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Hearing Date: April 1, 2011 at 10:00 a.m. Eastern Time Objection Deadline: March 31, 2011 at 12:00 p.m.

Eastern Time

COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 James A. Beldner Lawrence C. Gottlieb Lesley A. Kroupa Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------- x : In re : : LEHR CONSTRUCTION CORP., : : Debtor. : : : ---------------------------------------------------------------- x NOTICE OF DEBTORS AMENDED MOTION FOR ENTRY OF AN ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION CLAIMS FOR SUBCONTRACTORS AND VENDORS WHO HAVE STATUTORY LIEN RIGHTS PLEASE TAKE NOTICE that a hearing on the above referenced amended motion (the Motion)1 dated March 28, 2011 of Lehr Construction Corp., the debtor and debtor in possession (the Debtor), for an order authorizing payment of certain prepetition critical construction vendor claims, and certain related relief, all as more fully set forth in the Motion, shall be held before the Honorable Sean H. Lane, United States Bankruptcy Judge of the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court), One
Copies of the Motion and http://www.omnimgt.com/sblite/lehr
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Chapter 11

Case No. 11-10723 (SHL)

related

pleadings

may

be

obtained

on

the

Debtors

website:

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Bowling Green, New York, New York 100042, on April 1, 2011 at 10:00 a.m. (Prevailing Eastern Time) (the Hearing Date). PLEASE TAKE FURTHER NOTICE that any responses or objections to the Motion must be in writing, shall conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the Southern District of New York, and shall be filed with the Bankruptcy Court (a) electronically in accordance with General Order M-399 (which can be found at www.nysb.uscourts.gov) by registered users of the Bankruptcy Courts filing system and (b) by all other parties in interest on a 3.5 inch disk, compact disc, or flash drive, preferably in WordPerfect, or any other Windows-based word processing format (with two hard copies delivered directly to Chambers of the Honorable Sean H. Lane) and served upon: (i) the Debtor, Lehr Construction Corp., 902 Broadway, New York, NY 10010 (Attn: Frederick Coffey); (ii) attorneys to the Debtor, Cooley LLP, 1114 Avenue of the Americas, New York, NY 10036 (Attn: James A. Beldner, Esq.); (iii) attorneys to the official committee of unsecured creditors, Klestadt & Winters, LLP, 570 Seventh Avenue, 17th Floor, New York, NY 10018 (Attn: Sean C. Southard, Esq.); and (iv) the Office of the United States Trustee for the Southern District of New York, 33 Whitehall Street, 21st Floor, New York, NY 10004 (Attn: Susan Golden, Esq.), in each case so as to be received no later than 12:00 p.m. on March 31, 2011 (Prevailing Eastern Time) (the Objection Deadline).

The courtroom number cannot be confirmed at this time. On the Hearing Date, please see the courtroom assignment to be posted outside of Judge Lanes chambers, Room 708.

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PLEASE TAKE FURTHER NOTICE that if no objections are timely filed and served with respect to the Motion, the Debtor may, on or after the Objection Deadline, submit to the Bankruptcy Court an order substantially in the form of the proposed order annexed to the Motion, which order may be entered with no further notice or opportunity to be heard. Dated: March 28, 2011 New York, New York By: /s/ James A. Beldner James A. Beldner COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 James A. Beldner Lawrence C. Gottlieb Lesley A. Kroupa Attorneys for Debtor and Debtor in Possession

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Hearing Date: April 1, 2011 at 10:00 a.m. (ET) Objection Deadline: March 31, 2011 at 12:00 p.m. (ET)

COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 James A. Beldner Lawrence C. Gottlieb Lesley A. Kroupa Attorneys for Debtor and Debtor in Possession UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------- x : : In re : : LEHR CONSTRUCTION CORP., : : Debtor. : ---------------------------------------------------------------- x

Chapter 11 Case No. 11-10723 (SHL)

AMENDED MOTION OF THE DEBTOR FOR ENTRY OF AN ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION CLAIMS FOR SUBCONTRACTORS AND VENDORS WHO HAVE STATUTORY LIEN RIGHTS Lehr Construction Corp., as debtor and debtor in possession (the Debtor),1 files this amended motion (this Motion) for the entry of an order (the Order), substantially in the form attached hereto as Exhibit A, authorizing the Debtor to pay in the ordinary course of business prepetition claims (collectively, the Critical Construction Claims) held by certain critical construction subcontractors and vendors (collectively, the Critical Construction Creditors, a list of which is attached hereto as Exhibit B) that are essential to the Debtors ongoing construction obligations pursuant to the agreement between the Debtor and NBA Properties, Inc. related to certain properties located in Secaucus, New Jersey (the NBA
1

The last four digits of the Debtors federal tax identification number are 3507. The Debtors mailing address is 902 Broadway, New York, NY 10010.

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Project), as further described in the Declaration of Frederick Coffey Pursuant to Bankruptcy Rule 1007-2 (the Coffey Declaration) attached hereto as Exhibit C. In support of this Motion, the Debtor respectfully states as follows: BACKGROUND General 1. On February 21, 2011 (the Petition Date), the Debtor commenced with

this Court a voluntary case under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). The Debtor is authorized to operate its business as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 2. On March 11, 2011, the Office of the United States Trustee (the U.S.

Trustee) appointed the official committee of unsecured creditors (the Committee). 3. On March 9, 2011, the Debtor filed its Motion of the Debtor for Entry of

an Order Authorizing Payment of Prepetition Critical Construction Vendor Claims and to Provide Adequate Assurance of Future Performance for Subcontractors and Materialmen who Have Statutory Lien Rights (Docket No. 46) (the Original Critical Construction Creditor Motion). 4. On March 17, 2011, F&G Mechanical Corporation (F&G) and

Meadowlands Fire Protection (MFP) filed a limited objection (the F&G Objection) (Doc. No. 67) to the Original Critical Construction Creditor Motion. 5. On March 21, 2011, Venmar CES, Inc. (Venmar) filed its objection to

the Original Critical Construction Creditor Motion (the Venmar Objection). The Debtors Business 6. Lehr Construction Corp., a New York corporation, was founded in 1979

and has evolved from a small entrepreneurial business to one of the most respected builders in 2
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New York. Lehr specializes in interior construction and serves clients mainly throughout the New York metropolitan area. Lehr serves as construction manager and/or general contractor for its clients and Lehrs construction professionals work closely with their in-house estimating, purchasing, quality control and value engineering professionals to ensure projects are completed on schedule, within budget, and with impeccable quality. 7. Lehrs projects range from minor renovations to interior office build-outs

over a million square feet. Lehrs broad range of clients include retail stores, financial service firms, educational organizations, entertainment and media firms, and many others. 8. The Debtors headquarters is located in New York, New York and it has

a warehouse facility in Woodhaven, New York. The Debtors primary assets include contract rights and accounts receivable for its on-going and completed projects. JURISDICTION 9. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper before this Court pursuant to 28 U.S.C. 1408 and 1409. 10. The statutory bases for the relief requested herein are sections 105(a),

363(b), 1107(a), and 1108 of the Bankruptcy Code and Rule 6004 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules). RELIEF REQUESTED 11. By this Motion, the Debtor requests entry of an Order authorizing, but not

directing, the Debtor to pay Critical Construction Claims in the ordinary course of business. In connection with the NBA Project, the Debtor estimates that there is approximately $826,937 in outstanding prepetition Critical Construction Claims and approximately $6,455,000 remaining to be paid postpetition in the ordinary course to the Critical Construction Creditors who have lien 3
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rights pursuant to New Jersey statute.2 In addition to payment of the outstanding prepetition Critical Construction Claims, the Debtor requests authorization (i) to continue to pay any postpetition obligations to its Critical Construction Creditors in the ordinary course and (ii) to issue two-party checks endorsed by the Debtor and the Critical Construction Creditor for all future payments to all subcontractors and vendors involved with the NBA Project whether for outstanding prepetition or postpetition amounts. THE DEBTORS CONSTRUCTION OBLIGATIONS 12. As described above and in greater detail in the Declaration of Frederick

Coffey Pursuant to Local Bankruptcy Rule 1007-2 dated February 21, 2011 (Docket No. 2) (the First Day Declaration), the Debtor acts as a general contractor specializing in interior construction projects throughout the New York metropolitan area. Through its over thirty year history, the Debtor has developed important working relationships with certain trusted construction subcontractors and vendors, each of whom provide key services and supplies to the Debtors on-going construction projects. 13. The Critical Construction Creditors are essential to the Debtors NBA

Project; particularly, in connection with the Debtors efforts to ensure that the NBA Project is completed on a fast track schedule in order to (i) avoid debilitating defaults and liens and (ii) maintain the high level of quality the Debtors clients, including the NBA, expect. 14. As explained more fully below, unlike the New York Lien Law and

Article 3A Statute, New Jersey has no statute creating a constructive trust in favor of subcontractors or vendors to compensate them for work performed on a private construction project; thus, subcontractors and vendors providing labor, materials and equipment to a bankrupt contractor, whether a general or subcontractor, are merely general creditors at the time of the
2

See N.J.S.A. 2A:44A-1, et. seq.

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bankruptcy. However, despite the protections afforded to general contractors under chapter 11, these Critical Construction Creditors still have lien rights under the New Jersey construction lien law statute. 15. The Debtor has been advised by numerous Critical Construction Creditors,

that despite the protections of administrative priority status during this chapter 11 case, in order to protect their respective companies, they will file liens under New Jersey state law for any unpaid prepetition amounts as well as any postpetition invoices that are not timely paid. Such vendors may also refuse to provide goods or services postpetition to the Debtor if the Debtor cannot pay the prepetition Critical Construction Claims. The filing of such liens will trigger a default pursuant to the terms of the agreement between the Debtor and the NBA resulting in damages of millions of dollars to the Debtors estate. In addition, such a default could allow the NBA to liquidate the Irrevocable Standby Letter of Credit dated May 5, 2010 (the Letter of Credit) issued by Capital One Bank for the benefit of the NBA in the amount of $3 million. Although such Letter of Credit is presently only a contingent liability of the Debtor, upon drawdown such contingent liability will ripen into a liquidated indebtedness secured by substantially all of the assets of the Debtor. 16. Given the substantial progress (70% complete) already made on the NBA

Project, the Debtor believes that it would be extremely difficult, if not impossible, to locate alternative subcontractors and vendors in a timely or cost-effective manner. Transitioning the work in progress from the current Critical Construction Creditors would not only result in additional delay and expenses to the Debtor and the NBA, but in fact would be impossible due to several considerations. First, no subcontractor would take the work for such a short period of time knowing that the first set of subcontractors were not paid and thus filed liens on the NBA

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Project. Next, at the end of each job, a subcontractor must comply with a final write-off procedure with the local government authority inspectors. A completion subcontractor would have to represent to that governmental authority that the particular work was performed from the beginning according to code. A completion subcontractor would very rarely ever take that position. Many of the Debtors subcontractors have small operations and rely on a limited number of their own customers for their continued viability. Such subcontractors have limited access to capital and can ill afford their own loss of operating revenues. Such parties may have little choice but to demand that the Debtor satisfy its prepetition obligations in order to survive. If the Debtor cannot perform, then in order to protect their outstanding fees, such parties would take whatever action the law allows, in this case, the filing of liens. 17. Further, as described in the First Day Declaration, the goal of this chapter

11 case is the development of a business plan that will outline an orderly process for the completion of the Debtors current construction projects and wind-down of the Debtors business. This will allow the Debtor to focus its resources on completing its current projects for its clients in the timely, cost-effective, and high quality manner. This goal may only be reached if the Debtors relationships with its numerous Critical Construction Creditors can continue in the ordinary course through the completion of the Debtors construction projects, including the NBA Project. Terms and Conditions of Prepetition Payments 18. The Debtor proposes to make full or partial payment to a Critical

Construction Creditor pursuant to this Motion only to the extent it deems necessary, in the exercise of its business judgment, and to ensure that the applicable Critical Construction Creditor will provide essential goods and services to the Debtor on a postpetition basis. To that end, in return for paying Critical Construction Claims, the Debtor will condition the payment of Critical 6
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Construction Claims upon each subcontractor or vendors agreement to continue supplying goods and services on the terms that were acceptable to the parties as evidenced by prior purchase order or other agreement (the Prepetition Trade Terms). 19. Additionally, the Debtor requests that if a subcontractor or vendor accepts

payment pursuant to an order granting the relief requested in this Motion and thereafter does not continue to provide goods or services on Prepetition Trade Terms, that: (a) any payment on account of Critical Construction Claims, may be deemed to be an improper postpetition transfer, and therefore, recoverable by the Debtor in cash upon written request and (b) upon recovery of the payment by the Debtor, the Critical Construction Claim, shall be reinstated as if the payment had not been made. If there exists an outstanding postpetition balance due from the Debtor to a vendor or supplier, the Debtor may elect to recharacterize and apply any payment made pursuant to an order granting the relief requested in this Motion to such outstanding postpetition balance and such supplier or vendor will be required to repay to the Debtor such paid amounts that exceed the postpetition obligations then outstanding without the right of any setoffs, claims, provisions for payment of any claims, or otherwise. Further, in order to receive payment pursuant to this Motion, the subcontractor or vendor will agree to (i) waive the right to assert any liens against the NBA Project, and (ii) take any action necessary to remove any liens that may have been asserted or filed against the NBA Project. BASIS FOR RELIEF 20. Unlike New York,3 New Jersey has no law creating a constructive trust in

favor of subcontractors to compensate them for work performed on a private construction

Under New York law, a contractor holds in trust the funds received in connection with a contract for the improvement of real property, as well as any rights of action with respect to those funds. N.Y. LIEN LAW 70 (McKinney 1993). The trust funds must be used to pay certain designated expenses, including subcontractors and materialmen claims, related payroll taxes, unemployment taxes, employment benefits and insurance premiums. Id.,

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project.4 Additionally, the U.S. Court of Appeals for the Third Circuit has rejected the creation of a trust in favor of subcontractors. In re Matthews Associates, Inc., 394 F.2d 101 (3d Cir. 1968); See also Lawrence v. Bank of New Jersey, (In re Central Piping, Inc.), 4 Bankr. 298 (Bankr. D.N.J. 1980).5 Subcontractors providing labor, materials and the like to a bankrupt contractor are merely general creditors at the time of the bankruptcy. See Matthews, 394 F.2d at 104; Central Piping, 4 Bankr. at 302. Because the Critical Construction Creditors in New Jersey do not have the same state law protections afforded to subcontractors and other vendors in New York, it is highly likely that the Critical Construction Creditors will file liens on the property related to the NBA Project in order to protect the services they have expended thus far. Such actions potentially will trigger a default under the NBA Project agreement. Moreover, there is a risk that the Critical Construction Creditors could refuse to continue providing the same quality and timely services to the Debtor and its client postpetition, which would adversely affect the Debtors estate and the going-concern value of its business. 21. Courts in this district generally acknowledge that it is appropriate to

authorize the payment of prepetition obligations where necessary to protect and preserve the estate, including an operating business going-concern value. See In re Ionosphere Clubs, Inc., 98 B.R. 174, 175 (Bankr. S.D.N.Y. 1989) (authority to pay prepetition wages); Armstrong World Indus., Inc. v. James A. Phillips, Inc., (In re James A. Phillips, Inc.), 29 B.R. 391, 398 (S.D.N.Y.

71(2), 71(4). Misuse constitutes a diversion, id., 72(1), and the trust may be enforced through a class action brought by the beneficiaries or a representative action brought by the trustee on their behalf. See Buchwald v. Di Lido Beach Resort, Ltd., et al. (In re McCann, Inc.), 318 B.R. 276, 281 (Bankr. S.D.N.Y. 2004). The New Jersey Trust Fund Act imposes a trust on funds received by a contractor from state and municipalities in favor of laborers and materialmen for work performed under contracts for public improvement. N.J.S.A. 2A:44-148. The creditors in Matthews and Central Piping sought to use New Jerseys "misappropriation of funds" statutes to impress a trust upon funds owed to a debtor under construction contracts. See N.J.S.A. 2A:102-10 and 102-11. The courts in each case refused to do so because the statutes created a criminal rather than civil cause of action. Matthews, 394 F.2d at 103, n. 2; Central Piping, 4 Bankr. at 301.
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1983) (authority to pay prepetition claims of suppliers); see also In re CoServ, L.L.C., 273 B.R 487, 497 (Bankr. N.D. Tex. 2002). In so doing, courts rely on several legal theories rooted in sections 105(a), 363(b), 1107(a) and 1108 of the Bankruptcy Code. 22. Pursuant to sections 1107(a) and 1108 of the Bankruptcy Code, debtors in

possession are fiduciaries holding the bankruptcy estate[s] and operating the business[es] for the benefit of [its] creditors and (if the value justifies) equity owners. CoServ, 273 B.R. at 497. Implicit in the fiduciary duties of any debtor in possession is the obligation to protect and preserve the estate, including an operating businesss going-concern value. Id. Some courts have noted there are instances in which a debtor can fulfill this fiduciary duty only . . . by the preplan satisfaction of a prepetition claim. Id. The court in CoServ specifically noted the preplan satisfaction of prepetition claims would be a valid exercise of the debtors fiduciary duty when the payment is the only means to effect a substantial enhancement of the estate . . . Id. 23. In Coserv, the court set out a test to be applied in resolving whether a

general unsecured prepetition claim should be paid on the basis of necessity under section 105(a). According to the Coserv court, a debtor must show by a preponderance of the evidence: (i) that it is critical that the debtor deal with the claimant; (ii) that unless it deals with the claimant, the debtor risks the probability of harm, or alternatively, loss of economic advantage to the estate or the debtors going concern value, which is disproportionate to the amount of the claimants prepetition claim; and (iii) that there is no practical alternative by which the debtor can deal with the claimant other than by payment of the claim. See Coserv, 273 B.R. at 498. The Debtor easily meets each prong of the Coserv test.

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(i) It is Essential That the Debtor Deal With the Critical Construction Creditors 24. As described above, the Debtor requires a steady stream of construction

related services and supplies from its Critical Construction Creditors to ensure the timely and cost-effective completion of the NBA Project. The NBA Project is due to be completed in midJune 2011, a period of only 75 days. As of the date hereof, the NBA Project is over 70% complete. As described in the Coffey Declaration, the Debtors failure to pay the Critical Construction Creditors, as listed on Exhibit B, would result in liens being filed on the NBA Project. The filing of liens would trigger a default under the agreement between the Debtor and the NBA such that the Debtor would be responsible for providing the NBA with necessary funds to remove the liens from the property. Moreover, such a default would result in the Debtor not being reimbursed by the NBA for the amounts the Debtor has expended thus far in connection with payments to its subcontractors to fulfill various general conditions. Further, such liens would precipitate a default by the NBA under the terms of its lease with its landlord related to the NBA Project. (ii) The Probable Harm Faced by the Debtor Outweighs the Critical Construction Vendor Claims 25. The Debtor faces millions in potential liability and back-charges as well

as lost profit of approximately $110,000 and lost reimbursement of General Conditions in the sum of approximately $229,000. If the Debtor is unable to induce the Critical Construction Creditors to continue and complete their work on the NBA Project and prevent them from filing liens on account of their unpaid prepetition claims, which they may do pursuant to New Jerseys construction lien law. The prepetition claims of the Critical Construction Vendors total

approximately $826,937, an amount that is much less than the multimillion dollars of potential losses faced by the Debtor and its creditors if the requested relief is not approved. Moreover, 10
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while the Debtors estate will be diminished by $3 million upon the drawdown on the Letter of Credit alone, the Critical Construction Creditors will likely be paid by the NBA for any outstanding claims if liens are filed. Thus, the probable harm faced by the Debtor far outweighs the Critical Construction Claims. (iii) There is no Practical Alternative to Payment of the Prepetition Claims 26. Although certain of the Critical Construction Creditors are bound to the

Debtor by contract, the only way for the Debtor to prevent these creditors from filing liens on the NBA Project is to pay the Critical Construction Claims. As noted above, the Debtors estate will be gravely harmed if the Debtors subcontractors file liens against the NBA Project as they are permitted to do under New Jersey statute. The danger is very real that the Debtor will be severely impaired in the event the Critical Construction Claims are not paid. No alternative exists to the payment of the Critical Construction Claims. In Coserv, the court listed various alternatives that a debtor might employ in lieu of preplan payment of prepetition unsecured claims, including, deposits, collect on delivery terms, and payment on shipment. See Coserv, 273 B.R. at 499. The Debtor in that case was a communication/cable company and not a contractor that had subcontractor creditors with independent valid state lien rights. The sole option available to the Debtor in the present case is to pay the Critical Construction Claims. 27. Furthermore, although the Debtor has contractual relationships with

certain of the Critical Construction Creditors, and many of these contracts may be considered executory contracts subject to assumption by the Debtor, section 365(b)(1)(A) of the Bankruptcy Code requires the Debtor to cure, or provide adequate assurance that it will promptly cure outstanding defaults before it can assume such contracts. See U.S.C. 365(b). While the Debtor may ultimately choose to assume certain of the agreements it has with the Critical Construction

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Creditors, the Debtor is not required by the Bankruptcy Code to make such a determination at this early stage of its chapter 11 case. In addition, other unsecured creditors will not be

prejudiced by the Debtors payment of the Critical Construction Creditors with whom the Debtor has contractual relationships because, if such agreements were to be assumed, the claims arising thereunder would be subject to administrative priority treatment in any event. Accordingly, the existence of contractual relationships between the Debtor and certain of the Critical Construction Creditors should not present a barrier to the relief requested in the Motion. 28. Consistent with the debtors fiduciary duties, courts have also authorized

payment of prepetition obligations under section 363(b) of the Bankruptcy Code where a sound business purpose exists for doing so. See Ionosphere, 98 B.R. at 175 (finding that a sound business justification existed to justify payment of prepetition wages). The Southern District felt strongly about this policy as exhibited in Armstrong, 29 B.R. at 397-98 (relying on section 363 of the Bankruptcy Code to allow contractor to pay prepetition claims of suppliers who were potential lien claimants because the payments were necessary for general contractors to release funds owed to debtors). 29. In addition, the Court may authorize payment of prepetition claims in

appropriate circumstances based on section 105(a) of the Bankruptcy Code. Section 105(a), which codifies the inherent equitable powers of the bankruptcy court, empowers the bankruptcy court to issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title. 11 U.S.C. 105(a). Under section 105(a), courts may permit pre-plan payments of prepetition obligations when essential to the continued operation of the debtors business. Specifically, the Court may use its power under section 105(a) to authorize payment of prepetition obligations pursuant to the necessity of payment rule (also referred to as the

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doctrine of necessity). See In re NVR L.P., 147 B.R. 126, 127 (Bankr. E.D. Va. 1992). The doctrine of necessity or the necessity of payment rule has long been recognized as precedent within the Second Circuit. See Ionosphere, 98 B.R. at 175-176; see also In re Eagle-Picher Indus., Inc., 124 B.R. 1021, 1023 (Bankr. S.D. Ohio 1991) (approving payment of prepetition unsecured claims of tool makers as necessary to avert a serious threat to the Chapter 11 process). 30. This flexible approach is particularly critical where a prepetition creditor

provides vital goods or services to a debtor that would be unavailable if the debtor did not satisfy its prepetition obligations. In In re Structurlite Plastics Corp., 86 B.R. 922, 931 (Bankr. S.D. Ohio 1988), the bankruptcy court stated that a bankruptcy court may exercise its equity powers under 105(a) [of the Bankruptcy Code] to authorize payment of pre-petition claims where such payment is necessary to permit the greatest likelihood of survival of the debtor and payment of creditors in full or at least proportionately. Id. (citation omitted). The court explained that a per se rule proscribing the payment of pre-petition indebtedness may well be too inflexible to permit the effectuation of the rehabilitative purposes of the Code. Id. at 932. 31. Allowing the Debtor to pay Critical Construction Claims under the present

circumstances is especially appropriate where, as here, doing so is consistent with the two recognized policies of chapter 11 of the Bankruptcy Codepreserving going concern value and maximizing the value of property available to satisfy creditors. See Bank of Am. Natl Trust & Savs. Assoc. v. 203 N. LaSalle St. PShip., 526 U.S. 434, 453 (1999). Indeed, reflecting the recognition that payment of prepetition claims of certain essential vendors is, in fact, both critical to a debtors ability to preserve going-concerns and maximize creditor recovery, courts in this district routinely grant relief similar to that which the Debtor is seeking herein. See, e.g., In re

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Neff Corp., Case No. 10-12610 (SCC) (Bankr. S.D.N.Y. June 8, 2010); In re The Readers Digest Assoc., Inc., Case No. 09-23529 (RDD) (Bankr. S.D.N.Y. Sept. 17, 2009); In re Lear Corp., Case No. 09-14326 (ALG) (Bankr. S.D.N.Y. July 31, 2009); In re Gen. Motors Corp., Case No. 09-50026 (REG) (Bankr. S.D.N.Y. June 25, 2009); In re Chrysler LLC, Case No. 0950002 (AJG) (Bankr. S.D.N.Y. May 20, 2009); In re Gen. Growth Props., Inc., Case No. 0911977 (ALG) (Bankr. S.D.N.Y. May 11, 2009); In re Lyondell Chem. Co., Case No. 09-10023 (REG) (Bankr. S.D.N.Y. Jan. 23, 2009); In re Delphi Corporation, et al., Case No. 05-44481 (RDD) (Bankr. S.D.N.Y. Oct. 13, 2005).6 32. The Debtors fiduciary obligations would be betterserved by authorizing

the limited relief requested herein, thereby ensuring the Debtors access to construction services and supplies at this critical stage of this chapter 11 case. Moreover, the Debtors estate will not be diminished if these prepetition payments to its Critical Construction Creditors are authorized given that the subject funds necessary to fulfill the outstanding prepetition claims of the Critical Construction Creditors are already being held by the NBA and by agreement with the Debtor will only be paid to such Critical Construction Creditors via two-party checks endorsed by the Debtor and the Critical Construction Creditor upon entry of the proposed Order. The endorsed check will then be delivered to the appropriate Critical Construction Creditor. 33. For the reasons stated herein, the Debtor believes the relief requested

herein is vitally necessary to preserve the value of its estate for the benefit of all stakeholders in this chapter 11 case and should be granted.

Because of the voluminous nature of the orders cited herein, they are not attached to the Motion. Copies of these orders are available upon request of the Debtors counsel.

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REQUEST FOR WAIVER OF STAY 34. Any delay in paying the obligations addressed herein would be detrimental

to the Debtor, its creditors, and its estate. Accordingly and to successfully implement the foregoing, to the extent applicable, the Debtor seeks a waiver of the notice requirements under Bankruptcy Rule 6004(a) and the 14-day stay of any order authorizing the use, sale, or lease of property under Bankruptcy Rule 6004(h). MOTION PRACTICE 35. This Motion includes citations to the applicable rules and statutory

authorities upon which the relief requested herein is predicated and a discussion of their application to this Motion. Accordingly, the Debtor submits that this Motion satisfies Rule 90131(a) of the Local Bankruptcy Rules for the Southern District of New York (the Local Bankruptcy Rules). THE DEBTORS RESERVATION OF RIGHTS 36. Nothing contained herein is intended or should be construed as an

admission of the validity of any claim against the Debtor, a waiver of the Debtors rights to dispute any claim, or an approval or assumption of any agreement, contract, or lease under section 365 of the Bankruptcy Code. The Debtor expressly reserves its right to contest any invoice or claim related to the relief requested herein in accordance with applicable nonbankruptcy law NOTICE 37. The Debtor has served notice of this Motion on (i) the Office of the United

States Trustee for the Southern District of New York, (ii) all parties that have timely filed requests for notice under Bankruptcy Rule 2002, (iii) the Debtors 40 largest unsecured creditors,

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and (iv) the Critical Construction Creditors. In light of the nature of the relief requested, the Debtor submits that no other or further notice need be provided. 38. No previous request for the relief sought herein has been made by the

Debtor to this or any other court. WHEREFORE, the Debtor respectfully requests that the Court grant the relief requested herein and such other and further relief as is just and appropriate. Dated: March 28, 2011 New York, New York Respectfully submitted,

By:

/s/ James A. Beldner James A. Beldner

COOLEY LLP 1114 Avenue of the Americas New York, New York 10036 Telephone: (212) 479-6000 Facsimile: (212) 479-6275 James A. Beldner (JB 7166) Lawrence C. Gottlieb (LG 2565) Lesley A. Kroupa (LK 2620) Attorneys for Debtor and Debtor in Possession

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EXHIBIT A Proposed Order

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

---------------------------------------------------------------- x : : In re : LEHR CONSTRUCTION CORP., : : : Debtor. : ---------------------------------------------------------------- x

Chapter 11 Case No. 11-10723 (SHL)

ORDER AUTHORIZING PAYMENT OF PREPETITION CRITICAL CONSTRUCTION CLAIMS FOR SUBCONTRACTORS AND VENDORS WHO HAVE STATUTORY LIEN RIGHTS Upon the motion dated March 28, 2011 (the Motion),1 of Lehr Construction Corp., as debtor and debtor in possession (the Debtor),2 for an order, pursuant to sections 105(a), 363(b), 1107(a), and 1108 of the Bankruptcy Code and Rule 6004 of the Bankruptcy Rules authorizing the debtor to pay in the ordinary course of business Critical Construction Claims, all as more fully set forth in the Motion; and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. 157 and 1334 and the Standing Order of Referral of Cases to Bankruptcy Judges of the District Court for the Southern District of New York, dated July 19, 1984 (Ward, Acting C.J.); and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. 157(b); and venue being proper before this Court pursuant to 28 U.S.C. 1408 and 1409; and notice of the Motion appearing adequate and appropriate under the circumstances, and it appearing that no other or

Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Motion. The last four digits of the Debtors federal tax identification number are 3507. The Debtors mailing address is 902 Broadway, New York, NY 10010.

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further notice need be provided; and it appearing that the relief requested in the Motion being in the best interests of the Debtor, its creditors, and all parties in interest; and the Court having determined that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and upon all of the proceedings had before the Court and after due deliberation and sufficient cause appearing therefore, IT IS HEREBY ORDERED that the Motion is granted, to the extent provided herein; and it is further ORDERED the Debtor is authorized but not directed, in its sole discretion, to pay Critical Construction Claims related to the NBA Project in the ordinary course of the Debtor's business; provided, however, that with respect to each Critical Construction Claim: (a) the Debtor shall not be authorized to pay a Critical Construction Claim unless the Critical Construction Creditors has perfected or, in the Debtors business judgment, is capable of perfecting or might be capable of perfecting in the future one or more liens in respect of such Critical Construction Claim, (b) such payment shall not be deemed to be a waiver of rights regarding the extent, validity, perfection, or possible avoidance of the related liens, and (c) the Critical Construction Creditor agrees to release promptly any liens upon payment of such Critical Construction Claim; provided, however, that should the Critical Construction Creditor fail to release promptly such liens upon payment by the Debtor, any such liens shall be deemed released and expunged, without necessity of further action, and this Order shall be all that is required to evidence such release and expungement; and it is further ORDERED the Debtor may request, in its sole discretion, that each Critical Construction Creditor provide written acknowledgement of its obligation to continue providing services to the Debtor on pre-existing terms as a condition of receiving payment on account of

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any payment made pursuant to this Order; provided that the Debtors failure to request such an acknowledgement shall not be and shall not be deemed to be a waiver of the Debtors rights hereunder; and it is further ORDERED if any Critical Construction Creditor does not continue to provide services on such terms, then (a) any payment on account of a prepetition claim received by such Critical Construction Creditor shall be deemed, in the Debtors sole discretion, an improper postpetition transfer and, therefore, recoverable by the Debtor in cash upon written request by the Debtor and (b) upon recovery by the Debtor, any prepetition claim of such Critical Construction Creditor shall be reinstated as if the payment had not been made; and it is further ORDERED if there exists an outstanding postpetition balance due from the Debtor to such Critical Construction Creditor, the Debtor may elect to recharacterize and apply any payments made pursuant to this Order to such outstanding postpetition balance, and the Critical Construction Creditor shall repay immediately in cash to the Debtor such paid amounts that exceed the postpetition obligations then outstanding and without any claim right of setoff or recoupment against the Debtor resulting thereby; and it is further ORDERED nothing herein shall impair or prejudice the Debtors or, to the extent permitted by applicable law, the official committee of unsecured creditors ability to contest, in their sole discretion, the extent, perfection, priority, validity, or amounts of any claims held by any Critical Construction Creditor. The Debtor does not concede that any liens (whether

contractual, possessory, common law, statutory, or otherwise) or claims satisfied pursuant to this Order are valid, and the Debtor expressly reserves all rights to contest the extent, validity, or perfection or seek the avoidance of all such liens or the priority of such claims; and it is further

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ORDERED nothing in the Motion or this Order, nor as a result of the Debtors payment of any Critical Construction Claims pursuant to this Order, shall be deemed or construed as: (a) prejudicing any right the Debtor may have to contest the amount of or basis for any prepetition obligations owed to any Critical Construction Creditor; or (b) an admission as to the validity or priority of any claim against the Debtor; or (c) an assumption of any agreement, contract, or lease pursuant to section 365 of the Bankruptcy Code between the Debtor and any Critical Construction Creditor; and it is further ORDERED the Debtor is authorized to take all actions necessary to effectuate the relief granted pursuant to this Order in accordance with the Motion; and it is further ORDERED the terms and conditions of this Order shall be immediately effective and enforceable upon its entry, notwithstanding any applicability of Bankruptcy Rule 6004(h); and it is further ORDERED that this Court shall retain jurisdiction to hear and determine all matters arising from or related to the implementation, interpretation and/or enforcement of this Order. Dated: ___________________, 2011 New York, New York

HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE

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EXHIBIT B List of Critical Construction Vendors

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LIEN WAIVERS - BASE CONTRACT PROJECT: JOB #: REQ. #: REQ. DATE:

NBA 6311 REQ 3 2/25/2011 WORK COMPLETE 267,623 3,557 271,180 86,844 86,844 24,550 (3,700) 1,730 22,580 72,223 72,223 76,184 76,184 585,200 9,500 594,700 PRIOR PAYMENT 26,762 356 27,118 8,684 8,684 2,455 (370) 173 2,258 7,222 7,222 7,618 7,618 58,520 950 59,470 133,812 133,812 AMOUNT DUE 107,049 3,201 110,250 78,160 78,160 22,095 (3,330) 1,557 20,322 65,001 65,001 68,566 68,566 526,680 8,550 535,230 PRE BANKRUPTCY POST BANKRUPTCY -

TRADE ACCESSORIES

CONTRACTOR
A LISS & COMPANY Subtotal ACORN WIRE AND IRON WORKS Subtotal ALBERT PEARLMAN INC. Subtotal APC SALES & SERVICE CORP APC SALES & SERVICE CORP Subtotal BURGESS STEEL LLC BURGESS STEEL LLC Subtotal COMPUTER FLOORS INC. COMPUTER FLOORS INC. COMPUTER FLOORS INC. Subtotal CONSOLIDATED CARPET Subtotal EDGEKRAFT Subtotal F & G MECHANICAL CORP F & G MECHANICAL CORP F & G MECHANICAL CORP Subtotal FOLEY POWER SYSTEMS

PO # 155303

PO AMOUNT 1,434 1,434 13,640 13,640 71,000 71,000 267,623 3,557 271,180 173,688 2,078 175,766 245,500 (37,000) 17,300 225,800 138,500 138,500 195,901 195,901 1,463,000 9,500 45,864 1,518,364 654,000

% COMP 0%

RET.

TOTAL DUE -

39,080 39,080 324,108 8,550 332,658 -

CHAIN LINK FENCING

155345

0%

PAINT & WALLCOVERING

155412

0%

107,049 3,201

107,049 3,201

UPS UPS

155110 155395

100% 100%

110,250
39,080 -

110,250
78,160 -

ST. STEEL CO#5

155280 874391

50% 0%

39,080
22,095 (3,330) 1,557

78,160
22,095 (3,330) 1,557

RAISED FLOORING

155301 SRN36456 155397

10% 10% 10%

20,322
65,001

20,322
65,001

CARPET

155336

52%

65,001
68,566

65,001
68,566

FABRIC PANELS

155344

39%

68,566
202,572 -

68,566
526,680 8,550 -

HVAC ROOF TOP EQUIPMENT - HVAC CO#2

155282 155361 874111

40% 100% 0%

202,572 -

535,230
-

GENERATOR - FURNISH ONLY

155098

0%

LIEN WAIVERS - BASE CONTRACT PROJECT: JOB #: REQ. #: REQ. DATE:

NBA 6311 REQ 3 2/25/2011 WORK COMPLETE 78,018 78,018 30,140 30,140 4,960 4,960 11,621 4,050 1,530 17,201 18,801 18,801 43,560 43,560 121,500 121,500 831,974 1,708 111,112 944,794 PRIOR PAYMENT 16,921 16,921 112,500 112,500 AMOUNT DUE 70,217 70,217 27,126 27,126 4,464 4,464 10,459 3,645 1,377 15,481 39,204 39,204 109,350 109,350 636,277 1,537 100,000 737,814
PRE BANKRUPTCY POST BANKRUPTCY

TRADE ALT#1 - 5 YEAR MAINT. AGREEMENT ALT #2 TRAINING

CONTRACTOR
FOLEY POWER SYSTEMS FOLEY POWER SYSTEMS FOLEY POWER SYSTEMS Subtotal FURNITURE CONSULTANTS Subtotal GALDI MECHANICAL GALDI MECHANICAL GALDI MECHANICAL Subtotal JOSLOFF INDUSTRIES LLC Subtotal JP PATTI COMPANY JP PATTI COMPANY JP PATTI COMPANY Subtotal LIEBERT CORPORATION Subtotal MAXIMUM SECURITY Subtotal MEADOWLANDS FIRE PROTECTION Subtotal MEHL ELECTRIC COMPANY INC. MEHL ELECTRIC COMPANY INC. MEHL ELECTRIC COMPANY INC. MEHL ELECTRIC COMPANY INC. Subtotal

PO # 155111 155112 SRN37060

PO AMOUNT % COMP 43,335 0% 2,119 0% (20,273) 0% 679,181 140,433 140,433 75,350 3,374 35,402 114,126 9,240 9,240 37,845 13,500 5,100 56,445 112,807 112,807 132,000 132,000 486,000 486,000 2,357,936 1,708 692,500 20,271 3,072,415 56%

RET. 7,802 7,802 3,014 3,014 496 496 1,162 405 153 1,720 1,880 1,880 4,356 4,356 12,150 12,150 83,197 171 11,111 94,479

TOTAL DUE -

10,850 10,850 4,464 4,464 3,645 3,645 51,532 51,532 139,981 1,537 141,518

70,217

70,217

DEMOUNTABLE PARTITIONS

155302

70,217
16,276 -

70,217
27,126 -

PLUMBING ALL002 ALL003

155305 874313 874355

40% 0% 0%

16,276
-

27,126
4,464

WINDOW REMOVAL

155284

54%

10,459 1,377

4,464
10,459 3,645 1,377

WATERPROOFING/ROOFING ROOF TOP EQUIPMENT - ROOF PATCH TEMP PITCH POCKET

155356 155360 155396

31% 30% 30%

11,836
-

15,481
-

CRAC UNITS

155100

17%

39,204

39,204

SURVEILLANCE SYSTEM

155347

33%

39,204
57,818

39,204
109,350

SPRINKLERS

155281

25%

57,818
496,296 100,000 -

109,350
636,277 1,537 100,000 -

ELECTRIC ROOF TOP EQUIPMENT - ELECTRIC COMM CABLING CO#2

155283 155362 155364 874113

35% 100% 16% 0%

596,296

737,814

LIEN WAIVERS - BASE CONTRACT PROJECT: JOB #: REQ. #: REQ. DATE:

NBA 6311 REQ 3 2/25/2011 WORK COMPLETE 28,450 28,450 35,580 35,580 227,482 227,482 201,500 201,500 33,304 33,304 3,200 3,200 22,457 22,457 45,000 16,425 61,425 PRIOR PAYMENT 113,741 113,741 AMOUNT DUE 25,605 25,605 32,022 32,022 90,993 90,993 181,350 181,350 29,973 29,973 2,880 2,880 20,211 20,211 40,500 14,783 55,283
PRE BANKRUPTCY POST BANKRUPTCY 25,605

TRADE ARCH WOODWORK

CONTRACTOR
METROPOLITAN/NJS Subtotal MIDTOWN CONTRACTING CORP MIDTOWN CONTRACTING CORP MIDTOWN CONTRACTING CORP MIDTOWN CONTRACTING CORP MIDTOWN CONTRACTING CORP Subtotal MCQUAY INTERNATIONAL Subtotal NEW ENGLAND CONSTRUCTION NEW ENGLAND CONSTRUCTION Subtotal POWER MANAGEMENT CONCEPTS Subtotal REGIONAL SCAFFOLD REGIONAL SCAFFOLD Subtotal RG GLASS CREATIONS INC. Subtotal SERVICE WORKS INC. Subtotal TITAN CONTRACTING GROUP INC. TITAN CONTRACTING GROUP INC. Subtotal

PO # 155299

PO AMOUNT 84,418 84,418 118,600 26,500 281,384 9,158 16,300 451,942 227,482 227,482 806,000 780 806,780 51,480 51,480 44,405 7,939 52,344 32,000 32,000 61,245 61,245 50,000 18,250 68,250

% COMP 34%

RET. 2,845 2,845 3,558 3,558 22,748 22,748 20,150 20,150 3,330 3,330 320 320 2,246 2,246 4,500 1,643 6,143

TOTAL DUE 25,605

16,011 16,011 90,675 90,675 29,973 29,973 40,500 14,783 55,283

25,605
16,011 -

25,605
32,022 -

CONCRETE WATERPROOFING CO#2 CO#6 ALL009

155338 155357 874287 874624 874760

30% 0% 0% 0% 0%

16,011
90,993

32,022
90,993

CHILLERS - FURNISH ONLY

155099

100%

90,993
90,675 -

90,993
181,350 -

DRYWALL & CARPENTRY ALL002

155337 874314

25% 0%

90,675
-

181,350
-

COMMISSIONING AGENT

155384

0%

29,973 -

LOADING PLATFORM ALL001

155285 874226

75% 0%

2,880

29,973
2,880

ARCH METAL & GLASS

155300

10%

2,880
20,211

2,880
20,211

ACCESS CONTROL SYSTEM

155346

37%

20,211
-

20,211
40,500 14,783

DEMOLITION ROOF TOP DEMOLITION

155279 155358

90% 90%

55,283

LIEN WAIVERS - BASE CONTRACT PROJECT: JOB #: REQ. #: REQ. DATE:

NBA 6311 REQ 3 2/25/2011 WORK COMPLETE 61,525 61,525 61,444 61,444 99,061 46,936 26,555 172,551 3,291,603 PRIOR PAYMENT 28,750 28,750 55,300 55,300 461,024 AMOUNT DUE 26,622 26,622 89,156 42,242 23,899 155,297 2,501,420
PRE BANKRUPTCY POST BANKRUPTCY 26,622

TRADE AHU - FURNISH ONLY

CONTRACTOR
TRANE COMPANY Subtotal WEINSTEIN & HOLTZMAN WEINSTEIN & HOLTZMAN Subtotal LEHR CONSTRUCTION CORP LEHR CONSTRUCTION CORP LEHR CONSTRUCTION CORP Subtotal

PO # 155221

PO AMOUNT 61,525 61,525 110,600 2,500 113,100 353,790 167,627 94,838 616,255 10,041,053

% COMP 100%

RET. 6,153 6,153 6,144 6,144 9,906 4,694 2,655 17,255 329,160

TOTAL DUE 26,622

29,421 13,940 7,887 51,248 826,937

26,622
-

26,622
-

HOLLOW METAL ALL006

155286 874533

56% 0%

59,734 28,302 16,013

89,155 42,242 23,899

GC'S FEE INSURANCE TRADE SUBTOTAL

28% 28% 28% 32.78%

104,049 1,674,483

155,296 2,501,420

EXHIBIT C Declaration of Frederick Coffey in Support of Motion

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------------- x : In re : : LEHR CONSTRUCTION CORP., : : Debtor. : : ---------------------------------------------------------------- x

Chapter 11 Case No. 11-10723 (SHL)

DECLARATION OF FREDERICK COFFEY PURSUANT TO LOCAL BANKRUPTCY RULE 1007-2 I, Frederick Coffey, declare, pursuant to section 1746 of title 28 of the United States Code, that: 1. I am the President of the above-captioned debtor (the Debtor, Lehr or the

Company). I am familiar with the Debtors day-to-day operations, business and financial affairs. 2. I am a co-founder of Lehr and have more than thirty-five years of industry

management experience. I have hands-on management responsibilities for many of Lehrs largest projects. 3. On February 21, 2011 (the Petition Date), the Debtor filed with this Court a

voluntary petition for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code). 4. On the date hereof, the Debtor filed with this Court an amended motion

requesting this Courts authorization to (i) pay in the ordinary course of business prepetition claims (collectively, the Critical Construction Claims) held by certain critical construction vendors (collectively, the Critical Construction Creditors) that are essential to the Debtors ongoing construction obligations pursuant to the agreement between the Debtor and NBA

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Properties, Inc. related to certain properties located in Secaucus, New Jersey (the NBA Project) (the Motion).1 I am authorized by the Debtor to submit this Declaration on its behalf in support of the Motion. 5. I am familiar with the Debtors day-to-day operations, financial affairs, business Except as otherwise indicated, all facts set forth in this

affairs and books and records.

Declaration are based upon: (i) my personal knowledge; (ii) my review of relevant documents; (iii) information supplied to me by other members of the Debtors management team or professionals retained by the Debtor; or (iv) my opinion based on my experience and knowledge of the Debtors operations and financial condition. If I were called upon to testify, I could and would testify competently to the facts set forth herein. Immediate Need for Payment of the Critical Construction Claims 6. I have reviewed the Motion, and it is my belief that the relief sought therein is

necessary to: (a) avoid immediate and irreparable harm to, and ensure the uninterrupted operation of, the Debtors business, (b) avoid immediate and irreparable harm to the Debtors subcontractors and numerous other third parties, and (c) maximize and preserve the value of the Debtors chapter 11 estate. 7. The Debtor acts as a general contractor specializing in interior construction

projects throughout the New York metropolitan area. Through its over thirty year history, the Debtor has developed important working relationships with certain trusted construction vendors, each of whom provide key services and supplies to the Debtors on-going construction projects. 8. The Critical Construction Creditors, several of whom I have worked with for

many years, are essential to the Debtors NBA Project; particularly, in connection with the

Capitalized terms used herein but not defined shall have the meaning ascribed to them in the Motion.

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Debtors efforts to ensure that the NBA Project is completed on schedule and maintains the high level of quality the Debtors clients, including the NBA, expect. 9. I have been advised by Lehrs NBA Project managers that numerous Critical

Construction Creditors, despite the protections of administrative priority status during this chapter 11 case, will file liens under New Jersey state law in order to protect their respective companies, for any unpaid prepetition amounts as well as any postpetition invoices that are not timely paid. I have also been advised that such vendors may also refuse to provide goods or services postpetition to the Debtor if the Debtor cannot pay the prepetition Critical Construction Claims. The filing of such liens will trigger a default pursuant to the terms of the agreement between the Debtor and the NBA resulting in damages of millions of dollars to the Debtors estate. In addition, such a default could allow the NBA to liquidate the Irrevocable Standby Letter of Credit dated May 5, 2010 (the Letter of Credit) issued by Capital One Bank for the benefit of the NBA in the amount of $3 million. Although such Letter of Credit is presently only a contingent liability of the Debtor, upon drawdown such contingent liability will ripen into a liquidated indebtedness secured by substantially all of the assets of the Debtor. 10. Given the substantial progress (70% complete) already made on the NBA Project,

the Debtor believes that it would be extremely difficult to locate alternative subcontractors and vendors in a timely or cost-effective manner. Transitioning the work in progress from the current Critical Construction Creditors would not only result in additional expenses to the Debtor and the NBA, but in fact would be impossible due to several considerations. First, no

subcontractor would take the work for such a short period of time knowing that the first set of subcontractors were not paid and thus filed liens on the NBA Project. Next, at the end of each job, a subcontractor must comply with a final write-off procedure with the local government

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authority inspectors. A completion subcontractor would have to represent to that governmental authority that the particular work was performed from the beginning according to code. A completion subcontractor would very rarely ever take that position. 11. In addition, many of the Debtors subcontractors have small operations and rely

on a limited number of their own customers for their continued viability. Such subcontractors have limited access to capital and can ill afford their own loss of operating revenues. Such parties may have little choice but to demand that the Debtor satisfy its prepetition obligations in order to survive. If the Debtor cannot perform, then in order to protect their outstanding fees, such parties would take whatever action the law allows, in this case, the filing of liens. 12. Further, the goal of this chapter 11 case is the development of a business plan that

will outline an orderly process for the completion of the Debtors current construction projects and wind-down of the Debtors business. This will allow the Debtor to focus its resources on completing its current projects for its clients in a timely, cost-effective, and high quality manner. This goal may only be reached if the Debtors relationships with its numerous Critical Construction Creditors can continue in the ordinary course through the completion of the Debtors construction projects, including the NBA Project 13. The relief requested in the Motion is critical to preserving and maintaining the

going concern value of the Debtor and facilitating a successful and orderly wind-down of the Debtors operations

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Accordingly, I respectfully request that the Court grant all of the relief requested in the Motion and such other and further relief as may be just and appropriate. Dated: March 28, 2011 LEHR CONSTRUCTION CORP.

By:/s/Frederick Coffey Name: Frederick Coffey Title: President

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