Inre

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
Chapter 11
CRDENTIA CORP., et al./ Case No. 1 0-__ _
Debtors. (Joint Administration Requested)
MOTION OF DEBTORS FOR ORDER (I) AUTHORIZING CONTINUED
USE OF EXISTING BUSINESS FORMS AND RECORDS; (II) AUTHORIZING
MAINTENANCE OF EXISTING CORPORATE BANK ACCOUNTS AND CASH
MANAGEMENT SYSTEM; (III) WAIVING (IF NECESSARY) THE REQUIREMENTS
OF 11 U.S.C. 345(b) AND (JY) GRANTING RELATED RELIEF
Crdentia Corp. ("Crdentia Cm:p.") and its affiliated debtors, ATS Universal, LLC, Baker
Anderson Christie, Inc., CRDE Corp., GHS Acquisition Corporation, Health Industry
Professionals, LLC, IDP Holding, Inc., MP Health Corp., New Age Staffing, Inc. and Nurses
Network, Inc., (collectively with Crdentia Corp., the "Debtors" or "Crdentia"), file this motion
(the "Motion") for an order (i) authorizing continued use of existing business forms and records;
(ii) authorizing maintenance of existing corporate bank accounts and cash management system;
(iii) waiving (if necessary) the requirements of II U.S.C. 345(b); and (iv) granting related
relief, and in supp01t thereof, respectfully represent as follows:
JURISDICTION AND VENUE
1. This Comt has jurisdiction over this matter pursuant to 28 U.S.C. 157 and
1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper pursuant to
28 U.S.C. 1408 and 1409.
The Debtors, along with the last four digits of their federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631), CRDE Corp. (2509), GHS
Acquisition Corporation (9736), Health Industry Professionals, LLC ( 4246), IDP Holding, Inc. (3468), MP Health
Corp. (4403), New Age Staffing, Inc. (1214) aud Nurses Network, Inc. (6291). The Debtors' mailing address for
purposes of these cases is 1964 Howell Brauch Road, Ste. 206, Winter Park, Florida 32792.
BACKGROUND
2. On this date (the "Petition Date"), each of the Debtors filed a voluntary petition
for relief under Chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). The
Debtors continue to manage and operate their businesses as debtors in possession pursuant to
sections 1107 and 1108 of the Bankruptcy Code. The Debtors have filed a motion requesting
that the Court jointly administer the Debtors' bankruptcy estates.
3. An official committee of unsecured creditors has not been appointed in these
Chapter 11 cases. Further, no trustee or examiner has been requested or appointed in any of
these Chapter 11 cases.
4. The background facts for these cases are stated in the Declaration of Rebecca
Irish in Suppmi of the Debtors' Chapter 11 Petitions and First Day Pleadings, filed
contemporaneously herewith and incorporated herein by reference.
5. Prior to commencing these cases, in the ordinary course of business, the Debtors
used a cash management system (the "Cash Management System'') to efficiently collect, transfer,
and disburse funds generated by their business operations.
6. The Debtors provide healthcare staffing services to hospitals and other healthcare
facilities throughout the United States, including hospital, government, clinic, nursing home, and
home care clients.
7. Revenues generated by the receipt of staffing fees from clients are deposited into
a lockbox account ("Lockbox") controlled by Com Vest Capital LLC, the Debtors' secured
lender ("Com Vest"). Com Vest disburses these funds to the Debtors for their operations and use
on an as-needed basis, but at least weekly. Funds are transferred by Com Vest by wire from the
Lockbox to one or both of Crdentia's operating bank accounts, which the Debtors use to conduct
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all of their cash-based operations in the regular course of business, including paying all cash
liabilities, which include but are not limited to disbursements for operating expense, general and
administrative expense, and restructuring expenses.
8. The Debtors' primary operating account is at Valliance Bank ("Valliance"). The
following details Crdentia's primary bank account with Valliance (the "Valliance Account"):
Bank: V alliance Bank
Address: 1601 N.W. Expressway #100
Oklahoma City, OK 73118
Account name: Crdentia Corp.
Account#: 107007007
9. The Debtors' second operating account is at Florida Capital Bank, N.A. ("Florida
Capital"). The following details Crdentia's bank account with Florida Capital (the "Florida
Capital Account"):
Bank: Florida Capital Bank, N.A.
Address: 109 E. Church St. Suite 100
Orlando, FL 32801
Account name: Crdentia Corp.
Account #: 0000041599
10. Crdentia also maintains an account with Global Cash Card ("GCC"). Pursuant to
a ce1iain Payroll Cash Card Services Agreement dated February 12, 2009 between GCC and
Crdentia Corp., as amended, GCC provides electronic funds transfer services through electronic
cash cards. These cash cards are issued to Crdentia's Field Employees and permits Field
Employees to take advances of up to 70% of their weekly paychecks. Crdentia funds its account
with GCC by. making daily or weekly wire deposits into the account. GCC then allocates the
funds to the cash card of each Field Employee that has requested an advance. Advances may be
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taken by Field Employees as often as daily. The following details Crdentia's account with GCC
(the "GCC Account," and together with the Valliance Account and the Florida Capital Account,
the "Bank Accounts"):
Bank: Global Cash Card
Address: 7 Corporate Park, Suite 130
Irvine, CA 92606
Account name: Crdentia Corp.
Account#: 153495267061
RELIEF REQUESTED AND BASIS THEREFOR
11. The Debtors request, pursuant to 105(a), 345(b), 363(c), and 364(a) of the
Bankmptcy Code and Bankruptcy Rules 6003 and 6004, the entry of an order (i) authorizing the
Debtors to continue using their existing business forms and records; ( ii) authorizing the Debtors
to maintain their Bank Accounts and Cash Management System; (iii) waiving the requirements
of 11 U.S.C. 345(b) and (iv) granting related relief
A. The U.S. Trustee Guidelines and Section 345(b) of the Bankruptcy Code
12. The Office of the United States Trustee's Operating Guidelines for Chapter 11
Cases (the "Guidelines") require Chapter 11 debtors in possession to, among other things, close
all existing bank accounts and open new debtor-in-possession ("DIP") bank accounts, establish
one DIP account for all estate monies required for the payment of taxes (including payroll taxes),
maintain a separate DIP account for cash collateral, and obtain checks for all DIP accounts that
bear the designation, "debtor-in-possession." The Guidelines also require debtors to close their
books and records as of the petition date and to open new books and records. The Guidelines are
designed to provide, among other things, a clear demarcation between prepetition and
postpetition transactions and operations, which would, in theory, prevent the inadvertent
postpetition payment of a prepetition claim.
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13. The Debtors seek a waiver of certain of the Guidelines. The Debtors' operations
would be harmed by the disruption, confusion, delay, and cost that would most certainly result
fi:om rigid compliance with the Guidelines.
14. Rule 2015-2 of the Local Rules of Bankruptcy Practice and Procedure for the
United States Banlauptcy Comt for the District of Delaware (the "Local Rules") provides:
Where the debtor uses preprinted checks, upon motion of the debtor, the Comt
may, without notice and hearing, permit the debtor to use its existing checks
without the designation "Debtor-in-Possession" and use its existing bank
accounts. However, once the debtor's existing checks have been used, the debtor
shall, when reordering checks, require the designation "Debtor-in-Possession" and
the corresponding banlauptcy number on all such checks.
Del. Bankr. L.R. 2015-2.
15. Pursuant to Rule Local Rule 2015-2, the Debtors request an Order permitting
them to use their existing checks without the designation ''Debtor-in-Possession" and permitting
them to use their existing Bank Accounts.
16. Section 345(b) of the Bankruptcy Code provides as follows:
Except with respect to a deposit or investment that is insured or guaranteed by the
United States or by a depmtment, agency, or instrumentality of the United States
or backed by the full faith and credit of the United States, the trustee shall require
fiom an entity with which such money is deposited or invested-
(1) a bond-
(A) in favor of the United States;
(B) secured by the unde1taking of a corporate surety approved
by the United States trustee for the district in which the case is
pending; and
(C) conditioned on-
( i) a proper accounting for all money so deposited or
invested and for any retmn on such money;
(ii) prompt repayment of such money and return; and
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(iii) faithful performance of duties as a depository; or
(2) the deposit of securities of the kind specified in section 9303 of
title 31;
unless the court for cause orders otherwise.
11 US.C. 345(b).
17. Although the Debtors believe all of their accounts satisfY section 345(b) of the
Bankruptcy Code, out of an abundance of caution, the Debtors also request a waiver, to the
extent necessary, of the requirements of section 345(b) of the Bankruptcy Code.
B. Existing Business Forms and Records
18. The Debtors seek a waiver of the Guidelines' requirement that they open a new
set of books and records as of the Petition Date. Opening a new set of books and records would
create unnecessaty administrative burdens and hardship and would cause unnecessaty expense,
utilization of resources, and delay. In the ordinaty course of their business, the Debtors use
many invoices, stationery, and other business forms. By vi:tiue of the nature and scope of the
Debtors' business and the numerous patiies with whom they deal, the Debtors need to use their
existing business forms without alteration or change. Printing new business forms would take an
undue amount of time and expense. Fulfillment of the requirement would likely delay the
payment of postpetition claims and negatively impact operations and the value of these estates.
Accordingly, the Debtors respectfully request that they be authorized to continue to use their
existing business forms and to maintain their existing business records.
C. Continued Use of Bank Accounts and Cash Management System
19. The Debtors respectfully request authority to maintain the Bank Accounts and the
Cash Management System in accordance with their usual and customary practices to ensure a
smooth transition into Chapter 11 with minimal disruption to operations. The Debtors also
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request authority to close any of the Bank Accounts if, in the exercise of their business judgment,
the Debtors determine that such action is in the best interest of their estates.
20. In order to conduct their postpetition business, the Debtors need to be able to
issue checks to vendors, service providers, employees, and others. To open new accounts and
obtain checks for those accounts will cause delay and disruption to the Debtors' business and a
delay in receipt of funds needed for the Debtors' operations.
21. The Debtors' Cash Management System constitutes an ordinary course, essential
business practice providing significant benefits to the Debtors including, among other things, the
ability to (i) control funds, (ii) ensure the availability of funds when necessary, and (iii) reduce
costs and administrative expenses by facilitating the movement of funds and the development of
more timely and accurate account balance information. Any disruption of the Cash Management
System could have a severe and adverse impact upon the Debtors' reorganization effmis.
22. The relief requested in this motion is vital to ensuring the Debtors' seamless
transition into bankruptcy. Authorizing the Debtors to maintain their Cash Management System,
as modified, will avoid many of the possible disruptions and distractions that could divert the
Debtors' attention fiom more pressing matters during the initial days of these Chapter II cases.
23. No checks issued prior to the Petition Date will be honored, except as otherwise
provided by separate order of this Court. The Debtors reserve their rights pursuant to section
549 of the Bankruptcy Code with respect to any check issued prepetition that is inadveJiently
honored postpetition. The Debtors will continue to maintain records respecting all transfers
between and among the Bank Accounts so that all transactions can be ascertained after they have
occmred.
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D. Pavment of Banking Fees
24. Additionally, the Debtors' banks charge standard monthly fees for maintaining
the Bank Accounts, which may vary monthly based on actual usage. The Debtors were cunent
on payment of these monthly fees as of the Petition Date. The Debtors request authority to
continue paying the monthly fees in the ordinary course of business, including any portion of the
fee attributable to prepetition services.
E. Waiver of Requirements of 11 U.S.C. 345(b)
25. Pursuant to 105(a) of the Bankruptcy Code, the Debtors seek a waiver of the
requirements of 345(b) of the Bankruptcy Code. The Bank Accounts are maintained with a
financial institution that is financially stable. The Debtors believe that their banks are authorized
depositories in this and other jurisdictions. Out of an abundance of caution, however, the
Debtors request a waiver of the requirement to comply with 345(b)'s investment guidelines, if
necessary, as their deposits in the Bank Accounts should not pose a substantial risk to the
Debtors' estates or creditors.
26. Section 345(a) of the Bankruptcy Code authorizes deposits or investments of
money of estates, such as the Debtors' cash, m a manner that ''will yield the maximum
reasonable net retmu on such money, taking into account the safety of such deposit or
investment." 11 U.S.C. 345(a).
27. Due to the possibility of a significant amount of money that may be in the Bank
Accounts fiom time to time, it would take a large amount of time for the Debtors to locate and
detennine, where necessary, appropriate altemative accounts that satisfy 345(b). Requiring the
Debtors to change their deposits and other procedures could result in harm to the Debtors, their
estates, and creditors because such change would disrupt the Cash Management System.
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Conversely, the Debtors' estates and creditors will not be harmed by the Debtors' maintenance
of the status quo because of the safe and prudent practices already utilized by the Debtors.
28. For the foregoing reasons, a waiver of the requirement to comply with the
investment guidelines set forth in 345(b) should not pose any risk to the Debtors' estates.
APPLICABLE AUTHORITY
29. Section I 05 of the Bankruptcy Code provides in pertinent part that "[t]he comt
may issue any order, process, or judgment that is necessary or appropriate to cany out the
provisions of this title." II U.S. C. 105(a). Courts have long recognized that the power granted
by I 05( a) was expressly meant to be exercised to effectuate the rehabilitation of the debtor.
See, e.g., In re Ionosphere Clubs, Inc., 98 B.R. 174, 177 (Bankr. S.D.N.Y. 1989) (citing H.R.
Rep. No. 595, 95lh Cong., 1st Sess. 16 (1977)). The relief requested in this Motion is critical to
the Debtors' successful reorganization or liquidation, and is justified under I 05( a).
30. Extensive authority supports the relief the Debtors seek in the Motion. In other
Chapter II cases, comts have recognized that strict enforcement of the United States Trustee
requirements does not always serve the purposes of a Chapter II bankruptcy. Accordingly,
courts routinely waive such requirements in favor of alternative procedures that afford
comparable protections. See, e.g., In re Aleris Int'l, Inc., Case No. 09-10478 (BLS) (Docket No.
36) (Bankr. D. Del. Feb. 13, 2009); In re Landsource Comtys. Dev. LLC, Ch. II Case No. 08-
11111 (KJC) (Docket No. 29) (Bankr. D. Del. June 10, 2008); In re Sharper Image Corp., Ch. II
Case No, 08-10322 (KG) (Docket No. 43) (Bankr. D. Del. Feb. 20, 2008).
31. Additionally, 363(c)(l) of the Bankruptcy Code authorizes a debtor in
possession to. "use property of the estate in the ordinary course of business without notice or a
hearing." 11 U.S.C. 363(c)(l). The purpose of 363(c)(!) of the Bankmptcy Code is to
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provide a debtor in possession with the flexibility to engage in the ordinary course transactions
required to operate its business without unneeded oversight by its creditors or the Comt. Med.
Malpractice Ins. Ass 'n v. Hirsch (In re Lavigne), 114 F.3d 379, 384 (2d Cir. 1997); In re Git-N-
Go, Inc., 322 B.R. 164, 171 (Bankr. N.D. Okla. 2004); In re Enron Corp., No. 01-16034 (ALG),
2003 WL 1562202, at *15 (Bankr. S.D.N.Y. Mar. 21, 2003); In re Atlanta Retail, Inc., 287 B.R.
849, 856 (Bankr. N.D. Ga. 2002); Chaney v. Official Comm. of Unsecured Creditors of Crystal
Apparel, Inc. (In re Crystal Apparel, Inc.), 207 B.R. 406, 409 (S.D.N.Y. 1997). Included within
the purview of 363(c) is a debtor's ability to continue the "routine transactions" necessitated by
a debtor's cash management system. Amdura Nat 'l Distrib. Co. v. Amdura Corp. (In re Amdura
Corp.), 75 F.3d 1447, 1453 (10th Cir. 1996). Accordingly, the Debtors seek authority under
363(c)(1) of the Bankmptcy Code to continue the collection, concentration, and disbursement
of cash pursuant to their Cash Management System described above.
NOTICE
32. No tmstee, examiner or statutory creditors' committee has been appointed in these
chapter 11 cases. Notice of this Motion shall be provided to: (a) the United States Tmstee;
(b) those parties listed on the consolidated list of creditors holding the twenty (20) largest
unsecured claims against the Debtors, as identified in their chapter 11 petitions; and (c) counsel
for Com Vest. In light of the nature of the relief requested herein, the Debtors submit that no
other or further notice is required.
NO PRIOR REQUEST
33. No previous request for the relief sought herein has been made to this or any other
Comt.
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CONCLUSION
WHEREFORE, the Debtors respectfully request that the Court (i) enter an order
in substantially the form attached hereto as Exhibit A, (a) authorizing the Debtors to continue
using their existing business forms and records, (b) authorizing the Debtors to maintain their
existing corporate bank accounts and cash management system, (c) waiving the requirements of
11 U.S.C. 345(b), and (d) granting related relief, and (ii) grant such other and further relief as
is just and proper.
Dated: March 17,2010
Wilmington, Delaware
BAYARD,P.A
Is/ Jamie L. Edmonson
Jamie L. Edmonson (No. 4247)
222 Delaware Avenue, Suite 900
Wilmington, DE 19801
Phone: (302) 655-5000
Fax: (302) 658-6395
-and-
GERSTEN SAVAGE, LLP
Paul Rachmuth
600 Lexington A venue
New York, New York 10022
Telephone: (212) 752-9700
Facsimile: (212) 980-5192
Proposed Counsel for the Debtors and
Debtors in Possession
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Exhibit A
Proposed Order
In re
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
Chapter 11
CaseNo. 10-
----
CRDENTIA CORP., et al./
Debtors. (Joint Administration Requested)
ORDER (I) AUTHORIZING CONTINUED USE OF EXISTING BUSINESS
FORMS AND RECORDS; (ll) AUTHORIZING MAINTENANCE OF
EXISTING CORPORATE BANK ACCOUNTS AND CASH MANAGEMENT
SYSTEM; (III) WAIVING (IF NECESSARY) THE REQUIREMENTS OF
11 U.S. C. 345(b) AND (IV) GRANTING RELATED RELIEF
Upon the motion (the "Motion") of the above-caption debtors and debtors in
possession (the "Debtors"), for an order (i) authorizing continued use of existing business forms
and records; (ii) authorizing maintenance of existing corporate bank accounts and cash
management system; (iii) waiving (if necessary) the requirements of 11 U.S.C. 345(b); and (iv)
granting related relief; and upon the Declaration of Rebecca Irish in Support of the Debtors'
Chapter 11 Petitions and First Day Pleadings; and due and sufficient notice of the Motion having
been given; and it appearing that no other or ftuiher notice need be provided; and upon the
record herein; and it appearing that the relief requested by the Motion is in the best interest of the
Debtors' estates, the Debtors' creditors and other parties in interest; and after due deliberation
and sufficient cause appearing therefor;
The Debtors, along with the last four digits of their federal tax identification numbers, are: Crdentia
Corp.(5701), ATS Universal, LLC (3980), Baker Anderson Christie, Inc. (3631), CRDE Corp. (2509),
GHS Acquisition Corporation (9736), Health Industry Professionals, LLC ( 4246), HIP Holdiug, Inc.
(3468), MP Health Corp. (4403), New Age Staffing, Inc. (1214) aud Nurses Network, Inc. (6291) .. The
Debtors' mailiug address for purposes of these cases is 1964 Howell Brauch Road, Ste. 206, Wiuter Park,
Florida 32792.
IT IS HEREBY ORDERED THAT:
1. The Motion is GRANTED.
2. The Debtors are authmized to continue to use the Debtors' existing
business forms and to maintain their existing business records.
3. The Debtors are authmized to continue usmg the Cash Management
System to consolidate the management of their cash and to transfer money between Bank
Accounts in the normal course of business, as, when, and in the amounts necessary to maintain
business operations; and the Debtors shall maintain records of all such transfers of cash in a
manner so that all transactions made pursuant to the authorization granted in this order can be
readily ascettained.
4. The Debtors are authorized to maintain the Crdentia operating accounts
(the "Operating Accounts") and to deposit and receive in the Operating Account payments on
accounts receivable and to allow the transfer of funds to and from the Operating Account and all
related accounts pursuant to the Cash Management System as more fully described in the
Motion.
5. The Debtors are hereby authorized to execute any additional documents as
may be required to cany out the intent and purpose of this Order.
6. The Debtors are authorized to maintain all Bank Accounts listed in the
Motion used in conjunction with the Cash Management System.
7. The Debtors are authorized to maintain such other depositmy and
disbursement accounts as may be required or permitted by the Cash Management System or in
connection with other orders of this Court.
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8. The Debtors may modifY the Cash Management System, as may be
required by Orders of this Court, the Debtors' lender, or as the Debtors decide in their business
judgment, in the ordinary course of business, without the need for further order of this Court.
9. Valliance, Florida Capital and GCC, and any other financial institution at
which the Debtors may have an account or do business, may not set off any alleged prepetition
claims against any postpetition deposits made by the Debtors in any Accounts maintained by the
Debtors on a postpetition basis, except as authorized by this Court.
10. The Debtors are authorized to continue paying monthly fees with respect
to the Bank Accounts in the ordinary course of business, including any pmtion of such fees
attributable to prepetition services.
11. The requirements provided in 11 U.S. C. 345(b) (if applicable) are
hereby WAIVED as to the Accounts maintained with V alliance, Florida Capital and GCC.
12. The relief granted in this Order shall be subject to the Terms of the
Ratification Agreement, the Budget and (as applicable) the Interim Order or Final Order (each as
defined in the Debtors' Motion to obtain post-petition financing).
13. This Comt shall retain jurisdiction to hear and determine all matters
arising from the implementation of this Order.
Dated: March_, 2010
Wihnington, Delaware
THE HONORABLE

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