Rule 4001-3 Obtaining Credit.

(a)     Credit Agreement.  Each motion for authority to obtain credit must be accompanied by the proposed credit agreement.

(b)     Proposed Notice and Order.  A motion seeking authority to obtain credit must be accompanied by a proposed notice setting an objection date and a hearing date. Unless filed electronically through the ECF system, the clerk will return to the movant an updated mailing matrix to be used by the movant for the purpose of service.

(c)     Required Disclosure of Certain Provisions of Financing Motion, Order, or Stipulation - Chapter 9 or Chapter 11 Cases.  All motions seeking authorization to use cash collateral and all motions for authority to obtain credit - collectively, the "Financing Motions" - must:

          (1)     recite whether the proposed form of order, underlying cash collateral stipulation, or loan agreement contains any provision of the type indicated below;

          (2)     identify the location of any such provision in the proposed form of order, cash collateral stipulation, or loan agreement; and

          (3)     state the justification for the inclusion of such provision:

                    (A)     Provisions that grant cross-collateralization protection - other than replacement liens or other adequate protection - to the prepetition secured creditor (i.e., clauses that secure prepetition debt by postpetition assets in which the secured creditor would not otherwise have a security interest by virtue of its prepetition security agreement or applicable law).

                    (B)     Provisions or findings of fact that bind the estate or parties in interest with respect to validity, perfection, priority, or amount of the secured creditor’s prepetition lien or debt or the waiver of claims against the secured creditor without first giving parties in interest at least seventy-five (75) days from the entry of the order for relief and the creditors’ committee, if formed, at least sixty (60) days from the date of its formation to investigate such matters.

                    (C)     Provisions that seek to waive any rights the estate may have under 11 U.S.C. § 506(c).

                    (D)     Provisions that grant to the prepetition secured creditor liens on the debtor’s claims and causes of action arising under 11 U.S.C. §§ 544, 545, 547, 548, and 549.

                    (E)     Provisions that deem prepetition secured debt to be postpetition debt or that use postpetition loans from a prepetition secured creditor to pay part or all of that secured creditor’s prepetition debt, other than as provided under 11 U.S.C. § 552(b).

                    (F)     Provisions that provide treatment for the professionals retained by a committee appointed by the United States trustee different from that provided for the professionals retained by the debtor with respect to a professional fee carveout, and provisions that limit the committee counsel’s use of the carveout.

                    (G)    Provisions that prime any secured lien without the consent of the lienholder.

                    (H)    Provisions that release the secured creditor from lender liability.

                    (I)      Provisions that grant the lender expedited relief from the automatic stay under 11 U.S.C. § 362 or relief from the automatic stay without further order of court.

(d)     Summary of Essential Terms.  Any Financing Motion must provide a summary of the essential terms of the proposed use of cash collateral or financing, including:

          (1)     the amount to be borrowed or advanced on both an interim and final basis;

          (2)     the terms of repayment;

          (3)     the interest rate;

          (4)     the description of any collateral;

          (5)     events of default; and

          (6)     limitations on the use of funds.

(e)     Budget.  Any Financing Motion must include a budget covering the time period during which the proposed financing will remain in effect. The budget must state in as much detail as is reasonably practical the amount of the projected receipts and disbursements during the period covered by the budget.

(f)     Interim Relief.  If a Financing Motion is filed with the court on or shortly after the date of the order for relief, the court may grant interim relief pending review by parties in interest of the proposed debtor in possession financing arrangements. Interim relief will be granted only to avoid immediate and irreparable harm to the estate pending a final hearing. In the absence of extraordinary circumstances, the court will not approve interim financing orders that include any of the provisions previously identified under L.B.R. 4001-3(c)(3).

(g)     Final Approval of Financing Motion.  A final order may be entered only after notice and hearing under F.R.B.P. 4001. If formation of a creditors’ committee is anticipated, a final hearing may not be held until at least fourteen (14) days following the organizational meeting of the creditors’ committee contemplated by 11 U.S.C. § 1102 unless the court, upon motion, orders otherwise.

COMMENTS: L.B.R. 4001-3 was amended effective December 1, 2009 to limit the detailed disclosures concerning motions seeking authority to use cash collateral or obtain credit to cases filed under Chapters 9 or 11.

Part: 
Part IV - The Debtor: Duties and Benefits