Client Documents:4812-0994-9484v2|G3517-000004|12/14/2015

Joel L. Perrell Jr. (VSB No. 88924)

Kristen M. Siracusa (VSB 89729)

Miles & Stockbridge P.C.

100 Light Street, 10th Floor

Baltimore, Maryland 21202

Telephone: (410) 385-3762

Facsimile: (410) 385-3700

jperrell@milesstockbridge.com

Attorneys for Premium Assignment Corp., Movant

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

(Richmond Division)

IN RE: *

VIREOL BIO ENERGY LLC, * Chapter 11 (Conv. Inv. Ch. 7)

* Case No. 15-35970

Debtor.

* * * * * * *

PREMIUM ASSIGNMENT CORP., *

Movant, *

v. * Hearing Date: Jan. 13, 2016

VIREOL BIO ENERGY LLC, * Time: 9:00 a.m.

Respondent. *

* * * * * * * * * * * *

MOTION BY PREMIUM ASSIGNMENT CORPORATION

FOR RELIEF FROM THE AUTOMATIC STAY OR, IN THE ALTERNATIVE,

FOR ADEQUATE PROTECTION

Premium Assignment Corporation (“PAC”), by its undersigned attorneys and pursuant to

11 U.S.C. § 362(d)(1), Federal Rule of Bankruptcy Procedure 4001 and the Local Rules of this

Court, moves this Court for relief from the automatic stay to exercise its rights pursuant to

certain insurance premium finance agreements and applicable law, including (i) the collection of

all return premiums under financed policies of insurance previously cancelled voluntarily by the

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Debtor effective October 24, 2015 and (ii) the application of such return premiums and other

amounts returned to PAC to the obligations owed to PAC or, in the alternative, for adequate

protection of its interest in its collateral (specifically, unearned insurance premiums and related

collateral). In support of this Motion, PAC states as follows:

JURISDICTION

1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334 and

11 U.S.C. § 362.

2. Venue is appropriate in this Court pursuant to 28 U.S.C. § 1409.

3. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(G).

PARTIES

4. On November 18, 2015 (the “Petition Date”), certain creditors of Vireol Bio

Energy, LLC (the “Debtor”) filed an involuntary petition for relief under Chapter 7 of the United

States Bankruptcy Code against the Debtor (Doc. No. 1).

5. On December 4, 2015 and again on December 7, 2015, the Debtor requested

conversion of this case to a case under Chapter 11 of the Bankruptcy Code and consented to

entry of an Order for Relief (Doc Nos. 10 & 11).

6. On December 14, 2015, this Court entered an Order for Relief, and the case was

converted to a case under Chapter 11 of the Bankruptcy Code (Doc. Nos. 14 & 15).

7. PAC is a secured creditor of the Debtor pursuant to the terms of certain Premium

Financing Agreements dated April 28, 2015 (the “April 28 Agreement”) and May 7, 2015 (the

“May 7 Agreement” and together with the April 28 Agreement, collectively “Agreements”)

entered into by the Debtor and assigned to PAC, more particularly described in the following

paragraphs.

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FACTS

The April 28, 2015 Agreement

8. On or about April 28, 2015, the Debtor entered into and executed the April 28

Agreement with PAC as assignee. Under the terms of the April 28 Agreement, PAC advanced

$492,912.00 to enable the Debtor to purchase property, cargo, general liability, umbrella and

package insurance coverage (twelve-month coverage) (the “April 28 Insurance Coverage”). In

consideration for PAC’s advance of funds, the Debtor promised to repay the funds plus interest

in ten (10) monthly installments of $50,162.89. All installment payments were due the 24th day

of each month, commencing with an installment payment on April 24, 2015. A true and correct

copy of the April 28 Agreement is attached hereto as Exhibit A and incorporated herein by

reference.

The May 7, 2015 Agreement

9. On or about May 7, 2015, the Debtor entered into and executed the May 7

Agreement with PAC as assignee. Under the terms of the May 7 Agreement, PAC advanced

$15,868.01 to enable the Debtor to purchase EXCS insurance coverage (eleven-month coverage)

(the “May 7 Insurance Coverage”). In consideration for PAC’s advance of funds, the Debtor

promised to repay the funds plus interest in eight (8) monthly installments of $2,017.39. All

installment payments were due the 24th day of each month, commencing with an installment

payment on June 24, 2015. A true and correct copy of the May 7 Agreement is attached hereto

as Exhibit B and incorporated herein by reference. The April 28 Insurance Coverage and the

May 7 Insurance Coverage are collectively referred to as the “Insurance Coverage.”

10. Repayment of PAC’s loans under the Agreements is secured by a security interest

in all unearned premiums under the Insurance Coverage (the “Collateral”), coupled with a

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limited power of attorney to cancel the Insurance Coverage upon a default. See Agreements,

p. 1, ¶¶ 1 & 2. No filing of a financing statement is required to perfect PAC’s security interest in

the Collateral. See Va. Code Ann. § 38.2-4712 (no filing necessary to perfect validity of

premium finance agreement as secured transaction as against others); Fla. Stat. § 627.844(2)

(same).

11. Effective October 24, 2015, the Debtor voluntarily cancelled the Insurance

Coverage, except for the “package” policy under the April 28 Agreement. Copies of the

Debtor’s Cancellation Requests and Policy Releases are attached hereto as Exhibit C and

incorporated herein by reference.

12. It remains unclear why the Debtor did not cancel all policies.

13. The Debtor failed to make payment for November, 2015 under the Agreements

(post-petition arrearage). The Debtor remains in default under the Agreements as of the date of

this Motion.

14. As of the date of this Motion, the total amount due PAC is $159,149.85 (which

includes a late charge in the amount of $2,609.01 and interest through the term of each of the

Agreements), plus additional late charges, attorneys’ fees and other fees under the Agreements as

they may become due and owing.

15. On October 24, 2015 (the effective date of the Debtor’s cancellation of all

Insurance Coverage, except for the “package” policy under the April 28 Agreement), the value of

PAC’s Collateral, which represented the aggregate unearned premium for the Insurance

Coverage on a pro rata basis, exceeded the amount owed to PAC.

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Request for Relief

16. Cause exists pursuant to 11 U.S.C. § 362(d)(1) to grant PAC relief from the

automatic stay because the Debtor has cancelled all Insurance Coverage other than the package

coverage under the April 28 Agreement, and PAC, as creditor with a first priority lien on return

premiums, is entitled to such return premiums.

17. Further, the Debtor has not made or offered to make sufficient adequate

protection to PAC for the continued use of the Collateral (limited to the package insurance policy

under the April 28 Agreement), notwithstanding the benefits derived from and use of PAC’s

collateral on an ongoing basis. An insurance premium finance lender is entitled to either relief

from the automatic stay in order to cancel the financed insurance coverage or, in the alternative,

adequate protection payments pursuant to 11 U.S.C. § 363. See In re U.S. Repeating Arms Co.,

67 B.R. 990, 998 (Bankr. D. Conn. 1986) (finding that premium finance lender was entitled to

adequate protection of the value of its security interest); In re Auto-Train Corp., 9 B.R. 159, 167

(Bankr. D.D.C. 1981) (finding that premium insurance lender was entitled to adequate protection

from inception of bankruptcy case to expiration of the insurance policies).

18. Cause further exists because, upon information and belief, after payment of PAC

in full, excess return premiums will be available for payment to the Debtor and the Estate.

19. Accordingly, PAC seeks relief from the automatic stay in order to collect and to

apply the unearned premiums under the Insurance Coverage that was voluntarily cancelled by

the Debtor, to the outstanding indebtedness due and owing PAC, including principal, interest,

late fees, attorneys’ fees, and costs as allowed by the Agreements and applicable law.

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20. PAC further requests that the Court waive the stay of any Order entered that is

imposed by Federal Rule of Bankruptcy Procedure 4001(a)(3). PAC submits that cause exists to

waive such stay given the nature of the Collateral and its daily diminution in value.

WHEREFORE, Premium Assignment Corporation requests this Court to enter an Order:

(A) Modifying and lifting the automatic stay, pursuant to 11 U.S.C.

§ 362(d)(1);

(B) Permitting PAC to collect and to apply the unearned premiums under the

Insurance Coverage that was voluntarily cancelled by the Debtor, to the outstanding

indebtedness due and owing PAC, including principal, interest, late fees, attorneys’ fees, and

costs as allowed by the Agreements and applicable law;

(C) Permitting any insurance companies in possession of the Collateral to

turnover the Collateral to PAC;

(D) Permitting PAC to pay any excess return premium, after payment of the

outstanding indebtedness due and owing PAC, including principal, interest, late fees, attorneys’

fees, and costs as allowed by the Agreements and applicable law, to the Debtor;

(E) Waiving the stay imposed by Federal Rule of Bankruptcy Procedure

4001(a)(3); and

(F) Granting such other and further relief as is just and proper in this case.

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Dated this 17th day of December, 2015.

/s/ Joel L. Perrell Jr.

Joel L. Perrell Jr. (VSB 88924)

Kristen M. Siracusa (VSB 89729)

Miles & Stockbridge P.C.

100 Light Street, 10th Floor

Baltimore, Maryland 21202

Phone: (410) 385-3762

Fax: (410) 385-3700

Email: jperrell@milesstockbridge.com

Attorneys for Premium Assignment Corporation

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Certificate of Service

I HEREBY CERTIFY that on this 17th day of December, 2015, I caused copies of the

foregoing MOTION BY PREMIUM ASSIGNMENT CORPORATION FOR RELIEF FROM THE

AUTOMATIC STAY OR, IN THE ALTERNATIVE, FOR ADEQUATE PROTECTION, Exhibits,

Proposed Order and Notice of Motion, to be served via this Court’s CMECF system on all

parties registered to receive notice, and on the following parties by first-class mail postage

prepaid:

Vireol Bio Energy LLC

c/o Peter Conway, Debtor Designee

701 S. 6th Street

Hopewell, VA 23860

Kevin J. Funk

DurretteCrump PLC

1111 East Main Street, 16th Floor

Richmond, VA 23219

Counsel for Debtor

Virginia Electric and Power Co., Inc.

c/o James L. Stevens, Manager

701 East Cary Street

Richmond, VA 23219

Stephen E. Baril

Troy Savenko

Kaplan, Voekler, Cunningham & Frank, PLC

1401 East Cary Street (23219)

P.O. Box 2470

Richmond, VA 23218-2470

Counsel for Virginia Electric and Power Co., Inc.

West End Machine & Welding, Inc.

c/o John A. Rueger., Jr., President

6804 School Avenue

Henrico, VA 23228

Andrea Sullivan Gould

Mauck & Brooke PLC

416 West Franklin St.

Richmond, VA 23220

Counsel for West End Machine & Welding, Inc.

Southern Construction Utilities, Inc.

c/o Mark Moody, President

1774 Fine Street

Prince George, VA 23875

William A. Burnett

Williams Mullen

200 South 10th Street, 16th Floor

P.O. Box 1320

Richmond, VA 23218-1320

Counsel for Hillcrest Transportation, Inc.

Hillcrest Transportation, Inc.

c/o Kristina Ford, Manager

25452 Hofheimer Way

Petersburg, VA 23803

William Daniel Prince, IV

Neil S. Talegaonkar

Thompson McMullan, PC

100 Shockoe Slip

Third Floor

Richmond, VA 23219

Counsel for Southern Construction Utilities, Inc.

Office of the United States Trustee

701 East Broad Street

Suite 4304

Richmond, VA 23219

/s/ Joel L. Perrell Jr.

Joel L. Perrell Jr.

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