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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF GEORGIA
ROME DIVISION
In re:
ASTROTURF, LLC,
Debtor.

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Chapter 11
Case No. 16-41504

DECLARATION OF SEAN M. HARDING IN SUPPORT OF

FIRST DAY MOTIONS AND APPLICATIONS
Sean M. Harding, being duly sworn, deposes and says:
1.

I am the Chief Restructuring Officer (CRO) of AstroTurf, LLC (the Debtor).

In this capacity, I am familiar with the day-to-day operations, business, and financial affairs of
the Debtor.
2.

I am authorized to submit this declaration in support of the Debtors First Day

Motions (as hereinafter defined). Except as otherwise indicated, all facts set forth in this
declaration are based upon my personal knowledge, my review of relevant documents, or my
opinion based upon my experience, knowledge, and information concerning the Debtors
operations and financial affairs. If I were called upon to testify, I would testify competently to
the facts set forth herein.
BACKGROUND
3.

On the date hereof (the Petition Date), the Debtor filed a voluntary petition for

relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The
DMSLIBRARY01\29101984.v1

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Debtor is authorized to operate its business as a debtor in possession pursuant to Sections 1107
and 1108 of the Bankruptcy Code.
4.

The Debtor is currently engaged in the marketing, sale, and installation of high-

quality indoor and outdoor synthetic grass athletic surfaces, including field, track, indoor and
tennis surfaces (collectively, the Business). The Debtor offers advanced, state-of-the-art, multisport and specialized synthetic turf systems with proprietary engineered technologies.
A.

Company History
5.

The Debtor, formerly known as General Sports Turf, LLC, was formed under

the laws of the state of Michigan on January 23, 2003. The Debtor sold and installed a range of
goods and equipment for stadiums, including stands, lighting and sound systems.
6.

In April 2004, Textile Management Associates, Inc. (TMA), the Debtors

current majority equity holder, purchased the intellectual property associated with the
AstroTurf brand pursuant to a sale under Section 363 of the Bankruptcy Code in the
bankruptcy case of Southwest Recreational Industries, Inc. (Bankr. N.D. Ga. Case No. 0440656). Following the sale, TMA and the Debtor executed that certain License Agreement, dated
as of November 21, 2006, whereby TMA licensed certain of the intellectual property to the
Debtor. In 2009, AstroTurf, LLC, a Georgia limited liability company, and the Debtor merged
the Debtor was the surviving entity after the merger. Shortly thereafter, the Debtor changed its
name to AstroTurf, LLC. At the time of the merger the Debtor ceased its sale of stadium
equipment and transitioned into the synthetic turf business. In connection with the merger, TMA
and the Debtor entered into a subsequent license agreement pursuant to which TMA licensed
certain intellectual property to the Debtor related to the AstroTurf brand. Pursuant to that
certain License Agreement, dated as of March 1, 2012, between the Debtor and TMA (the
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License Agreement), the Debtor has the exclusive right (subject to certain limitations in the
License Agreement) to use such intellectual property in the United States.
B.

Description of the Debtors Current Business Operations

7.

The Debtor markets, sells, and installs high-quality indoor and outdoor synthetic

grass athletic surfaces, including field, track, indoor and tennis surfaces throughout North
America, Europe, Russia, and Africa. The AstroTurf brand is one of the iconic brands in
American sports. Synthetic turf was invented in 1964since that time, the technology has
changed dramatically. The Debtor is a leading innovator in the industry. The Debtors products
benefit from proprietary innovations in manufacturing, extrusion, installation and recycling that
outpace its competitors.
8.

The Debtor, in combination with the Other Sellers (as defined below), contributes

to the subject of a proposed sale transaction (discussed below) that is collectively referred to
herein and in connection with the sale transaction as the Turf Business. The Debtor and the
Other Sellers participate in the Turf Business pursuant to separately negotiated agreements that
define each parties role in the Turf Business. The Debtors contribution to the Turf Business is
primarily to market, sell, and install synthetic turf. The Other Sellers contribute to the Turf
Business through research and development of new turf products and the provision of other
services and materials.
9.

To market and sell its product, the Debtor uses both salespeople and relationships

with distributors in North America and Europe who are typically granted the exclusive right to
distribute the Debtors products in a particular geographic region. The Debtors customers
include university athletic departments, sports facilities, and other purchasers of synthetic turf.

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The Debtor also markets its products through sponsorship agreements with

athletic conferences and sports organizations. The sponsorship agreements ensure that the Debtor
is identified as a sponsor of a certain athletic conference or sport through various mediums,
including (but not limited to) website recognition, signage, logos, announcements, and speaking
opportunities for the Debtors employees. The Debtor pays the athletic conference or sports
organization an annual fee in exchange for such exposure. The Debtor is also party to several
licensing agreements that allow the Debtor to brand its products as the official turf of a particular
sport or organization.
11.

The majority of the Debtors customer contracts are secured through a

competitive bidding process. The Debtor does not manufacture the materials for its synthetic turf
products. Accordingly, when the Debtor is awarded a project, the Debtor places orders for the
necessary materials for the installation from other companies (including certain affiliates of the
Debtor). Those materials are then transported to the installation site and installed either by
independent subcontractors or employees of the Debtor. Direct customers of the Debtor (as
opposed to customers contracting through a distributor) are typically billed on a monthly basis.
12.

For a large synthetic turf field, the entire processfrom submitting the bid to

finalizing the installation of the finished producttakes between six and eight months.
C.

Employees
13.

The Debtor employs approximately 54 people (the Employees). Of the Debtors

54 Employees, approximately 44 are employed on a full-time salaried basis and approximately

10 are employed on a full-time hourly basis. The Debtor also uses the services of nine
independent contractors that provide sales and purchasing services (the Independent
Contractors).
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In addition to the 54 employees employed by the Debtor, the Debtor also

contracts with TMA for various services, including property management, information
technology, human resources, financial management, and sales functions (collectively, the
Services) pursuant to (i) that certain Human Resources Provider Agreement, dated as of
January 1, 2010, by and among the Debtor and TMA; and (ii) that certain Financial Services
Agreement, dated as of January 1, 2010, by and among the Debtor and TMA (collectively, the
Agreements). In accordance with the Agreements and the parties course of dealing, the
Debtor reimburses TMA for the Services, which are carried out by TMA employees.
D.

Facilities
Executive Offices
15.

The Debtors headquarters and executive offices are located in a leased facility at

2680 Abutment Road, Dalton, Georgia 30720. The Debtor also maintains an office at 400 Water
Street, Suite 250, Rochester, Michigan 48307. The Debtors officers and employees located in
Georgia direct and control the Debtors operations. The Michigan office houses one employee
and is used primarily for sales and marketing.
E.

Pre-Petition Capital Structure of the Debtor

Corporate Structure
16.

The Debtor is a Michigan limited liability company. TMA owns 98% of the

outstanding equity interests in the Debtor, William Bryan Peeples owns 1% of the outstanding
equity interests in the Debtor, and George Thomas Peeples owns 1% of the outstanding equity
interests in the Debtor. The Debtor has no subsidiaries.
Prepetition Secured Debt

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17.

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The Debtor and TMA are parties to that certain Amended and Restated Loan

Agreement dated as of January 1, 2014 (as amended and otherwise modified from time to time,
the Loan Agreement) pursuant to which TMA extended loans to the Debtor. To secure the
obligations under the Loan Agreement, the Debtor and TMA entered into that certain Security
Agreement dated as of January 1, 2014, whereby the Debtor granted TMA a security interest in
various assets of the Debtor. On January 1, 2015, the Debtor executed a promissory note in favor
TMA for $30,000,000 (which was subsequently amended and increased to $45,000,000). As of
the Petition Date, the total outstanding principal balance under the Loan Agreement is
approximately $37,760,500.
F.

Patent Litigation
18.

In June 2010, FieldTurf USA, Inc. and FieldTurf Tarkett Inc. (together,

FieldTurf) commenced an action against the Debtor in the United States District Court for the
Eastern District of Michigan (the District Court), styled FieldTurf USA, Inc., et al. v.
AstroTurf, LLC, Civ. Action No. 2:10-CV-12492-SJM-MJH (the Patent Litigation).
FieldTurfs complaint asserts that the Debtor infringed patent number 6,723,412 (the 412
Patent) held by FieldTurf for synthetic grass meeting certain specifications and requested (i)
royalties and lost profits as compensation for previously installed turf surfaces and (ii) temporary
and permanent injunctive relief. Despite the Debtor vigorously defending itself in the Patent
Litigation, on October 9, 2015, the jury rendered a verdict finding that the Debtor willfully
infringed the 412 Patent and that FieldTurf is entitled to recover damages in the amount of
$30,000,000. On October 30, 2015, FieldTurf filed motions requesting enhanced damages and
pre-judgment interest, which the Debtor opposed.

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A judgment has not yet been entered in the Patent Litigation. However, the

Debtor intends to file a motion with this Court seeking limited and specific relief from the
automatic stay to permit certain items to proceed with respect to the Patent Litigation (including,
without limitation, to the extent that the District Court enters judgment adversely to the Debtor,
filing a motion for judgment as a matter of law or a new trial and, if necessary, a notice of
appeal). I have been advised that in order to stay execution of a judgment pending appeal, the
Debtor would need to post a bond. However, based on my knowledge of the Debtors financial
position and resources, the Debtor does not have the financial wherewithal to obtain a bond to
secure a judgment of $30,000,000 or more.
20.

The Debtor believes it has several meritorious grounds for judgment as a matter

of law, new trial, or appeal that either will eliminate any claim for damages or will substantially
reduce such damages. The Debtors contentions include, among other things:
(a)

The District Court failed to complete the claim construction process, but
instead left key claim construction issues to the jury, contrary to governing
precedent.

(b)

The 412 Patent is invalid because it is indefinite.

(c)

FieldTurfs infringement and damages theories were insufficiently proved

because, among other things, FieldTurf relied on excluded evidence and
presented no reliable measurements of the infill depths of the allegedly
infringing fields.

(d)

FieldTurf USA, Inc. (the FieldTurf entity that sells turf installations) did
not have an exclusive license to the 412 Patent and thus lost profits
cannot be awarded.

(e)

No plaintiff in the case had standing to commence the Patent Litigation

when it was filed.

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Sale
21.

In October 2013, Sportfield Deutschland Holding GmbH (Sportfield) (or one

of its affiliates) contacted TMA and initiated discussions regarding the possibility of combining
the Turf Business with an artificial turf business owned by Sportfield. Thereafter, the parties
engaged in periodic discussions during 2014 regarding the possibility of a transaction. In April
2015, Equistone Partners Europe (a private equity firm based in Europe) acquired Sportfield and
discussions regarding a potential sale of the Turf Business to Sportfield intensified and
progressed.
22.

These discussions culminated in an offer by Sportfield to acquire (the Turf

Acquisition) the assets of the Turf Business (i.e., substantially all of the assets of the Debtor and
certain assets of other sellers directly related to the Turf Business).1 In the summer of 2015, the
parties reached a preliminary agreement on total purchase price and other material terms.
23.

On December 17, 2015, Sportfield, the Debtor, and the Other Sellers entered into

a non-binding letter of intent (the Letter of Intent) setting forth the proposed terms of the Turf
Acquisition. The Letter of Intent contemplated a purchase price of $100 million for the Turf
Business, but did not allocate the purchase price among the Debtor or the Other Sellers.
Sportfield then conducted extensive due diligence regarding the Turf Business and, in connection
with its due diligence investigation, Sportfield retained KPMG to perform a quality of earnings
review and to otherwise assist Sportfield in connection with the Turf Acquisition. After
Sportfield completed a substantial amount of due diligence and further negotiation among the

The other sellers are TMA; Synthetic Turf Resources, LLC; Crystal Products Co., Inc.; and
UTGH Equipment, LLC (collectively, the Other Sellers).
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parties, the parties agreed to reduce the cash purchase price for the Turf Acquisition from $100
million to $92.5 million.
24.

After evaluating its alternatives, and in light of the uncertainty and instability

caused by the Patent Litigation, the Debtor has determined that a sale of substantially all of its
assets (the Purchased Assets) would result in the best recovery for its stakeholders. A sale of
the Business as part of the Turf Acquisition will permit the Debtor to monetize the Purchased
Assets and to make substantial distributions to creditors, whereas continued operation of the
Debtors business under a cloud of litigation would likely result in a decrease in value that would
be detrimental to the Debtors stakeholders.
25.

Accordingly, on June 27, 2016, the Debtor, the Purchaser and APT Acquisition

Corp. entered into that certain Asset Purchase Agreement (the Agreement), a copy of which
(excluding Schedules) is attached as Exhibit C to the Debtors Motion for Entry of an Order
Pursuant to 11 U.S.C. 105, 363, and 365: (i) Authorizing the Sale of the Debtors Property
Free and Clear of Liens, Claims and Encumbrances; (ii) Authorizing the Assumption and
Assignment of Contracts and Leases; and (iii) Granting Related Relief, filed contemporaneously
herewith. The Agreement contemplates a private sale of the Purchased Assets to the Purchaser
pursuant to Section 363 of the Bankruptcy Code.
26.

The terms of the Agreement were independently and directly negotiated on the

Debtors behalf through arms-length negotiations by the Debtors CRO and King & Spalding
LLP, counsel for the Debtor.
27.

Contemporaneously with the execution of the Agreement, affiliates of Sportfield

executed separate asset purchase agreements with each of the Other Sellers (collectively, the
Other Purchase Agreements). The Other Purchase Agreements provide for the sale of certain
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assets of the Other Sellers related to the Turf Business. The consummation of the transactions set
forth in the Other Purchase Agreements is a condition to the consummation of the sale of the
Purchased Assets. The Other Sellers are represented by Miller & Martin PLLC, who negotiated
(along with certain officers of the Other Sellers) the Other Purchase Agreements with Sportfield
on behalf of the Other Sellers. Sportfield and its affiliates were represented in the negotiations
by the law firm of Thompson Hine LLP.
THE FIRST DAY MOTIONS2
28.

Contemporaneously with the filing of its bankruptcy petition and certain other

motions, the Debtor filed the motions and applications listed on Exhibit A (collectively, the
First Day Motions). I submit this declaration in support of the First Day Motions. I have
reviewed each of the First Day Motions (including the exhibits and schedules attached thereto)
and, to the best of my knowledge, believe the facts set forth therein are true and correct. Such
representation is based upon information and belief, through my review of various materials and
other information, and my experience and knowledge of the Debtors operations and financial
condition. If called upon to testify, I could and would, based on the foregoing, testify
competently to the facts set forth in each of the First Day Motions.
29.

As a result of my first-hand experience, and through my review of various

materials and other information, discussions with the Debtors other executives, and discussions
with the Debtors professionals, I have formed opinions as to (a) the necessity of obtaining the
relief sought in the First Day Motions; (b) the importance of the relief sought in the First Day

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to
them in the relevant motion.
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Motions for the Debtor to continue to operate effectively; and (c) the negative impact upon the
Debtor of not obtaining the relief sought in the First Day Motions.
30.

As described more fully below, the relief sought in the First Day Motions will

minimize the adverse effects of the chapter 11 case on the Debtor and ensure that the Debtors
reorganization effort proceeds as efficiently as possible and results in maximum recovery for
stakeholders. I believe the relief sought in each of the First Day Motions is necessary to enable
the Debtor to operate as debtor in possession.
I.

Procedural Motions

A. Debtors Emergency Motion for an Order Establishing Notice and Administrative

Procedures
31.

The Debtor requests the entry of an order establishing appropriate notice

procedures. Currently, nearly two thousand creditors and parties-in-interest may be technically
entitled to receive notice in this case. To require the Debtor to provide notice of all pleadings
and other papers filed in this case to these parties in interest would be extremely burdensome and
costly to the Debtors estate as a result of the photocopying, postage, and other expenses
associated with such large mailings.
B. Debtors Emergency Motion for an Order to Extend Time to File Schedules and
Statements of Financial Affairs
32.

The Debtor requests the entry of an order, pursuant to Bankruptcy Code Section

521 and Rule 1007(c) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules),
extending the time to file its schedules and statement of financial affairs (collectively, the
Schedules) until July 22, 2016.
33.

To prepare the Schedules, the Debtor must gather information from books,

records, and documents relating to a multitude of transactions. Consequently, collection of the

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necessary information requires the expenditure of substantial time and effort on the part of the
limited and already over-burdened Employees. The Debtor submits that the efforts of the
Employees during the initial stages of this case are critical and need to be focused on attending to
the Debtors business and maximizing the value of the Debtors estate. The Employees will
begin working diligently to assemble and collate the necessary information. The Debtor
anticipates that it will need a minimum of 10 additional days than that otherwise prescribed by
the Bankruptcy Rules in order to prepare and file its Schedules in the appropriate format.
II.

Operational Motions

A. Debtors Emergency Motion to Authorize Payment of Pre-Petition Wages, Payroll

Taxes, Certain Employee Benefits and Related Expenses, and Other Compensation
to Employees (the Employee Obligations Motion)
34.

The Debtor seeks authority to pay certain wages, compensation, and benefits

more fully described below (the Employee Obligations) that become payable during the
pendency of this chapter 11 case and to continue at this time its practices, programs, and policies
with respect to its Employees and Independent Contractors, as such practices, programs, and
policies were in effect as of the Petition Date.
35.

Even though the Debtor has incurred certain Employee Obligations prior to the

Petition Date, certain of the Employee Obligations will become due and payable in the ordinary
course of the Debtors business on and after the Petition Date. The Employee Obligations
include, without limitation: (i) wages, salary, and other compensation; (ii) payroll taxes; (iii)
vacation programs; (iv) qualified 401(k) plan obligations; and (v) health and welfare benefits.
The Employee Obligations are more specifically described as follows:3

In addition to the employee benefits described herein, the Debtor participates in a partially
self-insured workers compensation plan maintained by UTT (as hereinafter defined), which is
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Wages, salaries, and other compensation. These obligations consist of wages,

salaries, and commissions owed to the Employees (the Payroll Obligations).
The Debtor pays its payroll monthly for salaried Employees and weekly for
hourly Employees. The average monthly gross amount of the Payroll Obligations
is approximately $350,000. This gross amount includes certain deductions
described separately below, such as payroll taxes owed by the Employees and
401(k) contributions. All of the Payroll Obligations are deposited directly into the
Employees bank accounts. None are paid by check. As of the Petition Date, the
Debtor owes approximately $11,000 in Payroll Obligations.

Independent Contractors. These obligations consist of amounts owed as

compensation to the Independent Contractors. The average monthly gross amount
of these obligations is approximately $67,000. As of the Petition Date, nothing is
owed to the Independent Contractors.

Payroll taxes. These obligations consist of federal, state, and local income taxes,
social security, and Medicare taxes. The payroll taxes include the amounts owed
by Employees that the Debtor withholds from the gross amount of the Employees
wages or salary as well as the amounts separately owed by the Debtor. The
Debtors average monthly payroll tax liability for Employees is approximately
$104,447.78. This includes approximately $28,562.44 for the employer obligation
and $75,885.35 for the Employee component. The Employee component is
included in the gross amount of the Payroll Obligations discussed above. As of
the Petition Date, the Debtor owes approximately $3,500 on account of
outstanding pre-petition payroll taxes.

Unemployment taxes. The Debtor also pays certain state and federal
unemployment taxes. The Debtors average monthly unemployment tax liability
is $4,980.49. As of the Petition Date, there are no outstanding pre-petition
unemployment taxes.

Vacation and holiday programs. These obligations consist of time off for vacation
and company holidays. The Debtor recognizes five holidays per year. In addition,
Employees receive paid vacation as follows:
o Salaried Employees receive paid vacation based upon years of service as
follows: (i) the Employee receives one week vacation per year as of
January 1 following the Employees first year of employment; and (ii)
the Employee receives two weeks vacation per year as of January 1
following the Employees third year of employment. Unused vacation

discussed in the Debtors Emergency Motion for Authority to Continue Pre-Existing Insurance
Programs and to Pay Pre-Petition Premiums and Related Obligations filed contemporaneously
herewith.
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days do not roll over to the following year and are not paid out upon
termination or departure.
o Full-time hourly Employees receive vacation benefits based upon years
of service in the form of a yearly lump-sum payment, which is made on
or about June 1 each year. Following each Employees first year of
employment, the Employee receives a payment equal to forty hours
multiplied by such Employees hourly wage. After the Employees third
year of employment, that payment is increased to an amount equal to
eighty hours multiplied by such Employees hourly wage. Payments on
behalf of full-time hourly Employees vacation have been made for 2016.

401(k) plan obligations. The Debtor maintains a 401(k) plan, under which
Employees may defer a portion of their compensation. After completing a
minimum twelve months of employment working at least 1,000 hours, Employees
that are twenty-one years of age or older can contribute up to 100% of their
annual pay (up to the annual maximum deferral amount). Under the plan, the
Debtor matches 25% of each participating Employees contributions; however,
the Debtors matching contribution is limited to 6% of the participating
Employees compensation and any such matching contribution is discretionary.
The Debtors matching contribution is paid once per year in March or April. As of
the Petition Date, the Debtor does not owe Employees for matching 401(k)
contributions, and estimates that it owes approximately $400 in collected but
unremitted Employee contributions.

Expense Reimbursements. The Debtor provides certain of its Employees with

American Express cards linked to an account with TMA to use for travel
expenses. The Debtor pays TMA for the amounts charged to the card incurred in
connection with the Employees work-related travel expenses. All other charges
are the responsibility of the Employee, and the employee is responsible for any
unpaid balances on the American Express cards if the Debtor or TMA becomes
unable to pay. The amount of these reimbursement obligations is on average
approximately $155,000 per month. The Debtor reimburses TMA on account of
the American Express card during the first half of each month. As of the Petition
Date, the Debtor estimates that it owes approximately $175,000 to TMA related to
expense reimbursements for the Debtors Employees. The Debtor is not seeking
at this time authorization to reimburse TMA for this pre-petition amount. In
addition, the Debtor also reimburses Employees and Independent Contractors
directly for mileage and other travel-related expenses (Reimbursable Travel
Expenses). As of the Petition Date, the Debtor estimates that it owes
approximately $12,000 to various Employees and Independent Contractors on
account of Reimbursable Travel Expenses. For the avoidance of doubt, pursuant
to the Employee Obligations Motion, the Debtor does seek authority to reimburse
Employees and Independent Contractors for pre-petition Reimbursable Travel
Expenses.
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Flexible Spending Accounts. The Debtor offers the Employees the option to
contribute a portion of their pre-tax wages into tax-exempt flexible spending
accounts. The amounts contributed may be used for certain qualified expenses
such as medical expenses and dependent care expenses not otherwise covered by
insurance. As employees incur eligible expenses, they submit a claim to be
reimbursed from their flexible spending account. The Employees have elected to
contribute approximately $12,000 in the aggregate throughout the course of 2016.
As of the petition date, the Employees have contributed approximately $6,000 to
their flexible spending accounts for the current calendar year. There is no material
cost to the Debtor for this program.

Health and welfare benefits. The Debtor, through policies obtained by affiliates of
TMA, provides several health and welfare benefit plans for the Employees,
including insurance plans relating to medical, health, prescription, dental,
disability, and life insurance.
o Health Care Plans. The Debtor, through policies obtained by Varsity
Carpet Services, a TMA affiliate, provides a base health insurance plan
and a buy-up health insurance plan (collectively, the Health Plans) that
are administered by Cigna Health and Life Insurance, Inc. (Cigna).
Approximately 40 Employees participate in the Health Plans. The Debtor
pays $750 per participant per month on or about the first day of the
month into the Varsity Carpet Services Group Insurance Health Account
(the Varsity Account) on account of the Employees participation in
the Health Plans. Cigna is reimbursed for claims filed pursuant to the
Health Plans out of the Varsity Account. As of the Petition Date, the
Debtor will not owe funds to the Varsity Account in connection with the
Employees participation in the Health Plans.
o Basic Life Insurance. The Debtor, through policies obtained by Universal
Textile Technologies, LLC (UTT), a TMA affiliate, provides life
insurance administered by Guardian Life Insurance Company of America
(Guardian) to all Employees who participate in the Health Plans at no
cost to the Employees after 60 days of continuous service. UTT pays the
premiums due to Guardian, then bills the Debtor in arrears. The Debtors
annual premium is approximately $3,982. As of the Petition Date,
nothing is owed to UTT for the Debtors pre-petition portion of the life
insurance premium.
o Accidental Death and Dismemberment Insurance. The Debtor (through
policies obtained by UTT) provides Accident Death and Dismemberment
Insurance, administered by Guardian, to all Employees after 60 days of
continuous service. The premium for Accident Death and

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Dismemberment Insurance is included in the Debtors Basic Life

Insurance premium.

The following are pass-through programs for which the Debtor makes no
contributions or payments. UTT pays the applicable benefit provider directly, then
bills the Debtor in arrears. The Debtor reimburses UTT by withholding the
necessary amounts from the Employees paycheck and remitting such amounts to
UTT.
o Vision. The Debtor (through policies obtained by UTT) permits
Employees to enroll in a vision plan administered by Guardian. UTT
pays the premiums due to Guardian, then bills the Debtor in arrears. The
Debtor collects funds from the enrolled Employees and remits the funds
to UTT, but does not provide any reimbursement for this program. There
is no material cost to the Debtor for this program. As of the Petition Date,
nothing is owed to UTT on account of the Employees participation in
the vision plan.
o Dental. The Debtor (through policies obtained by UTT) permits
Employees to enroll in certain dental plans administered by Guardian.
UTT pays the premiums due to Guardian, then bills the Debtor in arrears.
The Debtor collects funds from the enrolled Employees and remits the
funds to UTT, but does not provide any reimbursement for this program.
There is no material cost to the Debtor for this program. As of the
Petition Date, nothing is owed to UTT on account of the Employees
participation in the dental plans.
o Short Term Disability. After 60 days of continuous employment, the
Debtor (through policies obtained by UTT) provides Employees the
option to purchase short-term disability coverage administered by
Guardian. This coverage runs from the date of disability through the first
thirteen weeks of disability. UTT pays the premiums due to Guardian,
then bills the Debtor in arrears. The Debtor collects premiums from the
enrolled Employees and remits the same to UTT the insurance company,
but does not provide any reimbursement for this program. There is no
material cost to the Debtor for this program. As of the Petition Date,
nothing is owed to UTT on account of the Employees participation in
the vision plan.
o Long-term Disability. After 60 days of continuous employment, the
Debtor (through policies obtained by UTT and administered by
Guardian) provides Employees the option to purchase long-term
disability coverage of up to 50% of the employees annual salary and
wages for hourly and salaried Employees and 60% of the Employees
annual salary and wages for executives after satisfying a 90-day
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elimination period. The applicable coverage lasts until Social Security

Normal Retirement Age or until the Employee is no longer disabled.
UTT pays the premiums due to Guardian, then bills the Debtor in arrears.
The Debtor collects premiums from Employees and remits the same to
UTT, but does not subsidize this program. There is no material cost to
the Debtor for this program. As of the Petition Date, nothing is owed to
UTT on account of the Employees participation in the long-term
disability plan.
o Supplemental Life Insurance. The Debtor (through policies obtained by
UTT) provides Employees who have basic life insurance with the option
of increasing their coverage by purchasing supplemental insurance
administered by Guardian. UTT pays the premiums due to Guardian,
then bills the Debtor in arrears. The Debtor collects funds from
Employees and remits the funds to UTT, but does not provide any
reimbursement for this program. There is no material cost to the Debtor
for this program. As of the Petition Date, nothing is owed to UTT on
account of the Employees participation in the supplemental life
insurance plan.
o Accident Insurance. The Debtor (through policies obtained by UTT and
administered by AFLAC) provides Employees with the option of
purchasing accident insurance to cover accidental death or
dismemberment (in addition to the accidental death and dismemberment
benefit described above). UTT pays the premiums due to AFLAC, then
bills the Debtor in arrears. The Debtor collects funds from Employees
and remits the funds to the insurance company, but does not provide any
reimbursement for this program. There is no material cost to the Debtor
for this program. As of the Petition Date, nothing is owed to UTT on
account of the Employees participation in the accident insurance plan.
o Cancer Insurance. The Debtor (through policies obtained by TMA)
provides Employees with the option of purchasing cancer insurance
administered by AFLAC. UTT pays the premiums due to AFLAC, then
bills the Debtor in arrears. The Debtor collects funds from Employees
and remits the funds to the insurance company, but does not provide any
reimbursement for this program. There is no material cost to the Debtor
for this program. As of the Petition Date, nothing is owed to UTT on
account of the Employees participation in the cancer insurance plan.
36.

As of the Petition Date, the Debtor does not believe there are any Employees for

whom the Employee Obligations would exceed $12,850. Accordingly, the Debtor believes that

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the vast majority (if not all) of the Employee Obligations would constitute priority claims
Pursuant to sections 507(a)(4) and 507(a)(5) of the Bankruptcy Code.
37.

Any delay in paying Employee Obligations will adversely impact the Debtors

relationships with its Employees and will irreparably impair the morale, dedication, confidence,
and cooperation of the very people upon whom the Debtor relies in order for its business to be
successful. The Debtor must have the support of its Employees in order for the Debtors efforts
in this chapter 11 case to succeed. Put simply, if the relief requested by the Employee
Obligations Motion is not granted, the Debtor will likely be out of business altogether.
38.

Moreover, absent an order granting the relief requested in the Employee

Obligations Motion, the Debtors Employees will suffer undue hardship and, in many instances,
serious financial difficulties, as the amounts in question are needed to enable certain of the
Employees to meet their own personal financial obligations. The stability of the Debtor will thus
be undermined, perhaps irreparably, by the possibility that otherwise loyal Employees will seek
other employment alternatives.
39.

The Debtor does not seek to alter its compensation, vacation, and other benefit

policies in the Employee Obligations Motion, and the Employee Obligations Motion is not to be
deemed an assumption or adoption of any agreement or policy providing for any such benefits.
Instead, the Employee Obligations Motion is intended only to permit the Debtor, in its discretion,
to make payments consistent with those policies and to permit the Debtor, in its discretion, to
continue to honor its practices, programs, and policies with respect to its Employees, as such
practices, programs, and policies were in effect as of the Petition Date.
40.

The Debtor requests that it be authorized to pay any cost or penalty incurred by a

person to which Employee Obligations are owed in the event that a check issued by the Debtor
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for payment of the Employee Obligations is inadvertently not honored because of the filing of
the Debtors bankruptcy case. Though the Debtor estimates any such costs or penalties to be de
minimis in amount, if the Debtor is not authorized to pay such costs or penalties, then its
Employees will suffer the exact type of harm that the Employee Obligations Motion seeks to
prevent, and the Debtor will suffer from loss of Employee goodwill.
B. Debtors Emergency Motion for Authority to Continue Pre-Existing Insurance
Programs and to Pay Pre-Petition Premiums and Related Obligations (the
Insurance Motion)
41.

The Debtor seeks an order (a) authorizing it to maintain its insurance programs,

insurance policies, workers compensation program, and any related agreements, as such
practices, programs, and policies were in effect as of the Petition Date and to pay, in its sole
discretion, pre-petition amounts accrued in connection therewith, (b) authorizing the Debtor to
reimburse TMA for costs associated with renewing the Insurance Programs (as hereinafter
defined) or obtaining replacement coverage, as needed in the ordinary course of business, and
only to the extent such reimbursement payments are for the Debtors allocated premium, without
the further approval of this Court, and (c) authorizing the Debtors bank to receive, process, and
pay any and all checks and other transfers related to such obligations.
42.

In connection with the operation of its business, the Debtor maintains various

insurance policies and programs through several different insurance carriers (the Insurance
Carriers). All but two of the insurance policies providing coverage for the Debtor list TMA as
the policy holder and provide coverage to TMA and certain of its affiliates. All insurance
policies covering the Debtor are listed on Exhibit A to the Insurance Motion, together with a list
of the Insurance Carriers, policy terms, and the premiums due thereunder.

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The insurance policies and programs covering the Debtor include liability and

property insurance policies, which provide the Debtor with insurance coverage relating to,
among other things, general liability, general property, automobile liability, workers
compensation, fiduciary liability, and directors and officers liability. A percentage of the total
premium for each policy is allocated to the Debtor based on a formula that takes into
consideration the number of employees, gross revenues, and other factors. TMA pays premiums
directly and is then reimbursed from the other insureds (including the Debtor). The Debtor
reimburses TMA approximately $70,000 per year (paid for in quarterly payments) for its
allocation of premiums due under the various insurance policies. As of the Petition Date, the
Debtor does not owe TMA any amounts for un-reimbursed premiums.4
44.

As of the Petition Date, the Debtor believes that it is current on its insurance

premiums with respect to the prepetition period. However, to the extent there is an outstanding
insurance policy premium payable by the Debtor that relates (in whole or in part) to the prepetition period, the Debtor seeks authority to pay these pre-petition premiums in the ordinary
course as such payments are necessary to keep its insurance policies and programs in force.
4

The Debtor also participates in an additional insurance program through four related-entity
insurance providers. This additional insurance provides an extensive list of coverage and
features, including deductible buydowns, additional property insurance, flood insurance, excess
umbrella liability, cyber liability, patent protection, product recall, work place violence, crisis
insurance, environmental liability, regulatory defense, employment practices liability, directors
and officers liability, fiduciary liability, and errors and omissions insurance. The Debtor makes
payments on account of the insurance coverage in December of each year in arrears. At this
time, the Debtor does not seek authority to make any payments with respect to this additional
insurance. However, for reference, the Debtor paid $472,979 and $525,248 in 2014 and 2015,
respectively, for this coverage. The additional insurance providers are Franklin Guaranty and
Indemnity, Inc. (owned by the Alan Peeples 2013 Irrevocable Trust), Legacy Guaranty and
Indemnity, Inc. (owned by the Jane Peeples Stanfield 2013 Irrevocable Trust), Specialty
Guaranty and Indemnity, Inc. (owned by the George Thomas Peeples 2013 Irrevocable Trust),
and Fidelity Guaranty and Indemnity, Inc. (owned by the William Bryan Peeples 2013
Irrevocable Trust).
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Certain of the insurance policies will expire in the next few months. As a result,

TMA may be required to renew or enter into new policies to replace the expiring policies, and
the new policies may require TMA to pay premiums in advance. The Debtor seeks authority
from the Court to reimburse TMA for costs associated with renewing or entering into new
policies to replace the expiring policies to the extent such reimbursement payments are for the
Debtors allocated premium for such insurance.
46.

Certain of the Debtors insurance policies for which the Debtor is the only named

insured involve deductible amounts or a self-insured retention for each claim that is submitted.
To the extent a deductible payment, self-insured retention payment, or reimbursement relating to
a period prior to the Petition Date is outstanding with respect to any of these insurance policies,
the Debtor seeks authority, in its discretion, to make such payments in the same manner that such
payments were made prior to the Petition Date by making such payments directly to the
Insurance Carrier.
47.

Under Georgia law, the Debtor is required to maintain workers compensation

policies and programs to provide its employees with coverage for claims arising from or related
to their employment with the Debtor. Workers compensation coverage for the Employees is
maintained through a self-funded workers compensation program (the Self-Funded Workers
Compensation Program) managed by UTT. The Debtor, through UTT, also maintains a
workers compensation reinsurance policy (collectively with the Self-Funded Workers
Compensation Program, the Workers Compensation Program) with Great American Insurance
Group for the benefit of the Employees. UTTs policy with Great American Insurance Group
covers claims exceeding $175,000 per employee. When a claim is below $175,000, UTT pays
the claim directly, and then is reimbursed by the Debtor. The Debtor pays UTT an annual
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premium based on the number of the Debtors employees for this coverage. The premium for
2016 is $17,635.65approximately $326 per employee per yearwhich covers a period from
July 2016 to July 2017. The premium is paid by AstroTurf to UTT annually in arrears.
48.

The Workers Compensation Program is managed by Strategic Comp, a division of

Great American Insurance Group. As of the Petition Date, two claims remained pending against
the Debtor under the Workers Compensation Program arising out of employee accidents on the
job. Except for potential liabilities arising from these two claims, as of the Petition Date, the
Debtor does not owe any amounts on account of the Workers Compensation Program.
49.

It is essential to the continued operation of the Debtors business and its efforts in

this chapter 11 case that the Insurance Programs be maintained on an ongoing and uninterrupted
basis. The failure to pay premiums when due may affect the Debtors ability to renew the
insurance policies. If the insurance policies are allowed to lapse, the Debtor could be exposed to
substantial liability for damages resulting to persons and property of the Debtor and others. Such
exposure could have an extremely negative impact on the Debtors ongoing business operations
and would also place the Debtors assets at risk.
50.

Continued effectiveness of directors and officers liability policies is necessary to

the retention of qualified and dedicated senior management and directors.

51.

Finally, pursuant to guidelines established by the United States Trustee, the

Debtor is obligated to remain current with respect to certain of its primary insurance policies.
52.

The amounts the Debtor proposes to pay in respect of the Insurance Programs are

minimal in light of the size of the Debtors estate and the potential exposure of the Debtor,
absent insurance coverage. Therefore, it is critical that the Debtor continue to maintain its
Insurance Programs on an uninterrupted basis and be permitted to pay any obligations in the
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ordinary course of business and consistent with pre-petition practices, including reimbursing
TMA for payments required to renew the Insurance Programs.
53.

The maintenance of the Workers Compensation Program is likewise justified

because applicable state law mandates this coverage, and 28 U.S.C. 959(b) requires the Debtor
to comply with valid state laws. In addition, the Debtors employees all depend on the protection
that the Workers Compensation Program provides.
54.

As of the Petition Date, the Debtor does not owe any amounts on account of the

Workers Compensation Program. The Debtor requests authority to pay any and all amounts that
become due and owing with respect to the Workers Compensation Program, and to maintain
and continue pre-petition practices with respect to the Workers Compensation Program,
including, among other things, allowing workers compensation claimantsto the extent they
have valid Workers Compensation Claimsto proceed with their claims under the applicable
insurance policy or program.
C. Debtors Emergency Motion for Authority to (A) Maintain Existing Bank Accounts
and (B) Continue Use of Existing Business Forms (the Cash Management Motion)
55.

The Debtor respectfully requests an order: (a) authorizing the Debtor to continue

to maintain its existing bank accounts; (b) authorizing it to continue to utilize its existing
business forms, including checks; and (c) granting it a waiver, to the extent required, from the
United States Trustees guidelines with respect to requirements pertaining to chapter 11 debtors.
56.

Prior to the commencement of this chapter 11 case, the Debtor maintained two

bank accounts (collectively, the Accounts) at the First Bank of Dalton (the Bank): a deposit
account (the Deposit Account) and a disbursement account (the Disbursement Account).
The Debtor typically receives funds for its products and services through checks mailed to its

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office in Dalton, Georgia, which are deposited into the Deposit Account. The Debtors operating
expenses (including payroll and other disbursements) are paid out of the Disbursement Account.
Any excess cash remains in the Deposit Account.5 The Debtor respectfully requests that it be
permitted to maintain the Accounts to avoid any disruption or delay in making and receiving
payments.
57.

Because of the disruption to the Debtors operations that would result if the

Debtor were forced to open one or more new accounts, the Debtor requests that this Court allow
it to maintain its existing bank accounts and business forms. The Debtor also asks for
authorization to open, when necessary, additional FDIC-insured bank accounts subject to any
order of this Court.
58.

Furthermore, by virtue of the nature and scope of the Debtors business, and its

numerous employees, suppliers of goods and services, and others with whom the Debtor
transacts business, it is important that the Debtor be permitted to continue to use its existing
business forms, including checks. A substantial amount of time and expense would be required
to print new business forms and stationery and being required to obtain new business forms
would also likely result in a substantial risk of disruption to the Debtors ordinary business
affairs.

Prior to the Petition Date, pursuant to that certain Amended and Restated Cash Management
Agreement, dated as of January 1, 2014, by and among TMA, the Debtor and the other parties
from time to time party thereto, any funds in excess of a target balance remaining in the Deposit
Account were swept to an account held by TMA and applied to reduce the obligations incurred
by the Debtor to TMA under the Loan Agreement. The sweep mechanism was deactivated
shortly before the Debtor commenced this bankruptcy proceeding.
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D. Debtors Emergency Motion for an Order Authorizing the Debtors to Pay PrePetition Sales, Use, Trust Fund, and Other Taxes and Related Obligations (the Tax
Motion)
59.

The Debtor seeks authority to pay, in its sole discretion, undisputed pre-petition

sales, use, and other similar trust fund taxes and obligations (the Taxes) owed to the state
and local taxing authorities listed on the schedule attached to the Tax Motion as Exhibit A
(collectively, the Taxing Authorities) in the ordinary course of business.
60.

As explained more fully in the Tax Motion, the relief requested should be granted

because, among other things, (i) certain of the taxes may constitute trust fund taxes and the
funds representing such Taxes are not property of the Debtors estate, (ii) such taxes may
constitute priority taxes, and (iii) the failure to pay the Taxes could disrupt the Debtors business.
In connection with the normal operation of its business, the Debtor collects, among other things,
sales taxes from its customers and other third parties for remittance to the Taxing Authorities. In
addition, the Debtor accrues and incurs state use taxes. The Debtor estimates that, as of the
Petition Date, it holds approximately $125,000 in collected but unremitted sales taxes and
accrued state use taxes. The amount requested in the Tax Motion is nominal compared to the
Debtors total pre-petition debt.
61.

The Debtor has sufficient cash reserves and will have sufficient cash from

ongoing operations and the DIP Facility (as hereinafter defined) to pay the amounts described in
the Tax Motion in the ordinary course of business.
62.

The Debtors failure to pay the Sales and Use Taxes could have a material adverse

impact on its ability to operate in the ordinary course.

63.

To the extent that any Taxes are not paid by the Debtor, the Debtors officers and

managers may be subject to lawsuits or criminal prosecution during the pendency of this chapter
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11 case. Any such lawsuit or criminal prosecution (and the attendant potential liability) would
undoubtedly distract the Debtor and its officers and managers from this chapter 11 case to the
detriment of all parties-in-interest.
E. Debtors Emergency Motion for an Order Authorizing the Debtors to Maintain and
Administer Customer Programs and Honor Certain Pre-Petition Obligations
Related Thereto (the Customer Obligations Motion)
64.

The Debtor respectfully requests entry of an order authorizing the Debtor, in its

sole discretion, to honor or pay all pre-petition obligations arising under the Customer Programs
(as hereinafter defined) (the Obligations). The Debtor believes that honoring and paying the
Obligations and maintaining the Customer Programs is the best way to maximize the value of the
Debtors estate and to minimize the negative impact of this chapter 11 case on the Debtors
customers and other key business partners.
65.

In the ordinary course of the Debtors business, the Debtor (like many businesses

in the artificial turf industry) maintains a customer warranty program (the Warranty Program)
and makes minor repairs to its preexisting product in the ordinary course (the Ordinary Course
Repairs, collectively with the Warranty Program the Customer Programs). On average, the
Debtor spends between approximately $1.2 million and $1.5 million per year to service its preexisting product. As of the Petition Date, there were fourteen pending projects pursuant to the
Customer Programs. The Customer Programs are designed to enhance the Debtors ability to
generate continuing revenues in its business and are more particularly described as follows:
a. Warranty Program. The Debtor provides warranties for certain of its products.
These warranties provide that the Debtor will repair or replace materials that exhibit
defects resulting from materials or workmanship at no cost to the customer within
eight years of installation of the artificial turf product.
b. Repairs. In the ordinary course of business, the Debtor provides repairs to its
products without requiring its customers to file a formal claim under the Warranty
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Program. These repairs vary significantly from project to project. Generally, each
individual Ordinary Course Repair costs less than $500. As of the Petition Date,
fourteen repair projects were outstanding.
66.

The success and viability of the Debtors business is dependent upon the loyalty

of its customers. The Debtor believes that the uninterrupted maintenance of the above-described
Customer Programs is essential to maintaining such loyalty. The Debtors Customer Programs
are designed to enable the Debtor to compete effectively with other businesses who offer
comparable programs. Indeed, any project subject to a public bidding process requires a product
warranty. Thus, any disruption which would necessarily result from the termination of some or
all of these Customer Programs would undoubtedly threaten the Debtors customer base and
have an adverse effect on the value of the Debtors assets and business.
67.

If the Debtor cannot honor these standard commercial terms in its customer

agreements, or are barred from honoring warranty claims arising from projects that were subject
to public bidding, the Debtors commercial reputation would suffer and future customers may
turn to a competing provider, resulting in a loss of business for the Debtor.
F. Debtors Emergency Motion For Interim and Final Orders (A) Prohibiting Utilities
from Altering, Refusing, or Discontinuing Service on Account of Prepetition
Invoices, (B) Deeming Utilities Adequately Assured of Future Performance, and (C)
Establishing Procedures for Determining Adequate Assurance of Payment (the
Utilities Motion)
68.

The Debtor respectfully requests the entry of an interim and final order (the

Interim Order and the Final Order, respectively), (a) prohibiting the Utility Companies (as
hereinafter defined) from altering, refusing, or discontinuing service on account of prepetition
invoices, (b) deeming utilities adequately assured of future performance, and (c) establishing
procedures for resolving disputes relating to adequate assurance of payment.

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Also, the Debtor requests that the Court schedule a final hearing on the Utilities

Motion (the Final Hearing) at its convenience on a date in advance of the expiration of thirty
(30) days following the Petition Date in order to, as discussed below: (a) address any outstanding
objections to the Utilities Motion and (b) resolve any disputes regarding adequate assurance of
payment prior to the expiration of the thirty (30) day period set forth in Section 366(c)(2) of the
Bankruptcy Code.
70.

Utility services are essential to the Debtors ability to sustain its operations while

this chapter 11 case is pending. In the normal conduct of its business, the Debtor has direct
relationships with approximately three utility companies (collectively, the Utility Companies)
for the provision of telephone, internet, and other services (the Utility Services). A list
identifying the Utility Companies and their notice addresses is attached to the Utilities Motion as
Exhibit A (the Utilities Service List).
71.

At all relevant times, the Debtor has attempted to remain current with regard to its

utility bills. Furthermore, to the best of the Debtors knowledge, the Debtor is current on all
amounts owing to the Utility Companies, other than payment interruptions that may be caused by
the commencement of this chapter 11 case.
72.

Continued and uninterrupted Utility Service is vital to the Debtors ability to

sustain its operations during this chapter 11 case. Because of the nature of the Debtors
operations, termination or interruption of the Debtors utility service would dramatically impair
the Debtors ability to conduct business and would cause considerable inconvenience to the
Debtors customers and employees. If utility providers are permitted to terminate or disrupt
service to the Debtor, the Debtors primary revenue source would be threatened.

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G. Emergency Motion for an Order Authorizing the Debtor to (A) Honor Prepetition
Obligations to and Continue Prepetition Practices with Shippers and (B) Assume
Contracts with Independent Subcontractors (the Shippers and Subcontractors
Motion)
73.

The Debtor respectfully requests the entry of an order authorizing, but not

directing, the Debtor, in its business judgment and sole discretion, to: (a) perform and honor
certain undisputed prepetition obligations to the Shippers (as hereinafter defined) up to $87,500
in aggregate amount for the Shipper Obligations (as hereinafter defined); (b) assume the
Subcontractor Contracts (as hereinafter defined) and pay cure costs related thereto (each a Cure
Cost, and together, the Cure Costs); provided, however, that, absent further order of the
Court, the Debtor shall only be authorized to assume a Subcontractor Contract if the counterparty to such contract consents to the assumption and the Debtor and such counter-party agree
upon the Cure Cost for such contract; and (c) continue during the postpetition period its
prepetition practices with the Shippers and Subcontractors (as hereinafter defined).
74.

Additionally, the Debtor seeks an order authorizing and directing all banks and

other financial institutions to receive, process, honor and pay any and all checks presented for
payment and electronic transfers with respect to payments authorized by the Shippers and
Subcontractors Motion, whether presented before or after the Petition Date, upon receipt by each
bank and financial institution of notice of such authorization, provided that sufficient funds are
on deposit in the applicable account to cover such payments.

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Shippers
75.

To deliver products and materials to its customers worksites, the Debtor requires

the coordinated efforts of certain critical freight shipment providers (collectively, the Shippers)
who transport the goods.
76.

In the ordinary course of its business and to facilitate efficient and timely

shipment and delivery of products and materials, the Debtor engages the Shippers to transport
the synthetic turf to domestic installation sites. On average, three trailers are required to transport
one field of synthetic turf. The Debtor generally sells approximately 300 fields per year.
Accordingly, on any given day, material for multiple full fields may be in transit. It is critical to
the Debtors operations and efforts to maximize the value of its estate that the Debtor maintain a
reliable and efficient transport system to ensure timely shipment and delivery of its products,
which will require the continued and uninterrupted services of the Shippers.
77.

Any failure by the Debtor to honor its obligations to the Shippers (the Shipper

Obligations) will likely have a materially adverse impact on the reliability and efficiency of the
current transport system. If Shipper Obligations remain unpaid, the Debtor faces the real
possibility that certain of the Shippers may refuse to continue their respective services. Further,
under some state laws, a shipper may have a lien on the goods in its possession, which secures
the charges or expenses incurred in connection with the transportation and/or storage of the
goods. Accordingly, certain Shippers may assert that they are entitled to possessory liens for
transportation, shipment and delivery or storage of the Debtors materials and goods in their
possession and may refuse to deliver or release such materials and goods before their claims
have been satisfied and their liens redeemed.

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To avoid any potential interruption or delay in the Debtors transport system,

which interruption or delay will likely have a material adverse impact on the Debtors operations
and efforts to maximize the value of its estate, it is imperative that the Debtor have the ability to
satisfy the Shipper Obligations in order to maintain the continued and uninterrupted services of
the Shippers.
79.

In satisfying any of the Shipper Obligations, the Debtor will, in its discretion,

attempt to condition any payment on the written acknowledgement from the applicable Shipper
that such Shipper will continue to provide its services to the Debtor on terms that, at a minimum,
it provided to the Debtor prior to the Petition Date, or such other trade practices and programs
that are at least as favorable to the Debtor as those in effect prior to the Petition Date. The Debtor
reserves the right to negotiate more favorable trade terms with any Shipper as a condition to
payment of any such Shipper Obligation. Further, the Debtor will only pay the claims of the
Shippers that it believes, in its business judgment, are necessary or appropriate. In determining
whether such payments are necessary or appropriate, the Debtor will consider: (a) whether the
benefits to the Debtors estate and creditors from making such payments would exceed the costs
that the Debtor would incur by bringing actions to compel the turnover of such goods; (b) the
delays associated with such actions; and (c) whether the additional expenses the Debtor would
incur (in the form of premium shipping costs) to replace the Shippers would exceed the amount
of unpaid prepetition claims.
80.

The average aggregate weekly amount of Shipper Obligations is approximately

$30,000. As of the Petition Date, the Debtor estimates that the aggregate outstanding amount of
Shipper Obligations is approximately $87,500.

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Maintaining positive relationships with the Shippers is critical to the continued

reliability and efficiency of the Debtors ongoing operations. The Debtors ability to maintain
continued and uninterrupted operations during this crucial time will in turn serve to maximize
value of its estate for the benefit of its estate and creditors. Accordingly, the Debtors ability to
pay certain prepetition claims of the Shippers will facilitate a smooth and orderly transition into
this chapter 11 case.
82.

The Debtor submits that the total amount to be paid to the Shippers is minimal

compared to (a) the importance and necessity of their services to (i) the Debtors transport
system and ongoing construction operations and (ii) maintaining the value of the Debtors
business and assets and (b) the losses the Debtor may suffer if those payments were not made.
83.

In the Debtors business judgment, the uninterrupted maintenance of the services

provided by the Shippers is essential to the continued and uninterrupted operations of the Debtor
which in turn will serve to maximize the value of its estate for the benefit of its estate and
creditors. The Debtor does not believe there are cost-effective and/or readily accessible
alternatives to the Shippers under the current circumstances.
Independent Subcontractors
84.

In the ordinary course of its business, the Debtor engages certain independent

subcontractors (collectively, the Subcontractors) to install the fields and athletic surfaces
purchased by the Debtors customers. The Subcontractors are a critical component of the
Debtors business; without the Subcontractors, the Debtor would not be able to complete projects
and installations for its customers. The Debtor is a party to contracts with each Subcontractor
(collectively, the Subcontractor Contracts).

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85.

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As of the Petition Date, the Debtor owes various amounts to certain

Subcontractors under the applicable Subcontractor Contracts (each a Cure Cost, and together,
the Cure Costs). The Debtor estimates that the aggregate Cure Costs do not exceed $1,200,000.
However, the exact amount of the Cure Costs cannot be determined at this time because the
Subcontractors, in certain instances, provided goods and services to the Debtor in the days
immediately preceding the Petition Date and have not yet invoiced the Debtor for such goods
and services. If the Cure Costs are not timely paid, the Subcontractors may be unable or
unwilling to continue performance under the Subcontractor Contracts (notwithstanding their
contractual obligation to continue performance), which would severely impair the Debtors
operations and revenue. Many of the Subcontractors are dependent upon payments from the
Debtor in order to make payroll and timely meet other financial obligations, and the financial
viability of these Subcontractors will be jeopardized if the Cure Costs are not paid. If the
Subcontractors stop working, it will be very time consuming, expensive, and difficult for the
Debtor to find replacements. Additionally, to the extent these contracts are not assumed and the
Cure Costs go unpaid, the Subcontractors may assert mechanics liens against the Debtors
property and/or property of the Debtors customers. In short, failing to assume the Subcontractor
Contracts could severely disrupt the Debtors operations and be costly to the Debtors estate.
86.

For the foregoing reasons, the Debtor believes it will face immediate and

irreparable harm if the Subcontractor Contracts are not assumed and Cure Costs are unpaid.

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Debtors Emergency Motion Pursuant to 11 U.S.C. 105, 361, 362, 363, 364 and
507 for Interim and Final Orders (I) Authorizing Debtor to Obtain Post-Petition
Financing from Textile Management Associates, Inc., Pursuant to Section 364 of the
Bankruptcy Code; (ii) Granting Liens and Super-Priority Claims; (iii) Modifying
the Automatic Stay; and (iv) Scheduling a Final Hearing on the Debtors Motion to
Incur Such Financing on a Permanent Basis and Approving the Form and Method
of Notice Thereof (the DIP Financing Motion)
87.

The Debtor seeks, pursuant to Sections 105, 361, 362, 363, and 364 of the

Bankruptcy Code and Bankruptcy Rules 4001(b) and (c), the entry of an interim and final order
authorizing the Debtor, inter alia, to obtain a post-petition secured loan (the DIP Facility) in a
principal amount equal to $10,000,000 pursuant to that certain Senior Secured Debtor in
Possession Loan Agreement (the DIP Facility Credit Agreement) by and between the Debtor,
as the debtor and debtor-in-possession, and TMA (the DIP Lender) substantially in the form
attached as Exhibit 1 to the DIP Financing Motion.
88.

Without adequate post-petition financing, the Debtor will not have sufficient

available sources of working capital to operate its business in the ordinary course for a period of
time sufficient to maximize the value of its assets for the benefit of all stakeholders. The
uncertainty concerning the Debtors financial condition necessarily limits its ability to secure
credit on affordable terms. As such, under the present circumstances, the Debtors ability to
finance its operations and administer this bankruptcy case is dependent on its ability to obtain the
funds made available under the DIP Facility.
89.

Any disruption of the Debtors operations would be devastating at this critical

juncture. The inability of the Debtor to obtain sufficient liquidity and to make payments on
certain obligations on a timely basis may result in, inter alia, the Debtors inability to pay its
employees, manufacturers, shippers, or subcontractors. If any of these events were to occur, the
Debtor would forfeit payment on major contracts, resulting in material harm to all of the
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Debtors creditors and other constituents. In light of the foregoing, the Debtor has determined, in
the exercise of its sound business judgment, that a post-petition credit facility, which permits the
Debtor to obtain up to $10,000,000 in financing, and to use such credit to finance the operation
of its business, is critical to its ongoing operations and stability during its bankruptcy process.
90.

The Debtor believes that the debtor in possession financing offered by the DIP

Lender presents the best option available to it and would enable the Debtor to preserve its value
as a going concern. The Debtor has engaged in good-faith and arms-length negotiations with
the DIP Lender. These negotiations culminated in an agreement by the DIP Lender to provide
post-petition financing on the terms and subject to the conditions set forth in the DIP Facility
Credit Agreement and the interim order substantially in the form attached to the DIP Financing
Motion as Exhibit 2 (the Interim Order).
91.

The credit provided under the DIP Facility will enable the Debtor to finance its

business operations, including the ability to operate its business in an orderly and reasonable
manner to preserve and enhance the value of its assets and enterprise for the benefit of all parties
in interest. It is expected that the availability of credit under the DIP Facility will provide the
Debtor with the necessary liquidity to continue its ordinary course business operations in order to
maximize the return available to the Debtors creditors in this bankruptcy case. Finally, the
implementation of the DIP Facility will be viewed favorably by the Debtors employees, vendors
and customers and will thereby permit the Debtor to continue to operate its business during the
bankruptcy process.
92.

As with most other large businesses, the Debtor has significant cash needs.

Accordingly, access to substantial credit is necessary to meet the day-to-day costs associated
with financing the operation of the Debtors business. In the absence of access to cash and
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credit, the Debtor may be unable to operate its business or to complete the bankruptcy process.
In turn, without the DIP Facility, the Debtors prospects for a successful chapter 11 case will be
seriously impaired and the Debtors creditors, estate and other parties in interest will be
materially harmed.
93.

The Debtor is unable to obtain unsecured credit or debt allowable as an

administrative expense under Section 503(b)(1) of the Bankruptcy Code in an amount sufficient
and readily available to maintain ongoing operations. The Debtor has been unable to find
alternative or better financing on the terms and of the type and magnitude required in this chapter
11 case on an unsecured basis, or without offering terms substantially similar to those of the DIP
Facility. The terms and conditions of the DIP Facility are fair and reasonable, and were
negotiated by the parties in good faith and at arms length. Based on this, as well as the
foregoing factors, the DIP Facility is the only feasible financing option for the Debtor and is in
the best interests of the Debtors estate.
94.

A working capital facility of the type needed in this case could not have been

obtained on an unsecured basis. Moreover, potential sources of the proposed DIP Facility for the
Debtor were extremely limited.
95.

Given the Debtors constrained liquidity, the DIP Facility is of critical importance

to operating the Debtors business and preserving the value of the Debtors assets, thereby
providing a greater recovery to the Debtors creditors than would be realized if the Debtor were
forced to convert to chapter 7.
[signature on following page]

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Exhibit A
First Day Motions
1.

Debtors Emergency Motion for an Order Establishing Notice and Administrative

Procedures

2.

Debtors Emergency Motion for an Order to Extend Time to File Schedules and Statements
of Financial Affairs

3.

Debtors Emergency Motion to Authorize Payment of Pre-Petition Wages, Payroll Taxes,

Certain Employee Benefits, and Related Expenses, and Other Compensation to Employees

4.

Debtors Emergency Motion for Authority to Continue Pre-Existing Insurance Programs,

and to Pay Pre-Petition Premiums and Related Obligations

5.

Debtors Emergency Motion for Authority to (A) Maintain Existing Bank Accounts, and (B)
Continue Use of Existing Business Forms

6.

Debtors Emergency Motion for an Order Authorizing the Debtors to Pay Pre-Petition Sales,
Use, Trust Fund, and Other Taxes and Related Obligations

7.

Debtors Emergency Motion for an Order Authorizing the Debtors to Maintain and
Administer Customer Programs and Honor Certain Pre-Petition Obligations Related Thereto

8.

Debtors Emergency Motion For Interim and Final Orders (A) Prohibiting Utilities from
Altering, Refusing, or Discontinuing Service on Account of Prepetition Invoices, (B)
Deeming Utilities Adequately Assured of Future Performance, and (C) Establishing
Procedures for Determining Adequate Assurance of Payment

9.

Debtors Emergency Motion for an Order Authorizing the Debtors to Honor Prepetition
Obligations to and Continue Prepetition Practices with Shippers and Independent
Subontractors

10.

Debtors Emergency Motion Pursuant to 11 U.S.C. 105, 361, 362, 363, 364 and 507 for
Interim and Final Orders (I) Authorizing Debtor to Obtain Post-Petition Financing from
Textile Management Associates, Inc., Pursuant to Section 364 of the Bankruptcy Code; (ii)
Granting Liens and Super-Priority Claims; (iii) Modifying the Automatic Stay; and (iv)
Scheduling a Final Hearing on the Debtors Motion to Incur Such Financing on a Permanent
Basis and Approving the Form and Method of Notice Thereof