Interim Order — In re Vyaire Medical, Inc., et al.

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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 (BLS)

)

Debtors.
)
(Jointly Administered)

)
Re:  Docket No. 10
INTERIM ORDER
(I) APPROVING THE DEBTORS’ PROPOSED
ADEQUATE ASSURANCE OF PAYMENT FOR FUTURE
UTILITY SERVICES, (II) APPROVING THE DEBTORS’ PROPOSED
PROCEDURES FOR RESOLVING ADDITIONAL ASSURANCE REQUESTS,
(III) PROHIBITING UTILITY PROVIDERS FROM ALTERING, REFUSING
OR DISCONTINUING SERVICES, AND (IV) 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) approving
the Debtors’ proposed adequate assurance of payment for future utility services, (b) approving the
Debtors’ proposed procedures for resolving additional adequate assurance requests, (c) prohibiting
utility providers from altering, refusing or discontinuing services, (d) granting related relief, and
(e) scheduling a final hearing to consider approval of the Motion on a final basis; all as more fully
set forth in the Motion; and upon the First Day Declaration; and the United States District Court
for the District of Delaware has jurisdiction over this matter pursuant to 28 U.S.C. § 1334, which
was referred to the Court under 28 U.S.C. § 157 and the Amended Standing Order of Reference

1  The last four digits of Debtor Vyaire Medical, Inc.’s federal tax identification number are 6495.  A complete list
of each of the Debtors in these chapter 11 cases and each such Debtor’s federal tax identification number may be
obtained
on
the
website
of
the
Debtors’
proposed
claims
and
noticing
agent
at
https://omniagentsolutions.com/Vyaire.  The location of Debtor Vyaire Medical, Inc.’s principal place of business
and the Debtors’ service address in these chapter 11 cases is 26125 North Riverwoods Boulevard, Mettawa,
Illinois, USA 60045.
2
Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Motion.
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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 July 9, 2024,
at 10:00 a.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 July 2, 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,
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Suite
1410,
Wilmington,
Delaware
19801,Attn.:
Patrick
J.
Reilley,
Esq.
(preilley@coleschotz.com), Stacy L. Newman (snewman@coleschotz.com), Michael E.
Fitzpatrick,
Esq.
(mfitzpatrick@coleschotz.com),and
Jack
M.
Dougherty,
Esq.
(jdougherty@coleschotz.com), and (iv) Cole Schotz P.C., Court Plaza North, 25 Main Street,
Hackensack, New Jersey 07601, Attn.: Michael D. Sirota, Esq. (msirota@coleschotz.com) and
Warren A. Usatine, Esq. (wusatine@coleschotz.com);(c) counsel to the 1L Ad Hoc Group,
(i) Gibson, Dunn & Crutcher LLP,  200 Park Avenue, New York, NY 10166-0193,
Attn.:  Scott J. Greenberg (SGreenberg@gibsondunn.com), Jason Zachary Goldstein
(JGoldstein@gibsondunn.com), Joshua Brody (JBrody@gibsondunn.com), and Kevin Liang
(KLiang@gibsondunn.com) and (ii) Pachulski Stang Ziehl & Jones LLP, 919 North Market Street,
17th Floor, Wilmington, DE 19801, Attn.: Laura Davis Jones (ljones@pszjlaw.com);
(d) the United States Trustee, 844 King Street, Suite 2207, Lockbox 35, Wilmington, Delaware
19801, Attn.: Benjamin A. Hackman (Benjamin.A.Hackman@usdoj.gov); and (e) any statutory
committee appointed in these chapter 11 cases.
3.
Until such time as this Court enters the Final Order on the Motion or the Court
orders otherwise, all Utility Providers are prohibited from altering, refusing or discontinuing
services on account of any unpaid prepetition charges, the commencement of these chapter 11
cases, or any perceived inadequacy of the Proposed Adequate Assurance.
4.
The Debtors shall serve a copy of the Motion and this Interim Order on each Utility
Provider listed on Exhibit C to the Motion within two business days after the date this Interim
Order is entered, and upon service, any such Utility Provider shall be bound by the Adequate
Assurance Procedures.
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5.
The Debtors’ service of the Motion upon the Utility Providers List shall not
constitute an admission or concession that any such entity is a “utility” within the meaning of
section 366 of the Bankruptcy Code, and the Debtors reserve all rights and defenses with respect
thereto.
6.
The Debtors are authorized to cause the Adequate Assurance Deposit to be held in
a segregated account during the pendency of these chapter 11 cases.
7.
The Adequate Assurance Deposit and the Debtors’ ability to pay for future Utility
Services in the ordinary course of business subject to the Adequate Assurance Procedures shall
constitute adequate assurance of future payment as required by section 366 of the
Bankruptcy Code.
8.
To the extent the Debtors identify new or additional Utility Providers or discontinue
or terminate services from existing Utility Providers, the Debtors are authorized, but not directed,
to add or remove such parties from the Utility Providers List; provided, however, that the Debtors
shall provide notice of any such addition or removal to the Notice Parties.  For any Utility Provider
that is subsequently removed from the Utility Providers List, the Debtors are authorized, in their
discretion and without further order of the Court, to reduce the Adequate Assurance Deposit by an
amount not exceeding, for each of the Utility Services being discontinued, the lesser of (a) one-half
of the average monthly cost of Utility Services previously provided, calculated based on the
aforementioned historical average to align with the go-forward average monthly cost of Utility
Services and (b) the amount of the Adequate Assurance Deposit then attributable to the applicable
Utility Provider; provided that for any Utility Provider for which the Adequate Assurance Deposit
is reduced, the Debtors shall have (i) provided such Utility Provider with fourteen days’ notice of
such reduction and (ii) paid such Utility Provider in full and for any outstanding postpetition Utility
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Services.  To the extent that there is any dispute as to the postpetition amounts owed to a Utility
Provider, such Utility Provider shall not be removed from the Utility Providers List, and no funds
shall be removed from the Adequate Assurance Deposit, until such dispute has been resolved.  For
any Utility Provider that is subsequently added to the Utility Providers List, the Debtors will serve
such Utility Provider with a copy of the Interim Order, including the Adequate Assurance
Procedures, and provide such Utility Provider fourteen days’ notice to object to the inclusion of
such Utility Provider on the Utility Providers List.  The Debtors shall increase the Adequate
Assurance Deposit by an amount equal to approximately one-half of the Debtors’ monthly average
cost of services from any subsequently added Utility Provider.  The terms of the Interim Order and
the Adequate Assurance Procedures shall apply to any subsequently identified Utility Provider to
the same extent as if the Utility Provider was listed on the original Utility Providers List attached
hereto.
9.
The following Adequate Assurance Procedures are hereby approved on an interim
basis:
a.
The Debtors will serve a copy of the Motion and the Interim Order granting
the relief requested herein to each Utility Provider identified on Exhibit C to
the Motion within 2 business days after entry of the Interim Order.
b.
Subject to paragraphs (f)–(l) herein, the Debtors will deposit the Adequate
Assurance Deposit, in the aggregate amount of $56,100 in the Adequate
Assurance Account within twenty days of the Petition Date.
c.
If an amount relating to Utility Services provided postpetition by a Utility
Provider is unpaid, remains unpaid beyond any applicable grace period, and
is undisputed, such Utility Provider may request a disbursement from the
Adequate Assurance Account by giving notice to:  (a) the Debtors, 26125
North Riverwoods Boulevard, Mettawa, Illinois, USA 60045, Attn.:  Charles
Braley (cbraley@alixpartners.com); (b) proposed co-counsel to the Debtors,
Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022,
Attn.: Joshua A. Sussberg, P.C. (jsussberg@kirkland.com), Chris Ceresa
(chris.ceresa@kirkland.com),
and
Tiffani
Chanroo
(tiffani.chanroo@kirkland.com); Kirkland & Ellis LLP, 333 Wolf Point
Plaza,
Chicago,
Illinois,
60654,
Attn.:
Spencer
A.
Winters
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(spencer.winters@kirkland.com)
and
Yusuf
U.
Salloum
(yusuf.salloum@kirkland.com); and 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); Cole Schotz P.C., Court Plaza North, 25
Main Street, Hackensack, New Jersey 07601, Attn.: Michael D. Sirota, Esq.
(msirota@coleschotz.com),
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), (e) counsel to any statutory
committee appointed in these chapter 11 cases, and (f) to the extent not listed
herein, those parties requesting notice pursuant to Bankruptcy Rule 2002
(collectively, the “Notice Parties”).  The Debtors shall honor such request
within 5 business days after the date the request is received by the Debtors.
The Debtors and any such requesting Utility Provider maintain the ability to
resolve any dispute regarding such request without further order of the Court.
To the extent a Utility Provider receives a disbursement from the Adequate
Assurance Account, the Debtors shall replenish the Adequate Assurance
Account in the amount disbursed.
d.
The portion of the Adequate Assurance Deposit attributable to each Utility
Provider (including any additional amount deposited upon request of any
applicable Utility Provider), or any portion thereof, shall revert to the
Debtors less any amounts owed on account of unpaid, postpetition Utility
Services, by no later than 5 business days following the earlier of the date
upon which (i) the Debtors reconcile and pay the Utility Provider’s final
invoice in accordance with applicable nonbankruptcy law following the
Debtors’ termination of Utility Services from such Utility Provider or (ii) the
effective date of any chapter 11 plan confirmed in these chapter 11 cases.
e.
Any Utility Provider desiring additional assurances of payment in the form
of deposits, prepayments, or otherwise must serve a request for additional
assurance (an “Additional Assurance Request”) on the Notice Parties.
f.
Any Additional Assurance Request must:  (i) be in writing; (ii) identify the
location for which the Utility Services are provided; (iii) summarize the
Debtors’ payment history relevant to the affected account(s); (iv) certify the
amount that is equal to one-half the monthly cost of the Utility Services the
Utility Provider supplies to the Debtors, calculated as a historical average
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over the twelve-month period ended March 31, 2024; (v) provide evidence
that the Debtors have a direct obligation to the Utility Provider; and
(vi) explain why the Utility Provider believes the Proposed Adequate
Assurance is not sufficient adequate assurance of future payment.
g.
If a Utility Provider fails to file and serve an Additional Assurance Request,
the Utility Provider shall be (i) deemed to have received “satisfactory”
adequate assurance of payment in compliance with section 366 of the
Bankruptcy Code and (ii) forbidden from altering, refusing or discontinuing
Utility Services to, or discriminating against, the Debtors on account of any
unpaid prepetition charges, or requiring additional assurance of payment
other than the Proposed Adequate Assurance.
h.
Upon the Debtors’ receipt of an Additional Assurance Request, the Debtors
shall have twenty days from the receipt of the Additional Assurance Request
to negotiate with the Utility Provider to resolve such Utility Provider’s
Additional Assurance Request.
i.
Without further order of the Court, the Debtors may, after consultation with
the 1L Ad Hoc Group, resolve any Additional Assurance Request by mutual
agreement with a Utility Provider, and the Debtors may, in connection with
any such agreement, provide a Utility Provider with additional adequate
assurance of payment, including, but not limited to, cash deposits,
prepayments, or other forms of security if the Debtors believe that such
adequate assurance is reasonable.
j.
If the Debtors determine in their business judgment that the Additional
Assurance Request is not reasonable and the Debtors are unable to reach an
alternative resolution with the Utility Provider within twenty days of receipt
of the Additional Assurance Request, the Debtors may request a hearing
(the “Determination Hearing”) before the Court to determine the adequacy
of assurance of payment with respect to that Utility Provider pursuant to
section 366(c)(3) of the Bankruptcy Code.
k.
Pending resolution of such dispute at a Determination Hearing, the relevant
Utility Provider shall be prohibited from altering, refusing, or discontinuing
Utility Services to the Debtors on account of:  (i) unpaid charges for
prepetition services; (ii) a pending Additional Assurance Request; or
(iii) any objections filed in response to the Proposed Adequate Assurance.
10.
The Utility Providers are prohibited from requiring additional adequate assurance
of payment other than pursuant to the Adequate Assurance Procedures.
11.
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
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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.
12.
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.
13.
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.
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14.
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, provided, however, that nothing in the Motion or this Interim
Order constitutes Court approval of the Restructuring Support Agreement.
15.
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.
16.
The Debtors have demonstrated that the requested relief is “necessary to avoid
immediate and irreparable harm,” as contemplated by Bankruptcy Rule 6003.
17.
Nothing in this Interim Order authorizes the Debtors to accelerate any payments
not otherwise due prior to the date of the Final Hearing.
18.
The contents of the Motion satisfy the requirements of Bankruptcy Rule 6003(b).
19.
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.
20.
Notwithstanding Bankruptcy Rule 6004(h), the terms and conditions of this Interim
Order are immediately effective and enforceable upon its entry.
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21.
The Debtors are authorized to take all actions necessary to effectuate the relief
granted in this Interim Order in accordance with the Motion.
22.
This Court retains jurisdiction with respect to all matters arising from or related to
the implementation, interpretation, and enforcement of this Interim Order.
BRENDAN L. SHANNON
UNITED STATES BANKRUPTCY JUDGE
Dated: June 11th, 2024
Wilmington, Delaware
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