48600445;2 

UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

Fort Lauderdale Division 

www.flsb.uscourts.gov

In re: Chapter 11

ADVANCE CASE PARTS, INC., Case No. 19-14930-RBR 

Debtor. 

/ 

DECLARATION OF PAUL PODHURST IN SUPPORT OF 

THE DEBTOR’S CHAPTER 11 PETITION AND FIRST DAY MOTIONS 

I hereby declare that the following is true to the best of my knowledge, information, and 

belief: 

I. INTRODUCTION 

1. My name is Paul Podhurst. I am over the age of 18 and am competent to testify. I 

am the President and CEO of Advance Case Parts, Inc. (the “Debtor”). 

2. To minimize any adverse effects on the Debtor's business as a result of the 

commencement of this Chapter 11 case, the Debtor intends to request various types of relief in 

certain “first day” applications and motions (collectively, the “First Day Motions”). The First 

Day Motions seek relief and are designed to, among other things: (a) continue the Debtor's 

operations while in Chapter 11 with as little disruption as possible; (b) allow the Debtor to 

continue serving its valued customers and operate its business pending a restructuring of the 

Debtor's debt; and (c) establish procedures for the smooth and efficient administration of this 

case. The relief requested in the First Day Motions will be crucial to the success of the Debtor's 

efforts to facilitate an orderly reorganization to be effectuated through the contemplated 

restructuring of the Debtor's debts. 

3. I submit this declaration (the “Declaration”) in support of the Debtor's Chapter 11 

voluntary petitions and the First Day Motions. As the President and CEO of the Debtor, I have 

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personal knowledge of the Debtor's books and records, and the Debtor's financial and operational 

affairs. Except as otherwise indicated, all statements in this Declaration are based upon my 

personal knowledge, my review of the Debtor's books and records, relevant documents and other 

information prepared or collected by the Debtor's employees or advisors. In making the 

statements herein based upon my review of the Debtor's books and records, relevant documents 

and other information prepared or collected by the Debtor's employees, I have relied upon these 

employees to accurately record, prepare and collect any such documentation and other 

information. 

4. If I were called to testify as a witness in this matter, I could and would 

competently testify to each of the facts set forth herein based upon my personal knowledge, 

review of documents, or my personal opinion, except as otherwise noted. I am authorized to 

submit this Declaration on behalf of the Debtor. 

II. BACKGROUND 

A. The Chapter 11 Filing. 

5. On April 16, 2019 (the “Petition Date”), the Debtor filed voluntary petition in this 

Court for relief under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). 

6. As of the date hereof, no official creditors committee has been appointed in this 

case. In addition, no trustee or examiner has been appointed. 

7. The Debtor is operating its business and managing its affairs as a debtor in 

possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 

B. Overview of the Debtor's Corporate Structure. 

8. The Debtor is a subchapter s corporation organized under the laws of the State of 

Florida. 

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9. The Debtor has two officers: (i) myself, Paul Podhurst, President; and (ii) George 

E. Hude, Jr., Treasurer. 

10. I own 57.28% of the outstanding shares in the Debtor and George E. Hude, Jr. 

owns the remaining 42.72%.

C. Description of Debtor Business and Reason for Filing Chapter 11.

11. The Debtor specializes in providing products and services for the supermarket and 

food industries, including replacement parts for refrigeration units, refrigeration case units, and 

oven units in commercial businesses. The Debtor's operations are located at 12489 NW 44th

Street, Coral Springs, Florida 33065, and it employs 36 employees. The Debtor also employs a 

service provider in Richmond, Virginia to service certain of its customers located in the 

Richmond area.

12. The Debtor is filing this chapter 11 petition in order to preserve the going concern 

value of the Debtor's assets and operations, maximize the Debtor's value for the benefit of the 

Debtor's creditors, reject contractual agreements and unexpired leases no longer necessary to the 

operations of the Debtor's business, and surrender certain collateral that is burdensome to the 

Debtor's operations. 

D. Historical Financial Performance. 

13. The Debtor's 2019 year to date gross income is approximately $1,275,000; the 

Debtor's gross income for 2018 was $5,639,386; and for 2017 the Debtor's gross income was 

$5,203,982.00. 

III. DEBTOR'S PRE-PETITION FINANCING 

14. Prior to the Petition Date the Debtor and CDS Business Services, Inc. d/b/a 

Newtek Business Credit (the “Lender”) were parties to an Accounts Receivable Administration 

Agreement dated February, 2016 and an Inventory Advance Agreement secured by a UCC-1 

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Finance Statement recorded as Instrument No. 201606526500 in the Florida Secured Transaction 

Registry on February 17, 2016 (hereinafter, together with all amendments thereto and 

modifications thereof, the “Pre-Petition Factor Agreements”). As of the date of this Motion, the 

amount owing to the Lender under the Pre-Petition Factor Agreements is approximately 

$1,117,119.26 (the “Factor Secured Debt”). 

15. Pursuant to the Pre-Petition Factor Agreements, the Debtor receives from Lender 

80% of each account receivable sold to Lender on the date the A/R is transferred to Lender and 

receives the remaining 20% of each A/R sold to Lender at the time the A/R is collected by the 

Lender. The Debtor is obligated to make the following payments to Lender pursuant to the PrePetition Factor Agreements: (i) monthly interest payments to Lender under the Pre-Petition 

Factor Agreements in the amount of 3.5% above the Prime Rate; (ii) processing fees equal to 

$.35 for each transfer to Lender from Debtor's account debtors; (iii) statement fees equal to $.85 

per statement issued by Lender to Debtor's account debtors, plus any cost of first class postage; 

and (iv) a collateral monitoring fee equal to 0.45% of the outstanding advanced to Debtor in the 

calendar month preceding the month for which the monitoring fee is calculated (the “Factor 

Obligations”). 

16. In the one-year period preceding the commencement of this case, the Factor 

Obligations have averaged approximately $17,500 per month. 

17. Prior to execution of the Pre-Petition Factor Agreements, the Debtor and Debtor's 

affiliate, Advance Case Parts RE Holdings, LLC (“ACP Real Estate”), were co-obligors on a 

Small Business Administration loan with Newtek Small Business Finance, LLC (the “SBA 

Lender”)1 for a principal balance of $3,033,000.00 secured by a first position lien on all assets of 

1

 Lender and SBA Lender are affiliated entities that are independently operated. 

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the Debtor and ACP Real Estate (the “SBA Loan”). The SBA Loan was used by the Debtor and 

ACP Real Estate to inter alia: (i) allow ACP Real Estate to acquire commercial real property that 

the Debtor currently leases from ACP Real Estate for its operations; (ii) payoff certain existing 

secured indebtedness by Debtor and ACP Real Estate; and (iii) provide Debtor with additional 

operating capital. The amount owing to the SBA Lender under the SBA Loan is approximately 

$3,036,872.71 (the “SBA Secured Debt”). 

18. Prior to the commencement of this case, the Lender and SBA Lender executed 

two intercreditor agreements wherein the SBA Lender subordinated its first position lien in favor 

of Lender as to Debtor's inventory, accounts, and any proceeds derived from any inventory or 

accounts (the “Intercreditor Agreements”). As security for the payment of all Factor 

Obligations, the Debtor granted to Lender pursuant to the Pre-Petition Factor Agreements and 

the Intercreditor Agreements documents (collectively, the “Pre-Petition Loan Documents”), 

security interests in and liens (collectively, the “Pre-Petition Liens”) upon all assets of the 

Debtor, including, without limitation, all of Debtor's accounts, inventory, deposits, and any 

proceeds of the aforementioned collateral (all such personal property, as the same existed on the 

Petition Date, together with all cash and non-cash proceeds thereof, the “Pre-Petition 

Collateral”). 

19. As of the Petition Date, the Debtor estimates that the Pre-Petition Collateral 

consists of approximately: (i) $55,000 currently on deposit in the Debtor's operating and 

checking accounts; (ii) $560,000 of accounts receivable that are less than 90 days old; and (iii) 

$550,000 in existing inventory. 

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IV. FIRST-DAY MOTIONS AND NECESSITY FOR EMERGENCY HEARINGS2

20. As President and CEO of the Debtor, I am generally familiar with the contents of 

each First Day Motions (including the exhibits thereto) described in further detail herein. Based 

upon that general familiarity and the information provided to me by other members of the 

Debtor's management team and my colleagues who report to me or provide information to me in 

the ordinary course of the Debtor's business, I believe that the relief sought in each First Day 

Motions is necessary to: (a) enable the Debtor to operate in Chapter 11 with minimal disruption 

or loss of productivity and value; (b) allow the Debtor to continue serving its valued customers 

and operating its business pending a restructuring of its debt; and (c) prevent immediate and 

irreparable harm to the Debtor's businesses as a whole. Concurrently herewith, the Debtor has 

filed or will be filing the following First Day Motions for which the Debtor requests that the 

Court conduct a hearing as soon as possible after the commencement of the Debtor's bankruptcy 

case (the “First Day Hearing”): 

i. Debtor's Emergency Application For Approval, on an Interim and Final Basis, of 

Employment of Eyal Berger and the Law Firm of Akerman LLP as General 

Bankruptcy Counsel for the Debtor-In-Possession Nunc Pro Tunc to the Petition 

Date; 

ii. Debtor's Emergency Motion For Agreed Motion for Order Authorizing the Debtor 

to Use Cash Collateral, Factor Accounts, and Provide Adequate Protection; 

iii. Debtor's Emergency Motion for Entry of an Order: (I) Authorizing the Payment 

of Priority Pre-Petition Wages, Salaries, and Employee Benefits; and (II) 

Authorizing the Debtor to Continue the Maintenance of Employee Practices amd 

Benefit Plans and Programs in the Ordinary Course of Business; 

iv. Debtor's Emergency Motion For the Entry of an Interim and Final Orders 

Authorizing the Debtor to Pay Critical Vendor Claims in the Ordinary Course of 

Business. 

2 Any capitalized terms not otherwise herein defined are ascribed the same meaning as in each respective 

First Day Motion. 

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21. I have reviewed each of the First Day Motions, including the exhibits thereto, and 

I believe that the relief sought in each of the First Day Motions is narrowly tailored to meet the 

goals described above and, ultimately, will be critical and necessary to the Debtor's ability to 

maximize the value of its assets for its creditors and shareholders. 

22. The Debtor will provide notice to all motions presented to the Court for 

consideration as First Day Motions on all parties identified on the master service list. 

A. Debtor's Emergency Application for Approval, on An Interim and Final Basis, of 

Employment of Eyal Berger and the Law Firm of Akerman LLP as General 

Bankruptcy Counsel for the Debtor-In-Possession Nunc Pro Tunc to the Petition Date. 

23. The Debtor seeks authority to retain, on an interim and final basis, Eyal Berger, 

Esq. (“Mr. Berger”) and the law firm of Akerman LLP (“Akerman”) as general bankruptcy 

counsel nunc pro tunc to the Petition Date. The Debtor understands that Mr. Berger and 

Akerman have extensive experience representing Chapter 11 debtors in this district (and others 

across the country), and that they are well-qualified to serve as general bankruptcy counsel to the 

Debtor. The Debtor believes it is in the Debtor's best interests, and those of its creditors, that Mr. 

Berger and Akerman be retained to serve as Debtor's general bankruptcy counsel in its Chapter 

11 case. 

24. To the best of the Debtor's knowledge, except as disclosed in the Declaration of 

Eyal Berger, on behalf of Akerman LLP, as proposed counsel for the Debtor, neither Mr. Berger 

nor Akerman has any connection with the Debtor's creditors or other parties in interest or their 

respective attorneys. 

25. I am aware that corporations may not appear in a Florida or Federal court within 

Florida pro se, and that only a licensed attorney may appear on their behalf. Because there is a 

myriad of relief that must be sought from the Court immediately, the Debtor will suffer 

immediate and irreparable harm if it is unable to obtain the services of counsel before a final 

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hearing on the Application for approval of counsel's employment can be convened. For 

example, the Debtor requires the Court's approval of an agreement for the use of cash collateral. 

Without the use of cash, the Debtor will be unable to operate its business and maximize the value 

of its assets for the benefit of its estate. It is, therefore, my belief that only with the granting of 

interim approval of counsel's employment will such immediate and irreparable injury be avoided. 

In that regard, counsel advises that this relief has been granted in other Chapter 11 cases in this 

District. Accordingly, in the exercise of my business judgment, it is in the best interests of the 

Debtor, its estate and creditors to retain Akerman as its counsel. 

B. Debtor's Emergency Motion For Agreed Motion for Order Authorizing the Debtor 

to Use Cash Collateral, Factor Accounts, and Provide Adequate Protection. 

26. The Debtor seeks authorization to consensually use the cash collateral of Lender 

pursuant to a 13 week cash collateral budget consensually negotiated with Lender prior to the 

commencement of this case. 

27. In connection with the Debtor's proposed use of Cash Collateral hereunder and in 

order to provide the Lender with adequate protection for the aggregate diminution of the Cash 

Collateral resulting from the Debtor's use thereof, the Debtor has agreed, subject to approval of 

this Court, that the Lender, shall have, nunc pro tunc as of the commencement of this Chapter 11 

case, a replacement liens pursuant to section 361(2) of the bankruptcy code on and in all property 

of the Debtor acquired or generated after the Petition Date, but solely to the same extent and 

priority, and of the same kind and nature, as the property of the Debtor securing the prepetition 

obligations to the Lender under the Pre-Petition Loan Documents. In addition, the Debtor has 

consented to the payment of $17,500 in monthly adequate protection payments to the Lender that 

equate to the average contractual interest and other charges the Debtor was paying Lender under 

the Pre-Petition Loan Documents. 

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28. In the event that diminution occurs in the value of Cash Collateral from and after 

the Petition Date as a result of the Debtor’s use thereof in an amount in excess of the value of the 

replacement liens granted herein, the Debtor has also agreed to provide the Lender the right to 

assert an administrative claim under section 507(b) of the Bankruptcy Code with priority over all 

other administrative expense claims, subject to the Debtor's obligations to pay: (i) fees to the 

Office of the Untied States Trustee, (ii) the Clerk of Court; and (iii) allowed fees of Akerman, 

LLP not to exceed $65,000. 

29. The Debtor proposes to use the Cash Collateral strictly in accordance with the 

terms of that certain Budget prepared by the Debtor. The Budget covers the period from the 

Petition Date through July 12, 2019. The Debtor also requests that it be authorized: (i) to exceed 

any line item on the Budget by an amount equal to ten percent (10%) of each such line item; or 

(ii) to exceed any line item by more than ten percent (10%) so long as the total of all amounts in 

excess of all line items for the Budget do not exceed ten percent (10%) in the aggregate of the 

total Budget. 

30. Supplemental to the replacement liens provided to the Lender, the Debtor will 

furnish the Lender with such financial and other information as required by the Pre-Petition Loan 

Documents or other reports as the Lender reasonably requests. 

31. The Debtor needs the use of cash collateral immediately to continue operating and 

in order to, among other things, pay wages and other direct operating expenses, and generally 

conduct the Debtor’s business affairs so as to avoid immediate and irreparable harm to the estate 

and the value of its assets. Without access to this working capital, the Debtor will be forced to 

halt operations, causing irreparable harm to the Debtor's enterprise and its creditors. The 

proposed use of cash collateral, therefore, is essential to sustain the Debtor during this Chapter 

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11 case and to prevent irreparable harm to the Debtor's estate. The Budget provides adequate 

funds to pay anticipated administrative expenses during the pendency of this Chapter 11 case. 

32. The proposed use of cash collateral is necessary, essential and appropriate for the 

continued operation of the Debtor's business, and the preservation of the assets of the estate. 

Given the circumstances of this case and of the Debtor, the terms of the use of cash collateral are 

fair, reasonable and adequate, and in the best interest of the Debtor's estate. The use of cash 

collateral provides the Debtor with working capital pursuant to the Budget, pending approval of 

the use of cash collateral on a permanent basis at the Final Hearing. The Debtor and I submit 

that granting of the relief sought is necessary and appropriate and in the best interests of the 

Debtor, its creditors, its shareholders and its customers. 

C. Debtor's Emergency Motion for Entry of an Order: (I) Authorizing the Payment of 

Priority Pre-Petition Wages, Salaries, and Employee Benefits; and (II) Authorizing 

the Debtor to Continue the Maintenance of Employee Practices amd Benefit Plans 

and Programs in the Ordinary Course of Business. 

33. The Debtor is requesting the entry of an order authorizing the Debtor to (a) pay 

various pre-petition wages, salaries, commissions and employee benefits of the Debtor's 

employees, and (b) continue the Debtor's various pre-petition Employee practices, benefit plans 

and programs provided by the Debtor in the ordinary course of its business. 

34. As of the Petition Date, the Debtor employed approximately thirty-four (34) full 

and part time employees, including management, service technicians, and administrative support 

staff. The Debtor, through CoAdvantage, a professional employer organization, pays its 

employees every other week with its next payroll set to be paid on Friday, April 26, 2019. The 

payroll for the employees to be distributed on April 26, 2019 is for the pay period ending April 

19, 2019, which will include six (6) days of pre-petition employee obligations, from April 8, 

2019 through and including April 15, 2019. The total amount of gross wages due to be paid to 

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CoAdavantage for the pre-petition payroll is approximately $40,323.58 The Debtor also pay its 

payroll taxes each payroll cycle through CoAdvantage and Debtor was current on the Petition 

Date. 

35. As part of the foregoing relief, the Debtor also seeks authorization to pay all 

federal and state withholding and payroll-related taxes relating to pre-petition periods including, 

but not limited to, all withholding taxes, Social Security taxes, and Medicare taxes, as well as all 

other withholdings such as life insurance and other employee deductions, if any. With additional 

withholding obligations, the total amount due to be paid to CoAdavantage for the pre-petition 

payroll is approximately $46,863.13. 

36. The Debtor has established various employee benefit plans and policies for the 

benefit of its employees which include medical, and life insurance, vacation pay, personal time 

off and other similar benefits (collectively, the “Employee Benefits”). The Debtor provides its 

health and life insurance directly to employees through deductions in payroll paid to Intuit on the 

Employees' behalf. 

37. All regular, full-time hourly Employees are eligible to accrue paid sick and 

personal days. The Debtor seeks authority to honor in the ordinary course of business all 

liabilities to its Employees that arose under its vacation and personal day policies prior to the 

Petition Date. The Debtor anticipates that its Employees may utilize any accrued vacation time 

or personal days in the ordinary course of business without resulting in any material cash flow 

requirements beyond the Debtor's normal payroll obligations. Any accrued vacation lapses at the 

end of each calendar year. 

38. I believe that the relief requested in the Employee Motion will enable the Debtor 

to maintain its current operations without interruption, thereby preserving the value of the 

business, and, at the same time, maintain employee morale. Without the relief requested, the 

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Debtor's ability to represent and protect its clients, preserve the Debtor's going concern value and 

maximize the value of its assets for all creditors of its estate will be adversely affected if the 

Debtor is unable to retain its dedicated and loyal Employees. 

E. Debtor's Emergency Motion for Authority to Pay Pre-Petition Obligations to the 

Debtor's Critical Vendors. 

39. In connection with the operation of the Debtor’s business, the Debtor uses Parts 

Town LLC (“Parts Town”) and Giles Food Service Equipment (“Giles” and collectively, with 

Parts Town, the “Critical Vendors”). 

40. Parts Town provides the following parts to the Debtor that are distributes OEM 

restaurant and foodservice parts for commercial kitchens in the United States. Parts Town offers 

replacement parts and accessories related to commercial beverage equipment, broilers, fryers, 

griddles, holding units, ice machines, pasta cookers, ranges, refrigeration equipment, steamers, 

toasters, and warmers. The Debtor purchases approximately 70% of its inventory from Parts 

Town at competative and already established rates. 

41. Giles produces a wide variety of commercial equipment, including fryers, 

ventilation hoods, merchandisers, and prep tables. The Debtor's largest customer, Publix 

Supermarket, utilizes Giles' equipment in its stores. The Debtor purchases inventory from Giles 

at a preferred rate in order to service Publix's equipment as required. 

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42. The Debtor currently owes $18,447.25 in prepetition debt to Giles and $76,405 in 

prepetition debt to Parts Town. The Debtor seeks authorization to pay $12,500 per week to the 

Critical Vendors (the “Critical Vendor Payment”). The Critical Vendor Payment shall be shared 

on a pro rata basis by and between the Critical Vendors, until such time as both the Parts Town 

Critical Vendor Claim and the Giles Critical Vendor Claim have been paid in full. 

43. The Critical Vendors have both informed me that they will not supply the Debtor 

with continued inventory in the event the Debtor does not repay the pre-petition obligations. 

44. Both Critical Vendors supply the parts necessary for the Debtor to use in 

servicing its customer contracts and there is no comparable replacement in the marketplace. 

45. Any interruption of shipments from the Critical Vendors, even if briefly, would 

disrupt the Debtor’s ability to continue with its business operations and service its customers, 

including one of its most important customers, Publix, thereby negatively impacting customer 

relationships, revenues and profits. Therefore, it is critical that Critical Vendors continue to 

supply the Debtor uninterrupted during this Chapter 11 case. 

V. DEBTOR'S OBJECTIVES IN THIS CASE 

46. The primary purposes of the filing of this Chapter 11 Case is to, among other 

things: (a) continue the Debtor's operations while in Chapter 11 with as little disruption as 

possible; (b) allow the Debtor to continue serving its valued customers and operate its business 

pending a restructuring of its debt, and (c) establish procedures for the smooth and efficient 

administration of this case. Through the motions described above and other motions and 

applications the Debtor may file later, the Debtor hopes to minimize any adverse effects that this 

Chapter 11 case might otherwise have on its business and its customers. For all of these reasons, 

I respectfully request that this Court grant the relief requested in each of the First Day Motions 

filed concurrently herewith. 

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