the Summit Course. The Mountain Course and the Short course were not opened in 2011.
The Pending Litigation
34. The Debtor is a party in the litigation matter pending in Colorado.
"CPOA/CTC Litigation"
35. On May 24, 2011, the Debtor filed a complaint in the District Court for Eagle
County, Colorado against the CPOA and the Cordillera Transition Corporation ("CTC"). The
Debtor's case turns upon a series of actions taken by a sub-group of Club Members in
furtherance of an apparent strategy to discredit the Debtor, incite Club Member resignations,
01:122303 71.4
8
damage the Debtor financially and reputationally, and ultimately seize ownership of the
Cordillera Club at a substantially discounted valuation.
36. The Complaint asserts seven causes of action for (1) Tortious Interference with
Contract; (2) Tortious Interference with Prospective Business Advantage; (3) Colorado
Organized Crime Control Act; ( 4) Fraud; (5) Fraud in the Inducement; (6) Civil
Conspiracy/Collusion; and (7) Defamation. The parties presently are in the midst of discovery.
Written discovery has been exchanged by all parties with approximately 145,000 pages of
documents produced in the case. The first series of depositions is scheduled to commence the
week of July 9, 2012 with additional depositions in the process of being scheduled. A three
week jury trial is set for April 1-19, 2013.
"Member Litigation"
37. Later in June 2011, in response to the Debtor's lawsuit, a class action suit was
filed against Debtor for breach of contract, alleging that management was required to open all
facilities. Foley v. Cordillera Golf Club LLC, 2011 CV 552 filed in Eagle County District Court,
Colorado? Class Plaintiffs seek return of all 2011 membership dues paid as well as their
membership deposits.
38. On May 4, 2012, Debtor filed a motion to dismiss the securities claims that were
added by way of third amended complaint. Two other defendants filed a separate motion to
dismiss for failure to state facts upon which relief may be granted. A decision on both motions is
pending.
2
The Plaintiff, Foley, has no relation to Debtor's counsel, Foley & Lardner LLP.
01:12230371.4
9
The Debtor's Chapter 11 Filing
39. The Debtor's 2010 budget estimated 50 additional Club Membership sales in
2010, well within statistical membership absorption and matriculation rates in comparable
markets. However, due to economic, industry and other circumstances beyond Debtor's control,
however, Club Membership sales for 2010 were not as robust as forecast. By mid-2010, it was
clear that the Cordillera Club lacked the critical mass of Club Members necessary to maintain the
high level of services and operations at the Club Facilities required by the Club Members.
40. These conditions were exacerbated by the tension with- and subsequent litigation
involving- the Debtor and the sub-group of Club Members which resulted in significant Club
Member cancelations, loss of dues and substantial litigation costs.
41. As a result of the foregoing, the Debtor will be unable to make the payment due to
Alpine Bank by close of business on June 26, 2012. After considering other alternatives, the
Debtor's management and ownership, in their reasonable business judgment, concluded that the
most effective way to maximize the value of their estates for the benefit of creditors is to
complete a prompt sale of one of its Club Facilities -the Mountain Course- pursuant to section
363 of the Bankruptcy Code, subject to higher or better bids at a public auction (a "Sale
Transaction").
42. The Debtor believes that a Sale Transaction of the Mountain Course through a
Bankruptcy Court supervised process will result in a substantial infusion of capital resulting in
the emergence of a much stronger and economically viable enterprise that will maximize the
value for the Debtor's business and ultimately benefit all creditor constituents, including Alpine
and Wilhelm.
01:12230371.4
10
43. To advance the foregoing goals, the Debtor- in consultation with its management
and professionals (including its CRO)- has retained the services of an experienced real estate
consultant with significant experience in the golf and hospitality industries, GA Keen Realty
Advisors, LLC, to assist the Debtor in conducting a robust post-petition marketing process to sell
the Mountain Course to the highest and best bidder through a court-supervised auction process.
The resulting capital return to the Debtor's estate will be utilize to reorganize and fund the
Debtor's remaining asset portfolio through a chapter 11 plan of restructuring.
FIRST DAY PAPERS
44. As a result of my first-hand experience, and through my review of various
materials and information, discussions with other of the Debtor's executives, and discussions
with the Debtor's outside advisors, I have formed opinions as to (a) the necessity of obtaining the
relief sought by the Debtor in its "first-day" applications and motions listed on Exhibit A hereto
(collectively, the "First Day Papers"), (b) the need for the Debtor to continue to operate
effectively, (c) the deleterious effects upon the Debtor of not obtaining such relief, and (d) the
immediate and irreparable harm to which the Debtor will be exposed immediately following the
Petition Date unless the relief requested in the First Day Papers is granted without delay.
45. I submit this Declaration in support of the Debtor's petition and First Day Papers
filed with the Court in connection with the commencement of this case.
46. I participated in preparing and have reviewed each of the First Day Papers
(including the exhibits and schedules attached thereto) and, to the best of my knowledge, I
believe that the facts set forth therein are true and correct. Such representation is based upon
information and belief and through my review of various materials and information, as well as
my experience and knowledge of the Debtor's operations and financial condition. If I were
01:122303 71.4
11
called upon to testify, I could and would, based on the foregoing, testify competently to the facts
set forth in each of the First Day Papers.
4 7. The relief sought in the First Day Papers will minimize the adverse effects of the
instant chapter 11 case on the Debtor and result in maximum creditor recoveries. I believe that
the relief sought in each of the First Day Papers is necessary to enable the Debtor to operate
effectively in chapter 11 as a debtor-in-possession.
48. As described more fully in the First Day Papers, the relief requested therein was
carefully tailored by the Debtor, in consultation with its advisors, to ensure that the Debtor's
immediate operational needs are met and that the Debtor suffers no immediate and irreparable
harm. I personally participated in the analysis that lead to the creation of each of the First Day
Papers and assisted in the drafting and development of the relief requested therein. At all times,
the Debtor's management and advisors remained cognizant of the limitations imposed on
debtors-in-possession and, in light of those limitations, the Debtor narrowed the relief requested
at the outset of this case to those issues that require urgent relief to sustain the Debtor's
immediate operability.
49. Accordingly, for the reasons stated herein and in each of the First Day Papers
filed concurrently or in connection with the commencement of this case, I respectfully request
that each of the First Day Papers be granted in its entirety, together with such other and further
relief as this Court deems just and proper.
CASH COLLATERAL FIRST DAY MOTION
SECURED DEBT OBLIGATIONS
50. Or about June 26, 2009, Alpine and the Debtor entered into that certain Business
Loan Agreement (the "Loan Agreement"), pursuant to which Alpine loaned to the Debtor the
01:12230371.4
12
original principal amount of$13,700,000 (the "Alpine Loan"). True and correct copies of the
relevant Alpine Loan Documents are being filed contemporaneously with the Cash Collateral
Motion.
51. The Alpine Loan is evidenced by a Promissory Note dated June 29, 2009 (the
"Alpine Note"). The Note matured on June 26, 2012. The Alpine Loan purports to be secured
pursuant to a Deed of Trust dated June 26, 2009 and recorded in Eagle County Record's Office
on June 29, 2009 as Document No. 200912623 (the "Alpine Deed of Trust").
52. As security for the Debtor's obligations under the Alpine Note, the Alpine Deed
of Trust purports to encumber the real property described therein, including all or a portion of the
Facilities (the "Real Property"). The Alpine Deed of Trust also purports to encumber certain
personal property described therein, including "all equipment, fixtures, and other articles of
personal property now or hereafter owned by Grantor, and now or hereafter attached or affixed to
the Real Property .... " The Alpine Note also purports to be secured pursuant to a Collateral
Assignment of Contracts dated June 26, 2009 purporting to encumber certain water rights, and
related contracts as listed therein; a Collateral Assignment and Security Agreement Covering
Agreements, Permits and Contracts dated June 26, 2009, purporting to encumber the "Collateral"
as defined therein, including contracts, licenses, and other agreements as described therein; a
Collateral Assignment and Security Agreement Covering Golf Membership Revenues dated June
26, 2009, purporting to encumber "Net Sales Revenues" and "Income from Dues" as defined
therein, including revenues from the sale of golf course memberships with respect to the Courses
and dues, assessments, fees or other charges on account of memberships in the Club; a
Commercial Pledge Agreement dated June 26, 2009 purporting to encumber all memberships in
the Club; and a Commercial Security Agreement dated June 26, 2009 purporting to encumber
01:12230371.4
13
furniture, fixtures, equipment, inventory, accounts receivable, general intangibles, contracts and
contract rights, permits, goods, instruments, investment property, letter of credit rights, chattel
paper, commercial tort claims, and all proceeds from the disposition thereof (all of the personal
property purporting to be collateral for the Alpine Note (collectively, the "Personal Property").
On June 30,2009, Alpine filed a UCC Financing Statement with the Delaware Secretary of State
purporting to perfect its security interest in the Personal Property. The documents executed in
connection with the Alpine Loan are collectively referred to as the "Alpine Loan Documents."
All collateral purported to secure the Alpine Note is collectively referred to as the "Alpine
Collateral."
53. On or about June 23, 2010, David Wilhelm ("Wilhelm") made a loan to the
Debtor in the original principal amount of $6,500,000 (the "Wilhelm Loan"), evidenced by a
Promissory Note dated June 23, 2010 (as at any time amended or modified, the "Wilhelm Note").
The Wilhelm Note purports to be secured by a Deed of Trust, Security Agreement, Assignment
of Leases and Rents and Fixture filing dated June 23, 2010, and recorded with the Eagle County
Recorder's Office on August 12, 2010 as Document No. 20105834 (as at any time amended or
modified, the "Wilhelm Deed of Trust"), purportedly encumbering the Real Property and
portions of the Personal Property, as further described therein. True and correct copies of the
relevant loan documents are being filed contemporaneously with the Cash Collateral Motion.
The documents executed in connection with the Wilhelm Loan are collectively referred to as the
"Wilhelm Loan Documents." All collateral purported to secure the Wilhelm Note is collectively
referred to as the "Wilhelm Collateral." The Alpine Collateral and the Wilhelm Collateral is
collectively referred to as the "Collateral," and Collateral which is personal property is
collectively referred to as the "Personal Property Collateral."
01:12230371.4
14
54. As of the filing date, the Debtor's books and records reflect the amount of the
outstanding amounts of the Alpine Loan and the Wilhelm Loan as approximately $12.7 million
and $7.5 million, respectively.
THE CASH COLLATERAL
55. Certain cash, documents of title, deposit accounts and other cash equivalents now
or hereafter coming into the possession or control of or acquired by the Debtor and arising from
the Alpine Collateral and/or the Wilhelm Collateral is or may be such lenders' (each a "Lender"
and collectively, the "Lenders") "cash collateral" within the meaning of 11 U.S.C. 363(a),
including without limitation portions of amounts that were on deposit as of the Petition Date in
Debtor's bank accounts (collectively, the "Cash Collateral").
56. As of the filing of the Debtor's case, the Debtor held cash of approximately
$210,000. On a post-petition basis, the Debtor also expects to generate cash from its operations,
including without limitation from membership dues, food and beverage sales, green fees, guest
fees, property sales and otherwise.
DEBTOR'S REQUEST TO USE CASH COLLATERAL
57. It is essential to the Debtor's efforts to preserve and maximize the value of the
Club and Facilities that it obtain the authority to use the Cash Collateral derived from operating
the businesses claimed as collateral by Alpine and/or Wilhelm. The Cash Collateral will be used
to pay for expenses identified in the budget attached as Exhibit A to the Interim Order (the
"Budget"). Such expenses include, but are not limited to, employee payroll and other benefits,
Club and Course maintenance, utilities, taxes, other expenses related to the Debtor's business
operations and administrative expenses of the bankruptcy estate. The Debtor anticipates cash
needs in excess of Cash Collateral expected to be generated on a short term basis, and it is
01:12230371.4
15
exploring potential avenues from which it may obtain post-petition financing for additional
liquidity to fund its operations during the pendency of this case.
58. The reasons supporting the Debtor's need to use Cash Collateral during the course
ofthis case are compelling. As the Debtor has extremely limited funds, use of Cash Collateral is
required to fund the day-to-day operating expenses, including payments to employees, Club and
Course maintenance and sustaining the going concern value of the Debtor's businesses. Unless
the Court authorizes use of the Cash Collateral, the Debtor will be unable to pay for services and
expenses necessary to preserve and maximize the value of the Debtor's assets. Indeed, absent
sufficient funds to support the Debtor's business operations, the value of the Debtor's assets may
erode. Therefore, authorization to use Cash Collateral pending the Final Hearing is in the best
interests of the Debtor's estate and creditors.
59. As of June 1, 2012, the Debtor believes the value of the Real Property to be
$33,000,000, based upon the appraisal dated June 1, 2012 prepared by Chrysalis Valuation
Consultants, LLC.
3
RELIEF REQUESTED AND ADEQUATE PROTECTION
60. The Debtor seeks: (a) authority pursuant to sections 105(a), 361, 362, 363 and 552
of the Bankruptcy Code for use of the purported Cash Collateral pursuant to the terms of the
Interim Order; (b) to grant to Alpine and Wilhelm adequate protection in respect of their
respective interests in the Cash Collateral portions ofthe Collateral; and (c) a final hearing on
this Motion (the "Final Hearing").
61. Pursuant to its Cash Collateral Motion, the Debtor does not concede the validity,
priority, extent of or perfection of Alpine's or Wilhelm's purported security interests or liens in
3
Such appraiser previously appraised the Real Property for Alpine Ban1c
01:12230371.4
16
any Collateral or other property, including the Real Property, the Personal Property, the Personal
Property Collateral or the purported Cash Collateral. The Cash Collateral Motion seeks authority
to use Cash Collateral to the extent it exists, and to grant replacement liens in the Debtor's assets
of the same type as exist as Personal Property Collateral in favor of Alpine and/or Wilhelm,
respectively, on a pre-petition basis, in the same priority as exists pre-petition and to the same
extent, validity, priority and perfected status as on a pre-petition basis.
4
62. Bankruptcy Rule 4001 (d) provides that the Court may fix the time within which
objections to the approval of an agreement relating to cash collateral and adequate protection
pursuant to section 363 of the Bankruptcy Code must be filed. In addition, the Court is
empowered to conduct an expedited preliminary hearing on the motion and authorize the use of
cash collateral to the extent necessary to avoid immediate and irreparable harm to the Debtor's
estate.
63. The interests of both Alpine and Wilhelm in the Collateral, Personal Property
Collateral and Cash Collateral is adequately protected by the value of their respective interests in
the Real Property. As set forth above, the estimated value of the real property collateral alone is
$33,000,000, creating a large equity cushion protecting both Alpine's and Wilhelm's interests.
64. Because the above-described equity cushion protects both Lenders' interests, no
further adequate protection is required under the Bankruptcy Code. However, for purposes of
this Motion only, and subject to the reservation of all the Debtor's rights, as further adequate
4
For example, pursuant to Bankruptcy Code 552, property acquired by the Debtor's estate post-
petition, such as food and beverage receipts or the like, may not be subject to Alpine's or Wilhehn's pre-
petition security agreements. For purposes of this Motion, the Debtor does not seek a determination of
the extent of such property as collateral under section 552 or otherwise, or the nature, extent, priority or
perfection of any liens, or the effect of the claims of the Debtor against Alpine and/or Wilhelm or the
Debtor's obligations to such parties. All of such issues are reserved and preserved for determination at a
later time, if and as necessary.
01:12230371.4
17
protection for the use of the purported Cash Collateral, to secure the repayment of any portion of
the Cash Collateral used by the Debtor, the Debtor will grant to each of the Lenders a security
interest in and lien upon (collectively, the "Replacement Liens"), all of the Debtor's now existing
or hereafter acquired personal property of the same type as the Personal Property Collateral in
which they have a purported interest, respectively, but specifically excluding avoidable transfer
claims and recoveries and/or similar claims and recoveries pursuant to Sections 542 through 550,
et seq. of the Bankruptcy Code, to further protect Lenders from any potential or actual loss due
to the use by the Debtor of purported Cash Collateral. The Replacement Liens are to be granted
to the same extent, and with the same validity and priority, as such Lenders' existing liens in the
Debtor's Cash Collateral existing on the Petition Date and which such Cash Collateral is used
thereafter.
65. The Debtor, as well as any creditor's committee appointed in the Debtor's case or
other creditors or parties-in-interest as may have standing under applicable law, reserve their
rights to dispute that Lenders (or either of them) hold a valid, enforceable, perfected and/or
unavoidable security interest in and/or liens upon the Cash Collateral, the Personal Property
Collateral or other Collateral or property, including without limitation, the Real Property and/or
the Personal Property, as well as any Cash Collateral derived from Debtor's business operations
which is subject to the security agreements between Lenders and the Debtor; and nothing in the
Motion, the Interim Order or the Final Order shall act to confirm, acknowledge or ratify the
validity, perfection or amount of either Lender's pre-petition lien on any Collateral or other
property, or either Lender's debt or claims, nor act as a waiver of the right of the Debtor to
impose additional security interests or liens on any Collateral or other property, whether senior
or junior to Lenders' liens, nor act as a waiver of any claims against Lenders, a waiver of rights
01:12230371.4
18
under 11 U.S.C. 506(c), a "rollover" of pre-petition debt of Lenders to post-petition debt, the
granting of relief from the automatic stay, nor to operate to divest the Debtor of any discretion in
the formulation of a plan or administration of the estate or limit access to the Court to seek any
relief under applicable provisions of law, including without limitation, with respect to the
treatment of claims.
01:122303 71.4
19
Error!
I cetiify under penalty of perjury based upon my information and belief
as set forth in this Declaration, the foregoing is true and correct.
Executed this 26th day of June 2012.
20
Exhibit A
Index of First Day Papers
01:12230371.4
INDEX TO FIRST DAY PLEADINGS
1. Debtor's Application for an Order Authorizing and Approving the Appointment of Rust
Consulting/Bankruptcy as Claims and Noticing Agent Pursuant to 28 U.S.C. 156(c),
Section 105(a) of the Bankruptcy Code, and Local Rule 2002-1()
2. Debtor's Motion for an Order (I) Approving Continued Use of Cash Management
System, (II) Authorizing Waiver of Certain Bank Account and Related Requirements of
the Office of the United States Trustee for the District of Delaware, and (III) Waiving the
Requirements of 11 U.S.C. 345(b) on an Interim Basis
3. Debtor's Motion for an Order (I) Authorizing Debtor to (A) Honor All Obligations Under
the Client Services Agreement for Payment ofPrepetition Employee Wages and for
Certain Employee Benefit Programs and to Continue to Honor Such Obligations in the
Ordinary Course of Business, and (B) Make Payments in Connection with Certain Other
Prepetition Employee Benefit Programs Provided Directly By Debtor and to Continue the
Employee Benefit Programs in the Ordinary Course of Business; and (II) Authorizing
Applicable Banks and Other Financial Institutions to Honor and Pay All Checks and
Transfers Drawn on the Debtor's Accounts to Make the Foregoing Payments
4. Debtor's Motion for Order Pursuant to Sections 105(a), 363(b), 541, and 507(a)(8) ofthe
Bankruptcy Code Authorizing (I) Payment of Certain Prepetition Taxes and Fees, and
(II) Financial Institutions to Process and Cash Related Checks and Transfers
5. Debtor's Motion for an Order Pursuant to Section 366 of the Bankruptcy Code
(I) Prohibiting Utility Companies from Altering, Refusing, or Discontinuing Utility
Services, (II) Deeming Utility Companies Adequately Assured of Future Performance,
(III) Establishing Procedures for Determining Adequate Assurance of Payment; And
(IV) Setting a Final Hearing Related Thereto
6. Debtor's Motion for an Order, Pursuant to Sections 105 and 363 of the Bankruptcy Code
and Bankruptcy Rule 6003, Authorizing and Approving (I) the Debtor's Designation of
Alfred H. Siegel as Chief Restructuring Officer, and (II) Retention and Employment of
Crowe Horwath, LLC, Nunc Pro Tunc to the Petition Date
7. Motion ofthe Debtor for Entry oflnterim and Final Orders (A) Authorizing Use of Cash
Collateral; (B) Granting Adequate Protection; (C) Scheduling a Final Hearing; and
(D) Granting Related Relief
01:12235984.1