2025-01-13 Debtors' Motion for Leave (Doc 299, received 2025-01-23)Case 24-11647-MFW Doc 299 Filed 01/13/25 Page 1 of 6
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)
(Jointly Administered)
DEBTORS' MOTION FOR LEAVE TO FILE REPLY TO POPPY BANK'S
OBJECTION AND IN SUPPORT OF DEBTORS' MOTION PURSUANT TO
SECTIONS 105, 361, 362, 363, 364, AND 507 OF THE BANKRUPTCY CODE,
BANKRUPTCY RULE 4001, AND LOCAL RULE 4001-2, FOR AN ORDER (I)
AUTHORIZING DEBTORS TO OBTAIN POSTPETITION FINANCING; (II)
GRANTING DIP LENDER PRIMING LIENS AND SUPER -PRIORITY CLAIMS;
AND (III) GRANTING RELATED RELIEF
Debtors, as debtors and debtors in possession in the above -captioned chapter 11 cases
respectfully move and represent as follows in support of this motion for leave (the "Motion for
Leave"):
Background
A. General Background
1. On August 5, 2024 (the "Petition Date"), the Debtors commenced with this Court
six voluntary case under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"),
which the Court administratively consolidated under bankruptcy case number 24-11647-MFW.
The Debtors are authorized to continue to operate their business and manage their properties as
debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No trustee
or examiner has been appointed in these Chapter 11 Cases.
'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 1, LLC (2247). The location of the Debtors' principal place of business and the Debtors'
mailing address is 343 Fourth Avenue, San Diego, CA 92101.
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2. Additional information regarding the Debtors' business and operations and the
circumstances leading to the commencement of these Chapter 11 Cases is set forth in the
Declaration of Robert S. Green Jr., Pursuant to 28 U.S.C. § 1746 In Support of Debtors' Chapter
11 Petitions and First Day Pleadings [Docket No. 13], incorporated herein by reference.
B. Specific Background
3. On December 12, 2024, the Debtors filed their Motion Pursuant to Sections 105,
361, 362, 363, 364, and 507 of the Bankruptcy Code, Bankruptcy Rule 4001, and Local Rule 4001-
2, for an order (i) Authorizing Debtors' to Obtain Postpetition Financing; (ii) Granting DIP Lender
Priming Liens and Super -Priority Claims; and (iii) Granting Related Relief [Docket No. 246] (the
"DIP Motion") seeking authorization to obtain postpetition financing through a priming DIP
Credit Facility from the City of La Quinta ("City"). Pursuant to the notice attached to the DIP
Motion, the initial deadline for parties to file responses or objections to the Motion, if any, was
December 26, 2024, at 4:00 p.m. (prevailing Eastern Time) (the "Initial Objection Deadline").
4. On December 27, 2024, Debtors filed an Amended Notice of Hearing on the DIP
Motion [Docket No. 265] that extended the deadline to file responses or objections to the DIP
Motion, if any, to January 6, 2025 at 4:00 p.m. (prevailing Eastern Time) (the "Extended
Objection Deadline"). A hearing to consider the DIP Motion is scheduled for January 15, 2025
at 2:00 p.m. (prevailing Eastern Time) (the "Hearing").
5. Between January 3 and January 6, 2025, Debtors agreed to extend the deadline for
the Major Constituents2 to file responses or objection to the DIP Motion, if any, through and
including January 8, 2025 at 11:59 p.m. (prevailing Eastern Time) (the "Major Constituent
Objection Deadline"). In granting this extension, Debtors asked the Major Constituents if they'd
2 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the DIP Motion.
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agree to extend the Debtors' deadline to reply to any response or objection to January 13, 2025 at
12:00 p.m. (prevailing eastern time), which the Major Constituents did. On or about January 8,
2025, Debtors agreed to extend the deadline for the U.S. Trustee to file an objection or response
to DIP Motion to January 10, 2025 at 11:59 p.m. (prevailing eastern time).
6. On January 8, 2025, Major Constituents Cypress Point Holdings, LLC, R.D. Olson
Construction, Inc., and Construction Loan Services II, LLC (dba Builders Capital) filed reservation
of rights in response to the DIP Motion. [See Docket Nos. 290, 291, 292]. Later that day, Poppy
Bank filed an objection to the DIP Motion (the "Poppy Objection") [Docket No. 293]. On January
10, 2025, the U.S. Trustee filed its reservation of rights [Docket No. 297].
Jurisdiction
7. The Court has jurisdiction to consider 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. This is a core proceeding pursuant to 28 U.S.C. §
157(b).
8. Pursuant to Rule 9013-1(f) of the Local Rules of Bankruptcy Practice and
Procedure of the United States Bankruptcy Court for the District of Delaware (the "Local Rules"),
the Debtors consent to the entry of an 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 consistent with Article III of the United States Constitution. Venue is proper
before the Court pursuant to 28 U.S.C. §§ 1408 and 1409.
Relief Requested
9. By this Motion for Leave, the Debtors seek entry of an order, pursuant to Local
Rule 9006-1(d), to file their reply to the Poppy Objection (the "Reply"), filed contemporaneously
herewith, in support of the DIP Motion.
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10. A proposed form of order granting the relief requested herein is annexed hereto as
Exhibit A (the "Proposed Order").
Relief Requested Should Be Granted
11. Pursuant to Local Rule 9006-1(d), "[r]eply papers ... may be filed by 4:00 p.m.
prevailing Eastern Time the [business] day prior to the deadline for filing the agenda." See Del.
Bankr. L.R. 9006-1(d). The agenda for the Hearing is due by 12:00 p.m. (prevailing Eastern Time)
on January 13, 2025. Accordingly, pursuant to Local Rule 9006-1(d), the deadline to file the Reply
was 4:00 p.m. (prevailing Eastern Time) on January 10, 2025 (the "Reply Deadline"). As a result,
absent leave of the Court, the Debtors would be unable to file the Reply and the Court would be
denied the opportunity to review the Reply in support of the DIP Motion and to address the
Objection in advance of the Hearing.
12. The Debtors submit that cause exists to grant the relief requested by the Motion for
Leave and approve an extension of the time by which to file the Reply under Local Rule 9006-
1(d). As described above, Debtors only agreed to extend the Major Constituent Objection
Deadline if the Major Constituents also agreed to extend the Reply Deadline. This would give
Debtors sufficient time to address the complex issues raised in any potential objection to the DIP
Motion, which were indeed raised in the Poppy Objection. The Debtors' opportunity to file the
Reply should not be foreclosed as a result of the Debtors' willingness to extend the Major
Constituent Objection Deadline and the Debtors' allowing Poppy the time it needed to present its
concerns over the DIP Motion to the Court.
13. The Poppy Objection raises legal and factual issues pertaining to the DIP Motion,
and the Reply both addresses these issues and provides the Court and all parties in interest with
critical information and arguments relevant to the relief requested by the Motion. The Court's
consideration of the Reply will help streamline argument at the Hearing and otherwise assist the
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Court in deciding the merits of the Motion and the Poppy Objection. Further, permitting the
Debtors to file the Reply after the Reply Deadline will not prejudice any parties in interest, as the
Major Constituents already agreed to extend the Reply Deadline, only Poppy objected to the DIP
Motion, and parties will now have an opportunity to review the Reply in advance of the Hearing
rather than hearing the arguments therein for the first time.
Notice
14. Notice of this Motion for Leave will be provided to (a) the Office of the United
States Trustee for the District of Delaware; (b) the Debtors' twenty (20) largest unsecured creditors
(excluding insider); (c) counsel to the DIP Lender; (d) all known holders of liens upon the Debtors'
assets, and; (d) all parties that have filed notices of appearance pursuant to Bankruptcy Rule 2002.
The Debtors respectfully submit that no further notice is required.
No Prior Request
15. No prior request for the relief sought herein has been made by the Debtor
to this or any other Court.
WHEREFORE the Debtors respectfully requests entry of the Proposed Order
granting the relief requested herein and such other and further relief as the Court may deem just
and appropriate.
Dated: January 13, 2025 ARMSTRONG TEASDALE LLP
Wilmington, Delaware
/s/Jonathan M. Stemerman
Jonathan M. Stemerman (No. 4510)
Eric M. Sutty (No. 4007)
Denisse Guevara (No. 7206)
1007 North Market Street, Third Floor
Wilmington, Delaware 19801
Telephone: (302) 416-9670
jstemerman@atllp.com
esutty@atllp.com
dguevara@atllp.com
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-and-
Victor A. Vilaplana (Pro Hac Vice)
823 La Jolla Rancho Road
La Jolla, CA 92037
Telephone: (619) 840-4130
vavilaplana@gmail.com
-and-
Benjamin M. Carson (Pro Hac Vice)
5965 Village Way STE E105
San Diego, CA 92130
Telephone: (858) 255-4529
ben@benjamincarson.com
Counsel to the Debtors and Debtors in
Possession
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Case 24-11647-MFW Doc 299-1 Filed 01/13/25 Page 1 of 3
Exhibit A
Proposed Order
Case 24-11647-MFW Doc 299-1 Filed 01/13/25 Page 2 of 3
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
x
In re Chapter 11
SilverRock Development Company LLC et al, : Case No. 24-11647 (MFW)
Debtors.1 Re: Docket No.
ORDER GRANTING MOTION FOR LEAVE TO FILE REPLY TO POPPY BANK'S
OBJECTION AND IN SUPPORT OF DEBTORS' MOTION PURSUANT TO
SECTIONS 105, 361, 362, 363, 364, AND 507 OF THE BANKRUPTCY CODE,
BANKRUPTCY RULE 4001, AND LOCAL RULE 4001-2, FOR AN ORDER (I)
AUTHORIZING DEBTORS TO OBTAIN POSTPETITION FINANCING; (II)
GRANTING DIP LENDER PRIMING LIENS AND SUPER -PRIORITY CLAIMS;
AND (III) GRANTING RELATED RELIEF
Upon the motion (the "Motion for Leave2") of Debtors for entry of an order (this
"Order"), pursuant to Local Rule 9006-1(d), granting the Debtor leave to file its Reply in support
of the DIP Motion, all as more fully set forth in the Motion for Leave; and the Court having
jurisdiction to consider the Motion for Leave and the relief requested therein pursuant to 28 U.S.C.
§ § 157(a)—(b) and § 1334, and the Amended Standing Order of Reference from the United States
District Court for the District of Delaware, dated February 29, 2012; and consideration of the
Motion for Leave and the requested relief being a core proceeding pursuant to 28 U.S.C. § 157(b);
and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409; and this Court
having reviewed the Motion for Leave; and upon any hearing held on the Motion for Leave; and
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 1, 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 not otherwise defined herein shall have the meanings ascribed to them in the Motion for Leave or
DIP Motion.
Case 24-11647-MFW Doc 299-1 Filed 01/13/25 Page 3 of 3
all objections, if any, to the relief requested in the Motion for Leave having been withdrawn,
resolved, or overruled; and the Court having determined that the legal and factual bases set forth
in the Motion for Leave establish just cause for the relief granted herein; and upon all of the
proceedings had before this Court; and after due deliberation and sufficient cause appearing
therefor,
IT IS HEREBY ORDERED THAT
1. The Motion for Leave is granted to the extent set forth herein.
2. The Debtors are granted leave and permission to file and serve Reply, and
the Court will consider the Reply at the hearing on January 15, 2025 at 2:00 p.m. (prevailing
Eastern Time).
3. The Debtors are authorized to take all actions necessary or appropriate to
carry out the relief granted in this Order.
4. This Court shall retain jurisdiction to hear and determine all matters arising
from or related to the implementation, interpretation, or enforcement of this Order.
2