IN THE UNITED STATES BANKRUPTCY COURT FCiR THE …

IN THE UNITED STATES BANKRUPTCY COURT

FCiR THE LI~TTi~'ICT ~v'i T~Ei.,AWAP~

In re: ) Chapter 11

KONA GRILL, INC., et al.,l ) Case No.: 19-10953 (CSS)(Jointly Administered)

Debtors. )Ike: Docket Nos. 8 and 40

Objection Deadline: May 21, 2019 at 4:00 p.m. (ET)

Hearing Date: May 28, 2019 at 1:00 p.m. (ET)

NOTICE OF ENTRY OF DEBTORS' MOTION FOR INTERIM AND FINAL ORDER

UNDER SECTIONS 105, 345, 363, 364, 503, 1107 AND 1108 OF THE BANKRUPTCY

CODE AUTHORIZING (I) MAINTENANCE OF EXISTING BANK ACCOUNTS;

(II) CONTINiJANCE OF EXISTII~IG CASH MAl~TAGEMENT SYSTEM, BANK

ACCOUNTS, CHECKS AND RELATED FORMS; (III) CONTINUED

PERFORMANCE OF INTERCOMPANY TRANSACTIONS; (IV) LIMITED

V4~AIVER OF SECTION 345(b) DEPOSIT AND INVESTMENT

REQUIREMENTS AND (V) GRANTING RELATED RELIEF

TO: (a) the Office of the United States Trustee; (b) Key Bank National Association and Zions

Bank, (c) parties asserting liens against the Debtors' assets, (d) the Debtors' thirty largest

unsecured creditors on a consolidated basis; (e) the Banks; and (f j any party requesting

special notice pursuant to Bankruptcy Rule 2002.

PLEASE TAKE NOTICE that on Apri130, 2019, the above-captioned debtors

and debtors in possession (collectively, the "Debtors"), each filed a voluntary petition for relief

under chapter 11 of title 11 of the United States Code with the Clerk of the United States

Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").

PLEASE TAKE FURTHER NOTICE that the Debtors filed the Debtors'

Motion for Interim and Final Order Under Sections 105, 345, 363, 364, 503, 1107 and 1108 of

the Bankruptcy Code Authorizing (I) Maintenance of Existing Bank Accounts; (II) Continuance

' The Debtors and the last four digits of their respective taxpayer identification numbers include: Kona Grill, Inc.

(6690); Kona Restaurant Holdings, Inc. (6703); Kona Sushi, Inc. (4253); Kona Macadamia, Inc. (2438); Kona

Texas Restaurants, Inc. (4089); Kona Grill International Holdings, Inc. (1841); Kona Baltimore, Inc. (9163); Kona

Grill International, Inc. (7911); and Kona Grill Puerto Rico, Inc. (7641). The headquarters and service address for

the above-captioned Debtors is 15059 North Scottsdale Road, Suite 300, Scottsdale, Arizona 85254.

DOCS DE223664.1 50045/002

Case 19-10953-CSS Doc 67 Filed 05/02/19 of 4

of Existing Cash Management System, Bank Accounts, Checks and Related Forrns; (III)

~antinued 1'e~form~nce cif Interc~snpany Transactirns; (I~) Li~~aite~ Waive; ~f Section 345(b)

Deposit and Investment Requirements and (V) GNanting Related Relief (the "Motion") [Docket

No. 8] with the United States Bankruptcy Court for the District of Delaware, 824 Market Street,

3rd Floor, Wilmington, Delaware 19801 (the "Bankruptcy Court"). A copy of the Motion is

attached hereto as Exhibit 1.

PLEASE TAKE FURTHER NOTICE that the Debtors presented certain first-

day motions at a hearing before the Honorable Christopher S. Sontchi at the Bankruptcy Court

on May 2, 2019. The Bankruptcy Court granted interim relief on the Motion and entered the

InteNim Order Unc~eN Sections 105, 345, 363, 364, 503, 1107 and 1108 of the Bankruptcy Code

Authorizing (I) Maintenance of Existing Bank Accounts; (II) Continuance of Existing Cash

Management System, Bank Accounts, Checks and Related FoNfns; (III) Continued Performance

of Intercompany Transactions; (IV) Limited WaiveN of Section 345(b) Deposit and Investment

Requirements and (V) Granting Related Relief (the "Interim Order") [Docket No. 40], attached

hereto as Exhibit 2.

PLEASE TAKE FURTHER NOTICE that any response or objection to the

entry of a final order with respect to the relief sought in the Motion must be filed with the

Bankruptcy Court on or before May 21, 2019 at 4:00 p.m. prevailing Eastern Tiine.

PLEASE TAKE I~ URTHER NOTICE that at the same time, you must also

serve a copy of the response or objection upon: (i) the Debtors, Kona Grill, Inc., 15059 N.

Scottsdale Rd., Suite 300, Scottsdale, AZ 85254, Attn: Christopher J. Wells; (ii) proposed

counsel for the Debtors, Pachulski Stang Ziehl &Jones LLP, 919 N. Market Street, 17th Floor,

Wilmington, DE 19801, Attn: James E. O'Neill (ioneill cr,pszjlaw.com); (iii) counsel to any

2DOCS DE223664.1 50045/002


statutory committee appointed in these cases; (iv) counsel for the Debtors' prepetition and

postpetitian secured l~r~ders, Buchanan Ingersoll ~i Rooney P~, 919 North Market Street,

Suite 990, Wilmington, DE 19801-1054 Attn: Mary F. Caloway, (mary.calowav cr,bipe.com);

and (v) the Office of The United States Trustee, Attn: Jaclyn Weissgerber,

(jaclyn.weiss er~nusdoj.~), 844 King Street, Suite 2207, Lockbox 35, Wilmington,

Delaware 19801.

PLEASE TAKE FURTHER NOTICE THAT IF YOU FAIL TO RESPOND IN

ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT THE FINAL RELIEF

REQUESTED BY THE MOTION WITHOUT FURTHER NOTICE OR HEARING.

PLEASE TAKE FURTHER NOTICE THAT A HEARING TO CONSIDER

THE FINAL RELIEF SOUGHT IN THE MOTION WILL BE HELD ON MAY 28, 2019 AT

1:00 P.M. PREVAILING EASTERN TIME BEFORE THE HONORABLE CHRISTOPHER

S. SONTCHI, UNITED STATES BANKRUPTCY COURT JUDGE, AT THE UNITED

[Remainder of Page Intentionally Left Blank)

DOCS DE223664.1 50045/002


STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 MARKET

STREET, 5TH FLOQR, C~TJRTR~~M NG~. 6, W?LMINCTOTl, nELA V~ARE 19801.

I~at~d: Niay 2, 2G i 9

PACHULSKI STANG ZIEHL &JONES LLP

/s/James E. O'NeillJeremy V. Richards (CA Bar No. 102300)James E. O'Neill (DE Bar No. 4042)John W. Lucas (CA Bar No. 271038)919 N. Market Street, 17th FloorP.O. Box 8705Wilmington, DE 19899-8705 (Courier 19801)Telephone: (302) 652-4100Facsimile: (302) 652-4400E-mail: [email protected]

[email protected] Lucas@pszj law. com

PNoposed Attorneys foN DebtoNs and Debtors inPossession

4DOGS UE:223664.1 50045/002


Exhibit 1

DOCS DE:223664.1 50045/002

Case 19-10953-CSS Doc 67-1 Filed 05/02/19 Page 1 of 41


In re:

KONA GRILL, INC., et al., l

FOR THE DISTRICT OF DELAWARE

Debtors. )

~hapier i i

Case No.: 19-10953 (__)Joint Administration Requested

DEBTORS' MOTON FOR INTERIM AND FINAL ORDER UNDER SECTIONS 105,

345, 363, 364, 503, 1107 AND 1108 OF THE BAN~~RUPTCY CODE AUTHORIZING (I)

MAINTENANCE OF EXIS'T'ING BANK ACCOUNTS; (II) CONTINUANCE OF

EXISTING CASH MANAGEMENT SYSTEM, BANK ACCOUNTS, CHECKS AND

RELATED FORMS; (III) CONTINUED PERFORMANCE OF INTERCOMPANY

TRANSACTIONS; (IV) LIMITED WAIVER OF SECTION 345(b) DEPOSIT AND

INVESTl~'IENT REQUIREIVIENTS AND (V) GRANTING RELATED RELIEF

The above-captioned debtors and debtors in possession (the "Debtors" or

"Company") hereby file this motion (the "Motion") for the entry of an interim and final order,

pursuant to sections 105, 345, 364, 363, 503, 1107, and 1108 of Title 11 of the United States Code

(the "Bankruptcy Code"), authorizing: (i) the maintenance of existing bank accounts, including

the authority to pay routine prepetition banking fees owed to financial institutions; (ii) the

continued use of the Company's existing cash management system, bank accounts, and checks

(the "Cash Management System"); (iii) the continued performance of intercompany transactions

("Intercompany Transactions"); (iv) a limited waiver of the deposit and investment requirements

i The Debtors and the last four digits of their respective taxpayer identification numbers include: Kona Grill, Inc.

(6690); Kona Restaurant Holdings, I~lc. (6703); Kona Sushi, Inc. (4253); Kona Macadamia, Inc. (2438); Kona Texas

Restaurants, Inc. (4089); Kona Grill International Holdings, Inc. (1841); Kona Baltimore, Inc. (9163); Kona Grill

International, I:~~. (7°11); and Kona Grill Puerto Rico, Inc. (7641). The headquarters and service address for the

above-captioned Debtors is 15059 North Scottsdale Road, Suite 300, Scottsdale, Arizona 85254.

~~~~~ p~_DOCS_LA:320608.7 ~~-~~ ~W ~ Nt ,.., [m~`'


imposed under section 345(b) of the Bankruptcy; and (v) granting related relief. In support of the

Motion, the Debtors respectfully represent as follows:

JURISDICTION AloTD VENUE

1. The United States Bankruptcy Court for the District of Delaware (the

"Court") has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended

Standing D~deN of Reference from the United States District Court fog the District of DelawaNe,

dated February 29, 2012. This matter is a core proceeding within the meaning of 28 U.S.C.

§ 157(b)(2), and the Debtors confirm their consent pursuant to Rule 9013-1(~ of the Local Rules

of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of

Delaware (the "Local Rules") to the entry of a final order by the Court in connection with this

Motion to the extent that it is later determined that the Court, absent consent of the parties, cannot

enter final orders or judgments in connection herewith consistent with Article III of the United

States Constitution.

2. The statutory bases for the relief sought in this Motion are sections 105,

345, 363, 364, 503, 1107, and 1108 of the Bankruptcy Code; Rules 6003, 6004, and 9013 of the

Federal Rules of Bankruptcy Procedure (the ̀ Bankruptcy Rules"); and Local Rule 9013-1(~.

Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

BACKGROUND

A. The Chapter 11 Cases

3. On the date hereof (the "Petition Date"), the Debtors commenced these

chapter 11 cases by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code.

The Debtors have continued in the possession of their property and have continued to operate and

2ROCS LA:320608.7


manage their business as debtors in possession pursuant to sections 1107(a) and 1108 of the

~anl~ry_ptcy Cocl_e: No truste~5 ~~aminer5 or comz~aittee has been appointed in the these chapter 11

~Y_~.Y:I.91

4. The factual background regarding the Debtors, including their current and

historical business operations and the events leading up to the commencement of these chapter 11

cases, is set forth in detail in the Declaration of Ch~istophe~ J. Wells in Support of FiNst Day

Pleadings (the "First Day Declaration") filed concurrently herewith and fully incorporated herein

by reference.

B. The Cash Management System and Bank Accounts

5. The Company's Cash Management System facilitates the timely and

efficient collection, management, and disbursement of funds used in the Debtors' business. The

Cash Management System currently consists of, as more fully outlined below, three primary bank

accounts and 38 linked depository sub-accounts, all located at Wells Fargo Bank, N.A. ("Wells

Faro").Z A list of the Company's bank accounts (collectively, the "Bank Accounts") is set forth

on Exhibit A annexed hereto. A schematic diagram of the Cash Management System is annexed

hereto as Exhibit B.

6. As more fully explained below, the Cash Management System is designed

to effectuate the collection of revenue from customers, pay operating expenses, and maintain

payroll obligations. Any disruption to the Cash Management System would jeopardize the

Company's ability to timely satisfy postpetition obligations.

2 Tha Company is in the process of closing certain restaurant locations. To the extent sub-accounts relating to these

restaurants are no longer necessary, the Debtors request authority to close such sub-accounts without further order

of the Court.

3DOCS LA:320608.7


The Operating Account

7. The Debtors maintain an operating account (Account No. 9811, the

"Operating Account") at Wells Fargo. The Operating Account is utilized for both receipts and

disbursements. The approximate balance in the Operating Account as of the Petition Date is $1.2

million.

8. The Company typically makes the following deposits to the Operating

Account:

• Restaurant Cash, Deposits: Each sub-account is maintained for aseparate restaurant location. Cash deposits from the restaurants aretransported on a weekly basis to and deposited into the applicable sub-account at a Wells Fargo branch by armored car. Deposits are

automatically swept from the sub-accounts to the Operating Accountsuch that the end of day balance of the sub-accounts is always $0.

• Credit Card Deposits: Credit card deposits (collectively the "Credit

Card Deposits") in the United States are received from (a} American

Express and (b) Total Systems Services, Inc. ("TSYS"). Credit card

deposits in Puerto Rico are received from Global Payments Inc.("Global Payments"). The Credit Card Deposits are made by the

applicable credit card processor directly into the Operating Account.

• Other Deposits: Checks may be received at the Company's corporate

office for vendor rebates, refunds, and for other miscellaneous reasons.

These checks are logged by the Senior Accountant into a summary

journal entry when received. The physical checks are stored in a lockeddrawer until deposited. The checks are deposited in~a the Operating

Account either electronically or at a physical Wells Fargo branch

location. In addition, the Debtors receive Automated Clearing House

("ACH") deposits from other vendors or consumers that are deposited

into the Operating Account.

9. As discussed above, the Company also utilizes the Operating Account as a

centralized disbursement account. Specifically, the Company uses the Operating Account to fund

the zero-balance payroll and accounts payable accounts, as described more fully below. The

llebtors also utilize the Operating Account to (i) fund certain credit card processing fees, (ii) send

4DOCS LA:32060A.7


wires to third parties when ACH is not available, and (iii) fund the on premise cash requirements

of individual restaurants.

ii. Accounts Payable Account

10. The Debtors make the majority of accounts payable disbursements and

some minor payroll-related disbursements (e.g., de minimis prepaid payroll debit cards) from a

zero balance account (Account No. 0072, the "Accounts Payable Account") maintained at Wells

Fargo. Disbursements from the Accounts Payable Account are made via automated and manual

checks and ACH transfers. Check runs typically occur on a weekly basis while ACH transfers

occur on a daily basis or as needed. The Accounts Payable Account is funded on an as-needed

and zero balance basis from the Operating Account.

iii. Payroll Account

11. The Debtors make the majority of payroll disbursements from a zero

balance account (Account No. 9829, the "Payroll Account") maintained at Wells Fargo. To meet

their weekly payroll obligations, the Debtors utilize the services of Paycom, a third party payroll

processor. Payments to fund payroll disbursements are made to Paycom from the Payroll Account.

The Payroll Account is funded on an as-needed and zero balance basis from the Operating

Account. The Debtors do not make any non-payroll-related disbursements from the Payroll

Account.

RELIEF REQUESTED

12. By this Motion, the Debtors seek (a) authority to (i) maintain their existing

bank accounts and to pay any prepetition routine banking fees imposed by the financial institutions

where the Debtors' bank accounts are maintained and to continue to use their existing business

5nocs LA:3zo6os.~


forms and check stock; (ii) continue to use their existing Cash Management System, as provided

herein; (iii) continue to perform intercompany transactions among the D~btorss (iv) obtain a

limited waiver of the requirements pursuant to section 345(b) of the Bankruptcy Code to the extent

required; and (b) the related relief set forth herein.

A. The Court Should Autho~•ize theDebtors to Maintain Existing Bank Accounts

13. The United States Trustee for the District of Delaware has established

certain operating guidelines for debtors in possession. One such provision requires chapter 11

debtors in possession to close all existing bank accounts and open new bank accounts. The

guidelines also require that debtors maintain new bank accounts in certain financial institutions

designated as authorized depositories by the United States Trustee. This requirement, designed to

provide a clear line of demarcation between prepetition and post-petition claims and payments,

helps protect against the inadvertent payment of prepetition claims by preventing banks from

honoring checks drawn before the Petition Date.

14. The Debtors seek a waiver of the United States Trustee's requirement for

the closure of the Bank Accounts and opening of new post-petition bank accounts at depositories

authorized by the United States Trustee. If strictly enforced in these cases, the requirement to

close and open new accounts would cause a severe disruption in the Debtors' activities and would

impair the Debtors' ability to operate under chapter 11. Maintenance of the Bank Accounts and

the Cash Management System will greatly facilitate the Debtors' operations in chapter 11. The

continued maintenance of the Bank Accounts is of paramount importance because the accounts

are used to collect revenues and effectuate payments to employees and vendors.

DOCS LA:320608.7


15. The Bank Accounts are maintained by a financial institution that is on the

Un~te~1 Stites Trustee's approved depository list for the District of Delaware. If the Bank Accounts

were closed, the Debtors would have to open new accounts and then attempt to arrange alternative

electronic and manual payment procedures for payments into and out of the Debtors' accounts,

which would disrupt the flow ofpost-petition receipts and disbursements. In addition, closing the

Bank Accounts would require the Debtors to cancel and reinstitute wire transfer instructions which

would be difficult to modify under exigent circumstances. This disruption would severely impact

and could irreparably harm the Debtors' ability to operate at this critical juncture. The Debtors

should be permitted to maintain their existing Bank Accounts and, if necessary, open new accounts

as debtors-in-possession accounts, and/or close any unneeded existing Bank Accounts.

16. To guard against improper transfers resulting from the post-petition

honoring of prepetition checks, the Debtors will promptly notify Wells Farga not to honor checks

drawn on the Debtors' accounts before the Petition Date, except upon limited Court-approved

exceptions. Subject to a prohibition against honoring prepetition checks or offsets without specific

authorization from this Court, the Debtors request that they be authorized to maintain and continue

the use of their Bank Accounts in the same manner and with the same account numbers, styles,

and document forms as those employed prepetition.

17. If the relief requested herein is granted, the Debtors will not pay, and Wells

Fargo will be required not to pay, any debts incurred before the Petition Date, other than as

specifically authorized through this Motion or otherwise ordered by the Court.

7DOCS LA:320608.7


B. The Court Should Authorize the Debtors to

Continue Their Existing Cash IVIana~ement System

18. The Debtors hereby seek authority to continue to use their Cash

Managemeni Sysiem as such sys~em rr~ay '~e I~~~difieu ~y tie Debtors. Fir t ~e r~as~~~s set forth

above, the Cash Management System constitutes an essential business practice and was created

and implemented by the management of the Debtors in the exercise of their business judgment.

The Cash Management System provides numerous benefits including the ability to (a) receive

customer payments; (b) allow a mechanism for deposits; (c) pay employee wages and benefits;

and (d) pay vendors. In addition, preserving a "business as usual" atmosphere and avoiding the

unnecessary distractions that would inevitably be associated with a substantial disruption of the

Cash Management System. Moreover, the Debtors submit that the relief requested is consistent

with the relief provided to debtors in a number of other cases pending in this district, as explained

below.

C. The Court Should Authorize the Payment

of Outstanding Routine Prepetition Expenses

Relating to the Operation of the Cash Management System

19. In the ordinary course of the operation and maintenance of the Cash

Management System, the Debtors incur routine bank charges and fees relating to the

administration of the Cash Management System, which also includes fees relating to the

processing of credit cards. While it is difficult to readily determine the aggregate amount of unpaid

prepetition banking fees as of the Petition Date (given, for example, the applicable bank's and third

party payment processors' varying timing of charging/deducting such fees from a given account),

on average, the Debtors pay approximately $250,000 to $300,000 per month.3 The Debtors seek

3 This amount is inclusive of monthly Credit Card Processor fees discussed below.

8DOCS LA:320608.7


authority, in their discretion, to pay any such routine and ordinary course prepetition banking fees

anc~ charges owed to any affected bank and to continue the post-petition payment of such fees and

charges in the ordinary course of business, subject to the terms of any order authorizing the Debtors

to obtain debtor in possession financing (a "Financin~Order")

D. The Court Should Authorize Debtors toContinue Processing Credit Card Transactions

20. The Debtors are party to a Merchant Processing Agreement (the "MPA")

with TSYS Merchant Solutions, LLC, as agent for First National Bank of Omaha (the "Credit Card

Processor"). The Company's customers are able to pay for their meals and other services with

credit cards. For purchases with American Express, the Credit Card Processor remits customer

payments to the Debtors after it withholds the related transaction fees associated with the purchase.

For all others, the Debtors are paid in full for each credit card transaction and the Credit Card

Processor debits the Company's account in the amount of its fee an the second business day of the

following month; provided, however, for credit card transactions in Puerto Rico, the Company is

paid in full for each credit card transaction and pays American Express and Global Payments the

related credit card processing fees at the end of each month.

21. It is routine for the Company's customers to pay using a credit card. As a

result, it is essential that the Debtors maintain the MPA with the Credit Card Processor in the

ordinary course of business. Accordingly, the Debtors request authority to pay any outstanding

fees owed to the Credit Card Processer to ensure that the Debtors continue to receive all of the

benefits and services associated under the MPA.

9DOCS LA:320608.7


22. The Debtors further request that the Court authorize the Banks and, to the

extent applicable, the Company's credit card processors, to process payments in the ordinary

course of business, including the netting out of any fees and/or chargebacks arising before, on, or

after the Petition Date.

E. Tile Court Should Grant a Limited Waiver

PursiYant to Section 345~b) of the Bankruptcy Code

23. The Debtors seek a waiver of section 345(b) of the Bankruptcy Code to the

extent required. The waiver would permit the Debtors to maintain the Bank Accounts without

posting a bond or other security, as would otherwise be required under section 345(b) whenever

the funds on deposit exceed the amount permitted under section 345(b). As explained above, all

of the Bank Accounts are maintained at Wells Fargo, which is a federally insured institution and

approved depository with the United States Trustee.

BASIS FOI2 RELIEF REQUESTED

A. The Continued Use of the Cash Management System

and Bank Accounts Is Essential and Approval to 1Viaintain the Status

Quo Is Routiuel~~ Granted Under Bankruptcy Code Sections 363 and 105

24. Bankruptcy courts routinely grant chapter 11 debtors authority to continue

utilizing existing cash management systems, and treat requests for such authority as a relatively

"simple matter." In re Baldwin-United CoNp., 79 B.R. 321, 327 (Bankr. S.D. Ohio 1987). This is

particularly true where, as here, the chapter 11 case involves affiliated entities with complex

financial affairs. In In Ne Charter Co., 778 F.2d 617 (1 lth Cir. 1985), for example, the bankruptcy

court entered an order authorizing the debtors and forty-three (43) of their subsidiaries "to continue

to consolidate the management of their cash as has been usual and customary in the past, and to

10DOCS LA:320608.7


transfer monies from affiliated entity to entity, including operating entities that are not debtors."

Id. at 620. The Eleventh Circuit Court of Appeals then affirmed a subsequent district court

decision denying a creditor's motion For leave to appeal the bankruptcy court's cash management

order, holding that authorizing the debtors to utilize their prepetition "routine cash management

system" was "entirely consistent" with applicable provisions of the Bankruptcy Code. Id. at 621.

25. Likewise, in another context, the bankruptcy court in the Columbia Gas

chapter 11 case explained that a centralized cash management system "allows efficient utilization

of cash resources and recognizes the impracticability ofmaintaining separate cash accounts for the

many different purposes that require cash." In Ne Columbia Gas Sys., Inc., 136 B.R. 930, 934

(Bankr. D. Del. 1993), aff'd in paNt and ~ev'd in past, 997 F.2d 1039 (3d Cir. 1993), cent. denied

sub nofn Official Comrn. of Unsecured C~editoNs v. Columbza Gas Transmission Copp., 114 S. Ct.

1050 (1994). The Third Circuit agreed, emphasizing that a requirement to maintain all accounts

separately "would be a huge administrative burden and economically inefficient." Columbia Gas,

997 F.2d at 1061. See also In Ne SouthmaNk Corp., 49 F.3d 111, 114 (5th Cir. 1995) (cash

management system allows debtors "to administer more efficiently and effectively their financial

operations and assets"); In re UNR Indus., Inc., 46 B.R. 25, 27 (Bankr. N.D. Ill. 1984).

26. Section 363(c)(1) of the Bankruptcy Code authorizes the debtors in

possession to "use property of the estate in the ordinary course of business without notice or a

hearing." 11 U.S.C. § 363(c)(1). The purpose of section 363(c)(1) of the Bankruptcy Code is to

provide a debtors in possession with the flexibility to engage in the ordinary transactions required

to operate their business without undue oversight by creditors or the court. Medical Malpractice

Ins. Assn. v. Hzr~sch (In ~e Lavigne), 114 F.3d 379, 384 (2d Cir. 1997). Included within the

11DOGS LA:320608.7


purview of section 363(c) is a debtors' ability to continue the "routine transactions" necessitated

by a debtors' cash management system. Ancdas~a Nat'l Dist~ib. Co. v. Amdura Corp. (In re

Amdura CoNp.), 75 F.3d 1447, 1453 (lOt" Cir. 1996). Accordingly, the Debtors seek authority

under section 363(c)(1) of the Bankruptcy Code to continue the collection and disbursement of

cash pursuant to their existing Cash Management System. Additionally the Court may exercise

their equitable powers to grant the relief requested herein. Section 105(a) of the Bankruptcy Code

empowers the Court to "issue any order, process, or judgment that is necessary to carry out the

provisions of this title." 11 U.S.C. § 105(a). Continuing the Cash Management System without

interruption is vital to the success of their chapter 11 cases.

27. In other cases in the District of Delaware, this Court has granted relief

substantially similar to that requested in this Motion. See, e.g., In re The Walking Company

Holdings, Inc., Case No. 18-10474 (LSS) (Banlcr. D. Del. Mar. 8, 2018); In Ne Aquion Energy,

Inc., Case No. 17-10500 (KJC) (Bankr. D. Del. Mar. 10, 2017); In ~e Basic Energy SeNvices, Inc.,

et al., Case No. 16-12320 (KJC) (Bankr. D. Del. October 26, 2016); In ~e Key Energy Services,

Inc., et al., Case 16-12306 (BLS) (Bankr. D. Del. October 25, 2016); In Ne Malibu Lighting

CoNpo~ation, et al., Case No. 15-12082 (KG) (Bankr. D. Del. Oct. 9, 2015); In Ne Cache, Inc.,

Case No. 15-10172 (MFW) (Bankr. D. Del. Feb. 5, 2015). Accordingly, the Debtors request that

the Court approve the continued use of the Cash Management System and Bank Accounts.

B. The Debtors' Sank Accounts Are I~Compliance With Section 345(b) of the Bankruptcy Code

28. Section 345(a) authorizes deposits or investments of money "as will yield

the maximum reasonable net return on such money, taking into account the safety of such deposit

12DOCS LA:320608.7


or investment." Section 345(b) requires a depository to provide a bond, unless deposits with such

depository are5 "i_n_sured or guarant~~d by the United States or by a department; agency, or

instrumentality of the United States or backed by the full faith and credit of the United States."

29. As noted above, the Debtors' depository accounts are with Wells Fargo

Bank, a bank that has been approved as a depository for funds of debtors in possession by the

United States Trustee for Region 3. Therefore, the Bank Accounts are in compliance with the

security or bonding requirements prescribed by section 345(b) of the Bankruptcy Code and no

security or bonds are necessary to secure the funds in such accounts.

C. The Court Should Grant the Debtors Authority

to Use Existing Checks and Related Forms

30. To minimize expense to their estates, the Debtors request authority to

continue using their respective existing pre-printed check stock, deposit slips, and related forms

without reference to their "debtors in possession" status until the existing stock has been exhausted,

provided that the Debtors shall add the "debtor in possession" designation to any new checks

ordered after the depletion of the existing stock. The Debtors' business forms are primarily

electronically generated, but certain forms used by the Debtors' accounts payable department are

preprinted. Parties doing business with the Debtors undoubtedly will be aware, as a result of the

notice that will be sent of the filing of the Debtors' chapter 11 cases and the publicity of the filing,

of the Debtors' status as a chapter 11 debtors in possession. For this reason, the Debtors request

that they be authorized to use existing checks and deposit slips without placing the label "debtor

in possession" on each such form until such a time as their existing stocks are depleted. In addition,

the Debtors request a reasonable amount of time to alter their software to provide for the insertion

13DOCS LA320608.7


of "debtor in possession" on postpetition purchase orders and invoices, which the Debtors estimate

may take up to three weeks to implement.

31. Similar relief has been granted in this district. See, e.g., In ~e The Walkzng

Company Holdings, Inc., Case No. 18-10474 (LSS) (Bankr. D. Del. Mar. 8, 2018); In ~e Aquiora

Energy, Inc., Case No. 17-10500 (KJC) (Bankr. D. Del. Mar. 10, 2017); In ~e Malibu Lighting

Corporation, et al., Case No. 15-12082 (KG) (Bankr. D. Del. Oct. 9, 2015).

F. The Debtors Should Be Allo«red to Continue the Intercompany

Transactions and Preserve Intercompany Setoff Rights

32. The Intercompany Transactions allow the Debtors, among other things, to

meet the needs of their customers and suppliers efficiently and in acost-effective manner, through

centralization of key administrative functions. Accordingly, the Debtors believe that the

continuation of the Intercompany Transactions is beneficial to their estates, their creditors and

other parties in interest and, therefore, should be authorized by the Court.

33. To ensure each individual entity will not, at the expense of its creditors,

fund the operations of another entity, the Debtors respectfully request that, pursuant to sections

503(b)(1) and 364(b) of the Bankruptcy Code, all intercompany claims between and among

affiliated Debtors arising after the Petition Date as a result of Intercompany Transactions

(collectively, "Intercompany Claims"), be accorded administrative priority expense status. If

Intercompany Claims are accorded administrative priority expense status, each entity utilizing

funds flowing through the Cash Management System should continue to bear ultimate repayment

responsibility for such ordinary course transactions.

14ROCS LA:320608.7


34. The Debtors also seek authorization to preserve and exercise intercompany

setoff rights. Section 553(x) of the Bankrunt~y Code provides that:

Except as otherwise provided in this section and in sections 362 andX63 ~f this title, this title dies not effect any right of a creditor to

offset a mutual debt owing by such creditor to the Debtors that arosebefore the commencement of the case under this title against a claim

of such creditor against the Debtors that arose before the

commencement of the case. .

11 U.S.C. § 553(a). A creditor need only establish two elements before a setoff may be asserted:

mutuality and timing. Official Comm, of Unsecured Creditors v. Mfrs. & T~ade~s Trust Co. (In

re The Bennett Funding Group, Inc.), 212 B.R. 206, 212 (2d Cir. B.A.P. 1997); see also In re

Ve~co IndustNies, 704 F.2d 1134, 1139 (9th Cir. 1983); In re Lundell Farms, 86 B.R. 582, 584

(Bankr. W.D. Wis. 1988). Although courts have not uniformly defined the elements of mutuality,

most courts require the following elements: that the debts be (i) owed between the same parties

and (ii) in the same right or capacity. See S Collies on Bankruptcy ~ 553.03[3][a] at 553-28-29

(15th rev, ed. 2004) (citing Davidovich v. Welton (In ~e Davidovich), 901 F.2d 1533, 1537 (10th

Cir. 1990); Lubman v. Sov~an Bank, N.A. (In re A & B Homes, Ltd.), 98 B.R. 243, 248 (Bankr.

E.D. Va. 1989); see also Cohen v. Says. Bldg. &Loan Co. (In re Bevill, B~esler &Schulman

Asset Mgmt. CoNp.), 896 F.2d 54, 57 (3d Cir. 1990) (explaining that the right of setoff depends on

the existence of mutual debts and claims between the creditor and debtor). Timing requires that

both claims arose prepetition. See Cooper.Iarrett, Inc, v. Cent. Transp., Inc., 726 F.2d 93, 96 (3d

Cir. 1984) (noting that a creditor may not [setoff] its prepetition claims against a debt owed to a

Debtors which came into existence after filing the bankruptcy petition); see also In ~e Sentinel

P~ods.Co~p., 192 B.R. 41, 45 (S.D.N.Y. 1996) ("Section 553(a) of the bankruptcy code preserves

15DOCS LA:320608.7


a creditor's right to set off ...between the Debtors and creditor as long as both debts arose before

the ~omrriencement of the [bankruptcy] case"); In re Westchester StNuctures, 181 B.R. 730, 739

(Bankr. S.D.N.Y. 1995) (same); Arnold M. Quittner, Setoff and Recouprnent, 715 PLI/Comm 633,

661 (1995) (same). As a result, "a creditor may not set off a prepetition claim against a post-

petition debt it owes the debtor, and likewise it may not set off apost-petition claim that it has

against apre-petition debt it owes to a debtor." In ~e Metco Minzng and Minerals, Inc., 171 B.R.

210 (Bankr. W.D. Pa. 1994); see also In ~e Westchester Structures, 181 B.R. at 739.

35. The Cash Management System and other processes allow the Debtors to

track all obligations owing between related entities and thereby ensure that all setoffs of

Intercompany Transactions will meet both the mutuality and timing requirements of section 553

of the Bankruptcy Code. The Debtors seek the authority to continue their Intercompany

Transactions in the ordinary course of business, in a manner consistent with the budget attached

to any Financing Order. The Debtors also respectfully request, therefore, that the Debtors

expressly be authorized, subject to any Financing Order to set off obligations arising on account

of Intercompany Transactions between the Debtors. For the avoidance of doubt, the Debtors are

not seeking authority by this Motion to satisfy prepetition claims arising out of Intercompany

Transactions by offsetting such prepetition Intercompany Transactions against post-petition

Intercompany Transactions.

WAIVER OF BANKRUPTCY RULES 6003 AND 6004

36. Pursuant to Bankruptcy Rule 6003(b), "a motion to pay all or part of a claim

that arose before the filing of the petition" shall not be granted by the Court within 21 days of the

Petition Date "[e]xcept to the extent that relief is necessary to avoid immediate and irreparat~le

16Docs ~,n:3zo6os.~


harm ...." Fed. R. Bankr. P. 6003(b). For the reasons described more fully above, and as

suppor-tec~ by the First Iaay Declaration, and to the extent that the relief requested herein implicates

Bankruptcy Rule 6003(b), the Debtors submit that the requirements of Bankruptcy Rule 6003 have

been met and that the relief requested in this Motion is necessary to avoid immediate and

irreparable harm.

37. Finally, to implement the foregoing successfully, the Debtors seek a waiver

of the notice requirements under Bankruptcy Rule 6004(a) and the fourteen-day stay of an order

authorizing the use, sale, or lease of property under Bankruptcy Rule 6004(h), to the extent these

rules are applicable.

NOTICE

38. Notice of this Motion shall be given to the following parties or, in lieu

thereof, to their counsel, if known: (a) the Office of the United States Trustee; (b) Key Bank

National Association and Zions Bank, (c) parties asserting liens against the Debtors' assets, and

(d) the Debtors' thirty largest unsecured creditors on a consolidated basis. As the Motion is

seeking "first day" relief, within two business days after the hearing on the Motion, the Debtors

will serve copies of the Motion and any order entered respecting the Motion as required by Del.

Bankr. LR 9013-1(m). The Debtors submit that, in light of the nature of the relief requested, no

other or further notice need be given.

NO PRIOR REQUEST

39. No prior motion for the relief requested herein has been made to this Court

or any other Court.

17DOGS LA:320608.7


WHEREFORE, the Debtors respectfully request that the Court enter an interim

order substantially in the form att~che~1 hereto as Exhibit C and a final order granting the relief

requested herein and granting such other relief as is just and proper.

Dated: April 30, 2019 PACHULSKI STANG ZIEHL &JONES LLP

c.

e y V. Richards (CA Bar No. 102300)

a es E. O'Neill (DE Bar No. 4042)John W. Lucas (CA Bar No. 271038)

919 N. Market Street, 17t" FloorWilmington, DE 91899Tel: (302) 652-4100Fax: (302). 652-4400E-mail: [email protected]

[email protected] lucas@pszj law. com

Proposed Attorneys for Debtorsand Debtors in Possession

18DOGS LA:320608.7


EXHIBIT Adank Accounts

DOCS LA:320608.7


PRIMARY ACCOUNTS

SUFiACCOUNTS UNDER ACCOUNT NO. -911

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KONA RESTAURANT HOLDINGS,

WELLS FARGO BANK,

# 101—

-7414

ZBA-SUBACCOUNT

INC.

N.A.

SCOTTSDALE, AZ


WELLS FARGO BANK,

#102 -

_742

2L BA-SUBACCOUNT

INC.

N.A.

CHANDLER, AZ


WELLS CARGO BANK,

#103 —

-7430

ZBA-SUBACCOUNT

INC.

N.A.

KANSAS CITY, MO


WELLS FARGO BANK,

#105-

-744

8ZBA-SuBaccotlNT

INC.

I\T.

A.LAS VEGAS, NV

KONG RESTAURANT HOLDINGS,

WELLS FARGO BANK,

#106 -

-7455

ZBA-SUBACCOUNT

ING.

N.A.

DENVER, CO


WELLS FARGO BANK,

#107 —

-7463

ZBA-SUBACCOUNT

Irrc.

N.A.

OMaxA, NE


WELLS FARGO BANK,

#108 —

-747

1SBA-SUBACCOUNT

I~vc.

N.A.

CAx~rEL, IN


WELLS FARGO BANK,

#110 —

-748

9SBA-SUBACCOUNT

INC.

N.A.

SAN ANTONIO, TX


WELLS FARGO BANK,

#111—

-749

7ZBA-SUBACCOUNT

INC.

N.A.

DALLAS, TX


WELLS FARGO BANK,

#~ 12 -LINCOLNSHIRE, IL

-7505

ZBA-SUBACCOUNT

INc.

N.A.

DOCS LA320608.7


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WELLS FARGO BANK,

#113 —

-7513

ZBA-SUBACCOUNT

INc.

N.A.

HousTo~v, TX


WELLS FARGO BANK,

# 114 —

-752

1Z,BA-SUBACCOUNT

INC.

N.A.

OAKBROOK, IL


WELLS FARGO BANK,

#116 —

-753

9ZBA-SUBACCOUNT

INc.

N.A.

AusT

irr,

TX


WELLS FARGO BANK,

#117 —

-754

7ZBA-SUBACCOUNT

INc.

N.A.

TROY, MI


WELLS FARGO BANK,

#1 ~ S -

-'75

54GBA-SU~ACCOUNT

INC.

N.A.

BATON ROUGE, LA

KONA RESTAURANT MOLDINGS,

WELLS FARGO BANTA,

# 12O -

-7562

ZBA-SUBACCOUNT

INC.

N.A.

GILBERT, AZ


WELLS FARGO BANK,

#121—

-7570

LBA-SUBACCOUNT

INC.

N.A.

STAMFORD, CT


WELLS FARGO BANK,

#122 —

_758

8GBA-SUBACCOUNT

INC.

N.A.

EDEN PRAIRIE, MN


WELLS FARGO BANK,

#i24 —

-760

4GBA-SUBACCOUNT

INC.

N.A.

GLEN ALLEN, VA

KONA RESTAURANT HOLDII~TGS,

WELLS FARGO BANK,

#126 —

-761

2SBA-SUBACCOUNT

Iivc.

N.A.

IsEL

~rr,

NJ


WELLS FARGO BANK,

#127 —

-7620

SBA-SUBACCOUNT

INC.

N.A.

BALTIMORE, MD


WELLS FARGO BANK,

#12g -

-763

8ZBA-SUBACCOUNT

INC.

N.A.

TAMPA, FL


WELLS FARGO BANK,

# 129 —

-7646

SBA-~UBACCOUNT

INC.

N.A.

MERIDIAN, ID


WELLS FARGO BANK,

# 132 —

-767

9ZBA-SUBACCOUNT

INc.

N.A.

EL PAso, TX


WELLS FARGO BANK,

#133 —

-765

7SBA-SuBaccou~rT

INc.

N.A.

CoLUNrsus, OH

DOCS LA:

3206

08.7


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Z~BA-SUBACCOUNT

INC.

N.A.

ALPHARETTA, GA


WELLS FARGO BANK,

#135 -

-7703

ZBA-SUBACCOUNT

INC.

N.A.

SARASOTA, FL


WELLS FARGO BANK,

#136 -

_237

2Z,BA-SUBACCOUNT

INC.

N.A.

SAN JUAN, PR


WELLS FARGO BANK,

#138 -

_7729

L,BA-SUBACCOUNT

INc.

N.A.

PLANo, T~


WELLS FARGO BANK,

#140 -

-7745

SBA-SUBACCOUI~TT

INc.

N.A.

AFu.

,riv

GTor

r, CIA


WELLS FARGO BANK,

# 141-

-775

2ZBA-SuBaccouN`r

I1VC.

N.A.

CINCINNATI, OH


WELLS FARGO BANK,

#143 -

-2315

ZBA-SUF3ACCOUNT

INC.

N.A.

SAN ANTONIO, TX


WELLS FARGO BANK,

#144 -

-2323

ZBA-SU~ACCOUNT

INC.

N.A.

FRIENDSWOOD, TX


WELLS FARGO BANK,

#145 -

-2331

L,BA-SU:BACCOUNT

INc.

N.A.

Mmrr

ETor

rKa,

MN


WELLS FARGO BANK,

#147 -

-2356

L.BA-SUBACCOUNT

Irrc.

N.A.

FxarrKt,nv, TN


WELLS FARGO BANK,

#148 -

-236

4ZBA-SUBACCOUNT

INC.

N.A.

HUNTSVTLLE, AL

KONA RESTAUFZANT HOLDINGS,

WELLS FARGO BANK,

#ISO -

_'77~g

ZBA-SUBACCOUNT

I~rc.

N.A.

HoNOLULu, HI


WELLS FARGO BANK,

#154 -

_~~g6

ZBA-SUBACCOUNT

INC.

N.A.

SCOTTSDALE, AZ

DOCS LA:

3206

08.7


Merchant Accounts - TSYS

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# 101—

-453

8MERCHANT

INC.

SERVICES, INC.

SCOTTSDALE, AZ

KONA P~ESTAURANT HOLDINGS,

TOTAL SYSTEMS

#102 -

-453

8MERCHANT

INC.

SERVICES, INC.

CHANDLER, AZ


TOTAL SYSTEMS

#103 —

-9815

MERCHANT

INC.

SERVICES, INC.

KANSAS CITY, MO


TOTAL SYSTEiVIS

#105

--9

802

MERCHANT

INC.

SERVICES, INC.

LAS VEGAS, NV


TOTAL SYSTEMS

#106 -

-979

2MERCHANT

INC.

SERVICES, INC.

DENVER, CO


TOTAL SYSTEMS

X107 -

-3g']9

MERCHANT

INC.

SERVICES, INC.

OMAHA, NE


TOTAL SYSTEMS

#lflg -

-4344

MERCHANT

INC.

SERVICES, INC.

CARMEL, IN


TOTAL SYSTEMS

#110 —

-433

1MERCHAT?T

INC.

SERVICES, INC.

SAN ANTONIO;

TX


TOTAL SYSTEMS

#111—

-4328

MERCHANT

INC.

SERVICES, INC.

DALLAS, TX


TOTAL SYSTEMS

#112 -LINCOLNSHIRE, IL

-4315

MERCHANT

INC.

SERVICES, INC.


TOTAL SYSTEMS

#113 —

-430

2MERCHANT

INC.

SERVICES, INC.

HOUSTON, TX


TOTAL SYSTEMS

#114 —

-429

2MERCHANT

INC.

SERVICES, INC.

OAKBROOK, IL


To`r

aL SYSTEMs

#116 —

-428

9MERCHANT

INC.

SERVICES, INC.

AUSTIN, TX


TOTAL SYSTEMS

#117 —

-4276

MERCHANT

INC.

SERVICES, INC.

TROY, MI

DOCS LA:

3206

08.7


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TOTAL SYSTEMS

#118 —

INC.

SERVICES, INC.

BATON ROUGE, LA

-4263

MF,RCHANT


TOTAL, SYSTEMS

#120 —

-4250

MERCHANT

INC.

SERVICES, INC.

GILBERT, AZ

K.ONA RESTAURANT HOLDII`TGS,

TOTAL SYSTEMS

#121—

-4661

MERCHANT

INC.

SERVICES, INC.

STANFORD, CT


TOTAL SYSTEMS

#122 -

-4205

MBRCH~NT

INC.

SERVICES, INC.

EDEN PRAIRIE, MN


TOTAL SYSTEMS

#124 —

-422

1MERCHANT

INC.

SERVICES, INC.

GLEN ALLEN, VA


TOTAL SYSTEMS

#126 —

-421

8MERCHANT

INC.

SERVICES, INC.

ISELIN, NJ


TOTAL SYSTEMS

#127 —

-424

7MERCHANT

INC.

SERVICES, INC.

BALTIMORE, MD


TOTAL SYSTEMS

#128 —

-419

5MERCHANT

INC.

SERVICES, INC.

TAMPA, FL

BONA RESTAURANT HOLDINGS,

TOTAL SYSTEMS

#129 —

_229

2MERCHANT

INC.

SERVICES, INC.

1~1ERIDIAN, ID


TOTAL SYSTEMS

#132 —

_ 1772

MERCHANT

INC.

SERVICES, Irrc

.EL PAso, TX


TOTAL SYSTEMS

#133 —

-8385

MERCHANT

INC.

SERVICES, INc.

CoLu~us, OH


TOTAL SYSTEMS

# 134 —

_6311

MERCHANT

INC.

SERVICES, INC.

ALPHARETTA, GA


DOTAL SYSTEMS

#135 —

-6308

MERcx~NT

INC.

SERVICES, INC.

SARASOTA, FL


TOTAL SYSTEMS

#138 —

-350

7MERCHANT

INC.

SERVICES, INC.

PLANO, TX


TOTAL SYSTEMS

#140 —

-3510

MERCHANT

INC.

SERVICES, INC.

ARLINGTON, VA

DOCS LA:320608.7


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TOTAL SYSTEMS

#141 —

-623

1VI~RCHANT

INC.

SERVICES, ANC.

CINCINNATI, ~I~


TOTAL SYSTEMS

#143 —

-424

7MERCHANT

INC.

SERVICES, INC.

SAN ANTONIO, TX


DOTAL SYSTEMS

#144 —

-8310

MERCHANT

INC.

SERVICES, INC.

FRIENDSWOOD, TX

KONA RESTAliRANTHOLDiNGS,

TOTAL SYSTEMS

#145 —

_gg19

MERCHANT

INC.

SERVICES, INC.

IVIINNETONKA, MN


TOTAL SYSTEMS

#147 —

-2530

MERCHANT

INC.

SERVICES, INC.

FRANKLIN, TN


TOTAL SYSTEMS

#148 —

-3206

MERCHANT

INC.

SERVICES, INC.

HLJNTSVILLE, AL


TOTAL SYSTEMS

# 150 —

-398

2MERCHANT

INC.

SERVICES, INC.

I~ONOLULU, HI

K~NA RESTAURANT HOLDINGS,

TOTAL SYSTEMS

#154 -

-883

2MERCHANT

INC.

SERVICES, INC.

SCOTTSDALE, AZ

1VIerchant Acc

ount

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AMEX

# 101—

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DOCS LA:320608.7


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EXHIBIT CProposed Order

DOCS LA:320608.7



I'OR THE DISTRICT OF DELAWARE

In re: ) Chapter 11

KONA GRILL, INC., et al.,l ) Case No.: 19-10953 (_)Joint Administration Requested

Debtors. )

INTERIM ORDER UNDER SECTIONS 105, 345, 363, 364, 503, 1107 AND 1108OF THE BANKRUPTCY CODE AUTHORIZING (I) MAINTENANCEOF EXISTING BANK ACCOUNTS; (II) CONTINUANCE OF EXISTINGCASH MANAGEMENT SYSTEM, BANK ACCOUNTS, CHECKS AND

RELATED FORMS; (III) CONTINUED PERFORMANCE OF INTERCOMPANYTRANSACTIONS; (IV) LIMITED WAIVER OF SECTION 345(b) DEPOSIT

AND INVESTIVIENT REQUIREMENTS AND (V) GRANTING RELATED RELIEF

Upon consideration of the motion (the "Motion")2 of the above-captioned

debtors and debtors in possession (the "Debtors") for the entry of an Order under sections

105, 345, 363, 1107, and 1108 of the Bankruptcy Code authorizing: (i) the maintenance of

existing bank accounts including the authority to pay routine prepetition banking fees owed

to financial institutions; (ii) the continued use of the Debtors' existing cash management

system, bank accounts, checks and related forms for the Debtors; (iii) continued performance

of intercompany transactions; and (iv) a limited waiver under Bankruptcy Code section 345(b)

to the extent necessary; and upon the First Day Declaration; and it appearing that the relief

requested is in the best interests of the Debtors' estates, their creditors and other parties in

I The Debtors and the last four digits of their respective taxpayer identification numbers include: Kona Grill, Inc.(6690); 3~ona Restaurant Holdings, Inc. (6703); Kona Sushi, Inc. (4253); Kona Macadamia, Inc. (2438); Kona TexasRestaurants, Inc. (4089); Kona Grill International Holdings, Iiic. (181); Kona Baltimore, Inc. (91b3); Kona GrillInternational, Inc. (7911); and Kona Grill Puerto Rico, Inc. (7641). The headquarters and service address for theabove-captioned Debtors is 15059 North Scottsdale Road, Suite 300, Scottsdale, Arizona 85254.

2 A capitalized term used but not defined herein shall have the meaning ascribed to it in the Motion.

DOCS LA320608.7


interest; and it appearing that this Court has jurisdiction over this matter pursuant to 28 U.S.C.

§§ 1S7 and 1334; and it appearing that this matter is a core proceeding pursuant to 28 U.S.C.

§ 157(b)(2); and due and adequate notice of the Motion having been given under the

circumstances; and after due deliberation and cause appearing therefor,

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED, on an interim basis as set forth herein.

2. A final hearing on the relief sought in the Motion shall be conducted on

May _, 2019 at (ET). Any objections to the Motion and to entry of a final order must be

filed on or before May , 2019 at 4:00 p.m. (ET) (the "Objection Deadline") and served

so that it is received and by the following parties on or before the Objection Deadline: (i) the

Debtors, Kona Grill, Inc., 15059 N. Scottsdale Rd., Suite 300, Scottsdale, AZ 85254, Attn:

Christopher J. Wells; (ii) proposed counsel for the Debtors, Pachulski Stang Ziehl &Jones LLP,

919 N. Market Street, 17th Floor, Wilmington, DE 19801, Attn: James E. O'Neill

([email protected]); (iii) counsel to any statutory committee appointed in these cases; (iv)

counsel for the Debtors' prepetition and postpetition secured lenders, Buchanan Ingersoll &

Rooney PC, 919 North Market Street, Suite 990, Wilmington, DE 19801-1054 Attn: Mary F.

Caloway, ([email protected]); and (v) the Office of The United States Trustee, Attn:

Jaclyn Weissgerber, (j [email protected]), 844 King Street, Suite 2207, Lockbox 35,

Wilmington, Delaware 19801.

3. The Debtors are authorized, but not directed, in the reasonable exercise of

their business judgment, (i) to designate, maintain and continue to use, with the same account

numbers, all of the bank accounts in existence on the Petition Date, including, without limitation,

2ROCS LA:320608.7


those accounts identified on Exhibit A to the Motion (the "Bank Accounts"); (ii) treat the Bank

Accounts for all purposes as debtors in possession accounts9 (iii) use all existing paper check stock

and related forms without reference to the Debtors' status as "debtors in possession" until such

supply is depleted, after which the Debtors will order new check stock, deposit slips and related

forms with the "debtor in possession" reference; and (iv) are afforded a reasonable time to arrange

for the labeling of "debtor in possession" on purchase orders and invoices issued postpetition, as

requested in the Motion.

4. The Debtors are authorized to close such sub-accounts described in the

Motion that are no longer necessary to the operation of the Company as a result of a restaurant

closure, without further order of the Court.

5. The banks set forth on Exhibit A to the Motion and any other bank (each, a

"Bank" and collectively, the "Banks") at which any Bank Account is or may be maintained are

hereby authorized to continue to service and administer such Bank Account as an account of the

Debtors as a debtor in possession bank account without interruption and in the usual and ordinary

course of business, and to receive, process, honor and pay any and all checks and drafts drawn on

the Bank Accounts after the Petition Date by the holders or makers thereof, as the case may be;

provided, however, that any check that the Debtors advise any Bank to have been drawn or issued

by the Debtors before the Petition Date maybe honored by any Bank only if specifically authorized

by order of this Court.

6. Except as modified by this Order, the Debtors' existing banking agreements

with the Banks with respect to the Bank Accounts and with respect to the transfers to and from the

3DOGS LA:320608.7


Bank Accounts shall continue to govern the post-petition cash management relationship between

the Debtors and each of the Banks.

7. The Debtors and each of the Banks may, without further order of this Court,

agree to and implement changes to the Cash Management System and procedures in the ordinary

course of business and/or in accordance with the terms of any Financing Order, including, without

limitation, the opening and closing of bank accounts with notice from the Debtor to the United

States Trustee, which accounts shall similarly be subject to this Order.

8. In the course of providing cash management services to the Debtors, each

Bank is authorized, without further order of this Court, to continue to deduct from the appropriate

accounts of the Debtors, the Bank's routine and ordinary course fees and expenses associated with

the nature of the deposit and cash management services rendered to the Debtors. The Debtors are

also authorized to remit or pay all prepetition and postpetition credit card processing fees in the

ordinary course of business.

9. With respect to all checks that have not been honored prior to the Petition

Date (the "Prepetition Checks"), the Debtors shall, no later than the close of business on the 5th

business day following entry of this Order, (a) place a stop payment on all such unauthorized

Prepetition Checks to be dishonored in accordance with the applicable Bank's stop payment

procedures (the "Voided Prepetition Checks"); and (b) send the Banks an electronic file containing

specific data for each applicable Voided Prepetition Check, together with a written representation

that a stop payment has been placed on all applicable Voided Prepetition Checks (the "Stop

Payment Representation"). All unauthorized Prepetition Checks that are not Voided Prepetition

Checks will be Prepetition Checks for which the Debtors have Court approval to pay and want the

4DOGS LA320608.7


Banks to honor, and the Banks shall promptly honor each such Prepetition Check after receipt of

the Stop Payment Representation from the Debtors. A Bank's reasonable reliance on the Stop

Payment Representation in connection with its honoring or dishonoring of a Prepetition Check, as

the case may be, shall not constitute a violation of this Order.

10. Each Bank that maintains a disbursement account of the Debtors shall

implement reasonable handling procedures designed to effectuate the terms of this Order, and no

Bank that implements such handling procedures and then honors a prepetition check or other item

drawn on any account that is the subject of this Order either (i) at the direction of the Debtors to

honor such prepetition check or item, (ii) in good faith belief that the Court has authorized such

prepetition check or item to be honored, or (iii) as a result of an innocent mistake made despite

implementation of such handling procedures, shall be deemed in violation of this Order.

11. The Debtors may continue to fund their businesses and operations through

the Bank Accounts, consistent with the terms, conditions, and budget attached to any Financing

Order.

12. The Debtors shall maintain detailed records reflecting all transfers of funds

(including any Intercompany Transactions) under the terms and conditions provided for by the

existing agreements with the institutions participating in the Cash Management System and any

Financing Order. In connection with the ongoing utilization of their Cash Management System,

the Debtors shall continue to maintain records in the ordinary course of business with respect to

all transfers so that all transactions (including any Intercompany Transactions) may be readily

ascertained, traced and recorded properly on the applicable accounts and distinguished between

prepetition and post-petition transactions.

5DOCS LA:320608.7


13. The Debtors are authorized to open any new Bank Accounts or close any

existing Bank Accounts as they may, in their discretion, deem necessary and appropriate; provided,

however, that the Debtors give notice within 14 days to the Office of the United States Trustee for

the District of Delaware and any statutory committees appointed in these chapter 11 cases;

provided, further, however, that the Debtors shall open any such new Bank Account at a bank that

has (i) executed a Uniform Depository Agreement with the Office of the United States Trustee for

the District of Delaware, or at a bank that is willing to immediately execute such an agreement;

(ii) or in accordance with the terms of any Financing Order; pNovided, furtheN, that any such new

Bank Account shall be subject to the terms of this Order and any Financing Order. For the

avoidance of doubt, the notice requirements contained in this paragraph do not apply to the closure

of sub-accounts related to closed restaurant locations.

14. For banks at which the Debtors hold bank accounts that are party to a

Uniform Depository agreement with the Office of the United States Trustee for the District of

Delaware, within 14 days of the date of entry of this Order the Debtors shall (a) contact each bank,

(b) provide the bank with each of the Debtors' employer identification numbers and (c) identify

each of their bank accounts held at such banks as being held by a debtors in possession in a

bankruptcy case.

15. The Debtors are authorized to continue utilizing their Cash Management

System to manage the Debtors' cash, in a manner consistent with the Debtors' prepetition

practices, in accordance with the terms of any Financing Order entered by the Court, and this

Order.

DDOCS LA:320608.7


16. The Debtors are authorized to continue to consummate the Intercompany

Transactions with other Debtors, and to create Intercompany Claims.

17. The Debtors are authorized to deposit funds, in excess of amounts insured

by the Federal Depository Insurance Corporation so long as such funds are deposited in a Bank

Account with a bank that has a Uniform Depository Agreement with the Office of the United States

Trustee.

18. Each of the Debtors' Banks is authorized to debit the Bank Accounts in the

ordinary course of business without the need for further order of this Court for: (i) all checks drawn

on the Bank Accounts which are cashed at such Bank's counters or exchanged for cashier's checks

by the payees thereof prior to the Petition Date; (ii) all checks or other items deposited in one of

Bank Accounts with such Bank prior to the Petition Date which have been dishonored or returned

unpaid for any reason, together with any fees and costs in connection therewith, to the same extent

the Debtors were responsible for such items prior to the Petition Date; and (iii) all undisputed

prepetition amounts outstanding as of the date hereof, if any, owed to any Bank as service charges

for the maintenance of the Cash Management System.

19. The Banks and, to the extent applicable, the Company's credit card

processors, are authorized to process payments in the ordinary course of business, including the

netting out of any fees and/or chargebacks arising before, on, or after the Petition Date.

20. Any of the Debtors' Banks may rely on the representations of the Debtors

with respect to whether any check or other payment order drawn or issued by the Debtors prior to

the Petition Date should be honored pursuant to this or any other order of this Court, and such

7DOCS LA:320608.7


Bank shall not have any liability to any party for relying on such representations by the Debtors as

provided for herein.

21. Except as otherwise set forth in this Order: (i) those certain existing deposit

agreements between the Debtors and the Banks shall continue to govern the postpetition cash

management relationship between the Debtors and the Banks, and all of the provisions of such

agreements, including, without limitation, the termination and fee provisions, shall remain in full

force and effect, and (ii) either the Debtors or the Banks may, without further Order of this Court,

implement changes to the cash management systems and procedures in the ordinary course of

business pursuant to terms of those certain existing deposit agreements, including, without

limitation, the opening and closing of bank accounts, provided, however, that any such changes to

the existing cash management systems and procedures shall be subject to the terms of this Order

and any Financing Order.

22. The Debtors shall cause a copy of this Order to be served on each Bank at

which a Bank Account is maintained within 7 days of the entry of this Order.

23. The requirements set forth in Bankruptcy Rule 6003(b) are satisfied by the

contents of the Motion.

24. The Bank Accounts comply with the requirements imposed under section

345(b) of the Bankruptcy Code. The requirements of Bankruptcy Code section 345(b) are deemed

satisfied.

25. Notwithstanding the relief granted in this Order, any payment made (or to

be made) by the Debtors pursuant to the authority granted herein shall be subject to the terms,

conditions, limitations and requirements of any Financing Order.

8ROCS LA:320608.7


26. The notice requirements under Bankruptcy Rule 6004(a) and the stay under

Bankruptcy Rule 6004(h) are hereby waived, to the extent that they apply.

27. This Court shall retain jurisdiction to hear and determine all matters arising

from the implementation of this Order.

Dated: May ~, 2019

UNITED STATES BANKRUPTCY JUDGE

9DOCS LA:320608.7


Exhibit 2

DOCS DE:223664.1 50045/002


1N THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

Tn re: ) Chapter 11

KONA GRILL, INC., et al., ~ ) Case No.: 19-10953 (CSS }Joint Administration Requested

Debtors. )RE: Docket No. 8

INTERIM ORDER UNDER SECTIONS IOS, 345, 3b3, 364, 503, 1107 AND 1108OF THE BANKRUPTCY CODE AUTIORiZING (Y) MAINTENANCEOF EXISTING BANK ACCOUNTS; (II) CONTINUANCE OF EXISTINGCASH MANAGEMENT SYSTEM, BANK ACCOUNTS, CHECKS AND

RELATED FORMS; (III) CONTINUED PERFORMANCE OF INTERCOMPANYTIZAN~ACTIONS; (IV) LIMITED WAIVER OF SECTION 345(b) DEPOSIT

AND INVESTMENT REQUIREMENTS AND (V) GRANTING RELATED RELIEF

Upon consideration of the motion (the "Motion")2 of the above-captioned

debtors and debtors in possession (the "Debtors") for the entry of an Order under sections

105, 345, 363, 1107, and 1108 of the Bankruptcy Code authorizing: (i) the maintenance of

existing bank accounts including the authority to pay routine prepetition banking fees owed

to financial institutions; (ii) the continued use of the Debtors' existing cash management

system, bank accounts, checks and related forms for the Debtors; (iii) continued performance

of intercompany transactions; and (iv) a limited waiver under Bankruptcy Code section 345(b)

to the extent necessary; and upon the First Day Declaration; and it appearing that the relief

requested is in the best interests of the Debtors' estates, their creditors and other parties in

The Debtors and the last four digits of their respective taxpayer identification numbers include: Kona Grill, Inc.(6b90); Kona Restaurant Holdings, Ina (6703); Kona Sushi, Inc. (4253); Kona Macadamia, Ina (2438); Kona TexasRestaurants, Inc. (4089); Kona Grill International Holdings, Inc. (1841); Kona Baltimore, Ina (9163); Kona GrillInternational, Ina (7911); and Kona Grill Puerto Rico, Inc. (7641). The headquarters and service address for theabove-captioned Debtors is 15054 North Scottsdale Road, Suite 300, Scottsdale, Arizona 85254.

2 A capitalized term used but not defined herein shall have the meaning ascribed to it in the Motion.

DOGS LA:32Q608.9

Docket No. 40Date: 5/2/19


interest; and it appearing that this Court has jurisdiction over this matter pursuant to 28 U.S.C.

§§ 157 anc~ 1334; and it appearing that this matter is a core proceeding pursuant to 28 U.S.C.

§ 15?(b)(2); and due and adequate notice of the Motion having been given under the

circumstances; and after due deliberation and cause appearing therefor,

YT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED, on an interim basis as set forth herein.

2. A final hearing on the relief sought in the Motion shall be conducted on

May ~~ 2019 at (on T~,(ET). Any objections to the Motion and to entry of a final order must

be filed on or before May z ~ , 2019 at 4:00 p.m. (ET) (the "Objection Deadline") and

served so that it is received and by the following parties on or before the Objection Deadline:

(i) the Debtors, Kona Griil, Inc., 15059 N. Scottsdale Rd., Suite 300, Scottsdale, AZ 85254,

Attn: Christopher 3. Wells; (ii) proposed counsel for the Debtors, Pachutski Stang Ziehl &

Jones LLP, 919 N. Market Street, 17th Floor, Wilmington, DE 19801, Attn: James E. O'Neill

([email protected]); (iii) counsel to any statutory committee appointed in these cases; (iv)

counsel for the Debtors' prepetition and postpetition secured lenders, Buchanan Ingersoll &

Rooney PC, 919 North Market Street, Suite 990, Wilmington, DE 19801-1054 Attn: Mary P.

Calaway, ([email protected]); acid {v) the Office of The United States Trustee, Attn:

Jaclyn Weissgerber, ([email protected]}, 844 King Street, Suite 2207, Lockbox

35, Wilmington, Delaware 19801,

3. The Debtors are authorized, but not directed, in the reasonable exercise

of their business judgment, {i} to designate, maintain and continue to use, with the same

account numbers, all of the bank accounts in existence on the Petition Date, including, without

f 2

DOCS LA:320608.9


limitation, those accounts identified on E~ibit A to the Motion (the "Bank Accounts"}; (ii)

treat the Bank Accounts for all purposes as debtors in possession accounts; (iii) use all existing

paper check stock and related forms without reference to the Debtors' status as "debtors in

possession" until such supply is depleted, after which the Debtors will order new check stock,

deposit slips and related forms with the "debtor in possession" reference and the corresponding

bankiliptcy case number; and (iv) are afforded a reasonable time to arrange for the labeling of

"debtor in possession" on purchase orders and invoices issued postpetition, as requested in the

Motion.

4. The Debtors are authorized to close such sub-accounts described in the

Motion that are no longer necessary to the operation of the Company as a result of a restaurant

closure, without further order of the Court.

5. The banks set forth on E~ibit A to the Motion and any other bank (each,

a "Bank" and collectively, the "Banks") at which any Bank Account is or raay be maintained

are hereby authorized to continue to service and administer such Bank Account as an account

of the Debtors as a debtor in possession bank account without interruption and in the usual and

ordinary course of business, and to receive, process, honor and pay any and all checks and

drafts drawn on the Bank Accounts after the Petition Date by the holders or makers thereof, as

the case may be; provided, however, that any check that the Debtors advise any Bank to have

been drawn or issued by the Debtors before the Petition Date may be honored by any Bank

only if specifically authorized by order of this Court.

6. Except as modified by this Order, the Debtors' existing banking

agreements with the Banks with respect to the Bank Accounts and with respect to the transfers

DOCS LA:320608.9


to and from the Bank Accounts shall continue to govern the post-petition cash management

relationship between the Debtors and each of the Banks.

7. The Debtors and each of the Banks may, without further order of this

Court, agree to and implement changes to the Cash Management System and procedures in the

ordinary course of business and/or in accordance with the terms of any Financing Order,

including, without limitation, the opening and closing of bank accounts with notice from the

Debtor to the United States Trustee, which accounts shall similarly be subject to this Order.

8. Tn the course of providing cash management services to the Debtors,

each Bank is authorized, without further order of this Court, to continue to deduct from the

appropriate accounts of the Debtors, the Bank's routine and ordinary course fees and expenses

associated with the nature of the deposit and cash management services rendered to the

Debtors. The Debtors are also authorized to remit or pay all prepetition and postpetition credit

card processing fees in the ordinary course of business.

9. With respect to all checks that have not been honored prior to the

Petition Date (the "Prepetition Checks"), the Debtors sha11, no later than the close of business

on the 5th business day fallowing entry of this Order, (a) place a stop payment on all such

unauthorized Prepetition Checks to be dishonored in accordance with the applicable Bank's

stop payment procedures (the "Voided Pre~etition_ Checks"); and (b) send the Banks an

electronic file containing specific data for each applicable Voided Prepetition Check, together

with a written representation that a stop payment has been placed on all applicable Voided

Prepetition Checks (the "Sto~Payment Representation"). All unauthorized Prepetition Checks

that are not Voided Prepetition Chec~Cs will be Prepetition Checks for which tie Debtors have

4ROCS LA:320608.9


Court approval to pay and want the Banks to honor, and the Banks shall promptly honor each

such Prepetition Check after receipt of the Stop Payment Representation from the Debtors. A

Bank's reasonable reliance on the Stop Payment Representation in connection with its

honoring or dishonoring of a Prepetition Check, as the case may be, shall not constitute a

violation of this Order.

10. Each Bank that maintains a disbursement account of the Debtors shall

implement reasonable handling procedures designed to effectuate the terms of this Order, and

no Bank that implements such handling procedures and then honors a prepetition check or

other item drawn on any account that is the subject of this Order either (i) at the direction of

the Debtors to honor such prepetition check or item, (ii} in good faith belief that the Court has

authorized such prepetition check ar item to be honored, or (iii) as a result of an innocent

mistake made despite implementation of such handling procedures, shall be deemed iii

violation of this Order.

11. The Debtors may continue to fund their businesses and operations

through the Bank Accounts~c a ~Y

• ,, _ ~ .'-

12. The Debtors shall maintain detailed records reflecting all transfers of

funds (including any Intercompany Transactions} under the terms and conditions provided for

by the existing agreements with the institutions participating in the Cash Management System

and any Financing Order. In connection with the ongoing utilization of their Cash

Management System, the Debtors shall continue to maintain records in the ordinary cauxse of

business with respect to all transfers so that all traxisactions (including any Intercompany

5DOCS LA:320608.9


Transactions) may be readily ascertained, traced and recorded properly on the applicable

accounts and distinguished between prepetition and post-petition fransacicions.

13. The Debtors are authorized to open any new Bank Accounts or close

any existing Bank Accounts as they may, in their discretion, deem necessary and appropriate;

provzded, however, that the Debtors give notice within 14 days to the Office of the United

States Trustee for the District of Delaware and any statutory committees appointed in these

chapter Z 1 cases; provided, further, however, that the Debtors shall open any such new Bank

Account at a bank that has (i) executed a Uniform Depository Agreement with the Office of

the United States Trustee for the District of Delaware, or at a bank that is willing to

immediately execute such an agreement; ~' ~ng

Qrcie~; provided, further, that any such new Bank Account shall be subject to the terms of this

Order .For the avoidance of doubt, the notice requirements contained

in this paragraph do not apply to the closure of sub-accounts related to closed restaurant

locations.

14. For banks at which the Debtors hold bank accounts that are party to a

Uniform Depository agreement with the Off ce of the United States Trustee far the District of

Delaware, within 14 days of the date of entry of this Order the Debtors shall (a) contact each

bank, (b) provide the bank with each of the Debtors' employer identification numbers and (c)

identify each of their bank accounts held at such banks as being held by a debtors in possession

in a bankruptcy case and provide the case number.

15. The Debtors are authorized to continue utilizing their Cash Management

System to manage the Debtors' cash, in a manner consistent with the Debtors' prepetition

6DOGS LA:320608.9


practices, ' F' ere Co is

16. The Debtors are authorized to continue to consummate the

Intercompany Transactions with other Debtors, and to create Intercompany Claims, provided,

however, to the extent that the Debtors have any non-debtor affiliates, the Debtors are

prohibited from making any intercompany transfers to such non-debtor affiliates, absent

fiuther order of the Court.

17. The Debtors are authorized to deposit funds, in excess of amounts

insured by the Federal Depository Insurance Corporation so long as such funds are deposited

in a Bank Account with a hank that has a Uniform Depository Agreement with the Office of

the United States Trustee.

18. Each of the Debtors' Banks is authorized to debit the Bank Accounts in

the ordinary course of business without the need for further order of this Court for; (i) all checks

drawn on the Bank Accounts which are cashed at such Bank's counters or exchanged for

cashier's checks by the payees thereof prior to the Petition Date; (ii) all checks or other items

deposited in one of Bank Accounts with such Bank prior to the Petition Date which have been

dishonored or returned unpaid for any reason, together with any fees and costs in connection

therewith, to the same extent the Debtors were responsibly for such items prior to the Petition

Date; and (iii) all undisputed prepetition amounts outstanding as of the date hereof, if any,

owed to any Bank as service charges for the maintenance of the Cash Management System.

7DOGS LA:320608.9


19. The Banks and, to the extent applicable, the Company's credit card

processors, ire ~uihorized ~o process payrne~ris in the aedina~y coi~fse of ~~si~-iess, iiicludii~g

the netting aut of any fees and/or chargebacks arising before, on, ar after the Petition Date.

20. Any of the Debtors' Banks may rely on the representations of the

Debtors with respect to whether any check or other payment order drawn or issued by the

Debtors prior to the Petition Date should be honored pursuant to this ar any other order of this

Court, and such Bank shall not have any liability to any party for relying on such

representations by the Debtors as provided for herein.

21. Except as otherwise set forth in this Order: (i} those certain existing

deposit agreements between the Debtors and the Banks shall continue to govern the

postpetition cash management relationship between the Debtors and the Banks, and all of the

provisions of such agreements, including, without limitation, the termination and fee

provisions, shall remain in full force and effect, and (ii) either the Debtors or the Banks may,

without further Order of this Court, implement changes to the cash management systems and

procedures in the ordinary course of business pursuant to terms of those certain existing deposit

agreer~~ents, including, without limitation, the opening and closing of bank accounts, x~

ges to t e exis m anagement syste 11

22. The Debtors shall cause a copy of this Order to be served on each Bank

at which a Bank Account is maintained within 7 days of the entry of this Order.

23. The requirements set forth in Bankruptcy Rine 6003(b) are satisfied by

the contents of the Motion.

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24. The Bank Accounts comply with the requirements imposed under

section 345(b} of the Bankruptcy Code. The requirements of Bankr~tpicy Code seciion 345~b)

are deemed satisfied.

25. Notwithstanding the use of a consolidated cash management system, the

Debtors shall calculate quarterly fees under 28 U.S.C. section 1930(a)(6) based on the

disbursements of each debtor, regardless of who pays those disbursements

26. The notice requirements under Bankruptcy Rule 6004(a) and the stay

under Bankruptcy Rule 6004(h) are hereby waived, to the extent that they apply.

27. This Court shall retain jurisdiction to hear and determine all matters

arising from the implementation of this Order.

Dated: May 2-r 2d19

CHRISTOPHER S. SONTCHI

UNITED STATES BANKRUPTCY JUDGE

9DOCS LA:320608.9


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