UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION
In re:
STONE PANELS, INC.,
STONE PANELS HOLDING CORP.

Debtors

Chapter 11
Case No. 16-32856-hdhl 1
Case No. 16-32859-bjhll

Joint Administration Requested

EMERGENCY MOTION FOR USE OF CASH COLLATERAL

TO THE HONORABLE HARLIN D. HALE., U.S. BANKRUPTCY JUDGE:
The above-captioned debtors and debtors-in possession (collectively, the "Debtors") file

their Emergency Motion for Use of Cash Collateral (the "Motion"):

I. Case Background
1.

Debtors filed for relief under Chapter 11 of the United States Bankruptcy Code on

July 21, 2016. The Debtors are operating as debtors-in-possession pursuant to 11 U.S.C. 1107

and 1108. The Debtors have filed a motion seeking joint administration of these cases.
2.

This Court has jurisdiction over this matter under 28 U.S.C. 1334. This is a core

matter pursuant to 28 U.S.C. l 57(b)(2)(M).

II. Secured Debt At Issue

3.

Debtors are Borrowers under that certain "Loan and Security Agreement" (the

"Agreement") dated September 19, 2014 (as may have been amended or modified) with The

PrivateBank and Trust Company ("Lender"). Pursuant to the Agreement, Lender provided a
Revolving Loan and a Term Loan. As of the time of the filing of the Petition, the sum of
$9,209,631.63 was outstanding under the Agreement. Subsequent to the filing of the Petition,
Thompson Street Capital Partners III, LP paid Lender the sum of $4,752,626.84 pursuant to a

guaranty agreement, reducing the outstanding balance of the loans. Accordingly, as of the date

of the filing of this Motion, the total outstanding balance due to Lender is $4,457,004.79 m
principal and accrued interest.
4.

The indebtedness owed under the Agreement is secured by substantially all of the

Debtors' assets (the "Collateral"), including accounts and accounts receivable.

5.

Debtors are not aware of any other person or entity who claims a lien or security

interest in any of the Debtors' accounts receivable or other assets.

III. Debtors' Business Operations

6.

Debtor Stone Panels Inc. C'SPI') is a manufacturer of lightweight panelized thin

stone cladding products. These products are used primarily to clad exterior and interior building
facades and are a direct substitute for traditional dimensional (or heavy) stone cladding products.
The mix of business is split between new construction and retrofit/rehab work. Stone Panels is
located in Coppell, Texas, and has been manufacturing thin stone panel products for over thirty

years and has thousands of installations worldwide (48 US states, Asia, Europe and South
America).

Stone Panels is the largest manufacturer of these products worldwide and

is

significantly larger than its nearest competitor.

7.

Debtor Stone Panels Holding Corporation ("Holding") is the holding company for

SPI, and has no separate operations.

8.

SPl's products are custom and unique, and require long lead times for production.

In addition to facing manufacturing and scheduling problems, SPl has been faced with cash flow
issues caused by increased costs that could not be passed through, customer demands for
liquidated damage payments, and several large unprofitable orders that had been booked with
small profit margins and complex assembly requirements. SPI has been attempting to restructure
its operations, reduce costs, create better manufacturing efficiency and increase capacity.

IV. Need for and Proposed Use of Cash Collateral

9.

Debtors need the revenues generated from the Collateral in order to pay nonnal

and necessary operating expenses in connection with their business in order to preserve and
protect the Debtors' business and the Estates and avoid immediate and irreparable injury. A
proposed budget is attached as Exhibit A. Without the use of cash collateral, Debtors will be
unable to operate their business and manage their affairs.
I 0.

Debtors propose to use cash collateral in accordance with the proposed Budget up

to a variance of 10% per line item. 11 U.S.C. 363 prevents the Debtors from using "Cash
Collateral" without the consent of the secured party. Counsel for Debtors is reviewing the
validity or perfection of the liens claimed by Lender on the Collateral, and Debtors are not
stipulating at this time to the validity or perfection of such liens for the purposes of an interim
order. However, to the extent such liens and claims are valid and perfected, Lender is adequately
protected in connection with the Debtors' use of Cash Collateral and continued operations of the
Debtors' business.
11.

To the extent necessary, and as adequate protection for Debtors' use of cash

collateral, Debtors propose to grant a post-petition lien and all collateral which was pledged to
the lienholder and was properly perfected, pre-petition. Other relevant terms of the proposed
adequate protection are set forth in the proposed order which is served concurrently with this
Motion and attached hereto as Exhibit B. Debtors respectively request that this Court authorize
the use of Cash Collateral under 11 U.S.C. 363 for ordinary and necessary expenses incurred
by the Debtors to operate, maintain, preserve and protect their business and the Estate. The use
of cash collateral, pursuant to the terms of the Budget is in the best interests of the Estates and

the creditors. Debtors have provided notice of this Motion to Lender and its counsel, all parties
listed on the mailing matrix, and to the United States Trustee in accordance with the Bankruptcy
Rules and the Local Rules.
12.

Debtors seek interim authority

to

use cash collateral on

an

emergency basis and

authority to use cash collateral upon final hearing of this Motion.

WHEREFORE, PREMISES CONSIDERED, Debtors respectfully request that this Court

authorize the use of Cash Collateral as heretofore requested. Debtors request such other and

further relief as they may show themselves justly entitled.

Respectfully submitted,
WALLER LANSDEN DORTCH & DAVIS, LLP

By:

Isl Eric J. Taube

Eric J. Taube
State Bar No. 19679350

Eric.taube@wallerlaw.com
Mark C. Taylor
State Bar No. 19713225

Mark.taylor@wallerlaw.com
Morris Weiss
State Bar No. 21110850

Morris. weiss@wallerlaw.com
100 Congress Ave., Suite 1800
Austin, Texas 7870 I
Telephone: (512) 685-6400
Telecopier: (512) 685-6417
PROPOSED ATTORNEYS FOR DEBTORS AND
DEBTORS IN POSSESSION