Motion of Debtors for Entry — Pay Prepetition Wages, Salaries — Vyaire Medical, Inc., et al. (Case No. 24-11217)

Summary

Motion of Debtors for Entry of Interim and Final Orders authorizing the Debtors to pay prepetition wages, salaries, other compensation, and reimbursable expenses and to continue employee benefits programs, in In re Vyaire Medical, Inc., et al., Case No. 24-11217, United States Bankruptcy Court for the District of Delaware, Doc 6, filed June 10, 2024. The Debtors seek payment of prepetition obligations in an aggregate amount of approximately $5,404,200 under the Interim Order, and ask the Court to schedule a final hearing approximately 21 days from the Petition Date. The motion states that the Debtors employ approximately 480 individuals on a full-time basis throughout the United States. A table lists accrued and unpaid amounts, including Unpaid Wages of $1,070,000 and Unpaid Commissions of $430,000.

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

)

In re:
)
Chapter 11

)

VYAIRE MEDICAL, INC., et al.,1
)
Case No. 24-11217 (___)

)

Debtors.
)
(Joint Administration Requested)

)

MOTION OF DEBTORS FOR ENTRY
OF INTERIM AND FINAL ORDERS (I) AUTHORIZING
THE DEBTORS TO (A) PAY PREPETITION WAGES, SALARIES, OTHER
COMPENSATION, AND REIMBURSABLE EXPENSES AND (B) CONTINUE
EMPLOYEE BENEFITS PROGRAMS, AND (II) GRANTING RELATED RELIEF
The above-captioned debtors and debtors in possession (collectively, the “Debtors” and,
each, a “Debtor”) state as follows in support of this motion:2
Relief Requested
1.
The Debtors seek entry of interim and final orders, substantially in the forms
attached hereto as Exhibit A and Exhibit B (respectively, the “Interim Order” and the “Final
Order”), (a) authorizing, but not directing, the Debtors to pay all prepetition wages, salaries, other
compensation, and Reimbursable Expenses on account of the Employee Compensation and
Benefits Programs (as defined below) and continue to administer the Employee Compensation and
Benefits Programs in the ordinary course of business, including payment of prepetition obligations

1  The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495.  A complete list
of each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax identification number may be
obtained
on
the
website
of
the
Debtors’
proposed
claims
and
noticing
agent
at
https://omniagentsolutions.com/Vyaire.  The location of Debtor Vyaire Medical, Inc.’s principal place of business
and the Debtors’ service address in these chapter 11 cases is 26125 North Riverwoods Boulevard, Mettawa,
Illinois, USA 60045.
2
A detailed description of the Debtors and their business, including the facts and circumstances giving rise to the
Debtors’ chapter 11 cases, is set forth in the Declaration of John Bibb, Group Chief Executive Officer of Vyaire
Medical, Inc., in Support of Chapter 11 Filing and First Day Motions (the “First Day Declaration”), filed
contemporaneously herewith and incorporated by reference herein.  Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the First Day Declaration.
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related thereto in an aggregate amount of approximately $5,404,200 pursuant to the Interim Order;
and (b) granting related relief.  In addition, the Debtors request that the Court schedule a final
hearing approximately 21 days from the Petition Date.
Jurisdiction and Venue
2.
The United States District Court for the District of Delaware has jurisdiction over
this matter pursuant to 28 U.S.C. §1334, which was referred to the United States Bankruptcy Court
for the District of Delaware (the “Court”) under 28 U.S.C. § 157 and the Amended Standing Order
of Reference from the United States District Court for the District of Delaware, dated February 29,
2012.  The Debtors confirm their consent, 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”), 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.
3.
Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.
4.
The statutory bases for the relief requested herein are sections 105(a), 362(d),
363(b), 507(a), and 541(b)(1) of title 11 of the United States Code, 11 U.S.C. §§ 101–1532
(the “Bankruptcy Code”), rules 6003 and 6004 of the Federal Rules of Bankruptcy Procedure
(the “Bankruptcy Rules”), and Local Rules 2002-1 and 9013-1.
Background
5.
Vyaire Medical, Inc., together with its direct and indirect subsidiaries
(collectively, “Vyaire” or the “Company”), is a global company focused on developing products
and providing related services for the diagnosis, treatment, and monitoring of various cardiology,
pulmonology, and respiratory health conditions.  With a 70-year history of pioneering breathing
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technology, the integrated solutions offered by the Company help enable, enhance, and extend
lives.  Headquartered in Mettawa, Illinois, Vyaire operates approximately 27 offices and
manufacturing facilities, and employs approximately 950 individuals around the world.
The Company has a global reach, and Vyaire products are available in more than 100 countries.
Its customers are the hospitals, health centers, and private practice facilities delivering
life-enhancing products and services to patients every day.
6.
On June 9, 2024 (the “Petition Date”), Vyaire Medical, Inc. and certain of its
subsidiaries filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.  The
Debtors are operating their business and managing their property as debtors in possession pursuant
to sections 1107(a) and 1108 of the Bankruptcy Code.  Concurrently with the filing of this motion,
the Debtors filed a motion requesting procedural consolidation and joint administration of these
chapter 11 cases pursuant to Bankruptcy Rule 1015(b).  No request for the appointment of a trustee
or examiner has been made in these chapter 11 cases, and no official committees have been
appointed or designated.
The Debtors’ Workforce
7.
Throughout the United States, the Debtors employ approximately 480 individuals
on a full-time basis (collectively, the “Employees”).3  The Employees perform a wide variety of
functions critical to the administration of these chapter 11 cases.  Their skills, knowledge, and
understanding of the Debtors’ operations and infrastructure are essential to preserving operational
stability and efficiency.  Many of these Employees have technical and unique Company-specific
knowledge essential to the Debtors’ operations.  Without the continued, uninterrupted services of

3
The Debtors’ foreign, non-Debtor affiliates employ approximately 481 employees.
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their Employees, the Debtors’ business operations will be halted, and the administration of the
Debtors’ estates will be materially impaired.
8.
Approximately 306 Employees are salaried, and 174 Employees are paid on an
hourly basis.  None of the Employees are represented by a collective bargaining unit.  In addition
to the Employees, the Debtors also hire certain contingent workers for a predetermined period on
a temporary and as-needed basis (the “Contingent Workers”) through a number of staffing
agencies (collectively, the “Staffing Agencies”).4  The Contingent Workers include assemblers,
accounts, virtual sales representatives, consultants, and engineers.  As of the Petition Date, the
Debtors have approximately 74 Contingent Workers.  The Debtors also periodically retain
consultants and engineers as independent contractors who are employed through single-employee
limited liability companies (the “Independent Contractors”) to meet staffing and project
requirements on an as-needed basis.  As of the Petition Date, the Debtors have approximately
14 Independent Contractors.  Together, the Contingent Workers and Independent Contractors
support the Debtors’ workforce and operations by providing necessary staff augmentation in
engineering, marketing, accounting, IT, and other operating roles.  The Debtors’ ability to maintain
the Contingent Workers and Independent Contractors is critical to supplement the efforts of the
Debtors’ Employees.
9.
In many instances, the Debtors’ Employees, Contingent Workers, and Independent
Contractors (collectively, the “Workforce”) rely exclusively on their compensation and benefits to
pay their daily living expenses and to support their families.  The Debtors’ Workforce will be
exposed to significant financial hardship and may leave the employ of the company in the event

4
The Staffing Agencies include Aerotek, Inc., David M Lewis Company, LLC, Aston Carter, Inc., Connexio
Health LLC, Gispath, Inc., PRN Health Services, LLC, Real Staffing Group, Actalent, Inc., and Gravity Talent
Solutions (Airlife).
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the Debtors are not permitted to continue paying wages and salaries, provide employee benefits,
and maintain existing employee programs in the ordinary course of business.  Accordingly, the
Debtors and their estates would be harmed if they are unable to provide compensation and benefits
to their workforce consistent with past practice.  Consequently, the Debtors respectfully submit
that the relief requested herein is necessary and appropriate under the facts and circumstances of
these chapter 11 cases.
Employee Compensation and Benefits Programs
10.
The Debtors seek to minimize the personal financial burden that their Employees
would suffer if prepetition Employee-related obligations were not paid or remitted when due or as
expected.  By this motion, the Debtors seek authority to pay and honor certain prepetition claims
and/or continue to honor obligations on a postpetition basis, as applicable, relating to, among other
things, wages, commissions, compensation, staffing agency obligations, payroll processing,
withholding taxes, other amounts withheld (including garnishments, Employees’ share of
insurance premiums, taxes, and 401(k) contributions and other retirement savings contributions),
reimbursable expenses, certain incentive and retention programs, health insurance benefits, health
savings accounts, flexible spending accounts, COBRA benefits, life and AD&D insurance, short
and long term disability benefits, voluntary benefits, the workers’ compensation program,
retirement savings plans, employee assistance programs, time off benefits (including paid time off,
unpaid time off, excused work days, holidays, and parental leave), and other benefits that the
Debtors have provided to Employees and/or Independent Contractors historically (collectively,
the “Employee Compensation and Benefits Programs”) on an interim and a final basis, as detailed
herein, and summarized in the chart below.  In addition, the Debtors also seek to pay all costs
incidental to the Employee Compensation and Benefits Programs.
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11.
Subject to the Court’s approval of the relief requested herein, the Debtors intend to
continue their prepetition Employee Compensation and Benefits Programs in the ordinary course
of business.  Out of an abundance of caution, the Debtors request confirmation of their right to
modify, change, and discontinue any of their Employee Compensation and Benefits Programs and
to implement new programs, policies, and benefits, in the ordinary course of business during these
chapter 11 cases and without the need for further Court approval, subject to applicable law.
12.
By this motion, the Debtors seek authority to pay the aggregate prepetition amounts
owed on account of the Employee Compensation and Benefits Programs set forth in the table
below:
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Employee Compensation and Benefits
Approximate
Amount
Accrued
and
Unpaid As of the Petition Date
Due in the First 21
Days
of
these
Chapter 11 Cases
Due After the First
21 Days of these
Chapter 11 Cases
Compensation and Withholding Obligations
Unpaid Wages
$1,070,000
$0
Unpaid Commissions
$430,000
$0
Unpaid Independent Contractor Obligations
$54,000
$108,000
Unpaid Staffing Agency Obligations
$1,200,000
$900,000
Payroll Fees
$26,000
$7,000
Withholding Obligations
$430,000
$0
Reimbursable Expenses
$1,100,000
$1,000,000
Vyaire Incentive Plan
$0
$0
SIOS Incentive Plan
$0
$0
Non-Insider Quarterly Retention Program
$0
$0
Non-Insider Severance Program
$12,000
$27,000
Benefits and Entitlements
Health Insurance Programs
$777,000
$233,000
Life and AD&D Insurance and Disability Benefits $44,000
$13,000
Workers’ Compensation Program
$0
$0
401(k) Obligations
$240,000
$720,000
Other Employee Benefits
Employee Assistance Program
$1,200
$0
PTO
N/A
N/A
Miscellaneous Benefits
$20,000
$0
Total
$5,404,200
$3,008,000

13.
As of the Petition Date, the Debtors estimate that approximately $5,404,200 on
account of Employee Compensation and Benefits will become due and owing within the first
21 days of these chapter 11 cases.  For the avoidance of doubt, the Debtors do not seek authority
to pay any current or former Employee amounts in excess of the statutory cap of $15,150 imposed
by sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code (the “Priority Claim Amount”)
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pursuant to the Interim Order.  The Debtors seek authority to pay such amounts solely pursuant to
the Final Order.
I.
Compensation and Withholding Obligations.
A.
Wages.
14.
The
Debtors
pay
the
wages,
salaries,
and
other
compensation
(excluding reimbursable expenses, commissions, and paid leave, the “Wages”) to their Employees
on a bi-weekly basis every other Friday, and one week in arrears.  Because Employees are
generally paid in arrears, certain Employees will be owed accrued and unpaid Wages as of the
Petition Date.  Wages may also be due and owing as of the Petition Date due to, among other
things, pay discrepancies that, upon resolution, may reveal that additional amounts are owed to
certain Employees.
15.
On average, the Debtors paid approximately $4.8 million in the aggregate on
account of Wages for the two pay cycles immediately preceding the Petition Date.  As of the
Petition Date, the Debtors estimate that they owe Employees approximately $1,070,000 in
prepetition accrued and unpaid Wages (the “Unpaid Wages”), all of which will become due and
owing within the first 21 days of these chapter 11 cases.  Accordingly, the Debtors seek authority
to pay any accrued Unpaid Wages and continue to pay Wages on a postpetition basis in the
ordinary course of business and consistent with past practices.
B.
Commissions.
16.
The Debtors pay sales-based commissions to approximately 42 Employees, none
of whom are Insiders (as defined herein).  Employees on the Debtors’ sales teams, which market
the Debtors’ products and services, are entitled to sale-based commissions as part of their
compensation.  These Employees generally receive commission payments in arrears on a monthly
basis in varying percentages based on the sales tied to their individual efforts and regional sales
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goals (the “Commissions”).  Sales are measured and attributed to eligible sales personnel based on
the Debtors’ records of product shipment, direct sales to end users, rebate submissions, and
revenue recognition procedures.  Commission payments vary depending on the Employee’s role
with the Company, i.e., sales consultants’ commissions-based pay ranges from 3-10% of total
applicable sales revenue in the assigned territory and sales supervisors’ commissions-based pay
ranges from 0.15-0.50% of total applicable sales revenue generated by the sales supervisors’ team.
Employees are eligible to earn Commissions on a year-to-date quota.  As an Employee approaches
or exceeds his or her revenue quota, they earn Commission at higher rates.  The Commissions are
an important part of these Employees’ overall compensation packages and motivate the Employees
to maximize their sales performance.  Therefore, failure to pay Commissions could result in
declining business performance and lower sales and revenue for the Company.
17.
In the 12-month period immediately preceding the Petition Date, the Debtors paid
an average of approximately $420,000 per month on account of the Commissions.  As of the
Petition Date, the Debtors estimate that they owe approximately $430,000 in accrued and unpaid
Commissions.  Accordingly, by this motion, the Debtors seek authority to pay any accrued and
unpaid Commissions (the “Unpaid Commissions”) and continue to pay the Commissions on a
postpetition basis in the ordinary course of business and consistent with past practices.
C.
Independent Contractor and Staffing Agency Obligations.
18.
The Debtors make payments to their Independent Contractors directly
(the “Independent Contractor Compensation”) and to Contingent Workers indirectly through
Staffing Agencies (the “Contingent Worker Compensation”).  Payments are made on a bi-weekly
or monthly basis at an agreed rate, depending on the terms of the Debtors’ agreement with the
Independent Contractor or Staffing Agency, as applicable.  The Independent Contractors and
Contingent Workers perform critical staff augmentation functions necessary to support the
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Debtors’ Employees and operations in areas such as engineering, marketing, accounting, and IT.
Accordingly, the Debtors believe that the authority to continue paying their Independent
Contractors and Contingent Workers is critical to maintaining and administering their estates.
19.
In the 12-month period immediately preceding the Petition Date, the Debtors paid
an average of approximately $54,000 per month on account of the Independent Contractor
Compensation invoices.  As of the Petition Date, the Debtors estimate that they owe approximately
$162,000 in accrued and unpaid Independent Contractor Compensation (the “Unpaid Independent
Contractor Obligations”), approximately $54,000 of which will become due and owing within the
first 21 days of these chapter 11 cases.  Accordingly, the Debtors seek authority to satisfy any
accrued and Unpaid Independent Contractor Obligations and continue to pay the members of the
Independent Contractors and Contingent Workers on a postpetition basis in the ordinary course of
business and consistent with past practices.
20.
Additionally, in the 12-month period immediately preceding the Petition Date, the
Debtors paid an average of approximately $520,000 per month to the Staffing Agencies on account
of the Contingent Workers and any related taxes and fees.  As of the Petition Date, the Debtors
estimate that they owe approximately $2.1 million in accrued and unpaid amounts to the Staffing
Agencies (the “Unpaid Staffing Agency Obligations”), approximately $1.2 million of which will
become due and owing within the first 21 days of these chapter 11 cases.  Accordingly, the Debtors
seek authority to satisfy any accrued and Unpaid Staffing Agency Obligations and continue to pay
the Staffing Agencies on a postpetition basis in the ordinary course of business and consistent with
past practices.
D.
Payroll Processing.
21.
The Debtors utilize software provided by Automatic Data Processing, Inc. (“ADP”)
to support payroll processing, payroll tax calculations and filings, and other payroll-related
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services and, correspondingly, pay certain software, payroll-related, and other administrative fees
to ADP (the “Payroll Fees”).  In the ordinary course of business, the Debtors accrue Payroll Fees
monthly.  Failure to satisfy the Payroll Fees in the future could lead to a delay in payroll processing
and delayed disbursement of payroll taxes to the appropriate third parties to the detriment of the
Employees and the Debtors’ operations.  The Debtors believe the authority to continue paying
ADP the Payroll Fees in order to maintain their use of ADP’s payroll processing and application
hosting services is critical to the Debtors’ continued operations while in chapter 11.
22.
In the 12-month period immediately preceding the Petition Date, the Debtors paid
an average of approximately $25,000 per month on account of the Payroll Fees.  As of the Petition
Date, the Debtors estimate that they owe approximately $33,000 in accrued and unpaid Payroll
Fees, approximately $26,000 of which will become due and owing within the first 21 days of these
chapter 11 cases.  Accordingly, the Debtors seek authority to remit the Payroll Fees to ADP and
to continue administering payroll in the ordinary course of business.
E.
Withholding Obligations.
23.
During each applicable pay period, the Debtors routinely deduct certain amounts
from Employees’ paychecks, which may include, without limitation, garnishments, levies, child
support and related fees, and pre-tax deductions payable in accordance with certain of the Health
and Welfare Programs (as defined below), including payments pursuant to any supplemental
Employee-elected, voluntary insurance programs (collectively, the “Deductions”).  The Debtors
deducted approximately $290,000 per bi-weekly pay period from Employees’ paychecks for the
two pay cycles immediately preceding the Petition Date.
24.
The Debtors also are required by law to withhold from the Employees’ Wages
amounts related to, among other things, certain taxes, Social Security, and government-issued
employment insurance (collectively, the “Employee Payroll Taxes”) for remittance to the
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appropriate governmental authorities.  The Debtors are required by applicable statutory authorities
to match from their own funds Social Security, Medicare taxes, and certain additional amounts for
unemployment insurance and short term disability insurance (the “Employer Payroll Taxes” and,
together with the Employee Payroll Taxes, the “Payroll Taxes”).5  The Payroll Taxes are generally
processed and forwarded to the appropriate governmental authority in accordance with remittance
intervals and deadlines established by those taxing authorities.
25.
In the 12-month period immediately preceding the Petition Date, the Debtors paid
an average of approximately $590,000 per month on account of the monthly Payroll Taxes.  As of
the Petition Date, the Debtors estimate that approximately $430,000 of accrued and unpaid
Deductions and Payroll Taxes (together, the “Withholding Obligations”) have been deducted but
not remitted to the appropriate third-party payees, all of which will become due and owing within
the first 21 days of these chapter 11 cases.  Moreover, the Debtors believe that the Withholding
Obligations are not property of their estates.  However, out of an abundance of caution, the Debtors
seek authority to remit the Withholding Obligations to the respective third-party payees and to
continue to honor and process the Withholding Obligations on a postpetition basis in the ordinary
course of business and consistent with past practices.
F.
Expenses.
26.
The Debtors reimburse certain Employees for certain expenses incurred in the
scope of their duties (the “Reimbursable Expenses”).  Reimbursable Expenses typically include
out-of-pocket expenses associated with transportation, lodging, and meals incurred in connection
with business travel and certain other work-related expenses, such as business mobile phones,

5
For the avoidance of doubt, the Debtors seek authority to pay Payroll Taxes solely in this motion and not in the
Motion of Debtors for Entry of Interim and Final Orders (I) Authorizing the Payment of Certain Taxes and Fees,
and (II) Granting Related Relief filed contemporaneously herewith.
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internet allowances, and general office expenses.  Reimbursable Expenses are typically incurred
directly by Employees with personal funds.  Employees then submit invoices of their reimbursable
out-of-pocket expenses through a platform maintained by Concur Technologies, Inc (“Concur”).6
Once the Debtors determines that the charges submitted are allowable work-related expenses, the
Debtors reimburse such Reimbursable Expenses through direct deposit.  Accordingly, without
reimbursement Employees may be held personally liable for any unpaid obligations.  The Debtors’
inability to reimburse such expenses would impose hardship on such individuals where the
obligations were incurred for the Debtors’ benefit.
27.
For the 4-month period immediately preceding the Petition Date, the Debtors paid
an average of approximately $1.1 million per month on account of the Reimbursable Expenses.
As of the Petition Date, the Debtors estimate that they will owe approximately $2.1 million in the
aggregate amount of accrued and unpaid Reimbursable Expenses, approximately $1.1 million of
which will become due and owing within the first 21 days of these chapter 11 cases.  Accordingly,
the Debtors seek authority to satisfy any accrued and unpaid prepetition Reimbursable Expenses
and continue to pay the Reimbursable Expenses on a postpetition basis in the ordinary course of
business and consistent with past practices.
G.
Non-Insider Incentive and Retention Programs (Final Order Only).
28.
The Debtors maintain certain incentive and retention programs to drive
performance among certain employees (such programs as to non-Insider Employees,
the “Non-Insider Incentive and Retention Programs”).7

6
For business travel flights, Employees book directly through Concur using a virtual credit card maintained by the
Debtors.
7
The relief sought under this motion does not include the payment of any obligations to an “insider” (as defined in
section 101(31) of the Bankruptcy Code, “Insiders”).  The Debtors may seek separate authority with respect to
such parties and reserve all rights with respect to the “insider” status of such parties.
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Vyaire Incentive Plan.
29.
The Debtors maintain an annualized incentive program for eligible Employees in
the corporate, ventilation, and respiratory diagnostics business units.  The program requires that
the Debtors meet certain EBITDA and revenue targets, and that the Employees achieve certain
individual key performance indicators (the “Vyaire Incentive Plan”).  Incentive compensation is
accrued on the achievement of individual goals, total revenue, and EBITDA targets, among others.
Payments on account of the Vyaire Incentive Plan are made annually after the conclusion of the
applicable fiscal year on which they are based.8  On April 12, 2024, the Debtors remitted
approximately $1.1 million to eligible Employees on account of the Vyaire Incentive Plan for
fiscal year 2023.  Presently, 160 non-Insider Employees are eligible to receive an award under the
Vyaire Incentive Plan for fiscal year 2024.
30.
The Debtors pay approximately $2.3 million annually on account of the Vyaire
Incentive Plan.  The Debtors do not believe they presently owe any amounts on account of the
Vyaire Incentive Plan for fiscal year 2024.9  Accordingly, the Debtors seek authority to continue
the Vyaire Incentive Plan on a postpetition basis in the ordinary course of business and consistent
with past practices.  For the avoidance of doubt, the Debtors seek authority to pay the amounts
related to the Vyaire Incentive Plan pursuant to the Final Order only and do not propose to make
any payment on account of the Vyaire Incentive Plan to Insiders.

8
However, in one instance, in fiscal year 2023, there were two quarterly payments made under the SIOS Incentive
Plan at the same time as payments made under the Vyaire Incentive Plan.
9
The Debtors’ fiscal year ends September 30, 2024, at which time amounts under the Vyaire Incentive Plan will
become due.
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Sharing in Our Success (SIOS) Incentive Plan.
31.
The Debtors also maintain the Sharing in Our Success Incentive Plan (the “SIOS
Incentive Plan” and, together with the Vyaire Incentive Plan, the “Incentive Programs”), a
discretionary, annual program for Employees otherwise not eligible for bonuses under the Vyaire
Incentive Plan or compensated through Commissions.  Depending on the Employee’s role, an
eligible Employee will receive an award payout under the SIOS Incentive Plan based on either the
Debtors’ consolidated business results or the specific business unit’s results (corporate, ventilation,
or respiratory diagnostics, as applicable).  All award payouts under the SIOS Incentive Plan are
based on the Debtors’ applicable EBITDA and revenue for the year on which the award is based.
Eligible Employees are paid bonuses equal to a percentage of their salary subject to the applicable
business results outlined above.  Historically, payments on account of the SIOS Incentive Plan are
made after the close of the fiscal year on which they are based.10  The Debtors expect to make one
payment on account of the SIOS Incentive Plan in October 2024 for fiscal year 2024.  Presently,
252 non-Insider Employees are eligible to receive an award under the SIOS Incentive Plan for
fiscal year 2024.
32.
On average, the Debtors paid approximately $190,000 annually on account of the
SIOS Incentive Plan.  The Debtors do not believe they presently owe any amounts on account of
the SIOS Incentive Plan.  However, out of an abundance of caution, the Debtors seek authority to
continue the SIOS Incentive Plan on a postpetition basis in the ordinary course of business and
consistent with past practices.  For the avoidance of doubt, the Debtors seek authority to pay the

10  While the Debtors typically make one payment per fiscal year in connection with the SIOS Incentive Plan, in
fiscal year 2023, the Debtors made two quarterly payments under the SIOS Incentive Plan.  The 2023 fiscal
payments were made at the same time as the Vyaire Incentive Plan payments.
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amounts related to the SIOS Incentive Plan pursuant to the Final Order only and do not propose to
make any payment on account of the SIOS Incentive Plan to Insiders.

Non-Insider Quarterly Retention Program
33.
In addition to the Incentive Programs, the Debtors maintain an annualized retention
bonus program for a select group of non-Insider Employees, which is paid out on a quarterly basis
(the “Non-Insider Quarterly Retention Program”).  The Non-Insider Quarterly Retention Program
is for an aggregate amount of $1 million.  The Debtors believe that the Non-Insider Quarterly
Retention Program is crucial to avoiding the disruption that would result if certain key Employees
were to leave their positions, especially during the pendency of these chapter 11 cases.
Approximately 30 Employees are eligible for the compensation under the Non-Insider Quarterly
Retention Program.  Awards are paid on a quarterly basis in arrears.
34.
The Debtors believe that, as of the Petition Date, no amounts are owed on account
of the Non-Insider Quarterly Retention Program.  However, out of an abundance of caution, the
Debtors request authority to pay any outstanding amounts on account of the Non-Insider Quarterly
Retention Program and to continue the Non-Insider Quarterly Retention Program in the ordinary
course of business and consistent with past practices.  For the avoidance of doubt, the Debtors seek
authority to pay the amounts related to the Non-Insider Quarterly Retention Program pursuant to
the Final Order only and do not propose to make any payment on account of the Non-Insider
Quarterly Retention Program to Insiders.
H.
Non-Insider Severance Program
35.
In the ordinary course of business, the Debtors maintain a severance program for
the benefit of certain non-Insider Employees (together, the “Non-Insider Severance Program”).
Under the Non-Insider Severance Program, certain Employees may be eligible for payment of
severance if their employment is terminated due to a workforce adjustment or any not-for-cause
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employer-initiated termination.  Such severance payments (the “Non-Insider Severance Benefits”)
are calculated based on length of service, with accrual of benefits capped at 6 months.
36.
The Debtors’ maintenance of the Non-Insider Severance Program and payment of
Non-Insider Severance Benefits are critical to maintaining Employee morale and loyalty.  Failure
to maintain the Non-Insider Severance Program will result in increased instability in the Debtors’
workforce, which will undermine the Debtors’ ability to strengthen their financial and operational
foundation, generate growth, and position themselves for long-term success.
37.
As of the Petition Date, the Debtors believe that approximately $39,000 is owed on
account of the Non-Insider Severance Program to two Employees, approximately $12,000 of
which will become due and owing within the first 21 days of these chapter 11 cases.  Accordingly,
the Debtors seek authority to satisfy any accrued and unpaid prepetition Non-Insider Severance
Benefits and continue to pay the Non-Insider Severance Benefits on a postpetition basis in the
ordinary course of business and consistent with past practices.
II.
Employee Benefits Programs.
A.
Health and Welfare Programs.
38.
The Debtors offer a number of health and welfare benefits programs to eligible
current and former Employees, including the Health Insurance Programs, the Life and AD&D
Insurance, the Disability Benefits, the Voluntary Benefits, the Workers’ Compensation Program,
and the 401(k) Plans, and pay certain administrative fees to third-party providers associated with
such programs (each as defined herein and, collectively, the “Health and Welfare Programs”).  The
Debtors utilize AssuredPartners, Inc. to manage and administer the Health and Welfare Programs.

Health Insurance Programs.
39.
The Debtors offer their Employees the opportunity to participate in a number of
health insurance and benefit programs, including, among other programs, the Medical Plans, the
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FSA and HSA, the Vision Plan, the Dental Plan, and the COBRA Benefits (each as defined herein,
and collectively, the “Health Insurance Programs”).
a.
The Medical Plans.
40.
The
Debtors
offer
medical
and
prescription
drug
benefit
programs
(the “Medical Plans”) to current and certain former Employees, which are administered by Cigna
Healthcare, Inc. (“Cigna”) and Kaiser Foundation Health Plan, Inc. (“Kaiser”).  The Medical Plan
administered by Kaiser is available only to Employees residing in California.  The coverage in the
Medical Plans differs depending on the level of coverage Employees or former Employees elect
to receive.  Monthly health care premiums differ depending on the Medical Plan in which the
Employee or former Employee is enrolled and whether the Employee or former Employee has
dependents covered by the applicable plan.  The Debtors subsidize the premiums due on account
of each Employee’s coverage under the Medical Plans.
41.
In the 12-months immediately preceding the Petition Date, the Debtors paid an
average of approximately $620,000 per month to Cigna and Kaiser on account of the Medical
Plans.  The Debtors estimate that, as of the Petition Date, the aggregate amount of accrued and
unpaid amounts on account of the Medical Plans is approximately $700,000.
b.
The FSA and HSA.
42.
The Debtors also offer Employees who participate in certain Medical Plans with
access to a flexible spending account (“FSA”) or a health savings account (“HSA”), which are
both administered by HealthEquity, Inc. (“HealthEquity”) and can be used to cover, among other
things, medical, dental and vision deductibles, copays, coinsurance, prescription drugs, vision care,
physical therapy, and counseling.  Currently, approximately 76 Employees utilize the FSA and
approximately 164 Employees utilize the HSA as part of the Health Insurance Program.  If
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Employees choose to participate in the HSA, they also have the option to participate in a
limited-purpose FSA that covers only dental and vision expenses.
43.
In the 12-months immediately preceding the Petition Date, the Debtors paid
approximately $1,900 per month to HealthEquity for the administration of the FSA and HSA.  The
Debtors estimate that, as of the Petition Date, the aggregate amount of accrued and unpaid amounts
payable to HealthEquity is approximately $2,200.  The Debtors make certain contributions to
Employees’ HSA on a bi-weekly basis in accordance with internal policies.  The Debtors estimate
that, as of the Petition Date, the aggregate amount of accrued and unpaid contributions is
approximately $10,900.
c.
The Vision Plan.
44.
The Debtors offer vision insurance through Vision Service Plan (the “Vision
Plan”).  The Vision Plan allows the freedom to use providers in and out of the network, though out
of pocket costs may be higher where an out of network provider is used.  The Debtors subsidize
the premiums on account of each Employee’s coverage under the Vision Plan.
d.
The Dental Plan.
45.
The Debtors provide dental insurance through MetLife (the “Dental Plan”).  The
Dental Plan allows the freedom to use providers in and out of the network, though out of pocket
costs may be higher where an out of network provider is used.  The coverage in the Dental Plan
differs depending on the level of coverage Employees or former Employees elect to receive.  The
Debtors subsidize the premiums on account of each Employee’s coverage under the Dental Plan.
e.
COBRA Benefits.
46.
The Debtors’ Health Insurance Programs also provide former Employees with
certain health benefits following their departure from the Debtors.  More specifically, pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), former Employees of
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the Debtors (the “COBRA Employees”) may continue to receive benefits in connection with
certain of the Health Insurance Programs (the “COBRA Benefits”).  COBRA Employees are
entitled by law to continue to receive COBRA Benefits for up to eighteen months, and in some
instances up to thirty-six months, following termination of employment.
47.
Typically, COBRA Employees are responsible for paying all costs associated with
the COBRA Benefits except with respect to those former Employees whose COBRA benefits are
consideration under a severance agreement and release of claims or similar documents.  As of the
Petition Date, the Debtors estimate that they owe an aggregate of approximately $410 in COBRA
Benefits.
48.
The Debtors provide the COBRA Benefits as part of their Health and Welfare
Programs in the ordinary course of business.  Accordingly, the Debtors seek authority to continue
providing the COBRA Benefits in the ordinary course, including any prepetition amounts that may
ultimately be owed on account of the COBRA Benefits.
49.
On average, the Debtors pay approximately $690,000 per month on account of
the Health Insurance Programs, which is paid to the vendors under the Health Insurance Programs
at the beginning of each month.  As of the Petition Date, the Debtors estimate that they owe
approximately $1,010,000 on account of the Health Insurance Programs, approximately $777,000
of which will become due and owing within the first 21 days of these chapter 11 cases.
Accordingly, the Debtors seek authority to pay any prepetition amounts owed on account of the
Health Insurance Programs and to continue the Health Insurance Programs on a postpetition basis
in the ordinary course of business and consistent with past practices.
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Insurance, Disability, and Workers’ Compensation Programs.
a.
Life and AD&D Insurance Programs.
50.
The Debtors provide basic life and accidental death and dismemberment insurance
coverage (the “Basic AD&D Insurance”) at no cost to current and former Employees and their
dependents through Standard Insurance Company (“Standard”), which provides coverage equal to
two times an Employee’s benefit pay11 in the event of an Employee’s death or dismemberment.
Current and certain former Employees may also purchase supplemental life insurance
(the “Supplemental Life Insurance,” and together with the Basic AD&D Insurance, the “Life and
AD&D Insurance”) through Standard to cover themselves, their spouses, and children.
The Debtors estimate that they will owe approximately $31,000 on account of Life and AD&D
Insurance within the first 21 days of these chapter 11 cases.  The Debtors are fully insured through
the Life and AD&D Insurance.
b.
Disability Benefits.
51.
The Debtors provide Employees with short and long term disability benefits.  All
Employees are eligible for disability benefits.  Under the short term disability benefits program, in
the event of a short term medical disability due to an illness or injury, Employees are entitled to,
among other things, continuation of 90% of their wages for the first eight weeks, after satisfying a
seven day waiting period, followed by 70% of their wages up to a total maximum benefit period
of 26 weeks (the “Short Term Disability Benefits”).  Under the long term disability benefits
program, in the event of a long term medical disability due to illness or injury, Employees are
entitled to, among other things, continuation of 60% of their wages up to a monthly limit of

11  For salaried Employees, benefit pay is equal to the Employee’s annual salary rate.  For hourly Employees, benefit
pay is equal to the Employee’s hourly rate multiplied by their regularly scheduled hours multiplied by 52 weeks.
For commissioned Employees, benefit pay is a combination of base salary, plus commissions and draws.
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$15,000 (the “Long Term Disability Benefits”, and, together with the Short Term Disability
Benefits, the “Disability Benefits”).
52.
An Employee’s Short Term Disability Benefits begin after an Employee is unable
to work due to illness or injury for seven consecutive days.  The Long Term Disability Benefits
begin after an Employee has been unable to work due to illness or injury for 180 days, or at the
end of the Employees Short Term Disability Benefits.  The Disability Benefits are fully insured
and administered through Standard.
53.
As of the Petition Date, the Debtors estimate that they owe approximately $57,000,
including administrative fees, on account of the Life and AD&D Insurance and Disability Benefits,
approximately $44,000 of which will become due and owing within the first 21 days of these
chapter 11 cases. Accordingly, the Debtors seek authority to pay any prepetition amounts owed on
account of the Life and AD&D Insurance and Disability Benefits and continue the Life and AD&D
Insurance and Disability Benefits on a postpetition basis in the ordinary course of business and
consistent with past practices.
c.
Voluntary Benefits
54.
The Debtors offer various voluntary health insurance plans to Employees that are
funded entirely by Employees through post-tax and pre-tax payroll deductions, all of which are
administered by Standard.  Approximately 65 Employees participate in voluntary hospital
indemnity insurance, which pays a cash benefit directly to Employees and eligible dependents for
hospital admissions (the “Voluntary Hospital Indemnity Insurance”).  Approximately 75 U.S.
Employees participate in voluntary accident insurance, which pays a cash benefit directly to
Employees and eligible dependents for specific injuries and events resulting from a covered
accident (the “Voluntary Accident Insurance”).  Approximately 95 Employees participate in
voluntary critical illness insurance, which pays a cash benefit directly to Employees and eligible
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23
dependents diagnosed with a covered illness or condition (such as cancer, heart attack, stroke,
multiple sclerosis, Alzheimer’s, etc.) (the “Voluntary Critical Illness Insurance”).
55.
The Debtors do not believe they presently owe any amounts on account of the
Voluntary Benefits.  As such, the Debtors seek authority to pay any prepetition amount solely out
of an abundance of caution and to continue to the Voluntary Benefits on a postpetition basis in the
ordinary course of business and consistent with past practices.
d.
Workers’ Compensation Program.
56.
The Debtors maintain workers’ compensation insurance for their Employees at the
levels required by laws in the states in which the Debtors operate (collectively,
the “Workers’ Compensation Program”).  All Employees participate in the Debtors’ Workers’
Compensation Program, which is fully insured.  The Debtors maintain coverage for the Workers’
Compensation Program through Marsh USA LLC (the “Workers’ Compensation Broker”) as
broker and Chubb National Insurance Company as the carrier (together with the Workers’
Compensation Broker, the “Workers’ Compensation Vendors”).12  The Debtors pay
approximately $100,000 annually to the Workers’ Compensation Vendors to maintain the
Workers’ Compensation Program.
57.
The Debtors must continue the claim assessment, determination, adjudication, and
payment processing pursuant to the Workers’ Compensation Program, without regard to whether
such liabilities are outstanding before the Petition Date, to ensure that the Debtors comply with

12  For the avoidance of doubt and in addition to the relief requested herein, pursuant to the Motion of Debtors for
Entry of Interim and Final Orders (I) Authorizing the Debtors to (A) Maintain Insurance and Surety Coverage
Entered Into Prepetition and Pay Related Prepetition Obligations, and (B) Renew, Supplement, Modify, or
Purchase Insurance and Surety Coverage, and (II) Granting Related Relief, filed contemporaneously herewith,
the Debtors seek authority to maintain the Debtors’ workers compensation policies.
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applicable workers’ compensation laws and requirements.13  There are currently no open claims
under the Workers’ Compensation Program to which this would apply.  The Debtors are not aware
of any potential claims against them that have not yet been formally reported.  Under their coverage
from the Insurance Providers, the Debtors do not pay any amounts associated with each
compensable claim; instead, the Insurance Providers pay any claim amounts directly.  As of the
Petition Date, the Debtors believe that there are no accrued, unpaid payments owed to Workers’
Compensation Vendors.
58.
For the claims administration process to operate in an efficient manner and to
ensure that the Debtors comply with their contractual and legal obligations, the Debtors must
continue to assess, determine, and adjudicate claims brought under the Workers’ Compensation
Program during these chapter 11 cases.  In addition, to the extent any Employees assert claims
under the Workers’ Compensation Program, the Debtors request that the Court modify the
automatic stay under section 362 of the Bankruptcy Code to permit the Employees to proceed with
their claims under the Workers’ Compensation Program.  This requested modification of the
automatic stay pertains solely to claims under the Workers’ Compensation Program.
59.
Because the Debtors are statutorily and/or contractually obligated to maintain the
Workers’ Compensation Program, their inability to do so may result in adverse legal consequences
that would disrupt the chapter 11 process.  Accordingly, the Debtors seek authority to continue the
Workers’ Compensation Program in the ordinary course of business on a postpetition basis,

13   The Debtors’ Workers’ Compensation Program may change postpetition in the ordinary course of business due
to changes in applicable laws and regulations and the Debtors’ ability to meet requirements thereunder.  By this
motion, the Debtors request authority to continue making all payments related to Workers’ Compensation
Program postpetition, including making any changes to current policy and practices that become necessary.
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including by modifying the automatic stay solely to allow affected Employees to assert claims
under the Workers’ Compensation Program.

Retirement Plans.
60.
The Debtors offer all of their Employees the opportunity to participate in either a
traditional 401(k) Plan or a Roth 401(k) Plan (together, the “401(k) Plans”).  All Employees aged
21 or over are eligible for the 401(k) Plans.  The 401(k) Plans generally provide for salary
deductions of compensation up to limits set by the Internal Revenue Code.  Each Employee’s
401(k) contributions are deducted automatically from each paycheck.  The Debtors match the
Employees’ 401(k) Plan contributions in an amount up to 100% of the Employees’ first 3% of
eligible compensation and up to a 50% match for the next 2% of eligible compensation for a total
of 5% of eligible compensation (the “401(k) Match”).  All 401(k) Plan contributions and 401(k)
Matches are immediately fully vested.
61.
On average, the Debtors’ accrued approximately $180,000 per month on account
of the 401(k) Match (the “401(k) Obligations”) for the two pay cycles immediately preceding the
Petition Date.  As of the Petition Date, the Debtors estimate that they owe Employees
approximately $960,000 on account of the 401(k) Plans, approximately $240,000 of which will
become due and owing within the first 21 days of these chapter 11 cases.  Accordingly, the Debtors
seek authority to pay any accrued and unpaid 401(k) Obligations and continue the 401(k) Plans on
a postpetition basis in the ordinary course of business and consistent with past practices.
62.
The 401(k) Plan is administered by Fidelity Brokerage Services LLC (“Fidelity”)
as trustee record keeper and broker.  Fees for the 401(k) Plan owed to Fidelity are paid out of the
plan itself.  Accordingly, as of the Petition Date, the Debtors believe that there are no outstanding
amounts due to Fidelity on account of the 401(k) Plans.
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The Employee Assistance Program.
63.
The Debtors provide Employees and their immediate family members with a free,
confidential, and voluntary counseling and referral service (the “Employee Assistance Program”).
The Employee Assistance Program provides Employees and/or their family members with support
and referrals regarding personal or work-related issues such as childcare and elder care, legal
issues, financial counseling, identity theft, emotional support counseling, or any concern that
becomes a problem in an Employee’s (or their immediate family member’s) life.
64.
The Employee Assistance Program is administered by Cigna Behavioral Health,
the behavioral health unit associated with Cigna.  The Debtors paid approximately $1,200 on
account of the Employee Assistance Program in the month preceding the Petition Date.  As of the
Petition Date, the Debtors estimate that they currently owe approximately $1,200 on account of
the Employee Assistance Program, all of which will become due and owing within the first 21 days
of these chapter 11 cases.

Paid and Unpaid Leave.
65.
The Debtors provide paid leave in the form of Paid Time Off (as defined below)
and certain other statutory Paid Leave (together, the “Paid Leave”); the Debtors also provide
Unpaid Leave (as defined below) in certain situations.
66.
In the ordinary course of business, the Debtors provide paid time off (“PTO”) to
the Employees as a Paid Leave benefit which may be used for any reason.  Employees who actively
work at least 20 hours per week are eligible to take PTO.  Employees scheduled to work at least
20 hours and less than 40 hours per week earn PTO on a pro-rated basis.  Contingent workers, such
as temporary personnel or interns are not eligible to accrue PTO.  For Employees at the director
level and above (the “Exempt Employees”), PTO is self-directed (the “Open PTO Program”)
(unless otherwise mandated by applicable employment law).
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67.
Because of the Debtors’ Open PTO Program, they do not officially offer vacation
time, sick time off, floating holidays, or personal time off for regular full-time Exempt Employees,
unless otherwise required by applicable employment law.  As such, there is generally no “accrued”
PTO, sick leave, or vacation, and Exempt Employees are not paid any amount of vacation, sick
time, or PTO upon termination of employment.  For all other eligible Employees, however, the
amount of PTO available to a particular Employee and the rate at which such PTO accrues is
generally determined by the Employee’s tenure and whether the Employee is hourly or salaried.
When an Employee elects to take PTO, that Employee is paid his or her regular hourly or salaried
rate.  Employees are generally allowed to carry over their PTO hours from the prior year up to the
maximum amount of 228 to 432 hours, depending on the Employee’s completed years of service.
68.
Upon termination, such Employees could be eligible for a payout of accrued and
unused PTO (unless applicable employment laws mandate otherwise).  The Debtors believe that,
within 21 days of the Petition Date, no such accrued PTO will become payable.
69.
In addition, the Debtors provide certain other forms of Paid Leave and Unpaid
Leave, including:
•
paid holidays throughout the year, during which Employees are not required
to work and are paid their base rate of pay;
•
leave under the Family and Medical Leave Act for:  (a) birth, adoption,14 or
foster care, (b) family care, (c) medical emergencies, (d) military
exigencies, and (e) military caregiving needs; and
•
other paid and unpaid leaves of absence for personal reasons, many of which
are required by law, including statutory sick leave, emergency closings,
missed work time in the ordinary course of business for bereavement leave,
jury or court attendance, or time spent voting and unpaid leaves of absence
for family medical leaves and military leaves (the “Unpaid Leave”).

14  In addition, the Debtors provide six weeks of paid parental leave at 100% of base pay for Employees with a
newborn or newly adopted child that have worked with the Debtors continuously for a year or more.
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These other forms of Paid Leave and Unpaid Leave do not involve incremental cash outlays
beyond standard payroll obligations.
70.
The Debtors believe that the continuation of the Paid Leave and Unpaid Leave
policies in accordance with prior practice is essential to maintaining Employee morale during these
chapter 11 cases.  Further, the policies are broad-based programs upon which all Employees have
come to depend.  The Debtors anticipate that their Employees will utilize any accrued Paid Leave
in the ordinary course of business, which will not create any material cash flow requirements
beyond the Debtors’ normal payroll obligations.
B.
Miscellaneous Benefits.
71.
In addition to the above-mentioned benefits programs, the Debtors maintain the
following benefits programs (the “Miscellaneous Benefits”):
•
The Debtors offer a tuition reimbursement plan for eligible tuition expenses
up to $5,250 per calendar year for undergraduate courses and, subject to
managerial approval, graduate degree courses;
•
The Debtors offer Employees business travel accident insurance to provide
financial protection in the event of an accident or death while on company
authorized business, in an amount equal to four times an Employee’s pay,
up to $1 million;
•
The Debtors offer a commuter benefits program, administered through
HealthEquity, that allows Employees to set aside pre-tax money for eligible
commuting expenses;
•
The Debtors offer a health and wellness program that addresses physical
and mental health and wellness relationships, financial security, safety, and
education;
•
The Debtors offer partial reimbursement of Weight Watchers membership
fees;
•
The Debtors offer a car allowance for sales employees for business-related
travel; and
•
The Debtors offer an adoption assistance plan whereby the Debtors offer
financial assistance up to $5,000 for eligible Employees who adopt a child
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for eligible expenses such as adoption agency fees, legal and court fees,
adoption-related travel, and medical care for the child.
72.
The Miscellaneous Benefits are an important part of the total benefits package
offered by the Debtors to their Employees.  The Debtors paid approximately $24,000 in the
aggregate on account of the Miscellaneous Benefits for the two pay cycles immediately preceding
the Petition Date for which the Debtors possess invoices.  The Debtors believe that the
continuation of the Miscellaneous Benefits will have a positive effect on Employee morale during
the pendency of these chapter 11 cases.  As of the Petition Date, the Debtors estimate that they
owe approximately $20,000 on account of the Miscellaneous Benefits.  Accordingly, the Debtors
therefore seek authority to pay unpaid prepetition amounts owed on account of the Miscellaneous
Benefits and to continue paying amounts that come due on a postpetition basis in the ordinary
course of business.
Basis for Relief
I.
Sufficient Cause Exists to Authorize the Debtors to Honor the Employee
Compensation and Benefits Programs.
A.
Certain Employee Compensation and Benefits Programs Are Entitled to
Priority Treatment.
73.
Sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code entitle the majority of the
Employee Compensation and Benefits to priority treatment, to the extent such payments do not
exceed $15,150 for each individual as provided for under sections 507(a)(4) and (5) of the
Bankruptcy Code.  As priority claims, the Debtors are required to pay these claims in full to
confirm a chapter 11 plan.  See 11 U.S.C. § 1129(a)(9)(B) (requiring payment of certain allowed
unsecured claims given priority under sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code
for (a) wages, salaries or commissions, including vacation, severance, and sick leave pay earned
by an individual and (b) contributions to an employee benefit plan).  To the extent that an
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Employee receives no more than the $15,150 cap imposed by sections 507(a)(4) and 507(a)(5) of
the Bankruptcy Code (the “Priority Claim Amount”), the relief sought with respect to
compensation only affects the timing of payments to Employees and does not have any material
negative impact on recoveries for general unsecured creditors.  To the extent an Employee is owed
more than the Priority Claim Amount on account of certain Compensation and Benefits Programs,
full payment of such obligations in the ordinary course is warranted under section 363(b)(1) of the
Bankruptcy Code and the doctrine of necessity.
74.
The Debtors’ Employees are essential to the success of these chapter 11 cases and
the Debtors’ business.  As such, payment of the Employee Compensation and Benefits Programs
at this time is necessary to avoid potential material disruption to the Debtors’ ordinary course
operations.  Finding, attracting, and training new qualified talent would be extremely difficult,
particularly given current labor market conditions.  Such recruitment efforts would most likely
require, among other things, higher salaries, guaranteed bonuses, and more comprehensive
compensation packages than are currently provided to Employees.  To avoid potentially costly
disputes that could reduce the value of the Debtors’ estates, as well as ease potential concerns from
Employees regarding ongoing compensation, it is necessary to pay any accrued and unpaid amount
on account of Employee Compensation and Benefits Programs.
B.
Payment of Certain Employee Compensation and Benefits Programs Is
Required by Law.
75.
As discussed above, the Debtors seek authority to pay the Withholding Obligations
to the appropriate third-party entities.  These amounts principally represent Employee earnings
that governments, Employees, and judicial authorities have designated for deduction from the
Employees’ paychecks.  Indeed, certain Withholding Obligations are not property of the Debtors’
estates because the Debtors have withheld such amounts from the Employees’ paychecks on
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another party’s behalf.  See 11 U.S.C. §§ 541(b)(1), (d).  Furthermore, federal and state laws
require the Debtors to withhold certain tax payments from the Employees’ paychecks and to pay
such amounts to the appropriate taxing authority.  26 U.S.C. §§ 6672, 7501(a); see also City of
Farrell v. Sharon Steel Corp., 41 F.3d 92, 95–97 (3d Cir. 1994) (finding that state law requiring a
corporate debtor to withhold city income tax from its employees’ wages created a trust relationship
between debtor and the city for payment of withheld income taxes); In re DuCharmes & Co., 852
F.2d 194, 196 (6th Cir. 1988) (noting that individual officers of a company may be held personally
liable for failure to pay trust fund taxes).  Because the Withholding Obligations may not be
property of the Debtors’ estates, the Debtors request that the Court authorize them to transmit the
Withholding Obligations on account of the Employees to the proper parties in the ordinary course
of business.  See In re Dameron, 155 F.3d 718, 721 (4th Cir. 1998).  The Debtors therefore request
that the Court recognize that the Withholding Obligations are not property of the Debtors’ estates
and, regardless of whether the Debtors collected the amounts prior to the Petition Date, authorize
the Debtors to transmit such monies to the proper parties in the ordinary course of business.
76.
Similarly, state laws require the Debtors to maintain the Workers’ Compensation
Program.  If the Debtors fail to maintain the Workers’ Compensation Program, state laws may
prohibit the Debtors from operating in those states.  Payment of all Workers’ Compensation
Program amounts is therefore crucial to the Debtors’ continued operations and the success of the
Debtors’ restructuring.  The Debtors therefore request that the Court authorize the Debtors to
maintain the Workers’ Compensation Program.
II.
Payment of the Employee Compensation and Benefits Programs Is Proper Pursuant
to Section 363(b) of the Bankruptcy Code and the Doctrine of Necessity.
77.
Courts have recognized that it is appropriate to authorize the payment of prepetition
obligations where necessary to protect and preserve the estate, including an operating business’s
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going-concern value.  See, e.g., In re Just for Feet, Inc., 242 B.R. 821, 825–26 (D. Del. 1999); see
also In re CoServ, L.L.C., 273 B.R. 487, 497 (Bankr. N.D. Tex. 2002); In re Ionosphere Clubs,
Inc., 98 B.R. 174, 175–76 (Bankr. S.D.N.Y. 1989); Armstrong World Indus., Inc. v. James A.
Phillips, Inc., 29 B.R. 391, 398 (S.D.N.Y. 1983).  In so doing, these courts acknowledge that
several legal theories rooted in sections 105(a) and 363(b) of the Bankruptcy Code support the
payment of prepetition claims.
78.
Section 363(b) of the Bankruptcy Code permits a bankruptcy court, after notice and
a hearing, to authorize a debtor to “use, sell, or lease, other than in the ordinary course of business,
property of the estate.”  11 U.S.C. § 363(b)(1).  “In determining whether to authorize the use, sale
or lease of property of the estate under this section, courts require the debtor to show that a sound
business purpose justifies such actions.”  Dai-Ichi Kangyo Bank, Ltd. v. Montgomery Ward
Holding Corp. (In re Montgomery Ward Holding Corp.), 242 B.R. 147, 153 (D. Del. 1999)
(collecting cases); see also Armstrong World, 29 B.R. at 397 (relying on section 363 to allow
contractor to pay prepetition claims of suppliers who were potential lien claimants because the
payments were necessary for general contractors to release funds owed to debtors); Ionosphere
Clubs, 98 B.R. at 175 (finding that a sound business justification existed to justify payment of
certain prepetition wages); In re Phx. Steel Corp., 82 B.R. 334, 335–36 (Bankr. D. Del. 1987)
(requiring the debtor to show a “good business reason” for a proposed transaction under
section 363(b)).
79.
Courts also authorize payment of prepetition claims in appropriate circumstances
based on section 105(a) of the Bankruptcy Code, which codifies a bankruptcy court’s inherent
equitable powers to “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).  Under section 105(a) of the Bankruptcy Code,
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33
courts may authorize pre plan payments of prepetition obligations when essential to the continued
operation of a debtor’s business.  See Just for Feet, 242 B.R. at 825–26.  Specifically, a court may
use its power under section 105(a) of the Bankruptcy Code to authorize payment of prepetition
obligations pursuant to the “necessity of payment” rule (also referred to as the “doctrine of
necessity”).  See, e.g., Ionosphere Clubs, 98 B.R. at 176; In re Lehigh & New England Ry Co., 657
F.2d 570, 581 (3d Cir. 1981) (stating that courts may authorize payment of prepetition claims when
there “is the possibility that the creditor will employ an immediate economic sanction, failing such
payment”); see also In re Columbia Gas Sys., Inc., 171 B.R. 189, 191–92 (Bankr. D. Del. 1994)
(noting that, in the Third Circuit, debtors may pay prepetition claims that are essential to the
continued operation of the business).  A bankruptcy court’s use of its equitable powers to
“authorize the payment of prepetition debt when such payment is needed to facilitate the
rehabilitation of the debtor is not a novel concept.”  See Ionosphere Clubs, 98 B.R. at 175–76
(citing Miltenberger v. Logansport, C. & S.W. Ry. Co., 106 U.S. 286 (1882)).  Indeed, at least one
court has recognized that there are instances when a debtor’s fiduciary duty can “only be fulfilled
by the preplan satisfaction of a prepetition claim.”  See CoServ, 273 B.R. at 497.
80.
Payment of the Employee Compensation and Benefits Programs is warranted under
this authority and the facts of these chapter 11 cases.  Employees will be exposed to significant
financial difficulties if the Debtors are not permitted to honor obligations for unpaid Employee
Compensation and Benefits Programs.  Additionally, continuing ordinary course benefits will help
maintain Employee morale and minimize the adverse effect of the commencement of these
chapter 11 cases on the Debtors’ ongoing business operations.
81.
Moreover, Employees provide the Debtors with services necessary to conduct the
Debtors’ businesses, and the Debtors believe that absent the payment of the Employee
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34
Compensation and Benefits Programs owed to the Employees, the Debtors may experience
Employee turnover and instability at this critical time in these chapter 11 cases.  The Debtors
believe that without these payments, Employee productivity may decline because of the potential
significant financial strain and other hardships the Employees may face.  Such Employees may
then elect to seek alternative employment opportunities.  Additionally, a significant portion of the
value of the Debtors’ businesses is tied to their workforce, which cannot be replaced without
significant efforts—which efforts may not be successful given the overhang of these chapter 11
cases.  Enterprise value may be materially impaired to the detriment of all stakeholders in such a
scenario.  The Debtors therefore believe that payment of the prepetition obligations with respect
to the Employee Compensation and Benefits Programs is a necessary and critical element of the
Debtors’ efforts to preserve value and will give the Debtors the greatest likelihood of retention of
their Employees as the Debtors seek to operate their businesses in these chapter 11 cases.
82.
The importance of a debtor’s workforce to its operations has been repeatedly
recognized by courts in this district, and such courts have granted relief similar to the relief
requested herein.  See, e.g., In re Appgate, Inc., No. 24-10956 (CTG) (Bankr. D. Del.
May 28, 2024) (authorizing debtors to continue compensation and benefit programs and pay
certain prepetition obligations related thereto on a postpetition basis); In re Express, Inc.,
No. 24-10831 (KBO) (Bankr. D. Del. May 14, 2024) (same); In re Sientra, Inc., No. 24-10245
(JTD) (Bankr. D. Del. March 11, 2024) (same); In re MVK FarmCo LLC, No. 23-11721 (LSS)
(Bankr. D. Del. Nov. 13, 2023 (same); In re Yellow Corporation, No. 23-11069 (CTG)
(Bankr. D. Del. Sept. 13, 2023) (same).  Accordingly, the Debtors respectfully request that the
Court authorize the Debtors to pay and continue the Employee Compensation and Benefits
Programs in the ordinary course of business and consistent with past practices.
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35
83.
Additionally, courts in this district and others have authorized payments of
prepetition commission obligations in excess of the Statutory Cap to non-insiders.
See, e.g., In re MVK FarmCo LLC, No. 23-11721 (LSS) (Bankr. D. Del. Nov. 13, 2023)
(authorizing the debtors to continue employee compensation and benefit programs and pay certain
prepetition obligations in the ordinary course, including amounts due on account of commission
obligations in excess of the Statutory Cap); In re Carestream Health, Inc., No. 22-10778 (JKS)
(Bankr. D. Del. Sept. 22, 2022) (same); In re Riverbed Tech., Inc., No. 21-11503 (CTG) (Bankr.
D. Del. Nov. 18, 2021) (same); In re APC Auto. Techs. Intermediate Holdings, LLC, No. 20-11466
(CSS) (Bankr. D. Del. June 23, 2020) (same); In re Millennium Lab Holdings II, LLC, No. 15-
12284 (LSS) (Bankr. D. Del. Dec. 14, 2015) (same).  Accordingly, the Debtors respectfully request
that the Court authorize the Debtors to continue the Employee Compensation and Benefits
Programs and pay related obligations in the ordinary course of business.
III.
A Limited Waiver of the Automatic Stay for Workers’ Compensation Claims Is
Appropriate Here.
84.
Section 362(a) of the Bankruptcy Code operates to stay “the commencement or
continuation, including the issuance or employment of process, of a judicial, administrative, or
other action or proceeding against the debtor that was or could have been commenced before the
commencement of the case under this title, or to recover a claim against the debtor that arose before
the commencement of the case under this title . . . .”  11 U.S.C. § 362(a)(1).
85.
Section 362 of the Bankruptcy Code, however, permits a debtor or other parties in
interest to request a modification or termination of the automatic stay for “cause.”
Id. at § 362(d)(1).  Cause exists here to modify the automatic stay to permit the Employees to
proceed with workers’ compensation claims in the appropriate judicial or administrative forum.
Staying the workers’ compensation claims could have a detrimental effect on the financial
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36
well-being and morale of the Employees and lead to the departure of Employees who are critical
at this juncture.  Such departures could cause a severe disruption in the Debtors’ businesses, which
would be to the detriment of all parties in interest.
86.
Additionally, with respect to any amounts owed to non-insider Employees or
Former Employees in excess of the Priority Claim Amount, out of an abundance of caution, the
Debtors seek authority to pay such amounts solely pursuant to the Final Order.  Accordingly, the
Debtors request authority, but not direction, to continue the Compensation and Benefits Programs
and pay related obligations in the ordinary course.
Processing of Checks and Electronic Fund Transfers Should Be Authorized
87.
The Debtors have sufficient funds to pay the amounts described in this motion in
the ordinary course of business by virtue of access to cash on hand and anticipated access to cash
collateral and debtor-in-possession financing.  In addition, under the Debtors’ existing cash
management system, the Debtors can readily identify checks or wire transfer requests as relating
to any authorized payment in respect of the relief requested herein.  Accordingly, the Debtors do
not believe that checks or wire transfer requests, other than those relating to authorized payments,
will be inadvertently honored.  Therefore, the Debtors request authority, but not direction, to
authorize all applicable financial institutions, when requested by the Debtors, to receive, process,
honor, and pay any and all checks or wire transfer requests in respect of the relief requested in this
motion.
The Requirements of Bankruptcy Rule 6003(b) Are Satisfied
88.
Bankruptcy Rule 6003 empowers a court to grant certain relief within the first
21 days after the petition date only “to the extent that relief is necessary to avoid immediate and
irreparable harm.”  For the reasons discussed above, the Debtors believe an immediate and orderly
transition into chapter 11 is critical, and the failure to receive the requested relief during the first
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37
21 days of these chapter 11 cases could impact the Debtors’ operations at this important
juncture.  The requested relief is necessary for the Debtors to operate their businesses in the
ordinary course, preserve the ongoing value of their operations, and maximize value of their estates
for the benefit of all stakeholders.  The Debtors have demonstrated that the requested relief is
“necessary to avoid immediate and irreparable harm,” as contemplated by Bankruptcy Rule 6003,
and the Court should grant the requested relief.
Reservation of Rights
89.
Nothing contained in this motion or any order granting the relief requested in this
motion, and no action taken by the Debtors pursuant to the relief requested or granted (including
any payment made in accordance with any such order), is intended as or shall be construed or
deemed to be:  (a) an admission as to the amount of, basis for, priority or validity of any claim
against the Debtors under the Bankruptcy Code or other applicable nonbankruptcy law;
(b) a waiver of the Debtors’ or any other party in interest’s rights to dispute any claim on any
grounds; (c) a promise or requirement to pay any particular claim; (d) an implication, admission
or finding that any particular claim is an administrative expense claim, other priority claim or
otherwise of a type specified or defined in this motion or any order granting the relief requested
by this motion; (e) a request or authorization to assume, adopt or reject any agreement, contract,
or lease pursuant to section 365 of the Bankruptcy Code; (f) an admission as to the validity, priority
enforceability or perfection of any lien on, security interest in or other encumbrance on property
of the Debtors’ estates; or (g) a waiver or limitation of any claims, causes of action or other rights
of the Debtors or any other party in interest against any person or entity under the Bankruptcy
Code or any other applicable law.  If the Court grants the relief sought herein, any payment made
pursuant to the Court’s order is not intended and should not be construed as an admission as to the
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38
validity, priority or amount of any particular claim or a waiver of the Debtors’ rights to
subsequently dispute such claim.
Waiver of Bankruptcy Rule 6004(a) and 6004(h)
90.
To implement the foregoing successfully, the Debtors seek a waiver of the notice
requirements under Bankruptcy Rule 6004(a) and the 14-day stay of an order authorizing the use,
sale, or lease of property under Bankruptcy Rule 6004(h).
Notice
91.
The Debtors will provide notice of this motion to:  (a) the United States Trustee for
the District of Delaware; (b) the holders of the 30 largest unsecured claims against the Debtors
(on a consolidated basis); (c) the office of the attorney general for each of the states in which the
Debtors operate; (d) the United States Attorney’s Office for the District of Delaware;
(e) the Internal Revenue Service; (f) the United States Securities and Exchange Commission;
(g) counsel to the 1L Ad Hoc Group; (h) the agent of the DIP Facility and counsel thereto; (i) the
agent of the First Lien Credit Agreement and counsel thereto; (j) the Second Lien Credit
Agreement Agent and counsel thereto; (k) the agent of the First Lien Notes and counsel thereto;
(l) ADP, (m) Cigna, (n) Kaiser, (o) HealthEquity, (p) VSP, (q) MetLife, (r) Standard, (s) Fidelity,
(t) the Staffing Agencies and counsel thereto, (u) Concur, (v) the Workers’ Compensation
Vendors, (w) AssuredPartners, Inc., and (x) any party that has requested notice pursuant to
Bankruptcy Rule 2002.  As this motion is seeking “first day” relief, the Debtors will serve copies
of this motion and any order entered in respect to this motion as required by Local Rule 9013-1(m).
The Debtors submit that, in light of the nature of the relief requested, no other or further notice
need be given.
Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 38 of 53

WHEREFORE, the Debtors request entry of Interim Order and Final Order, substantially
in the forms attached hereto as Exhibit A and Exhibit B, (a) granting the relief requested herein
and (b) granting such other relief as the Court deems appropriate under the circumstances.
Dated: June 10, 2024

Wilmington, Delaware

/s/ Patrick J. Reilley

COLE SCHOTZ P.C.

KIRKLAND & ELLIS LLP
Patrick J. Reilley, Esq. (DE Bar No. 4451)

KIRKLAND & ELLIS INTERNATIONAL LLP
500 Delaware Avenue, Suite 1410

Joshua A. Sussberg, P.C. (pro hac vice admission pending)
Wilmington, Delaware 19801

601 Lexington Ave
Telephone:
(302) 652-3131

New York, New York 10022
Facsimile:
(302) 652-3117

Telephone:
(212) 446-4800
Email:
preilley@coleschotz.com

Facsimile:
(212) 446-4900

Email:
joshua.sussberg@kirkland.com
- and -

- and -
Michael D. Sirota, Esq. (pro hac vice admission pending)

Warren A. Usatine, Esq (pro hac vice admission pending)
Spencer A. Winters, P.C. (pro hac vice admission pending)
Court Plaza North, 25 Main Street

Yusuf U. Salloum (pro hac vice admission pending)
Hackensack, New Jersey 07601

333 West Wolf Point Plaza
Telephone:
(201) 489-3000

Chicago, Illinois 60654
Facsimile:
(201) 489-1536

Telephone:
(312) 862-2000
Email:
msirota@coleschotz.com

Facsimile:
(312) 862-2200

wusatine@coleschotz.com

Email:
spencer.winters@kirkland.com

yusuf.salloum@kirkland.com

Proposed Co-Counsel to the Debtors

Proposed Co-Counsel to the Debtors
and Debtors in Possession
 and Debtors in Possession

Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 39 of 53

Exhibit A
Proposed Interim Order

Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 40 of 53

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

)

In re:
)
Chapter 11

)

VYAIRE MEDICAL, INC., et al.,1
)
Case No. 24-11217 (___)

)

Debtors.
)
(Joint Administration Requested)

)
Re:  Docket No. __
INTERIM ORDER (I) AUTHORIZING
THE DEBTORS TO (A) PAY PREPETITION
WAGES, SALARIES, OTHER COMPENSATION, AND
REIMBURSABLE EXPENSES AND (B) CONTINUE EMPLOYEE
BENEFITS PROGRAMS, AND (II) GRANTING RELATED RELIEF
Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors in possession
(collectively, the “Debtors”) for the entry of an interim order (this “Interim Order”), (a) authorizing
the Debtors (i) to pay undisputed prepetition wages, salaries, other compensation, and
reimbursable expenses on account of the Employee Compensation and Benefits and
(ii) to continue employee benefits programs in the ordinary course of business, including payment
of certain undisputed prepetition obligations related thereto; (b) scheduling a final hearing to
consider approval of the Motion on a final basis; and (c) granting related relief, all as more fully
set forth in the Motion; and upon the First Day Declaration; and the United States District Court
for the District of Delaware has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, which
was referred to the Court under 28 U.S.C. § 157 and the Amended Standing Order of Reference

1  The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495.  A complete list
of each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax identification number may be
obtained
on
the
website
of
the
Debtors’
proposed
claims
and
noticing
agent
at
https://omniagentsolutions.com/Vyaire.  The location of Debtor Vyaire Medical, Inc.’s principal place of business
and the Debtors’ service address in these chapter 11 cases is 26125 North Riverwoods Boulevard, Mettawa,
Illinois, USA 60045.
2
Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Motion.
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2

from the United States District Court for the District of Delaware, dated February 29, 2012; and
this Court having found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and this
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 this Court having found that the relief requested in the Motion
is in the best interests of the Debtors’ estates, their creditors, and other parties in interest; and this
Court having found that the Debtors’ notice of the Motion and opportunity for a hearing on the
Motion were appropriate under the circumstances and no other notice need be provided; and this
Court having reviewed the Motion and having heard the statements in support of the relief
requested therein at a hearing before this Court (the “Hearing”); and this Court having determined
that the legal and factual bases set forth in the Motion and at the Hearing 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 is granted on an interim basis as set forth herein.
2.
The final hearing (the “Final Hearing”) on the Motion shall be held on _________,
2024, at__:__ _.m., prevailing Eastern Time.  Any objections or responses to entry of a final order
on the Motion shall be filed on or before 4:00 p.m., prevailing Eastern Time, on _________, 2024
and shall be served on: (a) the Debtors, 26125 North Riverwoods Boulevard, Mettawa, Illinois,
USA 60045, Attn.: Charles Braley (cbraley@alixpartners.com); (b) proposed co-counsel to the
Debtors (i) Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022, Attn.:
Joshua
A.
Sussberg,
P.C.
(joshua.sussberg@kirkland.com),
Chris
Ceresa
(chris.ceresa@kirkland.com), and Tiffani Chanroo (tiffani.chanroo@kirkland.com), (ii) Kirkland
& Ellis LLP, 333 West Wolf Point Plaza, Chicago, Illinois, 60654, Attn.: Spencer A. Winters
(spencer.winters@kirkland.com) and Yusuf U. Salloum (yusuf.salloum@kirkland.com),
Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 42 of 53

3

(iii) Cole Schotz P.C., 500 Delaware Avenue, Suite 1410, Wilmington, Delaware 19801,
Attn.:
Patrick
J.
Reilley,
Esq.
(preilley@coleschotz.com),
Stacy
L.
Newman
(snewman@coleschotz.com), Michael E. Fitzpatrick, Esq. (mfitzpatrick@coleschotz.com), and
Jack M. Dougherty, Esq. (jdougherty@coleschotz.com), and (iv) Cole Schotz P.C., Court Plaza
North, 25 Main Street, Hackensack, New Jersey 07601, Attn.: Michael D. Sirota, Esq.
(msirota@coleschotz.com) and Warren A. Usatine, Esq. (wusatine@coleschotz.com);
(c) counsel to the 1L Ad Hoc Group, (i) Gibson, Dunn & Crutcher LLP,  200 Park Avenue, New
York, NY 10166-0193, Attn.:  Scott J. Greenberg (SGreenberg@gibsondunn.com), Jason Zachary
Goldstein (JGoldstein@gibsondunn.com), Joshua Brody (JBrody@gibsondunn.com), and Kevin
Liang (KLiang@gibsondunn.com) and (ii) Pachulski Stang Ziehl & Jones LLP, 919 North Market
Street, 17th Floor, Wilmington, DE 19801, Attn.: Laura Davis Jones (ljones@pszjlaw.com);
(d) the United States Trustee, 844 King Street, Suite 2207, Lockbox 35, Wilmington, Delaware
19801, Attn.: Benjamin A. Hackman (Benjamin.A.Hackman@usdoj.gov); and (e) any statutory
committee appointed in these chapter 11 cases.
3.
The Debtors are authorized, but not directed, to continue and/or modify, change,
and discontinue the Employee Compensation and Benefits Programs and to implement new
programs, policies, and benefits, in the ordinary course of business during these chapter 11 cases
and without the need for further Court approval, subject to applicable law.  For the avoidance of
doubt, nothing in this Interim Order should be construed as authorizing the Debtors to: (i) pay any
amounts to Insiders on account of any bonus or incentive programs; or (ii) make any payment on
account of the Employee Compensation and Benefits Programs that are outside the ordinary course
of business without prior Court approval.
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4

4.
The Debtors are authorized, but not directed, in their discretion, to pay and honor
prepetition amounts related to the Employee Compensation and Benefits Programs pursuant to this
Interim Order; provided that such payments shall not exceed $5,404,200 in the aggregate pending
entry of a final order, provided further that the Debtors are not authorized to pay any prepetition
amounts on account of the Non-Insider Incentive and Retention Programs pursuant to this Interim
Order.
5.
Nothing herein shall be deemed to authorize the payment of any prepetition
amounts above the statutory cap imposed by section 507(a)(4) and 507(a)(5) of the Bankruptcy
Code with respect to the prepetition amounts owed on account of the Employee Compensation and
Benefits Program, except upon further order of this Court.
6.
Nothing herein shall be deemed to authorize the payment of any prepetition
amounts in satisfaction of bonus or severance obligations, or which may implicate or be subject to
section 503(c) of the Bankruptcy Code; provided that nothing in this Interim Order shall prejudice
the Debtors’ ability to seek approval of relief pursuant to section 503(c) of the Bankruptcy Code
at a later time.
7.
Pursuant to section 362(d) of the Bankruptcy Code:  (a) the automatic stay is
modified so that Employees are authorized to proceed with their workers’ compensation claims in
the appropriate judicial or administrative forum under the Workers’ Compensation Program, and
the Debtors are authorized to pay all undisputed prepetition amounts relating thereto in the
ordinary course of business; and (b) the notice requirements pursuant to Bankruptcy Rule 4001(d)
with respect to clause (a) are waived.  This modification of the automatic stay pertains solely to
claims under the Workers’ Compensation Program, and any such claims must be pursued in
accordance with the applicable Workers’ Compensation Program.  Payment on account of any
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5

recoveries obtained in connection with a claim brought pursuant to this paragraph is limited to the
terms and conditions of the applicable Workers’ Compensation Program, including with regard to
any policy limits or caps.
8.
The banks and financial institutions on which checks were drawn or electronic
payment requests made in payment of the prepetition obligations approved herein are authorized
to receive, process, honor, and pay all such checks and electronic payment requests when presented
for payment, and all such banks and financial institutions are authorized to rely on the Debtors’
designation of any particular check or electronic payment request as approved by this Interim
Order.
9.
Nothing contained in the Motion or this Interim Order, and no action taken pursuant
to the relief requested or granted (including any payment made in accordance with this Interim
Order), is intended as or shall be construed or deemed to be:  (a) an admission as to the amount,
validity or priority of, or basis for any claim against the Debtors under the Bankruptcy Code or
other applicable nonbankruptcy law; (b) a waiver of the Debtors’ or any other party in interest’s
right to dispute any claim on any grounds; (c) a promise or requirement to pay any particular claim;
(d) an implication, admission or finding that any particular claim is an administrative expense
claim, other priority claim or otherwise of a type specified or defined in the Motion or this Interim
Order; (e) a request or authorization to assume, adopt, or reject any agreement, contract, or lease
pursuant to section 365 of the Bankruptcy Code; (f) an admission as to the validity, priority,
enforceability or perfection of any lien on, security interest in, or other encumbrance on property
of the Debtors’ estates; or (g) a waiver or limitation of any claims, causes of action or other rights
of the Debtors or any other party in interest against any person or entity under the Bankruptcy
Code or any other applicable law.
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6

10.
The Debtors are authorized, but not directed, to issue postpetition checks, or to
effect postpetition fund transfer requests, in replacement of any checks or fund transfer requests
that are dishonored as a consequence of these chapter 11 cases with respect to prepetition amounts
owed in connection with the relief granted herein.
11.
Nothing in the Motion or this Interim Order waives or modifies the requirements
of the Restructuring Support Agreement, including, without limitation, the consent and
consultation rights contained therein.
12.
Notwithstanding anything to the contrary contained herein, any payment to be made
hereunder, and any authorization contained herein, shall be subject to any interim and final orders,
as applicable, approving the use of such cash collateral and/or the Debtors’ entry into any
postpetition financing facilities or credit agreement, and any budgets in connection therewith
governing any such postpetition financing and/or use of cash collateral (each such order, a “DIP
Order”). To the extent there is any inconsistency between the terms of the DIP Order and any
action taken or proposed to be taken hereunder, the terms of the DIP Order shall control.
13.
The Debtors have demonstrated that the requested relief is “necessary to avoid
immediate and irreparable harm,” as contemplated by Bankruptcy Rule 6003.
14.
Nothing in this Interim Order authorizes the Debtors to accelerate any payments
not otherwise due prior to the date of the Final Hearing.
15.
The contents of the Motion satisfy the requirements of Bankruptcy Rule 6003(b).
16.
Notice of the Motion as provided therein shall be deemed good and sufficient notice
of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Local Rules are satisfied
by such notice.
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7

17.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Interim
Order are immediately effective and enforceable upon its entry.
18.
The Debtors are authorized to take all actions necessary to effectuate the relief
granted in this Interim Order in accordance with the Motion.
19.
This Court retains jurisdiction with respect to all matters arising from or related to
the implementation, interpretation, and enforcement of this Interim Order.
Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 47 of 53

Exhibit B
Proposed Final Order
Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 48 of 53

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

)

In re:
)
Chapter 11

)

VYAIRE MEDICAL, INC., et al.,1
)
Case No. 24-11217 (___)

)

Debtors.
)
(Joint Administration Requested)

)
Re:  Docket No. __
FINAL ORDER (I) AUTHORIZING
THE DEBTORS TO (A) PAY PREPETITION
WAGES, SALARIES, OTHER COMPENSATION, AND
REIMBURSABLE EXPENSES AND (B) CONTINUE EMPLOYEE
BENEFITS PROGRAMS, AND (II) GRANTING RELATED RELIEF
Upon the motion (the “Motion”)2  of the above-captioned debtors and debtors in possession
(collectively, the “Debtors”) for the entry of a final order (this “Final Order”), (a) authorizing the
Debtors (i) to pay undisputed prepetition wages, salaries, other compensation, and reimbursable
expenses on account of the Employee Compensation and Benefits and (ii) to continue employee
benefits programs in the ordinary course of business, including payment of certain undisputed
prepetition obligations related thereto; and (b) granting related relief, all as more fully set forth in
the Motion; and upon the First Day Declaration; and the United States District Court for the District
of Delaware has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, which was referred to
the Court under 28 U.S.C. § 157 and the Amended Standing Order of Reference from the United
States District Court for the District of Delaware, dated February 29, 2012; and this Court having

1  The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495.  A complete list
of each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax identification number may be
obtained
on
the
website
of
the
Debtors’
proposed
claims
and
noticing
agent
at
https://omniagentsolutions.com/Vyaire.  The location of Debtor Vyaire Medical, Inc.’s principal place of business
and the Debtors’ service address in these chapter 11 cases is 26125 North Riverwoods Boulevard, Mettawa,
Illinois, USA 60045.
2
Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Motion.
Case 24-11217-BLS    Doc 6    Filed 06/10/24    Page 49 of 53

2

found that this is a core proceeding pursuant to 28 U.S.C. § 157(b)(2); and this Court having found
that this Court may enter a final order consistent with Article III of the United States Constitution;
and this 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 this Court having found that the relief requested in
the Motion is in the best interests of the Debtors’ estates, their creditors, and other parties in
interest; and this Court having found that the Debtors’ notice of the Motion and opportunity for a
hearing on the Motion were appropriate and no other notice need be provided; and this Court
having reviewed the Motion; and this Court having determined that the legal and factual bases set
forth in the Motion 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 is granted on a final basis as set forth herein.
2.
The Debtors are authorized, but not directed, to continue and/or modify, change,
and discontinue the Employee Compensation and Benefits Programs and to implement new
programs, policies, and benefits, in the ordinary course of business during these chapter 11 cases
and without the need for further Court approval, subject to applicable law.  For the avoidance of
doubt, nothing in this Final Order should be construed as authorizing the Debtors to: (i) pay any
amounts to Insiders on account of any bonus or incentive programs; or (ii) make any payment on
account of the Employee Compensation and Benefits Programs that are outside the ordinary course
of business without prior Court approval.
3.
Notwithstanding anything to the contrary herein, the Debtors are authorized, but
not directed, to pay and honor prepetition amounts related to the Employee Compensation and
Benefits Programs.
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4.
Nothing herein shall be deemed to authorize the payment of any amounts which
violates or implicates section 503(c) of the Bankruptcy Code; provided that nothing herein shall
prejudice the Debtors’ ability to seek approval of relief pursuant to section 503(c) of the
Bankruptcy Code at a later time.
5.
Pursuant to section 362(d) of the Bankruptcy Code:  (a) Employees are authorized
to proceed with their workers’ compensation claims in the appropriate judicial or administrative
forum under the Workers’ Compensation Program, and the Debtors are authorized to pay all
undisputed prepetition amounts relating thereto in the ordinary course of business; and (b) the
notice requirements pursuant to Bankruptcy Rule 4001(d) with respect to clause (a) are waived.
This modification of the automatic stay pertains solely to claims under the Workers’ Compensation
Program and any such claims must be pursued in accordance with the applicable Workers’
Compensation Program.  Payment on account of any recoveries obtained in connection with a
claim brought pursuant to this paragraph is limited to the terms and conditions of the applicable
Workers’ Compensation Program, including with regard to any policy limits or caps.
6.
The banks and financial institutions on which checks were drawn or electronic
payment requests made in payment of the prepetition obligations approved herein are authorized
to receive, process, honor, and pay all such checks and electronic payment requests when presented
for payment, and all such banks and financial institutions are authorized to rely on the Debtors’
designation of any particular check or electronic payment request as approved by this Final Order.
7.
Nothing contained in the Motion or this Final Order, and no action taken pursuant
to the relief requested or granted (including any payment made in accordance with this Final
Order), is intended as or shall be construed or deemed to be:  (a) an admission as to the amount,
validity or priority of, or basis for any claim against the Debtors under the Bankruptcy Code or
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other applicable nonbankruptcy law; (b) a waiver of the Debtors’ or any other party in interest’s
right to dispute any claim on any grounds; (c) a promise or requirement to pay any particular claim;
(d) an implication, admission or finding that any particular claim is an administrative expense
claim, other priority claim or otherwise of a type specified or defined in the Motion or this Final
Order; (e) a request or authorization to assume, adopt, or reject any agreement, contract, or lease
pursuant to section 365 of the Bankruptcy Code; (f) an admission as to the validity, priority,
enforceability or perfection of any lien on, security interest in, or other encumbrance on property
of the Debtors’ estates; or (g) a waiver or limitation of any claims, causes of action or other rights
of the Debtors or any other party in interest against any person or entity under the Bankruptcy
Code or any other applicable law.
8.
The Debtors are authorized, but not directed, to issue postpetition checks, or to
effect postpetition fund transfer requests, in replacement of any checks or fund transfer requests
that are dishonored as a consequence of these chapter 11 cases with respect to prepetition amounts
owed in connection with the relief granted herein.
9.
Nothing in the Motion or this Interim Order waives or modifies the requirements
of the Restructuring Support Agreement, including, without limitation, the consent and
consultation rights contained therein.
10.
Notwithstanding anything to the contrary contained herein, any payment to be made
hereunder, and any authorization contained herein, shall be subject to any interim and final orders,
as applicable, approving the use of such cash collateral and/or the Debtors’ entry into any
postpetition financing facilities or credit agreement, and any budgets in connection therewith
governing any such postpetition financing and/or use of cash collateral (each such order, a “DIP
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Order”). To the extent there is any inconsistency between the terms of the DIP Order and any
action taken or proposed to be taken hereunder, the terms of the DIP Order shall control.
11.
Notice of the Motion as provided therein shall be deemed good and sufficient notice
of such Motion and the requirements of Bankruptcy Rule 6004(a) and the Local Rules are satisfied
by such notice.
12.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Final
Order are immediately effective and enforceable upon its entry.
13.
The Debtors are authorized to take all actions necessary to effectuate the relief
granted in this Final Order in accordance with the Motion.
14.
This Court retains jurisdiction with respect to all matters arising from or related to
the implementation, interpretation, and enforcement of this Final Order.
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