IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF KANSAS (KANSAS CITY) IN RE: ) ) THE MISSION GROUP KANSAS, INC. ) Case No. 16-20656 d/b/a WRIGHT CAREER COLLEGE ) Chapter 7 ) Debtor. ) MOTION FOR ORDER LIFTING THE AUTOMATIC STAY TO ALLOW SECURED CREDITOR GREAT WESTERN BANK TO TAKE POSSESSION OF COMPUTER EQUIPMENT NOT CONTAINING SENSITIVE DATA LOCATED IN OKLAHOMA CITY AND TULSA, OKLAHOMA CAMPUSES AND TO SELL COLLATERAL COMES NOW Great Western Bank ( GWB ), by and through its attorneys of record, and pursuant to 11 U.S.C. 362(d)(1) and (2), and Rules 9014 and 4001 of the Federal Rules of Bankruptcy Procedure, and Local Bankruptcy Rule 4001(a).1, hereby requests that the Court enter an Order allowing secured creditor GWB to take possession of computer equipment not containing sensitive data located on Debtor s Oklahoma City and Tulsa, Oklahoma campuses and to sell repossessed collateral securing GWB s claims and submitting an accounting to the Chapter 7 Trustee and Debtor: 1. On April 15, 2016, Debtor filed a voluntary petition for relief under Chapter 7 of Title 11 of the United States Code (the Bankruptcy Code ). 1334(b). 2. The Court has jurisdiction over this matter under 28 U.S.C. 157 and 3. Venue in this matter is proper under 28 U.S.C. 1409. A motion for relief from the automatic stay is a core proceeding pursuant to 28 U.S.C. 157(b). 4. Debtor is indebted to GWB as evidenced by that certain Loan Agreement by and among GWB and Debtor dated July 10, 2012 (the Loan Agreement ) referencing that 1 Case 16-20656 Doc# 149 Filed 07/20/16 Page 1 of 5
certain Promissory Note dated July 10, 2012 in the original principal amount of Two Million and 00/100 Dollars ($2,000,000.00) (the Note ) (the indebtedness evidenced by the Loan Agreement and Note, hereafter, the GWB Indebtedness ). The Loan Agreement and Promissory Note evidencing the GWB Indebtedness are attached hereto as Exhibits 1 and 2 and incorporated herein by this reference. 5. The GWB Indebtedness is secured by that certain Security Agreement by and among GWB and Debtor dated July 10, 2012 (the Security Agreement ), which is attached hereto as Exhibit 3 and incorporated herein by this reference, and which covers collateral more specifically described in Exhibit A to the Security Agreement. 6. GWB s lien evidenced by the Security Agreement was perfected by that certain UCC Financing Statement which was filed with the Kansas Secretary of State s Office on July 16, 2012, as File No. 6921266. The UCC Financing Statement is attached hereto as Exhibit 4 and is incorporated herein by this reference. 7. GWB s Records show that the outstanding balance of the GWB Indebtedness as of April 15, 2016 was $656,310.68, consisting of unpaid principal and accrued, unpaid interest. Interest continues to accrue on the unpaid principal balance thereof at the per diem rate of $81.10611. 8. GWB previously filed a Motion for Relief from Stay on April 21, 2016 at Doc. 30 ( First GWB MFR ). 9. The Court entered a Stipulated Order on April 22, 2016 at Doc. 39 (the Stay Relief Order ) authorizing the landlords or property managers of Debtor s campuses to, inter alia, grant access to GWB and the other secure creditors to locate, retrieve and preserve the secured creditors respective collateral, including GWB s collateral, subject to the terms of the 2 Case 16-20656 Doc# 149 Filed 07/20/16 Page 2 of 5
Stay Relief Order. 10. Stay Relief Order, at Paragraph 3, conditioned and limited the relief granted therein to prohibit the secured creditors from selling or disposing of any collateral pending further order from the court. 11. As of July 11, 2016 GWB has located and retrieved its collateral (except computers) from Debtor s Oklahoma City and Tulsa Oklahoma and Wichita, Kansas campuses. Said collateral is currently in storage and GWB is incurring storage charges. 12. GWB s inspection at the Oklahoma City and Tulsa, Oklahoma campuses has revealed that there are over 50 laptop computers and a similar number of computer towers at each campus. The majority of the laptops were in the possession of students who have returned them to the Debtor. The computer towers are located in classrooms. To the best knowledge of GWB and its agents, there are no student records or other sensitive data on these machines. 13. By this Motion, GWB is requesting an order from the Court allowing GWB to: (a) take possession of the computer equipment described in the preceding paragraph; (b) remove and wipe the data from the computer equipment; and (c) sell or otherwise dispose of the collateral, including the computer equipment (hereinafter, the Collateral ), pursuant to Article 9 of the Uniform Commercial Code. A copy of the Collateral to be sold is available to interested parties upon request. 14. GWB is proposing to sell the Collateral in a reasonable commercial manner pursuant to state law. GWB s records show that GWB is owed approximately $662,474.74 as of July 1, 2016. 15. GWB does not believe that there is any value to recover for the benefit of the 3 Case 16-20656 Doc# 149 Filed 07/20/16 Page 3 of 5
bankruptcy estate. There is a limited market available for GWB to sell the Collateral; however, GWB is ready, willing and able to sell the Collateral and account for the proceeds as well as the manner of sale to the Debtor and the Chapter 7 Trustee. 16. Section 362(d)(2) requires that relief from the automatic stay be granted if a debtor has no equity in the property and the property is not necessary for an effective reorganization. 11 U.S.C. 362(d)(2). Here, both requirements are met. 17. Accordingly, GWB contends cause exists under 11 U.S.C. 362(d)(1) and 362(d)(2) and that the stay should be lifted to allow GWB to exercise its rights with respect to the Collateral under state law including to sell the Collateral with an accounting of the sale method and proceeds applied to the GWB Indebtedness submitted to the Trustee and Debtor within a reasonable amount of time after a sale of the Collateral. 18. The fourteen (14) day stay provided under Rule 4001(a) (3) of the Federal Rules of Bankruptcy Procedure should be waived based on the facts set out in the preceding paragraphs. WHEREFORE, GWB respectfully requests that this Court enter an Order (A) allowing GWB to take possession of the computer equipment located in Debtor s Oklahoma City and Tulsa, Oklahoma campuses; (B) allowing GWB to sell the Collateral and submit an accounting of sale proceeds, if any, to the Debtor and Chapter 7 Trustee; (C) waiving the requirement of Rule 4001(a)(3) of the Federal Rules of Bankruptcy Procedure making the requested relief immediately available; and (D) granting such other and further relief as the Court deems just and proper. 4 Case 16-20656 Doc# 149 Filed 07/20/16 Page 4 of 5
Respectfully submitted, GREAT WESTERN BANK, By: s/craig A. Knickrehm Craig A. Knickrehm (Pro Hac Vice) WALENTINE, O TOOLE, MCQUILLAN & GORDON, LLP 11240 Davenport Street Omaha NE 68154-0125 (402) 330-6300 (402) 330-6303 fax cknickrehm@womglaw.com By: s/ Christine L. Schlomann Christine L. Schlomann, KS # 18712 ARMSTRONG TEASDALE, LLP 2345 Grand Blvd., Suite 1500 Kansas City, MO 64108 816-221-3420 816-221-0786 fax cschlomann@armstrongteasdale.com Attorneys for Great Western Bank CERTIFICATE OF SERVICE I hereby certify that on this 20 th day of July, 2016, a true and correct copy of the Motion for Relief from Stay was electronically filed with the court using the CM/ECF system which sent notification to all parties of interest participating in the CM/ECF system s/ Christine L. Schlomann Christine L. Schlomann, KS # 18712 5 Case 16-20656 Doc# 149 Filed 07/20/16 Page 5 of 5
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