Bruce W. Henry, VSB # 23951 

Kevin M. O’Donnell, VSB #30086 

Jeffery T. Martin, Jr., VSB # 71860 

Henry & O’Donnell, P.C. 

300 N. Washington St., Suite 204 

Alexandria, Virginia 22314 

(703) 548-2100 

Counsel to Sonabank 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Alexandria Division 

In Re: ) 

 ) 

FLOORING SOLUTIONS, INC., ) Case No. 16-12380-BFK 

 ) Chapter 7 

 Debtor. ) 

 ) 

 ) 

SONABANK, ) 

 ) 

 Movant, ) 

 ) 

v. ) Contested Matter 

 ) 

FLOORING SOLUTIONS, INC., and ) 

KLINETTE H. KINDRED, TRUSTEE, ) 

 ) 

 Respondents. ) 

 ) 

MOTION FOR RELIEF FROM THE AUTOMATIC STAY

COMES NOW, the movant Sonabank (“Sonabank”), by counsel, and files this Motion 

for Relief from the Automatic Stay (“Motion”) pursuant to 11 U.S.C. § 362(d) and Bankruptcy 

Rule 4001(a), to permit Sonabank to gain access to records of the Debtor and to enforce its lien 

against certain accounts receivable, contract rights and personal property of the Debtor or this 

Estate, and to take action necessary to preserve and protect the value of potential contract rights, 

including the ability to appoint a receiver for the purposes of investigation into and liquidation of 

accounts receivable and other contract rights and to recover possession of, and liquidate, 

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inventory of the Debtor necessary to the completion of contracts pending as of the petition date 

herein. In support of its motion, Sonabank states as follows: 

1. This is a proceeding seeking relief from the automatic stay and is a contested 

matter pursuant to Bankruptcy Rules 4001 and 9014, this matter is a core proceeding and this 

Court has jurisdiction properly founded upon 28 U.S.C. §§ 157 and 1334. 

2. The Debtor, Flooring Solutions, Inc. (“FSI” or “Debtor”), filed a voluntary 

petition for relief under Chapter 7 of the Bankruptcy Code on July 8, 2016, and thereafter 

Klinette H. Kindred (“Trustee”) was appointed interim Chapter 7 trustee herein and continues to 

serve in that capacity. 

3. Upon information and belief, FSI operated a substantial business as one of the 

largest commercial flooring contractors in the Washington Metropolitan area. FSI had been in 

business since 1998 and routinely contracted to provide commercial flooring solutions to some 

of the largest commercial builders and developers in the Washington Metro area. Shortly prior to 

its filing with this Court, FSI is believed to have been performing on over twenty (20) separate 

contracts to provide commercial flooring in substantial new commercial construction in the 

Washington Metropolitan area, including projects for the new Capitol One headquarters in 

McLean, Virginia, renovations of the Watergate Hotel and complex and the offices of the U.S. 

Department of Health and Human Services. 

4. FSI is obligated to Sonabank pursuant to a certain Promissory Note dated June 16, 

2008 in the original principal amount of $3,000,000.00. The Promissory Note was amended from 

time to time thereafter, including modifications providing for an increase of the maximum credit 

available to $4,000,002.00. A copy of the Promissory Note and all Amendments thereto are 

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attached hereto as Exhibit A and referred to collectively as the “Note.” All amounts owed 

pursuant to the Note are hereby referred to as the “Indebtedness.” 

5. The terms of the Note are governed by a certain Business Loan Agreement dated 

June16, 2008 (the “Loan Agreement”), a copy of which is attached hereto Exhibit B. 

As security for repayment of the Indebtedness, FSI granted a security interest to Sonabank 

pursuant to i) a certain Commercial Security Agreement executed by FSI as of June 16, 2008, 

and ii) a certain Security and Compliance Agreement executed by FSI as of June 16, 2009 

(collectively, the “Security Agreement”). Under the terms of the Security Agreement, FSI 

granted and provided to Sonabank a security interest in and lien against virtually all assets of 

FSI, including all equipment, furniture, fixtures, inventory, chattel paper, accounts and general 

intangibles, contracts and contract rights” (hereinafter the “Collateral”). A true and correct copy 

of the Security Agreement is attached hereto as Exhibit C. 

6. Sonabank perfected its security interest in the Collateral by filing UCC-1 

Financing Statements with the Virginia Secretary of State on June 18, 2008 and March 7, 2012, 

with a continuation statement being filed on January 22, 2013. Copies of the original financing 

statements and the continuation statement are referred to collectively as the “Financing 

Statements” and are attached hereto collectively as Exhibit D. The Note, Loan Agreement, 

Security Agreement, Financing Statements and all other related documents are referred to 

collectively herein as the “Loan Documents.” 

7. FSI is in default under the Note, the Loan Agreement and the Security 

Agreement, and Sonabank is seeking relief from the automatic stay to enforce its rights under 

state law against the Collateral, including the right to obtain appointment of a receiver to take 

charge of collateral and liquidate same for the benefit of Sonabank’s secured liens. As of July 12, 

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2016, the payoff under the Note was $4,067,619.33 with interest accruing at a rate of $712.36 

per diem plus attorneys’fees and costs incurred. There is no equity in the Collateral. 

8. Cause exists to grant relief from the stay. It is believed that most of the inventory 

located in the Debtor’s warehouses was purchased specifically for contract work ongoing and 

being performed by FSI shortly before the Chapter 7 filing herein. Sonabank has been informed 

that FSI’s remaining performance under many of these contracts has been assigned to other 

contractors who are likely moving to complete work attendant to the specific contracts. 

Sonabank requires immediate relief to be able to access inventory and seek to sell inventory to 

contractors in order to realize a reasonable recovery for the value of specifically ordered 

materials. Additionally, the receivables and contracts are in danger of being substantially 

diminished due to FSI’s failure to prosecute the work or to communicate with the general 

contractors since the time the petitions were filed. Sonabank requires prompt relief to investigate 

the potential for collection of accounts and/or completion of any work necessary to facilitate 

collection. 

9. Sonabank represents and avers that there is no equity in the Collateral that could 

be used for the benefit of general unsecured creditors and that the Collateral is not required for 

the Debtor’s reorganization. As the Debtor has filed a Chapter 7 petition before this Court, there 

is no attempt or apparent intent to effect any reorganization in this proceeding. 

10. Sonabank and the Trustee are in discussions with a view toward an agreed order 

resolving this matter. Sonabank’s counsel is optimistic that these discussions will be successful. 

11. In furtherance of, and ancillary to, relief from the stay, Sonabank requests that the 

Court authorize the Trustee to consent to appointment of the Receiver for the Collateral. 

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WHEREFORE, all parties served with this motion are hereby advised pursuant to L.R. 

4001(a)-1 that a written response to this motion must be filed with the Clerk of the United States 

Bankruptcy Court and served on the undersigned counsel for the plaintiff within fourteen (14) 

days of the date of service of this motion, and Sonabank does further pray that this court grant it 

relief from the automatic stay pursuant to 11 U.S.C. 362(d) to permit it to enforce its rights in the 

Collateral, including the appointment of a general receiver to take control and charge of such 

Collateral, and that Sonabank have such other and further relief as this Court may deem just. 

Respectfully submitted, 

SONABANK 

By Counsel 

 

 

/s/ Kevin M. O’Donnell 

Bruce W. Henry, VSB # 23951 

Kevin M. O’Donnell, VSB #30086 

Jeffery T. Martin, Jr., VSB # 71860 

Henry & O’Donnell, P.C. 

300 N. Washington St., Suite 204 

Alexandria, Virginia 22314 

(703) 548-2100 

Counsel to Sonabank 

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CERTIFICATE OF SERVICE

 I hereby certify that on this 15th day of July, 2016, a copy of the foregoing was served 

via first class mail, postage pre-paid, to the Debtor, Debtor’s Attorney and Chapter 7 Trustee, 

and via the ecf system to Debtor’s counsel and the Chapter 7 Trustee. 

/s/ Kevin M. O’Donnell 

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EXHIBIT A 

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EXHIBIT B 

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EXHIBIT C 

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EXHIBIT D 

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