UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF VIRGINIA

Alexandria Division

In re: )

 )

PRESIDENTIAL DETAILING LLC ) Case #16-10447-BFK

 ) (Chapter 11)

Debtor-In-Possession. )

_______________________________________)

MOTION FOR USE OF CASH COLLATERAL

Debtor and Debtor-In-Possession Presidential Detailing LLC (the “Debtor”), by counsel,

hereby requests, pursuant to 11 U.S.C. § 363(c)(2)-(4) and F.R.Bankr.P. 4001(b), that this Court

authorize it to use its accounts receivable, as they existed on the bankruptcy filing date, in the

ordinary course of its business including, on an interim basis until a final hearing can be

scheduled on this Motion upon 14 days’ notice to its creditors, the use of that amount of cash

collateral as is necessary to avoid immediate and irreparable harm to the estate. In support of this

Motion, the Debtor submits the following, which it relies upon as the required memorandum of

points and authorities:

1. The Debtor is in the business of providing vehicle washing and detailing services as a

contractor to various auto dealerships in the Washington, DC metropolitan area. The company

has been continuously in business since it was founded in January 2007 by its CEO and 100%

member Kevin Rohalmin. Currently the company provides services to approximately 13

dealerships, where its employees work on-site to wash and detail vehicles belonging to the

Steven B. Ramsdell, VA Bar #33222

Counsel to the Debtor

Tyler, Bartl, Ramsdell & Counts, P.L.C.

300 N. Washington St., Suite 202

Alexandria, VA 22314

(703) 549-5003

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dealerships’ customers. In 2015, the company had revenues of $4.2 million, its highest revenues

ever.

2. In May 2015, the Debtor became aware that it was the subject of a lawsuit by

approximately six of its former employees, alleging that they had not been paid the required

wages and overtime premiums required under the Fair Labor Standards Act (“FLSA”). That case

was ultimately settled in August 2015. In October 2015, the same attorney filed a new lawsuit on

behalf of 18 additional former employees of the Debtor raising similar allegations. In January

2016, the parties agreed to a consent judgment in the amount of $187,419.84, which remains

unpaid.

3. The costs of defending the above-referenced litigation disrupted the Debtor’s normal

cash flow, causing it to resort to loans from several receivables finance companies. Specifically,

the Debtor entered into a Secured Promissory Note dated August 20, 2015 with Small Business

Term Loans, Inc., pursuant to which it owes approximately $214,301; a Future Receivables Sale

Agreement dated September 14, 2015 with Knight Capital Funding, pursuant to which it owes

approximately $182,363.36; and a Merchant Agreement dated October 8, 2015 with Global

Merchant Cash, Inc., pursuant to which it owes approximately $116,458.52 (together the

“Receivables Lenders”). The claims of the Receivables Lenders purport to be secured by the

Debtor’s accounts receivable, but the Debtor does not have any evidence that these security

interests have been perfected under applicable non-bankruptcy law.

4. In order to stay collection actions by the FLSA plaintiffs and the Receivables Lenders

that were ongoing and threatened the viability of its business, the Debtor commenced this case by

filing a voluntary petition under Chapter 11 of the Bankruptcy Code on February 9, 2016, and it

continues to operate its business as a Debtor-In-Possession. The Debtor is a “small business

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debtor” and this is a “small business case,” as defined in 11 U.S.C. § 101(51C) & (51D). No

creditors’ committee has been appointed in this case.

5. As of the commencement of this case, the Debtor had outstanding accounts receivable

of $119,117.78. Exh. 1. Its operating account at Citibank, N.A. was overdrawn as of that date as

a result of a prepetition levy that had been served by Global Merchant Cash, Inc.

6. The receivables that the Debtor generates on account of work performed after the

filing of this case (the “Postpetition Receivables”) are not subject to the Receivables Lenders’

security interests. 11 U.S.C. § 552(a). However, the Debtor cannot wait for the collection of its

Postpetition Receivables in order to fund its ongoing business operations; in the interim, the

Debtor requires the use of its accounts receivable in order to pay its employees’ wages, rent,

utilities, and other routine business expenses and otherwise to operate in the ordinary course of

its business. The Debtor is therefore requesting the Court’s authority to pay its postpetition

expenses incurred in the ordinary course of business out of the existing accounts receivable.

7. In order to adequately protect the value of the Receivables Lenders’ security interests

in their prepetition cash collateral, the Debtor proposes: (a) that it will use such cash collateral

solely in the ordinary course of its business for such purposes as payroll, rent, and such other

expenses as are necessary to avoid immediate and irreparable harm to the estate pending a final

hearing on this Motion upon 14 days’ notice to its creditors; (b) that the Receivables Lenders be

granted replacement liens, in the same priority in relation to each other as they enjoyed against

the prepetition receivables, on the Debtor’s Postpetition Receivables and bank deposits to the

extent, dollar for dollar, that the Debtor utilizes the prepetition accounts receivable. The Debtor

represents that it will have adequate Postpetition Receivables in amount and quality to protect the

value of the Receivables Lenders’ security interests in prepetition cash collateral; and (c) that the

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Debtor account to the Court for its expenditures in the ordinary course of its business during this

case. Attached hereto as Exhibit 2 is an emergency operating budget that sets forth those

minimum expenses that the Debtor must pay between now and April 2, 2016 in order to avoid

immediate and irreparable harm to the estate and that reflects that the Debtor will generate

sufficient Postpetition Receivables to offset the prepetition receivables that it intends to spend on

such expenses.

8. The use of cash collateral on the terms set forth herein is imperative both to the

Debtor’s business viability and to preserving the quality and collectibility of the Receivables

Lenders’ prepetition receivables collateral.

WHEREFORE, the Debtor requests that this Court grant this Motion; authorize the

Debtor, on the conditions set forth herein, to use the Receivables Lenders’ cash collateral in the

ordinary course of its business including, on an interim basis until a final hearing can be

scheduled on this Motion upon 14 days’ notice to its creditors, the use of that amount of cash

collateral as is necessary to avoid immediate and irreparable harm to the estate; and grant such

other and further relief as this Court deems just and appropriate.

PRESIDENTIAL DETAILING LLC

By counsel

 /s/Steven B. Ramsdell 

Steven B. Ramsdell, VA Bar #33222

Tyler, Bartl, Ramsdell & Counts, P.L.C.

300 N. Washington St., Suite 202

Alexandria, VA 22314

(703) 549-5003

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CERTIFICATE OF SERVICE

I hereby certify that on this 19 day of February, 2016, a true copy of the foregoing th

Motion, together with the proposed Order, was served by first-class mail, postage prepaid, on the

Debtor’s secured creditors, the creditors included on the list of 20 largest unsecured claims, and

other parties in interest, all as set forth on the list attached to the original of this Motion that has

been filed with the Court and by facsimile as follows:

Global Merchant Cash, Inc.

c/o Marcella G. Rabinovich, Esq.

Facsimile (212) 804-7013

Global Merchant Cash, Inc.

c/o Kearns Brinen Monaghan, Inc.

Facsimile (302) 734-5269

Knight Capital Funding

Facsimile (866) 293-8143

Small Business Term Loans, Inc.

c/o Advance Funds Network

Attn: Jeffrey Schwartz

Facsimile (888) 645-6395

 /s/Steven B. Ramsdell 

Steven B. Ramsdell

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