Case 15-10317-PGH

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UNITED STATES BANKRUPTCY COURT

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AUBURN TRACE, LTD.

Case No.: 15-10317-PGH

DEBTOR-IN-POSSESSIONS EMERGENCY MOTION FOR ORDER

The Debtors ability to preserve its business and assets and ultimately
reorganize will be adversely affected if it is unable to retain its dedicated and
loyal employees. The Debtors employees are scheduled to receive their next
paycheck on January 21, 2015 for the pay period from January 3, 2015
through January 16, 2015. Additionally, the Debtors employees received
their most recent paychecks on January 7, 2015 for the pay period from
December 20, 2014 through January 2, 2015. While all of the checks were
issued prior to the Petition Date, the Debtor naturally anticipates that some
of these checks will not clear the Debtors bank account until a date that is
post-petition. In the interest of judicial economy since a hearing has been
scheduled on Friday, January 16, 2015 on the Debtors motion for authority
to use cash collateral, the Debtor respectfully requests that this motion be set
for hearing at the same time.

Auburn Trace, Ltd. (the Debtor), by and through its undersigned proposed counsel,

and pursuant to 11 U.S.C. 105 and 507, files this Emergency Motion for Order Authorizing
Debtor to Pay Prepetition Wages and Payroll Taxes, and in support thereof, respectfully states as

follows:

JURISDICTION

1.

This Court has jurisdiction over this motion under 28 U.S.C. 157 and 1334.

Venue is proper under 28 U.S.C. 1408 and 1409. This is a core proceeding as defined in
28 U.S.C. 157(b).
2.

The statutory predicates for the relief requested herein are 105 and 507 of the

Bankruptcy Code.
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BACKGROUND
3.

On January 7, 2015, the Debtor filed a voluntary petition for relief under Chapter

11 of the Bankruptcy Code (the Petition Date).

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4.

its business and managing its affairs as debtor-in possession. As of the date hereof, no trustee,
examiner, or statutory committee has been appointed in these Chapter 11 cases.
5.

The Debtor is a Florida limited partnership that owns affordable homes in Delray

Beach, Florida.
6.

The Debtor owns the real property located at 625 Auburn Circle W., Delray

Beach, Florida 33444 (collectively, the Real Property).

As of the Petition Date, the Debtors workforce consisted of approximately nine

(9) employees. The Debtors employees are paid bi-weekly.

The payroll for the period from January 3, 2015 through January 16, 2015 will be

due on January 21, 2015.

Additionally, the Debtors employees received their most recent paychecks on

January 7, 2015 for the pay period from December 20, 2014 through January 2, 2015. While all
of the checks were issued prior to the Petition Date, the Debtor naturally anticipates that some of
these checks will not clear the Debtors bank account until a date that is post-petition.

RELIEF REQUESTED AND BASIS THEREFOR

10.

Through this motion, the Debtor seeks authority under 105(a) and 507(a)(4) of

the Bankruptcy Code to pay the Debtors prepetition wage obligations.

Section 105(a) of the Bankruptcy Code provides, in part, that [t]he court may

issue any order, process or judgment that is necessary or appropriate to carry out the provisions
of this title. 11 U.S.C. 105(a).

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The prepetition wages are entitled to priority claim status under section 507(a)(4)

of the Bankruptcy Code to the extent of $12,475.00 per employee, for several reasons. As such,
these claims would be entitled to payment in full under any plan of reorganization.
Courts have repeatedly recognized the importance of a debtors employees to its

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13.

reorganization and the severe harm to employees that can arise if motions such as this one are
not granted. In re Braniff, Inc., 218 B.R. 628, 633 (Bankr. M.D. Fla. 1998) (approving payment
of prepetition employee wage claims due to the vital role the employees play to the debtors
reorganization). Courts have regularly granted motions to pay prepetition employee wages and
honor employee benefits when the employees continued efforts are necessary to the debtors
effective reorganization. See, e.g., In re Atlas Air Worldwide Holdings, Inc., Chapter 11 Case
No. 04-10792-BKC-RAM (Bankr. S.D. Fla. February 6, 2004) (Mark, J.) (Order Granting
Debtors Emergency Motion for Order Authorizing Debtors to Pay Prepetition Salaries); In re
US Airways Group, Inc., Chapter 11 Case No. 02-83984 (Bankr. E.D. Va. August 12, 2002)
(Mayer, J.) (Order Authorizing the Debtor to Pay Prepetition Salaries, Wages, and Benefits); In

re Fine Air Servs. Corp., Chapter 11 Case No. 00-18671-BKC-AJC (Bankr. S.D. Fla. Sept. 29,
2000 (Cristol, J.) (Order Authorizing the Debtors to Honor Obligations to Their Employees).
14.

The Debtors employees perform a variety of critical functions, all directed

toward the development of current and future operations of the Debtors business.

The loss of

one of these employees could seriously harm the ability for the Debtor to reorganize.
15.

As of the Petition Date, the Debtors workforce consisted of approximately nine

(9) employees. The Debtors employees are paid bi-weekly and are scheduled to receive their
next paycheck on January 21, 2015 for the pay period from January 3, 2015 through January 16,
2015. For the payroll for this time period during the prepetition period from January 3, 2015
through January 7, 2015, the Debtor estimates the aggregate amount will total approximately
$5,230.35.
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Additionally, the employees received their most recent payments before the filing,

for the pay period from December 20, 2014 through January 2, 2015 in the aggregate amount
$17,434.51. While all of the foregoing checks were issued by the Debtor prior to the filing of

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this Chapter 11 case, the Debtor naturally anticipates that some of these checks will not clear the
Debtors bank account until sometime that is post-petition. Accordingly, out of an abundance of
caution, the Debtor requests that the employees remain entitled to receive these funds for the
services rendered.
17.

The Debtor estimates that the total prepetition wage obligations that remain

unpaid as of the Petition Date is approximately $5,230.35, which amount covers the period from
January 3rd through 7th, 2015.

No single employee is owed prepetition wages exceeding

$12,475.00. See Exhibit A for a detail of the paychecks issued to the Debtors employees for
the services provided by same from December 20, 2014 through January 2, 2015. The Debtor
estimates the payments to its employees from January 3rd through 7th, 2015 will total

approximately 30% of the amounts listed on Exhibit A. The names of the employees have
been redacted for purposes of this filing and will be presented at the hearing on this motion.
18.

If the prepetition employee obligations are not received by the employees in the

ordinary course, they will suffer extreme personal hardship and, in many cases, will be unable to
pay their basic living expenses. Such a result obviously would destroy the morale of the
employees and result in unmanageable employee turnover, causing immediate and pervasive

damage to the Debtors business operations. Any significant deterioration in morale at this time
would substantially and adversely affect the Debtor and its ability to reorganize, thereby
resulting in immediate and irreparable harm to the Debtor, its estates and its creditors.
19.

The future of the Debtors business depends on its ability to retain existing skilled

and dedicated employees. Absent the relief requested herein, the existing employees will suffer
undue hardship because the funds requested to be paid are needed to enable the employees to
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meet their financial obligations. If the requested relief is not granted, many of the employees
will likely seek other employment and the Debtor will suffer irreparable harm. The Debtors
ability to preserve its business and assets and ultimately reorganize will be adversely affected if

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it is unable to retain its dedicated and loyal employees. Accordingly, it is critical that any
hardship and disruption caused by this Chapter 11 proceeding be minimized in order to preserve
morale and maintain the Debtors workforce.

WHEREFORE, the Debtor respectfully requests that this Court enter an order in

substantially the same form as the proposed order attached hereto as Exhibit B (i) granting the

instant motion; (ii) authorizing the Debtor to pay its prepetition wages; and (iii) granting the
Debtor such other and further relief as is just and proper.

Respectfully submitted,

Bradley S. Shraiberg
SHRAIBERG, FERRARA & LANDAU, P.A.
Proposed Attorneys for the Debtor
2385 NW Executive Center Drive, #300
Boca Raton, Florida 33431
Telephone: 561-443-0800
Facsimile: 561-998-0047
Email: [email protected]

By: /s/ Bradley S. Shraiberg

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ATTORNEY CERTIFICATION
I HEREBY CERTIFY that I am admitted to the Bar of the United States District Court
for the Southern District of Florida and I am in compliance with the additional qualifications to

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practice in this Court set forth in Local Rule 2090-1(A).

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was furnished via

Notice of Electronic Filing to those parties registered to receive electronic notices in this case on
this 12th day of January, 2015.

Respectfully submitted,

Bradley S. Shraiberg
SHRAIBERG, FERRARA & LANDAU, P.A.
Proposed Attorneys for the Debtor
2385 NW Executive Center Drive, #300
Boca Raton, Florida 33431
Telephone: 561-443-0800
Facsimile: 561-998-0047
Email: [email protected]

By: /s/ Bradley S. Shraiberg

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Case 15-10317-PGH

EXHIBIT A

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Auburn Trace ltd (6104)

Batch Number: 20151

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MWB104
Invoice Reprint
Report generated on 01/07/2015 at 8:05 AM
Invoice Number: 01930844
Invoice Date: 01/0712015

SOCIAL SECURITY

MEDICARE

FEDERAL UNEMPLOYMENT

WORKERS COMPENSATION

Page 1

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Case 15-10317-PGH

Auburn Trace Ltd (6104)

Report generated on 01/07/2015 at 8:07 AM

Year:2015
Employee: All Employees

Batch: 2015101-07-15 BIWEEKLY

Sort Option 1: Oeparlmflllt

Subtolal: Yes

Break: No

01/07/2015

30.

HCll.IDAY PAY HOL

P1

24.00

10

REG PAY

P-2

40.00

30.29

1,211.54

10

V/ICPAY

P.3

16.00

30.211

484.62

10

FEDERAL
INCOME

00-10

D-1

1.00

-407.56

-407.56

00.11

1).2

1.00

3'M4

10

001512

10

REG

728.92

SOCIAL
SECURITY

00-12

D-3

1.00

-145.96

-145.00

10

OENflil. 125

Del125.

D-4

1.00

1.00

1.00

10

CO MEDICAL

CMED125

D-5

1.00

-67.82

-67.82

10

Employee

Totals:

Totals: DEPT:
111

2,423.08

o.oo

2,423.08

68.82

587.66

1,7611.60

2,423.08

o.oo

2,423.08

68.82

587.66

1,766.60

Pagel

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Case 15-10317-PGH

REG PAY

15

15

MEDICAREEE

15

15

OENTAL125

15

Employee
Totals:

2,000.00

25.00

1.400.00

REG

P-2

56.00

00-10

D-1

uo

00-11

D-2

1.00

-28.99

00-12

D-3

1.00

123M

DEN125

D-4

1.00

-1.00

-1.00

2,000.00

1.00

262.83

1,7311.17

0.00

-28.99

0
D

01/07/2015

15
15

REG PAY

'15

MEDICAREEE

15

15

Employee
Totals:

15

us
15

---

2,884.63

0.00

001510

HOLIDAY PAY

VACPAY

HO&-

P1

24.00

38Jl8

885.39

REG

P-2

56.00

36.00

2.019.24

00-10

0.1

UK!

-4El<UI

464.19

00-11

D-2

1.00

-41.83

-41.83

OO-t2

1)..3

1.00

.,.,..

2,884.63

o.oo

684.87

2,199.76

19.00

458.00

HOL

VAC

P-1

24.00

P-'2

41.00

P-3

8.00

19.00

152.00

D.

15

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Case 15-10317-PGH

MEDICAREEE

15

15

401(K)

15

1~

15

ROTH401K

15
15

STD

Employee
Totals:

Totals: DEPT:

15

00-11

0-2

1.00

-22.04

-22.04

00.12

1).3

1.00

,._24

,..24

401K

D-4

1.00

0.00

0.00

401KC

0-5

1.00

0.00

o.oo

ROTH

D-6

1.00

-60.80

-60.80

ROTH<:

0.1

1.00

0.00

STOP IC

D-8

1.00

10.80

-10.80

1,520.00

o.oo

1,520.00

71.60

325.27

1,123.13

6,404.63

0.00

6,404.63

72.60

1,272.!17

5,0Sll.06

HOL

P1

24.00

25.00

600.00

PERSONAL

P-2

8.00

25.00

200.00

REG

P-3

48.00

25.oo

1,200.00

00-10

0-1

1.00

-395.37

-395.37

01/07/2015

25
25

0015iS

PERSONAL

25
25

FEDERAL
INCOME

25
25

00-12

1.00

-123.10

-123.10

1.00

0.00

0.00

0-5

1.00

0.00

0.00

0-5

1.00

-200.00

200-00

D-3

25
25

25

1.00

SOCIAL
SECURITY

401K
CATCH-UP

401KC

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Case 15-10317-PGH

ROTH
CATCH-UP

ROTHC

D-7

1.00

0.00

0.00

25

DBllTN.125

D9h25

D-8

1.00

-11.00

-11.00

25

VISION 125

VIS125

D-9

1.00

-3.50

-3.50

214.50

54726

1,23824

25

Employee
Totals:

2,000.00

o.oo

OO'lfl07

HOIJDAYPAY

HOL

P-1

24.00

19.00

45$.00

REG

P-2

56.00

19.00

1.064.00

0040

0-1

1.00

-I.SS

...

REG PAY

00-11

D-2

1.00

-21.99

-21.99

011-12

D-3

UJO

-94'2

-94.02

VIS125 ~:

D-4

1.00

-3.50

-3.50

1,5211.00

3.50

174.39

1,342.11

24.00

fUO

~.00

32.00

13.50

432.00

24.00

13.00

~.00

1.00

-129.39

-129.39

-15.45

-15M:i

2,000.00

01/07/2015

25
25

25

MEDICAREEE

25

25

VISION 125

25

Employee
Totals:

1,520.00

0.011

01/07/2015

25

25

HOL

REG PAY

FEDERAL
INCOME

REG

00-10

P-2

D-1

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Case 15-10317-PGH

SOCIAL
SECURITY

25

25

401K
CATCH-UP

25

25

ROTH
CATCH-UP

25

25
25

DENTAL 125

25
25

GARNISH FEE

Employee

Totals:

00-12

D-3

1.00

-66.06

-66.06

40U('

1.00

0.00

0.00

401KC

D-5

1.00

0.00

0.00

ROTH

o.a

1.00

~20

420

ROTHC

D-7

1.00

0.00

o.oo

o.a

1.00

-60.00

'-60.oo

OEN125

D-9

1.00

-11.00

-11.00

VIS125

IJ.10

1.00

...asc

4.50

GARN FEE

D-11

1.00

-2.00

-2.00

119.70

210.90

749.40

1,080.00

o.oo

001506

HOl.IDAV PAY

HOl

P.1

24.00

15.00

250.00

REG PAY

REG

P-2

56.00

15.00

640.00

D-1

1.00

-149.57

":149$1

D-2

1.00

-17.40

-17.40

0-3

1.00

1.200.00

0.00

1,080.00

01107/2015

25
25

25

MEDICAREEE

25

Employee
Totals:

--

1,200.00

0.00

-~~~-

-~~~~-

25

00-11

001514

REG PAY

241.37

-~--~A~-~-~~~-~~~>.-

REG

P-1

Page 5

8.00

958.63

"~~"~~~~-~

10.00

80.00

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Case 15-10317-PGH

MEDICAREEE

25

25

00-11

D-2

1.00

-1.16

-1.16

00.12

1)-3

1.00

4Jl6

4:111

0.00

6.12

73.88

Employee
Totals:

80.00

0.00

80.00

Totals: DEPT:
25

5,880.00

0.00

5,880.00

337.70

1,180.04

4,362.26

Grand Totals:

14,707.71

0.00

14,707.71

479.12

3,040.67

11,187.92

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EXHIBIT B

UNITED STATES BANKRUPTCY COURT

In re:

AUBURN TRACE, LTD.

Chapter 11

Debtor.
________________________________/

Case No.: 15-

ORDER GRANTING DEBTOR-IN-POSSESSIONS

THIS MATTER came before the Court for hearing on January 16, 2015 upon the debtor,

Auburn Trace, Ltd.s (the Debtor) Emergency Motion for Order Authorizing Debtor to Pay
The Court, having

Prepetition Wages and Payroll Taxes (the Motion) [ECF No. ___].

reviewed the Motion, hearing argument of counsel, and being otherwise fully advised in the
premises, makes the following FINDINGS OF FACT:
A.

Failure to pay the Debtors employees amounts owed as of the Petition Date,1 as

listed on Exhibit A of the Motion, for accrued and unpaid wages would have a negative impact

All capitalized terms shall have the meaning ascribed to them in the Motion, unless otherwise

indicated herein.
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on employee morale and result in a reduction in performance that would be detrimental towards
the development of current and future operations of the Debtors business.
B.

A sound business justification exists for the Debtor to pay outstanding amounts

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owed as of the Petition Date to the Debtors employees for accrued and unpaid wages because
many of the employees may seek other employment absent such payment.
C.

The payment of the amounts owed as of the Petition Date to the Debtors

employees for accrued and unpaid wages and adjustments thereto is necessary to the
reorganization process because the services supplied by the employees are necessary for the
Debtor to maintain its business operations on an interim basis.
D.

The Debtors estate will be improved for the benefit of all creditors as a result of

payments described herein.

The relief requested in the motion is necessary to avoid immediate and irreparable

harm to the Debtors estate and is in the best interests of the Debtor, its estate, and its creditors.
THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED THAT:
1.

The Motion is GRANTED, as set forth herein.

2.

The Debtor is authorized, under 105(a); 363(b) and 507(a)(4) of the

Bankruptcy Code, to pay amounts owed as of the Petition Date to the Debtors employees, as
listed on Exhibit A of the Motion, for accrued and unpaid wages and adjustments thereto. To the
extent that any employee is owed prepetition wages exceeding $12,475.00, the Debtor is only

authorized to pay such employee a total of $12,475.00. The Debtor is authorized to take all
actions necessary to effectuate the relief granted pursuant to this Order in accordance with this
Motion.
3.

This Order shall not be subject to the twenty-one (21) day time prohibition

proscribed by Rule 6003(b) of the Federal Rules of Bankruptcy Procedure because the relief
granted herein is necessary to avoid immediate and irreparable harm to the Debtors estate.
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###

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SUBMITTED BY:
SHRAIBERG, FERRARA & LANDAU, P.A.
Proposed Attorneys for the Debtor
2385 NW Executive Center Drive, #300
Boca Raton, Florida 33431
Tel.: 561-443-0800/Facsimile: 561-998-0047
Email: [email protected]

Bradley S. Shraiberg, Esq. is directed to serve copies of this Order upon all interested parties and to file a
certificate of service with the Court.

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