Proposed Hearing Date: March 23, 2011 at 11:00 a.m.

Eastern Time Proposed Objection Deadline: March 18, 2011 at 4:00 p.m. Eastern Time

COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 Lawrence C. Gottlieb James A. Beldner Lesley A. Kroupa Proposed Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------- x : In re : : LEHR CONSTRUCTION CORP., : : Debtor. : : : ---------------------------------------------------------------- x NOTICE OF DEBTORS MOTION FOR ENTRY OF AN ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION VENDOR CLAIMS AND TO PROVIDE ADEQUATE ASSURANCE OF FUTURE PERFORMANCE FOR SUBCONTRACTORS AND MATERIALMEN WHO HAVE STATUTORY LIEN RIGHTS PLEASE TAKE NOTICE that Lehr Construction Corp., the debtor and debtor in possession (the Debtor), has requested that a hearing on the above referenced motion (the Motion) dated March 9, 2011 for an order authorizing payment of certain prepetition critical construction vendor claims, and certain related relief, all as more fully set forth in the Motion, be held on shortened notice before the Honorable Sean H. Lane, United States Bankruptcy Judge, in Room 621 of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court), One Bowling Green, New York, New York 10004, on March 23, 2011 at
1706162 v1/NY

Chapter 11

Case No. 11-10723 (SHL)

11:00 a.m. (Prevailing Eastern Time) (the Proposed Hearing Date). If the Court does not grant the Debtors request for the Motion to be heard on the Proposed Hearing Date, a hearing date will be determined by the Court and notice of such hearing date will be served by the Debtor on all necessary parties as described in the Motion. PLEASE TAKE FURTHER NOTICE that the Debtor has also requested that any responses or objections to the Motion must be in writing, shall conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the Southern District of New York, and shall be filed with the Bankruptcy Court (a) electronically in accordance with General Order M-399 (which can be found at www.nysb.uscourts.gov) by registered users of the Bankruptcy Courts filing system and (b) by all other parties in interest on a 3.5 inch disk, compact disc, or flash drive, preferably in WordPerfect, or any other Windows-based word processing format (with two hard copies delivered directly to Chambers of the Honorable Sean H. Lane) and served upon: (i) the Debtor, Lehr Construction Corp. (Attn: Frederick Coffey); (ii) attorneys to the Debtor, Cooley LLP (Attn: James A. Beldner, Esq.); and (iii) the Office of the United States Trustee for the Southern District of New York (Attn: Susan Golden, Esq.), in each case so as to be received no later than 4:00 p.m. on March 18, 2011 (Prevailing Eastern Time) (the Proposed Objection Deadline). If the Court does not grant the Debtors request for the Proposed Objection Deadline, an objection deadline will be determined by the Court and notice of such revised objection deadline will be served by the Debtor on all necessary parties as described in the Motion. PLEASE TAKE FURTHER NOTICE that if no objections are timely filed and served with respect to the Motion, the Debtor may, on or after the Proposed Objection Deadline, submit to the Bankruptcy Court an order substantially in the form of the proposed order

1706162 v1/NY

annexed to the Motion, which order may be entered with no further notice or opportunity to be heard.

Dated: March 9, 2011 New York, New York By: /s/ James A. Beldner James A. Beldner COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 Lawrence C. Gottlieb James A. Beldner Lesley A. Kroupa Proposed Attorneys for Debtor and Debtor in Possession

1706162 v1/NY

Proposed Hearing Date: March 23, 2011 at 11:00 a.m. (ET) Proposed Objection Deadline: March 18, 2011 at 4:00 p.m. (ET)

COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 Lawrence C. Gottlieb James A. Beldner Lesley A. Kroupa Proposed Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------- x : : In re : : LEHR CONSTRUCTION CORP., : : Debtor. : ---------------------------------------------------------------- x

Chapter 11 Case No. 11-10723 (SHL)

MOTION OF THE DEBTOR FOR ENTRY OF AN ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION VENDOR CLAIMS AND TO PROVIDE ADEQUATE ASSURANCE OF FUTURE PERFORMANCE FOR SUBCONTRACTORS AND MATERIALMEN WHO HAVE STATUTORY LIEN RIGHTS TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE SEAN H. LANE: Lehr Construction Corp., as debtor and debtor in possession (the Debtor),1 files this motion (this Motion) for the entry of an order (the Order), substantially in the form attached hereto as Exhibit A, authorizing the Debtor to (i) pay in the ordinary course of business prepetition claims (collectively, the Critical Construction Vendor Claims) held by certain critical construction vendors (collectively, the Critical Construction Vendors) that are essential to the Debtors ongoing construction obligations pursuant to the agreement between the Debtor and NBA Properties, Inc. related to certain properties located in Secaucus, New Jersey (the
1

The last four digits of the Debtors federal tax identification number are 3507.

1705891 v3/NY

NBA Project); and (ii) provide adequate assurance of future performance to such Critical Construction Vendors. In support of this Motion, the Debtor respectfully states as follows: BACKGROUND General 1. On February 21, 2011 (the Petition Date), the Debtor commenced with

this Court a voluntary case under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The Debtor is authorized to operate its businesses and manage its

properties as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory creditors committee has been appointed in this chapter 11 case. The Debtors Businesses 2. Lehr Construction Corp., a New York corporation, was founded in 1979

and has evolved from a small entrepreneurial business to one of the most respected builders in New York. Lehr specializes in interior construction and serves clients mainly throughout the New York metropolitan area. Lehr serves as construction manager and/or general contractor for its clients and Lehrs construction professionals work closely with their in-house estimating, purchasing, quality control and value engineering professionals to ensure projects are completed on schedule, within budget, and with impeccable quality. 3. Lehrs projects range from minor renovations to interior office build-outs

over a million square feet. Lehrs broad range of clients include retail stores, financial service firms, educational organizations, entertainment and media firms, and many others. 4. The Debtors headquarters is located in New York, New York and it has

a warehouse facility in Woodhaven, New York. The Debtors primary assets include contract rights and accounts receivable for its on-going and completed projects. 2
1705891 v3/NY

JURISDICTION 5. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. 6. The statutory bases for the relief requested herein are sections 105(a),

363(b), 1107(a), and 1108 of the Bankruptcy Code and Rule 6004 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules). RELIEF REQUESTED 7. By this Motion, the Debtor requests entry of an Order authorizing, but not

directing, the Debtor to pay Critical Construction Vendor Claims. In connection with the NBA Project, the Debtor estimates that there is approximately $365,000 in outstanding prepetition Critical Construction Vendor Claims and approximately $7.8 million remaining to be paid postpetition in the ordinary course to the Critical Construction Vendors who have lien rights pursuant to New Jersey law. In addition to payment of the outstanding prepetition Critical Construction Vendor Claims, the Debtor requests authorization (i) to continue to pay any postpetition obligations to its Critical Construction Vendors in the ordinary course and (ii) to segregate the funds it receives from the NBA for payment to such Critical Construction Vendors into a separate bank account for the benefit of the Critical Construction Vendors that have lien rights pursuant to New Jersey law. THE DEBTORS CONSTRUCTION OBLIGATIONS 8. As described above and in greater detail in the Declaration of Frederick

Coffey Pursuant to Local Bankruptcy Rule 1007-2 dated February 21, 2011 (Docket No. 2) (the First Day Declaration), the Debtor acts as a general contractor specializing in interior construction projects throughout the New York metropolitan area. Through its over thirty year 3
1705891 v3/NY

history, the Debtor has developed important working relationships with certain trusted construction vendors, each of whom provide key services and supplies to the Debtors on-going construction projects. 9. The Critical Construction Vendors are essential to the Debtors NBA

Project; particularly, in connection with the Debtors efforts to ensure that the NBA Project is completed on schedule and maintains the high level of quality the Debtors clients, including the NBA, expect. 10. As explained more fully below, unlike New York, New Jersey state law

has no statute creating a constructive trust in favor of subcontractors to compensate them for work performed on a private construction project; thus, subcontractors and materialmen providing labor, materials and the like to a bankrupt contractor are merely general creditors at the time of the bankruptcy. 11. The Debtor has been advised that certain of the Critical Construction

Vendors, despite the protections of administrative priority status, will file liens under New Jersey state law for any unpaid prepetition amounts as well as any postpetition invoices that are not timely paid. Such vendors may also refuse to provide goods or services postpetition to the Debtor if it does not pay all or part of the prepetition Critical Construction Vendor Claims. The filing of such liens may trigger a default pursuant to the terms of the agreement regarding the NBA Project, potentially resulting in damages upwards of $10 million. Additionally, such a default could allow the NBA to liquidate the Irrevocable Standby Letter of Credit Number 30002626 dated May 5, 2010 (the Letter of Credit) from Capital One Bank for the benefit of NBA Properties Inc. in the amount of $3 million.

4
1705891 v3/NY

12.

Given the substantial progress already made on the NBA Project, the

Debtor believes that it would be extremely difficult to locate alternative subcontractors and materialmen in a timely or cost-effective manner. Transitioning the works in progress from the current Critical Construction Vendors almost certainly would result in additional expenses to the Debtor and the NBA. In addition, many of the Debtors subcontractors have small operations and rely on a limited number of their own customers for their continued viability. Such

subcontractors have limited access to capital and can ill afford their own loss of operating revenues. Such parties may have little choice but to demand that the Debtor satisfy its

prepetition obligations in order to survive. 13. Further, as described in the First Day Declaration, the goal of this chapter

11 case is the development of a business plan that will outline an orderly process for the completion of the Debtors current construction projects and wind-down of the Debtors business. This will allow the Debtor to focus its resources on completing its current projects for its clients in the timely, cost-effective, and high quality manner that it is known for. This goal may only be reached if the Debtors relationships with its numerous Critical Construction Vendors can continue in the ordinary course through the completion of the Debtors construction projects, including the NBA Project. Terms and Conditions of Prepetition Payments 14. The Debtor proposes to make full or partial payment to a Critical

Construction Vendor pursuant to this Motion only to the extent it deems necessary, in the exercise of its business judgment, to ensure that the applicable Critical Construction Vendor will provide essential goods and services to the Debtor on a postpetition basis. To that end, in return for paying Critical Construction Vendor Claims, the Debtor will require that the applicable supplier or vendor provide favorable trade credit terms for the postpetition delivery of goods and 5
1705891 v3/NY

services to the NBA Project. Specifically, the Debtor proposes to condition the payment of Critical Construction Vendor Claims upon each supplier or vendors agreement to continue supplying goods and services on terms that are acceptable to the Debtor in light of customary industry practices. In some circumstances, the Debtor may require certain suppliers or vendors or enter into a contractual agreement evidencing such terms. 15. Additionally, the Debtor requests that if a supplier or vendor accepts

payment pursuant to an order granting the relief requested this Motion and thereafter does not continue to provide goods or services on prepetition trade terms, that: (a) any payment on account of Critical Construction Vendor Claims, may be deemed to be an improper postpetition transfer, and therefore, recoverable by the Debtor in cash upon written request and (b) upon recovery of the payment by the Debtor, the Critical Construction Vendor Claim, shall be reinstated as if the payment had not been made. If there exists an outstanding postpetition balance due from the Debtor to a vendor or supplier, the Debtor may elect to recharacterize and apply any payment made pursuant to an order granting the relief requested in this Motion to such outstanding postpetition balance and such supplier or vendor will be required to repay to the Debtor such paid amounts that exceed the postpetition obligations then outstanding without the right of any setoffs, claims, provisions for payment of any claims, or otherwise. BASIS FOR RELIEF 16. Unlike New York,2 New Jersey has no law creating a constructive trust in

favor of subcontractors to compensate them for work performed on a private construction

Under New York law, a contractor holds in trust the funds received in connection with a contract for the improvement of real property, as well as any rights of action with respect to those funds. N.Y. LIEN LAW 70 (McKinney 1993). The trust funds must be used to pay certain designated expenses, including subcontractors and materialmen claims, related payroll taxes, unemployment taxes, employment benefits and insurance premiums. Id., 71(2), 71(4). Misuse constitutes a diversion, id., 72(1), and the trust may be enforced through a class action brought by the beneficiaries or a representative action brought by the trustee on their behalf. See Buchwald v. Di Lido Beach Resort, Ltd., et al. (In re McCann, Inc.), 318 B.R. 276, 281 (Bankr. S.D.N.Y. 2004).

6
1705891 v3/NY

project.3 Additionally, the U.S. Court of Appeals for the Third Circuit has rejected the creation of a trust in favor of subcontractors. In re Matthews Associates, Inc., 394 F.2d 101 (3d Cir. 1968); See also Lawrence v. Bank of New Jersey, (In re Central Piping, Inc.), 4 Bankr. 298 (Bankr. D.N.J. 1980).4 Subcontractors providing labor, materials and the like to a bankrupt contractor are merely general creditors at the time of the bankruptcy. See Matthews, 394 F.2d at 104; Central Piping, 4 Bankr. at 302. Because the Critical Construction Vendors in New Jersey do not have the same state law protections afforded to subcontractors and other materialmen in New York, it is likely that the Critical Construction Vendors will file liens on the property related to the NBA Project, thus potentially triggering a default under the NBA Project documents. Moreover, there is a risk that the Critical Construction Vendors could refuse to continue providing the same quality and timely services to the Debtor and its client postpetition, which would adversely affect the Debtors estate and the going-concern value of its business. 17. Courts in this district generally acknowledge that it is appropriate to

authorize the payment of prepetition obligations where necessary to protect and preserve the estate, including an operating business going-concern value. See In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989) (authority to pay prepetition wages); Armstrong World Indus., Inc. v. James A. Phillips, Inc., (In re James A. Phillips, Inc.), 29 B.R. 391, 398 (S.D.N.Y. 1983) (authority to pay prepetition claims of suppliers); see also In re CoServ, L.L.C., 273 B.R 487, 497 (Bankr. N.D. Tex. 2002). In so doing, courts rely on several legal theories rooted in sections 105(a), 363(b), 1107(a) and 1108 of the Bankruptcy Code.
3

The New Jersey Trust Fund Act imposes a trust on funds received by a contractor from state and municipalities in favor of laborers and materialmen for work performed under contracts for public improvement. N.J.S.A. 2A:44-148. The creditors in Matthews and Central Piping sought to use New Jerseys "misappropriation of funds" statutes to impress a trust upon funds owed to a debtor under construction contracts. See N.J.S.A. 2A:102-10 and 102-11. The courts in each case refused to do so because the statutes created a criminal rather than civil cause of action. Matthews, 394 F.2d at 103, n. 2; Central Piping, 4 Bankr. at 301.
4

7
1705891 v3/NY

18.

Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, debtors in

possession are fiduciaries holding the bankruptcy estate[s] and operating the business[es] for the benefit of [its] creditors and (if the value justifies) equity owners. CoServ, 273 B.R. at 497. Implicit in the fiduciary duties of any debtor in possession is the obligation to protect and preserve the estate, including an operating businesss going-concern value. Id. Some courts have noted there are instances in which a debtor can fulfill this fiduciary duty only . . . by the preplan satisfaction of a prepetition claim. Id. The court in CoServ specifically noted the preplan satisfaction of prepetition claims would be a valid exercise of the debtors fiduciary duty when the payment is the only means to effect a substantial enhancement of the estate . . . Id. 19. Consistent with the debtors fiduciary duties, courts have also authorized

payment of prepetition obligations under section 363(b) of the Bankruptcy Code where a sound business purpose exists for doing so. See Ionosphere, 98 B.R. at 175 (finding that a sound business justification existed to justify payment of prepetition wages); Armstrong, 29 B.R. at 397-98 (relying on section 363 of the Bankruptcy Code to allow contractor to pay prepetition claims of suppliers who were potential lien claimants because the payments were necessary for general contractors to release funds owed to debtors). 20. In addition, the Court may authorize payment of prepetition claims in

appropriate circumstances based on section 105(a) of the Bankruptcy Code. Section 105(a), which codifies the inherent equitable powers of the bankruptcy court, empowers the bankruptcy court to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). Under section 105(a), courts may permit pre-plan payments of prepetition obligations when essential to the continued operation of the debtors business. Specifically, the Court may use its power under section 105(a) to authorize payment of

8
1705891 v3/NY

prepetition obligations pursuant to the necessity of payment rule (also referred to as the doctrine of necessity). See In re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D. Va. 1992). The doctrine of necessity or the necessity of payment rule has long been recognized as precedent within the Second Circuit. See Ionosphere, 98 B.R. at 175-176; see also In re Eagle-Picher Indus., Inc., 124 B.R. 1021, 1023 (Bankr. S.D. Ohio 1991) (approving payment of prepetition unsecured claims of tool makers as necessary to avert a serious threat to the Chapter 11 process). 21. This flexible approach is particularly critical where a prepetition creditor

provides vital goods or services to a debtor that would be unavailable if the debtor did not satisfy its prepetition obligations. In In re Structurlite Plastics Corp., 86 B.R. 922, 931 (Bankr. S.D. Ohio 1988), the bankruptcy court stated that a bankruptcy court may exercise its equity powers under 105(a) [of the Bankruptcy Code] to authorize payment of pre-petition claims where such payment is necessary to permit the greatest likelihood of survival of the debtor and payment of creditors in full or at least proportionately. Id. (citation omitted). The court explained that a per se rule proscribing the payment of pre-petition indebtedness may well be too inflexible to permit the effectuation of the rehabilitative purposes of the Code. Id. at 932. 22. Allowing the Debtor to pay Critical Construction Vendor Claims is

especially appropriate where, as here, doing so is consistent with the two recognized policies of chapter 11 of the Bankruptcy Codepreserving going concern value and maximizing the value of property available to satisfy creditors. See Bank of Am. Natl Trust & Savs. Assoc. v. 203 N. LaSalle St. PShip., 526 U.S. 434, 453 (1999). Indeed, reflecting the recognition that payment of prepetition claims of certain essential vendors is, in fact, both critical to a debtors ability to preserve going-concerns and maximize creditor recovery, courts in this district

9
1705891 v3/NY

routinely grant relief similar to that which the Debtor is seeking herein. See, e.g., In re Neff Corp., Case No. 10-12610 (SCC) (Bankr. S.D.N.Y. June 8, 2010); In re The Readers Digest Assoc., Inc., Case No. 09-23529 (RDD) (Bankr. S.D.N.Y. Sept. 17, 2009); In re Lear Corp., Case No. 09-14326 (ALG) (Bankr. S.D.N.Y. July 31, 2009); In re Gen. Motors Corp., Case No. 09-50026 (REG) (Bankr. S.D.N.Y. June 25, 2009); In re Chrysler LLC, Case No. 09-50002 (AJG) (Bankr. S.D.N.Y. May 20, 2009); In re Gen. Growth Props., Inc., Case No. 09-11977 (ALG) (Bankr. S.D.N.Y. May 11, 2009); In re Lyondell Chem. Co., Case No. 09-10023 (REG) (Bankr. S.D.N.Y. Jan. 23, 2009); In re Delphi Corporation, et al., Case No. 05-44481 (RDD) (Bankr. S.D.N.Y. Oct. 13, 2005).5 23. As described above, the Debtor requires a steady stream of supplies and

services from its Critical Construction Vendors to ensure the timely and cost-effective completion of the NBA Project. The Debtors failure to pay the Critical Construction Vendor Claims could result in liens being filed on the NBA Project, a diminished capacity to complete the NBA Project on schedule, less favorable future construction contract terms, and an increased likelihood for severe disruptions to the Debtors overall business operations. As such, the Debtors fiduciary obligations would be betterserved by authorizing the limited relief requested herein, thereby ensuring the Debtors access to construction services at this critical stage of this chapter 11 case. For these reasons, the Debtor believes the relief requested herein is vitally necessary to preserve the value of its estate for the benefit of all stakeholders in this chapter 11 case and should be granted.

Because of the voluminous nature of the orders cited herein, they are not attached to the Motion. Copies of these orders are available upon request of the Debtors proposed counsel.

10
1705891 v3/NY

REQUEST FOR WAIVER OF STAY 24. Any delay in paying the obligations addressed herein would be detrimental

to the Debtor, its creditors, and its estate. Accordingly and to successfully implement the foregoing, to the extent applicable, the Debtor seeks a waiver of the notice requirements under Bankruptcy Rule 6004(a) and the 14-day stay of any order authorizing the use, sale, or lease of property under Bankruptcy Rule 6004(h).

MOTION PRACTICE 25. This Motion includes citations to the applicable rules and statutory

authorities upon which the relief requested herein is predicated and a discussion of their application to this Motion. Accordingly, the Debtor submits that this Motion satisfies Rule 90131(a) of the Local Bankruptcy Rules for the Southern District of New York (the Local Bankruptcy Rules). THE DEBTORS RESERVATION OF RIGHTS 26. Nothing contained herein is intended or should be construed as an

admission of the validity of any claim against the Debtor, a waiver of the Debtors rights to dispute any claim, or an approval or assumption of any agreement, contract, or lease under section 365 of the Bankruptcy Code. The Debtor expressly reserves its right to contest any invoice or claim related to the relief requested herein in accordance with applicable nonbankruptcy law NOTICE 27. The Debtor has served notice of this Motion on (i) the Office of the United

States Trustee for the Southern District of New York, (ii) all parties that have timely filed requests for notice under Bankruptcy Rule 2002, (iii) the Debtors 40 largest unsecured creditors, 11
1705891 v3/NY

and (iv) the Critical Construction Vendors. In light of the nature of the relief requested, the Debtor submits that no other or further notice need be provided. 28. No previous request for the relief sought herein has been made by the

Debtor to this or any other court. WHEREFORE, the Debtor respectfully requests that the Court grant the relief requested herein and such other and further relief as is just and appropriate. Dated: March 9, 2011 New York, New York Respectfully submitted,

By:

/s/ James A. Beldner James A. Beldner

COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 Lawrence C. Gottlieb (LG 2565) James A. Beldner (JB 7166) Lesley A. Kroupa (LK 2620) Proposed Attorneys for Debtor and Debtor in Possession

12
1705891 v3/NY

EXHIBIT A Proposed Order

1705891 v3/NY

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------- x : : In re : : LEHR CONSTRUCTION CORP., : : Debtor. : ---------------------------------------------------------------- x

Chapter 11 Case No. 11-10723 (SHL) Re: ___

ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION VENDOR CLAIMS AND TO PROVIDE ADEQUATE ASSURANCE OF FUTURE PERFORMANCE FOR SUBCONTRACTORS AND MATERIALMEN WHO HAVE STATUTORY LIEN RIGHTS Upon the motion dated March 9, 2011 (the Motion),1 of Lehr Construction Corp., as debtor and debtor in possession (the Debtor),2 for an order, pursuant to sections 105(a), 363(b), 1107(a), and 1108 of the Bankruptcy Code and Rule 6004 of the Bankruptcy Rules authorizing the debtor to pay in the ordinary course of business Critical Construction Vendor Claims, all as more fully set forth in the Motion; and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157 and 1334 and the Standing Order of Referral of Cases to Bankruptcy Judges of the District Court for the Southern District of New York, dated July 19, 1984 (Ward, Acting C.J.); and consideration of the Motion and the relief requested therein 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 notice of the Motion appearing adequate and appropriate under the circumstances, and it appearing that no other or further notice need be provided; and the Court having determined that the relief requested in the Motion being in the best interests of the Debtor, its creditors, and all
1

Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Motion. The last four digits of the Debtors federal tax identification number are 3507.

1
1705891 v3/NY

parties in interest; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and upon all of the proceedings had before the Court and after due deliberation and sufficient cause appearing therefore, IT IS HEREBY ORDERED that the Motion is granted, to the extent provided herein; and it is further ORDERED the Debtor is authorized but not directed, in its sole discretion, to pay Critical Construction Vendor Claims related to the NBA Project in the ordinary course of the Debtor's business; provided, however, that with respect to each Critical Construction Vendor Claim: (a) the Debtor shall not be authorized to pay a Critical Construction Vendor Claim unless the Critical Construction Vendor has perfected or, in the Debtors business judgment, is capable of perfecting or might be capable of perfecting in the future one or more liens in respect of such Critical Construction Vendor Claim, (b) such payment shall not be deemed to be a waiver of rights regarding the extent, validity, perfection, or possible avoidance of the related liens, and (c) the Critical Construction Vendor agrees to release promptly any liens upon payment of such Critical Construction Vendor Claim; provided, however, that should the Critical Construction Vendor fail to release promptly such liens upon payment by the Debtor, any such liens shall be deemed released and expunged, without necessity of further action, and this Order shall be all that is required to evidence such release and expungement; and it is further ORDERED the Debtor may request, in its sole discretion, that each Critical Construction Vendor provide written acknowledgement of its obligation to continue providing services to the Debtor on pre-existing, customary, or other terms as may be requested by the Debtor as a condition of receiving payment on account of any payment made pursuant to this

2
1705891 v3/NY

Order; provided that the Debtors failure to request such an acknowledgement shall not be and shall not be deemed to be a waiver of the Debtors rights hereunder; and it is further ORDERED that the Debtor is authorized to segregate any funds it receives from the NBA to be paid to the Critical Construction Vendors in a separate bank account for the benefit of those Critical Construction Vendors that have lien rights under New Jersey law; and it is further ORDERED if any Critical Construction Vendor does not continue to provide services on such terms, then (a) any payment on account of a prepetition claim received by such Critical Construction Vendor shall be deemed, in the Debtors sole discretion, an improper postpetition transfer and, therefore, recoverable by the Debtor in cash upon written request by the Debtor and (b) upon recovery by the Debtor, any prepetition claim of such Critical Construction Vendor shall be reinstated as if the payment had not been made; and it is further ORDERED if there exists an outstanding postpetition balance due from the Debtor to such Critical Construction Vendor, the Debtor may elect to recharacterize and apply any payments made pursuant to this Order to such outstanding postpetition balance, and the Critical Construction Vendor shall repay immediately in cash to the Debtor such paid amounts that exceed the postpetition obligations then outstanding and without any claim right of setoff or recoupment against the Debtor resulting thereby; and it is further ORDERED nothing herein shall impair or prejudice the Debtors or, to the extent permitted by applicable law, the official committee of unsecured creditors ability to contest, in their sole discretion, the extent, perfection, priority, validity, or amounts of any claims held by any Critical Construction Vendor. The Debtor does not concede that any liens (whether

contractual, possessory, common law, statutory, or otherwise) or claims satisfied pursuant to this

3
1705891 v3/NY

Order are valid, and the Debtor expressly reserves all rights to contest the extent, validity, or perfection or seek the avoidance of all such liens or the priority of such claims; and it is further ORDERED nothing in the Motion or this Order, nor as a result of the Debtors payment of any Critical Construction Vendor Claims pursuant to this Order, shall be deemed or construed as: (a) prejudicing any right the Debtor may have to contest the amount of or basis for any prepetition obligations owed to any Critical Construction Vendor; or (b) an admission as to the validity or priority of any claim against the Debtor; or (c) an assumption of any agreement, contract, or lease pursuant to section 365 of the Bankruptcy Code between the Debtor and any Critical Construction Vendor; and it is further ORDERED the Debtor is authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion; and it is further ORDERED the terms and conditions of this Order shall be immediately effective and enforceable upon its entry, notwithstanding any applicability of Bankruptcy Rule 6004(h); and it is further ORDERED that this Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation and/or enforcement of this Order; and it is further ORDERED that notice of the Motion as provided herein shall be deemed good and sufficient notice of such Motion. Dated: ___________________, 2011 New York, New York

HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE

4
1705891 v3/NY