Paul Sweeney, 33994

Yumkas, Vidmar, Sweeney & Mulrenin, LLC

10211 Wincopin Circle, Suite 500

Columbia, Maryland 21044

(443) 569-5972

psweeney@yvslaw.com

Counsel for Debtor

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

(Alexandria Division)

In re: *

FPMI SOLUTIONS, INC. * Case No: 16-12142-RGM (Chapter 11)

Debtor *

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

DEBTOR’S MOTION FOR ORDER (I) AUTHORIZING THE 

DEBTOR TO OBTAIN POSTPETITION FINANCING AND USE 

LOAN PROCEEDS, AND (II) GRANTING RELATED RELIEF

FPMI Solutions, Inc., the debtor and debtor in possession herein (the “Debtor” or 

the “Movant”), by counsel, files this Motion for Order (I) Authorizing the Debtor to Obtain 

Postpetition Financing and Use Loan Proceeds, and (II) Granting Related Relief (the “Motion”) 

pursuant to sections 363 and 364 of the United States Bankruptcy Code (the “Bankruptcy 

Code”), and states:

Jurisdiction and Venue

1. The Court has jurisdiction over this bankruptcy case pursuant to 28 U.S.C. 

§§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).

2. Venue is proper in this district under 28 U.S.C. §§ 1408 and 1409.

3. The statutory bases for relief are §§ 363 and 364 of the Bankruptcy Code.

Background

4. On June 20, 2016 (the “Petition Date”), the Debtor filed a voluntary 

petition for relief under Chapter 11 of the Bankruptcy Code. The Debtor continues to manage 

and operate its business as a debtor in possession pursuant to §§ 1107(a) and 1108 of the 

Bankruptcy Code. 

5. No official committee of unsecured creditors has been appointed.

6. The Debtor is a government contractor that operates as a business partner 

to organizations. The Debtor’s federal solutions work includes human capital management, 

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human capital outsourcing, and learning services. Its global/commercial solutions work includes 

strategic HR consulting solutions, recruitment process outsourcing & executive search, 

temporary service providers, shared services, and learning services.

7. The Debtor filed this bankruptcy case because of an alleged default under 

the Prepetition Loan Agreement (as defined below) that caused the Lender (as defined below) to 

sweep $860,723.08 from the Debtor’s bank account, resulting in the Debtor’s inability to make 

payroll on June 3, 2016 or at any time thereafter. The Debtor sought bankruptcy protection in 

order to develop a plan to move forward following its breakdown in negotiations with its secured 

lender, Western Alliance Bank, as successor in interest to Bridge Bank, National Association 

(the “Lender”), and a potential acquirer. 

The Prepetition Credit Facility

8. Before the Petition Date, the Debtor and the Lender entered into that 

certain Loan and Security Agreement, dated as of September 26, 2011, as amended and restated 

by that certain Amended and Restated Loan and Security Agreement, dated as of September 26, 

2013, as further amended by that certain First Amendment to Amended and Restated Security 

Agreement, dated as of September 25, 2015, as further amended by that certain Second 

Amendment to Amended and Restated Security Agreement, dated as of December 16, 2015, as 

further amended by that certain Forbearance Agreement and Third Amendment to Amended and 

Restated Loan and Security Agreement, dated as of April 19, 2016 (collectively, and as 

otherwise amended, restated, supplemented or modified from time to time, the “Prepetition Loan 

Agreement”).

9. Pursuant to the Prepetition Loan Agreement and related documents, the 

Debtor had access to a senior secured credit facility in the original principal amount of 

$2,500,000. As of the Petition Date, approximately $429,000 in principal obligations were 

outstanding under the Prepetition Loan Agreement. The obligations under the Prepetition Loan 

Agreement (the “Prepetition Indebtedness”) are secured by a first priority, senior lien on all 

personal property of the Debtor.

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The Debtor's Need for DIP Financing

10. The proposed DIP loan facility (the “DIP Facility”) from the Lender will 

provide Four Hundred Thousand Dollars ($400,000) to be used by the Debtor to fund the 

ordinary course expenses necessary to administer this case. The Debtor asserts that such amount 

is adequate for its funding needs at this time. This assertion is without prejudice to the Debtor’s 

right to request additional funding from the Lender, and if the Lender agrees to provide 

additional funding, to seek this Court’s authority, to borrow additional funds in the future if and 

as needed through the DIP Facility. No later than Monday, July 11, 2016 at 5:00 pm, the Lender, 

upon receipt of a satisfactory borrowing base certificate, shall provide its determination of the 

eligible amount available to be drawn upon once the DIP Facility is approved.

11. The Debtor believes it is necessary to obtain postpetition financing under 

the DIP Facility in order to maximize the value of its estate for the benefit of all parties in 

interest by continuing to operate as a going concern prior to a sale.

12. Absent the proposed DIP Facility, the Debtor will not have sufficient 

liquidity to fund its ordinary course expenditures, or to pay the expenses necessary to administer 

this bankruptcy case. Absent such funding, the Debtor would be required to cease operations, 

causing irreparable harm to the Debtor and its estate. Accordingly, the Debtor has a present need 

for the DIP Facility and entry of an interim order (the “Interim DIP Order”) and final order (the 

“Final DIP Order” and, together with the Interim DIP Order, the “DIP Orders”) authorizing and 

approving the DIP Facility.

13. As described more fully below, the Debtor has sought and is unable to 

obtain financing from other sources on terms preferable to the proposed DIP Facility. 

Specifically, the Debtor is unable to obtain (i) adequate unsecured credit allowable either 

(a) under sections 364(b) and 503(b)(l) of the Bankruptcy Code or (b) under section 364(c)(l) of 

the Bankruptcy Code, or (ii) adequate credit secured by a lien on unencumbered assets of the 

Debtor’s estate under section 364(c)(2) of the Bankruptcy Code.

14. The best source of secured credit available to the Debtor is the DIP 

Facility. The Debtor requires financing under the DIP Facility in order to satisfy its postpetition 

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liquidity needs. Hence, the Debtor has determined, in the exercise of its sound business 

judgment, that it requires financing under the terms of the DIP Facility and hereby requests 

authority to obtain such financing.

Efforts to Obtain Alternative Financing

15. Prior to the Petition Date, the Debtor’s litigation against the Lender made 

an alternate lending source extremely difficult to obtain. In addition, the Lender refused to 

provide unsecured lending. 

16. Now at a critical juncture in this bankruptcy case, the Debtor has 

evaluated its alternatives and determined that the DIP financing proposal described more fully 

herein below presents the best opportunity to successfully reorganize its financial affairs.

Concise Statement of Relief Requested

17. In accordance with Federal Rule of Bankruptcy Procedure 4001(c), the 

Debtor submits this concise statement of the material terms of the DIP Facility to be evidenced 

by a Debtor in Possession Loan and Security Agreement, to be filed with the Court prior to the 

hearing on this motion, and such related documents as the Lender may reasonably require 

(collectively, the “DIP Facility Documents”) and the DIP Orders. The summary below is 

qualified in its entirety by reference to the provisions of the DIP Facility Documents and the DIP 

Orders. To the extent there is any conflict or inconsistency between this summary and the terms 

of the DIP Facility Documents and the DIP Orders, the latter shall govern. 

Borrower FPMI Solutions, Inc.

Lender Western Alliance Bank

Amount $400,000.00

Interest Rate One and one quarter of one percent (1.25%) above the greater of (i) three 

and one quarter percent (3.25%), or (ii) the variable rate of interest, per 

annum, most recently announced by the Lender as its “prime rate,” 

whether or not such announced rate is the lowest rate available from the 

Lender.

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Borrowing Base The DIP Facility shall be governed by a borrowing base (the “Borrowing 

Base”) equal to ninety percent (90%) of the Debtor’s billed Eligible 

Accounts (as defined below) (net of pre-paid deposits, offsets and 

contras related to each specific account debtor), all as determined by the 

Lender with reference to Borrowing Base reports delivered by the Debtor 

to the Lender in a form satisfactory to the Lender in its sole and absolute 

discretion. Borrowing Base reports shall be delivered to the Lender on a 

weekly basis and upon every advance on the DIP Facility. For purposes 

of determining availability for any advance requested by the Debtor 

under the DIP Facility, the Lender shall take into account both the 

Prepetition Indebtedness and any amounts borrowed under the DIP 

Facility at the time of the request for an advance. 

“Eligible Accounts” shall be defined as those billed accounts that arise in 

the ordinary course of the Debtor’s business that comply with all of the 

Debtor’s representations and warranties to the Lender; provided, that 

standards of eligibility may be fixed and revised from time to time by the 

Lender in the Lender’s reasonable judgment based on the results of 

audits of the accounts or other information received by the Lender 

showing deterioration of the accounts and upon notification thereof to the 

Debtor. Unless otherwise agreed to by the Lender, Eligible Accounts 

shall not include the following: 

(a) accounts that the account debtor has failed to pay within (90) 

days of invoice date;

(b) accounts with respect to an account debtor, fifty percent (50%) 

of whose accounts the account debtor has failed to pay within ninety (90) 

days of invoice date; 

(c) accounts with respect to which the account debtor is an officer, 

employee, or agent of the Debtor;

(d) accounts with respect to which the account debtor is an affiliate 

of the Debtor;

(e) accounts with respect to an account debtor, including affiliates 

and subsidiaries of the Debtor, whose total obligations to the Debtor 

exceed fifty percent (50%) of all accounts, except as approved in writing 

by the Lender;

(f) progress billings and unbilled work in progress;

(g) retention billings;

(h) bill and hold accounts;

(i) accounts with respect to which the account debtor disputes 

liability or makes any claim with respect thereto as to which the Lender 

believes, in its sole discretion, that there may be a basis for dispute (but 

only to the extent of the amount subject to such dispute or claim), or is 

subject to any insolvency proceeding, or becomes insolvent, or goes out 

of business; and

(j) accounts the collection of which the Lender reasonably 

determines to be doubtful. 

Payments Payments of interest only shall be due and payable on the tenth (10th) 

calendar day of each month, through and including the Maturity Date (as 

defined below).

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Maturity Date The earliest of: (i) September 1, 2016, (ii) the date of closing of the sale 

of substantially all of the Debtor’s assets, (iii) the effective date of a 

confirmed Chapter 11 plan of reorganization, and (iv) the acceleration of 

the loan by the Lender as a result of the occurrence of an Event of 

Default.

Proposed Use of 

Proceeds 

The loan proceeds shall be used to pay the fees and expenses of Debtor’s 

business operations and the Carve-Out (as defined below).

Collateral The collateral securing the Prepetition Loan shall be secured by a 

security interest in all of the Debtor’s personal property, whether 

presently existing or hereafter created or acquired (the “Collateral”), 

including but not limited to:

(a) all cash, cash equivalents, accounts, chattel paper, deposit 

accounts, documents, equipment, general intangibles, goods, instruments, 

inventory, investment property, letter of credit rights, ownership rights 

and interests in other entities (including all stock certificates, 

membership certificates and other documents evidencing ownership 

rights and interests in other entities), and all books and records related to 

the foregoing; and

(b) any and all cash proceeds and/or noncash proceeds of any of the

foregoing, including, without limitation, insurance proceeds. 

Priority The DIP Facility shall be authorized and approved by the Court pursuant 

to Section 364(c)(3) of the Bankruptcy Code to be incurred as, and shall 

constitute, a lien on the Collateral, junior only to the lien of the Lender 

under the Prepetition Loan Agreement and the Carve-Out (as defined 

below).

Effective upon entry of the Final DIP Order, all obligations of the Debtor 

under the DIP Facility shall at all times be entitled to superpriority claim 

status under Section 364(c)(1) of the Bankruptcy Code and shall have 

priority over any and all administrative expenses specified in Sections 

105, 326, 328, 330, 331, 364(c), 503(a), 503(b), 506(c), 507(a), 507(b), 

546(c), 546(d), 726, 1114 of the Bankruptcy Code, or otherwise, subject 

only to the Carve-Out (as defined below).

Carve-Out Notwithstanding anything to the contrary herein, the lien in the Collateral 

securing the DIP Facility shall be subject and subordinate to the CarveOut. As used herein, “Carve-Out” means the following in an aggregate 

amount not to exceed $100,000: (i) unpaid fees of the Clerk of the Court 

and the U.S. Trustee pursuant to 28 U.S.C. § 1930; (ii) unpaid fees and 

expenses of the professionals of the Debtor retained by an order of the 

Court pursuant to §§ 327, 328, 363 or 1103(a) of the Bankruptcy Code 

(the “Professionals”) to the extent such fees and expenses are 

subsequently allowed by the Court under §§ 330, 331, or 363 of the 

Bankruptcy Code, and (iii) any retainers or any professional expense 

escrow account established by the Borrower. The Debtor may not use 

the Carve Out to object to or contest in any manner, or to raise any 

defenses to, the validity, extent, amount, perfection, priority or 

enforceability of the Prepetition Indebtedness or the Prepetition Loan 

Agreement. 

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Conditions to 

Borrowing

Obligations of the Lender to make each advance under the DIP Facility 

are subject to the following conditions precedent: (i) all necessary 

consents and approvals have been obtained, including all necessary 

internal credit approvals by the Lender; (ii) all information and 

documents requested by the Lender have been received in a form 

satisfactory to the Lender in its sole and absolute discretion; (iii) the 

Interim DIP Order has been entered, and it is effective and not subject to 

amendment, modification or stay, (iv) all the representations and 

warranties made in the DIP Facility Documents remain true in all 

material respects, (v) the Debtor is current on its reporting obligations to 

the Lender; and (vi) no Default or Event of Default has occurred or will 

occur after giving effect to the advance.

Reporting The Debtor shall promptly provide all financial reports as requested by 

the Lender, in addition to such reports as are required under the 

Prepetition Loan Agreement and any interim or final cash collateral 

order.

Financial Covenants Financial covenants shall include compliance with an approved budget on 

a weekly and cumulative basis, within a ten percent (10%) cumulative 

variance by category and a five percent (5%) cumulative variance in total.

The Debtor shall provide weekly variance reports and such other 

information as the Lender requires to monitor the Debtor’s compliance 

with the approved budget.

Release of Lender Effective upon the date of entry of the Interim DIP Order, the Debtor 

shall acknowledge that it has no claim, cause of action, counterclaim, 

defense, offset or demand of any kind or nature that can be asserted to 

reduce or eliminate all or any part of the Prepetition Indebtedness or to 

seek affirmative relief or damages of any kind or nature from the Lender. 

In addition, effective upon the date of entry of the Interim DIP Order, the 

Debtor and its affiliate, FPMI Solutions Group, Inc., and their equity 

owners (individually and collectively, the “Debtor Group Releasors”) 

shall release the Lender and its affiliates and their directors, officers, 

representatives, employees, agents, insurers, successors and assigns 

(individually and collectively, the “Lender Group Releasees”) from any 

and all claims, causes of action, demands, damages, liabilities, losses, 

obligations, costs, fees and expenses of whatsoever nature, character and 

kind, whether in law or equity, whether known or unknown, whether 

disclosed or undisclosed, whether anticipated or unanticipated, whether 

asserted or unasserted, whether direct or indirect, whether contingent or 

liquidated, which any of the Debtor Group Releasors ever had, now has 

or may have in the future against any of the Lender Group Releasees 

arising out of, based upon or in any manner connected with any 

transaction, event, circumstance, action, failure to act or occurrence of 

any type which occurred, existed, was taken, permitted or begun at any 

time prior to the date of entry of the Interim DIP Order. Without limiting 

the generality of the foregoing, the release shall cover any claims and 

causes of action which any of the Debtor Group Releasors ever had, now 

has or may have in the future against any of the Lender Group Releasees 

arising out of or relating to the Prepetition Loan Agreement and the 

Prepetition Indebtedness.

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The release to be granted by the Debtor Group Releasors is intended to 

be general and as broad as permitted by law so as to release all matters 

existing or arising at any time prior to entry of the Interim DIP Order. 

To this end, each of the Debtor Group Releasors shall waive and 

relinquish, to the fullest extent permitted under applicable law, any rights 

that it may have under any law limiting the effect of a release, including 

California Civil Code Section 1542, which states: A GENERAL 

RLEASE DOES NOT EXTEND TO CLAIMS WHICH THE 

CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR 

HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, 

WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY 

AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Dismissal of Pending 

Litigation

Within five (5) business days following the date of entry of the Interim 

DIP Order, the Debtor shall take such action as is necessary to dismiss 

with prejudice the litigation against the Lender currently pending before 

the Bankruptcy Court and before the United States District Court for the 

Northern District of California. 

Section 506(c) Waiver The Final DIP Order shall provide that no costs or expenses of 

administration which have been or may be incurred at any time in 

connection with the Debtor’s bankruptcy case shall be charged 

against the Lender or the Collateral pursuant to Sections 105 or 

506(c) of the Bankruptcy Code or otherwise. 

Events of Default The DIP Facility will terminate, and all amounts owing thereunder will 

immediately be due and payable without action or notice, if any of the 

following (each an “Event of Default”) shall occur: (i) the occurrence of 

an Event of Default under the Prepetition Loan Agreement; (ii) the 

occurrence of an Event of Default under the Interim Cash Collateral 

Order or any final order governing the Debtor’s use of cash collateral; 

(iii) entry of an order without the prior consent of the Lender amending, 

supplementing or otherwise modifying the Interim DIP Order or the 

Final DIP Order; (iv) reversal, vacatur or stay of the effectiveness of the 

Interim DIP Order, or the Final DIP Order; (4v) entry of an order to sell 

all or any part of the Collateral that does not provide for payment in full 

of the Debtor’s obligations to the Lender; (vi) the filing of a plan of 

reorganization that does not provide for the payment in full of the 

Debtor’s obligations to the Lender; and (vii) the Debtor asserts a claim 

or initiates an action seeking any relief against the Lender, including any 

action to avoid, invalidate, avoid, set aside or subordinate the Prepetition 

Indebtedness or the Lender’s liens on the Collateral.

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Challenge Period The stipulations, findings, representations and releases contained in the 

DIP Facility Documents and the DIP Orders with respect to the 

Prepetition Loan Agreement and the Prepetition Indebtedness shall be 

binding upon all parties-in-interest, any trustee appointed in the Debtor’s 

bankruptcy case and any statutory committee appointed in the Debtor’s 

bankruptcy case (each, a “Challenge Party”), unless and solely to the 

extent that the Court rules in favor of the Challenge Party in a timely and 

properly filed Challenge. 

A “Challenge” means any claim or cause of action against the Lender or 

an objection or challenge to: (i) the validity, extent, priority, or perfection 

of the security interests and liens of the Lender under the Prepetition 

Loan Agreement; (ii) the validity, allowability, priority or amount of the 

Prepetition Indebtedness; (iii) the secured status of the Prepetition 

Indebtedness; or (iv) any liability of the Lender with respect to any 

matter arising out of or relating to the Prepetition Loan Agreement. Any 

statutory committee appointed in the Debtor’s bankruptcy case shall have 

45 calendar days from the date of its appointment to formally commence 

a Challenge, and any other party-in-interest shall have 45 calendar days 

from the date of entry of the Interim DIP Order to formally commence a 

Challenge.

Automatic Perfection The Interim DIP Order shall constitute sufficient and conclusive 

evidence of the priority, perfection and validity of the security interests 

in and liens upon the Collateral, without the necessity of filing, recording 

or serving any financing statements or other documents that may 

otherwise be required under federal or state law in any jurisdiction or the 

taking of any other action to validate or perfect the security interests and 

liens granted to Lender in the DIP Facility Documents and the DIP 

Orders.

18. The Debtor submits that the foregoing relief is critical to its efforts to 

maximize value and structure its business for the benefit of its estate and all parties in interest.

Bases for Relief

19. “It is given that most successful reorganizations require the debtor-inpossession to obtain new financing simultaneously with or soon after the commencement of the 

Chapter 11 case.” In re Ames Department Stores, Inc., 115 B.R. 34, 36 (Bankr. S.D.N.Y. 1990).

20. A debtor in possession’s ability to obtain postpetition financing is 

governed by § 364 of the Bankruptcy Code, which presents a hierarchy of permissible 

postpetition financing arrangements. See 11 U.S.C. § 364; Modanlo v. Ahan (In re Modanlo), 

No. DKC 2006-1181, 2006 WL 4606303, *4 (D. Md. Aug. 16, 2006). Initially, a debtor must 

seek unsecured financing, offering a lender only administrative expense priority status. 

11 U.S.C. § 364(a) and (b). If such financing is not available, the court may authorize 

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(1) ”super-priority” administrative expense status for the lender’s claims, (2) first priority liens 

on unencumbered property, or (3) junior liens on property already encumbered by a lien. 

11 U.S.C. § 364(c). 

21. A court may approve secured financing under § 364(c) of the Bankruptcy 

Code if the debtor demonstrates that it has reasonably attempted, but failed, to obtain unsecured 

credit under sections 364(a) or (b). In re Ames, 115 B.R. at 37; see Modanlo, 2006 WL 4606303 

at *5. 

22. A debtor does not need to seek financing proposals from every possible 

lender or lending source before seeking the next level up in the § 364 financing hierarchy, but 

should make a reasonable effort to seek other sources of less onerous financing. See In re 

Snowshoe Co., 789 F.2d 1085, 1088 (4th Cir. 1986); see also In re 495 Central Park Avenue 

Corp., 136 B.R. 626, 630-631 (Bankr. S.D.N.Y. 1992).

23. In reviewing requests for approval of postpetition financing, assuming that 

the statutory requirements are met, courts generally defer to a debtor’s business judgment so long 

as the financing does not contain terms that leverage the bankruptcy process or powers, does not 

primarily benefit a third party over the estate, and does not unfairly cede control of the 

reorganization to one party in interest. See, e.g., In re Mastercraft Interiors, Ltd., No. 06-12769, 

2006 WL 4595946, *4 (Bankr. Md. Aug. 10, 2006) (approving financing as exercise of debtor’s 

business judgment); In re Ames, 115 B.R. at 40; In re YL West 87th Holdings I LLC, 423 B.R. 

421, 441 (Bankr. S.D.N.Y. 2010); In re Barbara K Enterprises, Inc., 2008 Bankr. LEXIS 1917, 

*39-40 (Bankr. S.D.N.Y. 2008). At the same time, there must be evidence of a benefit for the 

estate in obtaining the financing. See Ford Motor Credit Co. v. Dobbins, 35 F.3d 860, 866 (4th 

Cir. 1994).

24. As set forth below, approval and closing on the DIP Facility is essential to 

the orderly continuation of the Debtor’s operations and is critical for the management and 

preservation of the assets of its estate. Moreover, the Debtor, exercising its prudent business 

judgment, believes the financing is fair, reasonable, necessary and appropriate. After reasonable 

efforts under the circumstances, the Debtor was unable to obtain from any other qualified lenders 

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the necessary financing on less onerous terms. Accordingly, the Debtor has satisfied the 

requirements of § 364(c).

The DIP Facility is the Best Financing Option Available

25. The Debtor has actively explored alternatives to the financing to be 

provided under the DIP Facility and has been unable to procure financing in the form of 

unsecured credit allowable under § 503(b)(1) of the Bankruptcy Code, as an administrative 

expense under § 364(a) or (b) of the Bankruptcy Code, or in exchange for the grant of an 

administrative expense priority pursuant to § 364(c)(1) of the Bankruptcy Code without the grant 

of a junior lien on assets. In sum, the Debtor was unable to obtain from any other qualified 

lenders unsecured or secured credit on terms as competitive as those provided for under the DIP 

Financing.

The Budget is Adequate to Pay Chapter 11 Operating Expenses

26. The Debtor, with the assistance of its professional advisors, prepared a 

budget based on historical costs of operation, reasonable projections regarding operations, and 

the added costs of operating under Chapter 11 of the Bankruptcy Code. The Debtor identified 

the amount of financing needed to operate in this case, and successfully secured a proposal for 

that amount from the Lender. As such, the Debtor respectfully submits that the budget is 

adequate, considering all available assets, to pay all administrative expenses due or accruing 

during the period covered by the budget. 

The DIP Facility is Fair and Reasonable and was Negotiated in Good Faith

27. The Debtor believes that the terms and conditions of the DIP Facility are 

fair, just, and reasonable under the circumstances, are ordinary and appropriate for secured 

financing to debtors in possession, reflect the Debtor’s exercise of its prudent business judgment 

consistent with its fiduciary duties, and are supported by reasonably equivalent value and fair 

consideration. The DIP Facility Documents have been negotiated in good faith and at arms’ 

length by and between the Debtor and the Lender, with all parties represented by counsel. 

Accordingly, the Debtor believes that any credit extended under the terms of the DIP Facility 

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Documents and the DIP Orders is extended in good faith by the Lender as that term is used in 

§ 364(e) of the Bankruptcy Code.

28. After appropriate investigation and analysis, the Debtor has concluded that 

the DIP Facility is the best alternative available under the circumstances. Bankruptcy courts 

routinely defer to a debtor’s business judgment on most business decisions, including the 

decision to borrow money. See Group of Institutional Investors v. Chicago Mil. St. P. & Pac. 

Ry., 318 U.S. 523, 550 (1943); In re Simasko Prod. Co., 47 B.R. 444, 449 (D. Colo. 1985) 

(“Business judgments should be left to the board room and not to this Court”); In re Lifeguard 

Indus., Inc., 37 B.R. 3, 17 (Bankr. S.D. Ohio 1983) (“More exacting scrutiny would slow the 

administration of the Debtor’s estate and increase its cost, interfere with the Bankruptcy Code’s 

provision for private control of administration of the estates, and threaten the court’s ability to 

control a case impartially.”); Richmond Leasing Co. v. Capital Bank, N.A., 762 F.2d 1303, 1311 

(5th Cir. 1985).

29. In general, a bankruptcy court should defer to a debtor’s business 

judgment regarding the need for and the proposed use of funds, unless such decision is arbitrary 

and capricious. See In re Mastercraft Interiors, Ltd., No. 06-12769, 2006 WL 4595946, *4 

(Bankr. Md. Aug. 10, 2006); see also In re Curlew Valley Assocs., 14 B.R. 507, 511-13 (Bankr. 

D. Utah 1981). Courts generally will not second guess a debtor’s business decisions when those 

decisions involve “a business judgment made in good faith, upon a reasonable basis, and within 

the scope of his authority under the Code.” In re Curlew Valley Assocs., 14 B.R. at 513-14 

(footnotes omitted).

30. The Debtor has exercised sound business judgment—seeking advice from 

its professional legal and financial advisors—in determining that the DIP Facility is appropriate 

and consistent with applicable legal authority. The terms of the DIP Facility are fair and 

reasonable and are in the best interests of the Debtor’s estate. Accordingly, the Debtor should be 

granted authority under § 364(c) of the Bankruptcy Code to enter into the DIP Facility 

Documents and to borrow funds from the Lender on the basis described above.

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Notice

31. Notice of this Motion has been given to the following parties or to their 

counsel, if known: (i) the Office of the United States Trustee; (ii) the Debtor’s prepetition 

secured lenders, and (iii) all parties identified on the Debtor’s list of twenty largest unsecured 

creditors. In light of the nature of the relief requested, the Debtor submits that no further notice 

is necessary.

32. No previous motion for the relief sought herein has been made to this 

Court or to any other court.

Statement Pursuant to Local Bankruptcy Rule 9013-1

33. Pursuant to Local Bankruptcy Rule 9013-1, the Debtor states that, in lieu 

of submitting a memorandum in support of this Motion, it will rely solely upon the grounds and 

authorities set forth herein.

WHEREFORE, the Debtor respectfully requests that the Court enter a final order, 

substantially in the form to be filed with the Court, granting the relief requested herein and such 

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

Dated: July 1, 2016 /s/ Paul Sweeney Paul Sweeney, 33994

Yumkas, Vidmar, Sweeney & Mulrenin, LLC

10211 Wincopin Circle, Suite 500

Columbia, Maryland 21044

(443) 569-5972

psweeney@yvslaw.com

Counsel for Debtor

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4814-5289-0164, v. 7 14

CERTIFICATE OF SERVICE

I hereby certify that on the 1st day of July 2016, notice of filing the Motion for 

Order (I) Authorizing the Debtor to Obtain Postpetition Financing and Use Loan Proceeds, and

(II) Granting Related Relief (the “Motion”) was sent electronically to those parties listed on the 

docket as being entitled to such electronic notice, and a copy of the Motion was mailed first 

class, postage prepaid to the parties on the attached service list.

/s/ Paul Sweeney Paul Sweeney

Case 16-12142-RGM Doc 32 Filed 07/01/16 Entered 07/01/16 15:36:07 Desc Main

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Aronson LLC

805 King Farm Boulevard

Rockville, MD 20850

Blue Cross Blue Shield

450 Riverchase Parkway East

Birmingham, AL 35298

Bosserman Ctr Conflict Resolution

1100 Camden Avenue

Salisbury, MD 21801

Canal Center TT LLC

P. O. Box 785801

Philadelphia, PA 19178

CIGNA Life Insurance Company

P. O. Box 8500 K 110

Philadelphia, PA 19178-0110

Deltek Systems, Inc.

P. O. Box 79581

Baltimore, MD 21279-0581

Dentons US LLP

233 South Wacker Drive, Suite 5900

Chicago, IL 60606-6361

Department of Justice

Executive Office for US Trustees

441 G Street NW, Suite 6150

Washington, DC 20548

Federal Hill Renewal LLC

P. O. Box 23

New Market, MD 21774

GSA Modifications LLC

4646 Roundhill Road

Ellicott City, MD 21043

ITC-DELTACOM/Deltacom 1058

P. O. Box 2252

Birmingham, AL 35246-1058

Kelly, Anderson & Associates

424 North Washington Street

Alexandria, VA 22314

Mass Mutual

Attn: N 405 DCS David Kern

1295 State Street

Springfield, MA 01111-0001

Robert M. McLindon

11222 Beach Mill Road

Great Falls, VA 22066

MCS Partnership

c/o Samples Properties

P. O. Box 264

Huntsville, AL 35801

NEC Financial Services

24189 Network Place

Chicago, IL 60673-1241

Jimmi L. Pittmon

11804 Rodeo Drive

Frisco, TX 75035-2275

Monique E. Smith

6056 Chicory Place, Suite 100

Alexandria, VA 22310

Cheryl Vinci

26187 Tuscany Drive

Millsboro, DE 19966

Syrena J. West

176 Bluegreen Way

Rockwood, TN 37584

Robert K. Coulter

Assistant U.S. Attorney 

Office of the U.S. Attorney

Eastern District of Virginia

2100 Jamieson Avenue, 

Alexandria, Virginia 22314

The following parties received 

electronic notice of the filing:

Joseph A. Guzinski, Esquire

Jack Frankel, Esquire

Office of the United States Trustee

115 South Union Street, Room 210

Alexandria, Virginia 22314

Jerald R. Hess, Esquire

Counsel for Western Alliance Bank

DLA Piper LLP (US)

500 Eighth Street, N.W.

Washington, D.C. 20004

Jennifer Maria Kappel, Esquire

Counsel for Bridge Bank

DLA Piper, LLP

11911 Freedom Drive, Suite 300

Reston, Virginia 20190

Paul Sweeney, Esquire

Counsel for Debtor

Yumkas, Vidmar, Sweeney & Mulrenin

10211 Wincopin Circle, Suite 500

Columbia, Maryland 21044

Case 16-12142-RGM Doc 32 Filed 07/01/16 Entered 07/01/16 15:36:07 Desc Main

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