Motion Of Debtors Seeking Entry Of

What This Document Is

A first-day motion, filed June 10, 2024, seeking authority for Vyaire Medical and its affiliated debtors to pay certain prepetition claims of critical vendors, foreign vendors, 503(b)(9) claimants, and lien claimants in the ordinary course, and to confirm administrative-expense priority for undelivered prepetition orders.

Factual Summary

The motion requests authority to pay Critical Vendor Claims in an estimated amount of $4,700,000 ($3,300,000 available on the interim order, the remaining $1,400,000 on the final order), based on the Debtors' assessment of which vendors' goods or services are essential to continued operations and the risk and cost of disruption if unpaid. It separately seeks authority to pay Lien Claims in an aggregate amount of $1,100,000 and undisputed 503(b)(9) claims (goods received within 20 days of the petition date) in an aggregate amount of $400,000, framing both as necessary to keep vendors supplying goods and services post-petition. The motion also asks the court to confirm administrative-expense priority for goods ordered prepetition but not delivered until after the petition date, and to authorize payment of those obligations in the ordinary course, and requests a final hearing approximately 21 days after the petition date.

Key Facts

Filed 2024-06-10, docket entry 7, Case No. 24-11217 (BLS), the same day as the wage motion (docket 6).
Critical Vendor Claims: estimated $4,700,000 ($3,300,000 interim, $1,400,000 final).
Lien Claims: aggregate $1,100,000.
Undisputed 503(b)(9) claims: aggregate $400,000.
Also seeks administrative-expense priority for undelivered prepetition purchase orders.

Source Caveats

The requested dollar amounts are the Debtors' own estimates as of the petition date; this summary does not confirm the amounts the court ultimately approved in the interim or final orders.

Date: 2024-06-10

Cite this document

“Motion Of Debtors Seeking Entry Of.” Original at ecf.deb.uscourts.gov, dated 2024-06-10. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2024-06-10-motion-of-debtors-seeking-entry-of/, SHA-256 f8afcf0f75622334c4fc9ea06bdeb53f7d6699fdc65ac8c30e1a8f3cd4e25c4e.

Full text

Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 1 of 39

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 SEEKING ENTRY OF
INTERIM AND FINAL ORDERS (I) AUTHORIZING
DEBTORS TO PAY PREPETITION CLAIMS OF CERTAIN
CRITICAL VENDORS, FOREIGN VENDORS, 503(B)(9) CLAIMANTS,
AND LIEN CLAIMANTS, (II) CONFIRMING ADMINISTRATIVE EXPENSE
PRIORITY OF OUTSTANDING ORDERS, AND (III) 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 “Final

Order”): (a) authorizing the Debtors to pay, in the ordinary course of business, prepetition

amounts owing on account of (i) Critical Vendor Claims, (ii) Foreign Vendor Claims,

(iii) 503(b)(9) Claims, and (iv) Lien Claims (each as defined herein); (b) confirming

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.
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 2 of 39

administrative expense priority to all undisputed obligations on account of goods ordered by the

Debtors prior to the date hereof that will not be delivered until after the Petition Date and

authorizing the Debtors to satisfy such obligations in the ordinary course of business; and

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), 363, 503,

1107(a), and 1108 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 Rule 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

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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 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.

Overview of the Debtors’ Vendors

7. The Debtors’ customers require strict specifications for consistency and quality

control to meet certain product-specific standards, often promulgated by the U.S. Food and Drug

Administration (the “FDA”) and similar state and local governmental agencies. These regulations

address, among other things, manufacturing, packing, and transportation standards, delineation of

processes and controls for raw materials and other components, and particular defect levels for

natural or unavoidable defects in products. Careful assessment of the Debtors’ products, including

their components and production process, is a vital part of clearing the applicable regulatory and

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customer requirements. The Debtors have spent considerable time and resources to develop their

biomedical products, ensuring that their production process and final products comply with

applicable regulations. Any deviation by the Debtors from these standards could put the Debtors

in breach of these regulations and impact the Debtors’ ability to place their products on the market.

8. Accordingly, to effectuate their business model and ensure the uninterrupted flow

of products and services to their customers, the Debtors rely on goods and services provided by

approximately 350 vendors. As of the Petition Date, the Debtors estimate that they owe

approximately $35,000,000 in aggregate outstanding amount to all of their vendors on account of

goods delivered and/or services rendered prior to the Petition Date. Many of the Debtors’ vendors

are not subject to long-term contractual obligations and supply the Debtors with goods and/or

services primarily on purchase order payment terms. Additionally, many of the Debtors’ suppliers

are located outside the United States and may not fully understand the implications of chapter 11.

9. The Debtors estimate that approximately $8,000,000 is owed to an essential subset

of their vendors as of the Petition Date, approximately $5,750,000 of which will be owed during

the first 30 days of these chapter 11 cases. These amounts are summarized below:

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Approximate
Amount
Approximate
Payable in the
Amount Accrued
Category Description First 30 Days of
and Unpaid as of
these
Petition Date
Chapter 11
Cases

Critical Vendor Claims of vendors that provide, $4,700,000 $3,300,000
Claims among other things, key
components, equipment,
installation, repair services related
thereto, IT services, freight, and
equipment testing services allowing
the Debtors to provide high quality
products that meet specified
materials and standards and comply
with applicable regulations and
specifications for products and
services provided to customers.

Foreign Vendor Claims of foreign vendors and $1,800,000 $1,300,000
Claims suppliers that provide a significant
number of materials utilized by the
Debtors in all stages of the
manufacturing process of their
products, including machine parts,
filters, and assembly tools.

Lien Claims Claims of shippers and third-party $1,100,000 $750,000
logistics providers that maintain
liens on Debtors’ goods in their
possession and may refuse to
release the Debtors’ property if
outstanding claims against the
Debtors are not satisfied.

503(b)(9) Claims Claims of vendors from whom the $400,000 $400,000
Debtors have received goods within
the twenty-one days preceding the
Petition Date, giving rise to claims
under section 503(b)(9) of the
Bankruptcy Code.

Total $8,000,000 $5,750,000

I. The Debtors’ Critical Vendors.

10. The Debtors rely on several third-party vendors to provide them with goods and/or

services used in the operation of their business. The Debtors and their advisors have carefully

reviewed and analyzed the Debtors’ books and records and consulted with key personnel to

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identify those vendors of goods and/or services that are critical to the Debtors’ business

(collectively, the “Critical Vendors”). The Debtors’ Critical Vendors provide, among other things,

key components, equipment, installation, repair services related thereto, IT services, freight, and

equipment testing services allowing the Debtors to provide high quality products that meet

specified materials and standards and comply with applicable regulations and specifications for

products and services provided to customers.

11. The Debtors rely on the goods and services provided by the Critical Vendors to

continue to sell their life-enhancing products and provide services to customers efficiently and in

compliance with applicable governmental regulations. The loss of the goods and services provided

by the Critical Vendors could result in the Debtors’ inability to produce and provide their

life-enhancing products and services to customers, which would immediately and irreparably harm

the Debtors’ business and significantly impair their going-concern viability. Such harm would

likely far outweigh the cost of payment of the prepetition claims accrued in the ordinary course of

business held by certain Critical Vendors (collectively, the “Critical Vendor Claims”). As part of

the Critical Vendor identification process, the Debtors considered numerous factors, including:

a. whether a vendor is a sole or limited-source or high-volume supplier for
goods or services critical to the Debtors’ business operations;

b. whether alternative vendors are available that can provide similar goods or
services on equal (or better) terms and, if so, whether the Debtors would be
able to continue operating while transitioning business thereto;

c. whether an agreement exists that permits the Debtors to compel a vendor to
continue performing on prepetition terms;

d. whether certain regulatory frameworks, specifications, or contract
requirements prevent, directly or indirectly, the Debtors from obtaining
goods or services from alternative sources;

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e. the degree to which replacement costs (including pricing, transition
expenses, professional fees, and lost sales or future revenue) exceed the
amount of a vendor’s prepetition claim; and

f. whether failure to pay all or part of a particular vendor’s claim could cause
the vendor to refuse to provide critical goods or services on a postpetition
basis.

12. Accordingly, the Debtors seek authority, in their sole discretion and business

judgment, to make payments on account of Critical Vendor Claims in an estimated amount of

$4,700,000, of which $3,300,000 shall be available upon entry of the Interim Order and the

remaining $1,400,000 available upon entry of the Final Order, which amounts represent the

Debtors’ best estimate as to what aggregate amounts must be paid to the Critical Vendors to

continue an uninterrupted supply of critical goods and services. The Debtors further request that

the Court grant the Debtors the authority to allocate the foregoing amounts in their sole discretion,

without prejudice to seek additional relief, and subject to an agreement (within the Debtors’

discretion) to receive terms consistent with Customary Trade Terms (as defined herein) from the

Critical Vendors.

II. Foreign Vendor Claims.

13. As a multinational company, the Debtors’ supply chain includes certain foreign

vendors and suppliers (collectively, the “Foreign Vendors”) that provide a significant number of

materials utilized by the Debtors in all stages of the manufacturing process of their products,

including machine parts, filters, and assembly tools. These materials are sourced for their

effectiveness and adherence to the Debtors’, their customers’, and regulatory standards. As of the

Petition Date, the Debtors estimate that there is approximately $1,800,000 in aggregate amount

outstanding on account of prepetition goods provided by the Debtors’ Foreign Vendors

(the “Foreign Vendor Claims”).

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14. Based on the reactions of foreign suppliers in other chapter 11 cases, the Debtors

believe there is a material risk that the nonpayment could cause a Foreign Vendor to stop shipping

goods and supplies to the Debtors on a timely basis and/or completely sever its business

relationship with the Debtors. Suppliers and vendors located in foreign countries are often

unfamiliar with the chapter 11 process and react skeptically to its debtor protections. Short of

severing their relations with the Debtors, nonpayment of certain Foreign Vendor Claims may also

cause Foreign Vendors to take other harmful actions, including delaying shipments of goods.

Timely shipment of inventory is critical to the Debtors’ business, and the Debtors can ill afford

any delays or interruptions of this nature.

15. Accordingly, the Debtors seek authority, in their sole discretion and business

judgment, to make payments on account of Foreign Vendor Claims in an aggregate of $1,800,000,

of which $1,300,000 shall be available upon entry of the Interim Order and the remaining $500,000

available upon entry of the Final Order, which amounts represent the Debtors’ best estimate as to

what aggregate amounts must be paid to the Foreign Vendors to continue an uninterrupted supply

of critical goods and services. The Debtors further request that the Court grant the Debtors the

authority to allocate the foregoing amounts in their sole discretion, without prejudice to seek

additional relief, and subject to an agreement (within the Debtors’ discretion) to receive terms

consistent with Customary Trade Terms (as defined herein) from the Foreign Vendors.

16. Overall, with respect to the Critical Vendors and Foreign Vendors, the Debtors

believe that continuing to receive goods and services from the Foreign Vendors is necessary to

operate and restructure their businesses as going concerns and to maximize value of their estates.

If granted discretion to satisfy Foreign Vendor Claims as requested herein, the Debtors will assess,

on a case-by-case basis, the benefits to their estates of paying the Foreign Vendor Claims and pay

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any such claim only to the extent their estates will benefit. Without this relief, the Debtors believe

that the Foreign Vendors may cease providing goods to the Debtors and thereby negatively impact

the Debtors’ going concern value—a result that could be devastating for the Debtors and their

stakeholders.

III. Lien Claims.

17. In the ordinary course of business, the Debtors incur obligations

(the “Lien Claims”) to various shippers, maintenance workers, and other service providers

(collectively, the “Lien Claimants”) for the distribution, receipt, and delivery of the Debtors’

goods. The Debtors’ business depends on the ability to maintain uninterrupted flow of materials,

components, goods, and services through their supply chain and distribution network, which relies

heavily on shippers and third-party logistics providers. To maintain their operations and efficiently

transport products, the Debtors employ an extensive distribution network that utilizes the services

of the Lien Claimants. Under the laws of most states, these servicers or carriers will, in certain

circumstances, have a lien on the goods in their possession that secures the charges or expenses

incurred regarding the transportation of goods or the supply of labor. 3 Thus, if the Lien Claims

are not satisfied, the Lien Claimants may refuse to release the Debtors’ property, thereby disrupting

the Debtors’ supply chain and distribution network.

18. Accordingly, the Debtors seek authority, in their sole discretion and business

judgement, to make payments on account of Lien Claims in an aggregate amount of $1,100,000,

of which $750,000 shall be available upon entry of the Interim Order and the remaining $350,000

3
For example, section 7-307 of the Uniform Commercial Code provides, in pertinent part, that a “carrier has a lien
on the goods covered by a bill of lading or on the proceeds thereof in its possession for charges after the date of
the carrier’s receipt of the goods for storage or transportation (including demurrage and terminal charges) and for
expenses necessary for preservation of the goods incident to their transportation or reasonably incurred in their
sale pursuant to law.” See U.C.C. § 7-307(a) (2005).

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available upon entry of the Final Order, which amounts represent the Debtors’ best estimate as to

what aggregate amounts must be paid to the Lien Claimants to continue an uninterrupted supply

of critical goods and services. The Debtors further request that the Court grant the Debtors the

authority to continue paying Lien Claims on a postpetition basis in the ordinary course of business.

IV. 503(b)(9) Claims.

19. The Debtors may have received goods from various vendors within the twenty-day

period immediately preceding the Petition Date (collectively, the “503(b)(9) Claimants”), thereby

giving rise to prepetition claims under section 503(b)(9) of the Bankruptcy Code (the “503(b)(9)

Claims”). The Debtors receive large volumes of equipment components and related materials from

their vendors on a rolling basis to satisfy their customers’ demands.

20. The vast majority of the 503(b)(9) Claimants are also Critical Vendors or Foreign

Vendors. The Debtors’ relationships with the majority of their vendors and, similarly, with many

of the other 503(b)(9) Claimants, are not governed by long-term contracts. Rather, the Debtors

obtain goods from such claimants on an order-by-order basis, typically subject to applicable

payment terms. As a result, a 503(b)(9) Claimant may refuse to supply new orders if the Debtors

do not pay the 503(b)(9) Claims. Such refusal would negatively affect the Debtors’ estates, as the

Debtors’ businesses are dependent on the steady flow of biomedical manufacturing components.

21. The Debtors also believe that certain 503(b)(9) Claimants could demand payment

in cash on delivery, further exacerbating the Debtors’ liquidity. As of the Petition Date, the

Debtors estimate that they owe approximately $400,000 on account of materials and services

delivered within the twenty days immediately preceding the Petition Date, approximately all of

which may become due within the first thirty days of these chapter 11 cases, the value of which

may be entitled to administrative priority under section 503(b)(9) of the Bankruptcy Code.

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22. Accordingly, the Debtors request the authority, but not direction, to make payments

on account of the undisputed 503(b)(9) Claims as and when they come due, in an aggregate amount

of $400,000, all of which shall be available upon entry of the Interim Order, which amounts

represent the Debtors’ best estimate as to what aggregate amounts must be paid in order for the

503(b)(9) Claimants to continue supplying new orders. Importantly, the Debtors do not seek to

accelerate or modify existing payment terms with respect to the 503(b)(9) Claims. Rather, the

Debtors will pay the 503(b)(9) Claims as they come due in the ordinary course of business;

provided that such claimants make commercially reasonable efforts to maintain or restore

Customary Trade Terms (as defined herein).

V. Customary Trade Terms.

23. Subject to Court approval, the Debtors intend to pay the Critical Vendor Claims,

Foreign Vendor Claims, 503(b)(9) Claims, and Lien Claims only to the extent necessary to

preserve their business. To that end, in return for paying such claims either in full or in part, the

Debtors propose that they be authorized to require the Critical Vendors, the Foreign Vendors, the

503(b)(9) Claimants, and Lien Claimants as applicable, to provide favorable trade terms for the

postpetition procurement of goods and services.

24. Specifically, the Debtors seek authorization, but not direction, to condition payment

of the Critical Vendor Claims, Foreign Vendor Claims, 503(b)(9) Claims, and Lien Claims upon

such claimant’s agreement to continue—or recommencement of—supplying such products and

services to the Debtors pursuant to trade terms (including credit limits, discounts, pricing, timing

of payments, availability, and other terms) consistent with the parties’ ordinary course practice or

as otherwise agreed by the Debtors in their reasonable business judgment (the “Customary Trade

Terms”).

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25. In addition, the Debtors request that if any party accepts payment pursuant to the

relief requested by this motion and thereafter does not continue to provide goods or services on

Customary Trade Terms, then: (a) any payment on account of a prepetition claim received by such

party shall be deemed, in the Debtors’ sole discretion, an improper postpetition transfer and,

therefore, immediately recoverable in cash upon written request by the Debtors; (b) upon recovery

by the Debtors, any prepetition claim of such party shall be reinstated as if the payment had not

been made; and (c) if there exists an outstanding postpetition balance due from the Debtors to such

party, the Debtors may elect to recharacterize and apply any payment made pursuant to the relief

requested by the motion to such outstanding postpetition balance and such supplier or vendor will

be required to repay to the Debtors such paid amounts that exceed the postpetition obligations then

outstanding, without the right of any setoffs, claims, provisions for payment of any claims, or

otherwise.

VI. Outstanding Orders.

26. Prior to the Petition Date, and in the ordinary course of business, the Debtors may

have ordered goods that will not be delivered until after the Petition Date. Any such goods

delivered and accepted by the Debtors following the Petition Date are referred to herein as

the “Outstanding Orders.” In the mistaken belief that they would be general unsecured creditors

of the Debtors’ estates with respect to such goods, certain suppliers may refuse to ship or transport

such goods (or may recall such shipments) with respect to such Outstanding Orders unless the

Debtors issue substitute purchase orders postpetition—potentially disrupting the Debtors’ ongoing

business operations and requiring the Debtors to expend substantial time and effort in issuing such

substitute orders. As set forth in greater detail below, because the Outstanding Orders are likely

administrative expenses of the Debtors’ estates, the Debtors are requesting that the Court confirm

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the administrative expense priority of the Outstanding Orders and authorize the Debtors to pay

amounts due on account of Outstanding Orders in the ordinary course of business.

Basis for Relief

I. The Court Should Authorize the Payment of the Critical Vendor Claims and the
Foreign Vendor Claims.

27. Allowing the Debtors to pay the Critical Vendor Claims and the Foreign Vendor

Claims pursuant to all or some of the above-referenced Bankruptcy Code provisions is especially

appropriate where, as here, doing so is consistent with the “two recognized policies” of chapter 11

of the Bankruptcy Code—preserving going concern value and maximizing the value of property

available to satisfy creditors. See Bank of Am. Nat’l Tr. & Savs. Ass’n v. 203 N. LaSalle St. P’Ship,

526 U.S. 434, 453 (1999). Indeed, recognizing that payment of prepetition claims of certain

essential suppliers and vendors is, in fact, both critical to a debtor’s ability to preserve any

going-concern value and maximize creditor recovery, courts in this district regularly grant relief

consistent with that which the Debtors are seeking in this motion. See, e.g., In re Appgate, Inc.,

No. 24-10956 (CTG) (Bankr. D. Del. May 28, 2024) (authorizing the debtors to pay critical vendor

claims on a final 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. Mar. 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. Aug. 6, 2023) (same).

28. Additionally, if the Debtors do not pay certain of the Foreign Vendor Claims,

certain Foreign Vendors may refuse to do business with the Debtors unless and until they receive

payment on account of their prepetition claims. The Foreign Vendors may take other actions

against the Debtors based on the incorrect belief they are not bound by the automatic stay. As a

result, the Debtors would be unable to procure related products and services, potentially causing

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the Debtors to fail or delay providing products to their customers. Courts in this jurisdiction

routinely grant authorization for debtors to pay claims owing to foreign entities against which the

automatic stay cannot be enforced readily in the United States and as to which it would be unduly

time consuming and expensive to seek enforcement of an order of the bankruptcy court in the

creditor’s home country. See, e.g., In re Yellow Corporation, No. 23-11069 (CTG) (Bankr. D.

Del. Sept. 13, 2023) (authorizing payment of certain prepetition and postpetition foreign vendor

claims on a final basis); In re SiO2 Med. Prods. Inc., No. 23-10366 (JTD) (Bankr. D. Del. Apr. 24,

2023) (same); In re Akorn, Inc., No. 20-11177 (KBO) (Bankr. D. Del. June 6, 2020) (same);

In re Bluestem Brands, Inc., No. 20-10566 (MFW) (Bankr. D. Del. Mar. 30, 2020) (same).

29. The Debtors depend on the materials and technical services provided by the Critical

Vendors and the Foreign Vendors. Ensuring these Critical Vendors and Foreign Vendors continue

to supply certain materials and provide services is therefore vital to the success of these

chapter 11 cases and the ability of the Debtors to maximize any going-concern value.

Accordingly, for the reasons set forth herein, it is appropriate for the Court to authorize the Debtors

to satisfy the Critical Vendor and Foreign Vendor Claims.

II. The Court Should Authorize the Payment of Lien Claims.

30. Certain Lien Claimants may be entitled under applicable non-bankruptcy law to

assert certain possessory liens on the Debtors’ goods or equipment in their possession

(notwithstanding the automatic stay under section 362 of the Bankruptcy Code) in an attempt to

secure payment of their prepetition claim. Under section 362(b)(3) of the Bankruptcy Code, the

act of perfecting such liens, to the extent consistent with section 546(b) of the Bankruptcy Code,

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is expressly excluded from the automatic stay. 4 11 U.S.C. § 362(b)(3). As a result, the Debtors

anticipate that certain Lien Claimants may assert or perfect liens, refuse to turn over goods in their

possession, or stop performing their ongoing obligations. Even absent a valid lien, to the extent

that certain Lien Claimants have possession of the Debtors’ inventory, mere possession or

retention would disrupt the Debtors’ operations.

31. Additionally, pursuant to section 363(e) of the Bankruptcy Code, the

Lien Claimants may be entitled to adequate protection of a valid possessory lien to the extent that

the Debtors use or sell the estate property against which a Lien Claim is asserted. Given that the

value of such property will generally far exceed the value of the related Lien Claim, creditors will

not be harmed—and, in fact, will be benefited—by satisfying certain amounts owed to the Lien

Claimants. Those payments will facilitate the use and/or sale of estate property against which liens

may otherwise be asserted, helping to preserve the going-concern value of the Debtors’ business,

and enabling the Debtors to smoothly transition into chapter 11.

32. For these reasons, courts in this jurisdiction have authorized the payment of

prepetition lien claims under similar circumstances in recent chapter 11 cases. See, e.g., In re

Express, Inc., No. 24-10831 (KBO) (Bankr. D. Del. May 14, 2024) (authorizing payment to parties

with lien claims on a final basis); 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); In re SiO2 Med. Prods. Inc., No. 23-10366 (JTD) (Bankr. D. Del. Apr. 24, 2024)

(same); In re Akorn, Inc., No. 20-11177 (KBO) (Bankr. D. Del. June 11, 2020) (same).

4
See 11 U.S.C. § 546(b)(1)(A) (providing that a debtor’s lien avoidance powers “are subject to any generally
applicable law that . . . permits perfection of an interest in property to be effective against an entity that acquires
rights in such property before the date of perfection.”).

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Accordingly, for the reasons set forth herein, it is appropriate for the Court to authorize the Debtors

to satisfy the Lien Claims.

III. The Court Should Authorize the Payment of Claims Entitled to Priority Pursuant to
Section 503(b)(9) of the Bankruptcy Code.

33. Section 503(b)(9) of the Bankruptcy Code provides administrative priority for “the

value of any goods received by the debtor within twenty days before the date of commencement

of a case under this title in which the goods have been sold to the debtor in the ordinary course of

such debtor’s business.” The 503(b)(9) Claims must be paid in full for the Debtors to confirm a

chapter 11 plan. See 11 U.S.C. § 1129(a)(9)(A). Consequently, paying such claims now only

provides such parties with what they would be entitled to receive under a chapter 11 plan.

Moreover, the timing of such payments lies squarely within the Court’s discretion. See In re Glob.

Home Prods., LLC, No. 06-10340 (KG), 2006 WL 3791955, at *3 (Bankr. D. Del. Dec. 21, 2006)

(agreeing with parties that “the timing of the payment of that administrative expense claim is left

to the discretion of the Court”). The Debtors’ ongoing ability to obtain goods as provided herein

is key to their survival and necessary to preserve the value of their estates. Absent this relief, the

Debtors could be denied access to the goods necessary to maintain their operations and maximize

the value of their estates.

34. Moreover, the Bankruptcy Code does not prohibit a debtor from paying such claims

prior to confirmation. As administrative claims incurred in the ordinary course of business, the

Debtors believe they may pay such claims in an exercise of their business judgment pursuant to

section 363(c)(1) of the Bankruptcy Code. See, e.g., October 31, 2006 Hr’g Tr. at 49, In re Dura

Auto. Sys., Inc., No. 06-11202 (KJC) (Bankr. D. Del. Nov. 6, 2006) (“THE COURT: I think

arguably the debtor could pay its 503(b)(9) claimants without court approval.”).

16
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 17 of 39

35. For these reasons, courts in this district have regularly authorized the payment of

claims arising under section 503(b)(9) of the Bankruptcy Code in the ordinary course of business.

See, e.g., In re Express, Inc., No. 24-10831 (KBO) (Bankr. D. Del. May 14, 2024) (authorizing

payment to parties with section 503(b)(9) claims on a final basis); 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); In re SiO2 Med. Prods. Inc., No. 23-10366 (JTD)

(Bankr. D. Del. Apr. 24, 2024) (same); In re Akorn, Inc., No. 20-11177 (KBO) (Bankr. D. Del.

June 11, 2020) (same). Accordingly, it is appropriate for the Court to authorize the Debtors to

satisfy the 503(b)(9) Claims.

IV. The Court Should Confirm that Outstanding Orders are Administrative Expenses
and that Payment of Such Claims is Authorized.

36. Pursuant to section 503(b)(1) of the Bankruptcy Code, obligations that arise in

connection with the postpetition delivery of goods and services, including goods ordered

prepetition, are administrative expenses because they benefit the estate postpetition. See 11 U.S.C.

§ 503(b)(1)(A) (providing that the “actual [and] necessary costs and expenses of preserving the

estate” are administrative expenses); see also In re John Clay & Co., 43 B.R. 797, 809–10 (Bankr.

D. Utah 1984) (holding that goods ordered prepetition but delivered postpetition are entitled to

administrative priority). Thus, granting the relief sought herein with respect to the Outstanding

Orders will not afford such claimants any greater priority than they otherwise would have if the

relief requested herein were not granted and will not prejudice any other party in interest.

37. Absent such relief, however, the Debtors may be required to expend substantial

time and effort reissuing the Outstanding Orders to provide certain suppliers with assurance of

such administrative priority. The attendant disruption and delay to the continuous and timely flow

of critical materials and other goods to the Debtors would force the Debtors to potentially halt

17
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 18 of 39

operations and production, disrupt the Debtors’ business, and lead to a loss of revenue, all to the

detriment of the Debtors and their creditors.

V. The Court Should Grant the Relief Requested in this Motion Pursuant to
Sections 105(a) and 363(b) of the Bankruptcy Code.

38. 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. (In re 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.

39. 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)

18
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 19 of 39

(requiring the debtor to show a “good business reason” for a proposed transaction under

section 363(b) of the Bankruptcy Code).

40. 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 businesses. 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.” 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.” CoServ, 273 B.R. at 497.

41. As discussed above, every segment of the Debtors’ supply chain is indispensable

to ensure the Debtors’ products are safe and within specified standards. It is therefore imperative

19
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 20 of 39

that the Debtors have the authority to pay all of the Critical Vendors, Foreign Vendors,

503(b)(9) Claimants, and Lien Claimants if determined necessary to preserve the Debtors’

operations, reputation, and the go-forward success of the Debtors’ businesses. The relief requested

herein represents a sound exercise of the Debtors’ business judgment and is necessary to avoid

immediate and irreparable harm to the Debtors’ estates; it is therefore justified under

sections 105(a), 363(b), 1107(a), and 1108 of the Bankruptcy Code.

Processing of Checks and Electronic Fund Transfers Should be Authorized

42. 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

43. 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

20
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 21 of 39

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

44. 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.

21
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 22 of 39

Waiver of Bankruptcy Rule 6004(a) and 6004(h)

45. 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

46. 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;

and (l) 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.

[Remainder of page intentionally left blank]

22
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 23 of 39

WHEREFORE, the Debtors request entry of Interim Order and Final Order, substantially

in the forms attached hereto as Exhibit A and Exhibit B, respectively, (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 7 Filed 06/10/24 Page 24 of 39

Exhibit A

Proposed Interim Order
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 25 of 39

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 DEBTORS TO PAY
PREPETITION CLAIMS OF CERTAIN CRITICAL VENDORS, FOREIGN
VENDORS, 503(B)(9) CLAIMANTS, AND LIEN CLAIMANTS, (II) CONFIRMING
ADMINISTRATIVE EXPENSE PRIORITY TO ALL UNDISPUTED OBLIGATIONS ON
ACCOUNT OF OUTSTANDING ORDERS, AND (III) GRANTING RELATED RELIEF

Upon the motion (the “Motion”) 2 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for entry of an interim order (this “Interim Order”) (a) authorizing the

Debtors to pay, in the ordinary course of business, prepetition amounts owing on account of

(i) Critical Vendor Claims and Foreign Vendor Claims; (ii) 503(b)(9) Claims; and (iii) Lien

Claims; (b) confirming administrative expense priority to all undisputed obligations on account of

goods ordered by the Debtors prior to the date hereof that will not be delivered until after the

Petition Date and authorizing the Debtors to satisfy such obligations in the ordinary course of

business; 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 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), (iii)

2
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 27 of 39

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);

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 pay all or part of, and discharge, on

a case-by-case basis, the Critical Vendor Claims on an interim basis, absent further order of the

Court.

4. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the Foreign Vendor Claims on an interim basis, absent further order of the

Court.

5. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the Lien Claims on an interim basis, absent further order of the Court.

3
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 28 of 39

6. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the 503(b)(9) Claims on an interim basis, absent further order of the Court.

7. The Debtors are authorized on an interim basis to negotiate, pay, and remit all

claims pursuant to this Interim Order, provided that such payments shall not exceed $5,750,000 in

the aggregate pending entry of the Final Order.

8. All undisputed obligations related to the Outstanding Orders are granted

administrative expense priority in accordance with section 503(b)(1)(A) of the Bankruptcy Code.

9. The Debtors are authorized, but not directed, to pay all undisputed amounts relating

to the Outstanding Orders in the ordinary course of business consistent with the parties’ customary

practices in effect prior to the Petition Date.

10. As a condition to receiving payment hereunder, the Debtors, in their sole discretion,

may require, by written agreement, such parties to continue supplying goods or services to the

Debtors in accordance with trade terms at least as favorable to the Debtors as those practices and

programs (including credit limits, pricing, cash discounts, timing of payments, allowances, product

mix, availability, and other programs) consistent with the parties’ ordinary course practice

(collectively, the “Customary Trade Terms”). The Debtors reserve the right to require more

favorable trade terms with any party as a condition to payment of any prepetition claim.

11. If any party accepts payment hereunder for a prepetition obligation of the Debtors

premised on compliance with the above, and thereafter fails to comply with the Customary Trade

Terms, or other such terms as agreed to by the Debtors, then, subject to entry of a final order on

the Motion from this Court: (a) any payment on account of a prepetition claim received by such

party shall be deemed, in the Debtors’ sole discretion, an improper postpetition transfer and,

therefore, immediately recoverable in cash upon written request by the Debtors; (b) upon recovery

4
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 29 of 39

by the Debtors, any prepetition claim of such party shall be reinstated as if the payment had not

been made; and (c) if there exists an outstanding postpetition balance due from the Debtors to such

party, the Debtors may elect to recharacterize and apply any payment made pursuant to the relief

requested by the Motion to such outstanding postpetition balance and such supplier or vendor will

be required to repay to the Debtors such paid amounts that exceed the postpetition obligations then

outstanding, without the right of any setoffs, claims, provisions for payment of any claims, or

otherwise.

12. Any Critical Vendor, Foreign Vendor, 503(b)(9) Claimant, and Lien Claimant that

accepts payment from the Debtors on account of all or a portion of such party’s claim pursuant to

this Interim Order shall be deemed to (a) agree to the terms and provisions of this Interim Order

and (b) have waived, to the extent so paid, Critical Vendor Claims, Foreign Vendor Claims,

503(b)(9) Claims, or Lien Claims of any type, kind, or priority (including any reclamation claim),

against the Debtors, their assets, and properties. The Debtors shall provide a copy of this Interim

Order to any Critical Vendor, Foreign Vendor, 503(b)(9) Claimant, and/or Lien Claimant to whom

a payment is made pursuant to this Interim Order.

13. Nothing herein shall impair or prejudice the Debtors’ ability to contest, in their sole

discretion, the extent, perfection, priority, validity, or amounts of any claims held by any Critical

Vendor, Foreign Vendor, 503(b)(9) Claimant, and Lien Claimant. The Debtors do not concede

that any claims satisfied pursuant to this Interim Order are valid, and the Debtors expressly reserve

all rights to contest the extent, validity, or perfection, or to seek the avoidance of all such liens, or

the priority of such claims.

14. Notwithstanding the foregoing, prior to entry of an order granting the relief

requested in the Motion on a final basis, the Debtors are not authorized to pay any prepetition

5
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 30 of 39

amounts on account of Critical Vendor Claims, Foreign Vendor Claims, 503(b)(9) Claims, or Lien

Claims before the applicable due dates of such claims.

15. 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.

16. 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.

17. 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.

18. 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

6
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 31 of 39

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.

19. The Debtors are authorized 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.

20. The Debtors have demonstrated that the requested relief is “necessary to avoid

immediate and irreparable harm,” as contemplated by Bankruptcy Rule 6003.

21. Nothing in this Interim Order authorizes the Debtors to accelerate any payments

not otherwise due prior to the date of the Final Hearing.

22. 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.

23. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Interim

Order are immediately effective and enforceable upon its entry.

7
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 32 of 39

24. The Debtors are authorized to take all actions necessary to effectuate the relief

granted in this Interim Order in accordance with the Motion.

25. This Court retains jurisdiction with respect to all matters arising from or related to

the implementation, interpretation, and enforcement of this Interim Order.

8
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 33 of 39

Exhibit B

Proposed Final Order
Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 34 of 39

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
DEBTORS TO PAY PREPETITION CLAIMS OF
CERTAIN CRITICAL VENDORS, FOREIGN VENDORS,
503(B)(9) CLAIMANTS, AND LIEN CLAIMANTS, (II) CONFIRMING
ADMINISTRATIVE EXPENSE PRIORITY TO ALL UNDISPUTED OBLIGATIONS ON
ACCOUNT OF OUTSTANDING ORDERS, AND (III) GRANTING RELATED RELIEF

Upon the motion (the “Motion”) 2 of the above-captioned debtors and debtors in possession

(collectively, the “Debtors”) for entry of a final order (this “Final Order”) (a) authorizing the

Debtors to pay, in the ordinary course of business, prepetition amounts owing on account of

(i) Critical Vendor Claims and Foreign Vendor Claims, (ii) 503(b)(9) Claims, and (iii) Lien

Claims; (b) confirming administrative expense priority to all undisputed obligations on account of

goods ordered by the Debtors prior to the date hereof that will not be delivered until after the

Petition Date and authorizing the Debtors to satisfy such obligations in the ordinary course of

business; and (c) granting related relief, all as more fully set forth in the Motion; and upon the First

Day Declaration; and this Court having 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; 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 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 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 a final basis as set forth herein.

2. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the Critical Vendor Claims on a final basis, absent further order of the Court.

3. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the Foreign Vendor Claims on a final basis, absent further order of the Court.

4. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the Lien Claims on a final basis, absent further order of the Court.

5. The Debtors are authorized, but not directed, to pay all or part of, and discharge, on

a case-by-case basis, the 503(b)(9) Claims on a final basis, absent further order of the Court.

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Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 36 of 39

6. All undisputed obligations related to the Outstanding Orders are granted

administrative expense priority in accordance with section 503(b)(1)(A) of the Bankruptcy Code.

7. The Debtors are authorized, but not directed, to pay all undisputed amounts relating

to the Outstanding Orders in the ordinary course of business consistent with the parties’ customary

practices in effect prior to the Petition Date.

8. As a condition to receiving payment hereunder, the Debtors at their discretion may

require, by written agreement, such parties to continue supplying goods or services to the Debtors

in accordance with trade terms at least as favorable to the Debtors as those practices and programs

(including credit limits, pricing, cash discounts, timing of payments, allowances, product mix,

availability, and other programs) consistent with the parties’ ordinary course practice (collectively,

the “Customary Trade Terms”). The Debtors reserve the right to require more favorable trade

terms with any party as a condition to payment of any prepetition claim.

9. If any party accepts payment hereunder for a prepetition obligation of the Debtors

premised on compliance with the above, and thereafter fails to comply with the Customary Trade

Terms, or other such terms as agreed to by the Debtors, then: (a) any payment on account of a

prepetition claim received by such party shall be deemed, in the Debtors’ sole discretion, an

improper postpetition transfer and, therefore, immediately recoverable in cash upon written request

by the Debtors; (b) upon recovery by the Debtors, any prepetition claim of such party shall be

reinstated as if the payment had not been made; and (c) if there exists an outstanding postpetition

balance due from the Debtors to such party, the Debtors may elect to recharacterize and apply any

payment made pursuant to the relief requested by the Motion to such outstanding postpetition

balance and such supplier or vendor will be required to repay to the Debtors such paid amounts

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Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 37 of 39

that exceed the postpetition obligations then outstanding, without the right of any setoffs, claims,

provisions for payment of any claims, or otherwise.

10. Any Critical Vendor, Foreign Vendor, 503(b)(9) Claimant, or Lien Claimant that

accepts payment from the Debtors on account of all or a portion of such party’s claim pursuant to

this Final Order shall be deemed to (a) agree to the terms and provisions of this Final Order and

(b) have waived, to the extent so paid, any and all prepetition claims, of any type, kind, or priority

(including any reclamation claim), against the Debtors, their assets, and properties. The Debtors

shall provide a copy of this Final Order to any Critical Vendor, Foreign Vendor, 503(b)(9)

Claimant, and/or Lien Claimant to whom a payment is made pursuant to this Final Order.

11. Nothing herein shall impair or prejudice the Debtors’ ability to contest, in their sole

discretion, the extent, perfection, priority, validity, or amounts of any claims held by any Critical

Vendor, Foreign Vendor, 503(b)(9) Claimant, or Lien Claimant. The Debtors do not concede that

any claims satisfied pursuant to this Final Order are valid, and the Debtors expressly reserve all

rights to contest the extent, validity, or perfection, or to seek the avoidance of all such liens, or the

priority of such claims.

12. 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.

13. 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.

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Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 38 of 39

14. 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.

15. 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

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.

16. The Debtors are authorized to issue postpetition checks, or to effect postpetition

fund transfer requests, in replacement of any checks or fund transfer requests that are dishonored

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Case 24-11217-BLS Doc 7 Filed 06/10/24 Page 39 of 39

as a consequence of these chapter 11 cases with respect to prepetition amounts owed in connection

with the relief granted herein.

17. Nothing in this Final Order authorizes the Debtors to accelerate any payments not

otherwise due.

18. 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.

19. Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Final

Order are immediately effective and enforceable upon its entry.

20. The Debtors are authorized to take all actions necessary to effectuate the relief

granted in this Final Order in accordance with the Motion.

21. 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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