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Case 19-33568-mvl7 Doc 35 Filed 04/08/20 Entered 04/08/20 13:22:34 Page 1 of 12

David W. Elmquist - SBT #06591300 REED & ELMQUIST,P.C. 501 N. College Street
Waxahachie, TX 75165 (972) 938-7339 (972) 923-0430 (fax) ATTORNEYS FOR
DIANE G. REED, CHAPTER 7 TRUSTEE IN THE UNITED STATES BANKRUPTCY
COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re:
ERIC C. BLUE, et al., $ CASE NO. 19-33568-BJH-7 § (Jointly Administered) No
Hearing Requested Debtors. $ TRUSTEE'S MOTION TO INCUR POST-PETITION
DEBT PURSUANT TO 11 U.S.C. SS 364(b) AND 364(c) NO HEARING WILL BE
CONDUCTED HEREON UNLESS A WRITTEN RESPONSE IS FILED WITH THE
CLERK OF THE BANKRUPTCY COURT, 1100 COMMERCE STREET, ROOM
1254, DALLAS, TEXAS 75242, ON OR BEFORE CLOSE OF BUSINESS TWENTY-
ONE (21) DAYS FROM THE DATE OF SERVICE HEREOF. ANY RESPONSE
MUST BE IN WRITING AND FILED WITH THE CLERK. A COPY MUST SERVED
UPON COUNSEL FOR THE TRUSTEE PRIOR TO THE DATE AND TIME SET
FORTH HEREIN. IF A RESPONSE FILED, A HEARING WILL BE HELD WITH
NOTICE ONLY TO THE RESPONDING PARTY. IF NO RESPONSE IS TIMELY
FILED, THE RELIEF REQUESTED MAY BE DEEMED TO BE UNOPPOSED, AND
THE COURT MAY ENTER AN ORDER GRANTING THE RELIEF SOUGHT
WITHOUT CONDUCTING A HEARING. TO THE HONORABLE BARBARA J.
HOUSER, U.S. BANKRUPTCY JUDGE: COMES NOW Diane G. Reed (the
"Trustee"), the duly-appointed Chapter 7 trustee of the administratively consolidated
estates of Eric C. Blue ("Blue"), Capital Park Private Equity Partners, LLC, ("Capital
Park Equity"), and Capital Park Management Company, LLC ("Capital Park
Management") (collectively, the "Debtors"), and files this Motion to Incur Post-
Petition Debt Pursuant to 11 U.S.C. $$ 364(b) and 364(c) (the "Motion"), and in
support thereof states as follows: TRUSTEE'S MOTION TO INCUR POST-
PETITION DEBT PURSUANT TO 11 U.S.C. 88 364(b) AND 364(c) - Page 1 of 5
Case 19-33568-myl7 Doc 35 Filed 04/08/20 Entered 04/08/20 13:22:34 Page 2 of 12
I. Jurisdiction 1. The Court has jurisdiction over the Bankruptcy Case and this Motion
pursuant to 28 U.S.C. $$ 157 and 1334. This Motion constitutes a core proceeding
within the meaning of 28 U.S.C. § 157(b)(2)(A) and (D). II. Factual and Procedural
Background 2. On October 29, 2019, Portfolio Secure Lone, LLC ("PSL") filed
involuntary petitions under Chapter 7 of the United States Bankruptcy Code, 11
U.S.C. § 101 et seq. (the "Bankruptcy Code") against the Debtors initiating the
above-referenced cases with this Court. PSL asserts a joint and several claim
against the Debtors in the approximate amount of $4.7 million. 3. The Debtors failed
to answer the involuntary petitions. As a result, Orders for Relief in an Involuntary
Case were entered by the Court on November 26, 2019 in the Debtors' cases.' The
Trustee was thereafter appointed the chapter 7 trustee in each of the three cases. 4.
Upon motion for joint administration filed by PSL, an order granting the joint
administration of the cases was entered by the Court on December 12, 2019.2 5.
Blue is the sole member and manager of Capital Park Management. He is also the
sole manager of Capital Park Equity and upon information and belief, owns 80% of
the member interests. 6. The meetings of creditors in each of the Debtors' cases
were initially scheduled for January 6, 2020. Upon information and belief, Blue had
notice of these creditors' meetings in his individual capacity and in his capacity as
the sole manager of Capital Park Management and Capital Park Equity. Blue failed
to attend the creditors' meetings in the Debtors' cases so the Docket No. 8 in Case
No. 19-33568, Docket No. 10 in Case No. 19-33569, and Docket No. 8 in Case No.
19- 33571. 2 Docket No. 14. TRUSTEE'S MOTION TO INCUR POST-PETITION
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DEBT PURSUANT TO 11 U.S.Ã . 88 364(b) AND 364(e) - Page 2 of 5 Case 19-
33568-mvl7 Doc 35 Filed 04/08/20 Entered 04/08/20 13:22:34 Page 11 of 12
LENDER: PORTFOLIO SECURE LONE, LLC By: Arthur Maxwell Title: Manager
TRUSTEE breed DIANE G. REED, Chapter 7 Trustee for the Bankruptcy Estates of
Eric C. Blue, Capital Park Management Company, LLC, and Capital Park Private
Equity Partners, LLC AGREED: BAKER BOTTS L.L.P. By: Omar Alaniz Partner
LOAN AND SECURITY AGREEMENT - Page 6 of 6 Case 19-33568-mvl7 Doc 35
Filed 04/08/20 Entered 04/08/20 13:22:34 Page 12 of 12 In re Eric C. Blue, et al,
Debtor Case No. 19-33568-7 (Jointly Administered) Office of the United States
Trustee 1100 Commerce St., Room 976 Dallas, TX 75242 Internal Revenue Service
Department of the Treasury Austin, TX 73301-0002 Eric C. Blue 3140 Harvard Ave.,
#402 Dallas, TX 75205 Capital Park Management Co., LLC clo Eric C. Blue 3140
Harvard Ave., #402 Dallas, TX 75205 Capital Park Private Equity Partners, LLC clo
Eric C. Blue 3140 Harvard Ave., #402 Dallas, TX 75205 Portfolio Secure Lone, LLC
101 Huntington Ave., Suite 500 Boston, MA 02199 Neill S. Wright c/o Darrell Cook
6688 North Central Expwy. Dallas, TX 75206 JHT Holdings, Inc. c/o Peter N. Flocos
599 Lexington Ave. New York, NY 10022 Compass Bank clo Shawn K. Brady 6351
Preston Rd., Suite 350 Dallas, TX 75034 Wendell McCain 106 Saison Rd. Chapel
Hill, NC 27517 Phelps Dunbar LLP clo Christopher Ralston 365 Canal St., Suite
2000 New Orleans, LA 70130 Portfolio Secure Lone LLC 101 Huntington Ave., Suite
500 Boston, MA 02199 JHT Holdings, Inc. c/o Peter N. Flocos 599 Lexington Ave.
New York, NY 10022 Piney Lake Opportunities ECI Master Fund, LP c/o Proskauer
Rose, LLP Attn: Charles Dale One International Place Boston, MA 02110-2600
Internal Revenue Service Centralized Insolvency Operation P.O. Box 7346
Philadelphia, PA 19101-7346 Case 19-33568-mvl7 Doc 35 Filed 04/08/20 Entered
04/08/20 13:22:34 Page 3 of 12 Trustee rescheduled the meetings for February 11,
2020. Blue received notice of these rescheduled meetings. On February 11, 2020,
Blue again failed to appear for the creditors' meetings. On March 11, 2020, Blue
failed to appear for the second continued creditors' meetings. 7. Based on
information the Trustee received from Omar J. Alaniz, an attorney with the law firm
of Baker Botts L.L.P. ("Baker Botts") and counsel for PSL, the Trustee believes that
an investigation into the Debtors' assets, liabilities and financial affairs is necessary.
However, there are currently no funds in the Debtors' estates to pay for this
investigation. 8. PSL has agreed to make a loan to the Trustee and the Debtors'
bankruptcy estates in the sum of $45,000 pursuant to the terms of a Loan and
Security Agreement dated March 31, 2020 (the "Loan Agreement"), attached hereto
as Exhibit A. Subject to this Court's approval, the Trustee has agreed to the terms
and conditions of this loan as set forth in the Loan Agreement. The purpose of the
loan is to provide funds so that Baker Botts may undertake an investigation
described in paragraph 7 above. 9. The Trustee is filing an Application to Employ
Baker Botts L.L.P. as Special Counsel concurrently herewith. III. Relief Requested
and Basis for Relief 10. By this Motion the Trustee seeks entry of an order
authorizing her to obtain post- petition credit pursuant to Bankruptcy Code $$ 364(b)
and 364(c), Bankruptcy Rule 4001(d), and the terms of the Loan Agreement.
Specifically, the Trustee requests authority to incur debt through a limited recourse,
no-interest loan from PSL in the amount of $45,000. The Trustee and PSL have
agreed that $37,500 of these loan proceeds will be paid to Baker Botts as a retainer
for their legal and paralegal fees and expenses to be incurred in connection with
their investigation into the Debtors' assets, liabilities, business activities and financial
affairs. The remaining $7,500 will be TRUSTEE'S MOTION TO INCUR POST-
PETITION DEBT PURSUANT TO 11 U.S.C. 88 364(b) AND 364(c) - Page 3 of 5
Case 19-33568-mvl7 Doc 35 Filed 04/08/20 Entered 04/08/20 13:22:34 Page 4 of 12
retained by the Trustee to pay administrative expenses in these jointly administered
cases. The Trustee further requests that the Court approve the terms for repaying
this loan as set forth in the Loan Agreement. 11. Before the Trustee entered into the
Loan Agreement with PSL, the Trustee explored other options for financing the cost
of the investigation that the Trustee wishes to pursue. The Trustee spoke to one
company that specializes in litigation financing in bankruptcy cases. That company
declined the opportunity to provide financing in this case. The Trustee also had
discussions and negotiations with PSL concerning the terms of the loan. PSL was
unwilling to make the loan unless PSL was provided a security interest in all property
of the Debtors' estates." Since PSL has a lien and security interest in all pre-petition
property of these Debtors' estates, and since there is currently no other known
property of the estates, the Trustee believes that granting PSL a security interest in
properties that may be recovered is necessary and appropriate in the circumstances
of these cases. IV. PSL's Good Faith 12. The terms and conditions of this loan
arrangement are the most fair and reasonable terms the Trustee could negotiate
under the circumstances and were negotiated by the parties in good faith and at
arm's length. Accordingly, PSL is entitled to the protection afforded a good faith
lender under 11 U.S.C. § 364(e). WHEREFORE, PREMISES CONSIDERED, the
Trustee respectfully requests that the Court enter an order approving the Loan
Agreement and authorizing the Trustee to borrow and repay funds as set forth
therein. 3 PSL already has a perfected security interest in all pre-petition property of
the Debtors pursuant to a Loan Security Agreement dated February 1, 2019
between PSL, the Debtors and various affiliates of the Debtors. TRUSTEE'S
MOTION TO INCUR POST-PETITION DEBT PURSUANT TO 11 U.S.C. 88 364(b)
AND 364(c) - Page 4 of 5 Case 19-33568-mvl7 Doc 35 Filed 04/08/20 Entered
04/08/20 13:22:34 Page 5 of 12 Dated: April 8, 2020. Respectfully submitted, REED
& ELMQUIST, P.C. 501 N. College Street Waxahachie, TX 75165 (972) 938-7339
’ƒ
(972) 923-0430 (fax) Ð Ñ . /s/ David W. Elmquist David W. Elmquist, SBT
#06591300 ATTORNEYS FOR DIANE G. REED, CHAPTER 7 TRUSTEE
CERTIFICATE OF SERVICE This is to certify that on April 8, 2020, a true and
correct copy of the foregoing Motion was served electronically on all registered ECF
users in this case, and by U.S. first class mail, postage prepaid, on the persons
listed on the attached Service List, which includes the Debtors. /s/ David W. Elmquist
David W. Elmquist TRUSTEE'S MOTION TO INCUR POST-PETITION DEBT
PURSUANT TO 11 U.S.C. 88 364(b) AND 364(c) - Page 5 of 5 Case 19-33568-mvl7
Doc 35 Filed 04/08/20 Entered 04/08/20 13:22:34 Page 6 of 12 LOAN AND
SECURITY AGREEMENT This Loan and Security Agreement ("Agreement"), is
made and entered into on this 31 st day of March, 2020, by and between Portfolio
Secure Lone, LLC ("PSL" or "Lender") and Diane G. Reed, in her capacity as
Chapter 7 trustee (the "Trustee") for the bankruptcy estates of Eric C. Blue, Capital
Park Private Equity Partners, LLC, and Capital Park Management Company, LLC
(collectively, the "Debtors"). RECITALS: WHEREAS, on October 29, 2019, PSL filed
involuntary petitions against the Debtors in the United States Bankruptcy Court for
the Northern District of Texas, Dallas Division (the "Bankruptcy Court"); and
WHEREAS, on November 26, 2019, Orders for Relief in an Involuntary Case were
entered by the Bankruptcy Court in the Debtors' cases; and WHEREAS, the Trustee
was appointed as the Chapter 7 Trustee for the bankruptcy estates of the Debtors;
and WHEREAS, the Debtors' bankruptcy cases are being jointly administered under
Case No. 19-33568-HDDH-7 (the "Bankruptcy Cases"); and WHEREAS, the Trustee
desires to employ the law firm of Baker Botts L.L.P. ("Baker Botts") as special
counsel to the Trustee to investigate the assets, liabilities and pre-petition business
activities and financial affairs of the Debtors; and WHEREAS, the Trustee does not
have sufficient funds in the bankruptcy estates to pay Baker Botts for the services
she would like performed, as described above; and EXHIBIT tabbles A LOAN AND
“
SECURITY AGREEMENT †Page 1 of 6 Case 19-33568-mvl7 Doc 35 Filed
04/08/20 Entered 04/08/20 13:22:34 Page 7 of 12 WHEREAS, subject to the terms
and conditions of this Agreement, PSL is willing to make a secured loan to the
Trustee in the sum of $45,000, which shall be used to pay legal fees and expenses
of Baker Botts and the administrative expenses of the bankruptcy estates. NOW,
THEREFORE, in consideration of the mutual covenants herein contained, and for
other good and valuable consideration, the parties agree as follows: ARTICLE I.
AMOUNT AND TERMS OF THE LOAN Section 1.01 Loan Advances. Subject to the
terms and conditions hereinafter set forth, PSL agrees to make a secured loan to the
Trustee in the amount of $45,000 (the "Loan Amount"). PSL shall advance the loan
proceeds to the Trustee upon her written request or requests for same. Section 1.02
Use of Loan Proceeds. The loan proceeds received by the Trustee shall be used
solely to pay Baker Botts' fees and expenses up to a maximum of $37,500. The
remaining $7,500 of the loan proceeds shall be used by the Trustee to pay
administrative expenses of the Debtors' bankruptcy estates. Section 1.03
Repayment of Loan. The Trustee shall repay to PSL the loan, but only to the extent
funds become available in the bankruptcy estates from the Trustee's recovery of
property of the estates which she may recover from one or more of the Debtors, or
from third parties. ARTICLE II. CONDITIONS OF LENDING Section 2.01 Condition
Precedent to Loans. The obligation of PSL to make the loans described in Section
1.01 is subject to the condition precedent that the Bankruptcy Court shall LOAN
AND SECURITY AGREEMENT - Page 2 of 6 Case 19-33568-mvl7 Doc 35 Filed
04/08/20 Entered 04/08/20 13:22:34 Page 8 of 12 have approved this Agreement
and the Trustee's application to employ Baker Botts as special counsel. Section 2.02
Termination of Agreement. a) PSL has the right at any time to terminate this
Agreement and cease making loans to the Trustee, and such termination shall be
effective immediately upon receipt by the Trustee of written notice, which may be
made by e-mail to: delmquist@bcylawyers.com and dreed@bcylawyers.com. b) PSL
shall also send a copy of said notice to Baker Botts. Upon termination of this
Agreement, the Trustee's employment of Baker Botts shall also terminate. Upon the
termination of the employment of Baker Botts as special counsel for the Trustee, the
obligation of PSL to make the loans described in Section 1.01 above will cease;
however, PSL will be obligated to make a loan to the Trustee to pay Baker Botts'
fees and expenses that were incurred prior to the termination of this Agreement.
Nothing herein shall require PSL to loan more than the Loan Amount to the Trustee.
ARTICLE III. PSL'S ADMINISTRATIVE EXPENSE CLAIM Section 3.01 PSL's
Administrative Expense Claim. In consideration for the loan that PSL agrees to make
to the Trustee pursuant to this Agreement, PSL shall have an administrative
expense claim in the Bankruptcy Cases pursuant to 11 U.S.C. $$ 364(b) and 503(b).
The amount of PSL's allowed administrative priority claim shall be equal to the total
amount of the loan advances made by PSL to the Trustee. LOAN AND SECURITY
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AGREEMENT †Page 3 of 6 Case 19-33568-mvl7 Doc 35 Filed 04/08/20
Entered 04/08/20 13:22:34 Page 9 of 12 ARTICLE IV. PSL'S SECURED CLAIM
Section 4.01 PSL's Secured Claim. In further consideration for the loan that PSL
agrees to make to the Trustee pursuant to the terms of this Agreement, PSL shall
have a secured claim in all property of the Debtors' bankruptcy estates (other than
the loan proceeds) pursuant to 11 U.S.C. § 364(c) and, subject to Bankruptcy
Court approval, the Trustee grants to PSL a security interest in such property. The
amount of PSL's secured claim shall be equal to the total amount of loan advances
made by PSL to the Trustee. ARTICLE V. MISCELLANEOUS Section 5.01
Amendments. Etc. No amendment or waiver of any provision of this Agreement, nor
consent to any departure by the Trustee therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Trustee and PSL, and then
such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. Section 5.02 Notices, Etc. All notices and other
communications provided for hereunder shall be in writing and mailed, e-mailed, or
faxed to the following address: Lender: Portfolio Secure Lone LLC clo Stephen
Kutenplon Tarlow Breed Hart & Rodgers 101 Huntington Avenue, Suite 500 Boston,
MA 02199 Telephone: 617-218-2000 Fax: 617-261-7673 E-mail: skutenplon@tbhr-
law.com LOAN AND SECURITY AGREEMENT - Page 4 of 6 Case 19-33568-mvl7
Doc 35 Filed 04/08/20 Entered 04/08/20 13:22:34 Page 10 of 12 Trustee: With a
copy to: Diane G. Reed, Trustee 501 N. College St. Waxahachie, TX 75165
Telephone: 972-938-7334 Fax: 972-923-0430 E-mail: dreed@bcylawyers.com David
W. Elmquist Reed & Elmquist, P.C. 501 N. College St. Waxahachie, TX 75165
Telephone: 972-938-7339 Fax: 972-923-0430 E-mail: delmquist@bcylawyers.com
Baker Botts L.L.P. Attn: Omar Alaniz 2001 Ross Avenue, Suite 900 Dallas, TX
75201-2980 Telephone: 214-953-6500 Fax: 214-953-6503 E-mail:
omar.alaniz@bakerbotts.com Special Counsel: or at such other address as shall be
designated by either such party in a written notice to the other party, Section 5.03
Binding Effect; Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Texas. Section 5.04 Dispute Resolution.
Any dispute arising from or relating to the enforcement or interpretation of this
Agreement shall be resolved by the Bankruptcy Court, and the parties hereby submit
to the subject matter and personal jurisdiction of the Court with respect thereto.
Section 5.05 Bankruptcy Court Approval. This Agreement is subject to the approval
of the Bankruptcy Court in the Bankruptcy Case. IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written. LOAN AND
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SECURITY AGREEMENT †Page 5 of 6