12-50073-a998 Doc#395 Filed 11/07/12 Entered 11/07/12 18:02:00 Main Document Pg 1 UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION In re: Chapter 11 DELTA PRODUCE, L.P. 1, Case No. 12-50073-LMC Debtors Jointly Administered MOTION TO RELEASE FUNDS HELD IN ESCROW THIS PLEADING REQUESTS RELIEF THAT MAY BE ADVERSE TO YOUR INTERESTS. IF NO TIMELY RESPONSE IS FILED WITHIN TWENTY-ONE (21) DAYS FROM THE DATE OF SERVICE, THE RELIEF REQUESTED HEREIN MAY BE GRANTED WITHOUT A HEARING BEING HELD. A TIMELY FILED RESPONSE IS NECESSARY FOR A HEARING TO BE HELD. TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE: NOW COMES, INTERNATIONAL BANK OF COMMERCE, ( IBC ), files its Motion to Release Funds Held in Escrow (the Motion ) pursuant to the terms of the Order Granting Motion for Entry of an Order Authorizing and Approving the Sale of Certain of the Debtors Property Free and Clear of Liens, Claims, Interests, and Encumbrances Outside the Ordinary Course of Business (the Sale Order Doc. No. 382), and in support thereof would show unto the Court as follows: I. INTRODUCTION 1.1 The Bankruptcy Court has jurisdiction over this proceeding pursuant to 28 U.S.C. 157 and 1334 and other applicable sections of the Bankruptcy Code and Amendments. 1.2 IBC is, and has at all times herein mentioned, a federally insured bank duly 1 Debtors are the following entities: Delta Produce, L.P. Case No. 12-50073-LMC-11, Superior Tomato-Avocado, Ltd. Case No. 12-50074-LMC-11, Atled, Ltd. Case No. 12-50075-LMC- 11 and Staci Properties, Ltd. Case No. 12-50110-LMC
12-50073-a998 Doc#395 Filed 11/07/12 Entered 11/07/12 18:02:00 Main Document Pg 2 authorized to transact business in the state of Texas and may be served through counsel of record herein. 1.3 IBC is informed and believes, and based thereon, alleges that Debtors are and have been at all times herein mentioned been a Texas corporation, authorized to operate in Texas, whose address, shown on its voluntary petition, is 2001 S. Laredo Street, San Antonio, Texas 78207. 1.4 On January 3, 2012 (the Petition Date ), the Debtors (with the exception of Staci Properties, Ltd. which filed its Chapter 11 case on January 9, 2012) filed voluntary petitions for relief under Chapter 11 of title 11 of the United States Code, 11 U.S.C. 101-1532 (as amended, the Bankruptcy Code ). 1.5 Pursuant to the provisions of 11 U.S.C. 362(a), the filing of said petition operated as an automatic stay against IBC s rights to proceed against Debtors and/or to enforce its rights under applicable loan documents, including the right to foreclose. Upon IBC s information and belief, Debtors and/or the estate remain in possession of property securing claims owed to IBC. 1.6 The Order Granting Motion for Relief from Automatic Stay (the Lift Stay Order Doc. No. 392) on November 5, 2012 terminating the stay, authorizing IBC to take any and all steps under the terms of its loan documents and/or under the laws of the State of Texas to foreclose, offset and/or reposes its collateral. 1.7 Prior thereto, on October 31, 2012, this Court entered the Order Authorizing and Approving the Sale of Certain of the Debtors Property Free and Clear of Liens, Claims, Interests, and Encumbrances Outside the Ordinary Course of Business (the Sale Order ). The Sale Order required in part: PAGE - 2
12-50073-a998 Doc#395 Filed 11/07/12 Entered 11/07/12 18:02:00 Main Document Pg 3 Debtor shall pay the remaining net Sales proceeds to IBC after deduction of all usual and customary closing costs (including payment of Debtors obligations under the Agreement), less $400,000.00 (the Escrowed Funds ) which shall be deposited into a segregated account established by Debtors at Frost Bank, styled the Atled Sale Proceeds Account (the Segregated Account ). Debtors shall hold and not disburse such Escrowed Funds from the Segregated Account pending further order of the Court, pending resolution of the PACA claims disputes against IBC...all liens, claims and encumbrances of IBC or PACA claimants against the Property are transferred and attach to the $400,000 in the Segregated Account with the same validity, extent and order of priority that existed with respect to the Property. 1.8 The Court ordered $400,000.00 to be held in escrow based upon claims made by Special PACA Trust Counsel as set forth within the Limited Objection to Motion to Sell Property Fee and Clear of Liens (Doc. No. 379). Therein, Special PACA Counsel asserted: current collections of PACA trust assets under the claims procedure order are sufficient to cover most, but perhaps not all of PACA trust claims approved by the Court. A few collections and other issues remain pending. In any event, Special PACA Trust Counsel believes that no more than $400,000 of PACA trust assets need to held in the Court s registry. (Limited Objection to Motion to Sell Property Fee and Clear of Liens Doc. No. 379) II. ARGUMENTS AND AUTHORITIES 2.1 Following the Entry of the Sale Order, a hearing was conducted in relation to Special PACA Counsel s Omnibus Objection to PACA Creditors Fee Applications (Doc. No. 347) and, by Omnibus Objection to PACA Creditors Applications for Attorneys Fees filed by interested party W. Scott Jensen (Doc. No. 331). At that hearing, the Bankruptcy Court denied all post-petition fee applications of PACA creditors attorneys. Consequently, attorneys fees approximating $300,000.00, previously made part and included within the PACA claims were disallowed thereby reducing the outstanding PACA claim amount, resulting in a deduction of the exposure to PACA claims from $400,000;00 as asserted within the Limited Objection to Motion to Sell Property Fee and Clear of Liens, to a claim in the approximate amount of $100,000.00. PAGE - 3
12-50073-a998 Doc#395 Filed 11/07/12 Entered 11/07/12 18:02:00 Main Document Pg 4 2.2 IBC has duly perfected pre and post-petition liens evidenced by prepetition loan documents and post-petition Orders of the Court, while liens have attached to the $400,000.00 Escrow Fund. The Bankruptcy Court s Lift Stay Order dated November 5, 2012 authorizes IBC to take any and all steps to reposes and foreclose on its collateral and requires Debtor to cooperate fully with IBC s efforts to reposes or gain possession of its collateral. 2.3 The Court Order denying attorneys fees, reducing PACA exposure by approximately $300,000.00 and eliminating the need to retain $400,000.00 in escrow. At this time no more than $100,000.00 in risk exposure exists to the PACA claims. PRAYER WHEREFORE, PREMISES CONSIDERED, IBC respectfully requests, upon due consideration, that this Court require PACA Special Counsel to set forth the reduced amount of PACA exposure, after deducting amount of disallowed attorneys fees that the Court fix the maximum amount of PACA exposure in relation to the $400,000.00 Escrow Fund, that the $400,000.00 Escrow Fund be reduced to an amount of the reduced PACA exposure and that the amount so released, be ordered turned over to IBC to applied to outstanding IBC loan obligations, and that IBC be provided such other relief at law or in equity to which IBC may be justly entitled. Respectfully submitted, MARTIN & DROUGHT, P.C. 2500 Bank of America Plaza 300 Convent Street San Antonio, Texas 78205-3789 (210) 227-7591 / (210) 227-7924 By: /s/ Michael G. Colvard Michael G. Colvard State Bar No. 04629200 PAGE - 4
12-50073-a998 Doc#395 Filed 11/07/12 Entered 11/07/12 18:02:00 Main Document Pg 5 ATTORNEYS FOR INTERNATIONAL BANK OF COMMERCE CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing instrument was forwarded via United States Mail, First Class, postage prepaid, to the parties listed on the attached service list on November 7, 2012. /s/michael G. Colvard Michael G. Colvard PAGE - 5
12-50073-a998 Doc#395-1 Filed 11/07/12 Entered 11/07/12 18:02:00 Service List Pg 1 of 3 Delta Produce, LP 2001 S Laredo St -7023 Super Tomato-Avocado, Ltd. 2001 S Laredo St -7023 Staci Properties, Ltd. 2001 S Laredo St -7023 Atled, Ltd. 200 S Laredo St -7023 United States Trustee - SA12 US Trustee's Office 615 E Houston, Suite 533 PO Box 1539 San Antonio, TX 78295-1539 Craig A. Stokes Stokes Law Offices, LLP 3330 Oakwell Court, Suite 225 San Antonio, TX 78218 A&A Transportation, Inc. 4741 College Park San Antonio, TX 78249 William R. Davis Jr Allen M. DeBard Langley & Banack, Inc 745 E Mulberry, Suite 900 San Antonio, TX 78212 Del Campo Supreme, Inc. 672 W. Frontage Rd. Noales, AZ 85621 Dimare Newman, Inc. P.O. Box 517 Newman, CA 95360-0517 Divine Ripe, LLC 9901 S. Jackson Rd. #A Pharr, TX 78577-6961 Frank's Distributing of Produce P.O. Box 2020 Nogales, AZ 85628-2020 Harllee Packing, Inc. P.O. Box 8 Palmetto, FL 34220 Alamo Leasing 2010 NW Military Hwy. San Antonio, TX 78213 International Bank of Commerce 130 E. Travis Harvest Crown Co., Inc. P.O. Box 13578 Bakersfield, CA 93389 J-C Distributing, Inc. 2731 N. Donna Avenue Nogales, AZ 85621 Juniper Tomato Grower, Inc. P.O. Box 38 Greensboro, FL 32330 IFCO Systems NA 5250 Tacco Drive San Antonio, TX 78244 Kingdom Fresh Produce, Inc. 2243 North Goolie Rd., #A Donna, TX 78537 Mission Produce, Inc. 2500 Vineyad Ave., Suite 300 Oxnard, CA 93036 Rio Queen Citrus 4012 E. Goodwin Rd. Mission, TX 78574 Royal Flavor, LLC 2655 Melksee St. San Diego, CA 92154 Internal Revenue Service P.O. Box 7346 Philadelphia, PA 19101-7346 Valero Marketing & Supply P.O. Box 300 Amarillo, TX 79105-0300 A & D Carriers 4126 Luckenbach Rd. San Antonio, TX 78251 A&A Concepts, LLC 1219 S. Zarzamora St. Averitt Brokerage Co., Inc. Mr. David Faubion 9999 Perrin Beitel, Suite B San Antonio, TX 78217 B. Catalani, Inc. 1500 S. Zarzamora, #326 Banana Distributing Company 1500 S. Zarzamora
12-50073-a998 Doc#395-1 Filed 11/07/12 Entered 11/07/12 18:02:00 Service List Pg 2 Coosemans Houston, Inc. 3124 Produce Row Houston, TX 77023 of 3 Fresh Farm Direct, LLC 106 Adams St., Suite 2A Monte Vista, CLO 81144 Gonzalez Mexican Produce 2501 W. Military Hwy., A-23 McAllen, TX 78503 Harllee Packing, Inc. P.O. Box 8 Palmetto, FL 34220 Henry Avocado Corp. P.O. Box 300867 Escondidio, CA 92030-0867 Kitchen Pride P.O. Box 585 Gonzales, TX 78629 Le Best Banana Supply Co. P.O. Box 295 Hidalgo, TX 78557 M&P Logistics LP 1500 S. Zarzamora, #308 Maxim Egg Farms P.O. BOx 200805 Dallas, TX 75320-0805 Rio Bravo Produce 1006 S. Cesar Chavez Edinburg, TX 78542 Slankard Produce Co., Inc. 1500 S. Zarzamora Sunriver Sales P.O. Box 2738 Visalia, CA 93279 Touchstone & Associates 1500 S. Zarzamora St., #205 Willson Davis Company 1500 S. Zarzamora Robert E. Goldman 1 East Broward Blvd. Ste. 700 Fort Lauderdale, FL 33301 Tijerina & Sons, LLC c/o Zachary B. Aoki Thurman & Phillips, P.C. 8000 IH-10 West, Suite 1000 San Antonio, TX 78230 David G. Aelvoet Linebarger Gogan Blair 711 Navarro, Suite 300 Flatiron Capital c/o Robert L. Barrows 800 Broadway San Antonio, TX 78215 General Electric Capital Corp, NMHG Financial Services, Inc. c/o William H. Daniel McGinnis, Lochridge & Kilgore 600 Congress Ave., Ste. 2100 Austin, X 78701 Divine Ripe, LLC c/o John Kurt Stephen Cardenas & Stephen 100 South Bicentennial McAllen, TX 78501 Market Dispatch Service, Inc. c/o Celinda Baez Guerra Flume Law Firm, LLP 1020 N.E. Loop 410, Ste. 200 San Antonio, TX 78209 Muller Trading c/o Bruce W. Akerly Cantey Hanger LLP 1999 Bryan St., Suite 3300 Dallas, TX 75201 Divine Ripe, Rio Queen Citrus, Eco-Farms Sales, Garguilo, Inc. c/o Michael J. Black Burns & Black 750 Rittiman Road San Antonio, TX 78209 Steven E. Nurenberg Meuers Law Firm 5395 Park Centra Court Naples, FL 34109 Daimler Trust c/o Stephen G. Wilcox Bassel & Wilcox P.O. Box 11509 Fort Worth, TX 76110-0509 Paul T. Curl/ Diana M. Geis Curl & Stahl, P.C. 700 N. St. Mary s Street, Suite 1930 Wilson Davis Co. c/o Paul D. Barkhurst Barkhurst & Hinojosa, PC 110 Broadway, Suite 350 W. Scott Jenson c/o Elliott S. Cappuccio/Randall Pulman/Leslie S. Hyman Pulman Cappuccio Pullen & Benson 2161 NW Military Hwy., Suite 400 San Antonio, TX 78213 PACCAR Financial Corp. c/o Robert J. Reagan Reagan McLain Lee & Hatch, LLP 6060 North Central Expy., Ste. 690 Dallas, TX 75206 Harllee Packing, Inc. c/o Chris S. Tillmanns Bracewell & Giuliani, LLP 711 Louisiana Street, Ste. 2300 Houston, TX 77002-2770
12-50073-a998 Doc#395-1 Filed 11/07/12 Entered 11/07/12 18:02:00 Service List Pg 3 Harllee Packing, Inc. c/o Jake Blanchard Fowler White Boggs P.A. 501 E. Kennedy Blvd., Ste. 1700 Tampa, FL 33602 of 3 Key Equipment Finance c/o Mark W. Stout Padfield & Stout, LLP 777 Main Street, Suite 1920 Fort Worth, TX 76102 Guadalupe County c/o Lee Gordon McCreary, Veselka, Bragg & Allen P.O. Box 1269 Round Rock, Texas 78680 Jason A. Starks Assistant Attorney General P.O. Box 12548 Austin, TX 78711-2548 James S. Wilkins Willis & Wilkins, LLP 100 W. Houston Street, Ste. 1275