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IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chieftain Sand and Proppant, LLC, et al., Debtors.1

) ) ) ) ) ) )

Case No. 17-________ (__) Chapter 11 (Joint Administration Requested)

DEBTORS’ MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS PURSUANT TO SECTIONS 361, 362, 363 AND 364 OF THE BANKRUPTCY CODE AND RULE 4001 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE (A) AUTHORIZING THE DEBTORS TO (I) USE CASH COLLATERAL OF THE PREPETITION SECURED PARTIES, (II) OBTAIN SECURED SUPERPRIORITY POSTPETITION FINANCING AND (III) PROVIDE ADEQUATE PROTECTION TO THE PREPETITION SECURED PARTIES AND (B) SCHEDULING FINAL HEARING The above-referenced debtors and debtors-in-possession (collectively, the “Debtors”) hereby move the Court for the entry of an order, in substantially the form attached hereto as Exhibit A (the “Interim Order”), and a final order (the “Final Order”): (a) authorizing the Debtors to (i) use cash collateral of the Prepetition Secured Parties (as defined below), (ii) obtain secured postpetition financing and grant liens and superpriority administrative claims in connection therewith, and (iii) provide adequate protection to the Prepetition Secured Parties; and (b) scheduling a final hearing. In further support of this Motion, the Debtors respectfully state the following: JURISDICTION AND VENUE 1.

The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334 and 157

and the Amended Standing Order of Reference from the United States District Court for the

1

The Debtors in these chapter 11 cases, and the last four digits of their respective federal tax identification numbers, are Chieftain Sand and Proppant, LLC (1729) and Chieftain Sand and Proppant Barron, LLC (0418). The Debtors’ service address is: 331 27th Street, New Auburn, WI 54757.


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District of Delaware, dated February 29, 2012. This Motion is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). The Debtors confirm their consent, pursuant to rule 9013-1(f) of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the “Local Rules”), to the entry of a final order by the Court in connection with this motion to the extent that it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments in connection herewith consistent with Article III of the United States Constitution. 2.

Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

3.

The statutory bases for the relief requested herein are sections 105(a), 361, 362,

363, 364(c), 364(d)(1), 503, and 507(a)(8) of title 11 of the United States Code (the “Bankruptcy Code”), rules 4001, 6003, and 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Local Rules 4001-2 and 9013-1(m). PRELIMINARY STATEMENT 4.

As more fully described in this Motion and in the Declaration of Victor Serri in

Support of Chapter 11 Petitions and First Day Pleadings (the “First Day Declaration”) filed contemporaneously herewith, several factors have significantly impacted the Debtors’ financial condition and near-term liquidity, precipitating the commencement of these chapter 11 cases and requiring the Debtors to seek access to the Debtors’ proposed debtor-in-possession credit facility. 5.

Prior to commencing these cases, the Debtors, with the assistance of their

professional advisors, analyzed the liquidity that would be necessary to maintain business operations, continue the marketing and sale process, and fund these chapter 11 cases. 6.

As discussed below, the Debtors believe that the postpetition financing proposed

by their Prepetition Lenders represents the best source of appropriately-sized financing available

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to the Debtors under the circumstances. The proposed senior secured superpriority postpetition credit facility (the “Facility”) will, among other things, allow the Debtors to maintain their business operations and facility maintenance, fund certain operational and insurance expenses, continue the sales and marketing process, and satisfy working capital needs in the ordinary course. 7.

By this Motion, the Debtors seek authorization to obtain postpetition financing

pursuant to the terms set forth in this Motion, the Credit Agreement annexed to the Interim Order as Exhibit B (the “Credit Agreement”),2 the Interim Order, and the Final Order. CONCISE STATEMENT PURSUANT TO BANKRUPTCY RULE 4001 AND LOCAL RULE 4001-2 8.

The principal terms of the Credit Facilities are summarized below, together with

references to the applicable sections of the relevant source documents, as required by Bankruptcy Rules 4001(b)(1)B and 4001(c)(1)(B) and Local Rule 4001-2.3 Bankruptcy Code / Local Rule Borrower: Bankruptcy Rule 4001(c)(1)(B) Administrative Agent: Bankruptcy Rule 4001(c)(1)(B) DIP Lenders: Bankruptcy Rule 4001(c)(1)(B)

Term: Bankruptcy Rule 4001(b)(l)(B)(iii), 4001(c)(1)(B); Local Rule 4001-2(a)(ii)

Summary of Material Terms Chieftain Sand and Proppant, LLC Energy Capital Partners Mezzanine Opportunities Fund A, LP Energy Capital Partners Mezzanine Opportunities Fund A, LP, Energy Capital Partners Mezzanine Opportunities Fund B, LP, Energy Capital Partners Mezzanine Opportunities Fund, LP, and any other lenders from time to time party to the Credit Agreement as a lender. The term of the Credit Facilities shall commence on the date of entry of the Interim Order and, prior to the entry of the Final Order, mature on the earliest of (i) March 31, 2017, (ii) 30 days after entry of the Interim Order, if the Final Order has not been entered by such 30th day, among other things, containing such additional protections reasonably required by the Majority Lenders, with only such modifications thereto as are satisfactory in form and substance to the Administrative Agent, (iii) the effective date of a chapter 11 plan filed in the Cases that is confirmed pursuant to an order entered by the Bankruptcy Court, and (iv) the date

2

Capitalized terms not otherwise defined herein shall have the meanings given to them in the DIP Credit Agreement or Interim Order, as applicable.

3

This summary is qualified in its entirety by the provisions of the Credit Agreement and the Interim Order. Unless otherwise set forth in this summary, capitalized terms used within this summary shall have the meanings ascribed to them in the Credit Agreement.

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on which all Loans shall become due and payable in full under the Credit Agreement, whether by acceleration or otherwise; provided that, if any such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day. Commitment: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(ii)

Conditions of Borrowing: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(ii)

Interest Rates: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(ii)

Use of DIP Facility and Cash Collateral: Bankruptcy Rule 4001(b)(l)(B)(ii); Local Rule 4001-2(a)(ii)

Repayment Features: Local Rule 4001-2(a)(i)(E) Entities with Interests in Cash Collateral: Bankruptcy Rule 4001(b)(l)(B)(i) Fees: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(ii)

See Credit Agreement § 2.01(e) $2,100,785, consisting of (i) a senior secured priming and superpriority debtor-in-possession term loan credit facility in an aggregate principal amount (subject to entry of the Final Order (as defined below)) equal to $850,000 and (ii) a letter of credit facility in an aggregate principal amount up to $1,250,785; provided that such amount may be increased with the written consent of the DIP Agent (in the exercise of its sole discretion), of which $1,250,785 of the term loan credit facility shall be available on an interim basis pending entry of the Final Order. See Credit Agreement Annex A; Interim Order ¶ 2(c). The Lenders’ obligation to make its initial Loan is subject to customary borrowing conditions, including, but not limited to (i) delivery of executed Loan Documents, (ii) delivery of corporate authorizations, (iii) delivery of an officer’s certificate confirming satisfaction of certain conditions, (iv) delivery of financial statements, (v) evidence of insurance, (vi) payment of fees, (vii) commencement of these chapter 11 cases, (viii) entry of the Interim Order, (ix) entry of “first day” orders, and (x) delivery of the DIP Budget. See Credit Agreement § 4.01; Interim Order ¶ 2(h). 10%. During an Event of Default, interest shall increase 2.00% per annum from the date of such Event of Default until such Event of Default is cured or waived. See Credit Agreement § 2.07. Proceeds of the Credit Facility and all Cash Collateral shall be used and/or applied in accordance with the terms and conditions of the Interim Order, the Budget (subject to variances permitted under the Credit Agreement) and the other Loan Documents, for the types of expenditures in the Budget and for no other purpose; provided that, subject to the limitations set forth in the Budget, up to $50,000 in the aggregate of the proceeds of the Facility or Collateral may be used by any Committee solely to investigate the matters covered by the Claims Stipulations. See Credit Agreement §§ 2.01, 3.23, 5.11; Interim Order ¶¶ 3, 15 The Credit Agreement contains customary prepayment and repayment provisions. See Credit Agreement §§ 2.03, 2.04, 2.05, 2.06; Interim Order ¶ 2(g). The Prepetition Secured Parties, consisting of the Prepetition Lenders and Prepetition Agent. See Interim Order ¶ D. As consideration for the DIP Agent and the DIP Lenders arranging for the provision of any Letter of Credit under the Credit Agreement, the Borrower agrees to pay the DIP Agent, for the benefit of the DIP Lenders:

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a non-refundable fee in the amount of $500.00 per requested issuance or amendment of a Letter of Credit under the Credit Agreement, payable upon the submission of a Letter of Credit Provision Request in accordance with Section 2.13(b) of the Credit Agreement; a non-refundable fee per annum equal to the Letter of Credit Margin on the daily face amount of each Letter of Credit, less the amount of any draws on such Letter of Credit, payable on the Maturity Date, commencing on the issuance date thereof and continuing for so long as such Letter of Credit remains outstanding (including, for the avoidance of doubt, any Letter of Credit that is outstanding but has been Cash Collateralized) calculated on the basis of actual days elapsed in a year consisting of 360 days; and if the Borrower requests any non-standard Letter of Credit, such additional amount as shall be agreed to by the Borrower and the Administrative Agent (in the exercise of its sole discretion). Budget: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(ii) Reporting Information: Bankruptcy Rule 4001(c)(l)(B); Local Rule 4001-2(a)(ii) Chapter 11 Sales Process Milestones: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(ii)

See Credit Agreement § 2.13(c). The use of cash and proceeds of the Facility is subject to a customary budget (the “Budget”), attached to the Interim DIP Order as Exhibit A, and including any variances permitted under the Credit Agreement. See Credit Agreement §§ 2.01, 5.14, 5.15; Interim Order ¶ 2(d). The Credit Agreement requires certain reporting, including, without limitation, delivery of cash flow projections and budget reconciliations. See Credit Agreement §§ 5.14, 5.15; Interim Order ¶ 2(d). The Debtors shall cause the following actions to occur no later than the applicable date set forth below: (a) No later than 45 days after the Petition Date (or such later date to which the DIP Agent and the Majority Lenders consent in writing in their respective sole discretion), obtain Bankruptcy Court approval and entry of the Sale Procedures Order; and (b) On or before March 31, 2017, the Bankruptcy Court shall have entered the Sale Order approving the 363 Sale.

Liens and Priorities: Bankruptcy Rule 4001(c)(l)(B)(i); Local Rule 4001- 2(a)(i)(D) and (G), 4001-2(a)(ii)

See Credit Agreement § 5.19. Subject and subordinate to the Carve-Out, as set forth more fully in the Interim Order, the Agent for the ratable benefit of the Secured Parties is granted the following security interests and liens (the “DIP Liens”), which shall immediately be valid, binding, perfected, continuing, enforceable and non-avoidable: pursuant to section 364(c)(2) of the Bankruptcy Code, a perfected, binding, continuing, enforceable, and non-avoidable first priority Lien on all unencumbered DIP Collateral, including (upon entry of a Final Order) the proceeds of the Debtors’ claims and causes of action under sections 502(d), 544, 545, 547-550 and 553 of the Bankruptcy Code and any other avoidance or similar action under the Bankruptcy Code or similar state or municipal law (collectively, the “Avoidance Actions”), whether received by judgment, settlement, or otherwise;

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pursuant to section 364(c)(3) of the Bankruptcy Code, a perfected, binding, continuing, enforceable, and non-avoidable junior Lien upon all DIP Collateral that is subject solely to the Prepetition Senior Permitted Encumbrances, other than liens which are expressly stated to be primed by the liens to be granted to the DIP Agent described in clause (III) below; and pursuant to section 364(d)(1) of the Bankruptcy Code, a perfected first priority, senior priming lien on all DIP Collateral (including, without limitation, Cash Collateral) that is senior to the Adequate Protection Replacement Liens (as defined below) and senior and priming to (x) the Prepetition Liens and (y) any Liens that are junior to the Prepetition Liens and the Adequate Protection Replacement Liens, after giving effect to any intercreditor or subordination agreements (the liens referenced in clauses (x) and (y), collectively, the “Primed Liens”); provided, however, that the liens described in this subsection (III) shall be junior solely to the Carve-Out and the Prepetition Senior Permitted Encumbrances. The DIP Obligations shall, upon entry of the Interim Order, pursuant to section 364(c)(1) of the Bankruptcy Code, constitute an allowed superpriority claim (the “DIP Superpriority Claim”) for the benefit of the DIP Secured Parties, subject and subordinate only to the Carve Out. Carve Out: Bankruptcy Rule 4001(c)(1)(B); Local Rule 4001-2(a)(i)(f)

See Interim Order ¶¶ 2(i)-(l). The DIP Liens, the DIP Superpriority Claim, the Prepetition Liens, the Prepetition Adequate Protection Liens and the Prepetition Adequate Protection Superpriority Claim are subject and subordinate to a carve-out (the “Carve-Out”). Carve-Out” means (a) all unpaid fees required to be paid in these Cases to the clerk of the Bankruptcy Court and to the office of the United States Trustee under 28 U.S.C. § 1930(a)(6), together with the statutory rate of interest; (b) subject to the terms and conditions of the Interim Order, the unpaid fees, costs, and disbursements of professionals retained by the Debtors in these Cases other than the Debtors’ ordinary course professionals (collectively, the “Debtors’ Professionals”) that are incurred prior to the delivery by the DIP Agent of a Carve-Out Trigger Notice (as defined below), are in accordance with and limited by the Approved Budget, and are allowed either prior to or after the delivery by the DIP Agent of a Carve-Out Trigger Notice (as defined below) pursuant to an order of the Court under sections 327, 330, or 363 of the Bankruptcy Code and remain unpaid after application of any retainers being held by such professionals; (c) subject to the terms and conditions of the Interim Order, the reasonable unpaid fees, costs, and disbursements of professionals retained by the Committee in these Cases (collectively, the “Committee’s Professionals”) and all reasonable unpaid out-of-pocket expenses of the members of any Committee (“Committee Members”), in each case that are incurred prior to the delivery by the DIP Agent of a Carve-Out Trigger Notice (as defined below) and in accordance with and limited by the Approved Budget, and that are allowed either prior to or after the delivery by the DIP Agent of a CarveOut Trigger Notice (as defined below) by the Court under sections 328, 330, or 1103 of the Bankruptcy Code and remain unpaid after application of any retainers being held by such professionals; (d) the reasonable unpaid fees, costs, and disbursements of the Debtors’ Professionals that

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are incurred after the delivery of a Carve-Out Trigger Notice, that are allowed by the Court under sections 327 or 363 of the Bankruptcy Code and that are in accordance with the Budget, in an aggregate amount not to exceed $250,000.00 (inclusive of any unapplied retainers held by such professionals) (the “Debtors’ Professionals Post-Default Carve-Out Cap”); and (e) the reasonable unpaid fees, costs, and disbursements of the Committee Professionals and the reasonable unpaid expenses of Committee Members that are incurred after the delivery of a Carve-Out Trigger Notice, that are allowed by the Court under sections 328 or 1103 of the Bankruptcy Code, in an aggregate amount (for both Committee Members and the Committee’s Professionals) not to exceed $50,000.00 (inclusive of any unapplied retainers held by such professionals) (the “Committee Post-Default Carve-Out Cap” and, together with the Debtors’ Professionals Post-Default Carve-Out Cap, the “Post-Default Carve-Out Cap”) (clauses (a), (b), (c), (d), and (e), collectively, the “Carve-Out”). 506(c) Waiver: Bankruptcy Rule 4001(c)(l)(B)(x); Local Rule 4001-2(a)(i)(C)

Section 552(b): Bankruptcy Rule 4001(c)(l)(B); Local Rule 4001-2(a)(i)(h)

Stipulations to Prepetition Liens and Claims: Bankruptcy Rule 4001(c)(1)(B)(iii); Local Rule 4001-2(a)(i)(B) Challenge Period: Bankruptcy Rule 4001(c)(l)(B); Local Rule 4001-2(a)(i)(B)

See Interim Order ¶ 7. Subject to the entry of the Final Order, as a further condition of the DIP Facility and any obligation of the DIP Secured Parties to make credit extensions pursuant to the DIP Loan Documents (and their consent to the payment of the Carve-Out to the extent provided herein) and as a further condition to the Debtors’ use of Cash Collateral pursuant to the Interim Order and a Final Order, no costs or expenses of administration of the Cases or any Successor Cases shall be charged against or recovered from or against any or all of the DIP Secured Parties and/or the Prepetition Secured Parties, the Prepetition Collateral, the DIP Collateral and the Cash Collateral, in each case pursuant to section 506(c) of the Bankruptcy Code or otherwise, without the prior written consent of the Prepetition Agent and the DIP Agent, and no such consent shall be implied from any other action, inaction, or acquiescence of any or all of the Prepetition Secured Parties and the DIP Secured Parties. See Interim Order ¶ 8. Subject to the entry of the Final Order, the DIP Secured Parties and the Prepetition Secured Parties shall each be entitled to all of the rights and benefits of section 552(b) of the Bankruptcy Code and the “equities of the case” exception under section 552(b) of the Bankruptcy Code shall not apply to the DIP Secured Parties or the Prepetition Secured Parties with respect to proceeds, product, offspring or profits of any of the Prepetition Collateral or the DIP Collateral. Removed from Interim Order (but to be included in Final Order) The Interim Order contains stipulated findings of fact, including those related to the validity and enforceability of the Prepetition Obligations and the liens of the Prepetition Secured Parties. The stipulations referenced above shall become irrevocably binding on all persons and entities; however, any party with standing to do so may challenge or object to the stipulations by the date that is (x) with respect to any Committee, sixty (60) days following the formation of such Committee and (y) with respect to any other party with standing, seventy-five (75) days following entry of the Interim Order. Any stipulation not timely and successfully challenged shall be binding on all parties.

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See Interim Order ¶¶ D, 6. To the extent there is a diminution in value of the interests of the Prepetition Secured Parties in the Prepetition Collateral (including Cash Collateral) from and after the Petition Date resulting from the use, sale, or lease by the Debtors of the applicable Prepetition Collateral (including Cash Collateral), the granting of the DIP Superpriority Claims, the granting of the DIP Liens, the subordination of the Prepetition First Priority Liens thereto and to the Carve-Out, and the imposition or enforcement of the automatic stay of section 362(a) of the Bankruptcy Code (regardless of whether a motion asserting a lack of adequate protection due to the imposition of the automatic stay is filed by any of the Prepetition Secured Parties) (“Diminution in Prepetition Collateral Value”), the Prepetition Agent, for the benefit of all the Prepetition Secured Parties, is hereby granted, subject to the terms and conditions set forth below, pursuant to sections 361, 363(e), and 364 of the Bankruptcy Code, replacement Liens upon all of the DIP Collateral (such adequate protection replacement liens, the “Prepetition Adequate Protection Liens”), which Prepetition Adequate Protection Liens on such DIP Collateral shall be subject and subordinate only to the DIP Liens, the Prepetition Senior Permitted Encumbrances, and the Carve-Out and shall be senior in priority to the Prepetition First Priority Liens. The Prepetition Adequate Protection Liens and the Prepetition Adequate Protection Superpriority Claim (as defined below) (A) shall not be subject to sections 510, 549, 550, or 551 of the Bankruptcy Code or, subject to entry of the Final Order, section 506(c) of the Bankruptcy Code or the “equities of the case” exception of section 552 of the Bankruptcy Code, (B) shall not be subordinate to, or pari passu with, (x) any lien that is avoided and preserved for the benefit of the Debtors and their estates under section 551 of the Bankruptcy Code or otherwise or (y) any intercompany or affiliate liens or claims of the Debtors, and (C) shall be valid and enforceable against any trustee or any other estate representative appointed in the Cases or any Successor Cases, and/or upon the dismissal of any of the Cases. Prepetition Adequate Protection Superpriority Claims. To the extent of Diminution in Prepetition Collateral Value, the Prepetition Secured Parties are further granted allowed superpriority administrative claims (such adequate protection superpriority claims, the “Prepetition Adequate Protection Superpriority Claims”), pursuant to section 507(b) of the Bankruptcy Code, with priority over all administrative expense claims and unsecured claims against the Debtors and their estates, now existing or hereafter arising, of any kind or nature whatsoever, including, without limitation, administrative expenses of the kind specified in or ordered pursuant to sections 105, 326, 328, 330, 331, 503(a), 503(b), 506(c) (subject to entry of a Final Order), 507(a), 507(b), 546(c), 546(d), 726 (to the extent permitted by law), 1113, and 1114 and any other provision of the Bankruptcy Code, junior only to the DIP Superpriority Claims and the Carve-Out to the extent provided herein and in the DIP Loan Documents, and payable from and having recourse to all prepetition and postpetition property of the Debtors and all proceeds thereof; provided, however, that the Prepetition Secured Parties shall not receive or retain any payments, property, or other amounts in respect of the Prepetition Adequate Protection Superpriority Claims unless and until all DIP Obligations have been Paid in Full (as defined below). Subject to the relative priorities set forth above, the Prepetition Adequate Protection Superpriority Claims against each Debtor shall be against

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each Debtor on a joint and several basis. For purposes of the Interim Order, the terms “Paid in Full,” “Repaid in Full,” “Repay in Full,” and “Payment in Full” shall mean, with respect to any referenced DIP Obligations and/or Prepetition Credit Obligations, (i) the indefeasible payment in full in cash of such obligations and (ii) the termination of all credit commitments under the DIP Loan Documents and/or Prepetition Credit Documents, as applicable. Consent to Priming and Adequate Protection. The Prepetition Agent, on behalf of the Prepetition Secured Parties, consents to the Prepetition Secured Parties’ Adequate Protection and the priming provided for in the Interim Order; provided, however, that such consent of the Prepetition Agent to the priming of the Prepetition First Priority Liens, the use of Cash Collateral, and the sufficiency of the Prepetition Secured Parties’ Adequate Protection provided for in the Interim Order is expressly conditioned upon the entry of the Interim Order, and such consent shall not be deemed to extend to any other Cash Collateral usage or other replacement financing or debtor-in-possession financing other than the DIP Facility provided under the DIP Loan Documents; and provided, further, that such consent shall be of no force and effect in the event the Interim Order is not entered or is entered and subsequently reversed, modified, stayed, or amended (unless such reversal, modification, stay, or amendment is acceptable to the Prepetition Agent and the Prepetition Lenders in their respective sole discretion) or the DIP Loan Documents and DIP Facility as set forth herein are not approved. Right to Seek Additional Adequate Protection. Under the circumstances and given that the above-described adequate protection is consistent with the Bankruptcy Code, including section 506(b) thereof, the Court finds that the adequate protection provided in the Interim Order is reasonable and sufficient to protect the interests of the Prepetition Lenders. However, the Prepetition Agent, on behalf of the Prepetition Secured Parties, may request Court approval for additional or alternative adequate protection, without prejudice to any objection of the Debtors or any other party in interest to the grant of any additional or alternative adequate protection; provided that any such additional or alternative adequate protection shall at all times be subordinate and junior to the claims and Liens of the DIP Lenders granted under the Interim Order and the DIP Loan Documents. Events of Default: Bankruptcy Rule 4001(c)(l)(B); Local Rule 4001-2(a)(ii)

Waiver/Modification of the Automatic Stay: Bankruptcy Rule 4001(c)(1)(B)(iv)

See Interim Order ¶ 4. The events set forth in Section 7.01 of the Credit Agreement, each an “Event of Default,” include Events of Default that are customary in debtor-in-possession credit agreements, such as the failure to make timely payments, failure to comply with covenants, dismissal or conversion of the Chapter 11 Case, Change of Control, as well as other Events of Default deemed appropriate by the DIP Agent and the Debtors. See Credit Agreement § 7.01; Interim Order ¶ 13. Any automatic stay otherwise applicable to the DIP Secured Parties is modified by the Interim Order, without requiring prior notice to or authorization of this Court, to the extent necessary to permit the DIP Secured Parties to exercise the following remedies immediately upon the occurrence and during the continuance of any Termination Event (as set forth in Paragraph 3 of the Interim Order): (i) terminate the DIP

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Obligations; (ii) declare the principal amount then outstanding of, and the accrued interest on, the DIP Obligations and all other amounts payable by the Debtors under the DIP Loan Documents to be forthwith due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest, or other formalities of any kind, all of which are hereby expressly waived by the Debtors; (iii) terminate the DIP Facility and any DIP Loan Document as to any future liability or obligation of the DIP Secured Parties, but without affecting any of the DIP Obligations or the DIP Liens securing the DIP Obligations; (iv) declare a termination, reduction, or restriction on the ability of the Debtors to use any Cash Collateral (except as permitted in Paragraph 15(b) of the Interim Order), including Cash Collateral derived solely from the proceeds of DIP Collateral (any such declaration to be made in writing to the Debtors, the Prepetition Agent, the respective lead counsel to any Committee, and the United States Trustee shall be referred to herein as a “Termination Declaration” and the date which is the earliest to occur of any such Termination Declaration being herein referred to as the “Termination Declaration Date”); (v) reduce any claim to judgment; (vi) take any other action permitted by law; and/or (vii) take any action permitted to be taken by the DIP Loan Documents during the continuance of any Termination Event. Waiver/Modification of Applicability of Nonbankruptcy Law Relating to Perfection or Enforceability of Liens: Bankruptcy Rule 4001(c)(1)(B)(vii)

Indemnification: Bankruptcy Rule 4001(c)(1)(B)(ix)

See Interim Order ¶ 14. The Interim Order shall be sufficient and conclusive evidence of the validity, enforceability, perfection, and priority of the DIP Liens and the Prepetition Adequate Protection Liens without the necessity of (a) filing or recording any financing statement, deed of trust, mortgage, or other instrument or document which may otherwise be required under the law of any jurisdiction or (b) taking any other action to validate or perfect the DIP Liens and the Prepetition Adequate Protection Liens or to entitle the DIP Liens and the Prepetition Adequate Protection Liens to the priorities granted herein. Notwithstanding the foregoing, each of the DIP Agent and the Prepetition Secured Parties (in the latter case, solely with respect to the Prepetition Adequate Protection Liens) may, each in their sole discretion, enter into and file, as applicable, financing statements, mortgages, security agreements, notices of liens, and other similar documents, and is granted relief from the automatic stay of section 362 of the Bankruptcy Code in order to do so, and all such financing statements, mortgages, security agreements, notices, and other agreements or documents shall be deemed to have been filed or recorded at the time and on the Petition Date. See Credit Agreement § 3.19; Interim Order ¶ 5. The Debtors (through Chieftain Sand and Proppant, LLC) agree to indemnify and hold harmless the Administrative Agent (and any subagent thereof), each other Agent, each Lender, and each Related Party of any of the foregoing Persons from, any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs (including settlement costs), disbursements and out-of-pocket fees and expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), joint or several, of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted or awarded against any Indemnitee in any way relating to or arising out of or in connection with or by reason of (i) any actual or prospective claim, litigation, investigation or proceeding in any way relating to, arising out of, in connection with or by reason of any of the

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following, whether based on contract, tort or any other theory (including any investigation of, preparation for, or defense of any pending or threatened claim, litigation or proceeding): (x) the execution, delivery, enforcement, performance or administration of any Loan Document or any other document delivered in connection with the transactions contemplated thereby or any amendments, modifications or waivers of the provisions of the Credit Agreement or thereof (whether or not the transactions contemplated by the Credit Agreement or thereby shall be consummated) or the consummation of the transactions contemplated thereby or (y) any Commitment, any Credit Extension or the use or proposed use of the proceeds thereof; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, fees and expenses arise from any dispute solely among Indemnitees (other than any claims against an Indemnitee in its capacity or in fulfilling its role as an agent or arranger or any similar role under the Credit Agreement or under any other Loan Document and other than any claims arising out of any act or omission of the Borrower or its Subsidiary); or (ii) any actual or alleged presence or release of Materials of Environmental Concern on or from any property currently or formerly owned or operated by the Debtors, or any Environmental Liability related in any way to the Debtors (clauses (i) and (ii), collectively, the “Indemnified Liabilities”), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of such Indemnitee and regardless of whether such Indemnitee is a party thereto, and whether or not any such claim, litigation, investigation or proceeding is brought by the Borrower, its equity holders, its affiliates, its creditors or any other Person. Release, Waivers or Limitation on any Claim or Cause of Action: Local Rule 4001 (c)(1)(B)(viii)

See Credit Agreement §9.05(b); Interim Order ¶ 2(b). Subject to the reservation of rights set forth in Paragraph 6 of the Interim Order, each Debtor and its estate shall be deemed to have forever waived, discharged, and released Energy Capital Partners Mezzanine Opportunities Fund A, LP and its affiliates, and each of their respective members, managers, equity holders, affiliates, agents, attorneys, financial advisors, consultants, officers, directors, employees and other representatives (all of the foregoing, collectively, the “Prepetition Secured Party Releasees”) of any and all “claims” (as defined in the Bankruptcy Code), counterclaims, causes of action (including, without limitation, causes of action in the nature of “lender liability”), defenses, setoff, recoupment, or other offset rights against any and all of the Prepetition Secured Party Releasees, whether arising at law or in equity, relating to and/or otherwise in connection with the Prepetition Credit Obligations, the Prepetition First Priority Liens, or the debtor-creditor relationship between any of the Prepetition Secured Parties, on the one hand, and any of the Debtors, on the other hand, including, without limitation, (I) any recharacterization, subordination, avoidance, or other claim arising under or pursuant to section 105 or chapter 5 of the Bankruptcy Code or under any other similar provisions of applicable state law, federal law, or municipal law and (II) any right or basis to challenge or object to the amount, validity, or enforceability of the Prepetition Credit Obligations or any payments made on account of the Prepetition Credit Obligations, or the validity, enforceability, priority, or non-avoidability of the Prepetition First Priority Liens securing the Prepetition Credit Obligations. See Interim Order § D(iv)

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Subject to entry of a Final Order, the DIP Collateral includes liens on Avoidance Actions as well as proceeds relating thereto. See Interim DIP Order ¶ 2(i).

HIGHLIGHTED PROVISIONS UNDER LOCAL RULE 4001-2(A)(I) 9.

The Interim Order includes certain terms that constitute material provisions

requiring explicit disclosure under the Local Rules.4 The provisions described in Local Rule 4001-2(a)(i), to the extent applicable, are set out at the following sections of the Interim Order:

4

a.

Local Rule 4001-2(a)(i)(A) – Cross-Collateralization. The Interim Order and Final Order (collectively, the “Orders”) do not provide for cross-collateralization, other than replacement liens and superpriority claims as adequate protection.

b.

Local Rule 4001-2(a)(i)(B) – Validity, Perfection, and Amount of Prepetition Liens. The Debtors acknowledge, agree, admit, and stipulate to various matters, including, the validity, perfection, and priority of the Prepetition Liens. See Interim Order ¶ D. The stipulations set forth in paragraph D of the Interim Order are binding on the Debtors and successors thereto. In compliance with Local Rule 4001-2(a)(i)(B), parties in interest have seventy-five (75) days from the entry of the Interim Order, and the Committee, if formed, will have sixty (60) days from the date of its appointment, to investigate the stipulations set forth in paragraph D. See id. at ¶ 6.

c.

Local Rule 4001-2(a)(i)(C) – 506(c) Waiver. Subject to the entry of the Final Order, as a further condition of the DIP Facility and any obligation of the DIP Secured Parties to make credit extensions pursuant to the DIP Loan Documents (and their consent to the payment of the Carve-Out to the extent provided herein) and as a further condition to the Debtors’ use of Cash Collateral pursuant to the Interim Order and a Final Order, no costs or expenses of administration of the Cases or any Successor Cases shall be charged against or recovered from or against any or all of the DIP Secured Parties and/or the Prepetition Secured Parties, the Prepetition Collateral, the DIP Collateral and the Cash Collateral, in each case pursuant to section 506(c) of the Bankruptcy Code or otherwise, without the prior written consent of the Prepetition Agent and the DIP Agent, and no such consent shall be implied from any other action,

While the Debtors have attempted to highlight the provisions required by the Bankruptcy Rules and Local Rules, as well as certain other material provisions, the Debtors reserve the right to supplement this list at the Interim Hearing.

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inaction, or acquiescence of any or all of the Prepetition Secured Parties and the DIP Secured Parties. See Interim Order ¶ 8. d.

Local Rule 4001-2(a)(i)(D) – Liens on Avoidance Actions. Subject to entry of a Final Order, the Adequate Protection Liens shall attach to Avoidance Actions and any proceeds relating thereto. See Interim Order ¶ 2(i).

e.

Local Rule 4001-2(a)(i)(E) – Provisions Deeming Prepetition Debt to be Post Petition Debt. The Orders do not deem prepetition secured debt to be postpetition debt.

f.

Local Rule 4001-2(a)(i)(F) – Disparate Treatment of Professionals Retained by the Committee. In compliance with Local Rule 40012(a)(i)(F), the Interim Order contains a Debtors’ Professionals PostDefault Carve-Out Cap of $250,000.00 and a Committee Post-Default Carve-Out Cap of $50,000.00. See Interim Order, ¶ 7.

g.

Local Rule 4001-2(a)(i)(G) – Non-Consensual Priming. The Order provides for the priming of the Prepetition Liens, which the Prepetition Secured Parties have consented to. See Interim Order ¶ 4(iii).

h.

Local Rule 4001-2(a)(i)(H) – Provisions Affecting the Court’s Power to Consider the Equities of the Case. The proposed waiver of “equities of the case” claims under section 552(b) of the Bankruptcy Code will be effective after entry of the Final DIP Order. BACKGROUND

10.

Chieftain is a privately owned producer of hydraulic fracturing sand (“Frac

Sand”), a monocrystalline sand used as a proppant (a solid material, typically sand, designed to keep an induced hydraulic fracture open) to enhance oil and gas product recovery in petroleumrich unconventional shale deposits. 11.

With the current petroleum recession having caused demand for Frac Sand to

diminish to historic lows, the Debtors are unable to generate sufficient revenue and liquidity to continue to maintain their capital structure on a long term basis. To maximize value, the Debtors have entered into a stalking horse asset purchase agreement with Energy Capital Partners Mezzanine Opportunities Fund A, LP. The Debtors filed these chapter 11 cases with the goal of

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continuing the process for a sale of all or substantially all of their assets pursuant to section 363 of the Bankruptcy Code. 12.

On January 9, 2017 (the “Petition Date”), the Debtors each filed a voluntary

petition for relief under chapter 11 of the Bankruptcy Code, thereby commencing the above-captioned bankruptcy cases. 13.

Since the Petition Date, the Debtors have continued to operate and manage their

businesses as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As of the date hereof, an official committee of unsecured creditors has not been appointed in these cases. 14.

Additional information regarding the Debtors and these cases, including the

Debtors’ business, organizational structure, financial condition, and the reasons for and objectives of these cases, is set forth in the Declaration of Victor A. Serri in Support of Chapter 11 Petitions and First Day Pleadings (the “First Day Declaration”), filed contemporaneously herewith and incorporated herein by reference. The Debtors’ Prepetition Credit Agreement 15.

Pursuant to that certain Credit and Security Agreement (as amended, restated or

otherwise modified from time to time prior to the Petition Date, the “Prepetition Credit Agreement,” and collectively with any other agreements and documents executed or delivered in connection therewith, including, without limitation, the “Credit Documents” as defined therein, each as may be amended, restated, supplemented, or otherwise modified from time to time, the “Prepetition Credit Documents”), among (a) Chieftain Sand and Proppant, LLC, as Borrower (in such capacity, the “Prepetition Borrower”), (b) Chieftain Sand and Proppant Barron, LLC, as Guarantor (in such capacity, the “Prepetition Guarantor”), (c) the financial institutions party thereto as “Lenders” as defined therein (collectively, the “Prepetition Lenders”), and (d) Energy 14


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Capital Partners Mezzanine Opportunities Fund A, LP, as administrative agent and collateral agent for the Prepetition Lenders (in such capacities, the “Prepetition Agent” and, together with the Prepetition Lenders, the “Prepetition Secured Parties”), the Prepetition Lenders agreed to extend loans and other financial accommodations to the Prepetition Borrower. Pursuant to the Prepetition Credit Documents, the Prepetition Guarantor unconditionally guaranteed the obligations owed by the Prepetition Borrower under the Prepetition Credit Agreement. 16.

As of the Petition Date, (a) the applicable Debtors owed the Prepetition Secured

Parties, pursuant to the Prepetition Credit Documents, without defense, counterclaim, or offset of any kind, in respect of loans made and other financial accommodations made by the Prepetition Secured Parties, an aggregate principal amount of not less than $60,235,856, plus accrued and hereafter accruing and unpaid interest thereon in an aggregate amount of not less than $5,489,800, plus any additional fees, expenses (including any reasonable attorneys’, accountants’, appraisers’, and financial advisors’ fees and expenses that are chargeable or reimbursable under the Prepetition Credit Documents), and other amounts now or hereafter due under the Prepetition Credit Agreement and the other Prepetition Credit Documents (collectively, the “Prepetition Secured Obligations”). RELIEF REQUESTED 17.

By this Motion, the Debtors seek the following relief: the Court’s authorization, pursuant to sections 363 and 364(c)(1), (2), (3) and (d)(1) of the Bankruptcy Code, for the Debtors to (i) enter into the Facility provided by Energy Capital Partners Mezzanine Opportunities Fund A, LP, as administrative agent and as collateral agent (in such capacities, collectively, the “DIP Agent”), and the other lenders from time to time party thereto, as lenders (in such capacities, the “DIP Lenders”), pursuant to the Credit Agreement, the Interim Order, the Final Order and all other agreements, documents and instruments delivered or executed in connection therewith, as hereafter amended, supplemented or otherwise modified from time to time, including the Budget (as defined below) (collectively, the “DIP Loan Documents”), and (ii) obtain extensions of 15


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credit thereunder on a senior secured and superpriority basis, during the period from the date hereof through and including the earlier to occur of (i) March 31, 2017, (ii) 30 days after entry of the Interim Order, if the Final Order has not been entered by such 30th day, among other things, containing such additional protections reasonably required by the Majority Lenders, with only such modifications thereto as are satisfactory in form and substance to the DIP Agent, (iii) the effective date of a chapter 11 plan filed in the Cases that is confirmed pursuant to an order entered by the Bankruptcy Court, and (iv) the date on which all Loans shall become due and payable in full hereunder, whether by acceleration or otherwise; provided that, if any such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day (all financial accommodations and extensions of credit under the Credit Agreement and the Facility, the “DIP Extensions of Credit”); the Court’s authorization for each Debtor to execute the Credit Agreement and the other DIP Loan Documents to which it is a party, and to perform such other and further acts as may be necessary or appropriate in connection therewith; the Court’s authorization to use DIP Extensions of Credit in accordance with the proposed budget prepared by the Debtors and annexed to the Interim Order as Exhibit A (as updated from time to time pursuant to the DIP Loan Documents and, in each case, subject to the prior approval of the DIP Agent, the “DIP Budget”), and as otherwise provided herein and in the other DIP Loan Documents; the Court’s authorization to grant to the DIP Agent for the benefit of the DIP Lenders and the other secured parties under the DIP Loan Documents (collectively, the “DIP Secured Parties”), in respect of the DIP Obligations (as defined below), a superpriority administrative claim pursuant to section 364(c)(1) of the Bankruptcy Code and first priority priming liens on and security interests in all assets and property of the Debtors (now owned or hereafter acquired) pursuant to sections 364(c)(2), (c)(3) and (d)(1) of the Bankruptcy Code, in each case as and to the extent set forth more fully below and subject to the Carve-Out (as defined below); the Court’s authorization to use “cash collateral” as such term is defined in section 363 of the Bankruptcy Code (“Cash Collateral”) in which the Prepetition Secured Parties have an interest; the Court’s authorization to grant, as of the Petition Date, the Adequate Protection Superpriority Claim and Adequate Protection Liens, to the extent of and as compensation for any Diminution in Prepetition Collateral Value, in each case, as set forth more fully below and subject to the CarveOut; 16


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the modification by the Court of the automatic stay imposed by section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of the Facility, the Interim Order, and the other DIP Loan Documents; the scheduling by the Court of a final hearing (the “Final Hearing”) to consider entry of the Final Order and approving the form of notice with respect to the Final Hearing and the transactions contemplated by the Motion; and granting related relief. BASIS FOR RELIEF A.

The Bankruptcy Code Provides a Basis for the Relief Requested. 18.

Bankruptcy Code section 364(c) provides: If the [debtor-in-possession] is unable to obtain unsecured credit allowable under section 503(b)(1) of this title as an administrative expense, the court, after notice and a hearing, may authorize the obtaining of credit or the incurring of debt (1) with priority over any or all administrative expenses of the kind specified in section 503(b) or 507(b) of this title; (2) secured by a lien on property of the estate that is not otherwise subject to a lien; or (3) secured by a junior lien on property of the estate that is subject to a lien.

11 U.S.C. § 364(c). 19.

Bankruptcy Code section 364(d)(1) provides: The court, after notice and a hearing, may authorize the obtaining of credit or the incurring of debt secured by a senior or equal lien on property of the estate that is subject to a lien only if (A) the [debtor-in-possession] is unable to obtain such credit otherwise; and (B) there is adequate protection of the interest of the holder of the lien on the property of the estate on which such senior or equal lien is proposed to be granted.

11 U.S.C. § 364(d). 17


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Bankruptcy Rule 4001(c)(2) provides, in relevant part: The court may commence a final hearing 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)(2). B.

Entering into the DIP Loan Documents Is an Exercise of the Debtors’ Sound Business Judgment. 21.

The Debtors negotiated the Facility at arm’s-length and have determined, in the

exercise of their business judgment, that it is the best proposal under the circumstances. Provided that this judgment does not run afoul of the provisions of, and policies underlying, the Bankruptcy Code, courts grant a debtor considerable deference in acting in accordance with its business judgment in obtaining postpetition secured credit. See, e.g., In re Trans World Airlines, Inc., 163 B.R. 964, 974 (Bankr. D. Del. 1994) (approving postpetition loan and receivables facility because such facility “reflect[ed] sound and prudent business judgment”); In re Ames Dept. Stores, Inc., 115 B.R. 34, 40 (Bankr. S.D.N.Y. 1990) (courts have discretion under Bankruptcy Code section 364 to permit debtors to exercise reasonable business judgment so long as (i) the terms of the financing agreement do not “leverage the bankruptcy process and powers” and (ii) the financing agreement’s purpose is primarily to benefit the estate, and not a party in interest). 22.

Specifically, to determine whether the business judgment standard is met, a court

need only “examine whether a reasonable business person would make a similar decision under similar circumstances.” In re Exide Techs., 340 B.R. 222, 239 (Bankr. D. Del. 2006); see also In re Curlew Valley Assocs., 14 B.R. 506, 513–14 (Bankr. D. Utah 1981) (noting that courts should not second guess a debtor’s business decision when that decision involves “a business judgment 18


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made in good faith, upon a reasonable basis, and within the scope of [the debtor’s] authority under the [Bankruptcy] Code”). 23.

The Facility provides additional liquidity to the Debtors sufficient to enable them,

inter alia, to (i) minimize disruption to their business and operations, (ii) preserve and maximize the value of their estates for the benefit of all creditors, (iii) avoid immediate and irreparable harm to their businesses, their creditors, their employees, and their assets and (iv) permit the Debtors to pursue a sale transaction for the purpose of maximizing the value of the Debtors’ estates for the benefit of all the Debtors’ stakeholders. Without the financing provided under the Facility, the Debtors will not be able to fund their expenses, continue the sales and marketing process, perform any necessary maintenance on the facilities, or fund the costs of these proceedings, and as a result, will suffer irreparable harm. 24.

The Facility was negotiated at arm’s length and in good faith, and the Debtors

believe that the terms and conditions of the Facility are fair and reasonable under the circumstances. Accordingly, the Debtors respectfully request that the Court approve the Facility in accordance with the terms set forth in the Interim Order and the Credit Agreement. C.

The Debtors Should Be Authorized to Obtain Postpetition Financing Secured by First Priority Priming Liens. 25.

Pursuant to section 364(d) of the Bankruptcy Code, courts may authorize a debtor

to obtain postpetition credit secured by a lien that is senior or equal in priority to existing liens on the encumbered property, without the consent of the existing lienholders, if the debtor cannot otherwise obtain such credit and the interests of existing lienholders are adequately protected. See 11 U.S.C. § 364(d)(1). Consent by the secured creditors to priming obviates the need to show adequate protection. See Anchor Savs. Bank FSB v. Sky Valley, Inc., 99 B.R. 117, 122 (N.D. Ga. 1989) (“[B]y tacitly consenting to the superpriority lien, those [undersecured] creditors 19


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relieved the debtor of having to demonstrate that they were adequately protected.”). Accordingly, the Debtors may incur “priming” liens under the Facility if they are unable to obtain unsecured or junior secured credit and either (a) the Prepetition Lender has consented or (b) the Prepetition Lender’s interests in collateral are adequately protected. 26.

Here, the Debtors seek authority to enter into the Facility, which will provide the

DIP Lenders priming liens on the collateral currently secured by the existing liens of the Prepetition Lenders. Importantly, the Prepetition Lenders have consented to the Facility, and the priming liens granted thereunder. Therefore, the relief requested pursuant to section 364(d)(1) of the Bankruptcy Code is appropriate. D.

The Debtors Should Be Authorized to Use the Cash Collateral. 27.

In connection with their need for debtor-in-possession financing, the Debtors also

require the use of Cash Collateral. Bankruptcy Code section 363(c)(2) provides that the Debtors may not use, sell, or lease cash collateral unless “(A) each entity that has an interest in such cash collateral consents; or (B) the court, after notice and a hearing, authorizes such use, sale, or lease in accordance with the provisions of this section.” 11 U.S.C. § 363(c)(2). 28.

The Prepetition Lenders have consented to the Debtors’ use of Cash Collateral.

Based on the foregoing, the Debtors respectfully request that the Court authorize the Debtors to use the Cash Collateral in accordance with the terms set forth in the Interim Order. E.

Modification of the Automatic Stay Should Be Permitted. 29.

Bankruptcy Code section 362 provides for an automatic stay upon the filing of a

bankruptcy petition. See 11 U.S.C. § 362. The proposed Interim Order contemplates the modification of the automatic stay, to the extent necessary to grant the liens and security interests contemplated by the DIP Loan Documents and the Interim Order. The Interim Order further provides that, following the occurrence of an Event of Default (as defined in the Credit 20


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Agreement), the automatic stay shall be vacated and modified, following a notice period of at least five business days, to the extent necessary to permit the DIP Agent and/or Prepetition Agent to exercise any enforcement rights or remedies with respect to the DIP Collateral. 30.

Stay modification provisions of this type are standard features of postpetition

debtor-in-possession financing arrangements and, in the Debtors’ business judgment, are reasonable under the present circumstances. Accordingly, the Debtors respectfully request that the Court authorize the modification of the automatic stay in accordance with the terms set forth in the Interim Order and the Credit Agreement. F.

Interim Approval of the Facility. 31.

Bankruptcy Rules 4001(b) and (c) provide that a final hearing on a motion to use

cash collateral pursuant to Bankruptcy Code section 363 or to obtain credit under Bankruptcy Code section 364 may not be commenced earlier than 14 days after the service of such motion. Upon request, however, the Court is empowered to conduct a preliminary expedited hearing on the motion and to authorize the use of cash collateral and the obtaining of credit to the extent necessary to avoid immediate and irreparable harm to a debtor’s estate. 32.

The Debtors respectfully request that the Court conduct a preliminary hearing on

the Motion and authorize the Debtors from and after the entry of the Interim Order until the Final Hearing to obtain credit under the terms contained in the Credit Agreement and to utilize Cash Collateral. This relief will enable the Debtors to continue to operate their business in a manner that will permit them to preserve and maximize value, and, therefore, avoid immediate and irreparable harm to their estates and all parties in interest. G.

Establishing Notice Procedures and Scheduling Final Hearing. 33.

The Debtors respectfully request that the Court schedule the Final Hearing and

authorize them to serve the Motion and the signed Interim Order, which fixes the time, date and 21


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manner for the filing of objections, and proposed Final Order on (i) the Office of the United States Trustee for the District of Delaware; (ii) the Debtors’ [thirty (30)]5 largest unsecured creditors on a consolidated basis, as identified in their chapter 11 petitions; (iii) counsel to the DIP Agent and the Prepetition Agent; (iii) all other parties asserting a lien on or a security interest in the assets of the Debtors to the extent reasonably known to the Debtors; (iv) the Office of the United States Attorney General for the District of Delaware; (v) the Internal Revenue Service; (vi) the Securities and Exchange Commission; and (vi) all parties entitled to notice pursuant to Bankruptcy Rule 2002. NOTICE 34.

Notice of this Motion has been provided by delivery to: (a) the Office of the

United States Trustee for the District of Delaware; (b) counsel to the DIP Agent and the Prepetition Agent; (c) the Debtors’ [thirty (30)] largest unsecured creditors, as identified in their chapter 11 petitions; (d) those persons who have formally appeared in these cases and requested service pursuant to Bankruptcy Rule 2002; (e) the United States Securities and Exchange Commission; (f) the Internal Revenue Service; (g) the United States Department of Justice and (h) any parties entitled to notice pursuant to Local Rule 9013-1(m). In light of the nature of the relief requested in this Motion, the Debtors submit that no further notice is necessary. NO PRIOR REQUEST 35.

No prior request for the relief sought herein has been made to this Court or any

other court.

5

[NTD: Confirm list will include top 30 (other pleadings refer to top 20)].

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PRAYER WHEREFORE, the Debtors respectfully request that the Court enter the Interim Order and Final Order, granting the relief requested herein and such other and further relief to which the Debtors may be justly entitled. Dated: January 9, 2017 Wilmington, Delaware GIBBONS P.C. By: /s/ Howard A. Cohen Howard A. Cohen (DE 4082) Natasha M. Songonuga (DE 5391) 300 Delaware Avenue, Suite 1015 Wilmington DE 19801-1761 Telephone: (302) 518-6330 Facsimile: (302) 429-6294 Email: hcohen@gibbonslaw.com nsongonuga@gibbonslaw.com PROPOSED ATTORNEYS FOR THE DEBTORS

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