ArborOne Deal (9-20-09)

The court incorporates by reference in this paragraph and adopts as the findings and orders of this court the document set forth below.

/S/ SUSS KENDIG .". -' ~ j

Russ Kendig "..~:.;)' United 8t~te. BankrUiJtCy Judge

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF omo

EASTERN DIVISION

In re: ) Chapter 11 )

Northeastern Real Properties, Ltd., et al. ) Case No. 09-62467 )

Debtors. ) Judge Russ Kendig

STIPULATED FINAL ORDER AUTHORIZING USE OF CASH COLLATERAL OF ARBORONE

This matter carne before the Court on the "Emergency Motion of Debtors for Use of Cash

Collateral" filed on June 18,2009 (the "Motion"), of 1.J. Detweiler Enterprises, Inc., Sequatchie Mountain, LLC, Wilder Mountain, LLC, Northeastern Real Properties, Ltd., Southeast Real

Properties, Ltd., and Southwest Real Properties, Ltd. (each a "Debtor" and collectively, the "Debtors"). In the Motion, Debtors seek authority to use certain funds, which may be cash collateral within the meaning of 11 U.S.C. 363(a) ("Cash Collateral"), in order to pay operating expenses, including payroll and payroll-related expenses, subject to the terms and provisions of this Order.

IC0040JJS.1 ) 1

09-62467-rk Doc 140 FILED 09/09/09 ENTERED 09/09/09 10:33:22 Page 1 of 16

Notice of the Motion was given to the Lenders, including ArborOne ACA ("ArborOne"),

the Office of the United States Trustee (the "U.S. Trustee"), and the holders of the thirty (30) largest unsecured claims on a consolidated basis as set forth on the list filed pursuant to Rule

1007(d) of the Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"). The Court, having considered the Motion and based upon the agreement of the Debtors and ArborOne, finds

as follows:

A. A voluntary petition for relief under chapter 11 of title 11 of the United States

Code (the "Bankruptcy Code") was filed by each of the Debtors on June 18, 2009 (the "Petition Date"), and thereafter Debtors have continued in the management and possession of their businesses and properties as debtors-in-possession.

B. This Court has jurisdiction of this matter pursuant to 28 U.S.C. 1334 and 157. Venue of this Chapter 11 case in this district and division is proper pursuant to 28 U.S.C. 1408 and 1409. This is a "core" proceeding, for purposes of 28 U.S.C. 157(b), as to which this Court may enter a final order.

C. Notice of the Hearing on the Motion was adequate and sufficient under the

particular circumstances, for purposes of sections 102(1), 105, 361, 363 of the Bankruptcy Code and Rules 2002, 4001, 9007, 9013 and 9014 of the Bankruptcy Rules and other applicable law

and rules of Court.

D. As of the Petition Date, certain of the Debtors are indebted to ArborOne under

multiple promissory notes (collectively the "Notes") executed pursuant to that certain loan agreement (the "Loan Agreement"), dated July 13, 2006, as amended from time to time, and entered into by J.J. Detweiler Enterprises, Inc., Sequatchie Mountain, LLC, and Wilder

Mountain, LLC, (collectively, the "Borrowers"), as borrowers, and ArborOne, as lender. A detailed description of the indebtedness is attached hereto as Exhibit A. As of the Petition Date,

the principal amount outstanding under the Notes was approximately $6,992,944.15. E. ArborOne asserts that the Borrowers' indebtedness to ArborOne is secured by first

priority security interests in and liens on certain real and personal property (the "Collateral") in

(C004033S.1 I 2


connection with the real estate projects known to the Debtors as Sequatchie Mountain ("Sequatchie"), . Wilder Mountain ("Wilder"), The Ledges C4the Ledges"), and Bobcat Mountain ("Bobcaf'), including, without limitation, the proceeds in connection with certain installment land contracts (the 44Contracts"). In certain instances, there are Contracts where the purchaser has paid the Contract in full, but either has not received a deed to the land, or has not

received a partial release from ArborOne of its claimed mortgage interest in the land (the "Paid Contracts").

F. The Debtors have been unable and lack the ability to obtain unsecured credit.

G. On June 23,2009, an expedited hearing was held on the Motion. Counsel for the

Debtors and ArborOne made statements on the record and asked the Court to enter a Stipulated

Interhn Order Authorizing Limited Use of Cash Collateral, Combined with Notice of Further

Hearing (the 44Interim Order"). The u.s. Trustee did not oppose entry of the Interim Order. Though the Interim Order was never fully negotiated and approved by the parties and entered, a

final hearing was scheduled on the Motion for July 20, 2009.

H. An official committee of unsecured creditors (the 4'Committee") has not yet been appointed in these jointly administered Chapter 11 cases.

I. The Debtors and ArborOne are willing to consent to the use of Cash Collateral on

a final basis only upon the terms and conditions contained in this Order.

J. The Debtors assert that it is in the best interests -of the Debtors' estates and their

creditors for the Debtors to maintain operations using the Cash Collateral ofArborOne, pursuant

to the terms ofthis Order.

K. The terms of this Order are fair, equitable, and reasonable and were negotiated in

good faith and in an open and honest fashion by and between the Debtors and ArborOne.

L. Good, adequate and sufficient cause has been shown to justify the entry of this Order, and such entry is necessary to prevent irreparable harm to the Debtors' estates.

M. The Debtors assert that ArborOne is adequately protected for Debtors' use of Cash

Collateral by virtue of the fact that it is secured with respect to the real estate in which it asserts a

(COO4033S.1 ) 3


security interest. Notwithstanding the foregoing, based upon the tenns in this Order, the Debtors

and ArborOne have agreed to pennit the use of Cash Collateral until the Termination Date (as defined below), or until an Event of Default (as defmed below) and the expiration of the Cure Period (as defmed below).

N. Attached to this Order as Exhibit B is a budget which, in part, covers the period

through September 30, 2009 (the "Initial Budgef'). The Court finds and determines that the expenses that the Debtors propose to pay under the Initial Budget are necessary to avoid

immediate and irreparable harm to the Debtors' estates. It therefore is appropriate to authorize

Debtors to expend Cash Collateral until the Termination Date (and subj ect to the other terms and provisions of this Order), solely to pay the expenses enumerated in the Initial Budget, as amended from time to time pursuant to Paragraph II of this Order (the Initial Budget as so amended is referred to as the "Budgef').

o. The Court may authorize the terms of this Order pursuant to sections 363 and

1108 of the Bankruptcy Code and Rule 4001 of the Bankruptcy Rules.

Accordingly, based on the foregoing, it is hereby

ORDERED that:

(I) The Motion, shall be and hereby is granted solely to the extent provided in this Order.

(II) Subject to the terms of this Order, Debtors shall be and hereby are authorized to use that Cash Collateral generated by payments for certain land contracts for the purchase of real property at Sequatchie, The Ledges, Bobcat and Wilder (collectively, the "Accounts") until the Termination Date, or until an Event of Default and the expiration of any Cure Period, solely to pay those expenses that are enumerated in the Budget (or such additional amounts as ArborOne may agree), but only to the extent that collected funds are available in the Accounts for payment of the same. The Initial Budget extends through September 30, 2009. Within three (3) business days of the entry of this Order, and by no later than the last business day of each month thereafter, the Debtors shall provide ArborOne with a proposed Budget for the calendar month after the expiration of the current Budget. Following the submission of a proposed Budget, ArborOne shall have ten (10) business days to object to the proposed Budget for any calendar month, and the parties shall seek a hearing on an expedited basis for resolution by the

{COO40335.1 } 4


Bankruptcy Court of the proposed Budget prior to the commencement of the next Budget period.

(III) Cash Collateral generated as monthly payments on the Accounts must be used strictly in accordance with the terms of the Budget. The Debtors shall not, in any calendar month, without the prior written consent of the ArborOne, use Cash Collateral with respect to anyone line item in the Budget in excess of the greater of one hundred and five percent (l05(%) or $10,000 more than the amount originally identified in the Budget for that line item. Any extension or other modification of the Budget shall be subject to the prior written approval of ArborOne in its reasonable discretion.

(IV) Without acknowledging or admitting that ArborOne's interests. in the Collateral are or may be adequately protected to the extent required by the Bankruptcy Code, as partial adequate protection for any post-petition diminution in the value of ArborOne's interests in the Collateral, including, without limitation, the diminution in value resulting from the use of Cash Collateral, the use, sale or lease of any other Collateral, or the imposition of the automatic stay, the Debtors will pay ArborOne fifty percent (50%) of the Cash Collateral, subject to the following conditions:

a. ArborOne and the Debtors will work together to produce a master list of persons (each an Account Debtor and, collectively, the "Account Debtors") who owe on the Accounts and the amount owing to the Debtors on the same by each Account Debtor. ArborOne and Debtors will also work diligently and immediately to reconcile their respective records to determine the current status of each of the Account.

b. ArborOne will establish a dedicated account (the "Dedicated Account") in the name of the Debtors under the control ofArborOne. All Account Debtors shall forward payments to ArborOne, such payments to be deposited into the Dedicated Account. Debtors shall forward to ArborOne each and every check issued by Account Debtors. ArborOne shall have the right to endorse all checks payable to any of the Debtors and deposit such checks into the Dedicated Account.

c. On or about the thirtieth (30th) of each month, the Debtors will prepare a list of all sums received from Account Debtors as monthly payments during the month. The Debtors shall review the list of deposits into the Dedicated Account to determine if such amounts are consistent with its own records. On or before the fifth (5th) of each month, ArborOne shall issue to the Debtors a check or a wire transfer in the amount of fifty percent (50%) of the receipts for monthly payments from the Account Debtors deposited during the previous month into the Dedicated Account. ArborOne shall be permitted to apply fifty percent (50%) of the payments from the Accounts to any indebtedness owed by the.Debtors to ArborOne in accordance with its

(C0040335.ll 5


ordinary business practices. If any Account Debtor check is returned, NSF, ArborOne will make appropriate deductions from the next month's check. This Order applies to all payments received by Arbor One or the Debtor since the Petition Date.

d. The Debtors and ArborOne shall mail to each Account Debtor a letter in the fonn attached hereto as Exhibit C indicating that each Account Debtor is required to make payments directly to the Dedicated Account.

In the event that any Account Debtor pays off the remaining balance owing on an existing Account during the term of this Order, ArborOne shall retain seventy-five percent (75%) of such remaining balance and remit twenty-five percent (250/0) to the Debtors.

(V) The Debtors shall give ArborOne, its officers, employees, counsel, auditors, and consultants, reasonable access to the offices and facilities of the Debtors, and to the Debtors' books and records, during regular business hours, for the purposes of general inspection and review, or to monitor the Debtors' operations and assets. ArborOne shall have reasonable access to Sequatchie for the sole purpose of determining the environmental conditions of the same.

(VI) With respect to property located at Sequatchie, the Debtors and ArborOne agree that Debtors shall immediately commence a process for selling substantially all of the assets located thereon, including Accounts, together with the Accounts for Wilder, Bobcat and The Ledges and the real property which is connected to such Accounts (the real property connected to the Accounts for Sequatchie, Wilder, Bobcat and The Ledges, collectively the "Real Property"). The Accounts and the Real Property shall be auctioned together. The Debtors and ArborOne further agree that the Accounts and Real Property shall be sold separately from the remaining unsold Sequatchie real property (the "Remaining Real Property") and that the Accounts and the Real Property shall be sold prior to the Remaining Real Property. The Debtors shall immediately commence a sale process in which Debtors must pursue a sale of all Accounts (for Sequatchie, Wilder, The Ledges and Bobcat), the Real Property and/or the Remaining Real Property pursuant to Section 363 of the Bankruptcy Code.

(VII) The Debtors, in consultation with ArborOne, may select a broker (the "Broker") for the purposes of this process and will seek the retention of the Broker on terms reasonably acceptable to the Debtors and ArborOne. The Debtors and ArborOne agree that Debtors shall sell the Accounts, the Real Property and the Remaining Real Property at an auction to occur no later than December I, 2009; provided however, the parties may extend this auction date by mutual agreement.

(VIII) ArborOne, in its sole discretion, has the option to submit a bid for all or part of its debt for (i) the Accounts with the Real Property, and/or (ii) Remaining Real Property, at the auction. Notwithstanding the foregoing, ArborOne shall not

ICOO40JJS.l } 6


require the Debtors to abandon the Remaining Real Property under Section 554 of the Bankruptcy Code. Should ArborOne, or any affiliate of ArborOne, be the successful bidder at a sale, then any subsequent consideration or payments received by ArborOne from collection of the Contracts or sale of the Remaining Property or other Collateral minus reasonable costs of collection and/or sale shall be applied to the balance of the obligations of the Debtors to ArborOne to the extent such aggregate amounts exceed the amount bid at the sale.

(IX) During the term of this Order, the Debtors shall have the right to sell lot parcels in the ordinary course of business, and upon receipt of an agreed upon release price, ArborOne shall release its mortgage from the lot parcel to be sold. The Debtors and ArborOne agree to a release price for Wilder and The Ledges of (i) $750 an acre for lot parcels sold in connection with the Ledges, (ii) $1,500 an acre for lot parcels sold in connection with Wilder, and (iii) $1,125 an acre for lot parcels sold in connection with Bobcat. ArborOne agrees that Debtors shall have no less than one (1) year from the date of this Order to sell any such parcels prior to the exercise by ArborOne of any remedies related to its claim of a lien or mortgage interest in and/or to such properties. The parties agree that, for cause, after December 1, 2009, they may negotiate in good faith any changes in the release prices set forth in this paragraph.

(X) Debtors' right to use Cash Collateral under this Order shall immediately cease and terminate, without further notice, hearing, or order of the Court, upon an Event of Default (as defined below), after expiration of the Cure Period (if applicable), as defined below. Upon the occurrence of any of the Events of Default, ArborOne may provide Debtors and the Committee (if one is appointed) with written notice thereof (a "Default Notice"). Debtors shall have five (5) business days from the date of service of a Default Notice by ArborOne (the "Cure Period") within which either to cure such Event of Default or file a motion with the Court requesting an emergency hearing to determine whether such Event of Default has occurred and has not been cured.

(XI) Any of the following events shall constitute an event of default (an "Event of Default") under this Order:

(A) Debtors' use of the Cash Collateral to pay any obligation other than those specified in a duly entered Order of this Court, or in the Budget, or Debtors' use of the Cash Collateral to pay any obligation in excess of the applicable amount specified in this Order or in the Budget;

(B) Debtors' failure to remit payments from Accounts as required herein after the date of this Order;

(C) The entry of an order dismissing this bankruptcy case, converting this jointly administered bankruptcy case to a case under chapter 7 of the Bankruptcy Code, appointing a trustee (whether under chapter 11 or chapter 7 of

7


the Bankruptcy Code), or terminating the authority of Debtors' to conduct or operate their businesses;

(D) Debtors materially violate any other court order, or any rules or guidelines promulgated by the U.S. Trustee, that are applicable to Debtors and that materially adversely affect ArborOne; or

(E) Debtors' failure to reasonably cooperate with ArborOne to reconcile all Accounts.

(XII) Upon the occurrence of an Event of Default, the Bankruptcy Court shall enter a stipulated order (the "Stipulated Order") in the form attached hereto as Exhibit D granting relief from stay to ArborOne to foreclose on the Accounts and the Remaining Real Property. ArborOne shall have the right to sell Sequatchie and obtain payments on the Accounts until paid in full.

(XIII) ArborOne and the Debtors agree to work in good faith regarding the issues involving partial releases ofArborOne 's mortgage interest in connection with Paid Contracts.

(XIV) This Order is without prejudice to, and Debtors and ArborOne hereby reserve, all of their respective rights, legal positions and remedies under bankruptcy and applicable non-bankruptcy law.

(XV) The provisions of this Order and any actions taken pursuant hereto shall survive entry of any order which may be entered converting this jointly administered bankruptcy case to one under chapter 7 of the Bankruptcy Code , or any order which may be entered confirming or consummating any chapter 11 plan, and the tenns and provisions of this Order, as well as the priorities in payment, liens and security interests granted pursuant to this Order, shall continue in this or any superseding case under the Bankruptcy Code. The provisions hereof shall be binding upon Debtors, their estates, and any trustee or fiduciary who hereafter may succeed to the estate in this or any superseding case under the Bankruptcy Code.

(XVI) Debtors shall continue to bill and collect real estate tax payments from Account Debtors. Debtors shall timely remit to the appropriate taxing authorities when due all real estate taxes owing on the Real Property paid to Debtors by Account Debtors and shall provide evidence of such payments of real estate taxes to ArborOne.

(XVII) Nothing in this Order shall limit the Debtors' and ArborOne's rights at any time to seek modification of this Order.

###

(C0040llS.1) 8


754411.6

PREPARED AND APPROVED BY:

lsi Marc B. Merklin Marc B. Merklin (0018195) Bridget A. Franklin (0083987) Brouse McDowell, LPA 388 S. Main Street, Suite 500 Akron, Ohio 44311 Telephone: (330) 535-5711 Facsimile: (330) 253-8601

Counsel for the Debtors and Debtors-in-Possession

AND

lsi M. Colette Gibbons M. Colette Gibbons (0003095) Schottenstein, Zox & Dunn US Bank Centre at Playhouse Square 1350 Euclid Avenue Suite 1400 Cleveland, Ohio 44115 Phone: (216) 394-5063 Facsimile: 216 621 6502

Counselfor ArborOne ACA

(C0040335.1 ) 9


Exhibit A ArborOne Loan Details

Loan No. Principal Balance

465510610 $2,437,793.10

251868-04 $1,443,969.38

465510620 $33,690.15

251868-01' $3,077,491.52:

56,992,944.15

Original Loan Amount

$5,718,911.00

$1,500,000.00

$633,150.00

$5,000,000.00

512,852,061.00

Original Debtors Loan Date 7/13/2006 JJDE,

Wilder, Sequatchie

7/13/2006 JJDE, Wilder, Sequatchie

11/16/2006JJDE, Wilder, Sequatchie

7/13/2006JJDE, Wilder, Sequatchie

.Real Property Collateral Co-Signor:

Wilder Mountain properties, Sequatchie Joseph Mountain properties, the Ledges Detweiler .Property, and Bobcat Point Wilder Mountain properties, Sequatchie' Joseph Mountain properties, the Ledges Detweiler Property, and Bobcat Point Wilder Mountain properties, Sequatchie:Joseph Mountain properties, the Ledges 'Detweiler Property, and Bobcat Point Wilder Mountain properties, Sequatchie Joseph Mountain properties, the Ledges 'Detweiler Property, and Bobcat Point


J.J. DetwellerEnterprlses, Inc. and Affiliates One Month Global Cash Flow

September 2009

I J.J. Detweller Enterprises, Inc.

Core Lodge Kennel Farm SequatchieI Mountain

Wilder Mountain

NE Real Properties

SE Real Properties

SW Real Properties Total

Cash Flow From Operations before Chapter 11 45.586 (99) 5.639 (16.941) 20.628 22.149 3.302 32.284 10.936 123,483 Fees, Professional Fees and Adequate Protection Paymenls

Chapter 11 Fees U.S. Truslee o Creditor's Committee o

Professional Fees Brouse McDowell 56,211 The PhilUps Organization 11,098

Adequate Protection Payments

Net Cash Flow 1,174

See accountant's report

"Ill

55.000


EXHIBIT C

M. COLETIE GIBBONS PHONE: 2163945063

FAX: 216 3945088 EMAIL: CGIBBONS{glSZD.COM

August 19, 2009

Re: In re J.J. Detweiler Enterprises, Inc. In re Sequatchie Mountain. LLC In re Wilder Mountain. LLC) United States Bankruptcy Court Northern District of Ohio Case No. 09-62467 (for administration)

To all persons owing sums on certain land sale installment contracts to the Debtors identified above:

As you may mow, on June 18, 2009, certain entities owned and/or controlled by Joseph Detweiler, including hut not limited to Sequatchie Mountain, LLC, Wilder ,Mountain, LLC, and J,J. Detweiler Enterprises, Inc. (collectively, the "Debtors") filed petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio.

Pursuant to an agreement reached between ArborOne ACA ("ArborOne") and the Debtors, both ArhorOne and the Debtors hereby jointly direct you to make payable to ArborOne ACA all current and past due payments owing pursuant to the tenns of the land sale installment contract entered into with the Debtors and mail the same to ArborOne clo Robert Spivey, 800 Woody Jones Blvd., Florence, S.C. 29501. Upon receipt of payment in full of the amount owing on your land sale installment contracts to the Debtors, you will receive a deed to your property and ArborOne's lien on your property will be released.

This direction is pursuant to the order of Bankruptcy Judge Russ Kendig entered on August _,2009.

If you have any further questions please telephone Robert Spivey.

Robert Spivey ArborOne ACA P.O. Box 751 Lake View, SC 29563 (843) 432-2332

Very truly yours,

M. Colette Gibbons, Attorney for ArboTOne

Marc B. Merklin, Attorney for the Debtors

IC00402992I


Exh:ibitD

llmTEDSTATESBANKRUPTCYCOURT NORTHERN DISTRICT OF OIDO

EASTERN DMSION

In re:

Northeastem Real Properties, Ltd.

Debtor.

))))))))

Chapter 11

Case No. 09-62467

Judge Russ Kendig

AGREED ORDER GRANTING ARBORONE, ACA RELIEF FROM THE AUTOMATIC STAY

On September _, 2009, this Court entered the Stipulated Final Order Authorizing the

Use of Cash Collateral of ArborOne, ACA (the "Cash Collateral Order"). Pursuant to the terms

of the Cash Collateral Order and upon the representation of counsel for the above captioned

debtors and debtors in possession (each a "Debtor" and collectively the "Debtors") and counsel

for ArborOne, ACA ("ArborOne") that they have agreed to the relief set forth below, and upon

due deliberation, the Court finds that (a) it has jurisdiction over this matter pursuant to 28 U.S.C.

157 and 1334; and (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2).

IT IS HEREBY ORDERED THAT:

1. ArborOne is GRANTED relief from the automatic stay to the extent provided

herein.

2. Capitalized terms not otherwise defined herein have the meanings given to them

in the Cash Collateral Order.


3. Pursuant to Section VIII of the Cash Collateral Order, ArborOne is granted

immediate relief from stay to foreclose on the Accounts and the Remaining Real Property to the

extent provided in the Cash Collateral Order. ArborOne shall have the right to sell Sequatchie

and/or the Accounts or obtain payments on the Accounts until paid in full. Notwithstanding the

foregoing, ArborOne shall not require the Debtors to abandon the Remaining Real Property

under Section 554 of the Bankruptcy Code.

4. As provided in Section VIII of the Cash Collateral Order, should ArborOne, or

any affiliate of ArborOne, be the successful bidder at a sale, then any subsequent consideration

or payments received by ArborOne from collection of the Contracts or sale of the Remaining

Property or other Collateral minus reasonable costs of collection and/or sale shall be applied to

the balance of the obligations of the Debtors to ArborOne to the extent such aggregate amounts

exceed the amount bid at the sale.

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2


PREPARED AND APPROVED BY:

lsi Marc B. Merklin (0018195) Bridget A. Franklin (0083987) Brouse McDowell, LPA 388 S. Main Street, Suite 500 Akron, Ohio 44311 Telephone: (330) 535-5711 Facsimile: (330) 253-8601

Counsel for the Debtors and Debtors-in-Possession

lsi M. Colette Gibbons ( ) Schottenstein, Zox & Dunn US Bank Centre at Playhouse Square 1350 Euclid Avenue Suite 1400 Cleveland, Ohio 44115 Phone: (216) 394-5063 Facsimile: (216) 621-6502

3


Documents

ArborOne Deal (9-20-09)