Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 1 of 7 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION In re LIFE CARE ST. JOHNS, INC., a Florida not-for-profit corporation, doing business as GLENMOOR, 1 Debtor. Case No.: 3:16-bk-1347-JAF Chapter 11 DEBTOR'S MOTION FOR INTERIM ORDER (I DETERMINING ADEQUATE ASSURANCE OF PAYMENT FOR FUTURE UTILITY SERVICES, AND (II PROHIBITING UTILITIES FROM ALTERING OR DISCONTINUING UTILITY SERVICE Debtor, Life Care St. Johns, Inc., a Florida not-for-profit corporation doing business as Glenmoor ( Glenmoor or Debtor, moves the Court pursuant to 11 U.S.C. 105(a and 366 for the entry of an interim order (i determining the adequacy of the post-petition assurance of payment which Glenmoor has presented to its utility providers, and (ii prohibiting its utility providers from terminating utility service and in support of the motion states: 1. Glenmoor is a not-for-profit organization that owns and operates a continuing care retirement community ( CCRC in St. Johns County, Florida. The company received its certificate of occupancy in 1999 and began operations in October of 2001. 1 The Federal Employer Identification Number of the Debtor is 59-3474627. The principal address of the Debtor is 235 Towerview Drive, St. Augustine, Florida 32092.
Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 2 of 7 2. As a CCRC, Glenmoore provides lifecare services to its residents, each of whom reside in a Residential Unit. The lifecare concept recognizes that the healthcare and residency needs of elderly residents vary along a continuum beginning with independent living and in many cases ending with a need for full-time nursing care. The Glenmoor community thus includes independent residential units, an assisted living center, and a healthcare center for residents requiring round the clock nursing care. 3. Glenmoor is home to approximately 240 residents and consists of (a 157 residential units including 70 apartment homes, 11 one bedroom cottages, 32 patio homes and 31 estate homes, (b an Assisted Living Center with 36 assisted living suites, and (c a Health Center containing 30 nursing beds. 4. On April 11, 2016 (the Petition Date, Glenmoor filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. Glenmoor continues in possession of its properties and is managing its business as debtor in possession, pursuant to 1107(a and 1108 of the Bankruptcy Code. 2 5. The Court has jurisdiction over this matter pursuant to 28 U.S.C. 1334. Venue is proper pursuant to 28 U.S.C. 1408 and 1409. This matter is a core proceeding within the meaning of 28 U.S.C. 157(b(2. 6. The statutory predicates for the relief requested herein are 105(a and 366 of the Bankruptcy Code. 2 Glenmoor previously sought bankruptcy protection in July 2013, in a case styled as In re Life Care St. Johns, Inc.; debtor; United States Bankruptcy Court, Middle District of Florida, Jacksonville Division; Case No. 3:13-bk-4158-JAF (the Initial Chapter 11 Case. Debtor requested and obtained an order determining adequate assurance of utility payments and deposits in the Initial Chapter 11 Case. -2-
Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 3 of 7 7. In the normal course of its business, Glenmoor obtains gas, water, sewer, electric, and other similar utility services (collectively "Utility Services" from the following providers (collectively the "Utility Companies" in the average amounts indicated Provider FPL Energy Services, Inc. (gas St. Johns County Utility Dept. (water and sewer Average Monthly Consumption $1,600 $7,400 Florida Power & Light Company (electricity 3 $31,000 8. On the Petition Date, Debtor had the following security deposits with the Utility Companies: Provider Deposit Amount FPL Energy Services, Inc. $2,000 St. Johns County Utility Dept. $0 Florida Power & Light Company $68,436 9. Section 366(a of the Bankruptcy Code prevents utility companies from discontinuing, altering or refusing service to a debtor during the first twenty (20 days of a bankruptcy case. However, thirty (30 days from the Petition Date, a utility company has the option of terminating its services pursuant to 366(c(2 of the Bankruptcy Code if the utility has not received adequate assurance of payment. 3 Glenmoor has 19 accounts with Florida Power & Light and is provided with a Summary Bill by the utility each month. -3-
Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 4 of 7 10. Utility Services are essential to the ability of Glenmoor to sustain its operations while this Chapter 11 case is pending. Any interruption in Utility Services, even for a brief period, would severely disrupt Glenmoor s business operations and would be extremely harmful to Glenmoor s residents, revenues, profits, and ultimately its success in Chapter 11. It is critical that all Utility Services continue uninterrupted. 11. Glenmoor intends to timely pay all postpetition obligations owed to the Utility Companies. Such payments will be made in accordance with any interim or final orders on cash collateral entered by the Court and budgets attached thereto. Recognizing that mere promises of future payment may not be sufficient, Glenmoor is willing to pay any pre-petition amounts owed and to provide post-petition cash deposits to the Utility Companies who do not currently hold deposits as adequate assurance of future payment. 4 By this motion, Glenmoor seeks the entry of an order determining that payment of amounts due as of the Petition Date and the following post-petition cash deposits constitute adequate assurance of future payment (the Adequate Assurance Deposit : Provider Proposed Deposit FPL Energy Services, Inc. $0 St. Johns County Utility Dept. $7,500 Florida Power & Light Company $0 12. Furthermore, Glenmoor further requests the entry of an order prohibiting the Utility Companies from terminating the provision of Utility Services to Glenmoor based on any perceived inadequacy of the Adequate Assurance Deposit. 4 In the Initial Chapter 11 Case, Debtor timely paid all amounts due for utility services during the case and provided deposits to its utility providers. -4-
Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 5 of 7 13. The fundamental policy underlying 366 of the Bankruptcy Code is to protect debtors from utility service cutoffs upon the filing of a bankruptcy case, while at the same time providing utility companies with adequate assurance that the debtor will pay for postpetition services. See H.R. Rep. No. 95-595, at 350 (1978, reprinted in 1978 U.S.C.C.A.N. 5963, 6306. 14. To that end, Bankruptcy Code 366(a provides: Except as provided in subsections (b and (c of this section, a utility may not alter, refuse, or discontinue service to, or discriminate against, the trustee or the debtor solely on the basis of the commencement of a case under this title or that a debt owed by the debtor to such utility for service rendered before the order for relief was not paid when due. 11 U.S.C. 366(a. Bankruptcy Code 366(b further states, however, that: Such utility may alter, refuse, or discontinue service if neither the trustee nor the debtor, within 20 days after the date of the order for relief, furnishes adequate assurance of payment, in the form of a deposit or other security, for service after such date. Id. 366(b. 5 5 This Court also has the authority to grant the relief requested herein pursuant to 105(a of the Bankruptcy Code which provides that the Court may issue any order, process or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a. The purpose of 105(a is to assure the bankruptcy courts [sic] power to take whatever action is appropriate or necessary in aid of the exercise of their jurisdiction. Collier on Bankruptcy Paragraph 105.01, at 105-6 (15th rev. ed. 2006. Because the proposed Adequate Assurance Procedures protect the Debtors without prejudicing the Utility Companies, they implement 366 in a manner fully consistent therewith and are an appropriate exercise of this Court's authority under 105(a of the Bankruptcy Code. -5-
Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 6 of 7 15. Determinations of adequate assurance within the meaning of 366 of the Bankruptcy Code are within this Court's discretion. See In re Marion Steel Co., 35 B.R. 188, 198 (Bankr. D. Ohio 1983; see also In re Pacific Gas & Elec. Co., 271 B.R. 626-644 (N.D. Cal. 2002 (the "decision whether to order security lies within the discretion of the Bankruptcy Court.". Whether utilities are subject to an unreasonable risk of nonpayment for postpetition services must be determined from the facts and circumstances of each case. See In re Marion Steel Co., 35 B.R. at 198. Moreover, "[S]ection 366(b requires the Bankruptcy Court to determine whether the circumstances are sufficient to provide a utility with 'adequate assurance' of payment. The statute does not require an 'absolute guarantee of payment.'" In re Caldor, Inc.-NY, et ai., 199 B.R. 1, 3 (S.D.N.Y. 1996 (citations omitted. 16. The Proposed Adequate Assurance Deposit of $7,500 to the St. Johns County Utilities Department along with the existing deposits with FPL Energy and Florida Power & Light Company provide adequate assurance of future payment. Each Utility Company will have coverage equal to at least one month of utility consumption. Two week s coverage has been found sufficient in other cases. See, e.g., In re Refco, Inc., et al., Case No. 05-60006 (Bankr. S.D.N.Y. Dec. 9, 2005 (deposit equal to 50% of debtor's monthly utility expenses; In re Pliant Corp., et al., Case No. 06-10001 (Bankr. D. Del. Feb. 8, 2006 (two-week deposit. Any liens granted to UMB Bank, N.A. as Indenture Trustee in connection with cash collateral shall attach to any deposits returned to the Debtor. 17. Additionally, payments of amounts due to the Utility Companies, if any, as of the Petition Date provide further protection to the Utility Companies. -6-
Case 3:16-bk-01347-JAF Doc 21 Filed 04/11/16 Page 7 of 7 WHEREFORE, Glenmoor requests that the Court enter an interim order (i determining that the Utility Companies have been provided with adequate assurance of payment within the meaning of 366 of the Bankruptcy Code, (ii approving the Debtor s proposed offer of adequate assurance, (iii prohibiting the Utility Companies from altering, refusing or discontinuing services on account of prepetition amounts outstanding or on account of any perceived inadequacy of the Debtors proposed adequate assurance, and (iv granting such other and further relief as is appropriate. THAMES MARKEY & HEEKIN, P.A. /s/ Robert A. Heekin, Jr. By Richard R. Thames Bradley R. Markey Robert A. Heekin, Jr. Florida Bar No. 0718459 Florida Bar No. 0984213 Florida Bar No. 652083 50 N. Laura Street, Suite 1600 Jacksonville, Florida 32202 (904 358-4000 (904 358-4001 Facsimile rrt@tmhlaw.net brm@tmhlaw.net rah@tmhlaw.net Proposed Attorneys for Life Care St. Johns, Inc., a Florida not-for-profit corporation doing business as Glenmoor 35-7-