In re General Growth Properties, Inc. , 412 B.R. 609 ( 2009 )

FINAL ORDER PURSUANT TO SECTIONS 105(a), 345(b), 363(b), 363(c) AND 364(a) OF THE BANKRUPTCY CODE AND BANKRUPTCY RULES 6003 AND 6004(A) AUTHORIZING THE DEBTORS TO (I) CONTINUE USING EXISTING CENTRALIZED CASH MANAGEMENT SYSTEM (II) HONOR CERTAIN PREPETITION OBLIGATIONS RELATED TO THE USE OF THE CASH MANAGEMENT SYSTEM, AND (III) MAINTAIN EXISTING BANK ACCOUNTS AND BUSINESS FORMS; (B) GRANTING AN EXTENSION OF TIME TO COMPLY WITH SECTION 345(b) OF THE BANKRUPTCY CODE AND (C) SCHEDULING A FINAL HEARING

ALLAN L. GROPPER, Bankruptcy Judge.

Upon the motion, dated April 16, 2009 (the “Motion ”)¹ of South Street Seaport Limited Partnership, its parent, General Growth Properties, Inc. (“GGP ”), and their debtor affiliates, as debtors and debtors in possession (collectively, “General Growth ” or the “Debtors ”), pursuant to sections 105(a), 345(b), 363(b), 363(c) and 364(a) of the Bankruptcy Code and Bankruptcy Rules 6003 and 6004, for (a) authority to (i) continue to operate the Cash Management System, (ii) honor certain prepetition obligations related to the use of the Cash Management System, (in) maintain existing business forms, and (iv) maintain existing Bank Accounts; (b) extend the time to comply with section 345(b) of the Bankruptcy Code and (c) to schedule a final hearing (the “Final Hearing ”); all as more fully described in the Motion; and the Court having jurisdiction to consider the Motion and grant the requested relief in accordance with 28 U.S.C. §§ 157 and 1334 and the Standing Order M-61 Referring to Bankruptcy Judges for the Southern District of New York Any and All Proceedings Under Title 11, dated July 10, 1984 (Ward, Acting C.J.); and consideration of the Motion being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409; and the Debtors having provided notice of the Motion and Hearing (as defined below) (i) the Office of the United States Trustee for the Southern District of New York (Attn: Greg M. Zipes); (ii) the Securities and Exchange Commission; (iii) the Internal Revenue Service; (iv) EuroHypo AG, New York Branch, administrative agent for the lenders to certain of the Debtors under (a) the Second Amended and Restated Credit Agreement dated as of February 24, 2006 and (b) the Loan Agreement, dated as of July 11, 2008, as amended; (v) Deutsche Bank Trust Company Americas, as administrative agent for the lenders to certain of the Debtors under certain Loan Agreements, dated as of January 2, 2008 and February 29, 2008, respectively; (vi) Goldman Sachs Mortgage Company, as administrative agent for the lenders to certain of the Debtors under the Amended and Restated Credit Agreement, dated as of November 3, 2008; (vii) Wilmington Trust, FSB, as indenture trustee under (a) that certain Indenture, dated as of May 5, 2006, and (b) that certain Indenture, dated as of April 16, 2007; (viii) LaSalle Bank National Association and Wilmington Trust, FSB,² as indenture trustee under that certain Junior Subordinated Indenture, dated as of February 24, 2006; (ix) The Bank of New York Mellon Corporation, as indenture trustee under that certain Indenture, dated as of February 24, 1995; (x) those creditors holding the 100 largest unsecured claims against the Debtors’ estates (on a consolidated basis) and the (xi) the Banks (collectively, the “Notice Parties ”); and the Court having held a hearing to consider the requested final relief on May 8, and May 13, 2009 (the “Hearing ”); and upon the Declarations, the record of the Hearing, and all of the proceedings before the Court, the Court finds and determines that this Court has jurisdiction to consider the merits of the Motion; the requested relief is in the best interests of the Debtors, their estates, creditors, and all parties in interest; the Debtors have provided due and proper notice of the Motion and Hearing and no further notice is necessary; the legal and factual bases set forth in the Motion establish just and sufficient cause to grant the requested relief herein; the relief granted herein is necessary to avoid immediate and irreparable harm to the Debtors and their estates, as provided in Bankruptcy Rule 6003, and therefore it is:

ORDERED that the Motion is granted as provided herein; and it is further

ORDERED that the Debtors are authorized and empowered, pursuant to sections 105(a) and 363(c) of the Bankruptcy Code, to continue to manage their cash pursuant to the Cash Management System maintained by the Debtors prior to the Commencement Date, subject to any changes that may be appropriate or required thereto in connection with an order approving the Debtors’ postpetition fínancing, permitting use of cash collateral and granting adequate protection, and to collect, concentrate, and disburse cash in accordance with the Cash Management System, including intercompany transfers of funds (subject to such changes as to the Cash Management System as may be necessary, from time to time, to address the basic purposes of the Cash Management System); and it is further

ORDERED that the Debtors shall continue to maintain all receipts and disbursements and records of all transfers within the Cash Management System utilized postpetition so that all postpetition transfers and transactions will be properly documented, and accurate intercompany balances will be maintained; and it is further

ORDERED that all Intercompany Claims against a Debtor by another Debt- or or non-debtor affiliate arising after the Commencement Date as a result of inter-company transactions and transfers in the ordinary course of business shall be accorded administrative expense priority status in accordance with sections 503(b) and 507(a)(2) of the Bankruptcy Code; provided, however that any such administrative expense claims shall rank junior in priority of payment to the superpriority administrative expense claims granted to any prospective postpetition lender to the Debtors on account of such postpetition financing; and it is further

ORDERED that the Debtors are authorized to: (i) designate, maintain and continue to use any or all of their existing Bank Accounts including those listed on Exhibit 1, hereof, in the names and with the account numbers existing immediately prior to the Commencement Date (which Exhibit 1 shall be promptly amended to identify any Bank Accounts inadvertently omitted therefrom and which Exhibit 1, as so amended, shall be served within two (2) business days therefrom on the U.S. Trustee and the statutory committee of creditors (if and when appointed)), (ii) deposit funds in and withdraw funds from such accounts by all usual means including, without limitation, checks, drafts, wire transfers, automated clearinghouse transfers {“ACH Transfers ”) and other debits, (iii) pay any bank fees or charges associated with the Bank Accounts, and (iv) treat their prepetition Bank Accounts for all purposes as debtors in possession accounts; and it is further

ORDERED that except as otherwise provided in this Order, all Banks are authorized and directed to continue to maintain, service, and administer such Bank Accounts as accounts of the Debtors as debtors-in-possession without interruption and in the usual and ordinary course, and to receive, process, honor and pay any and all checks, drafts, wire transfers, ACH Transfers or other debits drawn on any of the Bank Accounts after the Commencement Date by the holders or makers thereof, to the extent funds are available as the case may be; and it is further

ORDERED that, unless otherwise specifically agreed to by the relevant Bank, the Debtors are authorized and hereby direct each such Bank to stop payment on, and each such Bank is directed not to honor, any and all checks, drafts, wires or ACH Transfers drawn or issued before the Commencement Date, but presented on or after the Commencement Date, except for payroll checks (the “Payroll Checks ”) drawn on the payroll accounts set forth on Exhibit 1, hereof (the “Payroll Accounts ”), which shall not be subject to a stop payment or be dishonored, provided, however, that the Debtors, to the extent necessary to comply with any order(s) of this Court authorizing payment of certain prepetition claims, shall re-issue after the Commencement Date any checks, drafts, wire transfers, ACH Transfers or other debits issued before the Commencement Date and which are subject to a stop payment and/or have been dishonored, and provided, further, that each such Bank shall pay postpetition amounts equal to the Payroll Checks to the payees or endorsees of such checks by wire transfer or bank check, including any such check, draft, wire transfer, ACH Transfer or other debit relating to Payroll Accounts that had been dishonored or had a payment stop before the Commencement Date but the Debtors have indicated their intention to such Bank that the check, draft, wire transfer, ACH Transfer or other debit shall be honored and paid. The Debtors shall provide each Bank with the final prepetition check number for checks issued prepetition on all disbursement Bank Accounts (other than the Payroll Accounts) and the check number beginning a new check sequence for use postpetition for the applicable Bank Account, such new check sequence to begin with a number that is at least fifty (50) numbers higher than the last check issued from such account prepetition; and it is further

ORDERED that the Debtors are in compliance with section 345(b) of the Bankruptcy Code with respect to the Bank Accounts currently insured or guaranteed by the United States or by a department, agency, or instrumentality of the United States; and it is further

ORDERED that with respect to other Bank Accounts that are currently insured or guaranteed by the United States or by a department, agency, or instrumentality of the United States, the Debtors shall have until May 27, 2009 (or such additional time as the U.S. Trustee may agree, without the necessity for further order of the Court) from the date of the entry of this Order to either come into compliance with section 345(b) of the Bankruptcy Code or to make such other arrangements as agreed with the U.S. Trustee; and it is further

ORDERED that nothing contained herein shall prevent the Debtors from opening any additional bank accounts, or closing any existing Bank Account(s) as they may deem necessary and appropriate, and the Banks are authorized to honor the Debtors’ requests to open or close, as the case may be, such Bank Accounts or additional bank accounts; provided, however, that any new account shall be with (a) a bank that is insured with the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation and organized under the laws of the United States and (b) any other bank, as the Debtors may determine, upon consultation with the U.S. Trustee; provided, further, that any and all accounts opened by any of the Debtors on or after the Commencement Date at any bank shall, for purposes of this Order, be deemed a Bank Account (as if it had been opened prior to the Commencement Date and listed on Exhibit 1), hereof; and it is further

ORDERED that, nunc pro tunc to the Commencement Date, to the extent any Bank Account on the Commencement Date was subject to a deposit account or securities account control agreement (a “Control Agreement”) between a Bank, a Debtor and a third party lender or agent (a “Secured Party ”) and such Secured Party had delivered notice to a Bank or otherwise obtained control over a Bank Account (or a Secured Party in the future attempts to exercise control over a Bank Account), such Bank is hereby authorized and directed, in accordance with this Order, to disregard the directions provided by such Secured Party, including without limitation pursuant to a Control Agreement, and to follow without any investigation all directions from the applicable Debtor regarding such Bank Account; provided, however, that this paragraph does not independently confer any rights on the Debtors to issue instructions to use a Secured Party’s cash collateral and any use of cash collateral by the Debtor shall be subject to separate order, including without limitation, the Final Cash Collateral Order; and it is further

ORDERED that to the extent a Debtor had provided a Bank with standing instructions regarding any Bank Account prior to the Commencement Date, each such Bank shall continue to honor such standing instructions until otherwise directed by the applicable Debtor; and it is further

ORDERED that notwithstanding anything else contained in this Order, all rights of U.S. Bank National Association (“U.S. Bank ”), if any, to (i) assert cash collateral rights against funds on deposit in Bank Accounts maintained at U.S. Bank on the Commencement Date, (ii) to demand adequate protection before use of such cash collateral or (iii) seek relief from the automatic stay to effectuate a setoff against such Bank Accounts are preserved; provided, however, that the Debtors’ rights to object to such relief are expressly preserved; and it is further

ORDERED that, until this Court orders otherwise, to preserve U.S. Bank’s asserted setoff rights, (i) U.S. Bank is entitled to refuse to make disbursements from the Main Operating Account that would result in the balance in such Bank Account falling below $1,717,336.18, the amount in such Bank Account as of the Petition Date (provided, however, U.S. Bank assumes all the risk that its setoff rights may be impaired if it allows the balance in the Main Operating Account to fall below $1,717,336.18), and (ii) any lien granted to a DIP lender or any other party shall be subordinated to U.S. Bank’s asserted claim to $1,717,336.18 in the Main Operating Account; provided, however, that (a) the rights of any parties in interest to object to U.S. Bank’s asserted setoff rights, its claims, and the forms of relief noted herein are expressly preserved and (b) the Debtors’ rights, generally, with respect to the Bank Accounts maintained at U.S. Bank are expressly preserved; and it is further

ORDERED that the Debtors are authorized to continue to use their existing Business Forms, including, but not limited to, purchase orders, letterhead, envelopes, promotional materials, invoices and other business forms substantially in the forms existing immediately prior to the Commencement Date, provided, however, as soon as practicable, from and after the Commencement Date, (i) the Debtors shall mark the full name of the relevant debtor in possession exactly as it appears on the voluntary petition as well as the term “Debtor in Possession” and the case number under which these cases are being jointly administered on their check stock and wire transfer instructions and (ii) the Debtors shall mark the term “Debtor-In-Possession” on the signature blocks of their centrally maintained contracts and purchase orders (excluding, however, letterhead, promotional materials and other Business Forms); and it is further

ORDERED that, pursuant to section 364(a) of the Bankruptcy Code, the Debtors are authorized in connection with the ordinary course of their Cash Management System to obtain unsecured credit and incur unsecured debt in the ordinary course of business without notice and a hearing; and it is further

ORDERED that the Debtors are authorized, but not directed, to pay prepetition amounts outstanding as of the Commencement Date, if any, owed to the Banks as Service Charges for the maintenance of the Cash Management System; and it is further

ORDERED that any obligations, chargebacks, returns, liabilities, costs, charges, fees or expenses incurred by the Banks that result from ordinary course transactions (prepetition and postpetition) under the Debtors’ Cash Management System (the “Banks’ Cash Management Expenses ”) shall be paid by the Debtors and shall be accorded superpriority status, with priority over any and all administrative expenses of the kind specified in sections 503(b) and 507(b) of the Bankruptcy Code; provided that the Banks’ Cash Management Expenses shall rank junior in priority to any superpriority administrative expense claims granted to any lender or lender on account of postpetition financing that may be extended to the Debtors by such lender or lenders; and it is further;

ORDERED that any Bank is authorized to charge back, offset, expense or deduct from any of the Debtors’ Bank Accounts maintained at such Bank (i) the Service Charges incurred by it resulting from the Banks’ Cash Management Expenses, returned checks or other returned items, including, but not limited to, dishonored checks, wire transfers, drafts, ACH Transfers or other debits, regardless of whether such amounts were deposited prepetition and regardless of whether the returned items relate to prepetition or postpetition items, and that solely the normal Service Charges may be assessed and deducted by such Banks from funds held in the Bank Accounts at such Banks with respect to the Cash Management System in the ordinary course of business as well as any other Cash Management Expenses and (ii) the Permitted Debits (provided, however, that if a Bank is unable to set off or charge Permitted Debits against such Bank Account, the Debtors shall promptly upon demand, reimburse such Bank in an amount equal to the amount of the Permitted Debits), and for these purposes any restrictions under the automatic stay provisions of section 362 of the Bankruptcy Code are modified; provided, however, that the automatic stay shall remain in full force and effect for all other purposes, including, but not limiting, any setoff rights (other than with respect to the Service Charges or the Permitted Debits) a Bank may have, and it is further

ORDERED that the Banks are authorized and directed to accept and honor and may rely without any investigation on all representations from the Debtors as to which checks, drafts, wire transfers, ACH Transfers or other debits should be honored or dishonored consistent with any order(s) of this Court, whether the checks, drafts, wire transfers, ACH Transfers or other debits are dated prior to, or on or subsequent to the Commencement Date, and whether or such Bank believes the payment is or is not authorized by any order(s) of the Court, provided, however, should any Bank honor a prepetition check, draft, wire transfer, ACH Transfer or other debit drawn on a Bank Account (a) at the direction of any of the Debtors to honor such prepetition check or item, (b) in a good faith belief that the Court has authorized such prepetition item to be honored, (c) as a result of an innocent mistake made despite the implementation of customary item handling procedures or (d) consistent with its past practices under the Cash Management System, such Bank shall not be deemed to be, nor shall be liable to, the Debtors or their estates or otherwise in violation of this Order; and it is further

ORDERED that the Banks shall have no liability for any operational processing errors that are the result of human error; and it is further

ORDERED that the Debtors shall be permitted to invest excess cash, as they may determine in their business judgment, in any money market fund or funds (collectively, the “Investment Funds ”) that invest at least 75% of such Investment Funds’ assets in U.S. Treasuries (the “Investment Guidelines ”); and it is further

ORDERED that the Investment Guidelines and the Investment Funds shall be deemed to be in compliance with section 345 of the Bankruptcy Code, and the Debtors are relieved from the obligations of section 345(b) of the Bankruptcy Code to obtain a bond from any entity with which money is deposited or invested in accordance with the Investment Guidelines; and it is further

ORDERED that the Investment Guidelines may be amended by order of the Court from time to time upon motion by the Debtors; and it is further

ORDERED that to the extent any of the contracts related to the Cash Management System are deemed to be executory contracts, nothing in this Order shall be deemed an assumption of any such contracts pursuant to section 365 of the Bankruptcy Code; and it is further

ORDERED that Bankruptcy Rule 6003 quested in the Motion is necessary to avoid immediate and irreparable harm to the

ORDERED that notice of the Motion as provided therein constitutes good and sufficient notice of such Motion and the requirements of Bankruptcy Rule 6004(a) are hereby waived; and it is further

ORDERED that notwithstanding any applicability of Bankruptcy Rule 6004(h), the terms and conditions of this Order are immediately effective and enforceable upon entry of the Order; and it is further

ORDERED that the Debtors shall serve a copy of this order within three (3) business days after its entry to the Notice Parties; and it is further

ORDERED that this Court hereby retains jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation and/or enforcement of this Order.

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1 . Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Motion.

2 . Wilmington Trust, FSB recently entered into an agreement pursuant to which it will assume the indenture trustee assignments of LaSalle Bank National Association. As of the Commencement Date, the trustee assignment with respect to this indenture has not yet been txansferred to Wilmington Trust, FSB; however, Wilmington Trust, FSB will succeed LaSalle Bank National Association as indenture trustee for this series of notes upon the transfer of the trustee assignment.