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2024-08-12 Interim and Final Orders - Bank Account Maint (Doc 8)Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 1 of 25 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re SilverRock Development Company., et al.1 Debtors. Chapter 11 Case No. 24-11647 MFW (Joint Administration Requested) MOTION OF THE DEBTORS FOR ENTRY OF INTERIM AND FINAL ORDERS (I) AUTHORIZING THE MAINTENANCE OF BANK ACCOUNTS AND CONTINUED USE OF EXISTING BUSINESS FORMS AND CHECKS, (II) GRANTING LIMITED RELIEF FROM THE REQUIREMENTS OF BANKRUPTCY CODE SECTION 345(b), AND (III) GRANTING RELATED RELIEF The Debtors and Debtors in Possession in the above captioned cases ( the "Debtors"), hereby submit this Motion of the Debtors for Entry of Interim and Final Orders (I) Authorizing the Maintenance of Bank Accounts and Continued Use of Existing Business Forms and Checks, (II) Granting Limited Relief from the Requirements of Bankruptcy Code Section 345(b), and (III) Granting Related Relief (the "Motion"). In support of the Motion, the Debtors respectfully state as follows: I. JURISDICTION AND VENUE 1. This Court has jurisdiction to consider and determine the Motion pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware, dated February 29, 2012. This is a core proceeding 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101. 1 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 2 of 25 within the meaning of 28 U.S.C. § 157(b). Venue is proper before this Court pursuant to 28 U.S.C. § § 1408 and 1409. 2. The statutory predicates for the relief sought herein are sections 105(a), 345, 363, 364 and 553 of title 11 of the United States Code, 11 U.S.C. §§ 101, et seq. (as amended or modified, the "Bankruptcy Code"), rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"), and rule 2015 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the "Local Rules"). 3. Pursuant to rule 9013-1(0 of the Local Rules, the Debtors consent to the entry of a final order or judgment with respect to the Motion if it is later determined that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. II. BACKGROUND 4. On August 5, 2024 (the "Petition Date"), the Debtors commenced the above - captioned chapter 11 cases (the "Chapter 11 Cases") by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code with the Court. 5. The Debtors continue to operate their business and manage their properties as debtors in possession, pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. As of the date of the Motion, no trustee, examiner or statutory committee has been appointed in the Chapter 11 Cases. 6. Additional information regarding the circumstances leading to the commencement of the Chapter 11 Cases and information regarding the Debtors' business and capital structure is set forth in detail in the Declaration of Robert S. Green Jr. Pursuant to 28 U.S.C. 5C 1746 in 2 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 3 of 25 Support of the Debtors' Chapter 11 Petitions and First Day Pleadings (the "First Day Declaration"), filed contemporaneously with the Motion and incorporated herein by reference. III. RELIEF REQUESTED 7. By the Motion, the Debtors request, pursuant to sections 105(a), 345, 363, 364 and 553 of the Bankruptcy Code, rules 6003 and 6004 of the Bankruptcy Rules, and rule 2015 of the Local Rules, entry of interim and final orders, substantially in the form attached hereto as Exhibit A (the "Proposed Interim Order") and Exhibit B (the "Proposed Final Order," and together with the Proposed Interim Order, the "Proposed Orders"): (i) authorizing the maintenance of the Bank Accounts (as defined herein); and (ii) granting related relief. 8. The Debtors also request the right in their discretion, but not the obligation, to (i) pay the Bank Accounts' related fees; and (ii) close or otherwise modify the terms of the Bank Accounts and open new debtor in possession accounts as may be necessary to facilitate the Chapter 11 Cases and operations. IV. THE DEBTORS' BANK ACCOUNTS 9. Prior to the commencement of the Chapter 11 Cases, and in the ordinary course of their business, each of the Debtors maintained a separate checking bank account at Bank of America (the "Bank Accounts'.") The Debtors maintained the Bank Accounts to manage the funds they hold to operate their business. A list of the Bank Accounts is attached hereto as Exhibit C. The entirety of each Debtor's cash assets is held in its respective Bank Account. 10. By the Motion, the Debtors seek entry of the Proposed Orders authorizing the 1 Fidelity National Title administers several escrow accounts in which Debtors have an interest. Held in the names of Debtors' potential Montage and Pendry homebuyers, these escrow accounts only distribute funds to the Debtors after title to the residential property is transferred to the homebuyers, and to make such a transfer, Debtors must assume the sales agreements with the homebuyers. Debtors exercise no control over distributing the funds in the escrow accounts. 3 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 4 of 25 maintenance of the Bank Accounts in the ordinary course of business consistent with prepetition practices. V. BASIS FOR RELIEF REQUESTED A. The Debtors Should be Permitted to Maintain the Bank Accounts 11. The Debtors should be authorized to continue to fund their business and operations by payments made from the Bank Accounts listed on Exhibit C and should be exempt from certain of the Guidelines2 established by the United States Trustee for the District of Delaware (the "U.S. Trustee"). One provision of the Guidelines requires the Debtors to open new bank accounts and close all existing accounts. This requirement, designed to provide a clear line of demarcation between prepetition and postpetition claims and payments, helps protect against the inadvertent payment of prepetition claims by preventing banks from honoring checks drawn before the Petition Date. The Guidelines also require that the Debtors open new bank accounts only in certain financial institutions designated as authorized depositories by the U.S. Trustee. The Debtors believe that the funds in the Bank Accounts are adequately protected. 12. As part of the relief requested herein, the Debtors also seek waiver of the requirement to establish specific bank accounts for any tax payments. The Debtors believe that tax obligations, if any, can be paid most efficiently out of the Bank Accounts, that the U.S. Trustee can adequately monitor the flow of funds into, among, and out of the Bank Accounts, and that the creation of new debtor -in -possession accounts designated solely for tax obligations is unnecessary and inefficient. 2 The Guidelines were issued in order to assist the U.S. Trustee in supervising the administration of chapter 11 cases. The Guidelines require chapter 11 debtors to, unless the Court orders otherwise, inter alia: i. Close all existing bank accounts and open new accounts which must be designated debtor -in -possession bank accounts; ii. Establish and maintain separate debtor -in -possession accounts for the payment of taxes and separate debtor -in -possession accounts for cash collateral; and iii. Obtain and utilize new checks for all debtor -in -possession accounts which bear the designation "Debtor - in -Possession" and contain certain other information related to the chapter 11 case. 4 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 5 of 25 13. The Debtors hereby require authority to maintain the Bank Accounts and utilize such accounts in the ordinary course of business. The Debtors do not believe that allowing them to do so will prejudice any party -in -interest or the Debtors' estates. If the relief requested herein is granted, the Debtors will not pay any debts incurred on their behalf before the Petition Date, unless specifically authorized by the Court. 14. If the Debtors were forced to close the Bank Accounts, the Debtors expect that disruption and confusion would result, which would negatively impact their operations. For instance, funds may be deposited into the wrong account, misapplied, held in limbo, or otherwise delayed, thus negatively affecting the Debtors' relationships with parties who are necessary to the Debtors' efforts, and who already may be burdened by the commencement of the Chapter 11 Cases. As a result, the Debtors submit that maintenance of the Bank Accounts is warranted. 15. Subject to section 553 of the Bankruptcy Code, all banks that maintain the Bank Accounts should be prohibited from offsetting, affecting, freezing, or otherwise impeding the Debtors' use of any funds deposited in the Bank Accounts on account of, or by reason of, any claim (as defined in section 101(5) of the Bankruptcy Code) of any such bank against the Debtors that arose before the Petition Date, absent further order of the Court. B. The Debtors Should be Permitted to Continue Using the Business Forms 16. Rule 2015-2(a) of the Local Rules provides: Where the debtor uses pre-printed checks, upon motion of the debtor, the Court may, without notice and hearing, permit the debtor to use its existing checks without the designation "Debtor -in -Possession" and use its existing bank accounts. However, once the debtor's existing checks have been used, the debtor shall, when reordering checks, require the designation "Debtor -in -Possession" and the corresponding bankruptcy number on all such checks. Pursuant to rule 2015-2(a) of the Local Rules, the Debtors seek an order authorizing them to use all correspondence and the Business Forms existing immediately before the Petition Date without 5 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 6 of 25 reference to the Debtors' status as "debtors -in -possession." As of the Petition Date, the Debtors had a large stock of the Business Forms that they used in the ordinary course of business. Reprinting the Business Forms to indicate that the Debtors are "debtors in possession" would impose an unnecessary burden and expense on the Debtors. The Debtors believe that the parties with whom the Debtors do business shortly will become aware that they are chapter 11 debtors - in -possession. C. Waiver of Section 345(b) of the Bankruptcy Code is Appropriate 17. Section 345(a) of the Bankruptcy Code governs a debtor's deposits during its bankruptcy case and authorizes deposits of money as "will yield the maximum reasonable net return on such money, taking into account the safety of such deposit or investment." For deposits or investments that are not "insured or guaranteed 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," section 345(b) of the Bankruptcy Code requires debtors to obtain from the entity with which such money is deposited a bond in favor of the United States and secured by the undertaking of an adequate corporate surety. 18. The Debtors seek an order waiving the requirements of section 345(b) of the Bankruptcy Code on an interim basis and permitting the Debtors to maintain their deposits in the Bank Accounts in accordance with existing deposit practices until such time as it obtains the Court's approval to deviate from the Guidelines under section 345(b) of the Bankruptcy Code on a more final basis. The Debtors' existing deposit practices are significantly less burdensome and more appropriately tailored to their business needs than the practices otherwise required under the Bankruptcy Code and the Guidelines. The Debtors submit that strict compliance with these requirements would be overly burdensome and restrictive, to the detriment of the Debtors' estates and creditors. 6 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 7 of 25 19. Maintaining the deposits in strict compliance with the requirements of section 345(b) would, in some cases, be inconsistent with the requirement of section 345(a) of the Bankruptcy Code that deposits be maintained in a manner that "will yield the maximum reasonable net return on such money, taking into account the safety of such deposit or investment." It is for this reason that in 1994, Congress amended section 345 of the Bankruptcy Code to allow the requirements of subsection (b) to be waived or modified if a court so orders "for cause." As the legislative history indicates, Congress believed that strict application of section 345(b) of the Bankruptcy Code could "needlessly handcuff larger, more sophisticated debtors." 140 Cong. Rec. H 10, 767 (Oct. 4, 1994). All of the Bank Accounts are maintained for operational and not investment purposes. These accounts may be subject to the bonding or collateralization requirements of section 345(b) of the Bankruptcy Code and the Guidelines unless those requirements are waived. 20. As discussed above, the Bank Accounts are maintained by Bank of America. The Bank Accounts are insured by the FDIC and therefore comply with section 345(b) of the Bankruptcy Code. 21. Out of an abundance of caution, however, to the extent that the Bank Accounts do not strictly comply with section 345(b) of the Bankruptcy Code, the Debtors submit that cause exists to grant a limited waiver of any such noncompliance as set forth herein on an interim basis given that all funds are deposited with a bank being administered by the FDIC. Courts may waive compliance with section 345 of the Bankruptcy Code and the Guidelines for "cause." In determining whether "cause" exists for a waiver, the Court considers the "totality of the circumstances," including the following factors: (a) sophistication of the debtor's business; (b) the size of the debtor's business operations; (c) the amount of the investments involved; (d) the bank's ratings of the financial institutions where debtor in possession funds are held; (e) the complexity of the case; (f) the safeguards in place within the debtor's own business of insuring the safety of 7 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 8 of 25 the funds; (g) the debtor's ability to reorganize in the face of a failure of one or more of the financial institutions; (h) the benefit to the debtor; (i) the harm, if any, to the estate; and (j) the reasonableness of the debtor's request for relief from the requirements in section 345(b) of the Bankruptcy Code in light of the overall circumstances of the case. See In re Serv. Merch. Co., Inc., 240 B.R. 894, 896 (Bankr. M.D. Tenn. 1999). 22. "Cause" exists here because, inter alia, Bank of America is a highly rated, reputable bank that is subject to supervision by national banking regulators; the Debtors have internal safeguards in place to ensure the safety of the funds in the Bank Accounts and retains the right to close accounts with the bank and establish new accounts as needed; and requiring the Debtors to transfer the funds in the Bank Accounts to a designated authorized depository would place an unnecessary administrative burden on the Debtors that would divert the attention of the Debtors' management away from the Chapter 11 Cases. The Debtors submit that, on balance, the benefits of a waiver would far outweigh any potential harm to the estates from noncompliance with section 345(b) of the Bankruptcy Code. 23. The Debtors submit that it would be in the best interests of the estates' creditors to continue following the existing deposit practices, notwithstanding the requirements of section 345(b) of the Bankruptcy Code and the Guidelines. The Debtors further submit that their deposit practices are commercially reasonable and appropriate, and consistent with the intent of section 345 of the Bankruptcy Code. 24. The Court has granted similar relief on an interim basis. See, e.g., In re Sharity Ministries, Inc., Case No. 21-11001 (JTD) (Bankr. D. Del. Aug. 10, 2021); In re Things Remembered, Inc., Case No. 19-10234 (KG) (Bankr. D. Del. Feb. 26, 2019); In re ADT Corp., Case No. 18-12221 (KJC) (Bankr. D. Del. Oct. 24, 2018); In re VER Techs. Holdco LLC, Case No. 18-10834 (KG) (Bankr. D. Del. May 4, 2018); In re EV Energy Partners, L.P., Case No. 18- 8 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 9 of 25 10814 (CSS) (Bankr. D. Del. Apr. 25, 2018); In re PESHoldings, LLC, Case No. 18-10122 (KG) (Bankr. D. Del. Jan. 23, 2018). The Debtors submit that cause for a similar waiver exists in this case.3 VI. RULE 6003 OF THE BANKRUPTCY RULES HAS BEEN SATISFIED AND RULE 6004 OF THE BANKRUPTY RULES SHOULD BE WAIVED 25. Rule 6003(b) of the Bankruptcy Rules provides that, to the extent relief is necessary to avoid immediate and irreparable harm, the Court may issue an order granting "a motion to use, sell, lease, or otherwise incur an obligation regarding property of the estate" before 21 days after the Petition Date. Certain aspects of the relief requested herein may, if granted, be subject to rule 6003(b) of the Bankruptcy Rules. 26. For the reasons described above and in the First Day Declaration, the relief requested herein is necessary for the Debtors to operate their business in the ordinary course and maximize the value of their estates for the benefit of all stakeholders. The Debtors believe that the relief requested herein is necessary to avoid immediate and irreparable harm and rule 6003(b) of the Bankruptcy Rules is therefore satisfied. 27. Additionally, to the extent that any aspect of the relief sought herein constitutes a use of property under section 363(b) of the Bankruptcy Code, the Debtors seek a waiver of the notice requirements under rule 6004(a) of the Bankruptcy Rules, to the extent not satisfied, and of the 14-day stay under rule 6004(h) of the Bankruptcy Rules. As described above, the relief that the Debtors seek in the Motion is immediately necessary for the Debtors to be able to continue to operate their business and preserve the value of their estates. The Debtors submit that the requested waiver of the notice requirements of rule 6004(a) of the Bankruptcy Rules and the 14-day stay imposed by rule 6004(h) of the Bankruptcy Rules is appropriate. 3 The Debtors' proposed counsel has copies of each order and will make them available to the Court or to any party that requests them. 9 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 10 of 25 VII. NOTICE 28. Notice of the Motion has been or will be provided to: ((a) the Office of the United States Trustee for the District of Delaware (Attn: Malcolm M. Bates); (b) the holders of the 20 largest unsecured claims against the Debtors, collectively; (c) the Debtor's secured creditors; (d) the Internal Revenue Service; (e) each of the banks holding the Bank Accounts set forth in Exhibit C hereto; and (f) any party that has requested notice pursuant to rule 2002 of the Bankruptcy Rules. As the Motion is seeking "first day" relief, the Debtors will serve copies of the Motion and any order entered in response of the Motion as required by rule 9013-1(m) of the Local Rules. 29. The Debtors believe that, under the circumstances, no other or further notice is required. WHEREFORE, the Debtors respectfully request that the Court grant the relief requested herein and such other and further relief as the Court may deem just and proper. Dated: August 12, 2024 ARMSTRONG TEASDALE, LLP Wilmington, Delaware /s/Jonathan M. Stemerman Jonathan M. Stemerman (No. 4510) Eric M. Sutty (No. 4007) Denissee Gueavara (No. 7206) 1007 North Market Street, Third Floor Wilmington, Delaware 19801 Telephone: (302) 416-9670 jsttemen-nan@atIlp.com esutty0),atllp.com dguevara@atllp.com - and- Victor A. Vilaplana (Pro Hac Vice Pending) P.O. Box 9038 La Jolla, CA 92037 Telephone: (619) 840-4130 vavilaplana(a�,gmail.com - and- 10 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 11 of 25 Benjamin M. Carson (Pro Hac Vice Pending) 5965 Village Way STE E105 San Diego, CA 92130 Telephone: (858) 255-4529 ben@benjamincarson.com Proposed Counsel to the Debtors and Debtors in Possession 11 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 12 of 25 EXHIBIT A (Interim Order) 12 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 13 of 25 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re SilverRock Development Company., et al.1 Debtors. Chapter 11 Case No. 24-11647 MFW (Joint Administration Requested) RE: Docket No. INTERIM ORDER (I) AUTHORIZING THE MAINTENANCE OF BANK ACCOUNTS AND CONTINUED USE OF EXISTING BUSINESS FORMS AND CHECKS, (II) GRANTING LIMITED RELIEF FROM THE REQUIREMENTS OF BANKRUPTCY CODE SECTION 345(B), AND (IIII) GRANTING RELATED RELIEF Upon the Motion of the Debtors for Entry of Interim and Final Orders (I) Authorizing the Maintenance of Bank Accounts and Continued Use of Existing Business Forms and Checks, (II) Granting Limited Relief from the Requirements of Bankruptcy Code Section 345(b), and (III) Granting Related Relief (the "Motion");2 and upon the Declaration of Robert S. Green Jr. Pursuant to 28 U.S.C. § 1746 in Support of the Debtors' Chapter 11 Petitions and First Day Pleadings (the "First Day Declaration"); and the Court finding that: (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, 2012; (b) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); (c) the Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and (d) the Court may enter a final order consistent with Article III of the United States Constitution; The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101. 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Motion. 13 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 14 of 25 and upon the record herein; and after due deliberation thereon; and it appearing that sufficient notice of the Motion has been given and that no other further notice is necessary, except as set forth in the Motion with respect to entry of this Interim Order and notice of the Final Hearing (as defined below); and good cause appearing therefor; it is hereby A. ORDERED THAT: 1. The Motion is GRANTED on an interim basis, as set forth herein. 2. The Debtors are authorized, but not directed, to maintain and use the Bank Accounts in the name and with the account numbers existing immediately prior to the Petition Date and shall not be required to establish a specific new bank account for tax payments. 3. The Debtors shall retain authority to close or otherwise modify certain of their accounts and open new debtor in possession accounts, they deem necessary to facilitate the Chapter 11 Cases and their operations. The Debtors are authorized to open any new bank accounts or close any existing bank accounts as they may deem necessary and appropriate in their sole discretion; provided, however, that the Debtors shall give notice within fifteen (15) days of opening or closing any bank account to the Office of the United States Trustee for the District of Delaware (the "U.S. Trustee") and any statutory committees appointed in the Chapter 11 Cases; provided, further, however, that the Debtors shall open any such new bank account at banks that have executed a Uniform Depository Agreement with the U.S. Trustee, or at such banks that are willing to immediately execute such an agreement. 4. The Debtors are authorized to deposit funds in and withdraw funds from the Bank Accounts by all usual means, subject to the same access rights and limitations existing prior to the Petition Date, including, but not limited to, checks, wire transfers, automated clearinghouse transfers, electronic funds transfers, and other debts and to treat the Bank Accounts for all purposes 14 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 15 of 25 as debtor in possession accounts. 5. The Debtors are authorized, but not directed, to continue to use their pre-printed checks, correspondence, and business forms and checks, including, but not limited to, purchase orders, letterhead, envelopes, promotional materials, and other business forms, substantially in the forms existing immediately prior to the Petition Date, without reference to the Debtors' debtor in possession status, provided that once the Debtors' existing checks have been used, the Debtors shall, when reordering checks, require the designation "Debtor In Possession" and the corresponding bankruptcy case number on all checks; provided, further, that, with respect to checks which the Debtors or their agents print themselves, the Debtors or their agents shall begin printing the "Debtor In Possession" legend on such items within ten (10) days of the date of entry of this Interim Order. 6. The banks listed on Exhibit C to the Motion are hereby authorized and directed to continue to service and administer the Bank Accounts of the Debtors as debtors in possession without interruption and in the usual and ordinary course of business, and to receive, process, honor and pay any and all checks, drafts, wires or ACH transfers drawn on the Bank Accounts by the holders or makers thereof, provided that nothing contained herein shall authorize any such bank to honor any check issued or dated prior to the Petition Date, except as otherwise provided by further order of the Court. In no event shall any of the banks be required to honor overdrafts or to pay any check, wire or other debit against any of the Bank Accounts that is drawn against uncollected funds. 7. The Debtors are authorized, but not directed, to pay, and the banks may continue to charge and collect, all customary and usual prepetition and postpetition fees arising from or related to the Bank Accounts. 8. Subject to section 553 of the Bankruptcy Code, all banks that maintain the Bank 15 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 16 of 25 Accounts are prohibited from offsetting, affecting, freezing, or otherwise impending the Debtors' use of any funds in the Bank Accounts on account of, or by reason of, any claim (as defined in section 101(5) of the Bankruptcy Code) of any such bank against the Debtors that arose before the Petition Date, absent further order of the Court. 9. The Debtors shall continue to maintain detailed 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, recorded properly, and distinguished between prepetition and postpetition transactions. 10. To the extent applicable, the Debtors' time to comply with section 345(b) of the Bankruptcy Code is hereby extended for a period of thirty (30) days from the date of this Order (the "Extension Period"), provided, however, that such extension is without prejudice to the Debtors' right to request a further extension of the Extension Period of the waiver of the requirements of section 345(b) in these Chapter 11 Cases. 11. With respect to banks at which the Debtors hold the Bank Accounts that are party to a Uniform Depository Agreement with the U.S. Trustee, within fifteen (15) days of the date of entry of this Interim 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 the Bank Accounts held at such banks as being held by a debtor in possession in a bankruptcy case. 12. To the extent applicable, for Banks at which the Debtors hold Bank Accounts that are not party to a Uniform Depository Agreement with the U.S. Trustee, the Debtors shall use their good -faith effort to cause such Banks to execute a Uniform Depository Agreement in a form prescribed by the U.S. Trustee within thirty days of the date of this Interim Order. 13. Nothing herein further authorizes the Debtors to make transfers or loans to non - debtor affiliates absent further order of the Court. 16 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 17 of 25 14. The requirements set forth in rule 6004(a) of the Bankruptcy Rules are hereby 15. The requirements set forth in rule 6003(b) of the Bankruptcy Rules are satisfied because the relief set forth in this Interim Order is necessary to avoid immediate and irreparable harm. waived. 16. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Interim Order in accordance with the Motion. 17. This Interim Order is effective immediately upon its entry. 18. The hearing to consider entry of an order granting the relief requested in the Motion on a final basis (the "Final Hearing") shall be held on , 2024 at 1. (prevailing Eastern Time). Any objection to the entry of a final order granting the relief requested in the Motion shall be filed with the Court and served on the following parties no later than 4:00 p.m. Prevailing Eastern Time on , 2024, (a) the Debtors, c/o SilverRock Development Company, LLC 343 Fourth Avenue, San Diego, CA 92101; (b) proposed counsel to the Debtors, Armstrong Teasdale LLP, 1007 North Market Street, Third Floor Wilmington, Delaware 19801, Attn: Jonathan M. Stemerman (jstemerman@atllp.com) and P.O. Box 9038, La Jolla CA, 92037, Attn: Victor A. Vilaplana (vavilaplana( gmail.com), and 5965 Village Way, STE E105, La Jolla, CA 92037 Attn: Benjammin M. Carson (ben(d;benjamincarsonlaw.com); and (f) the Office of the United States Trustee, 844 King Street, Suite 2207, Lockbox 35, Wilmington, Delaware 19801, Attn: Malcolm M. Bates (Malcolm.m.bates(�vusdoj.gov). In the event no objections to entry of the Final Order on the Motion are timely received, this Court may enter such Final Order without need for the Final Hearing. 19. The Court shall retain jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Interim Order. 17 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 18 of 25 EXHIBIT B (Final Order) 18 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 19 of 25 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re SilverRock Development Company., et al.' Debtors. Chapter 11 Case No. 24-11647 MFW (Joint Administration Requested) RE: Docket No. FINAL ORDER (I) AUTHORIZING THE MAINTENANCE OF BANK ACCOUNTS AND CONTINUED USE OF EXISTING BUSINESS FORMS AND CHECKS, (II) GRANTING LIMITED RELIEF FROM THE REQUIREMENTS OF BANKRUPTCY CODE SECTION 345(B), AND (IIII) GRANTING RELATED RELIEF Upon the Motion of the Debtors for Entry of Interim and Final Orders (I) Authorizing the Maintenance of Bank Accounts and Continued Use of Existing Business Forms and Checks, (II) Granting Limited Relief from the Requirements of Bankruptcy Code Section 345(b), and (III) Granting Related Relief (the "Motion"); and upon the Declaration of Robert S. Green Jr. Pursuant to 28 U.S.C. § 1746 in Support of the Debtors' Chapter 11 Petitions and First Day Pleadings (the "First Day Declaration"); and the Court finding that: (a) the Court has jurisdiction over this matter pursuant to 28 U.S.C. § § 157 and 1334 and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, 2012; (b) this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); (c) the Court having found that venue of this proceeding and the Motion in this district is proper pursuant to 28 U.S.C. §§ 1408 and 1409; and (d) the Court may enter a final order consistent with Article III of the United States Constitution; The Debtors in these chapter 11 cases, along with the last four digits of each Debtor's federal tax identification number, as applicable, are: SilverRock Development Company, LLC (5730), RGC PA 789, LLC (5996), SilverRock Lifestyle Residences, LLC (0721), SilverRock Lodging, LLC (4493), SilverRock Luxury Residences, LLC (6598) and SilverRock Phase I, LLC (2247). The location of the Debtors' principal place of business and the Debtors' mailing address is 343 Fourth Avenue, San Diego, CA 92101. 'Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Motion. 19 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 20 of 25 and upon the record herein; and after due deliberation thereon; and it appearing that sufficient notice of the Motion has been given and that no other further notice is necessary; and good cause appearing therefor; it is hereby A. ORDERED THAT: 1. The Motion is GRANTED on a final basis, as set forth herein. 2. The Debtors are authorized, but not directed, to maintain and use the Bank Accounts in the name and with the account numbers existing immediately prior to the Petition Date and shall not be required to establish a specific new bank account for tax payments. 3. The Debtors shall retain authority to close or otherwise modify certain of their accounts and open new debtor in possession accounts, as it deems necessary to facilitate the Chapter 11 Cases and their operations. The Debtors are authorized to open any new bank accounts or close any existing bank accounts as they may deem necessary and appropriate in their sole discretion; provided, however, that the Debtors shall give notice within fifteen (15) days of opening or closing any bank account to the Office of the United States Trustee for the District of Delaware (the "U.S. Trustee") and any statutory committees appointed in the Chapter 11 Cases; provided, further, however, that the Debtors shall open any such new bank account at banks that have executed a Uniform Depository Agreement with the U.S. Trustee, or at such banks that are willing to immediately execute such an agreement. 4. The Debtors are authorized to deposit funds in and withdraw funds from the Bank Accounts by all usual means, subject to the same access rights and limitations existing prior to the Petition Date, including, but not limited to, checks, wire transfers, automated clearinghouse transfers, electronic funds transfers, and other debts and to treat the Bank Accounts for all purposes as debtors -in -possession accounts. 20 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 21 of 25 5. The Debtors are authorized, but not directed, to continue to use their pre-printed checks, correspondence, and business forms and checks, including, but not limited to, purchase orders, letterhead, envelopes, promotional materials, and other business forms, substantially in the forms existing immediately prior to the Petition Date, without reference to the Debtors' debtor -in - possession status, provided that once the Debtors' existing checks have been used, the Debtors shall, when reordering checks, require the designation "Debtor In Possession" and the corresponding bankruptcy case number on all checks; provided, further, that, with respect to checks which the Debtors or their agents print themselves, the Debtors or their agents shall begin printing the "Debtor In Possession" legend on such items within ten (10) days of the date of entry of this Final Order. 6. The banks listed on Exhibit C to the Motion are hereby authorized and directed to continue to service and administer the Bank Accounts of the Debtors as debtors -in -possession without interruption and in the usual and ordinary course of business, and to receive, process, honor and pay any and all checks, drafts, wires or ACH transfers drawn on the Bank Accounts by the holders or makers thereof, provided that nothing contained herein shall authorize any such bank to honor any check issued or dated prior to the Petition Date, except as otherwise provided by further order of the Court. In no event shall any of the banks be required to honor overdrafts or to pay any check, wire or other debit against any of the Bank Accounts that is drawn against uncollected funds. 7. The Debtors are authorized, but not directed, to continue to pay, and the banks may continue to charge and collect, all customary and usual prepetition and postpetition fees arising from or related to the Bank Accounts. 8. Subject to section 553 of the Bankruptcy Code, all banks that maintain the Bank Accounts are prohibited from offsetting, affecting, freezing, or otherwise impeding the Debtors' 21 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 22 of 25 use of any funds in the Bank Accounts on account of, or by reason of, any claim (as defined in section 101(5) of the Bankruptcy Code) of any such bank against the Debtors that arose before the Petition Date, absent further order of the Court. 9. The Debtors shall continue to maintain detailed 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, recorded properly, and distinguished between prepetition and postpetition transactions. 10. To the extent applicable, the Debtors' time to comply with section 345(b) of the Bankruptcy Code is hereby extended for a period of thirty (30) days from the date of this Order (the "Extension Period"), provided, however, that such extension is without prejudice to the Debtors' right to request a further extension of the Extension Period of the waiver of the requirements of section 345(b) in these Chapter 11 Cases. 11. With respect to banks at which the Debtors hold the Bank Accounts that are party to a Uniform Depository Agreement with the U.S. Trustee, within fifteen (15) days of the date of entry of this Final 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 the Bank Accounts held at such banks as being held by a debtor -in -possession in a bankruptcy case. 12. Nothing herein further authorizes the Debtors to make transfers or loans to non - debtor affiliates absent further order of the Court. 13. The requirements set forth in rule 6004(a) of the Bankruptcy Rules are hereby waived. 14. The requirements set forth in rule 6003(b) of the Bankruptcy Rules are satisfied because the relief set forth in this Final Order is necessary to avoid immediate and irreparable harm. 22 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 23 of 25 15. The Debtors are authorized to take all actions necessary to effectuate the relief granted pursuant to this Final Order in accordance with the Motion. 16. This Final Order is effective immediately upon its entry. 17. The Court shall retain jurisdiction with respect to all matters arising from or related to the implementation, interpretation, and enforcement of this Final Order. 23 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 24 of 25 EXHIBIT C (To Bank Accounts Motion) 24 Case 24-11647-MFW Doc 8 Filed 08/12/24 Page 25 of 25 I. LIST OF BANK ACCOUNTS Bank of America SilverRock Phase I LLC USD Business Checking 6696 Bank of America SilverRock Luxury Residences, LLC USD Business Checking 8231 SilverRock Lodging, LLC Bank of America USD Business Checking 0337 Bank of America SilverRock Lifestyle Residences, LLC USD Business Checking 8286 Bank of America SilverRock Development Company, LLC USD Business Checking 8989 Bank of America RGC PA 789, LLC USD Business Checking 7440 25