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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 MAINTAIN AND ADMINISTER THEIR
EXISTING CUSTOMER PROGRAMS AND HONOR CERTAIN PREPETITION
OBLIGATIONS RELATED THERETO 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 maintain and administer their
customer-related programs (collectively, the “Customer Programs”)3 as described in this motion
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.
3
Although the description of the Customer Programs set forth in this motion is intended to be comprehensive, the
Debtors may have inadvertently omitted some of the Customer Programs. The Debtors request relief with regard
to all Customer Programs, regardless of whether any individual Customer Program is specifically identified
herein.
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and honor certain undisputed prepetition obligations related thereto; 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) and 363(b) 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 technology, the
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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 a voluntary petition 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’ Customer Programs
7.
The Debtors historically have provided certain incentives, discounts, and
accommodations to their customers to attract and maintain positive customer relationships, the
majority of which do not independently entail the expenditure of cash. The Debtors believe that
their ability to continue the Customer Programs and to honor any obligations thereunder in the
ordinary course of business is necessary to retain their reputation for reliability, comply with their
legal obligations, meet competitive market pressures, and ensure customer satisfaction, thereby
retaining current customers, attracting new ones, and, ultimately, enhancing revenue and
profitability for the benefit of all of the Debtors’ stakeholders. In light of the importance of the
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Customer Programs to the Debtors’ businesses, the Debtors request authority to continue to honor
obligations related to these programs in the ordinary course of business.
8.
The Debtors’ products are distributed both through a network of facilities and
directly from some manufacturing sites to optimize cost, inventory, and delivery performance.
The Debtors’ product lines are primarily organized into two segments: ventilation and respiratory
diagnostics. In the ordinary course of business, the Debtors’ offer Customer Programs in the form
of warranty offerings and service contracts, discounts, commissions/rebates, and promotions.
I.
Warranties, Repairs, and Service Contracts
9.
In the ordinary course of business, the Debtors provide warranties for their products
(the “Product Warranties”). The majority of the Product Warranties are considered assurance-type
warranties that are recognized as an expense when the products are sold. The Product Warranties
cover defects in material and workmanship for various periods depending on the product from the
date of sale to the customer. Currently, the Debtors offer warranties on all products. The majority
of ventilation and respiratory diagnostics products have a one-year warranty. Consumables and
parts have typically have a 90-day warranty. The Debtors record an estimated warranty cost on
their books at the time of sale based upon actual experience and regularly assess the adequacy of
these product warranty accruals and make adjustments as needed.
10.
Product Warranties may be expressly or impliedly included in a Customer’s
contract or purchase order, set forth in a warranty statement or manual delivered with the product,
or found on the Debtors’ website.
11.
Under the Product Warranties, the Debtors repair or replace damaged, defective, or
faulty products as a matter of quality control during the normal warranty period regardless of
whether an express warranty provision is set forth in a purchase order, contract, or product manual
(the “Product Repairs”). The Debtors estimate that Product Repairs typically amount to
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approximately $100,000 per month. As of the Petition Date, the Debtors estimate that
approximately $200,000 in Product Repairs has been accrued but not yet expended.
12.
Separately, the Debtors also provide refunds for returns that occur in the ordinary
course of business. The Debtors estimate that ordinary course returns amount to an average of
approximately $100,000 per month. As of the Petition Date, the Debtors estimate that
approximately $200,000 in ordinary course returns has been accrued but not yet expended.
13.
In addition to the standard Product Warranties, the Debtors also routinely enter into
prepaid extended warranty service contracts (the “Service Contracts”) with their customers.
Service Contracts are normally recorded as contract liabilities and the related revenue is recognized
over-time on a straight-line basis, over the duration of service period.
14.
The Debtors believe that maintaining their Product Warranties and honoring
Product Repairs, and ordinary course returns is essential to maintaining a healthy relationship with
their customers and mitigating potential adverse publicity resulting from the bankruptcy filings.
The Debtors request that the Court authorize the Debtors to continue the Product Warranties, and
honor Product Repairs and ordinary course returns accrued prepetition, without interruption in the
ordinary course of business consistent with past practice.
II.
Discounts
15.
In the ordinary course of business, the Debtors offer certain pricing discounts to
their customers. For example, the Debtors have historically offered preferred pricing to customers
purchasing through Group Purchasing Organizations (the “GPOs”), historically at rates between
20-35% off the non-discounted price. The Debtors believe that the discounts are in the best interest
of the customers, as well as in their own best interests to help to grow the client base and inure to
the benefit of the estates. The pricing discounts do not require any cash expenditures from the
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Debtors. Accordingly, as of the Petition Date, the Debtors believe there are no outstanding
prepetition amounts owed on account of the discounts.
III.
GPO Rebates
16.
Pursuant to the agreements between the Debtors and the GPOs, the Debtors offer
products available for purchase by individual entities (the “Members of GPOs”) or groups of
entities designated by the GPOs at negotiated prices. The Debtors typically compensate the GPOs
a rebate equal to 3% of all net sales of products sold directly or indirectly to Members of GPOs.
As of the Petition Date, the Debtors estimate that approximately $1.3 million in expected GPO
rebates have been accrued, but not yet paid or credited to GPOs. Approximately $375,000 of that
amount is estimated to be due during the first 21 days of these cases. The Debtors request that the
court authorize the Debtors to continue the GPO rebate program and honor GPO rebates accrued
prepetition without interruption in the ordinary course of business postpetition consistent with past
practice.
Basis for Relief
I.
Continuing to Honor the Customer Programs in the Ordinary Course Is Warranted
Under Sections 105(a) and 363(b) of the Bankruptcy Code.
17.
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
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.
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 6 of 23
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18.
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)).
19.
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,
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
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 7 of 23
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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.
20.
Continuing to administer the Customer Programs without interruption during these
chapter 11 cases will help preserve and expand the Debtors’ valuable customer relationships and
goodwill, that will inure to the benefit of all of the Debtors’ creditors and stakeholders.
Importantly, the Debtors’ competitors maintain similar customer programs. Thus, if the Debtors
are unable to continue their Customer Programs postpetition and satisfy obligations related thereto
in the ordinary course of business, the Debtors risk alienating their customer base and losing it to
their competitors. Loss of customer loyalty at this early stage in the proceedings could
significantly impair the Debtors’ prospects for a value-maximizing chapter 11 cases.
21.
In similar circumstances, where retaining the loyalty and patronage of customers is
critical to successful chapter 11 cases, courts in this district routinely authorize the continuation of
customer programs. See, e.g., In re Express, Inc., Case No. 24-10831 (KBO) (Bankr. D. Del.
May 14, 2024) (authorizing continuation of customer programs on a final basis); In re Sientra,
Inc., No. 23-10245 (JTD) (Bankr. D. Del. Mar. 11, 2024) (same); In re PGX Holdings, Inc.,
No. 23-10718 (CTG) (Bankr. D. Del. July 19, 2023) (same); In re Lannett Co., Inc., No. 23-10559
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 8 of 23
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(JKS) (Bankr. D. Del. June 5, 2023) (same); In re Carestream Health, Inc., No. 22-10778 (JKS)
(Bankr. D. Del. Aug. 24, 2022) (same).
22.
Accordingly, the Debtors submit that the substantial benefit conferred on the
Debtors’ estates by the Customer Programs warrants the authority to honor the Customer Programs
and any obligations relating thereto, whether arising prepetition or postpetition, and to continue to
administer their Customer Programs in the ordinary course of business.
Processing of Checks and Electronic Fund Transfers Should Be Authorized
23.
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
24.
Bankruptcy Rule 6003 empowers a court to grant certain relief within the first
twenty-one 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 twenty-one 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
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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
25.
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
validity, priority or amount of any particular claim or a waiver of the Debtors’ rights to
subsequently dispute such claim.
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Waiver of Bankruptcy Rule 6004(a) and 6004(h)
26.
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
27.
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) the GPOs; and (m) 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 8 Filed 06/10/24 Page 11 of 23
WHEREFORE, the Debtors request entry of the 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 8 Filed 06/10/24 Page 12 of 23
Exhibit A
Proposed Interim Order
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 13 of 23
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 MAINTAIN AND ADMINISTER THEIR
EXISTING CUSTOMER PROGRAMS AND HONOR CERTAIN PREPETITION
OBLIGATIONS RELATED THERETO 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, but not directing, the Debtors to maintain and administer the Customer Programs
and to honor certain 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
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
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 8 Filed 06/10/24 Page 14 of 23
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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; 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), (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),
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 15 of 23
3
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 to administer the
Customer Programs (including, but not limited to, those discussed in the Motion) currently in
effect and honor any undisputed prepetition obligations related to the Customer Programs, in each
case in the ordinary course of business, on an interim basis, consistent with prepetition practices,
and to modify, replace, or terminate any Customer Program in the ordinary course of business.
4.
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.
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4
5.
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.
6.
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.
7.
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.
8.
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,
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 17 of 23
5
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 or proposed to be taken hereunder, the terms of the DIP Order shall control.
9.
The Debtors have demonstrated that the requested relief is “necessary to avoid
immediate and irreparable harm,” as contemplated by Bankruptcy Rule 6003.
10.
Nothing in this Interim Order authorizes the Debtors to accelerate any payments
not otherwise due prior to the date of the Final Hearing.
11.
The contents of the Motion satisfy the requirements of Bankruptcy Rule 6003(b).
12.
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.
13.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Interim
Order are immediately effective and enforceable upon its entry.
14.
The Debtors are authorized to take all actions necessary to effectuate the relief
granted in this Interim Order in accordance with the Motion.
15.
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 8 Filed 06/10/24 Page 18 of 23
Exhibit B
Proposed Final Order
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 19 of 23
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 MAINTAIN AND ADMINISTER THEIR
EXISTING CUSTOMER PROGRAMS AND HONOR CERTAIN PREPETITION
OBLIGATIONS RELATED THERETO 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, but
not directing, the Debtors to maintain and administer the Customer Programs and honor certain
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
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
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 8 Filed 06/10/24 Page 20 of 23
2
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 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 to administer the
Customer Programs (including, but not limited to, those discussed in the Motion) currently in
effect and honor any undisputed prepetition obligations related to the Customer Programs, in each
case in the ordinary course of business, on a final basis, consistent with prepetition practices, and
to modify, replace, or terminate any Customer Program in the ordinary course of business.
3.
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.
4.
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
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 21 of 23
3
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.
5.
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.
6.
Nothing in the Motion or this Final Order waives or modifies the requirements of
the Restructuring Support Agreement, including, without limitation, the consent and consultation
rights contained therein.
7.
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
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 22 of 23
4
Order”). To the extent there is any inconsistency between the terms of the DIP Order and any
action or proposed to be taken hereunder, the terms of the DIP Order shall control.
8.
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.
9.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Final
Order are immediately effective and enforceable upon its entry.
10.
The Debtors are authorized to take all actions necessary to effectuate the relief
granted in this Final Order in accordance with the Motion.
11.
This Court retains jurisdiction with respect to all matters arising from or related to
the implementation, interpretation, and enforcement of this Final Order.
Case 24-11217-BLS Doc 8 Filed 06/10/24 Page 23 of 23