Executive Personnel Services, Inc

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
EXECUTIVE PERSONNEL
SERVICES, INC.,
Debtor.
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Case No. 08-00210
(Chapter 11)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION REGARDING FAILURE TO SERVE MOTION TO
USE CASH COLLATERAL ON THE ENTITIES LISTED UNDER RULE 1007(d)
This decision addresses whether the court may enter a final
order proposed by the debtor and its secured lender with respect
to the debtor’s Motion for Order Authorizing Use of Cash
Collateral (“the Motion”).
I
The debtor served notice of an interim hearing on the Motion
on the entities listed under Rule 1007(d), and the court entered
an interim order and then a further interim order on the Motion.
However, the debtor’s attorney’s certificate of service does not
reflect that he served the Motion itself on those entities.
After the court entered the interim order on the Motion and after
the court entered the further interim order on the Motion, the
The order below is hereby signed.
Signed: May 01, 2008.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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debtor neglected to notify the entities listed under Rule 1007(d)
of the final hearing on the Motion. 	With respect to the
forthcoming final hearing on the Motion, the debtor and the
secured lender have now filed a consent final order regarding the
use of cash collateral that would provide additional protections
to the lender. 	Notice of that proposed order has not been sent
to the entities listed under Rule 1007(d).
II
As amended effective December 1, 2007, Rule 4001(b) (“Use of
Cash Collateral”) provides:
(1) Motion; service.
(A) Motion. 	A motion for authority to use
cash collateral shall be made in accordance with
Rule 9014 and shall be accompanied by a proposed
form of order.
(B) Contents. 	The motion shall consist of or
(if the motion is more than five pages in length)
begin with a concise statement of the relief
requested, not to exceed five pages, that lists or
summarizes, and sets out the location within the
relevant documents of, all material provisions,
including:
(i) the name of each entity with an
interest in the cash collateral;
(ii) the purposes for the use of the
cash collateral;
(iii) the material terms, including
duration, of the use of the cash collateral;
and
(iv) any liens, cash payments, or other
adequate protection that will be provided to
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each entity with an interest in the cash
collateral or, if no additional adequate
protection is proposed, an explanation of why
each entity’s interest is adequately
protected.
(C) Service. 	The motion shall be served on:
(1) any entity with an interest in the cash
collateral; (2) any committee elected under § 705
or appointed under § 1102 of the Code, or its
authorized agent, or, if the case is a chapter 9
municipality case or a chapter 11 reorganization
case and no committee of unsecured creditors has
been appointed under § 1102, the creditors
included on the list filed under Rule 1007(d); and
(3) any other entity that the court directs.
(2) Hearing. 	The court may commence a final
hearing on a motion for authorization to use cash
collateral no earlier than 15 days after service of the
motion. 	If the motion so requests, the court may
conduct a preliminary hearing before such 15 day period
expires, but the court may authorize the use of only
that amount of cash collateral as is necessary to avoid
immediate and irreparable harm to the estate pending a
final hearing.
(3) Notice. 	Notice of hearing pursuant to this
subdivision shall be given to the parties on whom
service of the motion is required by paragraph (1) of
this subdivision and to such other entities as the
court may direct.
Also pertinent to the issue of whether it would be proper to
enter the consent order resolving the Motion is Rule 4001(d)
(“Agreement Relating to . . . Providing Adequate Protection [and
to] Use of Cash Collateral . . .”), which provides:
(1) Motion; service.
(A) Motion. 	A motion for approval of any of
the following shall be accompanied by a copy of
the agreement and a proposed form of order:
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(i) an agreement to provide adequate
protection;
(ii) an agreement to prohibit or
condition the use, sale, or lease of
property;
(iii) an agreement to modify or
terminate the stay provided for in § 362;
(iv) an agreement to use cash
collateral; or
(v) an agreement between the debtor and
an entity that has a lien or interest in
property of the estate pursuant to which the
entity consents to the creation of a lien
senior or equal to the entity’s lien or
interest in such property.
(B) Contents. 	The motion shall consist of or
(if the motion is more than five pages in length)
begin with a concise statement of the relief
requested, not to exceed five pages, that lists or
summarizes, and sets out the location within the
relevant documents of, all material provisions of
the agreement. 	In addition, the concise statement
shall briefly list or summarize, and identify the
specific location of, each provision in the
proposed form of order, agreement, or other
document of the type listed in subdivision
(c)(1)(B). 	The motion shall also describe the
nature and extent of each such provision.
(C) Service. The motion shall be served on:
(1) any committee elected under § 705 or appointed
under § 1102 of the Code, or its authorized agent,
or, if the case is a chapter 9 municipality case
or a chapter 11 reorganization case and no
committee of unsecured creditors has been
appointed under § 1102, on the creditors included
on the list filed under Rule 1007(d); and (2) on
any other entity the court directs.
(2) Objection. 	Notice of the motion and the time
within which objections may be filed and served on the
debtor in possession or trustee shall be mailed to the
parties on whom service is required by paragraph (1) of
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this subdivision and to such other entities as the
court may direct. Unless the court fixes a different
time, objections may be filed within 15 days of the
mailing of notice.
(3) Disposition; hearing. 	If no objection is
filed, the court may enter an order approving or
disapproving the agreement without conducting a
hearing. If an objection is filed or if the court
determines a hearing is appropriate, the court shall
hold a hearing on no less than five days' notice to the
objector, the movant, the parties on whom service is
required by paragraph (1) of this subdivision and such
other entities as the court may direct.
(4) Agreement in settlement of motion. 	The court
may direct that the procedures prescribed in paragraphs
(1), (2), and (3) of this subdivision shall not apply
and the agreement may be approved without further
notice if the court determines that a motion made
pursuant to subdivisions (a), (b), or (c) of this rule
was sufficient to afford reasonable notice of the
material provisions of the agreement and opportunity
for a hearing.
With respect to the requirement in Rule 4001(d)(1)(B) that the
motion “briefly list or summarize, and identify the specific
location of, each provision in the proposed form of order,
agreement, or other document of the type listed in subdivision
(c)(1)(B),” the types of provisions listed in the referenced
subdivision (Rule 4001(c)(1)(B)) are:
(i) a grant of priority or a lien on property of
the estate under § 364(c) or (d);
(ii) the providing of adequate protection or
priority for a claim that arose before the commencement
of the case, including the granting of a lien on
property of the estate to secure the claim, or the use
of property of the estate or credit obtained under §
364 to make cash payments on account of the claim;
(iii) a determination of the validity,
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enforceability, priority, or amount of a claim that
arose before the commencement of the case, or of any
lien securing the claim;
(iv) a waiver or modification of Code provisions
or applicable rules relating to the automatic stay;
(v) a waiver or modification of any entity’s
authority or right to file a plan, seek an extension of
time in which the debtor has the exclusive right to
file a plan, request the use of cash collateral under §
363(c), or request authority to obtain credit under §
364;
(vi) the establishment of deadlines for filing a
plan of reorganization, for approval of a disclosure
statement, for a hearing on confirmation, or for entry
of a confirmation order;
(vii) a waiver or modification of the
applicability of nonbankruptcy law relating to the
perfection of a lien on property of the estate, or on
the foreclosure or other enforcement of the lien;
(viii) a release, waiver, or limitation on any
claim or other cause of action belonging to the estate
or the trustee, including any modification of the
statute of limitations or other deadline to commence an
action;
(ix) the indemnification of any entity;
(x) a release, waiver, or limitation of any right
under § 506(c); or
(xi) the granting of a lien on any claim or cause
of action arising under §§ 544, 545, 547, 548, 549,
553(b), 723(a), or 724(a).
III
At today’s hearing, the parties shall be prepared to address
the foregoing. 	The Motion does not contain some of the contents
required by Rules 4001(b)(1)(B) and 4001(d)(1)(B). 	If the debtor
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never served the Motion on the entities listed under Rule
1007(d), I fail to see how I can enter the proposed consent order
as a final order. 	Moreover, if the Motion was never served, it
could hardly serve as a basis under Rule 4001(d)(4) for negating
the necessity for notice of a 15-day opportunity to object to the
entry of the proposed order. 	Although Rule 4001(b)(2) authorizes
granting a motion to use cash collateral on an interim basis (to
the extent necessary to avoid immediate and irreparable harm to
the estate pending a final hearing), creditors have not received
notice of the hearing set for today. 	The remedy may be for the
debtor to revise the Motion to comply with the contents
requirements of Rule 4001 and give notice of an interim hearing
under Rule 4001(b)(2).
[Signed and dated above.]
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8	O:\Judge Temp Docs\Executive Personnel Services, Inc. - Notice to D re Need for Service of Motion on Rule 1007(d) List.wpd
Copies to:
Debtor
Richard H. Gins, Esquire
3 Bethesda Metro Center
Suite 430
Bethesda, Maryland 20814
Office of the U.S. Trustee
115 S. Union Street, Suite 210
Alexandria, Virginia 22314
John G. McJunkin, Esquire
DLA Piper US LLP
1775 Whiele Ave. Suite 400
Reston, Va. 20190
Gregory T. DuMont, Esquire
Suite 900
1620 L Street, N.W.
Washington, D.C. 20036-5605
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