UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION. Debtor. / Emergency Relief Requested

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1 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION In re: Chapter 11 GUNNALLEN FINANCIAL, INC. Debtor. Case No. 8:10-bk-9635-MGW / Emergency Relief Requested DEBTOR S EMERGENCY MOTION FOR ORDER AUTHORIZING THE MAINTENANCE AND USE OF EXISTING BANK OF AMERICA BANK ACCOUNT A hearing on this Motion will be held on May 13, 2010, at 10:00 a.m., in Courtroom 8A, Sam M. Gibbons United States Courthouse, 801 N. Florida Avenue, Tampa, Florida, before the Honorable Michael G. Williamson, United States Bankruptcy Judge. GUNNALLEN FINANCIAL, INC., as the Debtor and the Debtor-in-Possession (the Debtor ), by and through its undersigned attorneys, hereby files its Emergency Motion for Order Authorizing the Maintenance and Use of Existing Bank of America Bank Account (the Motion ) and requests the entry of an order authorizing the maintenance and use of the Debtor s existing operating Bank of America bank account. In support of this Motion, the Debtor respectfully represents as follows: Jurisdiction and Venue 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. 157 and 1334.

2 2. The subject matter of this Motion is a core proceeding pursuant to 28 U.S.C. 157(b). 3. Venue is proper before this Court pursuant to 28 U.S.C and The statutory predicates for the relief sought herein are Sections 105(a), 1107 and 1108 of the Bankruptcy Code. 5. No previous application for the relief sought herein has been made by the Debtor to this Court or any other court. Background 6. On April 26, 2010, (the Petition Date ), the Debtor filed its Voluntary Petition for Relief under Chapter 11 of Title 11 of the United States Code (the Bankruptcy Code ). 7. The Debtor is engaged in the liquidation of its business and continues to manage its property as debtor in possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. 8. No trustee or examiner has been appointed in this case and no official committee has yet been appointed pursuant to 1102 of the Bankruptcy Code. Relief Requested 9. The Debtor presently maintains an active operating account at Bank of America, Account No. xxxx2703 (the BOA Account ). 10. The Debtor expects that it will continue to receive automatic deposits to the BOA Account on an ongoing basis representing trailing commission payments. Because of the potentially numerous sources of such automatic deposits, it is impractical for the Debtor to redirect them, and to close the BOA account will prejudice the Debtor s estate because it 2

3 may result in delays in receiving such funds or even the loss of such funds which belong to the Debtor s estate. 11. The Office of the United States Trustee has established certain operating guidelines for debtors in possession in order to supervise the administration of Chapter 11 cases. These guidelines require Chapter 11 debtors to, among other things, close all existing prepetition bank accounts and open new debtor in possession bank accounts, establish one debtor in possession account for all estate moneys required for the payment of taxes including payroll taxes, maintain a separate debtor in possession account for cash collateral, and obtain new checks for all debtor in possession accounts which bear the designation debtor in possession, the bankruptcy case number, and the type of account. The United States Trustee has established these requirements to provide a clear line of demarcation between prepetition and postpetition transactions and operations and to prevent banks from inadvertently honoring checks drawn prior to the bankruptcy filing date for the payment of prepetition claims. The Debtor believes that the exigent circumstances present in this case warrants some limited deviation from certain aspects of the United States Trustee s guidelines, as more fully set forth below. 12. The Debtor believes that the conduct of this Chapter 11 will be smoother and more orderly, with minimum disruption and risk of delay in receiving or even loss of funds due to the Debtor, if the BOA Account is continued for the sole purpose of allowing the Debtor to collect these automatic trailing commissions. When such commissions are deposited automatically into the BOA account, the Debtor then will periodically transfer the funds received into the new debtor in possession account it has already established at Bank of America. 3

4 13. As noted above, the Debtor expects for some period of time to continue to receive trailing commission payments via automatic deposit to its BOA Account, and therefore closure of this bank account may result in prejudice to the Debtor s estate due to an interruption in the timely collection of revenues. 14. The Debtor requests authorization (a) to designate and maintain the BOA Account with the same account number; (b) to continue to receive automatic deposits from trailing commissions into the BOA Account; and (c) to, on a periodic basis, transfer all monies directly deposited in the BOA account into its debtor-in-possession account recently established with Bank of America. 15. The Debtor further seeks authority for Bank of America to continue to service and administer the BOA Account as an account of the Debtor as debtor-in-possession without interruption for the sole purpose of receiving automatic deposits representing trailing commissions in this account and then periodically transferring all monies collected therein to its debtor in possession account. 16. The Debtor further seeks authority for the Debtor and Bank of America to continue to perform pursuant to the terms of any prepetition agreements that may exist between them. The Debtor and Bank of America shall continue to enjoy the rights and remedies afforded to them under such agreements. Grounds for Relief 17. Granting the relief sought herein will avoid disruption to the Debtor s efforts to collect all monies due to it and effect an orderly liquidation of its business. 4

5 18. Extensive authority supports the relief the Debtor seeks in this Motion. In other Chapter 11 cases, courts have recognized that strict enforcement of bank account closing requirements imposed by the United States Trustee does not always serve the purposes of Chapter 11. Courts have often waived such requirements and replaced them with alternative procedures. E.g. In re Charter Corp, 778 F.2d 617, 621 (11 th Cir. (Fla.) 1985) (recognizing that the cash management orders merely authorized the debtor to utilize a routine cash management system as has been usual and customary in the past. This is entirely consistent with the statute, which allows a debtor in possession to use property of the estate in the ordinary course of business without notice or a hearing ); In re Gold Standard Baking, Inc., 179 B.R. 98, 102 (Bankr.N.D.Ill. 1995) ( [s]ection 586(a) does not expressly mandate the subject check imprinting requirement or set forth the parameters within which the UST can direct how the Debtor should conduct its ordinary business operations ); Matter of Johnson, 106 B.R. 623, 624 (Bankr.D.Neb. 1989) ( [i]mprinting debtor-in-possession on Debtor s checks is not required to provide Debtor s and third parties with knowledge of Debtor s bankruptcy case ); In re Crosby, 93 B.R. 798, 805 (Bankr.S.D.Ga. 1988) (technical requirements should not be interpreted so as to frustrate Congressional intentions by torpedoing reorganization efforts with onerous paperwork ). Similar authorization is appropriate in this case. 19. Accordingly, the Debtor respectfully requests that the Court authorize the Debtor to maintain and use the BOA Account for the sole purpose of receiving automatic deposits representing trailing commissions into the BOA Account and periodically transferring all monies collected therein to its debtor in possession account with Bank of America. 5

6 Basis for Emergency Relief 20. The Debtor wants to ensure that the BOA Account can remain open in order that it may receive all monies due to the estate promptly and that the receipt of such monies is not at risk. WHEREFORE, the Debtor respectfully requests that this Court enter an order granting this Motion and authorizing the Debtor to continue to use the BOA Account for the sole purpose of receiving direct deposits thereto representing trailing commissions and transferring all monies collected on a periodic basis to its debtor in possession account with Bank of America, and for such other and further relief as is just and proper. Dated: May 11, 2010 /s/ Becky Ferrell-Anton Harley E. Riedel Florida Bar No Becky Ferrell-Anton Florida Bar No STICHTER, RIEDEL, BLAIN & PROSSER, P.A. 110 Madison Street - Suite 200 Tampa, Florida (813) (813) FAX hriedel@srbp.com bfanton@srbp.com Attorneys For Debtor 6

7 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing DEBTOR S EMERGENCY MOTION FOR ORDER AUTHORIZING THE MAINTENANCE AND USE OF EXISTING BANK OF AMERICA BANK ACCOUNT, has been furnished on this 11th day of May, 2010, by the Court s CM/ECF Transmission to the Office of the United States Trustee and by U.S. mail to Randy Lyons, CTP Senior Vice President Treasury Management Sales Bank of America Global Treasury Services FL E. Kennedy Blvd., 5th Floor Tampa, FL /s/ Becky Ferrell-Anton Becky Ferrell-Anton 7