UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re Chapter 11 BACK YARD BURGERS, INC., et al. Debtors. (Joint Administration Pending)
MOTION OF THE DEBTORS FOR AN ORDER: (I) APPROVING P ACA PROCEDURES; (II) AUTHORIZING THE DEBTORS TO PAY ALLOWED PACA CLAIMS; AND (III) GRANTING RELATED RELIEF
1

Case No. 12-12882 (PJW)

The above-captioned debtors and debtors-in-possession (collectively, the "Debtors") hereby move the Court (the "Motion") for the entry of an order pursuant to sections 1OS(a), 363 and 507(a) of title 11 of the United States Code (the "Bankruptcy Code"): (i) approving procedures for the treatment of claims arising under the under the Perishable Agricultural

Commodities Act of 1930, as amended, 7 U.S.C. 499a et seq. ("PACA"), (ii) authorizing the Debtors to pay the Allowed PACA Claims (as defined below); and (iii) granting certain related relief. In support of this Motion, the Debtors respectfully state as follows:
Status of the Case
1.

On the date hereof (the "Petition Date"), the Debtors commenced these cases by

filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code. 2. The Debtors have continued in possession of their properties and are operating

and managing their business as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

The Debtors in these chapter 11 Cases, along with the last four digits of each Debtor's federal tax identification number, are: Back Yard Burgers, Inc. (7163), BYB Properties, Inc. (9046), Nashville BYB, LLC (6507) and Little Rock Back Yard Burgers, Inc. (9133). The mailing address of the Debtors is: St. Clouds Building, 500 Church Street, Suite 200, Nashville, TN 37219.

3.

No request has been made for the appointment of a trustee or examiner, and a

creditors' committee has not yet been appointed in these cases.

Jurisdiction, Venue, and Statutory Predicates

4.

The Court has jurisdiction over this Motion pursuant to 28 U.S.C. 157 and

1334. Venue for this matter is proper pursuant to 28 U.S.C. 1408. This matter is core within the meaning of28 U.S.C. 157(b). 5. The statutory predicates for the relief sought herein are sections 105(a), 363 and

507(a) ofthe Bankruptcy Code.

Background

6.

The Debtors are an established quick-service restaurant chain with approximately

90 locations concentrated in the Southeast United States. The Debtors operate company owned locations and maintain a franchise network of individually owned restaurants which collectively employ approximately nine hundred eighty-six (986) employees. Back Yard Burgers began as a single restaurant in Cleveland, Mississippi in 1987, and today, the Debtors pride themselves on having a strong reputation for offering big and bold backyard tastes served straight from the grill at value prices. The Debtors compete for business by offering black-angus hamburgers and chicken grilled on-site on charcoal grills, providing savory flavors most usually found only in neighborhood back yards. Meal offerings include chicken sandwiches, turkey burgers, hot dogs, salads, sides, and desserts; however, the main focus of the menu is centered on the Debtors' premium Black Angus burgers. 7. The Debtors own and operate approximately 25 restaurants (excluding franchised

locations), positioned as quick-service dining destinations where families and children can enjoy a wide variety of freshly prepared meals and desserts for lunch and dinner. Restaurant

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operations generated $18.4 million in revenue in the first eight (8) months of 2012 with a $2.4 million EBITDA loss. 8. The Debtors also have contracted with approximately forty-two (42) franchisees

to operate more than sixty-four (64) restaurants under franchise agreements. Franchisees are offered the right to operate a Back Yard Burgers restaurant for an upfront fee, and franchised locations are operated under strict guidelines to present and preserve a unified brand image. Franchising offers stable cash flows from the collection of royalties and product purchases, accounting for approximately $1.3 million in revenue in the first eight (8) months of 2012. 9. In the first nine months of 2012, the Debtors reported a 0.8 percent decline and

1.8 percent incline in same store sales of franchise and company -operated stores, respectively. In the same segments, the Debtors reported declines of 4.0 percent and 5.7 percent, respectively, in 2011. These decreases were driven by a decline in guest traffic 10. A more detailed factual background of the Debtors' business and operations, as

well as the events precipitating the commencement of these cases, is fully set forth in the
Declaration of James E. Boyd, Jr. in Support of the Debtors' Chapter 11 Petitions and Requests for First Day Relief (the "First Day Declaration"), filed contemporaneously herewith and

incorporated herein by reference. Relief Requested

PACA Claims

11.

The Debtors believe that a certain portion of the products they have purchased but

not yet paid for may qualify as "perishable agricultural commodit[ies]" under PACA. Under PACA, the term perishable agricultural commodity is generally defined as "fruits and fresh vegetables of every kind and character [whether or not frozen or packed in ice]." 7 U.S. C

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499a(b )( 4). PACA provides various protections to fresh fruit and vegetable sellers, including the establishment of a statutory constructive trust (the "PACA Trust") consisting of a buyer's entire inventory of food or other derivatives of perishable agricultural commodities, the products derived therefrom and the proceeds related to any sale of the commodities or products (collectively, the "PACA Trust Assets"). See 7 U.S.C. 499e(c)(2). Assets subject to a PACA Trust are preserved as a non-segregated floating trust and may be commingled with non-trust assets. Funds held in a PACA Trust are not property of a debtor's estate. In re Kornblum &

Co., 81 F .3d 280, 284 (2d Cir. 1995).

12. Certain of the Debtors' suppliers (the "PACA Claimants") will be eligible to

assert potential claims under PACA (the "PACA Claims")? In exercising their rights under

PACA, PACA Claimants impose a PACA Trust on certain of the products granting them priority
ahead of all other secured and unsecured creditors of the Debtors' estates. Accordingly, payment of PACA Claims at this time will not prejudice or affect the amount available for distributions to other creditors of the Debtors. Further, it is imperative that the Debtors establish procedures for the orderly reconciliation and disposition of PACA Claims to ensure that the supply of fresh produce and related products continues unimpeded. 13. PACA requires that certain procedural steps be taken by a seller of perishable

agricultural commodities in order to preserve its rights as a trust beneficiary. To preserve the
2

The Debtors do not believe that their vendors have sold them "livestock," "poultry" or any other eligible goods covered by the Packers and Stockyards Act of 1921 as amended, 7 U.S.C. 181 et seq. ("PASA"), which prescribes the conditions of operations for businesses dealing in livestock. In the unlikely event, however, that any supplier claims fall under PASA, the Debtors submit that it is in the best interests of the Debtors' estates, creditors and parties in interest to treat such claims in a manner identical to the PACA Claims. PASA creates a statutory trust scheme that is virtually identical to PACA in respect of delivery of livestock and other eligible goods. See In re W.L. Bradley Co., 75 B.R. 505, 509 (Bankr. E.D. Pa. 1987) ("The Legislative history expressly notes that the [PACA Trust] was modeled on the trust amendment to the Packers and Stockyards Act."). Accordingly, for the purposes of this Motion and any related orders, the PACA Procedures and the term "PACA Claims" shall also incorporate any claims arising under PASA.

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protection of the PACA Trust, the trust beneficiary (i.e., the seller of fresh produce) must provide written notice (a "PACA Notice") to the buyer of such goods of its intent to preserve the benefits of the P ACA Trust. As such, the Debtors propose that the Court approve the procedures

described below (the "P ACA Procedures"), which are designed to facilitate the resolution of P ACA claims in an orderly and efficient manner: a. PACA Notices. Any PACA Claimant seeking the protection of a PACA Trust must deliver, or have previously delivered, a valid and timely PACA Notice to the Debtors in accordance with the statutory guidelines set forth in 7 U.S.C. 499e(c)(3)-(4). Notice of P ACA Order. The Debtors will send a copy of the order approving this Motion (the "PACA Order") by first-class mail to all persons or entities that have delivered a valid and timely PACA Notice (or a document that purports to be a valid and timely PACA Notice) to the Debtors. Allowed P ACA Claims. If the Debtors determine that a claim asserted in a PACA Notice is valid, the Debtors shall pay such claim as an administrative expense of the Debtors' estates as soon as practicable after receipt of the PACA Notice, or if later, in accordance with normal trade terms (the "Allowed PACA Claim"). Any holder of a PACA Claim that accepts payment from the Debtors on account of its Allowed P ACA Claim shall be deemed to have waived, released, and discharged any and all claims, of any type, kind, or priority on account of or in connection with its PACA Claim against the (i) Debtors, (ii) any former, present, or future officer, director, or employee of the Debtors, (iii) the Debtors' assets and properties and (iv) any funds or amounts held in trust by the Debtors. Settled Claim Report. Ninety days from entry of the final order approving the PACA Procedures, and every 90 days thereafter, the Debtors shall file a report with the Court listing all Allowed P ACA Claims (the "PACA Claims Report") for the preceding 90 day period. The P ACA Claims Report shall be sent by first class mail to the following parties: (i) the Office of the United States Trustee for the District of Delaware, (ii) counsel for any statutory committee appointed in these chapter 11 cases, and (iii) all parties filing a P ACA Claim that are listed in such P ACA Claims Report. Disputed Claim Report. As soon as practicable after the period ending 90 days after entry of the P ACA Order, the Debtors will file with the Court a report (the "Disputed P ACA Claims Report") that lists the PACA

b.

c.

d.

e.

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Claims the Debtors believe are invalid in whole or in part. The Disputed PACA Claims Report shall be sent by first-class mail to the following parties: (i) the Office of the United States Trustee for the District of Delaware, (ii) counsel for any statutory committee appointed in these chapter 11 cases and (iii) all parties filing a PACA Claim that are listed in such Disputed P ACA Claims Report. f. Objections to Disputed PACA Reports. A PACA Claimant (each, an "Objecting Claimant") objecting to the Debtors' determination of the PACA Claim as set forth in the Disputed PACA Claims Report must provide the Debtors with evidence or documentation demonstrating the basis for the dispute, including a statement identifying which information in the Disputed PACA Claims Report is incorrect, specifying the correct information, and stating any legal or factual basis for the objection (each, a "P ACA Objection"). Objections must be served on (i) counsel to the Debtors and (ii) counsel for any statutory committee appointed in these chapter 11 cases, so as to be actually received no later than the 20th day following the date the Disputed PACA Claims Report is filed (the "PACA Objection Deadline"). With respect to each P ACA Claim in the Disputed PACA Claims Report as to which no objection is timely received, such PACA Claim shall be deemed an invalid P ACA Claim (in whole or in part, as specified in the Disputed PACA Claims Report) without further order of the Court and, to the extent invalid, shall not be entitled to the priorities provided under PACA. With respect to each PACA Claim in the Disputed PACA Claims Report as to which an objection is timely received and the parties resolve the objection, the PACA Claim shall be treated as an Allowed PACA Claim or a disallowed PACA Claim, in whole or part, as agreed to by the parties, without further order of the Court, as set forth in the next PACA Claims Report. With respect to each PACA Claim in the Disputed PACA Claims Report as to which an objection is timely received and the objection cannot be resolved by the parties, the PACA Claim shall not be deemed valid or invalid except upon order of the Court. If a resolution is not reached by at least sixty (60) days after the date of the Disputed PACA Claims Report, or such later period as may be agreed to by the Debtors and the claimant, the Debtors will arrange for a hearing before the Court.
Legal Basis for Relief Requested

14.

The payment of Allowed PACA Claims is warranted under sections 105(a), 363, Assets

507 and 541 of the Bankruptcy Code and case law in this District and elsewhere.

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governed by PACA do not constitute property of the Debtors' estates. See In re Kornblum &
Co., 81 F.3d 280, 284 (2d Cir. 1995); Morris Okun, Inc. v. Harry Zimmerman, Inc., 814 F. Supp.

346, 348 (S.D.N.Y. 1993). As a result, the distribution of assets to the PACA Claimants falls outside the priority scheme of the Bankruptcy Code, and the PACA Claimants holding Allowed PACA Claims are, thus, entitled to payment from the PACA Trust ahead of the Debtors' other creditors. See, e.g., In re Magic Rests., Inc., 205 F.3d 108, 110 (3d Cir. 2000); Consumers
Produce Co., Inc. v. Volante Wholesale Produce, Inc., 16 F.3d 1374, 1377-78 (3d Cir. 1994). In

addition, the disposition of PACA Trust Assets is subject to the jurisdiction of the bankruptcy court. See Monterey Mushrooms, Inc. v. Carolina Produce Distribs., Inc., 110 B.R. 207, 209 (W.D.N.C. 1990); Allied Growers Co-Op, Inc. v. United Fruit and Produce Co., 86 B.R. 14, 16 (Bankr. D. Conn. 1988). 15. Because the funds held in a PACA Trust are not property of the Debtors' estates,

the relief requested herein does not prejudice the Debtors' creditors. In fact, payment made to PACA Claimants on account of Allowed PACA Claims is consistent with the intent of PACA and, moreover, will inure to the benefit of the Debtors and all parties in interest by (i) facilitating the continued purchase and receipt of fresh produce and other products and (ii) avoiding potential disruption to the Debtors' business operations. In addition, the PACA Procedures

satisfy due process by providing interested parties with notice and an opportunity to object to the Debtors' designation of their respective claims as invalid. 16. Further, in certain circumstances, shareholders, officers, or directors of a

corporate entity who are in a position to control trust assets but breach the fiduciary duty to preserve those assets may be held personally liable under PACA. See Sunkist Growers, Inc. v.
Fisher, 104 F.3d 280, 283 (9th Cir. 1997); see also Go/man-Hayden Co., 217 F.3d at 350 (noting

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that a court will inquire (i) whether the individual's involvement with the corporation was sufficient to establish legal responsibility and (ii) whether the individual, in failing to exercise any appreciable oversight of the corporation's management, breached a fiduciary duty owed to the PACA creditors, to determine personal liability). Thus, to the extent that any valid

obligations arising under PACA remain unsatisfied by the Debtors, the Debtors' officers and directors or members may be subject to lawsuits during the pendency of these chapter 11 cases. Any such lawsuit (and the ensuing potential liability) would distract the Debtors and their officers and directors in their attempt to implement a successful reorganization strategy and, moreover, could lead to the assertion of substantial indemnification claims under the Debtors' governing documents, employment agreements, and applicable laws to the detriment of all parties in interest. 17. Finally, payment of Allowed P ACA Claims will inure to the benefit of the

Debtors' estates by preserving goodwill between the Debtors and certain of the vendors of fresh produce. Without implementation of these procedures, the Debtors could be subject to numerous claims and adversary proceedings, including motions by PACA claimants for relief from the automatic stay and/or injunctive relief, which would result in the unnecessary expenditure of time, effort, and money by the Debtors. 18. Courts in this and other jurisdictions have approved similar procedures for

treatment of PACA claims. See, e.g., In re CB Holding Corp., No. 10-13683 (MFW) (Bankr. D. Del. Jan. 11, 2011); In re Uno Rest. Holdings Corp., No. 10-1209 (Bankr. S.D.N.Y. Jan. 20, 2010); In re Winn-Dixie Stores, Inc., No. 05-11063 (Bankr. S.D.N.Y. March 22, 2005); In re VI Acquisition Corp., No. 08-10623 (Bankr. D. Del. April4, 2008); In re Buffets Holdings, Inc., No. 10141 (Bankr. D. Del. Feb. 13, 2008).

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19.

In light of the foregoing, the Debtors respectfully submit that the relief requested

herein is: (i) necessary and essential for the Debtors' reorganization; (ii) in the best interests of the Debtors, their estates and their creditors; and (iii) necessary to prevent immediate and irreparable harm to the Debtors and their estates.
Request for Authority for Banks to Honor and Pay Checks Issued and Funds Transfers with Respect to PACA Claims

20.

In addition, by this Motion, the Debtors request that all applicable banks and other

financial institutions (collectively, the "Banks") be authorized, when requested by the Debtors, to receive, process, honor and pay any and all checks presented for payment of, and to honor all fund transfer requests made by the Debtors related to, PACA Claims, whether such checks were presented or fund transfer requests were submitted prior to or after the Petition Date, provided that sufficient funds are available in the applicable accounts to make the payments. The Debtors represent that these checks are drawn on identifiable disbursement accounts and can be readily identified as relating directly to the authorized payment of PACA Claims. Accordingly, the Debtors believe that checks other than those relating to authorized payments will not be honored inadvertently. 21. Nothing contained herein is intended or shall be construed as: (i) an admission as

to the validity of any claim against the Debtors; (ii) a waiver of the Debtors' rights to dispute any claim on any grounds; (iii) a promise to pay any claim; or (iv) an implication or admission that any particular claim against the Debtors is a PACA Claim.
Requests for Immediate Relief & Waiver of Stay

22.

The Debtors further submit that because the relief requested in this Motion is

necessary to avoid immediate and irreparable harm to the Debtors for the reasons set forth herein

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and in the First Day Declaration, Bankruptcy Rule 6003 has been satisfied and the relief requested herein should be granted. 23. Specifically, Bankruptcy Rule 6003 provides:

Except to the extent that relief is necessary to avoid immediate and irreparable harm, the court shall not, within 21 days after the filing of the petition, grant relief regarding the following: ... (b) a motion to use, sell, lease, or otherwise incur an obligation regarding property of the estate, including a motion to pay all or part of a claim that arose before the filing of the petition, but not a motion under Rule 4001. 24. No court within the Third Circuit has interpreted the "immediate and irreparable

harm" language in the context of Bankruptcy Rule 6003 in any reported decision. However, the Third Circuit Court of Appeals has interpreted the same language in the context of preliminary injunctions. In that context, irreparable harm has been interpreted as a continuing harm that cannot be adequately redressed by final relief on the merits and for which money damages cannot provide adequate compensation. See, e.g., Norfolk S. Ry. Co. v. City of Pittsburgh, 235 Fed. Appx. 907, 910 (3d Cir. 2007) (citing Glasco v. Hills, 558 F.2d 179, 181 (3d Cir. 1977)). Further, the harm must be shown to be actual and imminent, not speculative or unsubstantiated. See, e.g., Acierno v. New Castle County, 40 F.2d 645, 653-55 (3d Cir. 1994). 25. The Debtors further seek a waiver of any stay of the effectiveness of the order

approving this Motion. Pursuant to Rule 6004(h) of the Bankruptcy Rules, "[an] order authorizing the use, sale, or lease of property other than cash collateral is stayed until the expiration of fourteen (14) days after entry of the order, unless the court orders otherwise." As set forth above, the relief requested herein is essential to prevent irreparable damage to the Debtors' operations, going-concern value, and their efforts to pursue a sale or restructuring of their assets and liabilities.

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26.

The payment of PACA Claims is necessary to prevent the immediate and

irreparable damage to the Debtors' retail operations (and customer confidence therein), going-concern value and ability to reorganize that would result from the Debtors' inability to obtain indispensable goods and services. Accordingly, the Debtors submit that ample cause exists to justify (i) the immediate entry of an order granting the relief sought herein and (ii) a waiver of the fourteen-day stay imposed by Bankruptcy Rule 6004(h), to the extent that it applies.
Notice

27.

Notice of this Motion has been given to the following parties or, in lieu thereof, to

their counsel, if known: (a) the Office of the United States Trustee for the District of Delaware; (b) counsel to Harbert Mezzanine Partners, L.P., as the Debtors' prepetition lender; (c) counsel to Pharos Capital Partners II, L.P. and Pharos Capital Partners II-A, L.P., as the Debtors' postpetition lenders; (d) creditors holding the thirty (30) largest unsecured claims as set forth in the consolidated list filed with the Debtors' petitions; (e) those parties requesting notice pursuant to Rule 2002; (f) the Office of the United States Attorney General for the District of Delaware; and (g) the Internal Revenue Service. As the Motion is seeking "first day" relief, within two (2) business days of the hearing on the Motion, the Debtors will serve copies of the Motion and any order entered respecting the Motion in accordance with the Local Rules. The Debtors submit that, in light of the nature of the relief requested, no other or further notice need be given.
No Prior Request

28. other court.

No previous application for the relief sought herein has been made to this or any

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WHEREFORE, the Debtors respectfully request that this Court enter an order granting the relief requested herein and that it grant the Debtors such other and further relief as is just and proper.

Dated: October 17, 2012

GREENBERG TRAURIG, LLP

Is/ Dennis A. Meloro Dennis A. Meloro (DE Bar No. 4435) 1007 North Orange Street, Suite 1200 Wilmington, Delaware 19801 Telephone: (302) 661-7000 Facsimile: (302) 661-7360 Email: melorod@gtlaw.com
-andNancy A. Mitchell (pro hac vice pending) Maria J. DiConza (pro hac vice pending) Matthew L. Hinker (DE Bar No. 5348) GREENBERG TRAURIG, LLP 200 Park Avenue New York, New York Telephone: (212) 801-9200 Facsimile: (212) 801-6400 Email: mitchelln@gtlaw.com diconzam@gtlaw.com hinkerm@gtlaw.com

Proposed Counsel for the Debtors and Debtors-in-Possession

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

In re Chapter 11 BACKYARD BURGERS, INC., et al. 1 Case No. 12-12882 (PJW) Debtors. (Joint Administration Pending)
Ref. Docket No. ORDER AUTHORIZING THE DEBTORS TO PAY CERTAIN PACA CLAIMS

Upon the motion (the "Motion")2 filed by the above-captioned debtors and debtors-in-possession (collectively, the "Debtors") seeking entry of an order ; the Court having reviewed the Motion and the First Day Declaration and having considered the statements of counsel and the evidence adduced with respect to the Motion at a hearing before the Court (the "Hearing") (i) approving procedures for the treatment of claims arising under the under the Perishable Agricultural Commodities Act of 1930, as amended, 7 U.S.C. 499a et seq.

("P ACA"), (ii) authorizing the Debtors to pay the Allowed PACA Claims; and (iii) granting

certain related relief; and the Court having found that (i) the Court has jurisdiction over this matter pursuant to 28 U.S.C. 157 and 1334, (ii) venue is proper in this district pursuant to 28 U.S.C. 1409, (iii) this is a core proceeding pursuant to 28 U.S.C. 157(b), (iv) notice of the Motion and the Hearing was sufficient under the circumstances and (v) there is good cause to waive the fourteen-day stay imposed by Bankruptcy Rule 6004(h) to the extent it is applicable; after due deliberation the Court having determined that the relief requested in the Motion is
The Debtors in these chapter 11 Cases, along with the last four digits of each Debtor's federal tax identification number, are: Back Yard Burgers, Inc. (7163), BYB Properties, Inc. (9046), Nashville BYB, LLC (6507) and Little Rock Back Yard Burgers, Inc. (9133 ). The mailing address of the Debtors is: St. Clouds Building, 500 Church Street, Suite 200, Nashville, TN 37219.
2

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

(i) necessary and essential for the Debtors' reorganization, (ii) in the best interests of the Debtors, their estates and their creditors and (iii) necessary to prevent immediate and irreparable harm to the Debtors and their estates; and good and sufficient cause having been shown; IT IS HEREBY ORDERED THAT: 1. 2. The Motion is GRANTED. Subject to this Order, the Debtors, in their sole discretion are authorized to

reconcile and to pay the Allowed PACA Claims in an amount not to exceed $21 ,600 pursuant to the P ACA Procedures set forth below: a. PACA Notices. Any P ACA Claimant seeking the protection of a PACA Trust must deliver, or have previously delivered, a valid and timely PACA Notice to the Debtors in accordance with the statutory guidelines set forth in 7 U.S.C. 499e(c)(3)-(4). Notice of P ACA Order. The Debtors will send a copy of the order approving this Motion (the "PACA Order") by first-class mail to all persons or entities that have delivered a valid and timely PACA Notice (or a document that purports to be a valid and timely PACA Notice) to the Debtors. Allowed P ACA Claims. If the Debtors determine that a claim asserted in a P ACA Notice is valid, the Debtors shall pay such claim as an administrative expense of the Debtors' estates as soon as practicable after receipt of the PACA Notice, or if later, in accordance with normal trade terms (the "Allowed PACA Claim"). Any holder of a PACA Claim that accepts payment from the Debtors on account of its Allowed P ACA Claim shall be deemed to have waived, released, and discharged any and all claims, of any type, kind, or priority on account of or in connection with its P ACA Claim against the (i) Debtors, (ii) any former, present, or future officer, director, or employee of the Debtors, (iii) the Debtors' assets and properties and (iv) any funds or amounts held in trust by the Debtors. Settled Claim Report. Ninety days from entry of the final order approving the P ACA Procedures, and every 90 days thereafter, the Debtors shall file a report with the Court listing all Allowed PACA Claims (the "PACA Claims Report") for the preceding 90 day period. The P ACA Claims Report shall be sent by first class mail to the following parties: (i) the Office of the United States Trustee for the District of Delaware, (ii) counsel for any statutory committee appointed in these chapter 11

b.

c.

d.

cases, and (iii) all parties filing a PACA Claim that are listed in such PACA Claims Report. e. Disputed Claim Report. As soon as practicable after the period ending 90 days after entry of the PACA Order, the Debtors will file with the Court a report (the "Disputed P ACA Claims Report") that lists the PACA Claims the Debtors believe are invalid in whole or in part. The Disputed PACA Claims Report shall be sent by first-class mail to the following parties: (i) the Office of the United States Trustee for the District of Delaware, (ii) counsel for any statutory committee appointed in these chapter 11 cases and (iii) all parties filing a PACA Claim that are listed in such Disputed PACA Claims Report. Objections to Disputed PACA Reports. A PACA Claimant (each, an "Objecting Claimant") objecting to the Debtors' determination of the PACA Claim as set forth in the Disputed PACA Claims Report must provide the Debtors with evidence or documentation demonstrating the basis for the dispute, including a statement identifying which information in the Disputed PACA Claims Report is incorrect, specifying the correct information, and stating any legal or factual basis for the objection (each, a "P ACA Objection"). Objections must be served on (i) counsel to the Debtors and (ii) counsel for any statutory committee appointed in these chapter 11 cases, so as to be actually received no later than the 20th day following the date the Disputed PACA Claims Report is filed (the "P ACA Objection Deadline"). With respect to each PACA Claim in the Disputed PACA Claims Report as to which no objection is timely received, such PACA Claim shall be deemed an invalid PACA Claim (in whole or in part, as specified in the Disputed PACA Claims Report) without further order of the Court and, to the extent invalid, shall not be entitled to the priorities provided under PACA. With respect to each PACA Claim in the Disputed PACA Claims Report as to which an objection is timely received and the parties resolve the objection, the PACA Claim shall be treated as an Allowed PACA Claim or a disallowed P ACA Claim, in whole or part, as agreed to by the parties, without further order of the Court, as set forth in the next PACA Claims Report. With respect to each PACA Claim in the Disputed PACA Claims Report as to which an objection is timely received and the objection cannot be resolved by the parties, the PACA Claim shall not be deemed valid or invalid except upon order of the Court. If a resolution is not reached by at least sixty (60) days after the date of the Disputed PACA Claims Report, or such later period as may be agreed to by the Debtors and the claimant, the Debtors will arrange for a hearing before the Court.

f.

3.

Pending completion of the PACA Procedures, parties asserting PACA Claims

shall not take any other action to establish the validity and amount of their PACA Claims, including the commencement of adversary proceedings, except pursuant to the PACA Procedures. The PACA Procedures are the sole and exclusive method with respect to the

resolution and payment of PACA Claims asserted against the Debtors. 4. The Banks are authorized to receive, process, honor and pay all checks presented

for payment of, and to honor all funds transfer requests made by the Debtors related to, PACA Claims paid pursuant to this Order, regardless of whether such checks were presented or funds transfer requests were submitted prior to or after the Petition Date, provided that funds are available in the Debtors' accounts to cover such checks and funds transfers. The Banks are authorized to rely on the Debtors' designation of any particular check or funds transfer as approved by this Order. 5. Nothing in the Motion or this Order, nor the Debtors' payment of claims pursuant

to this Order, shall be deemed or construed as: (i) an admission as to the validity of any claim against the Debtors; (ii) a waiver of the Debtors' rights to dispute any claim on any grounds; (iii) a promise to pay any claim; or (iv) an implication or admission that any particular claim is a PACA Claim. 6. The requirements of Bankruptcy Rule 6003(b) have been satisfied with respect to

the payments authorized by this Order. 7. This Order shall be immediately effective and enforceable upon its entry. To the

extent that it may be applicable, the fourteen-day stay imposed by Bankruptcy Rule 6004(h) is hereby waived.

8.

Notwithstanding anything to the contrary contained herein, (i) any payment made,

or authorization contained, hereunder shall be subject to the requirements imposed on the Debtors under any order approving debtor-in-possession financing (a "DIP Order"), and (ii) any claim for which payment is authorized pursuant to this Order that is treated as an administrative expense of the Debtors' estates shall be and is subject and subordinate to any and all claims, liens, security interests and priorities granted to the DIP Agents (as defined in the DIP Order) in accordance with and subject to the terms of the applicable DIP Order, and payment on any such claim shall be subject to any and all restrictions on payments in the DIP Order and any other order of the Court authorizing the Debtors' use of cash collateral.

Dated: - - - - - - - ' 2012 PETER J. WALSH UNITED STATES BANKRUPTCY JUDGE